THE BRITISH BUDGET.

Hawke's Bay Herald-Tribune, Issue 81, 22 April 1937, Page 4

THE BRITISH BUDGET.

The Budget which the Chancellor of the Exchequer submitted to the House of Coxnmons on Tuesday night, and of which a summary reached us yesterday afternoon, presents but the oue notable feature, It was, of course, fully and generally understood that the extra expenditure involved in Great Britain's rearmament programme would necessitate seeking some sources of very considerably increased reveuue. 6ne thing of which all felt pretty well assured was tlia.'t. the ordinary iueoine-tax, based for the previous year bn a standard of 4/9 in the £, would go up, the general forecast being that it would be increased by 6d in the £. It will therefore be something of a pleasant disappointment to the main hody pf income-taxpayers to find that the standard has been raised -by only 3d to 5/-. Eeaders here will, of course, understand that this is. merely a standard rate up to which incomes of £2000 |o.rl • under are graduated, Something in the same way as with ourseives in New Zealand, only much more equitably. There, however, the general exemption is only £125 as against the £210 allowed with us, while other allowances are also on a distinctly lower scale. On the other hand, the extra taxation on big incomes is effected by the imposition of a graduated - surtav running up as high as 7/ 6 in the £ on the excess of income over £22,000. Seemingly this scheme has been in no way disturbed. "Nor has there been any increase in the rates - of indirect taxation, such as Customs duties, excise, and so on, In the alternative Mr.Chamberlain has elected to seek increased revenue from the imposition of what looks like a fairly drastic, but roughly graduated, tax on "excess profits" running over certain prescribed standards. The portion of our message dealing with this section of the Budget has evidently got somewhat tangled in transmission, thus leaving us in some doubt as to how precisely this new tax is to be applied. What seems clear, however, is that it is to be levied only upon profits earned in excess of the- average of those gained over the three years 1933-35. In cases where there is no such basis on which to proceed — -such, for instance, as companies that have come into existence during that period— the tax, again roughly graduated, is apparently to be levied - CA all profits in excess of 6 per cent. on the capital employed. That, at any rate, is the best interpretation we can as yet give to a somewhat mangled message. Mr. Chamberlain has justified himself in more than one way for reaort to fhis scheme of taxation to meet an emergency call for augmented revenue. Jn the first place, he says, as is undoubtedly the case, that the economic recovery of the Country is in a highly appreciable degi^e due to the way in which national finance has been handled and benefits spread about. Therefore the Government is entitled to make some recovery of its expenditure now that general prosperity seems fairly well assured. In the next place, he points out that the excess profits that are to be taxed will come very largeiy, either in a direcfc or an indirect way, from the vast amounts which, over the next five years, the Government' contemplates spending on rearmament. In this respect, it is to be specially noted that the Chancellor is emphatic in saying that the tax will cease at the same time as this emergency expenditure. Tinally, by no means the least cogbnt reason advanced is - a desire to check the otherwise almost certain tendency towards creating a boom period of rash spending and speculation, to be inevitably followed by another slump. All these seem, on the face of them, to be very fair ajrguments born of regard for past experiences and of a lengthy look abead, but at this distance it is not competent to calculate possible reactions. The recourse taken has 'evidently come as a complete surprise, and naturally it will have excited a great deal of astonished comment from those directly affected. This, however, must be altogether tpo hasty to be accepted as the finajl judgment, for which we shall have to await time for better consideration of it in its broader aspects and with the distant rather than the immediate future in view.