Its correct and just assessment impossible. Taxing the interest paid on the National Debt. 88 neither the leisure for, nor perhaps the means of, exposing the flagrant injustice and grave impolicy of this tax as it affects them individually. Actuaries and others accustomed to careful analysis and computation of financial facts seem generally of opinion that income is not by itself a fair basis for taxation, and must be considerably qualified before it can be fairly assessed; and though some witnesses of this class before the Income Tax Committees were betrayed into proposing schemes of their own, calculated on the values of average lives and various kinds of income, &c. (natural with men daily occupied in such questions, however ill adapted such speculative values must be to serve as bases for taxation), yet they almost unanimously concurred in condemning the principle of the Income Tax. The difficulty is to find any sure and solid basis for assessment in such a shifting, uncertain, involved element as a man's true income; for example, in Schedule D alone there are at least six different methods employed in assessing the tax payable on various conditions and kinds of income. The simple fact of the matter appears to be this: that income, if gross income, is an utterly unfair basis for taxation; and if net real income or profits, it is an utterly impracticable basis for it. The tax being assessed on income instead of on property, there is also a greater chance of evasions in cases of incomes of minors accumulating till they come of age. This plan of taxing income has landed the Government in the obvious impropriety of deducting income tax from the interest it pays for loans borrowed by itself; that is, the debtor taxes the creditor upon the interest received for his loan! "Preposterous!" said Mr. Joseph Hume in discussing the matter. The charge is none the less objectionable because in this case the debtor is in the unwonted position of being able to enforce the payment of it. A distinction is indeed made in not exacting the tax from the public funds held by foreign Ambassadors resident here, for it would really look too bad to do so. The property, for which a man under ordinary circumstances rightly pays the State for its protection, is borrowed and taken into possession by Government, and soon is represented by buildings, fortincations, guns, ironclads, land, &c., the only proof of his right to the value lent being an inscription of his name on a record of debts, and yet he has to pay tax on the interest received for the use of the money he lent, the tax so imposed on him actually providing in a large degree the revenue needed to pay such interest to himself! * Mr. P. Urquhart well exposed the unbecoming character of this charge, comparing it to a Mortgagee being taxed to assist his Debtor to pay the interest on the sum lent to the Mortgagee; but the theory of an income tax logically requires that this course should be followed. a Constant Income Taxes hostility to wherever and whenever It must be observed that no tax has raised more general and violent hostility to it than this one. The expression "Ce tribut détestable" of the noted French economist Du Puynode finds corresponding echo in the language of other European nations imposed. that have suffered from an income tax. In the United States they will not endure one. M. De Parieu in one of his works relates that a German Prince said in his presence "the French have suffered too many revolutions to have an income tax." A recent attempt at introducing one has been ineffectual. The City of London, in 1802, publicly demanded the repeal of the Income Tax as inquisitorial, hostile to both morality and liberty, hurtful to commerce, and unjust by the confusion arising between certain and precarious incomes, and these reasons were reproduced in 1812 and 1816. I have already referred to the intense antipathy felt against the tax about those times; yet the same principle remains in the present tax, the great difference being that the rate is not so high now as then (1816), namely, 10 per cent. It is probably owing to promises of reductions and to the rate of the tax being kept low that the British public has been induced to suffer its crude injustice so long. A further increase in its rate would doubtless be the signal for more strenuous efforts to get rid of the tax altogether. It has been well remarked that "a just Income Tax would *Under the Land Tax Act of 1697, interest on Loans to "His Majesty" the King was exempted from taxation. +"Dialogues on Taxation," by P. Urquhart, M.P.-page 71. De Parieu on the principle of taxing net incomes. require angels for Commissioners and, further, angels for its collectors." I will conclude by stating the opinion of M. De Parieu on the principle of taxing net incomes.