Evening Post. TUESDAY, MAY 25, 1937. A TAXATION SURPLUS

Evening Post, Volume CXXIII, Issue 122, 25 May 1937, Page 8

Evening Post. TUESDAY, MAY 25, 1937. A TAXATION SURPLUS

If the Government's.aim is, as the Prime Minister once stated, redistribution of income, the financial operations of the past year must be gratifying. If; on the'other, hand, the Government regarded the taxation of its predecessors as too heavy (as Mr. Savage also said) it cannot contemplate the result of its first complete financial year with anything short of consternation. For the year ended March 31, 1936, the taxation revenue (on 'rates . fixed while the Coalition Government was in office) was £21,566,000. Last year it was £26,941,000, almost £5,400,000 greater. Only in one recorded year has tax revenue approached near this mark, in '1921, when £22,184,000 was collected. But then, there was no unemployment taxation. If we now" reckon the unemployment taxation ;as approximating £4,000,000 (the actual figure is not available), it is seen that the public pay almost. £31,000,000 (almost £9,000,000.) more than in 1921. Yet-in that year the taxation was considered alarmingly heavy. The Government was warned that it was harmful to industry, and it took heed of the warning and quickly effected a reduction. 'Now this unprecedented and much heavier taxation result is announced without a promise or even hint of any intention of reducing the rates. When such details as have been made available are examined it is seen where the taxation presses most heavily. Through Customs duties and the sales tax (in large part paid by the family sash) £12,544,000 has' been collected. Customs duties alone yielded the record sum of £9,499,000. This is over a million-pounds more than last year.-Only once previously has. Customs revenue been, near this sum, and then there was no sales tax. Land tax, though falling short of the estimate, is twiqe as much. as in recent years. Income tax, which.in normal pre-depression years was expected, to yield about £4,000,000, has been made to return £6,619,000. ,But the correct comparison of the income-tax yield should reckon also unemployment taxation. If this is added, about £10,500,000 has been taken from incomes. As the unemployment taxation is all levied on individual incomes it can readily be seen how much more the average citizen is now required to pay to the cost of government.' And . this burdensome exaction, it should be remembered, is made upon many incomes reduced substantially by compulsory cuts in interest (Government and mortgage) and rent. No cuts have been restored; but the taxation has been raised. / . / ..■;' There is one feature of the accounts. which might be regarded as affording a little hope for the overburdened .taxpayer. The revenue has been underspent by £387,000 and this accounts for* the greater part 'of the £472,000 surplus. But the statement of the Acting Minister of Finance destroys the hope which this might raise. Mr: Fraser' says the amount of the surplus "is not by any means unduly large in view of the fact, which must be borne in mind, that for the current financial year provision must necessarily be made for a full year's charge on account of increases in salaries, wages, arid pensions, together with the additional cost of the shorter working week, all of which were introduced during the latter portion of last financial year." This would appear to indicate that the Government has no thought of returning to the taxpayer any part of the surplus taken from him. Indeed there is no guarantee that the demand will even remain as at present. Though the social service votes have been underspent by £571,000 they have taken £9,913,000, against £7,756,000 in 1935-36, This increase was in a year in which only part of the cost came into the accounts. This year the cost will be heavier still. • It may be useless to sound a warning, and to suggest that the abundant tax yield is not altogether a sign of business improvement. But a Government which does not want to put a brake on returning prosperity should consider these matters. Mr. Fraser says "income tax . and Customs, of course, reflect the substantial improvement in business conditions." This is true of Customs, but only partly correct as affecting income tax. The £6,619,000 was levied on income for the year ended March 31, 1936, which was received before'the present Government's policy had had any marked effect for good or ill. If the income lax reflects prosperity at all it is prosperity which was on the way before Labour took office. There is a further point of greater significance. The surplus would have been even bigger than £472,000 had the excessive yield of taxation not been offset by a fall in revenue from •interest and other receipts. Interest yielded £133,000 less than the esti-

mate and other receipts were £711,000 short. We cannot account for the latter shortage until details are supplied, but the fall in interest (£2,387,000 as against £2,721,000 for the previous, year) prompts the question: What'contribution was received from working railways, and the Post and Telegraph Depart: [merit? If these Departments failed to return interest equal to that of the previous -year,- does it not suggest that even the improvement in business cannot sustain the weight of newly-imposed costs? These Departments are not debited with land and income taxation on the same basis as private business. How then will private business carry increasing charges? The indication is one that cannot be disregarded. Especially is this so when it is remembered that the public accounts as published today do not include all the Government's taxation or all its spending. There is no reference there to unemployment taxation, sustenance or relief pay, no account of public works £10,000,000 programmes (which may be partly borrowed now. but will come to charge later), no mention of a probable big deficit from guaranteed-price dairy produce marketing, and no mention of the financial results of the housing policy. ■ i: ■■■'.'.. ,