§ SIR GEORGE CAMPBELL,
in rising to call attention to the Taxation of India, and to the injustice of placing new burdens on the food of the poor while the rich are not taxed in due proportion; and to move—That the total taxation on salt in India being already excessive should not he increased, and especially a very large additional burden on an article so essential to life and health should not be placed on the populations of Madras and Bombay at a time "when they are enfeebled and emaciated by a very prolonged and severe famine,said, he feared that the question might seem tame in these times, but it intimately concerned the welfare of 180,000,000 of the poorest of our fellow subjects, and was of special consequence at a time when, India and England being partners, both countries 474 might be plunged into a greatly increased expenditure. In such an event, the mode of taxation in India would be of the utmost importance; we had heard the measures which were proposed, and he trusted that this matter, so urgent from an Indian point of view, would command the attention of the House. The principal aim and object of his Motion was that in his judgment—and he trusted it would appear, also, in the judgment of the House—it was unfair and inexpedient that the additional taxation which it had been found necessary to impose on the Indian people, should be imposed on the poor and not on the rich; and more especially so since it would be imposed in a very objectionable form of taxation on the food of the poorer classes. Upon that point he might claim the sympathy of those hon. Gentlemen on the other side of the House who represented the financial policy inaugurated by the late Sir Robert Peel and adopted by his successors, the effect of that policy being to remove the taxes on food, and substitute a fair, proportionate tax on the income of the rich. That was the policy at present pursued in England, but not in India, where the example of a few oligarchical colonies had been copied. The right hon. Gentleman the Member for Birmingham (Mr. John Bright) had often denounced the Government of the East India Company; but those censures came rather ill from him, as, whatever might have been the failings of the Company, it had, at any rate, protected the poor, and had done its best for the masses of the people. Undoubtedly the present Financial Minister of India (Sir John Strachey), was an able man, and nothing could be more true than his retrospect of the circumstances which had given rise to the present necessity; but when he dealt with the prospects of the future, he took the position rather of an advocate than of a statesman, so that the Indian journals gave him credit for abandoning his own views in deference to public opinion. The Budget was, he believed, in this respect, rather Lord Lytton's than Sir John Strachey's, especially with reference to the salt duty. Sir John Strachey had unfortunately allowed himself to give a viewy colouring to the future which was possible enough in a small Assembly, though not possible in a place where statements 475 were narrowly criticized. He was compelled to agree with the Government of India that some serious addition to the taxation of that country was unfortunately necessary. Perhaps retrenchment might effect a saving; but, as a matter of fact, the authorities both of India and of England had tried to make reductions without much success. As regarded the military charges, that, he believed, was eminently the case, and the best way to guard against the increase of those charges was to abstain from a mischievous activity on the North-western frontier. Again, so far as the additional taxation which it was proposed to impose on India, there was, he thought, in that portion of the Budget extreme vagueness of statement, as well as a considerable inadequacy in the measures proposed. It was stated that a very heavy debt had been incurred on account of the Famine, and that it was deemed necessary to levy additional taxation to meet those recurring disasters. Out of the £1,500,000 a-year to be provided, only £700,000 per annum would be available from the new taxation proposed to be raised, and that was held out as available for material improvements rather than for paying the costs of the famine. It was not a large sum, and it was inadequate to meet the requirements of the case. Now, the famine tax which it was proposed to impose on land had his approval; while as to the tax on traders and artizans, he was in favour of the principle on which the Government had determined to proceed, provided the tax were justly and equally imposed upon all classes. He was ready to admit that up to the limit of £1,000 a-year, which would be represented by a £20 tax, the charge was a fair one; but his complaint was not of the mode of its imposition as a substitute for a regular income tax on the middle classes; but that, contrary to the practice in the case of such a tax, it was to be imposed on the very humblest and poorest artizans down apparently to men earning £5 a-year, while the very rich were left practically untaxed. Companies making £100,000 a-year of profit were to be taxed only on £1,000 a-year, and the same rule applied to the rich merchants and millionaires of India. The Government of India were afraid of 476 touching these great Companies and rich men, because of the unpopularity it would cause, and because of the complaints that would appear in the newspapers. In agreeing to increase the salt tax, Lord Lytton, he was grieved and ashamed to say, had yielded to a selfish demand on the part of the rich for exemption from taxation; and he could not help expressing his opinion that it was a base and unjust thing for the Government of India to seek popularity on such terms. The net increase of the salt tax was only £300,000. If the Government extended the principle of the licence tax to the very rich, and taxed the rich for their servants, elephants, and horses, they would raise a much larger sum than they gained by this iniquitous tax on the food of the poor. He thought there should be a limit to the constant increase of this tax. The Government was getting dangerously near the point at which the camel's back would be broken; and it was desirable that a little of the burden