Chapter LXIV: Appendix: TO ARTICLES I. AND II.—Taxes upon the Capital Value of (2)

The ancient customs were divided into three branches. The first, and,
perhaps, the most ancient of all those duties, was that upon wool and
leather. It seems to have been chiefly or altogether an exportation duty.
When the woollen manufacture came to be established in England, lest the
king should lose any part of his customs upon wool by the exportation of
woollen cloths, a like duty was imposed upon them. The other two branches
were, first, a duty upon wine, which being imposed at so much a-ton, was
called a tonnage; and, secondly, a duty upon all other goods, which being
imposed at so much a-pound of their supposed value, was called a poundage.
In the forty-seventh year of Edward III., a duty of sixpence in the pound
was imposed upon all goods exported and imported, except wools,
wool-felts, leather, and wines which were subject to particular duties. In
the fourteenth of Richard II., this duty was raised to one shilling in the
pound; but, three years afterwards, it was again reduced to sixpence. It
was raised to eightpence in the second year of Henry IV.; and, in the
fourth of the same prince, to one shilling. From this time to the ninth
year of William III., this duty continued at one shilling in the pound.
The duties of tonnage and poundage were generally granted to the king by
one and the same act of parliament, and were called the subsidy of tonnage
and poundage. The subsidy of poundage having continued for so long a time
at one shilling in the pound, or at five per cent., a subsidy came, in the
language of the customs, to denote a general duty of this kind of five per
cent. This subsidy, which is now called the old subsidy, still continues
to be levied, according to the book of rates established by the twelfth of
Charles II. The method of ascertaining, by a book of rates, the value of
goods subject to this duty, is said to be older than the time of James I.
The new subsidy, imposed by the ninth and tenth of William III., was an
additional five per cent. upon the greater part of goods. The one-third
and the two-third subsidy made up between them another five per cent. of
which they were proportionable parts. The subsidy of 1747 made a fourth
five per cent. upon the greater part of goods; and that of 1759, a fifth
upon some particular sorts of goods. Besides those five subsidies, a great
variety of other duties have occasionally been imposed upon particular
sorts of goods, in order sometimes to relieve the exigencies of the
state, and sometimes to regulate the trade of the country, according to
the principles of the mercantile system.

That system has come gradually more and more into fashion. The old subsidy
was imposed indifferently upon exportation, as well as importation. The
four subsequent subsidies, as well as the other duties which have since
been occasionally imposed upon particular sorts of goods, have, with a few
exceptions, been laid altogether upon importation. The greater part of the
ancient duties which had been imposed upon the exportation of the goods of
home produce and manufacture, have either been lightened or taken away
altogether. In most cases, they have been taken away. Bounties have even
been given upon the exportation of some of them. Drawbacks, too, sometimes
of the whole, and, in most cases, of a part of the duties which are paid
upon the importation of foreign goods, have been granted upon their
exportation. Only half the duties imposed by the old subsidy upon
importation, are drawn back upon exportation; but the whole of those
imposed by the latter subsidies and other imposts are, upon the greater
parts of the goods, drawn back in the same manner. This growing favour of
exportation, and discouragement of importation, have suffered only a few
exceptions, which chiefly concern the materials of some manufactures.
These our merchants and manufacturers are willing should come as cheap as
possible to themselves, and as dear as possible to their rivals and
competitors in other countries. Foreign materials are, upon this account,
sometimes allowed to be imported duty-free; spanish wool, for example,
flax, and raw linen yarn. The exportation of the materials of home
produce, and of those which are the particular produce of our colonies,
has sometimes been prohibited, and sometimes subjected to higher duties.
The exportation of English wool has been prohibited. That of beaver skins,
of beaver wool, and of gum-senega, has been subjected to higher duties;
Great Britain, by the conquests of Canada and Senegal, having got almost
the monopoly of those commodities.

That the mercantile system has not been very favourable to the revenue of
the great body of the people, to the annual produce of the land and labour
of the country, I have endeavoured to show in the fourth book of this
Inquiry. It seems not to have been more favourable to the revenue of the
sovereign; so far, at least, as that revenue depends upon the duties of
customs.

In consequence of that system, the importation of several sorts of goods
has been prohibited altogether. This prohibition has, in some cases,
entirely prevented, and in others has very much diminished, the
importation of those commodities, by reducing the importers to the
necessity of smuggling. It has entirely prevented the importation of
foreign wollens; and it has very much diminished that of foreign silks and
velvets, In both cases, it has entirely annihilated the revenue of customs
which might have been levied upon such importation.

The high duties which have been imposed upon the importation of many
different sorts of foreign goods in order to discourage their consumption
in Great Britain, have, in many cases, served only to encourage smuggling,
and, in all cases, have reduced the revenues of the customs below what
more moderate duties would have afforded. The saying of Dr Swift, that in
the arithmetic of the customs, two and two, instead of making four, make
sometimes only one, holds perfectly true with regard to such heavy duties,
which never could have been imposed, had not the mercantile system taught
us, in many cases, to employ taxation as an instrument, not of revenue,
but of monopoly.

