Nelson's history of the war. Vol. XI., The struggle for the Dvina, and the great invasion of Serbia

74 HISTORY OF THE WAR.

In an earlier chapter we have seen the results of the two loans of November 1914 and July 1915. Borrowing on a still vaster scale was in the near prospect, but when the Chancellor of the Exchequer introduced the second great War Budget in the House

S of Commons on 21st September he did

ept. 21. 2

not specify any fresh loans. He confined himself to dealing with the amount to be raised by new taxation—over /£300,000,000, leaving nearly [1,300,000,000 to be met by borrowing. The details of the new taxation may be roughly sketched. The income tax was increased by adding 40 per cent. to the existing rates. As this increase was not accompanied by any revision of the complicated system which had grown up during the preceding seventy years, the result was an exceedingly intricate and difficult scale of charges. Generally speaking, the effect was to assess large unearned incomes at about 3s. 6d. in the pound, and earned incomes under [1,500 at a fraction over 2s. 1d. All incomes in excess of £130 were made liable to taxation, and the amount allowed to go free was reduced to [120, though the deduction for each child was increased from f20 to f25. The tax, so far as employees were concerned, was to be paid quarterly, and employers were allowed to deduct it from salaries. The super-tax, too, was increased on incomes over [8,000.

There were a number of other financial expedients. The Customs dues on commodities already taxed were increased, and a new 33% per cent. ad valorem duty was imposed on certain foreign articles of luxury, such as motor cars, cinema films, clocks, and musical instruments. The aim of this impost