The Budget was introduced (April 18) in a speech of great lucidity and candour by the Chancellor of the Exchequer, who, the House having gone into Committee of Ways and Means, began by saying that while he could not, as in recent years, congratulate the country on increasing prosperity, he did not think that there had been any backward step. Whilst his estimated exchequer revenue for 1900-1 was 127,520,000l., the actual receipts were 130,385,000l., or 2,865,000l. more than the estimate. This excess was, however, mainly due to the forestalments of dutiable articles before the Budget, and had it not been for those forestalments his estimate of revenue would barely have been realised. Whilst he thought that the consuming power of the people had been maintained, there was no evidence. of its expansion. The Customs receipts showed increases on tea and tobacco, but wine had produced less than his estimate. The receipts under the head of Excise realised almost exactly his estimate. Beer, however, showed a decrease, due possibly to a diminished spending power and to the absence of so many beer consumers in South Africa. Dealers in beer had provided for the additional taxation imposed last year, not by raising their prices, but by doing what was euphemistically called "lowering the gravity." The experience of the past year showed that the limit of profitable taxation on spirits had now been reached. The yield from the death duties had almost exactly realised the cautious estimate which he had formed. He had better expectations of the yield from these duties next year. The revenue derived from the stamp duties was very unsatisfactory. This he accounted for by the effect of the prolongation of the war upon Stock Exchange business. The yield from income tax was most remarkable, amounting to nearly 27,000,000l., or 1,120,000l. more than his estimate. twelve years the assessable income of the country had increased by 120,000,000l. From the Mint there had been exceptional receipts. As to the telegraph receipts, they contrasted very unfavourably with the expenditure. The total exchequer revenue for the year was 130,385,000l., or, including the amount paid into the Local Taxation Fund, rather more than 140,000,000. In Sir M. Hicks-Beach proceeded to say that his estimate of expenditure last year was 150,061,000l.; but since the introduction of his Budget there had been large supplementary estimates for the Army, the Navy, and the Civil Service, and the total exchequer expenditure for the year amounted to 183,592,000l., more than one-third of the amount being for war expenditure in Africa and China. There was, therefore a deficit last year of 53,207,000l. This was provided for by war loans, Treasury Bills, Exchequer Bonds, and temporary borrowings on Ways and Means. Including the amounts paid into the Local Taxation Fund, capital expenditure on naval and military works, disbursements to the National Debt Cominissioners, and other outgoings, the total amount provided by the State last year came to the enormous sum of 198,246,000l. The dead-weight National Debt, which on April 1, 1900, was 628,979,000l., was now 687,932,000l., the increase being due to the cost of the war. Turning to the current year, the Chancellor of the Exchequer proceeded to deal with the estimated revenue and expenditure, the results of which were as follows: Sir M. Hicks-Beach said that his estimate of exchequer expenditure was 187,602,000l., and his estimate of revenue from taxation 111,200,000l. Adding to this the non-tax revenue he obtained a total of 132,255,000l., which left him with a deficit of 55,347,0001. Explaining his proposals for meeting this. deficit, which was at first sight a war deficit, he said he never would agree to defray the whole cost of a war by means of loans. A reasonable amount of such expenditure, he held, ought to be charged on the taxpayers. But the House had not to face only the war expenditure, but the greatly increasing ordinary expenditure of the country. It was universally admitted that we ought to have a strong Navy, and it was agreed that reforms must be introduced into our Army; and reforms cost money. Demands of all kinds involving additional civil expenditure were being constantly made in Parliament-of this Sir M. Hicks-Beach gave various illustrations-and no party, he maintained with earnestness, was in favour of economy for economy's sake. Therefore, it was necessary in dealing with our financial system to widen the basis of taxation, and he was prepared to ask both direct and indirect taxpayers to bear their due share of the burden. The income tax the Chancellor of the Exchequer proposed to increase by 2d., bringing it up to 14d. The addition was estimated to yield ultimately 4,700,000l. Turning to indirect taxation, he adduced reasons for