It is not merely a matter of historical interest, but it has very distinctly to do with the argument in favour of local option, to show that the magistrates for four centuries have had committed to them the duty of seeing that the needs of the district were no more than satisfied. In 1496, a statute directed "against vacabounds and beggers"
empowered two justices of the peace "to rejecte and put awey comen ale-selling in tounes and places where they shall think convenyent;" and in 1552 another Act confirmed this exercise of authority. In 1622, the Privy Council peremptorily directed the local justices to suppress "unnecessary alehouses;" and in 1635 the Lord Keeper, in his charge to the judges in the Star Chamber previous to their going circuit, denounced alehouses as "the greatest pests in the kingdom," and added this significant hint: "In many places they swarm by default of the justices of the peace, that set up too many; but if the justices will not obey your charge therein, certify their default and names, and I a.s.sure you they shall be discharged. I once did discharge two justices for setting up one alehouse, and shall be glad to do the like again upon the same occasion."
These facts show that the theory upon which our licensing system has grown up is that the wants of a locality shall be strictly borne in mind, and of late years the wishes of a locality have more and more been considered. No one would deny that magistrates as a whole pay greater attention to those wishes to-day than they were accustomed to do even as recently as fifteen years ago; and when new licences are applied for memorials against their grant, signed by the inhabitants, are allowed to have considerable weight with the bench. But that, after all, is only the result of indirect and irregular pressure. What Local Optionists desire is that the pressure shall be made direct and customary.
The reasonableness of demanding that local wishes shall control the issue of licences is proved by the facts adduced, and the justice is equally capable of being shown. If a locality determines that no fresh licences shall be granted, or that certain old ones shall be taken away, no more injustice will be done than if the magistrates under the present system did the like. No compensation has ever been granted to the holder of a licence the renewal of which a bench has refused; and although the majority of such refusals has been because of ill-conduct, there have been many cases (and those at Over Darwen were among them) where the magistrates have not renewed because they did not think the house was required. The fact stands that a publican"s tenure is in its nature precarious; he holds his licence from year to year at the pleasure of the magistrates; he would hold it in the same fashion were Local Option secured. And the fact that the power of refusal to renew a licence would pa.s.s from an irresponsible bench to either the whole of the ratepayers or a body specially elected by them for the duty, would not ent.i.tle him to demand a compensation then that does not exist for him now.
A great difficulty of the problem lies in consideration of the manner in which the popular power shall be exercised. "Local Option" is a somewhat elastic phrase, adopted by many who have never troubled to think what it may involve. Broadly speaking, there are three methods by which it might be carried into effect: (1) By placing the power of licensing in the hands of the Town Councils or the proposed County Councils; (2) in those of specially-elected licensing boards; or (3) in those of the ratepayers, who would exercise by ballot a "direct veto."
It is the first plan that finds favour with most of our statesmen. It was prepared to be adopted by the last Liberal Ministry, and is by no means so novel as many suppose. The Munic.i.p.al Corporations Act of 1835, as originally drawn, contained a clause giving the Town Councils the power of granting alehouse licences, but the proposition was abandoned.
The Local Government Bill of Lord Salisbury"s Administration has a similar provision, giving the licensing to the County Councils; but to this has been urged the objection that these bodies will have sufficient business to attend to without having the public-houses placed on their shoulders. When our system of popular education was fixed upon its present basis, it was resolved that the work should be done by specially chosen school boards. Mr. Forster at first proposed that these boards should in the towns be selected by the Munic.i.p.al Councils; but it was felt by the House of Commons that so special a function demanded direct election, and direct election was provided, with the best results. And if the licensing power is to be vested in a representative a.s.sembly and local option is to be anything but a sham, it must be placed in the hands of those elected by the ratepayers for that special purpose, so that no bye-issues of waterworks, or paving, or the increase of rates shall affect the one distinct question of the public-house.
The extreme temperance section argue that even such Licensing Boards--directly elected by the ratepayers for the specific purpose--would not meet the requirements of the case, and that nothing short of a popular vote can be accepted. But why should the representative system be abolished and a direct vote established in this case, any more than in the equally burning questions settled every day by Parliament, and the lesser but still important matters decided by town councils and school boards? We in England long ago made up our minds that the most excellent way to get public work done is to choose the best men, give them the requisite authority, and then allow them to do the duty to which they are called. And if we can disestablish a church, revolutionize the land system, or reform our inst.i.tutions from top to bottom through our representatives, without a direct vote of the people, the question of renewing public-house licences can scarcely demand so exceptional a process as is by some suggested.
