1)
Of the Revenue of the Sovereign or Commonwealth
a)
Of the Expences of the Sovereign or Commonwealth
i)
Of the Expence of Defence
·
The
expense of a military force is different at different periods.
·
Among
hunters it costs nothing.
·
When
shepherds go to war the whole nation moves with its property
·
and the
sovereign is at no expense.
·
Shepherds
are far more formidable than hunters.
·
Husbandmen
with little commerce and only household manufactures are easily converted into
soldiers, and it seldom costs the sovereign anything to prepare them for the
field,
·
or to
maintain them when they have taken the field.
·
Later it
becomes necessary to pay those who take the field,
·
since
artificers and manufacturers must be maintained by the public when away from
their work,
·
and the greater
length of campaigns make service without pay too heavy a burden even for
husbandmen.
·
The
possible proportion of soldiers to the rest of the population in much smaller
in civilised terms.
·
The
expense of preparing for the field was long inconsiderable.
·
Soldiers
were not a distinct class in Greece and Rome, nor at first in feudal times.
·
But as war
becomes more complicated, division of labour becomes necessary to carry the art
to perfection.
·
As society
advances the people become unwarlike.
·
There are
only two methods of providing for defence, (1) to enforce military exercises
and service,
·
or (2) to
make the trade of the soldier a separate one:
·
in other
words the establishment of a militia or a standing army.
·
Militias
were anciently only exercised and not regimented.
·
Fire-arms
brought about the change by making dexterity less important,
·
and
discipline much more so.
·
A militia
is always inferior to a standing army, being less expert,
·
and less
well disciplined.
·
The best
militias are those which go to war under the chieftains who rule in time of
peace.
·
A militia
kept long enough in the field becomes a standing army.
·
History
shows the superiority of the standing army.
·
That of
Macedon defeated the Greek militias.
·
In the
wars of Carthage and Rome standing armies defeated militias.
·
The
carthaginian standing army defeated the Roman militia in Italy
·
and Spain.
·
When the
Roman militias become a standing army they defeated the Carthaginian standing
army in Italy
·
and the
Carthaginian militia in Spain, and both standing army and militia in Africa.
·
Thenceforward
the Roman republic had standing armies, which found little resistance except
from the standing army of Macedon.
·
Under the
emperors these armies degenerated into militias.
·
Militias
were gradually superseded by standing armies in Western Europe.
·
A standing
army does not lose its valour in time of peace,
·
and is the
only safeguard of a civilised nation,
·
also the
only means of civilising a barbarous one.
·
It is not
unfavourable to liberty.
·
Defense
thus grows more expensive.
·
Fire-arms
enhance the expense,
·
and so
give an advantage to rich nations, which is favourable to civilisation.
ii)
Of the Expence of Justice
·
The
expense of justice is different at different periods.
·
Civil
government was first rendered necessary by the introduction of property.
·
Property
strengthens the causes of subordination.
·
There are
four causes of subordination,
·
(1)
superiority of personal qualifications,
·
(2)
superiority of age,
·
(3)
superiority of fortunem
·
and (4)
superiority of birth.
·
The
distinction of birth is not present among hunters,
·
but always
among shepherds.
·
Distinctions
of birth and fortune are both most powerful among shepherds.
·
Among
shepherds inequality of fortune arises and introduces civil government,
·
but the
judicial authority was long a source of revenue rather than expense,
·
which
produced great abuses,
·
whether
the sovereign exercised the judicial authority in person or by deputy.
·
These
abuses could not be remedied so long as the sovereign depended only on land
revenue and court fees,
·
but when taxes
became necessary, the people stipulated that no presents should be taken by
judges.
·
Justice is
never administered gratis.
·
The
salaries of judges are a small part of the expense of civilised government,
·
and might
be defrayed by fees of court.
·
The English
courts were originally maintained by fees, and this led to their encroachments.
·
Courts
might be maintained by a stamp duty on proceedings before them, but this would
tempt them to multiply such proceedings.
·
Another
way of securing independence would be to endow the courts with a revenue from
property.
·
The
separation of the judicial from the executive power is due to the increase of
executive business.
·
The
judicial should be not only separate but indepedent of the executive power.
iii)
Of the Expence of public Works and public
Institutions
·
The third
duty of the sovereign is the erection and maintenance of those public works and
institutions which are useful but not capable of bringing in a profit to
individuals.
·
These are
chiefly institutions for facilitating commerce and promoting instruction.
(1)
Of the public Works and Institutions for
facilitating the Commerce of Society
(a)
1st, For facilitating the general
Commerce of the Society
·
The
expense of such institutions increases.
·
The
expense need not be defrayed from the general public revenue,
·
but may be
raised by tolls and other particular charges.
·
Tolls
according to weight of carriages and capacity of boats are very equitable.
·
If the
tolls are higher on carriages of luxury, the rich contribute in an easy manner
to the relief of the poor.
·
Roads and
canals, etc., thus paid for cannot be made except where they are wanted.
·
Canals are
better in the hands of private persons than of commissioners.
·
But tolls
on a high road cannot safely be made private property and must be committed to
trustees.
