§ For the reasons that I have given to the Committee, among others it is not possible for me to reduce the rate of Income Tax. But I ask the Committee to believe that I have not been insensible to the plea which has been put forward that something should be done to revive the flagging spirits of the nation and that the extraordinary efforts made by the taxpayer last year deserve some recognition. I do recognise that when the taxpayer at the beginning of 1932 was faced, not only with a rise in the rate of his tax, but also with the requirement that in January he should pay three-quarters instead of half, and that in the four quarters of the year he would be called upon to find five quarters tax under Schedules B, D and E, he was given a task so heavy that nothing but a strong sense of duty to the country could have enabled him to carry it through. I particularly sympathise with those living on comparatively small incomes to whom this payment of three quarters in one lump in January comes at a particularly difficult time.
§ Looking over these things, I reflected that if only it had been possible for me to reverse the procedure of 1931–32 and to revert to the old half-yearly system, so that the taxpayer under these three Schedules would only have to pay half the tax, instead of three-quarters in January next, we should have afforded him a much-wanted relief and would, moreover, have released a substantial sum, which, by its circulation, might have done something to stimulate and encourage trade and industry. I went so far as to make some investigation as to the cost of a plan of that kind. I found to my dismay that it would involve a loss of revenue of £12,000,000. It was true that it would not be a genuine loss but would only be a postponement of revenue, but, then, as I have told the Committee, I had at my disposal only this meagre sum of £3,250,000. In those circumstances, I recalled the old Biblical story of how Abraham in need of a sacrifice to save the life of his son Isaac looked round and, behold, there was a ram caught by the horns in a thicket. I looked round and I found the ovine sacrifice that I required.
§ There was attached to the 5 Per Cent. War Loan a Depreciation Fund which under the prospectus of the 3½ Per 63 Cent. Conversion Loan is no longer required. The amount of it is £10,000,000. I propose to transfer that non-recurring asset to meet a non-recurring loss of revenue and thus, without transgressing any of the canons of sound finance, I am able to restore the half-yearly system of payment under the three Schedules I have mentioned. The taxpayer having paid one quarter's tax this July, will only pay one-half in January, thus receiving in this year a relief equal to one-quarter of the tax. This benefit will inure to 2,750,000 taxpayers and will come at a time of year when I think it will be most welcome.
|I am now able to strike my final balance. The Estimated Revenue taking into account the changes I have mentioned and adding the Depreciation Fund is||£698,777,000|
|And the Estimated Expenditure is||£697,486,000|
|Leaving me with a surplus of||£1,291,000|
§ As to the future, I will not be rash enough to prophesy. In what can be done at home we have at least made a good beginning. We have re-established confidence; we have provided cheap and plentiful money and low interest rates for long-term borrowing; we have given our industries fair play in the home market, and we have begun a reorganisation of agriculture which has already inspired our farmers with new hope. As far as possible we have striven to make sterling a useful instrument of international currency under conditions convenient for our trade. We have already 64 expressed our intention of proceeding with measures of internal development wherever we can find useful opportunities of extension. But I have not concealed my own feeling that the most hopeful prospect for any considerable advance towards prosperity lies in collaboration with other nations. The very success which this Government has achieved, has assigned to us a part second in importance to none in collaboration of that kind. It is in order to prepare the way for a common understanding by direct contact with the head of the State, that the Prime Minister has accepted President Roosevelt's invitation to visit him in Washington. That his mission, undertaken with a full sense of his responsibility for the welfare of this country, may prove fruitful in establishing a clearer perception among the nations of the possibilities of common action for the benefit of the world, will be, I know, the earnest prayer of every Member of this House, to whatever party he belongs.