§ Now we turn to my Estimate of revenue on the existing basis of taxation. It is in the nature of things that the earliest items to reflect any change of activity in the country are the Customs and Excise Duties. Taking as I do a reasonably optimistic view of the future course of trade, I think I am justified in expecting a larger yield from nearly all the important items in Customs and Excise. First of all, however, there are one or two items which I must mention in which for special reasons I think there will be a decrease. In the case of sugar I must allow for a fall of £500,000 on account of increased supplies from home and Empire sources of production. I must also allow for a decrease in the case of duties under the Ottawa Agreements and Irish Free State Duties Acts. As everyone knows the purpose of the Ottawa Agreements Act was to increase inter-Imperial trade and in proportion as inter-Imperial trade takes the place of foreign trade so, of course, one must ex- 914 pect a smaller revenue from the duties that are imposed under that Act. In the case of the Irish Free State the reduction is due to the imposition of quotas in this country and to the fact that in several cases the Irish Free State Government has reduced the bounties upon its exports. However, these are exceptional cases and they do not amount to very much. In the case of import duties under the Import Duties Act, I obtained last year £22,800,000, which shows a substantial increase over the sum which I had estimated. This year I expect a further increase, and I put the yield at £24,000,000. Beer last year, after deducting about £2,250,000 which must be ascribed to the fact that a higher rate of duty was in operation before the 26th April, 1933, produced £56,600,000. I am advised that I must discount this figure in my calculations this year because we must not expect to have such thirsty weather as we had last year. All the same, I am sanguine enough to anticipate that we shall see increased consumption again this year. I put my estimate up on the existing basis of taxation to £58,400,000. Owing to the continued expansion of trade, we ought also to get a further increase in the produce of the oil duty and I have allowed for an extra £2,000,000 bringing the figure up to £42,700,000. I am also allowing for increases on tobacco, wine, tea, cocoa, dried fruit, matches, entertainments, liquor licence duties and import duties. Hon. Members will find full details in the White Paper. The total revenue which I expect to get from Customs and Excise adds up to £290,000,000.
§ When I come to the rest of the revenue I have to base my calculations upon an analysis of past facts and figures. Anyone can see that items like Crown lands, Sundry Loans and Miscellaneous Receipts are not greatly affected by an increase in the prosperity of the country. Even Estate Duties are not likely to be materially affected by a change in those conditions except in so far as there may be a variation in the value of stocks and shares. But very few people seem to realise that in the case of Income Tax and Surtax the revenue to be received this year does not depend upon any prediction of what the course of trade will be this year. It depends upon the profits and income of past years. There is indeed one special feature of this year 915 which forms an exception to the general rule. We know that this year we shall receive a full year's receipt from tax-papers with earned incomes from whom the Exchequer received only three-fourths of a year's produce last year on account of the smaller instalment of tax that was payable on 1st January. I estimated the cost of that concession last year at £12,000,000 and therefore I can count upon a gain of that £12,000,000 this year. But the main bulk of the revenue from Income Tax is that which is payable on 1st January on the assessment for the current year.
§ The assessment for the year 1934 will be based upon the profits of the year 1933. The Board of Inland Revenue, with the assistance of traders—I should like once more to express my obligations to them—are in a position to say with considerable precision what were the profits of 1933 upon which my revenue this year must depend. The great fall in profits which has been going on since the world depression set in ceased in 1933, but it did not cease early enough to affect the whole of the assessments for this year. Hon. Members are no doubt aware that different businesses make up their accounts to different dates. Some make up their accounts to the end of June or the end of September and assessments on them for this year will depend on the profits made during a year which ended as long ago as June or September, 1933. Similarly others make up their accounts to the end of December or to the end of March, and in these cases the year of profits would be the year which ended on the 31st December, 1933, or the 31st March, 1934. A careful examination of all these different accounting periods shows that during the first half of 1933 profits were still actually falling. It was only during the second half of that year that there was a recovery which counterbalanced the fall in the earlier half of the year and which enables me to budget for the first time since 1929 for no fall in the assessment under Schedule "D." I wish I could budget for a rise, but although the omens for the future are favourable, the ascertained facts for the year 1933–34—facts upon which my receipts for this year depend—preclude me from taking that course. I estimate my revenue from Income Tax at £240,000,000 916 as against £229,000,000 which I received last year.
§ I now come to Surtax. Surtax, of course, lags a year behind the Income Tax. The Surtax for the year 1934 is based upon the Income Tax income of 1933, but the Income Tax assessment for 1933 is based upon the profits and incomes of 1932. Therefore the yield of Surtax this year depends upon what happened in 1932 when profits were still falling, and I must allow for a further fall in the yield of Surtax. I cannot put it at more than £50,000,000. When, I come to Death Duties, I have already pointed out to the Committee that the very high figure of last year was abnormal and was due to one single very large payment. I cannot expect that again, and I put my estimate of the yield from Death Duties at £76,000,000. Stamp Duties, I think, should show further growth during the year, and I estimate that they will yield £25,000,000. The yield of Land Tax and Mineral Bights Duty is fairly stable at £800,000, and I do not put the yield from Excess Profits Duty and Corporation Profits Tax at more than £1,200,000.
§ My total Inland Revenue then, adds up to £393,000,000, made up of £240,000,000 from Income Tax, £50,000,000 from Surtax, £76,000,000 from Death Duties, £25,000,000 from Stamp Duties, and £2,000,000 for the rest.
§ Other heads of Revenue will give me £44,200,000. I put the Exchequer share of Motor Vehicle Duty at £5,200,000, which is the same as was received last-year. The Post Office Exchequer receipts, that is to say, the gross revenue less gross expenditure, I put at £14,000,000, which is an increase of £2,300,000 over the 1933 estimate, and £900,000 more than the actual receipt. If I deduct the payment of £2,000,000 to the Post Office Fund which I have already mentioned that gives me a net Budget receipt of £12,000,000 from the Post Office. Crown Lands Revenue I put at £1,220,000, and Sundry Loans at £3,800,000. My estimate for Miscellaneous Receipts is £20,000,000. This is £10,000,000 below my estimate of last year, but it will be remembered that last year's receipt was swollen by a special item of £10,000,000 from the 5 per cent. War Loan Depreciation Fund. 917
| SURPLUS. | |
| Adding up all these items the total estimated revenue for 1934–5 on the existing basis of taxation amounts to | £727,200,000 |
| The estimated ordinary expenditure I have already given at | £698,100,000 |
| and I am therefore left with a surplus of | £29,100,000 |
§ If there are any hon. Members who have allowed themselves to dwell too hopefully upon some of the rather wild guessing which has been going on, I am afraid that that figure may have been somewhat disappointing, but I think, when they have had time to adjust their ideas a little and make a careful examination of the particulars I have submitted to the Committee, they will see that there never was any foundation for the expectation of a phenomenal surplus this year. In making my calculations, I have allowed for substantial increases in all those items which can be expected to reflect quickly the increase of prosperity, such as Customs and Excise and Stamp Duties, but for the bulk of the revenue I have to bear in mind that it cannot be very materially affected this year by the better conditions of the country. The improvement will come in later, when, as I foresee, I shall be very glad of it in order to meet inevitable additions to our expenditure. After all, I do not think there is any reason why anybody should be disappointed. The sum of £29,000,000, if not dazzling, is at any rate a very substantial surplus. It is the largest for 10 years, and it is sufficient to enable me to begin the long awaited process of relief from the burdens and sacrifices of the last few years.