·
The
prevalence of complaints against British turnpike toll is not remarkable.
·
It has
been proposed that the government should manage the turnpikes and make a
revenue from them.
·
This plan
is open to the following objections,
·
(1) the
tolls would be raised and become a great encumbrance to commerce,
·
(2) a tax
on carriages in proportion to weight falls principally on the poor,
·
and (3)
the roads would be neglected.
·
High roads
are under the executive in France,
·
and great
post roads are generally good, but all the rest entirely neglected.
·
The
executive in China and other parts of Asia maintains both high roads and
canals, it is said, in good condition, but this would not be the case in
Europe.
·
Public
works of a local nature should be maintained by local revenue.
·
The abuses
of local administration are small compared with those of the administration of
the general revenue.
(b)
2nd, For facilitating particular
Branches of Commerce
·
Some
particular institutions are required to facilitate particular branches of
commerce, as trade with barbarous nations requires forts, and trade with other
nations requires ambassadors.
·
Branches
of commerce which require extraordinary expense for their protection may
reasonably bear a particular tax.
·
The
proceeds of such taxes should be at the disposal of the executive, but have
often been given to companies of merchants,
·
which have
always proved in the long run burdensome or useless.
·
They are
either regulated or joint stock companies.
·
Regulated
companies are like corporations of trades and act like them.
·
There are
five existing regulated companies,
·
of which
the Hamburg, Russian and Eastland Companies are merely useless.
·
The Turkey
Company is an oppressive monopoly.
·
Regulated
companies are more unfit to maintain forts than joint stock companies,
·
but the
African company was charged with this duty.
·
The
statute establishing the company endeavoured ineffectually to restrain the
spirit of monopoly,
·
and
Parliament allots 13.000 pounds a year to the company for forts, which sum they
misapply.
·
Joint
stock companies differ from private partnerships:
·
(1)
withdrawals are by sale of shares;
·
(2)
liability is limited to the share held.
·
Such
companies are managed by directors, who are negligent and profuse.
·
Some have
and some have not exclusive privileges.
·
The Royal
African Company, having lost exclusive privileges, failed.
·
The
Hudson’s Bay Company have been moderately successful, having in fact an
exclusive trade and a very small number of proprietors.
·
The South
Sea Company failed to make any profit by their annual ship to the Spanish West
Indies,
·
lost
237.000 pounds in their whole fishery,
·
and
finally ceased to be a trading company.
·
They had
competitors in the trade of the annual ship.
·
The old
East India Company, unable to support competition,
·
was
superseded by the present company,
·
which with
exclusive privileges has traded successfully,
·
but has
conquered large territories,
·
and
mismanaged them,
·
so that
Parliament has been obliged to make alterations,
·
which are
not likely to be of service.
·
They tend
to encourage waste,
·
and the
company is now in greater distress than ever.
·
Companies
misuse the right of making peace and war.
·
The grant
of a temporary monopoly to a joint stock company may sometimes be reasonable,
but a perpetual monopoly creates an absurd tax.
·
A list of
fifty-five companies with exclusive privileges for foreign trade which have
failed has been collected by Abbé Morellet.
·
Only four
trades can be well carried on by a company with no exclusive privilege, namely,
·
banking,
·
insurance,
·
canal and
aqueduct management and construction.
·
A joint
stock company ought not to be established except for some purpose of remarkable
utility, requiring a larger capital than can be provided by a private
partnership.
·
These
conditions are fulfilled by banking,
·
insurance,
·
canals and
water works,
·
but not by
anything else.
(2)
Of the Expence of the Institutions for the
Education of Youth
·
Institutions
for education may also be made to furnish their own expense,
·
or may be
endowed.
·
Have
endowments really promoted useful education?
·
Exertion
is always in proportion to its necessity.
·
Endowments
diminish the necessity of application,
·
which is
not entirely removed where the teacher receives part of his emoluments from
fees, but is entirely absent when his whole revenue arises from endowments.
·
Members of
a college or university are indulgent to their fellow members.
·
External
control is ignorant and capricious.
·
To compel
young men to attend a university has a bad effect on the teachers.
·
The
privileges of graduates are thus like apprenticeship.
·
Scholarship,
·
regulations
against migration,
·
and
assignment of students to particular tutors are equally pernicious.
·
Where such
regulations prevail a teacher may avoid or suppress all visible signs of
disapprobation on the part of his pupils.
·
University
and college discipline is contrived for the ease of the teachers, and quite
unnecessary if the teachers are tolerably diligent.
·
The parts
of education that are not conducted by public institutions are better taught.
·
English
public schools, where the teachers depend more upon fees, are less corrupt than
the universities.
·
What the
universities teach badly would not be commonly taught at all but for them.
·
They were
originally instituted for the education of churchmen in theology;
·
but not
Greek or Hebrew, which were introduced by the Reformation.
·
Greek and
Latin continue to be a considerable part of university education.
·
There are
three branches of Greek philosophy,
·
(1)
physics or natural philosophy,
·
(2) ethics
or moral philosophy,
·
and (3)
logic.
