By NICHOLAS
DAVENPORT
THE City is kidding itself that Mr. Butler will make tax concessions in his Budget because he is not afraid to use the money weapon against inflation. The Banker even has an article entitled 'Tax Relief through Bank rate?' although it concludes tamely enough that the Chancellor should confine himself to sensible readjustments of taxation 'that improve the system as a whole without involving any perceptible net cost'—as, for example, the combination of variable surtax starting-points and earned-income allow- ances suggested by the Royal Commission. The City may, of course, be right for the Wrong reasons. It would be unnatural for this Chancellor, faced with an above-the- line surplus of perhaps £250 million next Year on the basis of existing taxation, to make no concessions at all. Mr. Butler has recently been talking about the value of incentives and in the debate in the House of Commons on March 23, Mr. 14audling, his Economic Secretary, repeated that it had been his policy 'constantly to give all possible incentives to increase pro- ductive efficiency by reducing taxation,' adding 'but not so fast as to threaten once again a return to inflation.' It would be strange if, on the eve of early election, Mr. butler did not find a cunning way to give some tax relief without adding to the inflationary pressures. After all, he has to look ahead and take a chance, as he did in 1953. If productive efficiency is not in- creased, our export trades will be in trouble, as the cotton textile trade is today. Mr. butler, on his own protestations, must do something stimulating.
• • • policy will be carried through to its logical conclusion?' Does it not amount to this: that in a modern welfare State, especially one governed by a Conservative administra- tion, no government can carry through a deflationary policy—by the harsh use of the money weapon—to the point that organ- ised labour will object, or to the point that the full employment policy has to be even temporarily abandoned? I am sure that Mr. •• •
I would add my plea to the Chancellor to supplement the recommendations of the Millard Tucker Committee—that insurance premiums for pensions for professional people and other self-employed persons should be allowed for tax purposes as are the premiums paid by commercial com- panies for their 'group' pensions. Here is an act of justice which is overdue. And its remedy in the Budget would encourage savings.
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