An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗
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are naturally cheap, they are consumed duty free ; where they are
naturally dear, they are loaded with a heavy duty.
Such taxes, though they raise the price of subsistence, and
consequently the wages of labour, yet they afford a considerable
revenue to government, which it might not be easy to find in any
other way. There may, therefore, be good reasons for continuing
them. The bounty upon the exportation of corn, so far us it
tends, in the actual state of tillage, to raise the price of that
necessary article, produces all the like bad effects ; and
instead of affording any revenue, frequently occasions a very
great expense to government. The high duties upon the importation
of foreign corn, which, in years of moderate plenty, amount to a
prohibition; and the absolute prohibition of the importation,
either of live cattle, or of salt provisions, which takes place
in the ordinary state of the law, and which, on account of the
scarcity, is at present suspended for a limited time with regard
to Ireland and the British plantations, have all had the bad
effects of taxes upon the necessaries of life, and produce no
revenue to government. Nothing seems necessary for the repeal of
such regulations, but to convince the public of the futility of
that system in consequence of which they have been established.
Taxes upon the necessaries of life are much higher in many other
countries than in Great Britain. Duties upon flour and meal when
ground at the mill, and upon bread when baked at the oven, take
place in many countries. In Holland the money-price of the:
bread consumed in towns is supposed to be doubled by means of
such taxes. In lieu of a part of them, the people who live in the
country, pay every year so much a-head, according to the sort of
bread they are supposed to consume. Those who consume wheaten
bread pay three guilders fifteen stivers; about six shillings and
ninepence halfpenny. Those, and some other taxes of the same
kind, by raising the price of labour, are said to have ruined the
greater part of the manufactures of Holland {Memoires concernant
les Droits, etc. p. 210, 211.}. Similar taxes, though not quite
so heavy, take place in the Milanese, in the states of Genoa, in
the duchy of Modena, in the duchies of Parma, Placentia, and
Guastalla, and the Ecclesiastical state. A French author {Le
Reformateur} of some note, has proposed to reform the finances of
his country, by substituting in the room of the greater part of
other taxes, this most ruinous of all taxes. There is nothing so
absurd, says Cicero, which has not sometimes been asserted by
some philosophers.
Taxes upon butcher’s meat are still more common than those upon
bread. It may indeed be doubted, whether butcher’s meat is any
where a necessary of life. Grain and other vegetables, with the
help of milk, cheese, and butter, or oil, where butter is not to
be had, it is known from experience, can, without any butcher’s
meat, afford the most plentiful, the most wholesome, the most
nourishing, and the most invigorating diet. Decency nowhere
requires that any man should eat butcher’s meat, as it in most
places requires that he should wear a linen shirt or a pair of
leather shoes.
Consumable commodities, whether necessaries or luxuries, may be
taxed in two different ways. The consumer may either pay an
annual sum on account of his using or consuming goods of a
certain kind; or the goods may be taxed while they remain in the
hands of the dealer, and before they are delivered to the
consumer. The consumable goods which last a considerable time
before they are consumed altogether, are most properly taxed in
the one way ; those of which the consumption is either immediate
or more speedy, in the other. The coach-tax and plate tax are
examples of the former method of imposing ; the greater part of
the other duties of excise and customs, of the latter.
A coach may, with good management, last ten or twelve years. It
might be taxed, once for all, before it comes out of the hands of
the coachmaker. But it is certainly more convenient for the
buyer to pay four pounds a-year for the privilege of keeping a
coach, than to pay all at once forty or fortyeight pounds
additional price to the coachmaker ; or a sum equivalent to what
the tax is likely to cost him during the time he uses the same
coach. A service of plate in the same manner, may last more
than a century. It is certainly-easier for the consumer to
pay five shillings a-year for every hundred ounces of plate, near
one per cent. of the value, than to redeem this long annuity at
five-and-twenty or thirty years purchase, which would enhance the
price at least five-and-twenty or thirty per cent. The
different taxes which affect houses, are certainly more
conveniently paid by moderate annual payments, than by a heavy
tax of equal value upon the first building or sale of the house.
