CO882-(3-4) — Page 362

PUBLIC

RECORD

OFFICE

Reference :-

TICO. 882

4 PUBLIC RECORD OFFICE, LONDON

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

tax for the RTSID tax.

Cadastral sur-

vey required.

Effect of abolishing

on grain.

46

and we think that possibly at some future day it may he desirable to adopt it. At present any proposal of the kind would raise the strongest objections on the part of the native population, and the practical application of the measure is beset with many difficulties of detail in a country where land is held in divided and undivided shares of alroost infinitesimal extent, and where tenures vary and exemptions and privileges have been granted, which would require to be dealt with with the utmost caution. It is preferable in theory to a rent which is levied only on the land capable of growing those crops which form the staple food of the people, and to import duties on the principal article of food; but it must be remembered that the grain tax is almost, the only tax which reaches the rural population, and that with a few rare exceptions every villager is a landowner, and though he pays a tax or rent only for his paddy field, still he holds his garden lands free, and, as we have already shown, the import duties reach the immigrant population which would otherwise escape taxation altogether.

In fact is is for them and the dwellers in the large towns that rice is imported. The rural population as a rule grows its own food. Notwithstanding the theoretical objec- tions to these taxes, we find that on the whole the incidence of taxation is fair, inoppressive, and generally acceptable. We therefore are not prepared to recommend the substitution of a general land tax the introduction of which, as we have already stated, would be met with many difficulties, and would be highly distasteful to all classes of the native inhabitants of the island, who would regard it as an impost on their gardens in addition to an impost on their fields; or, to use the language of the Sinhalese member of the Legislative Council, during a debate on this subject, as "a tax on their curry as well as their rice." They would not look upon it in the light of a compensation for a propor- tionate reduction of the tax on their paddy. As a practical objection to entertaining the proposal at present, we may add that a detailed survey is a necessary preliminary to the imposition of a land tax, and we are informed that the Surveyor-General estimates the time required with his present staff to complete a survey of the private lands in the Colony at 80 years, but with 120 additional surveyors, he could complete the work in seven years, at a cost of upwards of 42,0007. a year, and it might perhaps be desirable to remove this obstacle by carrying out a complete cadastral survey of the private lands in the Colony which, if not required hereafter for the purpose of a land tax, would in any case be of great value for the registration of titles, the prevention of litigation, and the protection of the Crown lands from encroachment.

III. We are not of opinion that the Customs duties on grain affect consumption in customs duties any appreciable degree. We have already shown that the import duty on rice bears a very small proportion to the cost of transport to the interior, and though any reduction or remission of the duties should tend to increase competition, the native traders who hold the rice trade almost entirely in their own hands would probably combine to maintain the price to which the people have become accustomed and which the high price of labour enables them readily to pay. The revenue would thus, at any rate for some years, be sacrificed by a reduction or remission of the duties to the benefit of the trader, and not of commerce; though ultimately the ordinary laws of supply and demand would prevail.

Present system of tax-

grown grain Kenerally

acceptable to the people.

IV. We reply in the words of the fourth question which has been put to us that ation on home the tax on paddy is conformable with ancient usage, and acquiesced in generally by the people. We are prepared to go further, and to state that the native cultivator in the east universally recognises the right of the Government to a share in the produce of the land to secure him the protection and assistance he requires. Moreover, in point of fact, a large portion of land now held by natives as private property was within the present century the absolute property of the Crown, held by tenants at will, to whom it was in course of time granted or sold subject to a reserved rent of a share of the produce. In all cases the tax on paddy may properly be regarded as the reserved rent of the Crown, and to abandon the tax would be to make a free grant to the landowners, in fee simple, of one-tenth of the arable land of the country now under cultivation.

As evidence of the peculiar objection of the natives to any change in a system of taxation to which they have become accustomed, we will quote the following extract from Sir E. Tennent's Report on the Finance and Commerce of the Island of Ceylon, 1846:-

"Nor must it for a moment be lost sight of that in any alterations that may be at- tempted, we shall have to deal not with the enterprising and elastic spirit of an European population, upon an exclusive experience and observation of whose habits and genius we have founded all our theories of political science, but with an enervated and apathetic people, who form an exception to all our rules, and among whom we must look in vain

47

for a realization of our most familiar maxims of financial, commercial, and political economy.

*

the fish rents.

