Proposed Tax on Bearer Securities – Duty on Wheat Postponed – Banca di Sconto Affairs – State Revenue

«The Economist», 1 aprile 1922, p. 627

Rome, March 26

The new Finance Minister, Signor Bertone, has laid on the table of the House of Deputies a Bill imposing a tax of 15 per cent, on the dividends of State bearer securities. If a bondholder desires to be exempted from the tax, he can do so by inscribing the security to his name. If accepted by Parliament this Bill will put an end to the compulsory inscription of all securities. Signor Giolitti had made compulsory inscription one of the chief items of his financial programme, and by the Law of September 24, 1920, the principle was formally introduced into our legislative code. Signor Giolitti foresaw many good results from its adoption, of which the chief was the certainty that taxpayers could no more escape succession tax, capital levy, and income-tax. Having securities inscribed to their name, taxpayers would be obliged to fill in tax forms correctly, whereas at present the custom of omitting bearer securities altogether is prevalent.

Joint stock companies have been unable to issue new shares, for no capitalist would touch an inscribed share. Unfortunate subscribers to such shares cannot get rid of them, for they are unsaleable, and no bank would think of making advances upon them. In Italy the public is bent on having bearer securities, and the methods of transferring inscribed shares are clumsy and costly. The Treasury found itself obliged to recognise facts, for it was impossible for the State to issue Consols or other bonds liable to the compulsory inscription. The only State security which has a market is the seven-year Exchequer bonds, as these were, by the Law of September 24, 1920, exempted from compulsory inscription. At last the Government has yielded to the lesson of hard facts, and the new Bill, while maintaining the principle of compulsory inscription – the present Cabinet is made up by Giolitti followers and a formal renunciation of a cherished shibboleth of the old chief was impossible – authorises every possessor of State or private securities to keep them in bearer form if they will submit themselves to a 15 per cent, tax on the dividends. Foreigners and Italian residents abroad will have also to pay the tax if they object to technicalities of the inscription. The new tax will not be favourable to the easy marketing of Italian State securities.

A recent decree has postponed to July 1, 1922, the duty on wheat, which was suspended during the war and was to be re-established on April 1, 1922. The duty is 7.50 gold lire, corresponding to about 30 paper lire per quintal. As the price is to-day about 110 lire, the duty would have added from 25 to 30 per cent, to the bread price. It seems unlikely that the duty on wheat will be eventually restored, as the Socialist and popular parties are obliged to oppose it. Perhaps this will be the beginning of the wane of protectionism. Agricultural interests will feel more and more aggrieved by high duties on implements, machinery, and textiles not counterbalanced by protective duties on agricultural products.

The affairs of the Banca Italiana di Sconto are stationary. By a decree of the Roma Tribunal a balance-sheet dated December 31, 1921, has been published in which the assets are estimated at 4,929.2 millions lire, and the liabilities (exclusive of capital and the reserves) at 5,916.7 millions lire. Of these 1,673.7 are privileged, so that only 3,255.5 millions are left to be shared among 4,243 millions lire of ordinary credits. The various classes of creditors and employees, though divided among themselves, are bent on obtaining the maximum aid from the banks of issue and the public Exchequer. It is not known exactly what shape State aid will take.

A recent official report states that the public revenue for the first eight months of the financial year 1921-22 (July to February) was 8,425 millions lire, against 7,016 millions lire for the corresponding months of 1920-21. The tax yield for the whole year can be estimated at 12,500 millions lire, against 2,500 in 1913-14. Adding about 2,500 millions lire paid to provinces and municipalities, we reach a sixfold increase on the pre-war year. As the purchasing power of the lira has been only reduced to one-fourth or one-fifth of its pre-war value, it appears that taxation has more than kept pace with the increase in paper incomes.