* "The basis of this theory (identical with that which attempts to distinguish in the means of an individual the superfluity in excess of his needs) consists in endeavouring to effect by taxation a perfectly and absolutely equal contribution from each taxpayer. I oppose to this principle a double objection. A rigorous application of it is impossible, and it necessarily involves a deviation more or less from the principle of an income tax. "To attain the desired result in accordance with the spirit of the theory it would be necessary to ascertain as matters of fact the family expenses, the chances of life, in short, all the infinite details which cause differences in the nature of the property and the expenses of the contributors. The first steps taken in this exact calculation of all the refined elements affecting the means of an individual would lead to the discovery of an abstract and singularly complicated value, having relation at one and the same time to the capital, the income, and the necessary expenses of the taxpayer." The above is in fact the process that would really be necessary in order to assess with justice each true net income, and establish a basis for its equitable taxation; and such a system would seem to be beyond the capacity and proper sphere of inquiry of any Local, Provincial, or Imperial Governing Body. This is the last of the Imperial taxes, but before proceeding to deal with Tithes and Teinds, which hold a mediate position between Imperial and Local Taxation, I must notice some other revenues included in the Imperial Budget, not, strictly speaking, taxes, but which under certain conditions might partially assume the nature of taxes. * "Traite des Impôts "-p. 495 (the passage is translated by the present writer). OTHER IMPERIAL REVENUES, NOT PROPERLY TO BE REGARDED AS TAXATION. The Post Office and Telegraph Revenues are, under ordinary Postal and circumstances, to be viewed as simply repayments for specific Telegraph Revenues. services directly performed for such of the general Public as need them, the tacit understanding between them and their Agent-the Government-being, that such services are to be conducted as nearly as possible at cost price. But a net profit of £2,931,728* in 1884-5, and some such sum for many preceding years, has been going on, and this may rightly be regarded as taxation, perhaps as unwise taxation, considering that foreign nations are establishing much cheaper postal and parcel communications with our Colonies and foreign nations having commercial relations with this country, and in some cases snperseding our Mail Packet Services in their, accustomed lines of operation. In other words our Postal and Packet Service is being starved, and the nation taxed to supply revenue for other services than that to which it should properly go. The rate of postage, &c., too, between most of our Colonies and dependencies and this country, might possibly be reduced with advantage. Revenues, The Woods and Forests Revenues, the Hereditary Revenues The Crown of the Crown, and other like receipts in the nature of Rents, may be converted into taxes by being forced upwards into rackrents. Both public and private Royalties, Way Rents, &c., payable in respect of Mines, and the output of mines, are very susceptible of this process, and such fixed charges may, under various circumstances, become an intolerable hindrance to enterprise, and the employment of labour in a district. * See Statistical Abstract -p. 13; but the Appropriation Accounts, Civil Services, &c., show (pp. 548-57) that the net revenue from Postal and Telegraph Business, after all final charges were deducted, was only £2,583,232. Profits from trolled Busi- Fees and Other Receipts in the form of Credits to Expense Services. Irregularity in respect of the revenue from Bankruptcy Fee Stamps. Then there are certain profits derived from businesses in which the State acts as Controller, if not as "Sleeping Partner" such as the Bank of England Note Issue Profits, Trustees' Savings Banks' Profits, and the net profit from the Patent Office Fees after deducting the expenses of the Patent Office. The same remark applies to these last named profits, as to the excessive Post Office profits, for it is very questionable policy to derive so large a gain as was made in 1884—5—£48,485 -from those unfortunate people who are inventors, and take out patents for their inventions. There is next a long list of fees received in the Courts and Offices connected with the Legal, Civil Service, and certain Local Government Offices in the nature of repayments for definite services or advantages, directly, or presently, to be rendered to the suitors or other applicants for such services. If these services are obligatory, but really useless and unnecessary, payment for them is of course nothing less than a tax; but presuming that the services are really valuable, and the fees or charges reasonable and fair, and that the services could not be as satisfactorily, and at less cost, supplied by other agency, of course they cannot be so regarded. There are many other items among the Miscellaneous Receipts, which are nothing else than credits to the services with which they correspond, and they one and all should be dealt with in the same way as Extra Receipts to the credit of the Army and Navy Budgets are treated, by creating a Civil Service Budget with its various votes, and estimates of probable Extra Receipts and Repayments. Interest received for Loans to Local Bodies has lately been eliminated, and in future will appear in its appropriate place. There is an anomaly in a matter of account that may be noticed here. The amount of revenue from Bankruptcy Court Fee Stamps, England, is not paid into the Exchequer and shown in the Finance Accounts like the other Fee Stamps are, but, in rather an obscure fashion, is paid into a separate suspense account kept by the Paymaster-General; and the Board of Trade, by requisitions on the Treasury, draw upon this suspense account * Some arrangement of the kind seems now to be in course of adoption. |