Before moving the adjournment yesterday, Sir, I was dealing with the tariffs proposed in this Bill on building materials. I have spoken of the taxation in other directions on the profits of building, the scarcity of money and on everything tending towards restricting of building operations. I can see nothing to justify the many provisions of this Finance Bill and the proposals of the Minister except the fact of his being confronted with a desperate situation. To my mind, the Minister is confronted with a situation somewhat similar to what Britain passed through in 1931; that other countries had to pass through since, and that France to some extent is passing through now. The Minister's deputy, the Parliamentary Secretary, yesterday said that he holds that a large percentage of the income from production should remain with the people and that the percentage in taxation should be a small portion of all the taxation. It is very well for the Parliamentary Secretary to say that he holds that a large percentage of the national income should be retained by the people, and that it should not be gobbled up in taxation. The Parliamentary Secretary seemed to be about to develop that point, and it was becoming interesting just when he ran away from it. As the Parliamentary Secretary was about to make the point that he holds as a strong principle that the producers should have as little as possible taken from them by taxation, I thought he was going to show that even though taxation has gone up here, the national income has gone up more, and that the percentage of income taken from the producers, even with the high taxation, is less now than it was years ago.
The Parliamentary Secretary did not develop that because I think he got on very shaky ground. He would not have been able to develop it successfully because the national income has not kept pace with taxation. If there were any other proofs necessary but this Budget and this Finance Bill, they dispel any doubts that anybody might have as to where we stood with the national income. According to the Minister's Budget speech, only a few items of taxation came up to expectation in tax yield. He rushed at those in the coming year and in this Bill he is going to impose additional taxation on these items. I said that the position here with which the Minister is confronted is pretty like the position that the Chancellor and the British Government were confronted with in 1931. In the report of the Committee on Finance and Industry presented to the British Parliament by the Financial Secretary to the Treasury in June, 1931, on page 89, paragraph 200, we find this set forth:—
In the direction of public finance also, a large fall in prices produces serious reactions affecting the equilibrium of the national Budget by its operation both on the revenue and on the expenditure of the State. We need only summarise briefly the directions in which pressure is felt:—
(i) The revenue of the State tends to be affected unfavourably in all its branches. Business depression reduces the volume of profits (including dividends distributed) liable to income tax and surtax; the valuation of estates liable to estate duties; the volume of transactions liable to stamp duties; the yield of customs and excise duties by reason not only of a reduction in the volume of goods consumed but of a fall in values. Consequently, in so far as the State must meet the charges fixed in terms of money, it must meet the situation by an increase in the level, or an extension of the field of taxation.
(ii) At the same time, the circumstances of the time tend to swell expenditure in certain directions with a view to relieving the unemployment situation or providing for the unemployed.
(iii) A high proportion of State expenditure is contractual in the form of debt interest and can only be reduced by conversions, either voluntary or on maturity under favourable circumstances. A further large block of expenditure is fixed in terms of money by Acts of Parliament (e.g., pensions allowances of many kinds, contributions to health and unemployment funds and other social services) and is not readily alterable when changes take place in the value of money.
I submit that the Minister finds trade, industry and agriculture here suffering from a depression similar to that which the British Government was confronted with as revealed by that report in 1931.
There are many recommendations made in this report. There was a recommendation for adhesion to gold, but the British found they were not able to carry out that beyond September, 1931, because they found unemployment was increasing; that they could not sell their goods in foreign markets; that they could not balance their Budget; that the revenue from income tax was declining because incomes were declining; and that in the eastern markets they were being crushed out by the Japanese. I do not want to go into details, but they were crushed out. It is only relevant in so far as it bears an analogy to our position.
We are suffering from world depression. On top of that we have another depression which I am not going to develop; a depression produced by British tariffs and the economic war. Great Britain was crushed out of eastern markets by the Japanese because the Japanese had depreciated their currency. An agreement was made by which Japan undertook to take a certain amount of raw cotton from India and in return would be allowed to sell to India a certain amount of cloth. That agreement was conditioned on her not depreciating her currency below a certain point. That was partly kept. Finally, the position was that Great Britain found herself producing goods at gold prices which she could not sell in any market. She had to go off the gold standard and produce them at prices at which she could sell in world markets. Since then, prices have gone up in Great Britain, but they are not gold prices.
The Minister should consider the position in which the producers of surplus products in this country find themselves to-day. The agricultural producers have eggs, poultry, pork, bacon, butter, beef, and cattle to sell in the British market. They are being put out of the British market by precisely the same methods that Great Britain was put out of the eastern markets four years ago—by our competitors in the British markets working on a depreciated currency. It is up to the Minister to recognise that and take steps to have something done about it.