Solutions: Tax Reform

⁷⁷ It is impossible to exactly ascertain the revenue to be produced by this colonial tax system.

Through this system, more than £10 million of revenue is annually levied in Great Britain on less than 8 million people.

• Ireland has more than 2 million people.
• The 12 American provinces have more than 3 million people.

Those accounts might have been exaggerated to:

• encourage their own people, or
• intimidate the people of Great Britain.

We shall suppose that our North American and West Indian colonies together have no more than 3 million people.

The whole British empire in Europe and America contains no more than 13 million people.

If this tax system raises a revenue of more than £10 million on less than 8 million people, it should raise a revenue of more than £16,250,000 on 13 million people ([13 * 1.25]).

Supposing that this system could produce this amount, the revenue raised in Ireland and the plantations for defraying the cost of their respective civil governments must be deducted from this revenue.

The cost of the civil and military establishment of Ireland, together with the interest of the public debt, amounts to less than £750,000 a year.

• This is the average of the two years which ended March 1775.

Before the start of the present disturbances, the revenue of the principal colonies of America and the West Indies amounted to £141,800.

• In this account, the revenue of Maryland, North Carolina, and all our recent acquisitions is omitted.
• We may estimate it to be between £30-40,000.

For the sake of even numbers, let us suppose that the revenue necessary for supporting the civil government of Ireland and the plantations was £1 million.

There would remain a revenue of £15,250,000 for:

• defraying the general expence of the empire,
• paying the public debt.

But if £1 million could spared in peacetime from Great Britain’s present revenue, £6,250,000 could very well be spared from this improved revenue to pay that debt.

This great sinking fund, too, might be increased every year by the interest of the debt which had been discharged the year before.

In this way, the sinking fund might increase very rapidly.

In a few years, it would be enough to:

• discharge the whole debt, and
• completely restore the empire’s current debilitated and languishing vigour.

The people might be relieved from some of the most burdensome taxes. The labouring poor would thus be enabled to=

• live better,
• work cheaper, and
• send their goods cheaper to market.

The cheapness of their goods would increase the demand for those goods and the labour that produced them. This increase in the demand for labour would increase the population of the labouring poor and improve their circumstances. Their consumption would increase and with it, the tax revenue arising from their consumption.

⁷⁸ The revenue from this tax system might not immediately increase in proportion to the population size subjected to it.

For some time, great indulgence would be due to those provinces which were subjected to burdens they were not accustomed to.

• Even when the same taxes were levied as exactly as possible everywhere, they would not produce a revenue proportional to the population size.

In a poor country, the consumption of the principal commodities subject to customs duties and excise is very small.

In a thinly inhabited country, smuggling opportunities are very great.

The consumption of malt liquors among the lower class in Scotland is very small.

The excise on malt, beer, and ale there produces less than in England in proportion to:

• the population, and
• the rate of the duties.

The duty on malt is different because of a supposed difference of quality.

In these particular branches of the excise, there is not much more smuggling in the one country than in the other.

The duties on the distillery and more of the customs duties produce less in Scotland than in England, in proportion to the population, because of:

• the smaller consumption of the taxed commodities, and
• greater smuggling.

In Ireland, the lower class is still poorer than in Scotland.

It is almost as thinly inhabited. In Ireland, therefore, the consumption of the taxed commodities might be still less than Scotland,in proportion to its population size.

• Smuggling is nearly the same.

In America and the West Indies, the lowest class of white people are in much better circumstances than the lowest class in England.

• Their consumption of all their usual luxuries is probably much greater.

The blacks who make most of the southern colonies and those of the West India islands are slaves.

• They are in a worse condition than the poorest people in Scotland or Ireland.
• But we must not on that account, imagine that=
  • they are worse fed, or
  • their consumption of articles subjected to moderate duties is less than that of the English lower class

In order that they may work well, their master’s interest is to feed them well and keep them in good heart in the same way as his working cattle.

Almost everywhere, the blacks accordingly have their allowance of rum and molasses or spruce beer in the same manner as the white servants.

• This allowance would probably not be withdrawn though those articles should be subjected to moderate duties.

The consumption of the taxed commodities, relative to the population size, would probably be as great in America and the West Indies as in any part of the British empire.

The opportunities of smuggling would be much greater because America is much less populated than Scotland or Ireland, relative to its area.

Smuggling opportunities in the most important branch of the excise can be almost entirely removed if the revenue presently raised by the malt and malt liquor duties were levied by a single malt duty.

Smuggling opportunities would be very much reduced if:

• the customs duties were confined to a few of the articles of the most general use and consumption, instead of being imposed on almost all the articles of importation, and
• the levying of those duties were subjected to the excise laws.

Because of those two very simple and easy alterations, the customs duties and excise might probably produce a revenue as great relative to the consumption of the least and most populated provinces, as they do at present.