Maud Parlow September 1909

Some First Effects of Germany’s New Taxes

Source: Social Democrat, Vol. XIII No. 9 September, 1909, pp. 399-407;
Transcribed: by Ted Crawford.

At last, even the average long-suffering and trusting German, with his child-like faith that “the Government knows what it is about,” is shaken in his convictions. The latest Budget, by which over 300 million marks are to be raised solely by indirect taxation of necessities, throwing an almost unbearable burden on the poorer classes, and coming so close on the heels-of last year’s promises of “not another pfennig indirect taxation,” has awakened first consternation and then gradually increasing indignation.

Even the most stolidly and narrowly patriotic Germans – those whose childhood has been spent in an atmosphere of Imperialism and Hohenzollern worship, who have learnt little else at school but a glorified history of Germany, a quantity of jingo songs, and the art of shouting “hurrah” on the frequent school holidays given in honour of the visit of this and that potentate, and who have developed in later life into blindly enthusiastic members of the thousand and one patriotic associations for the fostering of militarism, fleet-building, and general exaltation of the one and only Fatherland – even these are waking- up and looking round. They are still convinced, from the bottom of their souls, of the necessity of keeping up the Dreadnought competition; they still consider being ruled by blatant militarism as the happiest possible condition; they still regard the stamping out of East African natives as a noble work of culture, but to their own amazement a doubt is stealing over them as to the methods by which money is being raised for these desirable objects,

The Budget forced on the Reichstag by the Conservative-Clerical great landowner combination consists, besides about 100 million marks on dividend warrants, bill stamps, and other means of traffic and money circulation, of the following: –

Besides this, 55 million marks are gained by retaining the sugar and railway ticket taxes, supposed to be done away with or reduced. The taxes on bill stamps, cheques, etc., affect practically all classes except actual paupers; the small business man or saving workman being crippled by dues which are mere drops in the ocean to rich exchange merchants. Even where these taxes are apparently aimed at capital they will react largely on the masses. The dividend and interest warrant tax will, for instance, also affect mortgage loans, thus exercising an unfavourable influence on building activity, and leading eventually to raised rents. The tax on property transference will have a similar effect.

Thus, of the total sum of over 450 millions new taxes, 310 millions fall directly, the remainder indirectly, on the poorer classes. The sole tax proposed, which would have affected the well-to-do only, the inheritance tax, was unconditionally rejected by Conservatives and Clericals, and without the slightest veneer. Whilst the Conservative papers have long been trying to smooth down the rejection of the inheritance tax with a variety of soft soap about depriving widows and orphans of their dear departed’s well-earned savings, the parliamentary representative of the Conservatives openly stated in the debate that his party would not place such a weapon in the hands of a Parliament elected by equal suffrage. After this open declaration – after this enormous burden of new taxes on the necessities of life – who can maintain that there is no class war? This is the Budget of a fully class-conscious section of the community, a class pursuing their own interests only, and not caring for Kaiser or people, Government or Chancellor, so long as their own private property and privileges remain untouched. It might perhaps have been more diplomatic of these junkers if they had conceded a little more on this occasion, and avoided the storm of indignation now raging; but they are so fully conscious of having the upper hand at the moment that they scarcely find it necessary to disguise their class-interested manoeuvres. They are long accustomed to ruling Parliament in unassailable combination with the faithful Clericals; to them the Kaiser and his Government are only so many marionettes, and their sole tactic with regard to a Minister who opposes them is “to make it uncomfortable for him till he goes.” And, on this occasion, they felt themselves doubly secure; their majority in the present Reichstag is safe, and they need have no fear of bringing about a dissolution of Parliament by defeating the Government. For the poor, weak, self-contradictory Government, having been forced to give sops to various of the parties of the left, and driven into making-proposals for taxes which, at heart, they were not really wanting so very much, dared not appeal to the country, for the absurd reason that they feared the country agreed too heartily with them. From their point of view, they would have got altogether too much of a good thing, and the number of Social-Democrats who would have been in the new Parliament would have been as disagreeable to them as to their opponents. Anything rather than more Socialists! Better swallow defeat; dismiss the Chancellor; and then see how the country is to be pacified.

