INCREASE IN TAXATION

Waikato Times, Volume 125, Issue 20921, 28 September 1939, Page 7

INCREASE IN TAXATION

TO PRODUCE EXTRA £107,000,000 BRITISH INCOME TAX, 7/6 IN POUND HIGH PRICE OF VICTORY WORTH PAYING (Official Wireless) (Received Sept. 28, 12.30 p.m.) RUGBY, Sept. 27 Sir John Simon, Chancellor of the Exchequer, in the House of Commons to-day, said he was unable to say if the £500,000,000 vote of credit adopted in the first days of the war would be sufficient to cover the country’s requirements to the end of the financial year. They would now be facing a total outlay of £2,000,000,000 and on the other hand the original estimates of revenue, which up to the outbreak of war showed every sign of being realised, and even exceeded, must now be revised downwards.

Revenue on the basis of the existing taxes was unlikely to exceed £890,000,000, and it obviously was impossible to provide for the whole expenditure in the war by taxation. As regards borrowing the time had not yet come for the issue of a new national loan.

Sir John announced that the standard rate of the income tax would he raised to 7s 6d in the £ after the present financial year, during which the rate will be seven shillings. There will he reductions in existing allowances, and he must propose a new code to secure increased contribution from direct taxation all along the line.

Details of New Taxes Taking as his aim a code of taxation commensurate with the effort involved in war of not less than three years, and as the basis of the new income tax scheme a proposal, subject to reconsideration next April, for a standard rate of 7s 6d in the pound, Sir John made the following changes in current taxation: The income tax to have immediate effect at 7s in the pound. Considerable reductions in all allowances, having the purpose of abating the full charge in respect of smaller incomes. Income tax changes estimated to produce an extra £70,000,000 this year and £146,000,0000 in the full year. The surtax is increased to yield an additional £5,000,000 this year and £8,000,000 in the 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 yielding £6,000,000. Severe Sacrifices

Sir John said the proposals for ai unprecedented burden were onl;

justified by severe sacrifices which the situation demanded. The proposals affecting indirect taxation were: Id a pint on beer, giving £ll,000,000 this year and £27,000,000 in the full year.

An increased duty on spirits, yielding £2,000,000 this year and £3,500,000 in the full year.

An increased duty on wines and tobacco, giving £8,500,000 this year and £18,000,000 for the full year.

Finally, 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 to bring in £lO7, 000,0000 this year and £226,500,000 next year.

The Price of Victory

Sir John ended by declaring: “ If the price of victory is to be high it is a price worth paying. It is the price of our liberty and all that makes life worth living in Europe and for ourselves.”

WOOING GREECE

GERMANY ACTIVE (Unitea Press Assn.—Elec. Tel. Copyright) (Received Sept. 28, 12.30 p.m.) LONDON, Sept. 27 Reuter’s representative at Berlin report tremendous diplomatic activity in the German capital, where the Germans are attempting to woo Greece. It was announced in the House of Commons that the resumption of the regular commercial air service between Britain and France is at present under consideration.

NOT UNEXPECTED

PARTY LEADERS APPROVE READY FOR ALL SACRIFICES MAINTENANCE OF TRADE (Official Wireless) (Received Sept. 28, 12.30 p.ra.) RUGBY, Sept. 2* The severity of the tax increases announced by the Chancellor of the Exchequer was not unexpected, and the proposals which, apart from minor criticisms, received the approval of the Opposition leaders, who spoke later have been generally accepted by the publie as a demonstration: (1) Of the determination of the country at whatever cost to see the war through to victory; and (2) the immense resources upon which the Government can call in the struggle which lies ahead.

Sir A. Sinclair (Liberal Leader) expressed this attitude when he said:

“Though a severe Budget it does not bring us even remotely within the range of the limit of our national financial strength, and the people will accept the present and further sacrifices which may become necessary as a means to the victory which they are resolved to obtain.” The rationale of Sir John Simon’s plans for obtaining additional £226,500,000 in a full year by additional taxation superimposed on the tax estimated in the last Budget to yield £942,310,000, is contained in a passage of his speech in which the Chancellor explained that the economic problem of the war was to secure a reduction of private demands on industry corresponding to the enormous expansion of the Government’s demands. If the Government did not secure such reduction, there would be competition between Government and civilian demands upon the available resources and, therefore, his first duty was to use taxation as an instrument for curtailing civilian expenditure and directing it into proper channels. Priority of Demand The Chancellor sketched in rough order the priority of demands, starting with those in connection with the direct prosecution of the war. Next came the need to increase home production of food. Other demands for which provision must be made was the maintenance of the export trade. The same point was made by the President of the Board of Trade in an answer before Sir John Simon rose to make his 75-minute statement. Mr Oliver Stanley said the Government would use every effort to ensure that the country’s exporting capacity was used to the best advantage.

THE CURRENCY ISSUE

GERMAN MARK WEAK NO INTERNATIONAL VALUE (Official Wireless) (Received Sept. 28, 1.45 p.m.) RUGBY, Sept. 27 Sir John Simon, in his Emergency Budget speech, said the pound sterling is available for all proper purposes at the official rate of exchange, which is 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 has no position as international currency, and is likely rapidly to lose its value as internal currency. An inflationary tendency in Germany is bound to develop further under war conditions.