The second observation that I wish to make is this. I hear in some quarters that the situation disclosed in these Papers is worse than the public anticipated. I can only say that if that is so it is because the public paid insufficient attention to the warnings which I have addressed to the House. So far as I am concerned the position, though less good than I had expected at the time of the Budget statement, is distinctly better than I feared when I spoke to the House in August, and it is better in four ways.
In the first place, the tax revenue is coming in extraordinarily well. Every item of Inland Revenue except the Excess Profits Duty equals or exceeds the Budget estimate. The Excess Profits Duty is unlikely to yield in the current year as much as I had anticipated by a sum of £20,000,000. But that is not money lost. It is money which is in assessment, and it will come into payment in the following year. I watch, I will not say with anxiety, but I watch carefully, the arrears of Excess Profits Duty. By the nature of the tax that tax must be collected much later than the ordinary taxes of the year. The nature of the tax, and the method of assessment for accounting periods which end at irregular times, some of them very late in the year for which the tax is imposed, allow no time for assessment and adjustment of disputes before the year closes, so that the payment can only be made in the next year. If I continue to see signs of delays in payment which are not justifiable, I must consider whether I must not ask the House of Commons to impose interest on outstanding obligations. So much for Excess Profits.
Income Tax is the only other head of Inland Revenue which is not shown as likely to produce an excess over the Budget Estimate. The House will remember that I gave away a good deal of revenue in the Income Tax in the course of the passage of the Budget through the House of Commons, and that accordingly to be able now to look forward to the realisation of the sum which I originally estimated, in spite of these concessions, is to record an increased yield over the Budget estimate.
If Inland Revenue is satisfactory, Customs and Excise are even more satisfactory. It will be observed that Customs and Excise are now estimated to yield £38,500,000 more than at the time of the introduction of the Budget. Of that, £15,500,000 is accounted for by the increased barrelage of beer; but it is the remainder which is significant. Tea is expected to yield £4,000,000 more than I felt justified in estimating. Tobacco is expected to yield £14,000,000 more than I was justified, on the advice I received from the very competent revenue authorities, in counting upon at the beginning of the year. I call attention to that £18,000,000 increase because it speaks eloquently of the condition and the spending power of oar people. The condition of the people is a factor of prime importance, not merely in social stability, but to the revenue itself. There is one other tax, the Stamp Duties, which has always been looked upon as a good test of the activities of business itself The Stamp Duties which were estimated to yield £12,000,000 at the time of the Budget are now estimated to yield £16,000,000, an increase of £4,000,000 over the Budget estimate. Tea, tobacco, and stamps are the best indications that we can have in single taxes of the condition of the people and the condition of trade, commerce and business. I am justified, therefore, in saying that these are encouraging features. They are more encouraging than I should have ventured to prophesy to the House in August.
The second way in which the position is now more favourable than I antici- pated when I uttered my warning to the House in August is that the deficit of the current year, though large, is less than I then expected, and that the reductions which have been secured are taking earlier and greater effect than I then thought possible.
Lastly, in August, I warned the House, on the eve of its departure, that according to the position as it then presented itself it was unlikely that we should be able to balance incomings and outgoings next year without new taxation. I now no longer think that new taxation will be required for that purpose.