Mr. Chamberlain predicted that in 1922.23 the revenue would not
exceed £950,000,000. We should have next year to pay part at least of the £40,000,000 of annual interest on our American loan. Our expenditure in 1922-23 would, on the present basis, be not less than £950,000,000. That was too high and must be reduced. The Chancellor had already begun to press for " drastic reductions " in the departmental estimates for next year. While there would be no relief for the taxpayer, the heavy taxes on sparkling wines would be reduced and the surtax on imported cigars would be abolished because they her proved unprofitable. Sparkling wines had yielded £570,009 instead of £1,250,000 and the cigar duty £325,000 instead of £1,360,000. Mr. Chamberlain admitted that he had been mistaken. The incident shows once again that there is a limit beyond which taxation not only ceases to yield more revenue, but actually reduces the revenue. People ceased to drink chain• pagne or to smoke Havanas, and Mr. Chamberlain's sanguine estimates were at once falsified.
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