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86.: THE BUDGET EXAMINER, 20 FEB., 1831, PP. 113-14 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I [1822]

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The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I, ed. Ann P. Robson and John M. Robson, Introduction by Ann P. Robson and John M. Robson (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1986).

Part of: Collected Works of John Stuart Mill, in 33 vols.

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86.

THE BUDGET

EXAMINER, 20 FEB., 1831, PP. 113-14

Here Mill turns his attention to the British House of Commons, where, on 11 Feb., John Charles Spencer, Lord Althorp, introduced the budget (PD, 3rd ser., Vol. 2, cols. 403-18). The intentions behind the proposals, stated Spencer, were to reduce the burden on the poor, which could best be done by improving manufactures and thus increasing employment; to increase revenue by lowering duties and thereby increasing consumption; and to improve the distribution of taxes by spreading over the whole community those which fell on only one part. He proposed to abolish 210 offices, many in Ireland; to reduce duties on beer, leather, cider, and sugar; to reduce taxes on newspapers, coal, tallow candles, printed calicoes, glass, and tobacco; and to increase the tax on wine, timber, raw cotton, and passengers by steam. He also proposed to impose a one-half percent duty on the sale of funded property, but the outcry over this last proposal caused its immediate withdrawal. The debate continued on 14 Feb. in both Lords and Commons (see ibid., cols. 492-539).

The item, the first in the “Political Examiner,” is headed as title. It is described in Mill’s bibliography as “An article headed ‘The Budget’ in the Examiner of 20th February 1831” (MacMinn, p. 15), and is listed as title and marked with square brackets in the Somerville College set.

the budget has given a shock to the influence of the Ministry, from which, it seems to be the general persuasion that they will hardly recover. All that class of politicians, so numerous in times of difficulty, who, in the civil dissensions of the seventeenth century, were termed “waiters upon Providence,”1 are beginning to desert the falling house. They are “losing their confidence in the Ministry,” which from them always means, their confidence in its continuing in place. Those whose respect for a Cabinet is proportioned to their opinion of its durability, have lowered the quota of their respect to three months at most.

It cannot be denied withal, that the present Budget evinces large views of public good, an enlightened perception of the pernicious working of our fiscal system, a discriminating selection of the worst parts of it to be first got rid of, which it would be injustice to compare for a moment with any of the feeble aspirations of preceding financiers: but, unhappily, these generous and enlarged projects of improvement are deformed with blunders of so portentous a magnitude, as have caused all that is admirable in the general scheme to be passed over with little attention and no gratitude: and unhappily the Ministers, who like the remainder of the Parliamentary herd, if they are capable of receiving, are incapable of originating truth and good sense, are indebted to others for all their enlightened views; while their blunders, alas! are all their own.

The taxes which are taken off are such as all who were acquainted with their operation, had long since pointed out as some of the very worst which disgrace our fiscal code. These which are to be laid on, the Ministers, as ministers are wont, reserved in petto, to be first announced in Parliament, when it was too late to retract with any dignity; and of course, they underwent no other consideration or scrutiny than such as could be given them by the feeble, infantine, ministerial, parliamentary minds of their official originators.

Although the tax of one-half per cent. on the transfer of stock has been abandoned, which was the least foolish course a ministry could adopt, which had been so foolish as to propose it; the question which it involves is too deeply important, and too certain to recur again in some other shape, to be let pass without a few words of remark.

A tax on stock is partial taxation; it is taxation imposed upon that class whose property is, from its very nature, more precarious, less protected by the feelings which ordinarily attach to property, and more tempting to financial cupidity, than any other; and it is taxation in breach of a direct Parliamentary pledge, as clear as words could make it, which formed as essential a part of the national contract with the fundholder, as the rate of interest.2

To the assertion, that the proposed tax is partial taxation, in other words, confiscation, aggravated by a direct breach of faith, Ministers had no answer to make, but that they intended to impose a similar tax on the transfer of land, and that their measure was no more a breach of national faith than was the income tax.3

Neither of these pleas in justification, will bear a moment’s thought. The land and the funds together, form a very small portion of the national wealth; and a tax which falls upon them both, and upon nothing else, is partial taxation no less than if it fell only upon one or other of them. A large portion of the funds, moreover, change hands as many times in a year as land does in a century, and would therefore, under the show and pretext of exact equality, be taxed unequally in the ratio of one hundred to one. The allusion to the income tax is actually silly. The income tax was a general measure. The national creditor never stipulated for exemption from bearing his due share, proportional to his property, of the public burthens. He stipulated that he should not be made to pay it in such a way as should enable a profligate ministry and parliament, under the fraudulent pretence of calling upon him for his share, to call on him for more than his share, and place the nation in the disgraceful predicament of a debtor saying to his creditor, God forbid I should refuse you the interest of my debt, but I am free to call part of it a tax, and under that name I mean to keep it in my own pocket.

