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January 22, 1853,] THE LEADER. 87
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THIAL BY JTIB.Y. Some dozen gentlemen ha...
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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Taxation Reduced To Unity And Simplicity...
den of indirect taxation in the form of deprivation ; if he succeed in keeping up his income hy placing on other articles the profits he would have had from currants , then the purchasers of those other articles pay the tax ; although , in fact , the currants are not consumed . In order to avoid so much of those consequences as consists in . deprivation of use , accompanied , of course , with diminution of revenue , it has sometimes been attempted to place the tax on articles so necessary that none shall evade the use of them . But it is impossible to know to what degree an article is necessary ; and if this be not known , it is equally impossible to judge how far consumption will bo shortened under the
weight of a tax . If a tax were now laid on gas , young men might think that multitudes could not escape its pressure ; but those of us who happen to be old enough to remember the days of tallow candles , know -with how little artificial light the world will jog on . We complain of our present supply of water to London , averaging one hundred and sixty-four gallons per house per day , and we might think water such a necessity , that no tax could diminish the use of it : but , down to the reign of James I ., London had not one-fourth of the water in proportion to the population , artificially delivered , which it has at present . We know not how many people are now compelled to walk every day in London , by the absurd taxes on street conveyances .
Two taxes deserve , in this view , especial notice . First , our own tax on corn , —a case which is not invalidated , for our argument , by the protectionist object of its imposition . Recent facts have shown that five millions of quarters of wheat may be imported annually as an additional consumption , without any addition to the population , —that is , since a quarter of wheat suffices for a year ' s consumption of one person , the tax on
corn deprived the poorest part of our people of the consumption of as much bread every year as would have maintained five millions of persons during the same time . Since this deprivation fell on only part of our twenty-seven millions of people , probably not on nearly so much as half of them , the facts afford a most impressive lesson on the extent to which the consumption , even of an apparent necessary of life , may be forcibly contracted by a tax .
The other illustrative case is that of the salt-tax of India . This tax was long defended on the express ground that salt being a prime necessary of life , especially in India , the operation of the tax on it could not be escaped , and that no man would use more salt , if it were untaxed , for it is not a luxury . The facts , however , which come out on investigation , all go to an opposite conclusion . The tax is not uniform in Tndia . It is comparatively light In Bombay ; it is very heavy in Calcutta ; it is an excise in the former , a monopoly in the latter presidency . Wages , too , are lower in Calcutta , where the salt-tax is higher .
Instead , however , of the consumption being uniform under the presumed pressure of necessity on the one hand , and absence of mere luxurious inducement on the other , it is found that in Bengal the consumption varies from 41 bs . to more than 401 bs . per head per annum , according to the- income of different classes of consumers ; and that in Bombay , the poorest classes use 12 , 1 C , or 18 lbs . per head per annum , tho consumption of others rising to inoro than 30 lbs . The compressibility of consumption by a heavy tax , no matter how important tho article taxed , cannot 1 ) 0 doubted-after so striking an exhibition of it in the case of this indisponsiblo condiment .
Indirect taxation is necessarily subject to this dilemma ;—cither , for the Hake of stringency of application , it fixes on what is presumed to bo an article of urgent necessity , and then it causes cruel Buttering to the multitudes of the poor ; or , to avoid that suflbring , it fixes on luxuries , and ho ailbrds ample opportunity for evasion by relinquishment of consumption . But in any eaue , ono of its consequences is , either always , as with some taxes , or very frequently , as with others , to limit tho consumption . This limitation is variable , diflering from time to time with seasons , commercial
movements , and nil tho other causes which affect the relation botweon tho averugo of wages and tho cost oi living . Under ono degree of limitation one Hefc of parties pays the tax , or bears its . consequences ; ami under another degree , another , jh burdened with it . But it is altogether impossible to foresee , from your to year who will pay it , for it is impossible to foresee tho facts on which tho question d « pends ; it in , therefore , equally impossible , for this reason if for no other , to kco whether any indirect tax , or any net of indirect taxes , will lay on any g iven class its fair shuro of tho public expense .
