DEBT REDUCTION

Otago Daily Times, Issue 22985, 14 September 1936, Page 16

DEBT REDUCTION

A WINDFALL IN BRITAIN Fortunate taxpayers of some future generation may expect to profit by a “windfall" of something like £100,000,000 dropping into the Exchequer for the reduction of the National Debt (says the Daily Telegraph). Trust funds established a few years ago by generous and public-spirited donors will, in the course of decades, be swollen to this huge figure by the addition of compound interest. The annual report of the trustees of these funds, hitherto announced independently, are this year published in the form of a White Paper. The funds are the “ National Fiind,” constituted in 1927 with an anonymous gift of £500,000; the “Elsie Mackay Fund," constituted with a gift iof £500,000 by Viscount and Viscountess Inchcape in 1929 in memory of their daughter, who perished in an attempt to fly the Atlantic from east to west; and the “John Buchanan Fund,” constituted in 1932 with a gift of about £4OOO. The “ National Fund ” will go on accumulating for a period of years which will be decided by the trustees, Baring Brothers and Co., in accordance with the instructions in the trust deeds. The donors of the Mackay Fund proposed that the money should be allowed to accumulate for roughly 50 years, unless the proceeds, with other funds available, should be sufficient to redeem the liabilities of the State at an earlier date. At present the National Debt amounts to £7,796.056,000. The value of the assets of the National Fund is now £755,359, which includes interest, investment appreciation, and additional subscriptions totalling £15,142. At this rate of progress the fund, if realised 100 years after its inception, would produce about £70,000,000. The assets of the Elsie Mackay Fund are valued at £933,293, which, allowing for the same rate of interest and investment appreciation, would amount to some £35,000,000 at the end of 50 years. TAX REMISSIONS But the taxpayer of the future who will benefit from the generosity of founders and subscribers of these funds should not omit a passing tribute to the heavily burdened taxpayer of the present day. Investigation of the accounts shows that the public is contributing some £30,000 a year towards these funds m the form of a remission of income tax. By Section 30 of the Finance Act of 1928 trusts for the reduction of the National Debt are free from income tax, estate duty, and stamp duty. The income of the National Fund for the financial year ended March 31, 1936, was £30.517. Income tax and super tax on these amounts would be roughly £30,000. . As the assets of the funds increase with compound interest the loss to the Exchequer owing to the tax remission will, of course, increase. More severe is the temporary loss in respect of the estate duties, which would amount to some £250,000 in the case of each of the two larger trusts

had the money remained in private hands on the death of the owner. The feeling of the Treasury with regard to such trusts is that it is so grateful for the public-spirited sacrifice that it does not feel inclined to impose conditions as to when the proceeds arc to be realised. Apart from these welcome assurances of future relief, there is a continuous flow of gifts to the Exchequer for immediate dgbt extinction.