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If, however, it be said that all this has been not approved of, by ministers, but connived at,—not sanctioned, so much as endured, from a reasonable and prudent apprehension of committing the country to the hazardous experiment of war ;-or if, to speak more plainly, our monumental debt, the languor of overexertion, and the weakness induced by convulsive efforts, unsparingly and lavishly made in the pursuit of objects, some of which, at least, were of an ambiguous and questionable policy, have rendered interference on the part of England impossible; then have we just cause to lament, that no portion of our resources should bave been husbanded for emergencies as they might arise, –and first, and chiefest, for the support and maintenance of a cause, entitled to the favour of the civilized world; which has for its watch words, Liberty and Religion, names touching a chord that vibrates to the heart of every friend to the well-being of man in both stages of his existence;- a cause which, grafting the name of England upon the immortality of Greece, would hand down the exertions of our country, in her behalf, to the applause and admiration of all succeeding ages.
ART. VIII. Case of the Salt Duties, with Proofs and Illustra
tions. By Sir Thomas BERNARD, Bart. London, 1817.
E mean to be very practical in this article. It is not our
intention to enter into any investigation as to the comparative effects of high and low duties on profits and wages, but to confine ourselves entirely to a demonstration of the fact, that an increase of taxation is not always followed by an increase of revenue, nor a dimini:tion of taxation by a diminution of revenue. The prevalence of erroneous opinions on this subject has been in the highest degree injurious. In vain has it been shown, that high duties abridge the comforts and enjoyments of the people, and hold out a bounty to perjury, fraud, and smuggling. These truths are universally admitted ; but then, we are told that the evil is irremediable that the wants of the Government will not allow of any further diminution of taration! The loud and unanimous call of the people for relief from their burdens, has induced Ministers to consent to relinquish one shilling of the seven shillings and sixpence with which every bushel of malt is really loaded ;* but they have declared their inability to relinquish another farthing! And it is
* The duty on malt is 60s. 6d. a quarter-viz. 28s. of direct duty, and 10s. a barrel on each of the 34 barrels of beer, which are extracted from every quarter of malt.
on this single ground-the alleged necessity of keeping up the revenue to its present amount--that they take their stand, in justifying the exorbitant taxes on salt, leather, tea, sugar, and other necessary articles. They have not had the boldness to attempt to deny that these taxes are extremely burdensome and oppressive; but they contend, that the maintenance of public credit is superior to every other consideration; and that, as the revenue is, even with all the aid derived from the high duties, barely adéquate to meet the exigencies of the public service, and to keep up the nominis umbra of a sinking fund, they are reluctantly compelled to oppose every attempt to reduce them! Such is the reasoning of Ministers in Parliament, and such also is the reasoning of their adherents out of doors.
Now, this reasoning is plainly and avowedly bottomed on the assumption, that every reduction of taxation is necessarily followed by a corresponding reduction of revenue! If you reduce,' said the Chancellor of Exchequer, the duties on salt from 15s. to 10s. a bushel, we shall have only 1,000,0001. of revenue from salt, instead of 1,500,000l. ; but, in the existing circumstances of the country, and after the House has pledged itself to maintain a sinking fund of five millions, it is impossible for me to consent to such a diminution of the public income. It would certainly, added the Right Honourable Gentleman, give much satisfaction to his Majesty's Ministers, if they could, consistently with the real interests of the country, agree to a greater remission of taxes; but after what Parliament has already done on this point that is, after the deduction of ls. from the duty of 7s. 6d. a bushel affecting malt), he certainly thought it necessary to reithstand any further reduction.'* We shall not stop at present to point out the palpable absurdity, of supposing that any bad effects could possibly result from reducing a real sinking fund of fove to one of four and a half millions; it is sufficient to observe, that the same convenient plea of the necessity of maintaining this sacred treasure of five millions untouched, was the only reason assigned by Ministers for imposing three millions of new taxes in 1819, and that notwithstanding their imposition, both the principal and interest of the funded and unfunded unredeemed debt, have regularly increased since that period ! But admitting the expediency of raising a surplus revenue of five millions, it might have been supposed, without giving Mr Vansittart and his colleagues credit for any unusual share of sagacity, that it would have occurred to them that it was possible the consumption of a taxed commodity might be increased by a fall of duty
Debate on Mr Calerasts motion for a gradual repeal of the de ties on salt, 28th February 1822.
