When a tax is imposed upon the profits of stock in a particular branch of

trade, the traders are all careful to bring no more goods to market than

what they can sell at a price sufficient to reimburse them from advancing

the tax. Some of them withdraw a part of their stocks from the trade, and

the market is more sparingly supplied than before. The price of the goods

rises, and the final payment of the tax falls upon the consumer. But when

a tax is imposed upon the profits of stock employed in agriculture, it is

not the interest of the farmers to withdraw any part of their stock from

that employment. Each farmer occupies a certain quantity of land, for

which he pays rent. For the proper cultivation of this land, a certain

quantity of stock is necessary; and by withdrawing any part of this

necessary quantity, the farmer is not likely to be more able to pay either

the rent or the tax. In order to pay the tax, it can never be his interest

to diminish the quantity of his produce, nor consequently to supply the

market more sparingly than before. The tax, therefore, will never enable

him to raise the price of his produce, so as to reimburse himself, by

throwing the final payment upon the consumer. The farmer, however, must

have his reasonable profit as well as every other dealer, otherwise he

must give up the trade. After the imposition of a tax of this kind, he can

get this reasonable profit only by paying less rent to the landlord. The

more he is obliged to pay in the way of tax, the less he can afford to pay

in the way of rent. A tax of this kind, imposed during the currency of a

lease, may, no doubt, distress or ruin the farmer. Upon the renewal of the

lease, it must always fall upon the landlord.

In the countries where the personal taille takes place, the farmer is

commonly assessed in proportion to the stock which he appears to employ in

cultivation. He is, upon this account, frequently afraid to have a good

team of horses or oxen, but endeavours to cultivate with the meanest and

most wretched instruments of husbandry that he can. Such is his distrust

in the justice of his assessors, that he counterfeits poverty, and wishes

to appear scarce able to pay anything, for fear of being obliged to pay

too much. By this miserable policy, he does not, perhaps, always consult

his own interest in the most effectual manner; and he probably loses more

by the diminution of his produce, than he saves by that of his tax.

Though, in consequence of this wretched cultivation, the market is, no

doubt, somewhat worse supplied; yet the small rise of price which this may

occasion, as it is not likely even to indemnify the farmer for the

diminution of his produce, it is still less likely to enable him to pay

more rent to the landlord. The public, the farmer, the landlord, all

suffer more or less by this degraded cultivation. That the personal taille

tends, in many different ways, to discourage cultivation, and consequently

to dry up the principal source of the wealth of every great country, I

have already had occasion to observe in the third book of this Inquiry.

What are called poll-taxes in the southern provinces of North America, and

the West India islands, annual taxes of so much a-head upon every negro,

are properly taxes upon the profits of a certain species of stock employed

in agriculture. As the planters, are the greater part of them, both

farmers and landlords, the final payment of the tax falls upon them in

their quality of landlords, without any retribution.

Taxes of so much a head upon the bondmen employed in cultivation, seem

anciently to have been common all over Europe. There subsists at present a

tax of this kind in the empire of Russia. It is probably upon this account

that poll-taxes of all kinds have often been represented as badges of

slavery. Every tax, however, is, to the person who pays it, a badge, not

of slavery, but of liberty. It denotes that he is subject to government,

indeed; but that, as he has some property, he cannot himself be the

property of a master. A poll tax upon slaves is altogether different from

a poll-tax upon freemen. The latter is paid by the persons upon whom it is

imposed; the former, by a different set of persons. The latter is either

altogether arbitrary, or altogether unequal, and, in most cases, is both

the one and the other; the former, though in some respects unequal,

different slaves being of different values, is in no respect arbitrary.

Every master, who knows the number of his own slaves, knows exactly what

he has to pay. Those different taxes, however, being called by the same

name, have been considered as of the same nature.

The taxes which in Holland are imposed upon men and maid servants, are

taxes, not upon stock, but upon expense; and so far resemble the taxes

upon consumable commodities. The tax of a guinea a-head for every

man-servant, which has lately been imposed in Great Britain, is of the

same kind. It falls heaviest upon the middling rank. A man of two hundred

a-year may keep a single man-servant. A man of ten thousand a-year will

not keep fifty. It does not affect the poor.

Taxes upon the profits of stock, in particular employments, can never

affect the interest of money. Nobody will lend his money for less interest

to those who exercise the taxed, than to those who exercise the untaxed

employments. Taxes upon the revenue arising from stock in all employments,

where the government attempts to levy them with any degree of exactness,

will, in many cases, fall upon the interest of money. The vingtieme, or

twentieth penny, in France, is a tax of the same kind with what is called

the land tax in England, and is assessed, in the same manner, upon the

revenue arising upon land, houses, and stock. So far as it affects stock,

it is assessed, though not with great rigour, yet with much more exactness

than that part of the land tax in England which is imposed upon the same

fund. It, in many cases, falls altogether upon the interest of money.

Money is frequently sunk in France, upon what are called contracts for the

constitution of a rent; that is, perpetual annuities, redeemable at any

time by the debtor, upon payment of the sum originally advanced, but of

which this redemption is not exigible by the creditor except in particular

cases. The vingtieme seems not to have raised the rate of those annuities,

though it is exactly levied upon them all.

APPENDIX TO ARTICLES I. AND II.—Taxes upon the Capital Value of

Lands, Houses, and Stock.

While property remains in the possession of the same person, whatever

permanent taxes may have been imposed upon it, they have never been

intended to diminish or take away any part of its capital value, but only

some part of the revenue arising from it. But when property changes hands,

when it is transmitted either from the dead to the living, or from the

living to the living, such taxes have frequently been imposed upon it as

necessarily take away some part of its capital value.

The transference of all sorts of property from the dead to the living, and

that of immoveable property of land and houses from the living to the

living, are transactions which are in their nature either public and

notorious, or such as cannot be long concealed. Such transactions,

therefore, may be taxed directly. The transference of stock or moveable

property, from the living to the living, by the lending of money, is

frequently a secret transaction, and may always be made so. It cannot

easily, therefore, be taxed directly. It has been taxed indirectly in two

different ways; first, by requiring that the deed, containing the

obligation to repay, should be written upon paper or parchment which had

paid a certain stamp duty, otherwise not to be valid; secondly, by

requiring, under the like penalty of invalidity, that it should be

recorded either in a public or secret register, and by imposing certain

duties upon such registration. Stamp duties, and duties of registration,

have frequently been imposed likewise upon the deeds transferring property

of all kinds from the dead to the living, and upon those transferring

immoveable property from the living to the living; transactions which

might easily have been taxed directly.

The vicesima hereditatum, or the twentieth penny of inheritances, imposed

by Augustus upon the ancient Romans, was a tax upon the transference of

property from the dead to the living. Dion Cassius, { Lib. 55. See also

Burman. de Vectigalibus Pop. Rom. cap. xi. and Bouchaud de l’impot du

vingtieme sur les successions.} the author who writes concerning it the

least indistinctly, says, that it was imposed upon all successions,

legacies and donations, in case of death, except upon those to the nearest

relations, and to the poor.

Of the same kind is the Dutch tax upon successions. {See Memoires

concernant les Droits, etc. tom i, p. 225.} Collateral successions are

taxed according to the degree of relation, from five to thirty per cent.

upon the whole value of the succession. Testamentary donations, or

legacies to collaterals, are subject to the like duties. Those from

husband to wife, or from wife to husband, to the fiftieth penny. The

luctuosa hereditas, the mournful succession of ascendants to descendants,

to the twentieth penny only. Direct successions, or those of descendants

to ascendants, pay no tax. The death of a father, to such of his children

as live in the same house with him, is seldom attended with any increase,

and frequently with a considerable diminution of revenue; by the loss of

his industry, of his office, or of some life-rent estate, of which he may

have been in possession. That tax would be cruel and oppressive, which

aggravated their loss, by taking from them any part of his succession. It

may, however, sometimes be otherwise with those children, who, in the

language of the Roman law, are said to be emancipated; in that of the

Scotch law, to be foris-familiated; that is, who have received their

portion, have got families of their own, and are supported by funds

separate and independent of those of their father. Whatever part of his

succession might come to such children, would be a real addition to their

fortune, and might, therefore, perhaps, without more inconveniency than

what attends all duties of this kind, be liable to some tax. The

casualties of the feudal law were taxes upon the transference of land,

both from the dead to the living, and from the living to the living. In

ancient times, they constituted, in every part of Europe, one of the

principal branches of the revenue of the crown.

The heir of every immediate vassal of the crown paid a certain duty,

generally a year’s rent, upon receiving the investiture of the estate. If

the heir was a minor, the whole rents of the estate, during the

continuance of the minority, devolved to the superior, without any other

charge besides the maintenance of the minor, and the payment of the

widow’s dower, when there happened to be a dowager upon the land. When the

minor came to be of age, another tax, called relief, was still due to the

superior, which generally amounted likewise to a year’s rent. A long

minority, which, in the present times, so frequently disburdens a great

estate of all its incumbrances, and restores the family to their ancient

splendour, could in those times have no such effect. The waste, and not

the disincumbrance of the estate, was the common effect of a long

minority.

By a feudal law, the vassal could not alienate without the consent of his

superior, who generally extorted a fine or composition on granting it.

This fine, which was at first arbitrary, came, in many countries, to be

regulated at a certain portion of the price of the land. In some

countries, where the greater part of the other feudal customs have gone

into disuse, this tax upon the alienation of land still continues to make

a very considerable branch of the revenue of the sovereign. In the canton

of Berne it is so high as a sixth part of the price of all noble fiefs,

and a tenth part of that of all ignoble ones. {Memoires concernant les

Droits, etc, tom.i p.154} In the canton of Lucern, the tax upon the sale

of land is not universal, and takes place only in certain districts. But

if any person sells his land in order to remove out of the territory, he

pays ten per cent. upon the whole price of the sale. {id. p.157.} Taxes of

the same kind, upon the sale either of all lands, or of lands held by

certain tenures, take place in many other countries, and make a more or

less considerable branch of the revenue of the sovereign.

Such transactions may be taxed indirectly, by means either of stamp

duties, or of duties upon registration; and those duties either may, or

may not, be proportioned to the value of the subject which is transferred.

In Great Britain, the stamp duties are higher or lower, not so much

according to the value of the property transferred (an eighteen-penny or

half-crown stamp being sufficient upon a bond for the largest sum of

money), as according to the nature of the deed. The highest do not exceed

six pounds upon every sheet of paper, or skin of parchment; and these high

duties fall chiefly upon grants from the crown, and upon certain law

proceedings, without any regard to the value of the subject. There are, in

Great Britain, no duties on the registration of deeds or writings, except

the fees of the officers who keep the register; and these are seldom more

than a reasonable recompence for their labour. The crown derives no

revenue from them.

In Holland {Memoires concernant les Droits, etc. tom. i. p 223, 224, 225.}

there are both stamp duties and duties upon registration; which in some

cases are, and in some are not, proportioned to the value of the property

transferred. All testaments must be written upon stamped paper, of which

the price is proportioned to the property disposed of; so that there are

stamps which cost from three pence or three stivers a-sheet, to three

hundred florins, equal to about twenty-seven pounds ten shillings of our

money. If the stamp is of an inferior price to what the testator ought to

have made use of, his succession is confiscated. This is over and above

all their other taxes on succession. Except bills of exchange, and some

other mercantile bills, all other deeds, bonds, and contracts, are subject

to a stamp duty. This duty, however, does not rise in proportion to the

value of the subject. All sales of land and of houses, and all mortgages

upon either, must be registered, and, upon registration, pay a duty to the

state of two and a-half per cent. upon the amount of the price or of the

mortgage. This duty is extended to the sale of all ships and vessels of

more than two tons burden, whether decked or undecked. These, it seems,

are considered as a sort of houses upon the water. The sale of moveables,

when it is ordered by a court of justice, is subject to the like duty of

two and a-half per cent.

