’Nevertheless，thislatterkindoftaxesareinprincipleas
ineligibleastheformer，thoughnotpreciselyonthesame
ground。Aprotectingdutycanneverbeacauseofgain，but
alwaysandnecessarilyofloss，tothecountryimposingit，just
sofarasitisefficacioustoitsend。Anon—protectingduty，on
thecontrary，wouldinmostcasesbeasourceofgaintothe
countryimposingit，insofarasthrowingpartoftheweightof
itstaxesuponotherpeopleisagain;butitwouldbeameans
whichitcouldseldombeadvisabletoadopt，beingsoeasily
counteractedbyapreciselysimilarproceedingontheotherside。
’IfEngland，inthecasealreadysupposed，soughttoobtain
forherselfmorethanhernaturalshareoftheadvantageofthe
tradewithGermany，byimposingadutyuponlinen，Germanywould
onlyhavetoimposeadutyuponcloth，sufficienttodiminishthe
demandforthatarticleaboutasmuchasthedemandforlinenhad
beendiminishedinEnglandbythetax。Thingswouldthenbeas
before，andeachcountrywouldpayitsowntax。Unless，indeed，
thesumofthetwodutiesexceededtheentireadvantageofthe
trade;forinthatcasethetrade，anditsadvantage，wouldcease
entirely。’Therewouldbenoadvantage，therefore，in
imposingdutiesofthiskind，withaviewtogainbytheminthe
mannerwhichhasbeenpointedout。Butwhenanypartofthe
revenueisderivedfromtaxesoncommodities，thesemayoftenbe
aslittleobjectionableastherest。Itisevident，too，that
considerationsofreciprocity，whicharequiteunessentialwhen
thematterindebateisaprotectingduty，areofmaterial
importancewhentherepealofdutiesofthisotherdescriptionis
discussed。Acountrycannotbeexpectedtorenouncethepowerof
taxingforeigners，unlessforeignerswillinreturnpractise
towardsitselfthesameforbearance。Theonlymodeinwhicha
countrycansaveitselffrombeingaloserbytherevenueduties
imposedbyothercountriesonitscommodities，istoimpose
correspondingrevenuedutiesontheirs。Onlyitmusttakecare
thatthosedutiesbenotsohighastoexceedallthatremainsof
theadvantageofthetrade，andputanendtoimportation
altogether，causingthearticletobeeitherproducedathome，or
importedfromanotherandadearermarket。’
NOTES:
1。Itistrue，thisdoesnotconstitute，asatfirstsightit
appearstodo，acaseoftakingmoreoutofthepocketsofthe
peoplethanthestatereceives;sinceifthestateneedsthe
advance，andgetsitinthismanner，itcandispensewithan
equivalentamountofborrowinginstockorexchequerbills。But
itismoreeconomicalthatthenecessitiesofthestateshouldbe
suppliedfromthedisposablecapitalinthehandsofthelending
class，thanbyanartificialadditiontotheexpensesofoneor
severalclassesofproducersordealers。
2。Probablythestrongestknowninstanceofalargerevenue
raisedfromforeignersbyataxonexports，istheopiumtrade
withChina。ThehighpriceofthearticleundertheGovernment
monopoly（whichisequivalenttoahighexportduty）hasso
littleeffectindiscouragingitsconsumption，thatitissaidto
havebeenoccasionallysoldinChinaforasmuchasitsweightin
silver。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book5
Chapter5
OfSomeOtherTaxes
1。Besidesdirecttaxesonincome，andtaxesonconsumption，
thefinancialsystemsofmostcountriescompriseavarietyof
miscellaneousimposts，notstrictlyincludedineitherclass。The
modernEuropeansystemsretainmanysuchtaxes，thoughinmuch
lessnumberandvarietythanthosesemi—barbarousgovernments
whichEuropeaninfluencehasnotyetreached。Insomeofthese，
scarcelyanyincidentoflifehasescapedbeingmadeanexcuse
forsomefiscalexaction;hardlyanyact，notbelongingtodaily
routine，canbeperformedbyanyone，withoutobtainingleave
fromsomeagentofgovernment，whichisonlygrantedin
considerationofapayment:especiallywhentheactrequiresthe
aidorthepeculiarguaranteeofapublicauthority。Inthe
presenttreatisewemayconfineourattentiontosuchtaxesas
latelyexisted，orstillexist，incountriesusuallyclassedas
civilized。
Inalmostallnationsaconsiderablerevenueisdrawnfrom
taxesoncontracts。Theseareimposedinvariousforms。One
expedientisthatoftaxingthelegalinstrumentwhichservesas
evidenceofthecontract，andwhichiscommonlytheonlyevidence
legallyadmissible。InEngland，scarcelyanycontractisbinding
unlessexecutedonstampedpaper，whichhaspaidataxto
government;anduntilverylately，whenthecontractrelatedto
propertythetaxwasproportionallymuchheavieronthesmaller
thanonthelargertransactions;whichisstilltrueofsomeof
thosetaxes。Therearealsostamp—dutiesonthelegalinstruments
whichareevidenceofthefulfilmentofcontracts;suchas
acknowledgmentsofreceipt，anddeedsofrelease。Taxeson
contractsarenotalwaysleviedbymeansofstamps。Thedutyon
salesbyauction，abrogatedbySirRobertPeel，wasaninstance
inpoint。Thetaxesontransfersoflandedproperty，inFrance，
areanother:inEnglandtherearestamp—duties。Insome
countries，contractsofmanykindsarenotvalidunless
registered，andtheirregistrationismadeanoccasionforatax。
Oftaxesoncontracts，themostimportantarethoseonthe
transferofproperty;chieflyonpurchasesandsales。Taxeson
thesaleofconsumablecommoditiesaresimplytaxesonthose
commodities。Iftheyaffectonlysomeparticularcommodities，
theyraisethepricesofthosecommodities，andarepaidbythe
consumer。Iftheattemptweremadetotaxallpurchasesand
sales，which，howeverabsurd，wasforcenturiesthelawofSpain，
thetax，ifitcouldbeenforced，wouldbeequivalenttoataxon
allcommodities，andwouldnotaffectprices:ifleviedfromthe
sellers，itwouldbeataxonprofits，iffromthebuyers，atax
