PUBLIC RECORD OFFICE
Reference:
FELICO. 882
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4 PUBLIC RECORD OFFICE, LONDON
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be laid before the Council during this Session, and in view of the great proportion of the people of this Island whose interests will be affected by this Bill, your Excellency might have observed that it was the most important measure which had been proposed for many years or that would probably be laid before this Council for some years to come. need hardly observe that the difficulty of the subject is scarcely exceeded by its importance. It will be remembered that in the latter end of the year 1876 my lamented friend Mr. Alwis,-whose voice, alas! is now silenced by death-who was always foremost in advocating the interests and upholding the privileges of the people he so well represented in this Council, moved for a Commission to inquire, fully into this important subject. That Commission consisted of the most representative men that could be got together from the community, who after obtaining voluminous evidence from persons of all races and classes in the Island they published their report about a year ago; it contained a great number of important conclusions and many valuable recommendations. The recommendations of this Commission have been, as Your Excellency has observed, substantially approved of by the Secretary of State, and it is upon those recommendations that the present Bill is mainly based. I will not occupy the time of the Council by going fully into the history and nature of what are commonly called grain taxes. All hon. members who have read the report of the Commission and the evidence upon which it was founded will be in possession of all the material facts and issues of the matter. But as I am aware that many persons whose opinion is deserving of weight consider that these taxes should be swept away altogether, and as thie Bill, almost at the outset, expressly retains them, it may be right that I should say a few words in justification of this Ordinance. As hon. members are aware, throughout this Island a certain share of the paddy grown has been from time imunemorial and still is paid to the Government. The share varies according to the tenure of the land upon which the produce is grown. In the case of lands where the Crown has practically relinquished all or nearly all its rights, the tax or share is generally one-tenth. In the case of other lands, where the Crown still retains certain what may be called manorial rights, the tax or share due to the Government varies from one-fifth to one-half. In certain districts of the Kandyan Provinces that were conspicuous for their loyalty in the troubles of 1817, instead of one-tenth it was conceded to the owners of these lands that they should pay one-fourteenth only. All lands belonging to temples in the Kandyan provinces are free from taxation, as well as lands held by headmen during the tenure of their office. With these exceptions the produce of paddy on all lands throughout the Island pays some share to Government. In some parts of the Island, particularly, perhaps exclusively in the Northern Province, a certain share of other grain crops is also paid to Government, as well as a share from paddy. These shares originally were paid and collected in kind only. But for many years they have been collected in two ways. One was an annual money payment by way of commutation extending over a number of years; the last commutation was made to extend over ten years. In all these cases commutation has been effected by agreement between the agents of the Crown and the cultivators. The other mode of collection, which is more largely in use than commutation, has been by selling the right to collect these dues to certain middle- men who are called renters and who take upon themselves the burden of collecting the duty in kind. It has been generally assumed in the many discussions with regard to these grain taxes that they are almost universally collected through renters, but it is a fact, upon which I think I am entitled to lay great stress, that a very considerable portion has been collected by commutation. The Auditor-General has given me certain figures to show how largely at the present time the cultivators avail themselves of commutation, which I may observe is optional to all. The total amount of revenue derived from these grain duties last year, excluding arrears of former years, was R1,303,856, of which the sum derived from the commuted grain taxes was no less than R391,576. In addition to these taxes or dues on home-grown grain we have the import duty on paddy and rice amounting to sevenpence per bushel, which, in point of fact, taking the market price of these articles at Colombo, is about equivalent to the 10 per cent. tithe which, as a general rule, is the proportion of the tax on home-grown grain. You will therefore at once see that this import duty is in no sense a protective duty. It is not, I repeat, a protective duty at all. In considering the question of the advisableness or otherwise of abolishing these taxes it is desirable to see what proportion they contribute to the revenue of the country. Last year, 1877, the amount of revenue derived from the home-grown grain-tax was R1,303,856. That derived from imported grain was R2,109,072, making, in all, a sum of R3,412,928, or a little less than three and a half million rupees per annum. The entire revenue, as pointed out by Your Excellency in your opening address, amounted in that year (1877) to R17,260,191.
