TOPICS OF THE D.Y.
THE BUDGET. THE Chancellor of the Exchequer maintains the taxes at their present figure, and estimates the revenue of the coming financial year at £101,755,000. But the total expenditure last year was £97,764,000. Therefore if he did not increase his expenditure he would have a surplus of about £4,000,000. But owing chiefly to the needs of the Navy, he has to calculate on an expenditure of £100,047,000. This gives him an estimated surplus of £1,708,000. These are the main facts of the Budget. " What will he do with it ? " That is the question which the public asks the moment it hears that a surplus is estimated for on the basis of the existing taxation. The answer given by Sir Michael Hicks-Beach is to devote a sum a little short of a million to the relief of agricultural rates under a scheme not yet disclosed, but to be embodied in a Bill to be introduced by Mr. Chaplin on Monday. Next he is going to abolish certain inequalities and hardships in the Land-tax, and to encourage its redemption. The maximum charge upon land is to be ls. in the £1, not 4s. as now, and people are to be allowed to redeem at thirty years' purchase instead of at about thirty-six. The present plan, unless we are mistaken, is to give the Government sufficient money to cancel a block of Consols bearing interest equal to the amount of Land-tax sought to be redeemed. These two alterations taken together will, it is calculated, cost £100,000 in the year. Next, he is going to provide the money required under the new Education Bill, though this will not be a large sum, since the Bill will only come into operation from January 1st next. The only other fiscal changes of importance are connected with the Death-duties. The Chancellor of the Exchequer does not, of course, propose to alter them materially, but he intends to find a remedy for certain hard cases that have arisen in practice. The principle of these amendments is that people shall not be made to pay the duties twice over through a combina- tion of accident and a too strict and technical interpreta- tion of the Finance Act. The pressure of the Death-duties on works of art is also to be relieved by enacting that they are to be taken separately, and not aggregated with the rest of the dead man's property. Thus they will usually pay at a lower rate than now. These changes in the Death-duties will, it is calculated, cost £200,000 a year. This will leave the Treasury with a margin of £433,000 out of which to meet the new demands on the education grant and other unforeseen charges. It will be seen that Sir Michael Hicks-Beach has not constructed a sensa- tional Budget. He has neither taken off nor imposed fresh Imperial taxation, though the national prosperity has enabled him to be generous to the Navy, to help agriculture, and to provide for the first in- stalment of the relief which the Government intend to give to the voluntary schools. No doubt a section of the public will feel disappointment that the burden of taxation is not to be relieved. It would, how- ever, be more reasonable to feel satisfaction that the Chancellor of the Exchequer is able to spend so lavishly on new objects without adding to taxation. In no other country in the world would it be possible to go on paying off some £8,000,000 of Debt, to give an extra £2,000,000 to the Navy, to relieve a distressed industry by a grant of over £1,000,000, and to find a limited extra sum for education, and yet not add a farthing of new taxes. Of course, as he would be the first to admit, it is not Sir Michael Hicks-Beach who has done this miracle. This result, so eminently satisfactory, is due to the prosperity of the nation and the soundness of our fiscal system, which, without recourse to duties on " everything, from corn to divi-divi," enables us to raise £101,000,000 a year.
We must confine our criticism of the Budget to one or two simple points. Let us take first the relief offered to the land. That Sir Michael Hicks-Beach's proposals in regard to the Land-tax are sound and statesmanlike, we do not doubt for a moment. We also hold that he is right in granting £1,000,000 to lighten the local burdens on land. We do not, of course, yet know exactly the way in which this relief is to be granted, but we greatly fear that it will be given in the shape of a dole to the local authorities. That is, we presume, the only way in which a lump-sum levied by the Imperial Treasury can be used to relieve the rates. We are bound to say that we should greatly regret to see the system of doles still further extended. We do not grudge the landowners the money, and admit that they need the relief. Agricultural land is at present cruelly overtaxed for local purposes. What is wanted, however, is not another dole, which is sure to be partly wasted — local bodies always tend to waste money which they do not raise themselves—but a thorough remodelling of our whole system of local taxation. But perhaps it will be said it was impossible for the Government to touch so vast a question this year, and, further, that the owners of agricultural land could not be expected to wait till an ideal system had been de- vised. We admit the difficulty, but while we do so we would most strongly urge upon the Government to state that their new dole is only a temporary measure, and that they intend later on, and if possible next year, to deal on a large and wide scale with the whole subject of local taxation. We fail to see why our present system of rating should not be abolished altogether, and why a new scheme of local taxation should not be devised. Instead of doles the Government might hand over certain licenses like the liquor licenses to the Local Authorities, supple- menting them by a fixed local Land-tax and a local In- habited House duty. Of course there are difficulties many and great, but we do not believe that they are insuperable.
