Page:Encyclopædia Britannica, Ninth Edition, v. 9.djvu/200

 190 more than once been of great service in supplying the defi ciencies of revenue due to an increased expenditure. In 1843 and 1844 a few remissions of customs duties were effected. But the effect of the tariff reforms was now visible. The excess of income over expenditure in the first year was 2 millions, in ths second 6i millions. The wheat crop of 1843 was an average, that of 1844 was abundant ; the price was low, and the imports of foreign corn nearly ceased. In consequence, Peel was enabled to bring forward his most considerable measure of tariff re form. He remitted no less than 3| millions in the customs, and more than a million in the excise. The effect was an increase of income over expenditure of nearly 2| millions. lu 1846 the remission was three-quarters of a million, but there was again a surplus of 2f millions. In the same year the repeal of the corn laws was effected, and a modification was made in the sugar duties, followed in 1848 by an equalization of these duties. A little later and the Navigation Acts were repealed; and, finally, the last fragment of protection was extinguished in the abolition of the differential duties on foreign timber. The detailed history of these changes is best given in the last three volumes of Mr Tooke s History of Prices, and in the annual summaries of the Economist newspaper, compiled by Mr Newmarch, who was the coadjutor of Mr Tooke in the last three volumes of the history referred to. The process by which the new system of finance was established is de scribed and illustrated by Sir Stafford Northcote in his Twenty Years of Financial Policy. The principles of modern English finance are (1) to impose as high a duty as is consistent with the prosperity of the revenue on such articles of voluntary consumption as may be dispensed with and may be taken in excess; of these the most notable are alcoholic liquors and tobacco; (2) to abandon taxation on all articles which are used for manufacture or food, the last tax of the latter kind which has been extinguished being that on sugar; (3) to levy the lowest duties possible, consistent with revenue purposes, on articles of voluntary consumption and wholly innocent use, of which the best type is tea ; such are the customs and excise, the only trades now under the control of the inland revenue officers being those of the maltster, the brewer, and the distiller ; (4) to attempt the collection of as large a revenue as possible at the lowest possible rates on transactions by the mechanism of stamp duties ; (5) to simplify the assessed taxes, some of which indeed, as the house duty, are objectionable, and some of which have been perhaps imprudently remitted; and (6) to make use of the income tax as a supplementary means of raising a revenue when the expenditure is notably in excess of the income. Nothing, indeed, is simpler than the function of the chancellor of the exchequer, if he is resolved not to modify the established sources of the revenue or readjust its parts. All that is needed is to impose an additional income tax, or to remit a portion of that which has been imposed. It will be seen, however, that the continuity of the present system of British finance depends upon a continuity in the habits of the people. The revenue derived from alcoholic liquors and tobacco amounts annually to about 42 millions. That which is supplied from articles of voluntary consumption, the use of which is wholly innocent, is about 4i millions, the principal contribution to this head coming from tea. Purely direct taxation the land, house, and income tax on the one hand (the last-named at 3d. in the pound), and stamps, probate, and legacy duties on the other yield nearly equal sums, a little short of 8 millions each. The post office, which is sui generis, i.e., a payment for a special service rendered, supplies a further gross sum of 7 millions. The security, then, of the English revenue depends on the extent to which the habits of consuming alcoholic liquors and tobacco are permanent. The con sumption of the former is threatened by a powerful and apparently growing organization and agitation, and it can hardly be doubted that, should those who demand that the control of the traffic in alcoholic liquors ought to be trans ferred from the present licensing bodies to a direct popular vote be successful, the dimensions of the trade would be curtailed and the revenue diminished. One cannot other wise account for the alarm which is felt by those interested in the success of the trade at the activity of their critics, and the process by which the advocates of restraint believe that they can compass their ends. It is possible, also, that in the future the poorer classes, whose consumption is the cause of so large a revenue, may imitate the temperance or moderation of those who are better off, and whose habits are to all appearance in marked contrast to those of their pro genitors two or three generations ago. Should such a change ensue, it is not easy to determine what would be the direction taken by the financiers of the future ; for though there are some obvious sources of taxation, particularly real estate devised or inherited, and property specially so called, yet the receipts from these sources would necessarily be limited, and there is nothing more difficult, as we have attempted to show, than the task of familiarizing a people with a new impost. We need not be surprised that such a difficulty is felt and must be encountered when the financier attempts new expedients ; for, apart from the natural dissatisfaction with which a new tax is paid, and the resistance which powerful interests may make and have made to such im posts, such as we have seen to have been successful when Pitt attempted to levy an equal charge on the succession to personal and real estate, a tax may make a serious difference to values, or may interfere fatally with an industry. Thus there can be no doubt that the exemptions with which laud is favoured in the devolution of real estate is a cause why the rate of return to the purchase money of land is so low. Fixed charges will, of course, in the long run make no difference to the rate of interest derived from investments in land, though they would diminish the value to the vendor. Thus the value of land in France is as high or nearly as high as it is in England, and is much higher in Belgium, though in both countries there is a heavy land tax. But freedom from an accidental tax, a tax which cannot be computed beforehand, is a direct advantage to the vendor, and in the case of land would add to the number of years purchase at which the land is sold. The taxes which have been laid on industry and con sumption, apart from the reckless manner in which they were imposed, were felt far more severely in their first incidence than they were when they became familiar. There is a convenient and suggestive example of the manner in which such taxes affect industry in a matter of recent experience. Apart from the question whether Mi- Lowe s abortive match tax was in itself a judicious impost, a question which, it may be affirmed, most persons would answer in the negative, it became plain, when the pro posal was made, that two results would follow from its adoption. It would seriously curtail the employment of a very large class of very ill-paid labourers, and thereupon induce great distress on those who were already very poor, and it would ultimately transfer the industry to those countries where no excise is levied on the manufacture. Already, although matches are bulky in proportion to their value, and are conveyed from the place of their origin to the market of consumption at very high rates, owing to the dangerous character of the goods, the competition of a place so distant as Jonkoping in Sweden against the English manufacturer is so sharp as to lower materially the profits