An Inquiry into the Nature and Causes of the Wealth of Nations
Adam Smith

Part 17 out of 19

in a country town, may sometimes have more windows than a house of
five hundred pounds rent in London; and though the inhabitant of the
former is likely to be a much poorer man than that of the latter, yet,
so far as his contribution is regulated by the window tax, he must
contribute more to the support of the state. Such taxes are,
therefore, directly contrary to the first of the four maxims above
mentioned. They do not seem to offend much against any of the other

The natural tendency of the window tax, and of all other taxes upon
houses, is to lower rents. The more a man pays for the tax, the less,
it is evident, he can afford to pay for the rent. Since the imposition
of the window tax, however, the rents of houses have, upon the whole,
risen more or less, in almost every town and village of Great Britain,
with which I am acquainted. Such has been, almost everywhere, the
increase of the demand for houses, that it has raised the rents more
than the window tax could sink them; one of the many proofs of the
great prosperity of the country, and of the increasing revenue of its
inhabitants. Had it not been for the tax, rents would probably have
risen still higher.

ARTICLE II. -- Taxes upon Profit, or upon the Revenue arising from

The revenue or profit arising from stock naturally divides itself into
two parts; that which pays the interest, and which belongs to the
owner of the stock; and that surplus part which is over and above what
is necessary for paying the interest.

This latter part of profit is evidently a subject not taxable
directly. It is the compensation, and, in most cases, it is no more
than a very moderate compensation for the risk and trouble of
employing the stock. The employer must have this compensation,
otherwise he cannot, consistently with his own interest, continue the
employment. If he was taxed directly, therefore, in proportion to the
whole profit, he would be obliged either to raise the rate of his
profit, or to charge the tax upon the interest of money; that is, to
pay less interest. If he raised the rate of his profit in proportion
to the tax, the whole tax, though it might be advanced by him, would
be finally paid by one or other of two different sets of people,
according to the different ways in which he might employ the stock of
which he had the management. If he employed it as a farming stock, in
the cultivation of land, he could raise the rate of his profit only by
retaining a greater portion, or, what comes to the same thing, the
price of a greater portion, of the produce of the land; and as this
could be done only by a reduction of rent, the final payment of the
tax would fall upon the landlord. If he employed it as a mercantile or
manufacturing stock, he could raise the rate of his profit only by
raising the price of his goods; in which case, the final payment of
the tax would fall altogether upon the consumers of those goods. If he
did not raise the rate of his profit, he would be obliged to charge
the whole tax upon that part of it which was allotted for the interest
of money. He could afford less interest for whatever stock he
borrowed, and the whole weight of the tax would, in this case, fall
ultimately upon the interest of money. So far as he could not relieve
himself from the tax in the one way, he would be obliged to relieve
himself in the other.

The interest of money seems, at first sight, a subject equally capable
of being taxed directly as the rent of land. Like the rent of land, it
is a neat produce, which remains, after completely compensating the
whole risk and trouble of employing the stock. As a tax upon the rent
of land cannot raise rents, because the neat produce which remains,
after replacing the stock of the farmer, together with his reasonable
profit, cannot be greater after the tax than before it, so, for the
same reason, a tax upon the interest of money could not raise the rate
of interest; the quantity of stock or money in the country, like the
quantity of land, being supposed to remain the same after the tax as
before it. The ordinary rate of profit, it has been shewn, in the
first book, is everywhere regulated by the quantity of stock to be
employed, in proportion to the quantity of the employment, or of the
business which must be done by it. But the quantity of the employment,
or of the business to be done by stock, could neither be increased nor
diminished by any tax upon the interest of money. If the quantity of
the stock to be employed, therefore, was neither increased nor
diminished by it, the ordinary rate of profit would necessarily remain
the same. But the portion of this profit, necessary for compensating
the risk and trouble of the employer, would likewise remain the same;
that risk and trouble being in no respect altered. The residue,
therefore, that portion which belongs to the owner of the stock, and
which pays the interest of money, would necessarily remain the same
too. At first sight, therefore, the interest of money seems to be a
subject as fit to be taxed directly as the rent of land.

There are, however, two different circumstances, which render the
interest of money a much less proper subject of direct taxation than
the rent of land.

First, the quantity and value of the land which any man possesses, can
never be a secret, and can always be ascertained with great exactness.
But the whole amount of the capital stock which he possesses is almost
always a secret, and can scarce ever be ascertained with tolerable
exactness. It is liable, besides, to almost continual variations. A
year seldom passes away, frequently not a month, sometimes scarce a
single day, in which it does not rise or fall more or less. An
inquisition into every man's private circumstances, and an inquisition
which, in order to accommodate the tax to them, watched over all the
fluctuations of his fortune, would be a source of such continual and
endless vexation as no person could support.

Secondly, land is a subject which cannot be removed; whereas stock
easily may. The proprietor of land is necessarily a citizen of the
particular country in which his estate lies. The proprietor of stock
is properly a citizen of the world, and is not necessarily attached to
any particular country. He would be apt to abandon the country in
which he was exposed to a vexatious inquisition, in order to be
assessed to a burdensome tax; and would remove his stock to some other
country, where he could either carry on his business, or enjoy his
fortune more at his ease. By removing his stock, he would put an end
to all the industry which it had maintained in the country which he
left. Stock cultivates land; stock employs labour. A tax which tended
to drive away stock from any particular country, would so far tend to
dry up every source of revenue, both to the sovereign and to the
society. Not only the profits of stock, but the rent of land, and the
wages of labour, would necessarily be more or less diminished by its

The nations, accordingly, who have attempted to tax the revenue
arising from stock, instead of any severe inquisition of this kind,
have been obliged to content themselves with some very loose, and,
therefore, more or less arbitrary estimation. The extreme inequality
and uncertainty of a tax assessed in this manner, can be compensated
only by its extreme moderation; in consequence of which, every man
finds himself rated so very much below his real revenue, that he gives
himself little disturbance though his neighbour should be rated
somewhat lower.

By what is called the land tax in England, it was intended that the
stock should be taxed in the same proportion as land. When the tax
upon land was at four shillings in the pound, or at one-fifth of the
supposed rent, it was intended that stock should be taxed at one-fifth
of the supposed interest. When the present annual land tax was first
imposed, the legal rate of interest was six per cent. Every hundred
pounds stock, accordingly, was supposed to be taxed at twenty-four
shillings, the fifth part of six pounds. Since the legal rate of
interest has been reduced to five per cent. every hundred pounds stock
is supposed to be taxed at twenty shillings only. The sum to be
raised, by what is called the land tax, was divided between the
country and the principal towns. The greater part of it was laid upon
the country; and of what was laid upon the towns, the greater part was
assessed upon the houses. What remained to be assessed upon the stock
or trade of the towns (for the stock upon the land was not meant to be
taxed) was very much below the real value of that stock or trade.
Whatever inequalities, therefore, there might be in the original
assessment, gave little disturbance. Every parish and district still
continues to be rated for its land, its houses, and its stock,
according to the original assessment; and the almost universal
prosperity of the country, which, in most places, has raised very much
the value of all these, has rendered those inequalities of still less
importance now. The rate, too, upon each district, continuing always
the same, the uncertainty of this tax, so far as it might he assessed
upon the stock of any individual, has been very much diminished, as
well as rendered of much less consequence. If the greater part of the
lands of England are not rated to the land tax at half their actual
value, the greater part of the stock of England is, perhaps, scarce
rated at the fiftieth part of its actual value. In some towns, the
whole land tax is assessed upon houses; as in Westminster, where stock
and trade are free. It is otherwise in London.

In all countries, a severe inquisition into the circumstances of
private persons has been carefully avoided.

At Hamburg, {Memoires concernant les Droits, tom. i, p.74} every
inhabitant is obliged to pay to the state one fourth per cent. of all
that he possesses; and as the wealth of the people of Hamburg consists
principally in stock, this tax maybe considered as a tax upon stock.
Every man assesses himself, and, in the presence of the magistrate,
puts annually into the public coffer a certain sum of money, which he
declares upon oath, to be one fourth per cent. of all that he
possesses, but without declaring what it amounts to, or being liable
to any examination upon that subject. This tax is generally supposed
to be paid with great fidelity. In a small republic, where the people
have entire confidence in their magistrates, are convinced of the
necessity of the tax for the support of the state, and believe that it
will be faithfully applied to that purpose, such conscientious and
voluntary payment may sometimes be expected. It is not peculiar to the
people of Hamburg.

The canton of Underwald, in Switzerland, is frequently ravaged by
storms and inundations, and it is thereby exposed to extraordinary
expenses. Upon such occasions the people assemble, and every one is
said to declare with the greatest frankness what he is worth, in order
to be taxed accordingly. At Zurich, the law orders, that in cases of
necessity, every one should be taxed in proportion to his revenue; the
amount of which he is obliged to declare upon oath. They have no
suspicion, it is said, that any of their fellow citizens will deceive
them. At Basil, the principal revenue of the state arises from a small
custom upon goods exported. All the citizens make oath, that they will
pay every three months all the taxes imposed by law. All merchants,
and even all inn-keepers, are trusted with keeping themselves the
account of the goods which they sell, either within or without the
territory. At the end of every three months, they send this account to
the treasurer, with the amount of the tax computed at the bottom of
it. It is not suspected that the revenue suffers by this confidence.
{Memoires concernant les Droits, tom. i p. 163, 167,171.}

To oblige every citizen to declare publicly upon oath, the amount of
his fortune, must not, it seems, in those Swiss cantons, be reckoned a
hardship. At Hamburg it would be reckoned the greatest. Merchants
engaged in the hazardous projects of trade, all tremble at the
thoughts of being obliged, at all times, to expose the real state of
their circumstances. The ruin of their credit, and the miscarriage of
their projects, they foresee, would too often be the consequence. A
sober and parsimonious people, who are strangers to all such projects,
do not feel that they have occasion for any such concealment.