onconsumption;andneitherclasscouldthrowtheburthenupon
theother。Ifconfinedtosomeonemodeofsale，asforexample
byauction，itdiscouragesrecoursetothatmode，andifofany
materialamount，preventsitfrombeingadoptedatall，unlessin
acaseofemergency;inwhichcaseasthesellerisundera
necessitytosell，butthebuyerundernonecessitytobuy，the
taxfallsontheseller;andthiswasthestrongestofthe
objectionstotheauctionduty:italmostalwaysfellona
necessitousperson，andinthecrisisofhisnecessities。
Taxesonthepurchaseandsaleoflandare，inmost
countries，liabletothesameobjection。Landedpropertyinold
countriesisseldompartedwith，exceptfromreduced
circumstances，orsomeurgentneed:theseller，therefore，must
takewhathecanget，whilethebuyer，whoseobjectisan
investment，makeshiscalculationsontheinterestwhichhecan
obtainforhismoneyinotherways，andwillnotbuyifheis
chargedwithagovernmenttaxonthetransaction。（1*）Ithas
indeedbeenobjected，thatthisargumentwouldnotapplyifall
modesofpermanentinvestment，suchasthepurchaseofgovernment
securities，sharesinjoint—stockcompanies，mortgages，andthe
like，weresubjecttothesametax。Buteventhen，ifpaidbythe
buyer，itwouldbeequivalenttoataxoninterest:if
sufficientlyheavytobeofanyimportance，itwoulddisturbthe
establishedrelationbetweeninterestandprofit;andthe
disturbancewouldredressitselfbyariseintherateof
interest，andafallofthepriceoflandandofallsecurities。
Itappearstome，therefore，thattheselleristhepersonby
whomsuchtaxes，unlessunderpeculiarcircumstances，will
generallybeborne。
Alltaxesmustbecondemnedwhichthrowobstaclesintheway
ofthesaleofland，orotherinstrumentsofproduction。Such
salestendnaturallytorenderthepropertymoreproductive。The
seller，whethermovedbynecessityorchoice，isprobablysome
onewhoiseitherwithoutthemeans，orwithoutthecapacity，to
makethemostadvantageoususeofthepropertyforproductive
purposes;whilethebuyer，ontheotherhand，isatanyratenot
needy，andisfrequentlybothinclinedandabletoimprovethe
property，since，asitisworthmoretosuchapersonthantoany
other，heislikelytoofferthehighestpriceforit。Alltaxes，
therefore，andalldifficultiesandexpenses，annexedtosuch
contracts，aredecidedlydetrimental;especiallyinthecaseof
land，thesourceofsubsistence，andtheoriginalfoundationof
allwealth，ontheimprovementofwhich，therefore，somuch
depends。Toogreatfacilitiescannotbegiventoenablelandto
passintothehands，andassumethemodesofaggregationor
division，mostconducivetoitsproductiveness。Iflanded
propertiesaretoolarge，alienationshouldbefree，inorder
thattheymaybesubdivided;iftoosmall，inorderthattheymay
beunited。Alltaxesonthetransferoflandedpropertyshouldbe
abolished;but，asthelandlordshavenoclaimtoberelieved
fromanyreservationwhichthestatehashithertomadeinitsown
favourfromtheamountoftheirrent，anannualimpostequivalent
totheaverageproduceofthesetaxesshouldbedistributedover
thelandgenerally，intheformofaland—tax。
Someofthetaxesoncontractsareverypernicious，imposing
avirtualpenaltyupontransactionswhichitoughttobethe
policyofthelegislatortoencourage。Ofthissortisthe
stamp—dutyonleases，whichinacountryoflargepropertiesare
anessentialconditionofgoodagriculture;andthetaxeson
insurances，adirectdiscouragementtoprudenceandforethought。
2。Nearlyalliedtothetaxesoncontractsarethoseon
communication。Theprincipaloftheseisthepostagetax;to
whichmaybeaddedtaxesonadvertisements，andonnewspapers，
whicharetaxesonthecommunicationofinformation。
Thecommonmodeoflevyingataxontheconveyanceof
letters，isbymakingthegovernmentthesoleauthorizedcarrier
ofthem，anddemandingamonopolyprice。Whenthispriceisso
moderateasitisinthiscountryundertheuniformpenny
postage，scarcelyifatallexceedingwhatwouldbechargedunder
thefreestcompetitionbyanyprivatecompany，itcanhardlybe
consideredastaxation，butratherastheprofitsofabusiness;
whateverexcessthereisabovetheordinaryprofitsofstock
beingafairresultofthesavingofexpense，causedbyhaving
onlyoneestablishmentandonesetofarrangementsforthewhole
country，insteadofmanycompetingones。Thebusiness，too，being
onewhichbothcanandoughttobeconductedonfixedrules，is
oneofthefewbusinesseswhichitisnotunsuitabletoa
governmenttoconduct。Thepostoffice，therefore，isatpresent
oneofthebestofthesourcesfromwhichthiscountryderives
itsrevenue。Butapostagemuchexceedingwhatwouldbepaidfor
thesameserviceinasystemoffreedom，isnotadesirabletax。
Itschiefweightfallsonlettersofbusiness，andincreasesthe
expenseofmercantilerelationsbetweendistantplaces。Itis
likeanattempttoraisealargerevenuebyheavytolls:it
obstructsalloperationsbywhichgoodsareconveyedfromplace
toplace，anddiscouragestheproductionofcommoditiesinone
placeforconsumptioninanother;whichisnotonlyinitselfone
ofthegreatestsourcesofeconomyoflabour，butisanecessary
conditionofalmostallimprovementsinproduction，andoneof
thestrongeststimulantstoindustry，andpromotersof
civilization。
Thetaxonadvertisementswasnotfreefromthesame
objection，sinceinwhateverdegreeadvertisementsareusefulto
business，byfacilitatingthecomingtogetherofthedealeror
producerandtheconsumer，inthatsamedegree，ifthetaxbe
highenoughtobeaseriousdiscouragementtoadvertising，it
prolongstheperiodduringwhichgoodsremainunsold，andcapital
lockedupinidleness。
