FINANCE PUBLIC AND PRIVATE
THE BUDGET
BY ARTHUR W. KIDDY.
THE days seem to have passed when Budget secrets were scrupulously preserved. Speculations as to its character have, of course, always been rife, and some of the guesses have often gone near the mark, occasionally hitting the bull's-eye. Nowadays, however, it seems to be scarcely a question of guessing, or even of " intelligent anticipa- tions," for we find in this and that journal, some days before the Budget, announcements to the effect that " the Cabinet has decided " that there shall be a tax on betting, &c., while in yet another quarter we hear that the pro- posals for a Luxury Tax are " understood to have been abandoned." Whether, in spite of these apparent leakages, Monday's Budget will contain any important surprises remains to be seen.
NATURE OF THE TASK.
As a matter of fact, it would be far better if those who take a serious interest in our National Finances and in the annual Budget statement by the Chancellor of the Exchequer were to preface their hearing or reading of the speech, as the case may be, not so much by anticipations of its possible features as by a clear comprehension of the precise situation with which the Chancellor is confronted. This, of course, is to be obtained, first by an understanding of the character of the results for the year which has just closed, second by a remembrance of the definite amount of Expenditure which has to be provided for, and third by the probable amount of Revenue which the Chancellor can calculate upon-receiving without making any kind of change in' the general basis of taxation. These are points upon which it is not difficult to be quite well posted before the Budget Speech has been delivered.
CONSTRUCTION OF A BUDGET SPEECH.
A Chancellor of the Exchequer generally prefaces his Budget Speech by dealing with the figures of the past year, and; because his speech is almost invariably lengthy, he usually reserves his " tit-bits " in the shape of increased or remitted taxation until the very end, by which means he is better able to hold the attention of his listeners until the end. Proof of the soundness of this method of procedure is to be found in the fact that, when the moment for the " tit-bits " has passed, there is generally an exodus from the House of a number of Press reporters and Members eager to dispatch the news to all parts of the country.
Usually, then, the Budget Speech is framed along the lines of (a) a careful presentment of the figures for the past year, with some detailed comments ; (b) a recital of the items of Expenditure for the current year. Most of these have already been made known, but the precise amount to be devoted to the COnsolidated Fund Services has not previously been revealed. (c) The next stage is to give the estimates of new Revenue on the existing basis of taxation, showing the surplus or deficit resulting. (d) In the event of any changes -in taxation, these are then enumerated, together with their effect upon the figures previously given, and then the final Balance Sheet is presented, showing the net Estimated Surplus, because, of course, in a normal Budget there is always an estimated surplus.
LAST YEAR'S RESULTS.
Following this line, therefore, let us see' how much of Mr. Churchill's Statement on Monday can be anticipated. For the past year there was a total Expenditure- of £826,100,000 and a Revenue of £812,062,000, leaving a Deficit of £14,038,000. This Deficit was met in the sense that this amount of debt which would otheriAse have been redeemed was continued.' The Rattnue had exceeded. the -original estimate by £11,000,000, but Expenditure had exceeded the estimates by a still larger figure owing to the coal subsidy of £19,000,000. By reason of the unexpected increase in Revenue it will be seen that the Deficit was less than the amount Of the coal subsidy, and the Chancellor may possibly retort -on those critics who ginne Weeks ago prophesied a still kilter. Mficit: It will
be difficult, however, for him justly to indulge in any self-congratulations upon the accuracy of the Estimates because the increase in Revenue is shown to have been largely due to special circumstances, while estimates of individual departments were for the most part wide of the mark.
PROSPECTS FOR 1925-26. With regard to the current year, the Estimates already published show that, including the Consolidated Fund Services, the new total is likely to be about £810,000,000 and, therefore, the next question is concerned with the Revenue. Will that total be more or less than last year's figure of £812,062,000 ? In normal times we can calculate Upon an automatic increase in the Revenue of from 11 to 2 per cent. which gives us an increase of, say, £15,000,000 for the current year. From that figure, however, has to be deducted something like £6,006,000 in connexion with the further effect of remissions in taxation effected last year, so that if we add about £9,000,000 for a net automatic ihereate in the Revenue, plus a further £2,000,000 for additional Italian Debt payinents next year, and conceiv- ably a little more in the way of German Reparation Payments, we get a possible new total of Revenue of about 824 or. 826 millions, which would give a Surplus of about £15;000,000. Of course," these figures leave out of all consideration either the question of a coal strike or even a renewal of the subsidy for any important period. At present the amount entered in Expenditure for the new • year is only £4,000,000, the amount required to cover the month of April. If at the time of the Budget' Statement on Monday the coal crisis has not been solved, almost every estimate made by Mr. Churchill will have to be qualified by the assumption that we are to have industrial peace.
THE QUESTION OF TAXATION.
A possible Surplus of £15,000,000, although satisfactory, does not carry so very far in the way of a reduction in Income Tax inasmuch as even 6d. in the £ in a full year apparently involves something over £80,000,000,., Ultimately, of course, a tax on betting may bring to the Exchequer quite a large total of Revenue, but it can swee..154.4)e very much in a full year. Therefore, it looks, as 'though Mr. Churchill -would. adopt one of two ,courSes. e- in his Budget on Monday. Ile may explor some fresh avenues of taxation calculated to produce _sufficient Revenue to bring his Surplus to .0 ;total permitting. a- reduction. of 6d. in the Income Tax. Or„ haying regard to the many uncertainties of the outlook, he may prefer on: this occasion to produce a somewhat humdrum Budget,; adopting, • in fact, the course sometimes pursued in difficult times by a public company of carrying forward; ail exceptionally large surplus,
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