Evening star., 1942-04-12
Small Wage Farmers
In Britain Unafraid
OF New Budget
Half Of Every Dollar
Already Going for E
Huge War Costs
BY WILLIAM ]. HUMPHREYS,
taJ nor


LONDON, April livery day
Britons, whose government has
spent s39, 700 100000 since September
3. 1899, on the eve of another var
budget today felt that the exchequer
just couldn't squeeze a substantial
tax increase out of their already
frugal standard of living.
The present basic income tax rate
leaves the workingman so cents out
OF every dollar he earns.
In the highest income brackets
surtaxes commander $3.50 of every
$40.
This close approach to what a
cheerfully paying public feels is
the "saturation point" is equalized
over the breadth of the social classes
and has resulted in minimum of
speculation over the budget Sir
Kingsley Wood soon will announce
to the House of Commons.
1t is true that there is some ap-
prehension in the "City"-London's S
financial district. comparable to
Americas Wall Street"-that the
exechequer will lift income and sur
tax rates. But the little people are
sure there can be no heroic plan to
balance the budget.
That's just about impossible in
this, the most expensive of all wars.
Can't Be Much More.
Britain's small wage Garner knows
that whatever additional burden he
is called upon to shoulder cannot
be much. What cheers him most,
in a misery loves company way, is
that in any event all will stagger
along under proportionate tax loads.
For Americans whose new income
tax rates have brought home COM
pellingly the high cost of modern
war. the picture of the less for
tunate United Kingdom taxpayer
may be of some comfort.
1t may also suggest two stern les
sons for the future if the war drags
on.
Those lessons, said Geoffrey
Crowther, editor of the Economist,
are:
"l. Don't underestimate the ex-
tent to which expenditures will
rise.
20. Don't underestimate the peo-
pies willingness to pay"
In general, the S39,7OOOOO, 900
Britain has spent since the war be-
gan was raised as follows:
Revenue (taxation), SIT 092, ,000,-
900, or 43 per cent.
Loans, s14O40, 100000, or 35 per
cent.
Floating debt Short term loans
from banks, etc., $9,596 900 900, or
% per cent,
Unfortunately Crowther ex-
planned, ut isn't possible to say that
all loans have been purchased out
of savings. Banks have taken some
and some have been bought in ex-
change for other capital assets (such
as American securities surrendered
to the government.
Details to Be Given.
"a white paper to be issued with
the budget next week should make
it possible to break down the total
into: l, taxes; 2, other compulsory
contributions, such as social security
payments and war damage pre-
miums: 3, savings; 4, drafts on capt.
tai, and 5, credit expansion.
How has this all been done? On
taxes the story is obvious. On loans,
the national savings campaign has
been the answer.
The policy has been pursued for
most of the war of having war loans
on tap that is. continuously con-
vertible into cash, and of not max
Ing specific issues Of fixed amounts
from time to time.
Banks play their share, too. In
addition to the familiar method OF
offering treasury bills to them, the
banks have been asked to deposit
specified sums week by week with
the treasury.
Except on matters of detail, there
have been no major criticisms of
this system. On the contrary, two
aspects have given great Satisfac-
ton.
"One is the high proportion raised
In considerably higher than
in the last war. The other is the
low rate of Understanding has
been borrowed at more than 3 per
cent, and the average rate is just
under per cent.
Moreover, interest paid out is
subject to the full rate Of income
taxes and surtaxes, so that the net
cost to the Government Is well under
/ per cent.
THAT is considerably different
from the last war"
Where will the government get
more revenue?
Forced Savings Likely.
Granted that the new budget
won't add unduly to direct taxes on
income, some observers felt the
chancellor's request for additional
sources of revenue might result in
some form of compulsory savings,
the amounts to be extracted at the
source of income as income tax pay
ments are now.
Money thus invested in the Gov
ernment would draw reasonable in
terest and be payable some time
after the war ends. The payments
wouldn't follow the armistice quickly,
however, some say, because they
believe that one cause of the British
depression after the last war was
the unchecked spending splurge in
channels not economically healthful.
Also targets for new taxes-and
here the little man might be hit
again-might be popular to-