§ Let me now turn to the revenue side of the accounts. As regards Inland Revenue Duties, on the basis of the existing rates of tax I assume that the yield of Income Tax will be £605,000,000 in the current year. This is an increase of £81,000,000 over the past year, and is due mainly to the effect in a full year of the increased taxation imposed by the second Finance Act of last year. Some part of of the increase, however, is due to the increased wages being earned by workers in war industries since the national call for longer hours and special efforts after the fall of France last year. In computing the estimate, I had the advantage of receiving from traders forecasts of their profits for assessment in the coming year. As in past years, these forecasts have been very useful, and I am very grateful for this valuable assistance.
§ The effect in a full year of the increased rates of Surtax brought into force last year should result in an increase in the Surtax payable in the current year, and I accordingly put the estimate at £80,000,000. I place the estimate for 1311 Death Duties at £82,000,000, and that for Stamp Duties at the same figure as for last year, namely, £14,000,000. The assessment and collection of Excess Profits Tax at the 100 per cent. rate are now in full operation, and I estimate the yield of this tax, together with that of the National Defence Contribution, at £210,000,000. Other Inland Revenue Duties are put at £1,000,000. Thus the total estimate for the Inland Revenue Duties on the existing basis of taxation is £992,000,000.
§ For Customs and Excise, I am putting the estimate for 1941–42 at current rates of duty at £578,000,000, which is £49,000,000 more than the actual revenue of 1940–41, though considerably less than I should have expected if I could simply take last year's duties on a full year's basis. The Committee will appreciate, however, that Customs and Excise Duties are especially affected by the various controls and restrictions on public demand.
§ I do not want to spend time discussing each item in detail, but perhaps I may illustrate my point about the damping effect of these controls on my revenue by reminding the Committee that in consequence of the Government restriction on distillation the supply of whisky to the home trade has been cut by the distillers to 65 per cent. of pre-war, as against 80 per cent. last year; that tea and sugar are strictly rationed; that the supply of un-manufactured tobacco for use in the home trade has been curtailed; and that imports of matches have practically ceased and that the home supply is controlled. For these and similar reasons, the detailed estimates of revenue for Customs and Excise for 1941–42 are either lower than the revenue actually received last year, or show smaller rises than a full year's operation at current duties would otherwise have indicated.
§ The only other detailed estimate that I propose to mention is that for Purchase Tax. During the opening phase of the tax the shops were more or less stocked with pre-tax goods, and no doubt consumers likewise had anticipated the tax in many directions; so last year's revenue could not be regarded as adequately representing the flow of revenue after the tax had become fully productive. A full year's revenue would, therefore, in 1312 normal conditions, be expected substantially to exceed three times last year's receipts of £26,000,000. But conditions are not by any means normal. Apart from such disturbing effects as war has had on retail trade, the revenue here, too, is affected by yet another control, the Board of Trade Limitation of Supplies. In the circumstances, I think that this year's estimate for Purchase Tax should be put at £70,000,000. The Committee will find further details of the Estimates in the White Paper.
§ For the rest of the Revenue I put Motor Vehicle Duties at £39,000,000, Post Office net receipts at £3,250,000, and other items at £23,750,000, making £66,000,000 in all. The total estimated revenue for 1941, on the existing basis, is, therefore, £1,636,000,000.
§ In the estimates of revenue that I have just given, I have not included anything from the contributions and premiums payable under the War Damage Act. I propose, for this year at any rate, that out of receipts from those sources an amount equal to the expenditure on war damage during the year shall be taken in as revenue, and any balance, whilst still taken into the Exchequer, will be accounted for outside the Budget. The expenditure will be met out of the Vote of Credit, and in view of the difficulty of estimating the amount, as well as that of some of the receipts under the Act, I think the arrangement I have suggested would be most convenient.