อ
196.
15. With the figures before us we feel that it is hardly an ex- aggeration to say that taxation in Mauritius is in inverse order of capacity to pay. A system which takes Rs.40 from the peasant's exiguous income of Rs.400 and less than Rs.4,000 from the rich inan's income of Rs.50,000 is self condemned. Either the poor are grossly overtaxed or the rich are undertaxed. Both couclusions, however, are possible, and, we think, correct.
The fortunate position of the rich and well-to-do in Mauritius in respect of taxation is thrown into sharper relief when it is con- sidered that they enjoy other important economic advantages at the expense of the State which are not possessed by similar classes in other countries. School education, perhaps the main source of financial anxiety in an English household, is a comparatively minor item of expenditure in Mauritius. A Statc institution, the Royal College, at Curepipe, with its off-shoot, the Royal College School at Port Louis, provides a first-class education for a boy of the more prosperous classes at the ridiculously low fee of Rst a month, rising to Rs.15 a month in the senior forms, and the scholarships and exhibitions, also State-provided, are so numerous that a boy must be of less than mediocre ability if he cannot relieve his parents of at least a part of the cost of his educational course. For the more exceptional boy there is also the opportunity, with no dis- abling condition as to evidence of actual need, of competing for the two English scholarships, confined to students of the Royal College, which enable successful candidates to pursue a full University or professional course in England or France, with all fees and main- tenance expenses charged to the general taxation of the Colony.
Another instance of the State coming to the relief of the private expenditure of the middle and richer classes is found in the leasing of Crown Lands for the purpose of the" chasse or deer hunting, and for fishing. These leases which cover a total of 20,000 acres are held almost entirely by members of the small white population at rents which average 50 cents per acre, a figure much below their real value.
A final case is that of the religious endowment. We have already given our reasons for not advising the withdrawal of this long- standing privilege, but we feel that the pecuniary benefit which the more prosperous sections of the population enjoy under a system which relieves them at the expense of the State of a great part of the upkeep of their churches and priesthoods is a factor which necessarily enters into the question of their own further taxable capacity.
16. Our conclusion on this question may be briefly summarized in the statement that while the poorer classes in the Colony are greatly overtaxed, it is not beyond the power of other classes to increase their contribution without suffering undue hardship, and that the increase should be steeply graduated so as to correct to some extent the unequal and anomalous distribution of the existing
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burden of taxation. It is of interest to note that these conclusions bear a marked resemblance to those arrived at by the Royal Com- mission of 1909, as will be seen from the following extract (para- graph 143) from their Report:
Very varied views were expressed before us as regards the incidence of taxation in Mauritius, and some witnesses were inclined to think that the well-to-do classes were heavily taxed in comparison with their poorer neighbours. In our opinion the opposite is the case.
There is
no income-tax, no house or land tax, ami ho quit-rent is paid for the land, which seems to have been granted by the French Government to original settlers without any conditions beyond a simple cultivation clause. Death duties are in practice very light and are not graduated, The actual producers of sugar make a substantial but indirect contribu- tion to the revenue through the export duties; but the rest of the well- to-do community, such as business and professional men and persons living on their own means, pay little in comparison with their taxable capacity. On the other hand, the import duties on foodstuffs, petroleum, tobacco, and textiles, the excise duty on rum, and the licence duties on carts, draught animals and trades of all kinds must fall heavily on the very limited incomes of the mass of the population ".
Since the above was written the death duties have been increased and graduated, but the export contribution of the sugar trade to the general expenses of the Colony has been withdrawn-the present duty being in the nature of a loan repayment-and the house tax which has taken its place has aggravated rather than relieved the heavy burden of taxation on the poor.
Form of Additional Taxation. /
17. In considering what form such additional taxation should assume we have naturally first turned our attention to the question It will be of increasing the revenue from the existing sources. convenient to take each of these sources separately in their order of importance according to the present estimated yield of revenue,
viz. :-
Customs
(a) Import duties
(b) Export duties
Excise
(a) Rum
(b) Tobacco
Licences
Registration fees
Taxes on vehicles and animals House tax
Import duties.
