SECRETS OF THE BUDGET

Taranaki Daily News, 29 April 1931, Page 7

SECRETS OF THE BUDGET

DEFICIT OF £37,500,000 SHOWN

PROPOSALS TO MEET SHORTAGE

“RAID” ON DOLLAR EXCHANGE FUND

BRITAIN’S Budget shows a deficit of £37,500,000. The sensations expected did not materialise when Mr. Philip Snowden, Chancellor of the Exchequer, divulged his well-kept secrets in the House of Commons. To meet the deficiency in the national finance Mt. Snowden proposes to alter the niethod of payment of income tax so that the first of two instalments, amounting to three-quarters of the total, will become payable in the present financial year, making £10,000,000 available. The sum of £20,000,000 is to be taken from the dollar exchange fund, and the remaining, £7,500,000 is to be raised by increasing the tax on petrol from foilrpence to sixpence a gallon. The Budget also proposes an increase of„ one penny in the £1 land tax.

TENSE MOOD IN COMMONS YEAR’S FINANCE REVIEWEP DEBT REDUCTION TRANSACTIONS. DECREASES IN THE REVENUE. By Telegraph—Press Assn. —Copyright. London, April 27. The House of Commons was crowded and in a tenser mood than usual before the Budget speech, everyone, realising the difficult problem facing Mr, Snowden, who was received most sympathetically in. every part of the chamber upon hie return after hie serious illness. All the galleries were full, the visitors including Mr. Montagu Norman, governor of the Bank of England, Mrs. Snowden, aiid Mr. Snowden’s two doctors. Mr. Snowden was saved much time by tabling a printed report instead of delivering the usual introductory review on the last year’s financial operations. He dived straight into the situation facing him at the momput, the whole speech lasting only 70 minutes, Mr. Snowden said the expenditure and debt operations of the previous vear showed that ordinary revenue amounted to £770,805,000 and ordinary j expenditure to £732,341,000, which was in excess of the estimate by only £532,000, largely as the result of savings on debt interest management and other items.

The net result of the year, said Mr. Snowden, was a surplus applicable to debt reduction of £43,500,000, and apart from that there was a sum-of £9,000,000 received, as the proceeds of the German mobilisation loan, which was also attributed to debt reduction. Outside the Budget, in reality there was a surplus of income over expenditure, and it eaid much for the soundness of the national financial position that after a year of unparalleled financial depression they had not only been able to pay their way, but to make such a Substantial reduction in the fie'bt. NO addition TO DEBT charges. Mr. Snowden announced that he was making no direct addition to the fixed debt charges, which would be £355,000,000, as laid down by the Finance Act of 192-3. He confidently expected that as outcome of the recommendations of the Economy Committee considerable reductions in ’expenditure would bp made during the current year to go automatically to debt reduction, and it was also possible that during the year condition© would be favourable for a considerable debt conversion arid in favour of every possible effort to reduce the debt. He held the view.that in times of desperate depression and unemployment it was better to use resources to stimulate trade than to make undue sacrifice. Mr. Snowden estimated that the

yield from inland revenue would be £437,000,000, consisting of £248,000,000 from the income-tax, £72,000,000 from the surtax, £90,000,090 from dbi>th duties, £24,000,000 from stamp duties and £3,000,000 from the remaining items.

Hc hoped that the depression, which had upset all expectations last- year, had reached its limits and that better times were in store, blit he said it would take a little time after the tide had definitely turned before revenue would feel the benefit, and he must face the probability of a further decline in Customs and excise revenue, which he estimated at £238,000,000 a' drop of £7,500,000 on hist year's revenue. The consumption of alcoholic liquors fell last year, ancj he estimated for a further fall of revenue this year. This fall seemed to have a permanent tendency. and from the point/of national well-being it was to be heartly welcomed. ’Tfie estimates of revenue from ordinary sources amounted to £762,000,000, nearly £2,000,000 above the actual yield from corresponding items of last year, although £11,000,000 below t'lnj estimate! for last year. An addition of £4,000,000 from the rate relief suspensory fund gave a total o-f £766,000,000 revenue for the current ye[ir. On the expenditure side supply services accounted for £430,000,000, but he hoped, in view of the appointment of the Economy Committee, that the actual expenditure would fall considerably below this. Of the fixed debt charge of £355,000,000 he had to allot £302,900,000 for interest and management, leaving £252,100,000 available in the sinking fund. 1 The total estimated expenditure wqs thus ' £803,300,000 and the estimated revenue £766,000,000.

Before proceeding to the tax proposals Mr. Snowden said he was taking power in the Finance Bill to enable the present holders of savings certificates to make an extension io their investment and power for a loan to meet certain' costs in connection with road schemes in order to encourage the manufacture of a new type of light motor-cycle now being rapidly developed on the Continent. He proposed that the annual tax- on vehicles not exceeding ioO c.c. capacity should be limited to 15s instead of the present 40s. He Was proposing changes in the machinery for the collection of the incometax which would place the collecting service wider single undivided control, g.s recommended by ! the Royal Commission. Mr, Snowden said it was not intended to meet the previous’year's deficit; of £23,500,000 immediately by additional taxation. ~

He would never be a plirty to obtaining revenue from tariffs, which would relieve the rich ut the expense of the poor and would be an indirect attack on wages. It was proposed to take £•20,000,01)0 from the exchange fund of £33,000,000 now maintained in the United States as the establisliincut of the Bank of International Settlement had changed the circumstanced hud the hepd for a standard rate. The income tax wdfild not be but the petrol tax would be increased by 2d per gallpn and a tax of Id in the £ would be imposed oii the capital value of land.