In Holland, soon after the exaltation of the late prince of Orange to
the stadtholdership, a tax of two per cent. or the fiftieth penny, as
it was called, was imposed upon the whole substance of every citizen.
Every citizen assesed himself, and paid his tax, in the same manner as
at Hamburg, and it was in general supposed to have been paid with
great fidelity. The people had at that time the greatest affection for
their new government, which they had just established by a general
insurrection. The tax was to be paid but once, in order to relieve the
state in a particular exigency. It was, indeed, too heavy to be
permanent. In a country where the market rate of interest seldom
exceeds three per cent., a tax of two per cent. amounts to thirteen
shillings and four pence in the pound, upon the highest neat revenue
which is commonly drawn from stock. It is a tax which very few people
could pay, without encroaching more or less upon their capitals. In a
particular exigency, the people may, from great public zeal, make a
great effort, and give up even a part of their capital, in order to
relieve the state. But it is impossible that they should continue to
do so for any considerable time; and if they did, the tax would soon
ruin them so completely, as to render them altogether incapable of
supporting the state.

The tax upon stock, imposed by the land tax bill in England, though it
is proportioned to the capital, is not intended to diminish or, take
away any part of that capital. It is meant only to be a tax upon the
interest of money, proportioned to that upon the rent of land; so that
when the latter is at four shillings in the pound, the former may be
at four shillings in the pound too. The tax at Hamburg, and the still
more moderate taxes of Underwald and Zurich, are meant, in the same
manner, to be taxes, not upon the capital, but upon the interest or
neat revenue of stock. That of Holland was meant to be a tax upon the

Taxes upon the Profit of particular Employments.

In some countries, extraordinary taxes are imposed upon the profits of
stock; sometimes when employed in particular branches of trade, and
sometimes when employed in agriculture.

Of the former kind, are in England, the tax upon hawkers and pedlars,
that upon hackney-coaches and chairs, and that which the keepers of
ale-houses pay for a licence to retail ale and spiritous liquors.
During the late war, another tax of the same kind was proposed upon
shops. The war having been undertaken, it was said, in defence of the
trade of the country, the merchants, who were to profit by it, ought
to contribute towards the support of it.

A tax, however, upon the profits of stock employed in any particular
branch of trade, can never fall finally upon the dealers (who must in
all ordinary cases have their reasonable profit, and, where the
competition is free, can seldom have more than that profit), but
always upon the consumers, who must be obliged to pay in the price of
the goods the tax which the dealer advances; and generally with some

A tax of this kind, when it is proportioned to the trade of the
dealer, is finally paid by the consumer, and occasions no oppression
to the dealer. When it is not so proportioned, but is the same upon
all dealers, though in this case, too, it is finally paid by the
consumer, yet it favours the great, and occasions some oppression to
the small dealer. The tax of five shillings a-week upon every hackney
coach, and that of ten shillings a-year upon every hackney chair, so
far as it is advanced by the different keepers of such coaches and
chairs, is exactly enough proportioned to the extent of their
respective dealings. It neither favours the great, nor oppresses the
smaller dealer. The tax of twenty shillings a-year for a licence to
sell ale; of forty shillings for a licence to sell spiritous liquors;
and of forty shillings more for a licence to sell wine, being the same
upon all retailers, must necessarily give some advantage to the great,
and occasion some oppression to the small dealers. The former must
find it more easy to get back the tax in the price of their goods than
the latter. The moderation of the tax, however, renders this
inequality of less importance; and it may to many people appear not
improper to give some discouragement to the multiplication of little
ale-houses. The tax upon shops, it was intended, should be the same
upon all shops. It could not well have been otherwise. It would have
been impossible to proportion, with tolerable exactness, the tax upon
a shop to the extent of the trade carried on in it, without such an
inquisition as would have been altogether insupportable in a free
country. If the tax had been considerable, it would have oppressed the
small, and forced almost the whole retail trade into the hands of the
great dealers. The competition of the former being taken away, the
latter would have enjoyed a monopoly of the trade; and, like all other
monopolists, would soon have combined to raise their profits much
beyond what was necessary for the payment of the tax. The final
payment, instead of falling upon the shop-keeper, would have fallen
upon the consumer, with a considerable overcharge to the profit of the
shop-keeper. For these reasons, the project of a tax upon shops was
laid aside, and in the room of it was substituted the subsidy, 1759.

What in France is called the personal taille, is perhaps, the most
important tax upon the profits of stock employed in agriculture, that
is levied in any part of Europe.

In the disorderly state of Europe, during the prevalence of the feudal
government, the sovereign was obliged to content himself with taxing
those who were too weak to refuse to pay taxes. The great lords,
though willing to assist him upon particular emergencies, refused to
subject themselves to any constant tax, and he was not strong enough
to force them. The occupiers of land all over Europe were, the greater
part of them, originally bond-men. Through the greater part of Europe,
they were gradually emancipated. Some of them acquired the property of
landed estates, which they held by some base or ignoble tenure,
sometimes under the king, and sometimes under some other great lord,
like the ancient copy-holders of England. Others, without acquiring
the property, obtained leases for terms of years, of the lands which
they occupied under their lord, and thus became less dependent upon
him. The great lords seem to have beheld the degree of prosperity and
independency, which this inferior order of men had thus come to enjoy,
with a malignant and contemptuous indignation, and willingly consented
that the sovereign should tax them. In some countries, this tax was
confined to the lands which were held in property by an ignoble
tenure; and, in this case, the taille was said to be real. The land
tax established by the late king of Sardinia, and the taille in the
provinces of Languedoc, Provence, Dauphine, and Britanny; in the
generality of Montauban, and in the elections of Agen and Condom, as
well as in some other districts of France; are taxes upon lands held
in property by an ignoble tenure. In other countries, the tax was laid
upon the supposed profits of all those who held, in farm or lease,
lands belonging to other people, whatever might be the tenure by which
the proprietor held them; and in this case, the taille was said to be
personal. In the greater part of those provinces of France, which are
called the countries of elections, the taille is of this kind. The
real taille, as it is imposed only upon a part of the lands of the
country, is necessarily an unequal, but it is not always an arbitrary
tax, though it is so upon some occasions. The personal taille, as it
is intended to be proportioned to the profits of a certain class of
people, which can only be guessed at, is necessarily both arbitrary
and unequal.

In France, the personal taille at present (1775) annually imposed upon
the twenty generalities, called the countries of elections, amounts to
40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom.
ii, p.17.} the proportion in which this sum is assessed upon those
different provinces, varies from year to year, according to the
reports which are made to the king's council concerning the goodness
or badness of the crops, as well as other circumstances, which may
either increase or diminish their respective abilities to pay. Each
generality is divided into a certain number of elections; and the
proportion in which the sum imposed upon the whole generality is
divided among those different elections, varies likewise from year to
year, according to the reports made to the council concerning their
respective abilities. It seems impossible, that the council, with the
best intentions, can ever proportion, with tolerable exactness, either
of these two assessments to the real abilities of the province or
district upon which they are respectively laid. Ignorance and
misinformation must always, more or less, mislead the most upright
council. The proportion which each parish ought to support of what is
assessed upon the whole election, and that which each individual ought
to support of what is assessed upon his particular parish, are both in
the same manner varied from year to year, according as circumstances
are supposed to require. These circumstances are judged of, in the one
case, by the officers of the election, in the other, by those of the
parish; and both the one and the other are, more or less, under the
direction and influence of the intendant. Not only ignorance and
misinformation, but friendship, party animosity, and private
resentment, are said frequently to mislead such assessors. No man
subject to such a tax, it is evident, can ever be certain, before he
is assessed, of what he is to pay. He cannot even be certain after he
is assessed. If any person has been taxed who ought to have been
exempted, or if any person has been taxed beyond his proportion,
though both must pay in the mean time, yet if they complain, and make
good their complaints, the whole parish is reimposed next year, in
order to reimburse them. If any of the contributors become bankrupt or
insolvent, the collector is obliged to advance his tax; and the whole
parish is reimposed next year, in order to reimburse the collector. If
the collector himself should become bankrupt, the parish which elects
him must answer for his conduct to the receiver-general of the
election. But, as it might be troublesome for the receiver to
prosecute the whole parish, he takes at his choice five or six of the
richest contributors, and obliges them to make good what had been lost
by the insolvency of the collector. The parish is afterwards
reimposed, in order to reimburse those five or six. Such reimpositions
are always over and above the taille of the particular year in which
they are laid on.

When a tax is imposed upon the profits of stock in a particular branch
of trade, the traders are all careful to bring no more goods to market
than what they can sell at a price sufficient to reimburse them from
advancing the tax. Some of them withdraw a part of their stocks from
the trade, and the market is more sparingly supplied than before. The
price of the goods rises, and the final payment of the tax falls upon
the consumer. But when a tax is imposed upon the profits of stock
employed in agriculture, it is not the interest of the farmers to
withdraw any part of their stock from that employment. Each farmer
occupies a certain quantity of land, for which he pays rent. For the
proper cultivation of this land, a certain quantity of stock is
necessary; and by withdrawing any part of this necessary quantity, the
farmer is not likely to be more able to pay either the rent or the
tax. In order to pay the tax, it can never be his interest to diminish
the quantity of his produce, nor consequently to supply the market
more sparingly than before. The tax, therefore, will never enable him
to raise the price of his produce, so as to reimburse himself, by
throwing the final payment upon the consumer. The farmer, however,
must have his reasonable profit as well as every other dealer,
otherwise he must give up the trade. After the imposition of a tax of
this kind, he can get this reasonable profit only by paying less rent
to the landlord. The more he is obliged to pay in the way of tax, the
less he can afford to pay in the way of rent. A tax of this kind,
imposed during the currency of a lease, may, no doubt, distress or
ruin the farmer. Upon the renewal of the lease, it must always fall
upon the landlord.

