PUBLIC RECORD OFFICE
Reference :-
TLC.O. 882
5 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
sommendations
Encl. 8.
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(2.) Additional taxation of salt is a prominent feature of either scheme; the selling price is to be raised from Rs. 2.36 to Rs. 4 per cit. Reference has already been made to the objections to perma- nently increasing the taxation on this article.
(3.) In the absence of further explanations, it would seem rather hard on the Europeans to again raise the Customs duties to the amount of 500,000 rupees, as proposed in the second case, and it will be taxing a section of the population who are likely to make their voice heard directly tea shows any tendency to decline.
(4.) In the second scheme, the reduced paddy tax will be treated as an irrigation rate; the objec- tions to this have been already pointed out, the paddy growers who do not want irrigation will pay
for those who do.
(5.) In the first scheme-with the proposed land tax-the large numbers of agriculturists who eat but do not grow rice will be unjustly treated. They will pay both the land tax and the import duty on rice; the paddy grower, on the contrary, will pay the former only.
(6.) In the land tax no account seems to be taken of the outcry likely to be raised by those who redeemed the tithe or whose lands are exempt from taxation by the Kandyan agreement, &c.; and no allowance seems to be made for the arrears which are sure to accumulate in bad times however small the tax may be. It seems to be assumed that if you put a land tax low enough it will always be regularly paid. I doubt it.
(7.) It is a feature of both schemes to retain the import duty on grain, though in a modified form. I have already ventured to express an opinion that the possibility of such retention for any long period after the abolition of the paddy tax is extremely unlikely.
14. The Select Committee are in favour of re- Belect Com- taining the grain tax, but of modifying the present system in various particulars. Their recommenda- tions are given at pages xxii. and xxiii. of the print containing their report and its appendices; in addition to which they give on the preceding page valuable suggestions for encouraging and improving the cultivation of paddy which must not be lost sight of, though Mr. Saunders evidently does not believe in them. The recommendations are various, and deal inter alia to some extent with the minute subdivision of interests in land, which is character- ised as
"that which more than all other adverse "circumstances taken together militates against the proper cultivation and consequent increase of production of paddy in Ceylon." But the most important change, which is recommended, is the abolition of the system of orop commutation as an alternative to annual commutation, and the sub- stitution in all cases of a graduated tax.
port, par. 67.
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Under the 1878 Ordinance, it will be remembered, the taxpayer could choose one of two 'systems for a term of seven years. He could either pay a fixed sun year by year (annual commutation) or a fixed but higher sum in good years only (crop commuta. tion). If he chose the former, he received a bonus
in the form of a deduction of 10 per cent, from the tax for seed paddy.
It is now proposed to have annual commute. tion only, i.., only the one system of a uniform payment year by year, but on the other hand to have a sliding scale under which—
(a.) if the field produces less than fourfold the
tax will be entirely remitted;
(b.) If the field produces 4-6-fold, a remission
of 30 per cent. will be made;
(o.) If it produces 6-8-fold, 20 per cent. will be
remitted; and
(v.) If it produces 8-10-fold, 10 per cent. will
be remitted.
For fields producing over 10-fold there will be no remission.
22.
In their report the Commissioners estimate that the temporary financial result of their recommenda- par. tions will be a loss of revenue amounting to one fourth of the tax; but the Governor mys that it is 2792, par.. allowed that "at any rate at first and for some the loss will be considerably greater; and
time
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he thinks it should be estimated at not less than Rs. 350,000 per annum, or more than one-third of the tax:
The advantage of the recommendation is, that it allows for bad years and failure of crop, for which allowance is made by the present Ordinance in the case of crop commutation, but not in that of annual commutation. The Commissioners retain the more satisfactory and regular system of annual com. mutation, but they safeguard its want of elasticity
"that can
by the sliding scale described above. "No system 1791, En "of commutation," says Mr. O'Brien,
be devised will ever work satisfactorily in Ceylon, unless it takes into account the inability
" of the poorer class of holders to pay in bað "years"; he has met the difficulty, after ex- haustive consideration of other possible solutions, in the skilful way already noted.
On the other hand the disadvantages of the pro- posal seems to be as follows ---
(1.) The tax has already been cut down by the Ordinance of 1878. It is proposed now to cut it down again by one-third or one-fourth. Fach time it is whittled away, it becomes less worth keeping at all, unless the reductions result in large increase of paddy cultivation. The Commissioners in their report do contemplate such a result; but, if their anticipations are well founded, it looks as if the tax under present oircumstances was a heavy drag on cultivation, which most authorities have contended is not the case. It seems safer to anticipate that, tax or no tax, paddy cultivation will spread or not spread according as there is water or not for the villagers.
(2.) Prima facie it looks as if the proposed sliding scale would be expensive to work and supervise; and that it would tend to revive the jobbery and corruption, which it was the object of the 1878 Ordinance to remove by substituting a fixed for a shifting rate. Sir F. Dickson evidently considers 13,763. that the solution is not likely to be satisfactory, and
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