The bounties which are sometimes given upon the exportation of home
produce and manufactures, and the drawbacks which are paid upon the
re-exportation of the greater part of foreign goods, have given occasion
to many frauds, and to a species of smuggling, more destructive of the
public revenue than any other. In order to obtain the bounty or drawback,
the goods, it is well known, are sometimes shipped, and sent to sea, but
soon afterwards clandestinely re-landed in some other part of the country.
The defalcation of the revenue of customs occasioned by bounties and
drawbacks, of which a great part are obtained fraudulently, is very great.
The gross produce of the customs, in the year which ended on the 5th of
January 1755, amounted to £5,068,000. The bounties which were paid out of
this revenue, though in that year there was no bounty upon corn, amounted
to £167,806. The drawbacks which were paid upon debentures and
certificates, to £2,156,800. Bounties and drawbacks together amounted to
£2,324,600. In consequence of these deductions, the revenue of the customs
amounted only to £2,743,400; from which deducting £287,900 for the expense
of management, in salaries and other incidents, the neat revenue of the
customs for that year comes out to be £2,455,500. The expense of
management, amounts, in this manner, to between five and six per cent.
upon the gross revenue of the customs; and to something more than ten per
cent. upon what remains of that revenue, after deducting what is paid away
in bounties and drawbacks.

Heavy duties being imposed upon almost all goods imported, our merchant
importers smuggle as much, and make entry of as little as they can. Our
merchant exporters, on the contrary, make entry of more than they export;
sometimes out of vanity, and to pass for great dealers in goods which pay
no duty gain a bounty back. Our exports, in consequence of these different
frauds, appear upon the custom-house books greatly to overbalance our
imports, to the unspeakable comfort of those politicians, who measure the
national prosperity by what they call the balance of trade.

All goods imported, unless particularly exempted, and such exemptions are
not very numerous, are liable to some duties of customs. If any goods are
imported, not mentioned in the book of rates, they are taxed at 4s:9¾d.
for every twenty shillings value, according to the oath of the importer,
that is, nearly at five subsidies, or five poundage duties. The book of
rates is extremely comprehensive, and enumerates a great variety of
articles, many of them little used, and, therefore, not well known. It is,
upon this account, frequently uncertain under what article a particular
sort of goods ought to be classed, and, consequently what duty they ought
to pay. Mistakes with regard to this sometimes ruin the custom-house
officer, and frequently occasion much trouble, expense, and vexation to
the importer. In point of perspicuity, precision, and distinctness,
therefore, the duties of customs are much inferior to those of excise.

In order that the greater part of the members of any society should
contribute to the public revenue, in proportion to their respective
expense, it does not seem necessary that every single article of that
expense should be taxed. The revenue which is levied by the duties of
excise is supposed to fall as equally upon the contributors as that which
is levied by the duties of customs; and the duties of excise are imposed
upon a few articles only of the most general used and consumption. It has
been the opinion of many people, that, by proper management, the duties of
customs might likewise, without any loss to the public revenue, and with
great advantage to foreign trade, be confined to a few articles only.

The foreign articles, of the most general use and consumption in Great
Britain, seem at present to consist chiefly in foreign wines and brandies;
in some of the productions of America and the West Indies, sugar, rum,
tobacco, cocoa-nuts, etc. and in some of those of the East Indies, tea,
coffee, china-ware, spiceries of all kinds, several sorts of piece-goods,
etc. These different articles afford, the greater part of the perhaps, at
present, revenue which is drawn from the duties of customs. The taxes
which at present subsist upon foreign manufactures, if you except those
upon the few contained in the foregoing enumeration, have, the greater
part of them, been imposed for the purpose, not of revenue, but of
monopoly, or to give our own merchants an advantage in the home market. By
removing all prohibitions, and by subjecting all foreign manufactures to
such moderate taxes, as it was found from experience, afforded upon each
article the greatest revenue to the public, our own workmen might still
have a considerable advantage in the home market; and many articles, some
of which at present afford no revenue to government, and others a very
inconsiderable one, might afford a very great one.

High taxes, sometimes by diminishing the consumption of the taxed
commodities, and sometimes by encouraging smuggling frequently afford a
smaller revenue to government than what might be drawn from more moderate
taxes.

When the diminution of revenue is the effect of the diminution of
consumption, there can be but one remedy, and that is the lowering of the
tax. When the diminution of revenue is the effect of the encouragement
given to smuggling, it may, perhaps, be remedied in two ways; either by
diminishing the temptation to smuggle, or by increasing the difficulty of
smuggling. The temptation to smuggle can be diminished only by the
lowering of the tax; and the difficulty of smuggling can be increased only
by establishing that system of administration which is most proper for
preventing it.

The excise laws, it appears, I believe, from experience, obstruct and
embarrass the operations of the smuggler much more effectually than those
of the customs. By introducing into the customs a system of administration
as similar to that of the excise as the nature of the different duties
will admit, the difficulty of smuggling might be very much increased. This
alteration, it has been supposed by many people, might very easily be
brought about.