Ataxonnewspapersisobjectionable，notsomuchwhereit
doesfallaswhereisdoesnot，thatis，whereitprevents
newspapersfrombeingused。Tothegeneralityofthosewhobuy
them，newspapersarealuxurywhichtheycanaswellaffordto
payforasanyotherindulgence，andwhichisasunexceptionable
asourceofrevenue。Buttothatlargepartofthecommunitywho
havebeentaughttoread，buthavereceivedlittleother
intellectualeducation，newspapersarethesourceofnearlyall
thegeneralinformationwhichtheypossess，andofnearlyall
theiracquaintancewiththeideasandtopicscurrentamong
mankind;andaninterestismoreeasilyexcitedinnewspapers，
thaninbooksorothermorereconditesourcesofinstruction。
Newspaperscontributesolittle，inadirectway，tothe
originationofusefulideas，thatmanypersonsundervaluethe
importanceoftheirofficeindisseminatingthem。Theycorrect
manyprejudicesandsuperstitions，andkeepupahabitof
discussion，andinterestinpublicconcerns，theabsenceofwhich
isagreatcauseofstagnationofmindusuallyfoundinthelower
andmiddle，ifnotinall，ranks，ofthosecountrieswhere
newspapersofanimportantorinterestingcharacterdonotexist。
Thereoughttobenotaxes（asinthiscountrytherenowarenot）
whichrenderthisgreatdiffuserofinformation，ofmental
excitement，andmentalexercise，lessaccessibletothatportion
ofthepublicwhichmostneedstobecarriedintoaregionof
ideasandinterestsbeyonditsownlimitedhorizon。
3。Intheenumerationofbadtaxes，aconspicuousplacemust
beassignedtolawtaxes;whichextractarevenueforthestate
fromthevariousoperationsinvolvedinanapplicationtothe
tribunals。Likeallneedlessexpensesattachedtolaw
proceedings，theyareataxonredress，andthereforeapremium
oninjury。Althoughsuchtaxeshavebeenabolishedinthis
countryasageneralsourceofrevenue，theystillexistinthe
formoffeesofcourt，fordefrayingtheexpenseofthecourtsof
justice;undertheidea，apparently，thatthosemayfairlybe
requiredtobeartheexpensesoftheadministrationofjustice，
whoreapthebenefitofit。Thefallacyofthisdoctrinewas
powerfullyexposedbyBentham。Asheremarked，thosewhoare
underthenecessityofgoingtolaw，arethosewhobenefitleast，
notmost，bythelawanditsadministration。Tothemthe
protectionwhichthelawaffordshasnotbeencomplete，since
theyhavebeenobligedtoresorttoacourtofjusticeto
ascertaintheirrights，ormaintainthoserightsagainst
infringement:whiletheremainderofthepublichaveenjoyedthe
immunityfrominjuryconferredbythelawandthetribunals，
withouttheinconvenienceofanappealtothem。
4。BesidesthegeneraltaxesoftheState，thereareinall
ormostcountrieslocaltaxes，todefrayanyexpensesofapublic
naturewhichitisthoughtbesttoplaceunderthecontrolor
managementofalocalauthority。Someoftheseexpensesare
incurredforpurposesinwhichtheparticularlocalityissolely
orchieflyinterested;asthepaving，cleansing，andlightingof
thestreets;orthemakingandrepairingofroadsandbridges，
whichmaybeimportanttopeoplefromanypartofthecountry，
butonlyinsofarasthey，orgoodsinwhichtheyhavean
interest，passalongtheroadsoroverthebridges。Inother
casesagain，theexpensesareofakindasnationallyimportant
asanyothers，butaredefrayedlocallybecausesupposedmore
likelytobewelladministeredbylocalbodies;as，inEngland，
thereliefofthepoor，andthesupportofgaols，andinsome
othercountries，ofschools。Todecideforwhatpublicobjects
localsuperintendenceisbestsuited，andwhatarethosewhich
shouldbekeptimmediatelyunderthecentralgovernment，orunder
amixedsystemoflocalmanagementandcentralsuperintendence，
isaquestionnotofpoliticaleconomy，butofadministration。It
isanimportantprinciple，however，thattaxesimposedbyalocal
authority，beinglessamenabletopublicityanddiscussionthan
theactsofthegovernment，shouldalwaysbespecial—laidon
forsomedefiniteservice，andnotexceedingtheexpenseactually
incurredinrenderingtheservice。Thuslimited，itisdesirable，
wheneverpracticable，thattheburthenshouldfallonthoseto
whomtheserviceisrendered;thattheexpense，forinstance，of
roadsandbridges，shouldbedefrayedbyatollonpassengersand
goodsconveyedbythem，thusdividingthecostbetweenthosewho
usethemforpleasureorconvenience，andtheconsumersofthe
goodswhichtheyenabletobebroughttoandfromthemarketata
diminishedexpense。When，however，thetollshaverepaidwith
interestthewholeoftheexpenditure，theroadorbridgeshould
bethrownopenfreeoftoll，thatitmaybeusedalsobythoseto
whom，unlessopengratuitously，itwouldbevalueless;provision
beingmadeforrepairseitherfromthefundsofthestate，orby
arateleviedonthelocalitieswhichreaptheprincipalbenefit。
InEngland，almostalllocaltaxesaredirect，（thecoalduty
oftheCityofLondon，andafewsimilarimposts，beingthechief
exceptions），thoughthegreatestpartofthetaxationforgeneral
purposesisindirect。Onthecontrary，inFrance，Austria，and
othercountrieswheredirecttaxationismuchmorelargely
employedbythestate，thelocalexpensesoftownsare
principallydefrayedbytaxesleviedoncommoditieswhenentering
them。Theseindirecttaxesaremuchmoreobjectionableintowns
thanonthefrontier，becausethethingswhichthecountry
suppliestothetownsarechieflythenecessariesoflifeandthe
materialsofmanufacture，while，ofwhatacountryimportsfrom
foreigncountries，thegreaterpartusuallyconsistsofluxuries。
Anoctroicannotproducealargerevenue，withoutpressing
severelyuponthelabouringclassesofthetowns;unlesstheir
wagesriseproportionally，inwhichcasethetaxfallsinagreat
