"ONLY FIRST STEP"

Taranaki Daily News, 30 September 1939, Page 9

"ONLY FIRST STEP"

British Official Wireless.

BRITAIN'S WAR BUDGET INEVITABLE TAXATION BOENE WITH FORTITUDE

Rec. 9.40 p.m. Rugby. Sept. 28. Broadly stated, the effect of the British war Budget is that in the current year an additional £665,000,000 will be raised by direct taxation and £305,000,000 by indirect. Next year the direct taxpayer will pay £160,000,000 more than under the last Budget, and indirect taxation will yield an additional £665,000,000. It is generally recognised that this Budget represents only the first step in Sir John Simon's proposals. Among critics there is agreement that the increase in direct taxation described by Sir John himself was inevitable. In the House of Commons debate on the budget resolutions Mr. F. W. PethickLawrence (Labour) said that the Chancellor was right in deciding to start immediately with heavy new taxation. He had imposed unprecedented burdens but, "unpalatable as they may be, I am forced to the conclusion that Sir John Simon's prospective taxation for 1940-41, of which he spoke yesterday, cannot be his last word. The new direct taxes are recognised as necessary. and indirect taxes must and will be borne with fortitude." Lowered Bank Rate. The lowering of the bank rate to 3 per cent. was also warmly welcomed by Mr. Pethick-Lawrence, who however, urged the early restoration of the prewar rate of 2 per cent. He showed concern that in approaching the problem of war borrowing the Chancellor should see that the Treasury took appropriate steps to keep down interest rates, and this point was taken up 'by the Liberal speaker, Mr. H. Graham White, who also urged the importance of maintaining low interest rates. Sir Wardlaw Milne accepted the Budget with deep resignation. saying that the whole country was anxious to help the Government in every way. Sir Claud Schuster (National Liberal) spoke of the Government's responsibility to have a well-prepared policy for mobilising the resources of the nation in such a way as to keep them fujly employed by absorbing any left idle as a result of the drastic curtailment of private activities which the Budget proposals would effect. _ _ Several speakers dwelt on the importance of economy. Nccd For Economy. Replying to the debate, Sir John Simon said he was grateful for the way in which the House had received the proposals. In expanding the statement he made yesterday on the urgent need for economy and the avoidance of waste, he said that in a number of cases in recent months the finance branches of Government departments had been strengthened to enable them to maintain control over their greatly increased expenditure. He proposed to institute special inquiries into these departments where there was a case for investigation and hoped to call on experienced business men to act with officials of the Treasury and representatives of the departments concerned. He pointed out that an investigation of this sort had already been instituted as regards the Ministry of Information and steps were being taken to secure a review of the war establishments of local authorities. Sir John said that the raising of the bank rate enabled the Government to devise means to control inflationary tendencies. Its policy was to borrow from the genuine savings of the people at the lowest rate obtainable. "Direct taxation is going to inflict the most frightful blow on a great many homes which may seem to be comfortable and well appointed," he said. "No doubt the richer classes may have to revise the scale of their lives materially." Commenting on the Budget the Manchester Guardian says: "TJie Chancellor has been modest in the increase in indirect taxes and it presses relatively lightly on working class families. No one can complain that it is a capitalist Budget or that it grinds the faces of the workers." Armour. "The prospect revealed by the Budget of revenue of about £995,000,000 to meet an expenditure of £2,000,000,000, involving the borrowing of over £1,000,000,000, does not appal the nation," says the Times, which adds: "At least it can leave no doubt in any foreigner's mind about this country's determination to buckle on its financial armour, however uncomfortable it may be." The Daily Telegraph remarks: "It is evident that the whole scale of the nation's economy, private as well as public, will have to be rearranged, and the sooner the necessity is faced and wrestled with the less will the dislocatlon be apparent of the national war effort." Although the Daily Herald. the Labour paper, complains that Sir John Simon s choice of individual taxes are weighted against small and middle incomes, this view is not shared by other newspapers, where the proposals are studied in some quarters with special regard to the preservation of sources of revenue and the level of the State's credit. The grim severity of this first war Budget, however, has generally met a good reception by the public. "Though it serves notice that hard living is ahead," says the News Chronicle, "the knowledge that Britain is tackling the financial problems in such a way will maintain our credit abroad and conflrm the general confidence that Britain will shoulder her burdens till victory is achieved." The National Union of Manufacturers has appealed to Sir John Simon to modify the Budget proposals until normal trade has had time to adapt itself to the war conditions.