A HALF-HEARTED BUDGET
I N the additional taxation which Sir Kingsley Wood proposed in his supplementary Budget, increasing the total by i166,000,000 this year, or £239,000,000 in a full year, he imposed a burden which at any previous period of our history would have seemed fantastic in its magnitude. But the main criticism which it has en- countered today is that, gigantic as it is, it is still not enough. The public has gradually been becoming aware of the fact that in the aggregate, under war conditions, its consuming-power will not be much affected by any pay- ments it may make to the State, since the total amount of consumable goods left over when war demands have been satisfied is strictly limited. If more than a certain amount is left in its hands for private expenditure, it will have to pay more for the goods—that is, prices will rise. If the State, by taxation, leaves it less, then to that extent prices will be kept down and inflation will be avoided. Today the total money income of the community is greater than it was owing to employment on war work. When allowance has been made for lending the whole of this excess should be removed from it by taxation, and indeed more, since there are fewer consumable goods which it can buy. As the bill for war production grows—and it now comes to about £2.800,000,000 a year—we must simply congratulate our- selves that more money and energy have been diverted from pm ate use to the public business of winning the war.
Considering the question from this point of view, and choosing between taxation and inflation, there is no heroism in concluding that Sir Kingsley Wood has certainly not taxi.d us too much, and might have taxed us more. Cer- tartly if he intends to exact more from us in the near future, it would have been better to let the taxpayer know the worst at once rather than keep him in perpetual un- certainty. For the rest, criticism must turn mainly on how the incidence of deprivation is distributed among classes and individuals, and how it may help to confine expenditure as far as possible to necessaries rather than luxuries. The rich are privileged to contribute more by additional surtax and estates duty, as well as by income-tax raised to 8s. 6d. in the pound. The latter, of course, affects the middle classes most, and also the higher wage-earners, who will especially feel the increased rate on the first £165 of taxable income. Indirect taxation will enable consumers of beer, wine and tobacco to contribute more to the State, and the duty on entertainments is to be increased.
The revised Purchase Tax, levied on the sales of the wholesalers, and discriminating between luxuries and goods which come near to being necessaries, is in itself a sound tax, since it is directly proportioned to each person's ex- penditure on consumable goods of which less is available for purchase. But a grave mistake has been made in apply- ing this to books, newspapers and periodicals, whose con- sumption ought to be encouraged rather than reduced. Sir Kingsley is to be congratulated on one sensible innova- tion—the deduction of income-tax from salary payments by employers. Complicated as in some cases it may be, it will remove from the unthrifty the irksome duty of abstinence when tempted to spend what is due to the tax-collector. It must not be forgotten that if the Chancellor has refrained from imposing still higher taxes he has left the public an opportunity to contribute more by lending. All the money that can possibly be withdrawn from private expenditure should be put at the service of the State through Savings Certificates or other forms of loans to the State.
