§ I turn to the standard rate of Income Tax. I have reached the conclusion that 10s. in the £, falling as it does, subject of course to the allowances I have been speaking of, on all Income Tax payers from the richest to the poorest, is too high a rate to be carried over into peace time. I propose, therefore, as from the beginning of next financial year, the first complete year of peace, to reduce the standard rate by 1s., from10s. to 9s. in the £ But if I were to do this and no more, I should be treating the larger Income Tax payers too favourably, relatively to the smaller, since a reduction in the standard rate of one-tenth, which is what I propose, would relieve every Income Tax payer of one-tenth of his present liability. This would mean much larger reliefs for the big man than for the small.
§ Therefore, I propose two further changes. First, I propose a new graduation of the standard rate designed to make a further reduction of tax on the lower level of taxable income. At present the first £165 of taxable income pays 6s. 6d. in the £, which is about two-thirds of the standard rate. The rest pays 10s. I propose that in future the first £50 shall pay only at one-third of the standard rate, and the next £75 at only two-thirds of the standard rate. This means that next year 1894 the first £50 of taxable income after allowances have been deducted, will pay at 3s. in the £, the next £75 of taxable income will pay at 6s. in the £, and the remainder will pay at 9s. in the £.
§ Finally, I propose to raise the Surtax scale, so as to recover from the richer taxpayers the part of the standard rate relief, which otherwise would give them too much compared with the rest of the community. One of our great achievements on the Home Front during the war, with the aid of a series of war Budgets, has been a notable advance towards economic and social equality. Everybody has recognised that in war time this was right. If it was right for war time, it is not wrong for peace. We must not give ground now, when the men who won the war are coming home. On the contrary, we must make a further advance towards greater equality.
§ The Surtax is levied on a rising scale on successive slices of income above £2,000 a year, starting at a rate of 2s. in the £ applying to the first £500 slice, and reaching a maximum rate of 9s. 6d. which is charged on all income in excess of £20,000 a year.