TOPICS OF THE DAY.

SIR ROBERT PEEL'S SCHEME OF FINANCE.

THE Speech and Tariff contained in the Supplement which ac- companies this number of the Spectator are two of the most im- portant financial documents ever submitted to Parliament. A more original and a fuller exposition of the principles of finance could indeed be found without difficulty ; and more comprehensive schemes for the reform of every branch of our fiscal system have been suggested, by persons who had only to consider what was best to be done without regard to the difficulty of doing it. The Financial Reform of Sir ROBERT PEEL is to be looked at as a prac- tical measure, prepared and promulgated by authority, with the in- tention, and in its better parts with the certainty, of being carried. Considered in this light, the revision of the Import-duties is the largest and most judicious " Budget " ever brought forward. It is sound in the leading principles that have directed its classifi- cations,—abolishing prohibitions and non-productive duties, reliev- ing raw materials from taxation, and placing our Colonial on the footing of a coasting trade, to a very great extent, besides modify- ing the principle of undue protection. To some of its details particular objections may no doubt be made, several of the duties being useless, and others higher than are necessary; but a glance at the different heads and the items under them will show that each has been carefully considered, in regard to its nature, its place, and the amount of duty.

But as an intellectual effort the Speech surpasses the Budget ; for it possesses that excellence as a whole which cannot be awarded to every part of the financial plan. Perfectly clear in the perusal, it is said, even by opponents, to have been so lucid in the delivery that it was impossible not to understand it ; whilst it left the impression of great familiarity with the subject and of great pains bestowed upon it. The speech too possesses this character—it conveys an idea that the plan is the result of the speaker's own conviction of what is right, without regard to its effect upon friends or foes, or even upon the public. In looking at his financial plan, moreover, his peculiar diffi- culties should not be forgotten. He had not, like many other financiers—as GouLnuan in 1830, or ALTHOEP on more than one occasion—a considerable surplus revenue at his disposal. Sir ROBERT PEF.J. was embarrassed by a certain deficiency for the ensu- ing year, of 2,570,0001., with contingencies in China and India of uncertain amount. And even this deficiency was not the mere temporary result of a sudden pressure, but a gradual decline in the receipts for some years past, in despite of an increase both of duties and population. It was obvious too, to close observers, that something more than a temporary cause was at the root of the evil. At all events, the readers of the Spectator may remember, that so long ago as May 1838, we urgently called attention to the serious nature of our financial prospects,—the seemingly permanent nature of what SPRING RICE in his Budget speech of that year repre- sented as a "temporary inconvenience" ; the then non-elastic character of our revenue for the first time ; the non-diminution of the Debt after more than twenty years of peace, nay its actual increase ; the serious state of our foreign trade from foreign com- petition; and the necessity of "subjecting the whole of our financial system to thorough examination, in order to be put upon a footing adapted to the change in the circumstances of the world." The event has realized our fears : since the time we wrote, the deficiency, according to Sir ROBERT PEEL, has grown to 10,720,0001. The particulars of the proposed plan, and his reasons in support of it, will be found in the Supplement. We may say generally, that his leading principles appear to have been to tax wealth, and to relieve manufacturing industry from the taxes which press upon it. The summary of the account may be tabled as follows.

Loss.

EXCESS OP EXPENDITURE OVER INCOME.

Estimated deficiency in the year 2,570,000

A certain expense on the Chinese war of £800,000, which is not brought into account ; together with an uncertain ex- penditure in Afghanistan, and a further uncertain expen-

diture in China

REDUCTION OF TAXES.

In the Customs department. Modification of the various Import-duties in the

Tariff 4270,000 Loss from the reduction of the Coffee-duties. 170,000

Loss from the reduction of the Timber-duties 600,000 Repeal of the export-duty on British manufactures 100,000 In the Stamps department. Reduction of the duty on Stage-coaches 70,000

Total deficiency in the Public Income £3,780,000

GAIN.

On the Taxation of Ireland. Produce of additional Spirit-duty of Is. per gallon £250,000 Increased income from equalization of the Stamp-

duties 160,000 Property-tax on Irish Absentees, amount not esti-

mated But taken at

410,000

400,000 1,210,000 On the Taxation of Great Britain.

