The budget of the first half of 1919 has followed the same fundamental principles for the construction of the state budget by including the expenditures of the entire state production and distribution as well as the sum total of the revenue-in the form of income from the productive and distributive operations of the state. In other words, this budget for the first time takes into account all the transactions of the Supreme Council of National Economy and of the Commissariat for Food Supply. The further development of the budget will be directed toward the working out of the details of this general plan, and, in particular, toward differentiating revenue and expenditures: (1) direct, actual money received or paid, and (2) transactions involved in the accounting of material and labor, but not involving any actual receipts of money, or requiring any actual disbursements in money. VI In the field of taxation one must bear in mind first that the entire question of taxation has been radically changed with the beginning of Communist reconstruction. Under the influence of the combined measures of economic and financial legislation of the Republic, the bases for the levying of land, real estate, industrial taxes, taxes on coupons, on bank notes, on stock, stock exchange, etc., completely disappeared, since the objects of taxation themselves have become government property. The old statute regulating the income tax (1916), which has not as yet been abolished, was in no way suitable to the changed economic conditions. All this compelled the Commissariat of Finance to seek new departures in the field of taxation. However, it was impossible to give up the idea of direct taxation prior to the complete reformation of the tax system as a whole. Our work of Communist reconstruction has not been completed; it would be absurd to exempt from taxation the former capitalists as well as the newly forming group of people who strive for individual accumulation. This is why the system of direct taxation, which has until recently been in operation, was composed of fragments of the old tax on property and of the partly reformed income tax law. However, beginning with November, 1918, to this old system there were added two taxes of a purely revolutionary character which stand out apart within the partly outgrown system “taxes in kind” (decree of October 30, 1918) and “extraordinary taxes” (November 2, 1918). Both decrees have been described as follows by Comrade Krestinsky, Commissary of Finance, at the May session of the financial sub-divisions: “These are decrees of a different order, the only thing they have in common is that they both bear a class character and that each provides for the tax to increase in direction proportion with the amount of property which the tax-payer possesses, that the poor are completely free from both taxes, and the lower middle class pays them in a smaller proportion.”