The difficulties of assessing income are twofold.

1st. The difficulty of ascertaining the annual income of different persons; and 2ndly, supposing that amount to be known, the difficulty of laying an equal tax on incomes derived from different sources. Again, taxes of this kind cannot be fully secured without a conscientious co-operation on the part of the contributors-a co-operation scarcely to be hoped for in the present state of public morality. No amount of inquisitorial power, which would be tolerated even by a people the most disposed to submit to it, would enable the revenue officers to assess such taxes from actual knowledge of the circumstances of contributors. Incomes derivable from rent, whether of land or houses; national annuities; the profits of large joint-stock companies, whose accounts are always accessible to a numerous proprietary; the salaries of government servants, of clerks and other officials in industrial employments, are too well known for evasion to be possible; but the variable gains of professional men, and still more, the profits of farmers, manufacturers, and traders, which in many cases the persons assessed cannot themselves exactly determine, seldom admit of being estimated with any approach to fairness by a tax collector. The main reliance must be placed, and ever has been placed on the return made by the person subject to the charge. Thus, an Income Tax, on whatever principle of equality it may be imposed, is in practice unequal in one of the worst ways, falling most heavily on the conscientious, while the unscrupulous succeed in evading payment of a great portion of the sum which they should contribute to the state.

4.-ADVANTAGES OF INDIRECT TAXATION.-The facility of collecting a tax is of more real importance than the single advantage of a less burthen, or the absence of all interference with the convenience of those who supply commodities to the public. The habit which men have acquired of viewing money as the representative of everything that conduces to the support or comfort of life, makes them naturally very unwilling to part with what portion of it they possess, unless it be to procure some necessary or enjoyment. They spend money with pleasure on any object that yields a visible return, but it requires an effort to pay a debt, and particularly so, when the value received in exchange is not very obvious to the generality, as in the case of a tax. But by levying the tax on some article of consumption, by thus confounding it with price of the latter, and by making the payment of the duty and of the price of enjoyment become one and the same act, we render the consumer desirous to pay the impost. It is amid the profusion of entertainments and the prevalence of personal indulgence, that the duties on wine, spirits, and tobacco are paid; the public treasury thus finding a source of gain in the large voluntary consumption of luxuries.

Another advantage, possessed by a tax of the indirect kind, is its extreme divisibility into minute parts, and the ease with which it may be paid off, day by day, or even minute by minute. Thus, the mechanic, while refreshing himself after his day's labour, frequently pays within a very short time, part of two or three different duties.

In the plan of direct taxation, the impost appears without any disguise: the burthen of it is palpable and obvious. The demand for payment comes upon us unexpectedly, from the imprudence common to the bulk of mankind, and seldom fails to give annoyance and provoke complaint. All these considerations are overlooked by the friends of direct taxation, and yet their importance must be known to every one who has framed a scheme of finance.

One of the principal reasons for resorting by preference to indirect taxes, is the ready means which they afford of exacting contributions from all the members of society; nowhere is there to be found a people, from the majority of whom it would be possible to collect direct contributions, sufficient to defray the expenses of government; whereas, however great the cost of collection may be, however vexatious the interference with industrial employment, and however demoralising the temptations to evasion, it is undeniable, that by means of Customs and Excise taxes, few individuals escape making some contribution towards the expenses of government.

It may also be urged that an indirect tax by increasing, from time to time, the price of the objects of general consumption, renders these objects a little more costly, and thus gives rise to that development of labour and industry which is now required to obtain them. But if this tax be so proportioned as not to discourage the consumption, will it not then operate as a universal stimulus to the active and ingenious part of the community ?* Will it not incite that part to redoubled efforts by which it may still enjoy those luxuries which by habit have become almost necessaries, and, of course, lead to a further development of the productive powers of labour, and of the resources of industry? Are we not in such a case to conclude, that after the imposition of a tax, there will exist not only the quantity of labour which before was requisite to procure the necessaries and habitual enjoyments of the industrial classes, but, also, such an addition to this as will suffice for the payment of the tax?

If these conjectures are well founded, it follows that indirect taxation, far from having any hurtful influence on wealth and population, must, when wisely regulated, tend to increase and strengthen those two great elements of national power and wellbeing. It is, at least, certain that an extraordinary increase of wealth and commerce has taken place in this country, under the burthen of the heaviest indirect taxation. The revenue derived from the Customs and Excise is at present regarded as the best index of public prosperity. When this source of supply grows less, monetary confidence abates, and if the decrease continues to any great extent, a panic is not uncommonly produced.

