§ I now turn to the Revenue returns, as a whole. I cannot say they anywhere exhibit very great elasticity. In some respects, in view of the undoubted prosperity of trade, they are distinctly disappointing. As regards dutiable articles of consumption, tea and sugar have in each case very slightly exceeded the Budget estimate. For sugar there has been throughout the year a quiet and steady market, with an even level of prices, on the whole favourable to the consumer. The reduction of the tea duty by one penny was followed by an increase in the consumption of 4,500,0001bs. The year in tea has been a record one as regards imports, exports, and consumption. The great increase throughout the world in the demand, particularly for Indian teas, has raised the price, but there is little reason to doubt that but for the reduction of duty there would have been a still higher rise. Tobacco has not quite realised my expectations. Now I would say one word on what is really a more interesting item to the majority of the members of the Committee—the alcoholic group, in which there has been since 1899, as I pointed out last year, a progressive and formidable decline. Speaking strictly for the moment from the point of view of the Chancellor of the Exchequer, I am glad to observe that there are at last signs of a slight, but definite, reaction. The Excise receipts on beer and domestic spirits have exceeded the estimate 1179 by £150,000; the Customs receipts on wine by £60,000; and on foreign spirits by no less than £435,000, As compared with the actual receipts of 1905–6, the progress of the whole group shows in 1906–7 an increase of £494,000. The income-tax brought in a little more than the estimate. Our other two sources of revenue in addition to those with which I have dealt—namely, stamps and the Post Office—have fallen short of my expectations. The decrease in stamps of £200,000 is entirely attributable to the Stock Exchange and the shrinking in value of the securities which are there marketed. The receipts from deeds, bills of exchange, and companies' capital duty all show a very satisfactory increase. The check which has occurred to the normal growth of the Post Office revenue is more difficult to explain. The year 1905–6 was a year of unbounded prosperity for the Post Office; the receipts exceeded those of the previous year by over a million and were nearly half a million higher than the estimate which had been formed of them. In the four years preceding 1905–6 the average annual increase of the Post Office revenue was £670,000. For the year 1906–7 the estimated increase after allowing for the concessions promised in the Budget was £735,000; the increase actually realized was only £415,000. The causes to which the Post Office authorities attributed this comparative failure—for it is only comparative, not real—were, first, the less expansion in the demand for picture postcards, which have recently been a growing source of revenue, and secondly, the effect of the telephone in supplanting communication through the post. A great many people, particularly within the limits of the same town or district, who used to communicate by post, now speak through the telephone, and the revenue to that extent suffers. The third cause to which this comparative failure is attributed is the less rapid growth of revenue from telephone trunk lines. I ought to add the non-recurrence of a general election, as the general election largely stimulated postal revenue.
§ If hon. Gentlemen will now turn to the table showing the comparative revenue raised by the State for the year 1906–7 and the previous year they will realise that the revenue with respect to the Exchequer is not the only 1180 revenue for which the Chancellor of the Exchequer is responsible. He has also to make payments to the Local Taxation Account, which amounted in all for the year 1906–07 to £10,222,000. Of this there was derived from the surtax on beer and spirits £1,416,000; Excise licences, £4,122,000; and estate duties, £4,684,000. If you add this money to the Exchequer account of £144,814,000, it makes a total of £155,036,000. If for the moment we confine our attention to the revenue raised from taxes, adding the local taxation revenue to that which goes to the Exchequer, we shall see that instead of being, as would appear from the Table No. 2, only £119,830,000, the revenue receipts from taxes would be £130,052,000. I had also to provide during the year for capital expenditure amounting to £5,975,000, for which we borrowed £5,555,000, the difference being, made up out of balances. The total amount which had to be provided in the year was thus £160,591,000.
§ Another table (to complete the account for the year) shows the Exchequer balance-sheet. We began the year with an Exchequer balance of £10,451,000, and ended with a balance of £6,932,000. I ought to explain how the difference was made up. The balance was strengthened by a surplus revenue this year of £5,399,000. It was depleted by the issue of the old sinking fund of the previous year to the amount of £3,466,000; by a capital expenditure which was issued in excess of what was borrowed in the year amounting to £420,000; by some small sums £32,000; and then by the rather important item of Treasury bills, temporarily paid off under the Act of last year, amounting to £5,000,000. We took power in the Act of last year to do what previously we could not have done—namely, in the first quarter of the year, when our balance is large, not to renew the Treasury bills we otherwise should have renewed. We were previously in the ridiculous situation of going into the market to borrow money in connection with Treasury bills when the balance at the Exchequer was more than sufficient to meet our requirements. Therefore, we took power last year temporarily to drop those bills, and there has been a considerable saving in interest. For the moment the Exchequer balances are 1181 reduced to that extent. That is all I need say in reference to the finance of last year.