BRITISH BUDGET

Otago Witness, Issue 3764, 4 May 1926, Page 55

BRITISH BUDGET

CHANCELLOR’S SPEECH. LONDON, April 26. In introducing the Budget in the Hcuse of Commons, Mr Winston Churchill (Chancellor of the Exchequer) said he regretted that the Customs and Excise had fallen short of the estimate by £1,000,000. The nation was richer than it was a year ago, but, while general trade was steadily improving and some important sections were prosperous and large profits were being made from rubber and tin, the basic industries of the country were mostly obstinately depressed. The picture was not black or grey: it was piebald, with the dark patches less prominent, however, than last year. The estimate for inland revenue was £1,000,000 short, and the income tax was £2,500,000 under the estimate. This was partly offset by the improvement in stamps. The most striking feature was the death duties, which were £5,250,000 below, and the supertax, which was £5,250,000 above, the estimate. The increase in the supertax was due to stricter and more efficient collection. The annual non-taxable revenue had increased by £13,000,000 over the estimate. There would have been a net surplus over all the increases in expenditure of nearly £5,000,000 but for the coal subsidy, which alone was responsible for a deficit of £14,000,000. Mr Churchill emphasised the remarkable achievement in debt reduction. The total diminution for the past six years had been £75,000,000 annually, which was perhaps some repayment for Britain’s immense efforts. He could only say “Let us persevere.” The total estimates for the expenditure were £812,500,000, compared with £799,500,000 estimated and £828,000,000 actually expended last year. The new estimates included nearly £19,000,000 new additional expendituie, arising from either the automatic growth of pensions or decisions of policy. Last year there had been a net reduction of £7,000,000 in administrative services, including £4,000,000 on armaments. A further continuous effort was necessary. The Prime Minister (Mr Baldwin) had authorised him to say that the Cabinet Committee on Economy would continue its work, and that the estimates for the three fighting services would be considered jointly. The Government did not intend to renew the Trade Facilities Act, which had exhausted its usefulness. The estimated revenue on the existing basis of taxation was £804,700,000, twin’s the estimated deficit was £7,941,000. Mr Churchill dwelt on the happy effects of the restoration of l he gold standard, including the normalising of the exchanges. The great gold-using dominions, he said, were placing Britain’s return to prosperity on a solid basis. The silk duties had worked with unexpected smoothness and the present prices were somewhat below those of last year The country had secured a revenue of ‘ etween £6,000,000 and £7,000,000 for the full year without making dearer the finery of the poor working girl. The M‘Kenna duties had decreased the imports and increased the British exports of r tor cars and musical instruments. Mr Churchill dwelt on the heavy loss last year owing to dumping in the interval between the announcement of the silk tax and the passage of the Budget. Henceforth "new duties would be applied with less delay. Last year’s extensive preferences had duced satisfactory results. The imports of Empire sugar, which fell to 165,000 tons under Mr Snowden, had risen to 193,000 tons and promised to increase further during the present year. The heavier Empire wines for the first time had found an appreciable market. British Empire tobacco supplies were increasing steadily in quantity and improving in quality. Empire raisens had also increased, but preferences only produced an effective permanent reaction on inter-im-perial trade by stability and continuity. Therefore he proposed to extend the principle for 10 years and to guarantee all the numerous articles which were subject to Imperial preference. Mr Churchill enumerated minor readjustments such as, for example, the abandonment of the three-year average for the assessment of income tax and the agreement with the Free 9tate abolishing the double income tax before he came to the more substantial new taxes such as a betting tax. He analysed the anomalies in the present betting laws under which cash betting was legal on the racecourse but illegal elsewhere. Heemphasised that there was one law for the rich and another for the poor. He did not propose to alter the law because he was not looking for trouble, but he proposed to raise revenue by a 5 per cent, tax on every sum staked on a racecourse or through a credit bookmaker from November 1 next. He suggested that the bookmaker would recover the tax from his clients by a certain shortening of the odds. He estimated that the betting tax would produce £1,500,000 this year and £6.000,000 in a full year. He announced an import duty of 16 2-3 per cent, on wrapping paper and an extension of the M’Kenna duties to cover commercial motor cars. This was largely in order to simplify the Customs formalities, since only one-tenth of the commercial cars Britain used were imported while the exports exceeded the foreign imports. it' was proposed to re-enact for a period of 10 years Part P of the Safeguarding of Industries Act, which would otherwise lapse this year, relating to essential factors in national defence which nobody had seriously disputed since the war. The Chancellor extolled the superior quality of * British roads compared with