Your Excellency's intimate acquaintance with the Colony, and the peculiar character Narrative of of the Sinhalese, has rendered you familiar with the necessity of these precautions. But I think no circumstances is calculated to exhibit its importance to the authorities at home so strikingly as the history of the fish tax, and the utter failure of all the effects which were anticipated from its abolition. The tax had existed in Ceylon from time immemorial, and the people were not only reconciled to it from habit, but attached to it, from a conviction that they derived assistance and protection from the authorities in return for the payment. It consisted of a duty varying from one-quarter to one-sixth (a very heavy proportion) of all the fish caught, which was regularly collected by the Government, and out of the proceeds parties were paid to protect the fishers, to assist the men in case of danger or times of distress, and to regulate all the affairs of the craft, the care of the brood, and the season and time of fishing, &c. The tax was annually farmed to renters by public sale, and during the last ten years of its existence, it returned upwards of 6,000/. per annum to the Colonial Treasury.

attempts to

substitute

of a per- centage.

fishere,

"So heavy an impost upon the food of the people was naturally felt by the British Unsuccessful authorities to be open to reproach, and in order to render it less offensive, it was attempted on three successive occasions, in 1812, 1820, and 1827, I think, to get rid of license in lieu its objectionable appearance by imposing a license-duty upon the boats, in lieu of an assessment on the capture. But, singular as it may appear, this change, though a Resisted by the substantial improvement (being not only a relief in amount, but a relief from many vexations in the former mode of collection), proved most distasteful and objectionable to the fishers, who disliked the direct payment of money, and preferred their ancient system of payment in kind; the headmen, too, being paid by a fixed salary, had no longer a concurrent interest in the gains of the rest of the caste, who, in turn, being relieved from the obligation of exertion to make up the former amount of the duty, gradually relapsed into indolence and indifference; the quantity of fish taken diminished, the price rose, and the revenue fell one-third, from the inability or unwillingness of the fishermen to take out their license. It was found impracticable to overcome the inveterate prejudices of the people in favour of their ancient customs, and the con- sequence was that in each of the three instances in which the attempt was made, the experiment was an absolute failure, and the Government was compelled to revert to the and aban old system, which continued unaltered down to the arrival of the Commissioners of Inquiry in 1831.

"It

doned.

Commissioners

appears by the records of this office that these gentlemen instituted no inquiry as Rash con to the past history of the tax; they were contented upon theory to condemu it as being clusions of the raised on the subsistence of the people,' and omitting to inform themselves of the of Inquiry, absolute failure of the former experiments for its amelioration, they actually recommended, 1891. a fourth trial of the very expedient which had already been found unsuccessful upon three previous occasions; they advised the immediate substitution of a license in lieu of a percentage, and the ultimate abolition of the tax altogether so soon as the revenue would admit. It was in vain that the Colonial authorities pleaded the value of their own previous experience, represented the ascertained hopelessness of the license system, and prayed to be permitted to reduce gradually the amount of the tax, but to continue it in the form in which the fishers had become familiar with it. European theory prevailed Tax reduced. over local experience, and, after a lengthened correspondence, the tax was reduced first from one-quarter to one-sixth in 1834, and from one-sixth to one tenth in 1837, and finally abandonment by the Goverment in 1840.

Tax abolished.

of the reduc-

"And it is a remarkable fact, as illustrative of the singular habits of these people, that Singular effect each diminution of the duty, instead of leading to increase of the trade and an addition to tion of the the revenue, had in every instance the directly contrary effect.

duty.

"On an average of four years from 1830 to 1833, whilst the tax was one-quarter, the average amount of revenue was 7,3891. per annum.

"From 1834 to 1837, when it was reduced to one-sixth, the average annual receipt was 6,6941.

"And from 1837 to 1840, when the duty was but one-tenth, the receipts fell off to 4,8217.

tax to the

Homan

"But though abandoned by the Government in 1840, your Excellency is well aware Transfer of the that the tax was as far as ever from being abandoned by the fishermen, or abolished in Ceylon. On the contrary, so wedded were the fishers to their old habits, that in a body Catholic those of the Roman Catholic religion, who formed nearly one half of the entire, trans- ferred the payment, not only unaltered in form, but in some instances increased in amount, to the Roman Catholic Church; and in a memorial which was recently placed in my

F 4

clergy.