THE PROPOSAL TO BUY OFF A TAX.
THE great Railway Companies have shown more statesman- ship than the Chancellor of the Exchequer. They have refused to offer what he had distinctly intimated, in his reply to Sir J. McKenna yesterday week, that he was well prepared to consider. In a meeting of representatives of the Companies held on Tuesday, it is said that a resolution against volunteer- ing a commutation of the Railway Passengers duty was carried by a majority of four to one. Thus we are accidentally relieved of a great danger. But the very fact that we are only accidentally relieved of it,—that it has not been condemned and rejected by any public authority,—that the Chancellor of the Exchequer has half smiled on the project, and that Parliament has not had the opportunity of uttering its mind, is itself a serious misfortune,—a less misfortune, of course, than any show of favour to the project ; but still a misfortune, because it may lead, in times even less scrupulous than these, to conceptions and proposals
of the same type. We therefore propose to discuss the real nature of the suggested commutation, with a view to explaining the exceedingly menacing and unscrupulous character of this insidious scheme. The proposal was this. Certain ingenious Railway Directors, who saw into what a scrape the heroic foreign policy of the Government had plunged their finance, and were aware how welcome a good lump of money would be to a needy Administration, at a moment when an appeal to the country is believed to be imminent, came forward with a tempting proposal. They said to the Government that there had often been talk of remitting the Railway Passenger- duty. It is a duty generally condemned in principle, but for the remission of which in practice the opportunity had not arrived. Hence they said,—Why not let us capitalise it, at a mode- rate number of years' purchase,—say, from ten to twelve years ? The money would be convenient to the Government. It would enable them to extinguish the Treasury Bonds, and perhaps have something over for the extra expenses of this year, so as to give them a fresh financial start. It would be nothing but a pleasure to the Railway Companies to raise such a gratification for the Government, on condition they heard no more of this obnoxious tax on their receipts, nor of the equiva- lent concessions to public advantage which had always been insisted on as the proper equivalent for the remission of the tax, whenever it might come. Why not, then, listen to the voice of the charmer, and accept a sum down, which would enable the Government to go to the country with a balanced Budget, and would leave nothing for the taxpayer to complain of ? The Passenger duty would, nominally, at least, disappear. Travellers could not, of course, look to reap the advantage as railway passengers which they had already reaped as taxpayers in the form of a diminished liability for the interest on the debt. The Railway Companies would have a margin of extra profit, represented by the difference between the tax they had had to pay, and the interest and sinking fund on the advance to the Government ; and as for the criticism of the public,—the public is growing too large, and its criticism too uncertain and unsteady, to make it of much account. If the Government were pleased, and the Budget was balanced, and the Railway Companies were gratified by the reciprocal service which the Government and they had rendered to each other, who was likely to pass any censure on it that would produce the least permanent effect on the mind of the nation ? Such was, we conclude, the primel facie view of the case which induced Sir Stafford Northcote to declare that he was ready to consider any such proposal, if it should be made ; though, of course, as he naturally added, without the consent of Parliament, it would be absolutely impossible for any Minister to agree to such a proposal. And, indeed, without an Act of Parliament, and an Act of Parliament of a somewhat novel kind, no such proposal could possibly have been legalised, since it involves a very new sort of contract between the State and the Railway Companies, by which the former would have bound itself to leave the Railways free from taxation, either for all time, or at least for a considerable term of years, in return for the gratification which the latter had raised for the State,' at a moment when financial pressure was dis- agi esably felt. It might as well have been proposed, indeed, to sell the Crown Lands for a sum down, without an Act of Parliament, as to sell the Railway Passenger duty without an Act of Parliament,—and if there is any absolute difference of principle between the two transactions, it is in favour of the former, for in selling the Crown Lands there would be no bargain with a special class of proprietors, in effect transferring to them the proceeds of a tax nominally abolished, but really added to their returns.