any equal area in the world, and announced an increase in the taxation of heavy motor lorries, rubberless tyred charabancs, and hackney vehicles which would produce £2,350,000 in the full vear. Mr Churchill pointed out that the fund for the upkeep of the roads, to which the motor taxes had hitherto been allocated at present had a reserve of £19,000,000. The Treasury proposed to appropriate £7,000,000 of this amount, and henceforth to take one-third of all motor taxation which would be devoted to the general revenue. Then came what he characterised as a peculiarly refreshing windfall, namely—a reduction of the three months’ credit hitherto granted to the brewer for the payment of duty to two months. This would produce once and for all a payment of £5,250,000. The Chancellor said he had received an assurance from M. Peret without prejudice to the impending settlement of the French debt, that France had undertaken th* payment of £4,000,000 during the coming year on the sole credit of France. This practical step, he said, showed that M. Peret desired to arrive at a settlement and was a good augury for the coming discussions. The House should welcome it as proof of the determination and financial power of France to strengthen her credit by the proper regulation of her external debt. Summing up, the Chancellor showed that -he new taxes would produce approximately £22,000,000, which, after the deduction of a prospective definite sum of £7,900,000 on the present basis, left a surplus of £14,150,000. “What ••hall we do with it,” he asked. Mr Churchill added that he had resisted a sore temptation to grant a remission of taxation. He pointed out that the statutory Sinking Fund of £50,000,000 had been reduced to £36,000,000 last year owing to the deficit of £14,000,000 due to the coal subsidy. This year an additional £lo,ouu,ooo would be allocated to the Sinking Fund, leaving a surplus of £4,109,000. Three millions of the surplus would be earmarked for the purpose of tapering the coal subsidy and for other purposes. He pointed out that the Estimates were based on a peace footing, whereas in the event of a prolonged paralysis of industry overwhelming the country he would have to propose supplementary taxation which at present he thought it right to state would comprise substantial increases in direct and indirect taxation. Mr Churchill concluded: “Apart from unforeseen events we see our way fairly clearly to finance the next two years, but we must meet the emergencies courageously as they arise.” A NOTE OF DISAPPOINTMENT. LONDON, April 26. The Budget was received without enthusiasm. While it is admitted that it is sound finance, disappointment is felt that there is no reduction in taxation. The Times says: ‘‘Mr Churchill has faced the difficulties in this difficult year in the way in which they ought to be faced. The Sinking Fund operations cannot fail to have a favourable effect upon credit and the benefit will percolate through the whole industrial system.” Several papers describe it as a “chicory Budget.” The Daily Express says that it only offers the abolition of the dutv on chicory, involving a sacrifice of £SOO a year. The Morning Post affirms that the success of the Preference and silk duties shows that a general tariff would be justified. STIMULUS TO EMPIRE TRADE. LONDON, April 27. British and dominion traders are delighted with the Budget proposal to stabilise preferences for 10 years, conside g that it removes the annual fear of alteration or revocation, which previously had been the greatest deterrent to the fullest exploitation of the Empire’s commodities. Mr Ben Morgan said: “It means an enormous advance in the development of preferences, and will justify the employment greater capital in Empire industries, resulting in an expansion of inter-Empire trade.” The motor trade points out that the extension of the M'Kenna duties to commercial vehicles will assist in the development of exports, which will be further stimulated if petrol, instead cf horsepower, is taxed in 1927, as was promised, resulting in the more extensive manufacture of long-stroke engines suitable for dominion requirements. LABOUR AND LIBERAL CRITICISM. LONDON, April 27. During the Budget debate Mr Philip Snowden (Labour) said the betting tax was imposed in the face cf expert opinion that collusion between the backer and the bookmaker was very easy, and that both were interested in evasion. Mr Snowden said that Mr Churchill was at the end of his resources when he degraded the revenue by a tax on one of the greatest present-day evils. Last year it was a ricn man’s Budget. He (Mr Snowden) could not say that it was the Budget of a profligate bankrupt. Sir John Simon (Liberal, said He wished it clearly to be understood that any future Ministry could sweep away the whole protective system recently created. Mr E. Harmsworth (Con.) congratulated Mr Churchill on the preferential proposals, and said be hoped that future Budgets would include some steps in the direction of a real trading agreement between the different dominions and the Mother Country. Mr A. V. Alexander (Labour) said that the dominions might have ground for a charge of breach of faith if a future Government removed the food taxes, thus abolishing the preferences. Mr Churchill, in reply, pointed out that the preferences fell if and when the tax fell below the preference level. The debate was adjourned.

ATTITUDE OF LABOUR. LONDON, April 27. A meeting of the Parliamentary Labour Party decided to oppose all the new feature® of the Budget including the betting tax. PROPOSED BETTING TAX. LONDON, April 28. In the House of Commons, Mr Churchill, replying, said the trend of the debate showed that the House more nearly agreed with the Budget than was the case for the past 25 years. The Chancellor was not a dictator and had not the power to veto expenditure. The responsibility for that rested with the Cabinet. Referring to the betting tax the Chancellor sketched the harried existence of the street bookmakers owing to the activities of the police. It could not be suggested that a tax of 5 per cent, would make a respectable bookmaker seek a hunted life on the streets. The bookmakers were fully entitled to pass the tax on to their clients. That was the object of the tax. He was willing to discuss the methods and machinery of the tax with representatives of the bookmakers. The taxing ex peits reported that it would be easy and inexpensive to collect the great bulk of it coming from the credit bookmakers. He j estimated that the turnover of betting was \ at least £1,700,000 a year. j EMPIRE PREFERENCES. LONDON, April 28. j Ihe formal resolution covering the » general debate was agreed to. It is officially stated that it is the Government’s intention to incorporate the 10 years’ preference in the Finance Act, making it therefore unalterable except by another Act. The Government admits the right of Parliament to alter, amend, or repeal any Act, but it is unbelievable that. any succeeding Government would dishonour its predecessor’s pledge to the dominions if it were ratified by Parliament. - Mr Churchill said it was possible that 4 another Parliament would repudiate the Imperial Preference guarantee, but it was j a fact that stabilisation would prove a> { practical deterrent. Moreover, he hoped eventually that these matters of Imperial ) consolidation would cease to be pawns in ' party controversy. Future Government would have better things to do than upset the basis on whioh Imperial commercial trade had been built up. STABILISATION OF PREFERENCES.;' MELBOURNE, April 30. Mr Bruce warmly commends the inclusion of the 10 years’ term of preference to the dominions provided by the British Budget. A fixed term, he contends, will tend to stabilisation, and will allow producers and exporters to operate with confidence. The Budget is a magnificent example of courage and financial rectitude.