In France, there are both stamp duties and duties upon registration. The

former are considered as a branch of the aids of excise, and, in the

provinces where those duties take place, are levied by the excise

officers. The latter are considered as a branch of the domain of the crown

and are levied by a different set of officers.

Those modes of taxation by stamp duties and by duties upon registration,

are of very modern invention. In the course of little more than a century,

however, stamp duties have, in Europe, become almost universal, and duties

upon registration extremely common. There is no art which one government

sooner learns of another, than that of draining money from the pockets of

the people.

Taxes upon the transference of property from the dead to the living, fall

finally, as well as immediately, upon the persons to whom the property is

transferred. Taxes upon the sale of land fall altogether upon the seller.

The seller is almost always under the necessity of selling, and must,

therefore, take such a price as he can get. The buyer is scarce ever under

the necessity of buying, and will, therefore, only give such a price as he

likes. He considers what the land will cost him, in tax and price

together. The more he is obliged to pay in the way of tax, the less he

will be disposed to give in the way of price. Such taxes, therefore, fall

almost always upon a necessitous person, and must, therefore, be

frequently very cruel and oppressive. Taxes upon the sale of new-built

houses, where the building is sold without the ground, fall generally upon

the buyer, because the builder must generally have his profit; otherwise

he must give up the trade. If he advances the tax, therefore, the buyer

must generally repay it to him. Taxes upon the sale of old houses, for the

same reason as those upon the sale of land, fall generally upon the

seller; whom, in most cases, either conveniency or necessity obliges to

sell. The number of new-built houses that are annually brought to market,

is more or less regulated by the demand. Unless the demand is such as to

afford the builder his profit, after paying all expenses, he will build no

more houses. The number of old houses which happen at any time to come to

market, is regulated by accidents, of which the greater part have no

relation to the demand. Two or three great bankruptcies in a mercantile

town, will bring many houses to sale, which must be sold for what can be

got for them. Taxes upon the sale of ground-rents fall altogether upon the

seller, for the same reason as those upon the sale of lands. Stamp duties,

and duties upon the registration of bonds and contracts for borrowed

money, fall altogether upon the borrower, and, in fact, are always paid by

him. Duties of the same kind upon law proceedings fall upon the suitors.

They reduce to both the capital value of the subject in dispute. The more

it costs to acquire any property, the less must be the neat value of it

when acquired.

All taxes upon the transference of property of every kind, so far as they

diminish the capital value of that property, tend to diminish the funds

destined for the maintenance of productive labour. They are all more or

less unthrifty taxes that increase the revenue of the sovereign, which

seldom maintains any but unproductive labourers, at the expense of the

capital of the people, which maintains none but productive.

Such taxes, even when they are proportioned to the value of the property

transferred, are still unequal; the frequency of transference not being

always equal in property of equal value. When they are not proportioned to

this value, which is the case with the greater part of the stamp duties

and duties of registration, they are still more so. They are in no respect

arbitrary, but are, or may be, in all cases, perfectly clear and certain.

Though they sometimes fall upon the person who is not very able to pay,

the time of payment is, in most cases, sufficiently convenient for him.

When the payment becomes due, he must, in most cases, have the more to

pay. They are levied at very little expense, and in general subject the

contributors to no other inconveniency, besides always the unavoidable one

of paying the tax. In France, the stamp duties are not much complained of.

Those of registration, which they call the Controle, are. They give

occasion, it is pretended, to much extortion in the officers of the

farmers-general who collect the tax, which is in a great measure arbitrary

and uncertain. In the greater part of the libels which have been written

against the present system of finances in France, the abuses of the

controle make a principal article. Uncertainty, however, does not seem to

be necessarily inherent in the nature of such taxes. If the popular

complaints are well founded, the abuse must arise, not so much from the

nature of the tax as from the want of precision and distinctness in the

words of the edicts or laws which impose it.

The registration of mortgages, and in general of all rights upon

immoveable property, as it gives great security both to creditors and

purchasers, is extremely advantageous to the public. That of the greater

part of deeds of other kinds, is frequently inconvenient and even

dangerous to individuals, without any advantage to the public. All

registers which, it is acknowledged, ought to be kept secret, ought

certainly never to exist. The credit of individuals ought certainly never

to depend upon so very slender a security, as the probity and religion of

the inferior officers of revenue. But where the fees of registration have

been made a source of revenue to the sovereign, register-offices have

commonly been multiplied without end, both for the deeds which ought to be

registered, and for those which ought not. In France there are several

different sorts of secret registers. This abuse, though not perhaps a

necessary, it must be acknowledged, is a very natural effect of such

taxes.

Such stamp duties as those in England upon cards and dice, upon newspapers

and periodical pamphlets, etc. are properly taxes upon consumption; the

final payment falls upon the persons who use or consume such commodities.

Such stamp duties as those upon licences to retail ale, wine, and

spiritous liquors, though intended, perhaps, to fall upon the profits of

the retailers, are likewise finally paid by the consumers of those

liquors. Such taxes, though called by the same name, and levied by the

same officers, and in the same manner with the stamp duties above

mentioned upon the transference of property, are, however, of a quite

different nature, and fall upon quite different funds.

ARTICLE III.—Taxes upon the Wages of Labour.

The wages of the inferior classes of work men, I have endeavoured to show

in the first book are everywhere necessarily regulated by two different

circumstances; the demand for labour, and the ordinary or average price of

provisions. The demand for labour, according as it happens to be either

increasing, stationary, or declining; or to require an increasing,

stationary, or declining population, regulates the subsistence of the

labourer, and determines in what degree it shall be either liberal,

moderate, or scanty. The ordinary average price of provisions determines

the quantity of money which must be paid to the workman, in order to

enable him, one year with another, to purchase this liberal, moderate, or

scanty subsistence. While the demand for the labour and the price of

provisions, therefore, remain the same, a direct tax upon the wages of

labour can have no other effect, than to raise them somewhat higher than

the tax. Let us suppose, for example, that, in a particular place, the

demand for labour and the price of provisions were such as to render ten

shillings a-week the ordinary wages of labour; and that a tax of

one-fifth, or four shillings in the pound, was imposed upon wages. If the

demand for labour and the price of provisions remained the same, it would

still be necessary that the labourer should, in that place, earn such a

subsistence as could be bought only for ten shillings a-week; so that,

after paying the tax, he should have ten shillings a-week free wages. But,

in order to leave him such free wages, after paying such a tax, the price

of labour must, in that place, soon rise, not to twelve shillings a week

only, but to twelve and sixpence; that is, in order to enable him to pay a

tax of one-fifth, his wages must necessarily soon rise, not one-fifth part

only, but one-fourth. Whatever was the proportion of the tax, the wages of

labour must, in all cases rise, not only in that proportion, but in a

higher proportion. If the tax for example, was one-tenth, the wages of

labour must necessarily soon rise, not one-tenth part only, but

one-eighth.

A direct tax upon the wages of labour, therefore, though the labourer

might, perhaps, pay it out of his hand, could not properly be said to be

even advanced by him; at least if the demand for labour and the average

price of provisions remained the same after the tax as before it. In all

such cases, not only the tax, but something more than the tax, would in

reality be advanced by the person who immediately employed him. The final

payment would, in different cases, fall upon different persons. The rise

which such a tax might occasion in the wages of manufacturing labour would

be advanced by the master manufacturer, who would both be entitled and

obliged to charge it, with a profit, upon the price of his goods. The

final payment of this rise of wages, therefore, together with the

additional profit of the master manufacturer would fall upon the consumer.

The rise which such a tax might occasion in the wages of country labour

would be advanced by the farmer, who, in order to maintain the same number

of labourers as before, would be obliged to employ a greater capital. In

order to get back this greater capital, together with the ordinary profits

of stock, it would be necessary that he should retain a larger portion,

or, what comes to the same thing, the price of a larger portion, of the

produce of the land, and, consequently, that he should pay less rent to

the landlord. The final payment of this rise of wages, therefore, would,

in this case, fall upon the landlord, together with the additional profit

of the farmer who had advanced it. In all cases, a direct tax upon the

wages of labour must, in the long-run, occasion both a greater reduction

in the rent of land, and a greater rise in the price of manufactured goods

than would have followed from the proper assessment of a sum equal to the

produce of the tax, partly upon the rent of land, and partly upon

consumable commodities.

If direct taxes upon the wages of labour have not always occasioned a

proportionable rise in those wages, it is because they have generally

occasioned a considerable fall in the demand of labour. The declension of

industry, the decrease of employment for the poor, the diminution of the

annual produce of the land and labour of the country, have generally been

the effects of such taxes. In consequence of them, however, the price of

labour must always be higher than it otherwise would have been in the

actual state of the demand; and this enhancement of price, together with

the profit of those who advance it, must always be finally paid by the

landlords and consumers.

A tax upon the wages of country labour does not raise the price of the

rude produce of land in proportion to the tax; for the same reason that a

tax upon the farmer’s profit does not raise that price in that proportion.

Absurd and destructive as such taxes are, however, they take place in many

countries. In France, that part of the taille which is charged upon the

industry of workmen and day-labourers in country villages, is properly a

tax of this kind. Their wages are computed according to the common rate of

the district in which they reside; and, that they may be as little liable

as possible to any overcharge, their yearly gains are estimated at no more

than two hundred working days in the year. {Memoires concernant les

Droits, etc. tom. ii. p. 108.} The tax of each individual is varied from

year to year, according to different circumstances, of which the collector

or the commissary, whom intendant appoints to assist him, are the judges.

In Bohemia, in consequence of the alteration in the system of finances

which was begun in 1748, a very heavy tax is imposed upon the industry of

artificers. They are divided into four classes. The highest class pay a

hundred florins a year, which, at two-and-twenty pence half penny

a-florin, amounts to £9:7:6. The second class are taxed at seventy; the

third at fifty; and the fourth, comprehending artificers in villages, and

the lowest class of those in towns, at twenty-five florins. {Memoires

concernant les Droits, etc. tom. iii. p. 87.}

The recompence of ingenious artists, and of men of liberal professions, I

have endeavoured to show in the first book, necessarily keeps a certain

proportion to the emoluments of inferior trades. A tax upon this

recompence, therefore, could have no other effect than to raise it

somewhat higher than in proportion to the tax. If it did not rise in this

manner, the ingenious arts and the liberal professions, being no longer

upon a level with other trades, would be so much deserted, that they would

soon return to that level.

The emoluments of offices are not, like those of trades and professions,

regulated by the free competition of the market, and do not, therefore,

always bear a just proportion to what the nature of the employment

requires. They are, perhaps, in most countries, higher than it requires;

the persons who have the administration of government being generally

disposed to regard both themselves and their immediate dependents, rather

more than enough. The emoluments of offices, therefore, can, in most

cases, very well bear to be taxed. The persons, besides, who enjoy public

offices, especially the more lucrative, are, in all countries, the objects

of general envy; and a tax upon their emoluments, even though it should be

somewhat higher than upon any other sort of revenue, is always a very

popular tax. In England, for example, when, by the land-tax, every other

sort of revenue was supposed to be assessed at four shillings in the

pound, it was very popular to lay a real tax of five shillings and

sixpence in the pound upon the salaries of offices which exceeded a

hundred pounds a-year; the pensions of the younger branches of the royal

family, the pay of the officers of the army and navy, and a few others

less obnoxious to envy, excepted. There are in England no other direct

taxes upon the wages of labour.

