EVENING POST. FRIDAY, JULY 3, 1931. IN A GRAVE EMERGENCY

Evening Post, Volume CXII, Issue 3, 3 July 1931, Page 6

EVENING POST. FRIDAY, JULY 3, 1931. IN A GRAVE EMERGENCY

There are two things to be said in favour of the Government's unemployment finance proposals: They are submitted in a grave emergency to meet an urgent and real need, and their operation is limited to a year. These are arguments of expediency and they are the only arguments in favour of the proposals. On principle the proposals are wholly unsound and in a-great measure they are unjust. They violate the canons of taxation. They destroy the last vestige of insurance principle in'the original Act, and they practically thrust' the main burden of meeting the cost of unemployment upon the general taxpayer. Yet when all this is said, it must be allowed that the Bill, so far as its main provisions are concerned, is the only Bill that could have been introduced. It is justified by expediency alone, but expediency must rule in this emergency. '/Soundly devised and .equitable measures could not be made operative to yield suffi-, cient revenue in time. In humanity's! name something had to be done, and if that which is proposed is ■\lrong and inequitable the excuse which must be accepted is that it is necessary to prevent the gravest hardship. The wages tax is certainly preferable to thrusting the whole charge on the Consolidated Fund. It is a visible and direct tax. The taxpayer can, therefore, distinguish between the money hcpays to "the Government" and the money he pays to relieve unemployment. Because of this distinction he will be less inclined to vent his indignation in general and useless protests against "Government extravagance," and more disposed to watch the spending of his wages tax and protest against wastage. This advantage compensates for the additional cost that must be incurred in collecting a special tax, and which would be saved if the general taxation machinery were used to collect another million for the Consolidated Fund. There is the further advantage that the wages, salary, and income tax does not apply to companies, so that the heavy handicap which high company taxation now imposes on enterprise is not made heavier still-r-except in so far as part of the additional Government subsidy must come from this source. But the main reason for preferring a wages tax to the Consolidated Fund is one to which the Labour Party is already objecting—that it,widens the field of contribution to include all persons who receive salaries or wages. Many such persons would contribute nothing if the money were taken mainly from income taxation. It is right and fair that such'persons should contribute, for they are the principal beneficiaries; Even as it is, the. scale of contributions is inequitable. It may be condemned in the words used by "The Times'.' in criticism of the Trades Union Congress proposals for jthe' amendment of the British Unemployment Insurance scheme: — Contributors are to be brought in irrespective of. their risk of unemployment and, broadly speaking, made to contribute in inverse proportion to that risk. There is to be no relation whatever between the contribution and the benefit of the individual. , This applies exactly to the wages and salaries tax." The. £1000 a year man who pays, £13 10s (apart from his income tax share of the Government subsidy) has not five times the. risk of unemployment of the £3 a week man who pays £2 17s 6d. Nor if he lose his employment, arc his benefits five times as great. Indeed, he has practically no prospect of any benefit.'" In brief, the more the contributor pays the less he is likely to receive, and the less he pays the more he is likely to benefit. Under such circumstances there can be no justification whatever for yielding to Labour pressure and exempting the chief beneficiaries from all obligation to contribute. • In a sound unemployment insurance scheme, prepared before the need was pressing, contributions should be graded "according to risk and benefit. Even the flat rate tax offended less against this principle than does the wages tax, in which payments .are in inverse proportion to risks and benefit. But when the urgent need is upon us the money is unobtainable under an equitable scheme. Even an increased flat rate tax would' have been difficult to collect. Hence the resort to injustice and expediency. But even in this last resort Parliament should endeavour to avoid Heaping up further trouble for itself. On this ground we hope that women will yet be excluded from the scope of the measure. The revenue obtained from

them will not compensate for the difficulty imposed upon the board of devising a plan to meet their needs, and the difficulty also of deciding who shall and who shall not contribute. An indication of this latter difficulty may be seen in the exemption of domestic servants. Why should the domestic, with wages, board, and lodging worth £2 10s to £3 a week pay nothing, while the girl in the shop, office, or tearooms, with £2 to £3 wages (out of which, she must pay board and lodging) is taxed? Incidentally, it seems to us that the farming community may be allowed to escape lightly if a declaration of "no income" takes no account of accommodation and food, which the farmer does not pay directly, but which the town-worker must pay for, and be taxed on the wages wherewith he pays. These are just a few of |he^points which require careful. scrutiny, if the injustice of an unsound .measure, justified only by the gravity of the emergency, is not to be aggravated.