An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗
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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 ascertnining, 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 exigencie’s 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 discouragmnent 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 materiais 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 relanded 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:9�d. 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 diminutiun 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,
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