Part 12

The words of Cobden upon the point are as true to-day as when they were uttered. Speaking upon the Budget of 1848, he dwelt upon the inequalities of the Income Tax, which was then still talked of by Chancellors of the Exchequer as a temporary measure. "Make your tax just," he said, "in order that it may be permanent. It is ridiculous to deny the broad distinction that exists between incomes derived from trades and professions, and those drawn from land. Take the case of a tradesman with L10,000 of capital; he gets L500 a year interest, and L500 more for his skill and industry. Is this man's L1000 a year to be mulcted in the same amount with L1000 a year derived from a real property capital of L25,000? So with the cases of professional men, who literally live by the waste of their brains. The plain fair dealing of the country revolts at an equal levy on such different sorts of property. Professional men and men in business put in motion the wheels of the social system. It is their industry and enterprise that mainly give to realized property the value that it bears; to them, therefore, the State first owes sympathy and support."

There is a further injustice under the present system, and that is that, when a man has passed the L400 limit, he has to pay as heavy a percentage upon his income, precarious or permanent, as the wealthiest millionaire among us. The struggling tradesman, the hardly-pressed professional man, every one who depends upon his brains for his living, has to pay as heavily as the Duke of Bedford, the Duke of Westminster, and the Duke of Portland, to whom the brains they possess makes no difference to their income, and whose property has been secured not by efforts of their own, but of others.

Is it any wonder, then, that the demand should be growing for a graduated Income Tax? It is one upon which Mr. Chamberlain has spoken plainly. At Ipswich, in January, 1885, he said--"Is it really certain that the precarious income of a struggling professional man ought to pay in the same proportion as the income of a man who derives it from invested securities? Is it altogether such an unfair thing that we should, as in the United States, tax all incomes according to their amount?... Prince Bismarck some time ago proposed to the Reichstag an Income Tax, to be graduated according to the amount of the income, and to vary according to the character of the income. We already have done something in that direction in exempting the very smallest incomes from taxation. But I submit that it is well worthy of careful consideration whether the principle should not be carried a little further." And at Warrington, eight months later, he observed--"I think that taxation ought to involve equality of sacrifice, and I do not see how this result is to be obtained except by some form of graduated taxation--that is, taxation which is proportionate to the superfluities of the taxpayer. When I am told that this is a new-fangled and a revolutionary doctrine, I wonder if my critics have read any elementary book on the subject; because if they had, they must have seen that a graduated Income Tax is not a novelty in this country. It existed in the Middle Ages, when those who exercised authority and power did so with harshness to their equals, but they knew nevertheless how to show consideration for the necessities of those beneath them."

The first answer to the demand for a graduated Income Tax will, of course, be that it would be "confiscation"--a word by which the rich are ever striving to frighten others from making them pay their proper share to the State; and one may be content to rest in this matter upon the apparent paradox of Disraeli: "Confiscation is a blunder that destroys public credit; taxation, on the contrary, improves it; and both come to the same thing." The fact, as has before been stated, is that taxation is the price we pay for protection; and the more we have to protect, the more we ought to pay.

And, as Mr. Chamberlain observed, this suggestion of a graduated tax is no new-fangled or revolutionary idea: it is one for instances of which it is not even necessary to go back with him to some vague reminiscences of the Middle Ages, for it exists in various degrees at the present time. It is only dwellings of over the annual value of L20 that are liable to inhabited house duty; houses of less than L30 rateable value have in various districts certain water privileges for nothing which those of greater value have to pay for; and the difference in the death duties, according to the degree of relationship of the legatee, indicates that the law recognizes the reasonableness of graduating the burden according to the shoulders which have to bear it. And when we come to the Income Tax itself, we find not merely that incomes under L150 are exempt, while those between that sum and L400 are subject to reductions which lessen the percentage of the tax to be paid compared with those above the last given figure, but that no other a Chancellor of the Exchequer than Mr. Gladstone has acknowledged the principle of graduation, and that in the most practical way; for in his Budget of 1859, when the rate of the tax stood at 5d. and he proposed to add another 4d., he coupled with it the proviso that incomes from L100 to L150 (L100 being the then initial point) should pay only 11/2d. extra.

The argument sometimes used that the heavier taxation of large incomes would tend to discourage thrift by putting a penalty upon its results is disposed of by every-day experience. Does a man cease to wish to earn L150 because that sum will make him liable to Income Tax, or L400 because that will bring him fully within its scope? We know such a man does not exist, and why should the conditions be changed if the graduation went further than at present?

