CHAPTER XXIII

OF REVENUE WITHOUT TAXATION

After dealing at some length with the details of British taxation it is well to point out why it is necessary for the British Government to raise so much revenue by taxes.

It appears to be commonly taken for granted that in the matter of national ways and means a source of revenue is the same thing as a source of taxation. Perhaps it is not surprising that this idea is prevalent in Britain, for of a truth we have scarcely any national revenue save what is derived from the more or less just taxation of British citizens.

Save in its power to levy taxes, the United Kingdom, as a State, is one of the poorest in the world.

The British Government, as compared with many other governments, is singularly lacking in property. It follows that it is singularly lacking in natural State revenue. As a matter of fact, the only items of British State property worth mentioning are (1) the Post Office, which brings in about £5,000,000 a year; (2) a few Crown lands, which bring in about £500,000 a year; and (3) The Suez Canal shares, bought by Lord Beaconsfield, which bring in about £1,000,000 a year.

The total British State revenue from property is thus about £6,500,000, and that is all. If the Government wants any more money it has to tax the governed, a fact which arouses various emotions.

The consequence is that, as public expenses increase, our taxes constantly swell. The items of natural State revenue are too small, even if elastic, to meet the growing bills. This is found out by all parties. A politician out of office may, and usually does, denounce new taxes, but we never find the same politician, after taking office, taking off the taxes he has denounced; he simply cannot do it. The Conservatives, it will be remembered, were unfriendly to Sir William Harcourt's Death Duties, but when they came into power they not only did not repeal them, but it is a fact that they seriously considered increasing them.

I do not think it can be reasonably alleged that taxation has yet reached an intolerable level, indeed the facts on that head are sufficiently made plain in these pages. At the same time, I suppose that none of us desires to increase the burden of taxation more than is necessary.

Is it not well, then, to ask ourselves whether taxation need be the only hope of State revenue? Here comes in a rather curious fact. We have passed through troubled days in which additional taxation has been denounced as "Socialistic," and the "Observer" newspaper tells its readers constantly that modern Socialism simply means taxation.

_As a matter of fact, it is because the British Government has been one of the least Socialistic in the world that it finds itself in 1910 raising so much of its revenue from taxation._

The Germans are heavily taxed, but they are so much poorer than the British people that the sum they raise in taxes is much smaller than the sum raised here. It should not be forgotten that, in considering German taxes, we have to add the taxes raised by the governments of its various kingdoms and States to the taxes raised by the German Imperial Government. When that is done it will be found that the total amount so raised, although considerable, is not nearly enough to meet the Imperial and national expenditure. What is the explanation? I commend it most earnestly to the politicians and publicists who fill the air with clamour about Socialism.

Consider the following extract from the official description of German Taxation in Blue Book, Cd. 4,750:

To make any profitable comparison of direct taxation in England and Germany, it is necessary to take into consideration in the case of the latter not merely the Imperial taxes, but also the taxes levied by the Federal States. It is also important to remember that a _large portion of the States' expenditure, in Prussia as much as 47 per cent., is covered by the profits of railways and other industrial undertakings, the State being thus enabled_, pro tanto, _to dispense with taxation_.

Varying, but usually considerable, proportions of the State revenues of the kingdom of Bavaria, the kingdom of Saxony, the kingdom of Wurtemberg, the six Grand Duchies, the five Duchies, and the seven Principalities, not to mention the free cities, are derived similarly from State undertakings, ranging from railways to forests, and from mines to china factories.

I beg the reader to realize that but for these enormous State natural revenues the Germany of to-day would not be able to build Dreadnoughts or to sustain the greatest army in the world. Successful State Socialism has been the backbone of German finance, and the secret of a big expenditure and the maintenance of the greatest army in the world and the second largest navy in the world by a poorer country than ours, in which (basing ourselves on the official Income Tax Statistics of Prussia) we are able to affirm that one-half of the people are under the income line of £45 a year (17s. 3d. per week).

Germany derives from her Customs Duties, believed by ill-informed people here to be the chief feeder of her revenues, about £30,000,000 a year. This may be contrasted with a single item of German State Socialist revenue:

NET PROFITS OF THE PRUSSIAN STATE RAILWAYS

£ 1906 33,480,000 1907 34,323,000 1908 31,180,000

Surely it is worth the gravest consideration here that one-half the State revenue of Prussia, the chief State of the German Empire, is derived from the ownership of railways, forests, mines, and other national undertakings. And there can be little doubt that Germany will soon own and control her Power supply. _In 1910 the State railways of the entire German Empire will yield a net profit of about £50,000,000, meeting, in effect, the bill for German armaments._