My answer, therefore, to the question, "How is Local Option to be worked?" as well as to the kindred temperance question, "How is Sunday closing to be settled?" is, "By means of licensing boards, directly elected by the ratepayers." And if this solution be adopted, our licensing system will be placed upon a basis at once more safe and more free from friction or the likelihood of injustice than any other that has been proposed.
XXIII.--WHY AND HOW ARE WE TAXED?
Taxes are the price we pay for being governed: they defray interest upon money borrowed and wages for protection and service. The fact that they are called by a name which is to many obnoxious, or that they are handed to the State instead of to an individual, ought not to blind us to their real nature--that they are the price of services rendered. The name is nothing. In churches the money we pay is called a pew-rent or an offertory; in clubs it is a subscription; to doctors or lawyers a fee; to tradesmen a price; to railway companies a fare; for personal services wages; for the loan of a house rent; for life or fire insurance a premium; and for water a rate. All are in a measure taxes; and if it be answered that the difference is that these payments are voluntary, may not the same be said of much that is called "indirect taxation"?
When the subject is considered, there are three questions which naturally demand reply.
1. Why are we taxed?
2. How are we taxed? and 3. How ought we to be taxed?
To the first question some answer has already been given. Put in the simplest fashion, the reply would be that it is cheaper to pay taxes and be taken care of than not to pay them and have to take care of ourselves. As members of an organized society, we have to provide for external protection and internal service--for the army and navy as a safeguard against enemies from without, for the officers of the law as a safeguard against depredators within, for the means of government, for education, and for a large number of other matters designed for the security of our persons and property and for the welfare and advancement of the community. We have further to pay the interest upon the National Debt--money borrowed by the State at times of emergency to prosecute such wars as Parliament had sanctioned.
In point of fact, taxes are a subst.i.tution for personal service. The State in England once compelled this as a means of raising an army; and, though this form of personal service was long ago commuted by the payment of a sufficient sum through taxation for the maintenance of a standing force, the State has only waived, not abrogated, the right.
Even as lately as the last century people in our country districts had to give six days in the year to the repair of such highways as were under the management of the justices of the peace. In the one case the personal service has been commuted into a tax, in the other into a rate--the difference being that a tax is imperially and a rate locally levied--it being found that forced labour of the kind indicated is more wasteful and less efficacious than hired labour; and, if any want to know how wasteful and how inefficient, they can find abundant ill.u.s.trations in the history of the old _regime_ in France, or that of the Egyptian fellaheen.
There has been indicated the difference between imperial and local taxation--the one being a tax imposed by the State and the other a rate levied by a local authority. The object in each case is similar; but, while the cost of the central administration, the army and navy, and the superior courts of justice, with the interest on the National Debt, is paid by taxes, that of lighting, draining, and other purely local matters is defrayed by rates, and that of the police, the poor, the highways, and education comes out of taxes and rates combined.
So much for the _why_ of being taxed; let us now consider the _how_. At present the receipts of the State are derived from direct and indirect taxation, together with a form which may be said to come under both these heads. The most familiar mode of direct taxation is the Income Tax; of indirect, the Customs and Excise; and of that which savours of both, the stamp duties and the profits from the Post Office.
These methods of taxation are, as far as England is concerned, comparatively modern. In the earlier days of settled government in this country, the mode of taxing was different and somewhat fitful, causing much trouble in the collection, and sometimes forming the pretext for revolt. "Aids" to the King were a frequent means of oppression long ago; and as far back as the time of John they were felt as a grievance, Magna Charta providing that the King should take no aids without the consent of Parliament, except those for knighting the lord"s eldest son, for marrying his eldest daughter, and for ransoming the lord from captivity (the lord, it being remembered, holding at that time his land direct from the sovereign). "Benevolences"--a charming name for an unpleasing idea--were also in vogue in the Middle Ages, and, although specifically declared by an Act of Richard III. to be illegal, were levied in a fashion which caused much discontent. "Loans" were another form of raising money which the nation resented, as Charles I. found to his cost; while a "Poll Tax," as all men know, drove Wat Tyler into rebellion. "Subsidies" and "Tenths" and other taxing devices equally failed in the long run to answer the desired purpose of filling the National Exchequer; and after the Restoration all such gave place to a system by which the Customs, the Excise, and the Land Tax provided most of the money required.
Gradually the proceeds of the Land Tax dwindled, and direct taxation was almost extinct when, in the throes of the great war with France, which lasted, with slight intervals, for twenty-two years, the younger Pitt revived it in an Income Tax, the form in which it is now mainly known.