The importer of commodities liable to any duties of customs, it has been
said, might, at his option, be allowed either to carry them to his own
private warehouse; or to lodge them in a warehouse, provided either at his
own expense or at that of the public, but under the key of the
custom-house officer, and never to be opened but in his presence. If the
merchant carried them to his own private warehouse, the duties to be
immediately paid, and never afterwards to be drawn back; and that
warehouse to be at all times subject to the visit and examination of the
custom-house officer, in order to ascertain how far the quantity contained
in it corresponded with that for which the duty had been paid. If he
carried them to the public warehouse, no duty to be paid till they were
taken out for home consumption. If taken out for exportation, to be
duty-free; proper security being always given that they should be so
exported. The dealers in those particular commodities, either by wholesale
or retail, to be at all times subject to the visit and examination of the
custom-house officer; and to be obliged to justify, by proper
certificates, the payment of the duty upon the whole quantity contained in
their shops or warehouses. What are called the excise duties upon rum
imported, are at present levied in this manner; and the same system of
administration might, perhaps, be extended to all duties upon goods
imported; provided always that those duties were, like the duties of
excise, confined to a few sorts of goods of the most general use and
consumption. If they were extended to almost all sorts of goods, as at
present, public warehouses of sufficient extent could not easily be
provided; and goods of a very delicate nature, or of which the
preservation required much care and attention, could not safely be trusted
by the merchant in any warehouse but his own.

If, by such a system of administration, smuggling to any considerable
extent could be prevented, even under pretty high duties; and if every
duty was occasionally either heightened or lowered according as it was
most likely, either the one way or the other, to afford the greatest
revenue to the state; taxation being always employed as an instrument of
revenue, and never of monopoly; it seems not improbable that a revenue, at
least equal to the present neat revenue of the customs, might be drawn
from duties upon the importation of only a few sorts of goods of the most
general use and consumption; and that the duties of customs might thus be
brought to the same degree of simplicity, certainty, and precision, as
those of excise. What the revenue at present loses by drawbacks upon the
re-exportation of foreign goods, which are afterwards re-landed and
consumed at home, would, under this system, be saved altogether. If to
this saving, which would alone be very considerable, were added the
abolition of all bounties upon the exportation of home produce; in all
cases in which those bounties were not in reality drawbacks of some duties
of excise which had before been advanced; it cannot well be doubted, but
that the neat revenue of customs might, after an alteration of this kind,
be fully equal to what it had ever been before.

If, by such a change of system, the public revenue suffered no loss, the
trade and manufactures of the country would certainly gain a very
considerable advantage. The trade in the commodities not taxed, by far the
greatest number would be perfectly free, and might be carried on to and
from all parts of the world with every possible advantage. Among those
commodities would be comprehended all the necessaries of life, and all the
materials of manufacture. So far as the free importation of the
necessaries of life reduced their average money price in the home market,
it would reduce the money price of labour, but without reducing in any
respect its real recompence. The value of money is in proportion to the
quantity of the necessaries of life which it will purchase. That of the
necessaries of life is altogether independent of the quantity of money
which can be had for them. The reduction in the money price of labour
would necessarily be attended with a proportionable one in that of all
home manufactures, which would thereby gain some advantage in all foreign
markets. The price of some manufactures would be reduced, in a still
greater proportion, by the free importation of the raw materials. If raw
silk could be imported from China and Indostan, duty-free, the silk
manufacturers in England could greatly undersell those of both France and
Italy. There would be no occasion to prohibit the importation of foreign
silks and velvets. The cheapness of their goods would secure to our own
workmen, not only the possession of a home, but a very great command of
the foreign market. Even the trade in the commodities taxed, would be
carried on with much more advantage than at present. If those commodities
were delivered out of the public warehouse for foreign exportation, being
in this case exempted from all taxes, the trade in them would be perfectly
free. The carrying trade, in all sorts of goods, would, under this system,
enjoy every possible advantage. If these commodities were delivered out
for home consumption, the importer not being obliged to advance the tax
till he had an opportunity of selling his goods, either to some dealer, or
to some consumer, he could always afford to sell them cheaper than if he
had been obliged to advance it at the moment of importation. Under the
same taxes, the foreign trade of consumption, even in the taxed
commodities, might in this manner be carried on with much more advantage
than it is at present.

It was the object of the famous excise scheme of Sir Robert Walpole, to
establish, with regard to wine and tobacco, a system not very unlike that
which is here proposed. But though the bill which was then brought into
Parliament, comprehended those two commodities only, it was generally
supposed to be meant as an introduction to a more extensive scheme of the
same kind. Faction, combined with the interest of smuggling merchants,
raised so violent, though so unjust a clamour, against that bill, that the
minister thought proper to drop it; and, from a dread of exciting a
clamour of the same kind, none of his successors have dared to resume the
project.

The duties upon foreign luxuries, imported for home consumption, though
they sometimes fall upon the poor, fall principally upon people of
middling or more than middling fortune. Such are, for example, the duties
upon foreign wines, upon coffee, chocolate, tea, sugar, etc.

The duties upon the cheaper luxuries of home produce, destined for home
consumption, fall pretty equally upon people of all ranks, in proportion
to their respective expense. The poor pay the duties upon malt, hops,
beer, and ale, upon their own consumption; the rich, upon both their own
consumption and that of their servants.

