With that general background in our minds, the Committee will perhaps allow me to pass fairly rapidly in review certain features of expenditure and revenue in the past financial year. On the expenditure side, the important point to note is that expenditure out of the Vote of Credit much exceeded the figure of £2,800,000,000, assumed in my Budget of July, 1940. It amounted to £3,220,000,000, against the £3,300,000,000 ultimately voted. The total expenditure for the year amounted to £3,884,000,000.
On the revenue side, it will be remembered that the original total estimate of £1,234,000,000 was increased in the July Budget to £1,360,000,000. In the result, that increased figure was exceeded by some £49,000,000. The Inland Revenue Duties at £792,000,000 provided £22,000,000 of the excess. Of the total sum collected, Income Tax accounted for £524,000,000, which was £13,000,000 in excess of the estimate. In making his Financial Statement last year, my predecessor drew attention to the fact that the amount of Income Tax collected in 1939–40, £390,000,000, constituted a record. That record figure has now been dwarfed by the amount of Income Tax collected last year, and this magnificent result was achieved notwithstanding postponement until the present year of a part of the tax which is now being deducted from salaries and wages. My thanks, and the thanks of the whole nation, are due to those taxpayers who, notwithstanding the many other pressing calls upon their purses, have responded so readily to my appeal for prompt payment of tax.
I should like at this point to refer briefly to the scheme for deducting Income Tax from salaries and wages which was introduced last year. That scheme is now working smoothly, and instead of having to find a large sum of money every six months the great majority of taxpayers, over 4,000,000, now have their tax deducted from their pay week by week or month by month. The successful launching of this scheme is due in a large measure to the readiness with which employers, both large and small, have co-operated with the Income Tax authorities. I am glad to take this opportunity of thanking them for their invaluable assistance in carrying through this important reform.
So far as the taxpayer is concerned, the deductions have been made with few complaints. In recent weeks an unofficial inquiry was made in a certain area as to how this new scheme was working. Four-fifths of those concerned definitely favoured the new method. I should like to quote some of the actual comments made on the new system, some from the men and some from the wives: "Well, you are sort of paying for the war as you go"; "A very good idea"; "What you don't have, you don't miss"; "He doesn't mind it"; "He did mind at first, but he has got used to it"; "It isn't what you feel, but what you have got to do." This shows how the Englishman has a genius for co-operating with the tax collector. In fact, a first-class revolution in our fiscal system has happened, though silently, in the past year.
The yield of National Defence Contribution and Excess Profits Tax exceeded the estimate of £70,000,000 by no less than £26,000,000. The collection of the newly-imposed Excess Profits Tax had hardly begun a year ago, the amount collected in 1939–40 being only £40,000, and the amount collected in 1940–41 depended very largely upon the speed at which the assessments were agreed and the tax paid over. The large surplus is due mainly to the public-spirited manner in which many firms and companies have paid over the estimated tax due from them without waiting for the figures to be finally agreed. On the other hand, Estate Duties and Stamps each yielded £5,000,000 less than the estimate.
Customs and Excise exceeded the July estimate by £6,000,000, although the final yield was the result of large surpluses and deficits. Despite the further increases of duty on beer and tobacco last July those twin pillars of the Budget yielded £25,500,000 and £15,500,000 more than their respective estimates. On the other hand, the course of the war on the Continent during the year lost much revenue which depends upon trade. Thus, the duties under the Import Duties Act and Ottawa Agreements Act were £20,500,000 short of the estimate, and there were deficiencies of £3,000,000 and £2,000,000 on matches and silk respectively.
The Purchase Tax yielded some £26,000,000. The tax was three weeks late in coming into operation, there have been certain restrictions on supplies, and the original estimate has also been affected by enemy operations. Its administration has worked quite smoothly. The registration of 40,000 traders was completed quickly, and the machinery of accounts has worked well. Nearly 60 per cent. of all returns due on 10th March were received within 10 days of that date. The fact that this scheme has been successfully established in this way has been largely due to the traders. I would not pretend that they like this tax, any more than any of us like taxation, but they took the common-sense view that as the money was wanted for the war, and as they were expected to administer and collect the tax, they should do it to the best of their ability, which they have done to the advantage of the revenue and the country.
Other sources of revenue produced £88,000,000, against an estimate of £68,000,000, £3,000,000 of the excess being attributable to the Motor Vehicle Duties and £13,000,000 to the very large number of free gifts to the Exchequer. This total excludes generous contributions sent direct to my right hon. Friend the Minister of Aircraft Production towards the cost of aircraft. The steady flow of such gifts, both large and small, is a constant source of pride and gratification, and I am sure the nation will wish me to express its thanks again to all those at home and overseas who have helped us in such a spirit of patriotic self-denial.
It will be seen that towards the total expenditure of £3,884,000,000 we have received a total revenueof£1,409,000,000, which left a deficiency of £2,475,000,000 which had to be met by other means.