A very interesting point was raised by Sir Michael Hicks-Beach when be reviewed our general fiscal system- It is clear that he thinks we have almost got to the end of our tether on the present lines of taxation. He did not, he said, "envy the Chancellor of the Exchequer who would have to impose increased taxation to any large extent under the present financial system." He evidently considers that we are getting as much as we can hope to get out of the Death-duties, and, indeed, out of direct taxation generally. He went on to point out that the burden had been gradually shifted from indirect to direct taxation. In 1841 73 per cent. was paid by indirect taxation, and 27 per cent. by direct. Now, 56 per cent. came from direct, and only 44 per cent. from indirect taxation. Sir Michael Hicks-Beach went on to say that our system as it now stood did not add to the popular support which any Chancellor of the Exchequer could enlist in aid of economy. In spite of his increased burdens, the direct tax payer was too idle to do more than grumble and pay. The indirect tax payer was very moderately burdened indeed. The taxation on articles of great consumption had not been increased for very many years, and, with the exception of wine, spirits, and beer, had not been increased at all since 1878. " He wished the Committee to con- sider what the position of the Chancellor of the Exchequer would be in some future year, when he might have to meet a continuing and enormous increase of expenditure, under this system of taxation. He wished to ask them whether they were quite sure that our present financial policy could be maintained." We cannot refrain from saying that we very greatly regret this covert attack on direct taxation, we might almost have said this incite- ment to the Protectionist and Fair-trade factions to add the cry of "the country in danger" to their armoury of sophistries in regard to taxation. Very possibly if we got into a great war we should have to resort to a tax on sugar, and conceivably even on corn, but in heaven's name let us avoid the madness of breaking down a fiscal system which has served us so splendidly, only in order to be prematurely ready for war. Sir Michael Hicks-Beach himself admits that our present system has done wonders for us. There could be no doubt, he declared, that under it " the industry and enterprise of the country, our wealth and commerce and trade, had been enormously developed. Therefore, he supposed that they might say that the policy was justified by the results." Assuredly it has been. We should be mad to go back to indirect taxation as our fiscal mainstay, when chiefly under a system of direct taxation we have paid off £200,000,000 of Debt, and raised, as in the present year, over £100,000,000 without pain or difficulty. That Sir Michael Hicks-Beach is right in warning us that we cannot go on spending indefinitely we do not doubt for a moment, nor do we deny that an eight- penny Income-tax and the present Death-duty rates are very high. To use language, however, which may be made to appear to lend encouragement to the cry for duties which can be manipulated to make trade " fair " seems to us most unfortunate. Besides, as Sir Michael Hicks- Beach pointed out, we possess a war-fund which would carry us through anything but a very long and very desperate war without adding a penny to our present taxation. If we stopped paying off debt we could raise a loan of £200,000,000, and pay the interest on it, without the nation being aware from the Budget that we had raised a sixpence. We now vote yearly £25,009,000 for the service of the Debt. In the case we are supposing we should continue to do so, only instead of paying-off some £6,000,000 or £7,000,000 a year—as a matter of fact, we paid off over £8,000,000 last year—we should pay the interest on the £200,000,000 loan. But, it will be said, we should have a great extra burden round our necks. Hardly. In spite of the supposed war-loan, the total National Debt would not nominally be greater than it was in 1857. In reality, of course, it would be much less, for the relative wealth of the country has very greatly increased in the last fifty years. It only remains to be said that Sir Michael Hicks- Beach's statement was extremely clear and well put. His manner was pleasing, though not in the least studied or ornate. The House heard him with evident pleasure, and we seldom remember a Budget speech which was so easily followed and so readily understood. To speak for two full hours and be relevant and intelligible the whole time is no small feat. Sir Michael Hicks-Beach well main- tains the best traditions of the race of governing country gentlemen and Quarter Sessions statesmen which has done so much for England.
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