The whole consumption of the inferior ranks of people, or of those below
the middling rank, it must be observed, is, in every country, much
greater, not only in quantity, but in value, than that of the middling,
and of those above the middling rank. The whole expense of the inferior is
much greater titan that of the superior ranks. In the first place, almost
the whole capital of every country is annually distributed among the
inferior ranks of people, as the wages of productive labour. Secondly, a
great part of the revenue, arising from both the rent of land and the
profits of stock, is annually distributed among the same rank, in the
wages and maintenance of menial servants, and other unproductive
labourers. Thirdly, some part of the profits of stock belongs to the same
rank, as a revenue arising from the employment of their small capitals.
The amount of the profits annually made by small shopkeepers, tradesmen,
and retailers of all kinds, is everywhere very considerable, and makes a
very considerable portion of the annual produce. Fourthly and lastly, some
part even of the rent of land belongs to the same rank; a considerable
part to those who are somewhat below the middling rank, and a small part
even to the lowest rank; common labourers sometimes possessing in property
an acre or two of land. Though the expense of those inferior ranks of
people, therefore, taking them individually, is very small, yet the whole
mass of it, taking them collectively, amounts always to by much the
largest portion of the whole expense of the society; what remains of the
annual produce of the land and labour of the country, for the consumption
of the superior ranks, being always much less, not only in quantity, but
in value. The taxes upon expense, therefore, which fall chiefly upon that
of the superior ranks of people, upon the smaller portion of the annual
produce, are likely to be much less productive than either those which
fall indifferently upon the expense of all ranks, or even those which fall
chiefly upon that of the inferior ranks, than either those which fall
indifferently upon the whole annual produce, or those which fall chiefly
upon the larger portion of it. The excise upon the materials and
manufacture of home-made fermented and spirituous liquors, is,
accordingly, of all the different taxes upon expense, by far the most
productive; and this branch of the excise falls very much, perhaps
principally, upon the expense of the common people. In the year which
ended on the 5th of July 1775, the gross produce of this branch of the
excise amounted to £3,341,837:9:9.

It must always be remembered, however, that it is the luxuries, and not
the necessary expense of the inferior ranks of people, that ought ever to
be taxed. The final payment of any tax upon their necessary expense, would
fall altogether upon the superior ranks of people; upon the smaller
portion of the annual produce, and not upon the greater. Such a tax must,
in all cases, either raise the wages of labour, or lessen the demand for
it. It could not raise the wages of labour, without throwing the final
payment of the tax upon the superior ranks of people. It could not lessen
the demand for labour, without lessening the annual produce of the land
and labour of the country, the fund upon which all taxes must be finally
paid. Whatever might be the state to which a tax of this kind reduced the
demand for labour, it must always raise wages higher than they otherwise
would be in that state; and the final payment of this enhancement of wages
must, in all cases, fall upon the superior ranks of people.

Fermented liquors brewed, and spiritous liquors distilled, not for sale,
but for private use, are not in Great Britain liable to any duties of
excise. This exemption, of which the object is to save private families
from the odious visit and examination of the tax-gatherer, occasions the
burden of those duties to fall frequently much lighter upon the rich than
upon the poor. It is not, indeed, very common to distil for private use,
though it is done sometimes. But in the country, many middling and almost
all rich and great families, brew their own beer. Their strong beer,
therefore, costs them eight shillings a-barrel less than it costs the
common brewer, who must have his profit upon the tax, as well as upon all
the other expense which he advances. Such families, therefore, must drink
their beer at least nine or ten shillings a-barrel cheaper than any liquor
of the same quality can be drank by the common people, to whom it is
everywhere more convenient to buy their beer, by little and little, from
the brewery or the ale-house. Malt, in the same manner, that is made for
the use of a private family, is not liable to the visit or examination of
the tax-gatherer but, in this case the family must compound at seven
shillings and sixpence a-head for the tax. Seven shillings and sixpence
are equal to the excise upon ten bushels of malt; a quantity fully equal
to what all the different members of any sober family, men, women, and
children, are, at an average, likely to consume. But in rich and great
families, where country hospitality is much practised, the malt liquors
consumed by the members of the family make but a small part of the
consumption of the house. Either on account of this composition, however,
or for other reasons, it is not near so common to malt as to brew for
private use. It is difficult to imagine any equitable reason, why those
who either brew or distil for private use should not be subject to a
composition of the same kind.

A greater revenue than what is at present drawn from all the heavy taxes
upon malt, beer, and ale, might be raised, it has frequently been said, by
a much lighter tax upon malt; the opportunities of defrauding the revenue
being much greater in a brewery than in a malt-house; and those who brew
for private use being exempted from all duties or composition for duties,
which is not the case with those who malt for private use.

In the porter brewery of London, a quarter of malt is commonly brewed into
more than two barrels and a-half, sometimes into three barrels of porter.
The different taxes upon malt amount to six shillings a-quarter; those
upon strong ale and beer to eight shillings a-barrel. In the porter
brewery, therefore, the different taxes upon malt, beer, and ale, amount
to between twenty-six and thirty shillings upon the produce of a quarter
of malt. In the country brewery for common country sale, a quarter of malt
is seldom brewed into less than two barrels of strong, and one barrel of
small beer; frequently into two barrels and a-half of strong beer. The
different taxes upon small beer amount to one shilling and fourpence
a-barrel. In the country brewery, therefore, the different taxes upon
malt, beer, and ale, seldom amount to less than twenty-three shillings and
fourpence, frequently to twenty-six shillings, upon the produce of a
quarter of malt. Taking the whole kingdom at an average, therefore, the
whole amount of the duties upon malt, beer, and ale, cannot be estimated
at less than twenty-four or twenty-five shillings upon the produce of a
quarter of malt. But by taking off all the different duties upon beer and
ale, and by trebling the malt tax, or by raising it from six to eighteen
shillings upon the quarter of malt, a greater revenue, it is said, might
be raised by this single tax, than what is at present drawn from all those
heavier taxes.