It is also a matter of some moment that under the indirect method an opportunity is afforded of discouraging the consumption of certain commodities by raising their price; two good works being thus accomplished at the same time,-the procuring a revenue for government purposes, and the checking the consumption of such articles as spirits and tobacco. The best plea, however, in favour of this system is to be found in the consideration already touched upon, that a tax thus levied is taken from the contributor at a time and in a manner likely to be convenient to him. It is paid at a time when he has, at any rate, a payment to make; it causes, therefore, no additional trouble, as the tax is included in the price of the article purchased, nor, unless the impost be laid on necessaries, any inconvenience, but what is inseparable from the outlay itself. He can also, except in case of very perishable goods, select his own time for laying in a stock of the commodity, and, consequently, for the payment of the tax.

* It is important to bear in mind that the effect of indirect taxes in stimulating industry, depends on the circumstance of their not lessening consumption, or, what is the same thing, of their being so moderate that the contributor may defray them by increased exertion and economy. Were not this the case, such taxes would have a precisely opposite influence, and, instead of acting as an incentive to exertion, they would certainly occasion its decline,

The producer or dealer who advances these taxes, is, indeed, sometimes subjected to inconvenience; but, in the present day, this inconvenience is reduced to a minimum by the extended operation of what is called the Warehousing or Bonding system, under which, instead of paying the duty at the time of importation or manufacture, he is permitted to reserve payment until the goods are taken out for consumption-a thing seldom done before he has actually found, or has the prospect of immediately finding, a purchaser.

5.-RULES FOR EQUITABLE TAXATION.-The distinguishing feature of the best tax is not that it is most nearly proportioned to the means of the contributor, but that it is most easily assessed and collected, and is, at the same time, most conducive, all things considered, to the public interests. It may be generally affirmed that that system of taxation is the best which collects the funds requisite for government at the smallest possible cost, which offers the fewest facilities for evasion, and introduces the least derangement into industrial pursuits. 1st. As large a revenue as conveniently may be, should be raised from those classes of luxuries which have most connection with mere ostentation, and least with positive enjoyment, such as the more costly qualities of all kinds of personal equipment and ornament. 2nd. Whenever practicable, the tax should be demanded, not from the producer, but direct from the consumer, since when levied on the producer it raises the price by much more than the mere amount of the tax. 3rd. As the only indirect taxes which yield a large revenue, are those which fall on articles of universal or very general consumption, and as it is, therefore, necessary to have some taxes on real luxuries, these taxes should be adjusted so as to bear with the same proportional weight on small, on moderate, and on large incomes. But this is not easy, since the poor pay the bulk of the more productive taxes. A higher duty in proportion to the value might be attached to articles consumed by the wealthier classes. But, again, from the difficulty of ascertaining the true value of many articles of commerce, this scheme is found to be impracticable. 4th. The taxation should be concentrated on a few objects, in order that the expense of collection may be smaller, and that as few employments as possible may be burthened and vexatiously interfered with. 5th. The taxation should be levied chiefly on imported articles, because in the case of these the duty can be collected with a less degree of vexatious interference, and with fewer incidental bad effects than when it is imposed in the field or the manufactory. Customs duties are, all things considered, preferable to Excise, but the tax is only to be laid on things not produced in the country itself, or else the home production must be prohibited, as in the case of tobacco, or subjected to an Excise duty of equal amount. Taxes on commodities for revenue purposes must not operate as protective duties, but must be levied impartially on an article for every mode in which it can be obtained, whether the produce of the country itself, or an importation.

A certain amount of revenue may be raised without injustice from a tax on rent. Besides the present Land Tax, and an equivalent for the Stamp Duties on the conveyance of land, some further taxes might be imposed to enable the state to participate in the progressive increase of landlords' property from natural causes. Legacies and Inheritances ought to yield a considerable revenue. With these taxes, and a House Tax of suitable amount, we certainly reach the prudent limits of direct taxation, unless in a national emergency so urgent as to justify the government in disregarding the inequality and unfairness which may ultimately be

found inseparable from an Income Tax. The remainder of the revenue would have to be provided by taxes on consumption, and the question is, which of these is the least objectionable.