ARTICLE IV.—Taxes which it is intended should fall indifferently

upon every different Species of Revenue.

The taxes which it is intended should fall indifferently upon every

different species of revenue, are capitation taxes, and taxes upon

consumable commodities. Those must be paid indifferently, from whatever

revenue the contributors may possess; from the rent of their land, from

the profits of their stock, or from the wages of their labour.

Capitation Taxes.

Capitation taxes, if it is attempted to proportion them to the fortune or

revenue of each contributor, become altogether arbitrary. The state of a

man’s fortune varies from day to day; and, without an inquisition, more

intolerable than any tax, and renewed at least once every year, can only

be guessed at. His assessment, therefore, must, in most cases, depend upon

the good or bad humour of his assessors, and must, therefore, be

altogether arbitrary and uncertain.

Capitation taxes, if they are proportioned, not to the supposed fortune,

but to the rank of each contributor, become altogether unequal; the

degrees of fortune being frequently unequal in the same degree of rank.

Such taxes, therefore, if it is attempted to render them equal, become

altogether arbitrary and uncertain; and if it is attempted to render them

certain and not arbitrary, become altogether unequal. Let the tax be light

or heavy, uncertainty is always a great grievance. In a light tax, a

considerable degree of inequality may be supported; in a heavy one, it is

altogether intolerable.

In the different poll-taxes which took place in England during the reign

of William III. the contributors were, the greater part of them, assessed

according to the degree of their rank; as dukes, marquises, earls,

viscounts, barons, esquires, gentlemen, the eldest and youngest sons of

peers, etc. All shop-keepers and tradesmen worth more than three hundred

pounds, that is, the better sort of them, were subject to the same

assessment, how great soever might be the difference in their fortunes.

Their rank was more considered than their fortune. Several of those who,

in the first poll-tax, were rated according to their supposed fortune were

afterwards rated according to their rank. Serjeants, attorneys, and

proctors at law, who, in the first poll-tax, were assessed at three

shillings in the pound of their supposed income, were afterwards assessed

as gentlemen. In the assessment of a tax which was not very heavy, a

considerable degree of inequality had been found less insupportable than

any degree of uncertainty.

In the capitation which has been levied in France, without-any

interruption, since the beginning of the present century, the highest

orders of people are rated according to their rank, by an invariable

tariff; the lower orders of people, according to what is supposed to be

their fortune, by an assessment which varies from year to year. The

officers of the king’s court, the judges, and other officers in the

superior courts of justice, the officers of the troops, etc are assessed

in the first manner. The inferior ranks of people in the provinces are

assessed in the second. In France, the great easily submit to a

considerable degree of inequality in a tax which, so far as it affects

them, is not a very heavy one; but could not brook the arbitrary

assessment of an intendant.

The inferior ranks of people must, in that country, suffer patiently the

usage which their superiors think proper to give them.

In England, the different poll-taxes never produced the sum which had been

expected from them, or which it was supposed they might have produced, had

they been exactly levied. In France, the capitation always produces the

sum expected from it. The mild government of England, when it assessed the

different ranks of people to the poll-tax, contented itself with what that

assessment happened to produce, and required no compensation for the loss

which the state might sustain, either by those who could not pay, or by

those who would not pay (for there were many such), and who, by the

indulgent execution of the law, were not forced to pay. The more severe

government of France assesses upon each generality a certain sum, which

the intendant must find as he can. If any province complains of being

assessed too high, it may, in the assessment of next year, obtain an

abatement proportioned to the overcharge of the year before; but it must

pay in the mean time. The intendant, in order to be sure of finding the

sum assessed upon his generality, was empowered to assess it in a larger

sum, that the failure or inability of some of the contributors might be

compensated by the overcharge of the rest; and till 1765, the fixation of

this surplus assessment was left altogether to his discretion. In that

year, indeed, the council assumed this power to itself. In the capitation

of the provinces, it is observed by the perfectly well informed author of

the Memoirs upon the Impositions in France, the proportion which falls

upon the nobility, and upon those whose privileges exempt them from the

taille, is the least considerable. The largest falls upon those subject to

the taille, who are assessed to the capitation at so much a-pound of what

they pay to that other tax. Capitation taxes, so far as they are levied

upon the lower ranks of people, are direct taxes upon the wages of labour,

and are attended with all the inconveniencies of such taxes.

Capitation taxes are levied at little expense; and, where they are

rigorously exacted, afford a very sure revenue to the state. It is upon

this account that, in countries where the case, comfort, and security of

the inferior ranks of people are little attended to, capitation taxes are

very common. It is in general, however, but a small part of the public

revenue, which, in a great empire, has ever been drawn from such taxes;

and the greatest sum which they have ever afforded, might always have been

found in some other way much more convenient to the people.

Taxes upon Consumable Commodities.

The impossibility of taxing the people, in proportion to their revenue, by

any capitation, seems to have given occasion to the invention of taxes

upon consumable commodities. The state not knowing how to tax, directly

and proportionably, the revenue of its subjects, endeavours to tax it

indirectly by taxing their expense, which, it is supposed, will, in most

cases, be nearly in proportion to their revenue. Their expense is taxed,

by taxing the consumable commodities upon which it is laid out.

Consumable commodities are either necessaries or luxuries.

By necessaries I understand, not only the commodities which are

indispensibly necessary for the support of life, but whatever the custom

of the country renders it indecent for creditable people, even of the

lowest order, to be without. A linen shirt, for example, is, strictly

speaking, not a necessary of life. The Greeks and Romans lived, I suppose,

very comfortably, though they had no linen. But in the present times,

through the greater part of Europe, a creditable day-labourer would be

ashamed to appear in public without a linen shirt, the want of which would

be supposed to denote that disgraceful degree of poverty, which, it is

presumed, nobody can well fall into without extreme bad conduct. Custom,

in the same manner, has rendered leather shoes a necessary of life in

England. The poorest creditable person, of either sex, would be ashamed to

appear in public without them. In Scotland, custom has rendered them a

necessary of life to the lowest order of men; but not to the same order of

women, who may, without any discredit, walk about barefooted. In France,

they are necessaries neither to men nor to women; the lowest rank of both

sexes appearing there publicly, without any discredit, sometimes in wooden

shoes, and sometimes barefooted. Under necessaries, therefore, I

comprehend, not only those things which nature, but those things which the

established rules of decency have rendered necessary to the lowest rank of

people. All other things I call luxuries, without meaning, by this

appellation, to throw the smallest degree of reproach upon the temperate

use of them. Beer and ale, for example, in Great Britain, and wine, even

in the wine countries, I call luxuries. A man of any rank may, without any

reproach, abstain totally from tasting such liquors. Nature does not

render them necessary for the support of life; and custom nowhere renders

it indecent to live without them.

As the wages of labour are everywhere regulated, partly by the demand for

it, and partly by the average price of the necessary articles of

subsistence; whatever raises this average price must necessarily raise

those wages; so that the labourer may still be able to purchase that

quantity of those necessary articles which the state of the demand for

labour, whether increasing, stationary, or declining, requires that he

should have. {See book i.chap. 8} A tax upon those articles necessarily

raises their price somewhat higher than the amount of the tax, because the

dealer, who advances the tax, must generally get it back, with a profit.

Such a tax must, therefore, occasion a rise in the wages of labour,

proportionable to this rise of price.

It is thus that a tax upon the necessaries of life operates exactly in the

same manner as a direct tax upon the wages of labour. The labourer, though

he may pay it out of his hand, cannot, for any considerable time at least,

be properly said even to advance it. It must always, in the long-run, be

advanced to him by his immediate employer, in the advanced state of wages.

His employer, if he is a manufacturer, will charge upon the price of his

goods the rise of wages, together with a profit, so that the final payment

of the tax, together with this overcharge, will fall upon the consumer. If

his employer is a farmer, the final payment, together with a like

overcharge, will fall upon the rent of the landlord.

It is otherwise with taxes upon what I call luxuries, even upon those of

the poor. The rise in the price of the taxed commodities, will not

necessarily occasion any rise in the wages of labour. A tax upon tobacco,

for example, though a luxury of the poor, as well as of the rich, will not

raise wages. Though it is taxed in England at three times, and in France

at fifteen times its original price, those high duties seem to have no

effect upon the wages of labour. The same thing maybe said of the taxes

upon tea and sugar, which, in England and Holland, have become luxuries of

the lowest ranks of people; and of those upon chocolate, which, in Spain,

is said to have become so.

The different taxes which, in Great Britain, have, in the course of the

present century, been imposed upon spiritous liquors, are not supposed to

have had any effect upon the wages of labour. The rise in the price of

porter, occasioned by an additional tax of three shillings upon the barrel

of strong beer, has not raised the wages of common labour in London. These

were about eighteen pence or twenty pence a-day before the tax, and they

are not more now.

The high price of such commodities does not necessarily diminish the

ability of the inferior ranks of people to bring up families. Upon the

sober and industrious poor, taxes upon such commodities act as sumptuary

laws, and dispose them either to moderate, or to refrain altogether from

the use of superfluities which they can no longer easily afford. Their

ability to bring up families, in consequence of this forced frugality,

instead of being diminished, is frequently, perhaps, increased by the tax.

It is the sober and industrious poor who generally bring up the most

numerous families, and who principally supply the demand for useful

labour. All the poor, indeed, are not sober and industrious; and the

dissolute and disorderly might continue to indulge themselves in the use

of such commodities, after this rise of price, in the same manner as

before, without regarding the distress which this indulgence might bring

upon their families. Such disorderly persons, however, seldom rear up

numerous families, their children generally perishing from neglect,

mismanagement, and the scantiness or unwholesomeness of their food. If by

the strength of their constitution, they survive the hardships to which

the bad conduct of their parents exposes them, yet the example of that bad

conduct commonly corrupts their morals; so that, instead of being useful

to society by their industry, they become public nuisances by their vices

and disorders. Through the advanced price of the luxuries of the poor,

therefore, might increase somewhat the distress of such disorderly

families, and thereby diminish somewhat their ability to bring up

children, it would not probably diminish much the useful population of the

country.

Any rise in the average price of necessaries, unless it be compensated by

a proportionable rise in the wages of labour, must necessarily diminish,

more or less, the ability of the poor to bring up numerous families, and,

consequently, to supply the demand for useful labour; whatever may be the

state of that demand, whether increasing, stationary, or declining; or

such as requires an increasing, stationary, or declining population.

Taxes upon luxuries have no tendency to raise the price of any other

commodities, except that of the commodities taxed. Taxes upon necessaries,

by raising the wages of labour, necessarily tend to raise the price of all

manufactures, and consequently to diminish the extent of their sale and

consumption. Taxes upon luxuries are finally paid by the consumers of the

commodities taxed, without any retribution. They fall indifferently upon

every species of revenue, the wages of labour, the profits of stock, and

the rent of land. Taxes upon necessaries, so far as they affect the

labouring poor, are finally paid, partly by landlords, in the diminished

rent of their lands, and partly by rich consumers, whether landlords or

others, in the advanced price of manufactured goods; and always with a

considerable overcharge. The advanced price of such manufactures as are

real necessaries of life, and are destined for the consumption of the

poor, of coarse woollens, for example, must be compensated to the poor by

a farther advancement of their wages. The middling and superior ranks of

people, if they understood their own interest, ought always to oppose all

taxes upon the necessaries of life, as well as all taxes upon the wages of

labour. The final payment of both the one and the other falls altogether

upon themselves, and always with a considerable overcharge. They fall

heaviest upon the landlords, who always pay in a double capacity; in that

of landlords, by the reduction, of their rent; and in that of rich

consumers, by the increase of their expense. The observation of Sir

Matthew Decker, that certain taxes are, in the price of certain goods,

sometimes repeated and accumulated four or five times, is perfectly just

with regard to taxes upon the necessaries of life. In the price of

leather, for example, you must pay not only for the tax upon the leather

of your own shoes, but for a part of that upon those of the shoemaker and

the tanner. You must pay, too, for the tax upon the salt, upon the soap,

and upon the candles which those workmen consume while employed in your

service; and for the tax upon the leather, which the saltmaker, the

soap-maker, and the candle-maker consume, while employed in their service.

