A HUNDRED YEARS OF INCOME TAX
By FRANK LEWIS
N a recent public lecture on the subject of wishful thinking the I eminent psychologist, Professor J. C. Flugel, referred to the kind of apparently meaningless blunder or mistake which immediately reveals our innermost desires to the expert eye. Such is the charac- teristic human tendency to mislay a bill before it is paid. Very few of us, on the other hand, are prone to lose cheques. It would not surprise the psychologist, therefore, if the income tax centenary were totally ignored. Nor would he be deceived by the ready excuse that a nation involved in total warfare cannot spare the time to cast its mind back to the comparatively uneventful days of Sir Robert Peel. In his wisdom he would conveniently overlook the fact that the one, hundred and fiftieth anniversary of Mozart's death was not forgotten last December, or that even the span of eight hundred years did not prevent us from remembering Peter Abelard on April nst.
In other words, income tax is pot a topic like the weather, or a neighbour's rheumatoid arthritis, about which one can talk dispassionately. The barest reference to Schedule D or E is sufficient to stir powerful emotions. Consequently, the subject is usually taboo. That attitude the historian must, perforce, condemn as unreasoning and unjustifiable. The story of social and economic progress, from Danegeld to Excess Profits Tax, lacks any record of an acceptable impost. Nothing stamped the villainy of William the Conqueror so indelibly as his inquisitorial Domesday Survey. The tenths and fifteenths which Henry III attempted to wheedle cut of an unwilling Council of Magnates seemed utterly shocking to Matthew Paris and his fellow-chroniclers, convinced in their minds that every penny was destined for the bottomless coffers of William
de Valence and other Poitevin or Savoyard ne'er-do-wells. The Poll-tax of 1381 evoked an uprising which ended in the unusual spectacle of a Lord Mayor of London slaying the leader of the malcontents in a city thoroughfare. And so on, as the centuries succeeded each other. Maltoltes or monopolies, tonnage and Poundage or the excise scheme—reign after reign the wrangling con- tinued. Nothing was more likely to damn a politician in the eyes of posterity than a connexion with some fiscal innovation, however mild. Lord North was an excellent administrator, but his virtues have long since been obscured by the luckless imposition of an almost negligible duty which led to unimagined consequences in a New England harbour. Cardinal Morton must needs have passed into decent obscurity but for the diabolical ingenuity of his fork. Conversely, the man who refused to pay a tax was assured of per- manent honour among the great liberators of the human race. The uninvited guests at the Boston Tea Party will remain popular heroes for ever. Were it not for the celebrated ship-money trial, the name of Hampden might well have lain buried among the parish registers of Buckinghamshire.
From every previous form of impost the taxation of incomes is dis- tinguished by its fairness and equity. We should, therefore, having Admitted that taxation is a necessary evil, proceed to rejoice in the decision .the House of Commons took on May 31st, 1842, when it approved Sir Robert Peel's famous Property and Income Tax Bill by a majority of io6. Although at first a temporary measure with a time-limit of three years, and introduced to remedy a series of annual deficits, income tax has never since been discarded. Even Gladstone (the lifelong opponent of differentiation), who reduced its rate to 2d. in the £, was unwilling entirely to deprive the national economy of so valuable a buttress. No one needs to be reminded what income tax is today. But some of us can remember the general dismay when it rose from xs. in 19o7-09 to is. 2d. in 1909-14, jump- ing to 3s. in the first full war year 1915-16 and to 6s. in 1918-22, and dropping gradually to 4s. in the years 1925-29.
The true income-tax centenary occurs this year, for Pitt's earlier recourse to direct taxation was a drastic wartime expedient to finance the struggle against Napoleon. Peel's Act, however, was passed in a year when the country was at peace. Thii was no hasty device. It was a wise and thoughtful plan, " for the purpose." as Peel him- self declared, " of not only supplying the deficiency in the revenue, but of enabling me with confidence and satisfaction to propose great commercial reforms." True to his forecast, he repealed the Corn Laws in 1845.
The Act was primarily a great personal triumph for the Prime Minister, though the political wisdom of his followers also deserves praise. No fewer than sixteen divisions were required before the Act was finally passed. In the Upper House, Lord Brougham tabled sixteen resolutions condemning the tax as an inquisitorial exaction which filled the country with " horror," and because it offered an irresistible temptation to governmental extravagance. Even more vehement were Peel's opponents in the House of Commons. Joseph Hume represented the Bill as a deep-laid scheme to " starve an entire people," and especially designed to make the working-classes suffer. The Whig financier, Sir Francis Baring, felt certain that it would cause so much perjury and fraud that the whole British character would be permanently undermined. Rather surprisingly, Dr. Bowring interpreted it above all as a means of oppressing the people of Afghanistan. Naturally, opposition was not confined to the legislature. David Buchanan, the author of a well- known treatise on economics, described the tax as " a practical inroad on the rights of free men, to which there is no parallel, even under the most absolute governments in Europe, and truly an anomaly in a country long famous for its love of liberty." It is necessary to add that the rate of tax in 1842 was 7d. in the £, or not quite 3 per cent. Peel anticipated that the Exchequer would benefit thereby to the extent of some £3,750,000.
During the present financial year the estimated revenue from income tax, surtax, National Defence Contribution and Excess Profits Tax amounts to L1,418,000,000. And yet, despite this enormous difference, there is a curious similarity between 1842 and 1942. To tread once more upon the fringe of psychology, it is a common axiom that we fear most those things which we do not understand. A hundred years ago few were able to envisage the effects of Peel's measure. The spectre of national starvation did not haunt Joseph Hume alone. Today direct taxation is familiar enough, but not its extension to the pay-packet of,manual workers and weekly wage-earners. The Ministry of Information's Income Tax Quiz,
though useful, did not manage to check the grotesque rumours and misconceptions which, spreading like wildfire through the factories, lessened the volume of production appreciably for a time.
Just as the opposition to income tax died down when the virtues of Peel's Act gradually became apparent, so, at the present time, the original outcry against the taxation of manual workers has diminished with the growth of understanding. Hardly any dissentient voices were raised against the Austerity Budget, for it has come to be recog- nised that fiscal realism is an essential handmaid to the Commando spirit. Sacrifices are sometimes hard to make, and not until the day of victory will their benefit be finally realised. At this tremendous epoch in our national history, we remember more than ever the celebrated dictum of Oliver Wendell Holmes : " When I pay my taxes, I buy civilisation." Might not this be amended slightly? Since the sombre days of Dunkirk we have paid our taxes not to buy, but to save, civilisation.
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