Loftus's Inland Revenue Officers' Manual ...

those to which we have already referred as incident even to moderate degrees of taxation: 1st. Multiplicity and complexity of regulations; 2ndly, severity of penal enactments and prosecutions; 3rdly, increased vigilance and closeness of inspection of the trader, and consequently, additional interference with the trade; 4thly, the various kinds of vexation and annoyance to the trader necessarily attendant upon this severity of regulation and closeness of inspection; 5thly, the temptation and encouragement to a system of evasion of duty by those who are fraudulently disposed, and the consequent injury to the fair trader; 6thly, the temptation held out and the numerous opportunities afforded for the corruption of officers; 7thly, the inevitable increase in the general expenses of collection; 8thly, the failures in the attempt to obtain an amount of duty in any degree commensurate with the rate of taxation imposed, or equivalent to what the article might be made to produce under a more moderate and better adapted rate. Every one of the evil consequences of which the enumeration is above given, will, on an investigation of the cases in which they have arisen, be found to have been either wholly produced, or at least produced in an aggravated degree, by having carried the rates of duty too high All experience of this mode of taxation has proved, that to every article which is the object of it, there is a certain limit to the amount of duty, which cannot be exceeded without creating such a temptation to its evasion, altogether or in part, as to call for that multiplicity of regulations, restrictions, and penalties, and the various inconveniences resulting from them, to which we have above adverted and also to an evil attended with consequences more extensively injurious than them all, in the effect produced upon the general habits and morals of the people, by any cause which leads them to an habitual and almost undisguised practice of violating any branch of the law.

"It appears, however, that the evils to which we have alluded, have of late years been greatly mitigated and reduced, by the improvements which have taken place in the nature and application of the regulations relating to exciseable articles -in the general character and conduct of the various discriptions of officers employed in the department-and also in the general conduct and mode of dealing of the manufacturer or traders who are subject to the regulations."

HISTORIC SKETCH OF THE EXCISE REVENUE.

9.-ORIGIN Of Taxes in GENERAL.-The scheme of taxation in force in modern Europe, had its origin in the decline of the feudal system, which was devised by the conquering nations of the north as the most likely means of securing their new acquisitions, and became firmly established in England a few years after the Norman invasion. According to the principles of that system, lands were held as fiefs of the crown, on condition of their possessors rendering certain services, of which the obligation to support the sovereign when he took the field, with a body of retainers armed and maintained at their own expense, was by far the most important. The tenants in chief of the great fiefs, or those who held directly or under the sovereign, were either originally invested with the right

FIRST IMPOSITION OF EXCISE DUTIES.

of dispensing justice in their respective lordships, or they subsequently usurped that prerogative; and in those days the administration of justice, instead of being a source of expense, became, in consequence of the corruption and abuses with which it was infected, a considerable source of influence and emolument. The clergy were supported partly by the produce of their own estates, and partly by a tithe levied on the estates of others. During a few days before and after harvest, the labour of the peasantry sufficed to put the roads and bridges into that state of repair which the undeveloped condition of commerce and the limited intercourse among the different parts of the country seemed to require. It was not even necessary to levy a tax for the support of the monarch and his court. The rents of the crown estates, or of the royal demesnes which had not been granted to others but remained in the immediate possession of the sovereign, together with the revenue derived from wardships, aids, benevolences, and other feudal incidents, were generally sufficient to defray this portion of the public expenditure. When the feudal system was in its vigour, the demesnes of the crown were, in most countries, very extensive, and the alienations of property occasioned by the profusion and facility of some princes, were compensated by the forfeitures and escheats that were always taking place. The vicious nature of this system is It had, for a long series of years, the most too obvious to need any comment. disastrous influence on the peace and prosperity of Europe, but the slow advances of civilization ultimately effected its overthrow. Money payments were gradually substituted for personal services, and in this way became the basis of direct pecuniary taxation. The establishment of standing armies in France by Charles VII., and their introduction into other countries, entirely broke the power and spirit of the feudal aristocracy, and enabled the various governments to adopt and enforce that system of regular pecuniary contribution which now universally obtains.

