A Bit of Incentive

Britain's rich and poor, taxpayers alike, waited nervously last week, hoping for the best, fearing the worst. Chancellor of the Exchequer Selwyn Lloyd was headed for the House of Commons to deliver his first budget speech. For weeks the government had been grumbling about the growing inflation. That seemed to suggest only one thing: another round of income tax increases.

But when he opened the traditional scuffed dispatch case and began to read his speech, the chancellor had a pleasant surprise for most Britons. For the great majority, income tax would remain the same, and for one important group--the successful executives and skilled professionals in the $5,600 to $11,200 income group--they actually would drop sharply. "In the modern world," said Lloyd, "the work of the manager, the scientist, the technologist" must not be taxed out of existence. As if anticipating the angry protests from the Labor benches at this boon to a special high-salaried class, Lloyd announced a boost in the profits tax on industry (to 53 3/4% of a company's income), declared that firms could no longer charge off as "business expenses" on their tax returns automobiles worth more than $5,600, i.e., the Jaguars and Rolls-Royces.

Pausing occasionally for a swig of the Scotch and water on the stand before him.* Lloyd lectured the House on Britain's nagging problem of productivity, asked for standby power to tax companies 4 shillings (56-c-) per week for each worker they employ, as a means of encouraging them to switch to more efficient, labor-saving machinery. To fight inflation and help bolster sagging exports, the chancellor proposed that Parliament drop the system of fixing excise and purchase taxes by law, leave it to the government to manipulate the rates within limits as it sees fit, raising the taxes when the domestic market is absorbing too many goods better exported, lowering them when the home economy needs a bit of a boost.

For all their howls of opposition, Labor members had to admit that it was the most imaginative budget in years.

*Chancellors always refresh themselves during the tedious budget speech. "If there is any speculation as to what this liquid I am drinking is," said Lloyd, "I can say it has certain medicinal properties . . . For every gallon you drink the revenue benefits to the tune of -L-10.10s."

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