Chapter 2, Part D, of the Wealth of Nations, Book 5. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith, Book 5, Chapter 2, Part D, of the Sources of the General or Public Revenue of the Society. Article 2 Taxes Upon Profit or Upon the Revenue Arising from Stock 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 a 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 shown 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 labor. 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 labor would necessarily be more or less diminished by its removal. 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 neighbor 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 percent. Every hundred pound stock accordingly was supposed to be taxed at 24 shillings, the fifth part of six pounds. Since the legal rate of interest has been reduced to five percent, every hundred pound stock is supposed to be taxed at 20 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 be 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 every inhabitant is obliged to pay to the state one fourth percent of all that he possesses, and as the wealth of the people of Hamburg consists principally in stock, this tax may be considered as a tax upon stock. Every man assesses himself, and in the presence of the magistrate, puts annually into the public offer a certain sum of money, which he declares upon oath to be one fourth percent 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 everyone 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 everyone 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 Basel 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 in-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. 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 occasioned for any such concealment. In Holland, soon after the exaltation of the late Prince of Orange to the Statholdership, a tax of two percent, or the fiftieth penny, as it was called, was imposed upon the whole substance of every citizen. Every citizen assessed 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 percent, a tax of two percent amounts to thirteen shillings and fourpence in the pound, upon the highest neat revenue which is commonly drawn from stock. It is the tax which very few people could pay, without encroaching more or less upon their capitals. In a particular exigency the people may, from a 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 undervald and Zürich 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 capital. 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 peddlers, that upon hackney coaches and chairs, and that which the keepers avail houses pay for a license to retail ale and spiritist liquors. During the late war another tax of the same kind was proposed upon shops. The war having been undertaken it was said in defense of the trade of the country the merchants who were to profit by it ought to contribute towards the support of it. 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 overcharge. 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 favors 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 favors the great nor oppresses the smaller dealer. The tax of twenty shillings a year for a license to sell ale of forty shillings for a license to sell spiritus liquors and of forty shillings more for a license 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 and 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 shopkeeper would have fallen upon the consumer with a considerable overcharge to the profit of the shopkeeper. 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 tale 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 seemed 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 tale was said to be real. The land tax established by the late king of Sardinia and the tale in the provinces of Languedoc, Provence, Dauphin, and Brittany, in the generality of Montsebonne and in the elections of Aegon and Condemn, as well as in some other districts of France, our 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 tale was said to be personal. In the greater part of those provinces of France, which are called the countries of elections, the tale is of this kind. The real tale, as it is imposed only upon a part of the lands of the country, is necessarily unequal, but it is not always an arbitrary tax, though it is so upon some occasions. The personal tale, 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 tale at present, 1775, annually imposed upon the twenty generalities, called the countries of elections, amounts to forty million one hundred seven thousand two hundred and thirty nine levers, sixteen 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, and 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 intended. 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 meantime, yet if they complain and make good of 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 tale 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 attacks 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. Attacks 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 tale 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 endeavors to cultivate with the meanest and most wretched instruments of husbandry that he can. Such is his distrust and 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 tale 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 inquiry. What are called poll taxes in the southern provinces of North America and the West India Islands, annual taxes of so much ahead 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 retribution. Taxes of so much ahead 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 Holland 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 head for every man's 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 tax than those who exercise the untaxed employments. Taxes upon the revenue arising from stock and 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 ventium, or 20th 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 from land, houses, and stock. So far as it affects stock, it is assessed, though not with great rigor, 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 exeggable by the creditor except in particular cases. The ventium seems not to have raised the rate of those annuities, though it is exactly levied upon them all. Appendix to articles one and two taxes upon the capital value of lands, houses, and stocks. 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 value. The transference of all sorts of property from the dead to the living, and that of immovable 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 movable 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 deed transferring property of all kinds from the dead to the living and upon those transferring immovable property from the living to the living. Transactions which might easily have been taxed directly. The Vesema hereditatum or the 20th 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, the author who writes concerning it the least indistinctly, says 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. Collateral successions are taxed according to the degree of relation from 5 to 30 percent 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 the 50th penny. Deluctuosa hereditas the mournful succession of ascendance to descendants to the 20th penny only. Direct successions or those of descendants to ascendance 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 for us familiarated. 