THE COMPULSORY LOAN

Otago Daily Times, Issue 24416, 30 September 1940, Page 4

THE COMPULSORY LOAN

The regulations which have been issued, detailing the plan that may be adopted by the Minister of Finance to enforce contributions by taxpayers to the war loan, indicate that recourse to official blackmail—for so it may be fairly described—is not despised by the Government. By notice in the Gazette a person may be required to subscribe to the loan, and - the . notice will specify the amount which this person should subscribe. The prospectus of the loan makes it clear that the Minister will not regard any. person as having subscribed to the loan in due proportion to bis means unless he has subscribed at least the amount of the income tax paid by him for the past year, less £ 50. In the case of companies the amount of the contribution to the loan is to be the amount of the income tax diminished by £7O. The terms of. the notice that , is to be issued in the Gazette must necessarily be governed by the reference in the prospectus to the basis of subscription to the loan. And thus it is- plain that a gazetted notice, to any person specifying the amount of the subscription which he is required to make to the loan must divulge the amount that has been paid by him in income-tax, and from this it may be possible to calculate approximately the amount of his income. But the returns of income which are made to the Commissioner of Taxes are furnished in confidence, and it is one of the cherished traditions of the Taxation Department that it preserves the confidence which the taxpayers re-

pose in it. Apparently this tradition is now to be destroyed, and the principle of secrecy that has obtained in the past as between the department and the public is to be violated. It cannot be otherwise if the regulations which the Government has issued are to be put into effect. There may be no need to put them into effect. Probably there will be none. Rather than expose themselves to the risk of having their names published in the Gazette as those of persons who have not subscribed to the loan to the extent of their means, people will certainly subscribe. The Government will thus, by either shaming or coercing the public, attain its object of securing a full subscription to the loan. In either event it will have no cause for pride. And yet the Minister of Finance has had the hardihood to assert that it is a misnomer to talk of the loan as a compulsory loan. He may yet realise that the Government's whole conception of this loan, originating in a desire to placate a section of its supporters whose loyalty to it has become somewhat doubtful, has been mistaken. If the prospectus is consulted it will be seen that the loan is of unstated amount. The Minister of Finance has, however, spoken of £8,000,000 being required. This, sum—and more than this sum—would have been readily subscribed by the public if the Government had sought to raise the money in the ordinary way at a modest rate of interest. It would have been better business on its part if it had done so. The stock which is to be issued under its compulsory loan will be quoted at a very considerable discount when it comes on the market, and it seems quite likely that the effect of this will be prejudicial to the general credit of the Dominion. The principal demand that there will.be for the stock will arise out of a desire to utilise it in payment of death duties.