Compulsory Subscriptions to the Loan,

Press, Volume LIV, Issue 16212, 15 May 1918, Page 6

Compulsory Subscriptions to the Loan,

We have consistently urged upon our readers tho moral obligation to subscribe to the utmost limit of thoir abilities to war loans, believing as we do that by so dding they will not only ho helping themselves, but helping in a most practical way to win the war. The Finance Act of last session has considerably altered the legal obligations in this respect, and, in view of the Minister's expressed intention to put into operation the compulsory clauses after the 31st May, some explanation of the main provisions may be wolcomed by those who liavo not had an opportunity of studying the Act for themselves.

The Finance Act, 1918, repeals section 40 of the Finance Act, 1917, dealing with compulsory subscriptions, and enacts that: —"If tho Commissioner of " Taxes has reason to believe that any " person (including a company or other " corporato body) has not subscribed " in duo proportion to his means to tho ! ' loan authorised to bo raised by this "part of this Act, he may . . . .

" call upon that person to subscribe to "that loan. . . The maximum amount which a person can be called upon to subscribe is six times tho yearly average of the land tax and income tax (exclusive of excess-profits duty) paid or payable by him for the three years ended on tho 31st March, i9lB. In calculating the obligation no allowance is made for donations to

war charities or subscriptions to previous war Joans. "The loan authorised "to be raised under this part of this "Act" is primarily the loan of twenty millions, which •will be floated about the end of the year, but also includes the balance of the twenty-eight million loan unsubscribed on tho 15th April last. The latter and any excess which may bo subscribed before the flotation iof the twenty million loan are deemed to havo been raised under the Finance Act, 1918, and it is to this that the present compulsory clauses apply. It should be noted that the liability is imposed On all payers of land or income tax, no matter hoiv small the amount, and that the liability is already imposed, although, no prospectus for the twollty million loan has yet been issued, because the balance of the twenty-eight lriillion loan is deemed to. b"e raised tinder the* Finance Act, 1918. Tho penalties niay be severe. In the first place, all moneys subscribed in rosponse to a notice bear interest at 3 per cent. only. This is obligatory, and no discretion is allowed. Further, in the case of any person who refuses or fails to comply "with the terms of such notice, or such notice as modified on appeal, an additional penalty of double the total land tax and income tax payable by him under the Finance Act, 1917, i's imposed. This latter, if imposed, is not a subscription, but a penalty. Tho Minister has announced that notices will not bo sent to persons who have already subscribed to war loans until after they have been communicated with by letter, and been given an opportunity to increase their holding voluntarily. Those who havo not so far subscribed should do so at once, as notices will be sent out as soon as possible after tho 31st May, and subscriptions in response to these noticoa only bear interest at 3 per cent. This is our reading of the Act, but we havo heard it stated on good authority that the maximum of six times the average land tax and inconio tax applies as a separate liability both to tho second half of tho twenty-eight million loan and to the twenty million loan. Making allowances for tho large number of cases where it will bo clearly inequitable, if not impossible, to compel the maximum subscription, the twenty millions will be just about covered if everyono who can do so subscribes his maximum liability. The legal obligation is, therefore, in most cases a fair guido to the moral obligation. Subscriptions aro now being received for the balance pf the twenty-eight million loan, and will be credited against the liability on tho twenty million loan. This will be a convenience to those who have the money available, as subscriptions bear interest from the date of receipt by the Treasury. "We advise all jrho can. to invest at once^