Here, then, is the claim for a graduated Income Tax, and, after the examples which have been given, it cannot honestly be argued that such a system is either immoral in design or impossible of execution. What is wanted is that the burden of taxation shall be equalized by fixing the greater weight upon the shoulders that ought most to bear it. No single citizen should be exempt from a share, and by preserving indirect taxation upon luxuries and starting a direct tax at the lowest reasonable point, every one will have to pay something. But by rearranging the death duties and graduating the Income Tax we shall secure that those who have most to lose, and, therefore, who demand most from the State, shall pay the State in proportion to their demand.

XXV.--HOW IS TAXATION TO BE REDUCED?

At no moment in recent years was it more desirable to urge a demand for retrenchment in the national expenditure, and probably at no moment could such a demand be urged with more chance of good result. For the recent revelations made upon the highest authority as to the wastefulness which characterizes our Government departments have aroused in the public mind not merely indignation at the spendthrifts who rule us but determination to put an end to much of their extravagance.

The only way in which taxation can be reduced is to lessen the need for taxes, and that can be done in no other fashion than by reducing the expenditure. Ministry after Ministry has entered Downing Street with the announced determination to exercise retrenchment, and Ministry after Ministry has left that haven for office-seekers with the expenditure higher than ever. The stock excuse for this state of things is, that as the national needs increase, the national expenditure must increase with them; but, allowing that this will justify a rise upon certain items, the question which will have to be pressed home to every Minister and would-be Minister, to every member of Parliament and would-be member, is this--"Is the money that is disposed of spent in economical fashion and to the best advantage?" And he will have to be a very thick-skinned specimen of officialdom who will venture to reply "Yes" to the question.

In the estimates for the navy, the army, and the Civil Service, there is abundant room for the pruning knife, while to the principle which underlies the granting of many of the pensions there ought to be applied the axe. Of course, as long as we possess an empire which exceeds any the world has ever seen for the vastness of its extent and its resources, so long must an army and navy be maintained; and even if, by a reverse of fortune, every one of our colonies were cut off from us, an army and navy would still be needed for our own protection. They are as necessary to a nation, situated like our own, as a fire-brigade to a town; and it would be folly, and worse, to starve them into inefficiency. What money is needed, therefore, to place the defences of the country--whether those defences be men, ships, forts, or coaling stations--in such a state of efficiency as shall avoid the chance of national disaster should war burst upon us, ought to be definitely ascertained and cheerfully granted.

But is the money now voted for the army and navy expended to the best advantage, or is not a large portion of it wasted in useless and ornamental adjuncts? We have not yet reached the point attained by that Mexican force which is traditionally stated to have contained twenty-five thousand officers and twenty thousand men: but the number of superior officers of both services is altogether out of proportion to the size of the force. In order to stimulate what is called the "flow of promotion," officers are placed on the retired list at a ridiculously early age, and the country is deprived of, while having to pay for, the services of those who are in the prime of life, and still capable of doing their full duty, in order that room may be made for their juniors to climb into their places, those juniors themselves being soon supplanted, and the "flow of promotion" going merrily on--at our expense. And the hollowness of the pretension that all this is for the country's good is shown by the fact that, while a determined effort was made by the Horse Guards to compulsorily retire Sir Edward Hamley, the finest tactician England possesses, the Duke of Cambridge is suffered to remain commander-in-chief long after the age at which any other officer would have been shifted. This is only one example of how all rules, salutary and otherwise, are put aside when courtiership demands, for there is a distinct danger, to which the country should be awakened, of our services being royalty-ridden.

Royalty, it is true, has not yet invaded the Civil Service, though the scions of the reigning house are so rapidly increasing in number that the prizes even of this department are likely, at no distant date, to be snatched from the skilled and deserving; but this particular Government department has plenty to be purged of, notwithstanding. Put in the shortest fashion, the complaint the public have a right to bring against the Civil Service is that it is over-manned and over-paid. A large section of its members--and those located at the various offices in Whitehall afford a glaring instance--commence work too late, leave off too early, and even when on their stools have not enough to do. Their number should be lessened, and their hours increased. Ten to four, with an interval for lunch, is a working period so scandalous in its inadequacy that even the Salisbury Ministry has condemned it, and has in some fashion, but at the country's expense, been striving to make it longer. No private business could possibly pay if it adopted such a system; and what must be done is to treat the Government service upon the same lines as a flourishing private concern. The old notion that a State should provide a maximum of pay for a minimum of work, and that a Government office should be a paradise for the idle and incompetent, must be swept away. It is nothing less than a scandal that taxes should be wrung in an ever-increasing amount from the toilers of the country to pay for work which, under efficient management, could be better done at a less price.