If the fundholder is not taxed in the same proportion to his property as other people, it is in the power of Parliament to make the matter certain, by laying on a uniform tax in proportion to property. But if inequalities in the pressure of taxation are to be made up for, as this scheme proposes, by partial taxes on those who are supposed to be undertaxed, there is so much unavoidable uncertainty, and so much room for sophistry and quibble, in discussing whether the fundholder pays his share or less than his share, that he is the ready victim of any minister, who with plunder in his heart and jesuitry on his lips, should come down to Parliament with a proposition for throwing two-thirds of the public burthens upon the shoulders of a single class; and that, too, the only class whose property the nation has, by a special obligation, engaged itself to protect.

So far is this from being a hypothetical danger, urged merely for effect, and unlikely to be realized, that the very tax proposed realizes it as far as it goes. For can there be a more impudent assumption than that the fundholder does not pay his due share of the taxes? The rich, truly enough (and sufficiently to our discredit) are more lightly taxed than persons of small, or middling fortunes; but the poor fundholder pays the same taxes as any other poor man, and the rich fundholder pays the same as any other rich man. The fundholder pays all the assessed taxes. He pays all the taxes on consumption. He pays the legacy duty in common with the public in general; this the landholders, in their two Houses of Parliament, have taken good care that their land should not pay. There remain only the taxes which fall peculiarly on the land. Now, without saying any thing of their amount, which has been so grossly exaggerated; or of the counter-balancing advantage of low wages, which, to the greatest national detriment, is occasioned by those very taxes; is there a man in the country who does not know that there has been enacted a Corn Law for the declared purpose of compensating, and more than compensating, the landholders for all these taxes, at the cost of three times the amount, taken from the pockets of all the other classes of the community, the fundholder included? But the lion’s share of the plunder of the people does not content our rent-eating oligarchy; they would have the whole, and, doubtless, will make a desperate effort to seize and engross it, by means of the approaching Sham Reform. This at least is certain—that if, when the facts which prove the contrary are so flagrant and notorious, the impudent pretence is made, that the landlords bear more than their share of the taxes, and the fundholders less, it is a sufficient proof how abundantly needful the stipulation was, which formed part of the contract with the fundholder, that he should not be called upon to pay any tax, unless in common with all the rest of the community; for if a pretext can be found for imposing a partial tax upon him now, when, in the name of Heaven, can such a pretext possibly be wanting?

The other taxes which are to be laid on, are all more or less objectionable. The tax on raw cotton is less mischievous certainly than that on calicoes; but it is justly chargeable, though not quite in an equal degree, with nearly all the vices which a tax can have, together with the accidental one of being a new tax, and therefore disturbing previous expectations and arrangements. It falls heavier on the poor than on the rich; it impedes the increase of intercourse with foreign countries; it renders larger capitals necessary, for carrying on all the branches of manufacture in which cotton is used; it compels the keeping up of two establishments, one to levy the tax, and another to pay back as much (according to some) as two-thirds of it; and it occasions all the frauds inseparable from a system of drawbacks. And while we are on the subject of drawbacks, we may just remark, how much eagerness is always shown to prevent a tax from falling upon our exports, that is to say, upon foreigners, while our own people are suffered to be taxed à merci et à miséricorde, without a tithe of the complaints. This keen anxiety for the interests of our merchants, and indifference to that of the consumers, is quite in keeping with all the rest of the working of our aristocratical government.

The tax on steam-boat passengers is as indefensible an impost, viewed on general principles, as can easily be conceived; and it will, besides, most injuriously affect existing interests. Our fear is, that it is not sufficiently high to prevent the influx of Irish, which degrades and pauperizes our labourers; for if it were, nothing could exceed the delight and gratitude with which we should hail even so bad a means of effecting so virtuous an end.

The modification of the duties on timber is highly objectionable as an increased burthen upon a necessary of life and a material of all manufactures; while it has not, at least if the newspapers have rightly reported it, the redeeming merit of removing the inequality of taxation between Baltic and Canada timber.4 If it accomplished this, it would of itself save the country a sum of one million annually, which is now as completely lost and sacrificed as if it were thrown into the sea, or into the fire. But the measure, we fear, is so distant an approach to this equalization, that its effect in removing the evil of a forced and unprofitable employment of capital, will scarcely be perceived.