Income-tax (excluding incomes under ,£150 per annum) Schedule A—Rent of Land and Houses, Tithes, Shares in Railways, Mines, &c 1,600,000 Schedule B—Income of Farmers, taken at one- half of the rent which they pay 150,000

Schedule C—Public Funds and Securities 646,000 Schedule D —Trading and Professional Incomes 1,220,000 Schedule E—Income of Public Officers 155,000 3,771,000 But the total is taken at only On the Taxation of the United Kingdom. Probable increase from the new Corn-laws, not es- timated, or mentioned in the Budget Speech Duty on exported Coal

Total amount from New Taxes Surplus £520,000

But a larger surplus than 520,000/. may be available. The loss from reductions in the Import-duties may be less than is estimated ; no account is taken of the produce of the tax on Irish absentees; and though a corn-duty will always fluctuate with the harvest, it is the opinion of those who are best informed on this point, that the new Corn-law will yield very much more than the old, though of this source of gain Sir ROBERT has omitted all estimate. The Income-tax will most probably yield more than is put down, notwithstanding the difficulty of estimating or rather of conjecturing with any approach to accuracy the large deductions to be made on account of incomes under 1501. a year.

So far, then, as regards the object proposed—the equalization of the public income with the expenditure—the plan of Sir Bonsai, PEEL is secure from criticism. It is not so safe from objection with respect to the mode by which he proposes to raise the larger part of his revenue; whether we look to the exemptions in his tax on incomes derived from realized property, (in favour of the poor, we readily admit,) or to the nature of the tax upon pro- fesaional and trading incomes. Let casuistical theorists argue as they may, common sense will always draw a broad distinction between an income arising from a capital invested in some realized security, and an income arising from personal exertions, or the profits of capital employed in trade. Income from the first class, or what is called properly, is secure from fluctuation, except the fluctuations arising from the circum- stances of society. Ill health, a personal accident, a home or foreign failure, a change of fashion, the offence or caprice of indi- viduals, may, singly or combined, reduce or even destroy the re- venue arising from a profession or trade. A man of" property" receives his income without care or exertion ; it is as available for the infant or the bed-ridden as for the most active and enterprising person : but where is the support of the professional or commer- cial man in sickness or old age, and what is to become of his family? A man with property need never live beyond his income: if that is insufficient, some active pursuit is equally a duty, whether he wishes larger means to maintain his family or to minister to his own pleasure. But many hundreds, nay many thousands of young traders and professional men are driven to a pinching economy and even to encroachments on their principal, (if they have any,) or to loans from friends, to maintain that appearance before the world without which the world will never bestow its patronage in their respective callings. It may be a nice distinction, that property depends far more for its security upon positive law, than income arising front industry ; but it is a distinction, felt by mankind at large from the most savage to the most civilized. Unless during an anarchy whose violence must soon destroy itself, my right in the animal I have bred, the corn I have grown, the article I have manufactured, or the bale I have imported, would be respected to a great extent in practice, and admitted at once in theory, upon that principle inherent in the human mind, to which LOCKE traces the origin of all property. But realized capital—the public funds— the landed or household estate (not merely too great for need, but, at a superficial glance, forjustice)—require the never-ceasing powers of the state to uphold them, and to enforce the complicated wills and settlements of their possessors. Nor is it only protection which the state gives them, but something more : however other incomes may fare, the fundholder is paid; with an insolvent tenant, the landlord walks in, seizes upon every article of stock or furniture, pays himself in full, and leaves to the other creditors only the remnant, which may amount to nothing. We do not say that this is wrong; but it is not unreasonable that those who require this special protection, and possess these special privileges, should be called upon to pay the public something for it. In a practical point of view, the facility with which an universal tax on realized property can be levied, is a great recommendation. There is no trouble, no fraud, no inquisition into any man's circum- stances, or putting hint to the question on family secrets. The collector calls upon every householder as he calls for poor-rate, or water-rate, or window-tax : he ascertains the amount of his rent, and, charging him 7d. in the pound, gives a receipt; which the tenant hands over to his landlord as so much money. If the pro- perty is encumbered, the landlord deducts 7d. in the pound from the interest due ; showing the taxgatherer's receipt, if it be called for, as proof of his payment. The Bank of England, the agents of Foreign States for the dividends payable in this country, and the Joint Stock Companies, stop 7d. in the pound from the gross amount of the dividends due, which they hand over to Govern- ment, and there ends the whole matter. The machinery for col-

3,700,000 200,000 £4,300,000 lection is already in existence; and any secret transaction is as se- cret then as now.

