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PUBLIC RECORD OFFICE

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TLITICO. 882

4PUBLIC RECORD OFFICE, LONDON

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Government to a share in the produce of the soil." In fact, most of the private lands (the Temple lands and some others being specially exempt) have been acquired by inheritance, grant, or sale, subject to the payment to the Government of a share of the produce; the tithe is from this point of view more analogous to rent than to a tax in the ordinary sense of the term. It is a part of the national property, and the present incumbents of that property have no just right to claim relief from the conditions upon which they acquired their land.

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5. The mode, however, in which this rent has been collected by intermediate farmers of the revenue (called in the report and evidence "renters ") has been condemned by a long series of statesmen and governors and must be abandoned without delay. I need not stop to dwell on the abuses to which this mode of collecting the revenue may give rise. These abuses are fully exposed in the despatches of successive Governors, in the reports of Royal Commissions, in official documents, and in books written about Ceylon. No doubt every care has been used by the Government; Ordinances have been passed to punish fraudulent practices and to check oppression, close supervision has been exercised, yet there is reason to apprehend that abuses have occurred, and they may again recur without detection. On this point the Commissioners report as follows: "Notwith. "standing every precaution and the care with which the law has been framed to prevent abuse, and while securing the due collection of the revenue to give all possible protection to the cultivator, the evidence compels us to the conclusion that the

present "mode of collecting the tithe on home-grown grain by the existing system is susceptible The remedy "of abuse, and has been abused to the disadvantage of the cultivator." recommended by the Commissioners is the conversion of the tithe into a fixed money payment by the landowners. This system is already almost exclusively adopted in the Kandyan Provinces, and to a considerable extent in other provinces. It has, therefore, the advantage of being familiar to the people. It is proposed that the money value of the tithe should be fairly assessed under the provisions of a law to be passed, and the amount so assessed paid to the Government in lieu of the payment in kind. In order to meet the varying circumstances of the assessed lands, it is proposed that the commutation shall be subject to revision at the end of the first seven years, and thereafter, if the commutation be found not to diminish unduly the revenue, and on the other hand not to press hardly on the cultivators, the commutation may be extended to longer periods. This system has several advantages to recommend it; one is that it is already in practice throughout the Central Province, and is not unfamiliar to the people; another is that it will put an end wholly and entirely to the renting system and its manifold inconveniences and possible abuses. If the assessment be fairly made, as it ought, so as to bring in the net amount of the tax now received by the Government under the present system, the cultivators as a body will benefit by the whole profit now reaped by the renters which will remain in their hands. This profit has been estimated by one of the most experienced Government agents, Mr. Dickson, at no less than 30 per cent.

6. There is a subsidiary question connected with this, namely, the difficulty of commuting the tax upon what is called "fine grain." This is chiefly grown in the Northern Province, and the Government agent of that province has more than once recommended the abolition of the tax, as any commutation of the tax appears to him so difficult as to be, in his opinion, impracticable. The abolition of the fine grain tax is recommended by a majority of the Commissioners, and if it should be found upon trial that it is not practicable to make a fair assessment of the dry grain lands I shall be prepared to concur in this recommendation rather than perpetuate the existing system.

7. Although the evils incidental to the collection of the tithe on home-grown grain by the agency of the renters may be removed, yet it will be asked why taxes on food which have been abandoned in England as impolitic should be maintained in Ceylon, and why the Customs duties and tithe should not be altogether surrendered. A full answer to this question will be found in the enclosed report. These grain taxes yielded in 1876 290,278, which was 33 per cent. of the entire ordinary revenue of the colony exclusive of extraordinary receipts, and this amount of taxation could not be remitted without suddenly arresting all the improvements now in progress.

8. The total expenditure of the colony in the year 1876 was 1,276,9301. Of this sum the Government establishments, including the judicial, ecclesiastical, and medical depart ments, and the departments of public instruction, police, and prisons, cost 351,1367.; the military contribution paid to England on account of the garrison was 116,2507.; and the maintenance of public hospitals, the up-keep of the roads, and the other ordinary and necessary charges of Government amounted to 417,8917., making the total ordinary expenditure 885,2971. The remainder of the public expenditure, amounting to 391,633, was chiefly devoted to railway services, irrigation, and public works.

