11 Mar 1804

Polit. Economy

Finance

Ch.2. Leading Features

' Finance

1

1. Where a tax is imposed upon any commodity, a proportionable discouragement -

intended or not intended - is applied to the corresponding branch of

profit-seeking industry, and thence a proportionable encouragement to the most

immediately rival branches. In this way the branch of Political Economy which

belongs to Finance, is unavoidably, though perhaps often undesignedly, entangled

with the other branches.

2. To an indirect tax, each man pays no more than he pleases, and the vexation

attendant on the collection of it, is confined to the makers and venders of the

commodity taxed.

3. To a direct tax each man pays what the imposer of the tax pleases, and the

vexation embraces every man who pays.(a)

4. A tax on imports is borne by our own people: a tax upon exports to foreign

countries is borne by the inhabitants of foreign countries. Whatever imposition

of this kind foreigners can be made to bear is so much gain to us. If a fresh

tax is imposed upon all articles of export, and the quantity of it produced is

considerably diminished by the tax, a temporary distress is thereby produced,

the suffering of which may be less or greater than the suffering saved, by the

saving in the amount of taxes borne by ourselves. But if the quantity produced

be merely prevailed from encreasing no such suffering is produced, and the

benefit by the saving in home-paid taxes is pure. The addition which would have

been made to the quantity of the commodity thus taxed, spreads itself among

other commodities of all sorts.}

{ Note

(a) Among a certain set of political philosophers, may be observed a horror for

indirect taxes, a passion for direct ones: a passionate desire to be coerced and

vexed. The word indirect seems to have been the source of illusion here, as the

word venality when applied to judicial offices. A man who buys the office at

such a price as to perform the functions of it gratis, shews that it is the

function that recommends it to him, not the salary. A eulogistic or dyslogistic

appellative, stands in place of a reason, and works more than a reason, upon the

great body - not only of mankind, but of philosophers and politicians.