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of Europe." She discovered by sad experience that this alluring title had brought nothing but loss and disappointment. The influence of capital did not prevent Turkey, a country to which France had lent vast sums, from going over to the enemy, and the still vaster sums advanced to Russia had also been lost, apparently beyond recall. It would not be surprising if the result of this object-lesson were to convince the French people that it is better to work and produce than to live on the interest of one's money, and that they had it within their power to become a great manufacturing country with an important share in the world's trade. (G. A. R.)

FINANCE, 1900-21

French finances underwent such changes during the World War that in 1921 there seemed to be no relationship at all between the present-day budgets and those of 1909-10, so enormously had figures been swollen, taxes increased, and their nature modified. From this latter point of view the whole French fiscal system has been changed. Up to the eve of war direct taxation was levied in France, following the principles of the first revolution, in accordance with external signs of wealth, chiefly in accordance with the letting value of the tax-payer's residence. This does not mean that capital was not touched. Taxation was levied in the form of inheritance duties on the whole of an estate, on the transfer of house property, and securities were taxed annually on the income, and by imposts on stock-exchange transactions. A few weeks before the opening of hostilities a global income tax was introduced, of the modest amount of 2 %. The execution of this measure was delayed, but in 1916 it was put into operation, the figure rising rapidly to 1 2 % and then 20 %. The law of June 25 1920 brought the maximum up to 50%, with a sliding scale, making this super-tax of 50% only applicable to that portion of incomes exceeding 550,000 francs. In 1917 a further tax was introduced which varied according to whether the income was derived from agriculture, professions, etc. Thus the old system, which had been applied for over a century, and which, although frequently modified, had subsisted in its first conceptions, had given way to a new system which, although more in conformity with modern theories, could not in 1921 be said to be as solidly founded as was its predecessor.

I. The System of Taxation. The system of taxation until 1914 was formed by four kinds of taxation, i. The so-called direct contributions that is to say, levied on four kinds of external signs of wealth, namely (a) revenue from land and house property, (b) doors and windows, (c) the personal figure arrived at by the letting value of the house or flat occupied by the tax-payer, and (d) license tax paid by traders, manufacturers, and some of the liberal professions, which varies according to occupation. 2. The so-called indirect contributions consisting of fixed or proper proportional duties, levied (a) on the transfer of property, (b) on the emission and negotiation of stocks and shares, and (c) on private contract notes. 3. Consumption taxes, levied on French produce, such as alcohol, wine and sugar. 4. Customs duties, levied on a large number of imports.

Direct contributions were reformed by the law of July 31 1917, which suppressed the taxation on personal property, doors and windows, and licences, and placed a tax on different categories of income. A tax is placed on industrial and commercial profit made during the preceding year. It is levied upon all concerns belonging to one person, globally, either at the head office, or at the office of the chief person concerned.

The tax is calculated on the net profit of those companies which are by law bound to communicate their balance-sheets to the registry office, and upon those individuals or companies which, before April i of each year, have furnished the authorities with a summary of their profit and loss account. In the absence of a declaration the taxable profit is fixed by applying an appro- priate coefficient to the turn-over of the concern. The fixed tax of 4-5% was raised to 8% by the law of June 25 1920. An annual tax of 3-75%, raised by the same law to 6%, is placed upon agricultural profits, which are considered as being equal to half the rental value of the land. If, however, the real profit

does not reach half the rental value the taxpayer is entitled to a proportionate reduction. Incomes of over 1,250 fr. from this source are taxable, and no declaration of income is required. In- comes derived from public or private payment, salaries, annuities, etc., are subject to a tax of 3-75%, raised to 6% by the law of June 1920. In fixing the taxable figure the net value of such pay- ments, whether they be in money or kind, is taken into account. Employers, whether they be companies or individuals, are required to furnish the authorities with a list of their employees. People engaged in professions, or in other occupations which are not subject to special income tax have to pay 6 per cent. Interest from mortgages, loans, and bank deposits is also taxed.

Such are the chief provisions of the law which has established a schedular income tax in France. While it has suppressed former taxation, the old forms of taxation still exist as the basis of local taxation, and will do so until new laws have been voted.

A fresh tax is that on the turn-over (chiff re d'affaires) which is levied on all businesses in France save the selling of bread, the products of State monopolies and, of course, stamps and stamped paper issued by the Government. Further exceptions are made in favour of those trades and businesses whose prices, charges or commissions are fixed by public authorities, such as marine brokers, stock brokers, chemical manufacturers, insurance companies, public entertainers and public carriages. Exception is made in these cases because enterprises of this kind are already taxed in other ways. The chiffre d'affaires tax is fixed at i %, a tenth of which goes to the department and the commune. The various imperfections of this tax have led to certain alter- ations which were adopted by Parliament in June 1921.

II. The Budgets. The Budget on the eve of war, 1914, in millions of francs was as follows:

Expenditure Revenue

Public Debt. . . 1,318 Taxation. . .3,616

Salaries of Public Monopolies. . . 1,005

Officers ... 19 Domains ... 64

General Administration Budgetary Sundries. 68

Services. . . 3,336 Extraordinary Revenue 507

Regie. . . . 651 Receipts (recettes

Restitution ... 49 d'ordre) . . . 1 1 1

Algerian credit. . 2

5,373

5,373 With this may be compared the ordinary Budget of 1921 :

Expenditure Revenue

Public Debt. . . 11,248 Taxation. . . 13,901

Salaries of Public Monopolies. . . 2,526

Officers ... 39 Domains. . . 145

General Administration Budgetary Sundries. 157

Services ... . 8,877 Extraordinary Revenue 5,200

Regie .... 2,455 Algerian Credits. . 6

Repayments and Res- Alsatian-Lorraine Credits 408

titution. . . 129 Receipts (recettes

d'ordre) . . . 494

22,748

22,837

In presenting the Budget of 1913, which did not reach 5,000 million fr., M. Klotz told Parliament that he begged his col- leagues to reduce the demands of their departments to what was strictly necessary. He analyzed an increased credit of 167 mil- lions due to military expenditure, social demands, and the de- velopment of national equipment. Justifying the demand for the army he pointed out the advantages given to soldiers serv- ing more than their legal time, the allowances given to those supporting a family, the placing of officers in a special reserve, the reorganization of the artillery and of medical officers, premiums given to motor-lorry owners, increase in the pay of officers, increased assistance to old soldiers, increased cost of living and of material, and the increases in the budget strength of men and horses. The social programme comprised demands for the Ministry of Labour, for compulsory insurance and for increase in the benefits of voluntary insurance; help for mutual societies and advances for building societies. Public works called for large sums for the improvement of internal waterways and seaports. The full programme for the former amounted to 440 million francs.