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PUBLIC RECORD OFFICE

Reference

C.O. 882

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

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4PUBLIC RECORD OFFICE, LONDON

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17. The tax which is most commonly advocated in lieu of the grain taxes is a general land tax, embracing not only the paddy fields now subject to tithe, but also the coffee plantations, cocoa-nut walks, cinnamon gardens, and village lands. This tax has the support of such high authorities as Sir Charles Layard, the most experienced servant of the Crown in Ceylon, and of Colonel Fyers, R.E., the Surveyor General. The Com- missioners in their report point out some of the difficulties in the way of assessing such a tax, but consider it "a measure which has much to commend it to the most patient "consideration of the Government, and think that possibly at some future day it may "be desirable to adopt it." This conclusion, while leaving the question open, admits that it is not practicable to impose the land tax as a present substitute for the grain taxes. And there is, in my judgment, a very fatal objection to the tax in that it is a tax to which the people are unaccustomed, that it will reach multitudes of those who are in no way affected by the grain taxes, that it will be condemned by the people, and that the collection of it will be passively evaded though not, perhaps, openly resisted.

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To

18. I do not venture to express such an opinion after so short a residence in the Island without authority. There will be found in the first appendix* to the report a most valu- able body of evidence, consisting of the written replies given by 78 mostly representative persons to a series of 23 questions drawn up by the Commissioners, and circulated in the native languages as well as in English among the principal public officers, and the leading native landowners and agriculturalists. The 23rd question was on the following terms: "Do you think it advisable or practicable to substitute a general land tax for the present taxes on home-grown and import grain ? If so, you are requested to specify "the amount which you would propose to assess coffee plantations and gardens, cinna- mons, tobacco, paddy fields, and other plots of cultivated land, also uncultivated lands "in private hands, and the annual amount which could thereby be fairly realized." this question answers were returned by 27 European gentlemen and 46 native gentlemen. The present or eventual substitution of a land tax was approved by four European gentlemen and pronounced unadvisable or impracticable by 23. But it is to native opinion that, in a question of this kind, the greatest weight is due, and I find that out of the 46 gentlemen who answered the question, four were in favour of the proposed sub- stitution, two favoured it but thought that it could not be effected at present, and 40 were totally opposed to a land tax. In most cases their dissent was simply, though emphatically, expressed, but those who did give reasons all expressed as their principal ground of objection that the substitution of a land tax would be ruinous to the villagers, that the people generally would suffer by it, and that it would be acceptable to none.

19. It must be remembered that the great bulk of the Sinhalise peasantry are land- owners. Irrespective of the vast number of grants of smali holdings of Crown lands issued annually by the Government (1,757 grants for plots of lands averaging only six acres each were issued in the year 1876 alone), the lands which have descended from parents to children have been almost infinitesimally divided as the population multiplied. The number of these small holdings bearing, perhaps, half-a-dozen cocoa-nut trees or a few garden shrubs, is immense, and the cost alone of the machinery for collecting the land tax would be so great in proportion to the yield of the tax that it would amout to a virtual prohibition even if the discontent of the people offered no other obstacle to it.

20. Another difficulty would be found in assessing a land tax in the great contrast between the amount of capital expended upon some lands, and the value of the produce raised thereon, and the laissez faire with which other lands are suffered to produce what they will without manure or care of any kind. The difference between the value of the produce of an acre of coffee on a fine estate and that of an acre of cocoa-nut trees is enormous. Even in the grain taxes, where all the produce is of the same general kind, there is often much difficulty arriving at a correct assessment of the land, but the difficulty would be enormously increased if all produce is to be assessed.

Yet no land

tax could be imposed which would bring a net revenue of 290,000l. into the treasury, which did not distinguish between different kinds of land; it would be impracticable to impose a uniform tax payable in money on all the private lands in the colony, for to do so must lead to the ejection of hundreds of thousands of villagers, who could not pay the tax, from their ancient holdings, and would ensure their pauperization.

21. These considerations, and the fact that there is no existing survey of much of the country sufficiently accurate to base an assessment upon, dispose me to think that a land tax is impracticable. I would gladly aid in the removal of the taxes on food. I came to the colony three months ago fully persuaded of the impolicy of these taxes, and hoping to remove them. I have, after full consideration, come to the conclusion that these taxes do not in Ceylon either affect trade or cultivation to any appreciable extent. I do not think that it will be practicable to raise an equal sum by other means of

• Appendices not printed.

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taxation.

I believe that the revenue cannot be reduced by the amount of the grain I believe that the injury arising taxes without stopping irrigation and railway works. from the stoppage of the irrigation works alone will not be compensated by any benefit that may be derived from the repeal of these taxes; and I am therefore reluctantly obliged to add my recommendation to that of the Commissioners that these taxes be for the present retained subject to the alteration in the mode of collection which has been pointed out.

I have, &c.

The Right Hon. the Earl of Carnarvon,

&c.

&c.

GENTLEMEN,

&c.

Enclosure in No. 8.

J. R. LONGDEN,

Governor.

APPOINTMENT and INSTRUCTIONS to the COMMISSION.

Colonial Secretary's Office, Colombo,

January 22, 1877.

Commission.

Appointment

and instruc-

I AM directed to acquaint you that you have been appointed a Commission to Gain Tax inquire into the taxes on home-grown grain and the Customs duties on imported grain.

You are requested to take evidence of the following points :- Whether you are of opinion that the present taxes on home-grain and the Customs tions. duties on imported grain ought to be entirely remitted, and a general land or other tax substituted for them, such substituted tax to be an equivalent in amount to the tax and duties remitted; and whether you are of opinion that such a general tax would be more acceptable to the people than the present mode of levying this portion of the revenue?

Whether the Customs duties on grain affect consumption in any appreciable degree, and whether if they were remitted or reduced there would be a corresponding reduction in price, increased competition in the grain trade, and a larger importation of rice into the colony ?

Whether the tax on paddy is conformable with ancient usage and acquiesced in generally by the people?

Whether the mode of collecting the larger proportion of it by selling the rent is oppressive and demoralising; and, if so, whether it would be feasible to replace it by commutation, either by offering equitable inducements or by making it compulsory upon the expressed desire of the majority of landowners within a certain area.

Whether, if it be found in any cases to be impracticable to induce the landowners to commute, they might be encouraged to become farmers of their own tythe, and in what manner ?

If you should decide that the present taxes on grain should be replaced by a land tax, you are requested to specify the amount at which you would propose to assess coffee plantations and gardens, cocoa-nut plantations, cinnamon, tobacco, paddy fields, and other plots of cultivated land, also uncultivated land, and the annual amount which could thereby be fairly realized.

In considering the subject generally, the lightness of the taxation of Ceylon should be horne in mind, as also the necessity of maintaining the revenue so as to carry on the administration and material improvement of the Island and provide for the interest on loans which have been raised, and will be raised, for the latter purpose. You should also keep in mind, in any changes you may be disposed to suggest, that no check should thereby be imposed on the progress and elasticity of the revenue.

The enclosed Commission empowers you to summor witnesses and to call for papers.

I am, &c. CHARLES P. LAYARD,

(Signed)

The Honourable the Colonial Secretary.

The Honourable H. Dias.

The Honourable R. Cayley.

The Honourable Sir C. P. Layard.

The Honourable Sir M. Coomara Swamy. The Honourable J. Alwis.

J. F. Dickson, Esq.

G. Wall, Esq.

The Maha Mudaliyar. Dullewe Loku Banda.

G 4

·

Acting Colonial Secretary.