In the countries where the personal taille takes place, the farmer is
commonly assessed in proportion to the stock which he appears to
employ in cultivation. He is, upon this account, frequently afraid to
have a good team of horses or oxen, but endeavours to cultivate with
the meanest and most wretched instruments of husbandry that he can.
Such is his distrust in the justice of his assessors, that he
counterfeits poverty, and wishes to appear scarce able to pay
anything, for fear of being obliged to pay too much. By this miserable
policy, he does not, perhaps, always consult his own interest in the
most effectual manner; and he probably loses more by the diminution of
his produce, than he saves by that of his tax. Though, in consequence
of this wretched cultivation, the market is, no doubt, somewhat worse
supplied; yet the small rise of price which this may occasion, as it
is not likely even to indemnify the farmer for the diminution of his
produce, it is still less likely to enable him to pay more rent to the
landlord. The public, the farmer, the landlord, all suffer more or
less by this degraded cultivation. That the personal taille tends, in
many different ways, to discourage cultivation, and consequently to
dry up the principal source of the wealth of every great country, I
have already had occasion to observe in the third book of this

What are called poll-taxes in the southern provinces of North America,
and the West India islands, annual taxes of so much a-head upon every
negro, are properly taxes upon the profits of a certain species of
stock employed in agriculture. As the planters, are the greater part
of them, both farmers and landlords, the final payment of the tax
falls upon them in their quality of landlords, without any

Taxes of so much a head upon the bondmen employed in cultivation, seem
anciently to have been common all over Europe. There subsists at
present a tax of this kind in the empire of Russia. It is probably
upon this account that poll-taxes of all kinds have often been
represented as badges of slavery. Every tax, however, is, to the
person who pays it, a badge, not of slavery, but of liberty. It
denotes that he is subject to government, indeed; but that, as he has
some property, he cannot himself be the property of a master. A poll
tax upon slaves is altogether different from a poll-tax upon freemen.
The latter is paid by the persons upon whom it is imposed; the former,
by a different set of persons. The latter is either altogether
arbitrary, or altogether unequal, and, in most cases, is both the one
and the other; the former, though in some respects unequal, different
slaves being of different values, is in no respect arbitrary. Every
master, who knows the number of his own slaves, knows exactly what he
has to pay. Those different taxes, however, being called by the same
name, have been considered as of the same nature.

The taxes which in Holland are imposed upon men and maid servants, are
taxes, not upon stock, but upon expense; and so far resemble the taxes
upon consumable commodities. The tax of a guinea a-head for every
man-servant, which has lately been imposed in Great Britain, is of the
same kind. It falls heaviest upon the middling rank. A man of two
hundred a-year may keep a single man-servant. A man of ten thousand
a-year will not keep fifty. It does not affect the poor.

Taxes upon the profits of stock, in particular employments, can never
affect the interest of money. Nobody will lend his money for less
interest to those who exercise the taxed, than to those who exercise
the untaxed employments. Taxes upon the revenue arising from stock in
all employments, where the government attempts to levy them with any
degree of exactness, will, in many cases, fall upon the interest of
money. The vingtieme, or twentieth penny, in France, is a tax of the
same kind with what is called the land tax in England, and is
assessed, in the same manner, upon the revenue arising upon land,
houses, and stock. So far as it affects stock, it is assessed, though
not with great rigour, yet with much more exactness than that part of
the land tax in England which is imposed upon the same fund. It, in
many cases, falls altogether upon the interest of money. Money is
frequently sunk in France, upon what are called contracts for the
constitution of a rent; that is, perpetual annuities, redeemable at
any time by the debtor, upon payment of the sum originally advanced,
but of which this redemption is not exigible by the creditor except in
particular cases. The vingtieme seems not to have raised the rate of
those annuities, though it is exactly levied upon them all.

APPENDIX TO ARTICLES I. AND II. -- Taxes upon the Capital Value of
Lands, Houses, and Stock.

While property remains in the possession of the same person, whatever
permanent taxes may have been imposed upon it, they have never been
intended to diminish or take away any part of its capital value, but
only some part of the revenue arising from it. But when property
changes hands, when it is transmitted either from the dead to the
living, or from the living to the living, such taxes have frequently
been imposed upon it as necessarily take away some part of its capital

The transference of all sorts of property from the dead to the living,
and that of immoveable property of land and houses from the living to
the living, are transactions which are in their nature either public
and notorious, or such as cannot be long concealed. Such transactions,
therefore, may be taxed directly. The transference of stock or
moveable property, from the living to the living, by the lending of
money, is frequently a secret transaction, and may always be made so.
It cannot easily, therefore, be taxed directly. It has been taxed
indirectly in two different ways; first, by requiring that the deed,
containing the obligation to repay, should be written upon paper or
parchment which had paid a certain stamp duty, otherwise not to be
valid; secondly, by requiring, under the like penalty of invalidity,
that it should be recorded either in a public or secret register, and
by imposing certain duties upon such registration. Stamp duties, and
duties of registration, have frequently been imposed likewise upon the
deeds transferring property of all kinds from the dead to the living,
and upon those transferring immoveable property from the living to the
living; transactions which might easily have been taxed directly.

The vicesima hereditatum, or the twentieth penny of inheritances,
imposed by Augustus upon the ancient Romans, was a tax upon the
transference of property from the dead to the living. Dion Cassius, {
Lib. 55. See also Burman. de Vectigalibus Pop. Rom. cap. xi. and
Bouchaud de l'impot du vingtieme sur les successions.} the author who
writes concerning it the least indistinctly, says, that it was imposed
upon all successions, legacies and donations, in case of death, except
upon those to the nearest relations, and to the poor.

Of the same kind is the Dutch tax upon successions. {See Memoires
concernant les Droits, etc. tom i, p. 225.} Collateral successions are
taxed according to the degree of relation, from five to thirty per
cent. upon the whole value of the succession. Testamentary donations,
or legacies to collaterals, are subject to the like duties. Those from
husband to wife, or from wife to husband, to the fiftieth penny. The
luctuosa hereditas, the mournful succession of ascendants to
descendants, to the twentieth penny only. Direct successions, or those
of descendants to ascendants, pay no tax. The death of a father, to
such of his children as live in the same house with him, is seldom
attended with any increase, and frequently with a considerable
diminution of revenue; by the loss of his industry, of his office, or
of some life-rent estate, of which he may have been in possession.
That tax would be cruel and oppressive, which aggravated their loss,
by taking from them any part of his succession. It may, however,
sometimes be otherwise with those children, who, in the language of
the Roman law, are said to be emancipated; in that of the Scotch law,
to be foris-familiated; that is, who have received their portion, have
got families of their own, and are supported by funds separate and
independent of those of their father. Whatever part of his succession
might come to such children, would be a real addition to their
fortune, and might, therefore, perhaps, without more inconveniency
than what attends all duties of this kind, be liable to some tax.

The casualties of the feudal law were taxes upon the transference of
land, both from the dead to the living, and from the living to the
living. In ancient times, they constituted, in every part of Europe,
one of the principal branches of the revenue of the crown.

The heir of every immediate vassal of the crown paid a certain duty,
generally a year's rent, upon receiving the investiture of the estate.
If the heir was a minor, the whole rents of the estate, during the
continuance of the minority, devolved to the superior, without any
other charge besides the maintenance of the minor, and the payment of
the widow's dower, when there happened to be a dowager upon the land.
When the minor came to de of age, another tax, called relief, was
still due to the superior, which generally amounted likewise to a
year's rent. A long minority, which, in the present times, so
frequently disburdens a great estate of all its incumbrances, and
restores the family to their ancient splendour, could in those times
have no such effect. The waste, and not the disincumbrance of the
estate, was the common effect of a long minority.

By a feudal law, the vassal could not alienate without the consent of
his superior, who generally extorted a fine or composition on granting
it. This fine, which was at first arbitrary, came, in many countries,
to be regulated at a certain portion of the price of the land. In some
countries, where the greater part of the other feudal customs have
gone into disuse, this tax upon the alienation of land still continues
to make a very considerable branch of the revenue of the sovereign. In
the canton of Berne it is so high as a sixth part of the price of all
noble fiefs, and a tenth part of that of all ignoble ones. {Memoires
concernant les Droits, etc, tom.i p.154} In the canton of Lucern, the
tax upon the sale of land is not universal, and takes place only in
certain districts. But if any person sells his land in order to remove
out of the territory, he pays ten per cent. upon the whole price of
the sale. {id. p.157.} Taxes of the same kind, upon the sale either
of all lands, or of lands held by certain tenures, take place in many
other countries, and make a more or less considerable branch of the
revenue of the sovereign.

Such transactions may be taxed indirectly, by means either of stamp
duties, or of duties upon registration; and those duties either may,
or may not, be proportioned to the value of the subject which is

In Great Britain, the stamp duties are higher or lower, not so much
according to the value of the property transferred (an eighteen-penny
or half-crown stamp being sufficient upon a bond for the largest sum
of money), as according to the nature of the deed. The highest do not
exceed six pounds upon every sheet of paper, or skin of parchment; and
these high duties fall chiefly upon grants from the crown, and upon
certain law proceedings, without any regard to the value of the
subject. There are, in Great Britain, no duties on the registration of
deeds or writings, except the fees of the officers who keep the
register; and these are seldom more than a reasonable recompence for
their labour. The crown derives no revenue from them.

