CO882-(3-4) — Page 368

Taxes on

home-grown grain.

System of

maritime pro-

vinces.

58

A

Of these sources of revenue the most important are land sales, railway profits, and timber. The revenue from land sales must gradually decrease, so must the revenue from timber, unless a large expenditure is incurred in forming new plantations, and the permanence of the railway profits mainly depends on the continued success of the coffee enterprise.

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Of the ordinary sources of revenue the grain taxes and import duties on grain yield The taxes on home-grown grain 290,000l. a year, or one third of the ordinary revenue. amount to 107,0007., of which 100,0007. is derived from paddy and 7,0001.⚫ from fine grains. The taxes on home-grown grain are levied on the authority of immemorial usage. We may here draw a distinction between the maritime and the Kandyan Provinces, as the tenures and laws are different though the origin of the grain tax is the same in both cases. The maritime provinces were taken from the Dutch in 1795-6, and they were ceded by the Treaty of Amiens in 1802. In 1815 the Kandyan Provinces were brought under British rule by a convention with the Kandyan chiefs and people. By the proclamations of 3rd May 1800, and 3rd September 1801, the Governor, taxation in the anxious to "enable every man to enjoy with security the fruits of his industry," declared that "all land within these settlements (ie., the maritime provinces) now held in "undivided tenure by more than one proprietor, shall pay to Government the tax of "one-fifth part of the produce until the same be divided among the said proprietors; "after which division the grain tax shall be reduced to one tenth, excepting when the said land be subject to the payment of anda or any proportion amounting to or "exceeding one-fourth part, the payment of which shall still continue as heretofore; or "where the said land shall be held on tenure of service;" and grants of uncultivated lands were made "in full and perpetual property," on condition of bringing the land into cultivation within five years, and "on the terms of paying annually to Government "the fourth part of the produce of the low grounds and the tenth of that of the high grounds." It was further declared "that all obligation to service on tenure of lands throughout these settlements shall cease and lands held duty free at this present time " on account of such service shall pay to Government one tenth of their produce of high "lands and one-fifth part of their produce of low lands excepting only such lands as were formerly malapala, nilapala, ratninda, or anda, which will continue to pay one fourth of "their produce to Government." By the proclamation of 22nd April 1803, it was ordained that in all cases, where no share of the produce had been reserved to Govern. ment by any specific grant or title or by any legislative enactment, the share to be reserved for Government should be fixed at one-fifth part of the produce of all low lands, and at one-tenth part of the produce of all other lands "excepting such gardens as do "not contain the number of ten fruit-bearing trees which shall remain free of all direct " contribution to Government."

Tax on

gardens.

*

C

The rights of the Crown to a certain share of the produce of all land was here recognised and fixed, but the collection of the tax on gardens and small plots was found to be so objectionable and attended with such an amount of resistance, evasion, and extortion that it became necessary, in 1924, to exempt coffee, cotton, and pepper, and practically the rights of the Crown to a share of the produce of paddy fields and to a share of the fine and dry grain grown on high lands only were retained, and the right to a share of the produce of cocoa-nut and other plantations was tacitly abandoned. In 1797 a special tax on cocoa-nut trees was imposed which had to be at once abandoned owing to the general discontent to which it gave rise. It is owing to the variety of tenures referred to in the proclamations quoted above that there still exist in the maritime provinces the rates of one half, one third, and one fourth. They represent the measure of relief granted in former days to those who held on oppressive tenures; and to assimilate the tenures of land, the Government, in 1813, provided that all who were Revenue Com liable to pay a higher rate than one tenth might redeem by instalments such portions as Deputy Beere exceeded one tenth of the produce, a measure which Sir William Colebrooke reported in We would recommend that measures be tary to Gorer-1831 to have been attended with good effect.

taken to encourage landowners still holding at the high rates to take advantage of this provision.

Letter to

missioner from

ment, dated

24th Novem-

ber 1813.

System of

taxation in the Kandyan Pro- vinees.

In the Kandyan country the rule is more simple. By the proclamation of 2nd March 1815, the Royal dues and revenues of the Kandyan Provinces were retained according to lawful custom, and after the rebellion of 1817 the Government placed the taxation of those provinces on its present footing. By the proclamation of the 21st November 1818, all taxes were abolished except a general tax on paddy lands which was "fixed at one tenth of the annual produce to be delivered by the proprietor or cultivator at such

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• This also includes the sums levied for rent on dry grain grown on Crown lands.

