Chapter XXI: Taxation, Revenue, and Expenditure

At the beginning of every year the Soudan Budget, with the estimates of receipts and expenditure for the year, has to be submitted to the Egyptian Council of Ministers. The total amount to be granted to the Soudan from the Egyptian revenues is then decided, and any consequent alterations in the Budget made. The Governor-General and the Financial Secretary are responsible for seeing that the total sum so granted by Egypt is not exceeded, but while this limit is observed, credits can be transferred from one head to another without reference to Cairo. Any special or unforeseen expenditure can be defrayed by Egypt by special grants sanctioned by the Egyptian Council of Ministers, and the Egyptian Minister of Finance has at all times the right of inspection, audit, and supervision of the Soudan Government accounts. Practically, of course, this means that the finances of the Soudan are subject to the control of the British Financial Secretary and the British Consul-General at Cairo, but that the Soudan Government exercises a very wide discretion as to the disposal of its revenues once realized.

The revenues of the Soudan are therefore at present made up from three sources: first, taxation, fees, licenses, etc.; secondly, the receipts of certain earning departments—_e.g._, railway, steamers, post, and telegraphs; and thirdly, the contribution from Egypt. Of these the third is still, it must be confessed, the most important, but the first is steadily growing. Strictly speaking, the second should not be included, for although the earnings of these departments are materially increasing, and although without them very little could be done, their annual accounts do not as yet show a profit, for various reasons that will be explained.

The principles of taxation are not new. Many of the taxes are the same in kind as those which were formerly in force not only under Egyptian rule, but also under the Khalifa’s. It was wisely decided that no innovations should be introduced based on Western notions, unless they were unavoidable. The taxes are of a kind to which the people have long been accustomed, but, of course, great care is taken that they shall be fixed at a moderate rate, and that no one shall pay more than is actually required by law. It was the uncertainty of the amount to be paid, the illegal imposts levied by the collector on his own account, and the dates at which they were collected, that made the old taxes so often cruel and ruinous. The uncertainty of the amount to be paid had, however, an attraction for the Oriental. It varied with the circumstances of the year. The Government wished to get all they could, and in a good year they exacted a most excessive amount; but in a bad year they took little or nothing at all. According to the Western system a fixed moderate amount has to be paid every year, and a whole or partial failure of the crop is not considered any excuse. The latter system is, of course, far the most just and economically sound, but it lacks the elasticity of the other. It is the constant endeavour of European administrators in Oriental countries to endeavour to combine the advantages of both systems. In the Soudan the system of petitions direct to the Governor-General is a means to secure this result. When adequate cause is shown, he is able to remit taxation wholly or partly, and there have been several cases in which he has done so, notably in Berber and Dongola Provinces in 1900, when the low Nile caused a great deal of land to be thrown out of cultivation. Of course, such remissions are inclined to play havoc with a Budget framed on careful estimates. It cannot be helped, and at any rate it is only one of many difficulties which have to be encountered in balancing a Soudan Budget. Unforeseen expenditure often becomes necessary, but happily during the last two or three years the receipts have been increasing unexpectedly also.

Although the taxes remain the same in principle, a comparison with the former state of things shows the difference in the methods of assessment and collection to be so great as to amount to a revolution. Then, as now, the Government in the Soudan was, according to the general rule in the East, the admitted owner of the soil, and the cultivator had to pay a tax amounting to one-tenth of the produce for its use. The actual sum to be paid included all other taxes, as house-tax, animal-tax, and so on. Each district was rated at so much in the Budget; this sum was divided among the villages and communes until the individual cultivator was reached. The nomad and other tribes which did not cultivate the soil were assessed at an annual tribute, according to their wealth in camels, cattle, and horses. In Berber and Dongola the tax was not on the produce of the land, but on the instruments of irrigation. It varied according to the instrument and according to the quality of land. One sakieh was calculated to be capable of watering 8 acres, and if more land was cultivated an increase was made in the tax. It has already been mentioned how these water-wheels were often taxed in a sum far beyond their possible earning capacity. It was the same with the assessment of the districts and the tribute of the tribes. The official estimates were seldom or never realized as far as the public exchequer was concerned (although the bullying tax-collectors took much more for themselves). Arrears accumulated, in spite of every effort, and became a direct incentive to discontent and revolt. In the year 1879 the deficiencies of the amounts actually received below those estimated ranged in the different provinces from 10 to 60 per cent. The figures of the Budget were, in fact, pure fancy, especially when the country was disturbed. But the thing was even worse than it looked. Districts and tribes, though they might not pay all that was asked, paid a great deal more than they could afford, and consequently, as the money had to be found somehow, they found it by indulging in the only prosperous trade—that of slavery. In other words, the Soudan lived largely by expending its capital.