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Deducting from the general revenue the amount derived from the sale of colonial stores, which, as has been often observed, is merely a matter of cross entry; deducting also the amount obtained from the pearl fishery and from the sale of waste lands, we find that what may be fairly deemed to be the revenue of 1877 was R14,479,918, so that, in point of fact, a little less than one-fourth of the entire permanent revenue of the country is derivable from duties on grain. Now, whatever opinion there may be on the abstract question as to the advisableness of taxing the staple food of the people, I think we shall all agree that unless this system can be superseded by another as fair and equally productive it would be exceedingly rash to abandon it. The time possibly may come in future years when a considerable portion of this tax may be remitted, but I think all will agree that this time has not come yet. We are now engaged in carrying on a number of very important and useful works, for the completion of which the credit of the Colony is almost pledged. We have already incurred considerable liabilities in procuring funds for those works, and we have in prospect still further liabilities yet to be incurred. It would be exceedingly dangerous at this juncture to relinquish so important a source of revenue unless it can be superseded by some other source equally productive. In fact, it would not be an extreme statement to say that we could not abandon this source of revenue without imperilling the credit of the Colony, and arresting the progress of material progress throughout the length and breadth of the Island. No doubt there is a good deal to be said on general principles against taxing the staple food of a people. It is, I am aware, contrary to all English notions on the subject which have been generally accepted during the last 25 or 30 years, but in applying English notions on this matter to an Oriental country like Ceylon, where the circumstances and conditions of life are altogether different, care must be taken lest we be led by fallacious analogies into inferences which are plausible rather than true and which if carried out into practice might be followed by very mischievous consequences. There is no doubt, as a general principle, that taxes should fall upon classes that are above the very poorest, that wealth and luxury should be taxed rather than the necessaries of life, and in a country like England, where property is so unevenly distributed, where luxuries are so widely dispersed, and where there is so great a contrast between great wealth, on the one hand, and poverty on the other, principles of this kind meet necessarily with universal approval, but in this country things are very different. Few, if any, in Ceylon are very rich. Few, if any at all, are in actual want of the necessaries of life. The circumstances and conditions of life are very simple. Everywhere, vivitur exiguo. Luxuries are hardly known or, at least, are not sought for, and great wealth and absolute destitution are rare. own opinions. In proof of these facts which I have stated I would cite the words of the late Mr. Alwis,—who, if anyone did, certainly knew the condition as well as the feelings of his countrymen. In the speech in which he moved for the Commission I have already referred to he quoted some words of his own on previous occasions. He said: "No one intimately acquainted with the people can believe in the existence of entire destitution." Of course I am speaking, as Mr. Alwis was speaking, of the general condition of the people, not of exceptional times and seasons when, no doubt, scarcity and suffering may prevail. But these are exceptional cases, which must always be dealt with by exceptional measures.
Mr. Alwis was speaking
These are not my
of the general condition of the people, and I think most people will agree with him in what he says on this subject. In this view of things, it seems perfectly clear that there is no means of compelling the people of this country to pay their fair share of the expenses of the administration of the Colony-expenses incidental to the protection of life and property which they enjoy except either by taxing the produce of lands or by taxing these lands themselves. Theoretically, no doubt, a land tax commenda itself to one's approval in preference to a tax on the produce of land. In the one case, no doubt, there is more encouragement to the improvement and better cultivation of the land than in the other. But in this Island there are a number of serious. objections to a land tax which it appears to me impossible to overlook. In the first place, as nearly every member of the agricultural class has some share or interest in the land that he cultivates, a land tax would be as much a burden to him as a tax on the produce of his land. No doubt, if a general land tax were substituted for a tax on the grain, he could pay less on the paddy, but, on the other hand, be would have to pay on his garden and plantation. But there is a still more serious objection than these to the imposition of a land tax, and that is that it would be in the highest degree listasteful to the people of this country. Many years ago a tax on the produce of cocos- nut plantations was tried and found to be so odious that it had to be abandoned. That a land tax would not be less distasteful now than then was shown by the various persons C 2
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