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 inconvenience 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 miner 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 miner and the payment of the widow's dower when there happened to be a dowager upon the land. When the miner came to be 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 encumbrances and restores the family to their ancient splendor could in those times have no such effect. The waste and not the disencombrance 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 Byrne it is so high as a sixth part of the price of all noble fives and the tenth part of that of all ignoble ones. In the Canton of Lucerne 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 10% upon the whole price of the sale. 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 transferred. In Great Britain the stamp duties are higher or lower not so much according to the value of the property transferred an 18 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 recompense for their labor. The crown derives no revenue from them. In Holland 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 stamp 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 300 florins equal to about 27 pounds 10 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 percent 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 unducked. These it seems are considered as a sort of houses upon the water. The sale of movables when it is ordered by a court of justice is subject to the like duty of two and a half percent. In France there are both stamp duties and duties upon registration. The former are considered as a branch of the aides 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 a 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 convenience 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 labor. They are all more or less unthrifty taxes that increase the revenue of the sovereign which seldom maintains any but unproductive laborers at the expense of the capital of the people which maintains none but productive. 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 inconvenience 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 control are. They give occasion it is pretended too 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 control 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 imposed. The registration of mortgages and in general of all rights upon immovable property as it gives great security both through 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 licenses to retail ale wine and spiritus 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 funds. End of Book 5 Chapter 2 Part D Chapter 2 Part E of the Wealth of Nations Book 5 This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer please visit LibriVox.org Recording by Stephen Escalera The Wealth of Nations by Adam Smith Book 5 Chapter 2 Part E of the sources of the general or public revenue of the society Article 3 Taxes upon the wages of labor The wages of the inferior classes of workmen I have endeavored to show in the first book are everywhere necessarily regulated by two different circumstances. The demand for labor and the ordinary or average price of provisions. The demand for labor 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 laborer 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 workmen in order to enable him one year with another to purchase this liberal moderate or scanty subsistence. While the demand for the laborer and the price of provisions therefore remain the same a direct tax upon the wages of laborer 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 laborer and the price of provisions were such as to render 10 shillings a week the ordinary wages of labor and that a tax of one fifth or four shillings in the pound was imposed upon wages. If the demand for laborer and the price of provisions remain the same it would still be necessary that the laborer should in that place earn such a subsistence as could be bought only for 10 shillings a week so that after paying the tax he should have 10 shillings a week free wages. But in order to leave him such free wages after paying such a tax the price of labor must in that place soon rise not to 12 shillings a week only but to 12 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 labor 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 labor must necessarily soon rise not one tenth part only but one eighth. A direct tax upon the wages of labor therefore though the laborer 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 labor and the average price of provisions remain 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 labor 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 labor would be advanced by the farmer who in order to maintain the same number of laborers 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 labor must in the long run occasioned both a greater reduction in the rent of land and a greater rise in the price of manufactured goods then 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 labor have not always occasioned a proportionable rise in those wages it is because they have generally occasioned a considerable fall in the demand of labor. The declension of industry the decrease of employment for the poor the diminution of the annual produce of the land and labor of the country have generally been the effects of such taxes and consequence of them however the price of labor 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 labor 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 proportion. Absurd and destructive as such taxes are however they take place in many countries. In France that part of the tail which is charged upon the industry of workmen and day laborers and 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 200 working days in the year. 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 a system 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 nine pounds seven shilling six pence. 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 25 florins. The recompense of ingenious artists and of men of liberal professions I have endeavored to show in the first book necessarily keeps a certain proportion to the emoluments of inferior trades. A tax upon this recompense 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 dependence 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 six pence 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 accepted. There are in England no other direct taxes upon the wages of labor. Article 4 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 labor. 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 a year can only be guessed at. His assessment therefore must in most cases depend upon the good or bad humor 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, Marquise, Earls, Viscounts, Barons, Esquires, Gentlemen the eldest and youngest sons of peers, etc. All shopkeepers and tradesmen worth more than 300 pounds that is the better sort of them were subject to the same assessment how great so ever 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. Sergeants, 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 living 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 Kings 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 attendant. 