HC Deb 11 April 1927 vol 205 cc73-6
The CHANCLLOR of the EXCEQUER (Mr. Churchill)

Now I turn to the Revenue of 1927. The task of framing the Estimates of Customs and Excise in the present year has been exceedingly difficult. The Revenue for the past year is of very little value as a guide. The year 1927 should be better than 1926, assuming there are no further upheavals, but will 1927 prove better than 1926 would have done had there been peace in industry? After many inquiries, we have formed the opinion that, apart from Spirits, we may reasonably look forward to 1927 as a year a little better than 1926 would have been had there been no dispute. It is on this assumption that I put Customs and Excise Revenue at £247,000,000.

Two subjects of taxation call for special notice, both merry in nature but doleful in mood—Betting and Whisky. As to Betting, I know of no reason to alter the Estimate of £6,000,000 given last year for a full year's yield of the Betting Tax. It was made as a speculative estimate, and a speculative estimate it remains. I am sure that the House of Commons, which carried this tax by overwhelming majorities, will show itself determined that the tax shall have a fair trial, and that we shall be able to measure the results after it has been in operation during the flat racing season. As to Spirits, year by year I am confronted with the necessity of furnishing a Spirit estimate substantially less than the one before. In spite of the fact that in last year's estimate I allowed for a drop of over 1.7 millions, the out-turn of the year failed to reach the estimate by £4,750,000. The shortage is due partly to the troubles of last year, and partly to the postponement of clearances in the vain hope that a reduction of duty was in contemplation.

Viscountess ASTOR

Hear, hear!


I have great regard and respect for the Noble Lady, but I do not think we are likely to learn much from the liquor legislation of the United States. After conceding some gain to 1927 from the postponements of 1926, I am still forced to allow for a decline of 1.2 millions below last year's estimate. It is quite clear that the present rate of 72s. 6d. per proof gallon, imposed at the time when the consuming power of the country was at its height, has resulted in a steady decline in consumption, and there are no signs that the bottom has yet been reached. The, moral effect may be cheering, but possibly deceptive. I have been told that various queer concoctions, baffling in some cases the terrors of our most detestable denaturants, have replaced in part the consumption of the national product, famous and welcome all over the world. I shall continue to examine whether any means can be found of mitigating the continuous fall in revenue, while at the same time taking no action injurious to the community. I am bound to state, however, that I am not hopeful of a solution.

Coming to the estimates of direct taxation for 1927, the conditions of the moment and the transfer to the basis of the preceding year make a trustworthy estimate of the yield of the Income Tax exceedingly difficult. Last year I estimated Income Tax at £254,750,000. Having regard both to the over-estimate which I then made, and to the loss from the Coal Dispute, I cannot put the Income Tax of 1927 at more than £232,000,000. I see that the right hon. Gentleman the Member for Colne Valley, in a forecast which he gave, placed it at £230,000,000, and I think it is very remarkable that, without any official information, his own private calculations should carry him so near the mark. A falling off of this amount is a very grievous fact, and one which no previous Chancellor of the Exchequer of whom I know has been called upon to face. On this basis I have to estimate for a decline of nearly £23,000,000 upon the estimate of last year, and that in spite of the £4,250,000 carried over. I estimate the total of Inland Revenue duties for 1927 at £393.7 millions, made up of £232,000,000 Income Tax, £67,500,000 Death Duties, £25.7 millions Stamps, and £62,000,000 Super-tax. The remaining £6,500,000 is provided by the dying gasps of the Excess Profits Duty and the Corporation Profits Tax, and by the Land Tax and the Mineral Rights Duty.

In the field of Tax Revenue there is only one bright spot. The receipts from the Motor Licence Duties are advancing, in Mr. Gladstone's phrase, "by leaps and bounds". In 1925 they were £18,000,000, in 1926 they were nearly £21,500,000, and in 1927 I estimate them at no less than £24.1 millions. This brings the total Tax Revenue to £664,800,000. The total non-Tax Revenue is estimated at £132,050,000, made up as follows: Post Office, £62,000,000; Crown Lands, £1,050,000; Sundry Loans, £23,500,000; Miscellaneous Ordinary Receipts, £18,500,000; Special Receipts, £27,000,000. The total revenue on the existing basis therefore amounts to £796,850,000.

5.0 p.m.

Let us take one sweeping glance backwards over the finance of the past two years. Since the right hon. Gentleman the Member for Colne Valley was responsible for our finances, I have added to the current revenue £16,000,000 by Luxury, McKenna and Safeguarding Duties. We have derived from the Road Fund and the Post Office an additional £18,000,000 of revenue. The receipts from Reparations and Debt settlements have increased by £13,000,000. The improvement in Super-tax, apart from remissions, has amounted to £11,000,000, and other sources of revenue have shown increases amounting to about £15,000,000. Thus there has been in three years a total increase in revenue of £73,000,000. Against this we have had to face £26,000,000 of loss of revenue through the lag of tax remissions granted by the right hon. Gentleman the Member for Colne Valley and his predecessors. Our resources have been depleted to the extent of about £9,000,000 by the continual diminution of the special receipts from the sale of War stores, etc., and I myself have remitted, on balance, £35,000,000 of taxation. But for the Coal Trouble, these remissions would have been fully justified, and the revenue would have expanded to meet all needs. As things have turned out, the loss from the old revenue has been replaced by new, and the total revenue has not materially changed; it is, in fact, little more than £2,500,000 above the estimate of 1924. The present Government have met their own new expenditure by their own economies. The automatic expenditure has increased by £28,000,000, and I am left with the prospective deficit of £21,540,000.