The Southland Times. PUBLISHED EVERY MORNING “LUCEO NON URO” THURSDAY, APRIL 22, 1937. Surprises In The British Budget

Southland Times, Issue 23180, 22 April 1937, Page 4

The Southland Times. PUBLISHED EVERY MORNING “LUCEO NON URO” THURSDAY, APRIL 22, 1937. Surprises In The British Budget

The British Budget was presented to the House of Commons on Tuesday afternoon. An early message stated that strict measures had been taken “to, prevent any premature disclosure”, and it must be admitted that some of the Budget proposals, more especially in relation to taxation, have come as a complete surprise. The threepence increase in income tax had been confidently predicted; but the Chancellor of the Exchequer had something else in reserve which breaks new ground in British politics and has caused alarm among members of his own party. In its general outline, the Budget conforms fairly closely to the predictions of economists. It was believed, for instance, that there would be a small surplus, although it was recognized that a marked increase in the tempo of rearmament in the last quarter of the financial year might result in a deficit. At one time the expenditure on the Supply Services reached the remarkable figures of £18,000,000 for two weeks in succession, and from calculations based on the possibility of a continued expenditure at this level for the remaining few weeks of the year The Economist admitted that the estimated surplus could have been converted into a deficit of £17,000,000. An actual deficit of £5,497,000, therefore, will cause little surprise, although it is not a good beginning for a year which is to see an unparallelled expenditure on armaments. In April of last year, Mr Chamberlain budgeted for a revenue of £798,400,000, and it will be seen from the figures published this morning that although there is a difference of little more than £1,000,000 between estimated and unrealizable revenue the difference is on the wrong side of the ledgers. This is in spite of a continued buoyancy in trade and a fairly general recovery in industry. It will be noticed, too, that “income tax fell short of expectations by £1,750,000”. and that the surtax was “disappointing.” It has been impossible to consider Budget probabilities without making liberal allowance for rearmament; but now that the future is to be traced" dimly beyond the rows of figures the full weight of the burden can be realized. The coming year is expected to provide an increase of £18,000,000 in income tax and of £4,500,000 in the surtax; but the decrease in these important sources of revenue already noted for the year just ended would suggest that the estimate is overhopeful were it not for factors that are both extraordinary and temporary. It is obvious that the Coronation, in addition to pro vid-, ing an estimated increase of £12,000,000 for the customs and excise revenue, is certain to swell the total taxable income to a considerable figure. This is a fact which helps to make the Budget unusual in its reference to—and in part its dependence on—abnormal conditions. The increase in customs and excise and post office revenue can be accepted as an index to the rising tide of recovery in Britain. Armaments must be included among the contributing causes of prosperity: it is not necessary to go beyond this for the meaning of Mr Chamberlain’s reference to the large part played by the Government’in the revival of trade. But economists —and all sane men—look upon armaments as the worst kind of trade influence; they dread the dislocation of a normal progress, and look anxiously for the time when boom conditions fall over into reaction and slump. It is not surprising, therefore, that Mr Chamberlain should have adopted a special measure for meeting the heavy liabilities of the coming year. But it is definitely surprising that he should have introduced the measure that is now disturbing Conservative circles in Britain.

According to the cable message printed this morning, the proposed tax on businesses with profits exceeding £2OOO yearly “can be described as a national defence contribution”; but business men and financiers who approved of the Defence Loan as an alternative to taxation for armaments may feel that the Government is trying to have it both ways. Mr Chamberlain is reported to have said that “the profits tax will end with the completion of rearmament”; but everybody who has noticed the way in which temporary measures are absorbed into the permanent framework of government will remain sceptical on this point. Perhaps it is a little too much to say, with the Australian Associated Press political writer, that the Budget was “brilliant socialism”, even though Labour members welcomed it with cheers. But a measure which comes so close to being a capital levy that any other term for it is a mere euphenism is a long step for a Conservative Gov-,

ernment. Its justification is in the present state of world politics. Provisions far more drastic than the profits tax are introduced in war time almost without opposition; and the obvious inference is that the British Government looks upon the preparation for war as a state of emergency which justifies a bold innovation. It is interesting to pause upon the thought of a Chancellor of the Exchequer whose personal reputation has been built on a'solid conservatism introducing a measure that causes dismay on the Government benches and jubilation among the Socialists. But it is by no means irreconcilable with the policy of a Government which has shown itself to be fully aware of changing needs in an age' of transition.