CO882-(3-4) — Page 359

PUBLIC RECORD OFFICE

Reference:

C.O. 882

4 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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3. The first act of the Commission was to draw up and tircultate among the leading landowners and agriculturists of the Sinhalese, Tamil, and Moorish communities a These series of questions designed to elicit opinions on all the points of inquiry. questions were answered by 77 gentlemen, and I enclose a paper containing the as an Appendix to the questions with all the answers to them, which will be printed Report.

4. The positions taken up by Mr. Birch in his Draft Report are mainly these :—

(a.) That the tythe levied on home-grown rice is in the nature of a reserved rent

for the land, and not a tax.

(b.) That all paddy lands in the colony (except Temple lands and a few other excepted lands) have been bought, inherited, or otherwise acquired, subject to this reserved rent.

(c.) That this rent is conformable here, as it is in India,* to the ancient usages of

the people, and is not complained of by them.

(d.) That the practice of farming out the rent has led to abuses, and should be

abolished.

(e.) That the practice of commutation for a fixed sum, that is, the payment of the rent in money instead of in kind, which prevails extensively in some provinces, should be made universal.

(f) That the Customs duty on imported rice, viz., 7d. per bushel, forms so small a part of the cost of the rice when it has been transported into the interior, that the remission of the duty would give no appreciable benefit to

the consumer.

(g.) That the imposition of a land tax which has been suggested as a substitute for the grain taxes is impracticable, first, because the natives would resent the imposition of such a tax and evade its collection, and, secondly, because there is no proper survey of the island.

(h.) That, in the present state of the finances, and in view of the burdens which the colony has assumed, the revenue cannot be decreased; that no taxes can be remitted unless an equal substitute be found, without putting an entire stop to the great improvements now being carried on in railway and irriga- tion works, and that those works tend much more to improve the condition of the people than the remission of the grain tax would do.

5. These positions appear to me to be sustained by the general tenor of the evidence, and by the circumstances of the island.

6. At the time of my arrival in Ceylon, I entertained for my own part a strong opinion of the impolicy of the impost upon the rice grown within the island, and especially of the oppression and extortion which was rendered possible by the practice of farming out the tythes. The series of enactments by which the Government have endeavoured to prevent any abuses on the part of the renters or farmers of the revenue is a sufficient testimony to the possibility of these abuses occurring. As regards the impost itself, there is sufficient evidence to show that the tythe on rice is not what is properly called a tax, but a rent paid at the option of the cultivator, either in money or in kind, and paid While I wish it were willingly by the people as a due which they know they owe. financially possible to abandon altogether this tythe or produre tax, I am bound to say that regarding it as a rentcharge and not as a tax, there is no equitable reason why the Government should hand over to the present cultivators a rentcharge which is a species of public property. Those who are best acquainted with the native character are of opinion that the existence of the tythe does not curtail the cultivation of rice, and that If this be so, its general remission would not cause a single acre more to be cultivated.

no great benefit would accrue to the public at large by remitting it. If the tax is to be The system of farming it out retained, the machinery for collecting it must be altered. must unhesitatingly be condemned, as it has often been, and a fixed money rent payable to the revenue officers substituted in all cases for the tythe.

7. The tythe on rice grown in the island is much less important in a financial point of view than the customs duty on rice imported from abroad. According to the statistics contained in the Blue Book for 1876, the whole quantity of rice, exclusive of fine grain grown in the island, was 7,895,244 bushels, and the revenue raised upon it amounted to 75,2411.196.4d. 802,581 rupees. It is believed that, as regards the quantity of rice raised, this is an under statement, and that the year's produce was more than 9,000,000 bushels. Even at this larger estimate the quantity imported is equal to nearly two thirds of the home

• Where, however, taxation is heavier, as shown in the Report.

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growth. The customs duty on rice yielded last year a revenue of 1,665,905 rupees, 158,178. collected on an importation of 5,744,531 bushels.

8. It is evident from these figures that the rice grown in the island at the present titne is not sufficient to feed the native Sinhalese population alone, and, however much the produce of the rice crop may increase as the area of the paddy lands is enlarged by the cultivation of the now waste lande irrigable from the newly repaired tanke, it may well be doubted, looking to the small difference between the home growth and the imported grain, whether Ceylon will cease for a long time to be a rice-importing country. The rice dnty may therefore be looked upon as a permanent source of revenue as long as it is maintained.

9. A large proportion of the imported rice is carried up into the interior for the use of the thousands of coolies (almost all emigrants from India) engaged in the great coffee industry. The labour of the coolies engaged in coffee planting is worth ninepence a day, and it is therefore clearly more profitable to import rice for them from countries, where labour is not worth more than threepence a day, than to set them to grow rice in competition with those countries. And the same argument applies to the cinnamon

and other industries.

11.. 10.

10. The import duty is sevenpence per bushel and bears so small a proportion to 19 cents. the cost of transporting rice from Colombo to the interior that even if the native mer- chants agreed to allow the coolie the whole benefit of the remission of the duty which it is extremely doubtful if they would do, the benefit he would derive from the remission of the duty would be infinitesimal, being not quite a farthing a quart. I myself have the strongest doubts founded on my experience in the West Indies, whether the remission of the whole duty would affect the retail price of rice in the bazaare in the smallest degree. The price of rice in the interior will be much more materially reduced by facilitating and cheapening the means of communication by the extention of railways and cart roads than by the remission of the duty.

11. It is the custom on some estates for the proprietors to engage to supply their coolies with rice at a fixed price in order to ensure their being able to procure it at a price within their means, and thus induce them to remain on the estate. To whatever extent this practice prevails, it is manifest that the remission of the duty will affect the planter and not the coolie. And, indeed if through the remission of duty the impor- tation of rice increased, and the price fell to any great extent the rate of wages would fall with it, for the supply of labour is constantly recruited from India, and the tide of emigration will continue as long as there is a sufficient margin between the wages earned and the price of living in Ceylon, to enable the coolie to put by a few pounds, and return to India with his savings. In this case, too, it is clear that the profit arising from the remission of duty would remain with the planter and not with the coolie.

12. As I shall have to report again more fully on the whole question when forwarding officially the report of the Commission, I have confined myself in this hurried despatch to a few of the main considerations on which I think the question will have to be decided.

I have, &c. (Signed) J. R. LONGDEN,

Enclosure in No. 6.

Confidential. For Members of the Grain Commission only.

DRAFT REPORT,

To his Excellency the Governor.

C

Governor.

We, the Commissioners appointed under the instructions of Government, dated 22nd January 1877, hereto prefixed, to inquire into the taxes on home-grown grain and the customs duties on imported grain, have the honour to submit to your Excellency the See evidence, evidence we have taken and the conclusions at which we have arrived.

Appendix I.

from all

Our first step was to prepare a series of questions calculated to elicit the fullest Steps taken to expression of opinion on all the points referred to in our instructions, and to circulate obtain evidence these questions in English, Sinhalese, and Tamil, among the principal officers of Govern- classes. ment, European and Native, and the leading landowners and agriculturists of the Sinhalese, Tamil, and Moorish communities. We have received 77 replies from re- presentatives of all classes, and a large number of landowners have either not replied or have stated that they have no information to communicate. We advisedly allowed

A. 694.

F