THE OTAGO DAILY TIMES WEDNESDAY, October 2, 1940. THE CMPULSORY LOAN

Otago Daily Times, Issue 24418, 2 October 1940, Page 6

THE OTAGO DAILY TIMES WEDNESDAY, October 2, 1940. THE CMPULSORY LOAN

It has been computed that only one out of every nine individuals in the Dominion who have assessable incomes will be required to contribute to the compulsory war loan. The other eight will escape through the operation of the clause in the loan prospectus which states that a person will not be deemed to have subscribed his due proportion of the loan unless he has subscribed at least the amount of his income tax for the past year diminished by £ 50. The effect of this exemption is that persons with incomes up to £6OO will be relieved of the obligation to subscribe. They constitute by far the largest class of payers of income tax. It is to, a. comparatively small class, in the numerical sense, that the spur of compulsion must, where necessary, be applied. Moreover, the aggregate assessable income of members of the class that is exempted from the obligation to subscribe to the loan is greatly in excess of that of members of the smaller class. The most recent return indicates that the taxable balance of incomes of individuals in receipt of £6OO and less amounts to nearly £67,000,000 out of a total of £79,157,000. The contributors to the loan will, in fact, apart from companies, be a limited number of people—fewer than 22,000 in all — who are already among the most severely taxed in the community. The successful prosecution of the war is vital to every citizen of the Empire wholly irrespective of class or grade. Upon this account the Government proposed, in the Budget, to require every one to make some direct and appreciable contribution to the cost of the war effort. Mr Nash expressed confidence that every one would gladly make his contribution by the payment of a national security tax of Is in the £ of all income. How misplaced that confidence was is known to the public. The Arbitration Court has required that the contribution shall, in the case of workers under industrial awards, be paid by the employers, and the Government itself has decided that the taxpayers shall provide the contribution on behalf of public servants whose salaries and wages do not exceed a certain amount.

This plan of its devising having broken down with its own concurrence, the Government has another scheme by which it is contemplated that all classes of the people shall have an opportunity of directly providing finance for application to the war effort. To this scheme reference was made in the Budget in the following terms: “ In addition to loans in a form suitable for ordinary investors, provision will be made to enable the rank and file of the people to do their part by subscribing small amounts at regular or irregular intervals as best suits them. This will be done through the introduction of a national savings scheme operated in conjunction with the Post. Office Savings Bank.” The intention of the Government to inaugurate a scheme of this nature had been announced eleven months earlier by Mr Savage, when-he was acting Minister of Finance, but the legislation that was then promised “ at an early date ” to give effect to the proposal was never submitted to Parliament. Now, however, that the scheme is definitely related to the provision of war finance, it should not be too much to hope that it. will not also be abandoned. There should be large numbers of industrious and thrifty persons of moderate and small means in the Dominion desirous of contributing, according to their ability, to the cost of the prosecution of the war. A vast sum of money has been I’aised in Great Britain through the support that has been given to a savings campaign and the sale of war savings certificates in Australia has yielded between £4.000,000 and £5,000,000. An important effect of the operation of schemes of this nature, while it swells the funds available for war finance, is that it provides a safeguard against inflation in the sense that money which is saved might otherwise be Utilised in the purchase of consumable goods and thus, by its pressure on the market, force an upward movement of prices. The Dominion awaits the inauguration of a savings plan. If the experience in other parts of the Empire furnishes a reliable guide, it should be highly successful.