The further development of the budget will be directed toward the working out of the details of this general plan, and, in particular, toward differentiating revenue and expenditures: (1) direct, actual money received or paid, and (2) transactions involved in the accounting of material and labor, but not involving any actual receipts of money, or requiring any actual disbursements in money.
VI
In the field of taxation one must bear in mind first that the entire question of taxation has been radically changed with the beginning of Communist reconstruction.
Under the influence of the combined measures of economic and financial legislation of the Republic, the bases for the levying of land, real estate, industrial taxes, taxes on coupons, on bank notes, on stock, stock exchange, etc., completely disappeared, since the objects of taxation themselves have become government property. The old statute regulating the income tax (1916), which has not as yet been abolished, was in no way suitable to the changed economic conditions. All this compelled the Commissariat of Finance to seek new departures in the field of taxation.
However, it was impossible to give up the idea of direct taxation prior to the complete reformation of the tax system as a whole. Our work of Communist reconstruction has not been completed; it would be absurd to exempt from taxation the former capitalists as well as the newly forming group of people who strive for individual accumulation. This is why the system of direct taxation, which has until recently been in operation, was composed of fragments of the old tax on property and of the partly reformed income tax law. However, beginning with November, 1918, to this old system there were added two taxes of a purely revolutionary character which stand out apart within the partly outgrown system “taxes in kind” (decree of October 30, 1918) and “extraordinary taxes” (November 2, 1918).
Both decrees have been described as follows by Comrade Krestinsky, Commissary of Finance, at the May session of the financial sub-divisions:
“These are decrees of a different order, the only thing they have in common is that they both bear a class character and that each provides for the tax to increase in direction proportion with the amount of property which the tax-payer possesses, that the poor are completely free from both taxes, and the lower middle class pays them in a smaller proportion.”
The extraordinary tax aims at the savings which remained in the hands of the urban and larger rural bourgeoisie from former times. Insofar as it is directed at non-labor savings it cannot be levied more than once. As regards the taxes in kind, borrowing Comrade Krestinsky’s expression, “it will remain in force during the period of transition to the Communist order, until the village will from practical experience realize the advantage of rural economy on a large scale compared with the small farming estate, and will of its own accord, without compulsion, en masse adopt the Communist method of land cultivation.”
Thus, the tax in kind is a link binding politically the Communist socialized urban economy and the independent individual petty agricultural producers.
Such are the two “direct” revolutionary taxes of the latest period. In regard to the old system of pre-revolutionary taxes, the work of the Commissariat of Finance during all of the latest period followed the path of gradual change and abolition of the already outgrown types of direct taxation and partial modification and adaptation to the new conditions of the moment, of the old taxes still suitable for practical purposes.