h 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 L670,000,000, 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 L5,000 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