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 £7 16s. by one-half, but if prices have
dropped further, say half-way, to the pre-war level, the comparable
burden will still be £4 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."