There has been indicated the difference between imperial and local taxation—the one being a tax imposed by the State and the other a rate levied by a local authority. The object in each case is similar; but, while the cost of the central administration, the army and navy, and the superior courts of justice, with the interest on the National Debt, is paid by taxes, that of lighting, draining, and other purely local matters is defrayed by rates, and that of the police, the poor, the highways, and education comes out of taxes and rates combined.
So much for the why of being taxed; let us now consider the how. At present the receipts of the State are derived from direct and indirect taxation, together with a form which may be said to come under both these heads. The most familiar mode of direct taxation is the Income Tax; of indirect, the Customs and Excise; and of that which savours of both, the stamp duties and the profits from the Post Office.
These methods of taxation are, as far as England is concerned, comparatively modern. In the earlier days of settled government in this country, the mode of taxing was different and somewhat fitful, causing much trouble in the collection, and sometimes forming the pretext for revolt. “Aids” to the King were a frequent means of oppression long ago; and as far back as the time of John they were felt as a grievance, Magna Charta providing that the King should take no aids without the consent of Parliament, except those for knighting the lord’s eldest son, for marrying his eldest daughter, and for ransoming the lord from captivity (the lord, it being remembered, holding at that time his land direct from the sovereign). “Benevolences”—a charming name for an unpleasing idea—were also in vogue in the Middle Ages, and, although specifically declared by an Act of Richard III. to be illegal, were levied in a fashion which caused much discontent. “Loans” were another form of raising money which the nation resented, as Charles I. found to his cost; while a “Poll Tax,” as all men know, drove Wat Tyler into rebellion. “Subsidies” and “Tenths” and other taxing devices equally failed in the long run to answer the desired purpose of filling the National Exchequer; and after the Restoration all such gave place to a system by which the Customs, the Excise, and the Land Tax provided most of the money required.
Gradually the proceeds of the Land Tax dwindled, and direct taxation was almost extinct when, in the throes of the great war with France, which lasted, with slight intervals, for twenty-two years, the younger Pitt revived it in an Income Tax, the form in which it is now mainly known. With the end of the war this ceased, and the proceeds of indirect taxation were again chiefly those upon which the State relied. What the result was, how in every direction trade was hampered and public comfort destroyed, has been summed up for all time in one of Sydney Smith’s essays; and the quotation is worth re-perusal by everybody interested in the subject, and especially by those who to-day are wishing to get rid of the main form of direct taxation we possess—the Income Tax, as revived by Sir Robert Peel.
Uttering, in 1820, a warning to the United States to avoid that spirit which we now call “Jingoism,” Sydney Smith wrote—“We can inform Jonathan what are the inevitable consequences of being too fond of glory—Taxes upon every article which enters into the mouth, or covers the back, or is placed under the foot; taxes upon everything which it is pleasant to see, hear, feel, smell, or taste; taxes upon warmth, light, and locomotion; taxes on everything on earth and the waters under the earth—on everything that comes from abroad or is grown at home; taxes on the raw material; taxes on every fresh value that is added to it by the industry of man; taxes on the sauce which pampers man’s appetite, and the drug that restores him to health; on the ermine which decorates the judge, and the rope which hangs the criminal; on the poor man’s salt, and the rich man’s spice; on the brass nails of the coffin, and the ribands of the bride—at bed or board, couchant or levant, we must pay. The schoolboy whips his taxed top; the beardless youth manages his taxed horse, with a taxed bridle, on a taxed road; and the dying Englishman, pouring his medicine, which has paid 7 per cent., into a spoon that has paid 15 per cent., flings himself back upon his chintz bed, which has paid 22 per cent., and expires in the arms of an apothecary who has paid a licence of a hundred pounds for the privilege of putting him to death. His whole property is then immediately taxed from 2 to 10 per cent. Besides the probate, large fees are demanded for burying him in the chancel; his virtues are handed down to posterity on taxed marble; and he is then gathered to his fathers—to be taxed no more.”
Ludicrous as the picture seems, it was correctly painted for the time it depicted; and it is first to Sir Robert Peel and next to his greatest pupil, Mr. Gladstone, that we owe the change from the harassing indirect taxation of the past to the comparatively innocuous forms of it we have to-day. But it is still from indirect taxation that most of our revenue is derived. The heads of that revenue, as given officially, are—(1) Customs, (2) Excise, (3) Stamps, (4) Land Tax, (5) House Duty, (6) Income Tax, (7) Post Office, (8) Telegraph Service, (9) Crown Lands, (10) Interest on Advances for Local Works and Purchase Money of Suez Canal shares, and (11) Miscellaneous. Of all these, Excise stands first by several millions, while Customs are far ahead of any of the rest, Stamps and Income Tax being the next best paying sources of revenue. And, in some form or other, every one among us—the peer who smokes a cigarette, the peasant who drinks a pint of beer, and the very pauper who sends a letter to a friend—has indirectly to contribute his quota to the Exchequer, while all who earn more than £150 a year have to pay Income Tax; and those who inherit property, probate, legacy, or succession duty.