New Sources of Revenue Needed
By A. Sokolov.
[From Russkia Vedomosti, No. 171, July 26 (Aug. 8), 1914.]
RUSSIA entered upon the present war better equipped financially than ever before in her history. But it is evident that her ordinary resources will not suffice, and the Ministry of Finance will have to find new sources of revenue to meet the gigantic expenditures. The Ministry of Finance has begun the usual banking and credit operations—the supervision of specie payments, the issuance of paper money, and the discounting of the Treasury notes in the State Bank. In addition to these the Ministry is ready to turn to new taxes.
It proposes to increase the tax on tobacco and to raise the price of whisky. Both are desirable objects of taxation. The tobacco tax has been relatively low in Russia. Only the poorer grades of tobacco have been taxed 100 per cent. ad valorem, while the higher grades have been taxed at a lower rate.
Any increase of indirect taxation can be justified only by the present emergency. We should bear in mind that already three-fourths of the Russian revenue raised by taxation comes through indirect taxes. Further increase of these taxes will inflict new heavy burdens upon the poorer classes, who in any case will have to bear the heaviest burden of the war.
The present historical moment is of such magnitude that it can be compared only with the Napoleonic wars. But at that time also the higher classes had to contribute to the war expenditures. In 1810 an income tax was put upon the landed nobility. Wishing to make it appear that the war tax is a voluntary contribution, the Government levied it according to the declarations of the taxpayers and refused to listen to informers as to tax-dodging. The tax rate was progressive, with a maximum of 10 per cent. All incomes below 500 rubles ($250)[1] were exempt.
It is to be hoped that the great memory of the year 1812 will induce the well-to-do classes to contribute their share to the expenditures inflicted upon us by the war. An income tax and possibly a temporary property tax should be accepted by them.
A. SOKOLOV.