·
Philosophy
was afterwards divided into five branches, Metaphysics or pneumatics were added
to physics,
·
and gave
rise to Ontology.
·
Moral
philosophy degenerated into casuitry and an ascetic morality,
·
the order
being (1) logic, (2) ontology, (3) pneumatology, (4) a debased moral
philosophy, (5) physics.
·
University
education was thus made less likely to produce men of the world.
·
This
course is still taught in most universities with more or less diligence.
·
Few
improvements in philosophy have been made by universities, and fewest by the
richest universities.
·
In spite
of all this the universities drew to themselves the education of gentlemen and
men of fortune,
·
but in
England it is becoming more usual to send young men to travel abroad, a plan so
absurd that nothing but the discredit of the universities could have brought it
into repute.
·
In Greece
the state directed education in gymnastics and music.
·
The Romans
had the Campus Martinus, resembling the gymnasium, but no music. They were none
the worse for its absence.
·
The
teachers of military exercises and music were not paid or appointed by the
state.
·
Reading,
writing and arithmetic were taught privately.
·
Philosophical
education was independent of the state.
·
No public
institutions for teaching law existed at Rome, where law was first developed
into an orderly system.
·
The
ancient system was more successful than the modern, which corrupts public
teaching and stifles private.
·
If there
were no public institutions for education nothing except what was useful would
be taught.
·
Women’s
education is excellent in consequence of the absence of public institutions.
·
Ought the
state to give no attention to education?
·
In some
cases it ought, in others it need not.
·
Division
of labour destroys intellectual, social and martial virtues unless government
takes pains to prevent it,
·
whereas in
barbarous societies those virtues are kept alive by constant necessity.
·
The
education of the common people requires attention from the state more than that
of people of rank and fortune, whose parents can look after their interests,
and who spend their lives in varied occupations chiefly intellectual,
·
unlike the
children of the poor.
·
The state
can encourage or insist on the general acquirement of reading, writing, and
arithmetic,
·
by
establishing parish schools,
·
giving
prizes,
·
and
requiring men to pass an examination before setting up in trade.
·
In this
way the Greeks and Romans maintained a martial spirit.
·
Martial
spirit in the people would diminish both the necessary size and the danger of a
standing army.
·
The Greek
and Roman institutions were more effectual than modern militias, which only
include a small portion of the people.
·
It is the
duty of government to prevent the growth of cowardice,
·
gross
ignorance and stupidity.
(3)
Of the Expence of the Institutions for the
Instruction of People of all Ages
·
These
institutions are chiefly for religious instruction. Religious like other
teachers are more vigorous if unestablished and unendowed.
·
The
inferior clergy of the Church of Rome are more stimulated by self-interest than
those of any established Protestant Church.
·
Hume says
the state may leave the promotion of some arts to individuals who benefit by
them,
·
others
must be promoted by the state;
·
it might
be thought that the teaching of religion belonged to the first class,
·
but it
does not, because the interested zeal of the clergy should be discouraged.
·
Establishments
and public endowments have not been due to reasoning like this, but to the
needs of political faction.
·
If
politics had never called in the aid of religion, sects would have been so
numerous that they would have learnt to tolerate each other,
·
and if
they did not, their zeal could do no harm.
·
Of the two
systems of morality, the strict or austere and the liberal or loose, the first
is favoured by the common people, the second by the people of fashion.
·
Religious
sects usually begin with the austere system,
·
and in
small religious sects morals are regular and orderly and even disagreeably
rigorous and unsocial.
·
There are
two possible remedies,
·
(1) the
requirement of a knowledge of science and philosophy from candidates for
professions and offices;
·
and (2)
the encouragement of public diversions.
·
Where no
religion was favoured the sovereign would not require to influence the teachers
of religion,
·
as he must
where there is an established church,
·
since he
cannot directly oppose the doctrines of the clergy.
·
The clergy
hold their benefices for life, and violence used against them would be
ineffectual; so management must be resorted.
·
Bishops
were originally elected by the clergy and people, afterwards by the clergy
alone,
·
still
later to a large extent by the Pope.
·
This,
joined with the great wealth of the clergy, rendered them exceedingly
formidable.
·
Benefit of
clergy and other privileges were the natural result.
·
The Church
of Rome in the Middle Age was the most formidable combination against liberty,
reason and happiness.
·
Its power
was destroyed by the improvement of arts, manufactures and commerce.
·
The
sovereigns endeavoured to deprive the Pope of the disposal of the great
benefices, and succeeded, especially in France and England.
·
Ever since
the French clergy have been less devoted to the Pope.
·
So even
before the Reformation the clergy had less power and inclination to disturb the
state.
·
The
Reformation doctrines were recommended to the common people by the zeal of
their teachers
·
and
enabled sovereigns on bad terms with Rome to overturn the Church with ease,
·
while in
countries the sovereigns of which were friendly to Rome the Reformation was
suppressed or obstructed.
·
In some
countries the Reformation overturned both church and state.
·
The
followers of the Reformation had no common authority like the court of Rome,
and divided into Lutherans and Calvinists.
·
The
Lutherans and the Church of England preferred episcopacy, and gave the disposal
of benefices to the sovereign and other lay patrons.
