appointment of the Committee above mentioned, seems almost to have gone. The House of Commons does not now exercise its influence as it ought, to check extravagance, and probably the more widely the electorate is extended, as already said, the less will the House of Commons care to exercise rigid control in favour of economy. It is always an easy way of getting popularity to be what is called "generous" when dealing with other people's money. Everyone who looks after the public interest by trying to prevent expenditure, whether national or local, which is not imperatively called for, is styled mean and narrow-minded, and his task is a thankless one. Everyone who wants money spent will be able to make out a plausible case, either that the amount is so small or the object is so important that what he asks must be granted, and he will have some eager constituents to back him up. The best chance for economy is to have a body of men whose decisions the House will respect and not overrule, except for really good cause, who have both the knowledge and the strength of character to go through the estimates and call attention to the cases in which substantial reductions could be effected, or proposals for increased expenditure refused. It will not be an agreeable task, and now probably less popular than ever. The masses admire lavish expenditure whether by public bodies or by the private person who spends his money "like a gentleman," and it is to be feared there will not be much help from the women electors, as women, although they may practise economy occasionally themselves, usually regard it as a most objectionable virtue in a man. How often in families do we find the mother and sisters will admire the self-indulgent idle youth who spends money freely even if he borrows from them, rather than the steady, plodding son who, by rigid economy and personal self-denial, helps to provide them with the means of livelihood!
Turning to the other side of the account, what can be done to increase the revenue of the State? It has
been estimated that for the year 1919-20 it will amount to £900,000,000, but of this £300,000,000 is excess profits duty, which can hardly continue—in its present form at least—beyond the period during which additional expenditure above the permanent normal requirements is needed, in order to carry out demobilisation. Putting the permanent charge to meet interest on debt and the cost of the public services at £670,000,000, there may be a deficit even if the present rate of taxation is maintained, and the normal expenditure remains at its existing level. There will be no surplus for the reduction of debt, or to meet new demands. Some new sources of revenue must, if possible, be found, and the old ones require readjustment.
Income tax, if levied on the present system, has touched the extreme limit. A rate of taxation willingly borne to meet the cost of war while danger threatened will be felt more and more burdensome as time goes on. To meet a higher income tax there will be pressure to increase salaries paid by the Government and all public authorities. An official salary fixed at £5,000 a year when income tax was one shilling and sixpence, may be thought insufficient when it is nearly ten shillings including super-tax. Persons have incurred liabilities for rent and other fixed payments which they are not able to reduce. All along the line there will be claims for higher payments for services rendered or goods supplied. On the other hand, industrial undertakings will have to pay more for the capital they must borrow to carry on and develop their work, and 6 per cent. instead of 4 per cent. will have to be paid for debenture capital now raised by the best industrial companies. For those who have money to lend, the burden of tax may thus be practically met by an increased income, but for those whose money is locked up in permanent investments there will be no indirect relief in higher rates of interest. Income tax, house duty, and rates will absorb so much that the margin for voluntary expenditure will be small even out of incomes that are nominally high.
The death duties, especially where a deceased person leaves a large family, already cause much hardship. A general increase in the existing rates of estate duty cannot be made without discouraging thrift. It is a hardship if it is made impossible for parents to make reasonable provision for children some of whom may from various causes be unable to earn for themselves. On the contrary, where there are no children and no widow to be provided for, death duties might be much increased without causing hardship. A very much higher legacy duty might be charged in the case of large sums passing on death to persons other than the widow, direct descendants, or other near relatives of a deceased person. On small legacies the present rates should suffice, but there is no moral claim for distant relatives to be allowed to take large sums. Would there be any real hardship in imposing a heavy duty of, say, 25 per cent. on gifts over, say, £1,000 to collateral relations not dependent on the testator or to strangers? Or there might be a graded scale according to the remoteness of the relationship. In case of intestacy it would be often a real advantage to take the whole property for the State, if there were no relations within the third or fourth degree, i.e., uncles and aunts, and nephews and nieces being in the third degree, first cousins in the fourth. Economists for the last hundred years—Bentham, Mill, and others—have advocated such a change. Nearly every judge or officer of the Courts who has to do with the administration of estates would support a change which would do away with much wasteful litigation and disappoint no reasonable expectations. No source of revenue should be neglected if it can truly be said that by imposing the additional taxation proposed there will be (i) no dislocation of trade or hampering of industry or commerce; (ii) no discouragement of thrift; (iii) no real hardship; (iv) no great expense incurred in collection in proportion to the amount raised. It is only sheer stupidity that refuses to adopt a means of raising even a small amount when
the method proposed for doing so would have positively beneficial results in other ways.
The land increment duty should be a warning as regards cost of collection. That cost relatively to the amount produced has been enormous. But actual cost of collection as returned, represents only a small part of the expenditure really caused by the tax. The time taken up in making returns and filling up forms and obtaining the necessary advice in doing so is a burden on those who own even the smallest landed property and causes real hardship and injury. It discourages people from acquiring small properties.
The only other source of additional revenue in immediate contemplation appears to be the luxury tax. If this can be levied so as to fall on articles which are really luxuries, i.e., things not required for full and healthy life, the effect of such a tax should be wholly beneficial. If, notwithstanding the tax, people go on buying such luxuries the State will gain. If, on the other hand, the effect of the tax is to check expenditure on luxuries it will be a gain to the country, because its productive power and its purchasing power will be used to obtain articles which are really valuable and do promote national welfare. The idea that those who spend money on luxuries are helping trade, and so benefiting others, ought to have been exploded long ago. If the industry which has been devoted to producing articles which are really useless were diverted to producing things of utility, the aggregate of human happiness would be greatly increased. A difficulty in applying the tax is that the price of an article is little criterion as to whether it is a luxury or not.
There are two other sources from which additional revenue might be obtained.
First, to impose again an export duty on coal. Such a duty would help rather than hinder British industry. That industry is dependent absolutely on the supply of coal. British Coal Measures are an asset which enables the country to keep industries going, but it is a wasting asset. Deeper and better mining