Cyclopædia of Political Science, Political Economy, and the Political History of the United States
CONSUMPTION, Taxes on Articles of. Taxes imposed on consumption of provisions, merchandise or products of any kind, and collected, either at the time when the articles taxed pass the boundaries of a state, a province, or a commune, or at the time they are sold, removed or manufactured, constitute, in almost all the modern states of Europe, and in those of European origin, the chief source of public revenue.
—In France, these taxes comprise those included under the title of indirect taxes—duties on liquors, native sugar, the proceeds from the sale of tobacco, gunpowder, paper, etc., plus the customs duties and the proceeds from the sale of salt; the total amounting, according to the estimate of the budget of 1869, to 742,559,000 francs on a total national receipt of 1,722,444,903 francs. The octrois of French cities are also taxes on consumption, and their gross annual amount exceeds 150,000,000 francs. Certain direct taxes are in their nature similar to taxes on articles of consumption: such are those imposed on carriages, horses, dogs, etc., when used as luxuries. If the stamp duty was extended to all writing paper, that duty also would be a tax on consumption, but as in France it is confined to paper which may be produced in court, or for agreements, contracts, checks, etc., they are included under the large class of taxes on documents.
—In Great Britain duties on consumption, comprising the custom house duties and excise, in the year 1867-8, reached the sum of £45,642,851, on a total receipt of £83,333,217.
—In Austria indirect taxes, imposed generally on consumption, figure in the budget of 1868 at 220,292,813 florins, on an ordinary total receipt of 546,035,407 florins.
—These taxes are put down in the budget of Prussia of 1861, including salt, at 44,627,107 thalers, on a total receipt of 135,094,415 thalers.
—The budget of Russia for 1868 gives indirect taxes, customs and excise duties at 193,850,330 rubles, on a total receipt of 480,593,517 rubles.
—Before the war between the north and south the income of the United States was almost entirely furnished by customs duties. For the year included between July 1, 1859, and June 30, 1860, the ordinary receipts were made up from the three following sources only (see
—Among the drawbacks inseparable from all taxes there are some which taxes on articles of consumption have in the highest degree: 1. The distribution of the burden which it imposes is in no way proportionate to the resources of the taxpayers; and the most productive of these taxes, those on liquors and provisions in general use, on salt, combustibles, etc., weigh as heavily on the poor as on the rich. 2. Their collection demands an amount of administration, supervision and verification very damaging to production, and to the circulation of or trade in the objects taxed. It is well known in France what a network of minute rules and difficulties are connected with the general taxes on liquors and the octrois. 3. A considerable part of the proceeds of the taxes in question is absorbed by the cost of collecting them. That proportion is not generally less than 13 or 14 per cent.
—It has been urged, in favor of these taxes, that the payers, for different reasons, meet them more willingly than direct taxes. It is said, first of all, that their collection is generally divided into smaller fractions, and more easily paid. It is next alleged, that, in the majority of cases, they are added to the price of the articles taxed in such a way that the consumer, confounding them with the price, bears the burden of them almost without knowing it; that weighing more frequently on kinds of consumption not indispensable to the maintenance of life or health, the taxes in question are paid only when it is convenient to buy articles which could really be done without; so that the poorest, the most prudent or the most economical have always the power of avoiding them by refraining from buying, and find in this a new stimulant to saving.
—These motives often appealed to by financiers, politicians and all publicists occupied with fiscal questions, may be more or less justified in reference to certain special taxes, but if it is intended to appeal to them in the case of all duties on articles of consumption, it is very questionable whether it can rightly be done. It is by no means demonstrated that these duties are acknowledged and paid more willingly than direct taxes, and, as to customs duties and octrois, smuggling, which always continues in spite of the activity and the severity of repression, shows the contrary clearly enough. We know, besides, to what an extent taxes are collected under the inspection of officers of indirect taxes, such as the retail duty on wine, the duties on the manufacture of beer, native sugar, etc., and how impatiently they are borne by those on whom they are imposed. We know, also, that in France the octrois have always been the most unpopular of all taxes; and the favor with which their complete suppression in Belgium was received by public opinion, shows well enough what a general object of hatred they are.
—It will not be easier to justify the allegation that these taxes are paid more easily and in smaller fractions than direct taxes which may be collected in twelfth parts. This is not the case with customs duties, which are generally collected in large sums; nor with taxes on liquors, native sugar, salt, etc. Although divided, so far as the consumers are concerned, they cause heavy expenses to producers, merchants and dealers, before reaching their final destination. It is quite true that consumers, when they have to pay or refund these taxes, pay them in fractions more or less small, and confound them with the price of the object taxed, without thinking how much they pay in this way to the government. But is this really a public advantage? In view of the use which the greater number of governments make of their resources, is it really desirable that they should increase them at the expense of private persons, without the masses observing, or, at least, without their being able to render an account of all that has been thus taken from them?
—And lastly, the assertion that taxes on consumption are generally levied on articles of little need in the maintenance of life or health, and which can be dispensed with conveniently, is not better founded than the other considerations appealed to in defense of these taxes. This assertion lacks truth altogether with regard to salt, meat and the greater part of other provisions on which a customs duty or an octrois is levied. Sugar, indeed, appears to be of less absolute necessity, the populations of Europe having done without it for a long time; but they have also done without shirts and shoes; and would it be proper at present to tax these articles of clothing heavily under the pretext that those who wish to avoid the tax are able to do without them? The use of sugar is common among all classes: it is used in preserving fruits, in the preparation of a multitude of medicines and food; and its consumption has become almost as necessary in the civilized world as that of salt. As to beverages, such as wine, beer and cider, it is not certain that a suppression of their consumption would not be very injurious to the health of people who use them. The use of fermented liquors is universal in human society; it exists in every degree of civilization; and if this does not sufficiently authorize us to consider it one of the necessaries of social life, if we must see in it but an artificial want or pleasure, we should still have to ask ourselves whether it is reasonable and just to make this pleasure much more costly, more difficult for the most numerous classes, by overloading with taxes the objects capable of procuring that want or pleasure.
—Taxes on consumption, considered in their totality, are not justified by any of the reasons generally adduced in their favor; and they present, in a higher degree than any others, the drawbacks arising from a want of proportion between them and the resources of tax payers, the heavy cost of collection and the hindrances and difficulties imposed by them on production and commerce. There is, therefore, no valid reason for giving them the preference in the general system of taxation; and there are very strong reasons why they should be resorted to as little as possible. Their only raison d'être is to be found in excessive public outlay which the resources procurable by the most equitable and least harmful means can never meet, and which brings about recourse to all possible methods of collecting taxes, whatever they may be.
—Some of the taxes on consumption weigh, nevertheless, on articles injurious to the health, to the mental or moral faculties, of those who use them habitually, such as tobacco and alcoholic drinks. These taxes are certainly among the best warranted, and their establishment or maintenance can only be approved; but, the best method of collecting them should be a constant object of research.*66
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