If one cannot have a levy complete at the time of imposition, it clearly ought not to be launched at a time of rapidly changing prices.  But that is, perhaps, when the economic case for it is strongest.

A DESPERATE REMEDY

I do not rule the Capital Levy out as impracticable by any means, but as a taxation expedient I cannot be enthusiastic about it.  It is a desperate remedy.  But if our present temper for “annual” tax relief at all costs continues, we may need a desperate remedy.  Without a levy what kind of position can you look forward to?  Make some assumptions, not with any virtue in their details, but just in order to determine the possible prospect.  If in fifteen to twenty years reparation payments have wiped out 1000 millions, debt repayments another 1000, and ordinary reductions by sinking funds another 1000 millions, you will have the debt down to 5000 millions, and possibly the lower interest then effective may bring the annual charge down to some 200 or 225 million pounds.  If the population has reached sixty millions the nominal annual charge will be reduced from L7 16s. by one-half, but if prices have dropped further, say half-way, to the pre-war level, the comparable burden will still be L4 10s. per head.

It is no good talking about “holidays from taxation” and imagining you can get rid of this thing easily; you won’t.  We are still in the war financially.  There is the same need of the true national spirit and heroism as there was then.  Thus hard facts may ultimately force us to some such expedient as the levy, but we should not accept it light-heartedly, or regard it as an obvious panacea.  Perhaps in two or three years we may tell whether economic conditions are stable enough to rob it of its worst evils.  The question whether the burden of rapidly relieving debt by this means in an instalment levy over a decade is actually lighter than the sinking fund method, depends on the relation of the drop in prices over the short period to the drop over the ensuing period, with a proper allowance for discount—­at the moment an insoluble problem.  I cannot yet with confidence join those who, on purely economic and non-political grounds, commend the scheme and treat it as “good business for the income-tax payer.”

FREE TRADE

BY RT.  HON.  J.M.  ROBERTSON

P.C.; President of National Liberal Federation since 1920; M.P. (L.), Tyneside Division, Northumberland, 1906-18; Parliamentary Secretary to Board of Trade, 1911-15.