In Great Britain, the principal taxes upon the necessaries of life, are

those upon the four commodities just now mentioned, salt, leather, soap,

and candles.

Salt is a very ancient and a very universal subject of taxation. It was

taxed among the Romans, and it is so at present in, I believe, every part

of Europe. The quantity annually consumed by any individual is so small,

and may be purchased so gradually, that nobody, it seems to have been

thought, could feel very sensibly even a pretty heavy tax upon it. It is

in England taxed at three shillings and fourpence a bushel; about three

times the original price of the commodity. In some other countries, the

tax is still higher. Leather is a real necessary of life. The use of linen

renders soap such. In countries where the winter nights are long, candles

are a necessary instrument of trade. Leather and soap are in Great Britain

taxed at three halfpence a-pound; candles at a penny; taxes which, upon

the original price of leather, may amount to about eight or ten per cent.;

upon that of soap, to about twenty or five-and-twenty per cent.; and upon

that of candles to about fourteen or fifteen per cent.; taxes which,

though lighter than that upon salt, are still very heavy. As all those

four commodities are real necessaries of life, such heavy taxes upon them

must increase somewhat the expense of the sober and industrious poor, and

must consequently raise more or less the wages of their labour.

In a country where the winters are so cold as in Great Britain, fuel is,

during that season, in the strictest sense of the word, a necessary of

life, not only for the purpose of dressing victuals, but for the

comfortable subsistence of many different sorts of workmen who work within

doors; and coals are the cheapest of all fuel. The price of fuel has so

important an influence upon that of labour, that all over Great Britain,

manufactures have confined themselves principally to the coal counties;

other parts of the country, on account of the high price of this necessary

article, not being able to work so cheap. In some manufactures, besides,

coal is a necessary instrument of trade; as in those of glass, iron, and

all other metals. If a bounty could in any case be reasonable, it might

perhaps be so upon the transportation of coals from those parts of the

country in which they abound, to those in which they are wanted. But the

legislature, instead of a bounty, has imposed a tax of three shillings and

threepence a-ton upon coals carried coastways; which, upon most sorts of

coal, is more than sixty per cent. of the original price at the coal pit.

Coals carried, either by land or by inland navigation, pay no duty. Where

they are naturally cheap, they are consumed duty free; where they are

naturally dear, they are loaded with a heavy duty.

Such taxes, though they raise the price of subsistence, and consequently

the wages of labour, yet they afford a considerable revenue to government,

which it might not be easy to find in any other way. There may, therefore,

be good reasons for continuing them. The bounty upon the exportation of

corn, so far as it tends, in the actual state of tillage, to raise the

price of that necessary article, produces all the like bad effects; and

instead of affording any revenue, frequently occasions a very great

expense to government. The high duties upon the importation of foreign

corn, which, in years of moderate plenty, amount to a prohibition; and the

absolute prohibition of the importation, either of live cattle, or of salt

provisions, which takes place in the ordinary state of the law, and which,

on account of the scarcity, is at present suspended for a limited time

with regard to Ireland and the British plantations, have all had the bad

effects of taxes upon the necessaries of life, and produce no revenue to

government. Nothing seems necessary for the repeal of such regulations,

but to convince the public of the futility of that system in consequence

of which they have been established.

Taxes upon the necessaries of life are much higher in many other countries

than in Great Britain. Duties upon flour and meal when ground at the mill,

and upon bread when baked at the oven, take place in many countries. In

Holland the money-price of the bread consumed in towns is supposed to be

doubled by means of such taxes. In lieu of a part of them, the people who

live in the country, pay every year so much a-head, according to the sort

of bread they are supposed to consume. Those who consume wheaten bread pay

three guilders fifteen stivers; about six shillings and ninepence

halfpenny. Those, and some other taxes of the same kind, by raising the

price of labour, are said to have ruined the greater part of the

manufactures of Holland {Memoires concernant les Droits, etc. p. 210,

211.}. Similar taxes, though not quite so heavy, take place in the

Milanese, in the states of Genoa, in the duchy of Modena, in the duchies

of Parma, Placentia, and Guastalla, and the Ecclesiastical state. A French

author {Le Reformateur} of some note, has proposed to reform the finances

of his country, by substituting in the room of the greater part of other

taxes, this most ruinous of all taxes. There is nothing so absurd, says

Cicero, which has not sometimes been asserted by some philosophers.

Taxes upon butcher’s meat are still more common than those upon bread. It

may indeed be doubted, whether butcher’s meat is any where a necessary of

life. Grain and other vegetables, with the help of milk, cheese, and

butter, or oil, where butter is not to be had, it is known from

experience, can, without any butcher’s meat, afford the most plentiful,

the most wholesome, the most nourishing, and the most invigorating diet.

Decency nowhere requires that any man should eat butcher’s meat, as it in

most places requires that he should wear a linen shirt or a pair of

leather shoes.

Consumable commodities, whether necessaries or luxuries, may be taxed in

two different ways. The consumer may either pay an annual sum on account

of his using or consuming goods of a certain kind; or the goods may be

taxed while they remain in the hands of the dealer, and before they are

delivered to the consumer. The consumable goods which last a considerable

time before they are consumed altogether, are most properly taxed in the

one way; those of which the consumption is either immediate or more

speedy, in the other. The coach-tax and plate tax are examples of the

former method of imposing; the greater part of the other duties of excise

and customs, of the latter.

A coach may, with good management, last ten or twelve years. It might be

taxed, once for all, before it comes out of the hands of the coach-maker.

But it is certainly more convenient for the buyer to pay four pounds

a-year for the privilege of keeping a coach, than to pay all at once forty

or forty-eight pounds additional price to the coach-maker; or a sum

equivalent to what the tax is likely to cost him during the time he uses

the same coach. A service of plate in the same manner, may last more than

a century. It is certainly-easier for the consumer to pay five shillings

a-year for every hundred ounces of plate, near one per cent. of the value,

than to redeem this long annuity at five-and-twenty or thirty years

purchase, which would enhance the price at least five-and-twenty or thirty

per cent. The different taxes which affect houses, are certainly more

conveniently paid by moderate annual payments, than by a heavy tax of

equal value upon the first building or sale of the house.

It was the well-known proposal of Sir Matthew Decker, that all

commodities, even those of which the consumption is either immediate or

speedy, should be taxed in this manner; the dealer advancing nothing, but

the consumer paying a certain annual sum for the licence to consume

certain goods. The object of his scheme was to promote all the different

branches of foreign trade, particularly the carrying trade, by taking away

all duties upon importation and exportation, and thereby enabling the

merchant to employ his whole capital and credit in the purchase of goods

and the freight of ships, no part of either being diverted towards the

advancing of taxes, The project, however, of taxing, in this manner, goods

of immediate or speedy consumption, seems liable to the four following

very important objections. First, the tax would be more unequal, or not so

well proportioned to the expense and consumption of the different

contributors, as in the way in which it is commonly imposed. The taxes

upon ale, wine, and spiritous liquors, which are advanced by the dealers,

are finally paid by the different consumers, exactly in proportion to

their respective consumption. But if the tax were to be paid by purchasing

a licence to drink those liquors, the sober would, in proportion to his

consumption, be taxed much more heavily than the drunken consumer. A

family which exercised great hospitality, would be taxed much more lightly

than one who entertained fewer guests. Secondly, this mode of taxation, by

paying for an annual, half-yearly, or quarterly licence to consume certain

goods, would diminish very much one of the principal conveniences of taxes

upon goods of speedy consumption; the piece-meal payment. In the price of

threepence halfpenny, which is at present paid for a pot of porter, the

different taxes upon malt, hops, and beer, together with the extraordinary

profit which the brewer charges for having advanced than, may perhaps

amount to about three halfpence. If a workman can conveniently spare those

three halfpence, he buys a pot of porter. If he cannot, he contents

himself with a pint; and, as a penny saved is a penny got, he thus gains a

farthing by his temperance. He pays the tax piece-meal, as he can afford

to pay it, and when he can afford to pay it, and every act of payment is

perfectly voluntary, and what he can avoid if he chuses to do so. Thirdly,

such taxes would operate less as sumptuary laws. When the licence was once

purchased, whether the purchaser drunk much or drunk little, his tax would

be the same. Fourthly, if a workman were to pay all at once, by yearly,

half-yearly, or quarterly payments, a tax equal to what he at present

pays, with little or no inconveniency, upon all the different pots and

pints of porter which he drinks in any such period of time, the sum might

frequently distress him very much. This mode of taxation, therefore, it

seems evident, could never, without the most grievous oppression, produce

a revenue nearly equal to what is derived from the present mode without

any oppression. In several countries, however, commodities of an immediate

or very speedy consumption are taxed in this manner. In Holland, people

pay so much a-head for a licence to drink tea. I have already mentioned a

tax upon bread, which, so far as it is consumed in farm houses and country

villages, is there levied in the same manner.

The duties of excise are imposed chiefly upon goods of home produce,

destined for home consumption. They are imposed only upon a few sorts of

goods of the most general use. There can never be any doubt, either

concerning the goods which are subject to those duties, or concerning the

particular duty which each species of goods is subject to. They fall

almost altogether upon what I call luxuries, excepting always the four

duties above mentioned, upon salt, soap, leather, candles, and perhaps

that upon green glass.

The duties of customs are much more ancient than those of excise. They

seem to have been called customs, as denoting customary payments, which

had been in use for time immemorial. They appear to have been originally

considered as taxes upon the profits of merchants. During the barbarous

times of feudal anarchy, merchants, like all the other inhabitants of

burghs, were considered as little better than emancipated bondmen, whose

persons were despised, and whose gains were envied. The great nobility,

who had consented that the king should tallage the profits of their own

tenants, were not unwilling that he should tallage likewise those of an

order of men whom it was much less their interest to protect. In those

ignorant times, it was not understood, that the profits of merchants are a

subject not taxable directly; or that the final payment of all such taxes

must fall, with a considerable overcharge, upon the consumers.

The gains of alien merchants were looked upon more unfavourably than those

of English merchants. It was natural, therefore, that those of the former

should be taxed more heavily than those of the latter. This distinction

between the duties upon aliens and those upon English merchants, which was

begun from ignorance, has been continued front the spirit of monopoly, or

in order to give our own merchants an advantage, both in the home and in

the foreign market.

With this distinction, the ancient duties of customs were imposed equally

upon all sorts of goods, necessaries as well its luxuries, goods exported

as well as goods imported. Why should the dealers in one sort of goods, it

seems to have been thought, be more favoured than those in another? or why

should the merchant exporter be more favoured than the merchant importer?

The ancient customs were divided into three branches. The first, and,

perhaps, the most ancient of all those duties, was that upon wool and

leather. It seems to have been chiefly or altogether an exportation duty.

When the woollen manufacture came to be established in England, lest the

king should lose any part of his customs upon wool by the exportation of

woollen cloths, a like duty was imposed upon them. The other two branches

were, first, a duty upon wine, which being imposed at so much a-ton, was

called a tonnage; and, secondly, a duty upon all other goods, which being

imposed at so much a-pound of their supposed value, was called a poundage.

