THE TABLET, April 11th, 1959. VOL. 213, No. 6203

Published as a Newspaper rr H E T A B L i r

A WEEKLY NEWSPAPER & REVIEW

Pro Ecclesia Dei, Pro Regina et Patria

FOUNDED IN 1840

APRIL 11th, 195 9

NINEPENCE

The German Presidency: Dr. A d e n au e r ’s Decision

Schism in China: Twenty Illicit C onsecrations. By M ich ae l J . O ’Neill

Russia, China and Tibet: A Long-Standing R ivalry . By Czeslaw Jcsm an

Mission Schools in Southern Rhodesia: A L e t te r from the B ishop of Um ta li

Critics’ Columns : Notebook : Book Reviews : Letters : Chess

WARMING NUMBED LIMBS

HPHE cries of thankfulness in Wednesday morning’s papers for some quite unspectacular though all the same welcome reductions of taxation revealed to what an unnaturally depressed condition the nation has been brought through twenty years of war and its aftermath. Any reduction of taxation is still an exceptional thing, and is valued like water in the desert. The income-tax is still higher than it was in 1940, but there has not been a reduction of as much as ninepence for so long that the result is hailed with pathetic gratitude, even by papers and commentators with no sympathy for the Conservatives. Even when twopence a pint is taken off beer, it remains in this country extremely dear for so mild a beverage, simply by virtue of the heavy tax. Purchase tax, intended to check home demand for goods that should be exported, seems to be taking its place, as temporary taxes have a wicked way of doing, as a permanent part of the tax structure. Still, some £300,000,000 of peoples’ money which was collected from them last year will not be collected from them this year. Out of a budget revenue of £5,620,000,000, it is nearly six per cent, and it leaves the general structure of taxation in Britain still in an unwholesome state.

While the nation wants, as it broadly does, the present expenditures, it is idle, and can easily be dishonest, to call for any large reduction in Government expenditure, and the real relief can only come if that expenditure is prevented from rising more than a little, while the total national income rises faster. This is the master-thought of the Conservatives, to widen the gap, and leave private people with an even relatively larger share of their own money ; and it is a sufficient reason for supporting them. But it is very significant, showing the immense mental change that has taken place, by which the Budget has become primarily an instrument of economic policy, that Mr. Heathcoat Amory justifies his choices of the places where the burden should be lightened, not on grounds of what is equitable, but on grounds of what is economically advantageous. Beer is reduced because consumption was falling, and it is an important part of the revenue, and also because it is an important part of the cost of living. Companies will get a little relief from ninepence off the standard ra te of income tax, with the hope that, if they have more money, they will plough it back in ways th a t will improve productivity. The Chancellor had, in fact, to do something of a tig h trope walk, wanting to encourage more consumption, but wanting even more to encourage more saving and investment. Here there is some contradiction between the economic and the political advantage. Broadly speaking, concessions to the very poor lead to immediate consumption, and, to th e very rich to investment. In between, where most people live, it is an entirely open question what will happen, when people find, themselves one or two pounds a week better off.

The last year was a record year for savings, demonstrating th a t the habit, after all the immense discouragements it has received, is still deeply ingrained, and only needs confidence th a t the price level will stay reasonably stable. If people will save, interest rates will stay low, with great benefit to the cost of building operations in particular. People will save if it is to their advantage to do so, but they should not be told, when their money is left with them, that, like Victorian children, they are not meant to spend it, but to put in the money-box and savings bank. Money that is spent on immediate consumption helps some in dustries; money th a t is invested helps others.

If it is more important that there should be investment than consumption, Socialists can easily point out th a t much the surest way of securing that end is not to remit taxes. It is, they think, for the Government to take and keep the surplus beyond its current needs, and to invest it, as is done in Russia. I t can, in fact, be argued that, once the wealth is created, it cannot help being used well. I t will be invested by the Government, as 'Socialist planners prefer, or private investors’ companies who know their own business best, or it will be spent, and in being spent will maintain a buoyant home market, and absorb unemployment. Tertiary industries help secondary and then primary ones. If hotels do well, they consume more electricity and coal.