In 1772, the old malt tax produced......... £722,023: 11: 11
The additional... £356,776: 7: 9¾
In 1773, the old tax produced............... £561,627: 3: 7½
The additional... £278,650: 15: 3¾
In 1774, the old tax produced ............. £624,614: 17: 5¾
The additional....£310,745: 2: 8½
In 1775, the old tax produced ..............£657,357: 0: 8¼
The additional....£323,785: 12: 6¼
4)£3,835,580: 12: 0¾
Average of these four years ............... £958,895: 3: 0

In 1772, the country excise produced.......£1,243,120: 5: 3
The London brewery 408,260: 7: 2¾
In 1773, the country excise................£1,245,808: 3: 3
The London brewery 405,406: 17: 10½
In 1774, the country excise................£1,246,373: 14: 5½
The London brewery 320,601: 18: 0¼
In 1775, the country excise................£1,214,583: 6: 1¼
The London brewery 463,670: 7: 0¼
4)£6,547,832 19: 2¼
Average of these four years ...............£1,636,958: 4: 9½
To which adding the average malt tax........ 958,895: 3: 0¼

The whole amount of those different
taxes comes out to be........£2,595,835: 7: 10

But, by trebling the malt tax,
or by raising it from six to
eighteen shillings upon the quarter
of malt, that single tax would produce.....£2,876,685: 9: 0
A sum which exceeds the
foregoing by.... 280,832: 1: 3

Under the old malt tax, indeed, is comprehended a tax of four shillings
upon the hogshead of cyder, and another of ten shillings upon the barrel
of mum. In 1774, the tax upon cyder produced only £3,083:6:8. It probably
fell somewhat short of its usual amount; all the different taxes upon
cyder, having, that year, produced less than ordinary. The tax upon mum,
though much heavier, is still less productive, on account of the smaller
consumption of that liquor. But to balance whatever may be the ordinary
amount of those two taxes, there is comprehended under what is called the
country excise, first, the old excise of six shillings and eightpence upon
the hogshead of cyder; secondly, a like tax of six shillings and
eightpence upon the hogshead of verjuice; thirdly, another of eight
shillings and ninepence upon the hogshead of vinegar; and, lastly, a
fourth tax of elevenpence upon the gallon of mead or metheglin. The
produce of those different taxes will probably much more than
counterbalance that of the duties imposed, by what is called the annual
malt tax, upon cyder and mum.

Malt is consumed, not only in the brewery of beer and ale, but in the
manufacture of low wines and spirits. If the malt tax were to be raised to
eighteen shillings upon the quarter, it might be necessary to make some
abatement in the different excises which are imposed upon those particular
sorts of low wines and spirits, of which malt makes any part of the
materials. In what are called malt spirits, it makes commonly but a third
part of the materials; the other two-thirds being either raw barley, or
one-third barley and one-third wheat. In the distillery of malt spirits,
both the opportunity and the temptation to smuggle are much greater than
either in a brewery or in a malt-house; the opportunity, on account of the
smaller bulk and greater value of the commodity, and the temptation, on
account of the superior height of the duties, which amounted to 3s. 10
⅔d. upon the gallon of spirits. {Though the duties directly imposed upon
proof spirits amount only to 2s. 6d per gallon, these, added to the duties
upon the low wines, from which they are distilled, amount to 3s 10 ⅔d.
Both low wines and proof spirits are, to prevent frauds, now rated
according to what they gauge in the wash.}

By increasing the duties upon malt, and reducing those upon the
distillery, both the opportunities and the temptation to smuggle would be
diminished, which might occasion a still further augmentation of revenue.

It has for some time past been the policy of Great Britain to discourage
the consumption of spiritous liquors, on account of their supposed
tendency to ruin the health and to corrupt the morals of the common
people. According to this policy, the abatement of the taxes upon the
distillery ought not to be so great as to reduce, in any respect, the
price of those liquors. Spiritous liquors might remain as dear as ever;
while, at the same time, the wholesome and invigorating liquors of beer
and ale might be considerably reduced in their price. The people might
thus be in part relieved from one of the burdens of which they at present
complain the most; while, at the same time, the revenue might be
considerably augmented.

The objections of Dr Davenant to this alteration in the present system of
excise duties, seem to be without foundation. Those objections are, that
the tax, instead of dividing itself, as at present, pretty equally upon
the profit of the maltster, upon that of the brewer and upon that of the
retailer, would so far as it affected profit, fall altogether upon that of
the maltster; that the maltster could not so easily get back the amount of
the tax in the advanced price of his malt, as the brewer and retailer in
the advanced price of their liquor; and that so heavy a tax upon malt
might reduce the rent and profit of barley land.