Owing to the alteration in the boundaries of the Soudan, it is somewhat difficult to calculate what the amount raised in taxation from the present territories amounted to. As nearly as can be made out, it was about £360,000 a year nominally, with a nominal deficit on the whole administration in the same provinces of £70,000 a year. Absolutely nothing was spent in the development of the country; salaries, rations, and clothes for the army of occupation made up almost the whole of the expenditure.

As compared to this, the actual sums raised in the Soudan by taxation during the last four years have been as follows:

£E.

1900 95,000

1901 155,000

1902 190,000

1903 200,000[7]

But the conditions are so different that nothing can really be deduced from this comparison. The figures show clearly that the country is advancing steadily. The burden is lightly borne. It would be very easy to exact far more than this without any positive discontent, but it would be a most unwise policy to do so, for it would be at the expense of its future progress.

The taxes are no longer assessed by the district. The tribute from the nomad tribes is the only exception to the rule that the Government deals directly with the individual taxpayer. They are no longer collected by irregular and irresponsible bullies; they are payable at the most convenient seasons, and they are moderate in amount. So great a difference in detail is almost a difference in principle; but the names are the same. Of the whole collected the receipts from land-tax and ushur are about a quarter—_i.e._, about £50,000 a year. The land-tax proper is no longer levied according to the instruments of irrigation, but, as in Egypt, according to the acreage and situation of the irrigated fields. Land irrigable by wells and foreshore land irrigable by flood pays 20 piastres (4s.) per acre; land on the mainland irrigable by water-wheels and shadoofs, 30 to 40 piastres; and land on islands similarly irrigable, 50 to 60 piastres. All other lands—that is to say, lands which depend for their water-supply not on irrigation, but on rainfall—are taxed at the rate of 10 per cent. _ad valorem_ on their produce. This tithe is called ushur. At first it was paid almost entirely in kind, but it is now collected as far as possible in money, and, as the money in circulation increases, payment in kind—a most inconvenient form of payment—will be altogether abolished. The date-tax—2 piastres (5d.) on every date-palm that has begun to bear fruit—is akin to the land-tax. It produces some £15,000 a year.

The land-tax in some form will be the staple of the future revenues of the Soudan. Every year as population increases and more land comes under cultivation it will form a larger proportion of the total receipts. In many of the remote parts of the country, owing to the great distances and the small number of officials, it is hardly yet in working order, but with improved organization all may be expected to bear their just share of taxation, and the receipts will benefit accordingly. Any large scheme of irrigation and cotton culture will, of course, send up this branch of revenue by leaps and bounds. Second in importance to the land-tax, and for the time being exceeding it, come the royalties charged on exports of gum, ostrich-feathers, ivory, india rubber, and a few other articles, at the rate of 20 per cent. by weight. The extraordinary growth of the gum-trade is mainly responsible for this item, which makes up another quarter of the taxation revenue. Ivory receipts can hardly be expected to come to very much, but ostrich-feathers and rubber will probably show a marked increase in future years.

Other minor receipts were estimated in the Budget for 1902 as follows:

£E.

Animal-tax 9,500

Tribute from tribes 8,000

Ferries and fisheries 4,000

Sale of salt 1,530

Stamped paper 1,200

Customs 5,400

Slaughtering dues and market fees 5,200

Road-tax 2,000

Rent of Government lands 1,300

Boat-tax 1,000

All these taxes are familiar in the Soudan. Some of them, especially those small in their results—and there are a good number more of less importance than those named—will probably be abolished as soon as the country is able to stand the immediate loss. But as yet even the most objectionable in principle do not act as restrictions to trade. They only distribute the burden of a very light taxation, so as to make all classes contribute something, and the Government is still so poor that even a few hundred pounds are of very great importance.

