11 Mar 1804

Polit. Economy

Ch.2. Leading Features

Finance

2

{5 The direct effect of a tax called indirect is to make a man pay for the use of

the article taxed, and to go on using it as before: an indirect effect is to

make him cease to use it, to avoid paying the tax: This indirect effect is the

same as that of a prohibitive law, prohibiting the use of the article, viz:

under a penalty equal to the amount of the tax. So far as the one effect takes

place, the other does not. Commonly they take place together, in proportions

infinitely diversifiable.

In the way of prohibition, a tax seldom falls on the article taxed, so heavily

as it appears or might be expected to do. The prohibition falls not so much upon

the article taxed, as upon whatever article each man can best spare. When a

fresh tax is imposed upon wine, a man who having been used to buy wine and

books, is fonder of wine than of books, reduces the quantity not so much of his

wine, as of his books. By a tax upon gin, many a man instead of being sobered

has been starved.

The best sort of indirect tax is that which by its effect in the character of a

prohibition, diminishes the consumption of an article the use of which is

pregnant with future misery, the dregs of the cup of present pleasure. Such

above all are the pabula of drunkenness. The fiscal is in this case crowned by a

moral, one.

The worst sort of indirect tax is that which in the character of a prohibition

lessens the use of any article, to which a man's attachment is apt not to be so

great as it were to be wished it were, considering what is the produce of it in

the shape of permanent good, over and above the evanescent pleasure. The fiscal

use is in this case clogged with an antimoral tendency. Books, especially of the

instructive kind may be mentioned as examples. But books of the least

instructive kind, music, instruments of pastime of all sorts, not to speak of

public entertainments - every thing - morality is served by every thing that

calls a man from drunkenness.}