CHAPTER XI.

PROTECTION AS INDIRECT AND

DELEGATED TAXATION.

Taxation is a price paid to government for common services rendered. In its indirect form, certain goods are charged customs and excise duties, and the extra we pay goes first to the government, and then comes back to us, minus the expenses of collection, in benefit. But, under Protection, the government, wishing to benefit its producing classes, delegates the power of taxation to them; it shuts out foreign competition; and the extra price, made possible by taxing foreign goods, is taken by these producing classes. It is as if a government, recognising the services of distillers as employers of labour, were to impose customs duties on foreign spirits and no excise on home spirits. Protection, then, is paid for by the nation in indirect taxation.

WE know that government does certain things for us. We realise, probably, that these things cannot be done for nothing, and that our taxation generally is the price of these services. In the annual Finance Accounts is found, on the one hand, the cost of the services which the Central Government renders, and, on the other, the price we pay. In 1903-4 the price was £1471 millions. What, then, is Taxation? It is, as a whole, the annual sum paid to the government—and the 1 In 1904-5, it was £143 millions; in 1905-6, £144 millions.

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TAXATION NO BURDEN

CHAP.

government, of course, is just a grand committee of ourselves, put in power by our own votes to carry out our own wishes-in exchange for which the government purposes to give back to us the whole amount, less the expenses of collection and administration, in State Services. If the Protection of industry, then, be added to the recognised functions of the State, it is not to be expected that such a function can be performed without heavily adding to the taxation.

But we are SO accustomed to hear that Protection "taxes" the people-meaning, by that, "burdens" the people-that we do not so readily realise that, if a tax does burden the people, it is a bad tax. It seems, then, of the last importance that we should understand where Protection stands in any scheme of taxation. For, indeed,

the term Taxation is too good for it.

The thesis of the present chapter is that, by Protection, a government delegates and gives up its sacred and sovereign power of taxation, and permits certain of its citizens to impose taxes in their own interest.

In old times, when a sovereign wished to befriend a favourite, he gave him a monopoly of some import. The favourite, having a monopoly of the goods, charged what prices he liked, or could get, and the public bore this burden. They paid the subsidy to the favourite in high prices just as certainly as if they had given a sum out of their pockets. This, in ordinary circumstances, was Burden. It was quartering an

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THE DELEGATION OF TAXATION

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often worthless character on the homes of England. Only in form was it taxation.

Suppose, however, that Elizabeth gave the Earl of Essex leave to levy sixpence a barrel on every cask of wine that came into the port of London, on the ground that Essex manned and maintained a fleet of ships to patrol the entrance to the Thames against pirates and foreign fleets, then the monopoly was only payment for services rendered to the nation. It might be a bad way of paying him-bad taxation; that is all that could be said against it.

This, however, is the kind of taxation that Protection is. The government might go straight to the people; take a sum openly out of their pockets, called, perhaps, the Industrial Subsidy; and spend this in giving each deserving manufacturer a sum equivalent to what he would have got in profits under Protection. There is no doubt that this would be direct taxation. As it is, the government gives a monopoly of the home market; not indeed to a favourite, but to a favoured class, the producers-they being considered to render services which deserve recognition-and by this allows them to charge as high a price as they can get under the monopoly. Thus all who buy the goods are forced by the government to pay a subsidy out of their pocket for the maintenance of this favoured class.

Fully to understand the difference between the two systems and the difference between their effects, we must go a little deeper into what Taxation always means and always does. Usually

G

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TAXATION A PRICE

CHAP.

the individuals of a nation provide each other with goods and services by each making and selling what he likes. But, as a nation, we have many common interests which can best be provided for in common. National Defence is one of these. In times not very long ago, the noble surrounded himself with a band of retainers, whom he fed, uniformed, and housed. Many of them were domestic servants of various sorts; many of them were merely private policemen. When, again, a rich citizen went to supper at a late hour through one of the parks, he hired an armed escort. When we learn that Sir Robert Peel first established the splendid force we still, in grateful remembrance, call Bobbies or Peelers, the fact suggests-what was true-that, before his day, men took their local defence into their own hands; they carried swords, and their servants were armed. But from very early times it was seen that national, as distinct from local and personal defence, was not a matter for private effort; so an army and navy were provided by the central authority, and were paid for by a subsidy levied on the citizens. Justice is another common interest. No man should get more than justice because he is rich and able to hire lawyers or employ strength, and no man should get less than justice because he is poor; it was to secure this even-handed justice that the expenses of courts, judges, and administration generally were got from the citizens by way of a general levy. So even with the more ornamental parts of the constitution. For some time after the Conquest, kings

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FOR COMMON BENEFITS

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paid to be kings. They had immense expenses for armies, the administration of justice, etc., and they paid for these out of their own estates. When they spent more than they could afford, they generally took simple ways of getting their subjects to assist them. Taxation was called Benevolence, Aids, Gifts, Contributions, and, when appealed for on higher motives, Duty. And one reason given for the fact that there was so little friction between early kings of Scotland and their people, was that the Scottish kings lived within their incomes, and did not come on the people for taxes. But, some time ago, it was discovered that it was a bad thing for the sovereign to defray anything of his kingly expenses out of his own purse. We do not like unpaid secretaries even now. willing to be under an obligation, and we wanted to have some control of what he spent. put him on a salary like any other government servant, and the "Civil List" of £470,000 appears in the same category of the Finance Accounts as the £5 paid to the Precentor of the Town Church of Glasgow.

We were not

So we

The idea of taxation, then, is that of a sum, contributed by each man out of his income, in payment for the great common services. It is compulsory indeed. It could not be otherwise. However good the things we buy, we all naturally want to escape paying for them if we can : and, as natural men, I have no doubt we would be quite willing that Mr. Carnegie should pay the heavy end of our taxes, as he does our