The Customs are set down as producing only £E5,400, and this demands a word of explanation. £4,500 of this is taken at the port of Suakin, the remainder on the land frontier in Kassala and Sennar. The Customs on the land side, small as they are, show a steady increase; those at Suakin have been constantly decreasing, as trade is more and more diverted to the Nile Valley route. But all Customs duties on goods coming to the Soudan on this side are levied at the Egyptian ports, and retained by Egypt. The duties are 20 per cent. per kilo on tobacco, and 8 per cent. _ad valorem_ on all other goods. In the year 1903 it is estimated that the sum thus retained by Egypt will amount to £E70,000, but this has not been taken into account in calculating the Soudan revenues.

As for the profit-earning departments, their profits are as yet invisible—invisible, that is, as far as their accounts are concerned, though visible enough in the increasing prosperity of the country. Still, the actual takings of the railway and the post and telegraphs mark progress. They stand for three years:

_Railways._ _Post and Telegraphs._

£E. £E.

1900 38,412 7,900

1901 75,808 9,000

1902 85,000[8] 11,000[8]

But these receipts are far from being any criterion of the actual amount of work done. They exclude all that was done on Government account. Up till 1903 all passengers, goods, and messages on behalf of Government were carried free of charge. But it was found that this system tended to extravagance. A department, for example, wishing to buy dhurra for Khartoum, was apt to buy it at Dongola, possibly at a cheaper rate, and have it brought by rail for nothing, rather than buy it locally and disburse something for the cost of local camel or mule transport. This was good business for the department, which had only a certain credit allotted to it, but waste from the point of view of the railway, by which the cost of transport was borne. Now each department is charged in the books of the railway or post-office for all services actually rendered. The change is, of course, only one of book-keeping, but it is a good instance of the way in which good book-keeping works towards economy. With this alteration the working of the profit-earning departments makes a much better appearance. The estimates for 1903 are:

_Receipts._ _Expenditure._

£E. £E.

Railways 143,970 143,777

Post and telegraphs 24,428 34,800

Steamers and boats 69,028 86,223

The maintenance of the army in the Soudan is the item most affected by this alteration. The sum to be paid to the Egyptian War Department is set down at £E193,658 for 1903 as against £E122,548 for 1902.

The Steamers and Boats Department has been too recently organized for an opinion to be formed upon its working, but the Railways are soundly and economically managed. The increase of traffic has made it possible to reduce the ratio of working expenses, though the high price of fuel is still a great obstacle. Besides the ordinary expenditure there has also been a good deal of capital expenditure, which was very necessary considering the haste with which the line was laid down as a purely military railway. These sums are: In 1899, a special credit of £E390,000 for the completion of the line from the Atbara to Khartoum; in 1900, a special credit of £E15,000 for culverts and bridges on the same portion of the line, and a loan of £E55,000 for general development and purchase of rolling-stock; and in 1902-1903, a loan of £E528,000 (spread over five years) for the same purposes; and a special advance of £10,000 for the survey of the proposed Suakin-Berber line. All these sums, together with an advance of £E31,000 for the improvement of the harbour at Suakin, have been found by Egypt. The Soudan pays 2½ per cent. on the loans.

The nature of the country makes it inevitable that the postal service should show a loss for some time; but the telegraph service would show a profit over actual working expenses, but for the fact that so much is expended every year on extension, and this is credited to ordinary expenditure. £E18,500 was, however, borrowed from Egypt in 1900 to meet a special difficulty. The wooden poles were sometimes devoured by white ants, and were also liable to rot. After various experiments it was found best to bolt the poles on to steel bases, and it was to meet this emergency that the loan was contracted. The new plan has been found to answer admirably, and it has also facilitated telegraph extension, because the shorter poles (12 ft. 6 in. instead of 18 ft.) make a much more convenient load for a camel. Besides the wires along the railway, there is now telegraphic communication from Berber to Suakin, Suakin by Tokar to Kassala, Kassala to Gedaref, and Gedaref to Gallabat. A line from Gedaref connects at Messalamia with a line down the Blue Nile from Khartoum by Wad Medani to Sennar, which then crosses over to Goz Abu Goma on the White Nile, and is continued to Fashoda. Another line runs from Khartoum to Duem, on the White Nile, and thence to El Obeid. In time the telegraph will be continued south to Uganda, and whenever this takes place the telegraph tariff convention arranged by Mr. Cecil Rhodes for through communication between Alexandria and Cape Town will come into force.