The Conservatives and Clericals have calculated well so far, it only remains to be seen if the country will have forgotten when the next election comes in three years’ time. It may be that the law-abiding and authority-worshipping German patriot will swallow any pill gilded with the glory of the Fatherland, and think it just and right to pay any amount of fees so long as he has to fill in half-a-dozen forms about them, and waste no end of time running from one public building to another interviewing insolent officials. Still, it may be that this time he will not forget – that which is felt daily and hourly in the pocket and in the stomach does not escape the memory so easily – and the Social-Democratic propaganda now finds fruitful soil among those who are awakening to the fact that they are being plundered.

At the moment panic prevails in all camps. The Clerical shepherds are endeavouring to explain it all away to their sheep, and as they have been pretty skilful in excluding any ray of enlightenment from their faithful flocks, they may succeed for the time being. The Conservatives tactfully ignore the taxes which have been imposed, with the exception of drawing attention to the self-sacrificing spirit of the upper classes as exemplified by the magnificent 5 millions on champagne, and confine themselves mostly to the negative line of dilating on the depravity of those who would have taxed sacred property and destroyed the German home with their abominable inheritance tax. The Conservative constituents are, however, not so easily quieted as the Roman Catholics, and many movements of protest are being made, even to the holding of meetings censuring the action of the parliamentary representatives, and passing resolutions in favour of the formation of a new Conservative party.

As for the other capitalist parties, the Liberals, National Liberals, Radicals, and what not, representing more the manufacturing as opposed to the land-owning class, these are simply beside themselves. And their indignation is entirely genuine. Here are class interests being favoured, but not the interests of their class! Loud are the complaints of intolerable burdens on commercial enterprise, ruin of manufactures, paralysing of trade, etc. The opportunity is being seized for pushing the wildest party propaganda. Here, as everywhere else, the parties sailing under the flag of alleged friendliness to the proletariat are more dangerous than the open enemy; and, no doubt, many of the half-enlightened may be carried away by fair speeches, and bagged for the Hansa Bund and other “non-political” societies for the protection of trade. Happily, the German worker – at least, in the towns – has learnt, as a rule, to know his enemy, and is not likely to be much impressed by a National Liberal tobacco manufacturer dropping crocodile tears for the sorrows of workers with decreased incomes and increased expenses, when this same manufacturer finds himself compelled, through the execrable taxes, to request his employees to work overtime till August 15 in order to fulfil the many orders for delivery of goods before the tax comes into force, to be rewarded with dismissal when the slack time sets in.

The tendency of public opinion is pretty well shown by the recent bye-election at Neustadt-Landau, where the National Liberals lost the seat to the Social-Democrats, and this although the National Liberals gave themselves out as an opposition party and against the taxation. Already, in the first ballot, the Socialist vote showed an increase of 2,000 since the last election. The class-conscious worker may agree with the Liberal capitalists as regards condemnation of land-owning greed and misuse of parliamentary power, but that is no reason for him to devote his energies to bettering the lot of the lords of industry; he has his own lot to better.

Whilst the capitalist parties are “getting each other by the hair,” as the German phrases it, throwing the blame on each other all round, and advertising themselves, each and every one, as the sole salvation of the nation, there is one point with regard to the new taxation on which they are all agreed – namely, in dodging the practical results of the taxes, whether by trickery, or by pushing the payment on to somebody else.

The real aims of the capitalist leaders are better seen here than in their speeches. In every instance, whilst railing against the taxes, they utilise the opportunity for extra profit. The match manufacturers, obliged by the tax to raise the price of a 10 pfennigs packet to 25 pfennigs, are raising it to 35 pfennigs. The manufacturers forming a syndicate, this price must be submitted to. The incandescent mantle factories are adopting the same line. The tax on spirits would in itself throw a burden of about 400 millions on the consumers, the distillers make it 1,000 millions.

