The Budget
CHANCELLORS of the Exchequer have sometimes surprised the House of Commons by the nimbleness with which they escaped from their difficulties, but inasmuch as Mr. Churchill had to face on Monday an unprecedented deficit, it must be said—indeed, this is the first thing to say about the Budget—that the nimble- ness with which he wriggled out of his difficulties was also unprecedented. He proved himself to be a perfect Houdini. Before the Budget it seemed as though he was not only bound hand and foot, but was in a box, with the lid securely fastened, at the bottom of the river. Yet in a very short time Mr. Churchill was climbing out of the box, bland and eloquent and with no trace of his bonds.
The coal stoppage and the general strike, of course, made hay of the national finances. They provided Mr. Churchill with a very good, though not a complete, excuse for his deficit of more than 136,000,000 ; but the truth cannot be evaded that the Government, quite apart from their misfortunes, have not succeeded in economizing as they promised to do. Mr. Churchill used to talk gaily about a progressive yearly saving of £10,000,000. No such saving has been made. Moreover,t, a very evil habit has established itself of passing on the blame: The Government blame the House of Commons. " What can you expect ? " they say with an air of injured innocence. " Nobody is more intent upon saving than we are, but the House always insists upon the main- tenance • of extremely expensive Services." No doubt Unionist members of Parliament are to blame, but not so much as the Government, who ever since they took office have been in quite a strong enough position to call the tune. • However, Mr. Churchill has made a beginning of reducing the swollen Services. We are not among those who think that the Ministry of Transport, the Depart- ment of Mines and the Department of Overseas Trade have done nothing. The question is whether they have done enough to be worth their price. We believe that they have not, though we must confess to real doubts in the case of the Department of Overseas Trade, which has been excellently managed by Mr. A. M. Samuel and has been very helpful. The saving will be only nominal unless the staffs arc greatly reduced when they are transferred to other Ministries.
Mr. Churchill expects a deficit in the coming year of £21,000,000, but in spite of this gloomy outlook he has had the courage and the economic orthodoxy to raise the payment to the Sinking Fund. It is true that he does not raise it so far as would satisfy the Colw3;n Committee, but in a year of adversity to increase it by £15,000,000, as he proposes to do, is a stroke of some daring which deserves applause. As he said, the repay- ment of debt liberates the sum repaid for industry and commerce. None the less it must be pointed out that though Mr. Churchill is raising the contribution to the Sinking Fund from the stipulated figure of £50,000,000 to £65,000,000, the Government have fallen in the past two years £40,000,000 into arrears. Add the increased payment of 115,000,000 to the prospective deficit of £21,000,000 and add the amount for certain small supplementary estimates and you have the real deficit which Mr. Churchill has to provide for—nearly £88,000,000.
A 'Chancellor of the Exchequer more old-faShioned and less of a conjuror than Mr. Chtirehill would no doubt have added 6d. to the Income Tax. In former days that would have been the approved solution and would have been perfectly simple. Moreover, increased direct taxation is a very • good schoolmaster ; it admonishes ; it is a constant reminder to people that they have been out-running the constable, and that they must save or be ruined. We admit, however, that that is merely an ideal policy from the moral .point of view. Mr. Churchill recognizes that industry is now bearing as much taxation as it can carry if it is to revive quickly, and so he has preferred to raise money by manipulations of his balance sheet and to impose some fresh taxes of which the taxpayer will be barely conscious. It is certainly a singular feat to have accomplished this without levying fresh taxation upon what are properly called necessaries. " All the same, let us recognize that the moral lesson which would have been simply invaluable in these days of over-spending is absent from the Budget. There is nowhere in it any real pledge of economy.
The new duties on imported tyres and imported pottery will probably make little difference to the consumer. The foreign motor-car is already taxed in respect of all its parts except the tyres ; complete logic is now attained. The tobacco tax will not, • it seems, touch the smoker of cigarettes. Perhaps the large companies which sell the popular brands will be less prodigal with their trimmings and trappings—such as pictures and silver paper and tissue paper coverings —which seem to give more pleasure to small boys who are the residuary legatees than to anybody else. The increase in the wine duties is largely aimed at the enormously increased consumption of the cheap kinds of' port wine. The heavy taxation on spirits haS caused drinkers who like strong drink to turn to cheap pOrt wines as giving them the concentration of alcohol they desire at a lower price than they can get it in Spirits. To some extent the merchants of port wines will no doubt dodge the tax by reducing the alcoholic content of the wines below the point where the taxation begins to rise. We are glad that, contrary to the expecta- tion of the Trade, the duty on spirits has not been reduced. Mr. Churchill could probably have got more revenue by reduction, but he resisted the temptation.
For the second time Mr. Churchill has raided the reserves of the Road Fund, and we think that he was justified in doing so. The doctrine that this Fund, however much it may mount up, is sacred to the service of the roads, even though no more roads may be wanted, cannot be maintained. Up to a point—a very high point, too—we agree that money is never wasted on roads. They are all-important, but as Mr. Gladstone used to say, " We must distinguish " ; there must be reason in all things. Mr. Churchill's devices of again shortening the brewers' credit and of collecting the Landlord's Property Tax in one lump instead of in two instalments cannot be repeated. They are " once-for-all " expedients. They come handsomely to his rescue this time, but • if finance of this order becomes permanent the whole' future will be gradually mortgaged.
The promised simplification of the Incotne Tax and the Super Tax is admirable. The way is now clear to the complete fusion of the two taxes. To sum up; Mr. Churchill has displayed a positively uncanny ingenuity, but he is banking on a trade revival to help him through. He has laid bare no new permanent source of revenue. He has is all the crumbs out of his cupboards. The moral is that the nation must save in earnest.
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