30 APRIL 1842, Page 13

THIRD LETTER ON THE INCOME-TAX.

PARLIAMENTARY DEFINITION OF INCOME.

The Income-tat Bill has been produced for John Bull's inspection; and he is now scrutinising it, with that mixture of conjecture and uncomfortable an- ticiwion with which a man eyes the screw a dentist holds in his hand ready to wrench one of his molares from its socket. While the operator is despatching preliminaries, John parleys with him. John. " I do not quite like that."

Dentist. " The tooth, Sir, must come out. It is mere quackery to go on applying this and that nostrum to it: stopping, filing—nothing short of this will really relieve you." John. "As to the extraction of the tooth, it is not that to which I object— it is your ugly pickaxe, with which you are going to dig at it. How do I know that it may not bring away more than the tooth? And then that 1)-shaped hook will tear and mutilate the part so savagely!" Dentist. " Pho, phol What we want is to get the tooth out ; and the in- strument will do that, I promise you, and no mistake."

Soberly speaking, the public are muttering remonstrance, in a tone much resembling this, against the operation by which the Minister is preparing to extract from them the needful revenue. There is no want of confidence in his administrative skill. There is a pretty general admission, too, of the necessity of the strong measure. But the Instrument with which he is going to work is tremendousfy rough—contrived with a reckless disregard to the infliction of inconvenience and pain.

We hear it said, indeed, in recommendation of the measure, that it fixes the burden to be borne on the wealthy classes. But I have said enough, I trust, in say former letters, to show that, as the bill now stands, it is a glaring deviation from our general bystem a taxation in this very respect—that it imposes much less than the usual proportion of tax on the rich, and much more than the usual proportion on persons of moderate income. It is surprising to me that so lithe attention should be paid to the fact that our taxation generally in- creases in proportion with the increase of property and income, that the pro- posal to graduate the scale for the Income-tax should be regarded as a no- velty. The real innovation will be not to do it. The most recent measure which may be cited as an actual precedent, is a measure which was framed by one of the leading members of the present Administration. When Lord STANLEY was Irish Secretary, a tax, for ecclesiastical purposes, was imposed on the professional incomes of the clergy, including Bishops: and the principle by which it was adjusted was that of a graduated scale, such as I have advo- cated for the present national Income-tax. 'rue Irish tax is still in operation. The fairness of the principle was never questioned; and no one can doubt that hut for the adoption of this principle it would have been oppressive and into- lerable. Does Lord STANLEY mean to take a different view of equity in an income-tax when his own is among the larger incomes lobe taxed ?

The bill is now in Committee. It is susceptible of many important improve- ments, which it may receive there ; mid it will be really too bad, if, owing to a sulky strike of work on the part of the Opposition, and a servile acquiescence on the part of Ministerialists, it is permitted to pass without being so modelled as not merely to extort a given sum of money for the present, but to admit of being continued, if advisable, beyond the proposed term, and even permanently substituted, perhaps, for a more uncertain taxation. If the Premier is content to deal with it as a mere emergency-tax, and so to frame it as a builder runs up a house on a short building-lease, it may tumble about his ears before even the brief term shall expire.

One thing, at all events, we may demand from the Collective Wisdom of the British Senate on the occasion—a clear definition of TAXABLE INCOME. It should not be left to the Commissioners to determine, in any instance, by a principle of their own, what is and what is not income. Here are one or two instances of questions which may be raised on this poiut. A is proprietor of landed estates in the West Indies. During the last three years, those estates have yieided no return—rather the reverse ; and the pro- prietor has supplied his annual expenditure from loans. Still the property would sell for 10,000/. Ile is, therefore, still a man of some substance; but what is his income ? Is he to be exempt from tax, or is there to be a Parlia- mentary definition of income to include him?

B has laid out a large sum in building houses, which are not yet tenanted, or otherwise made productive of income. During the last three years, too, there has been a constant outgoing of money and no incoming. What is the Parliamentary definition of income which will include him ? Or is lie again, though a man of substance, to be exempt from tax?

C has sold an estate for a fixed sum—say 10,0001., to he paid by annual in- stalments of 2,000L What is his taxable income? Is it only the interest on the sum due to him ? If so, is it consistent to tax at their full amount an- nuities terminable with a term of years ? These, and indeed all terminable annuities, are composed (like the price of an estate paid for by instalments) partly of capital gradually diminishing, partly of interest on the successive remainders.

Obviously, in these and many other esses, it is only by an arbitrary Parlia- mentary definition of income that income can be said to be taxed.

What is really contemplated in a measure like the present, whether it be called an Income-tax, a Property-tax. or any thing else, is to get a contribution from every individual in the community who has ability to contribute ; and %vitlt a view to such a tax, the various resources of taxable persons may be con- veniently arranged under three heads.

1. Fixed property yielding income.

2. Fixed property yielding no income, but convertible into a source of in- come,—as, for example, a private house and pleasure-grounds; a gallery of pictures ; property rendered unproductive by temporary obstructions.

3. Income, not derived from fixed property.

In order equitably to lay on all these different kinds of means a direct tax, they should be taxed in very different proportions. To ascertain the propor- tions with any thing like exactitude, and to apply the rule accurately through all the complication of individual cases, would be difficult—perhaps imprac- ticable. On this account, the readiest and surest mode of improving the bill has appeared to me to be the application of the graduated scale to it : it would, at all events, lighten the !pressure of its unequal exaction. Public opinion, however, is in favour of an attempt to rectify these inequalities ; and it is therefore incumbent on Parliament to consider what approximation may be made towards doing this. To defend the blemishes of the bill by saying that it has been modelled after an older bill which did work its way notwithstanding, is absurd. The nation has before this submitted to an Income, tax, crudely and hastily projected, on account of the greatness of the emergency, the excitement of war, and the private sympathies which were so generally felt with the naval and military establishments maintained by the tax ; hardly one taxed individual being so isolated as not to have relative, friend, or acquaintance, in the ranks of service. Of this generous ardour there is nothing now. Patriotism in a season of tran- quil security is of another spirit. It is, "forsooth, a great arithmetician "; it calculates profit and loss, strikes an even balance in accounts with neighbours, and brings statesmen to a cold-blooded reckoning. The tax, as it i levied from quarter to quarter, will be scanned with more and more of jealous scrutiny. Its imposition may be really as justifiable as when the enemy's flotillas were spreading terror to our domestic hearths, and son or sire, friend or brother, was battling and bleeding in the cause for which the tax was paid: but it cannot be expected that, as under those circumstances, the same tax, with the same grievances, will be borne with the same heroic equanimity. Wise though the Premier is, he is not wise enough for the work he bss chalked out for him-