CO882-(4-5) — Page 270

PUBLIC RECORD OFFICE

Reference :-

C.O. 882

5 PUBLIC RECORD OFFICE, LONDON

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

yomid the paddy

be retained as Irrigation rate ?

122, Enel. 9.

the aboli-

growing, or as though it wanted anything but a good and continuous supply of water, for which this vary tithe helps to pay.

6. It has sometimes occurred to me that the paddy tax, simply retained as an irrigation rate, would be more justifiable and more palatable than it is at present. This, it will be seen, is more or less the position taken up by Mr. Grinlinton in the debate on Mr. Christie's motion, and he expressed similar views to me when in this country. At present one-fourth of the receipts of the paddy tax- is set aside for irrigation by Ordinance 2 of 1887. Taking the 1890 Estimates, the revenue from the paddy tax (exclusive of dry grain) was estimated at Rs. 895,600; while the Irrigation Vote was Rs. 240,000 under Ordinance 2 of 1887, and Rs. 322,000 under the Public Works Vote, making a total of Rs. 562,000. If the recommendations of the Select Committee were carried out, the revenue from the grain tax wou'd, it is anticipated, be reduced by one-fourth, and there ought, therefore, to be no difficulty in applying to irrigation purposes all the money received from the peddy tax. But there is a fatal objection to dressing up the tax as a special irrigation rate. The lands which require the largest expenditure on artificial irrigation are naturally at present the least productive; con- versely, those which are most productive and re- quire least outlay are those which contribute most to the tax. If the proceels of the tax were applied, not to general revenue, but exclusively to irrigation, there would be a protest, which it would be im- possible to resist with any show of justice, from proprietors who paid the bulk of the rate without deriving any or much benefit from it.

7. In considering the possibility of abolishing home paddy the paddy tax, a very important point, perhaps the most important of all, is whether the abolition of the home tax involves the further abolition of the import duty on grain.

involve the tion of the bort duty on

1.27.

Encl. 9.

The report of the Select Committee shows that in 1888 the grain tax produced Rs. 951,950; and the import duty on grain Rs. 2,153,210; the two together being one-fifth of the revenue.

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The imported grain feeds the towns, the planta- tion labourers, &c.; Indian rice is totally different from that grown in Ceylon, and the Tamil coolies will not eat the latter as long as they can get the former. It is now freely contended that the home tax and the import duty bear little or no relation to cach other, and that the former can very well be abolished without touching the latter. worked out by the Ceylon National Association in This is their pamphlet.

Each tax," they say, “stand or fall on its own merits.'

"must debate Mr. Christie stated that he "would devote In the late most of his attention to trying to upset the theory that there is an intimate and inseparable connexion between the import duty on rice and " the tithe which is collected under the heading of “the paddy tax," and the next speaker, a Sinhalese, followed suit. Among officials, Mr. Saunders, to judge by his spesoh on this occasion and by his

"

(4

p. 17.

rider to the report of the Select Committee, does not consider that the two must stand or fall together. Mr. Twynam is of the same opinion, 40 Encl. 7, p. 5. is Mr. Fisher. Sir Arthur Havelook takes the same view in the seventh paragraph of his despatch. On the other hand, the Select Committee state in their report: "If the grain tax were abolished, the par. 20.

duty on imported paddy and rice would, as "recently resolved by the Cobden Club, have to be abolished also,” and the members of the Executive Council, with the exception of Mr. Saunders, take the same view.

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It is true that, treating the paddy tax according to its historical origin, as a rent not as a tax, there is no necessary connexion between the tithe and the import duty; but as a matter of fact the two have been arranged to supplement each other so that all may pay alike, just as “on imported salt 2702, Encl. 5, "there is a Customs duty corresponding to the "Excise." It seems to me therefore impossible to doubt that Mr. O'Brien is perfectly right in his contention that, if the grain tax were abolished, "the import duty would soon follow, whatever pledge might be given to the contrary." The opposition to these taxes has been based on the ground that they are taxes on food. Is it likely that that opposition will cease when the sinaller tar only, involving one third only of the whole amount,

H

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"is taxed."

is abolished! No doubt the abolition of the home tax will be accepted at first by itself as an instal- mant, and this is the line which has been taken in Mr. Wall's newspaper, but it impossible to suppose that the matter will be allowed to rest there. At present the double tax is logical and consistent. It is a food tax, but everyone pays it alike. In Mr. O'Brien's words: “ Speaking broadly the whola population eats rice, and every grain of rice that is imported no less than that grown in the Island But, if the two are to be severed and the import duty alone is to be left, it will be odious not only as a food tax but also as a protective duty; and, if there is a general land tax in lieu of the home paddy, the agriculturists of Ceylon who eat imported rice, the coconut growers and others, will, as compared with the paddy growers, pay double [ie, both land tax and import duty]. unless the imported rice is entirely driven out by the home-grown rice, in which case they will suffer the alternative evil of buying rice at an artificial price caused by the protective duty. To my mind the present position is defensible, whereas the position of an imported duły without a paddy tax is wholly untenable, and it had better be faced at once that abolition of one means abolition

of both.

2847, p. 4.

8. The abolition of the dry gmin tax will no Dess the doubt be used, and indeed has already been used, of the dry

of the pay

28 Bu argument for abolishing the paddy tax. It tax logist is well therefore to point out that, în urging the roire them abolition of the tax on dry grain, Sir Arthur Havelock stated: "The rapeal of the dry grain tax. 10th Ost, ing

" is in no way connected wish the variona proposals 21,428. "that have been made with respect to the paddy "tax. It is a matter that stands by itself and on

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Reference :-

C.O. 882

5 PUBLIC RECORD OFFICE, LONDON

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

etern, No. 34,

inion se to-

the

popu-

larity,

+6

14

8

"its own merits. It will not satisfy those who disapprove of the system of food taxes which prevails in Ceylon, but it will remove the most glaring and the most indefensible defect in that system."

