HOW THE EXCESS PROFITS TAX HAS WORKED IN GREAT BRITAIN.

Manawatu Herald, Volume XXXIX, Issue 1741, 28 July 1917, Page 2

HOW THE EXCESS PROFITS TAX HAS WORKED IN GREAT BRITAIN.

MR. RAYMOND'RADCLIFFE contributes to The English Review a rather remarkable article upon the heavy taxation in Great Britain. He says that an income tax of 5s in the pound and an excess profits tax of 60 per cent, produced no less than £340,053,000 for the year ending .March 31st, This warmed the hearts of the people who regarded it as a splendid contribution towards the cost of the war. But, says Mr Radeliffe, the net result of the heavy taxes has been to make the cost of the war go up by millions, and ho gives figures which apparently prove this. The working man thinks that he is getting his own back when he hears that all the great capitalists have been compelled to disgorge 00 per cent, of their ill-gotten gains, “Why stop there?” he says; “why not make it 70 per cent., or even 80, or take the whole lot for the benefit of the State?” The capitalist laughs and replies, “Put on any tax you like, I don’t care. I don’t pay it. You pay it, you poor deluded working man, ignorant of political economy.” Mr Radeliffe asserts that the purchasing power of the pound sterling has dwindled so steadily that today a £1 Treasury note is worth only 11s. Traders cannot, and will not, work at a loss. They add the (axes to (he cost of (he goods they sell. That traders do add taxes to the cost of the goods can be readily seen in (he annual reports of the thousand and one limited companies which appear every year. If these companies struck their balances before adding the excess profits tax we should perhaps not be able to point the moral, but; they don’t. Almost all give, net profits after deducting the (ax, and also after deducting income tax. . . . Every manufacturer has made more money than he ever made before, and has made it after paying all the preposterous taxes. The excess profits tax, says Mr Radeliffe, is like a snowball. The shell-maker adds 60 per cent, to the cost of making, and usually another 10 per cent, for himself. He has to pay the iron or steel maker 60 or 70 per cent, more for the steel, and each separate item in this bill of costs is added to by the tax. The inevitable result is that he sells to the Government at a figure which includes the payment of the tax. Provision shops have had to pay more for provisions, and workmen find the cost of living higher and demand higher wages, which again increases the cost of goods they make. Yet the snowball goes on Tolling, and when (lie Budget comes along we may find the excess profits fax raised to 75 per cent., which will automatically raise the whole cost of the war 15 per cent. Xay, it will do more, for it will raise the cost of the workman’s food, and this moans discontent, strikes, and then higher wages. In conclusion, he suggests that the Government ought, to take off the tax. The people, when they demanded an Excess Profits Tax, thought that they would stop profiteering. They must admit their mistake and cut it off altogether. “It was a hideous blunder, and has acted in a manner none of us foresaw,’’