In the forty-seventh year of Edward III., a duty of sixpence in the pound

was imposed upon all goods exported and imported, except wools,

wool-felts, leather, and wines which were subject to particular duties. In

the fourteenth of Richard II., this duty was raised to one shilling in the

pound; but, three years afterwards, it was again reduced to sixpence. It

was raised to eightpence in the second year of Henry IV.; and, in the

fourth of the same prince, to one shilling. From this time to the ninth

year of William III., this duty continued at one shilling in the pound.

The duties of tonnage and poundage were generally granted to the king by

one and the same act of parliament, and were called the subsidy of tonnage

and poundage. The subsidy of poundage having continued for so long a time

at one shilling in the pound, or at five per cent., a subsidy came, in the

language of the customs, to denote a general duty of this kind of five per

cent. This subsidy, which is now called the old subsidy, still continues

to be levied, according to the book of rates established by the twelfth of

Charles II. The method of ascertaining, by a book of rates, the value of

goods subject to this duty, is said to be older than the time of James I.

The new subsidy, imposed by the ninth and tenth of William III., was an

additional five per cent. upon the greater part of goods. The one-third

and the two-third subsidy made up between them another five per cent. of

which they were proportionable parts. The subsidy of 1747 made a fourth

five per cent. upon the greater part of goods; and that of 1759, a fifth

upon some particular sorts of goods. Besides those five subsidies, a great

variety of other duties have occasionally been imposed upon particular

sorts of goods, in order sometimes to relieve the exigencies of the

state, and sometimes to regulate the trade of the country, according to

the principles of the mercantile system.

That system has come gradually more and more into fashion. The old subsidy

was imposed indifferently upon exportation, as well as importation. The

four subsequent subsidies, as well as the other duties which have since

been occasionally imposed upon particular sorts of goods, have, with a few

exceptions, been laid altogether upon importation. The greater part of the

ancient duties which had been imposed upon the exportation of the goods of

home produce and manufacture, have either been lightened or taken away

altogether. In most cases, they have been taken away. Bounties have even

been given upon the exportation of some of them. Drawbacks, too, sometimes

of the whole, and, in most cases, of a part of the duties which are paid

upon the importation of foreign goods, have been granted upon their

exportation. Only half the duties imposed by the old subsidy upon

importation, are drawn back upon exportation; but the whole of those

imposed by the latter subsidies and other imposts are, upon the greater

parts of the goods, drawn back in the same manner. This growing favour of

exportation, and discouragement of importation, have suffered only a few

exceptions, which chiefly concern the materials of some manufactures.

These our merchants and manufacturers are willing should come as cheap as

possible to themselves, and as dear as possible to their rivals and

competitors in other countries. Foreign materials are, upon this account,

sometimes allowed to be imported duty-free; spanish wool, for example,

flax, and raw linen yarn. The exportation of the materials of home

produce, and of those which are the particular produce of our colonies,

has sometimes been prohibited, and sometimes subjected to higher duties.

The exportation of English wool has been prohibited. That of beaver skins,

of beaver wool, and of gum-senega, has been subjected to higher duties;

Great Britain, by the conquests of Canada and Senegal, having got almost

the monopoly of those commodities.

That the mercantile system has not been very favourable to the revenue of

the great body of the people, to the annual produce of the land and labour

of the country, I have endeavoured to show in the fourth book of this

Inquiry. It seems not to have been more favourable to the revenue of the

sovereign; so far, at least, as that revenue depends upon the duties of

customs.

In consequence of that system, the importation of several sorts of goods

has been prohibited altogether. This prohibition has, in some cases,

entirely prevented, and in others has very much diminished, the

importation of those commodities, by reducing the importers to the

necessity of smuggling. It has entirely prevented the importation of

foreign wollens; and it has very much diminished that of foreign silks and

velvets, In both cases, it has entirely annihilated the revenue of customs

which might have been levied upon such importation.

The high duties which have been imposed upon the importation of many

different sorts of foreign goods in order to discourage their consumption

in Great Britain, have, in many cases, served only to encourage smuggling,

and, in all cases, have reduced the revenues of the customs below what

more moderate duties would have afforded. The saying of Dr Swift, that in

the arithmetic of the customs, two and two, instead of making four, make

sometimes only one, holds perfectly true with regard to such heavy duties,

which never could have been imposed, had not the mercantile system taught

us, in many cases, to employ taxation as an instrument, not of revenue,

but of monopoly.

The bounties which are sometimes given upon the exportation of home

produce and manufactures, and the drawbacks which are paid upon the

re-exportation of the greater part of foreign goods, have given occasion

to many frauds, and to a species of smuggling, more destructive of the

public revenue than any other. In order to obtain the bounty or drawback,

the goods, it is well known, are sometimes shipped, and sent to sea, but

soon afterwards clandestinely re-landed in some other part of the country.

The defalcation of the revenue of customs occasioned by bounties and

drawbacks, of which a great part are obtained fraudulently, is very great.

The gross produce of the customs, in the year which ended on the 5th of

January 1755, amounted to £5,068,000. The bounties which were paid out of

this revenue, though in that year there was no bounty upon corn, amounted

to £167,806. The drawbacks which were paid upon debentures and

certificates, to £2,156,800. Bounties and drawbacks together amounted to

£2,324,600. In consequence of these deductions, the revenue of the customs

amounted only to £2,743,400; from which deducting £287,900 for the expense

of management, in salaries and other incidents, the neat revenue of the

customs for that year comes out to be £2,455,500. The expense of

management, amounts, in this manner, to between five and six per cent.

upon the gross revenue of the customs; and to something more than ten per

cent. upon what remains of that revenue, after deducting what is paid away

in bounties and drawbacks.

Heavy duties being imposed upon almost all goods imported, our merchant

importers smuggle as much, and make entry of as little as they can. Our

merchant exporters, on the contrary, make entry of more than they export;

sometimes out of vanity, and to pass for great dealers in goods which pay

no duty gain a bounty back. Our exports, in consequence of these different

frauds, appear upon the custom-house books greatly to overbalance our

imports, to the unspeakable comfort of those politicians, who measure the

national prosperity by what they call the balance of trade.

All goods imported, unless particularly exempted, and such exemptions are

not very numerous, are liable to some duties of customs. If any goods are

imported, not mentioned in the book of rates, they are taxed at 4s:9¾d.

for every twenty shillings value, according to the oath of the importer,

that is, nearly at five subsidies, or five poundage duties. The book of

rates is extremely comprehensive, and enumerates a great variety of

articles, many of them little used, and, therefore, not well known. It is,

upon this account, frequently uncertain under what article a particular

sort of goods ought to be classed, and, consequently what duty they ought

to pay. Mistakes with regard to this sometimes ruin the custom-house

officer, and frequently occasion much trouble, expense, and vexation to

the importer. In point of perspicuity, precision, and distinctness,

therefore, the duties of customs are much inferior to those of excise.

In order that the greater part of the members of any society should

contribute to the public revenue, in proportion to their respective

expense, it does not seem necessary that every single article of that

expense should be taxed. The revenue which is levied by the duties of

excise is supposed to fall as equally upon the contributors as that which

is levied by the duties of customs; and the duties of excise are imposed

upon a few articles only of the most general used and consumption. It has

been the opinion of many people, that, by proper management, the duties of

customs might likewise, without any loss to the public revenue, and with

great advantage to foreign trade, be confined to a few articles only.

The foreign articles, of the most general use and consumption in Great

Britain, seem at present to consist chiefly in foreign wines and brandies;

in some of the productions of America and the West Indies, sugar, rum,

tobacco, cocoa-nuts, etc. and in some of those of the East Indies, tea,

coffee, china-ware, spiceries of all kinds, several sorts of piece-goods,

etc. These different articles afford, the greater part of the perhaps, at

present, revenue which is drawn from the duties of customs. The taxes

which at present subsist upon foreign manufactures, if you except those

upon the few contained in the foregoing enumeration, have, the greater

part of them, been imposed for the purpose, not of revenue, but of

monopoly, or to give our own merchants an advantage in the home market. By

removing all prohibitions, and by subjecting all foreign manufactures to

such moderate taxes, as it was found from experience, afforded upon each

article the greatest revenue to the public, our own workmen might still

have a considerable advantage in the home market; and many articles, some

of which at present afford no revenue to government, and others a very

inconsiderable one, might afford a very great one.

High taxes, sometimes by diminishing the consumption of the taxed

commodities, and sometimes by encouraging smuggling frequently afford a

smaller revenue to government than what might be drawn from more moderate

taxes.

When the diminution of revenue is the effect of the diminution of

consumption, there can be but one remedy, and that is the lowering of the

tax. When the diminution of revenue is the effect of the encouragement

given to smuggling, it may, perhaps, be remedied in two ways; either by

diminishing the temptation to smuggle, or by increasing the difficulty of

smuggling. The temptation to smuggle can be diminished only by the

lowering of the tax; and the difficulty of smuggling can be increased only

by establishing that system of administration which is most proper for

preventing it.

The excise laws, it appears, I believe, from experience, obstruct and

embarrass the operations of the smuggler much more effectually than those

of the customs. By introducing into the customs a system of administration

as similar to that of the excise as the nature of the different duties

will admit, the difficulty of smuggling might be very much increased. This

alteration, it has been supposed by many people, might very easily be

brought about.

The importer of commodities liable to any duties of customs, it has been

said, might, at his option, be allowed either to carry them to his own

private warehouse; or to lodge them in a warehouse, provided either at his

own expense or at that of the public, but under the key of the

custom-house officer, and never to be opened but in his presence. If the

merchant carried them to his own private warehouse, the duties to be

immediately paid, and never afterwards to be drawn back; and that

warehouse to be at all times subject to the visit and examination of the

custom-house officer, in order to ascertain how far the quantity contained

in it corresponded with that for which the duty had been paid. If he

carried them to the public warehouse, no duty to be paid till they were

taken out for home consumption. If taken out for exportation, to be

duty-free; proper security being always given that they should be so

exported. The dealers in those particular commodities, either by wholesale

or retail, to be at all times subject to the visit and examination of the

custom-house officer; and to be obliged to justify, by proper

certificates, the payment of the duty upon the whole quantity contained in

their shops or warehouses. What are called the excise duties upon rum

imported, are at present levied in this manner; and the same system of

administration might, perhaps, be extended to all duties upon goods

imported; provided always that those duties were, like the duties of

excise, confined to a few sorts of goods of the most general use and

consumption. If they were extended to almost all sorts of goods, as at

present, public warehouses of sufficient extent could not easily be

provided; and goods of a very delicate nature, or of which the

preservation required much care and attention, could not safely be trusted

by the merchant in any warehouse but his own.

If, by such a system of administration, smuggling to any considerable

extent could be prevented, even under pretty high duties; and if every

duty was occasionally either heightened or lowered according as it was

most likely, either the one way or the other, to afford the greatest

revenue to the state; taxation being always employed as an instrument of

revenue, and never of monopoly; it seems not improbable that a revenue, at

least equal to the present neat revenue of the customs, might be drawn

from duties upon the importation of only a few sorts of goods of the most

general use and consumption; and that the duties of customs might thus be

brought to the same degree of simplicity, certainty, and precision, as

those of excise. What the revenue at present loses by drawbacks upon the

re-exportation of foreign goods, which are afterwards re-landed and

consumed at home, would, under this system, be saved altogether. If to

this saving, which would alone be very considerable, were added the

abolition of all bounties upon the exportation of home produce; in all

cases in which those bounties were not in reality drawbacks of some duties

of excise which had before been advanced; it cannot well be doubted, but

that the neat revenue of customs might, after an alteration of this kind,

be fully equal to what it had ever been before.