With the end of the war this ceased, and the proceeds of indirect taxation were again chiefly those upon which the State relied. What the result was, how in every direction trade was hampered and public comfort destroyed, has been summed up for all time in one of Sydney Smith"s essays; and the quotation is worth re-perusal by everybody interested in the subject, and especially by those who to-day are wishing to get rid of the main form of direct taxation we possess--the Income Tax, as revived by Sir Robert Peel.
Uttering, in 1820, a warning to the United States to avoid that spirit which we now call "Jingoism," Sydney Smith wrote--"We can inform Jonathan what are the inevitable consequences of being too fond of glory--TAXES upon every article which enters into the mouth, or covers the back, or is placed under the foot; taxes upon everything which it is pleasant to see, hear, feel, smell, or taste; taxes upon warmth, light, and locomotion; taxes on everything on earth and the waters under the earth--on everything that comes from abroad or is grown at home; taxes on the raw material; taxes on every fresh value that is added to it by the industry of man; taxes on the sauce which pampers man"s appet.i.te, and the drug that restores him to health; on the ermine which decorates the judge, and the rope which hangs the criminal; on the poor man"s salt, and the rich man"s spice; on the bra.s.s nails of the coffin, and the ribands of the bride--at bed or board, couchant or levant, we must pay. The schoolboy whips his taxed top; the beardless youth manages his taxed horse, with a taxed bridle, on a taxed road; and the dying Englishman, pouring his medicine, which has paid 7 per cent., into a spoon that has paid 15 per cent., flings himself back upon his chintz bed, which has paid 22 per cent., and expires in the arms of an apothecary who has paid a licence of a hundred pounds for the privilege of putting him to death. His whole property is then immediately taxed from 2 to 10 per cent. Besides the probate, large fees are demanded for burying him in the chancel; his virtues are handed down to posterity on taxed marble; and he is then gathered to his fathers--to be taxed no more."
Ludicrous as the picture seems, it was correctly painted for the time it depicted; and it is first to Sir Robert Peel and next to his greatest pupil, Mr. Gladstone, that we owe the change from the hara.s.sing indirect taxation of the past to the comparatively innocuous forms of it we have to-day. But it is still from indirect taxation that most of our revenue is derived. The heads of that revenue, as given officially, are--(1) Customs, (2) Excise, (3) Stamps, (4) Land Tax, (5) House Duty, (6) Income Tax, (7) Post Office, (8) Telegraph Service, (9) Crown Lands, (10) Interest on Advances for Local Works and Purchase Money of Suez Ca.n.a.l shares, and (11) Miscellaneous. Of all these, Excise stands first by several millions, while Customs are far ahead of any of the rest, Stamps and Income Tax being the next best paying sources of revenue.
And, in some form or other, every one among us--the peer who smokes a cigarette, the peasant who drinks a pint of beer, and the very pauper who sends a letter to a friend--has indirectly to contribute his quota to the Exchequer, while all who earn more than 150 a year have to pay Income Tax; and those who inherit property, probate, legacy, or succession duty.
XXIV.--HOW OUGHT WE TO BE TAXED?
It being certain that, as long as we are citizens of any sort of State, we shall be called upon to pay for its maintenance, the question "How ought we to be taxed?" is one of considerable moment to all. Grumble we may, but pay we must.
Some think they would solve the problem at a stroke by subst.i.tuting direct for indirect taxation. They argue that people should know exactly what they are paying for the service of the State; and that direct taxation is not only a more logical but a more economic method of raising the revenue. They show that the consumer of duty-bearing articles pays not only the duty but a percentage upon it as interest to the middleman; and a striking instance of this was afforded in the fact that when, in 1865, Mr. Gladstone, as Chancellor of the Exchequer, took sixpence a pound off the tax on tea, the retail price of that article immediately fell eightpence.
But it may be feared that those who argue in favour of entirely direct taxation make small allowance for the weaknesses of human nature. I may prove to demonstration to the first person I meet that he is paying more than he ought to do because of the working of the indirect system, and that to this wastefulness is added the sin of ignorance as to what he actually does pay; but the chances are ten to one that he will reply that, hating all taxation as the natural man does, he would rather not know to what extent he was being mulcted, and that, if the whole amount were annually and in a lump sum presented to his view, he would never find it in his heart or his pocket to pay it.