·
Zwinglians
and Cavlinists gave the right of election to the people, and established
equality among the clergy.
·
Election
by the people gave rise to great disorders,
·
and after
trial was abolished in Scotland, though the concurrence of the people is still
required.
·
The
equality of the Presbyterian clergy makes them independent and respectable.
·
The
mediocrity of their benefices gives them influence with the common people.
·
It also
enables the universities to draw on them for professors, who are thus the most
eminent men of letters.
·
Eminent
men of letters in Greece and rome were mostly teachers.
·
The
revenue of the church except that part which arises from endowments is a branch
of that of the state.
·
In some
cantons of Switzerland the old revenue of the church now maintains both church
and state.
·
The whole
revenue of the Church of Scotland is a trifling amount, but that church
produces all possible good effects.
·
This is
also true in a still higher degree of the Swiss Protestant churches.
·
Large
revenue is unsuitable to the office of clergymen.
iv)
Of the Expence of supporting the Dignity of the
Sovereign
·
The
expense of supporting the dignity of the sovereign increases as the expenditure
of the people increases,
·
and is
greater in a monarchy than in a republic.
v)
Conclusion of the Chapter
·
The
expense of defence and of maintaining the dignity of the sovereign should be
paid by general contribution.
·
But the
expense of justice may be defrayed by fees of court,
·
and
expenses of local benefit ought to be defrayed by local revenue.
·
The
expense of roads may not unjustly be defrayed by general contribution, but
better by tolls.
·
The
expense of education and religious instruction may also be defrayed by general
contribution, but better by fees and voluntary contribution.
·
Any
deficiencies in the revenue of institutions beneficial to the whole society
must be made up by general contribution.
b)
Of the Sources of the general or public Revenue
of the Society
i)
Of the Funds or Sources of Revenue which may
peculiarly belongs to the Sovereign or Commonwealth
·
All
revenue comes from one or two sources: (1) property belonging to the sovereign;
(2) the revenue of the people.
ii)
Of Taxes
(1)
Article 1st. Taxes upon Rent; Taxes
upon the Rent of Land Taxes which are proportioned, not to the Rent, but to the
Produce of Land
·
The
property may be in stock or land.
·
Revenue
from stock may be profit or interest.
·
Tartar and
Arabian chefs make profit from herds and flocks, Hamburg from a wine cellar and
apothecary’s shop, and many states from banks
·
and post
offices.
·
But
generally princes are unsuccessful as traders.
·
The two
characters are inconsistent.
·
Treasure
may be lent to subjects or foreign states:
·
Berne
lends to foreign states,
·
Hamburg
has a pawn-shop.
·
Pennsylvania
lent paper money on land security.
·
No great
revenue can be derived from such a source.
·
Revenue
from land is much more important,
·
especially
when war cost little, as in ancient Greece and Italy,
·
and in
feudal times, when all expenses were small.
·
The
present rent of all the land in the country would not suffice for the ordinary
expenditure
·
but if the
whole of the land of the country were under the extravagant management of the
state, the rent would be much reduced,
·
and the
revenue of the people would be reduced by a still greater amount.
·
The sale
of crown lands would benefit both sovereign and people.
·
The
revenue from crown lands costs the people more than any other.
·
Public
parks, etc., are the only lands which should belong to the sovereign.
·
The
greater part of the sovereign’s expense must be defrayed by taxes.
(2)
Taxes upon the Rent of Houses
·
Taxes may
be intended to fall on rent, profit, or wages, or upon all three sorts of
revenue.
·
There are
four maximx with regard to taxes in general,
·
(1)
equality
·
(2)
certainty,
·
(3)
convenience of payment,
·
and (4)
economy in collection,
·
which have
recommended themselves to all nations.
(2)
Article 1st. Taxes upon Rent. Taxes
upon the Rent of Land.
·
A tax on
the rent of land may be on a constant or variable valuation.
·
If on a
constant valuation it becomes unequal, like the British land tax.
·
Circumstances
have made the constant valuation favourable to the British landlords, the
country having prospered and rents risen,
·
and the
value of money and silver remained uniform.
·
The
constancy of valuation might have been very inconvenient to one or other of the
parties.
·
The French
economists recommend a tax varying with the rent.
·
In the
Venetian territory rented lands are taxed 10 per cent. and lands cultivated by
the proprietor 8 per cent.
·
Such a
land tax is more equal but is not so certain, and is more troublesome and
expensive than British.
·
The
uncertainty and expense could be diminished.
·
Leases
should be registered,
·
fines
taxed higher than rent,
·
conditions
of cultivation should be discouraged by high valuation,
·
rents
payable in kind should be valued high,
·
and an
abatement given to landlords cultivating a certain extent of their land.
·
Such a
system would free the tax from inconvenient uncertainty and encourage
improvement.
·
The extra
expense of levying the tax would be inconsiderable.
·
The value
of improvements should be for a fixed term exempt from taxation,
·
and the
tax would then be as little inconvenient as is possible.
·
It would
adjust itself to all changes.