If the gross takings of the railways, post and telegraphs, and boats, are included in the revenues of the Soudan, the Budget wears a more imposing aspect than if only the net expenditure of each of these departments is included. The estimates for 1903 stand thus:

£E. £E.

Expenditure—Civil 624,226

Military 193,658
-------
817,884

Receipts 428,163
-------
Deficit 389,721

By starving the administration it would be possible to make this deficit a great deal less, and, on the other hand, it would be very easy to make it a great deal more. A country which has been going steadily, even rapidly, backwards for so many years affords unlimited opportunity for capital expenditure. Indeed, a large part of its ordinary expenditure is really capital, so far as it is incurred for permanent buildings, railways, telegraphs, and all the other machinery, not only of government, but of elementary civilization, which were all entirely wanting. The item of public works bulks very large in the civil expenditure. It is inevitable that the expenditure should increase with the development of the country, but it is a satisfactory symptom that it is not increasing so fast in proportion as the revenue. The civil expenditure, too, goes up, while the military expenditure goes down. In the following table only the net expenditure on railways, etc., is included:

EXPENDITURE.

_Civil._ _Military _Total._
(including
Gunboats, etc.)_

£E. £E. £E.

1899 230,000 281,000 511,000

1900 271,000 282,000 553,000

1901 330,000 222,000 552,000

1902 350,000 193,000 543,000

1903 380,000 193,000 573,000

The richer provinces in the Soudan might prosper very much faster if they were allowed to devote the whole of their own revenues to the development of their own resources. But, of course, the whole receipts have to go into the common purse, and then be doled out again in the interests of the country as a whole. Naturally, there is a tremendous fight every year between the Mudirs, who are responsible for the provincial budgets, and the central Treasury. Two provinces stand out prominently in the matter of profits—Kordofan and Dongola. Dongola had pride of place at first, but then Kordofan passed in a stride, through the revival of the gum trade. But Dongola is still a good second, in spite of her railway difficulties, through the date-tax and the land-tax. Two-thirds of the whole amount raised by this latter tax is supplied by her. Halfa Province, or, rather, District, also shows a good profit by means of the land and date taxes. The Ghezireh Province, the kernel of the Soudan, makes a favourable appearance. Sennar just pays its way. The others all show a deficit. Khartoum, of course, stands in a different category, as also Suakin. But Berber and Kassala may soon be expected to redeem themselves. Fashoda is as yet very undeveloped, and naturally the Bahr el Ghazal, only just occupied, comes well at the bottom of the list. That this order of financial merit will be maintained unchanged is most unlikely.

It will be noticed that the estimated deficit for 1903 was some £E390,000, and this is Egypt’s contribution towards the current expenses of the year. The same sum was contributed in 1902, and it has been agreed that this subsidy shall be continued at the same figure for some years to come. The approximate amounts so expended in former years were: 1899, £E385,000; 1900, £E417,000; and the same in 1901. On the basis of this contribution, which is called ‘Insuffisance,’ the estimates for the Soudan are drawn up. Considering all the difficulties in the way of accurate calculations, it speaks well for the Soudan officials that their expectations have been so nearly realized. In 1899 and 1900, when the accounts were finally made up, there were found to be deficits of £E23,000 and £E40,000. But in 1901 the finances of the country took a great turn for the better, and, although expenditure exceeded the estimate, this excess was so much overbalanced by unforeseen increase of receipts that sufficient surpluses were realized in 1901 and 1902 to make good the deficiencies of the two previous years. During the years 1899-1903 Egypt has therefore expended close upon £2,000,000 in these annual grants; she has also paid over, partly as special credits and partly as loans, another £1,000,000 for capital expenditure on railways and telegraphs, as already mentioned. There are deductions to be made from this sum of £3,000,000 in calculating the actual cost imposed on Egypt by the Soudan; but as these are the actual amounts on which the Soudan Budget is calculated, they must be set down here.

It sounds, perhaps, a strange thing to say that the Soudan finances are in a sound condition when such sums have to be contributed by Egypt, but such is certainly the fact. The great feature is the recuperative power of the country, so markedly displayed since 1901, and there can be no doubt that if, with Egypt’s help, the two principles of low taxation and irrigation can be steadily applied, they will produce, if not as great, yet a similar result to that which they have produced in Egypt itself.