The Press. — London, England, 1857-01-17 00:00:00

I 52 extravagant establishments, and were found unequal to the pressure which actual war put upon them. They broke down in the hour of need, while the resources of England with marvellous buoyancy responded to the enor mous call made upon them. The total expen diture of this country in the last year of war rose to 93,000,000/., and that amount, amazing as it was, might have been exceeded to any extent that the Government deemed neces sary—so inexhaustible were the resources of the nation. Our ability to conduct war on a colossal scale when the necessity arises is due t► the wise economy which presides over our finances in ti me of peace. Had we maintained larger establishments from 1815 to 1854 than we did, it is probable that we should have been less prepared for war when it broke forth than we actually wero. Whatever unprepared ness existed, was owing much less to the smallness of our establishments than to their inexperience. As it was, we were able to send from our shores, at the ver7 commencement of the War, an army of 50,000 men in the most perfect state of equipment and discipline. 11. We find that the expense of our military and naval establishments had fallen to the lowest point in 1835. Their cost in that year was 11,657,4861., and they went on gradually increasing until in 1853 they rose to 16,000,00001., or about 4,000,000/. more than they had been eighteen years previously. This increase was not unobserved, nor did it pass without strong expressions of dissatisfac tion on the part of a powerful body of politi- cians—the manufacturing and peace party. In fact, it was only the outbreak of war which saved the country from a regular agitation against what Mr. COBDEN, Mr BRIGHT, and their followers called war establishments in time of peace. They demanded that the esti mates of the army and navy *should be re duced to as low a point as they were in 1835. Whether an average of 16,000,0001. is suffi cient for these services in time of peace, it is for the Legislature and the country to decide. The average from 1830 to 1840 was less than 13,000,0001. And we are strongly inclined to believe that if the highest point previous to the War be much exceeded, a reaction will set in, which will again compel their reduction to an inadequate scale. We do not believe that for any considerable number of years of peace the country will consent to the maintenance of establishments more expensive than those previous to the late War. And obviously it will be gross and most foolish waste of the national money to uphold larger establishments for two or three years (while the public retain a lively sense of the late War) than can be permanently maintained. What scale of effi ciency and expenditure it is desirable to main tain in future should be determined during the next session. The principle should be steadily kept in view, that our forces should be so arranged in time of peace as to allow of great and rapid expansion when war occurs. We are satisfied it would be sounder policy to replace our military and naval establish ments on nearly their footing immediately pre ceding the war, and gradually strengthen them as the country recovers from the pres sure of its new burdens, than to greatly in crease them at once, and be compelled by the force of opinion in a few years' time to reduce them. To show the misdom of economy, PALEY puts the case of one man who began his expenditure at a scale of 1001, and was able to raise it 501. a year, until in twenty years it reached 1,0001. per annum ; and the case of another man who began at 1,0001, and was compelled to drop it 501. a year, until in twenty years it was reduced to 1001. In the twenty years both men would have spent the same sum, but which would have had the most comfort? The gradual reduction in our establishments carried on from the Peace of 1815 to 1835 were, on the whole, narrow, pinching, and injudicious. The increase from 1835 to 1854 waa, on the whole, liberal, efficient, and wise ; and it is the latter system which we hope to see adopted. On the supposition that our ordinary expen diture be nearly reduced to the amount pre vailing in 1853, or to about 51,000,0001., there will be an addition of more than 1,000,000/. for THE PRESS. the. interest on the increase of the public debt, and there will be a charge of, we believe, about 1,500,0001. more for the payment of the prin cipal of the loans raised, until the amount is paid off'. For several years to come the War has entailed on this country an addition to its burdens of about 2,500,000/. annually, and this increase will be thought by most persons to supply another strong reason for vigilant and judicious economy in the management of our finances. The expenditure for the ensuing financial year may probably be fixed at about 53,000,0001., or 54,000,0001. If we take the latter amount, which, accord ing to the scale of expenditure of 1853, would allow of about 17,000,0001. for army and navy, or one-half more than was thought necessary in 1835 ; and if we suppose the net revenue of the current year to reach 08,000,0001., the Par liament will have to determine in what manner the two are to be balanced. It may decide on a large increase of expenditure. This we hardly think likely ; nor would such increase, now that all the threads of the War are gathered up, meet with the support of the country. A very considerable reduction in the existing seals of taxation must be decided on, and the only practical question to be consi dered is, whether that reduction shall be in favour of direct or of indirect taxation. If the Income Tax is to remain as a per manent source of revenue, it may be plausibly reasoned that on the whole it is better to derive a large amount from this impost, and to reduce indirect, taxation, than to derive from it a comparatively small amount. while the indirect taxation remains untouched, as the inquisitorial character of the tax, and the obnoxious machinery by which it is raised, exist in full force whether the amount derived from it be small or large. In fact, we believe that beyond the question whether large and expensive, or efficient and economical arma ments shall be supported, the Parliament will this next session be called on to pronounce a decided opinion in favour of direct or of indirect taxation. If arrangements are not NOW