SINEWS OF WAR

Evening Star, Issue 23383, 28 September 1939, Page 11

SINEWS OF WAR

THE PRICE OF VICTORY BRITAIN PREPARES FOR STRUGGLE AHEAD HEW TAXATION ANNOUNCED , (British Official Wireless.) (RUGBY, September 27. (Received September 28,,at noon.) Taking as his aim a code of taxation commensurate with the effort involved in a war of not less than three years, and as the basis of a new income tax scheme proposal, subject to reconsideration next April for a standard rate of 7s 6d in the £, Sir John Simon announced the following changes ill the current taxation: — The income tax to have immediate effect at 7s in the £. Considerable reductions in all allowances having the purpose of abating the full charge in respect to smaller incomes. Income tax changes estimated to produce an extra £70,000,000 this year and £146,000,000 in a full year. ’Surtax increased to yield an additional £5,000,000 this year and £8,000,000 in a full year. Estate duties increased by 10 per cent, up to £50,000 and by 20 per cent, on larger estates, bringing the maximum rate on the largest estates to 60 per cent, and yielding £6,000,000 in a full year. Sir John Simon said the proposals for an unprecedented burden were only justified by the severe sacrifices which the situation demanded. The proposals affecting indirect taxation were Id per pint on beer, giving £11,000,000 this year and £27,000,000 in a full year. The increased duty on spirits will yield £2,000,000 this year and £3,500,000 in a full year. The increased duties on wdnes and tobacco will give £9,000,000 and £18,000,000. A penny a pound on sugar will give £8,500,000 and £18,000,000. Sir John Simon announced a duty at the rate of 60 per cent, on any excess over profits for the pre-war standard period as an alternative to the present national defence contribution. All the additions to taxation, taken together, were estimated by Sir John Simon, to bring in £107,000,000 this year and £226,500,000 next year. The additional tax on beer would he 24s per 36 gallons, equivalent to a penny a. pint, and on spirits it would be 10s per proof gallon. The basic duty on tobacco, which was being increased from 11s 6d to 13s ;.Gd per lb, was equivalent to IJd per ounce. The wine increases were 2s a gallon on light and 4s on heavy wines. The sugar duties would be increased by the equivalent of Id per lb on full refined .products, with corresponding increases in molasses and glucose, to be effective on September, 27, yielding £8,500,000 this year and £18,000,000 in a full year. Sir John Simon said the pound sterling was available for all proper purposes at the official rate of exchange, which was published daily. On the other hand, even before the war the official rate of the German mark really meant nothing at all. There were 50 different kinds of marks, each showing a different degree of depreciation. At present the German mark had no position as international currency, and was likely rapidly to lose its value as internal currency. The inflationary tendency in Germany was bound to develop further under war conditions. Mr Attlee said Sir John Simon was right in endeavouring to raise largo suras by taxation, but some of the taxes would apply to people who had not got sufficient to-day. The changes in the allowances for income tax would discourage people from having children. He had no objection to the taxes on alcohol and tobacco, but -the sugar tax should be reconsidered. He welcomed the tax on war profits, but said it would be better to have no war profits. The House adopted the taxation on alcohol and tobacco without a division. Later the sugar and income tax resolutions were carried. The retail price of sugar is being increased by Id per lb. The whisky and tobacco trades are considering the position. The opinion in the lobbies was that the Chancellor’s measures are very severe. Sir John Simon ended by declaring: ‘‘ If the price of victory be high it is a price worth paying. It is the price of our liberty and all that makes life worth liviiig in Europe and for ourselves.” OPPOSITION LEADERS APPROVE. The severity of the tax increases announced by the Chancellor of the Exchequer were not unexpected, and the proposals, which, apart from minor criticism, received the approval of the Opposition leaders, who spoke later, have been generally accepted by the public as a demonstration, firstly, of the determination of the country at whatever cost to see the war through to victory, and, secondly, of the immense resources upon which the Government can call in the struggle which lies ahead. Sir Archibald Sinclair expressed this attitude when he said of the' severe Budget: “It does not bring us even remotely within range of the limit oi our national financial strength, and the people will accept present and further sacrifices wdiich may become necessary as a means of victory, which they have resolved to obtain.”

The rationale of Sir John Simon’s plans for obtaining an additional £226,500,000 in a full year by the additional taxation superimposed on the tax system itself, estimated in the last Budget