Mexborough & Swinton Times – Saturday 30 September 1939
The Cost of War
The War Budget has brought home the financial implications of our task. It does not represent the full measure even of the economic effort we must make. By comparison with the cost in life and limb that may have to be paid, these preliminary exactions are but a light affliction. Nevertheless, they represent the severest taxation yet imposed on this country, and call for sacrifices greater even than those demanded in 1931 when the State had to be rescued from bankruptcy.
Income tax rises by two shillings to the unprecedented figure of seven and sixpence (37.5p), and there is little attempt to temper the wind to the shorn lamb unless the war has already shorn at least twenty per cent, of his income. There are corresponding increases in death duties, super-tax, and industrial taxation, together with drastic indirect taxation on common luxuries such as tobacco, beer, sugar, and spirits. All this is by way of prelude to war, loans. Wealth, earning power, I spending power, and thrift are’ raided in all directions. Contributions are demanded from every source, and there are few avenues of evasion. This draconic taxation will press hardest upon those with inelastic and diminishing incomes. An all-round reduction in the standard of living is the first price that has to be paid for the war against Hitlerism. Those who cannot earn more must spend less, but taxation which has that general effect will defeat its object, and it is to be presumed that Sir John Simon has foreseen this. His Budget assumes a high and continuing and widespread level of prosperity, and we await with interest the proposals of the Government to ensure this.
Rationing and similar restrictions must have their effect on earning, saving, and spending, the three bases of remunerative taxation. The Government are clearly anxious to avoid inflation, and this prompt and severe fiscal measure is so intended, but it is difficult to see how these huge sums can be suddenly collected from private and industrial earnings without forcing up prices and therefore wages which is the way of inflation. Nevertheless, it is a contribution that must be made to the war effort, and a relatively light one. Mind, body, and estate—all are embarked in this life-and-death adventure to which we are irrevocably committed.