imposed by this tax should be removed and laid upon different shoulders. By no man had that opinion been more strongly held than by the late Lord Mayo, assisted by the present Finance Minister, Sir John Strachey. It had also been held by Lord Lawrence, and Lord Hobart, and many others, and last year the noble Lord opposite (Lord George Hamilton) had stated that the Secretary of State for India was of opinion that some means should be taken for reducing the tax. The statistics of the operation of the tax showed one or two very remarkable results. The consumers of rice and ragi in the South of India used a much larger proportion of salt than the population of the wheat-consuming country in the North of India. Among the latter the consumption was only 6lb. a-head; whereas in the South of India it amounted to 15lb. or 16lb. a-head. The tax would thus press most heavily on the population which was compelled to use the poorest class of grain, and a population impoverished, too, by the late Famine. It was a striking fact that, during the Famine, when food was scarce or of an inferior quality, the consumption of salt was greater than when it was plentiful and good, as the people used it as a kind of stimulant. The proposal to raise the salt tax 40 per 477 cent in Madras and Bombay, and reduce it only 4 per cent in Bengal, would result in a very considerable increase as a whole. Equalization was no reason for raising the whole tax. He regretted that Sir John Strachey bad attempted to justify the action which had been taken in regard to the imposition of the salt tax in the way be bad. The proposal was said to be of a temporary character, and stress was laid on the benefit that would result from its decrease in future years; but that was a fallacy, for the proposed increase must result in a substantial increase of the tax. The increase of 40 per cent in Madras and Bombay was unjustifiable, for already the population of these Provinces paid a higher rate of taxation per head in the shape of salt duties than any other part of India. The inhabitants of Madras and Bombay already paid £2,000,000 net of the salt tax of India. They contained less than one-third of the population of the country, but they paid more than one-third of the salt tax, and those Presidencies had naturally protested against any increase of the tax. This increased tax was unjust and inexpedient. It was unjust, because the rich in India were not taxed in due proportion, whilst it was a very heavy tax on the poor. The salt tax was, in reality, a food tax in its worst form; and whilst the poor in India were heavily taxed, the rich in that country, since the abolition of the income tax, were the most lightly taxed people on the face of the earth. Deducting the land tax, and opium, and other similar sources of income, the real taxation of India amounted to some £12,000,000, one-half of which was derived, from salt, leaving only £6,000,000 to be paid by the country generally, and by far the greater part of that sum was paid by the poor. If additional taxation was to be imposed on India, it was only right and proper that a fair share of it should be imposed on the rich. The hon. Gentleman concluded by moving his Amendment.
To leave out from the word "That" to the end of the Question, in order to add the words "the total taxation of salt in India being already excessive should not he increased, and especially a very large additional burden on an article so essential to life and health should not he placed on the populations of Madras and
Bombay at a time when they are enfeebled and emaciated by a very prolonged and severe famine,"—(Sir George Campbell,)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ LORD GEORGE HAMILTON
said, that the hon. Gentleman opposite had moved a very ingenious Amendment against a Budget which was not in possession of the House; but it was impossible for the House, unless it was in possession of the full scope and bearing of Sir John Strachey's scheme, to understand why in one portion of India he had been obliged to increase the tax on a particular commodity. The hon. Member had jumped to the conclusion that Sir John Strachey had preferred to put all taxation on the poor and to abolish the taxes on the rich; but be could not understand bow anyone who was in full possession of the scheme could make such a statement. The statement of Sir John Strachey only reached this country a few days back. He (Lord George Hamilton) might say, without exaggeration, that Sir John Strachey had made a most comprehensive, most able, and statesmanlike exposition of the finances of India. It was true that he proposed additional taxation, but he coupled it with a large number of important administrative and financial reforms. Lord Mayo bad not only established an equilibrium between revenue and expenditure, but had bequeathed a considerable surplus to his successor. Lord Northbrook bad enlarged the surplus to such an extent that be thought it right to abolish the income tax. He thought the abolition of that tax was a matter to be regretted; but it had been abolished under peculiar circumstances, and it was one thing to abolish a tax and another to re-impose it. Prom the period at which the income tax was abolished up to the present time, there had been long-continued famines in one part of India or another, which bad entailed an expenditure of £16,000,000, adding £360,000 to the permanent expenditure of that country. The fall in the value of silver had imposed another charge, which could not be estimated at less than £1,500,000. There had also been an increased expenditure for military organization. Taking these amounts 479 altogether, India had during the last four or five years to meet additional charges amounting to £3,000,000, and that had eaten up the whole of the surplus. Sir John Strachey had pointed out how they would obtain a surplus of £500,000, which was insisted upon by the Secretary of State, and also an insurance fund of £1,500,000 per annum to provide against famine. He proposed to do this by a series of wise administrative changes, and giving the Local Government greater control over the Civil Service. He in this way saved in this year and the next £400,000. That would leave £1,100,000 to be provided for, and he