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describe the principal sources from which the revenues are derived, and give some of the more important facts connected with Indian taxation, trade, and economical interests.

The gross annual revenues of British India at the present time amount to more than 77,000,0001., but it would be a mistake to suppose that this sum represents the amount taken from the people by taxation. The State in India has resources which render heavy taxation unnecessary, and there is certainly no country in the world possessing a civilised Government in which the public burdens are so light. The taxation falling annually on the population of British India is less than 28. per head. If we were to include the land revenue it would be about double that amount, but this would be no more reasonable than, in a similar calculation for our own country, to reckon as taxation a large proportion of the rent paid to private landholders.

In 1886–87, out of a gross income of 77,337,0001., only 20,684,0001. was raised by taxes properly so called ; 56,653,000l. was derived from other sources. If we compare these figures with the corresponding figures of the English revenues, we find that, in the latter case, in 1886–87, out of a total revenue of 90,000,0001., 75,000,0001. was derived from taxation, and only 15,000,0001. from other sources.

In England, taxation supplies five-sixths, and in India not much more than one-fourth of the public income. The difference is really greater, for the Indian figures include not only the receipts of the imperial Government, but those derived from provincial and local sources of revenue throughout India, excepting taxes raised in municipalities for the service of the towns.

The following table shows the actual gross revenues of India for 1886–87 under each of the principal heads:

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Many of these receipts do not represent sources of net revenue. In the Indian accounts the gross receipts in every branch of the administration are entered, whether net revenue is yielded or not. For example, the Government lends money to Native States and to various public bodies, and receives from them payments of interest; these, amounting to nearly 700,0001., are shown among the gross receipts; but on the other side of the account there is an entry of more than 4,000,0001. for interest on the ordinary public debt. So again, the Government received from railways and irrigation works more than 16,000,0001., and this sum is shown as gross revenue, but the expenditure from revenue in the same year on those classes of works exceeded the receipts by nearly 2,000,0001. Under other heads, representing real sources of net revenue, the expenses of collection are shown on the other side of the account. Thus, for instance, more than 23,000,0001. is entered as the gross amount of the land revenue, but nearly 3,500,0001. appears under expenditure as charges of collection. There are other receipts called "departmental,' but with one or two exceptions I need not refer to them, or to receipts under heads which do not show a net income. Setting off against expenditure receipts of this kind, and deducting from the gross revenues the charges of collection, the actual net revenue of British India in 1886–87 was 44,736,0001.

I shall now explain what are the great sources of

revenue.

The most important of all is the Land revenue, which yields a gross amount of about 23,000,0001. a year.

From time immemorial the ruling power throughout India has been entitled to a share of the produce of every acre of land, and this share is the so-called land revenue.

Mr. Fawcett, in his · Manual of Political Economy,' has described the land revenue of India in a passage which I cannot do better than quote -

The Government in India exercises over a great portion of the soil the same rights of property as those which an English landlord exercises over his own estate. The Government in India takes the place of individual landlords, and the cultivators of the soil rent their land from the Government instead of from private landholders. . . As far as the cultivators of the soil are concerned, it can be a matter of no consequence whatever to them whether they pay a land tax to the Govern

ment, or whether they pay rent to private landowners. Hence a land tax is no harder upon the cultivator ; nor does this impost cause any loss to the rest of the community. It, therefore, follows that a land tax, so long as it does not exceed a rack-rent, cannot increase the price of products raised from the land, for those who grow the products would not sell them cheaper if they paid rent to a private landlord instead of paying the same amount to the Government in the form of a land tax. A land tax consequently differs from all other taxes, for it possesses the excellent quality of providing a large revenue for the State without diminishing the wealth of any class of the community. Those, therefore, are completely in error who quote the aggregate amount of taxation which is raised in India in order to prove how heavily the people of that country are taxed. At least 20,000,0001. per annum is obtained in India by the land tax, but it would be as unreasonable to consider this amount as a burden laid upon the people as it would be to consider that the whole rent which is paid to English landlords in this country is an impost levied on the cultivators of the soil.'?

Instead of giving opinions of my own to the same effect, I will make another quotation from Mr. J. S. the British rule, in every instance in which the fact of excessive assessment was proved by large outstanding balances and increased difficulty of realisation, the Government has, when the fact was ascertained, taken measures for reducing the assessment. The history of our government in India has been a continued series of reductions of taxation; and in all the improved systems of administration the object has been not merely to keep the Government demand within the limits of a fair rent, but to leave a large portion of the rent to the proprietors. . . Thus, by far the largest item in the public revenue of India is obtained virtually without taxation, because obtained by the mere interception of a payment which, if not made to the State for public uses, would generally be made to individuals for their private use.''

Mill:

country,

'A large portion of the revenue of India consists of the rent of land. So far as this resource extends in

any the public necessities of the country may be said to be provided for at no expense to the people at large. Where the original right of the State to the land of the country has been reserved, and its natural — but no more than its natural—rents made available to meet the public expenditure, the people may be said to be so far untaxed; because the Government only takes from them as a tax what they would otherwise have paid as rent to a private landlord. . It is, of course, essential that the demand of revenue should be kept within the limits of a fair rent. Under the native Governments, and in the earlier periods of our own, this limit was often exceeded. But, under

Manual of Political Economy, 5th edit. p. 568.

In the last fifty years there has been a very large increase in the land revenue of British India. The gross amount received in 1836–37 was 12,300,0001. ; in 1856-57 it was 18,000,0001. ; in 1886–87 it was 23,000,0001. ; but it must not be supposed that the burden on the land has become heavier. The truth is that the process, described by Mr. Mill as 'a continued series of reductions of taxation,' has gone on during this period without intermission. The increase of land revenue has been mainly due to the extension of the empire. Since 1840 there has been an addition of about 450,000 square miles of territory, with, taking no account of Upper Burma, 6,000,0001. of land revenue. In our older provinces the growth of the land revenue has been entirely the result of increase in the area of cultivation and in the value of agricultural produce, and in no instance has it been due to enhancement of the incidence of the Government demand. Thus (I am now quoting from Mr. Cunningham),

1 Memorandum of the Improvements in the Administration of India, 1858.

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