§ I now return to the problem of finding the necessary additional revenue to cover the prospective deficit of £37,366,000. Such a problem must necessarily be a grievous anxiety to any Chancellor at any time, but my task is exceptionally hard since the great depression in world trade which has produced the Budget problem is essentially the strongest obstacle to any increase in the rate of taxation. I have not lacked advisers in my difficulties. The party opposite would find an easy solution of this problem by the imposition of duties upon everything. From these duties a sum of £50,000,000 to £100,000,000 a year would fall into the lap of the Exchequer 1403 as a gift from Providence, like the Israelites' manna dropped down from Heaven. No one is to pay these duties, and, incidentally, they will be levied on goods which Protection has prevented from coming into the country. A revenue tariff is advocated as the first instalment of a high general protective tariff, and so far as it produces revenue, as a means of transferring taxation to the general consumer for the relief of the direct taxpayer. It is not to be accompanied, we are told, by countervailing Excise Duties, but it will levy an Excise Duty on every article of home production, with this difference, that this Excise Duty on home production will not come as revenue to the Exchequer, but will be pocketed by the manufacturers in increased prices.
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We are asked by this proposal for a revenue tariff to go back to the pernicious taxation methods of a century ago, which were graphically described by William Pitt when he said:
There is a way in which you can tax the last rag from the back, and the last bite from the mouth without causing a murmur against heavy taxation and that is by taxing a large number of articles in general use. The tax will pass into the price of the article. The people will grumble about high prices and hard times, but they will never know that the hard times are caused by heavy taxation.
A revenue tariff, apart from its Protectionist object, is a means of relieving the well-to-do at the expense of the poor, and is an indirect method of reducing wages. I shall never be a party to any such imposition. Taxes which would reduce the main consuming power of the masses of the people, apart from all other considerations, must be harmful to trade, and I have explained on several previous occasions my desire to avoid, if possible, all forms of taxation which, whether from the economic or the psychological point of view, would have a depressing effect on industry, and which might retard recovery in trade and employment. Moreover, it is only too clear that in many directions increased rates of taxation would at this time produce a disappointingly low increase in yield. It will be obvious to the Committee that I shall have to propose additions to taxation. On the other hand, the present problem is largely a temporary one. I regard this Budget like a war Budget
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as one dealing with a temporary emergency and justifying temporary measures. A revival of trade, when it comes, will be followed by an expansion of revenue and by a reduction on the expenditure side of the account in respect of unemployment.