No tax can ever reduce, for any considerable time, the rate of profit in
any particular trade, which must always keep its level with other trades
in the neighbourhood. The present duties upon malt, beer, and ale, do not
affect the profits of the dealers in those commodities, who all get back
the tax with an additional profit, in the enhanced price of their goods. A
tax, indeed, may render the goods upon which it is imposed so dear, as to
diminish the consumption of them. But the consumption of malt is in malt
liquors; and a tax of eighteen shillings upon the quarter of malt could
not well render those liquors dearer than the different taxes, amounting
to twenty-four or twenty-five shillings, do at present. Those liquors, on
the contrary, would probably become cheaper, and the consumption of them
would be more likely to increase than to diminish.

It is not very easy to understand why it should be more difficult for the
maltster to get back eighteen shillings in the advanced price of his malt,
than it is at present for the brewer to get back twenty-four or
twenty-five, sometimes thirty shillings, in that of his liquor. The
maltster, indeed, instead of a tax of six shillings, would be obliged to
advance one of eighteen shilling upon every quarter of malt. But the
brewer is at present obliged to advance a tax of twenty-four or
twenty-five, sometimes thirty shillings, upon every quarter of malt which
he brews. It could not be more inconvenient for the maltster to advance a
lighter tax, than it is at present for the brewer to advance a heavier
one. The maltster does not always keep in his granaries a stock of malt,
which it will require a longer time to dispose of than the stock of beer
and ale which the brewer frequently keeps in his cellars. The former,
therefore, may frequently get the returns of his money as soon as the
latter. But whatever inconveniency might arise to the maltster from being
obliged to advance a heavier tax, it could easily be remedied, by granting
him a few months longer credit than is at present commonly given to the
brewer.

Nothing could reduce the rent and profit of barley land, which did not
reduce the demand for barley. But a change of system, which reduced the
duties upon a quarter of malt brewed into beer and ale, from twenty-four
and twenty-five shillings to eighteen shillings, would be more likely to
increase than diminish that demand. The rent and profit of barley land,
besides, must always be nearly equal to those of other equally fertile and
equally well cultivated land. If they were less, some part of the barley
land would soon be turned to some other purpose; and if they were greater,
more land would soon be turned to the raising of barley. When the ordinary
price of any particular produce of land is at what may be called a
monopoly price, a tax upon it necessarily reduces the rent and profit of
the land which grows it. A tax upon the produce of those precious
vineyards, of which the wine falls so much short of the effectual demand,
that its price is always above the natural proportion to that of the
produce of other equally fertile and equally well cultivated land, would
necessarily reduce the rent and profit of those vineyards. The price of
the wines being already the highest that could be got for the quantity
commonly sent to market, it could not be raised higher without diminishing
that quantity; and the quantity could not be diminished without still
greater loss, because the lands could not be turned to any other equally
valuable produce. The whole weight of the tax, therefore, would fall upon
the rent and profit; properly upon the rent of the vineyard. When it has
been proposed to lay any new tax upon sugar, our sugar planters have
frequently complained that the whole weight of such taxes fell not upon
the consumer, but upon the producer; they never having been able to raise
the price of their sugar after the tax higher than it was before. The
price had, it seems, before the tax, been a monopoly price; and the
arguments adduced to show that sugar was an improper subject of taxation,
demonstrated perhaps that it was a proper one; the gains of monopolists,
whenever they can be come at, being certainly of all subjects the most
proper. But the ordinary price of barley has never been a monopoly price;
and the rent and profit of barley land have never been above their natural
proportion to those of other equally fertile and equally well cultivated
land. The different taxes which have been imposed upon malt, beer, and
ale, have never lowered the price of barley; have never reduced the rent
and profit of barley land. The price of malt to the brewer has constantly
risen in proportion to the taxes imposed upon it; and those taxes,
together with the different duties upon beer and ale, have constantly
either raised the price, or, what comes to the same thing, reduced the
quality of those commodities to the consumer. The final payment of those
taxes has fallen constantly upon the consumer, and not upon the producer.

The only people likely to suffer by the change of system here proposed,
are those who brew for their own private use. But the exemption, which
this superior rank of people at present enjoy, from very heavy taxes which
are paid by the poor labourer and artificer, is surely most unjust and
unequal, and ought to be taken away, even though this change was never to
take place. It has probably been the interest of this superior order of
people, however, which has hitherto prevented a change of system that
could not well fail both to increase the revenue and to relieve the
people.

Besides such duties as those of custom and excise above mentioned, there
are several others which affect the price of goods more unequally and more
indirectly. Of this kind are the duties, which, in French, are called
peages, which in old Saxon times were called the duties of passage, and
which seem to have been originally established for the same purpose as our
turnpike tolls, or the tolls upon our canals and navigable rivers, for the
maintenance of the road or of the navigation. Those duties, when applied
to such purposes, are most properly imposed according to the bulk or
weight of the goods. As they were originally local and provincial duties,
applicable to local and provincial purposes, the administration of them
was, in most cases, entrusted to the particular town, parish, or lordship,
in which they were levied; such communities being, in some way or other,
supposed to be accountable for the application. The sovereign, who is
altogether unaccountable, has in many countries assumed to himself the
administration of those duties; and though he has in most cases enhanced
very much the duty, he has in many entirely neglected the application. If
the turnpike tolls of Great Britain should ever become one of the
resources of government, we may learn, by the example of many other
nations, what would probably be the consequence. Such tolls, no doubt, are
finally paid by the consumer; but the consumer is not taxed in proportion
to his expense, when he pays, not according to the value, but according to
the bulk or weight of what he consumes. When such duties are imposed, not
according to the bulk or weight, but according to the supposed value of
the goods, they become properly a sort of inland customs or excise, which
obstruct very much the most important of all branches of commerce, the
interior commerce of the country.

