The Press MONDAY, JUNE 7, 1943. Budget Notes

Press, Volume LXXIX, Issue 23967, 7 June 1943, Page 4

The Press MONDAY, JUNE 7, 1943. Budget Notes

Taxation.—The Minister of Finance expects to draw £40,000,000 of tax revenue into the War Expenses Account this year at unchanged rates; that is, about £500,000 more than last year’s receipts. His reasons for this high estimate are not clear, since his Consolidated Revenues estimates are lower under customs and sales tax and he expects income tax revenue to fall but to be made up by a drivje against defaulters. Unless the Commissioner of Taxes sees big game on the horizon, the War Expenses Account is not likely to profit heavily; and conditions in which customs and sales tax are expected to yield less to the Cpnsolidated Fund might be expected to produce an even heavier fall in the revenues directed from these sources to the War Expenses Account. For they are largely derived from luxury imposts. Nor is it possible to suppose that a sharp rise is estimated in National Security Tax revenue, the largest tax item in the account. The estimate for social security charge revenue, levied on the same income sources and in the same way, stands at last year’s revenue figure. A review of the direct and indirect tax system strongly suggests that it needs a bold measure of simplification, in principle, in graduated incidence, and in collec,tion. Indirect taxation, especially in the form of sales tax, bulks too large. Too much direct revenue is collected on flat rates, which do not discriminate between earners on ‘.he same income level but in different circumstances. The collection of tax on incomes a year after they are earned is an all-round nuisance. Anomalies remain, such as land tax. Downright injustice remains, such as the one-sided device which brings the non-assessable income in mixed incomes indirectly under tax, or double tax, in fact. The removal of this shoddy stratagem, planted in the Finance Act, 1942, can of course still be hoped for this ’session, and should be demanded.

Savings.—Although the Minister of Finance has rightly emphasised the place that small savings should have in the £35,000,000 War Loan, it is unfortunate that he should betray a certain want of confidence in his own plan or in the popular response to it. After the loan has dosed, early in July, and up to the end of March next, Mr Nash says that he expects to draw the balance needed, £5,000,000, in over-the-counter stock purchases and savings. It cannot be very far out to say that this may be divided into £2,000,000 stock and ' £3,000,000 savings; and such an estimate corresponds with actual savings investments last year, £3,972’,000. But if Mr Nash does not believe that his earnest and necessary plea for maximum, systematic, and sacrificial savings is going to produce a better result than that over nine months—and it could, and should, produce a far better result—then it is not easy to suppose that he feels assured of a nation-wide surge of savings into the War Loan over five weeks. “If during the month of “ June every one determines to “ place all his or her surplus into “ the War Loan,” Mr Nash said, “ the sum required will not only be “ obtained but further taxation will “be unnecessary." The last words sound very much as if Mr Nash has alternative plans in view—plans to achieve certainly what his present plans- are not, as he judges, certain to achieve. But the first duty of a war-time Minister of Finance is to choose, always and at once, the measures which will most certainly succeed. If Mr Nash has chosen otherwise, it will be Impossible to acquit him of letting political motives move him. Wider taxation, compulsory savings—any such measure would be unpopular; and on the eve of a General Election caution sits at the window and courage in the attic. There are other signs. The optimistic cast of the tax estimates and the avoidance of any new pressure on luxury spending, for instance, bespeak a desire to keep voters in good humour. It can only be said that it is much more necessary to show patriots their full dutv and lead them to do it.