TOPICS OF THE DAY.
THE BUDGET.
WE congratulate Mr. Asquith very heartily on the good sense and statesmanship which he has shown in his Budget. Mr. Chamberlain described it as a humdrum and commonplace Budget, but we venture to say that no reasonable and unprejudiced man who takes all the circumstances into consideration will deny that Mr. Asquith would have been guilty of a grave dereliction of duty if on the present occasion he had not produced a humdrum and commonplace Budget. To have attempted a sensational handling of the national finances after having been only some five months at the Treasury, with a General Election taken out of those five months, would have been nothing short of a scandal. Mr. Asquith clearly felt that, with the national finances in their present unsatisfactory condition, his first duty was to take a steady and comprehensive view of the whole situation, and then when occasion offered to develop a comprehensive series of reforms. Meantime his business was to relieve the pressure of taxation where it most pinches, and to begin making arrangements for a serious effort to pay off Debt. People sometimes talk as if the making of a serious effort to pay off Debt were a kind of Little Englandism. As a matter of fact, the creation of a sound and effective Sinking Fund is the highest form of Imperialism. There is no better preparation for future dangers—no better form of Imperial defence, that is—than the adequate provision of the sinews of war. With a great Empire like ours to defend, and with a situation abroad always unsettled, and capable at any moment of becoming actually dangerous, we must husband our resources and prepare for the possibility of some great strain being suddenly placed upon them. When that strain comes it is essential that the national credit shall stand high, and that we shall be able to raise large sums of money for immediate needs on easy terms. But the national credit will not and cannot stand high unless in peacetime we reduce the Debt. By reduction of Debt, through a sufficiently large Sinking Fund, we are in effect establishing the best possible form of war-chest for emergencies. We welcome, therefore, the announcement that Mr. Asquith has placed another £500,000 a year to the Sinking Fund, and we trust that in next year's Budget he will be able still further to increase the sum allotted to this purpose. It is easy to call such provision hum- drum and commonplace, but it is on such common- place actions that the safety and welfare of the nation depend. Mr. Asquith was also well advised in assigning £500,000 out of the Chinese war indemnity to the reduc- tion of Debt.
Mr. Asquith's determination to give the Sinking Fund the first claim upon his estimated surplus made it impossible for him to do anything very heroic in the matter of reduction of taxation. He decided, however, to abolish the export-duty on coal altogether, and to take a penny off the Tea-duty. We do not doubt that in both cases the reduction is well advised. The imposition of the Coal-duty may have been necessary as a war measure, for during war the Chancellor of the Exchequer must get money where he can, and often without much thought of the consequences. The tax, neverthe- less, was essentially a bad one, and had a depressing effect upon one of our greatest industries. The notion that the foreigner paid the tax was absurd. Equally ridiculous was the defence of the tax on the ground that it enables us to hoard our coal. We had better dispose of our coal while we can, for who knows whether some scientific invention on the one side, or an increase of the use of water-power or mineral oils on the other, may not in another generation greatly decrease the demand for coal ? We have all heard of the fate of old-maids who hoard their trumps. The reduction of the Tea-duty was also, we think, wise, for it is very doubtful whether the taxation of tea had not gone beyond the point where it was really lucrative. It is possible that the reduction in the amount of the tax may prove in the end to have very little reduced the total yield of the impost. Mr. Asquith's readjustment of the Tobacco-duties is not a matter of great importance either from the consumer's point of view or from that of the revenue, but we do not doubt that the complicated arrangements introduced by Mr. Austen Chamberlain threw a very unfair burden upon the trade, and that the alterations will put the Tobacco- duties on a sounder basis. For the reduction in the charges of the Parcel Post we have nothing but praise. We have always desired to see an increase in the direct supply of minor agricultural products through the post, but the obstacle in the way of this development has been the high charges of the Post Office. Under the reduced scale we hope that a very large number of farmers, small and great, will be able to do a lucrative business direct with customers in towns.
Though we realise that in the circumstances of the present year Mr. Asquith was not able to touch the Income-tax, we greatly regret that it should remain at its present high rate. Those who pay Income-tax unquestion- ably deserve an alleviation of the heavy burden which they have now borne for over five years. Again, it is not prudent finance that the Income-tax should stand in peace- time at a war rate. If unhappily we should again become engaged in war, it would be an immense advantage to the Chancellor of the Exchequer if he could put an extra fourpence on the Income-tax, and thereby raise an extra eight or nine millions a year, without having recourse to any novel fiscal developments, which are sure to bring commercial troubles and difficulties in their train. An eightpenny Income-tax, in our opinion, should be regarded as the normal peace standard, and an increase of that tax to a shilling, or even to eighteenpence, should be the first measure of war finance.
