HIGH TAXES

Wairarapa Times-Age, 27 April 1938, Page 8

HIGH TAXES

MEETING DEFENCE COSTS IN BRITAIN ENORMOUS TOTAL OUTLAY IN PROSPECT. CHANCELLOR LOOKING WELL AHEAD. (British Official Wireless) (Recd This Day, 11.15 a.m.) RUGBY, April 26. An increase of the standard rate of income tax by sixpence, to 5s 6d in the pound, and the announcement of purchases of wheat, whale oil and sugar already made by the Government to ensure stocks during the early months of an emergency, were two of the chief points of interest in the Budget statement made by Sir John Simon (Chancellor of the Exchequer), in the crowded House of Commons. The Chancellor also announced an increase of the petrol tax by a penny, to ninepence per gallon, and of the duty on tea by 2d per pound (to 8d per pound). Sir John Simon prefaced his proposals to increase taxation by putting before the House arguments for and against filling by borrowing the gap of £30,000,000 which remained between revenue and expenditure after he had estimated a yield in the coming year of existing taxes at £914,400,000. He pointed out that the prospective deficit was due to rearmament, the originally estimated cost of which at £1,500,000,000 was going to be substantially exceeded. Though it had been decided from the beginning that rearmament should not be financed entirely from taxation, and borrowing up to £400,000,000 over five years had been authorised, there were three things to be borne in mind in forming a proper judgment. The first was that in the Defence Estimates for the current year they had already provided for taking £700,000,000 from outside sources.. Therefore the gap to be filled was really 120 millions, of which they had already decided that ninety millions should not be got by additional taxation. Secondly, the Government had announced and were already in course carrying out an acceleration of the rearmament programme. The whole country realised the necessity of and approved that decision, but it meant substantial Supplementary Estimates later in the year, not included in the total expenditure for which he was budgeting. He intended that those Supplementary Estimates should be met out of loan money under the Defence Loans Act. The third consideration was the most serious and important of all. They had to look beyond the present year. The peak of the defence expenditure would not be reached until next year, perhaps even the year after. Moreover, the huge outlay on war materials also involved a higher annual maintenance cost. The Chancellor said he had come to the conclusion that he would not be doing his duty if he followed the easier course by borrowing. “We must take some proportion of the increased expenditure on * our shoulders by increasing taxation now,” he said. “By so doing, we shall reduce our difficulties hereafter and we shall show the world that this country does not quail when it faces the burden of expenditure.” Describing the results of the last financial year, the Chancellor said the revenue amounted to £872,580,000, an increase over the Budget estimate of nearly 9J millions, and an increase of nearly 48 millions over the financial year 1936/37. AN UNSPARING CRITIC LABOUR LEADER DENOUNCES BUDGET. ARMAMENTS AND ECONOMIC RECESSION. (Recd This Day, 12.10 p.m.) LONDON, April 27. In the House of Commons the Leader of the Opposition, Major the Rt. Hon. C. R. Attlee, attacked the Budget as a mark of the Government’s reckless finance. He said the Budget was unbalanced and forecast a series of unbalanced Budgets. Meanwhile, he continued, the balance of trade was heavily increasing against Britain, who would suffer further as a result of purchases of aircraft from America, all of which Sir John Simon had disregarded. "Moreover,” said Major Attlee, “we are entering a world armaments race, involving every sign of trade recession and further unbalancing the Budget, which is giving an advantage to the privileged classes.” SIR A. SINCLAIR’S COMMENT. The Rt. Hon. Sir Archibald Sinclair (Liberal Leader) said the speech indicated a grave financial and extremely critical economic situation. The question was how the downward trend of the last six months was to be prevented from developing into a slump. "I am not satisfied,” he said, “with the machinery controlling the vast expenditure on armaments and hope the Government will consent to an inquiry into it." The House agreed to the tea and oil resolutions and the debate on the remaining proposals was adjourned.