According to the Home Office Statistics of Compensation paid during the year 1938, nearly 40% of the number of cases of compensation in the seven main groups of industries in Great Britain occurred in the mining industry, and 80% of the compensation to workers in the industry is paid by employers who insure their Workmen's Compensation risk with Mutual Indemnity Associations. As these Coal Trade Mutual Indemnity Associations deal with about one-third of the compensation paid in the seven main industrial groups, the experience of the larger associations is capable of useful analysis according to the age of the workman, the cause and effect of the accident or industrial disease, and the degree and duration of the resulting incapacity.

The main object is to discuss principles and therefore many points of detail will be omitted, however intrinsically interesting they may be. Satisfactory consideration of principles entails reference to all classes of business which involve an actuarial valuation (viz. life assurance and annuity business, sinking fund business and permanent sickness insurance business). Reference will be made to the National Defence Contribution and the Excess Profits Tax, which are based upon income-tax legislation. The subject in mind is the relation of such taxation to insurance business and funds of the classes mentioned, as distinct from other aspects of income tax which an insurance office encounters, and it will be considered solely from the point of view of an office established in the United Kingdom which transacts business only in the United Kingdom. In view of the paper by Messrs S. J. Rowland and F. H. Wales on ‘The Taxation of the Annuity Fund’ (March 1937, J.I.A. Vol. LXVIII), only brief reference will be made to annuity business, and it will be assumed that it is unnecessary, in describing taxation processes, to include explanations or qualifying phrases on account of annuity business.

This paper falls into three parts which form a progressive study involving

I. proposals for the reform of the Income Tax system as related to personal assessments,

II. consideration of the interrelation of Income Tax and Social Security,

III. proposals for the co-ordination of the Income Tax and Social Security systems.

Part I of this progressive study is a plea for a business-like administration of the Income Tax system. Part II examines the combined effect upon the individual of the Income Tax system and the Social Security plan proposed by Sir William Beveridge. Part III sets out to co-ordinate Income Tax and Social Security and to simplify the financial relationship between the individual and the community.