Evening star., 1938-04-24
BRITISH SPENDING
SOURCES DECIDED
Sir John Checks Figures
Prior to Laying Budget
Before Commons.
~ the Associated Press

creased rearmament and other costs in
the fiscal year which began April l.
The public will not know from
whose pocket the cash will come until
Thursday, when Sir John Simon.
chancellor of the exchequer, will pre-
sent the 1889 budget to the House
of Commons.
Britain faces the stern necessity Of
finding millions of pounds sterling ad-
ditional for rearmament under the
handicaps Of slowly declining business
and tax rate already the highest in
her history.
The cabinet will be given the budget
details Monday at q special session
after Sir John has spent the week
end rechecking the figures which he
and his financial advisers spent weeks
In compiling.
Then on Tuesday Sir John will
stride to Parliament with the fateful
program in the dull red Morocco dis
patch case every chancellor since Will
liam E. Gladstone has used.
Figures Beyond Revenue.
Every one knows some Of the prob
lens the budget figures must solve,
for 1t has been predicted 1889 ex-
penditures will amount to E94O, ,000, 900
H4,700, ,000,000) against an estimated
revenue of f910. 100000 to f9l5 1000, 900
H4,55o, ,o0o, 0o0-s4575, ,O00, ,0OO).
Rearmament estimates-exclusive of
money to be spent on the new naval
construction program-alone call for
expenditure of s1,809, 1925, 900 during
the year.
For the 1878 fiscal year which
closed March 81, the government had
technical surplus but "a per cent
Of the income was borrowed money
Income was fs72,580,OO0 (s4.362.-
100000: expenditure, s843, 1874 900
ts4,2l8.970, ,0oO. and the realized sur
plus f28.7se.00o ts143. $40, ,0oO. But
f64. 1867, 900 (s324335,ooO was bor-
rowed
The same principle of borrowing,
instead Of taxing. to make surplus
may be applied this year by Sir John.
It is estimated that though the
GoNSlA CAECNUo W IOllCSG
taxes in the current year, income
probably will fall short of outgo by
as much as f3O,0O0,000 (sl50. 900 0OO)
Sir John is getting paid s25.ooo a
year to figure out how to get the
difference.
Income Tax Boost Feared.
The income tax rate, raised last
year to Is per cent, already is the
highest the country ever had but
there is a strong feeling it may be
elevated to 27l2 per cent. The income
tax produces more money now than
any other tax item.
The so-called soak the rich sur
tax also may be raised and regulations
for its collection made more stringent.
At the same time, there are sugges-
tions for more taxes on gasoline. au-
tomobiles, radios, alcohol and business
in general.
No one. including members of the
government, favors any heavy tax
increase, especially at the present time
when business is declining.
A quick picture of the British
economic situation shows:
Employment gaining slightly after
Q severe fall.
Building construction tapering off
after long rise.
General production of goods and
materials decreasing while stocks in
crease
Heavy industries, such as iron and
steel, booming because of rearmament.
Imports increasing; exports de-
ereasing.
Automobile production falling
Textiles declining.
Commodity rubber. tin, copper,
control schemes frightened to prop
sagging prices.
How 1t Sums Up.
The sum total Is:
British business is not so good as
It once was nor as good as the gov
ernment wants it to be-
Experts say that taxing sick busi-
hess would not increase business.
The Financial Times summed up
the situation editorially as follows:
AT the present stage of the trade
cycle any large increase in taxation
would have retarding effects upon in
dustrial activity, and a good case can
be made for the expenditure of bor-
rowed money ="
Sir John already is empowered to-
borrow f400,00O,OO0 $4,000, 900 ,O0O)
In five years under the national de-
tense loans act for meeting partially
the more than fl 500, 900 900 ($7,50O,-
900 ,000) rearmament program.
Out Of borrowing this year the gov
ernment could produce another tech
nical surplus without additional taxes.