Now what are the real vices of any proposal of this nature ? In the first place, it would have amounted to a remission of taxation, not in the interest of the per- sons taxed, but in that of the intermediate bodies who happen to collect the tax. It will be said of course that so far as the sum paid went to extinguish National Debt, the trans- action would not favour any class in particular, as every taxpayer in the nation would get the benefit of it. But then howfirr would this be the case? Of course, if £10,000,000 of National Debt were extinguished merely by selling a short annuity of twelve years, of the same amount as the average Railway Passenger-duty, to the highest bidder in the open market, it would be quite true that the benefit of the transaction would accrue to the British taxpayer, in general. That, however, would obviously not be the case. If the Railways had made this offer, they would have made it because they were the gainers by it,—because, after paying interest and sinking fund on the sum raised, they would have made a good thing of the bargain. In other words, they would get a substantial commission on the ways and means which they had provided for the Government. The rail- way shareholder, not the railway passenger, would have gained whatever the taxpayer had lost by the transaction ; and that the taxpayer would lose, that the terms proposed were not the best on which such a sum could be raised in the open market, is obvious enough, or it would never have answered the purpose of the Railways to make the offer. They are not money- lenders. They would borrow only when they could see their way to such a profit as they were accustomed to make after paying the interest on the borrowed money, and there- fore it is certain they would never hold out this offer to the Government, if they did not see their way clear to getting out of the taxpayers' and the railway travellers' united pockets, a substantial profit on the transaction. The remission of the tax, therefore, would not be a remission to the persons who pay it,—the railway travellers. Part of the remission would go to all taxpayers, as taxpayers, in the shape of a diminished charge for the National Debt. Part of it would go to railway share- holders, as additional profit on the new arrangement. But the benefit to the shareholders would not have been represented by additional facilities for travel. On the contrary, the old hindrance to locomotion would have remained. This is a serious objection, to begin with. It is not fair to pretend to remit an objectionable tax, and yet not remit it to those who pay it, but to some one else. Of course the Railway Com- panies would have said, that having purchased the remission of the duty from the Government, they must reimburse themselves, and could not remit it to the railway passengers. In other words, they would have purchased from the Government the right to collect the duty for themselves,—and being mono- polists, they would have been able so to collect it. This is, to our minds, a formidable primary objection to the course suggested.
But it is by no means the most important or the most
impressive. It is a still more grave objection that the precedent of making over the proceeds of a tax, not, as hitherto in the case of remission, on grounds of public policy to those who have hitherto paid it, and on whom it might, if public policy required it, be imposed again, but to others who are not bound by public policy at all, and who pur- chase, if not absolutely a perpetual, at least a very long- enduring right to impose and receive the equivalent of the tax, in consideration of what they had given for it, no matter what public policy might require, is one threatening the very principles of honest finance. Just conceive such a case as this. Say, that in 1842, Sir Robert Peel had, for a sufficient capital sum, sold the produce of the Corn-duty to a syndicate of corn- factors, who had thereby gained the right to receive it from the Customs' officers of the United Kingdom, and that when the Irish famine came, he found himself embarrassed by the conflict between this pledge of the public faith on the one hand, and the public duty of abolishing the Corn-duty on the other,—what would the nation have said if he had been compelled either to repurchase, at a costly sacrifice to the nation, at the very pinch of its urgent necessity, the right thus basely thrown away, or to defer indefinitely a reform so urgent Yet this is only a somewhat stronger illustration of speeches of the rank and file. Its substance is not an argu- the vicious principle involved in the very essence of this ment, but a string of assertions, some of them unproved, and strange proposal to let anyone buy off a tax. For the many entirely contrary to the most obvious facts. Sir W. Hart State to part with its right to reconsider freely year by year Dyke's main contention is that as compared with the position on grounds of public policy, the taxes imposed in the last year, when a convulsion was imminent, the country has name of public policy, is radically and hopelessly vicious. " much to be thankful for." The country has allies which it had Yet this is precisely what such a transaction as this not then, it has a Treaty of Berlin which it had not then, and would have implied. Suppose ever so strong a feeling to every jot and tittle of that Treaty will be carried out. It have grown up in the next year or two, that the conditions is, in fact, in a much higher position than it would have of the State's bargain with the Railways needed reconsidera- been had a Liberal Government been in power. This tion,—a reconsideration which, so long as the passenger-duty statement has been repeated in so many quarters and with remained, might always have been given with a view to the such emphasis, that it is clearly the official cue ; and if it were conditions on which it should be remitted,—it would have only true, or even plausible, it would not be a bad one. There been simply impossible, with common honour, to impose any can be no doubt upon the face of events that a majority of the new conditions involving pecuniary sacrifices on the Railway people were longing to see the country " assert itself " more Companies, after this duty had been sold to those Companies distinctly in European politics, to make the Government tare themselves. It would have been said, and justly said, that a loftier tone, and show that England was still in the very front if it had thus interfered, after receiving the quid pro quo, rank of nations, and it is to the credit of Lord Beaconsfield's the State would have used its omnipotence, at the expense of discernment that he