§ I now come to the peroration of the Budget, speech new taxation. There are different views as to the method which should be adopted, as to the general principles which ought to guide us in levying taxation. In effect, however, I 705 think every sensible man will agree with this principle, that it is our duty to levy as much taxation, now, to make us bear as much of the current expenditure of the War, as can be borne by the nation without weakening us in the conduct of it. That, I think, is the principle—though there will be different opinions as to the application of it. I, for one, am strongly of opinion—and have throughout acted upon it—that we could hardly make a greater mistake than to forget that the War has to be financed to-day, that we must not only think of the position afterwards, and that, therefore, it is absolutely essential that we should not levy taxation on such a scale as to cripple every industry and every financial institution in this country, with the result that it would be impossible to obtain by voluntary means the money it is necessary to borrow to carry on the War. It might easily be impossible to obtain it by any means which would not shake to the bottom the whole foundation of our national stability.
§ There is another consideration. Up bill now, in imposing taxation, I think everyone has been struck with the readiness with which all classes in the country have been prepared to pay. Nothing could be worse than to put taxation on any class on a scale which seems to them in excess of the needs of the situation. For that reason we really must be moderate in the amount which we raise by taxation. There is, however, another thing. Even from the point of view of borrowing it is necessary that the lender should have reason to believe that the security is good. For that purpose it is essential that we should show, by the amount of taxation which we raise, that the country is in a position to bear the burden of additional loans. It is on that principle, as I have said, that I have tried to act.
§ There is something else I should like to say. Last year I found—and I am sure my predecessor also found it—that on the whole the House of Commons recognised the need for drastic taxation, and was prepared to support the Government in their proposals to a greater extent, I think, than was ever the case in times of peace. I hope, and I expect, that the House of Commons will take the same view this year. But that lays a special obligation on the Government, and on the Chancellor of the Exchquer, to make sure—or at least as sure as it is in their power to make that the proposals are in themselves just and fair.
706§ Not only I myself, but all those who have assisted me, including my hon. Friend at my side (Mr. Baldwin), have the conviction that the proposals I shall submit are proposals which, after examination—in connection with which we have spared no trouble—are the most equitable that it is in our power to propose to the House of Commons. I shall not take up the time of the House by describing the different forms of taxation which we have considered and rejected. I will, however, say a word about one. It has been proposed in many quarters—and, indeed, has been urged in many quarters—that we should increase the amount of the Excess Profits Duty.
§ Colonel W. THORNEHear, hear!
§ Mr. BONAR LAWI have carefully considered that. I do not think it necessary for me to give the House the reasons—they are many—which have induced me to leave that source of revenue untouched. I will state one reason which I think is adequate. My advisers have told me, after examination, that it is their deliberate opinion that, if the rate were raised still more, we could not possibly get more, and the result would very likely be less revenue. There is, however, one thing in connection with the Excess Profits Duty which I propose to do, and that is to stop a leakage which was not intended in the Act. It has been found that in some cases goods which, if sold in the ordinary course, would be liable to the Excess Profits Tax, have been sold either by selling the whole business or in winding it up, and have so escaped. I have looked into that matter carefully, and I consider that that should stop, and, if my proposals are adopted, a Resolution will be carried which will put an end to that from to-day. I dare say there are many hon. Members of the House who would have liked me to have made this proposal retrospective. I have considered that, and I have decided against it [HON. MEMBERS: "Hear, hear!"] That course may be more popular, but there is the strongest objection, unless there is actual need, to making taxation of this kind retrospective. I have looked into it, and taking into account the extent of it, and also the extreme difficulty of getting at the right people and doing it at the right time, I have come to the conclusion that it would not be wise to make it retrospective.