In Holland {Memoires concernant les Droits, etc. tom. i. p 223, 224,
225.} there are both stamp duties and duties upon registration; which
in some cases are, and in some are not, proportioned to the value of
the property transferred. All testaments must be written upon stamped
paper, of which the price is proportioned to the property disposed of;
so that there are stamps which cost from three pence or three stivers
a-sheet, to three hundred florins, equal to about twenty-seven pounds
ten shillings of our money. If the stamp is of an inferior price to
what the testator ought to have made use of, his succession is
confiscated. This is over and above all their other taxes on
succession. Except bills of exchange, and some other mercantile bills,
all other deeds, bonds, and contracts, are subject to a stamp duty.
This duty, however, does not rise in proportion to the value of the
subject. All sales of land and of houses, and all mortgages upon
either, must be registered, and, upon registration, pay a duty to the
state of two and a-half per cent. upon the amount of the price or of
the mortgage. This duty is extended to the sale of all ships and
vessels of more than two tons burden, whether decked or undecked.
These, it seems, are considered as a sort of houses upon the water.
The sale of moveables, when it is ordered by a court of justice, is
subject to the like duty of two and a-half per cent.

In France, there are both stamp duties and duties upon registration.
The former are considered as a branch of the aids of excise, and, in
the provinces where those duties take place, are levied by the excise
officers. The latter are considered as a branch of the domain of the
crown and are levied by a different set of officers.

Those modes of taxation by stamp duties and by duties upon
registration, are of very modern invention. In the course of little
more than a century, however, stamp duties have, in Europe, become
almost universal, and duties upon registration extremely common. There
is no art which one government sooner learns of another, than that of
draining money from the pockets of the people.

Taxes upon the transference of property from the dead to the living,
fall finally, as well as immediately, upon the persons to whom the
property is transferred. Taxes upon the sale of land fall altogether
upon the seller. The seller is almost always under the necessity of
selling, and must, therefore, take such a price as he can get. The
buyer is scarce ever under the necessity of buying, and will,
therefore, only give such a price as he likes. He considers what the
land will cost him, in tax and price together. The more he is obliged
to pay in the way of tax, the less he will be disposed to give in the
way of price. Such taxes, therefore, fall almost always upon a
necessitous person, and must, therefore, be frequently very cruel and
oppressive. Taxes upon the sale of new-built houses, where the
building is sold without the ground, fall generally upon the buyer,
because the builder must generally have his profit; otherwise he must
give up the trade. If he advances the tax, therefore, the buyer must
generally repay it to him. Taxes upon the sale of old houses, for the
same reason as those upon the sale of land, fall generally upon the
seller; whom, in most cases, either conveniency or necessity obliges
to sell. The number of new-built houses that are annually brought to
market, is more or less regulated by the demand. Unless the demand is
such as to afford the builder his profit, after paying all expenses,
he will build no more houses. The number of old houses which happen at
any time to come to market, is regulated by accidents, of which the
greater part have no relation to the demand. Two or three great
bankruptcies in a mercantile town, will bring many houses to sale,
which must be sold for what can be got for them. Taxes upon the sale
of ground-rents fall altogether upon the seller, for the same reason
as those upon the sale of lands. Stamp duties, and duties upon the
registration of bonds and contracts for borrowed money, fall
altogether upon the borrower, and, in fact, are always paid by him.
Duties of the same kind upon law proceedings fall upon the suitors.
They reduce to both the capital value of the subject in dispute. The
more it costs to acquire any property, the less must be the neat value
of it when acquired.

All taxes upon the transference of property of every kind, so far as
they diminish the capital value of that property, tend to diminish the
funds destined for the maintenance of productive labour. They are all
more or less unthrifty taxes that increase the revenue of the
sovereign, which seldom maintains any but unproductive labourers, at
the expense of the capital of the people, which maintains none but

Such taxes, even when they are proportioned to the value of the
property transferred, are still unequal; the frequency of transference
not being always equal in property of equal value. When they are not
proportioned to this value, which is the case with the greater part of
the stamp duties and duties of registration, they are still more so.
They are in no respect arbitrary, but are, or may be, in all cases,
perfectly clear and certain. Though they sometimes fall upon the
person who is not very able to pay, the time of payment is, in most
cases, sufficiently convenient for him. When the payment becomes due,
he must, in most cases, have the more to pay. They are levied at very
little expense, and in general subject the contributors to no other
inconveniency, besides always the unavoidable one of paying the tax.

In France, the stamp duties are not much complained of. Those of
registration, which they call the Controle, are. They give occasion, it
is pretended, to much extortion in the officers of the farmers-general
who collect the tax, which is in a great measure arbitrary and
uncertain. In the greater part of the libels which have been written
against the present system of finances in France, the abuses of the
controle make a principal article. Uncertainty, however, does not seem
to be necessarily inherent in the nature of such taxes. If the popular
complaints are well founded, the abuse must arise, not so much from the
nature of the tax as from the want of precision and distinctness in the
words of the edicts or laws which impose it.

The registration of mortgages, and in general of all rights upon
immoveable property, as it gives great security both to creditors and
purchasers, is extremely advantageous to the public. That of the
greater part of deeds of other kinds, is frequently inconvenient and
even dangerous to individuals, without any advantage to the public.
All registers which, it is acknowledged, ought to be kept secret,
ought certainly never to exist. The credit of individuals ought
certainly never to depend upon so very slender a security, as the
probity and religion of the inferior officers of revenue. But where
the fees of registration have been made a source of revenue to the
sovereign, register-offices have commonly been multiplied without end,
both for the deeds which ought to be registered, and for those which
ought not. In France there are several different sorts of secret
registers. This abuse, though not perhaps a necessary, it must be
acknowledged, is a very natural effect of such taxes.

Such stamp duties as those in England upon cards and dice, upon
newspapers and periodical pamphlets, etc. are properly taxes upon
consumption; the final payment falls upon the persons who use or
consume such commodities. Such stamp duties as those upon licences to
retail ale, wine, and spiritous liquors, though intended, perhaps, to
fall upon the profits of the retailers, are likewise finally paid by
the consumers of those liquors. Such taxes, though called by the same
name, and levied by the same officers, and in the same manner with the
stamp duties above mentioned upon the transference of property, are,
however, of a quite different nature, and fall upon quite different

ARTICLE III. -- Taxes upon the Wages of Labour.

The wages of the inferior classes of work men, I have endeavoured to
show in the first book are everywhere necessarily regulated by two
different circumstances; the demand for labour, and the ordinary or
average price of provisions. The demand for labour, according as it
happens to be either increasing stationary or declining; or to require
an increasing, stationary, or declining population, regulates the
subsistence of the labourer, and determines in what degree it shall be
either liberal, moderate, or scanty. The ordinary average price of
provisions determines the quantity of money which must be paid to the
workman, in order to enable him, one year with another, to purchase
this liberal, moderate, or scanty subsistence. While the demand for
the labour and the price of provisions, therefore, remain the same, a
direct tax upon the wages of labour can have no other effect, than to
raise them somewhat higher than the tax. Let us suppose, for example,
that, in a particular place, the demand for labour and the price of
provisions were such as to render ten shillings a-week the ordinary
wages of labour; and that a tax of one-fifth, or four shillings in the
pound, was imposed upon wages. If the demand for labour and the price
of provisions remained the same, it would still be necessary that the
labourer should, in that place, earn such a subsistence as could be
bought only for ten shillings a-week; so that, after paying the tax,
he should have ten shillings a-week free wages. But, in order to leave
him such free wages, after paying such a tax, the price of labour must,
in that place, soon rise, not to twelve shillings a week only, but
to twelve and sixpence; that is, in order to enable him to pay a tax
of one-fifth, his wages must necessarily soon rise, not one-fifth part
only, but one-fourth. Whatever was the proportion of the tax, the
wages of labour must, in all cases rise, not only in that proportion,
but in a higher proportion. If the tax for example, was one-tenth, the
wages of labour must necessarily soon rise, not one-tenth part only,
but one-eighth.

A direct tax upon the wages of labour, therefore, though the labourer
might, perhaps, pay it out of his hand, could not properly be said to
be even advanced by him; at least if the demand for labour and the
average price of provisions remained the same after the tax as before
it. In all such cases, not only the tax, but something more than the
tax, would in reality be advanced by the person who immediately
employed him. The final payment would, in different cases, fall upon
different persons. The rise which such a tax might occasion in the
wages of manufacturing labour would be advanced by the master
manufacturer, who would both be entitled and obliged to charge it,
with a profit, upon the price of his goods. The final payment of this
rise of wages, therefore, together with the additional profit of the
master manufacturer would fall upon the consumer. The rise which such
a tax might occasion in the wages of country labour would be advanced
by the farmer, who, in order to maintain the same number of labourers
as before, would be obliged to employ a greater capital. In order to
get back this greater capital, together with the ordinary profits of
stock, it would be necessary that he should retain a larger portion,
or, what comes to the same thing, the price of a larger portion, of
the produce of the land, and, consequently, that he should pay less
rent to the landlord. The final payment of this rise of wages,
therefore, would, in this case, fall upon the landlord, together with
the additional profit of the farmer who had advanced it. In all cases,
a direct tax upon the wages of labour must, in the long-run, occasion
both a greater reduction in the rent of land, and a greater rise in
the price of manufactured goods than would have followed from the
proper assessment of a sum equal to the produce of the tax, partly
upon the rent of land, and partly upon consumable commodities.

If direct taxes upon the wages of labour have not always occasioned a
proportionable rise in those wages, it is because they have generally
occasioned a considerable fall in the demand of labour. The declension
of industry, the decrease of employment for the poor, the diminution
of the annual produce of the land and labour of the country, have
generally been the effects of such taxes. In consequence of them,
however, the price of labour must always be higher than it otherwise
would have been in the actual state of the demand; and this
enhancement of price, together with the profit of those who advance
it, must always be finally paid by the landlords and consumers.