With this question of pay there is linked that of pensions. It is often urged that men join the public service at a less rate of pay than the same abilities could obtain in other walks of business life, not merely because of the security of tenure, but because they know there is a pension to follow the work. This is exceedingly to be doubted; and although it would be unjust to deprive of pensions those who have entered Government employment under present conditions, the question ought very seriously to be considered whether it would not be wise for the State to pay, as private firms do, for the services actually rendered, and for individual thrift to be allowed to provide for illness or old age. Or, if it be thought desirable to maintain the pension system, the Government servants should be called upon, like the police, to contribute out of their wages to a superannuation fund. The system of pensions, as at present in operation, is indefensible upon sound business principles, and taxpayers have something better to do with their money than continue to spend it for sentimental reasons.

As to hereditary pensions, there is no need to say much. Thanks to Mr. Bradlaugh these are in a fair way to be disposed of; but it will still need that a keen watch be kept, to prevent the State being further robbed by any fanciful scheme of commutation. It may be taken as settled that no further pensions will be granted for more than one life; but pensions for a single life, as now arranged, often prove an intolerable burden upon the revenue. A favourite device of the Government offices is to "reorganize" departments, with the result of placing a new set of officials upon the pay sheet and an old set upon the pension list. Many of the latter will be comparatively young men, capable of doing service in other departments; and, if they are not wanted in one, they ought to work for their pay in another. But that is not the way in which the State does its business. They are pensioned off with such astounding results as was seen in the case of one official, whose place was abolished in 1842, who was pensioned at the rate of nearly L2500 a year, and who lived until 1880; or of another, whose office was abolished in 1847, who was pensioned in L3100, and who, up to this date (for he is believed still to be living), has drawn over L120,000 from our pockets without having done a single day's work for the money. And not only is the "reorganization" system a means of lightening the national pocket without good result, but the "ill-health" device has the same effect. Annuitants live long, as all insurance offices will tell you, and it is proved by the fact that there are pensioners still on the list who retired from the Government service between forty and fifty years ago because of "ill-health."

Here, then, are some of the fashions in which the country is defrauded; they could be multiplied, but the samples should suffice to arouse the attention of all who bewail the continual increase of taxation. The State is evidently regarded by a large section of the population as a huge milch-cow, which shall provide an ever-flowing stream; and this view will continue to be held as long as our legislators are not forced by the constituencies to give due heed to economy. Nothing practical in that direction can be done until the House of Commons has a thorough control over the national expenditure. At present the control it exercises partakes so largely of the nature of a sham that it is not worth considering; its scrutiny must become active and persistent, and it should be directed to the pickings secured in high places as well as in low--to the receivers of heavy salaries as well as of light wages. The tendency has too long been to exhibit economy in regard to the small people and to pass over the extravagances which feed the large, and that is a tendency which will have to be stopped.

No one desires to lessen the efficiency of the public service; but as no one would seriously dream of saying that that quality is at this moment its most distinguishing feature, good rather than harm would be done by the exercise of sound economy. It is only by lopping off the extravagances which have grown up like weeds in our Government departments, and which are now choking much of their power for good, that the taxes can ever be reduced. And so it is the bounden duty of the Liberals to raise their old banner of Retrenchment once again.

XXVI.--IS FREE TRADE TO BE PERMANENT?

Before leaving the consideration of taxes, the question of Free Trade must be dealt with. A very few years ago it would have been thought as unnecessary to discuss the wisdom of continuing our system of Free Trade as of lengthening the existence of the House of Commons; but we are to-day threatened with the revival of a Protectionist agitation, and it is necessary to be argumentatively prepared for it.

It is impossible within my limits to say all that can be said in favour of Free Trade or all that ought to be said against Protection; but it should be the less necessary to do the former, because the proof that it is working evil to the country must rest with those who assert it, and that proof they do not afford.

The main contention of the Protectionists--Fair Traders some of them call themselves, but the old distinctive name is preferable--is that the free importation of corn has ruined agriculture, and of other goods has crippled manufactures. And, having assumed this to be correct, their remedy is to place such a duty upon all imported articles which compete with our own productions as to "protect British industry."