If, by such a change of system, the public revenue suffered no loss, the

trade and manufactures of the country would certainly gain a very

considerable advantage. The trade in the commodities not taxed, by far the

greatest number would be perfectly free, and might be carried on to and

from all parts of the world with every possible advantage. Among those

commodities would be comprehended all the necessaries of life, and all the

materials of manufacture. So far as the free importation of the

necessaries of life reduced their average money price in the home market,

it would reduce the money price of labour, but without reducing in any

respect its real recompence. The value of money is in proportion to the

quantity of the necessaries of life which it will purchase. That of the

necessaries of life is altogether independent of the quantity of money

which can be had for them. The reduction in the money price of labour

would necessarily be attended with a proportionable one in that of all

home manufactures, which would thereby gain some advantage in all foreign

markets. The price of some manufactures would be reduced, in a still

greater proportion, by the free importation of the raw materials. If raw

silk could be imported from China and Indostan, duty-free, the silk

manufacturers in England could greatly undersell those of both France and

Italy. There would be no occasion to prohibit the importation of foreign

silks and velvets. The cheapness of their goods would secure to our own

workmen, not only the possession of a home, but a very great command of

the foreign market. Even the trade in the commodities taxed, would be

carried on with much more advantage than at present. If those commodities

were delivered out of the public warehouse for foreign exportation, being

in this case exempted from all taxes, the trade in them would be perfectly

free. The carrying trade, in all sorts of goods, would, under this system,

enjoy every possible advantage. If these commodities were delivered out

for home consumption, the importer not being obliged to advance the tax

till he had an opportunity of selling his goods, either to some dealer, or

to some consumer, he could always afford to sell them cheaper than if he

had been obliged to advance it at the moment of importation. Under the

same taxes, the foreign trade of consumption, even in the taxed

commodities, might in this manner be carried on with much more advantage

than it is at present.

It was the object of the famous excise scheme of Sir Robert Walpole, to

establish, with regard to wine and tobacco, a system not very unlike that

which is here proposed. But though the bill which was then brought into

Parliament, comprehended those two commodities only, it was generally

supposed to be meant as an introduction to a more extensive scheme of the

same kind. Faction, combined with the interest of smuggling merchants,

raised so violent, though so unjust a clamour, against that bill, that the

minister thought proper to drop it; and, from a dread of exciting a

clamour of the same kind, none of his successors have dared to resume the

project.

The duties upon foreign luxuries, imported for home consumption, though

they sometimes fall upon the poor, fall principally upon people of

middling or more than middling fortune. Such are, for example, the duties

upon foreign wines, upon coffee, chocolate, tea, sugar, etc.

The duties upon the cheaper luxuries of home produce, destined for home

consumption, fall pretty equally upon people of all ranks, in proportion

to their respective expense. The poor pay the duties upon malt, hops,

beer, and ale, upon their own consumption; the rich, upon both their own

consumption and that of their servants.

The whole consumption of the inferior ranks of people, or of those below

the middling rank, it must be observed, is, in every country, much

greater, not only in quantity, but in value, than that of the middling,

and of those above the middling rank. The whole expense of the inferior is

much greater titan that of the superior ranks. In the first place, almost

the whole capital of every country is annually distributed among the

inferior ranks of people, as the wages of productive labour. Secondly, a

great part of the revenue, arising from both the rent of land and the

profits of stock, is annually distributed among the same rank, in the

wages and maintenance of menial servants, and other unproductive

labourers. Thirdly, some part of the profits of stock belongs to the same

rank, as a revenue arising from the employment of their small capitals.

The amount of the profits annually made by small shopkeepers, tradesmen,

and retailers of all kinds, is everywhere very considerable, and makes a

very considerable portion of the annual produce. Fourthly and lastly, some

part even of the rent of land belongs to the same rank; a considerable

part to those who are somewhat below the middling rank, and a small part

even to the lowest rank; common labourers sometimes possessing in property

an acre or two of land. Though the expense of those inferior ranks of

people, therefore, taking them individually, is very small, yet the whole

mass of it, taking them collectively, amounts always to by much the

largest portion of the whole expense of the society; what remains of the

annual produce of the land and labour of the country, for the consumption

of the superior ranks, being always much less, not only in quantity, but

in value. The taxes upon expense, therefore, which fall chiefly upon that

of the superior ranks of people, upon the smaller portion of the annual

produce, are likely to be much less productive than either those which

fall indifferently upon the expense of all ranks, or even those which fall

chiefly upon that of the inferior ranks, than either those which fall

indifferently upon the whole annual produce, or those which fall chiefly

upon the larger portion of it. The excise upon the materials and

manufacture of home-made fermented and spirituous liquors, is,

accordingly, of all the different taxes upon expense, by far the most

productive; and this branch of the excise falls very much, perhaps

principally, upon the expense of the common people. In the year which

ended on the 5th of July 1775, the gross produce of this branch of the

excise amounted to £3,341,837:9:9.

It must always be remembered, however, that it is the luxuries, and not

the necessary expense of the inferior ranks of people, that ought ever to

be taxed. The final payment of any tax upon their necessary expense, would

fall altogether upon the superior ranks of people; upon the smaller

portion of the annual produce, and not upon the greater. Such a tax must,

in all cases, either raise the wages of labour, or lessen the demand for

it. It could not raise the wages of labour, without throwing the final

payment of the tax upon the superior ranks of people. It could not lessen

the demand for labour, without lessening the annual produce of the land

and labour of the country, the fund upon which all taxes must be finally

paid. Whatever might be the state to which a tax of this kind reduced the

demand for labour, it must always raise wages higher than they otherwise

would be in that state; and the final payment of this enhancement of wages

must, in all cases, fall upon the superior ranks of people.

Fermented liquors brewed, and spiritous liquors distilled, not for sale,

but for private use, are not in Great Britain liable to any duties of

excise. This exemption, of which the object is to save private families

from the odious visit and examination of the tax-gatherer, occasions the

burden of those duties to fall frequently much lighter upon the rich than

upon the poor. It is not, indeed, very common to distil for private use,

though it is done sometimes. But in the country, many middling and almost

all rich and great families, brew their own beer. Their strong beer,

therefore, costs them eight shillings a-barrel less than it costs the

common brewer, who must have his profit upon the tax, as well as upon all

the other expense which he advances. Such families, therefore, must drink

their beer at least nine or ten shillings a-barrel cheaper than any liquor

of the same quality can be drank by the common people, to whom it is

everywhere more convenient to buy their beer, by little and little, from

the brewery or the ale-house. Malt, in the same manner, that is made for

the use of a private family, is not liable to the visit or examination of

the tax-gatherer but, in this case the family must compound at seven

shillings and sixpence a-head for the tax. Seven shillings and sixpence

are equal to the excise upon ten bushels of malt; a quantity fully equal

to what all the different members of any sober family, men, women, and

children, are, at an average, likely to consume. But in rich and great

families, where country hospitality is much practised, the malt liquors

consumed by the members of the family make but a small part of the

consumption of the house. Either on account of this composition, however,

or for other reasons, it is not near so common to malt as to brew for

private use. It is difficult to imagine any equitable reason, why those

who either brew or distil for private use should not be subject to a

composition of the same kind.

A greater revenue than what is at present drawn from all the heavy taxes

upon malt, beer, and ale, might be raised, it has frequently been said, by

a much lighter tax upon malt; the opportunities of defrauding the revenue

being much greater in a brewery than in a malt-house; and those who brew

for private use being exempted from all duties or composition for duties,

which is not the case with those who malt for private use.

In the porter brewery of London, a quarter of malt is commonly brewed into

more than two barrels and a-half, sometimes into three barrels of porter.

The different taxes upon malt amount to six shillings a-quarter; those

upon strong ale and beer to eight shillings a-barrel. In the porter

brewery, therefore, the different taxes upon malt, beer, and ale, amount

to between twenty-six and thirty shillings upon the produce of a quarter

of malt. In the country brewery for common country sale, a quarter of malt

is seldom brewed into less than two barrels of strong, and one barrel of

small beer; frequently into two barrels and a-half of strong beer. The

different taxes upon small beer amount to one shilling and fourpence

a-barrel. In the country brewery, therefore, the different taxes upon

malt, beer, and ale, seldom amount to less than twenty-three shillings and

fourpence, frequently to twenty-six shillings, upon the produce of a

quarter of malt. Taking the whole kingdom at an average, therefore, the

whole amount of the duties upon malt, beer, and ale, cannot be estimated

at less than twenty-four or twenty-five shillings upon the produce of a

quarter of malt. But by taking off all the different duties upon beer and

ale, and by trebling the malt tax, or by raising it from six to eighteen

shillings upon the quarter of malt, a greater revenue, it is said, might

be raised by this single tax, than what is at present drawn from all those

heavier taxes.

In 1772, the old malt tax produced......... £722,023: 11: 11

The additional... £356,776: 7: 9¾

In 1773, the old tax produced............... £561,627: 3: 7½

The additional... £278,650: 15: 3¾

In 1774, the old tax produced ............. £624,614: 17: 5¾

The additional....£310,745: 2: 8½

In 1775, the old tax produced ..............£657,357: 0: 8¼

The additional....£323,785: 12: 6¼

4)£3,835,580: 12: 0¾

Average of these four years ............... £958,895: 3: 0

In 1772, the country excise produced.......£1,243,120: 5: 3

The London brewery 408,260: 7: 2¾

In 1773, the country excise................£1,245,808: 3: 3

The London brewery 405,406: 17: 10½

In 1774, the country excise................£1,246,373: 14: 5½

The London brewery 320,601: 18: 0¼

In 1775, the country excise................£1,214,583: 6: 1¼

The London brewery 463,670: 7: 0¼

4)£6,547,832 19: 2¼

Average of these four years ...............£1,636,958: 4: 9½

To which adding the average malt tax........ 958,895: 3: 0¼

The whole amount of those different

taxes comes out to be........£2,595,835: 7: 10

But, by trebling the malt tax,

or by raising it from six to

eighteen shillings upon the quarter

of malt, that single tax would produce.....£2,876,685: 9: 0

A sum which exceeds the

foregoing by.... 280,832: 1: 3

Under the old malt tax, indeed, is comprehended a tax of four shillings

upon the hogshead of cyder, and another of ten shillings upon the barrel

of mum. In 1774, the tax upon cyder produced only £3,083:6:8. It probably

fell somewhat short of its usual amount; all the different taxes upon

cyder, having, that year, produced less than ordinary. The tax upon mum,

though much heavier, is still less productive, on account of the smaller

consumption of that liquor. But to balance whatever may be the ordinary

amount of those two taxes, there is comprehended under what is called the

country excise, first, the old excise of six shillings and eightpence upon

the hogshead of cyder; secondly, a like tax of six shillings and

eightpence upon the hogshead of verjuice; thirdly, another of eight

shillings and ninepence upon the hogshead of vinegar; and, lastly, a

fourth tax of elevenpence upon the gallon of mead or metheglin. The

produce of those different taxes will probably much more than

counterbalance that of the duties imposed, by what is called the annual

malt tax, upon cyder and mum.