not augmenting the taxes on spirits, beer, wine, tea or tobacco, and combated the arguments of those who would impose Customs duties on manufactured goods or who would tax bicycles, or raise money in other ways that would disorganise the whole of our social fabric without benefiting the revenue materially. What was wanted was a tax which would be largely productive, and it must, therefore, be levied on some article of universal consumption. It was upon sugar that he proposed to put a duty. That article was taxed in every country in Europe and in the United States, and the tax would be in no sense a protective duty. In the interests of economy and peace it was desirable that the labouring classes as well as all others should bear part of the burden of the cost of war and of preparing for war. After discussing the probable effect of the imposition of the duty on the price of sugar, he stated that his intention was to put a duty of 4s. 2d. per cwt. on refined sugar, the duty diminishing gradually on the different kinds of raw sugar according to the amount of crystallisable sugar contained in each of them. He saw no reason why the duty should increase the retail price of sugar by more than a halfpenny per pound. West Indian sugar would not be excepted from the operation of the duty. Having explained in detail the manner in which the duty on raw sugar would be assessed, he said that means would be taken to treat fairly the different interests concerned in the sugar trade. For molasses, which could not be tested by the polariscope, the duty would be 2s. per cwt. On glucose he contemplated putting a duty of 1s. 8d. per cwt. He did not anticipate that manufacturers who used sugar in their business would be at all seriously injured by his proposals; and, of course, import duties would be placed on manufactured articles imported from abroad, and drawbacks would be allowed on articles exported from this country. He estimated that the tax would produce this year 5,100,0001. The Chancellor of the Exchequer's other leading proposal was to place an export duty of 1s. per ton on coal. This was a novel proposal, no tax of the kind having been imposed for fiftyfive years. He quite recognised that in aiming at revenue they must not sacrifice trade, but for reasons which he gave he did not believe that the coal trade would suffer if the tax were imposed. The burden of the duty would fall upon the consumers abroad. The yield expected from it was 2,100,000l. Summing up the results of his proposals, he said that by the methods of taxation which he had described he estimated to raise 11,000,000l.; 50-3 per cent. of the revenue would come from direct taxation, and 49.7 per cent. from indirect taxation. He estimated that the total taxation revenue for the year would be 122,200,000l., and adding the non-tax revenue the total would be 143,255,0007. He proposed to suspend the Sinking Fund again, and by that means to bring down our expenditure to 182,962,000l. Deducting the revenue from that, there would be a deficit of 39,707,000l., to which he had to add about 1,125,000l. for interest on the fresh debt. As it was desirable that he should have a margin after meeting this liability, he intended to ask the committee for borrowing powers up to 60,000,000l. That the Transvaal would be able to assist this country financially as soon as the war terminated Sir M. Hicks-Beach said he did not believe. Sir David Barbour had informed him that it would be impossible to arrive at any definite conclusion with regard to the amount of the contribution towards the cost of the war which could fairly be claimed from the Transvaal until after the lapse of a considerable period after the restoration of peace. From the Orange River Colony nothing could be expected. But the Government kept their claim alive, and it would be enforced when prosperity should have returned to the Transvaal. As to the war, which could no longer be called a "little war," its estimated cost and the cost of the operations in China amounted to 153,000,000l. That was double the cost of the Crimean War. To defray this expenditure it was clear they ought no longer to rely upon temporary borrowing, and he therefore intended to ask the committee to extend the powers of borrowing which had been given him on previous occasions by enabling him to borrow on Consols. The principle upon which he had based his Budget was that of equitable contribution towards the expenditure of the State by all classes of the community. The results of the Chancellor of the Exchequer's proposals may be conveniently seen from the following analysis: Estimated expenditure Debt and other Consolidated Fund Charges Supply Services Estimated receipts on basis of existing taxation (details given £27,800,000 -£187,602,000 above on p. 104) 132,255,000 |