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 contended 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 attendant 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 meantime. The attendant, 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 tale is the least considerable. The largest falls upon those subject to the tale 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 labor and are attended with all the inconveniences 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 endeavors 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 indispensable 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 labor 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 there 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 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 labor 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 laborer may still be able to purchase that quantity of those necessary articles which the state of the demand for labor whether increasing stationary or declining requires that he should have. Attacks 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 attacks must therefore occasionally rise in the wages of labor proportionable to this rise of price. It is thus that attacks upon the necessaries of life operates exactly in the same manner as a direct tax upon the wages of labor. The laborer 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 and the price of the taxed commodities will not necessarily occasion any rise in the wages of labor. Attacks 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 15 times its original price those high duties seem to have no effect upon the wages of labor. The same thing may be 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 spiritist liquors are not supposed to have had any effect upon the wages of labor. The rise and 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 labor in London. These were about 18 pence or 20 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 sumtuary 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 and 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 labor. All the poor indeed are not sober and industrious and the disillute 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 expose 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. Though 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 labor must necessarily diminish more or less the ability of the poor to bring up numerous families and consequently to supply the demand for useful labor 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 labor necessarily tend to raise the price of all manufacturers 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 labor the profits of stock and the rent of land. Taxes upon necessaries so far as they affect the laboring poor are finally paid partly by landlords and a 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 manufacturers as our real necessaries of life and are destined for the consumption of the poor of coarse woolens for example must be compensated to the poor by a further 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 labor. 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 salt maker 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 four pence 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 and a half pence a pound. Candles at a penny. Taxes which upon the original price of leather may amount to about eight or ten percent upon that of soap to about twenty or five and twenty percent and upon that of candles to about fourteen or fifteen percent. 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 labor. 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 and influence upon that of labor that all over Great Britain manufacturers 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 manufacturers 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 attacks of three shillings and three pence a ton upon coals carried coastways which upon most sorts of coal is more than 60% 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 labor 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 as 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 the government. Nothing seems necessary for the repeal of such regulations but to convince the public of the futility of that system and 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 and lieu of a part of them the people who live in the country pay every year so much ahead according to the sort of bread they are supposed to consume. Those who consume wheat and bread pay three guilders fifteen civers about six shillings and nine pence half-penny. Those and some other taxes of the same kind by raising the price of labor are said to have ruined the greater part of the manufacturers of Holland. 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 Placencia and Guastalla and the Ecclesiastical State. A French author 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's nothing so absurd, says Cicero, which has not sometimes been asserted by some philosophers. Taxes upon butchers meat are still more common than those upon bread. It may indeed be doubted whether butchers meat is anywhere and 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 butchers meat, afford the most plentiful, the most wholesome, the most nourishing and the most invigorating diet. Decency nowhere requires that any man should eat butchers meat, as it in most places requires that he should wear a linen shirt or a pair of leather shoes. End of Book 5, Chapter 2, Part E Chapter 2, Part F of the Wealth of Nations Book 5 This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera The Wealth of Nations by Adam Smith Book 5, Chapter 2, Part F of the Sources of the General or Public Revenue of the Society 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 10 or 12 years. It might be taxed once for all before it comes out of the hands of the coachmaker. But it is certainly more convenient for the buyer to pay four pounds a year for the privilege of keeping a coach, then to pay all at once 40 or 48 pounds additional price to the coachmaker or a sum equivalent to what the tax is likely to cost him during the time he uses the same coach. A service of plate in the same manner may last more than a century. It is certainly easier for the consumer to pay five shillings a year for every 100 ounces of plate near 1% of the value, then to redeem this long annuity at 5 and 20 or 30 years purchase, which would enhance the price at least 5 and 20 or 30%. 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 license 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 spiritus 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 license 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 license 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 three pence half penny 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 then may perhaps amount to about three half pence. If a workman can conveniently spare those three half pence he buys a pot of porter. If he cannot he contents himself with a pint and as a penny saved as 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 chooses to do so. Thirdly, such taxes would operate less as sumtuary laws. When the license 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 inconvenience 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 ahead for a license to drink tea. I have already mentioned a tax upon bread which so far as it is consumed in farmhouses 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 accepting 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 Bergs 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 unfavorably 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 from 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 as 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 favored than those in another? Or why should the merchant exporter be more favored 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 woolen manufacturer came to be established in England lest the king should lose any part of his customs upon wool by the exportation of woolen 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 47th year of Edward III a duty of six pence 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 14th of Richard II this duty was raised to one shilling in the pound but three years afterwards it was again reduced to