Expenditure Arising Out of the War.

Part of Supplementary Vote of Credit, 1941. – in the House of Commons on 16th December 1941.

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Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I do not wish to particularise. I would appeal to all who influence public opinion—Members of this Committee, leaders in our local life, employers and trade union representatives— to continue to do their utmost to drive home this paramount need for saving and lending to our country. We all want our war effort to be the effort of a people united in the firm will to work and produce to their utmost, secure in the knowledge that while they do so their standard of living will not be filched away from them by rising prices. Inflation is not an economists' bogy; it is a danger which, if allowed to develop, may threaten the very basis of the material welfare and the peace of mind of all of us. If it does that, it will also threaten the effectiveness of the war effort. To help to keep such consequences at bay is surely worth the really small effort, but a really important and a vital one, involved in refraining from spending what it is not absolutely necessary to spend. In this connection, I would again venture to refer the Committee to two matters I have so often emphasised. Our total expenditure during this war has now reached the colossal figure of some £8,300,000,000. We have a long and a hard war before us. It is more imperative than ever, first, that all waste and extravagance should be avoided, and, secondly, that all plans and projects not directly connected with the war effort, but involving appreciable extension of Government expenditure, should be considered in relation to the vital necessity of husbanding our resources and maintaining our financial strength.

As regards revenue, I cannot forecast the year's out-turn, but it is clear that, thanks mainly to the buoyancy of the Customs and Excise, the Budget Estimates will be appreciably exceeded. On the Customs side, the bulk of the increase so far has been provided by the Tobacco. Duties, while as regards Excise Duties, the increase is due mainly to the Purchase Tax and to the Beer Duties, though the Spirit Duties and Entertainments Duty have also helped that increase over the estimate. I am glad to inform the Committee that the main. Inland Revenue taxes are also doing will, but as the bulk of Income Tax and Surtax is payable later in the year, it is too early for me to venture on a prophecy under those heads, or in relation to Excess Profits Tax.

In connection with direct taxation, I have an announcement to make which I think will interest the Committee. High taxation means that extra care has to be exercised in making provision against the time when it falls due. It also means that in so far as such provision is made gradually in advance, large sums of money accumulate in the banks and are in due course paid to the Treasury, much of them in the last quarter of the financial year. I have been considering whether I could not offer some machinery which would help taxpayers who have material sums to meet by direct payment to set aside those sums as their profits or income accrue. Some such assistance would be specially helpful, I think, to companies liable to Excess Profits Tax. It is, at the same time, desirable, if possible, to avoid the piling up of tax moneys in the banks, and to encourage their more even flow into the Exchequer. With this triple object in view, I have decided to issue a new special security which can be taken up for such amounts and at such times as any taxpayer finds most convenient. He will be able to tender it during a limited period in payment of certain taxes, and if it is so tendered, it will earn interest. The taxes in question will be Income Tax (other than Schedule E), Surtax, National Defence Contributions, Excess Profits Tax, Land Tax and War Damage Contributions.