A REALISTIC BUDGET
a country now accustomed to the conception of " total " it needs no explaining that finance occupies a key position main front. It is both a sign and a determinant of the use national resources, and the magnitude and the soundness operations tend to show to what extent the whole nation ched and efficiently stretched for war. In the impressive in made by the Chancellor of the Exchequer in his Budget on Tuesday he had to ask the House of Commons to face • expenditure in the coming year of £5,286,000,000, a figure does not take into account the value of the goods we are under Lend-lease arrangements ; but by deducting disinvestments for meeting expenditure abroad he was to reduce the total to £4,5oo,000,000 as the estimated cure requiring domestic financing. By some means this sum has to be provided without leaving a gap which, if road, would lead inevitably to severe inflation. Sir Kingsley this year sees his way to closing the gap completely. He • to achieve this by increased taxation amounting to about noo,000, raising the total estimated tax revenue to ,000,000, and by voluntary savings, which should provide balance.
e calculations will only be effective if the total revenue is certain proportion to the total national income. It is the on of war finance to co-operate with other Government Is and so direct national expenditure. that the right lion goes into the war effort and a strictly limited amount personal consumption or attempted consumption. Rationing, controls, limitations of supplies and concentration of indus- are among the means which prevent the excessive diversion goods to private consumption. Lending to the State is a tary contribution to the same end. The rest must be done applying the screw in the form of taxation. Income may be away by direct taxation, and wherever there is a tendency apply what remains of income to inessential personal expends- that too can be cut down ad libitum by indirect taxation. Chancellor has realised that it is within his power to check assential expenditure just so far as he desires by taking away such of it as is necessary by taxes on consumption.
That is why the increases of tax in this year's Budget rightly e the form of indirect taxation. There is not much more that Id have been got by the direct method. Surtax already takes heavy toll of the rich, and the fact has to be faced that most the national income is earned by the comparatively poor- nes below £5o0 account for 85 per cent. of the aggregate canal incomes of the country. The comparatively poor, there- ; must bear a large share of the burden, but it would be It' unjust to attempt to raise more from them by added race tax. There was no alternative, therefore, but to increase aect taxes, and the obviously right course was to look round luxury articles which are in great demand and seem likely to be bought whatever their price. Ibis was the course which -Sir Kingsley Wood was obviously ly to adopt. Most people had already foreseen that he would ace tobacco, beer and spirits ; for in spite of the fact that were already taxed beyond anything that would once have a deemed possible the demand continued greatly to exceed supply. Tobacco is difficult to get not because there is little t but because the demand is so great, and such a situation rs a golden opportunity to a Chancellor of the Exchequer. duty on wines is also to be raised, not because much revenue 7 can be derived from this source, but because they could be exempted when other alcoholic drinks were taxed. The big increase in the entertainments tax (not applicable to the cheapest seats at cinemas) is not so much to be regretted as it would be at any other time because even the working-classes evidently have money to spend in this way, and it is axiomatic that they too must contribute. The decision to double the purchase tax on a large number of luxury goods was exactly in accord with the main principles adopted. The object of the Budget is not only to raise revenue, but also, as part of a process which is one and indivisible, to divert expenditure from personal consumption to the purposes of the State.
Sir Kingsley Wood has not neglecteil to deal with certain griev- ances which have been much in the public mind. His comments against the argument for the separate assessment of the incomes of married men and women are not convincing, but it may be agreed that it might have been difficult to introduce this long-overdue re- form in a war-time Budget. But he goes far to meet the grievance, acutely felt at a time when so many women are fully engaged in war-work and earning incomes of their own, by increasing the maximum additional personal allowance on a wife's earned income from £45 to L80. He has also taken measures to lessen the grievance arising from the present method of deducting income tax from wage-earners. He does not claim to have completely solved this problem, but hardship will be averted by the adjust- ments to meet the case of workers in seasonal occupations, and by raising the minimum wages from which deductions may be made to £2 a week for a single man, £3 for a married man, and £4 or £5 for men with one or two children. The aim of the new plan is to level out weekly payments over the whole year and to prevent deductions in weeks when workers are in receipt of small wages. Turning to the opposite end of the scale, the Chancellor aims at removing some of the anxieties of those who are disturbed about the incidence of Excess Profits Tax by promising that the post-war credit would be made a statutory right. This will do something to reassure those who were con- cerned about provision for post-war reconstruction, but leaves many anomalies untouched.
The Budget has met with general approval, and deserves it because it rests on principles which are now generally accepted— principles which govern the whole conduct of the war, demanding control, sacrifice, discipline and the concentration of the maximum effort on a single end. The policy that has been pursued, though unaccompanied by an adequate system of wage-fixing matched to price-fixing, has prevented a heavy rise in the cost of living and disastrous fluctuations in prices. The budgetary situation is sound—far sounder than in the last war. But it would be well that at this stage everyone should realise that a time will come when our financial and general economic system will be subjected to a test not less severe than that of war-time—the period imme- diately following the war. It was most important that Sir Kingsley Wood should raise this point, and he did not neglect to do so. Anyone who imagines that when the war is over we can quickly return to the conditions of the pre-war pericd is living in a fool's paradise. Much invaluable experience has been gained during this war from which the fullest advantage must be derived. Sir Kingsley Wood insisted that in the period when it will be a primary objective to expand international trade it will be essential to regulate the pent-up demand and to take steps to prevent what happened after the last war—an inflationary boom. The financial and economic controls which have served the war effort will be needed at the conclusion of hostilities not less than now. The controls, doubtless, should not then be directed in the same way as now, for the plans that will then be necessary will aim at increased production for consumption and the better and increased 'distribution of the goods that our own people and the people of other countries will need. But a plan international in its scope there must be, and that presupposes large measures of control, which, though in many spheres they may be progressively diminished, in others may have to be fully maintained. It is well that the country should realise in advance that in the financial and economic spheres there can be no return to the whole doctrine of laissez-faire. It is• reassuring to know that Sir Kingsley Wood is not leaving the future direction of finance to impron when the war is over, and realises that in this sphere as in the fullest preliminary investigation is essential. He is pursuing his inquiries with his colleagues in other depa and seeking advice outside Government circles from experts sphere of finance, industry, shipping and labour. Finance h key position in national policy, and must play its full schemes of national reconstruction. The schemes are Eeing discussed, and rightly. • So must their financial as
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