Some betrayal.

WHEN PRESIDENT REAGAN slashed income-tax rates, he fired a shot heard round the world. Even the Socialist governments of Australia and New Zealand have felt obliged to follow suit. In Britain, Margaret Thatcher's government, already embarked on a similar course, was encouraged in its well-doing and, far more successfully than the Reagan Administration, has matched supply-side theory on tax cuts with fundamental good housekeeping.

In his annual Budget Day speech, Chancellor of the Exchequer Nigel Lawson was able to announce that he had balanced the budget, something achieved by only one other Chancellor since the early 1950s and an example that, as one British commentator optimistically suggested, may stiffen spines in Washington. He proposed further substantial tax cuts. The dramatic implications of his proposals were underlined by chants of "Shame! Shame! Shame!" from Labour Members of Parliament which forced the Speaker to suspend the sitting for ten minutes.

The Chancellor had begun his arithmetic from a very favorable position. The Treasury's coffers are overflowing; inflation, at 4 per cent, is relatively low; unemployment is falling, production rising; and economic forecasts remain cheerful. Mrs. Thatcher's government really has turned Britain around to a sensational degree. Its worst failure, as the Chancellor admitted, is that the proportion of the national income consumed by public expenditures has actually risen-to 51 per cent; even Mrs. Thatcher seems helpless to reduce the total burden.

Lawson followed the Reagan example of eliminating various tax breaks in return for lowering rates. The Conservatives had inherited from previous Labour governments a confiscatory tax structure rising steeply to an absurd peak of 98 per cent on investment income. Lawson has now reduced the standard rate, which is paid by 95 per cent of the working population, to 25 per cent (with a future target of 20 per cent), and has consolidated all the higher gradations into a single rate of 40 per cent (charged on income above roughly $40,000 a year).

These figures, like the Reagan tax cuts, are to some extent misleading. Social Security deductions, filching another 9 per cent from wage packets, should really be included, while Value Added Tax increases most prices by 15 per cent: and there are property taxes, excise duties, and a variety of other imposts. Nevertheless, Britain does now have the lowest and simplest income tax since the Second World War.

The Labour Party called it "a day of betrayal." The Liberals called it "deeply offensive." Almost everybody called it "a budget for the rich." And Professor John Kenneth Galbraith, who was passing through London condemned it as a deplorable imitation of Reaganomics. He lamented the virtuous days of British welfarism in almost exactly the same words as his fellow socialists. None of these critics was prepared even to consider the argument, patiently repeated by Lawson and for which there is now much evidence, that reducing high tax rates will increase, rather than diminish, the Treasury's income, thus not only benefiting the taxpayer but making more money available for social services. If the Left admitted such a possibility, the politics of envy would stand naked.

A "wet" Conservative MP said nervously: "The budget's fine if it doesn't cause a revolution." The idea that many people should want to start a revolution because, although their own taxes have been reduced, other people's have been reduced still more is a very modern and, it must be hoped, implausible one. But the Chancellor plainly has a job of education to do. Opinion polls found instant majorities saying that the budget was "unfair" and that they would have preferred the money to go to the Health Service. There is, of course, an easy answer. These altruistic souls can send their unwanted windfalls direct to the Health Service or back to the Chancellor. Then everyone will be happy. -A. LEJEUNE