The Tea industry had a less satis-year than 1937. The higher rate of release under the Regulation brought about án increase in with the result that prices Provincial Government, whose Excise revenue was 320 lakhs two years ago, has announced that it is prepared to sacrifice 180 lakhs of this revenue. The difficulty of course is to find alternative sources of revenue, and some of the new taxes imposed or proposed seem to trench on fields of taxation hitherto regarded as belonging to other authorities. Three instances will suffice. One Province proposes to impose a tax on Urban rateable values in its chief town which would appear to encroach on a field hitherto reserved for the Municipal authorities. In another an Employment tax is proposed. It is to be graduated according to income, and is just an additional Income Tax. In others again there is a Sales tax on petrol which must tend to reduce consumption and thereby to affect the revenue derived by the Central Government from the Import duty and Excise on petrol Developments of this kind must be an embarrassment to the Central Government which already has taxation problems of its own. Indeed it is not easy to see what reserve of taxation it has for use in an emergency. The revenue budget for 1939-40 shows that nearly 50 per cent of its revenue comes from Customs duties, and nearly 70 per cent. from Customs duties and Income Tax. The rate of Income Tax is already high, and it is doubtful whether it could be raised much more without placing an undue burden on industry. The Customs duties consist partly of protective duties which presumably are intended to reduce imports, and partly of duties imposed primarily for revenue purposes. But the general level of these latter duties—25 or 30 per cent. ad valorem—is so high that in effect they have assumed a protective character, and in any case there is always the danger of setting in motion the law of diminishing returns. A new Act has just been passed by the Indian Legislature to amend the Indien Income Tax. One of the most controversial features relates to the definition of Residence in British India so far as it relates to companies and firms. Any company or firm will be regarded zs resident in British India if in any year its income arising in British India exceeds its in. come arising without British India It is not very clear what the effect will be. but it looks as if any company or firm which makes profits in British India will be required every year to disclose to the Indian Income Authorities its total profits, wherever made, and to pay Indian Income Tax on those total profits in any year in which more than half of them are made in British India. It is not surprising that this part of the Act has aroused much criticism.
The prospects for the current year in India may perhaps be said to be more hopeful than they were a year ago, but everything of course depends on how the international political situation develops.
Text read from the printed page and cleaned; old type leaves the occasional error.