If this bo true in respect , of deprivation of con-Hiiinption , mid its commercial consequences , it is equally ho in respect of tlio proportion of tax falling on ouch I > orBon through whose hands tho article passes ,
Hupposing it still to be consumed in undiminished quantities . As a component part of the price , the tax is subject to all the commercial vicissitudes of price . Everything which affects profits affects tax also ; and the uncertainty of commercial profit ( not , indeed , on the whole , but as to particular times and persons ) applies just as much to indirect taxation . - The party which is commercially the weakest at the moment pays the tax , either in money or deprivation ; but which that party may be in any given future year , or in any remaining part of the present year , nobody can tell . It aggravates the difficulty to remark , that if it is uncertain who will pay the tax at any given time , or in what proportion it will be shared , it is equally uncertain whether the tax will or will not reach the consumer with a
large accompanying profit . For tax having become part of price , is liable to just the same augmentation as any other component part of first cost , if circumstances favourable to the seller permit such an augmentation to be realized . This uncertainty of operation we hold to be fatal to any scheme of indirect taxation . Whatever may be the advantage of government of which any individual may have to pay in his due proportion of its costs , it is utterly impossible to say # iat any particular impost
will reach him in that proportion ; and if we cannot say that M any one impost , it is obviously impossible to say it otany number of them , and therefore equally impossible to say that one of them compensates another and the result is correct on the whole . Moreover , if a set of indirect imposts could be so adjusted this year as to give , by its complex operation , a true fiscal result , the same set of imposts must fail of the same result next year , from the ever-varying influence of commercial circumstances , foreign to its nature and objects , to which taxation is most needlessly subjected .
If , then , taxation is not to be the exaction of the strong hand , but a just proportionate contribution to common purposes , indirect taxation is wholly inadmissible , as a device whose uncertainty of effect is incompatible with the conservation of that fundamental principle . We can conceive but two modes in which it can be proposed that indirect taxation should be adjusted in conformity with the principle of just proportionate distribution . The first of these is , that the tax be placed where it will naturally find its way to each person in due proportion . This indispensible Iffect we have discussed above , and we see that its realization is impossible . The second , assuming that every direct tax
would have some indirect operation , would lay the actual tax , not where the work of government is really done and where the payment for it has properly become due , but where that payment would ultimately place itself by the natural forces of society . That is—a man who has paid a tax endeavours to repay himself by means of his labour , bis business , or his source of income of any kind ; and it may be proposed to take the tax where he would take it , and not from the man himself . But hero , again , we arc met with the fluctuating uncertainties of the times . In no two cases does tho ultimate incidence fall alike ; in scarcely any case is it possible to tell where it really does fall . Tho principle utterly fails in application .
Many errors on this subject arise from sup ] K > sing that there is something peculiar in this one source of expense—taxation . Hence complications and abstrusities which are never thought of in other matters exactly similar in nature and effect . To gain some idea of tho extent to which this mode of treating the subject misleads uk , let us suppose any other sourco of constant expense , as rent or insurance , to bo a-SKosned or paid indirectly . Suppose insurance on n . bouse to be paid by a charge on the coals consumed in it , and we should have a case at least as fair as that of any part
of our existing taxation ; for the quantity of coals consumed in a bouse is quite as true an indication of the valuo of the house as either tea , soap , or even rent , is of income , or as income- is of property . The ihvst question would be—Why not go to the property to be insured at once ?—why take this circuitous and unsafe method of using an artificial ratio for the valuo of that property , when you may have the value itself V The next would be— Who really pays this tax?—tlm consumer of the coals , tho dealer , or the original coalowner P and in no two yours could Iho name answer be
given to tho question . Another considerable source of error is tho putting of averages in tho place of facts . It may bo perfectly true that on the average the consumer pays tho tax ; but it i » quite consistent with that average thnt many dealers are ruined by its extreme occasional pressure on them . It may bo true that consumers pay tho tax , but it may at tho mime time be truo \ j , hat some consumers pay through if- much more than * they ought , and others much less . In truth , the use of averages in this argument requires it to bo proved that tho avcrHgo of the
consumption , and consequently . of the payment of the tax , always ( not merely commonly ) coincides with the average of the payments justly due from the individual to the state . We believe not only that such a concurrence of the averages cannot be shown to exist , but that it scarcely ever does exist . The only justification attempted when we come to this view of the subject is , that we have not the administrative means of carrying out any other system . But here the difficulty is created by failing to ask , first of all , what is the matter for which the tax is to pay ?
