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PUBLIC RECORD OFFICE

Reference:

سائل.

། :། །

C.O. 882

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

4 PUBLIC RECORD OFFICE, LONDON

72

8. The main arguments urged against it appear to be (1) the disfavour with which it pre- would be regarded by the native inhabitants of Ceylon, and (2) the cost of the liminary surveys.

9. As regards the first point, Sir W. Gregory has spoken in the strongest terms in his Despatch No. 15, of the 9th of January, stating that in view of the strong conservatism of the East, "The imposition of fresh direct taxation is a very serious matter, the 64 consequences of which no one can foretell," and I may also notice that Mr. Alwis, a member of council, to whose opinion great weight is due, has deliberately stated that in his judgment a land tax would cause a rebellion, and could only be enforced at the point of the bayonet.

10. I should be sorry to think this a justifiable estimate of the popular temper; but, after careful consideration, I am satisfied that any immediate imposition of this form of tax would be unadvisable. I do hot, however, desire to be understood as expressing the opinion that it would be impossible to introduce at some future time a judicious system of land taxation.

11. It is, indeed, to be observed that the compulsory commutation now proposed in practically nearly equivalent to a land tax, extending merely to rice-growing lands, and the introduction of this system of commutation will, in all probability, tend to familiarise the minds of the population with the idea of such a form of tax, and lead them to regard it more favourably than could be expected if it were now imposed.

12. With regard to the cost of the preliminary surveys, I observe that Colonel Fyers has stated that in order to make a full cadastral survey of all the private lands in the colony within a period of seven years, he would require an addition to his staff of 120 men, and an annual outlay of about 42,000l. per annum for seven years, but I also notice that he has suggested a cheaper and simpler plan, by which a return of the extent of paddy land sufficiently accurate for the purpose could be obtained within a few months. This proposal may for some reason, with which I am unacquainted, be an impracticable one, but it scarcely seems to have received from the Cominission the consideration which it deserves.

13. I would also refer you to my Despatch No. 10, of the 18th of February,† and to other correspondence which has taken place relative to the proposal to carry on the trigonometrical survey of India as far as the south of Ceylon. Such a proposal deserves fresh attention in connexion with the present subject, and the expediency of having a full cadastral survey of all the private lands in the colony has already been recognised. It may possibly be found desirable to incur further expenditure in temporarily increasing the staff of the Survey Department, with a view to taking active steps in the direction which I have suggested.

14. From the foregoing remarks you will understand the general nature of the opinions which, as at present advised, I am inclined to entertain with regard to the retention or abolition of the taxes on grain, and on the merits of a land tax, considered as a substitute for them; but before coming to any definite conclusion I desire to have the advantage of your own opinion upon the points which I have now raised, accompanied by any further information which may assist me in forming my judgment on the

I have, &c.

matter.

(Signed)

Enclosure in No. 9.

M. E. HICKS BEACH.

In reply to Sir Michael Hicks Beach's questions: To what extent wine, spirits, beer, and tobacco are taxed? Whether they would bear more? And if not, why not? And how far they are consumed by the whole population, especially by the natives? I have to report that the Customs dues at present levied are, on Wine imported in the wood

·

·

ls. a gallon. 2s. 6d. 3d.

"

-

4d.

"

in bottle

..

Malt liquor

the wood

23

in bottle

↑ Not printed.

"

• No. 1.

73

Spirits pay 58. a gallon under proof, 6s. proof and 10° above proof, and an additional 1s. a gallon for every additional 10° over proof.

The license to sell liquor varies from 31. to 257, per annum.

Tobacco pays on cigars and snuff 18. per lb., manufactured tobacco 4d., unmanu- factured 24d. per lb.

The Customs revenue collected on these articles in 1876 was, wine 5,1024, spirits 20,085l., beer 3,2877, tobacco 2,9927.

The amount of wine annually imported does not exceed 50,000 gallons, and of this over 50 per cent. is light claret. The importation of malt liquor is increasing with the increasing number of European planters settling in the island. Last year over 300,000 gallons were imported, but not more than 220,000 of this was for Island consumption. The increase in the importation of spirits is not large and is not more than the growing prosperity of the Colony justifies. am not prepared to recommend any addition to the present Customs rates on wine, beer, and spirits, which would make any appreciable difference to the revenue. The consumption of wine and beer is limited to the European and Eurasian population. It is true that a certain amount of the imported spirits finds its way into Native taverns, but the policy of the Government has been to restrict the number of these taverns in the rural districts, and the license to sell by retail has been increased from 21. 10s., 5., 10%, to 37, 101., 251. The present import duties on spirits are high, and I believe that any increase to existing rates would only act as a further inducement to increase the local manufacture of a more deleterious concoction from methylated spirit, which bas already been pursued with sufficient success to justify special legislation to mitigate the growing evil.

Tobacco is largely consumed by all classes, but the difficulty of raising a fair revenue from this legitimate source has been frequently pointed out. Sir E. Tennant in 1846 referred to the tobacco trade, which had formerly flourished to a very considerable extent, (producing an average revenue for a few years of from 9,000l. to 10,000l. per annum from the export tax,) as having been absolutely annihilated by the said export tax then levied on island grown tobacco. Since the abolition of the tax the cultivation of tobacco has been successfully carried on on a large scale in the north and in portions of the western province, and nearly 40,000 cwt. was exported to India in 1876. There is now scarcely a village in the interior where a garden of tobacco may not be found. But the competition with India still exists to so great an extent that I question if the re-imposition of the export tax would not be certain to again cripple this industry, which gives employment to a numerous class of natives. While Ceylon was exporting 40,000 cwt. of unmanufactured tobacco to India in 1876, Customs duty was paid on 29,305 lbs. of Indian manufactured cigars which can be purchased at from 3. to 88. per lb. in the local market, and on which a duty of 18. per lb. is levied. During the same period only 546 lbs. of cigars were imported from Europe, and 1,377 lbs. from Hong Kong (Manilla). The consumption of tobacco by the natives is limited to that grown in the several districts supplemented to a small extent by the manufactured tobacco imported from India. The present duty on the better classes of tobacco is light, but the con- sumption is so limited that the additional duty which might fairly be charged would make no appreciable difference in the revenue returns, and see no way of fairly taxing the cheaper class of tobacco unless a general land tax is decided upon.

With the exception of cotton goods the consumption of foreign articles by the bulk of the native population is limited. In a recent despatch Sir J. Longden expresses a doubt whether the revenue could be substantially increased by the imposition of any new duties as the consumption of dutiable goods by the mass of the native population is very limited. In support of this statement it may be noted that excluding the revenue from imported grain and the duty levied on cotton goods and spirits, the total customs receipts derived from the numerous articles enumerated in the schedule attached to the Customs Ordnance (on which an ad valorem duty of 5 per cent. is levied) as well as the amount received on wine, beer, and tobacco, does not in the aggregate amount to 50,000l. per annum. I do not consider that any material addition to the import dues sufficient to compensate in any degree for the loss of revenue by the abolition of the grain taxes could be fairly levied. "The burden of any addition to the present Customs dues on what may be termed luxuries would mainly fall on the small European and Eurasian population, as, excluding the coffee estates owned by Europeans, foreign luxuries are almost unknown outside the chief towns of the island.

The consumption of a rack (a spirit distilled from the cocoa nut palm) is greatly on the increase.

The revenue derived from this item of taxation exceeded in 1876 one- seventh of the total revenue, and amounted to 217,436. Under the existing system

A 634.

K

(To simplify

the calcula tions, I have

taken the rupes

at is.)