The Daily News. THURSDAY, JANUARY 22, 1920. REDUCING THE WAR BURDENS.

Taranaki Daily News, 22 January 1920, Page 4

The Daily News. THURSDAY, JANUARY 22, 1920. REDUCING THE WAR BURDENS.

The great problem which is facing Britain, and, in a lesser degree, the units of the Empire, is that of the war debt. Britain's liability has reached the stupendous sum of £8,000,000,000, necessitating the raising of £400,000,000 a year for charges connected therewith. No Chancellor of the Exchequer could live who merely proposed to screw up the income | tax still further in a way that would penalise energy and enterprise on the one hand, while encouraging a desperate and fatalistic extravagance on the other. This assertion applies with equal force to the Finance Ministers of the Dominions. The danger of an attitude of complacency towards war ,debts is very real, and the temptation to leave the heritage to posterity—plus further accumulations appeals to those who use the line of least resistance. There is only one statesmanlike course of action to take, and that is to grapple with the war debts. This can be done either by a capital levy, a levy on war fortunes, or a permanent and heavy tax (over and above the income tax) on all business profits. Financial experts are practically agreed that the objection to a capital levy is the acute danger that, instead of being employed as a unique emergency measure, never to be repeated if peace is to be preserved, it would be used as a Socialist precedent. With regard to business profits, it may safely be assumed they will be permanently taxed in Britain, but a wider and more equitable impost will have to be levied than is provided by the excess profits tax, though great care must be taken to avoid crippling the productive and competitive energy of the nation. Evidently the most attractive method of raising money to meet the war debts is a capital levy ou fortunes made by, or in consequence of, the war. Several leading English journals, the Labor Party, the Liberals, and a strong section of Unionists favor this plan, though its application can be by no means easy or speedy. Obviously these fortunes were made in different ways—some by deliberate profiteering, some by automatic gain, and others legitimately. Hence the necessity for discrimination to avoid injustice. It is considered probable' that a capital levy on war wealth will be made, and in view of the unprecedented profits made by such firms as Coates' .(the cotton spinners) there appears to be good grounds for the k levy. If this impost does not suffice, then other drastic devices of a wider bearing will have to be tried. That the total mass of war debt must be reduced by exceptional measures is a certainty, quite apart from normal taxation. It is claimed that the alternative to a levy is heavy taxation spread over a long period of years to stabilise finances. The main drawback to a levy is the difficulty of framing a practical working scheme that would not savor of confiscation. To lay the whole burden of the war debt on accumulated property would eertainly penalise those who save capital for the community, while those who squander their incomes would escape. The possession of wealth ! naturally carries with it certain responsibilities, but to dispossess the owners of their savings would be decidedly a communistic move. Italy's intention to put into operation a plan of taxation ainounting really to a levy on capital, has been indefinitely postponed owing t tc ateong opposition from certain

bankers and financiers, and it is stated this has caused general disappointment. To raid men's resources nowadays would mean raising a barrier against enterprise the world over at a time when there is an insistent demand for capital that shall repair, build up, and restore the inroads made by the war. Commerce would be crippled everywhere and development paralysed. Before any definite action is taken there appears to be a need for a searching inquiry into the* best means for grappling with the war debts, and opening up fresh sources of revenue. Meanwhile retrenchment should be pushed to the utmost possible limit, and then the Governments should act wisely and boldly. In resolute, clear-headed financial ability, Britain has set the example to all other countries for the last two centuries, and will, doubtless, continue so to do in the future. The war debt problem presents no comfortable way out, but it has to be faced in a statesmanlike manner, for the limit of borrowing has nearly been reached. Greater production involves the use of capital, and if a serious effort is to be made to solve the war debt' problem it must inevitably follow the established lines of sound political economy and place the burden on those best able to bear it. This has been Britain's policy in the past, and may be expected to be so in the future.-