six pence. It was raised to eight pence 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 in 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 percent a subsidy came in the language of the customs to denote a general duty of this kind of five percent. This subsidy which is now called the old subsidy still continues to be levied according to the book of rates established by the 12th of Charles II. The method of ascertaining by a book of rates the value of good 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 percent upon the greater part of goods. The one third and the two third subsidy made up between them another five percent of which they were proportionable parts. The subsidy of 1747 made a fourth five percent 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 exigencies 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 these imposed by the latter subsidies and other imposts are upon the greater parts of the goods drawn back in the same manner. This growing favor of exportation and discouragement of importation have suffered only a few exceptions which chiefly concern the materials of some manufacturers. These are 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 seniga has been subjected to higher duties. Great Britain by the conquest of Canada and Senegal having got almost the monopoly of those commodities. That the mercantile system has not been very favorable to the revenue of the great body of the people to the annual produce of the land and labor of the country I have endeavored to show in the fourth book of this inquiry. It seems not to have been more favorable 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 woolens 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 manufacturers 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 defocation 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 fifth of January 1755 amounted to 5,068,000 pounds. The bounties which were paid out of this revenue though in that year there was no bounty upon corn amounted to 167,806 pounds. The drawbacks which were paid upon debentures and certificates to 2,156,800 pounds. Bounties and drawbacks together amounted to 2,324,600 pounds. In consequence of these deductions the revenue of the customs amounted only to 2,743,400 pounds from which deducting 287,900 pounds for the expensive management in salaries and other incidents the neat revenue of the customs for that year comes out to be 2,455,500 pounds. The expensive management amounts in this manner to between 5 and 6 percent upon the gross revenue of the customs and to something more than 10 percent upon what remains of that revenue after deducting what is paid away and bounties and drawbacks. Heavy duties being imposed upon almost all goods imported are 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 the export sometimes out of vanity and to pass for great dealers and goods which pay no duty and sometimes to gain a bounty or a drawback. Our exporters 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 four shillings nine and three quarter pence for every 20 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 occasioned much trouble, expense and vexation to the importer. In point of perpetuity, precision and distinctness therefore the duties of customs are much more 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 coconuts etc. and in some of those of the East Indies tea coffee chinaware spiceries of all kinds several sorts of peace goods etc. These different articles afford perhaps at present the greater part of the revenue which is drawn from the duties of customs. The taxes which at present subsist upon foreign manufacturers if you accept 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 merchants an advantage in the home market. By removing all prohibitions and by subjecting all foreign manufacturers 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 tax 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 effectively 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 time 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 time 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 the 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 accordingly 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 relanded 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 manufacturers 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 labor but without reducing in any respect its real recompense. 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 labor would necessarily be attended with a proportionable one in that of all home manufacturers which would thereby gain some advantage in all foreign markets. The price of some manufacturers 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 India duty free the silk manufacturers in England could greatly undersell those of both France and Italy. There will 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 those so unjust a clamor against that bill that the minister thought proper to drop it and from a dread of exciting a clamor 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 than 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 labor. 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 laborers. Thirdly some part of the profits of stock belongs to the same rank as the 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 laborers 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 labor 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 homemade fermented and spirited 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 three million three hundred and forty one thousand eight hundred and thirty seven pounds nine shillings nine pence. 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 spiritist 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 distill 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 cost them eight shillings of barrel less than it cost 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 of 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 alehouse. 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 six pence ahead for the tax. Seven shillings and six pence 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 practiced the malt liquors consumed by the members of the family make but a small part of the consumption 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 distill 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 four pence a barrel in the country brewery therefore the different taxes upon malt beer and ale seldom amount to less than twenty three shillings and four pence frequently to twenty six shillings upon the produce of a quarter of malt taking the whole kingdom and an average therefore the whole amount of the duties upon malt beer and ale cannot be estimated at less than 24 or 25 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 18 shillings upon the quarter of malt a greater revenue it is said might be raised by this single tax then what is that present drawn from all those heavier taxes under the old malt tax indeed is comprehended a tax of four shillings upon the hog's head of cider and another of ten shillings upon the barrel of mum in 1774 the tax upon cider produced only 3083 pounds six shillings eight pence it probably fell somewhat short of its usual amount all the different taxes upon cider 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 eight pence upon the hog's head of cider secondly a like tax of six shillings and eight pence upon the hog's head of reduce thirdly another of eight shillings and nine pence upon the hog's head of vinegar and lastly a fourth tax of 11 pence upon the gallon of mead or methagland 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 cider and mum end of book five chapter two part f