The Dominion. THURSDAY, JULY 15, 1920. BRITISH AFTER-WAR FINANCE

Dominion, Volume 13, Issue 249, 15 July 1920, Page 6

The Dominion. THURSDAY, JULY 15, 1920. BRITISH AFTER-WAR FINANCE

■♦ One, of to-day's cablegrams mentions that a motion in tho House of Obmmona to reduce the excess profits tax from 60 to 40 per cent, was rejected by 285 votes to 117. This no doubt means that the statesmanlike Budget framed by Mr. ■Austen Chamberlain is', finally and decisively endorsed. Great efforts have been made to secure some modification of the extraordinarily severe taxation (reaching its peak in the increased excess profits tax) which is the outstanding feature of 'the Budget, but the Parliamentary vote reported to-day in effect authorises the British Government to carry taxation to its practicable limits. The imposts by which it is proposed to raise a revenue of £1,418,300,000 during the current year are necessarily almost unexampled of their kind. Tho nature of the demands made upon tho wealthy is indicated in some particulars cited by Mr. Chamberlain during a debate on the Budget. A man with, an income of £26,000, he observed, had to pay 13s. out of every pound ho earned; a man with £•50,000, fourteen shillings; with £100,000, fifteen shillings and threepence; and with £150,000,.practically sixteen shillings. At the other end of the scale of wealth substantial contributions are exacted from peppk who in this country would be_ entirely exempt from direct taxation. In Britain single persona begin to pay income tax on investment returns of £140 a year, and on incomes wholly earned if they amount to £160 a year. As against the income tax exemption of £300 in this country, the unmarried person who earns an income of that amount in- Britain pays a tax of £20 ss. per annum. The. unmarried taxpayer deriving the same income from investment pays an additional amount of £4 10s. in income tax. . The financial burdens which necessitate such demands upon the national resources were graphically set forth in a recent lecture bv Professor John A. Todd, of Ba'lliol College, Oxford. The most striking of a series of instructive comparisons instituted by Professor Todd con trastod British finances in the late war and in the Napoleonic wars: — Napoleonic Great War wars. (estimates) Datei ■ 1Y93-1815 1914-19 Duration 22 years. 5 years. Ooet to U.K. £831 millions £10,656 millions liaised by tax- (gross)* ation £391 millions £3,3MuuUlons Percentage ot total 47 32 War revenue (annual) £191 millions £109-£IOSO millions Raised by loans £440 millions £7,282 millions Percentage of total 63 68 Be- Beginning ginning of war. End. of war. End. Annual taxation per head- 20/- 70/- 75/6 £24 Annual debt charge per head 13/- 35/- 10/6 £7/10 National income £250 £350 £2250 £4000 mill. mill. mill. mill. National income per head £17 £18 £50 £80 Taxation per cent of income 6 20-7} SO ♦Including £1852 millions accounted for by loans to the Dominions and Allies. It will be observed that taxation at the end of 1919 absorbed 30 per cent, of tho Britsh national income (is compared with 20 por cent, at the close of the Napoleonic wars. Nevertheless, the late war ' was financed iri a much greater ratio than the earlier conflict with borrowed •money, and debt charges per head, which increased less than 200 per cent, in the twenty-two years of the Napoleonic wars, increased by nyirly 1400 per cent, iu tho five years to the end of 1919. The problems thus raised are, of course, enormously accentuated by the liberal provision now made for disabled soldiers and for the dependants of dead and living soldiers as compared with the conditions that obtained a century ago. The best justification for the strong policy adopted by the British Chancellor ol bie Exchequer appears in the fact that the leeway to be recovered in restoring the national finances is very much greater now. relatively as well as absolutely, than at tho end of the long struggle against Napoleon. While the unsparing call made upon the national resources is the leading feature of the British Budget, it is in other respects noteworthy. The Chancellor of the Exchequer has (•one, for instance, to considerable lengths in meeting tho prevailing contention that married people, particularly if they have children, ought to be granted somo definite relief from taxation, and also in. distinguishing between incomes that are earned by personal effort oi service and those derived from investmont. As the income tax is remodelled thoro is an exemption ot £250 for married folk and £150 for the unmarried. The rates on all incomes up to £800 are to be lowered, and the taxation on big incomes increased. Mention has already bcon made of taxation on such

incomes amounting to four-fifths of their total amount. As regards small and medium incomes, the incidence of the new taxation as it bears respectively on single persons and on married persons with and without children, together with tho distinction drawn between "earned" and investment incomes is indicated in the tables which follow. In every_ caso the, minimum income taxable in each category is shown :— Single Persons. Tax on Tax on Total earned" '"investment" Income. Income. Income ,£ ■£ a. d. £ fl . d. ltd 0 0 0 o 15 0 150 0 0 0 & 5 0 160 17 0 3 15 0 200 6 15 0 9 15 o » 20 5 0 24 15 0 600 60 16 0 7515 0 1000 195 15 0 225 15 5 2000 «5 15 0 fi2515 0 Married Couples Without Childken. Tax on Tax on .Total. "earned" "investment" Income. Inoomo. Income £ 4 ■• d - £ «• «•' 250 0 0 0 3 15 0 300 6 15 0 H 5 0 500 33 16 0 48 15 0 1000 16R15 0 10315 0 2000 438 15 0 498 15 0 Married Couples Entitled to Allowance for Three Children. _ , , Tl "°n Tax on Total. 'earned" "inTCStnwmt" Income. Income. ■ Income. , t £ „ • £*■ d. £b. d. 350 1M nt <00 615 0 1215 0 MO 20 5 0 27 15 0 1000 141 15 0 m ]5 „ 2000 411 15 0 471 15 0