The great brewery owners have been laying their heads together to decide how best to unload the beer tax on to the shoulders of the consumers, whether by decreasing the size of the vessels in which it is sold – which would be a great initial expense – or by increasing the price, which generally works out at an impossible fraction; and have concluded to improve the occasion by so rounding up the price as to squeeze a tremendous additional profit out of the public. The tax raises the price of the beer, originally sold at 30 pfennigs the litre to 341/2 pfennigs. The combined brewers of Berlin have decided to raise the price to 40 pfennigs the litre. That is, the average 7,300 million litres of beer consumed in Germany are to be burdened with an additional 730 million marks. Of this sum 100 millions go to the State, 630 millions into the pockets of the brewers and publicans.

The consumers look helplessly on, the few who would be willing to attempt to boycott being too scattered and powerless to hope to intimidate the brewers. A third party, the unsalaried waiters, are discussing the only too well founded fear of a decrease in income, for tips will certainly diminish in quantity and quality with lessened consumption and dearer beer and spirits. Naturally, in this case, the weakest will suffer: the waiters in loss of work and money, the poorer consumers in less or inferior drink. Indeed, there is no development of the new taxes which does not fall heavier on the poorer classes. Every householder with a small sum at his disposal has been laying in the lawfully permissible household stock (20lbs. of each) of tea and coffee before the tax comes into force, thus postponing the increased expense for some time; but how many workmen’s families can suddenly lay out in advance for household goods?

One of the finest attempts at tax-dodging comes from the so loyal and self-sacrificing Conservatives and Roman Catholics themselves. In the “Münsterischen Anzeiger,” a Clerical organ, the following announcement may be read: –

“Gerbaulet Shares.

“Our shareholders are requested to immediately hand in the dividend warrants and coupons in their possession, to be exchanged for new warrants and coupons for the business years 1909 to 1918. On August 1 of this year the dividend warrant tax comes into force. Warrants not drawn before August 1 are subject to stamp, and we shall thus be obliged to charge the amount of the tax to such shareholders as have not received their warrants before August 1.”

The shares of this company are chiefly in the hands of the Conservative and Roman Catholic nobles of the Münster district. Among the shareholders are lords chamberlain, privy councillors, Landtag and Reichstag members, etc.

The “Köllner Bürgergesellschaft,” whose stockholders include members of the better-to-do Clericals of Cologne and district, and which has at its head various town councillors and other big guns of the ultramontane world, also addresses a like notice to its shareholders. Thus, without giving a thought to the hungry fleet and army for which they have declared themselves eager to shed their heart’s blood, these lords of patriotism and feudalism are openly prepared to swindle their way out of a tax resolved on by their own party. And these directors and shareholders are not mere misled voters, they are of the intimate circle of upholders of the parliamentary action of their representatives.

Naturally, as soon as the Reichstag meets again, it is proposed to render this far-seeing proceeding futile by a law declaring dividend and interest warrants issued before August 1 as equally liable to tax. But as precisely the individuals who hit upon this clever idea for avoiding the tax are the same who will have the casting. vote on the matter in Parliament, it is not to be supposed that it will be very severely dealt with.