By Sir ROBERT PEEL'S proposal to exempt property from the tax where the owner's income is under 150/. a year, these great advantages are in a measure lost. We perfectly appreciate the motives which induced this exemption : if it lay upon the surface, the exemption would be proper enough ; but, practically, it will render a property-tax as troublesome, and to some extent as vexatious, as an income-tax. For example, in Mr. MansuaLes Tables we find the total number of persons receiving dividends at a particular period was 276,000. Of these, 220,000 received dividends under 100/. for the half-year, and only 54,000 above that amount. Now, if there is to be any sort of exemption, the circumstances of many of these 220,000 persons, or whatever the number may now be, must be in- quired into. It is obvious that one person may have 1401. a year in the Funds and nothing else : he or she is exempt from the tax. Another individual may only have 40/. a year, or even 41., yet may derive an income of 2001. or 300/. a year from other sources; and his 401. or 4/. a year would be chargeable. These unfortunate per- sons will have to be bandied about from one official to another : they must make a confession of their position and circumstances to somebody, and then be prepared with such evidence as may satisfy that somebody of the truth of their story; or else they must submit to pay what the Legislature declares they ought not to pay. With shares, houses, or land, there will be still greater trouble, front the wider distribution of the property. The exemption is doubtless well-meant ; but it is rather a specious than a solid boon to the most necessitous. Sevenpence in the pound on 36/. a year is a guinea; and, unless the owner is versed in business, and has plenty of time on his hands, he will find he has dearly earned his guinea by the time he has established his right to exemption. This boon is, we repeat it, well-intentioned, but ill-considered in the working. To very small incomes, the trouble, inquisition, irritation, and what is called" bother," will be so great, that it is scarcely worth while to submit to it for the small gain. And as matter of justice, or even of tenderness, it must be borne in mind, that the tendency of the new Tariff is to lower the price of coffee, meat, and other articles of food, we should think to the extent of the tax on incomes under 60/. or 70/. a year. It may be true that persons in this category can ill bear a reduction ; but the reduction is made up in another way. It is impossible to tax for particular cases; nor can a person with 60/. or 70/. a year, derivable from realized property and payable without any exertion on his part, be called positively poor. It is argued by the Bank of England and others, that annuities for terms of years should not be taxed at the same rate as the perpetual annuities. A much harder case than these annuitants, is that of short beneficial leaseholders, say of a leaseholder whose term may expire in one year. The truy answer to such cases is that with which Pirr sophistically replied to the difference be- tween _income from property and Income from industry—" Each income pays as long as it endures." That many hard cases will occur, we can imagine; but a taxation perfectly equal or per- fectly just is the dream of theorists. A broad and average justice is the utmost that is attainable, contrive how we may. The most perfectly equal and just taxation is a graduated in- come-tax rated according to the means of each individual in the community. But omniscience would be required to assess it and omnipotence to levy, it ; and after all, nobody would be satis- fied, for the necessary expenditure of some men with an income of 1,000/. a year would justify a lighter assessment than of others with an income of 500/. Absolute and perfect justice in taxing is as complete a dream as to aim at charging a different duty on the liquors which are drunk in moderation for health from those with which the drunkard undermines his life.

For these reasons, we think it would have been more business- like to have levied a certain tax of 7d. in the pound on all income derivable from rents, tithes, shares, or funds. We think it would be still advisable to modify the plan in this way ; which, on Sir ROBERT Pstres own calculation, would yield about three millions, or within 700,000/. of his property-tax and income-tax together. So much for the Property-tax part of the plan. To the Income- tax we think the objections insuperable ; that is to Schedule D, embracing trading and professional incomes. With much of the sentimental cant upon this subject we have indeed no sympathy. The casuistry about the different value of incomes according to ages, and so forth, is already answered : every man pays as long as he lives. Upon this argument there would'be no taxes; for what is more unjust, in articles of consumption, than to tax the poor, first to nearly the same amount as the Ail), and then to nearly double that amount by putting on the cheap article the same rate of duty as the dear? The real objections to the income- tax are its injustice, its exposure, and its practical injury, with the irritation these things are sure to cause. All experience shows that the majority of embarrassed men shrink from exposure: we may therefore be sure that, rather than make a true return of their income, which in fact would be nil, and expose their affairs to the Government Commissioners, they will make false returns of their prosperity, not only paying the substance of their creditors to Government in the shape of an income-tax, but in some cases getting deeper into debt on the credit of that very fraud. Then again, in the case of honest industry in the lower class of incomes, where parties are struggling to maintain a creditable appearance on limited means : there are, we believe, thousands upon thousands of persons who are compelled to submit to numerous privations to "Nec Dens intersit, nisi dignus vindice nodes Incideret."