·
Some
states make a survey and valuation for the land tax,
·
for
example, Prussia,
·
Silesia,
·
and
Bohemia.
·
Under the
Prussian land tax the church lands are taxed higher than the rest; in some
states they are taxed lower than the rest.
·
Differences
are often made between land held by noble and base tenures.
·
A land tax
assessed according to a general survey and valuation soon becomes unequal,
·
as in
Montauban.
(3)
Taxes which are proportioned, not to the Rent,
but to the Produce of land
·
Taxes on
the produce are finally paid by the landlord,
·
and are
very unequal taxes,
·
which
discourage both improvement and good cultivation.
·
They form
the principal revenue of the state in many Asiatic countries,
·
and are
said to interest the sovereign in the improvement and cultivation of land
there.
·
They may
be in kind or in money.
·
Collection
in kind is quite unsuitable for public revenue.
·
A money
tax on produce may be always the same or may vary with the market price of
produce.
·
When a
certain sum of money is to be paid in compensation for the tax it becomes
exactly like the English land tax.
(4)
Taxes upon the Rent of Houses
·
House rent
consists of two parts,
·
building
rent,
·
and ground
rent.
·
A tax on
house rent paid by the tenant falls partly on the inhabitant and partly on the
owner of the ground,
·
as may be
shown by an example.
·
On the
inhabitants it would be an unequal tax, falling heaviest on the rich.
·
It would
be like a tax on any other consumable commodity, it would be very much in
proportion to men’s whole expense, and it would produce considerable revenue.
·
The rent
could be easily ascertained. Empty houses should be exempt, and houses occupied
by their proprietor should be assessed at their letting value.
·
Ground
rent is a still more proper subject of taxation than building rent,
·
as no discouragement
is given to industry by the taxation of the rent of land.
·
Ground
rents are even a more proper subject of taxation than ordinary land rents.
·
Ground
rents are nowhere separately taxed, but might be.
·
House rent
is legally liable to the British land tax.
·
In Holland
there is a tax on the capital value of houses.
·
House
taxes in England have not been proportioned to the rent,
·
but first
to the number of hearths,
·
and later
to the number of windows.
·
The
present window tax augments gradually from 2d. per windows to 2s.
·
Window
taxes are objectionable, chiefly on the ground of inequality.
·
Taxes on
houses lower rents.
(3)
Article 2nd. Taxes upon Profit, or
upon the Revenue arising from Stock
·
Profit is
divided into interest and surplus over interest.
·
The
surplus is not taxable.
·
Interest
at first sight seems as fit to be taxed as rent,
·
but it is
not, since,
·
(1) the
amount received by an individual cannot be readily and exactly ascertained,
·
and (2)
stock may be removed from the country imposing the tax.
·
Where such
a tax exists it is levied on a loose and very low valuation,
·
as under
the English land tax.
·
Inquisition
is avoided.
·
At Hamburg
each inhabitant privately assesses himself on oath.
·
In some
Swiss cantons each man assesses himself publicly,
·
which
would be a hardship at Hamburg.
·
Holland
once adopted the Hamburg practice.
·
On that
occasion the tax was meant to be a tax on the capital.
(4)
Taxes upon the Profit of particularl Employments
·
Taxes are
sometimes imposed on particular profits,
·
such as
those on hawkers, pedlars, etc.
·
These fall
not on the dealers but on the consumers of the goods,
·
but when
not proportioned to the trade of the dealer they oppress the small and favour
the great dealer.
·
The
personal taille in France on the profits of agriculture is arbitrary and uncertain.
·
The
authority which assesses it is always ignorant of the real abilities of the
contributors and often misled by friendship, party animosity and private
resentment.
·
Taxes on
the profits of agriculture do not, like those on profits of other trades, fall
on the consumer, but on the landlord.
·
The
discouragement to good cultivation caused by the personal taille injures the
public, the farmer and the landlord.
·
Per capita
taxes on negro slaves fall on the landlords.
·
Poll taxes
have been represented as badges of slavery, but, to the taxpayer every tax is a
badge of liberty.
·
Taxes on
menial servants are like taxes on consumable commodities.
·
Taxes on
particular profits cannot affect interest.
(5)
Appendix to Article 1st and 2nd.
Taxes upon the Capital Value of Lands, Houses, and Stock
·
Taxes on
the transmission of property often necessarily take a part of the capital
value.
·
Transfers
from the dead to the living and all transfers of immovable property can be
taxed directly; transfers by way of loan of money have been taxed by stamp
duties or duties on registration.
·
Transfers
from the dead to the living were taxed by the Vicesima Hereditatum,
·
and the
Dutch tax on successions.
·
The feudal
law taxed the transference of land,
·
by
wardships and reliefs,
·
and fines
on alienation, which last still form a considerable branch of revenue in many
countries.
·
These
taxes on the sale of land may be levied by stamps or duties on registration.
·
In Great
Britain the duties are not proportioned to the value of the property.
·
In Holland
some are proportioned and others not.
·
In France
different sets of officers collect the stamp duties and the registration
duties.
·
Both
stamps and registration duties are modern methods of taxation.
