New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-03-28
BUDGET MAKING.
A BORROWING POLICY WITH DIRECT
TAXATION-BLUNDER IN FINANC-
ING THE wAR-A FREE
TRADE BOURBON.
London, March 10

with Iair degree or commence When sir
Michael Hicks-Beach is Chancellor OF the Elk
chequer. An old Tory squire in politics. he is a
fnancier overawed by the traditions Of Liberal
Treasury administration. He has accepted the
results Of Mr.. Gladstone's experience, and stands
II dread OF Sir William Harcourt's criticism. No
startling surprises are 10 be expected in the
Budget speech. If he can avoid an unmanageable
deficit Of current revenues. Expert financiers
with clean states do find It difficult TO antci-
pate his methods Of dealing with the next years
dehcit. They can make allowance for collections
Of arrears Of income tax at a higher rate and
increased returns from the sugar and coal taxes
and can safely forecast a revenue not far from
1880 600 for the ensuing financial year on
the basis Of the present schedules This will be
gain Of bout Z. 500 O00 over the current year.
The estimates Of expenditures have been pub
nshed. and these involve a decrease OF about
f260O0O00 over those Of the current year the
main shrinkage being in war disbursements
With this margin of diminished expense and in
creased receipts. the deficit next year may he
computed at f25Oo00o0. for which the Chan
cellor Of the Exchequer will be forced to pro-
vide As he is a timorous inancier he is not
likely 70 have recourse to large or novel meth
ods OF covering so manageable a deficit. He will
borrow the bulk Of it, unless all signs fail and
will provide for the balance by increased taxa
ton. IN this way he will please the bankers.
who Ike 10 handle a moderate loan annually,
and will maintain the Liberal tradition of
throwing 2 portion OF the war burden upon tax
payers Of the day.
These calculations may be upset If the reve-
nues for this month fall behind the estimates.
or # the War Once naodifes an estimate for the
military campaign in South Africa which seems
smaller than the magnitude OF the force en-
ployed jUstifes. If the experts are within reach
of the truth, the deficit will not be large enough
70 involve anything more than fresh exercise
Of borrowing powers and a moderate increase
Of taxation The Chancellor of the Exchequer
evidently anticipates this general result. for he
has been quieting apprehensions in one trade
after another. He has blurted out the fact that
there viii be no increase of taxation OF spirits
and wine. and that the coal schedule will remain
unchanged. The agreement brought about at
the Brussels conference precludes any nodfca-
ton Of the sugar schedule. The income tax and
tobacco are the unknown factors of the prob
lem. a portion Of the deficit is likely to be COW
cred either by additional twopence on in
comes or by increased taxation Of tobacco. Sir
William Harcourt would prefer without doubt
increased taxation Of incomes, and he might be
inclined 10 make the twopence an Increment Of
fouTpence The burdens Of direct taxation
have fairly overwhelmed the most important
class Of taxpayers in the United Kingdom
those with incomes ranging between 100 and
tl.500. and any further increase will be borne
with impotence and resentment. Tobacco Of
fers an alluring field for increased duties on &C
count Of the active competition Of British and
American trusts for the control of the market.
Prices have fallen and consumption has in
creased; and an increased duty would involve
as little hardship 10 taxpayers as any fresh tax
which could be proposed.
The military administration during the war is
constantly under discussion in Parliament and
in the press. The financial administration es-
cares criticism because there is dogged reso-
luton on the part of the Kings loyal subjects
70 bear the burdens Of taxpaying with the same
fortitude which the soldiers displaying in the
field. Only experts Ike Sir Robert Giffen are
aware OF the opportunity for fiscal readjustment
which has been wasted during the last three
years from the lack Of a hnancer Of originality
and courage at the Treasury The relations and
proportions Of direct and indirect taxation have
been transformed during the last twenty five
years. Before the outbreak of the war national
expenditures had been increased about 30 per
cent in the course of two decades. and the bulk
Of the additional burden had been thrown upon
direct taxation. whereas indirect taxation had
remained unchanged, excise and customs being
taken together. Since Kriger's ultirnatum there
has been another vast increase in national ex-
penditures. the figures having run up from
Csc 600 900 in 1900 1874 100000 in 1901. ST.
nultaneously with the enlarged outlay for ma
tionaI ornaments and administration there has
been an enormous increase in local taxation.
The expense of local government has increased
from f35.O000OO in 1867 70 fl31 100000 in 1901.
and the rates are steadily rising. The death
duties have been nearly trebled and the income
tax has grown proportionately; and. with the
exception OF the sugar and coal duties imposed
last year, there has been no widening OF the area
Of indirect taxation. What once a great
financial reserve for an erergercy-the re-
sources Of income taXation-has been employed
year after year in costly ornaments during
period Of unbroken peace; and when supreme
national emergency arose the bulk OF the bur
den Of the war in South Africa has been thrown
by direct taxation upon limited class Of tax
payers. The Chancellor Of the Exchequer in the
opinion Of many experienced economists, would
have financed the war more wisely If he had en-
iarged the scope Of the customs schedules in
stead Of running up the income tax and depend
Ing continuously upon direct taxation for carry
Ing extraordinary burdens.
The Chancellor Of the Exchequer has also
neglected to profit by excellent opportunity
for taking up Imperial Federation on the busi-
ness side. This is the opinion Of broad minded
lnperialists OF the Chamberlain school The re-
vivaI of tariff legislation would have enabled
the mother country to promote commercial in
tercourse within the British Empire on a pref
erentisl basis. and to do this when the colonies
were sending their picked contingents TO fight
Englands battle in South Africa. The United
Empire Trade League has recently been advo-
eating this policy at its conference in London
and quoting Mr.. Chamberains dictum: "EX-
perience has taught US that this closer union ,
can be most hopefully approached upon its COM