Practical Politics; or, the Liberalism of To-day

by Alfred Farthing Robbins

XXIV.—HOW OUGHT WE TO BE TAXED?

It being certain that, as long as we are citizens of any sort of State, we shall be called upon to pay for its maintenance, the question “How ought we to be taxed?” is one of considerable moment to all. Grumble we may, but pay we must.

Some think they would solve the problem at a stroke by substituting direct for indirect taxation. They argue that people should know exactly what they are paying for the service of the State; and that direct taxation is not only a more logical but a more economic method of raising the revenue. They show that the consumer of duty-bearing articles pays not only the duty but a percentage upon it as interest to the middleman; and a striking instance of this was afforded in the fact that when, in 1865, Mr. Gladstone, as Chancellor of the Exchequer, took sixpence a pound off the tax on tea, the retail price of that article immediately fell eightpence.

But it may be feared that those who argue in favour of entirely direct taxation make small allowance for the weaknesses of human nature. I may prove to demonstration to the first person I meet that he is paying more than he ought to do because of the working of the indirect system, and that to this wastefulness is added the sin of ignorance as to what he actually does pay; but the chances are ten to one that he will reply that, hating all taxation as the natural man does, he would rather not know to what extent he was being mulcted, and that, if the whole amount were annually and in a lump sum presented to his view, he would never find it in his heart or his pocket to pay it.

To the sternly logical this attitude will appear sad, if not absolutely sinful; but we have to take man as we find him, and it is of little use attempting to run straight athwart his deepest prepossessions for so small a result as even the substitution of direct for indirect taxation would attain. But there is a further point, which even the political logician must bear in mind, and that is what the practical effect would be of sweeping away all duties of Customs and Excise.

If we could secure a “free breakfast table” by liberating from toll tea, coffee, cocoa, currants, raisins, and other articles of domestic consumption, all would rejoice—though, in the present state of our finances, no Chancellor of the Exchequer is likely to sacrifice the five millions of revenue now raised from those commodities. But the English people will think a good many times before striking tobacco, spirits, and wine off the Customs list, with the more than 13 millions they produce, or spirits and beer off the list of the Excise, with the 13 millions in the one case and the 8½ millions in the other that we now receive from them. Even if any one can imagine for a moment that the 27 millions here involved could be made up by some new direct tax, it does not need an extensive acquaintance with our social history to be aware that the result of removing the duties from the various intoxicants would be widespread national demoralization.

The taxation of the future, therefore, as of the past, will certainly include Customs and Excise. Some items may be struck off both; that a free breakfast table can be secured should be no dream; and it may be fairly hoped that the hindrances to trade involved in such licences as those for auctioneers and hawkers—who ought no more to be fined by the Government for practising their employment than butchers, bakers, or other traders—will soon be swept away. But upon beer, wine, spirits, and tobacco—their importation, manufacture, and sale—the tax-gatherer will continue, and rightly continue, to lay his hand.

Similarly, there will be no disposition to abolish the probate, legacy, and succession duties, but every disposition to strengthen them, and especially the last of them. The “Death duties” at present are inequitably levied; great fortunes do not pay as large a proportion as, relatively to small ones, they ought to do: and landed property is lightly let off compared with other forms.

But it is a comparative few who will be touched even by this much-needed reform; and taxation, to be fair, must touch all round. The Income Tax, obnoxious as from some aspects all will admit it to be, has almost infinite capacities of being made useful to the State; and the question which practical statesmen will soon have to consider is the direction in which that usefulness can best be developed.