THE HONG KONG TELEGRAPH.
FULL REPORT OF GREAT BUDGET SPEECH,
EXTRA
HONGKONG, SATURDAY, OCTOBER 30, 1915
bare to take care that the duties thrown on the Board of Inland Revenue and the Customs and Ex- cine are such as they can perform in the fosucial year. If the war THE NEW TAXES, AND WHAT THEY WILL BRING IN proceeds there will be more War Badgets, particularly as it appears to become a habit to introduce two Budgets a year, and either I or my successor will have an op- portunity of incorporating some of the valuable suggestions which I have received. My present de sire is to offer to the House only ob proposals as I am advised are practicable.
NO INCREASE ON BEER OR SPIRITS,
Mr. McKenna, introducing his Wartime Budget in the House of Commous on September 21, apoke for an hour and a quarter. He mid:-
BATY.
It is now my lot to introduce the third Budget, in which I must sak the House to assent to ad- ditional and unprecedented bar- deas, which I feel confident will be accepted by the country. (Cheers.)
the triple task this country had (assumed in the war :--
To keep command of the seas. To maintain an Army, sad
during the current year, was to cost £140,000,000, an Army that was to cost £800,000,000, and external advances to the amount of £200,000,000.
We have now to contemplate a Navy costing £190,000,000, an Army costing £716,000,000, and external advanose to the amount of £123,000,000,
4 Millions a Day,
Three Birds with one Stans.
find money to pay the full tax would make him chargeable to In such cases allowance must be which constitutes so large a.alics income tax, he will be entitled to rande for that capital. In the of that income. Payment by incall for repayment of the quarter-same way capital: invested in the atalments will enable individuals | ly amonat he has already paid. three years before the war, which and firms who are liable to direct Where a man has a regular wage has been anremunerative during assessment in respect of profession or salary to that amount he will that period, may be also subject or husbandry to pay the tax in have to pay quarterly by direct half-yearly instalments on Janu- ary 1 and July 1 following.
Resegemant,
At the Rich Man's End,
At the other end of the scale we see how the rich man isto be treat
The second change of im portance is that for employees of all descriptions both ssssssed. ment- and collection will be quarterly,
This arrangement, however, will not disentitle the taxpayes to any relief due to him on the basis of To obtain revenue is now and a full year's income. The obange To assist our Allies with up-always the first object of taxation, will take full effect next year. This is the third Budget sinoo plies, and in financing their sor- but at this time there are other The arrangements for the current the ontbreak of the war. The vices in countries other than their objects which must not be year are too far advanced to first was introduced last Novem-[own.
left out of view. I am afraid enable the transition to be made ber, when the proposed new taxa- He had in mind a Navy that, what I am going tonay will satisfy from the old system to the pow tion was estimated to bring in
asither the strict Free Trader not in time. As a temporary expedi 68 millions in the fall year.
the scientific Tariff Reformer.ent, however, I propose to allow Last May the Minister of Mani
Both, for the time being, must put persons to whom the instalment tions proposed a new Budget,
their fiscal theories on one side. aystem is to apply to pay the tax which included no new taxes, al-
(Cheers) Wo have to tax now imposed by the first Budget of though he warned the country that
with objects beyond revenue, with the year in January and the ad- another Badget would be neces
objects purely temporary, and ditional duty under the prezant without regard to the permanent Budget in July. effect on trado. We must look at the state of our foreign exchanges. We must discourage imports, Grave se was the warning of We cannot increase our exporte my predecessor last May, his because our capital and labour words have a far greater signi- are otherwise engaged. We have ficance to-day. I make no to look on the reduction of imports apology for dwelling on our ex as an object in itself. That we In 1913-14-the last year of penditure. It is a subject on also have to pay atriot regard to peace-the revenue and expendi-which bon. members ought to the necessity of reducing oon- tare nearly balscoed, at about have all the information that is in sumption. $198,000,000. In 1914-15-the my possession. (Obeer.)