A tax upon the wages of country labour does not raise the price of the
rude produce of land in proportion to the tax; for the same reason
that a tax upon the farmer's profit does not raise that price in that

Absurd and destructive as such taxes are, however, they take place in
many countries. In France, that part of the taille which is charged
upon the industry of workmen and day-labourers in country villages, is
properly a tax of this kind. Their wages are computed according to the
common rate of the district in which they reside; and, that they may
be as little liable as possible to any overcharge, their yearly gains
are estimated at no more than two hundred working days in the year.
{Memoires concernant les Droits, etc. tom. ii. p. 108.} The tax of
each individual is varied from year to year, according to different
circumstances, of which the collector or the commissary, whom
intendant appoints to assist him, are the judges. In Bohemia, in
consequence of the alteration in the system of finances which was
begun in 1748, a very heavy tax is imposed upon the industry of
artificers. They are divided into four classes. The highest class pay
a hundred florins a year, which, at two-and-twenty pence half penny
a-florin, amounts to 9:7:6. The second class are taxed at seventy;
the third at fifty; and the fourth, comprehending artificers in
villages, and the lowest class of those in towns, at twenty-five
florins. {Memoires concemant les Droits, etc. tom. iii. p. 87.}

The recompence of ingenious artists, and of men of liberal
professions, I have endeavoured to show in the first book, necessarily
keeps a certain proportion to the emoluments of inferior trades. A tax
upon this recompence, therefore, could have no other effect than to
raise it somewhat higher than in proportion to the tax. If it did not
rise in this manner, the ingenious arts and the liberal professions,
being; no longer upon a level with other trades, would be so much
deserted, that they would soon return to that level.

The emoluments of offices are not, like those of trades and
professions, regulated by the free competition of the market, and do
not, therefore, always bear a just proportion to what the nature of
the employment requires. They are, perhaps, in most countries, higher
than it requires; the persons who have the administration of
government being generally disposed to regard both themselves and
their immediate dependents, rather more than enough. The emoluments of
offices, therefore, can, in most cases, very well bear to be taxed.
The persons, besides, who enjoy public offices, especially the more
lucrative, are, in all countries, the objects of general envy; and a
tax upon their emoluments, even though it should be somewhat higher
than upon any other sort of revenue, is always a very popular tax. In
England, for example, when, by the land-tax, every other sort of
revenue was supposed to be assessed at four shillings in the pound, it
was very popular to lay a real tax of five shillings and sixpence in
the pound upon the salaries of offices which exceeded a hundred pounds
a-year; the pensions of the younger branches of the royal family, the
pay of the officers of the army and navy, and a few others less
obnoxious to envy, excepted. There are in England no other direct
taxes upon the wages of labour.

ARTICLE IV. -- Taxes which it is intended should fall indifferently
upon every different Species of Revenue.

The taxes which it is intended should fall indifferently upon every
different species of revenue, are capitation taxes, and taxes upon
consumable commodities. Those must be paid indifferently, from
whatever revenue the contributors may possess; from the rent of their
land, from the profits of their stock, or from the wages of their

Capitation Taxes.

Capitation taxes, if it is attempted to proportion them to the fortune
or revenue of each contributor, become altogether arbitrary. The state
of a man's fortune varies from day to day; and, without an
inquisition, more intolerable than any tax, and renewed at least once
every year, can only be guessed at. His assessment, therefore, must,
in most cases, depend upon the good or bad humour of his assessors,
and must, therefore, be altogether arbitrary and uncertain.

Capitation taxes, if they are proportioned, not to the supposed
fortune, but to the rank of each contributor, become altogether
unequal; the degrees of fortune being frequently unequal in the same
degree of rank.

Such taxes, therefore, if it is attempted to render them equal, become
altogether arbitrary and uncertain; and if it is attempted to render
them certain and not arbitrary, become altogether unequal. Let the tax
be light or heavy, uncertainty is always a great grievance. In a light
tax, a considerable degree of inequality may be supported; in a heavy
one, it is altogether intolerable.

In the different poll-taxes which took place in England during the
reign of William III. the contributors were, the greater part of them,
assessed according to the degree of their rank; as dukes, marquises,
earls, viscounts, barons, esquires, gentlemen, the eldest and youngest
sons of peers, etc. All shop-keepers and tradesmen worth more than
three hundred pounds, that is, the better sort of them, were subject
to the same assessment, how great soever might be the difference in
their fortunes. Their rank was more considered than their fortune.
Several of those who, in the first poll-tax, were rated according to
their supposed fortune were afterwards rated according to their rank.
Serjeants, attorneys, and proctors at law, who, in the first poll-tax,
were assessed at three shillings in the pound of their supposed
income, were afterwards assessed as gentlemen. In the assessment of a
tax which was not very heavy, a considerable degree of inequality had
been found less insupportable than any degree of uncertainty.

In the capitation which has been levied in France, without-any
interruption, since the beginning of the present century, the highest
orders of people are rated according to their rank, by an invariable
tariff; the lower orders of people, according to what is supposed to
be their fortune, by an assessment which varies from year to year. The
officers of the king's court, the judges, and other officers in the
superior courts of justice, the officers of the troops, etc are
assessed in the first manner. The inferior ranks of people in the
provinces are assessed in the second. In France, the great easily
submit to a considerable degree of inequality in a tax which, so far
as it affects them, is not a very heavy one; but could not brook the
arbitrary assessment of an intendant.

The inferior ranks of people must, in that country, suffer patiently
the usage which their superiors think proper to give them.

In England, the different poll-taxes never produced the sum which had
been expected from them, or which it was supposed they might have
produced, had they been exactly levied. In France, the capitation
always produces the sum expected from it. The mild government of
England, when it assessed the different ranks of people to the
poll-tax, contented itself with what that assessment happened to
produce, and required no compensation for the loss which the state
might sustain, either by those who could not pay, or by those who
would not pay (for there were many such), and who, by the indulgent
execution of the law, were not forced to pay. The more severe
government of France assesses upon each generality a certain sum,
which the intendant must find as he can. If any province complains of
being assessed too high, it may, in the assessment of next year,
obtain an abatement proportioned to the overcharge of the year before;
but it must pay in the mean time. The intendant, in order to be sure
of finding the sum assessed upon his generality, was empowered to
assess it in a larger sum, that the failure or inability of some of
the contributors might be compensated by the overcharge of the rest;
and till 1765, the fixation of this surplus assessment was left
altogether to his discretion. In that year, indeed, the council
assumed this power to itself. In the capitation of the provinces, it
is observed by the perfectly well informed author of the Memoirs upon
the Impositions in France, the proportion which falls upon the
nobility, and upon those whose privileges exempt them from the taille,
is the least considerable. The largest falls upon those subject to the
taille, who are assessed to the capitation at so much a-pound of what
they pay to that other tax.

Capitation taxes, so far as they are levied upon the lower ranks of
people, are direct taxes upon the wages of labour, and are attended
with all the inconveniencies of such taxes.

Capitation taxes are levied at little expense; and, where they are
rigorously exacted, afford a very sure revenue to the state. It is
upon this account that, in countries where the case, comfort, and
security of the inferior ranks of people are little attended to,
capitation taxes are very common. It is in general, however, but a
small part of the public revenue, which, in a great empire, has ever
been drawn from such taxes; and the greatest sum which they have ever
afforded, might always have been found in some other way much more
convenient to the people.

Taxes upon Consumable Commodities.

The impossibility of taxing the people, in proportion to their
revenue, by any capitation, seems to have given occasion to the
invention of taxes upon consumable commodities. The state not knowing
how to tax, directly and proportionably, the revenue of its subjects,
endeavours to tax it indirectly by taxing their expense, which, it is
supposed, will, in most cases, be nearly in proportion to their
revenue. Their expense is taxed, by taxing the consumable commodities
upon which it is laid out.

Consumable commodities are either necessaries or luxuries.

By necessaries I understand, not only the commodities which are
indispensibly necessary for the support of life, but whatever the
custom of the country renders it indecent for creditable people, even
of the lowest order, to be without. A linen shirt, for example, is,
strictly speaking, not a necessary of life. The Greeks and Romans
lived, I suppose, very comfortably, though they had no linen. But in
the present times, through the greater part of Europe, a creditable
day-labourer would be ashamed to appear in public without a linen
shirt, the want of which would be supposed to denote that disgraceful
degree of poverty, which, it is presumed, nobody can well fall into
without extreme bad conduct. Custom, in the same manner, has rendered
leather shoes a necessary of life in England. The poorest creditable
person, of either sex, would be ashamed to appear in public without
them. In Scotland, custom has rendered them a necessary of life to the
lowest order of men; but not to the same order of women, who may,
without any discredit, walk about barefooted. In France, they are
necessaries neither to men nor to women; the lowest rank of both sexes
appearing there publicly, without any discredit, sometimes in wooden
shoes, and sometimes barefooted. Under necessaries, therefore, I
comprehend, not only those things which nature, but those things which
the established rules of decency have rendered necessary to the lowest
rank of people. All other things I call luxuries, without meaning, by
this appellation, to throw the smallest degree of reproach upon the
temperate use of them. Beer and ale, for example, in Great Britain,
and wine, even in the wine countries, I call luxuries. A man of any
rank may, without any reproach, abstain totally from tasting such
liquors. Nature does not render them necessary for the support of
life; and custom nowhere renders it indecent to live without them.

As the wages of labour are everywhere regulated, partly by the demand
for it, and partly by the average price of the necessary articles of
subsistence; whatever raises this average price must necessarily raise
those wages; so that the labourer may still be able to purchase that
quantity of those necessary articles which the state of the demand for
labour, whether increasing, stationary, or declining, requires that he
should have. {See book i.chap. 8} A tax upon those articles necessarily
raises their price somewhat higher than the amount of the tax, because
the dealer, who advances the tax, must generally get it back, with a
profit. Such a tax must, therefore, occasion a rise in the wages of
labour, proportionable to this rise of price.