measureontheconsumersoftownproduce，whetherresidingin
townorcountry，sincecapitalwillnotremaininthetownsif
itsprofitsfallbelowtheirordinaryproportionascomparedwith
theruraldistricts。
NOTES:
1。Thestatementinthetextrequiresmodificationinthecaseof
countrieswherethelandisownedinsmallportions。These，being
neitherabadgeofimportance，noringeneralanobjectoflocal
attachment，arereadilypartedwithatasmalladvanceontheir
originalcost，withtheintentionofbuyingelsewhere;andthe
desireofacquiringlandevenondisadvantageoustermsisso
great，astobelittlecheckedbyevenahighrateoftaxation。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book5
Chapter6
ComparisonbetweenDirectandIndirectTaxes
1。Aredirectorindirecttaxesthemosteligible？This
question，atalltimesinteresting，hasoflateexciteda
considerableamountofdiscussion。InEnglandthereisapopular
feeling，ofoldstanding，infavourofindirect，oritshould
ratherbesaidinoppositiontodirect，taxation。Thefeelingis
notgroundedonthemeritsofthecase，andisofapuerilekind。
AnEnglishmandislikes，notsomuchthepayment，astheactof
paying。Hedislikesseeingthefaceofthetax—collector，and
beingsubjectedtohisperemptorydemand。Perhaps，too，themoney
whichheisrequiredtopaydirectlyoutofhispocketisthe
onlytaxationwhichheisquitesurethathepaysatall。Thata
taxofoneshillingperpoundontea，oroftwoshillingsper
bottleonwine，raisesthepriceofeachpoundofteaandbottle
ofwinewhichheconsumes，bythatandmorethanthatamount，
cannotindeedbedenied;itisthefact，andisintendedtobe
so，andhehimself，attimes，isperfectlyawareofit;butit
makeshardlyanyimpressiononhispracticalfeelingsand
associations，servingtoillustratethedistinctionbetweenwhat
ismerelyknowntobetrueandwhatisfelttobeso。The
unpopularityofdirecttaxation，contrastedwiththeeasymanner
inwhichthepublicconsenttoletthemselvesbefleecedinthe
pricesofcommodities，hasgeneratedinmanyfriendsof
improvementadirectlyoppositemodeofthinkingtothe
foregoing。Theycontendthattheveryreasonwhichmakesdirect
taxationdisagreeable，makesitpreferable。Underit，everyone
knowshowmuchhereallypays;andifhevotesforawar，orany
otherexpensivenationalluxury，hedoessowithhiseyesopento
whatitcostshim。Ifalltaxesweredirect，taxationwouldbe
muchmoreperceivedthanatpresent;andtherewouldbea
securitywhichnowthereisnot，foreconomyinthepublic
expenditure。
Althoughthisargumentisnotwithoutforce，itsweightis
likelytobeconstantlydiminishing。Therealincidenceof
indirecttaxationiseverydaymoregenerallyunderstoodandmore
familiarlyrecognized:andwhateverelsemaybesaidofthe
changeswhicharetakingplaceinthetendenciesofthehuman
mind，itcanscarcely，Ithink，bedenied，thatthingsaremore
andmoreestimatedaccordingtotheircalculatedvalue，andless
accordingtotheirnon—essentialaccompaniments。Themere
distinctionbetweenpayingmoneydirectlytothetax—collector，
andcontributingthesamesumthroughtheinterventionofthe
tea。dealerorthewine—merchant，nolongermakesthewhole
differencebetweendislikeoropposition，andpassive
acquiescence。Butfurther，whileanysuchinfirmityofthe
popularmindsubsists，theargumentgroundedonittellspartly
ontheothersideofthequestion。Ifourpresentrevenueof
aboutseventymillionswereallraisedbydirecttaxes，an
extremedissatisfactionwouldcertainlyariseathavingtopayso
much;butwhilemen’smindsaresolittleguidedbyreason，as
suchachangeoffeelingfromsoirrelevantacausewouldimply，
sogreatanaversiontotaxationmightnotbeanunqualified
good。Oftheseventymillionsinquestion，nearlythirtyare
pledged，underthemostbindingobligations，tothosewhose
propertyhasbeenborrowedandspentbythestate:andwhilethis
debtremainsunredeemed，agreatlyincreasedimpatienceof
taxationwouldinvolvenolittledangerofabreachoffaith，
similartothatwhich，inthedefaultingstatesofAmerica，has
beenproduced，andinsomeofthemstillcontinues，fromthesame
cause。Thatpart，indeed，ofthepublicexpenditure，whichis
devotedtothemaintenanceofcivilandmilitaryestablishments，
（thatis，allexcepttheinterestofthenationaldebt，）affords，
inmanyofitsdetails，amplescopeforretrenchment。Butwhile
muchoftherevenueiswastedunderthemerepretenceofpublic
service，somuchofthemostimportantbusinessofgovernmentis
leftundone，thatwhatevercanberescuedfromuseless
expenditureisurgentlyrequiredforuseful。Whethertheobject
beeducation;amoreefficientandaccessibleadministrationof
justice;reformsofanykindwhich，liketheSlaveEmancipation，
requirecompensationtoindividualinterests;orwhatisas
importantasanyofthese，theentertainmentofasufficient
staffofableandeducatedpublicservants，toconductina
betterthanthepresentawkwardmannerthebusinessof
legislationandadministration;everyoneofthesethingsimplies
considerableexpense，andmanyofthemhaveagainandagainbeen
preventedbythereluctancewhichexistedtoapplytoParliament
foranincreasedgrantofpublicmoney，though（besidesthatthe
existingmeanswouldprobablybesufficientifappliedtothe
properpurposes）thecostwouldberepaid，oftenahundredfold，
inmerepecuniaryadvantagetothecommunitygenerally。Ifso
greatanadditionweremadetothepublicdislikeoftaxationas
mightbetheconsequenceofconfiningittothedirectform，the
classeswhoprofitbythemisapplicationofpublicmoneymight
probablysucceedinsavingthatbywhichtheyprofit，atthe