If, then, we can by any first year of the war-pur revenge, When the Prime Minister in- mesas, by taxation, at the same inclading the new taxes, ross to troduced the Vate of Credit last time restriot imports and reduce £227,000,000, and our expendi-Wednesday he gave £3,500,000 as consumption, and bring in re- ture to 8581,000,000, so the deficit the current daily rate of not ex- vanne (laughter and cheers) for the year was £334,000,000. penditure from that Voto; but the I think for the moment we may The estimate of revenue made Committee know we have to meet be considered to have found laat may for the current year was expenditure from Votes other than £287,000,000. On the assump: the Vote of Oredit, and we have There is one other point. You tion that the war would last until to form an estimaste of the expen-must keep in view the necessity Karch 31 next, the estimated ex-diture for a longer period than the of not interfering with the trades penditure was £1,133,000. Prime Minister bad to take into most lucrative to you and on With later experience this osview in moving this particular which your export trade depends. timate has now to be revised. On motion. My survey extends to
Higher Income Tax. the existing basis of taxation the the end of the financial year and The principal head of the new revenue may be put at £272,000,- includes an expenditure on all taxes is income tax. 000 an increase of £5,000,000, and services. the expenditure is now estimated at £1,500,000, an increase of £467,000,0000.
Spending £1,590,000.
Great as is thin total, I am sure that the country is prepared to fsos it with courage and confid ence (cheers)-and to meet salutely every demand which the continuance of the war may entail. To enable us to cope with our colossal tank, avary saction of the nation must be called upon to contribute and to make great Korifices.
Taking the whole period un- til March 31, the best estimate that can be framed of the total daily rate of expenditure on all services from now onwards is over 84,500,000; and in the later weeks of the financial year it may have risen to more that £5,000,000. a day.
Unparalleled in History. The Committee will raaline what the rising scales of expendi- ture must mean in the ensuing financial year.
the ideal tax.
I propose to add 40 per cent. to the existing income tax rates, combined with improved ma chinery for assessing employees, and special relief where income has fallen more than 10 per
cent.
A man with 85,000 a year will pay £1,099, which is vir tually da. 1d, in the pound That combines super-tax and income tax.
A man with £10,000 a year will pay in income tax and super-tax £2,529, 8 virtual rate of 58. Id. in the pound.
A man with an income of over $10,000 a year will pay £2,629 on the first ten thousand and 7s. in the pound on all over £10,000.
Thus a man with £20,000 in come will pay £6,029 in tax, a virtual rate of 6s, in the pound; and happy possessor of £100,000 (obeere and laughter)—will be called on to pay £34,029-(ohears) a virtual rate of 8s 10d. in the pound.
Repayable, if.- Belief in also proposed from the additional income tax în cer- tain cases, and the whole of the I am not enre, having regard to additional duty will be repayable the charges that many rich in the event of any individual people have assumed to a large proving that his actual income number of people dependent on from all scarces for the year is them, and heavy responsibilities less by one fifth then the income they cannot avoid, the lot of these on which he has paid the tax. wen in these ciroumstances will This is an endeavour to redzase be a very happy one when called the hardship on the individual on to find £34,000. Given time, who, this year, having a far it can be done, and given time no smaller income, is assessed on the doubt, if necessity requires it, average of the preceding three further burdens can be met. A years when he had a for larger sudden blow may cripple the income, and fade he is called on individual with less advantage to to pay 38. 8d. in the income tax the State thea if we take from on an income which he once en-him by taxation, by degrees, what joyed but no longer possesses, It he is prepared and able to pay is proposed that where it is loaa from time to time. by one-fifth he shall be relieved of the whole 40 per cent, inores 95. Where the deficienoy does not amount to one-fifth, but is more than 10 per cent, repay ment of a proportionate part of the additional duty will be silowed,
What They will Bring in. The addition of 40 per cent. to the income tax (20 per cent. for the remainder of this year) after the allowance for relief is esti mated to bring 211,274,000 and The 40 per cent. rate of increase in a fall effective year £37,400,- will be for a fall year, and conse-009. quently in the remaining six The reduction of the exemption months of the current year only limit to £130 in estimated to bring 20 per cont, of the increase will in, in a full effective year, £939,- become due. I will state all the 000. The reduction of abate- charges I propose in the income mente from £160 to 190, with tax law before giving the financial consequential changes, is estimat- ed to produce £3,821,000 in a fall
Special Tax of go per cent.
