, would have to be abandoned with the Customs duties. We will
consider the possibility of raising this L40,000,000 by direct
taxation before we dilate on the advantages which would follow
Universal Free Trade.
Ricardo, at the end of his masterly consideration of the effect of
taxation variously levied, comes to the general conclusion that the
best tax is that which is least in amount. Adam Smith and the older
economists held that one test which a well-devised tax had to satisfy
was that it should take the money from the taxpayer insensibly,
indirectly. Now, all taxes that thus insensibly drain the taxpayers
invariably take more in gross from them than reaches the Government.
To raise L40,000,000 by customs and excise costs about L3,000,000; so
that the people have to pay L43,000,000, while the Government gets
L40,000,000. In direct taxes, as income taxes, property rates, the
cost of collection is very small--about two-pence in the pound. In
public as in private business it is much more economic to look
payments in the face and make them with our eyes open than to let the
money slip away in driblets. Moreover, modern politicians think, in
opposition to Adam Smith, that it has a good moral effect on the body
politic to be made to feel exactly what taxes they pay, so that they
cannot help knowing whenever taxation is increased.
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