The government is directly interested in the increase of national wealth, and taxes upon commodities should be allowed to interfere with it as little as possible. On this account duties upon raw materials are objectionable. They increase the price of such materials, and thus limit the power of the manufacturer to purchase them, and to employ labour in increasing their value, and in adding to the produc tion and capital of the country. They discourage foreign commerce and the em ployment of shipping ; for as the power of buying is restrained, so also is that of selling, and the interchange of mer chandize between different countries is checked. Moreover, by increasing the price of the exported manufactures, they limit the demand for them abroad and subject them to dangerous competition.
Similar objections may be urged against taxes upon domestic manufac tures, since by increasing the price they diminish consumption, and consequently discourage the manufactures, which if left to themselves would have given em ployment to more capital and labour, and would have added greatly to the amount of national wealth and prosperity. The object of a government should always be to collect its revenue from the results of successful employment of capital and in dustry, and not to press upon any inter mediate stage of production.
The British legislature has of late years very wisely repealed or reduced various duties upon raw materials and upon ma nufactures. Of the former we may in stance the customs' duties on barilla ; on raw, waste, or thrown silk ; on cotton wool and sheep's wool, unwrought-iron, hemp, and flax ; and, above all, upon timber ; which have been from time to time very much reduced or repealed. Of the latter, the taxes on printed goods, on candles, and on tiles, have been altoge ther removed; and those on malt, and on soap, have been partially remitted As to some of the most important recent al terations see TARIFF. There are still many similar taxes which need revision.
One of the chief recommendations of indirect taxes is, that, when placed upon the proper description of articles, the pay ment of them by the consumer is optional.
If charged upon what may be strictly called the necessaries of life, their pay ment becomes compulsory, and falls with unequal weight upon labour. Compe tition generally reduces a large proportion of the working classes to a state which allows them little if any thing beyond necessaries ; consequently a duty upon these, as it will have no effect in dimi nishing the competition of labour and in raising wages, must reduce the comforts and stint the subsistence of labouring men.
That class of articles commonly, called luxuries, of which, the consumption is op tional, is a fair subject of taxation. In principle there is no objection to such taxes: they do not interfere with industry or production, but are paid out of the in comes of the contributors, and paid will ingly, and for the most part without un due pressure upon their means. But in laying on taxes upon particular articles of this description care must be taken to proportion the charge to the value of the article. Excessive duties fail in the very object they have in view, by rendering the revenue less productive than moderate duties ; while the causes of their failure are injurious to the wealth of the country by discouraging consumption, and to its morals by offering an inducement to smuggling. [SMUGGLING.] High duties upon foreign articles im ported into a country are liable to all the objections which apply to immoderate taxes upon articles of consumption, and they are chargeable with another —they diminish importation, and thereby restrict commercial intercourse and the demand for and exportation of domestic produce and manufactures.
The success of moderate duties upon articles of consumption, in encouraging the use of them, placing them within the reach of a larger number of persons, and at the same time augmenting the revenue, was never better shown than in the ar ticle of coffee. In 1824 the duty on British plantation coffee was ls., upon East India ls. 6d., and upon foreign coffee 2s. 6d. per lb. In 1825 those duties were re duced one-half, and the consequence was considerably more than a threefold in crease in the consumption, while the revenue in 1841 had been more than doubled.
In 1835 coffee, the produce of British possessions in India, was admitted at the same duty as plantation coffee, viz. 6d. per lb., and the effect of the reduction, in encouraging the growth of the plant in India and the consumption of the berry in this country, has already been very great, and perhaps the coffee-trade of the East may as yet be considered in its infancy. In 1834, the year before the reduction, 8,875,961 lbs. were im ported from the East India Company's territories and Ceylon ; and in 1840, 16,885,698 lbs., or nearly double. In 1842 the duty on foreign coffee was re duced to 8d. a lb., and on coffee the pro duce of British possessions, to 4d.; and notwithstanding so extensive a reduction the revenue has not very materially suf fered.