made for the total abolition of the Income Tax, it is most unlikely that the country will ever be relieved from this obnoxious impost. Contrary to good faith, it has been maintained beyond the periods promised for its expiration. It was at first proposed by Sir ROBERT PEEL as an extraor dinary aid for three years, and then extended, that the experiment of reducing indirect taxes might be further proceeded with. The pa• tience with which it was borne induced Lord JOHN RUSSELL'S Chancellor of the Exche quer to propose an addition to it; this was resisted by Parliament, and other sources of revenue were easily found. The ease with which this impost can be augmented supplies financiers with a continual temptation to increase it, that compliance may be made with the demands sure to be plentifully raised for remissions of taxation on particular sources of revenue. No financier has attempted to deny the radical inequality of the Income Tax. The injustice in particular cases is glaring. Thus it taxes the total income from house property, though heavy sums are required from time to time to be laid out in repairs. Annuities and leaseholds for short terms are charged at the same rate as income from perpetuities. In very many cases, particularly as regards pro fessional men, a hap portion of their income is necessarily spent in upholding establish ments beyond their wants and means, but absolutely indispensable to their position and to the localities where, for convenience sake, they arc compelled to reside. In all such eases the tax becomes cruelly oppressive, and its burden is felt the more harshly from the means used to arrive at the amount of incomes. The surveyor is an irresponsible officer. He is interested in raising as large an amount of revenue as possible ; and there are eases in which he has at random surcharged the inha bitants of whole districts with no better reason than that he hopes to wring from them a larger amount than they have returned. All attempts to remedy the inequality and oppressiveness inherent iu the tax have failed. Mr. DISRAELI, in his Budget of 1852, proposed to reduce the tax on incomes to bd. in the SATURDAY, pound, while the tax on property remained at 7d. This was a recognition of the injustice of a uniform rate of assessment, but it would only very partially have remedied such injustice, as some incomes, in the same class, must be much more sure, and much more clear of en cumbrance, than others. In the same year, Mr. GLADSTONE proposed in his Budget that the Income Tax should totally expire in the year 1860, when the charge fin• annuities to the extent of 2,150,0001. will fall in. The Par liament will this next session have to decide whether that pledge shall be kept. In determining between direct and indirect taxation there is one very important point to be borne in mind. It is, that practically there is a limit to the benefit the public can derive from the reduction of indirect taxation. When the price of an article is suddenly lowered by the remission of the duty upon it, an increased demand arises which means do not exist of supplying. The price then rises, and frequently the whole amount of duty re mitted goes into the pocket of the producer, the price rising to the point at which it stood before the duty was remitted. To give one familiar instance, we may take the article of brandy. The duty was reduced by Sir ROBERT PEEL from, we think, 21s. 61. to 15s. the gallon. At first the price of brandy fell ; but as the supply did not grow with the demand caused by the reduction of price, the rate again rose, and brandy is now, we believe, about as dear—at all events, to the retail con sumer—as it was before the reduction of duty. The Revenue has lost, the consumer has not gained, the foreign producer has alone bene fited. The relief from direct taxation is, on the contrary, certain, and extends to other classes than those immediately affected by it. Direct taxation falls with severity upon capital, and curtails the enterprises in which surplus capital is accustomed to find employment. The increase of the Income Tax put almost a total stop to building, and to all branches of industry therewith connected. The result is severe suffering among the industrious classes. Ten thousand honest artisans willing to work, but unable to procure employment, met this week in Smithfield, to declare the intense dis tress to which they were, without any fault of their own, reduced. The sixteen millions of additional taxation imposed by the 'War have been principally abstracted from the capital which sets industry in motion, which gives wages to the artisan, profits to the tradesman, income to the small capitalist, and continually renders life more commodious by making our large towns more elegant and salubrious. It is very justly observed by a contem porary—the Morning Post—that the Income fax is in its nature a War Tax, and should be confined to pe►iods of war. " Its original " designation," we are told, "in the Act of " GEORGE M., passed in 1798, is An aid and " contribution granted for the purposes of the " War,' and that is, in truth, the fitting descrip " tion. It is not, properly speaking, a tax, " but is rather of the nature of the benevo " lences ' which were granted upon urgent " occasions—generally occasions of war—to " our monarchs in ancient times." As a re source in time of war the Income Tax is in valuable. In any great emergency its inequality would be overlooked, and it would be paid by all classes with cheerfulness. If retained as a permanent source of revenue, it must be modified. The people will not submit. to have all descriptions of income, from the most pre carious and encumbered to the most sure and unembarrassed, taxed alike. But the very modification that would be necessary in time of peace, would impair its usefulness in time of war, and when it rose high would cause it to fall with dreadful severity upon property. Indeed, a property tax alone, or a tax which fell mainly upon property, would always be liable, in cases of urgency or pretended urgency, to be pushed close to confiscation. A regulated tax, distinguishing different kinds of income, would probably lead to a graduated tax, by which large fortunes would be assessed at a much higher rate than small ones. The first questi on th en i n w hi c h th e p u bli c Is interested is—whether the Government