CO129-566-21 Military contributions 7-5-1938 - 31-1-1939 — Page 42

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the British Empire.

There has been for the last generation,

and still is, a strong tendency toward the extension of the field of Government expenditure, especially on social services, with a corresponding necessary expansion of the

proportion of the community's income collected in taxation.

Perhaps the strongest criticism of the percentage

contribution is that over a long period it has varied

more with the general scope and aims of Government

activities than with the prosperity of the community.

7.

The following is a practical example. Government

may be favourably disposed to greater expenditure on

education and may consider that the community is able to

bear the necessary extra taxation; but on top of the

amount necessary to meet the desired expenditure there

must be raised an additional 25% to cover the extra Defence

Contribution. The amount of that contribution is thus

affected by the entirely irrelevant consideration of the

field of Government expenditure which is thought desirable

at any given moment. Taking another example, this Government may well have to levy extra taxation to pay

for expensive air raid precautions and would then find

itself in the anomalous position that the more it spends

on its own defence the more it will have to pay in Defence

Contribution. I have already referred to the illogicality

of including in such a calculation the gross takings received in payment for services rendered, e.g., water

rates.

8. It is an inevitable consequence of the present

system that when any large new expenditure, which has a

bearing on the revenue, comes up for consideration,

Government policy is bound to be affected by the existence