We have no objection to the inquiry by a Committee of the House of Commons into the possibility of graduating and differentiating the Income-tax, for it is obviously right that the House should every now and then conduct such inquiries. We trust, however, that the Committee will make its inquiries in a thorough and statesmanlike manner, and will not be led into making any hasty recommenda- tions. All proposals for graduation should, in our opinion, be regarded with special care and attention. In theory, no doubt, it is perfectly just that the men with incomes ranging from five or ten to four hundred or five hundred thousand a year should pay at higher rates than the men less blessed with a superfluity of the world's goods. We must not forget, however, that the object of a tax is to raise money for the Treasury, and not to do justice— or what is supposed to be social justice—on copy-book lines. But it is more than doubtful if any system of graduation can be devised which will not seriously injure the Income-tax from the Exchequer point of view. It has yet to be shown that if we adopt graduation we can continue to collect the Income-tax at the source. It is in the automatic collection of the tax, and before the income passes into the hands of the persons who enjoy it, that the strength of the British Income-tax rests. But obviously you cannot collect the Income-tax at the source on a graduated basis. Take, as a concrete example, a sum of £1,000 in- vested in Great Western Railway stock in the names of three trustees. It may well happen that the interest on that stock goes to a man with £50,000 a year ; but, save in exceptional cases, it is not possible to ascertain this fact. Therefore, though the dividends may be destined for a millionaire, they would have to be charged with Income- tax at the low, and not the high, rate. We do not, of course, wish to dogmatise too absolutely on this point, and are quite willing to consider any scheme that may be put forward which will combine graduation and collection at the source; but we are bound to express ourselves as sceptical as to the result. In regard to differentiation, we think it is far more possible that some working scheme may be devised. For example, though an income taxable at the source—that is, an income derived from capital—might be charged at one rate, it might be quite possible to charge incomes derived from professional skill or business ability at another rate. Take the case of a great doctor or lawyer making .210,000 a year by his professional skill, and also possessed of £20,000 of stock. It would not only be fair, but quite consonant with a due regard to the interests of the national Exchequer, to enact that on stock a man should pay a ninepenny Income-tax, whereas he should only pay two-thirds of the rate, or sixpence, on his professional income,—an income which dies with him. This, however, is not the moment for discussing plans of graduation or differentiation. It will be time enough to argue about them when the Commission produces its Report. At present- we merely wish to warn the 'public that they must not expect too much, and to urge them not to destroy one of the greatest and most useful fiscal instruments ever devised by human ingenuity in order to satisfy the abstract sense of justice which demands that the man with £300,000 a. year shall pay at a higher rate than the man with .21,000.
Before we leave the subject of Mr. Asquith's Budget we must express our very .deep regret that he should have given encouragement to the notion that Ireland is overtaxed, and unfairly and ungenerously treated by the British Exchequer. In reality, the very reverse is true, as may be seen from the following considera- tions. If Ireland is overtaxed, Irishmen must be over- taxed, for the taxes are not paid by sticks and stones, or by mountains, lakes, and rivers, but by human beings. But if Irishmen are overtaxed, it must be possible to produce cases in which it can be shown that Smith, Jones, and Robinson because they live in Ireland are making contributions to. the revenue which they would not make if they lived in England or Scotland. Now we venture to say, without any fear of contradiction, that it is absolutely impossible to produce any Irishman or body of Irishmen in this condition,— i.e., paying taxes not paid by Englishmen. If that is the case, what sense or justice is there in speaking of Ireland being overtaxed ? But though it is impos- sible to produce men who pay taxes in Ireland which they would not pay if they lived in England, it is perfectly possible to find thousands of Englishmen and Scotchmen who, because they live in England or Scotland, pay taxes which they would not pay were they living in Ireland. In Ireland men not only do not pay the Inhabited House Duty, but very few of the assessed taxes,—i.e., the taxes in regard to licenses for carriages, men-servants, armorial bearings, &c. For example, we have noted the case of a man of moderate income and with a moderate establish- ment in England, who yet every year pays nearly £20 to the revenue which he would not pay if he had the fiscal good fortune to be an Irishman. In truth, the belief that Ireland is overtaxed is a piece of paradoxical nonsense, and rests on the ridiculous assump- tion which we have mentioned above,—viz., that material things like land or houses or counties or provinces pay taxes, and not human beings. Ireland happens to be one of the less rich parts of the United Kingdom, and therefore it may seem, from a superficial view of the case, as if she bore an undue burden of taxation. As a matter of fact, poor English or Scotch counties, such as Wilt- shire or Sutherlandshire, could be shown to have quite as great a grievance, if it is a grievance, as Ireland. But though we must protest with all our vigour against the monstrous assumption that Ireland is any more unjustly treated than Wiltshire or Sutherlandshire, we fully agree that Ireland, and every other poor and backward part of the United Kingdom, has a right to claim that she shall have special indulgence in the matter of help from the central Exchequer. We would never dream of insisting that Ireland should only be entitled to an expenditure out of the Imperial . Exchequer consonant with her contri- bution. On the contrary, as Unionists, we believe that all parts of the United Kingdom should be equally considered, and that the rich parts should help the poor. But this is in effect what we do for Ireland. We pay for the whole of her police out of the Imperial Exchequer, we give her an administrative and judicial machinery which costs more per capita than the same machinery in England, and by a whole series of legislation such as culminated in the recent Laud Act we spend Imperial money on Irish development which we should never dream of spending in the case of England or Scotland. But though we do not grudge this expendi- ture, and would even continue it and, develop it wherever a sound case is made out, we consider that the claim that Ireland has a fiscal grievance against the rest of the United Kingdom should be rejected with firmness.
In conclusion, we note with satisfaction Mr. Asquith's hint that he intends next year to bring in a Licensing Bill which will deal with the waste of a great national meet to which we have often alluded. We mean the Waste Occasioned by bestowing on the holder of a license to sell liquor a share in a most valuable monopoly without charging him for that grant anything approaching its market value.
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