"WITHOUT PRECEDENT"

Dominion, Volume 6, Issue 1740, 3 May 1913, Page 3

"WITHOUT PRECEDENT"

GERMANY AND THE LEVY ON PROPERTY. REVOLUTIONARY FINANCE. EVEN THE "SURPRISE-PROOF" PERSONS STARTLED. Berlin, March 6. In matters of politics and _ economy Germany is receptive to new ideas and easily reconciled to throwing over old ones. Nevertheless, tho measure which tho Government now proposes, apparently as the oniy menus of continuing tho armaments race, has 6tartlcd even persons who are ordinarily surpriso-proof. This is the "single contribution from property" with which tho heavier, immediate part of tho new Army expenditure is to bo met. A levy, roughly estimated at .£50,000,000, is to be assessed on the capital value of all property over a certain, not yet stated, value in tho Empire; and this sum is to bo paid immediately, or at most in a couple of years, as a contribution. The heavy increase of permanent expenditure oil the Army is lo bo provided by continuing taxes, whi(& will also in somo form bo paid by property. Tho non-recurring contribution has naturally made a sensation, because it is opposed to the principles of taxation as recognised in European States; and it is without precedent in Germany in normal times. In war time it was practised in Prussia in 1812 and 1813; and to some extent it is tho centenary of the patriotio uprising of 1813 which is responsible for the idea of a contribution. Hitherto German financial experts havo universally doclared that the contribution expedient is justifiable only in times of war or of great emergency. Even . reference books agree that single enforced contributions from tho capital of property

are unwise and injurious to prosperity, if only because they decrease tax paying power in tlie future. The conclusion to 00 drawn from its adoption now is that the '"great emergency" has come; and that Germany's ordinary finances are too weak to provide for necessary armaments. The Government must either ■ have recourse to the non-repeating contribution from capital, or—what in principle is much the same—pay for current espenses by borrowing without making any provision for paying off. The "Vossische Zeitung" declares that "the non-recurring Imperial property contribution is equivalent to a declaration of bankruptcy of the national Treasury," and (quite apart from many objections raised by those who will be hit by the tax) that seems to be the general view. The disharmony between the national resources and the expenditure has, of oourse, been plain for twenty years;, but tho recourse to the contribution expedient indicates that the limit has been reached. What the Objectors Say. At present the political parties, judged by their newspapers, are only making up their minds as to how to treat the Government's proposal. The proposal has not, so far, been repudiated by any party. It is the non-party sticklers for sound finance who object. These do not believe the promise that the contribution will not be repeated; they predict that in future all unexpected armaments' expenditure will be met in some such way, and that, in turn, the possibility of so easily meeting expenditure will encourage the Government to arm without troubling whether it can pay out.of current revenue or not. The position, say tho objectors. will be this: In addition to at least £10,000,000 fresh taxes to be paid every year assessed on capital must be paid up at once. Only in rare cases can it be paid out of income. ,It means,' therefore, not only tho loss of the ,£5U,000,000, but also an annual tax. in the shape of loss of income, of any sum from JiHtoUO.OOU upwards, according as the money composing the levy is mainly taken out of mere investments or lost to productive enterprise. The proposed contribution causes surprise for other reasons. The chief is that hitherto the idea of an Imperial property tax has been rejected as bad finance. Property taxes have been left to the federated States for their own revenue purposes. The States have hitherto resolutely opposed tho ide.i of surrendering them tor Imperial purposes. Pria e Bulow said in 1909 that an Imperial property tax would be roCTi'ded }>y tije States as surrender ef their independence; and tho prologue to tho Financial Reform of that ycur laid down that the property tax was an essential factor in State and municipal economy; and that to appropriate it for Imperial purposes •vould bring the _ Stetes into the same embarrassed conditions as the Empire then found itsel f . This, "f course, referred to a nomiaal property tax, under which the capital value of property i 9 taken merely as a convenient i standard for taxing income: but the objection) is coosidered to apply doubly to a contribution out of capital. So fax, how ever, it appears that boxouy is tho only important Stato which dislikes the proposal. The Bavarian Prime Minister is reported, to bo delighted with tho new expedient. One objection raised to the new way of raising money is that sotrie States, among them Bavaria and AVurttemberg have i u property tax at all, and here the whole machinery of assessment will have to be specially created for tho'sake- of a single contribution which is not to recur. This and -several oth-?r practical difficulties, however, aro ignored in the general surprise at tho new principle in Imperial finance. Newspapers expiess surprise that the present Conservative, unimaginative Chancellor should exploit the patriotic "1813 sentiment" as the only menns <f avoiding the alternative ills: inadequate armaments and national bank'uj-tcy. Bui no confide ico : s shown in this new solution proving more permanent than thi last half-lozen finan."ial reforms, each of which was finally to repair the, Empire'., shattered finances.—''"Westminster Gazette."