In some small states, duties similar to those passage duties are imposed
upon goods carried across the territory, either by land or by water, from
one foreign country to another. These are in some countries called
transit-duties. Some of the little Italian states which are situated upon
the Po, and the rivers which run into it, derive some revenue from duties
of this kind, which are paid altogether by foreigners, and which, perhaps,
are the only duties that one state can impose upon the subjects of
another, without obstruction in any respect, the industry or commerce of
its own. The most important transit-duty in the world, is that levied by
the king of Denmark upon all merchant ships which pass through the Sound.

Such taxes upon luxuries, as the greater part of the duties of customs and
excise, though they all fall indifferently upon every different species of
revenue, and are paid finally, or without any retribution, by whoever
consumes the commodities upon which they are imposed; yet they do not
always fall equally or proportionally upon the revenue of every
individual. As every man’s humour regulates the degree of his consumption,
every man contributes rather according to his humour, than proportion to
his revenue: the profuse contribute more, the parsimonious less, than
their proper proportion. During the minority of a man of great fortune, he
contributes commonly very little, by his consumption, towards the support
of that state from whose protection he derives a great revenue. Those who
live in another country, contribute nothing by their consumption towards
the support of the government of that country, in which is situated the
source of their revenue. If in this latter country there should be no land
tax, nor any considerable duty upon the transference either of moveable or
immoveable property, as is the case in Ireland, such absentees may derive
a great revenue from the protection of a government, to the support of
which they do not contribute a single shilling. This inequality is likely
to be greatest in a country of which the government is, in some respects,
subordinate and dependant upon that of some other. The people who possess
the most extensive property in the dependant, will, in this case,
generally chuse to live in the governing country. Ireland is precisely in
this situation; and we cannot therefore wonder, that the proposal of a tax
upon absentees should be so very popular in that country. It might,
perhaps, be a little difficult to ascertain either what sort, or what
degree of absence, would subject a man to be taxed as an absentee, or at
what precise time the tax should either begin or end. If you except,
however, this very peculiar situation, any inequality in the contribution
of individuals which can arise from such taxes, is much more than
compensated by the very circumstance which occasions that inequality; the
circumstance that every man’s contribution is altogether voluntary; it
being altogether in his power, either to consume, or not to consume, the
commodity taxed. Where such taxes, therefore, are properly assessed, and
upon proper commodities, they are paid with less grumbling than any other.
When they are advanced by the merchant or manufacturer, the consumer, who
finally pays them, soon comes to confound them with the price of the
commodities, and almost forgets that he pays any tax. Such taxes are, or
may be, perfectly certain; or may be assessed, so as to leave no doubt
concerning either what ought to be paid, or when it ought to be paid;
concerning either the quantity or the time of payment. What ever
uncertainty there may sometimes be, either in the duties of customs in
Great Britain, or in other duties of the same kind in other countries, it
cannot arise from the nature of those duties, but from the inaccurate or
unskilful manner in which the law that imposes them is expressed.

Taxes upon luxuries generally are, and always may be, paid piece-meal, or
in proportion as the contributors have occasion to purchase the goods upon
which they are imposed. In the time and mode of payment, they are, or may
be, of all taxes the most convenient. Upon the whole, such taxes,
therefore, are perhaps as agreeable to the three first of the four general
maxims concerning taxation, as any other. They offend in every respect
against the fourth.

Such taxes, in proportion to what they bring into the public treasury of
the state, always take out, or keep out, of the pockets of the people,
more than almost any other taxes. They seem to do this in all the four
different ways in which it is possible to do it.

First, the levying of such taxes, even when imposed in the most judicious
manner, requires a great number of custom-house and excise officers, whose
salaries and perquisites are a real tax upon the people, which brings
nothing into the treasury of the state. This expense, however, it must be
acknowledged, is more moderate in Great Britain than in most other
countries. In the year which ended on the 5th of July, 1775, the gross
produce of the different duties, under the management of the commissioners
of excise in England, amounted to £5,507,308:18:8¼, which was levied at an
expense of little more than five and a-half per cent. From this gross
produce, however, there must be deducted what was paid away in bounties
and drawbacks upon the exportation of exciseable goods, which will reduce
the neat produce below five millions. {The neat produce of that year,
after deducting all expenses and allowances, amounted to £4,975,652:19:6.}
The levying of the salt duty, and excise duty, but under a different
management, is much more expensive. The neat revenue of the customs does
not amount to two millions and a-half, which is levied at an expense of
more than ten per cent., in the salaries of officers and other incidents.
But the perquisites of custom-house officers are everywhere much greater
than their salaries; at some ports more than double or triple those
salaries. If the salaries of officers, and other incidents, therefore,
amount to more than ten per cent. upon the neat revenue of the customs,
the whole expense of levying that revenue may amount, in salaries and
perquisites together, to more than twenty or thirty per cent. The officers
of excise receive few or no perquisites; and the administration of that
branch of the revenue being of more recent establishment, is in general
less corrupted than that of the customs, into which length of time has
introduced and authorised many abuses. By charging upon malt the whole
revenue which is at present levied by the different duties upon malt and
malt liquors, a saving, it is supposed, of more than £50,000, might be
made in the annual expense of the excise. By confining the duties of
customs to a few sorts of goods, and by levying those duties according to
the excise laws, a much greater saving might probably be made in the
annual expense of the customs.

