WELL DEFINED

Wairarapa Times-Age, 18 December 1942, Page 3

WELL DEFINED

BRITISH WAR FINANCE HEAVY AND PAINFUL TAXATION NOW PROVIDING HALF OF TOTAL OUTLAY. BORROWING AT LOW RATES OF INTEREST. (British Official Wireless.) RUGBY, December 16. Replying to a debate on war finance in the House of Commons, the Chancellor of the Exchequer, Sir Kingley Wood, said that the financial policy had been well defined and carefully conceived. The Government had endeavoured to see that it made the greatest possible contribution to the war effort and, at' the same time, provided the strongest safeguards against economic and financial difficulties. They had had to resprt to most heavy and painful taxation, first to meet as much as possible the cost of the war as we went, in order to keep our necessarily large borrowing to a minimum, and secondly, to, reduce the large increase in purchasing power which the war inevitably entailed and which, if allowed free play in an increased demand for foods and services, would produce inflation. In the first three years of the war, we had met 42 per cent of expenditure cut of revenue and for the current financial year the figure would be practically 50 per cent. In regard to the second object, measures like rationing, price control and stabilisation of prices had held inflationary tendencies in check. One of the most' striking aspects had been the universal acceptance of the burden of war taxation. There were some

9,500,000 wage earners, black-coated workers and others with small incomes who were making a contribution of £270,000,000- a year. , , The borrowing policy had three objectives, first, by imposing as large a taxation as possible, to keep borrowing within reasonable bounds; secondly, to borrow as cheaply and reasonably as possible; and thirdly, to keep short-term borrowing from non-Gov-ernment sources as low as possible. In each of the first two years they had borrowed more than 60 per cent of expenditure, but in the third year it was only 52 per cent. Excluding floating debt, which carried interest at the rate of 1 per cent, our loans cost us only 21 per cent, compared with 5 per cent in the first three years of the last war. A case had not yet been proved for saying that the banks were making excessive profits. They had loyally co-operated with the Treasury and had made a very considerable contribution to the war effort. . ... The savings campaign had been one of the most remarkable financial efforts in history and it had yielded £4,600,000,000, at an average of £30,000,000 a week since the beginning of the war. Referring to post-war policy, the Minister said he was not pessimistic or despondent. He wanted to see a policy socially just, economically sound and financially prydent.