FINAKE-PUBLIC AND PRIVATE

THE YEAR'S REVENUE

BY ARTHUR W. KIDDY.

Tun publication of the Revenue figures for the fiscal year which ended last Tuesday should have a sober- ing effect upon those who have indulged in wildly opti- mistic forecasts of taxation remission in the forthcoming Budget. Latterly this optimism has been of a more subdued character, and confident forecasts of a few weeks ago of a shilling off the Income Tax have dwindled down into hopes of a reduction of sixpence. I am far from sug- gesting that this reduction may not take place, but what is quite certain is that Mr. Churchill's task in making even the smallest remission of taxation will be a difficult one and apparently will only be possible by making very optimistic Estimates of the new Revenue.

SURPLUS FOR PAST YEAR.

It is quite true that the past year closed with a realized surplus of £3,659,000, but for the reasons stated subsequently the figure has very little bearing upon the prospective surplus for the current year. The Revenue for 1924-25 exceeded Mr. Snowden's Estimate by about £5,000,000, but the Expenditure was also ahead of original expectations, and, indeed, it must be noted in passing that for the first time for about seven years the total of Expenditure exceeded that of the preceding year. Moreover, although in the matter of aggregate totals the financial results for the past year were pretty near to the official Estimates, the discrepancies in points of detail were very great. To mention only two : Mr. Snowden estimated that Excess Profits Duties would bring in £8,000,000, whereas the total was only £700,000. On the other hand, he anticipated a decline in Income and Super Tax of £4,000,000, whereas there was actually an advance of £6,545,000, and it is worth noting that direct taxation contributed about 64 per cent. to the total tax revenue for last year. The following table shows the actual receipts for the year, as compared with the original Estimates ;— Customs • • Excise .. • • Motor vehicles duties .. • • Estate duties .. • •

• .

Stamps ..

• •

Land tax and house duty

• •

Income and Super-tax ..

Excess Profits Duty Corporation Profits Tax .. Post, telegraph, and telephones.. Crown lands Interest on sundry loans Miscellaneous :— Special .. • . • •

Ordinary • • • • Total • • 0, •

Original Estimate of Inc. or Dec.

for Year.

£

—18,000,000

—12,000,000 + 900,000 — 1,800,000 — 570,000 — 1,510,000 — 3,970,000 + 8,000,000 — 3,340,000 + 700,000 .— 20,000 — 350,000 — 6,800,000 — 4,100,000 Actual Inc. or Dec. for Year. £ —20,614,000 —12,842,000 + 1,473,000 + 1,650,000 ± 1,280,000 — 1,310,000 + 6,545,000 + 700,000 5,240,000 ± 2,050,000 + 40,000 696,017 — 9,838,285 — 1,561,387 —42,860,000 .. —37,733,689

BUDGET PROSPECTS.

The disclosure of the amount required in the current financial year for Debt charges has still to be made, but at present it looks as though the new Estimates of Expenditure in the forthcoming Budget would be higher than the actual outlays for the past year, and that, assuming there were to be no change in the total of Revenue, Mr. Churchill would only have a Surplus of a million or two to deal with, whereas in a full year sixpence off the Income Tax would cost about £25,000,000 and even for the current year probably about one-half of that amount. Not only so, but as I have explained on a former occasion, the Exchequer stands to lose in the current year about £14,000,000 in connexion with indirect taxation remission of a year ago, while special revenues from War Stores will be smaller.

NEED FOR ECONOMY.

If, therefore, the anticipated reduction of sixpence is to be made in the Income Tax, it looks as though that course would only be made possible by (a) Reparation Payments, (b) a possible rearrangement of the incidence of Income Tax, and (c) optimistic forecasts of Revenue. As to this last possibility the excellent receipts of the past year may, perhaps, justify hopefulness, but, on the other hand, the present trade outlook is scarcely sug- gestive of expanding Revenue. It becomes, indeed, more clear every day that, as Mr. McKenna has so fre- quently insisted, the need for a further reduction in Expenditure was never more urgent if industry is to be relieved from some part of the present crushing burden of taxation.