·
Taxes on
transfers from the dead to the living fall on the person who acquires the
property; taxes on sales of land fall on the seller;
·
taxes on
the sale of new buildings fall on the buyer;
·
taxes on
the sale of old houses fall on the seller;
·
taxes on
the sale of ground rents fall on the seller;
·
taxes on
loans fall on the borrower;
·
taxes on
law proceedings fall on the suitors.
·
All taxes
on transfers, so far as they diminish the capital value, are unthrifty.
·
Even when
proportioned to the value of the property they are unequal, because the
frequency of transfer varies. They are certain, convenient and inexpensive.
·
French
stamp-duties on transfers are not much complained of, but the registration
duties (or Contrôle) are said to be arbitrary and uncertain.
·
Public
registration of mortgages and all rights to immovable property is advantageous,
but secret registers ought not to exist.
·
Many stamp
duties are duties on consumption.
(6)
Article 3rd. Taxes upon the Wages of
Labour
·
A tax on
wages must raise wages by rather more than the amount of the tax.
·
The rise
in the wages of manufacturing labour would be advanced by the employers and
paid by the consumers, and the rise in agricultural wages advanced by the
farmers and paid by the landlords.
·
The effect
of the tax in raising wages is generally disguised by the fall in the demand
for labour which it occasions.
·
A tax on
agricultural wages raises prices no more than one on farmers’ profits.
·
Many
countries have such taxes, e.g., France and Bohemia.
·
A tax on
the recompense of the liberal professions, etc., would also raise that recompense,
but a tax on government offices would not raise salaries.
(7)
Article 4th. Taxes which, it is
intended, should fall indifferently upon every different Species of Revenue
·
These are
capitation taxes and taxes on consumable commodities.
(a)
Capitation Taxes
·
Capitation taxes ostensibly proportioned to
revenue are altogether arbitrary.
·
If proportioned to rank they are unequal.
·
In the first case they are always grievous and
in the second they are intolerable unless they are light.
·
In the poll taxes of William III. assessment was
chiefly according to rank.
·
In France the assessment is by rank in the
higher and by supposed fortune in the lower orders of people.
·
The French tax is more rigorously exacted than
the English taxes were.
·
Capitation taxes on the lower orders of people
are like taxes on wages.
·
They are inexpensive and afford a sure revenue.
(8)
Taxes upon consumable Commodities
·
The
impossibility of taxation according to revenue has given rise to taxation
according to expenditure on consumable commodities, either necessaries or
luxuries, necessaries including all that creditable people of the lowest order
cannot decently go without.
·
What
raises the price of subsistence must raise wages.
·
So that a
tax on necessaries, like a tax on wages, raises wages.
·
Taxes on
luxuries even if consumed by the poor have no such effect,
·
as they
act like sumptuary laws, and so do not diminish the ability of the poor to
bring up useful families,
·
whereas a
rise in the price of necessaries diminishes the ability of the poor to bring up
useful families and supply the demand for labour.
·
Taxes on
necessaries are contrary to the interest of the middle and superior ranks of
people.
·
The chief
British taxes on necessaries are those on salt, leather, soap and candles,
·
and also
sea-borne coal.
·
Such taxes
at any rate bring in revenue which is more than can be said of the regulations
of the corn trade, etc., which produce equally bad effects.
·
Much
higher taxes on necessaries prevail in many other countries. There are taxes on
bread,
·
and meat.
·
A tax on a
consumable commodity may be levied either periodically from the consumer or
once for all from the dealer when the consumer acquires it.
·
The first
method is best when the commodity is durable.
·
Sir M.
Decker proposed to adapt it also to other commodities by issuing annual
licenses to consume them, but this would be liable to greater objections than
the second and usual method.
·
Excepting
the four mentioned above, British excise duties fall chiefly on luxuries.
·
Customes
were originally regarded as taxes on merchants’ profits,
·
those of
aliens being taxed more heavily.
·
So
originally customs were imposed equally on all sorts of goods, and on exports
as well as imports.
·
The first
was that on wool and leather, and the second tonnage (on wine) and poundage (on
all other goods). Subsidies were additions to poundage.
·
The
prevalence of the principles of the mercantile system has led to the removal of
nearly all the export duties,
·
and has
been unfavourable to the revenue of the state,
·
annihilating
parts of it by prohibitions of importation,
·
and
reducing other parts by high duties.
·
Bounties
and drawbacks (great part of which is obtained by fraud) and expenses of
management make a large deduction from the customs revenue.
·
In the
customs returns the imports are minimised and the exports exaggerated.
·
The
customs are very numerous and much less perspicuous and distinct than the
excise duties.
·
They might
with great advantage be confined to a few articles.
·
Foreign
wines and brandies and East and West Indian products at present yield most of
the customs revenue.
·
The yield
of high duties is often lessened by smuggling or diminished consumption.
·
In the
first case the only remedy is to lower the duty.
·
For
smuggling the remedy is to lower the tax or increase the difficulty of smuggling.
·
Excise law
are more embarassing to the smuggler than the customs.
·
If customs
were confined to a few articles, a system of excise supervision of stores could
be instituted.