It is thus that a tax upon the necessaries of life operates exactly in
the same manner as a direct tax upon the wages of labour. The
labourer, though he may pay it out of his hand, cannot, for any
considerable time at least, be properly said even to advance it. It
must always, in the long-run, be advanced to him by his immediate
employer, in the advanced state of wages. His employer, if he is a
manufacturer, will charge upon the price of his goods the rise of
wages, together with a profit, so that the final payment of the tax,
together with this overcharge, will fall upon the consumer. If his
employer is a farmer, the final payment, together with a like
overcharge, will fall upon the rent of the landlord.

It is otherwise with taxes upon what I call luxuries, even upon those
of the poor. The rise in the price of the taxed commodities, will not
necessarily occasion any rise in the wages of labour. A tax upon
tobacco, for example, though a luxury of the poor, as well as of the
rich, will not raise wages. Though it is taxed in England at three
times, and in France at fifteen times its original price, those high
duties seem to have no effect upon the wages of labour. The same thing
maybe said of the taxes upon tea and sugar, which, in England and
Holland, have become luxuries of the lowest ranks of people; and of
those upon chocolate, which, in Spain, is said to have become so.

The different taxes which, in Great Britain, have, in the course of
the present century, been imposed upon spiritous liquors, are not
supposed to have had any effect upon the wages of labour. The rise in
the price of porter, occasioned by an additional tax of three
shillings upon the barrel of strong beer, has not raised the wages of
common labour in London. These were about eighteen pence or twenty
pence a-day before the tax, and they are not more now.

The high price of such commodities does not necessarily diminish the
ability of the inferior ranks of people to bring up families. Upon the
sober and industrious poor, taxes upon such commodities act as
sumptuary laws, and dispose them either to moderate, or to refrain
altogether from the use of superfluities which they can no longer
easily afford. Their ability to bring up families, in consequence of
this forced frugality, instead of being diminished, is frequently,
perhaps, increased by the tax. It is the sober and industrious poor
who generally bring up the most numerous families, and who principally
supply the demand for useful labour. All the poor, indeed, are not
sober and industrious; and the dissolute and disorderly might continue
to indulge themselves in the use of such commodities, after this rise
of price, in the same manner as before, without regarding the distress
which this indulgence might bring upon their families. Such disorderly
persons, however, seldom rear up numerous families, their children
generally perishing from neglect, mismanagement, and the scantiness or
unwholesomeness of their food. If by the strength of their
constitution, they survive the hardships to which the bad conduct of
their parents exposes them, yet the example of that bad conduct
commonly corrupts their morals; so that, instead of being useful to
society by their industry, they become public nuisances by their vices
and disorders. Through the advanced price of the luxuries of the poor,
therefore, might increase somewhat the distress of such disorderly
families, and thereby diminish somewhat their ability to bring up
children, it would not probably diminish much the useful population of
the country.

Any rise in the average price of necessaries, unless it be compensated
by a proportionable rise in the wages of labour, must necessarily
diminish, more or less, the ability of the poor to bring up numerous
families, and, consequently, to supply the demand for useful labour;
whatever may be the state of that demand, whether increasing,
stationary, or declining; or such as requires an increasing,
stationary, or declining population.

Taxes upon luxuries have no tendency to raise the price of any other
commodities, except that of the commodities taxed. Taxes upon
necessaries, by raising the wages of labour, necessarily tend to raise
the price of all manufactures, and consequently to diminish the extent
of their sale and consumption. Taxes upon luxuries are finally paid by
the consumers of the commodities taxed, without any retribution. They
fall indifferently upon every species of revenue, the wages of labour,
the profits of stock, and the rent of land. Taxes upon necessaries, so
far as they affect the labouring poor, are finally paid, partly by
landlords, in the diminished rent of their lands, and partly by rich
consumers, whether landlords or others, in the advanced price of
manufactured goods; and always with a considerable overcharge. The
advanced price of such manufactures as are real necessaries of life,
and are destined for the consumption of the poor, of coarse woollens,
for example, must be compensated to the poor by a farther advancement
of their wages. The middling and superior ranks of people, if they
understood their own interest, ought always to oppose all taxes upon
the necessaries of life, as well as all taxes upon the wages of
labour. The final payment of both the one and the other falls
altogether upon themselves, and always with a considerable overcharge.
They fall heaviest upon the landlords, who always pay in a double
capacity; in that of landlords, by the reduction, of their rent; and
in that of rich consumers, by the increase of their expense. The
observation of Sir Matthew Decker, that certain taxes are, in the
price of certain goods, sometimes repeated and accumulated four or
five times, is perfectly just with regard to taxes upon the
necessaries of life. In the price of leather, for example, you must
pay not only for the tax upon the leather of your own shoes, but for a
part of that upon those of the shoemaker and the tanner. You must pay,
too, for the tax upon the salt, upon the soap, and upon the candles
which those workmen consume while employed in your service; and for
the tax upon the leather, which the saltmaker, the soap-maker, and the
candle-maker consume, while employed in their service.

In Great Britain, the principal taxes upon the necessaries of life,
are those upon the four commodities just now mentioned, salt, leather,
soap, and candles.

Salt is a very ancient and a very universal subject of taxation. It
was taxed among the Romans, and it is so at present in, I believe,
every part of Europe. The quantity annually consumed by any individual
is so small, and may be purchased so gradually, that nobody, it seems
to have been thought, could feel very sensibly even a pretty heavy tax
upon it. It is in England taxed at three shillings and fourpence a
bushel; about three times the original price of the commodity. In some
other countries, the tax is still higher. Leather is a real necessary
of life. The use of linen renders soap such. In countries where the
winter nights are long, candles are a necessary instrument of trade.
Leather and soap are in Great Britain taxed at three halfpence
a-pound; candles at a penny; taxes which, upon the original price of
leather, may amount to about eight or ten per cent.; upon that of
soap, to about twenty or five-and-twenty per cent.; and upon that of
candles to about fourteen or fifteen per cent.; taxes which, though
lighter than that upon salt, are still very heavy. As all those four
commodities are real necessaries of life, such heavy taxes upon them
must increase somewhat the expense of the sober and industrious poor,
and must consequently raise more or less the wages of their labour.

In a country where the winters are so cold as in Great Britain, fuel
is, during that season, in the strictest sense of the word, a
necessary of life, not only for the purpose of dressing victuals, but
for the comfortable subsistence of many different sorts of workmen who
work within doors; and coals are the cheapest of all fuel. The price
of fuel has so important an influence upon that of labour, that all
over Great Britain, manufactures have confined themselves principally
to the coal counties; other parts of the country, on account of the
high price of this necessary article, not being able to work so cheap.
In some manufactures, besides, coal is a necessary instrument of
trade; as in those of glass, iron, and all other metals. If a bounty
could in any case be reasonable, it might perhaps be so upon the
transportation of coals from those parts of the country in which they
abound, to those in which they are wanted. But the legislature,
instead of a bounty, has imposed a tax of three shillings and
threepence a-ton upon coals carried coastways; which, upon most sorts
of coal, is more than sixty per cent. of the original price at the
coal pit. Coals carried, either by land or by inland navigation, pay
no duty. Where they 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

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
coach-maker. 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 forty-eight pounds additional price to the
coach-maker; 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, half-yearly, 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, half-yearly, or quarterly 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 the pound; but, three
years afterwards, it was again reduced 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
ascertaining, 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 discouragement 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
materials 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 re-landed
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:9d. 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 diminution 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, and never to be opened but in his
presence. If the merchant carried them to his own private warehouse,
the duties to be immediately paid, and never afterwards to be drawn
back; and that warehouse to be at all times subject to the visit and
examination of the custom-house officer, in order to ascertain how far
the quantity contained in it corresponded with that for which the duty
had been paid. If he carried them to the public warehouse, no duty to
be paid till they were taken out for home consumption. If taken out
for exportation, to be duty-free; proper security being always given
that they should be so exported. The dealers in those particular
commodities, either by wholesale or retail, to be at all times subject
to the visit and examination of the custom-house officer; and to be
obliged to justify, by proper certificates, the payment of the duty
upon the whole quantity contained in their shops or warehouses. What
are called the excise duties upon rum imported, are at present levied
in this manner; and the same system of administration might, perhaps,
be extended to all duties upon goods imported; provided always that
those duties were, like the duties of excise, confined to a few sorts
of goods of the most general use and consumption. If they were
extended to almost all sorts of goods, as at present, public
warehouses of sufficient extent could not easily be provided; and
goods of a very delicate nature, or of which the preservation required
much care and attention, could not safely be trusted by the merchant
in any warehouse but his own.

If, by such a system of administration, smuggling to any considerable
extent could be prevented, even under pretty high duties; and if every
duty was occasionally either heightened or lowered according as it was
most likely, either the one way or the other, to afford the greatest
revenue to the state; taxation being always employed as an instrument
of revenue, and never of monopoly; it seems not improbable that a
revenue, at least equal to the present neat revenue of the customs,
might be drawn from duties upon the importation of only a few sorts of
goods of the most general use and consumption; and that the duties of
customs might thus be brought to the same degree of simplicity,
certainty, and precision, as those of excise. What the revenue at
present loses by drawbacks upon the re-exportation of foreign goods,
which are afterwards re-landed and consumed at home, would, under this
system, be saved altogether. If to this saving, which would alone be
very considerable, were added the abolition of all bounties upon the
exportation of home produce; in all cases in which those bounties were
not in reality drawbacks of some duties of excise which had before
been advanced; it cannot well be doubted, but that the neat revenue of
customs might, after an alteration of this kind, be fully equal to
what it had ever been before.