expenseofthatwhichwouldonlybeusefultothepublic。
Thereis，however，afrequentpleainsupportofindirect
taxation，whichmustbealtogetherrejected，asgroundedona
fallacy。Weareoftentoldthattaxesoncommoditiesareless
burthensomethanothertaxes，becausethecontributorcanescape
fromthembyceasingtousethetaxedcommodity。Hecertainly
can，ifthatbehisobject，deprivethegovernmentofthemoney:
buthedoessobyasacrificeofhisownindulgences，which（if
hechosetoundergoit）wouldequallymakeuptohimforthesame
amounttakenfromhimbydirecttaxation。Supposeataxlaidon
wine，sufficienttoaddfivepoundstothepriceofthequantity
ofwinewhichheconsumesinayear。Hehasonly（wearetold）to
diminishhisconsumptionofwineby5l。，andheescapesthe
burthen。True:butifthe5l。，insteadofbeinglaidonwine，
hadbeentakenfromhimbyanincometax，hecould，byexpending
5l。lessinwine，equallysavetheamountofthetax，sothat
thedifferencebetweenthetwocasesisreallyillusory。Ifthe
governmenttakesfromthecontributorfivepoundsayear，whether
inonewayoranother，exactlythatamountmustberetrenched
fromhisconsumptiontoleavehimaswelloffasbefore;andin
eitherwaythesameamountofsacrifice，neithermorenorless，
isimposedonhim。
Ontheotherhand，itissomeadvantageonthesideof
indirecttaxes，thatwhattheyexactfromthecontributoris
takenatatimeandinamannerlikelytobeconvenienttohim。
Itispaidatatimewhenhehasatanyrateapaymenttomake;
itcauses，therefore，noadditionaltrouble，nor（unlessthetax
beonnecessaries）anyinconveniencebutwhatisinseparablefrom
thepaymentoftheamount。Hecanalso，exceptinthecaseof
veryperishablearticles，selecthisowntimeforlayingina
stockofthecommodity，andconsequentlyforpaymentofthetax。
Theproducerordealerwhoadvancesthesetaxes，is，indeed，
sometimessubjectedtoinconvenience;but，inthecaseof
importedgoods，thisinconvenienceisreducedtoaminimumby
whatiscalledtheWarehousingSystem，underwhich，insteadof
payingthedutyatthetimeofimportation，heisonlyrequired
todosowhenhetakesoutthegoodsforconsumption，whichis
seldomdoneuntilhehaseitheractuallyfound，orhasthe
prospectofimmediatelyfinding，apurchaser。
Thestrongestobjection，however，toraisingthewholeorthe
greaterpartofalargerevenuebydirecttaxes，isthe
impossibilityofassessingthemfairlywithoutaconscientious
co—operationonthepartofthecontributors，nottobehopedfor
inthepresentlowstateofpublicmorality。Inthecaseofan
incometax，wehavealreadyseenthatunlessitbefound
practicabletoexemptsavingsaltogetherfromthetax，the
burthencannotbeapportionedwithanytolerableapproachto
fairnessuponthosewhoseincomesarederivedfrombusinessor
professions;andthisisinfactadmittedbymostofthe
advocatesofdirecttaxation，who，Iamafraid，generallyget
overthedifficultybyleavingthoseclassesuntaxed，and
confiningtheirprojectedincometaxto’realizedproperty’，in
whichformitcertainlyhasthemeritofbeingaveryeasyform
ofplunder。Butenoughhasbeensaidincondemnationofthis
expedient。Wehaveseen，however，thatahouse—taxisaformof
directtaxationnotliabletothesameobjectionsasanincome
tax，andindeedliabletoasfewobjectionsofanykindas
perhapsanyofourindirecttaxes。Butitwouldbeimpossibleto
raisebyahouse。taxalone，thegreatestpartoftherevenueof
GreatBritain，withoutproducingaveryobjectionable
overcrowdingofthepopulation，throughthestrongmotivewhich
allpersonswouldhavetoavoidthetaxbyrestrictingtheir
houseaccommodation。Besides，evenahouse—taxhasinequalities，
andconsequentinjustices;notaxisexemptfromthem，anditis
neitherjustnorpolitictomakealltheinequalitiesfallinthe
sameplaces，bycallingupononetaxtodefraythewholeorthe
chiefpartofthepublicexpenditure。Somuchofthelocal
taxation，inthiscountry，beingalreadyintheformofa
house。tax，itisprobablethattenmillionsayearwouldbefully
asmuchascouldbeneficiallybelevied，throughthismedium，for
generalpurposes。
Acertainamountofrevenuemay，aswehaveseen，beobtained
withoutinjusticebyapeculiartaxonrent。Besidesthepresent
land。tax，andanequivalentfortherevenuenowderivedfrom
stampdutiesontheconveyanceofland，somefurthertaxation
might，Ihavecontended，atsomefutureperiodbeimposed，to
enablethestatetoparticipateintheprogressiveincreaseof
theincomesoflandlordsfromnaturalcauses。Legaciesand
inheritances，wehavealsoseen，oughttobesubjectedto
taxationsufficienttoyieldaconsiderablerevenue。Withthese
taxes，andahouse。taxofsuitableamount;weshould，Ithink，
havereachedtheprudentlimitsofdirecttaxation，saveina
nationalemergencysourgentastojustifythegovernmentin
disregardingtheamountofinequalityandunfairnesswhichmay
ultimatelybefoundinseparablefromanincometax。Theremainder
oftherevenuewouldhavetobeprovidedbytaxesonconsumption，
andthequestionis，whichofthesearetheleastobjectionable。
2。Therearesomeformsofindirecttaxationwhichmustbe
peremptorilyexcluded。Taxesoncommodities，forrevenue
purposes，mustnotoperateasprotectingduties，butmustbe
leviedimpartiallyoneverymodeinwhichthearticlescanbe
obtained，whetherproducedinthecountryitself，orimported。An
exclusionmustalsobeputuponalltaxesonthenecessariesof
life，oronthematerialsorinstrumentsemployedinproducing
thosenecessaries。Suchtaxesarealwaysliabletoencroachon
whatshouldbeleftuntaxed，theincomesbarelysufficientfor
healthfulexistence;andonthemostfavourablesupposition，
namely，thatwagesrisetocompensatethelabourersforthetax，