Malt is consumed, not only in the brewery of beer and ale, but in the

manufacture of low wines and spirits. If the malt tax were to be raised to

eighteen shillings upon the quarter, it might be necessary to make some

abatement in the different excises which are imposed upon those particular

sorts of low wines and spirits, of which malt makes any part of the

materials. In what are called malt spirits, it makes commonly but a third

part of the materials; the other two-thirds being either raw barley, or

one-third barley and one-third wheat. In the distillery of malt spirits,

both the opportunity and the temptation to smuggle are much greater than

either in a brewery or in a malt-house; the opportunity, on account of the

smaller bulk and greater value of the commodity, and the temptation, on

account of the superior height of the duties, which amounted to 3s. 10

⅔d. upon the gallon of spirits. {Though the duties directly imposed upon

proof spirits amount only to 2s. 6d per gallon, these, added to the duties

upon the low wines, from which they are distilled, amount to 3s 10 ⅔d.

Both low wines and proof spirits are, to prevent frauds, now rated

according to what they gauge in the wash.}

By increasing the duties upon malt, and reducing those upon the

distillery, both the opportunities and the temptation to smuggle would be

diminished, which might occasion a still further augmentation of revenue.

It has for some time past been the policy of Great Britain to discourage

the consumption of spiritous liquors, on account of their supposed

tendency to ruin the health and to corrupt the morals of the common

people. According to this policy, the abatement of the taxes upon the

distillery ought not to be so great as to reduce, in any respect, the

price of those liquors. Spiritous liquors might remain as dear as ever;

while, at the same time, the wholesome and invigorating liquors of beer

and ale might be considerably reduced in their price. The people might

thus be in part relieved from one of the burdens of which they at present

complain the most; while, at the same time, the revenue might be

considerably augmented.

The objections of Dr Davenant to this alteration in the present system of

excise duties, seem to be without foundation. Those objections are, that

the tax, instead of dividing itself, as at present, pretty equally upon

the profit of the maltster, upon that of the brewer and upon that of the

retailer, would so far as it affected profit, fall altogether upon that of

the maltster; that the maltster could not so easily get back the amount of

the tax in the advanced price of his malt, as the brewer and retailer in

the advanced price of their liquor; and that so heavy a tax upon malt

might reduce the rent and profit of barley land.

No tax can ever reduce, for any considerable time, the rate of profit in

any particular trade, which must always keep its level with other trades

in the neighbourhood. The present duties upon malt, beer, and ale, do not

affect the profits of the dealers in those commodities, who all get back

the tax with an additional profit, in the enhanced price of their goods. A

tax, indeed, may render the goods upon which it is imposed so dear, as to

diminish the consumption of them. But the consumption of malt is in malt

liquors; and a tax of eighteen shillings upon the quarter of malt could

not well render those liquors dearer than the different taxes, amounting

to twenty-four or twenty-five shillings, do at present. Those liquors, on

the contrary, would probably become cheaper, and the consumption of them

would be more likely to increase than to diminish.

It is not very easy to understand why it should be more difficult for the

maltster to get back eighteen shillings in the advanced price of his malt,

than it is at present for the brewer to get back twenty-four or

twenty-five, sometimes thirty shillings, in that of his liquor. The

maltster, indeed, instead of a tax of six shillings, would be obliged to

advance one of eighteen shilling upon every quarter of malt. But the

brewer is at present obliged to advance a tax of twenty-four or

twenty-five, sometimes thirty shillings, upon every quarter of malt which

he brews. It could not be more inconvenient for the maltster to advance a

lighter tax, than it is at present for the brewer to advance a heavier

one. The maltster does not always keep in his granaries a stock of malt,

which it will require a longer time to dispose of than the stock of beer

and ale which the brewer frequently keeps in his cellars. The former,

therefore, may frequently get the returns of his money as soon as the

latter. But whatever inconveniency might arise to the maltster from being

obliged to advance a heavier tax, it could easily be remedied, by granting

him a few months longer credit than is at present commonly given to the

brewer.

Nothing could reduce the rent and profit of barley land, which did not

reduce the demand for barley. But a change of system, which reduced the

duties upon a quarter of malt brewed into beer and ale, from twenty-four

and twenty-five shillings to eighteen shillings, would be more likely to

increase than diminish that demand. The rent and profit of barley land,

besides, must always be nearly equal to those of other equally fertile and

equally well cultivated land. If they were less, some part of the barley

land would soon be turned to some other purpose; and if they were greater,

more land would soon be turned to the raising of barley. When the ordinary

price of any particular produce of land is at what may be called a

monopoly price, a tax upon it necessarily reduces the rent and profit of

the land which grows it. A tax upon the produce of those precious

vineyards, of which the wine falls so much short of the effectual demand,

that its price is always above the natural proportion to that of the

produce of other equally fertile and equally well cultivated land, would

necessarily reduce the rent and profit of those vineyards. The price of

the wines being already the highest that could be got for the quantity

commonly sent to market, it could not be raised higher without diminishing

that quantity; and the quantity could not be diminished without still

greater loss, because the lands could not be turned to any other equally

valuable produce. The whole weight of the tax, therefore, would fall upon

the rent and profit; properly upon the rent of the vineyard. When it has

been proposed to lay any new tax upon sugar, our sugar planters have

frequently complained that the whole weight of such taxes fell not upon

the consumer, but upon the producer; they never having been able to raise

the price of their sugar after the tax higher than it was before. The

price had, it seems, before the tax, been a monopoly price; and the

arguments adduced to show that sugar was an improper subject of taxation,

demonstrated perhaps that it was a proper one; the gains of monopolists,

whenever they can be come at, being certainly of all subjects the most

proper. But the ordinary price of barley has never been a monopoly price;

and the rent and profit of barley land have never been above their natural

proportion to those of other equally fertile and equally well cultivated

land. The different taxes which have been imposed upon malt, beer, and

ale, have never lowered the price of barley; have never reduced the rent

and profit of barley land. The price of malt to the brewer has constantly

risen in proportion to the taxes imposed upon it; and those taxes,

together with the different duties upon beer and ale, have constantly

either raised the price, or, what comes to the same thing, reduced the

quality of those commodities to the consumer. The final payment of those

taxes has fallen constantly upon the consumer, and not upon the producer.

The only people likely to suffer by the change of system here proposed,

are those who brew for their own private use. But the exemption, which

this superior rank of people at present enjoy, from very heavy taxes which

are paid by the poor labourer and artificer, is surely most unjust and

unequal, and ought to be taken away, even though this change was never to

take place. It has probably been the interest of this superior order of

people, however, which has hitherto prevented a change of system that

could not well fail both to increase the revenue and to relieve the

people.

Besides such duties as those of custom and excise above mentioned, there

are several others which affect the price of goods more unequally and more

indirectly. Of this kind are the duties, which, in French, are called

peages, which in old Saxon times were called the duties of passage, and

which seem to have been originally established for the same purpose as our

turnpike tolls, or the tolls upon our canals and navigable rivers, for the

maintenance of the road or of the navigation. Those duties, when applied

to such purposes, are most properly imposed according to the bulk or

weight of the goods. As they were originally local and provincial duties,

applicable to local and provincial purposes, the administration of them

was, in most cases, entrusted to the particular town, parish, or lordship,

in which they were levied; such communities being, in some way or other,

supposed to be accountable for the application. The sovereign, who is

altogether unaccountable, has in many countries assumed to himself the

administration of those duties; and though he has in most cases enhanced

very much the duty, he has in many entirely neglected the application. If

the turnpike tolls of Great Britain should ever become one of the

resources of government, we may learn, by the example of many other

nations, what would probably be the consequence. Such tolls, no doubt, are

finally paid by the consumer; but the consumer is not taxed in proportion

to his expense, when he pays, not according to the value, but according to

the bulk or weight of what he consumes. When such duties are imposed, not

according to the bulk or weight, but according to the supposed value of

the goods, they become properly a sort of inland customs or excise, which

obstruct very much the most important of all branches of commerce, the

interior commerce of the country.

In some small states, duties similar to those passage duties are imposed

upon goods carried across the territory, either by land or by water, from

one foreign country to another. These are in some countries called

transit-duties. Some of the little Italian states which are situated upon

the Po, and the rivers which run into it, derive some revenue from duties

of this kind, which are paid altogether by foreigners, and which, perhaps,

are the only duties that one state can impose upon the subjects of

another, without obstruction in any respect, the industry or commerce of

its own. The most important transit-duty in the world, is that levied by

the king of Denmark upon all merchant ships which pass through the Sound.

Such taxes upon luxuries, as the greater part of the duties of customs and

excise, though they all fall indifferently upon every different species of

revenue, and are paid finally, or without any retribution, by whoever

consumes the commodities upon which they are imposed; yet they do not

always fall equally or proportionally upon the revenue of every

individual. As every man’s humour regulates the degree of his consumption,

every man contributes rather according to his humour, than proportion to

his revenue: the profuse contribute more, the parsimonious less, than

their proper proportion. During the minority of a man of great fortune, he

contributes commonly very little, by his consumption, towards the support

of that state from whose protection he derives a great revenue. Those who

live in another country, contribute nothing by their consumption towards

the support of the government of that country, in which is situated the

source of their revenue. If in this latter country there should be no land

tax, nor any considerable duty upon the transference either of moveable or

immoveable property, as is the case in Ireland, such absentees may derive

a great revenue from the protection of a government, to the support of

which they do not contribute a single shilling. This inequality is likely

to be greatest in a country of which the government is, in some respects,

subordinate and dependant upon that of some other. The people who possess

the most extensive property in the dependant, will, in this case,

generally chuse to live in the governing country. Ireland is precisely in

this situation; and we cannot therefore wonder, that the proposal of a tax

upon absentees should be so very popular in that country. It might,

perhaps, be a little difficult to ascertain either what sort, or what

degree of absence, would subject a man to be taxed as an absentee, or at

what precise time the tax should either begin or end. If you except,

however, this very peculiar situation, any inequality in the contribution

of individuals which can arise from such taxes, is much more than

compensated by the very circumstance which occasions that inequality; the

circumstance that every man’s contribution is altogether voluntary; it

being altogether in his power, either to consume, or not to consume, the

commodity taxed. Where such taxes, therefore, are properly assessed, and

upon proper commodities, they are paid with less grumbling than any other.

When they are advanced by the merchant or manufacturer, the consumer, who

finally pays them, soon comes to confound them with the price of the

commodities, and almost forgets that he pays any tax. Such taxes are, or

may be, perfectly certain; or may be assessed, so as to leave no doubt

concerning either what ought to be paid, or when it ought to be paid;

concerning either the quantity or the time of payment. What ever

uncertainty there may sometimes be, either in the duties of customs in

Great Britain, or in other duties of the same kind in other countries, it

cannot arise from the nature of those duties, but from the inaccurate or

unskilful manner in which the law that imposes them is expressed.

Taxes upon luxuries generally are, and always may be, paid piece-meal, or

in proportion as the contributors have occasion to purchase the goods upon

which they are imposed. In the time and mode of payment, they are, or may

be, of all taxes the most convenient. Upon the whole, such taxes,

therefore, are perhaps as agreeable to the three first of the four general

maxims concerning taxation, as any other. They offend in every respect

against the fourth.

Such taxes, in proportion to what they bring into the public treasury of

the state, always take out, or keep out, of the pockets of the people,

more than almost any other taxes. They seem to do this in all the four

different ways in which it is possible to do it.

First, the levying of such taxes, even when imposed in the most judicious

manner, requires a great number of custom-house and excise officers, whose

salaries and perquisites are a real tax upon the people, which brings

nothing into the treasury of the state. This expense, however, it must be

acknowledged, is more moderate in Great Britain than in most other

countries. In the year which ended on the 5th of July, 1775, the gross

produce of the different duties, under the management of the commissioners

of excise in England, amounted to £5,507,308:18:8¼, which was levied at an

expense of little more than five and a-half per cent. From this gross

produce, however, there must be deducted what was paid away in bounties

and drawbacks upon the exportation of exciseable goods, which will reduce

the neat produce below five millions. {The neat produce of that year,

after deducting all expenses and allowances, amounted to £4,975,652:19:6.}

The levying of the salt duty, and excise duty, but under a different

management, is much more expensive. The neat revenue of the customs does

not amount to two millions and a-half, which is levied at an expense of

more than ten per cent., in the salaries of officers and other incidents.