If, by such a change of system, the public revenue suffered no loss,
the trade and manufactures of the country would certainly gain a very
considerable advantage. The trade in the commodities not taxed, by far
the greatest number would be perfectly free, and might be carried on
to and from all parts of the world with every possible advantage.
Among those commodities would be comprehended all the necessaries of
life, and all the materials of manufacture. So far as the free
importation of the necessaries of life reduced their average money
price in the home market, it would reduce the money price of labour,
but without reducing in any respect its real recompence. The value of
money is in proportion to the quantity of the necessaries of life
which it will purchase. That of the necessaries of life is altogether
independent of the quantity of money which can be had for them. The
reduction in the money price of labour would necessarily be attended
with a proportionable one in that of all home manufactures, which
would thereby gain some advantage in all foreign markets. The price of
some manufactures would be reduced, in a still greater proportion, by
the free importation of the raw materials. If raw silk could be
imported from China and Indostan, duty-free, the silk manufacturers in
England could greatly undersell those of both France and Italy. There
would be no occasion to prohibit the importation of foreign silks and
velvets. The cheapness of their goods would secure to our own workmen,
not only the possession of a home, but a very great command of the
foreign market. Even the trade in the commodities taxed, would be
carried on with much more advantage than at present. If those
commodities were delivered out of the public warehouse for foreign
exportation, being in this case exempted from all taxes, the trade in
them would be perfectly free. The carrying trade, in all sorts of
goods, would, under this system, enjoy every possible advantage. If
these commodities were delivered out for home consumption, the
importer not being obliged to advance the tax till he had an
opportunity of selling his goods, either to some dealer, or to some
consumer, he could always afford to sell them cheaper than if he had
been obliged to advance it at the moment of importation. Under the
same taxes, the foreign trade of consumption, even in the taxed
commodities, might in this manner be carried on with much more
advantage than it is at present.

It was the object of the famous excise scheme of Sir Robert Walpole,
to establish, with regard to wine and tobacco, a system not very
unlike that which is here proposed. But though the bill which was then
brought into Parliament, comprehended those two commodities only, it
was generally supposed to be meant as an introduction to a more
extensive scheme of the same kind. Faction, combined with the interest
of smuggling merchants, raised so violent, though so unjust a clamour,
against that bill, that the minister thought proper to drop it; and,
from a dread of exciting a clamour of the same kind, none of his
successors have dared to resume the project.

The duties upon foreign luxuries, imported for home consumption,
though they sometimes fall upon the poor, fall principally upon people
of middling or more than middling fortune. Such are, for example, the
duties upon foreign wines, upon coffee, chocolate, tea, sugar, etc.

The duties upon the cheaper luxuries of home produce, destined for
home consumption, fall pretty equally upon people of all ranks, in
proportion to their respective expense. The poor pay the duties upon
malt, hops, beer, and ale, upon their own consumption; the rich, upon
both their own consumption and that of their servants.

The whole consumption of the inferior ranks of people, or of those
below the middling rank, it must be observed, is, in every country,
much greater, not only in quantity, but in value, than that of the
middling, and of those above the middling rank. The whole expense of
the inferior is much greater titan that of the superior ranks. In the
first place, almost the whole capital of every country is annually
distributed among the inferior ranks of people, as the wages of
productive labour. Secondly, a great part of the revenue, arising from
both the rent of land and the profits of stock, is annually
distributed among the same rank, in the wages and maintenance of
menial servants, and other unproductive labourers. Thirdly, some part
of the profits of stock belongs to the same rank, as a revenue arising
from the employment of their small capitals. The amount of the profits
annually made by small shopkeepers, tradesmen, and retailers of all
kinds, is everywhere very considerable, and makes a very considerable
portion of the annual produce. Fourthly and lastly, some part even of
the rent of land belongs to the same rank; a considerable part to
those who are somewhat below the middling rank, and a small part even
to the lowest rank; common labourers sometimes possessing in property
an acre or two of land. Though the expense of those inferior ranks of
people, therefore, taking them individually, is very small, yet the
whole mass of it, taking them collectively, amounts always to by much
the largest portion of the whole expense of the society; what remains
of the annual produce of the land and labour of the country, for the
consumption of the superior ranks, being always much less, not only in
quantity, but in value. The taxes upon expense, therefore, which fall
chiefly upon that of the superior ranks of people, upon the smaller
portion of the annual produce, are likely to be much less productive
than either those which fall indifferently upon the expense of all
ranks, or even those which fall chiefly upon that of the inferior
ranks, than either those which fall indifferently upon the whole
annual produce, or those which fall chiefly upon the larger portion of
it. The excise upon the materials and manufacture of home-made
fermented and spirituous liquors, is, accordingly, of all the
different taxes upon expense, by far the most productive; and this
branch of the excise falls very much, perhaps principally, upon the
expense of the common people. In the year which ended on the 5th of
July 1775, the gross produce of this branch of the excise amounted to

It must always be remembered, however, that it is the luxuries, and
not the necessary expense of the inferior ranks of people, that ought
ever to be taxed. The final payment of any tax upon their necessary
expense, would fall altogether upon the superior ranks of people; upon
the smaller portion of the annual produce, and not upon the greater.
Such a tax must, in all cases, either raise the wages of labour, or
lessen the demand for it. It could not raise the wages of labour,
without throwing the final payment of the tax upon the superior ranks
of people. It could not lessen the demand for labour, without
lessening the annual produce of the land and labour of the country,
the fund upon which all taxes must be finally paid. Whatever might be
the state to which a tax of this kind reduced the demand for labour,
it must always raise wages higher than they otherwise would be in that
state; and the final payment of this enhancement of wages must, in all
cases, fall upon the superior ranks of people.

Fermented liquors brewed, and spiritous liquors distilled, not for
sale, but for private use, are not in Great Britain liable to any
duties of excise. This exemption, of which the object is to save
private families from the odious visit and examination of the
tax-gatherer, occasions the burden of those duties to fall frequently
much lighter upon the rich than upon the poor. It is not, indeed, very
common to distil for private use, though it is done sometimes. But in
the country, many middling and almost all rich and great families,
brew their own beer. Their strong beer, therefore, costs them eight
shillings a-barrel less than it costs the common brewer, who must have
his profit upon the tax, as well as upon all the other expense which
he advances. Such families, therefore, must drink their beer at least
nine or ten shillings a-barrel cheaper than any liquor of the same
quality can be drank by the common people, to whom it is everywhere
more convenient to buy their beer, by little and little, from the
brewery or the ale-house. Malt, in the same manner, that is made for
the use of a private family, is not liable to the visit or examination
of the tax-gatherer but, in this case the family must compound at
seven shillings and sixpence a-head for the tax. Seven shillings and
sixpence are equal to the excise upon ten bushels of malt; a quantity
fully equal to what all the different members of any sober family,
men, women, and children, are, at an average, likely to consume. But
in rich and great families, where country hospitality is much
practised, the malt liquors consumed by the members of the family make
but a small part of the consmnption of the house. Either on account of
this composition, however, or for other reasons, it is not near so
common to malt as to brew for private use. It is difficult to imagine
any equitable reason, why those who either brew or distil for private
use should not be subject to a composition of the same kind.

A greater revenue than what is at present drawn from all the heavy
taxes upon malt, beer, and ale, might be raised, it has frequently
been said, by a much lighter tax upon malt; the opportunities of
defrauding the revenue being much greater in a brewery than in a
malt-house; and those who brew for private use being exempted from all
duties or composition for duties, which is not the case with those who
malt for private use.

In the porter brewery of London, a quarter of malt is commonly brewed
into more than two barrels and a-half, sometimes into three barrels of
porter. The different taxes upon malt amount to six shillings
a-quarter; those upon strong ale and beer to eight shillings a-barrel.
In the porter brewery, therefore, the different taxes upon malt, beer,
and ale, amount to between twenty-six and thirty shillings upon the
produce of a quarter of malt. In the country brewery for common
country sale, a quarter of malt is seldom brewed into less than two
barrels of strong, and one barrel of small beer; frequently into two
barrels and a-half of strong beer. The different taxes upon small beer
amount to one shilling and fourpence a-barrel. In the country brewery,
therefore, the different taxes upon malt, beer, and ale, seldom amount
to less than twenty-three shillings and fourpence, frequently to
twenty-six shillings, upon the produce of a quarter of malt. Taking
the whole kingdom at an average, therefore, the whole amount of the
duties upon malt, beer, and ale, cannot be estimated at less than
twenty-four or twenty-five shillings upon the produce of a quarter of
malt. But by taking off all the different duties upon beer and ale,
and by trebling the malt tax, or by raising it from six to eighteen
shilling's upon the quarter of malt, a greater revenue, it is said,
might be raised by this single tax, than what is at present drawn from
all those heavier taxes.

In 1772, the old malt tax produced......... 722,023: 11: 11
The additional... 356,776: 7: 9
In 1775, the old tax produced............... 561,627: 3: 7
The additional... 278,650: 15: 3
In 1774, the old tax produced ............ 624,614: 17: 5
The additional....310,745: 2: 8
In 1775, the old tax produced ....... .....657,357: 0: 8
The additional....323,785: 12: 6
5,855,580: 12: 0
Average of these four years .............. 958,895: 3: 0

In 1772, the country excise produced.......1,243,120: 5: 3
The London brewery 408,260: 7: 2
In 1773, the country excise................1,245,808: 3: 3
The London brewery 405,406: 17: 10
In 1774, the country excise................1,246,373: 14: 5
The London brewery 320,601: 18: 0
In 1775, the country excise................1,214,583: 6: 1
The London brewery 463,670: 7: 0
4)6,547,832: 19: 2
Average of these four years ..............1,636,958: 4: 9
To which adding the average malt tax........ 958,895: 3: 0

The whole amount of those different
taxes comes out to be........2,595,835: 7: 10

But, by trebling the malt tax,
or by raising it from six to
eighteen shillings upon the quarter
of malt, that single tax would produce.....2,876,685: 9: 0
A sum which exceeds the
foregoing by.... 280,832: 1: 3

Under the old malt tax, indeed, is comprehended a tax of four
shillings upon the hogshead of cyder, and another of ten shillings
upon the barrel of mum. In 1774, the tax upon cyder produced only
3,083:6:8. It probably fell somewhat short of its usual amount; all
the different taxes upon cyder, having, that year, produced less than
ordinary. The tax upon mum, though much heavier, is still less
productive, on account of the smaller consumption of that liquor. But
to balance whatever may be the ordinary amount of those two taxes,
there is comprehended under what is called the country excise, first,
the old excise of six shillings and eightpence upon the hogshead of
cyder; secondly, a like tax of six shillings and eightpence upon the
hogshead of verjuice; thirdly, another of eight shillings and
ninepence upon the hogshead of vinegar; and, lastly, a fourth tax of
elevenpence upon the gallon of mead or metheglin. The produce of those
different taxes will probably much more than counterbalance that of
the duties imposed, by what is called the annual malt tax, upon cyder
and mum.

