§ I next come to examine the prospects for 1950–51 on the basis of the existing taxation. Consolidated Fund Services will take £537 million, of which £490 million is for service of the debt. We shall continue during this year the policy of using any Budget or other surplus funds to pay off short-term debt.
§ The total supply expenditure for the year, as provided by the Estimates submitted to Parliament, amounts to £2,918 million, an increase of £137 million over the original Estimates for 1949–50, and of £81 million over the actual outturn of last year. The result is, therefore, a total estimate of expenditure above the line of £3,455 million.
§ Revenue on the existing basis of taxation is estimated for Customs and Excise at £1,510 million. The more important items in this total are as follows: beer and alcoholic drinks, £387 million; tobacco, £590 million; Purchase Tax, £295 million; Entertainments Duty, £46 million; oil, £68 million; betting, £25 million; Import Duties Act, £48 million and other duties, £51 million. There is no very marked variation in these from the actual receipts of last year. The total, as I have said, is £10 million less. Inland Revenue receipts are expected again to be much about the same as last year's 57 outturn, a total of £2,100 million against an outturn of £2,111 million.
§ As I stated earlier, the progressive increase in profits which had gone on for nine years came to an end in 1948, and we cannot therefore look to any increase in revenue from that source. It must also he noted, and this like all benefits is soon forgotten, that this year we have to meet the first instalment of the increase in the initial allowance for new machinery which was granted in last year's Budget, and which will this year amount to a sum of £40 million. On the other hand, individual incomes are likely to increase with increased productivity and production, so that taking all the factors into account we hope to raise £1,460 million by Income Tax, which marks a small increase over last year's outturn of £1,438 million.
§ Surtax should yield £120 million and Death Duties, which have not yet been fully affected by last year's increases, should yield £195 million. Profits Tax and Excess Profits Tax are expected to yield £270 million, a fall of £27 million compared to last year's outturn, which is mainly attributable to a further decline in Excess Profits Tax which came to an end three years ago. Stamps should give £50 million, and arrears of special contribution and miscellaneous duties £5 million.
§ It is pretty clear, I think, that we can no longer look for those large annual increases in Inland Revenue duties which have helped us so much with our finances over the last few years. Any further yield from these taxes can only come from increases in the total of national production. We must not overlook the fact, in this connection, that the effective rate of taxation upon money distributed as salaries and wages is much less than that upon profits. The shift which is now taking place away from the earning of large profits towards the payment of more money in the form of salaries and wages must therefore tend to curtail the amount of Revenue we can raise by the Inland Revenue taxes. This is a material factor in assessing our future capacity to raise the money required to meet a rising expenditure.
§ As regards other Revenue, I put Motor Duties at £56 million the same as received last year; surplus Stores, which are naturally decreasing rapidly in volume, 58 at £35 million compared to £79 million received last year; trading services at £85 million compared with £48 million last year. The reason for this is that we can look for further substantial receipts especially from the disposal of war-time purchases of wool, and on stocks of raw materials held by various controls on the cessation of Government trading. Miscellaneous receipts I put at £70 million compared to £78 million last year, which, together with £40 million for other smaller items, gives £286 million for other Revenue, and a grand total of estimated Revenue on the existing basis of taxation of £3,896 million.
§ As regards below-the-line items, receipts are put at £70 million as compared to £66 million last year, and payments at £520 million as against £553 million. The two largest items are £279 million for loans to local authorities, which I have already mentioned, and £100 million for war damage, which it will be noted still makes large demands on our resources.
§ The result is, therefore, to show, on the existing basis of taxation, an estimated above-the-line surplus of £441 million compared to last year's estimate of £470 million and an outturn of £549 million; a true revenue surplus of £411 million; compared to £492 million estimated, £518 million realised last year, and an overall deficit of £9 million compared to an overall surplus of £14 million estimated, and £62 million realised in 1949–50.