on Extra Receipts. It is proposed to introduce a epesial lax with respect of profite which have increased during the war period. The tax is to extend to all trades, manufacturera, con cerns in the nature of trade and businesses, including agencies- (cheers)-whose profits for any business year of account ending on any date between September 1, 1914, and July 1, 1915, exosed ed the profits on the income tax assessment for 1914 by more than £100.
It is proposed that 50 per cent, of the surplus above £100 shall be taken as the special tax. (Cheers.)
position to reduce the price with great advantage to the trade and consumer, and also to the great advantage of the revenue; The effect of the increase of
revenue and the reduction of to allowance. In ordinary cir- price will be to raise the cost of Gamstances & per cent, would be wager about 5s, a owt or a half. the rate of interest applicable to penny in the pound. If this tax the last two cases, but an appeal is accepted, granulated sugar will to the tribunal this rate of interest be sold at 4d, a pound instead of may be exceeded for any special at 3d. Other kindsof sugar will reason unob as rapid depreciation fall in price according to their or obsolescence, or the fact that quality, but lamp sugar, will no the capital employed is used for cesarily rite a great deal in price, war purposes only.
not on account of the tax, but on £30,000,000 for a Full Year, sccount of the shortness of supply. The estimate of the revenue In general, however, sugar now obtained in these cases of war 3jd, a pound will become 4d. ■ profit is £30,000,000 in a fall pound. effective year.
The anticipated revenue from
Tas, Coffee, Tobacco,
I have stated that the limit to the increase of the tax on sugar in be taken of the business accounts 25,300,000 this year, and 11, of the first year is from Septem- 600,000 in a full year. ber 1, 1914, to July 1915, I am dealing now only with the immediate effect in this year. This is an addition to the income I now come to the familiar sub- tax. Of course, 50 per cent. will jeota of tas, tobacco, cocos, coffee, be reckoned as super tax. It ohicory and dried fruits, works out after deducting income tax at just over 60 per cent on net profite.
On each of these articles an all round increase is proposed of 50 per cent, on the existing daty.
Only £6,000,000 This Year. For this purpose, this year, I
The financial effect will be to have limited it to July 1 in order increase the revenue in a full year that the effect of this tax may not from ten by $4,500,000, from to- interfere with the operation of the bacco by 65,100,000, and from Munitions Act with regard to coopa, coffee and chicory by special firms which come under 3490,000. (Ob, ok.) its provision. We shall have an Neither spirits nor beer ars opportunity, between now and included in the present proposals the next Budget, of judging the (Ob ob). Beer was very heavy effect of the Munitions Act, and taxed last Novermber, when my then we shall be able to make a predecessor explained the reasons proper arrangement so as to dove for not adding to the duty of tail one Act into the other in spirits, reasons which still hold the ensuing year. For the pre- good. On the other hand, the cent year this tax is limited to general question of the o those firms whose business year ion of liquor is being dealt with, ends on or before June 30. where necessary, by the measure As regards the revenue of the of restriction under the direction current year from this cax, not of the Board of Control of the Li merely is a large deduction to be quor Traffic, whose efforts, I under made for the reason just given, stand, have already resulted in bat a farther deduction must be considerable reduction of son made in the estimate owing to sumption. inevitable delay in collection, consequent on the novelty of the tax and the working of appeals,
Motor Spirit,
On motor spirit I propose
I estimate that only six milliona will be collected before March 31 an increase of duty of 3d next; but this will be a mere gallon, raising the existing postponement for the benefit of rates of 3d. and lid. to 6d; and next year,
44d, a gallon respectively. The
Taking all the items and new proceeds of the far for the time texation together, under the being will be retained in the Er head of laland Revenue, we chequer, and not be paid out to have a total estimate of addi. the Road Improvement Fund. tional roveous in the currant (Cheers.) The yield of the ad year of £10,434,000, and in a full | ditional tax this year is estimated effective year of £77,035,000. at #650,000; ia a fall year at. There is one other technical sab. €1,100,000. I hope the whole of I will complete the details of effect. It is obvious that by taxation expenditure in the current year,
