Finance—Public & Private
The Budget
IT will be easier in the course of the next few days to record the City's carefully considered judgement of Mr. Chamberlain's second Budget, but writing on the morning after the event I am able to say that there is considerable relief in business and financial circles that the Chancellor has produced a balanced Budget. Much pressure was brought to bear on him by economists and certain journalists to produce a favourable psychological effect by reducing the Income Tax substantially, even at the cost of an unbalanced Budget. This advice, however, has been rejected, and in the course of his defence of the procedure adopted Mr. Chamberlain contended that quite apart from the undesirability of defying sound prin- ciples by producing an unbalanced Budget, even the psychological effect of a reduction in the Income Tax would have been lost if the accounts had shown a sub- stantial Deficit instead of a Surplus.
THE NEW ESTIMATES.
On the basis of existing, taxation, the Chancellor budgeted for a total net decrease in the Revenue for the new year of £81,862,000, of which over £21,000,000 was in Income and Surtax, thus giving a pretty plain indi- cation that taxation under those heads has reached a point where ill-effects are being produced upon the Revenue itself. Indeed, Mr. Chamberlain in the course of his speech stated that as a result of the general depression the Returns of last year showed that no fewer than 12,000 individuals, -who, in the previous year had been liable for surtax, had now fallen below the surtax level. In Excise the Chancellor also budgeted .for a decline on the existing basis of taxation of over - (Continued -on page 6-24.-) - Finance—Public and Private (Continued from page 622.) 3/7,000,000. On the whole the estimates of new Revenue appear to have been made on the cautious side, and it May be hoped that they may be pleasingly falsified. On the other hand, I am not at all sure that as regards Expenditure Mr. Chamberlain was not over-optimistic in his estimated further reduction in the Consolidated Fund services even.. when allowance is made for the savings effected through the conversion of the 5 per cent. War Loan.
INCOME TAX PROPOSAL.
By imposing certain new duties on heavy road vehicles and by extending the application of the Income Tax in some measure to Co-operative Societies, the Chancellor obtained a • provisional Surplus of a little Over £17,000,000. A remodelling of the Beer Duty; however, cost him an -Estimated loss for the current year of about 114,009,000, leaving a prospective Surplus too small 'to give relief to the income taxpayer. By, the appropriation, however, of £10,000,000 which had accumulated in the Depreciation Fund for the old 5 per cent. War Loan, Mr. Chamberlain was able to give some Relief to the actual burden of the income taxpayer by reverting to the old system whereby the tax will in future once again be payable in two equal instalments instead of as at present three-fourths in January and the remaining one-fourth in July. This will mean a cost to the Exchequer of about £12,000,000 for the current fiscal year, leaving the Chancellor with a final Estimated Surplus of £1,291,000. There will be general regret that the whole of the Sinking Fund has had to be aban- doned, but on the other hand, the reduction in the Stamp Duty on the capital of new companies from 20s. to 10s. per cent. should tend to stimulate the promotion of new enterprises. Moreover, the material increase of Duties en the heavier classes of motor vehicles will meet with approval from the many who have experienced incon- Venience through the present congested condition of the read traffic, while as the Chancellor clearly recognized, The increased Duties were on the grounds of equity in the matter of road and rail competition, very much Overdue.
Not the least important item in the Budget, however, and one to which 'I hope to make fuller reference next week was Mr. Chambeilain's intimation that the resources 4f what is known as the Exchange Equalization Account :Were likely to be increased. At present those resources have been fixed by Parliament at £175,000,000, but it is thought there may be a substantial addition. The' operations of this Exchange Equalization account are concerned with efforts to stabilize as far as possible the sterling exchange, and the matter is one of supreme importance to the financial and commercial interests of
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