First for the complaint. Is it true that the system of free imports has ruined agriculture and crippled manufactures? There is no doubt that the farming interest has been very seriously hit by a series of inadequate harvests and the growth of foreign competition; and there is as little doubt that, if such a duty were placed upon imported grain as would make its culture in England profitable under the present conditions, the farmers would thrive, even if the poorer among us starved. No one can deny that, if there is to be Protection at all, the agricultural interest demands it the most, but we will see directly whether such a tariff as would make profitable the growth of wheat is practicable. As to the crippling of manufactures, there is something to be said which is as true as it may be unpalatable. Without denying that the free importation of foreign goods, coupled with the heavy duties levied by other countries upon our exported articles, has seriously diminished the profits of certain of our manufacturers, and has thereby injured the persons by them employed, those who have watched the recent course of British trade are compelled to see that other causes have been at work to account for much of the depression.

Making haste to be rich has had more to do with that depression than the weight of foreign competition. Manufacturers who scamp and merchants who swindle; folks who endow churches or build chapels to compromise with their conscience for robbing their customers and blasting the honour of the English name--these are the men who deserve to be pilloried when we talk of depression. We _do_ want fair trade in the sense of honest trade, for it is the burning desire for gain, the resolve to practise any device that leads to money-making, which is injuring the British manufacturing industry far more than the foreigner. The sick man who disliked a wash was at last, in desperation, recommended by his doctor to try soap; the manufacturers who size their cottons to the rotting point, and the merchants who have been accustomed to sell German cutlery with a Sheffield label, should be told, when they cry out upon depression, to try honesty. And when they whine, as they sometimes do, that it is the demand for cheap goods that makes such a supply, they must be reminded that the butcher who sells bad meat, or the baker who adulterates his bread, pleads the same excuse, but it does not save either from being branded as a cheat.

There is a further point which will account for the loss of British trade in foreign markets, and that is the lack of adaptability to new circumstances shown by English traders. And this is displayed all round. Our farmers ought to know by this time that they cannot compete by wheat-growing with the United States, Canada, or India; but they will not comprehend that they can compete with foreign countries in the matter of butter, eggs, cheese, fruit, and poultry. And the consequence is that we are paying many millions yearly to France, Holland, Belgium, and America for articles that our own farmers ought to supply; and that the largest cheesemongers in London find it cheaper, easier, and quicker to import all their butter from Normandy than to buy a single pound in England. It is the same with our manufacturers. An American firm had a large order to give for cutlery; they asked terms which the English manufacturer rejected because they were novel; and a German at once seized the chance, and kept the trade. In New Zealand there was wanted a light spade for agricultural purposes; the English manufacturer would not alter his pattern to suit his customers; and the whole order went to the United States. In China the people wish for a cotton cloth which will not vanish at the first shower of rain; Manchester is so accustomed to heavily size its goods that it cannot change; and the China trade in that commodity is going elsewhere. Before, then, we complain of foreign competition--a complaint which is bitterly heard to-day as against England in France, Germany, Austria, and the United States--let us be certain that we are doing all we honestly can to cope with it.

Some there are who say that they are in favour of Free Trade in the abstract, but that they will not support it as long as it is not accepted by other nations. This is about as sensible as a decision to cheat in business as long as some of our neighbours cheat would be honest, and is exactly on a level with the old death-bed injunction of the miserly parent--"My son, make money--honestly if you can, but make money." And when it is stated, as it sometimes is, that Free Trade was adopted by this country only on the understanding that it would be universally agreed to, it is a sufficient answer that Sir Robert Peel, in introducing his measure for the repeal of the Corn Laws, observed:--"I fairly avow to you that in making this great reduction upon the import of articles, the produce and manufacture of foreign countries, I have no guarantee to give you that other countries will immediately follow our example."

When the Protectionists, call themselves by what name they will and use what arguments they may, ask us to change our present system, we first then deny their assumption that England is going to the dogs, and next we ask what they propose to put in its place. Upon a plan they find it impossible to agree. Some would tax corn lightly, others as heavily as would be required to make its growth certainly profitable to the farmer; some would fix a duty only upon manufactured articles, others upon everything which is imported that can be raised here; some would admit goods from our colonies at a lighter rate than from foreign countries, others would put them all on the same level. Out of this chaos of contradictions no definite plan has yet been evolved, and none is likely to be.