The customs and excise duties on alcoholic liquors must of course remain on moral grounds, and the tobacco duty might well remain for the present. We should thus tax the working classes through their luxuries alone, while the workman who dispensed with drink and smoked in moderation would be practically untaxed. The general recognition of this fact, combined with the cheapening of tea, coffee and cocoa, would not be without its effect upon the nation's drink bill, and in so far as its recognition reduced our revenue we could count it gain.
Reverting to the facts illustrated in the frontispiece, the effect of the abolition of the food duties would be slight in relation to the extraordinary inequalities of income, but a just and certain step, nevertheless, in the direction of amelioration. Just as a small burden is great to a narrow income, so a small relief is a great boon, and fully 10,000,000 of our people would feel in an appreciable degree the removal of the food duties. The step has been urged by reformers for many years; considered in relation to the Error of Distribution it is seen to be an exceedingly small measure of justice, which needs little rhetoric to enforce its claims.
To proceed with the application of the doctrine of ability to taxation in view of the facts as to the National Income, we come to the consideration of the Income Tax and Death Duties.
CHAPTER XXI
THE MAIN INSTRUMENT OF TAXATION
THROUGH the income tax we go directly to the person upon whom we desire to levy taxation, and take from him such portion of his earnings or other profits as we consider to be his just contribution to the revenue. Through the income tax we can, if we care to do so, cause each subject of the State to contribute towards the expenses of government according to his ability.
It is the purpose of this chapter to show that the income tax could be so amended that, so far from being counted an obnoxious impost, it would be regarded as a just and proper instrument of taxation.
It is generally believed that the British Income Tax was originated by Pitt in 1798. As a matter of fact, however, the direct taxation of incomes in the United Kingdom dates back many hundreds of years. For the purposes of this work, I do not propose to trace the history of the subject to an earlier date than 1692.
The Property and Income Tax imposed in that year is commonly known as the "Land-Tax," and this name has given rise to a great deal of misunderstanding.