ing revenue duties on theirs. Only it must take care that those duties be not so high as to exceed all that remains of the advantage of the trade, and put an end to importation altogether, causing the article to be either produced at home, or imported from another and a dearer market."

CHAPTER V.

OF SOME OTHER TAXES.

1. BESIDE direct taxes on income, and taxes on consumption, the financial systems of most countries comprise a variety of miscellaneous imposts, not strictly included in either class. The modern European systems retain many such taxes, though in much less number and variety than those semi-barbarous governments which European influence has not yet reached. In some of these, scarcely any incident of life has escaped being made an excuse for some fiscal exaction; hardly any act, not belonging to daily routine, can be performed by any one, without obtaining leave from some agent of government, which is only granted in consideration of a payment; especially when the act requires the aid or the peculiar guarantee of a public authority. In the present treatise we may confine our attention to such taxes as lately existed, or still exist, in countries usually classed as civilized.

In almost all nations a considerable revenue is drawn from taxes on contracts. These are imposed in various forms. One expedient is that of taxing the legal instrument which serves as evidence of the contract, and which is commonly the only evidence legally admissible. In England,

scarcely any contract is binding unless executed on stamped paper, which has paid a tax to government; and when the contract relates to property the tax rises, though in an irregular manner, with the pecuniary value of the property. There are also stamp duties on the legal instruments which are evidence of the fulfilment of contracts; such as acknowledgments of receipts, and deeds of release. Taxes on contracts are not always levied by means of stamps. The duty on sales by auction, abrogated by Sir Robert Peel, was an instance in point. The taxes on transfers of landed property, in France, are another; in England these are stamp-duties. In some countries, contracts of many kinds are not valid unless registered, and their registration is made an occasion for a tax.

Of taxes on contracts, the most important are those on the transfer of property; chiefly on purchases and sales. Taxes on the sale of consumable commodities are simply taxes on those commodities. If they affect only some particular commodities, they raise the prices of those commodities, and are paid by the consumer. If the attempt were made to tax all purchases and sales, which, however absurd, was for centuries the law of Spain, the tax, if it could be enforced, would be equivalent to a tax on all commodities, and would not affect prices; if levied from the sellers, it would be a tax on profits, if from the buyers, a tax on consumption; and neither class could throw the burden upon the other. If confined to some one mode of sale, as for example by auction, it discourages recourse to that mode, and if of any material amount, prevents it from being adopted at all, unless in a case of emergency; in which case, as the seller is under a necessity to sell, but the buyer under no necessity to buy, the tax falls on the seller; and this was the strongest of the objections to the auction duty; it almost always fell on a necessitous person, and in the very crisis of his necessities.

Taxes on the purchase and sale of land are, in most countries, liable to the same objection. Landed property in old countries is seldom parted with, except from reduced circumstances, or some urgent need; the seller, therefore, must take what he can get, while the buyer, whose object is an investment, makes his calculations on the interest which he can obtain for his money in other ways, and will not buy if he is charged with a government tax on the transaction. It has indeed been objected, that this argument would not apply if all modes of permanent investment, such as the purchase of government securities, shares in joint-stock companies, mortgages, and the like, were subject to the same tax. But even then, if paid by the buyer, it would be equivalent to a tax on interest; if sufficiently heavy to be of any importance, it would disturb the established relation between interest and profit; and the disturbance would redress itself by a rise in the rate of interest, and a fall of the price of land and of all securities. It appears to me, therefore, that the seller is the person by whom such taxes, unless under peculiar circumstances, will always be borne.

