Manawatu Evening Standard. THURSDAY, OCTOBER 18, 1917. THE £4,000,000 WAR LOAN.

Manawatu Standard, Volume XLII, Issue 10110, 18 October 1917, Page 4

Manawatu Evening Standard. THURSDAY, OCTOBER 18, 1917. THE £4,000,000 WAR LOAN.

Sir .Toskpii Ward in introducing the new Loan Hill lasb evening, intimated that the total borrowings lor war purposes, with borrowings authorised to da to, amounted to £59,335,000, which, with the new loan of lour millions, would bring the total up to £63,335,000. The interest on this sum alone represents an annual additional charge (on a four and a half per cent, basis) of £2,850,000, which must be met from the Consolidated Fund. And the end is not yet, for the amount stated by the Minister for Finance will only carry us up to the end of July, 1918. The money, however, must be found, and it will be the duty of the taxpayers to provide it. Money has been described as "a good soldier." The main factors in the war are men and money, the former for the lighting and the latter for provisioning and munitioning them. Both are urgently needed. Effective steps have been taken to provide the men: we must not let the money provision prove less effective. But, that said, it seems to us that the Government would do well to revise the terms upon which it is issuing its war loans. It should be an easy matter to liberalise the next issues so as to make them more attractive to the smaller class of investor. Four and a half per cent., free of income tax, is an excellent thing 'or the capitalist with large interests, but when it is possible for the .smaller man, say with £IO,OOO capital, on the interest of which he has elected to live, to get six, or even live and a half per cent, for his money, it is not a fair proposition to ask him to reduce his in- | come bv £'l4l 5s per annum in the one case, or by £lOl Us 3d in the other. Although Labour Socialists and Radicals, whose bete noii- is the so called capitalist, declaim against the iniquity of the National Government in remitting income tax on the interest derived from War Loan investments, the smaller investor really does, or can do, better for himself by using his capital in I other directions, and paying income tax on the interest derived from his investments, than he would do- were he to take ui) War Bonds at J-J per cent, free of income lax. To take cases in which sav, a retired farmer, or business man,' has £IO,OOO of £20,000 canital, on the interest of which he is clel pendent for the remainder of his days. 11l the former ease he invests bis money hn property or stocks, returning hint. Lav 6 per "cent. On his £IO,OOO the interest amounts to C6OO per annum. f Under the present income tax rates he lis allowed exemption up to C3OO, and so is taxed only on the remaining £JTO. I I'aying at the rate of 7d in the £l, he i is chargeable with £8 15s income tax, l his net income being thus reduced to £5'.).! ss. If, as a patriotic duty, lie

invests liis capital in War Bonds freo of income tax, his income would be reduced to £450, so that he is actually at a loss of £l4l ss. But ; say he only gets .0} per cent, his income thus standing at £550. His income tax would, at (i : ;d iu the £l, amount to £8 8s 9d, leaving his net income at £551 lis 3d, or £lOl Us 3d more than he would receive from a -U per cent tree of income tax investment in War Bonds. The man with £20,000 invested in Government War Loans would receive £9OO interest on his free of income tax bonds, as against £ll4jJ on a 6 per cent investment, upon which he paid income tax at the rate of one Milium in the £l. so that his VVar Loan investment places him at a loss oi IJU) |.«r annum. There are other anomalies in connection with our war finance, but we have said enough on the subject to show the necessity tor liberalising further War Loans.