46 While I appreciate that in many territories it would
be inequitable and undesirable to increase the rates of direct
taxation at present payable by the mass of the people, 1 am
of opinion that the two following possibilities should be
examined: ~
(a) That taxation paid by wealthier members of the
community might be increased, Imposition of income tax or
increase of it if it already exists would probably be the
most scientific way of securing this and I hope that if it is
at all practicable you will not be unduly deterred by
administrative difficulties from imposing such taxation.
Falling income tax some other form of direct taxation is i
suggest indicated as being ea-lest means of ensuring that
taxation is paid by tote the can beat bear the burden.
That on general grounds 18 is very desirable that
some arrangement should be made to ensure that Governments
obtain an adequate share of any excess profits accruing as the
result of war, I suggest that whether or no prices are in
fact already showing tendawy to race it will be desirable to
pass legislation on the subject without delay : As regards
profits from exports it may be found that only practicable
method of achieving object is some form of export duty bered
on the excess of war-time prices and quantities of over pro-
var prices and quantities.
5.M As regarde local trade problem of excess profits
will not arise if as I hope action is taken to prevent
profiteering. If as may be the case (see paragraph 1(b)
above) there is a shortage of imports and an accumulation of
funds locally, there will probably be a marked rise in margia
betveer c.i.f. price of imports
and their retall price as well as in the prices of
local produce. I have indeed already had indications fron
some
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