^{page 9 note 1} Over a period of time it may be possible of course to increase quite substantially the proportion of the national income collected in taxation without any actual reduction in the standard of living, insofar as real incomes per head are rising. This is particularly important in those cases where incomes are rising fast on account of increasing yields or higher export prices for the main crops.

^{page 10 note 1} This is not to suggest that either the inequality of incomes or the inequality in standards of consumption could be eliminated by taxation. It is not possible or expedient to prevent the owner of the successful business from enjoying the fruits of his success during his lifetime—any more than it is possible to prevent scarce talent from earning its high reward in a socialist state. But clearly not all forms of economic privilege fulfil any positive social function—absentee landlords for example—and the experience of western Europe and North America has shown that the consumption of the entrepreneurial class can be reduced within wide limits, by means of progressive taxation, without interfering either with incentives or the means of continued growth and accumulation. It is consumption, rather than saving out of profits, which shows wide differences between countries, according to the nature of their tax systems.

^{page 17 note 1} The expansion of the Ceylon tea industry is said to have been severely hampered on account of excessive taxation by means of export duties.

^{page 19 note 1} Two of these studies have been published: Indian Tax Reform. Report of a Survey (New Delhi, Ministry of Finance, 1956),Google Scholar and Suggestions for a Comprehensive Reform of Direct Taxation (Colombo, Government Publications Bureau, 1960).Google Scholar

^{page 20 note 1} It is for this reason that export duties, in many cases, are fixed in terms of some sliding scale, the incidence of which varies with the prices actually realised in relation to some average.

^{page 20 note 2} For a description of the facilities offered by such ‘tax haven’ countries, see Gibbons, W. J., Tax Factors in Basing International Business Abroad (Cambridge, Mass., Harvard Law School, 1957).Google Scholar

^{page 21 note 1} That this problem is not peculiar to under-developed countries but affects the countries of the parent companies as well is shown by the current efforts of the U.S. administration to get tax legislation amended so as to bring the profits of foreign subsidiaries and associated companies within the scope of the U.S. corporation tax.