Seven Months’ Revenue – The Chief Taxes

«The Economist», 26 marzo 1921, pp. 647-8

Turin, March 12

The revenue results of the first seven months of the financial year (from July 1, 1920, to January 31, 1921) are gratifying, as the following figures (in millions of lire) show:

Apart from the income-taxes, the increase is the highest in the industrial monopolies. Tobacco has risen from 837.9 to 1,364.0 millions lire, and the matches monopoly from 63.8 to 99.3 millions lire. Notwithstanding heavy increases of prices, the returned soldier has not abandoned the smoking habit contracted in the trenches. The increased receipts from stamp duties is the proof of the continuance during the period considered of a great commercial activity. Perhaps the coming months will not be so fruitful for the public exchequer. In the Excise and Customs duties the net increase is the combined result of a great increase in the Excise duties (+ 174.0), and the new tax on wine (+ 263.0), and of various decreases.

The most interesting item of public revenue, and one which is undergoing the most thorough transformation, is the first direct income-taxes. A special publication of the Director of Taxes gives some useful details, referring to the years 1919 and 1920. The total yield of all taxes on income in the last pre-war year was 540 millions lire. In 1919 there was inscribed in the tax-payers’ rolls a sum of 1,801.5 millions; in 1920, 3,406.1 millions, exclusive of some hundred millions lire which are not entered in the rolls, but are paid directly into the exchequer; as, for instance, the income-tax on salaries of public servants.

This huge sum of 3,406.1 millions lire, which is between six and sevenfold the pre-war figure, may be said to fall into two classes, the extraordinary and the ordinary taxes. Among the extraordinary taxes class we must include the following: 1) The war profit tax, with a yield of 944.7 millions lire in 1919, and 1,413.4 in 1920. Owing to the nature of the case, as the taxing period was closed at June 30, 1920, the yield will rapidly fall when the arrears are made up. 2) The war increase of capital tax, simply an addition to the war profit tax. The yield was nil in 1919, and 545.2 in 1920, the first year of her application. The taxing period closes at June 30,1920. The yield in this case will probably increase in 1921 and 1922.3) The capital or wealth extraordinary tax: This is the much-talked-of capital levy. It is in principle a one-time tax, on wealth possessed at January 1, 1920, but for convenience it was made payable in 20 or 10 instalments, according as land and houses were entered for more or less than 40 per cent, in the total wealth. The capital tax was inscribed in the 1920 rolls for a sum of354.6 millions lire, but only 225,009 out of a total of 361,080 taxpayers’ returns were entered, and many other returns, new or supplementary, are expected when the law compelling inscription of bearer shares, stocks, and bonds begins to bear fruit. For at least the first ten years the capital tax will certainly yield some 1,000 millions lire a year. 4) Among the minor extraordinary taxes may be mentioned the tax on incomes above 10,000 lire, which in 1921 will be doubled; the tax on dividends of bearer securities, which is 15 per cent, on the annual dividends, and will cease to operate when all securities are inscribed, the special tax on joint-stock, limited and other commercial and industrial companies’ directors and managers, &c. To the ordinary taxes group belong the three old taxes on the land, houses, and other incomes. The land income-tax yielded 127.8 millions lire in 1920, against 127.9 in 1919. One must remember, however, that land income is the favourite object of taxation of provinces and municipalities, which in 1920 taxed it to the extent of 323.1 millions lire. Notwithstanding the existence of these burdens, land is capable of giving much more to the national exchequer. The house income-tax yielded 168.7 millions lire in 1919, and 177.7 millions in 1920. The product of this tax will also increase when the present rent-fixing legislation ceases. The receipts from the “other income” tax increased from 464.2 millions lire in 1919 to 622.7 in 1920.