THE COMING - BUDGET .
BuDG,Et,sepretA are usually well preserved, and inztllis artip10, which will. appear fully three weeks befote.. the Btidg4t statement, I shall . certainly not attempt to suggest ini What direction and to what extent Mr., Chamberlain will ctecide to balaike his Budget by means of new or increased- taxation. Inasmuch; however, as I have ebtistantly to record thi 'fact that- the-Stcick 'Markets are ;being iffeCtect by Budget uktCer- tainties, it May be useful perhaps to say something as 10 the nature of the task with which the Ch:mirellor of the Exclifquer will be-confronted on Budget Day. And this it is now fossible to do first because we are almost Within 'gen of the results for the Current'finaticiatyear,And second because theestimates of expenditutc fox the coniing -year, have: already Iheen publiShed. Before, however, dealing in detail with the figures of ripincfitilie an The -possible 'figures of reienue for the neW. yeti, I think I cah:Say at one that iii.One _sense the aCtual amount of fresh xevenue which Will be required to produce a Budget equilibrium is possibly less than some people have imagined, though as Will be seen later,' the situation is such a peculiar one that under the head of futiire Supplementary Estimates, Mr.- Chamberlain may decide to Make such ample provision as to make it necessary to impose a good deal-in the way of new taxation.
REVENUE OF THE .CURRENT YEAR. !
Judging from the weekly, returns of Public income and expenditure made up-to last Saturday) March t3th, it 'looks as though the current financial year might close with a small surplus, though almost everything will depend upon the extent of expenditure during the final fortnight of the year. Up to last Saturday, the deficit in the national accounts was £22,4000,000, including the amount for the Sinking Fund, but excluding that amount it was only Lio,soo,000 with another two and a half weeks to go. Even, however, if this year should close with a deficit rather than a .surplus, the really important point as affecting the forthcoming Budget is the elasticity of the revenue, for upon the extent of that elasticity in the new year must largely depend whether the Chancellor has to draw heavily on the taxpayer to produce Budget equilibrium.
FUTURE EXPENDITURE.
There is little doubt that the Chancellor of the Exchequer will make no change in his estimate for the service of the Consolidated Fund in. the new year, but as regards Supply expenditure, which includes all outlays for the Army, Navy and the Air-Forcie, the Official estimates whirl have already been-Made known provide -foe in increase Of a over £ite,000;cido -over- the probable figure for the current Sar. If 'therefore-these figures meant that it6o,boo;oo6- of -new revenue had to be found to produce a balanced Budget for 1937-8, the position would' indeed be a serious one for the taxpayer. That, however, is not so. _ In the first place, from the approximate amount of increased expenditure of £160,000,000 has at once to te deducted £22,500,000 owing to the fact that the Road Fund Accounts formerly separate have now been brought into the general expenditure. In the second place, we know that up to an amount of, roughly, L80,000,000 a year, increased expenditure is to be met out of borrowing; so froin the £160,q00,000 we can deduct £102,500,000,". reducing- the total to something like £58,000,000. Then, again-is:the-former reVemie- of the Road Fund will, in common with the-outlays, come-into the general account, and glowing for the. great increase in 'the number of motors, it looks as if the income of the Road Vii.nd will increase very greadi,inif-Perliais give the CriariceTlor another £6,000;000 - Of revenue, thus bringing dostit'his prospectivedeficitIto. something. like:£52,000,000. '
REVENUE EMPANSI3N: • - - The next poiriftOtiote ir tfie- prospectt ofa farther expansion in the revenue--on the existing basia :of taxation, and allowing for the fact that the extra_ taxation jniposegl: a-_year_ wy will yield about 43,5oo,000 more in the- coming Mr. Chamberlain :win& iirobably lintified-ii anticipating an expansion, in his- entire revenue on the existing basis of taxation of £34 n435,000,000; For the period-on which next year's income 'tax, will be payable &a-been:I:prosperous one, and the expansion both in-indorne and surtax revenue should be very great. Ori thia basis- orrec-koning, it would seem that, to establish an equilibrium in the new Budget, the Chancellor- would only require-about -£4,000,000, a sum which could be produced by an extra 3d. in the income tax, bringing it up to 5s. in the pound. Or, he might even elect to leave the tax where it is and impose various indirect taxes to make up the total required.
SUPPLEMENTARY ESTIMATES.
Unfortunately, however, there is something more to be said with regard to the Chancellor's task. - It will be remem- bered that a year ago, after making his estimates of revenue and expenditure, Mr.. Chamberlain decided that it was necessary to make a provision of something over £20,000,000 for Supplementary Estimates, and it would not be surprising if in the coming Budget he were to feel it necessary to make an even larger provision, say £25,000,000, in Which case some- thing like £39,000,000 in all would required to balance his Budget.
And while there will doubtless be every desire to spare the taxpayer as far as may be possible, and certainly every desire to do nothing which shall check trade activity, it will be the Chancellor's. first .duty. to: produce a.soimd. Budget, for only by so doing Can confidetice-.-whiCh" is the founda- tion of all trade. and financial activity—be Maintained. 'Moreover, stern facts have to be faced and, serious' as it may be to have a 5s. income tax in times of peace, it is absolutely necessary at a -time when idiiiitedly some £400,00b;060 *ill have to be borrowed over a period of Years that the cost of Defence should, as" far as 'Possible, be met out of revenue.
DIFtECT AND INDIRECT TAXATION.
For my own part, therefore, I consider that 'Mi. Neville Chamberlain's task in his next—and presumably his last— Budget will be to see that the cost of Defence for the coming year is not met by more -than £80,000,000 out of borrowing, and that any new and additional taxation is so contrived as to occasion the minimum amount of disturbance to financial and trade activity, upon which not only the welfare of the community but the welfare of the Exchequer in the matter of its revenues so greatly depends.
When, however?. considerihi the question of increased taicatiqt0 in it is. inIPO5sible to. overlent( the fict of the enormous increase which has taken place in direct taxation (Continued on page 562.)
FINANCE
- (Continued front pew 56o.) during the past .twenty to _twentfive_. years. In, 4913, for example, the contributions to income and suitai and .local rates was about £178,000,000. Today the figure isnearer
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