Statutes
| DOI | http://doi.org/10.1111/j.1468-2230.1948.tb00102.x |
| Author | A. Farnsworth |
| Published date | 01 October 1948 |
| Date | 01 October 1948 |
STATUTES
THE
FINANCE
ACT,
1948
THE idea behind a general Capital
Levy
’
upon
an
individual’s
assets has always been that the proceeds
of
the levy would
SO
diminish governmental indebtedness that the consequential saving
in interest
on
the National Debt would enable the rates
of
taxation
to be considerably reduced and thus free money for productive
enterprise,
so
particularly essential
in
the present critical state
of
our
national economy. The late
Lord
Stamp showed up the
fallacy
of
this idea in his
Current
Problem
of
Finance
and
Govemmt (1928),
where he estimated that, with the
then
rates
of
taxation and interest
on
public loans,
a
capital levy producing
28,000,000,000
would snve
2142,000,000
per
annum
on
the
National Debt against which, however, would have
to
be
offset
a loss of
E70,000,000
per
annum
in
income tax and supertax and
E28,000,000
per
annum in the yield
of
the death duties, then
leaving a maximum net saving of some
E60,000,000
per annum.
Since then the rate
of
interest payable by the State
on
its major
loans has fallen from five
per
cent. to three per cent. while taxation,
in the highest income brackets, has risen from an aggregnte of
111-
in the
E
to
10/6
in the
E,
so
that, at the present time, the
probable
net
annual saving resultant from a capital levy
of
similar
magnitude would be only a few million pounds per annum. When
the almost insuperable administrative
difficulties
in assessing and
levying such
a
tax are taken into account, it seems clear beyond
peradventure that
a
capital levy of the normal type
wobld
result
in a positive loss to the State, if measured in terms of
annual
saving of interest and loss
of
revenue.
The Finance Act,
1948,
is particularly noteworthy for the
‘
Special Contribution
’
(Part
V)
which represents Sir Stafford Cripps’
ingenious, and not unsuccessful, attempt
to
devise a form of
capital levy-‘onc! and for all’-which would not
be
open to
the insuperable practical objections that put such a tax beyond
the realm of practical politics after the first World War. Broadly
speaking, the Special Contribution is charged upon all individuals
liable
to
surtax for the year
1047-8-i.e.,
whose total income from
all sources exceeded E2,000-in respect
of
the excess over
2250
of
their investment income
’
for that year; the contribution is
thus not leviable upon
an
individual’s assets but only upon the
fruit thereof and should normally be able to be paid out
of
income
save in the ca,se of those liable at the higher rates
of
surtax. The
rates of contribution vary from
21-
in the
E
for the first
2250
of
the
excess
of
investment income over
€250,
to
lo/-
in the
E
for
488
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