Rs. 4,000,000 762,500
2,250,000 850,000 1,250,000 700,000 410,000 400,000
A general increase in the rates of import duties with the excep- tion of those on a small number of essential food-stuffs, rice, dholl, flour, and dried or salted fish has already been made with effect from the 2nd June and it is estimated to yield additional revenue to
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the extent of Rs.300,000 for the current financial year. From the point of view of administrative convenience a further general increase would be the easiest and the simplest method of raising a part at least of the sum required to meet the deficit, but it is not a means which we feel able to recommend. Although the last increase has not been reflected in a proportionate increase in the general cost of living, there is no reason to believe that a second increase of a similar amount would fail to have that result, more particularly as certain articles, including rice, have recently shown an upward tendency. Having regard to the present very low rates of wages, which have been described to us by several witnesses as having reached the irreducible minimum, any rise at all in the cost of living would be productive of hardship to the poorest classes. There are, however, one or two items of customs revenue from which, we think, some further increase could be obtained without affecting the poor man's budget, and at the same time without unduly penalizing any other particular class.
18. The most important of these items is the duty on tobacco. This duty together with the tobacco excise duty has undergone a progressive series of increases during the last five years, with the view not so much of increasing the customs and excise revenues as of increasing the local growth and manufacture of tobacco. As a result of this protective policy a very considerable proportion of the cheaper grades of cigarettes is now made locally from the home- grown leaf, and a factory has been started by the British American Tobacco Company whose manufactures both from native and imported leaf have already secured an important share of the home market. It is hoped that the development of the industry will in course of time take the form of an export trade in leaf if not in the manufactured article, but this stage is not likely to be reached for several years to come. The steady increase in the production of the excise duty has not yet balanced the decline in customs revenue from tobacco, and we are inclined to think that further encourage- ment could now be given with profit to the Colonial Treasury as well as benefit to the local industry. We propose, therefore, that the rates of duty both on unmanufactured tobacco and manufactured cigarettes should be again increased, the former from Rs.6.50 to Rs.8.50 and the latter from Rs.13 to Rs.16 per kilo. As a result of these increases there will no doubt be a small rise in the price of the better-class cigarettes, but with the excise duty stationary at its present level the price of the cheaper cigarettes which are made almost entirely from the local leaf will remain unaffected. Making allowance for a certain decline in the volume of the imports of manufactured cigarettes, but taking into consideration the increase in imported unmanufactured tobacco required for the consequent expansion of the local cigarette industry, we estimate a net total increase of Rs.161,000 in the Customs revenue from both duties.
199.
Although the widening of the margin between the duty on imported leaf and that on manufactured cigarettes must tend to an increased import of leaf, the increase will be at the expense of the import of the manufactured article and not of the home-grown product. The chief immediate benefit will accrue, no doubt, to the local manu- facturer rather than to the cultivator, but the increase in the price of the imported leaf should be of some assistance to the Mauritius Government in, their efforts to improve the quality of the native- grown tobacco.
19. Another Customs duty from which we consider that some further contribution might reasonably be expected is that on silk. The value of imports of silk (including artificial silk) manufactured goods for the year 1930 is shown in the Trade and Shipping Returns for that year at Rs.339,641 with an additional item of Rs.169,395 of imports through parcel post, and the duty realized on these items was Rs.46,593 and Rs.33,053 respectively. The existing rates of duty ad valorem are 22 per cent. ordinary and 13.2 per cent. preferential, and we propose that they should now be raised to 50 per cent. and 25 per cent. respectively. These increases are estimated to yield a total net increase of Rs.75,000 in revenue. Their effect upon prices cannot be regarded as a serious hardship in present circumstances when the Colony's adverse trade balance requires that imports of purely luxury articles should be discouraged, "' silk dumped and they should operate to check the influx of goods of foreign origin which has grown to a remarkable extent in recent months.
20. Perfumery and toilet preparations are other articles of luxury. use which might well bear some additional duty. The value of imports for the year 1930 amounted to Rs.94,919 (including Rs.13,961 value of that sent through parcel post) and the duty paid thereon Rs.13,861. We propose that the rates of duty should be raised from Rs.16.5 per cent. ordinary and Rs.11 per cent. preferential to Rs.30.10 per cent. ordinary and Rs.22 per cent. preferential, respectively, with an estimated additional total yield of Rs.8,000 per annum.
21. There is one article not at present in the dutiable list which in our opinion should now be called upon to pay its quota to the revenue. We refer to the case of dried fruits, the imports of which have risen rapidly during the last few years for a reason other than their consumption as food. It has been represented to us that the recent heavy decline in the imports of light wines is to be explained largely by the concurrent growth of the local manufacture of synthetic imitative beverages for which dried fruits, particularly raisins, are used to supply a vinous flavouring. Without entering into the question whether, as has been alleged, these substitute liquors are both deleterious and decidedly alcoholic in charácter, we can see no reason why their manufacture and sale should receive
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