jasta proposal to introduce into the tax will be retained for the stone a small part only of the de- In addition to the Navy, Army the exemption limit from $160 to under Schedule B is estimated to required of the actual profite of insome tax. In future, banks not be proper for me to dwell The first proposal is to reduce year, and the increased liability fits of 1914-15, return will be with the method of settling the that is a subject on which it would the Finance Bill a clause dealing Exobequer during the war, but fait can be met. On a previcus and External advances there is a £130. I sak you also to reduce bring in £2,240,000. (Chest) the business of the year, and the socasion I submitted to the House change of 30 millions for present the abatement (on incomes that The total effect of those obsuges taxpayer will be charged the will be authorised to take the tax now. proposals for raising a loan, sad and part moratoriam bills, arising do psy] from $160 to $120. The in 1915-16 will be to increase the special tax on any excess. The Payable from the interest due to you will remember how magni-cut of arrangements we made in whole proposal is that while the Revenue by £11,274,000, and in a ficently the country responded. the City at the outbreak of war, total exemption lirait becomes full effective year by $44,400,000.
Dead Weight Debt £1,200.000.
On some future occasion I shall and 5170,000,000 for our ordinary £130, the abatement [on incomes have to borrow again. Bat now national services, exoloding the above that] will be 2120 where it I bave to lay before the House my Army and Navy, but including was £160." Where it was £150 or proposals for taxation.
the charge for debt, food supplies £120 (that is, on still higher in-
£1,500,000,000,
I have given the total expendiand some minor items, together ture of this year as $1,500,000. with an allowance for contin- On this basis we may estimate the gencies, make up the total of total dead-weight debt at the close of this year at ƒ2,200,000. Oar secumulated wealth is great, and a National Debt, even of this mag nitude, will by no means eripple our resources." (Cheers.)
A total of this kind has never before been reached; and there
comes] it will become $100.
Grounds of Appeal. Taking the lowest average pro
general liability can be adjusted on appeal, on any of the following grounde
their customers on their deposit and other accounts, and this in terest will be included in the computation of advances provid ad for the purpose,
Patent Medicines.
Then I propose to double the patent medicinedaties (cheers and laughter)-giving an ad- dition to the revenue in a full year of 625,000,
The Super-Tax", 354 I next propose to revise, the
if the profite sexessed to income super-tax scales applicable to tax in 1914-15 are less than 6 per incomes in excess of £3,000. cont. on the capital employed by
Heavy Sugar Duty, Par At present any excess of income the proprietors in their business additional taxation under the Imported Luxuries,
I now come to the proposals for Half Yearly and Quarterly
over 28,000 is chargeable at the on April 5, 1914, that percentage head of Castoms and Excise. A Payments.
rato of 24. 81. Hence-forth the on their capital may be taken se large revenue willspring from an need to maintain our foreign ex I have already referred to the Next I propose that the assess-oharge will be 2. 103. between the datum line. ment under Sohedule B shall be 28,000 and taken as the rent paid instead of between £9,000 and $10,000, 38. mainly carried on before the war
£9,000, "3a. 21. Where, in the case of a business increase in the duty on sugar. change and to keep down, as far We have now a duty on as we can, all expenditure on im is no record of a nation having one-third of the roat paid ed. on the surplus of all incomes for supplying under Government
angar emoanting to 18. 104, a ported luxuries.. I have also ex voluntarily accepted liabilities (sheen)-without affecting the above $10,000. The effect of this contrasts munitions of war and
cwt. I propose to increase the plained to the House the limita hearing so high a proportion option of the assessed person to revision will be to produce 2-war material less than a fair re-
duty to 9s. 4d, s owt, But wo most not overlook the to the total national income claim to be brought under 150,000 this year, and £2,885,000 turn has been made on the pro-
tion which is put on possible Mr. W. Thorne: Where are action by be limits of existing strain that expenditure impo388 for which provision has to be Schedule D.