itoperatesasapeculiartaxonprofits，whichisatonce
unjust，anddetrimentaltonationalwealth。（1*）Whatremainare
taxesonluxuries。Andthesehavesomepropertieswhichstrongly
recommendthem。Inthefirstplace，theycannever，byany
possibility，touchthosewhosewholeincomeisexpendedon
necessaries;whiletheydoreachthosebywhomwhatisrequired
fornecessaries，isexpendedonindulgences。Inthenextplace，
theyoperateinsomecasesasanuseful，andtheonlyuseful，
kindofsumptuarylaw。Idisclaimallasceticism，andbynomeans
wishtoseediscouraged，eitherbylaworopinion，anyindulgence
（consistentwiththemeansandobligationsofthepersonusing
it）whichissoughtfromagenuineinclinationfor，andenjoyment
of，thethingitself;butagreatportionoftheexpensesofthe
higherandmiddleclassesinmostcountries，andthegreatestin
this，isnotincurredforthesakeofthepleasureaffordedby
thethingsonwhichthemoneyisspent，butfromregardto
opinion，andanideathatcertainexpensesareexpectedfrom
them，asanappendageofstation;andIcannotbutthinkthat
expenditureofthissortisamostdesirablesubjectoftaxation。
Iftaxationdiscouragesit，somegoodisdone，andifnot，no
harm;forinsofarastaxesareleviedonthingswhichare
desiredandpossessedfrommotivesofthisdescription，nobodyis
theworseforthem。Whenathingisboughtnotforitsusebut
foritscostliness，cheapnessisnorecommendation。AsSismondi
remarks，theconsequenceofcheapeningarticlesofvanity，isnot
thatlessisexpendedonsuchthings，butthatthebuyers
substituteforthecheapenedarticlesomeotherwhichismore
costly，oramoreelaboratequalityofthesamething;andasthe
inferiorqualityansweredthepurposeofvanityequallywellwhen
itwasequallyexpensive，ataxonthearticleisreallypaidby
nobody:itisacreationofpublicrevenuebywhichnobody
loses。（2*）
3。Inordertoreduceasmuchaspossibletheinconveniences，
andincreasetheadvantages，incidenttotaxesoncommodities，
thefollowingarethepracticalruleswhichsuggestthemselves。
1st。Toraiseaslargearevenueasconvenientlymaybe，from
thoseclassesofluxurieswhichhavemostconnexionwithvanity，
andleastwithpositiveenjoyment;suchasthemorecostly
qualitiesofallkindsofpersonalequipmentandornament。2ndly。
Wheneverpossible，todemandthetax，notfromtheproducer，but
directlyfromtheconsumer，sincewhenleviedontheproducerit
raisesthepricealwaysbymore，andoftenbymuchmore，thanthe
mereamountofthetax。Mostoftheminorassessedtaxesinthis
countryarerecommendedbyboththeseconsiderations。Butwith
regardtohorsesandcarriages，astherearemanypersonsto
whom，fromhealthorconstitution，thesearenotsomuchluxuries
asnecessaries，thetaxpaidbythosewhohavebutoneriding
horse，orbutonecarriage，especiallyofthecheaper
descriptions，shouldbelow;whiletaxationshouldrisevery
rapidlywiththenumberofhorsesandcarriages，andwiththeir
costliness。3rdly。Butastheonlyindirecttaxeswhichyielda
largerevenuearethosewhichfallonarticlesofuniversalor
verygeneralconsumption，andasitisthereforenecessaryto
havesometaxesonrealluxuries，thatis，onthingswhichafford
pleasureinthemselves，andarevaluedonthataccountrather
thanfortheircost;thesetaxesshould，ifpossible，beso
adjustedastofallwiththesameproportionalweightonsmall，
onmoderate，andonlargeincomes。Thisisnotaneasymatter;
sincethethingswhicharethesubjectsofthemoreproductive
taxes，areinproportionmorelargelyconsumedbythepoorer
membersofthecommunitythanbytherich。Tea，coffee，sugar，
tobacco，fermenteddrinks，canhardlybesotaxedthatthepoor
shallnotbearmorethantheirdueshareoftheburthen。
Somethingmightbedonebymakingthedutyonthesuperior
qualities，whichareusedbythericherconsumers，muchhigherin
proportiontothevalue（insteadofmuchlower，asisalmost
universallythepractice，underthepresentEnglishsystem）;but
insomecasesthedifficultyofatalladjustingthedutytothe
value，soastopreventevasion，issaid，withwhattruthIknow
not，tobeinsuperable;sothatitisthoughtnecessarytolevy
thesamefixeddutyonallthequalitiesalike:aflagrant
injusticetothepoorerclassofcontributors，unlesscompensated
bytheexistenceofothertaxesfromwhich，asfromthepresent
incometax，theyarealtogetherexempt。4thly。Asfarasis
consistentwiththeprecedingrules，taxationshouldratherbe
concentratedonafewarticlesthandiffusedovermany，inorder
thattheexpensesofcollectionmaybesmaller，andthatasfew
employmentsaspossiblemaybeburthensomelyandvexatiously
interferedwith。5thly。Amongluxuriesofgeneralconsumption，
taxationshouldbypreferenceattachitselftostimulants，
becausethese，thoughinthemselvesaslegitimateindulgencesas
anyothers，aremoreliablethanmostotherstobeusedin
excess，sothatthechecktoconsumption，naturallyarisingfrom
taxation，isonthewholebetterappliedtothemthantoother
things。6thly。Asfarasotherconsiderationspermit，taxation
shouldbeconfinedtoimportedarticles，sincethesecanbetaxed
withalessdegreeofvexatiousinterference，andwithfewer
incidentalbadeffects，thanwhenataxisleviedonthefieldor
ontheworkshop。Custom—dutiesare，caeterisparibus，muchless
objectionablethanexcise:buttheymustbelaidonlyonthings
whicheithercannot，oratleastwillnot，beproducedinthe
countryitself;orelsetheirproductiontheremustbeprohibited
（asinEnglandisthecasewithtobacco），orsubjectedtoan
excisedutyofequivalentamount。7thly。Notaxoughttobekept
sohighastofurnishamotivetoitsevasion，toostrongtobe
counteractedbyordinarymeansofprevention:andespeciallyno
