Emergency Tax

a mandatory payment made to the state and exacted only under special circumstances, such as the advent of war.

Emergency taxes are levied either by imposing new taxes or by raising existing tax rates. They were widely used in Russia and Great Britain during World War I and in Great Britain, the USA, and Germany during World War II. In capitalist countries the working people pay the bulk of emergency taxes; the capitalists usually try to avoid such taxation. When the monopolies have to pay emergency taxes, the expenditure is recovered through a faster rate of depreciation or through overt or covert subsidies granted by the state—for example, military orders may be filled at higher prices. Thus, between 1945 and 1955, American monopolies were repaid $25.7 billion, which amounted to over half of the taxes they paid in World War II.

Emergency taxes have been used in the USSR as a way of attracting capital from the population to finance extraordinary state expenditures. In 1918, during the Civil War, a one-time emergency revolutionary tax was imposed on the well-off strata of the population, raising 10 billion rubles. A tax was collected from all citizens in 1922 to help famine victims, and a one-time tax was introduced in 1924 to counter the effects of a crop failure. A war increment imposed on income and agricultural taxes in 1941 was replaced in 1942 by a war tax, which was abolished in 1946.