•

The reasons for abolishing the tax on dry grain were the small amount derived from it; the " very ocossional character" of its cultivation (to quote Sir J. Longden's words), which made commutation for money apuntent impossible, and therefore involved the continuance of the renting system with all its evils; and the irregularity of the tax which was levied in some districte only, Dry grain, too, does not require artificial irrigation to the same extent as paddy, and therefore, so far as the paddy tax supplies the means of irrigation, there is obviously a reason for it which does not and never did exist in case of dry grain. Of the Commission of 1877, who gave ananimous support to the paddy tax, a majority wished to abolish the tax on dry grain. A Special Commission appointed abortly afterwards to inquire into the subject re- ported in favour of its abolition, on the ground that it could not be satisfactorily collected; and there- fore the step, which has lately been taken for its abolition, is one which has been long intended, to which all are agreed, and which has been in no way bound up with the question of the paddy tax.

9. The tax which has usually been regarded as is the weight the only possible substitute for the grain taxes, is a general land tax. There is no doubt, whatever, that a general land tax as ordinarily understood would be most unpopular. The Surveyor-General says, "The feeling generally is adverse to the intro- *duction of a land tax, not so much because people "have thought the matter out, but because of a

6.) the practi-

cability and tax? Enel. 8.

7, p. 10.

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general dislike to ohange the known for the unknown." Mr. O'Brien says, "I do believe, "absurd as it may sound, that if substantially "relieved by the operation, the people would object

Of

to a general land tax. They are strongly averse

" to innovation and fresh taxation." Mr. Templer, Government Agent of the Southern Province, sayɛ, "I am very certain that in its results, if it were "once introduced, it would give far more cause " for discontent than does the Grain Tax Ordi-

•

1281100. Mr. Fisher, Government Agent of Uva, writes, "It can hardly be questioned that a general- “land tax of the scope contemplated by the Com- "mittee, by reason of its being a universal direct tax, would be most unpopular." Mr. Wace. Government Agent of Sabaragamuwa, mys, “I * believe that the imposition of a general land tax "would lead to an amount of disaffection in the poorer Kandyan districts hitherto unprecedented "under our Government.'

Here is a mmple of Native opinion. The Govern- ment Agent of the Western Province consulted his Mudalyarn on the subject, and 11 out of the 12

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gave it as their opinion that the abolition of a

“ grain tax and the imposition of a general land "tax would, whether accompanied by a reduction "on or abandonment of a duty on rice, be a mes- ** sure most unacceptable to the villagers, and in

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"its resulta productive of greater hardship than

" has ever yet been experienced from the operation

" of the grain tax.”

In the debate Mr. Seneviratna (Sinhalese) says, Enol. 9.

Any substitution in the way of a land tax would

"be more distressing," and Mr. Panabokke (Kan- dyan), "I am not one that will stand up for a land "tax in the event of the grain tax being abolished; "that would be taxing not only the rice, but the

very curry which we eat.'

"

But perhaps the most striking evidence of the unpopularity of a land tax is the fact that the charge has perpetually been made against the Grain Tax Ordinance of 1878, that it converted the tax on paddy into a land tax, which would primá facie have seemed a merit. Thns Mr. Le Meaurier, Assistant Government Agent for the Nuwara Eliya district, in his administrative report for 1887, statéd, "The tax has been converted from a tax on the produce of the land into a land tax pure and

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simple." Mr. Twynam writes: "The departure 2792, Encl. 7, "then made (in 1878) from the principle on which p. 4. "the tax on paddy was recovered, in virtually con-

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verting it into a tax on paddy land, has given

"rise to much of the recent agitation against the

"1

grain taxes." Mr. Fisher writes: "To my mind p. 16. "the most objectionable feature of the Ordinance "No. 11 of 1878 is that it has practically con- "verted the grain tax into a land tax."*

Conclusion 3.

As to the feasibility of a general land tax, the best opinions are divided. The Select Committee par. 93. came to the conclusion "that the substitution of a general land tax for the grain tax, and the import duty on grain is impracticable."

16

In his memorandum on their report, Mr. O'Brien Excl. 8. repeats: "I regard it (the substitution in question) "as absolutely impracticable." His colleagues in the Executive Council agree with him, and so do

the majority of the Government Agents.

Mr. Dawson, Government Agent of the Western Encl. 7, p. 2. Province, writes: "The objections to the abolition of

"the grain tax expressed by the Select Committee,

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as well as those to the introduction of a general

** land tax, I fully endorse."

Mr. Moir writes: "Speaking of the present time, p. 3. "I am decidedly of opinion that a general land tax

cannot be collected."

"

Mr. Elliott writes: "As regards the feasibility of p. 11. a general land tax, I entirely concur with the "Committee that it is impracticable and undesir-

"able."

Mr. Grenier is convinced that a land tax "would Enci. 8. "be entirely out of place in Ceylon, and that its "recovery would be attended with practical diffi- "culties which it would be impossible to grapple " with.”

Mr. Murray, however, is in favour of the imposi- Encl. 7, tion of a general land tax. Mr. Jevers seems to be

on the whole of the same opinion. Mr. Fisher says, Encl. 7, p. 17.

The imposition of a land tax is, in my opinion, "quite feasible." Mr. Saunders thinks such a tax Note to Reports more practicable than it was; and, to take one of Select Comialida

P. xxiH,

B 66990.

• Sae elso Sir A, Havelock's Memorandum (Endl. 1 of 1792).

B