To the sternly logical this att.i.tude will appear sad, if not absolutely sinful; but we have to take man as we find him, and it is of little use attempting to run straight athwart his deepest prepossessions for so small a result as even the subst.i.tution of direct for indirect taxation would attain. But there is a further point, which even the political logician must bear in mind, and that is what the practical effect would be of sweeping away all duties of Customs and Excise.
If we could secure a "free breakfast table" by liberating from toll tea, coffee, cocoa, currants, raisins, and other articles of domestic consumption, all would rejoice--though, in the present state of our finances, no Chancellor of the Exchequer is likely to sacrifice the five millions of revenue now raised from those commodities. But the English people will think a good many times before striking tobacco, spirits, and wine off the Customs list, with the more than 13 millions they produce, or spirits and beer off the list of the Excise, with the 13 millions in the one case and the 8 millions in the other that we now receive from them. Even if any one can imagine for a moment that the 27 millions here involved could be made up by some new direct tax, it does not need an extensive acquaintance with our social history to be aware that the result of removing the duties from the various intoxicants would be widespread national demoralization.
The taxation of the future, therefore, as of the past, will certainly include Customs and Excise. Some items may be struck off both; that a free breakfast table can be secured should be no dream; and it may be fairly hoped that the hindrances to trade involved in such licences as those for auctioneers and hawkers--who ought no more to be fined by the Government for practising their employment than butchers, bakers, or other traders--will soon be swept away. But upon beer, wine, spirits, and tobacco--their importation, manufacture, and sale--the tax-gatherer will continue, and rightly continue, to lay his hand.
Similarly, there will be no disposition to abolish the probate, legacy, and succession duties, but every disposition to strengthen them, and especially the last of them. The "Death duties" at present are inequitably levied; great fortunes do not pay as large a proportion as, relatively to small ones, they ought to do: and landed property is lightly let off compared with other forms.
But it is a comparative few who will be touched even by this much-needed reform; and taxation, to be fair, must touch all round. The Income Tax, obnoxious as from some aspects all will admit it to be, has almost infinite capacities of being made useful to the State; and the question which practical statesmen will soon have to consider is the direction in which that usefulness can best be developed.
As at present levied, this tax does not affect those whose incomes are below 150; if their incomes are between that sum and 400, the tax is paid upon 120 less than the correct figure; while if they exceed 400 the full tax is levied.
Now these regulations act unfairly in various directions. In the first place, the tax starts at too high a figure. Until a few years ago it began at an income of 100--a deduction of 80 being allowed--and there is no reason why it should not begin at 50, so that every man earning a pound a week in wages should be made to see as by a barometer how the national expenditure was rising or falling--though it never falls. And, however little he might be called upon to pay, there would be a distinct gain in so many additional capable citizens knowing from experience what an extra penny on the Income Tax means, for they would thereby be taught more closely to watch how the national money is got rid of, and their pockets consequently made the lighter.
In the next place, the regulations now in force make no distinction between a precarious and a settled income, causing the tradesman or professional man, whose revenue dies with him, to pay as heavily as his neighbour who has inherited or acquired property, of which those dependent upon him will not be deprived by his decease. As the point was put in a motion made many years ago in the House of Commons by Mr.
Hubbard (now Lord Addington), "the incidence of an Income Tax touching the products of invested property should fall upon net income, and the net amounts of industrial earnings should, previous to a.s.sessment, be subject to such an abatement as may equitably adjust the burden thrown upon intelligence and skill as compared with property." Upon this point, it is true, Mr. Gladstone has been antagonistic to the view here held; he opposed this very motion, and years before it was introduced he declared that it was not possible for him to conceive a plan which would secure the desired end. But it is also true that more than thirty years ago, and in his very first Budget speech, he intimated that "the public feeling that relief should be given to intelligence and skill as compared with property ought to be met, and may be met"; and that as plans he could not conceive in 1853 have become realized achievements with him before 1888, this concerning a differentiated Income Tax may yet be added to the number.
The words of Cobden upon the point are as true to-day as when they were uttered. Speaking upon the Budget of 1848, he dwelt upon the inequalities of the Income Tax, which was then still talked of by Chancellors of the Exchequer as a temporary measure. "Make your tax just," he said, "in order that it may be permanent. It is ridiculous to deny the broad distinction that exists between incomes derived from trades and professions, and those drawn from land. Take the case of a tradesman with 10,000 of capital; he gets 500 a year interest, and 500 more for his skill and industry. Is this man"s 1000 a year to be mulcted in the same amount with 1000 a year derived from a real property capital of 25,000? So with the cases of professional men, who literally live by the waste of their brains. The plain fair dealing of the country revolts at an equal levy on such different sorts of property. Professional men and men in business put in motion the wheels of the social system. It is their industry and enterprise that mainly give to realized property the value that it bears; to them, therefore, the State first owes sympathy and support."