But if these were the best of all taxes, instead of ranking among the worst, could the ministers hope to gain the least credit with the public for merely shifting the burthen which oppresses us from one shoulder to the other, when we are all firmly convinced that such retrenchments are possible, as would have enabled taxes of this amount to be dispensed with altogether? What retrenchment, however, is to be expected from a ministry, which expatiates on its own economy in cutting off an Irish Postmaster-General, or a Lieutenant-General of the Ordnance, while it levies nine thousand additional soldiers to fight Swing;5 not having the common sense which would have taught any ploughboy, that Swing will range the country for ever, if he continues at large until regular troops can catch him; nor foreseeing, what has since been boasted of by the Attorney-General,6 that the common officers of justice would quietly go to the spot, and take the offenders and try them and hang them without the smallest impediment.

A Ministry, whose fears can thus far overmaster their reason, may possibly be sincere in making the monstrous assertion, that the public service does not admit of any diminution of taxation.7 But where was Mr. Hume when this was said? Had such a doctrine been advanced by a Goulburn or a Herries, what bounds could have been set to his indignation?

The Ministry should have taken off the duty on cottons, on sea-borne coals, on candles, on glass, and reduced those on newspapers and advertisements,8 without laying on any new tax at all, until they had time to see, first, what expenditure they could retrench, and next, how much revenue they would actually lose. The loss of revenue is never equal to the amount of the nominal sacrifice, because a portion of what the consumers save is sure to be expended in some other taxable article. These taxes in particular, as they take from the consumer very much more than they bring into the public treasury, would, when remitted, have set at liberty a much larger income than the nominal amount of the tax, and would consequently have increased in more than the usual degree, the produce of the other taxes. The abolition of the duty on glass, by leading to a large export of that article, would have caused increased imports, and an increase of the customs revenue. Neither must it be forgotten, that trade and manufactures are now extremely prosperous, and that an increase of revenue is naturally to be looked for from that cause alone. The equalization of the duties on wines, one of the best of Lord Althorp’s propositions, might have been persevered in; and as the abolition of the duty on glass would, we are informed, have been nearly a compensation to the wine merchant, for the small increased duty on Spanish, Portuguese, and German wines, a large increase of consumption and of revenue might have been expected, and a great extension of commercial intercourse with France, leading to manifold advantages, and not without a beneficial effect on the revenue.

If all these sources of increased revenue, together with such retrenchments as the proprietors of Parliament could be induced to permit, proved insufficient to supply the deficit occasioned by the repeal of so many taxes, it would have been a trifling evil to make up the deficiency for a single year by the issue of, certainly, far less than a million of exchequer bills. In the meantime, public attention would have been drawn to the possible necessity of a new tax; the merits and defects of all those which could occur to any one, would have been fully canvassed, and the least objectionable, or the least unacceptable, might have been chosen; unless a Parliamentary Reform, occurring in the meantime, should bring about (as, if not a mere imposture, it undoubtedly would) such retrenchment as would have rendered not these alone, but many others of our taxes altogether unnecessary.

It is not too late, even now, for the Ministers to adopt this course; but we fear there is little chance of it.

In giving up the proposed tax on the transfer of land and stock, the Ministry have abandoned the intended reduction of the duties on tobacco, and the abolition of those on glass. The first we do not lament; as we have no hope that a reduction, which would still have left a duty of 600 per cent. would have had the effect expected from it, and which alone could justify it,—the prevention of smuggling. The change of determination with respect to the duty on glass, we deeply regret.

[1 ]For the term, see Hume, History of England, Vol. VII, p. 227.

[2 ]The words appear in the Acts authorizing the raising of money by a bond issue on the credit of the Consolidated Fund; see, e.g., 28 George III, c. 26 (1788): “and moreover, that no Money to be lent upon the Security of this Act shall be rated or assessed to any Tax or Assessment whatsoever.”

[3 ]A reply by Spencer (11 Feb., 1831), PD, 3rd ser., Vol. 2, cols. 446-7. The wartime taxes referred to both as income and property taxes were established by 38 George III, c. 60 (1798), and 39 George III, c. 13 (1799), and repealed in effect by 56 George III, c. 65 (1816).

[4 ]See, e.g., leading articles in the Morning Chronicle, 12 Feb., p. 4, and The Times, 12 Feb., p. 3.

[5 ]The name used to personify the rick-burning and other current disturbances in the agricultural areas mostly of the south.

[6 ]Thomas Denman.

[7 ]Spencer, speech of 11 Feb., cols. 404-6.

[8 ]For the concluding two, part of the “taxes on knowledge,” see No. 177, n2.