commodityshouldbetaxedsohighlyastoraiseupaclassof
lawlesscharacters，smugglers，illicitdistillers，andthelike。
Oftheexciseandcustomdutieslatelyexistinginthis
country，allwhichareintrinsicallyunfittoformpartofagood
systemoftaxation，have，sincethelastreformsbyMrGladstone，
beengotridof。Amongthesearealldutiesonordinaryarticles
offood，whetherforhumanbeingsorforcattle;thoseontimber，
asfall。ingonthematerialsoflodging，whichisoneofthe
necessariesoflife;alldutiesonthemetals，andonimplements
madeofthem;taxesonsoap，whichisanecessaryofcleanliness，
andontallow，thematerialbothofthatandofsomeother
necessaries;thetaxonpaper，anindispensableinstrumentof
almostallbusinessandofmostkindsofinstruction。Theduties
whichnowyieldnearlythewholeofthecustomsandexcise
revenue，thoseonsugar，coffee，tea，wine，beer，spirits，and
tobacco，areinthemselveswherealargeamountofrevenueis
necessary，extremelypropertaxes;butatpresentgrosslyunjust，
fromthedisproportionateweightwithwhichtheypressonthe
poorerclasses;andsomeofthem（thoseonspiritsandtobacco）
aresohighastocauseaconsiderableamountofsmuggling。Itis
probablethatmostofthesetaxesmightbearagreatreduction
withoutanymateriallossofrevenue。Inwhatmannerthefiner
articlesofmanufacture，consumedbytherich，mightmost
advantageouslybetaxed，Imustleavetobedecidedbythosewho
havetherequisitepracticalknowledge。Thedifficultywouldbe，
toeffectitwithoutaninadmissibledegreeofinterferencewith
production。Incountrieswhich，liketheUnitedStates，import
theprincipalpartofthefinermanufactureswhichtheyconsume，
thereislittledifficultyinthematter:andevenwherenothing
isimportedbuttherawmaterial，thatmaybetaxed，especially
thequalitiesofitwhichareexclusivelyemployedforthe
fabricsusedbythericherclassofconsumers。Thus，inEnglanda
highcustom—dutyonrawsilkwouldbeconsistentwithprinciple;
anditmightperhapsbepracticabletotaxthefinerqualitiesof
cottonorlinenyarn，whetherspuninthecountryitselfor
imported。
NOTES:
1。Somearguethatthematerialsandinstrumentsofall
productionshouldbeexemptfromtaxation;butthese，whenthey
donotenterintotheproductionofnecessaries，seemasproper
subjectsoftaxationasthefinishedarticle。Itischieflywith
referencetoforeigntrade，thatsuchtaxeshavebeenconsidered
injurious。Internationallyspeaking，theymaybelookeduponas
exportduties，and，unlessincasesinwhichanexportdutyis
advisable，theyshouldbeaccompaniedwithanequivalentdrawback
onexportation。Butthereisnosufficientreasonagainsttaxing
thematerialsandinstrumentsusedintheproductionofanything
whichisitselfafitobjectoftaxation。
2。’Werewetosupposethatdiamondscouldonlybeprocuredfrom
oneparticularanddistantcountry，andpearlsfromanother，and
weretheproduceoftheminesintheformer，andofthefishery
inthelatter，fromtheoperationofnaturalcauses，tobecome
doublydifficulttoprocure，theeffectwouldmerelybethatin
timehalfthequantityofdiamondsandpearlswouldbesufficient
tomarkacertainopulenceandrank，thatithadbeforebeen
necessarytoemployforthatpurpose。Thesamequantityofgold，
orsomecommodityreducibleatlasttolabour，wouldberequired
toproducethenowreducedamount，astheformerlargeramount。
Werethedifficultyinterposedbytheregulationsof
legislators……itcouldpurposesofmakenodifferencetothe
fitnessofthesearticlestoservethevanity。’Supposethat
meanswerediscoveredwherebythephysiologicalprocesswhich
generatesthepearlmightbeinducedadlibitum，theresultbeing
thattheamountoflabourexpendedinprocuringeachpearl，came
tobeonlythefivehundredthpartofwhatitwasbefore。’The
ultimateeffectofsuchachangewoulddependonwhetherthe
fisherywerefreeornot。Wereitfreetoall，aspearlscouldbe
gotsimplyforthelabouroffishingforthem，astringofthem
mightbehadforafewpence。Theverypoorestclassofsociety
couldthereforeaffordtodecoratetheirpersonswiththem。They
wouldthussoonbecomeextremelyvulgarandunfashionable，andso
atlastvalueless。Ifhoweverwesupposethatinsteadofthe
fisherybeingfree，thelegislatorownsandhascompletecommand
oftheplace，wherealonepearlsaretobeprocured;asthe
progressofdiscoveryadvanced，hemightimposeadutyonthem
equaltothediminutionoflabournecessarytoprocurethem。They
wouldthenbeasmuchesteemedastheywerebefore。Whatsimple
beautytheyhavewouldremainunchanged。Thedifficultytobe
surmountedinordertoobtainthemwouldbedifferent，but
equallygreat。andtheywouldthereforeequallyservetomarkthe
opulenceofthosewhopossessedthem。’Thenetrevenueobtained
bysuchatax’wouldnotcostthesocietyanything。Ifnotabused
initsapplication，itwouldbeaclearadditionofsomuchto
theresourcesofthecommunity。’——Rae，NewPrinciplesof
PoliticalEconomy，pp。369—71。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book5
Chapter7
OfaNationalDebt
1。Thequestionmustnowbeconsidered，howfaritisright
orexpedienttoraisemoneyforthepurposeofgovernment，notby
layingontaxestotheamountrequired，butbytakingaportion
ofthecapitalofthecountryintheformofaloan，andcharging
thepublicrevenuewithonlytheinterest。Nothingneedsbesaid
aboutprovidingfortemporarywantsbytakingupmoney;for
instance，byanissueofexchequerbills，destinedtobepaid
off，atfurthestinayearortwo，fromtheproceedsofthe
existingtaxes。Thisisaconvenientexpedient，andwhenthe
governmentdoesnotpossessatreasureorhoard，isoftena