The enforcement of the taxes, on the whole, is an exceedingly unwieldy and difficult business. Wherever an attempt is made to avoid a tax, a new regulation must be immediately coined to thwart the attempt, and as all taxes have been formulated somewhat superficially, and with a dozen loopholes for obeying the letter and not the spirit, hundreds of new controlling officials and inspectors must be appointed; dozens of new laws must be made; and an incalculable amount of time and money must be expended. Even if all citizens were ready to pay up joyfully, and required no superintendence, the mere technical side of ascertaining and recording their liabilities involves a burden of useless labour. How many more ledgers will have to be kept when every cheque, bill-stamp, dividend warrant, etc., must be noted down afresh for purposes of taxation, every pfennig interest recalculated; how much unnecessary writing, printing, bookkeeping, sending back and forward of documents, become indispensable? How much litigation and needless red tape will result from the loose wording of the dividend and interest warrant tax, which does not state whether buyer or seller be liable, or how the original purchaser is going to put up with paying the tax in advance for the whole of the ten years for which his warrant is probably issued, although it may pass out of his possession long before that period is reached? How much tedious and profitless work is being thrust at the present juncture on to the manufacturers of, or dealers in the freshly-taxed industrial products? All goods in stock are liable to post-duty, and an exact inventory must be made, and list sent in by a certain date. What an infinity of unproductive labour before all this is brought into order! Before the lists are compiled, rectified, reckoned through, the amounts collected and receipted! It is poor consolation that the fresh work involved will give employment to some. Unproductive work must none the less be paid for in the long run by the real producer, and it is only evidence of a very rotten social system when unnecessary work can appear as a blessing. If a tobacco manufacturer is obliged, for instance, to provide that every packet of cigarettes, even the smallest packet of ten, has its own special wrapper gummed round it, and is thus obliged to employ hands for a work which earns nothing, it is quite certain that he adds the increased expense to the price of his goods, besides doing his best to utilise the opportunity to lengthen the hours and shorten the wages of his employees – generally under the guise of overtime and subsequent short time. It is pitiable that a state of society should have reached such a condition of logical absurdity as to impose on itself such a complicated, time-wasting, and economically false set of laws. It is the inevitable result of government by a class seeking only its own interests, instead of government by all for all.

If the taxes had been thought out with devilish ingenuity for the purpose of causing economical confusion, they could not have accomplished this object better than they are doing. On every side victims of the new order of things are being driven into absurd courses of action; dealers in incandescent mantles, tobacco, etc., are selling off their goods at any price because they cannot raise the sum due on their stock under the post-duty regulation; others are pretending to do the same thing, but really making a very profitable “clearance sale,” with the intention of paying off the majority of their employees when the busy time is over; owners of automatic machines are wondering how they can make it clear to their apparatus that boxes of waxlights hitherto delivered up for 10 pfennigs must now not be disgorged under 20 pfennigs; match manufacturers are working day and night, but totally unable to cope with the feverish eagerness with which housewives are laying in a stock; even the manufacture of matches with a head at each end is being contemplated; there is no end to the confusion.

And when all is said and done, when the confusion has settled down, then the proletariat will find that they, and they alone, are the sufferers. Whilst the manufacturers in the trades affected can compensate themselves with tripled prices, thousands of their workmen must join the unemployed, forming a surplus stock of workers by which thousands more are compelled to submit to a reduction of wages. And apart from these, it is the poorer class of workman, who has been living up to now to the full extent of his income, who will feel the full weight of the increased prices. That all classes contribute to the taxes is true, but as soon as a class has an income above the living wage it possesses a margin enabling it to meet the taxation without actual physical suffering. And to the well-to-do it is little matter if they smoke a cigar at 40 pfennigs instead of 50 pfennigs; the difference in quality is not enough to affect health and happiness. The workman’s family is differently placed. If coffee, potatoes, and bread have been hitherto practically the sole means of sustenance, if the cheapest coffee obtainable has already been in use, and in the smallest possible quantity to keep the family alive, what is to be done when the price is raised? If the cheapest possible beer and the worst imaginable cigars have already been accorded for years to the workman as his sole relaxation and pleasure, what can be given him now? With less the people cannot do, they have already long reached the minimum. The only solution is to invent still more wretched substitutes for coffee than are already in vogue, to roll up still more frightful combinations of weeds into so-called cigars than has hitherto been the case, to produce still worse qualities of beer.

The taxes are a direct crime committed on the health of the poorer classes. And with what calculated ruthlessness they have been chosen. They are taxes intended to be effective. They are aimed at something essential to the masses. Coffee, beer, and tobacco are no luxuries, they are necessities of life to the German poor; their sole stimulant, strength, and refuge. Poor substitutes, no doubt, for what they should have to live on, but none the less articles which cannot be done without under the present wretched conditions. Class interested taxation has laid its hand, with demoniac farsightedness, precisely on that which is indispensable even to the poorest, that none may escape from paying his dole into the coffers of the possessing classes.

It is another step on the thorny road of enlightenment. How many more such lessons will be required before the whole of the proletariat recognises that the men who make these laws are not their representatives, but their foes?

Maud Parlow

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