FRENCH FINANCE
BUDGET THRICE THE PRE-WAR HlilißE
HOW ALSACE WILL HELP
There is no doubt that France has bee, more heroic on'the batdofield than .. l the matter of taxation. Perhaps Uuaverage Frenclunan, being a P e! }^ ,nt heart, is more prepared «P lis life than his money. As a fact the French farmer has had to lace during the war an increase in taxation which was rather mild in comparison with that which was being b> the British taxpayer. To complete Ine truth it must be owned that some ot tne new taxes have been evaded in the good old French way: M: Klot* has, indeed, had to ask for additional means of coercion, and told tho Senate that the sum of these evasions v,-ns estimated to lie not much short of '250 million francs a year. When this confession has been made, with due humility, there is on the otn° r hand, another aspect of things which foreign observers may well take into account before forming their final opinion on tho matter. The financial position of France has been throughout Hie war much more difficult llian that of Britain. In the first place, the ten department!) which were touched by the .German invasion were among the richest ot the wliolo country. Though (hey did not quite represent . thn eighth part of, France, tliev supplied to the Frencu Treasury a little less than one-fifth of i.s revenue. In the second place, while Britain was able to keep her trade connections with many parts of the world and manv of her industries going—a fact which, no doubt, was beneficial to all the Allies—the main part of French economic activitv had to be diverted from the day of the outbreak of hostilities to- . wards the war—a disaster which was not adequately compensated bv the. money spent on French territory by Allied armies. Finally, there was the intense moral and physical strain inflated by the war on the manhood of the nation. Speaking from an economic point of view, the million and a half_Frcnch dead represent a diminution in national wealth which makes it difficult to impost)]at once on the nation the burden of taxation necessary to meet tho new requirements.
The National, Debt. These requirements aro pretty heavy indeed. According to the figures given by M. Klotz, the national debt will ultimately reach the very high figure of 200 billion francs (XS.COO.OOO.OfIfI at the normal rate of exchange), involving an annual rent of ten billion francs. To this annual sum"-must be added the normal increase!! expenditure, which M. Klotz •reckons to reach six biljion francs, everything included, but which other experts aro inclined to put at a higher figure. This "means that resources will have to be found fcr a Budget of lfi and 18 billion francs (-£G!0,000,000 and ,£720,000,000), while the pre-war Budge! was about five biilion francs, that' is. less than one-third of the new one. Jlow are these resources to bo found? Some have already been raised during the war. As an immediate measure the Minister is now asking Parliament to at once vote additional taxation bearing on various matters. Instead of establishing a tax on capital he asks-for an increase in death duties. He suggests also the creation of a super-tax on increased incomes. The other devices are less new, as they more especially consist in raising' indirect taxation on all kinds of commodities, including sugar, coffee, wine, tobacco, and even matches. This would provide the Treasury with an additional revenue of 12S0 million francs, which, added to the revenue already derived from old and now taxes, would bring the national revenue to 8195 millions. As the real' revenue before the war was only 4005 millions, this r..enns that as early as 1919 it will be about, double what it was in 1914. Revenue from Alsace-Lorraine.
This, however, is clearly but a beginning, for this new figure will be far from meeting the needs of the after-war Budget. On the other hand, M.lvlotz, while wisely declining to take into account the possible indemnities due by Germany, rightly remarked before the' Senate that the national income will quite naturally increase in consequence of the liberation of the occupied territories and of Alsace-Lorraine. According to his estimate this will result within the next three or four years in an automatic increase of about 25 per cent, of the national revenue. Without creating any .additional resources the national income will by 'that time have reached 11,250 million francs. This leaves a net deficit only of from five to seven billion francs, according to the estimate which is made of the probable national expenditure.
The Psychological Difficulty, How that gap may be tilled is still a matter 111 speculation. Al. Kkhz personally favours an increased income tax, additional taxes on war benefits, tarili' reform, and the nationalisation of uu and pecrol. Whether his schemes will ultimately be attained is anotner question. The Preach socialists arc aireauy'starting an agitation, corresponding to mat winch is taKiiig piace in other countries, for the nationalisation ot mints, tailways, other tilings, witiiuuc talcing into account tne tael that Prenoh railways, lor instance, arc working at an increasing loss so that their nutiuuahiu nun wouid result only in an increased burden'tor the Prencli taxpioei. Then propaganda mil, However, lie met only n a strong liiiancial policy is set tip by inose who want to resist blind demagogy. Unless such a policy is ini:util 111 nine,' and placed before tne nation, lime is a danger that the Prencli peasant wili pteter experiences in wlioiesaie natiuiiaiisa« iiou to paying direct taxes, lor the psychological duliculiy comifcctou with l'roiicn linauce is always that of convincing tne agricultutal taxpayer Jlowever complicated the question may bo, it will be faced. The reparations wnidi Germany is to bo made to pity will enable the country to make a new start. It is after that ecouomic. revival has begun—thac is, witiun lew years from iiu\v—that it will oo possible deliiutciy to restore- the balance of French .budgets which Hit wax Has m> dangerously upset.
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Dominion, Volume 12, Issue 259, 29 July 1919, Page 6
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1,009FRENCH FINANCE Dominion, Volume 12, Issue 259, 29 July 1919, Page 6
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