6.-SELECTION OF ARTICLES FOR INTERNAL TAXATION.-On this subject the Commissioners of Excise Inquiry offer in their Seventh Report (British Spirits, Part I., 1834) the following apposite remarks :-"As the question of what is or is not to be deemed a luxury must be decided in relation to the habits and usages of society at different times and under diffierent circumstances, it would obviously be difficult, if not impracticable, to establish any accurate definition of the articles which ought in strictness to be classed under that denomination: with a view, however, to our present purpose, it may be assumed, that a general distinction on this point has been sufficiently established by common consent and acknowledgment and in accordance with this distinction, we apprehend that we are justified in considering the taxes on Spirits, Malt, Hops, and Sweets or Home-made Wines, as taxes on luxuries; whilst those on Paper, Soap, Glass, Bricks, Starch, Vinegar, and Stone Bottles, may be described as heads of taxation on articles of useful manufacture.*

"In making a selection of articles for internal or excise taxation, we conceive that there will be little difference of opinion as to the comparative fitness for that purpose of the two classes of articles which are above enumerated: and that whilst the first, or the class of luxuries, must be admitted to afford one of the most appropriate and least objectionable of the sources from which this species of taxation can be supplied, the tax on the second, or class of manufactures, is liable to some of the strongest and most general objections that can be alleged against any species of taxation, except, perhaps, that which is imposed on the raw produce and raw materials+ from which the above or other descriptions of manufactures are made. The weight of these objections can, perhaps, be fully appreciated by those only who have occasion to examine the details of the excise regulations, as applied to the various manufactures which are subjected to them: but the general nature of the inconveniences which are necessarily produced by them, will be sufficiently apparent by adverting to some of the principal effects which are in practice found to attend their operation.

7.-INJURIOUS EFFECTS OF EXCISE INTERFERENCE WITH MANUFACTURES.-< In the first place, it is obviously necessary, for the purposes of the revenue survey, that the officers of the department should have a complete and general cognizance of a manufacture during every part of its process that the business should not be commenced without a licence from the department: and that the buildings, grounds, or premises in which it is carried on, and that the various implements, machines, receptacles, and vessels which are required for its production, should be at all times subject to the survey and inspection, and in many cases should be under the

*This list of duties is now reduced to Spirits and Malt,

+ Duties on raw materials enhance the price of such materials, and thus limit the power of the manufacturer to purchase them, or to employ labour in increasing their value and in adding to the production and capital of the country. They discourage foreign commerce, and the employment of shipping, for as the power of buying is restrained so also is that of selling, and the interchange of merchandise between different countries is checked. Moreover, by raising the price of exported manufactures, such duties limit the demand for them abroad, and subject them to dangerous competition,

control of excise officers.

And it is further necessary, in the case of many of the manufactures, that the mode of conducting the business, and the times of commencing and completing the several stages of the operations, should be, in a great measure, prescribed by Acts of Parliament, the observance of which is enforced by severe penalties. The disadvantages to the manufacturer of conducting his business under such a system of interference and regulation, as compared with the free exercise of his ingenuity, skill, and resources, at the times and in the manner best suited to his own convenience, do not require to be enlarged upon; but we may briefly allude, as amongst the most prominent of these disadvantages, to the discouragement of all attempts at invention or improvement, which must arise as well from the interference of the prescribed rules with any change in the management of the process, and from the obligations imposed upon many manufacturers of obtaining certain amounts of produce from given quantities of materials, as from the circumstance that the person who makes any experiment or attempt at improvement is, by the necessary publicity given to every part of a process conducted under excise regulation, debarred from the private or exclusive advantages which should be the reward of a successful invention. Under this system the manufacturer is also prevented from giving effect to the inventions or improvements of others, for which his manufacture may furnish the means, if for that purpose he shall be obliged to depart from the mode prescribed by law for the conduct of his business.

"A further disadvantage attending the application of fiscal regulations to processes of manufacture, arises from their compelling such processes in many instances to be carried on in a less economical and productive manner than would be practised if the manufacturer were left unrestricted in his mode of conducting them. In referring to these injurious effects upon the manufacturers or traders, it should be recollected that they must also be felt in an accumulated degree by the public who are the consumers, against whom the tax operates by the addition made to the price of the commodity, not only by its direct amount, but by the necessity of compensating the manufacturer for his advance of capital in defraying it, and also by the increased cost of production arising from the unnecessary additions to the expenses of manufacturing to which we have alluded. It may be observed that the enhancement in the price of an article of general use, when such enhancement is produced by institutions peculiar to any one country, at the same time that it checks consumption, and thus diminishes the employment of industry and capital in that country, has the further effect of giving direct encouragement to foreign competitors in trade; and instances might be adduced in which the supply of articles in general demand has been partially or entirely transferred from a native to a foreign market, through the effects of internal taxation.

8.-EVILS OF HIGH DUTIES.—«The evils to which we have alluded, as being incident to the Excise Taxation of manufactures, are inherent in the principle of all such taxation, and in their general effect are unavoidable, although they may vary in their degree and mode of pressure under different circumstances; and it may be added, as a position of equally general application, that the evils are in all respects greatly increased through the attempts which are so frequently made to obtain a large amount of revenue, by fixing the rates of duty immoderately high. Amongst the inevitable consequences of these high rates of duty may be ranked the following, which cannot fail to be considered as so many additional evils beyond