Secondly, such taxes necessarily occasion some obstruction or
discouragement to certain branches of industry. As they always raise the
price of the commodity taxed, they so far discourage its consumption, and
consequently its production. If it is a commodity of home growth or
manufacture, less labour comes to be employed in raising and producing it.
If it is a foreign commodity of which the tax increases in this manner the
price, the commodities of the same kind which are made at home may
thereby, indeed, gain some advantage in the home market, and a greater
quantity of domestic industry may thereby be turned toward preparing them.
But though this rise of price in a foreign commodity, may encourage
domestic industry in one particular branch, it necessarily discourages
that industry in almost every other. The dearer the Birmingham
manufacturer buys his foreign wine, the cheaper he necessarily sells that
part of his hardware with which, or, what comes to the same thing, with
the price of which, he buys it. That part of his hardware, therefore,
becomes of less value to him, and he has less encouragement to work at it.
The dearer the consumers in one country pay for the surplus produce of
another, the cheaper they necessarily sell that part of their own surplus
produce with which, or, what comes to the same thing, with the price of
which, they buy it. That part of their own surplus produce becomes of less
value to them, and they have less encouragement to increase its quantity.
All taxes upon consumable commodities, therefore, tend to reduce the
quantity of productive labour below what it otherwise would be, either in
preparing the commodities taxed, if they are home commodities, or in
preparing those with which they are purchased, if they are foreign
commodities. Such taxes, too, always alter, more or less, the natural
direction of national industry, and turn it into a channel always
different from, and generally less advantageous, than that in which it
would have run of its own accord.

Thirdly, the hope of evading such taxes by smuggling, gives frequent
occasion to forfeitures and other penalties, which entirely ruin the
smuggler; a person who, though no doubt highly blameable for violating the
laws of his country, is frequently incapable of violating those of natural
justice, and would have been, in every respect, an excellent citizen, had
not the laws of his country made that a crime which nature never meant to
be so. In those corrupted governments, where there is at least a general
suspicion of much unnecessary expense, and great misapplication of the
public revenue, the laws which guard it are little respected. Not many
people are scrupulous about smuggling, when, without perjury, they can
find an easy and safe opportunity of doing so. To pretend to have any
scruple about buying smuggled goods, though a manifest encouragement to
the violation of the revenue laws, and to the perjury which almost always
attends it, would, in most countries, be regarded as one of those pedantic
pieces of hypocrisy which, instead of gaining credit with anybody, serve
only to expose the person who affects to practise them to the suspicion of
being a greater knave than most of his neighbours. By this indulgence of
the public, the smuggler is often encouraged to continue a trade, which he
is thus taught to consider as in some measure innocent; and when the
severity of the revenue laws is ready to fall upon him, he is frequently
disposed to defend with violence, what he has been accustomed to regard as
his just property. From being at first, perhaps, rather imprudent than
criminal, he at last too often becomes one of the hardiest and most
determined violators of the laws of society. By the ruin of the smuggler,
his capital, which had before been employed in maintaining productive
labour, is absorbed either in the revenue of the state, or in that of the
revenue officer; and is employed in maintaining unproductive, to the
diminution of the general capital of the society, and of the useful
industry which it might otherwise have maintained.

Fourthly, such taxes, by subjecting at least the dealers in the taxed
commodities, to the frequent visits and odious examination of the
tax-gatherers, expose them sometimes, no doubt, to some degree of
oppression, and always to much trouble and vexation; and though vexation,
as has already been said, is not strictly speaking expense, it is
certainly equivalent to the expense at which every man would be willing to
redeem himself from it. The laws of excise, though more effectual for the
purpose for which they were instituted, are, in this respect, more
vexatious than those of the customs. When a merchant has imported goods
subject to certain duties of customs; when he has paid those duties, and
lodged the goods in his warehouse; he is not, in most cases, liable to any
further trouble or vexation from the custom-house officer. It is otherwise
with goods subject to duties of excise. The dealers have no respite from
the continual visits and examination of the excise officers. The duties of
excise are, upon this account, more unpopular than those of the customs;
and so are the officers who levy them. Those officers, it is pretended,
though in general, perhaps, they do their duty fully as well as those of
the customs; yet, as that duty obliges them to be frequently very
troublesome to some of their neighbours, commonly contract a certain
hardness of character, which the others frequently have not. This
observation, however, may very probably be the mere suggestion of
fraudulent dealers, whose smuggling is either prevented or detected by
their diligence.

The inconveniencies, however, which are, perhaps, in some degree
inseparable from taxes upon consumable communities, fall as light upon the
people of Great Britain as upon those of any other country of which the
government is nearly as expensive. Our state is not perfect, and might be
mended; but it is as good, or better, than that of most of our neighbours.