Present

The Right Honourable Lord Colwyn (Chairman)

Mr J. M. Keynes, C.B., called and examined.

Evidence-in-Chief handed in by Mr Keynes

1. It would not be reasonable to introduce a new and disturbing form of taxation, such as a capital levy, except for an important and definite purpose.

I am not aware that any reasons could be advanced in favour of the levy which would satisfy this criterion, except the following:—

1. (1) In order to redeem the national debt more rapidly than would be possible otherwise.

2. (2) In order to change the incidence of taxation as between different types of taxes.

3. (3) In order to effect a redistribution of wealth as between different classes in the community.

Since different taxes generally affect different classes unequally, there is no sharp line of division between the second of these objects and the third.

2. Let me take them in order:—

(1) Circumstances might exist in which the rapid redemption of the dead-weight debt was a matter of primary importance. I see, however, no reasons for supposing that this is the case at present. Indeed, on the contrary. If the demand for new gilt-edged investments was exceeding the flow of savings into those channels, there would be a prima facie reason for expediting debt redemption. But at present, in my opinion, the opposite is true. Indeed, I think it unlikely that there would be a strong argument for a more rapid redemption of debt unless (1) we were anticipating a war at an early date, or (2) the Government or other public bodies were embarking on new capital expenditure of a productive kind on a somewhat large scale.