Under the constitutional governments of Europe, the people do not indeed suffer from violent exactions, as in the Turkish empire and in Persia ; but industry, and commerce are often restrained by irregu lar and ill-defined taxes. Spain affords many examples of misgovernment, and the injurious character of its taxation is shown in reference to this as well as other principles. To select one instance of un certainty: "Every landowner is liable to have his property taken in execution for government taxes, if he is not prepared to pay a half-year or more in advance. according to the difficulties of the Ex chequer ; consequently he is often com pelled to make great sacrifices in order to meet such exigencies." (Madrid in 1835, vol. ii. p. 107.) To levy a tax "at the time and in the manner most likely to be convenient for the contributor to pay it" is always a wise policy on the part of the state. The time or manner of payment may often be more vexatious than the amount of the tax itself, and thus have the evil effects of high taxation, while it produces no revenue to the sate. Suppose, for ex ample, that a merchant imports goods and is required to pay a duty upon them immediately and before he has found a market for them :—he must either ad vance the money himself or borrow it from others, and in either case he will be to charge the purchaser of the with the interest; or he must sell the goods at once, not on account of any commercial occasion for the sale, but in order to avoid prepayment of the tax. If he pays the tax and holds the goods, the consumer will have to repay not only the tax but the interest; and if he parts with them at a loss or inconvenience, trade is injured, and the general wealth and con sequent productiveness of taxation pro portionately diminished. To prevent these evils the Bonding or Warehousing system was established in this country, which affords the most liberal con venience to the merchant and a general facility to trade. Certain warehouses are appointed under the charge of officers of the customs, in which goods may be de posited without being chargeable with duty uctil they are cleared for consump tion, and thus the tax is paid when the article is wanted, and when it is least in convenient to pay it.
Similar accommodation is granted on their own premises to the manufacturers of articles liable to excise duties. At present the customs bonding-warehouses are confined to the ports. An extension of them to inland towns would be sound in principle, very convenient to trade, and unattended by any serious risk to the revenue or difficulty of management.
The evils resulting from inconvenien modes of assessing and collecting tare have been very seriously felt in thi country under the operation of the excis laws. When any manufacture is subjec to excise duties, the officers of the re venue have cognizance of every part o the process, inspect and control the pre mises and machinery of the manufacturer and often even prescribe the mode of con ducting and the times of commencing anc completing each process ; while the ob servance of numberless minute regula tions is enforced by severe penalties. The manufacturer is put to great inconve nience and expense, and his ingenuity and resources are constantly interfered with in such a manner as to impede in ventions and improvements, and to dimi nish his profits. A London distiller
stated to the Commissioners of Excise Inquiry, that assuming that the duties on spirits distilled by him should be fully secured to the revenue, "it would be well worth his while to pay 3000/. a-year for the privilege of exemption from excise interference." (Digest of Reports of Com missioners of Excise Inquiry, p. 15.) Any injury done to trade is injurious to the state by diminishing the national wealth and the employment of labour. It has the same effect also upon the re venue as excessive taxation. The high price of the article limits the consump tion and consequently the revenue arising from it. The injurious effects of the excise restrictions "must be fblt in an accumulated degree by the public who are the consumers, against whom the tax operates by the addition made to the price of the commodity, not only by its direct amount, but by the necessity of compel'. sating the manufacturer for his advance of capital in defraying it, and also by the increased cost of production." (ibid., p. 15.) In the case of a heavy tax, which also diminishes consumption, the state, at least, derives some benefit; but in the case of onerous restrictions and impedi ments to trade caused by the mode of col lecting a tax, the state gains nothing whatever, and the manufacturer and the consumer are seriously injured, without an equivalent to any party. If the con sumer must suffer, it should, at least, be for the benefit of the revenue, for diet. his contributions may be diminished in some other direction. Great attention has been paid, of late years, to the im provement of the excise regulations, espe cially by the Commissioners of Inquiry, under the able direction of Sir Henry Parnell. Various restrictions have been removed, especially those affecting the manufacture of glass, and it is to be hoped that the excise revenue may be found capable of being collected without inflicting greater injuries upon trade than other branches of taxation.
The net produce of a tax is all that the state is interested in, and therefore any violation of the fourth maxim of Adam Smith is liable to the same objec tions as those already stated in reference to the third. Such violation increases the amount of the tax directly, as the former was shown to increase it indi rectly, without any advantage to the state. Facility of collection is a great recom mendation to any tax ; and, on the con trary, a disproportion between the cost of collecting and the amount ultimately secured is a good ground for removing a tax, though founded, in other respects, upon just principles. On this account alone, as well as for the general conve nience of trade, it has been a wise policy to reduce, as far as possible, the number )f articles upon which customs duties are levied. The cost of collecting the duties von the larger and more productive 'nicks of import bears only a small pro 'ortion to the amount of the tax, while he expense of collecting the duties on he smaller and less productive articles 'ears a large proportion to the tax, and nay in some cases exceed it.