·
Great
simplification without loss of revenue would then be secured,
·
while the
trade and manufactures of the country would gain greatly.
·
Sir Robert
Walpole’s excise scheme was something of this kind so far as wine and tobacco
are concerned.
·
The duties
on foreign luxuries fall chiefly on the middle and upper ranks.
·
Taxes on
the consumption of the inferior ranks are much more productive than those on
the consumption of the rich.
·
But such
taxes must never be on the necessary consumption of the inferior ranks.
·
Liquors
brewed or distilled for private use are exempt from excise, though a
composition must be paid for malting.
·
It is said
that a tax on malt smaller than the present taxes on malt, beer and ale taken
together would bring in more revenue,
·
and
figures are quoted to prove it.
·
Taxes on
cyder and mum included in the old malt tax are counterbalanced by the “country
excise” duty on cyder, verjuice, vinegar and mead.
·
If the
malt tax were raised, it would be proper to reduce the excises on wines and
spirits containing malt,
·
but not so
as to reduce the price of spirits.
·
Dr.
Davenant objects that the malster’s profits would be unfairly taxed, and the
rent and profit of barley land reduced, but the change would make malt liquors
cheaper, and so be likely to increase the consumption,
·
and the
malster could recover eighteen shillings as easily as the brewer at present
recovers twenty-four or thirty and might be given longer credit.
·
The
consumption of barley not being reduced, the rent and profit of barley land
could not be reduced, as there is no monopoly.
·
The only
sufferers would be those who brew for private use.
·
Tolls on
goods carried from place to place affect prices unequally.
·
Some
countries levy transit duties on foreign goods.
·
Taxes on
luxuries do not reach absentees, but the fact that they are paid voluntarily
recommends them.
·
They are
also certain
·
and
payable at convenient times,
·
but take
much more from the people than they yield to the state, since
·
(1) the
salaries and perquisites of customs and excise officers take a large proportion
of what is collected;
·
(2)
particular branches of industry are discouraged;
·
(3)
smuggling is encouraged;
·
and (4)
vexation equivalent to expense is caused by the tax-governers’ examinations and
visits.
·
Great
Britain suffers less than other countries from these inconveniencies.
·
Duties on
commodities are sometimes repeated on each sale, as by the Spanish Alcavala,
·
and the 3
per cent. tax at Naples.
·
Great
advantage is obtained by the uniformity of taxation in Great Britain.
·
In France
the diversity of taxes in different provinces occasions many hindrances to internal
trade,
·
and the
commerce in wine is subject to particular restraints.
·
Milan and
Parma are still more absurdly managed.
·
The
collection of taxes by government officers is much superior to letting the
taxes to farm.
·
Farmers of
taxes require sanguinary revenue laws.
·
Taxation
by monopolies let to farm is even worse.
·
In France
the three branches of revenue which are levied by government officers are much
more economical.
·
The taille
and capitations should be abolished, the vintièmes increased, the taxes on commodities
made uniform, and farming abolished.
·
The French
system is in every respect inferior to the British.
·
In Holland
heavy taxes on necessaries have ruined manufactures.
·
But
perhaps Holland has done the best possible.
c)
Of public Debts
·
When
expensive luxuries are unknown, persons with large revenue are likely to hoard
savings.
·
So the
ancient sovereigns of Europe amassed treasures.
·
When
luxuries are introduced, the sovereign’s expenditure equals his revenue in time
of peace,
·
and in
time of war he contracts debts.
·
The same
causes which make borrowing necessary make it possible.
·
Merchants
and manufactures are able to lend,
·
and also
willing.
·
A
government dispenses itself from saving if it knows it can borrow,
·
whereas if
there is no possibility of borrowing, it feels it must save.
·
Nations
have begun to borrow without special security and have afterwards mortgaged
particular funds.
·
The
unfunded debt of Great Britain is contracted in the first way.
·
Mortgages
of particular branches of revenue are either for a term of years, when money is
said to be raised by anticipation, or in perpetuity, when it is said to be
raised by funding.
·
The annual
land and malt taxes are always anticipated.
·
Under
William III. and Anne anticipations gave rise to deficiencies,
·
and the
term of the mortgage taxes was prolonged in 1697,
·
in 1701,
·
in 1707,
·
in 1708,
·
in 1709,
·
and in
1710.
·
In 1711
the taxes were continued for ever and made into a fund for paying the interest
on 9,-177.968 pounds.
·
The only
earlier taxes imposed in perpetuity to pay interest on debt were those for
paying interest on the advances of the Bank and East India Company.
·
In 1715
several taxes were accumulated into the Aggregate Fund,
·
and in
1717 several others into the General Fund.
·
Thus most
of the anticipated taxes were made into a fund for paying interest only.
·
When once
become familiar, perpetual funding is preferred to anticipation.
·
A fall in
the market rate of interest led to a saving, which gave rise to the Sinking
Fund.
·
A sinking
fund facilitates the contraction of new debt.
·
Money is
also borrowed by terminable and life annuities.
·
Under
William III. and Anne large sums were borrowed on annuities for terms of years.
