The Revenue Surplus
R. CHURCHILL is fortunate in his surplus of IVJL £18,394,463. Although it comes mainly from goal luck, and only partly from good management, it is nevertheless a welcome sign that several of the Fariable sources of revenue in the country . may be ex- pected to come to the rescue when the usual sources fail. Look at the matter how we may, the fact that there is a surplus when so many of the basic industries are still depressed is very gratifying.
The surplus of £18,394,463 is not exactly what it appears to be. £7,290,566 is due to the reduction of the Sinking Fund appropriation from £65,000,000 to 07,709,484. Most of the rest of the surplus is due to an unexpected harvest of Death Duties. These yielded £8,570,000 more than was expected. Another windfall comes under the heading of " Special " receipts, which brought in over £3,000,000 more than Mr. Churchill petted, and nearly £13,000,000 more than the year fore. This was the result of the happy transaction the currency note reserve.
On the other hand, it is encouraging that the total rdinary revenue amounted to more than £5,000,000 above Mr. Churchill's estimate. Income Tax was expected to produce less than in the previous year, and lthough it certainly did produce less the result was 4,720,000 more than Mr. Churchill estimated. The come Tax yield of the previous year was, of course, exceptional, because Mr. Churchill (by what a good any people called a trick of Budgeting) collected an xtra six months of the property tax under Schedule A. , Then allowances have been made for this it will be seen that the Income Tax, instead of really falling, has been a little more fruitful. Yet Super-Tax produced almost £4,000,000 less than Mr. Churchill estimated. Those who think that the country can bear even heavier direct taxation would do well to take this plain warning. There is a great danger that the amount of capital which ought to be kept free for the financing of industrial enterprise is being gradually reduced. It is a seductive cry that those must pay up who have plenty of money, but if the money of the very rich is, in practice, creating work— Dr at least creating more than would be created if the money passed to other hands—it would be silly to check industry for the pleasure of " punishing the millionaires."
Another very curious figure is the great increase in he revenue for stamp duties. This brought in over E3,000,000 more than was expected—a result due, of curse, to the extraordinary amount of speculation nn the Stock Exchange. Yet another notable figure is he fall in the Excise Duties of nearly £7,000,000. The Ugh duties on spirits and beer are having a progressive effect upon drinking. Possibly people are also finding obacco too expensive. But upon that point we remain in loubt; the spread of smoking among women makes it prob- dile that the total consumption of tobacco is increasing. Under the Sinking Fund Scheme, introduced by Mr. hildwin, £50,000,000 a year ought to be provided out if revenue for debt reduction. Out of last year's revenue 11r. Churchill has provided only about £44,000,000. io doubt he would excuse himself by saying that he xpected the debt to be reduced more handsomely than is actually happening from other sources, and that his hope was defeated by the unexpected rise in the rate of interest on Treasury Bills. We confess, however, that we are not quite satisfied with manage- ment which, in effect, defeats the intention of Mr. Baldwin's scheme, especially as the surpluses on the last two Budgets have been seized by Mr. Churchill although they ought to have gone automatically to the reduction of debt. A surplus which is taken as a matter of course for the outgoings of the next year no longer leaves one with the old feeling of security that was derived from self-contained Budgets not dovetailed into their prede- cessors and successors. A continuous automatic policy of debt redemption is one thing, but a continuous auto- matic policy of expenditure is quite another.
On the other hand Mr. Churchill must be given credit for having spent £6,000,000 less than he had budgeted for on Supply Services. This saving, it is true, does not look very imposing beside his promise that he would reduce expenditure continuously by £10,000,000 a year. Still, it is something, and a good deal more than was generally expected.
The buoyancy of the revenue as a whole encourages real hopefulness. If the results are so good when the old " heavy " industries are still feeble, may we not hope for even more than our old prosperity when the " heavies " add their prosperity to that of the new industries ? The new industries, such as the motor, electrical, wireless and chemical industries, must be thriving indeed. The distribution of insured workers throughout the country is an index of what has been happening, without a great many people being aware of the remarkable industrial transformation. South of a line drawn from the Trent to Staffordshire there now dwell nearly 50 per cent. of the insured workers. It is not that the heavy industries moving away from their natural sites near the northern coal fields. The new industries have been industrializing the south.
The Daily Express of Tuesday published some acid comments on Mr. Churchill's surplus by Mr. Snowden. We think that his remarks contained too much fault- finding, but we welcome his insistence on the importance of debt reduction. He complains that Mr. Churchill is injuring credit by failing to reduce debt sufficiently, and that he is financing current expenditure out of capital reserves. This is good hearing from Mr. Snowden, who was said to have capitulated to the demands of his party that a Surtax on investment incomes of over £500 a year should be earmarked for Social Services rather than for debt redemption. It is difficult to imagine any scheme which would make a greater hole in those capital reserves that are essential for the financing of industry.
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