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 will say a word about that later. Schedule E tax will not enter into the scheme in view of the existing arrangements for deduction of Income Tax at the source from salaries and wages. The security will be issued in units of £25 and multiples thereof. The scheme is practically complete and I hope to announce full details before the end of the month. This will answer the query of my hon. Friend the Member for East Birkenhead (Mr. Graham White). From the many requests which I have had and the communications which I have received, I have every confidence that the scheme will, for a large body of taxpayers, definitely ease the task of providing for the taxation which they now have to bear and will also be of considerable advantage to the State.

As we are approaching the period when the major part of the Income Tax will be collected, it is perhaps appropriate for me again to speak of the vital part which taxation plays in our war economy. Taxation to-day is such as to demand many sacrifices, but I know that these will be willingly borne. From the highest to the lowest incomes, we shall bo taking those contributions which, will certainly bring home to our people more than ever the financial implications of our stupendous war effort. Some millions of wage-earners will soon be paying Income Tax for the first time. Others of them will, like all other Income-Tax payers, be paying more this year than last. The necessity is plain. Our war taxation has not been imposed for its own sake. It is an integral part of the whole plan by which the country has been put on a war footing. War conditions necessarily mean that the money incomes of the community largely exceed the supply of goods and services on which those incomes can be spent. The greater our success in directing an ever-increasing proportion of our productive power to the war effort, the greater does that excess become, or, more accurately, the greater it would become if it were not corrected by, among other things, increased taxation. High taxation is indispensable in order to prevent the shortage of goods in war time leading to inflation.

It is not the only instrument on which we rely for this purpose. As the Committee is aware, we continue to take many steps through an elaborate system of controls and rationing to see that the limited supplies of essential goods are distributed fairly and made available at reasonable prices. But I would remind my hon. Friends that these measures will all fail to achieve their purpose if we neglect, on the financial side, to correct the excess of purchasing power. That we do, first by severe taxation, and, secondly, by the savings movement, and as the momentum of war production has increased, we have been bound to intensify our efforts in both those directions. Each of them has greatly contributed to the fact that in the midst of all our difficulties, we have been able, so far, to keep our finances and general economy on an even keel. The most striking proofs of this are to be seen in the low rate of interest at which we have borrowed, in our maintenance of peace-time social services and in the steadiness of the cost of living.

Everyone in the country has benefited from these achievements, but just as the price of our liberty is eternal vigilance, so the price of our economic security is unrelenting sacrifice. There can be no faltering, either in our ready acceptance of taxation or in our firm determination to save. We may have little choice in the payment of our taxes, but the decision whether to save or spend is mainly ours alone, and in our private lives there is probably no daily question in which the taking of the right decision means so much for the welfare of our fellow-citizens, the maintenance of our firm financial front and the ultimate triumph of our cause.