§ The consuming power of the people is maintained. It is more than maintained, it is increasing. It is increasing faster than the population, but it is not increasing very rapidly; it is not increasing in any remarkable manner. The character of the consumption of the people has been affected by the high taxation on beer and spirits. Both show a decline on Budget: estimates.
§ Mr. CHURCHILL
Beer shows a small increase in consumption over the previous year, but spirits have again fallen—
§ Mr. CHURCHILL
—and I must budget for a further fall in the year now beginning. This change is, no doubt, largely due to the extremely high taxation in force on these articles. It is also due, though to an extent which cannot be precisely determined, to changing habits and competing interests in the general life of the nation. The reformer may rejoice, but the revenue suffers. On the other hand, tea, the cocoa group, and sugar show healthy compensating 1688 expansion. The tax on tea is actually lighter than it was before the War, and the consumption has responded to the relief. Sugar, above all, has grown and thrived. The large reduction effected in the sugar tax by the right hon. Gentleman the ex-Chancellor of the Exchequer, combined with exceptionally cheap world prices, have enabled the population to consume last year, for the first time, a larger quantity of sugar per head than before the War. My estimate this year assumes a consumption from foreign, Imperial, and home-grown sources nearly one-fifth greater—that is to say, 1,740,000 tons against 1,460,000 tons—than only three years ago. In this total homegrown sugar has played its part. This year it will cost the Exchequer £2,750,000 in subsidy, and a loss of revenue of over £500,000 more, but it is expected to produce over 130,000 tons. That is a real achievement; it is a very expensive one.
Tobacco, I am glad to say, more than holds its own. Perhaps it may prove to be the last stronghold of the male population of the twentieth century. In spite of high taxes. and, I must add, high profits, the consumption of tobacco has substantially increased in the past year, and I hope for a further modest increase in the present year. However, speaking generally about the Customs and Excise, I feel bound to say that they show only moderate resiliency. They are increasing steadily, they are increasing healthily, but they are not increasing as much as one would have expected, in view of the gradual improvement in industrial conditions. It would seem, also that the immense sums paid by the National Exchequer in social services for the mass of the people have tended to average the effect of good and bad times as far as the Customs and Excise revenue is concerned. We have to look forward to smaller fluctuations in that revenue. We have fallen short by £1,000,000 of the very exact estimate of Customs and Excise which was made last year; and in budgeting for a moderate general increase this year. I shall hope to be equally accurate, and even more successful.
When I turn to the Inland Revenue, we see the national position revealed from a different angle. But, although the angle is different, the impression of the picture is the same. The nation is richer 1689 this afternoon than it was a year ago. The profits on which future calculations of Income Tax may he based show an increase, a substantial increase, but not so much as I had been inclined, even a few months ago, to hope. While the general trade of the country is steadily improving, while important sections of that trade are in an extremely prosperous condition, while very large profits have been made in rubber and in tin, commodities so important for our exchange position: while all this is taking place the basic industries of the country, those, that is to say, which employ the largest number of work-people, and require very large amounts of rateable property, nearly all continue obstinately depressed under their heavy burdens. The picture, as I said some time ago, is not black. It is not grey; it is piebald, and, on the whole, the dark patches are less prominent this year than last.
The estimate of the Inland Revenue has rivalled that of the Customs and Excise in exceptional accuracy. In fact, it is only £1,000,000 wrong in the enormous total of £428,000,000. But that £1,000,000. again, is wrong on the wrong side The details of the Inland Revenue show their customary variations. If the Committee care to consult the Blue Paper, which, in colour, at least, is almost indistinguishable from the White Paper, they will find in Table 2 the details of Inland Revenue. The two moribund taxes practically balance each other. Excess Profits Duty is £2,000,000 less than the Estimate, and the Corporation Profits Tax is £2,500,000 more. Income Tax is £2,500,000 less than the Estimate, but that is partially offset by the improvement in Stamps. The most striking feature of the Inland Revenue is presented by the Death Duties and the Super-Tax. Last year I reduced the Super-tax, and I increased the Death Duties by equal amounts. Yet the Death Duties are £5,250,000 below the Estimate, and the Super-tax is £5,250,000 above it. What is the explanation? It is not, unhappily, the explanation which we should all have welcomed, namely, that an increase of taxation, at this point in the scale, produces a decrease in yield, and, conversely, a decrease in taxation produces a corresponding increase in yield. No, Sir, I cannot say that. The increase of Super-tax is due to 1690 stricter and more efficient collection, and the overtaking of arrears. These two factors have powerfully reinforced the real increase. On the other hand, the falling off in Death Duties is not shown in that middle class of estates which, last, year, was made the subject of the increased duties. It has mainly occurred in the very large estates of over £1,000,000 in the aggregate, and in these a serious deficiency has manifested itself. Whether this is due to an exceptional wave of good health and longevity among millionaires, or to the habit of dividing estates in the lifetime of owners, and to other methods of avoiding the high scales of taxation, are matters which, while they are being watched with keen attention, had better await the experience of another year.
The non-tax Revenue shows in the field of Miscellaneous Receipts, both Ordinary and Special, a substantial advance upon the Estimate. When I budgeted last year for£30,000,000 of Miscellaneous Special Receipts, the right hon. Gentleman opposite was inclined to think I was over sanguine. In fact, however, no less than £37,000,000 has been realised, including £10,250,000 from German Reparations. When to this is added £3,000,000 increase on Miscellaneous Ordinary Receipts, and £2,000,000, the first instalment of the Italian Debt, together with one or two small items, the non-tax Revenue exceeded by more than £13,000,000 the Estimate., making a surplus of total Revenue over the Estimate of £11,000,000. In fact, but for the Coal Subsidy, in respect of which we have paid £19,000,000 in the past year, we should have realised a net surplus of Revenue in spite of all the increased expenditure of nearly £5,000,000. Coal—and coal alone—has converted this into a, deficit of £14,000,000. That deficit would, in the normal course of events, have gone to swell the total of our Floating Debt, but one of the results of the Conversion Issue, which I effected last autumn, has been to fund this addition to our Debt. It is now actually funded, and there, for the moment, but only for the moment, I leave this deficit of £14,000,000.
The position revealed by last year's Revenue figures is not so good as it, looks. Although we may expect Reparations and payments on account of War Debts to swell the Revenue in future years, there 1691 is no doubt that the Special Receipts, which have played such a large part in our present finance, will undergo heavy, continuous diminution. I have to count this year, on this head alone, upon £11,000,000 less than was yielded last year. And this blunt fact emerges—The tax Revenue, our staple, on which we must rely, has produced no windfall, no unexpected advantages, indeed, it has fallen slightly short of the Estimate, while the non-tax Revenue, on which we last year thrived, is about to undergo severe progressive contraction. To this contraction we must add the heavy pending loss through the drying up of the moribund taxes, and of the extra cost to the Revenue of the reductions in direct taxation made last year. When, therefore, we contrast, on the one hand, a revenue which in its permanent branches is barely holding its own with the strong swelling tide of expenditure on the other, the outlook is somewhat bleak. That is the general position of our finances, as revealed by the experience of last year.