BANKS AND TAXATION

Evening Post, Volume CX, Issue 42, 18 August 1930, Page 11

BANKS AND TAXATION

POSSIBLE EFFECTS ON PRICE OF MONEY It is understood that the Government is calling for applications from the banks for treasury bills of short date, or until the collections of land tax and, later, from income tax, are available. The rates of interest at which tenders may be submitted are likely to be definitely influenced by the proposed increases in the bank-note tax and in the income tax to be paid by banks. In other words, a higher rate of interest may be asked for these new treasury bills, in consequence of the proposed increased taxation. The increase in the note tax, if given effect to, is likely to lead to realisa-, tion of Government securities and a' considerable calling up of advances, in order to reduce' the note circulation, and the charges of the banks may be increased. It has been explained that the banks must perforco hold a substantial quantity of gold in their vaults as the foundation of credit, as the Government would have to do if it were the sole note-issuing authority. Notes must have a gold backing.

The views of the banks on the proposed taxation and their objections to it and the probable consequences, if it is carried have, we understand, beea fully set out in a private deputation to the Government.