perceived the full strength of that latent its good-faith, to take back a large share of what it had sold, impulse. But that his perception of the wish enabled him without paying any compensation at all. We cannot conceive to secure its realisation is a statement with so little any financial course so fatal as virtually to stereotype taxes foundation, that it is very doubtful even now whether in the very act of appearing to repeal them, for the benefit of the Premier even sought such realisation,—.vhether he bodies which must necessarily think mainly of the advantage was not from the first endeavouring to secure, instead of a of their own constituents, and not of that of the nation at large. great position, an appearance which Englis'imen, always Finally, what a danger it would threaten to the elasticity of our ignorant of foreign politics, would mistake for one. It is financial system, to part with growing resources,—resources, nearly inconceivable that he can have contemplated a first- indeed, of probably indefinite powers of growth,—not on con- class war, and never have asked for ten thousand extra soldiers. ditions which stimulate the source of prosperity itself, but on He published in the Salisbury manifesto a grand scheme of the contrary, on conditions which only benefit a class, and resistance to Russia ; but when it was clear his scheme would that certainly not the largest class of the people. If the Rail- involve war, he got rid of it by a secret arrangement with way Passenger-duty be a tax in restraint of wholesome and Count Schouvaloff. He arranged a splendi I Congress at desirable locomotion, part with it, by all means. The whole Berlin, and tried to pose there as arbiter of the destinies of nation benefits by getting rid of a restraint on wholesome and Eastern Europe, and Grand Vizier of the Empress who pro- desirable locomotion. But by this expedient, the Government tected Turkey ; but he was bound at every turn by the secret would not only have declined to extinguish it, but would have arrangement ; was obliged—greatly, we admit, to the benefit pledged themselves, for an indefinite time at least, to continue of mankind—to bribe the Hapsburgs by a present of it, though they had handed over the proceeds to others. What the Sultan's grand provinces of Bosnia and Herzegovina would have been the result ? Why, that neither the general —a complete kingdom in themselves ;—asserfed to the prosperity,—and therefore the probable yield of other taxes,— surrender of two more provinces to Greece, though h3 is would have been stimulated as these would be by the re- now trying to back out of it ;—and gave up to Russia her moval of such a tax, nor could the Government profit by conquests on the Asiatic side, including Batoum, about which the growing yield of the tax, as it could if it had kept he had vapoured to the skies. His only achievements were it in its own bands. It would have acted like a thriftless the vindication of the Turkish right to garrison the Balkans, landlord, who, in a moment of difficulty, has sold off a source already given up, and a division of Bulgaria so absurd that it of rapidly growing wealth at rates determined by its past has compelled the Bulgarian nation, though eager for protection yield. And yet while it would have lost a great source of finan- against Russia, to throw themselves once more at her feet. cial elasticity, it would have done nothing by stimulating the Where is the triumph in all this, or the grandeur of a policy general prosperity of the nation to add to the elasticity o f other by which we have irritated the Russian people, but not the sources of revenue. Looked at from this point of view, this Russian Court, have alienated the Turks, have secured Austrian project for selling to others—at a rate determined by the past good-will by binding her to the partition we pretend to object yield—a rapidly increasing source of revenue, without obtain- to, and have placed France in circumstances so favourable ing any commensurate benefit for the general public, would be that she is enabled without striking a stroke or spending a one of financial imbecility. It would resemble the conduct of a shilling to secure the devotion of the people, the Greeks, who prodigal reversioner who burdens his future with post-obits, whether they ever " reign " in the Balkan peninsula or not, are that he may get the immediate use of a few thousands in the certain by right of brain to " rule " there,—who, for example, to
present. all human appearance are about at once to acquire predominant In short, the proposal for the Commutation of the Railway influence through Alexo Vogorides in both Bulgarias Lord Rassenger-duty countenanced by the Government, would have Beaconsfield carried so little away from Berlin that he was been, in the first place. a great injustice to those who pay obliged, in order to maintain even an appearance of grandeur, that -duty, since it would have imposed on them a needless to intrigue for a secret convention with Turkey, carried out in burden, in order to provide an extra profit for railway share- a haste that overlooked all details, by which England secured holders ; in the next place, a most pernicious precedent a subordinate right of administering Cyprus according to for our finance, inasmuch as it would have set the example Turkish laws, on condition of paying to. the Sultan all the of parting with the right to review every year, in the surplus revenue and maintaining his sovereignty, and of light of public policy, taxes imposed in the name of protecting Asia Minor—an impossible task—if the Porte
public policy; and lastly, a heavy blow to the financial would reform — a hopeless stipulation. Where is the elasticity of the country, since the Government must have grandeur in a position of this kind, to counterbalance the agreed to discount, at a rate determined by its yield in the loss of prestige caused by our weak fidgettiness int,— past, a source of revenue whose proceeds are rapidly growing the direct consequence of the jealousy excited in France our in amount, and this without compensating the sacrifice by seizure of Cyprus—by our wasteful and senseless enterprise in any sort of stimulus to that general prosperity which feeds the Afghanistan, and by our exhibition of weak precipita- proceeds of our other sources of revenue. Only a blind and tion in South Africa ? Sir W. Hart Dyke would not, reckless Government would have been willing even to consider we suppose, deny that the political interest of Great
seriously such a financial proposal as this. Britain in Egypt is of the most peremptory kind, and
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