PREFACE THE necessity of an up-to-date text-book on the science of public finance for the use of colleges and universities has been generally recognised. Since the outbreak of the Great War, nearly a decade ago, great changes have taken place in the domain of the science. These changes have notably affected the views held regarding the canons of expenditure; the burden and distribution of taxation; taxable capacity; expenditure from capital and from revenue; the means of repayment of public debts, including such schemes as a capital levy. Many of the principles connected with these have received new importance in theory and practice. The years that have passed have been pregnant with grave issues and overshadowed by financial trials enough to daunt the bravest heart. But, throughout, the British Empire has shown initiative and strength, and has remained unwavering in its devotion to the ideals of sound public finance. The object of this work is to set out and to illustrate in the light of these recent changes the principles of public finance. Some countries have had to revise their ideas, others even their constitutions. India, for example, in 1919 was given a new constitution, but public finance, Federal and Provincial, seems to have received at the hands of the framers of the constitution not quite the treatment that so important an issue deserved. There are in India sources of revenue untouched, for example, inheritance taxes and the taxation of agricultural incomes. Another inducement to undertake the work has been the desire to contribute something to the development of post-War financial rectitude at a time when countries are examining their financial systems, either from the point of view of economy and retrenchment, or from that of the real burden of taxation. The Chancellor of the British Exchequer announced in March last the formation of a strong Committee under Lord Colwyn "to consider and report on the National Debt and the incidence of existing taxation, with special reference to their effect on trade, industry, employment, and national credit". In India, too, a similar inquiry has been set on foot : 66 (1) To examine the manner in which the burden of taxation is distributed between the different classes of the population, (2) to consider whether the whole scheme of taxation, Central, Provincial, and Local, is equitable and in accordance with economic principles, and if not, in what respects it is defective, (3) to report on the suitability of alternate sources of taxation, (4) to advise as to the machinery required for the imposition, assessment, and collection of taxes old and new, (5) to prepare rough estimates of the financial effects of the proposals, and (6) to include in the inquiry consideration of the Land Revenue only so far as is necessary for a comprehensive survey of the existing conditions". These are but two examples. The necessity of putting one's house in order is everywhere seen. It is hoped that this volume, including the many statistical tables, will be of some utility in such investigations. It need hardly be stated that, as in my work on Indian Finance and Banking, the book is in no sense an official publication. The views expressed in the volume are my own personal ones, and for these neither the Government of India nor the Government of Bombay can be regarded as in any way responsible. One of the main aims has been to set out facts, and special care has been bestowed on the statistical data. The book has, perhaps, been rather long on the stocks. It has not been written during what some people are pleased to regard as the ample leisure of official life, for, in India, the luxury of an eight-hour day, sweetened by golden moments of lettered ease, is almost non-existent, at any rate to the official at headquarters. BOMBAY, August 1924. G. FINDLAY SHIRRAS. THE CHARACTERISTICS OF PUBLIC EXPENDITURE Sect. 1. Neglect of the Theory of Public Expenditure. |