The moment a clear sight is obtained of- the true relations of the parties , the administrative difficulty vanishes just as in all other cases , ( but for reasons we cannot now stay to discuss ) the working out of a true principle always leads to simplicity of detail and facility of execution , while the orig inal assumption of a false principle involves complexity and obscurity , even where the end can be accomplished at all . There is no practical difficulty ( save t he difficulty wh ich is assumed without showing it ) when once a fair definition is established of the object for which taxation is instituted .
Lord Aberdeen , in statingthe policy of the Government j ust installed , said , " I am not going to enter into a discussion of the respective merits of direct and indirect taxation ; it is obvious that in a revenue such as ours the union of both is indispensable ; and it is to the application of that principle that we look for the prosperity of the country . " To us the direct contrary of this opinion is obvious ; and if the foregoing remarks have any truth in them , they show that indirect taxation is altogether wrong , and not merely a mode of taxation which is open to preference or rejection , or which may or may not be associated with other modes . It radically contravenes
the principle on which all justice in taxation rests , and it only needs that its nature be fairly exposed to ensure it that universal condemnat ion which has already fallen on political and economical principles , which in their day had as much of p lausibility and even of a certain sort of logic in their favour , and as much of the support of Cabinets and Parliaments to guarantee their acceptance . Gradually , but surely , we believe that the principles we have been advocating will find their way to the convictions of honest me n in office , and , still more important , to the plain apprehensions of the unpledged multitude . The consequent change in our financial policy we trust will be gradual and cautious , but at the same time firm , ever advancing , and ultimately complete .
January 22, 1853,] The Leader. 87
January 22 , 1853 , ] THE LEADER . 87
Thial By Jtib.Y. Some Dozen Gentlemen Ha...
THIAL BY JTIB . Y . Some dozen gentlemen having favoured us with letters this week , which all happened to be on the same subject , and that not a very new one , wo must excrciso an impartial severity , and , to avoid offence to any , shut out , as courteously as may be , all these correspondents together . Wo will , however , tako tho subject into our own hands , and say half-a-dozen words upon it , more especially as some of our readers seem to have arrived at the- conclusion that because wo did not ageeo with tho jury that tried
Kirwan , and thought Mr . . Dennis , tho foreman thereof , had , to uso Ralph Osborne ' s phrase , " tho pen of a ready but ungrammatical writer , " we had objections fo the institution altogether , and worn inclined to think it ; might advantageously bo dispensed with . Now , tho fact is , that what excites our indignation or ridicule in tho conduct of jurymen whim they do wrong , is precisely tho consciousness that such absurdities as they aro committing ( lro calculated to bring discredit and disdain down upon what wo valuo as , and Mr . Dennis calls , a " sacred institution . " We know ili ' nt no sooner have twelvo men resigned thonwolvcs into
the hands of a judge , or given a verdict according to prejudice and not " according to evidence-, than they , if told that they are guilty of folly or knavery in so doing , raise n shout that we aro damaging the character of trial by jury and endangering a " sacred institution , " and we cannot but perceive Hint unless there in a proper exposure of this practice , as oft en as may bo required , the repeated offences of individuals , always willing to confound thomse ves with > uid cloak themselves under , the institution , will at last really damage its character , and *<> perhaps depr . ve ub is the ^ eatest and
of what , next perhaps to the press , most firmly established safeguard of our l . bort . eH . An esteemed correspondent ' s words will admirably express our opinion . Mr . Isaac Ironside , of She / hold , writes Ilius- " I know and regret that tho institution has not tho priHtino vigour , and e / licioncy about it which it formerly had , but that does not arise from tho institution itself . For ' years it has been tho fashion of centralize ™ to sneer at it and write it down . Judges too have habitually overstepped their jurisdiction , and have directed juries what to do Whonmon liavo a proper houmo of the deep
responsibilities of a juryman , they will effectually put down this innovation , and doclaro what thoir opinion in without dictation or direction from any ono . "
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Citation
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Leader (1850-1860), Jan. 22, 1853, page 15, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/cld_22011853/page/15/
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