THE BUDGET. T HE War Budget is an excellent one, and
Sir Michael Hicks-Beach has our warmest and most sincere con- gratulations upon his handling of a very difficult problem. He had so many and such pressing reasons urged upon him to go wrong, and has gone so very right, that he deserves the strongest possible support from all who care for the higher financial interests of the natibn, and, are anxious to preserve intact the great fiscal principles upon which in so large a measure the welfare of the nation depends. One may sum up the Budget by saying that "in spite of all temptations to belong to other nations" it remains an English Budget. It might have been a Prussian Budget with rigid accounts, but with the sinews of war derived from the system of Protection. It might have been a French Budget with the unpleasant task of getting more money artfully concealed by factitious distinctions between ordinary and extraordinary expen- diture. Instead it remains an English Budget, in which, though recourse is had, and rightly, to a loan for part of the money required, a very large part is raised by extra taxation. The extra revenue, again, is derived, not from new-fangled taxes, but from the reasonable and legitimate increase of existing imposts, and, finally, is fairly distri- buted and in equitable proportions between the direct and the indirect taxes,—the taxes of the rich and the taxes of the poor. In other words, Sir Michael Hicks-Beach has realised the force of the great fiscal principle that "old chains gall less than new," and that wisdom lies in keeping true to our well-tried system and not embarking upon the perilous waters of Protection under any of its many aliases.
A word must be said on both these points. No doubt it is quite possible to spoil a tax by overdoing it and by making it too onerous, but provided this is avoided it is better, granted that the money must be obtained some- where, to raise an old tax rather than to impose a new one, which is sure to be as disagreeable as a pair of new boots. To begin with, an addition to an existing tax does not involve any, or, at any rate, any large, increase in the cost of collection, it costs practically no more to get in a shilling than an eightpenny Income-tax, and an extra shilling a barrel on beer does not perceptibly increase the expenses of Somerset House. On the other hand, an entirely new tax involves new machinery to work it, and thus a large proportion of the new revenue is very apt to run away and be lost in the sands of collection. At the same time the " fret " of a new tax is very much greater than that of an old. Of course, this defence of increasing old taxes rather than devising new supposes that the old taxes are of the kind that practically affect all classes, are not taxes on special trades and industries, and that the new taxes would be of a similar kind. No doubt the mass of the population would feel a new tax on, say, silk hats less than an increase of the old tax on beer, but then the tax on silk hats would probably not be worth collezting. We know that at the moment this is not the popular and accepted view, and that it is generally believed that our basis of ,taxation is not broad enough, that we have too few taxes, and that we ought, instead, to have more sources of revenue. We, on the contrary, hold that, within reason, a few taxes that draw largely are better than many that draw a little and cause not only friction but great expense in collection. The reason why we have so few taxes is at bottom a practical reason. Successive Chancellors of the Exchequer have taken off minor taxes which produced comparatively little money and cost a great deal to collect. Our present system is not the result of doctrinaire theories or of any desire to help special classes, but has been largely derived from the process of maintaining the taxes that draw largely, and in which the cost of collection bears but a small proportion to the total pro- duction. Thus our system resembles nothing so much as one of George IV.'s coats, in which a perfect fit was pro- duced in the following way. After the coat was made the Regent wore it for a little, and till a certain number of wrinkles were produced. Then the tailors came, and while it was on the Royal back cut out all the wrinkles and irregularities, and finedrew the incisions. John Bull's fiscal coat has been treated much in the same way, and now fits as easily as it is possible for a tax-coat to fit; —that can never be very easy owing to the harsh nature of the material, but at any rate the inconvenience is reduced to a minimum. But if it was wise of Sir Michael Hicks-Beach not to fidget about with little new taxes, it was still wiser of him to refuse sternly to have anything to do with taxes on corn and sugar, which, even if recommended on non-protectionist lines, would have necessarily assumed a protectionist complexion when once they were imposed. Those who desire to see a tax on corn do not realise how essential it is to keep the staple food of the people at the very lowest point which it is humanly possible. Those who want sugar taxed do not see how important it is to keep a commodity that has once got on to the free-list free from the interference of the Customs House officer. Sugar is a most valuable food, but it is also the raw material of a dozen trades, and to reduce it from a free to a taxed article would be to throw sand into the wheels of commerce. No doubt a condition of things is conceivable when a tax on sugar would be necessary and when recourse to that expedient would be an immense help to the Treasury, but let us wait till a really great emergency arises, and not tax sugar before we are obliged. In that he has so fully realised the signal advantages of keeping a great staple commodity on the free-list, and has refused light-heartedly to put sugar into fiscal bondage, Sir Michael Hicks-Beach has "deserved well of the Republic."
The question of Sir Michael Hicks-Beach's proposals for borrowing remains to be considered. Practically he has asked for a free hand to make the best bargain he can, and that free hand has been most willingly accorded to him. We will only express the hope that the new loan will be made not only easily divisible and easily transfer. able, but that this divisibility and transferability shall, if possible, be visible and intelligible to all men. We should personally like to see the new loan raised in bonds or sections of, say,L2 each—each £2 bond at 2 per cen t. would produce is. a year—and sold over the counter at the post. offices, and the small men thus encouraged to invest in Government bonds. As it is, the difficulties of employing brokers and executing transfers, not to say powers of attorney, when one wants to buy or sell a small quantity of Government stock, are most tedious and expensive. Purchase over the counter is, we feel sure, what the greater public would like best.
There is one more point to be noticed. It is quite right, no doubt, that the Government should place a considerable part of the war expenditure on the gold- fields. We trust, however, that they will be most careful to do so in no way which can be repre- sented as the exaction of a tribute from the new South African State or States. It is all very well to talk about squeezing the gold millionaires, and personally we have no great objection to that process, but one must look ahead and remember that when once the new States settle down what is now discredited as "gold grubbing' will be described, and not inappropriately, as "the staple industry of the community." After all, the gold industry in the Transvaal is a regular manufac- ture in which rock is the raw material, and the finished product bullion, and we may say with absolute certainty that if our present Colonial system is to be maintained, as it must be, it will not prove easy or pleasant to levy what can be called—no doubt miscalled—a tribute on a special industry. The form, then, of imposing the gold- fields' share of the cost of the war must be carefully chosen. As we have said, let their fair share of the war expenses be borne by the goldfields, but let the money be raised and paid out by them as soon as possible and the transaction finished. We do not, that is, want to see any annual sum in a Colonial Budget ear-marked in perpe- tuity, or even for a long term of years, as an Imperial contribution. We admit that the matter is largely one of form, but in such matters the adoption of the right form is a matter of great importance.
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