But the perquisites of custom-house officers are everywhere much greater

than their salaries; at some ports more than double or triple those

salaries. If the salaries of officers, and other incidents, therefore,

amount to more than ten per cent. upon the neat revenue of the customs,

the whole expense of levying that revenue may amount, in salaries and

perquisites together, to more than twenty or thirty per cent. The officers

of excise receive few or no perquisites; and the administration of that

branch of the revenue being of more recent establishment, is in general

less corrupted than that of the customs, into which length of time has

introduced and authorised many abuses. By charging upon malt the whole

revenue which is at present levied by the different duties upon malt and

malt liquors, a saving, it is supposed, of more than £50,000, might be

made in the annual expense of the excise. By confining the duties of

customs to a few sorts of goods, and by levying those duties according to

the excise laws, a much greater saving might probably be made in the

annual expense of the customs.

Secondly, such taxes necessarily occasion some obstruction or

discouragement to certain branches of industry. As they always raise the

price of the commodity taxed, they so far discourage its consumption, and

consequently its production. If it is a commodity of home growth or

manufacture, less labour comes to be employed in raising and producing it.

If it is a foreign commodity of which the tax increases in this manner the

price, the commodities of the same kind which are made at home may

thereby, indeed, gain some advantage in the home market, and a greater

quantity of domestic industry may thereby be turned toward preparing them.

But though this rise of price in a foreign commodity, may encourage

domestic industry in one particular branch, it necessarily discourages

that industry in almost every other. The dearer the Birmingham

manufacturer buys his foreign wine, the cheaper he necessarily sells that

part of his hardware with which, or, what comes to the same thing, with

the price of which, he buys it. That part of his hardware, therefore,

becomes of less value to him, and he has less encouragement to work at it.

The dearer the consumers in one country pay for the surplus produce of

another, the cheaper they necessarily sell that part of their own surplus

produce with which, or, what comes to the same thing, with the price of

which, they buy it. That part of their own surplus produce becomes of less

value to them, and they have less encouragement to increase its quantity.

All taxes upon consumable commodities, therefore, tend to reduce the

quantity of productive labour below what it otherwise would be, either in

preparing the commodities taxed, if they are home commodities, or in

preparing those with which they are purchased, if they are foreign

commodities. Such taxes, too, always alter, more or less, the natural

direction of national industry, and turn it into a channel always

different from, and generally less advantageous, than that in which it

would have run of its own accord.

Thirdly, the hope of evading such taxes by smuggling, gives frequent

occasion to forfeitures and other penalties, which entirely ruin the

smuggler; a person who, though no doubt highly blameable for violating the

laws of his country, is frequently incapable of violating those of natural

justice, and would have been, in every respect, an excellent citizen, had

not the laws of his country made that a crime which nature never meant to

be so. In those corrupted governments, where there is at least a general

suspicion of much unnecessary expense, and great misapplication of the

public revenue, the laws which guard it are little respected. Not many

people are scrupulous about smuggling, when, without perjury, they can

find an easy and safe opportunity of doing so. To pretend to have any

scruple about buying smuggled goods, though a manifest encouragement to

the violation of the revenue laws, and to the perjury which almost always

attends it, would, in most countries, be regarded as one of those pedantic

pieces of hypocrisy which, instead of gaining credit with anybody, serve

only to expose the person who affects to practise them to the suspicion of

being a greater knave than most of his neighbours. By this indulgence of

the public, the smuggler is often encouraged to continue a trade, which he

is thus taught to consider as in some measure innocent; and when the

severity of the revenue laws is ready to fall upon him, he is frequently

disposed to defend with violence, what he has been accustomed to regard as

his just property. From being at first, perhaps, rather imprudent than

criminal, he at last too often becomes one of the hardiest and most

determined violators of the laws of society. By the ruin of the smuggler,

his capital, which had before been employed in maintaining productive

labour, is absorbed either in the revenue of the state, or in that of the

revenue officer; and is employed in maintaining unproductive, to the

diminution of the general capital of the society, and of the useful

industry which it might otherwise have maintained.

Fourthly, such taxes, by subjecting at least the dealers in the taxed

commodities, to the frequent visits and odious examination of the

tax-gatherers, expose them sometimes, no doubt, to some degree of

oppression, and always to much trouble and vexation; and though vexation,

as has already been said, is not strictly speaking expense, it is

certainly equivalent to the expense at which every man would be willing to

redeem himself from it. The laws of excise, though more effectual for the

purpose for which they were instituted, are, in this respect, more

vexatious than those of the customs. When a merchant has imported goods

subject to certain duties of customs; when he has paid those duties, and

lodged the goods in his warehouse; he is not, in most cases, liable to any

further trouble or vexation from the custom-house officer. It is otherwise

with goods subject to duties of excise. The dealers have no respite from

the continual visits and examination of the excise officers. The duties of

excise are, upon this account, more unpopular than those of the customs;

and so are the officers who levy them. Those officers, it is pretended,

though in general, perhaps, they do their duty fully as well as those of

the customs; yet, as that duty obliges them to be frequently very

troublesome to some of their neighbours, commonly contract a certain

hardness of character, which the others frequently have not. This

observation, however, may very probably be the mere suggestion of

fraudulent dealers, whose smuggling is either prevented or detected by

their diligence.

The inconveniencies, however, which are, perhaps, in some degree

inseparable from taxes upon consumable communities, fall as light upon the

people of Great Britain as upon those of any other country of which the

government is nearly as expensive. Our state is not perfect, and might be

mended; but it is as good, or better, than that of most of our neighbours.

In consequence of the notion, that duties upon consumable goods were taxes

upon the profits of merchants, those duties have, in some countries, been

repeated upon every successive sale of the goods. If the profits of the

merchant-importer or merchant-manufacturer were taxed, equality seemed to

require that those of all the middle buyers, who intervened between either

of them and the consumer, should likewise be taxed. The famous alcavala of

Spain seems to have been established upon this principle. It was at first

a tax of ten per cent. afterwards of fourteen per cent. and it is at

present only six per cent. upon the sale of every sort of property whether

moveable or immoveable; and it is repeated every time the property is

sold. {Memoires concernant les Droits, etc. tom. i, p. 15} The levying of

this tax requires a multitude of revenue officers, sufficient to guard the

transportation of goods, not only from one province to another, but from

one shop to another. It subjects, not only the dealers in some sorts of

goods, but those in all sorts, every farmer, every manufacturer, every

merchant and shopkeeper, to the continual visit and examination of the

tax-gatherers. Through the greater part of the country in which a tax of

this kind is established, nothing can be produced for distant sale. The

produce of every part of the country must be proportioned to the

consumption of the neighbourhood. It is to the alcavala, accordingly, that

Ustaritz imputes the ruin of the manufactures of Spain. He might have

imputed to it, likewise, the declension of agriculture, it being imposed

not only upon manufactures, but upon the rude produce of the land.

In the kingdom of Naples, there is a similar tax of three per cent. upon

the value of all contracts, and consequently upon that of all contracts of

sale. It is both lighter than the Spanish tax, and the greater part of

towns and parishes are allowed to pay a composition in lieu of it. They

levy this composition in what manner they please, generally in a way that

gives no interruption to the interior commerce of the place. The

Neapolitan tax, therefore, is not near so ruinous as the Spanish one.

The uniform system of taxation, which, with a few exception of no great

consequence, takes place in all the different parts of the united kingdom

of Great Britain, leaves the interior commerce of the country, the inland

and coasting trade, almost entirely free. The inland trade is almost

perfectly free; and the greater part of goods may be carried from one end

of the kingdom to the other, without requiring any permit or let-pass,

without being subject to question, visit or examination, from the revenue

officers. There are a few exceptions, but they are such as can give no

interruption to any important branch of inland commerce of the country.

Goods carried coastwise, indeed, require certificates or coast-cockets. If

you except coals, however, the rest are almost all duty-free. This freedom

of interior commerce, the effect of the uniformity of the system of

taxation, is perhaps one of the principal causes of the prosperity of

Great Britain; every great country being necessarily the best and most

extensive market for the greater part of the productions of its own

industry. If the same freedom in consequence of the same uniformity, could

be extended to Ireland and the plantations, both the grandeur of the

state, and the prosperity of every part of the empire, would probably be

still greater than at present.

In France, the different revenue laws which take place in the different

provinces, require a multitude of revenue officers to surround, not only

the frontiers of the kingdom, but those of almost each particular

province, in order either to prevent the importation of certain goods, or

to subject it to the payment of certain duties, to the no small

interruption of the interior commerce of the country. Some provinces are

allowed to compound for the gabelle, or salt tax; others are exempted from

it altogether. Some provinces are exempted from the exclusive sale of

tobacco, which the farmers-general enjoy through the greater part of the

kingdom. The aides, which correspond to the excise in England, are very

different in different provinces. Some provinces are exempted from them,

and pay a composition or equivalent. In those in which they take place,

and are in farm, there are many local duties which do not extend beyond a

particular town or district. The traites, which correspond to our customs,

divide the kingdom into three great parts; first, the provinces subject to

the tariff of 1664, which are called the provinces of the five great

farms, and under which are comprehended Picardy, Normandy, and the greater

part of the interior provinces of the kingdom; secondly, the provinces

subject to the tariff of 1667, which are called the provinces reckoned

foreign, and under which are comprehended the greater part of the frontier

provinces; and, thirdly, those provinces which are said to be treated as

foreign, or which, because they are allowed a free commerce with foreign

countries, are, in their commerce with the other provinces of France,

subjected to the same duties as other foreign countries. These are Alsace,

the three bishoprics of Mentz, Toul, and Verdun, and the three cities of

Dunkirk, Bayonne, and Marseilles. Both in the provinces of the five great

farms (called so on account of an ancient division of the duties of

customs into five great branches, each of which was originally the subject

of a particular farm, though they are now all united into one), and in

those which are said to be reckoned foreign, there are many local duties

which do not extend beyond a particular town or district. There are some

such even in the provinces which are said to be treated as foreign,

particularly in the city of Marseilles. It is unnecessary to observe how

much both the restraints upon the interior commerce of the country, and

the number of the revenue officers, must be multiplied, in order to guard

the frontiers of those different provinces and districts which are subject

to such different systems of taxation.

Over and above the general restraints arising from this complicated system

of revenue laws, the commerce of wine (after corn, perhaps, the most

important production of France) is, in the greater part of the provinces,

subject to particular restraints arising from the favour which has been

shown to the vineyards of particular provinces and districts above those

of others. The provinces most famous for their wines, it will be found, I

believe, are those in which the trade in that article is subject to the

fewest restraints of this kind. The extensive market which such provinces

enjoy, encourages good management both in the cultivation of their

vineyards, and in the subsequent preparation of their wines.

Such various and complicated revenue laws are not peculiar to France. The

little duchy of Milan is divided into six provinces, in each of which

there is a different system of taxation, with regard to several different

sorts of consumable goods. The still smaller territories of the duke of

Parma are divided into three or four, each of which has, in the same

manner, a system of its own. Under such absurd management, nothing but the

great fertility of the soil, and happiness of the climate, could preserve

such countries from soon relapsing into the lowest state of poverty and

barbarism.