THE RAILWAY-PASSENGER DUTY.
TAE Chairmen and Directors of Railway Companies are expending much valuable energy quite needlessly. No- thing is more easy than to obtain the repeal of the Passenger Duty, provided they are willing to give the public a sufficient equivalent. But they flatter themselves that the great voting power which they dispose of in Parliament will enable them to dispense with the equivalent, and yet gain their object. We think we may venture to assure them that they are mis- taken. At the half-yearly meetings which have just been held, the Chairmen, with a significant unanimity, have harangued the shareholders on the hardship of this duty. According to their varying temperaments, they have been de- nunciatory or argumentative, indignant or complaining, but all have united in describing the tax as uniquitous, unjust, and oppressive. The meaning of these tactics is clear enough. The public have refused to support the agitation against the duty, although reminded of what was expected of it by a heavy addition to fares, and have even shown a disposition to blame the Companies. It was necessary, therefore, to enlighten the shareholders, and through them to endeavour to stir up the public. But it won't do. The hollowness of the Companies' case is too transparent even on the Directors' own showing. The Railways possess a practical monopoly of the traffic of the country.' Except where they encroach upon one another's territory, there is literally no com- petition possible with the greater lines, and although in London a certain amount of competition is maintained by river steamers, omnibuses, and cabs, the advantages of the railways are so great, so palpable, and increase so much as London grows, that even there the competition is more apparent than real. Now, the monopoly thus possessed by the Railways is the direct gift of the State. Parliament has armed the Railways with power to take land wherever and in whatever quantity they require, it authorises them even to pull down whole quarters of the most densely peopled parts of our great towns, to block up streets, to cut thoroughfares, and generally to disarrange all other traffics. In addition it invests them with legislative functions, it enables them to maintain a police of their own, and it has actually gone the length of creating special offences for their protection. Is it unreasonable to make them pay a small price for such extensive favours ? True, the favours are granted because railways promote the common welfare. But so does the Bank of England promote the general welfare, and yet it is made to pay for the privileges it enjoys. The argument of the Companies, then, that the duty is exceptional, so far as it is true, is absolutely without pertinence. The privileges of the Rail- ways are extremely exceptional, and as long as the State does not resume them, it is not merely justified, it is bound to exact a price in return. To do otherwise would be to enrich private individuals at the expense of the whole body of the people. Of course, the nature of the price is a question for Parliament to determine, but that some price should be insisted upon is a principle of very high importance, which on no con- sideration ought to be forgotten.
But, the Companies urge, the duty presses with unjust weight upon them. The fact is the very reverse. We need hardly remind the reader that the duty amounts to no more than 5 per cent. on the gross passenger receipts, and it appears from the report of the Inland Revenue Commissioners for last year that in 1872 the total sum collected was less by a small fraction than 1 per cent. of the gross earnings of the Railways. Since then, it is true, the tax has been more productive. Third-class passenger tickets, when the train stops at every station, are exempt from the duty. The exemption was granted to induce the Companies to accommodate the poorer class of passengers, and the Com- panies argued that, on the same principle, third-class tickets in fast trains ought also to be exempt. On this ground they refused to pay the full duty chargeable, but after much con- tention, the Inland Revenue Department brought one case to trial, and obtained a verdict. Since then the yield of the duty
has largely increased, which is one of the reasons of the violent outcry against the duty raised at the recent meetings. But even if the proceeds of the duty have been doubled, it cannot surely be maintained that a tax of less than fivepenee in the pound on the gross receipts is heavy. The real defect of the tax is not its oppressiveness, but the inequality of its incidence. It is levied only on passenger receipts, and conse- quently it falls heavily on the passenger lines, like the Metro- politan, the Metropolitan District, and the North London, which are precisely those that can least afford to bear it, since they are the poorest, and have not the elements of a rapid development. On the other hand, the great Companies, with immense goods traffic, enormous resources, and rapidly growing revenues, in great measure escape its incidence. Their passen- ger traffic yields the least valuable part of their income. Although, then, the tax, when looked at in the aggregate, is very light, in individual cases it undoubtedly presses heavily. But the remedy is very simple. It is either to convert the duty into a tax upon gross receipts, or to add a duty on goods traffic. Clearly, if the duty is to be retained, either plan ought to be adopted. Either would equalise the burden of the tax, and no longer allow the wealthy Companies to escape their fair share of the price exacted for the privileges accorded them. But the first plan, while doing this, would enable the Government to lower the nominal amount of the rate. As we have seen, less than two per cent. on gross receipts would equal five per cent. on passenger receipts. And it would, moreover, render it diffi- cult for the Companies to endeavour to recoup themselves for the tax, as they do at present, by increasing fares, since the proportion of the duty that would fall on either passengers or goods would be small. But on the other hand, the amount of duty now levied is certainly not too heavy, and an additional duty on goods traffic would have the advantage of considerably increasing the revenue.
In round numbers, the duty is expected to yield this year about three-quarters of a million. By converting it into a duty on gross receipts, and reducing the per-centage, it might yield a million. By simply adding a duty on goods' receipts, it might be raised to nearly a million and a half. In any case, it will increase with the development of railway travelling. What, then, are the Directors prepared to offer in redemption of this increasingly productive tax ? The question is one which it behoves them to consider speedily, for every year the value of the impost, and consequently its redemption-price, will rise. While they are slowly bringing themselves to face the disagreeable necessity, we will suggest to them an answer to our inquiry. Let them offer to reduce third-class fares from a penny to a halfpenny per mile. We are convinced that the Railways themselves would benefit by the change. Some years ago the greatest of living financiers recommended the Metropolitan District Company to follow the example of the State, and base their finance on the wants of the masses of the people. The advice was disregarded by those to whom it was tendered, but it was treasured up by the Mid- land Company. The experiment tried by the Midland this year is rather an evasion of Mr. Gladstone's suggestion than a carrying-out of his proposal, but Midland figures are in the highest degree instructive. Mr. Ellis told the shareholders at Derby the other day, that in the first half of the present year there had been an increase of third-class passengers, as compared with the first half of last year, of 1,384,991, which, in spite of a falling-off in the number of first-class passengers as compared with first and second last year, and in spite of the reduction of first-class fares, brought in an additional revenue of nearly £51,000. Now, whatever may be thought of the actual changes made by the Midland, the signifi- cance of these figures cannot be mistaken. They prove in the plainest manner the great expansion of which the third-class traffic is capable. But although we are convinced that halfpenny fares would pay the Railways, we are nevertheless clearly of opinion that it would be good policy on the part of the State to remit the passenger duty in favour of any company that would adopt halfpenny fares. The great problem of our existing civilisation is to prevent the physical degeneration of the race while the population is being massed in great towns. With our present knowledge, that can be done only by con- verting the centre of the towns into workshops and scattering the workpeople and their families through the suburbs. By the adoption of halfpenny fares, workpeople would be able to live twice as far as at present from their places of employment. In other words, a man who can now afford to live in Camden Town might then move out to Hampstead, while the families that are now crowded together in the neighbourhood of Gray's Inn Road and Leather Lane would find rents falling in Camden Town, and might migrate thither in considerable numbers. In comparison with the immense importance of diminishing over- crowding in towns, the other advantages of the reduction are small. Yet the benefit to the country would be immense of such a lowering of fares as would give a new impetus to travelling, and would bring within the reach of classes who now catch a glimpse of the country only when they join some club excursion, frequent visits to field, and stream, and waving wood. Is the Midland Company prepared to lead the way in this reform, which is the logical consequence of the change they introduced at the beginning of this year? If so, ,we cannot doubt that the House of Commons will be willing to remit the passenger duty.