Finance—Public & Private
Brighter Budget Prospects
WHEN Mr. Churchill rises to make his Budget Statement on April 24th, it will not be necessary for him on this occasion to apologize for the previous year having closed with a Deficit. As recently as last January the first nine months of the fiscal year had left the Exchequer with a Deficit of over £150,000,000, but so rapidly did the Revenue come in during the final quarter that the year closed with a realized Surplus of £4,289,124. A realized Surplus—which goes automatically to debt redemption—does not necessarily spell a Surplus for the coming year, but nevertheless there is an important • connexion between the old and the new Balance Sheets. In the first place, the realized Surplus having gone automatically to debt redemption, the circumstance is not without its influence in affecting the Sinking Fund policy for the new year. In the second place, if, as in the present instance, the Surplus is due, in part, to Revenue having slightly exceeded the official Estimates, there is a tendency to be optimistic with regard to fore- casts for the new year, although on the present occasion I think that optimism will be severely restrained by a remembrance of the fact that a year hence the Govern- ' ment will be on the eve of a General Election and will doubtless be anxious to be perfectly sure that they go to the country on a Surplus and not a Deficit.
EXCEPTIONAL REVENUES.
Moreover, while the Revenue for the past year was excellent, its exceptional character must be duly remem- bered. No less than 181,000,000 came from quarters which cannot be tapped in the next Budget, while the fact that Estate Duties exceeded the official Estimates by over £9,000,000 was clearly due to windfalls in the shape of exceptionally large estates. Moreover, while the total Revenue was about £8,000,000 in excess of Estimates, -Expenditure expanded by over £5,000,000 beyond the original Budget Estimates, though it is fair to note that the increase was entirely connected with debt services.
FANCIFUL SURPLUSES..
Assuming, for the moment-7-and it is probably a fair assumption—that the Sinking Fund is maintained at its present level, the total outlays for the new year promise to be, approximately, about £880,000,000. If, therefore, the Revenue were to be maintained at the same level of last year, namely, /842,000,000, Mr. Churchill would have an approximate Surplus of £12,000,000. Indeed, if we were to go further and add an increase of about 1 per cent, for automatic expansion in Revenue, we should get a further £12,000,000, raising the Surplus to £244000,000. It is possible, however, to go further than that and to remember that when introducing new indirect taxation a year ago, Mr. Churchill reckoned that in the second year of its operation an additional yield should be given of about £7,500,000. If, therefore, this sum is added, we get a total prospective Surplus of about 181,500,000.
REAurrEs.
Now,, however, we come to the big deductions which have to be made. The Chancellor cannot be expected to tap the Road Fund again to the extent of £12,000,000, nor can he obtain from Schedule A of Income Tax the £14,800,000 obtained last year, or the 15,000,000 repre- sented by reduction of credit period to brewers in the matter of the Excise Revenue. Here, then, we have a deduction to make of nearly £82,000,000, to say nothing of allowances which should be made for a set-back in Excise Revenue from the excessively high figure of last year. While, therefore, there can be little doubt that the Chancellor will obtain his ' prospective Surplus all right—especially when allowance is made for the pro- bability of the Vetting Tax becoming more productive next year—I cannot help thinking that he may obtain his Surplus by imposing some new forms of taxation, for Mr. Churchill is the kind of Chancellor who does not enjoy producing a really humdrum Budget. -
ARTHUR W. KIDDY.
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