RECORD FIGURES

Wanganui Chronicle, Volume 84, Issue 96, 26 April 1940, Page 5

RECORD FIGURES

SURTAX OF 17s APPEAL TO PEOPLE FINANCIAL FRONT PAYING FOR MODERN WAR

[ British Official Wirdoi ) Received April 24, 5.5 p.m. RUGBY, April 23. Summing up the Budget which he presented to the House of Commons in a speech occupying over two hours, Sir John Simon said it was essential that saving and the lending of savings should increase in response to tne mounting ex-penditure of modern war, and concluded: ‘Provided the zeal and persistence of our people in supporting Government loans equal their fortitude and resolution in paying Govern- | ment taxes we have nothing to feai. , Our financial front will hold as firmly I as does every other front in the fight for victory.” He detailed how he proposed to raise from revenue 11,234,000,000—a larger figure than had ever been raised by taxation in a single year in the history of British finance, and £185,000,0GU more than last year. Dealing with the increase in direct taxation he said these involved a standard rate of income tax of 7s 6d in the ■ ound, and I reductions in allowances which would ( have the effect of increasing tr.e effec-• five rate right through the scale of ■ income levels and rising with the sur-! tax to a maximum of 17* in the pound, i The Chancellor commented: “Noth-; ing on this scale has ever been ap- ■ proached before in war or peace.> With the surtax, the minimum late in I the last, war was only 10s 6d. ’ His • additional proposal was cu charge sur i tax on incomes over ±ISOJ instead of I £2OOO. The Purchase Tax. Sir John Simon explained that the; form of purchase tax had been decided on only after careful study. In addition to food and drink, to which it would not apply, it would also not, apply to articles already subject to; 'heavy duty, such as tobacco and; •petrol, nor generally to sucn services, | as gas, electricity, and water. Before: introducing the machinery of the tax! he hoped to have consultations with I trade organisations. Further explaining the new tax . the Chancellor said it was of the I • greatest possible importance to re- |

strict internal spending at this time. The Lax would assist in securing that result without interfering witl the Government’s plans for maintaining an adequate supply of tilings like food. It would put no sort of obstacle m the way of export trade, but woulci result in limiting the consume tion ol goods at home. “It is the deliberate intention <>l such a tax to do so,” he said. ‘‘We have to face boldly the necessity for transforming our home economy for the purpose of winning the war. This cannot be done without drastic and definite action.”

Keynes Plan. In a digression, Sir John Simon referred to the Keynes Plan for deferred payments which he had examined with the utmost care, but in which he had found many objections. Among thesi was the danger of discouraging voluntary saving, further to encourage which, he announced, the Government was prepared to introduce legislation the general effect oi which would be to withdraw from tne future calculation of the means of applicants for unemployment assistar.ee new amounts lent to the nation during the war up to a total of £375. This brought the Chancellor to a general exposition of the Gcver iment s financial and economic policy as a whole. ‘What we have to do,” he taid, ' is to foster and improve the conditions by which the flow of voluntary contributions to the Government may be stimulated and inflation avoided. Whatever may help to restrict the misuse of spending power k of vital importance. Economic Sphere. “The Government’s effort in the economic sphere has been directed to secure these objects. There is a series or steps to be taken or conveiging to this end. We aim at the maintaining of a level of economy in prices and in the flow of commodities required for consumption. “First, we have strict control of imports. By the imports licensing system we reduce imports which are not essential. It is estimate.- that by the opeartion of this part of the imports system we have reduced the lei».« essential imports, which in 1938 were valued at £125,000,000, to a figure in the first year of lhe war of ±50,000,000. “The system of control ot nonessential imports has been extended to many raw materials tor the purpose primarily of enabling control by the Ministry of Supply to secure their employment to the greatest advantage. This system of controlling and directing imports

now applies to 75 per cent, of the value of the whole of our imports.” Priority Allocations. The Chancellor explained the system of priority allocations of imports so that first essentials were given to the war effort. Second priorities met the claims of the export trade. The I residue was available at appropriate prices tor general consumption. [ They were finding £60,090,000 a year in subsidies for cheapening food prices, said Sir John Simon. By a system of costing and contract procedure the Government was endeavouring to secure a rate ot profit on Government work which was reasonao.c, but the taking of the excess of reasonable profits was part of its economic policy. Limit on Profits. ' ' 1 have one further announcement to make.” continued Sir John Simon. "There is another contribution to this end which I have in mind ai.u which will necessitate legislation. It is complementary to the whole economic policy I have outlined. "The excess profits duty is al a heavy rate, but it leaves a certain proportion of increased profits in the hands of the trader. “That is essential, but I think these increased profits, where they occur, are valuable in proportion as they remain tn Hie business

concerned. They will be very useful if they are available to sustain and repair industry in the dilficult period of the war. "They are less valuable if they are used in lhe hands of shareholders. 1 propose accordingly to provide for the limitation of dividends paid by public companies which shall net. distribute a greater dividend on ordinary shares than was distributed in any one of iLs three pre-war periods." Sir John Simon also announced that it was intended to prohibit l«re issue of bonus shares. Dealing with the war expenditure, he said he was going lo estimate that what wci.ld be needed in this financial year for war purposes only would be £2,000,000.