necessaryone，ontheoccurrenceofextraordinaryexpenses，orof
atemporaryfailureintheordinarysourcesofrevenue。Whatwe
havetodiscussistheproprietyofcontractinganationaldebt
ofapermanentcharacter;defrayingtheexpensesofawar，orof
anyseasonofdifficulty，byloans，toberedeemedeithervery
graduallyandatadistantperiod，ornotatall。
ThisquestionhasalreadybeentoucheduponintheFirst
Book。Weremarked，thatifthecapitaltakeninloansis
abstractedfromfundseitherengagedinproduction，ordestined
tobeemployedinit，theirdiversionfromthatpurposeis
equivalenttotakingtheamountfromthewagesofthelabouring
classes。Borrowing，inthiscase，isnotasubstituteforraising
thesupplieswithintheyear。Agovernmentwhichborrowsdoes
actuallytaketheamountwithintheyear，andthattoobyatax
exclusivelyonthelabouringclasses:thanwhichitcouldhave
donenothingworse，ifithadsupplieditswantsbyavowed
taxation;andinthatcasethetransaction，anditsevils，would
haveendedwiththeemergency;whilebythecircuitousmode
adopted，thevalueextractedfromthelabourersisgained，notby
thestate，butbytheemployersoflabour，thestateremaining
chargedwiththedebtbesides，andwithitsinterestin
perpetuity。Thesystemofpublicloans，insuchcircumstances，
maybepronouncedtheveryworstwhich，inthepresentstateof
civilization，isstillincludedinthecatalogueoffinancial
expedients。
Wehoweverremarkedthatthereareothercircumstancesin
whichloansarenotchargeablewiththesepernicious
consequences:namely，first，whenwhatisborrowedisforeign
capital，theoverflowingsofthegeneralaccumulationofthe
world;or，secondly，whenitiscapitalwhicheitherwouldnot
havebeensavedatallunlessthismodeofinvestmenthadbeen
opentoit，orafterbeingsaved，wouldhavebeenwastedin
unproductiveenterprises，orsenttoseekemploymentinforeign
countries。Whentheprogressofaccumulationhasreducedprofits
eithertotheultimateortothepracticalminimum，——tothe
rate，lessthanwhichwouldeitherputastoptotheincreaseof
capital，orsendthewholeofthenewaccumulationsabroad;
governmentmayannuallyinterceptthesenewaccumulations，
withouttrenchingontheemploymentorwagesofthelabouring
classesinthecountryitself，orperhapsinanyothercountry。
Tothisextent，therefore，theloansystemmaybecarried，
withoutbeingliabletotheutterandperemptorycondemnation
whichisduetoitwhenitoverpassesthislimit。Whatiswanted
isanindextodeterminewhether，inanygivenseriesofyears，
asduringthelastgreatwarforexample，thelimithasbeen
exceededornot。
Suchanindexexists，atonceacertainandanobviousone。
Didthegovernment，byitsloanoperations，augmenttherateof
interest？Ifitonlyopenedachannelforcapitalwhichwouldnot
otherwisehavebeenaccumulated，orwhich，ifaccumulated，would
nothavebeenemployedwithinthecountry;thisimpliesthatthe
capital，whichthegovernmenttookandexpended，couldnothave
foundemploymentattheexistingrateofinterest。Solongasthe
loansdonomorethanabsorbthissurplus，theypreventany
tendencytoafalloftherateofinterest，buttheycannot
occasionanyrise。Whentheydoraisetherateofinterest，as
theydidinamostextraordinarydegreeduringtheFrenchwar，
thisispositiveproofthatthegovernmentisacompetitorfor
capitalwiththeordinarychannels，ofproductiveinvestment，and
iscarryingoff，notmerelyfundswhichwouldnot，butfunds
whichwould，havefoundproductiveemploymentwithinthecountry。
Tothefullextent，therefore，towhichtheloansofgovernment，
duringthewar，causedtherateofinteresttoexceedwhatitwas
before，andwhatithasbeensince，thoseloansarechargeable
withalltheevilswhichhavebeendescribed。Ifitbeobjected
thatinterestonlyrosebecauseprofitsrose，Ireplythatthis
doesnotweaken，butstrengthens，theargument。Ifthegovernment
loansproducedtheriseofprofitsbythegreatamountofcapital
whichtheyabsorbed，bywhatmeanscantheyhavehadthiseffect，
unlessbyloweringthewagesoflabour？Itwillperhapsbesaid，
thatwhatkeptprofitshighduringthewarwasnotthedrafts
madeonthenationalcapitalbytheloans，buttherapidprogress
ofindustrialimprovements。This，inagreatmeasure，wasthe
fact;anditnodoubtalleviatedthehardshiptothelabouring
classes，andmadethefinancialsystemwhichwaspursuedless。
activelymischievous，butnotlesscontrarytoprinciple。These
veryimprovementsinindustry，maderoomforalargeramountof
capital;andthegovernment，bydrainingawayagreatpartofthe
annualaccumulations，didnotindeedpreventthatcapitalfrom
existingultimately，（foritstartedintoexistencewithgreat
rapidityafterthepeace），butpreventeditfromexistingatthe
time，andsubtractedjustsomuch，whilethewarlasted，from
distributionamongproductivelabourers。Ifthegovernmenthad
abstainedfromtakingthiscapitalbyloan，andhadalloweditto
reachthelabourers，buthadraisedthesupplieswhichit
requiredbyadirecttaxonthelabouringclasses，itwouldhave
produced（ineveryrespectbuttheexpenseandinconvenienceof
collectingthetax）theverysameeconomicaleffectswhichitdid
produce，exceptthatweshouldnotnowhavehadthedebt。The
courseitactuallytookwasthereforeworsethantheveryworst
modewhichitcouldpossiblyhaveadoptedofraisingthesupplies
withintheyear:andtheonlyexcuse，orjustification，whichit
admitsof，（sofarasthatexcusecouldbetrulypleaded），was
hardnecessity;theimpossibilityofraisingsoenormousan
annualsumbytaxation，withoutresortingtotaxeswhichfrom
theirodiousness，orfromthefacilityofevasion，itwouldhave
beenfoundimpracticabletoenforce。