A £1,550,000,000 BUDGET

Dominion, Volume 14, Issue 173, 18 April 1921, Page 5

A £1,550,000,000 BUDGET

TAXATION AND INDEMNITY.

Continuing the Newmarch lectures at University /College recently, Sir J°s ia “ Stamp discussed “The Limits of taxable Capacity.” He said that although the idea was freely used in the discussions about our own financial «tuatimi, and also about the power of Geimanj to pay indemnities, ■ the principles underlying it had not yet been publicly fonnucapacity,” he pointed out, really depended on the total resources belonging to the inhabitants of a. country? whether arising within or beyond , its boundaries, and excluding vhat wen . to non-residents. It varied according to five main conditions :-(l) Th ® e * ten l* o j which taxes raised were used for_ pa - I meat of interest on debt held at homo, (i) the extent of redemption of home debt: (3) the way in which toxes were rvised’ (4) the ineouality of distribution of wealth; and (5) the prevailing payx'holoffv of th.o nation. He held that, if pre-war production were once more obtained, and if we were content with a current consumption ot | 10 per cent, less than in 1913, and nlso with a reduced annual accumulation of capital, the limit of taxation at the present level of prices would be Cudgel of £1,550,000.000, provided that £300,000.000 were applied to the redemption of . debt and £350,000.000 to interest payments But. the sacrifice entailed would | be real, and the invested capital em- ! ploved in satisfying demands for com- j modifies and luxuries of secondary im- I portance would be in some jeopardy, while capital would bo accumulating at onlv about half the pre-war rate. This figure moreover, must include all addi- I lions to local rates. We had no exact knowledge of lhe present output, but enough to indicate that, tho present taxing limit was below this critical point. , When taxation approached this limit, it was just doubtful whether lhe amount of incentive left to the. worker and saver was sufficient to enable the assumed ; amount of production to I>e obtained, ex- j cept under the influence of patriotic ; stimulus and « conviction that the ' l'9(IO.(KIO.Wfl was being profitably spent. I “Taxable i-nnacity’’ was only theoretically the difference between total prodne- ‘ tion and the subsistence level, and people j considering the capacity of Germany often thought only of depressing consump 1 ion to tho latter level, and ignored the effect niton production. The pro- . duction level was not an absolute figure, • hut was functionally related to the eonsumption level. More could lie got from Germany ultimately by not pressing the inhabitants 100 ruthlessly down to the subsistence point at tho present time.