Public Revenue – Decrease in the Consumption of Luxuries -Cost of Living again Increasing

«The Economist», 1 ottobre 1921, p. 510

Turin, September

The official statistics on public revenue are good:

All categories give an interesting yield; and if we multiply by six fold the yield of first two months of the current fiscal year, we obtain figures sensibly higher than those relating to the whole of the fiscal year 1920-21. But there are not wanting signs of the economic crisis, especially in those taxes which are liable to feel more immediately the effects of decreasing transactions. In the succession and registration duties category, apart from the succession tax, which is stationary, the registration taxes diminished from 66.8 to 59.4 millions lire in the two months considered, and the yield is much lower than the sum which would be necessary to come up to the 491.7 millions obtained during the whole of last year. Stamps yield 110.2 millions lire more in 1921 than in 1920, but of that increase 76.1 millions lire are due to stamp duty on the increased notes issue and 25.3 millions to the new tax on luxury sales. As in France, this tax is a little disappointing. The tax is exacted by means of stamps to be put on double notes of sale, of which a part is given to customer and a part is retained by the selling party. As the tax is very high – from July 1, 1921, it has been increased from 10 to 11.50 per cent, of the sale price – it appears that very frequently sellers and buyers conspire together, to the loss of the Exchequer, for evading altogether the tax, or inscribing in the note a sum notably less than the true sum paid. A symptom of the economic crisis may be seen also in the lessened yield of taxes on cinema palaces (from 1,897,970 to 1,848,501 lire), on gems and other jewellery (from 3,967,775 to 2,490,465 lire), liquors and fine wines (from 3,859,400 to 1,697,150 lire).

The diminished consumption of luxuries is probably explained by the persistence of the high cost of living in the face of decreasing opportunity of employment, and more or less severe cuts in wages of the working class. The decrease of retail prices was short-lived, as may be seen from the following table compiled by the Turin municipal bureau of labour statistics of the cost of living of the working family (father, mother, and three sons of 10 to 15 years). The basis is fixed in the first half of 1914. (See table at p. 221).

As rent is subject to legal maximums, the variations are those authorised by royal decrees. New occupiers, in fact, are obliged to pay very much higher rents if they desire to secure a house for their family. The increases of rent above the legal maximums are unlawful, even for new occupiers, and house owners are liable to refund them at the request of the occupier. But, in fact, the restitution is never claimed, as the excesses above the maximum are frequently veiled as entrance fee, price of furniture, and so on.