or of price. It is certain, however, that they have either entirely overlooked this consideration, or that they are of opinion that it is quite the same thing to the great bulk of society whether prices are low or high! For, if the consumption of taxed commodities be increased by a reduction of duty, it is plain the revenue cannot be proportionably diminished; and it is even probable, it may sustain a positive and considerable increase. * If, after a reduction of the duty on salt from 15s. to 10s., three bushels were consumed instead of two, there would be no diminution of revenue; and if two bushels were consumed instead of one, there would be a very great increase-so much so, that Government would actually gain 500,0001. by the reduction. Now, we contend, that this effect will always follow every diminution of high duties laid on commodities in general request. And we are prepared to show, that, far from causing any diminution of revenue, a considerable reduction of these duties would, by causing a much greater increase of consumption, be among the most effectual means that could be taken to increase it. The demand for such commodities as are, from the great expense of their production, necessarily high priced, must be always comparatively limited, and could not be greatly extended by any reduction of the duties with which they are charged. But a reduction of the duties laid on commodities in extensive demand, and whose natural cost is not very considerable, must be always followed by a very great increase of consumption. For, such a reduction not only enables those who were previously consumers to consume a greater quantity, but it brings them within the reach of new and more numerous classes of consumers. If any of our readers will take the trouble to look into the tables which have been published by Dr Colquhoun and others of the numbers and incomes of the different classes of the people, they will at once perceive that such a reduction of the duty or price of any commodity previously used by the higher classes only, as would fit it to be used by those in inferior stations, would extend the demand for it in a geometrical proportion. The truth of this observation may be strikingly exemplified by a reference to the case of cotton goods. At the accession of his late Majesty in 1760, the price of cottons, owing to the difficulty of producing them, was extremely high; and the value of the manufactured cottons annually brought to market, did not exceed 200,0001. * But, thanks to the genius and inventions of Hargreaves, of Arkwright, and of Watt, the price of cottons has been so far sunk as to bring them within ihe reach of the poorest individual; and yet, such has been the
• Macpherson's Annals of Commerce, vol. 4. p. 132.
vast increase of demand, that notwithstanding this reduction of price, the value of the cottons annually manufactured in Great Britain, and either disposed of at home, or sent abroad, amounts, according to the very lowest estimate, to the amazing sum of FORTY MILLIONS! It is obvious, however, that if the same reduction of the price of cottons which has been brought about by the improvement of machinery, had been brought about by an equivalent reduction of taxation, precisely the same effects would have followed. . The demand would have equally increased, and would have far more than compensated for the diminution of the duties.
But it is not necessary, in order to establish the superior productiveness of moderate taxation, to resort to arguments drawn from general principles, or from analogy. The history of taxe ation, both in this and other countries, furnishes numerous direct, conclusive, and well-authenticated proofs of the same principle. We shall notice a few of them. Previously to 1745, the excise duty of 4s. a pound on tea yielded, at an average, about 150,000l. a year; which, had there been no smuggling or adulteration, would have shown that the consumption was equal to about 750,000 lbs. But it was well known that smuggling was then carried to a very great height, and that the real consumption of tea was much greater than the apparent consumption. To put a stop to this clandestine importation, a bill was introduced into Parliament in 1745, in pursuance of the recommendation of a Committee of the House of Commons, and passed into a law, by which the excise duty of 4s. was reduced to ls., and 25 per cent. ad valorem. This measure was signally successful. In 1746, the year immediately subsequent to the reduction, the sales of tea for home consumption amounted to above TWO MILLIONS of pounds weight, and the revenue was increased to 243,3091.! But to set the effects of this wise and salutary measure in a still clearer point of view, we shall subjoin an account of the nett produce of the Tea duties, from 1743 to 1748, both inclusive.
In 1743 it amounted to L. 151,959
303,545. But this unanswerable demonstration of the superior produc
• Hamilton's Principles of Taxation, Appendix, No. 19; and Postlethwaite's History of the Revenue, p. 293.
tiveness of low duties, was unable to restrain the rapacity of the Treasury. In 1748, the duties were again increased, and fluctuated between that epoch and 1784, troin 64 to 119 per cent. ad valorem. The effects which followed this inordinate extension of the duties, are equally instructive with those which folJowed their reduction. The revenue was not increased in any thing like a corresponding proportion; and as the use of tea bad now become general, smuggling was carried to an infinitely greater extent than at any former period. In the nine years preceding 1780, above 118 millions of pounds weight of tea were exported from China to Europe, in ships belonging to the Continent, and about 50 millions of pounds in ships belonging to England. But from the best information attainable, it appears that the real consumption was almost exactly the reverse of the quantities imported; and that, while the consuniption of the British dominions amounted to above 13 millions of pounds, the consumption of the Continent did not exceed 5% millions! If this statement be nearly correct, it follows, that an annual supply of about eight millions of pounds must have been clandestinely imported into this country, in defiance of the utmost vigi. lance on the part of the revenue officers. But this was not the worst effect of the high duties, for many of the retail merchants, who purchased tea at the East India Company's sales, being in & great measure beat out of the market, were, in order to put themselves in a condition to stand the competition of the smugglers, tempted to adulterate their teas, by mixing them with sloe and ash leaves. * At length, in 1784, ministers, alter having in vain tried every other resource for the suppression of smuggling, resolved to follow the precedent of 1745, and reduced the duty on tea from 119 to 12) per cent. This measure was as successful as the former. Smuggling, and the practice of adulteration were immediately put an end to. The following official statement shows, that the quantity of tea sold by the East India Company, was about tripled in the course of the two years im-. mediately following the reduction !
In 1781, the quantity of tea sold at the East India Company's sales, amounted to
5,023, 419 lbs. 1782
5,857,853 84 (Duties reduced)
16,692,426 + • Macpherson's Commerce with India, p. 208. Milburn's Oriental Commerce, vol. 2, p. 540.
+ Macpherson's Commerce with India, p. 416.