Paying Our Way
THERE is no great temptation to comment at length on a Budget whose content The Times summarizes comprehensively and sufficiently in a single paragraph : " No .important change in taxation was proposed, the only alterations being the reimposition of a duty on tea and the granting of an increased preference to Colonial sugar." The salient feature about the Budget is that it balances, and subject to the uncertainty attaching to estimates of future yields, balances honestly, in a year when the United States is facing a deficit of £400,000,000 and France looks like being short in her accounts to the extent of £24,000,000. For that achievement Mr. Chamberlain paid just tribute to the income-tax payer, for though the burdened citizen had no alternative to . payment, except an ultimate distraint on his goods, the spirit in which he made his sacrifices deserved all admiration. It will not be quite the same spirit next year. A second effort means a much heavier strain than the first, and a relief of sixpence would have made far more difference psychologically than the actual sum involved might imply. In many cases, moreover, the tax has been paid this year out of capital, or by inroads into the future in the shape of bank overdrafts. A repetition of that process in a second consecutive year will inevitably inflict a great deal of real hardship.
But it must frankly be recognized that if he had expenses amounting to £766,000,000 (apart from the self-balancing items) to meet., Mr. Chamberlain could not consider reducing income-tax. He might with advantage have given some small relief in hard cases— that of the married man with a low income is a par- ticularly hard case—instead of presenting £1,000,000 to Colonial and home sugar-growers, but as things are, the tremendous burden of a general tax of 5s. in the £ must clearly be shouldered for another year yet. As things are—for a Budget can as well be balanced by reducing expenditure as by increasing revenue. The estimated expenditure for 1932-3 is about £4,500,000 less than the actual expenditure in the year just ended, and though considerable economies were, of course, effected as a result of Lord Snowden's second Budget of last September, the occasion demands a more vigorous use of the pruning-hook stilt. This is not the time to starve education or any social service, but it is essentially the time for satisfying ourselves in all fields that we are getting full value for the vast sums we are spending.
The Government will do well to remember that it came in largely on an economy programme. Certain obvious economies will unfortunately have to wait for another year or two yet. The scandal of the beet sugar subsidy, calculated as it is to increase the world production of sugar artificially and uneconomically at a time when the world is glutted through over- production (the subsidy has so far cost the Exchequer £84,000,000), must continue till the period covered by outstanding pledges has expired, but the im- position should be ended ruthlessly then. The defence estimates this year have been cut by £10,000,000, but if the Disarmament Conference at Geneva yields results in the least degree commensurate with the hopes set on it, there should be further relief to look for in this quarter.
The British Government has proposed so far the com- plete abolition of heavy guns, tanks and submarines.
That is a modest programme, but if it were accepted by the Conference the defence estimates, which to-day stand at £106,000,000 out of an effective expenditure (i.e., for other than debt service) of £447,000,000, could be substantially reduced.
For the rest Mr. Chamberlain has turned where he could and picked up whatever offered. The refusal to lower the beer duty while the income-tax payer was get- ting no relief was abundantly justified. To have reduced beer prices before income-tax would have been intolerable unless it could be shown, as it has not been, that the increase in the duty was defeating its own ends. The tea duty hits the poorest section of the population hardest, but it may be argued that tea at the moment is cheap, and even with an increase of a penny a quarter-pound (or half that in the case of Empire tea) the tea-drinker will be no worse off than two or three years ago. But these, of course, are details. The serious feature of the Budget is that it is based so largely on complete uncertainties. That is not entirely Mr. Chamberlain's fault. As he observed, he cannot predict how many rich men will die and make their due contribution to death duties in a given year. So far as he shares responsibility for the introduc- tion of import duties the uncertainty in their yield is his own affair. It is true, of course, that the estimated £33,000,000 forthcoming from that source is an indispen- sable item in the Chancellor's accounts as he has framed them, but to use that as a taunt to those who opposed Protection is singularly superficial. No one ever doubted that to levy a tax on incoming goods would produce an item to insert on the revenue side of the national balance- sheet. The question is what effect Protection will have, as soon as its effects work themselves out, on other items in the same column—income-tax based on shipping profits, for example ? The £33,000,000 of inunediate yield throws no light on that whatever.
But the supreme uncertainty is, of course, the world financial situation. It is a notable achievement for this country to be paying its way, even at a cost to the individual which should not be minimized. But it is idle to suppose that we can regain prosperity, or retain what measure of it we have, in a world where conditions are drifting daily from depression to disaster. We live on international trade, and international trade in Europe is rapidly evaporating altogether. No single expedient is going to restore normality, but the immediate event of outstanding importance is the Lausanne Con- ference. Mr. Chamberlain, with this in view, has made no entry under revenue in respect of German reparations and Allied debt payments and none under outgoings for debt payments to the United States. In that he is clearly right. For the moment the Balfour Note policy—that we ask from Germany and our Allies together only so much as we have to pay America, in other words that incomings and outgoings under those heads balance—stands. But it is to be hoped that the Chancellor, who will himself be a principal delegate at Lausanne, does not regard the Balfour Note policy as immutable. The time has manifestly come when Reparations and the American debt must be dealt with separately. To achieve a final settlement of Reparations, whether on the basis of complete cancellation, or, as Sir Arthur Salter has suggested in his recent book, of heavily reduced payment by Germany of something between £20 and £15 millions a year, will, by clearing the inter- national atmosphere and giving business men some hope again, do more to ease the Chancellor of the Exchequer's task a year hence than all the expedients the most ingenious of his experts could devise.
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