CHAPTER I. ON THE GENERAL PRINCIPLES OF TAXATION. T is customary for writers on political economy to discuss taxation as a part of the separate division of the science which has been termed by the late Mr Mill, 'the influence of government.' It is no doubt true, that almost every law which is enacted exerts, either directly or indirectly, some influence on the economy and wealth of the nation. It might therefore appear that every act of Parliament might be appropriately discussed in a treatise on political economy. But if such a course were adopted, the range of this science would be practically unlimited. It is therethat some restriction should be placed upon fore necessary the scope of this part of our enquiry; a convenient boundary line will be drawn, if our investigations are confined to measures, the specific object of which is to obtain money, which the government either spends itself, or directs to be expended by others. It is manifest that such measures are included in the term taxation, meaning by the word local as well as general taxation; for taxation has no other object in view except to obtain money. The taxes, when collected, may be devoted to any purposes which the government may direct; but a persou is never made to pay a tax, in order that some subsidiary end may be attained. As an example it may be mentioned, that a tax on spirits raises their price; the consumption of an intoxicating beverage is thus discouraged, and the tax may be therefore said to promote temperance. But anxious as the government may be to prevent drunkenness, the tax on spirits is imposed for the sole purpose of obtaining revenue. It is, BOOK IV. CH. I. fluence the production, distribution, and ex change of wealth. Governments are compelled to raise taxes. Are there any princiwill enable us to decide ples which on their justice? Adam Smith's of course, fortunate if the tax effects another subsidiary object, and improves the morality of the people. But if the revenue which is raised by the spirit-duties should not be wanted, no one but a fanatic would think of retaining these duties merely for the purpose of discouraging drunkenness. Even if such a proposition were seriously entertained, it would involve considerations which would not belong to political economy, but to the general science of ethics. Political economy has simply to explain what will be the influence of any particular measure upon the production, the distribution, and the exchange of wealth; this science is trespassing upon the domains of other sciences, if it attempts to decide whether a particular measure be right or wrong. We therefore think it advisable to avoid discussing, in a treatise on political economy, those acts of a government which are intended to effect some object which is not directly concerned, either with the production, the distribution, or the exchange of wealth, but which may, nevertheless, at the same time exert some indirect influence upon the general economy of the nation. Several advantages are obtained by adopting this course. This It is evident that a government cannot possibly exist, unless it possesses a revenue; its laws, for instance, become a dead letter, unless the penalties which the law sanctions are enforced on those who disobey. The people who enforce these penalties are servants of the State, and they therefore require some remuneration for the duties which they perform. Hence the State must possess a revenue, in order to pay its various agents and servants, revenue may be obtained by rapine and pillage; but if such means are resorted to, the revenue is not raised by taxation; for taxation implies, that the right to levy a tax is given by law, and that the law not only enacts by what classes of the community the tax should be paid, but also specially states the penalty which any one incurs, if he refuses to pay the tax. The question, therefore, is at once suggested, Are there any principles which will enable us to decide whether any particular tax is just or unjust, defensible or indefensible? Adam Smith considered, that all the principles of taxation might be deduced from the four following rules, or precepts. These four rules, which |