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9. The total receipts for the same year were 1,375,8871.; of this sum more than a fifth part was received from the Government railways, the gross receipts of which amounted to 279,670.; the receipts from the sale of Clown lands, the produce of the Government salt ponds, and the other special receipts amounted to 224,402/., 80 that the revenue proper derived from taxation, customs, stamps, taxes, and licenses amounted, including the grain taxes, to only 871,8157,, & sum smaller in fact than the ordinary and necessary expenditure of the colony.

10. It is, I submit, evident that in the present financial condition of the colony taxation to the extent of 290,2781. could not be surrendered without probably endangering the credit of the colony, and certainly not without arresting the progress of the improvements so urgently needed.

11. Among these improvements the first place for importance to the population at large must be given to the restoration of the ancient tanks which alone rendered in past times, and which alone can render now the cultivation of the low lands possible. With water cultivation may increase almost indefinitely, without it the land remains a jungle. If the policy of Sir Henry Ward, Sir Hercules Robinson, and Sir William Gregory in restoring these ancient works be vigorously followed up extensive tracts of land can be restored to cultivation. In pursuance of this policy my Government has proposed, and the Legislative Council have agreed, to a vote of 400,000 rupees for irrigation works in 1878.

12. Of scarcely less importance is the improvement of the communications by the construction of railways as well in the low country like the Kalutara Railway as among The extent to which the natives avail the mountains where the coffee plantations are. themselves of the railway wherever it is opened may be read in the reports of the railway officials. A more convincing proof of it is to be seen in the revenue.

13. The repeal of the grain taxes without raising an equivalent amount of revenue from other sources would, as I have pointed out, arrest the progress of these improve- ments. The native population would undoubtedly suffer from the abandonment of the irrigation works, and the hope of raising within the Island sufficient food for its resident and immigration population would have to be indefinitely postponed. And the surrender of these taxes would benefit a comparatively small section only of the population. The present owners of paddy lands who have acquired them subject to the tithe would obtain a relief that they have no more right to them than the tenant farmers of England have to be relived of the payment of their rent. The repeal of the Customs duties on grain would benefit the merchants only, mostly native chitties, in whose hands the rice trade is, for they would obtain an extra profit equal to the remitted duty, and the price of rice in the bazaars by the pound or measure would almost certainly remain the same.

14. Nor do I think that the colony at large would benefit by any extension of its trade or cultivation in consequence of these taxes being given up, for the quantity of grain imported and the area of land put under cultivation depend on considerations altogether independent of the duties, and the duties do not appear ever to have interfered with the gradual development of trade and cultivation. This will be clearly seen on reference to the statistics appended to the Commissioners report. The annual return from the Customs duty on grain has increased 15 fold in the last half century. In 1828 the duties yielded 12,9271.; in 1876, 183,953. This increase is to be mainly attributed to the great development in the coffee industry and the consequent immigration of thousands of Coolies annually from India to work on the coffee plantations where they earned more than wages enough to buy the imported rice. In the same period the revenue from home-grown grain increased only threefold, namely, from 36,7167. în 1823 to 106,3257. in 1876. The increase in the home-grown grain bas necessarily been restricted by the want of irrigation, and bas only increased as the restoration of the ancient works permitted additional tracts of land to be irrigated.

15. The next consideration is whether any other tax could be substituted for the grain tax that would not be considered in England so objectionable as taxes on food always are.

16. The revenue derived from the Customs, exclusive of the import duties on grain, is undoubtedly small for a population of 24 millions, being only 109,8641. But I doubt whether the revenue could be substantially increased by the imposition of new duties, for the consumption of dutiable goods by the mass of the native population is very limited. The total value of the imports, exclusive of grain, upon which the above-named duties of 109,8641. were levied was 2,830,976/., so that the average rate of duty on all imported articles whatsoever is about 4 per cent., and if allowance be made for the articles admitted free of duty the per-centage will be higher. The ad valorem duty on goods not specially named in the tariff is in fact 5 per cent.

• Probably 24 millions now.-J. B. L.

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