All taxes must be condemned which throw obstacles in the way of the sale of land, or other instruments of production. Such sales tend naturally to render the property more productive. The seller, whether moved by necessity or choice, is probably some one who is either without the means, or without the capacity, to make the most advantageous use of the property for productive purposes; while the buyer, on the other hand, is at any rate not needy, and is probably a person both inclined and able to improve the property, since, as it is worth more to such a person than to any other, he is likely to offer the highest price for it. All taxes, therefore, and all difficulties and expenses, annexed to such contracts, are decidedly detrimental; especially in the case of land, the source of subsistence, and the

original foundation of all wealth, on the improvement of which, therefore, so much depends. Too great facilities cannot be given to enable land to pass into the hands, and assume the modes of aggregation or division, most conducive to its productiveness. If landed properties are too large, alienation should be free, in order that they may be subdivided; if too small, in order that they may be united. All taxes on the transfer of landed property should be abolished; but, as the landlords have no claim to be relieved from any reservation which the state has hitherto made in its own favor from the amount of their rent, an annual impost equivalent to the average produce of these taxes should be distributed over the land generally, in the form of a land tax.*

* In our own country, the taxes on contracts are the more objectionable, because, with that tendency to spare the rich which pervades our financial system, they are proportionally much heavier on the smaller transactions. Many stamp duties do not profess to be ad valorem, but are fixed charges, whether the amount of the transaction be great or small. With respect to those which do pretend to be ad valorem; "of the stamps on conveyances, the lowest, which attaches where the purchase money does not amount to £20, is 10s.; where the purchase money amounts to £20, and not to £50, £1; where £50, and not amounting to £150, £1 10s.; and there are twenty-three other enumerated stamps, rising in amount by unequal steps, the highest being £1000, where the purchase money is £100,000, beyond which, however high the purchase money may rise, the tax does not increase. . . In the case of a £20 purchase of freehold, the duty is £2, or 10 per cent. on the value; while on the £200,000 or £300,000 purchase (as on all conveyances of £150 and upwards) the stamp is only £1 158., a fraction of the value too inconsiderable to deserve notice. It often happens also in conveyances of properties of small amount, that beside this conveyance, other deeds are required, as assignments or surrenders of terms, and covenants for the production of title deeds; and the stamps on these deeds are the same whether the purchase is £20 or £20,000." In the stamp duties on bonds and mortgages, the inequality is still more glaring; the rate ad valorem being "eighty times as great on the security for £50 as on that for £100,000."-McCulloch on Taxation, pp. 277-280. And in another place, "The stamp duties in their present form wholly want that compensating quality which has often been ascribed to them (and with which they might be endowed) of giving increased security to transactions. On the

Some of the taxes on contracts are very pernicious, imposing a virtual penalty upon transactions which it ought to be the policy of the legislator to encourage. Of this sort is the stamp duty on leases, which in a country of large properties are an essential condition of good agriculture; and the tax on insurances, a direct discouragement to prudence and forethought. In the case of fire insurances, the tax is exactly double the amount of the premium of insurance on common risks; so that the person insuring is obliged by the government to pay for the insurance just three times the value of the risk. If this tax existed in France, we should not see, as we do in some of her provinces, the plate of an insurance company on almost every cottage or hovel. This, indeed, must be ascribed to the provident and calculating habits produced by the dissemination of property through the laboring class; but a tax of so extravagant an amount would be a heavy drag upon any habits of providence.

2. Nearly allied to the taxes on contracts, are those on communication. The principal of these is the postage tax; to which may be added the tax on advertisements, and that on newspapers, which are taxes on the communication of information.

The common mode of levying a tax on the conveyance of letters, is by making the government the sole authorized carrier of them, and demanding a monopoly price. When

contrary, one would think they had been intended to serve as decoys with which to entrap parties. and force them into the courts. The difficulty which they create of determining what is and what is not a proper stamp, is itself a most prolific source of uncertainty, and consequently of litigation and expense," (p. 276.) We may well add, with the same writer, (p. 281) “It will be curious to see how long the present system will be permitted to continue.'

It is a characteristic fact, that while the sale of land is taxed, its settlement, which prevents it from being sold, is one of the few legal transactions which are not liable to any tax.