59

"convenient store-house in every province" as might be appointed. To mark the just sense which the Government had of the loyalty and good conduct of the chiefs and people of certain districts the rate was reduced in those districts from one tenth to one fourteenth, but that it might be "known that persons who are leaders in revolt or disobedience shall meet punishment," it was proclaimed that all lands "declared forfeited "by the misconduct of the proprietors shall, if by the mercy of Government restored In the Kandyan "to the former owners, pay a tax of one fifth of the annual produce.” country fine grain was not liable to tax.

on grain.

The import duties on grain yield about 180,000l. a year, which is equivalent to up- Import duties wards of one fifth of the ordinary revenue raised from taxation. It is at the rate of 7d. a bushel on rice, which is about 10 per cent. on the ordinary market rate of 6s. 6d. a It is therefore, in its operation, not a protective duty, bushel at the port of Colombo. being only equivalent to one tenth which the native cultivator pays on home-grown grain. It falls chiefly on the immigrant and floating population, and, excepting the small amount they pay for salt, is the only tax which they pay for the protection they receive. It also falls on the inhabitants in towns, who likewise pay no other taxes except those special to It should be observed that the labouring population of the towns in which they live. the coffee districts consists mainly of immigrants from India, a large proportion of whom return annually to their native country carrying with them considerable savings earned in Ceylon. This portion of the population is free from the road tax, which is levied upon the resident population, and, but for the import duty on rice, would be practically exempt from taxation of any kind. These import duties are collected easily and cheaply, without oppression and without fraud. Owing to the heavy cost of carriage the import duty of 7d. a bushel forms a very small part of the cost of rice over and above the Colombo price by the time it reaches the interior. In the coffee districts rice reaches even double the Colombo price, owing to the expense and difficulties of transport and interruptions in the communications. In this connexion it is proper to remark that the price of rice forms an important element in the rate which the employers of labour in Ceylon have to pay to attract Tamil labour from India, and that to some extent the import duty on rice is eventually paid by them, and we would observe that the coffee planters further contribute to the revenue not only by the indirect payment of this duty, The inducements, which suffice but by assessed charges for medical aid to the coolies.

roads and

to bring Tamil coolies over from their more distant home to labour in Ceylon, fail to attract the Sinhalese villagers, who, in quitting their villages, would have to exchange the most honourable of all pursuits for one which in their eyes is degrading. But if they were to yield to the offers of the planter they would still require wages sufficient to buy food at the high prices ruling in the coffee districts. In any case, therefore, the employer would have to pay all charges included in the cost of the food of his labourers.

The policy we would recommend is not to remit or materially reduce taxation, but to Importance of make rice cheaper by extending and improving the communications by road and railway rigation. throughout the whole interior of the Island, and by restoring and improving irrigation works with a view to increasing the local production of grain. The success of the irriga- tion works in the Eastern Province shows that this is the true policy. The restoration of those works was commenced 20 years ago by Sir H. Ward, and was continued by Sir H. Robinson, and it is the only part of the Island where sufficient time has elapsed to render it possible to judge of the results. Thousands of acres of which 24,000 are in one block have now been converted from forest and jungle into productive paddy fields, the owners of which are able to send large quantities of surplus grain to Jaffna and Badulla and other parts of the Island. There is every reason to anticipate similar results from following the same policy in other parts of the Island, and in order that the Government may be able to do more and not less than it has hitherto done in this direction, we should wish to see the revenues increased and not diminished.,

II.-The substitution of a general land tax for the present grain taxes it a measure Proposal to which has much to commend it to the most patient consideration of the Government, and substitute a we think that possibly at some future day it may be desirable to adopt it. At present for the any proposal of the kind would raise the strongest objections on the part of the native grain taxes. 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 almost infinite- simal extent, and where tenures vary and exemptions and privileges have been granted, which would require to be treated with the utmost caution. It is preferable in theory to a tax 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 while H 2

general land

To Tz Ti

19

PUBLIC RECORD OFFICE

Reference:→

C.O. 882

4 PUBLIC RECORD OFFICE, LONDON ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH--NOT TO