·
But little
money was so borrowed in the wars of the middle of the eighteenth century, most
people preferring a perpetual annuity,
·
and
annuities for terms and for lives were only given as premiums.
·
Tontines
are preferred to annuities on separate lives, though they do not liberate the
public revenue so quickly.
·
In France
a much greater proportion of the whole debt is in life annuities than in
England;
·
the
difference is due to the fact that in England the lenders are merchants,
·
whereas in
France they are persons engaged in the farming and collection of the taxes, who
are chiefly bachelors.
·
The
systems of perpetual funding prevents the people from feeling distinctly the
burden of war.
·
Their
burdens are not reduced on the conclusion of peace.
·
Any new
taxes imposed are rarely sufficient to do more than pay the new interest.
Sinking funds arise generally from reductions of interest,
·
and are
constantly misapplied.
·
The
British debt had its origin in the war of 1688-97,
·
which left
a debt of twenty-one and a half millions. This was reduced by five millions in
1697-1701. From 1702 to 1722 the increase was thirty-nine millions, and from
1722 to 1739 the reduction was only eight and one-third millions.
·
From 1739
to 1748 the increase was thirty-one and one-third millions.
·
During the
peace of 1748-55 the reduction was six millions, and the seven year’s war added
more than seventy-five.
·
In the
eleven years of peace before January 1775 the reduction was only ten and a half
millions, and most of this was due to reductions of interest.
·
The
opinion that the national debt is an additional capital is altogether
erroneous.
·
When necessary
expenditure is met by taxes, it only diverts unproductive labour from one
unproductive employment to another.
·
When it is
met by borrowing, it diverts labour from productive to unproductive employment,
and the only advantage is that people can continue to save more during the war,
·
which
advantage disappears immediately peace is concluded. Under the other system,
too, wars would be shorter and periods of peace longer.
·
Moreover
funding at length burdens the revenue so greatly that the ordinary peace expenditure
exceeds that which would under the other system have been sufficient in war.
·
The fact
of part of the whole of the debt being held at home makes no difference.
·
Land and
capital, the two original sources of all revenue, are managed by landlords and owners
of capital.
·
Taxation
may diminish or destroy the landlord’s ability to improve his land,
·
and induce
the owner of the capital to remove it from the country.
·
The
transference of the sources of revenue from the owners of particular portions
of them to the creditors of the public must occasion neglect of land and waste
or removal of capital.
·
The
practice of funding has always enfeebled states.
·
The
superiority of the British system of taxation will not enable Britain to
support an unlimited burden.
·
Bankruptcy
is always the end of great accumulation of debt.
·
Raising
the coin has been the usual method of disguising bankruptcy though this
expedient has much worse consequences than open bankruptcy.
·
It has
been adopted by many states, including ancient Rome,
·
and has
led to the universal reduction of the value of the coin.
·
Another
expedient is to adulterate the coin,
·
but this
is a treacherous fraud which occasions such indignation that it usually fails.
·
It has
been tried in England, Scotland and most other countries.
·
For the
paying off or reduction of the British debt a very considerable increase of
revenue or diminution of expense is necessary.
·
Alterations
in taxation might increase the revenue considerably but not sufficiently.
·
An
extension of taxation to Ireland and the colonies would afford a larger
increase.
·
The
land-tax could well be extended to Ireland, America and the West Indies.
·
Stamp
duties could easily be extended.
·
The
extension of the customs would be of great advantage to all, as it would be
accompanied by an extension of free trade.
·
Excise
duties would require some variation,
·
as for
example in the case of American beer.
·
Sugar, rum
and tobacco could be made subject to excise.
·
The
increase of revenue thus obtained, if proportionate to the increased population
taxed, would yield six millions and a quarter to be applied in reduction of
debt, and this sum would of course be a growing one.
·
Some
necessary deductions from this estimate would be counterbalanced by additions
resulting from a few simple alterations.
·
The
Americans have little gold and silver,
·
but this
is the effect of choice, not necessity.
·
Paper is
more convenient to the Americans for home trade,
·
while for
their external trade they use as much gold and silver as is necessary.
·
In the
trade between Great Britain and Virginia and Maryland tobacco is a more
convenient currency than gold and silver.
·
The
northern colonies generally find the gold and silver necessary to pay the
balance on their trade with Great Britain.
·
The sugar
colonies generally find the gold and silver necessary to pay the balance to
Great Britain which arises from the sugar planters being absentees.
·
Any
difficulties have not been proportionate to the size of the balance due,
·
and have
arisen from unnecessary and excessive enterprise.
·
It is
justice that Ireland and America should contribute to the discharge of the
British debt.
·
Union
would deliver Ireland from an oppressive aristocracy founded on religious and
political prejudices.
·
The
colonies would be delivered from rancorous factions which are likely to lead to
bloodshed in case of separation from Great Britain.
·
East India
with lighter taxes and less corrupt administration might yield an even larger
addition of revenue.
·
If no such
augmentation of revenue can be obtained Great Britain should reduce her
expenses by ridding herself of the cost of the colonies in peace and war.
2)
Appendix on the Herring Bounty
3)
Index I. Subjects
4)
Index II. Authorities
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