The Sun.
London, England, 1860-05-14 00:00:00

THE PAPER DUTY.

(From the Economist.)
The resistance which Lord Derby
has announced
to the repeal of the excise duty on paper raises one
of the most difficult financial and political questions
which we have had in this country for Many years.
In the first 'place the proposal to repeal this duty
was the weak point of Mr. Gladstone's budget. It
was separable ,from all the other parts of it. We
were engaged in a vast undertaking ; we were abo-
lishing the remnant of protective duties ; we were
simplifying our tariff; we were paying the cast of
the French treaty. Fvery one must feel that these
three operations were enough for one year. There,
was no occasion now to trouble ourselves with any-
thing further.
Secondly, the argument which Mr. Gladstone
deduces from the cessation of the Long Annuities is
not tenable. We have undoubtedly £2,000,000 in a
mercantile sense "to the good" from that source,
but it does not follow that we can afford to give up
that portion of our national income. Unfortunately
our expenditure has increased, and we are not so
rich as we hoped to be. We cannot, therefore, af-
ford to remit taxes as we otherwise might do. In-
deed, Mr. Gladstone does not remit taxes ; he sub-
stitutes the income tax for the paper duty ; he
changes the incidence of the burden, but he does
not diminish the pressure on the nation. Nor do we
attach conclusive weight to the report of the Inland
Revenue department. No doubt, their objections to
the tax are very true. Everything nearly which
can be objected to a tax may be objected to this one.
Still, when our finances have other claims on them,
we must often for a time endure a very imperfect
tax ; we must " rub on" with it, so to say, till our
difficulties are less.

Thirdly, there is no doubt that the provision
for the finances of the year is not a very satisfac-
tory one. The incipient war with China will,
we fear, cost much, and there is no margin even
now for extra charges. As we remarked three
months ago," very considerable credit is taken for an
increased consumption which must be hypothetical,
for tie yield of taxes of which the very existence
is problematical, and for savings in departmental
expenditure which have not yet been made."
Many of the small taxes on trade will never pass;
indeed, their nature has been much changed since
the remarks just quoted were written. We cannot
calculate the yield of those which may pass exactly;
nor eau we rely with perfect confidence on the in-
creased consumption of articles affected by the
French treaty. We are, indeed, disposed to think
that a cheap and light wine will be drunk much
more extensively in this country than it ever has
been, but we do not like to speculate on a revenue
from such a source. It may be substituted for other
duty-paying stimulants, and then our revenue might
not be improved. _ _ _

All these reasons seem to be in favour of Lord
Derby's resistance to the repeal of the paper duty ;
and we think they undoubtedly show that Mr.
Gladstone should not have proposed to repeal it.
We regret that he has burdened our finances this
year with an additional difficulty. But these con-
siderations by no means exhaust the question,
First, we must bear in mind that it is hardly
right to keep an important trade in a state of
suspense. After what has occurred, no one will
ever believe that the paper duty will be perma-
net. If we postpone the repeal of it till next
year or the year after we expose a large branch of
industry to the paralysing effect of uncertainty.
Much business has now been transacted, many
contracts made in the expectation that the repeal
would be immediate. No duty can be in a more
unstable position. It has been condemned by a
resolution of the House of Commons, by the depart-
ment which has to levy it, by the Chancellor of the
Exchequer, by a Cabinet, by a bill sent up to the
House of Lords. We have hardly a right to keep
any great trade in this state. One of the first rules
of indirect taiation is that it should be steady, con-
sistent, and calculable. The Excise duty on paper
can no longer be so.

Secondly-, it is not constitutionally expedient to
thrust money on the Executive Government. It is
for the Cabinet to calculate what it requires ; if it
makes an inefficient provision it does so at its peril.
The reputation of financiers depends on the accu-
racy of their calculations. Public opinion will
visit them with severe condemnation if they indulge
in sanguine calculations unverified by the event.
It is scarcely for the House of Commons to give
them more than they ask for; still less is it for the
HOUS3 of Lords to give what neither the House of
Commons nor the Government deem necessary.
We admit that extreme cases may justify such a
course, though it must always be anomalous. But
we doubt its expediency to preserve a condemned
duty, which we cannot now regard as a permanent
source of revenue. It may often be the duty of
Parliament to reject a budget—occasionally it may
be their duty to alter a budget—to refuse to sanc-
tion the abandonment of permanent taxes which
the Government would surrender. But this power
must always be an exceptional power. It should
only be used on extreme occasions. We doubt
whether it is wise to use it to preserve a duty which
cannot last, which was bad when we thought it
durable, and is worse now that we know it to be
temporary.
Thirdly, we must take into consideration a
source of revenue which is not enough regarded.
We have said that we doubt the calculations of in-
creased revenue which are deduced from the in-
creased consumption of articles affected by the pre-
sent budget. We do not say we disbelieve them, but
we doubt them. On the other hand, however, the
indirect revenue derived from all the principal ar•
tides on which it is levied is largely increasing, and
while the country continues to be prosperous it wii I
go on increasing. We would rather not speculate
on this increase until it is realised, but nevertheless
it may be borne in mind. The House of Lords is
now asked to interfere because our finances are in
extreme peril. In estimating the amount of that
peril, it is proper to remember that our ordinary
revenue is singularly elastic ; that it increases year
by year with rapidity; that it will enable us to re-
cover the amount we must lose by the repeal of the
paper duty within a moderate space of time.
On the whole, therefore, though we regret that
the repeal of the paper duty was• proposed this year,
though we feel that our financial calculations are
more speculative and less cautious than we could
wish them to be, we cannot recommend the course
which Lord Derby would have us take. There are
a few singular cases in which so extreme a step
would bojustifiable, but this is scarcely one of them.,