There is a further injustice under the present system, and that is that, when a man has pa.s.sed the 400 limit, he has to pay as heavy a percentage upon his income, precarious or permanent, as the wealthiest millionaire among us. The struggling tradesman, the hardly-pressed professional man, every one who depends upon his brains for his living, has to pay as heavily as the Duke of Bedford, the Duke of Westminster, and the Duke of Portland, to whom the brains they possess makes no difference to their income, and whose property has been secured not by efforts of their own, but of others.
Is it any wonder, then, that the demand should be growing for a graduated Income Tax? It is one upon which Mr. Chamberlain has spoken plainly. At Ipswich, in January, 1885, he said--"Is it really certain that the precarious income of a struggling professional man ought to pay in the same proportion as the income of a man who derives it from invested securities? Is it altogether such an unfair thing that we should, as in the United States, tax all incomes according to their amount?... Prince Bismarck some time ago proposed to the Reichstag an Income Tax, to be graduated according to the amount of the income, and to vary according to the character of the income. We already have done something in that direction in exempting the very smallest incomes from taxation. But I submit that it is well worthy of careful consideration whether the principle should not be carried a little further." And at Warrington, eight months later, he observed--"I think that taxation ought to involve equality of sacrifice, and I do not see how this result is to be obtained except by some form of graduated taxation--that is, taxation which is proportionate to the superfluities of the taxpayer.
When I am told that this is a new-fangled and a revolutionary doctrine, I wonder if my critics have read any elementary book on the subject; because if they had, they must have seen that a graduated Income Tax is not a novelty in this country. It existed in the Middle Ages, when those who exercised authority and power did so with harshness to their equals, but they knew nevertheless how to show consideration for the necessities of those beneath them."
The first answer to the demand for a graduated Income Tax will, of course, be that it would be "confiscation"--a word by which the rich are ever striving to frighten others from making them pay their proper share to the State; and one may be content to rest in this matter upon the apparent paradox of Disraeli: "Confiscation is a blunder that destroys public credit; taxation, on the contrary, improves it; and both come to the same thing." The fact, as has before been stated, is that taxation is the price we pay for protection; and the more we have to protect, the more we ought to pay.
And, as Mr. Chamberlain observed, this suggestion of a graduated tax is no new-fangled or revolutionary idea: it is one for instances of which it is not even necessary to go back with him to some vague reminiscences of the Middle Ages, for it exists in various degrees at the present time. It is only dwellings of over the annual value of 20 that are liable to inhabited house duty; houses of less than 30 rateable value have in various districts certain water privileges for nothing which those of greater value have to pay for; and the difference in the death duties, according to the degree of relationship of the legatee, indicates that the law recognizes the reasonableness of graduating the burden according to the shoulders which have to bear it. And when we come to the Income Tax itself, we find not merely that incomes under 150 are exempt, while those between that sum and 400 are subject to reductions which lessen the percentage of the tax to be paid compared with those above the last given figure, but that no other a Chancellor of the Exchequer than Mr. Gladstone has acknowledged the principle of graduation, and that in the most practical way; for in his Budget of 1859, when the rate of the tax stood at 5d. and he proposed to add another 4d., he coupled with it the proviso that incomes from 100 to 150 (100 being the then initial point) should pay only 1d. extra.
The argument sometimes used that the heavier taxation of large incomes would tend to discourage thrift by putting a penalty upon its results is disposed of by every-day experience. Does a man cease to wish to earn 150 because that sum will make him liable to Income Tax, or 400 because that will bring him fully within its scope? We know such a man does not exist, and why should the conditions be changed if the graduation went further than at present?
Here, then, is the claim for a graduated Income Tax, and, after the examples which have been given, it cannot honestly be argued that such a system is either immoral in design or impossible of execution. What is wanted is that the burden of taxation shall be equalized by fixing the greater weight upon the shoulders that ought most to bear it. No single citizen should be exempt from a share, and by preserving indirect taxation upon luxuries and starting a direct tax at the lowest reasonable point, every one will have to pay something. But by rearranging the death duties and graduating the Income Tax we shall secure that those who have most to lose, and, therefore, who demand most from the State, shall pay the State in proportion to their demand.
XXV.--HOW IS TAXATION TO BE REDUCED?