His machinery is disproportioned to his object. Had be determined to raise ten or twelve millions of money, and by means of the amount to thoroughly revise our whole system of taxation' —to abolish the Excise-taxes on manufactures, left unmentioned and untouched—to remove the anomalies and inequalities in the Stamps and Assessed Taxes, as well as to reduce the Custom-duties on articles of domestic consumption,—there would have been some sort of reason for dragging almost every decent individual in the community before the• myrmidons of the Tax-office, to unfold their most secret affairs, and submit to official scepticism or to its vexatious demands for proofs. The exceptions in the lower rates of income derived from property would then have been proper, and have repaid the trouble. But the 1,220,0001. he proposes to raise by the tax on trading god professional incomes is considerably less than the old House-tax, to whose alleged unfairness and vexation Lord ALTRORP was compelled to give way with his Reform majority at his back : it is not three-fourths of the produce of the old postage; nay, the very coal carried coastwise to Lon- don yielded within some 300,000/. of this most galling and judged proposition. We venture to say that the Metropolis would gladly compound for exemption from the Income-tax by consenting to the imposition of the duty on coals carried coastwise : before autumn, the House-tax would be welcomed back.

It must not be understood from these remarks that we object to tax incomes, if some fair proportion were drawn between the per- centage on income and property, and the taxation were practicable without entailing so many evils in its train. The amount of 150,000L, estimated as the produce of the incomes of the agricul- turists, seems to us not merely partial, but grossly and glaringly unjust. But though the amount is small, there is no financial objection to the tax. The rent which a farmer pays is no par- ticular secret, and as a general rule it bears some relation to his profits : one-half the rent may be too low a test, but it is a fixed and definite test, involving no inquisition, exposure, or vexation. Strictly, it is our business to criticize and not to propose, as Sir ROBERT PEEL told the Whigs when demanding from him an amendment of their Budget. But we earnestly suggest to him to raise 3,000,000/. by a property-tax alone, and gradually change the Timber-duties • relinquishing the duty on all mere incomes—agricultural, trading, and professional. If circumstances compel him to refuse this, we would strenu- ously urge him to adopt for trades and professions the same broad, liberal, definite, but we may take leave to say, guess-work data, he has adopted with the agriculturists, and make rent the supposed test of income. Of course, a man who derives no reve- nue from industrial pursuits, and shows that be has already paid the property-tax, should be exempt ; but upon houses occu- pied by all other persons some fixed percentage should be levied on rents above a settled amount, giving the householder power to charge lodgers with their rateable proportion. We have "no ac- cess to official information," to say what would be a fair per- centage on rent, or what amount it would yield. We think, short of the 1,220,000/. We also think that it would favour the higher class of incomes, and be so far less equitable than an income-tax if that could be equitably levied. But it would be analogous to

the mode of taxing agricultural profits; it would involve no in- quisition and no disclosure, though perhaps some hardship ; and

we think it would be more acceptable to the bulk of the commu- nity than the present project of putting to the question every person with a stake in the country—and for the small sum of 1,200,0001.

keep up an appearance on less than 1501. a year. No one out of doors would credit that their income is within that sum ; and all this struggling, anxious, and deserving class, must either submit to pay what the Government Surveyors think fit to rate their income at from appearances, or have their necessities or their obligations exposed. Again, there are many men within the range of the tax, whose gains, whether trading or professional, it will certainly be un- pleasant and perhaps injurious to expose; or to rip up the family pensions, allowances, or what not,that in many cases diminish the net profits of any business or profession. Incomes, again, are fluctuating. In the case of property, this settles itself: if a house or farm is un- let, everybody knows the fact ; and though the persons entitled to dividends on shares, or state securities, vary, the income itself does not. But every man's income from industrious exertion must be submitted to the Government Commissioners. This subject might be pursued further, but it has been pretty well ex- patiated upon by the daily press : we may, however, point to another source of grievance—the mode of payment. A tax upon rent, dividends, &c. is stopped piecemeal: it is equally a deduc- tion of 151. from 500/. a year but it is not so felt as in an income- tax, where you wrench the money direct from the pocket.

The very smallness of the tax is, strange to say, an objection to Sir ROBERT PEEL'S plan. He violates the first of canons in every pursuit-