in a fall effective year, on our sources of supply. The
made within a single year.
you going? pristors' capital in the preceding A far-reaching alteration of
taxation machinery I put forward expenditure of £1,500,000,000 to
Let me now give some exam three years, the datum line shall
Mr. McKenna: I will soothe now, however, a list of artioles, Suggestions not Accepted. the income tax is suggested to ples of the operation of the income be determined by a tribunal, my hon, friend by telling him the impot of which may properly the and of the year means that I pasa row to my proposals for goods and services to that value new taxation. Many suggestions
enable payment by instalment tax if the suggested changes are specially appointed, arons which that the whole of this increase be restricted by means of duties in certain casen, have to be found for our own I have been unable to accept-This alteration will not only
adopted.
would be fait under all the oir of duty will raise the price in time of war, on both support and for the support of not because the suggestions operate sa a relief to taxpayers,
A man with no children, cumstances of the case. This is very little to the Consumer grounds I have mentioned those we are assisting. So far as in themselves were bad-many but, in the opinion of the Board
earning £2 15s. a week, will be necessary proviso to deal with the At the same time that we in sign exchange and luxury. So las goods and services can be obtain-were very good-but because of Inland Revenue, will facilitate 12. Id. quartorly
directly segessed, and will pay very limited numberof businesses. that the Royal Commission on importation they may be a souros
crease the duty, it is proposed as the duties do not put an end ed by us by loans from neutral there is a strict limit to the pos- the administration of the law, es
-I don't suppose half a dozen- states, or as the price of securities aible amount of taxation that can pecially in the lower levels of ag
A man earning 63 a week, which have been carried on with whole of the sugar now to con- The articles to which I refer are sugar supplies, which supplies the of revenue not to be neglected sold abroad, there is an immediate be imposed at one time.
without children, will also be out profits for a great many years sessment. Hitherto, speaking relief to the burden cast on our
directly assessed, and once in the hope and expectation that the refiners, and dealers by a parts thereof, and cinema theatre.
sumere, ehall, reduce the price to motor-care, It is as much a question of ma broadly, insome tax has been pay
motor-oyales, and own power of production; but, chinery as of anything else. able for the whole year in Janu-
quarter he will pay 18s. 11de possibly one day, in war; they seen era, adding som 2 Alms (Chests,) subject to this relief, the whole Every new tax imposes a new ary. But with a tax varying, as
A man earning 34 a week, might recoup themasives for their 6d. to.de. owl, A borden of providing goods and burden on the Board of Inland the tax will now, from 28. 1d. to
without children, will have to losses. These facts would be
Mr. Will Thorne': Poor old services falls on this country, Revenue and the Office of One-3s. 6d. in the 2, the individual and to pay £2 6. 2d. (49 4. pindent tribunel,
meet a quarterly assessment taken into account by an inde
The Royal Commission has Charlie Chaplin, (Laughter.) Our Triple Task. -eq toms and Excise. They have an taxpayer in trade, &c., whore
bought very large supplies of Mr. McKenna (continuing lift Four and a half months ago, in admirablo staff, but necessarily business assessment frequently
angar at each times as the list); Olooke, watches. a forcible passage in his Budget limited. Unless the whole pro-overs the whole of his income, may man proven that in the whole year where additional capital has been
market appeared to offer them justrumen's, plate glass, and hata, speech, my predecessor described poenle are to prove a fiasco, we obviously be hard put to it to he has not earned:
8d. a year)h create das diThe third consideration of In all these cases, wherever & which secount must be taken is
aam sal invested daring the war period.
a favourable opportunity, with (Laughter.) the result that we are now in a (Continua
A