10. FIRST IMPOSITION OF EXCISE DUTIES.*-Most of the indirect taxes But at were originally imposed to defray the expenses of consecutive wars at home and abroad, and they may, therefore, be regarded as essentially war taxes. the time of their introduction, they were held to be an innovation on the system of direct taxation which then prevailed. The first attempt to create Excise duties was in 1626, by a commission under the great seal issued to thirty-three lords and others; but the parliament having remonstrated, it was judged by both houses contrary to law, and the commission was accordingly cancelled by the king. So odious was the very name of an Excise, that Sir Dudley Carlton, then Secretary of State, having only mentioned it in the House of Commons, with a view to show the happines which the people of England enjoyed above other nations in being exempt from that imposition, was suddenly interrupted, called to the bar, and narrowly escaped being sent to the Tower.

During the civil wars in 1641, parliament ventured to impose an excise on beer, cider, and perry; but although they pleaded absolute necessity in excuse for this measure, and continued it only from month to month, the execution of it raised riots in London.

*The word Excise is supposed to be derived either from the Belgian Acciisse (Tributum), or from the Latin, Excisum, as a part or thing cut off, that is, a portion of the national profits cut off for government purposes.

+ Cox's Life of Sir Horace Walpole.

Charles I., in one of his declarations, charged parliament with upholding insupportable taxes and odious excises. He was himself afterwards under the neces sity of resorting to the same expedient. A little later, the parliament imposed an excise on butchers' meat, sugar, and a few other commodities. At the Restoration,

the excise was abolished on all articles of consumption, except beer, ale, cider, and perry, which, according to Davenant, produced a clear revenue of £666,383. These duties were divided into two equal portions-the hereditary Excise, so named because granted to the crown for ever, in compensation for the Court of Wards and Purveyance, abolished by Act of Parliament-and the Temporary Excise, so named because granted only for the life of the sovereign.

On the accession of James II., parliament not only renewed the Temporary Excise for his life, but increased it by additional duties, which were imposed on wines, vinegar, tobacco, and sugar. These duties, however, were suffered to expire. The immediate effects of the Revolution were to diminish the excises, as supposed to be of a nature peculiarly obnoxious to the spirit and principles of the Constitution. But the necessity of raising money to defend our religion and liberties became so urgent that even this species of impost was adopted. Excises on salt, on homemade spirits, and on malt were then first introduced. An additional excise on beer alone produced £450,000, and the sums raised by those duties during the reign of William III., amounted to £13,649,328, or nearly a million per annum.

So great were the necessities which the war of the Spanish succession entailed on the nation during the reign of Anne, that the aversion to the Excise did not prevent additional duties being laid on several articles of consumption, and accordingly, in her reign, this revenue produced the sum of £20,159,311, or nearly £1,738,275 per annum. During the entire reign of George I., no additional excise was levied, except a small duty on wrought plate under the administration of Sutherland; but the internal tranquillity of the country, and the exemption from foreign wars, increasing the produce of the taxes, the Excise yielded in thirteen years, £30,421,251, or about £2,340,000 per annum. Its unpopularity, however, was not abated by long usage, and the laws for its collection were necessarily so severe, and so often exercised in preventing frauds and punishing smugglers, that they were considered by many persons as encroaching on private property and personal liberty. Indeed, such were the prejudices conceived against the Excise, that the principal writers on finance, government, and trade, from the Revolution to the period under consideration, almost uniformly condemned it, and a plausible notion prevailed, that as the real income of every country originates from land, all taxes should be, at once, imposed on that description of property.