Malt is consumed, not only in the brewery of beer and ale, but in the
manufacture of low wines and spirits. If the malt tax were to be
raised to eighteen shillings upon the quarter, it might be necessary
to make some abatement in the different excises which are imposed upon
those particular sorts of low wines and spirits, of which malt makes
any part of the materials. In what are called malt spirits, it makes
commonly but a third part of the materials; the other two-thirds being
either raw barley, or one-third barley and one-third wheat. In the
distillery of malt spirits, both the opportunity and the temptation to
smuggle are much greater than either in a brewery or in a malt-house;
the opportunity, on account of the smaller bulk and greater value of
the commodity, and the temptation, on account of the superior height
of the duties, which amounted to 3s. 10 2/3d. upon the gallon of
spirits. {Though the duties directly imposed upon proof spirits amount
only to 2s. 6d per gallon, these, added to the duties upon the low
wines, from which they are distilled, amount to 3s 10 2/3d. Both low
wines and proof spirits are, to prevent frauds, now rated according to
what they gauge in the wash.}

By increasing the duties upon malt, and reducing those upon the
distillery, both the opportunities and the temptation to smuggle would
be diminished, which might occasion a still further augmentation of

It has for some time past been the policy of Great Britain to
discourage the consumption of spiritous liquors, on account of their
supposed tendency to ruin the health and to corrupt the morals of the
common people. According to this policy, the abatement of the taxes
upon the distillery ought not to be so great as to reduce, in any
respect, the price of those liquors. Spiritous liquors might remain as
dear as ever; while, at the same time, the wholesome and invigorating
liquors of beer and ale might be considerably reduced in their price.
The people might thus be in part relieved from one of the burdens of
which they at present complain the most; while, at the same time, the
revenue might be considerably augmented.

The objections of Dr. Davenant to this alteration in the present
system of excise duties, seem to be without foundation. Those
objections are, that the tax, instead of dividing itself, as at
present, pretty equally upon the profit of the maltster, upon that of
the brewer and upon that of the retailer, would so far as it affected
profit, fall altogether upon that of the maltster; that the maltster
could not so easily get back the amount of the tax in the advanced
price of his malt, as the brewer and retailer in the advanced price of
their liquor; and that so heavy a tax upon malt might reduce the rent
and profit of barley land.

No tax can ever reduce, for any considerable time, the rate of profit
in any particular trade, which must always keep its level with other
trades in the neighbourhood. The present duties upon malt, beer, and
ale, do not affect the profits of the dealers in those commodities,
who all get back the tax with an additional profit, in the enhanced
price of their goods. A tax, indeed, may render the goods upon which
it is imposed so dear, as to diminish the consumption of them. But the
consumption of malt is in malt liquors; and a tax of eighteen
shillings upon the quarter of malt could not well render those liquors
dearer than the different taxes, amounting to twenty-four or
twenty-five shillings, do at present. Those liquors, on the contrary,
would probably become cheaper, and the consumption of them would be
more likely to increase than to diminish.

It is not very easy to understand why it should be more difficult for
the maltster to get back eighteen shillings in the advanced price of
his malt, than it is at present for the brewer to get back twenty-four
or twenty-five, sometimes thirty shillings, in that of his liquor. The
maltster, indeed, instead of a tax of six shillings, would be obliged
to advance one of eighteen shilling upon every quarter of malt. But
the brewer is at present obliged to advance a tax of twenty-four or
twentyfive, sometimes thirty shillings, upon every quarter of malt
which he brews. It could not be more inconvenient for the maltster to
advance a lighter tax, than it is at present for the brewer to advance
a heavier one. The maltster does not always keep in his granaries a
stock of malt, which it will require a longer time to dispose of than
the stock of beer and ale which the brewer frequently keeps in his
cellars. The former, therefore, may frequently get the returns of his
money as soon as the latter. But whatever inconveniency might arise to
the maltster from being obliged to advance a heavier tax, it could
easily be remedied, by granting him a few months longer credit than is
at present commonly given to the brewer.

Nothing could reduce the rent and profit of barley land, which did not
reduce the demand for barley. But a change of system, which reduced
the duties upon a quarter of malt brewed into beer and ale, from
twentyfour and twenty-five shillings to eighteen shillings, would be
more likely to increase than diminish that demand. The rent and profit
of barley land, besides, must always be nearly equal to those of other
equally fertile and equally well cultivated land. If they were less,
some part of the barley land would soon be turned to some other
purpose; and if they were greater, more land would soon be turned to
the raising of barley. When the ordinary price of any particular
produce of land is at what may be called a monopoly price, a tax upon
it necessarily reduces the rent and profit of the land which grows it.
A tax upon the produce of those precious vineyards, of which the wine
falls so much short of the effectual demand, that its price is always
above the natural proportion to that of the produce of other equally
fertile and equally well cultivated land, would necessarily reduce the
rent and profit of those vineyards. The price of the wines being
already the highest that could be got for the quantity commonly sent
to market, it could not be raised higher without diminishing that
quantity; and the quantity could not be diminished without still
greater loss, because the lands could not be turned to any other
equally valuable produce. The whole weight of the tax, therefore,
would fall upon the rent and profit; properly upon the rent of the
vineyard. When it has been proposed to lay any new tax upon sugar, our
sugar planters have frequently complained that the whole weight of
such taxes fell not upon the consumer, but upon the producer; they
never having been able to raise the price of their sugar after the tax
higher than it was before. The price had, it seems, before the tax,
been a monopoly price; and the arguments adduced to show that sugar
was an improper subject of taxation, demonstrated perhaps that it was
a proper one; the gains of monopolists, whenever they can be come at,
being certainly of all subjects the most proper. But the ordinary
price of barley has never been a monopoly price; and the rent and
profit of barley land have never been above their natural proportion
to those of other equally fertile and equally well cultivated land.
The different taxes which have been imposed upon malt, beer, and ale,
have never lowered the price of barley; have never reduced the rent
and profit of barley land. The price of malt to the brewer has
constantly risen in proportion to the taxes imposed upon it; and those
taxes, together with the different duties upon beer and ale, have
constantly either raised the price, or, what comes to the same thing,
reduced the quality of those commodities to the consumer. The final
payment of those taxes has fallen constantly upon the consumer, and
not upon the producer.

The only people likely to suffer by the change of system here
proposed, are those who brew for their own private use. But the
exemption, which this superior rank of people at present enjoy, from
very heavy taxes which are paid by the poor labourer and artificer, is
surely most unjust and unequal, and ought to be taken away, even
though this change was never to take place. It has probably been the
interest of this superior order of people, however, which has hitherto
prevented a change of system that could not well fail both to increase
the revenue and to relieve the people.

Besides such duties as those of custom and excise above mentioned,
there are several others which affect the price of goods more
unequally and more indirectly. Of this kind are the duties, which, in
French, are called peages, which in old Saxon times were called the
duties of passage, and which seem to have been originally established
for the same purpose as our turnpike tolls, or the tolls upon our
canals and navigable rivers, for the maintenance of the road or of the
navigation. Those duties, when applied to such purposes, are most
properly imposed according to the bulk or weight of the goods. As they
were originally local and provincial duties, applicable to local and
provincial purposes, the administration of them was, in most cases,
entrusted to the particular town, parish, or lordship, in which they
were levied; such communities being, in some way or other, supposed to
be accountable for the application. The sovereign, who is altogether
unaccountable, has in many countries assumed to himself the
administration of those duties; and though he has in most cases
enhanced very much the duty, he has in many entirely neglected the
application. If the turnpike tolls of Great Britain should ever become
one of the resources of government, we may learn, by the example of
many other nations, what would probably be the consequence. Such
tolls, no doubt, are finally paid by the consumer; but the consumer is
not taxed in proportion to his expense, when he pays, not according to
the value, but according to the bulk or weight of what he consumes.
When such duties are imposed, not according to the bulk or weight, but
according to the supposed value of the goods, they become properly a
sort of inland customs or excise, which obstruct very much the most
important of all branches of commerce, the interior commerce of the

In some small states, duties similar to those passage duties are
imposed upon goods carried across the territory, either by land or by
water, from one foreign country to another. These are in some
countries called transit-duties. Some of the little Italian states
which are situated upon the Po, and the rivers which run into it,
derive some revenue from duties of this kind, which are paid
altogether by foreigners, and which, perhaps, are the only duties that
one state can impose upon the subjects of another, without obstruction
in any respect, the industry or commerce of its own. The most
important transit-duty in the world, is that levied by the king of
Denmark upon all merchant ships which pass through the Sound.

Such taxes upon luxuries, as the greater part of the duties of customs
and excise, though they all fall indifferently upon every different
species of revenue, and are paid finally, or without any retribution,
by whoever consumes the commodities upon which they are imposed; yet
they do not always fall equally or proportionally upon the revenue of
every individual. As every man's humour regulates the degree of his
consumption, every man contributes rather according to his humour,
than proportion to his revenue: the profuse contribute more, the


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