It was the well-known proposal of Sir Matthew Decker, that all
commodities, even those of which the consumption is either
immediate or speedy, should be taxed in this manner; the dealer
advancing nothing, but the consumer paying a certain annual sum
for the licence to consume certain goods. The object of his
scheme was to promote all the different branches of foreign
trade, particularly the carrying trade, by taking away all duties
upon importation and exportation, and thereby enabling the
merchant to employ his whole capital and credit in the purchase
of goods and the freight of ships, no part of either being
diverted towards the advancing of taxes, The project, however, of
taxing, in this manner, goods of immediate or speedy consumption,
seems liable to the four following very important objections.
First, the tax would be more unequal, or not so well proportioned
to the expense and consumption of the different contributors, as
in the way in which it is commonly imposed. The taxes upon ale,
wine, and spiritous liquors, which are advanced by the dealers,
are finally paid by the different consumers, exactly in
proportion to their respective consumption. But if the tax were
to be paid by purchasing a licence to drink those liquors, the
sober would, in proportion to his consumption, be taxed much more
heavily than the drunken consumer. A family which exercised great
hospitality, would be taxed much more lightly than one who
entertained fewer guests. Secondly, this mode of taxation, by
paying for an annual, halfyearly, or quarterly licence to
consume certain goods, would diminish very much one of the
principal conveniences of taxes upon goods of speedy consumption;
the piece-meal payment. In the price of threepence halfpenny,
which is at present paid for a pot of porter, the different taxes
upon malt, hops, and beer, together with the extraordinary profit
which the brewer charges for having advanced than, may perhaps
amount to about three halfpence. If a workman can conveniently
spare those three halfpence, he buys a pot of porter. If he
cannot, he contents himself with a pint; and, as a penny saved is
a penny got, he thus gains a farthing by his temperance. He pays
the tax piece-meal, as he can afford to pay it, and when he can
afford to pay it, and every act of payment is perfectly
voluntary, and what he can avoid if he chuses to do so. Thirdly,
such taxes would operate less as sumptuary laws. When the licence
was once purchased, whether the purchaser drunk much or drunk
little, his tax would be the same. Fourthly, if a workman were to
pay all at once, by yearly, halfyearly, or quarlerly payments, a
tax equal to what he at present pays, with little or no
inconveniency, upon all the different pots and pints of porter
which he drinks in any such period of time, the sum might
frequently distress him very much. This mode of taxation,
therefore, it seems evident, could never, without the most
grievous oppression, produce a revenue nearly equal to what is
derived from the present mode without any oppression. In several
countries, however, commodities of an immediate or very speedy
consumption are taxed in this manner. In Holland, people pay so
much a-head for a licence to drink tea. I have already mentioned
a tax upon bread, which, so far as it is consumed in farm houses
and country villages, is there levied in the same manner.
The duties of excise are imposed chiefly upon goods of home
produce, destined for home consumption. They are imposed only
upon a few sorts of goods of the most general use. There can
never be any doubt, either concerning the goods which are subject
to those duties, or concerning the particular duty which each
species of goods is subject to. They fall almost altogether upon
what I call luxuries, excepting always the four duties above
mentioned, upon salt, soap, leather, candles, and perhaps that
upon green glass.
The duties of customs are much more ancient than those of excise.
They seem to have been called customs, as denoting customary
payments, which had been in use for time immemorial. They appear
to have been originally considered as taxes upon the profits of
merchants. During the barbarous times of feudal anarchy,
merchants, like all the other inhabitants of burghs, were
considered as little better than emancipated bondmen, whose
persons were despised, and whose gains were envied. The great
nobility, who had consented that the king should tallage the
profits of their own tenants, were not unwilling that he should
tallage likewise those of an order of men whom it was much less
their interest to protect. In those ignorant times, it was
not understood, that the profits of merchants are a subject not
taxable directly ; or that the final payment of all such taxes
must fall, with a considerable overcharge, upon the consumers.
The gains of alien merchants were looked upon more unfavourably
than those of English merchants. It was natural, therefore.
that those of the former should be taxed more heavily than those
of the latter. This distinction between the duties upon
aliens and those upon English merchants, which was begun from
ignorance, has been continued front the spirit of monopoly, or in
order to give our own merchants an advantage, both in the home
and in the foreign market.
With this distinction, the ancient duties of customs were imposed
equally upon all sorts of goods, necessaries as well its
luxuries, goods exported as well as goods imported. Why should
the dealers in one sort of goods, it seems to have been thought,
be more favoured than those in another ? or why should the
merchant exporter be more favoured than the merchant importer?
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
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