The Acts 12 Charles II. cc. 23 and 24, passed in 1665, first granted duties of Excise as part of the revenue of the crown. Cap .24 is to the effect: « that the Court of Wards, &c., and Liveries and Tenures in Capite, and by Knight Service and Purveyance which had subsisted from the time of the Conquest, should be abolished, and that a revenue in lieu thereof should be derived from an impost of 1s. 3d. per barrel on beer, and a proportionate sum on other liquors; and that the moiety of this new tax should be settled on the King's Majesty, his heirs and successors, in full recompense and satisfaction of the profits and emoluments of which the said enactment deprived him."

11.-TRANSITION FROM DIRECT ΤΟ INDIRECT TAXATION.-This Act of Charles II. may be said to mark the transition from direct to indirect taxation.

Neither it nor the former Act of the same reign (cap. 23.) has ever been expressly repealed. But most of the provisions, as amended by various subsequent statutes, are incorporated with the General Excise Laws now in force, and are therefore virtually superseded in their ancient form, since the consolidations of 1803, 1827, &c. It is not a little remarkable, that Cromwell's Excise Act of 1657, contains regulations giving officers powers to search, and requiring traders to give notice, very similar to those which at present govern the department.

12.-FORMER DISTINCTION OF DUTIES.-A distinction was originally made between the duties of Excise and duties under the management of the Commissioners; the former being considered to be such imposts as have been from their first establishment within the receipt of the Commissioners, and the latter, such as have been transferred from other Commissioners to this board. Some duties were also distinguished from excise duties properly so called, by the term, "Inland Duties," that is, duties payable by the maker or dealer, over and above the customs or other duties payable on malt, dry goods, and other articles made subject to the duty after the original establishment of the excise, which related chiefly to liquors, &c. But these distinctions no longer obtain in practice, all the duties under the management of the Commissioners being called indiscriminately Duties of Excise.

The excise duties were at one time let to farm, and the old laws contain various provisions against the Commissioners being in any way concerned as farmers or contractors. This practice, however, has long been discontinued.

13.-PROGRESS OF THE EXCISE REVENUE.-From the time of Charles II., down to the peace of 1815, the revenue of excise kept increasing, with a few stationary intervals of short duration, both in annual amount, and in the variety of articles placed under taxation. In 1803 an excise was collected from each of the following heads of duty, many of which had long been subject to this species of impost :

The gross produce of taxation of these articles in the United Kingdom for the year 1803, fell little short of £21,000,000. Some of the duties were levied only in England.

After the lapse of about ten years from the above date, nearly the whole of which was a period of war, the excise duties were increased in amount, and a new table of rates was enacted. The gross produce of the excise for the year 1815 reached the enormous sum of thirty-two millions and a quarter sterling.

Between 1816 and 1834, an interval of uninterrupted peace, various alterations took place, both in the number of articles charged, and in the amount of revenue.

DUTIES REPEALED, IMPOSED, TRANSFERRED, ETC.

Additional duties were granted by the Act 59 Geo. III. c. 53, on tea, coffee, and cocoa nuts, tobacco and snuff, pepper, malt, and British spirits.

The general list, however, of duty-charged articles, continued nearly the same up to the year 1830, when the duties were repealed on the important articles of beer, hides, and skins. These reductions were followed by the abrogation of the whole of the duties on tiles, candles, printed goods, and of half the amount on soap; so that in 1833, the gross revenue of excise hardly exceeded eighteen millions and a half. The annexed table exhibits the principal changes that have taken place in respect of the imposition and repeal of excise duties, from the commencement of 1834 down to the present day.

[merged small][merged small][ocr errors][merged small][merged small][ocr errors][merged small][ocr errors][merged small]

Spirits for consumption in Ireland, reduced 1s. per gallon

1835.

Retailers of spirits not receiving or consuming more than 50 gallons in the year, relieved from the additional 50 per cent. on spirit licences.

Flint glass reduced to one-third of the former rate of duty.

1836. Countervailing duties on medicated spirits and sweets, or made wines, removed from Scotland or Ireland to England, or from Ireland to Great Britain, first imposed, and countervailing drawbacks granted.