The Waikato Times With which is incorporated The Waikato Argus. FRIDAY, JANUARY 29, 1926. FRENCH FINANCE.

Waikato Times, Volume 100, Issue 16711, 29 January 1926, Page 4

The Waikato Times With which is incorporated The Waikato Argus. FRIDAY, JANUARY 29, 1926. FRENCH FINANCE.

The finances of France are causing alarm, the deficit being huge, and there is much difference of opinion amongst politicians regarding the best Way to meet the situation. Of the Bills in the programme of the Minister of Finance, the most important are a measure for raising new taxation and another for establishing a sinking fund for redemption of debt. The.first contemplates additional taxes, which it is hoped will yield nearly seven milliards next year and nearly eight milliards in 1927, out of which rj,600,000,000f. is required to meet the estimated Budget deficit, leaving the balance to go to a sinking fund. In addition to the seven milliard francs of additional revenue to be raised for the 1926 Budget, there will also fall to be collected from the taxpayers next year tlnee milliards under the special income levy imposed under a Bill passed recently in respect of the deficit for the current year.' This would bring the total of new taxation to be collected next year up to 10 milUards, which is equal to nearly 30 per cent, of the estimated revenue to be collected this year. Naturally the French, already heavily taxed, have been startled by, these proposals. They appear to be uncertain whether the sacrifices they are. called upon to make will really remedy the situation. This is the gravest feature of French finance. The suspicion grows that the public hostility to these taxation measures is due not t'o fiscal insensibility but to distrust of Parliament in consequence of its persistent, mishandling of the situation.

The Minister intended to raise 5,600,000,000 francs, the sum required to balance the Budget, partly from direct and partly from indirect taxation, the increases ranging from 7.2 per cent, on salaries and agricultural profits up to 20 per cent, on securities and real property. The special revenue for the sinking fund he hoped to provide by what would be virtually taxes on capital. The Right of the Ghamber is reported to be solidly opposed to the' character of the taxation proposed, while the Socialists are hostile to the indirect" taxation. Indirect taxation happens to be the most effectual fiscal weapon that France possesses and direct taxation the least. There seems to be an unbridgeable gap between the assessment and collection of direct taxation, which, of course, is a grave reflection on the machinery established for the purpose. Thus even if the Minister succeeded in persuading the Chamber to accept his fiscal measures, there would, it is feared, be little ground for confidence*that he had succeeded in solving the financial problem. There seems to be an air of unreality about a proposal to establish at this juncture a sinking fund. To balance the Budget on paper is one thing; to balance it in hard cash is another. The only real sinking fund is a surplus of revenue. If the Budget were balanced on paper and a sinking fund established at the same time, as the Minister purposes, and it was found at the end of the fiscal year that there was a deficit on the Budget, the Government would find itself in the absurd position of paying off bonds on the one hand and creating fresh debt on the other. The financial situation of France grows worse day by day, and tfie failure of the French Parliament to rise to that level of statesmanship which the gravity of the financial situation demands is ,a very disturbing fact. This feature of <the situation was dealt with by M. Raoul Peret in a speech he made on his election as president of M. Loucheur's Radical group. He urged the formation of a national Government that would sink political differences and deal with the financial problem in a really national spirit. If that were done, there would be real hope of solution; at present there seems to be none.