§ I turn to the question of the remission of taxation. The concessions which I have announced have now reduced my surplus to £21,300,000, so that the possibilities are strictly limited. As far as indirect taxation is concerned, I was driven last year to remove the extra tax upon beer in order to safeguard the revenue. Much as I should have liked to have modified the Entertainments Duty, I am afraid it is impossible for me to contemplate this year any further remission of indirect taxation.
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Now I come to Income Tax. I should like to quote again from that article written by my predecessor in December last:
The Income Taxpayers, large and small, made by far the largest contribution to meeting the national emergency in 1931.
In fact, out of £81,500,000 of extra taxation which was imposed at that time, the Income Tax payers found no less than £57,500,000, or 70 per cent. of the extra taxation. Although their burdens were already heavy, they shouldered an extra 6d. on the standard rate; there were general reductions in the Income Tax allowances; and there was an addition of 10 per cent. to the Surtax charge upon the larger incomes. Moreover, all these increases of taxation took effect from April, whereas the cut only became operative in the autumn. I think, too, one must not forget that since 1931 many of these Income Tax payers have also suffered a further serious reduction in their incomes owing to the operation of the Conversion Loan. Therefore, the case for some remission is overwhelming, and the only question is what form it should take. In deciding upon the form, I thought I ought to consider the effect of any remission not merely upon the individual taxpayer, but upon the country as a whole. Looking at it from that point of view, I had no hesitation in coming to the conclusion that the relief which would confer most direct benefit upon the country, which would have the greatest psychological effect, and which would impart the most immediate and vigorous stimulus to the expansion of
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trade and employment, would be a reduction in the standard rate of Income Tax. Accordingly, I propose to remove the 6d. imposed in 1931, at a cost of £20,500,000 this year and £24,000,000 in a full year.