proposed to raise by land cess £450,000, and by licence taxes £650,000; Madras and Bombay being exempted from the land cess. He further proposed to hand over to the Local Government additional means to construct irrigation works and railways. He proposed to lay the foundation of a great fiscal and financial reform—namely, an equalization of the salt duty in India. The salt duty of India was said to be crushing; but where? Not in Madras and Bombay, but in Bengal. At the present moment the rate in Bengal was 52 annas per maund. The rate in the North-west and other parts of India was 48 annas. In Bombay and Madras it was 29 annas. It was the duty of the Government to equalize, not by levelling up, but by levelling down. But it was impossible to level down to the level of Bombay and Madras without sacrificing a very large part of the revenue. Were we, then, to sit still and never attempt to equalize the duties of India? There was one course that might be adopted— namely, that of raising, to a certain extent, the duty in Madras and Bombay and to level the duty in Bengal down to that which was proposed in Madras and Bombay. That was what Sir John Strachey proposed. He proposed to exempt Bombay and Madras from the land tax. It would be reversing the principle of local rule and responsibility to lay down a rule that when a locality suffered a calamity all others were to bear the taxation necessary for its relief; yet that would be the result of Sir John Strachey's proposals if he had not put additional taxation upon Madras and Bombay. He objected to put it in the shape of a land cess, because the land revenue was high, and impoverished 480 people would have difficulty in paying a land cess, which would become payable at certain stated intervals. Therefore he proposed to bring the salt duty in Madras and Bombay to the level which he proposed for the whole of India—namely, 2 rupees 8 annas. An increase of 12 annas was, no doubt, a considerable one; but the raised duty would still be below the present rate in Bengal, which was to be reduced by 2 annas, while that of the North-west Provinces and elsewhere would be reduced by 4 annas. These changes were not made capriciously simply to increase taxation, but they were made to accomplish reforms and equalization, and to facilitate the abolition of the inner Customs' line of 2,000 miles, which reflected little credit on our administration. It would not be possible to carry out these reforms with a lower duty on salt. Negotiations were being carried on with the Native Princes on the other side of the line, and when these were completed there would be a uniform duty on salt throughout India. All other forms of taxation had been considered, and preference given to the increase of the salt duties, which amounted to only 2d. a-head, and would not be payable all at one time; while the change embodied the germ of a great fiscal reform and furnished the means by which Madras and Bombay would contribute their fair share towards a famine insurance fund. If the Amendment should be accepted the whole equilibrium of the Budget would be destroyed, and the most important of the reforms proposed would be indefinitely postponed. Notwithstanding all the criticism indulged in, no alternative was offered; yet it was proposed that the House should incur the serious responsibility of interfering with the functions of the Indian Government, which after mature deliberation had adopted a form of taxation preferred by the people, of whom 147,000,000 were now paying a tax higher than that proposed, which would be an advance to 45,000,000. He had always taken a sanguine view of the salt tax, and believed that reduction of the tax would be followed by increase of consumption. If that anticipation were realized, the Finance Minister would be able to reduce the rate for all India to the present rate for Madras and Bombay. Sir John Strachey had sketched reforms 481 which would be of great utility, and he hoped the House would not, on a plausible Motion directed to the weakest part of the Budget, postpone indefinitely reforms which would confer great benefits on the people of India.
§ MR. LYON PLAYFAIR
The subject upon which we are asked to pronounce an opinion by the hon. Member for Kirkcaldy is one of no ordinary importance. I agree with the noble Lord who has just spoken that we ought to discuss the Budget with moderation, for there is no doubt that Sir John Strachey, in his recent able speech on Indian finance, has proved the need of increased taxation with the view of forming a famine insurance fund. That is to amount to £1,500,000, and he derives that sum by taxes on land and licences on trade. In addition to this sum, however, he proposes to raise £500,000 as a surplus on revenue in ordinary years. This £500,000 is to be obtained by raising the tax on salt in Madras and Bombay about 40 per cent on its present amount. He takes credit that while he thus largely augments the tax on these Presidencies, containing 47,000,000 of people, he actually reduces the tax in Bengal and Northern India, containing 137,000,000 of people. This is a taking statement, but as my hon. Friend shows, it in reality means that a heavy tax is made more heavy in Madras and Bombay, by at least 10d. per family, while it is lightened in other districts by about 3d. A salt tax is not peculiar to India. It is an ancient form of tax, established by the Romans, and has existed in almost every land. But since science showed how essential salt is as a necessary of life, the tax has been growing into disfavour, and when it was found to cramp the growth of manufacture, England long ago abandoned it as a source of revenue. Sir John Strachey adduces France as an example of a country which has increased the salt tax in recent years. France may be used as a warning, but scarcely as an example for imitation, as the history of her salt tax has always been lamentable. Its oppressiveness did more than any other single cause to bring on the Great Revolution, and its incidence in modern times has prevented the growth of manufactures in France. One strong objection to a salt tax is that it forms a poll tax of the worst description. The old poll 482 tax did discriminate persons according to their ability to pay, but a salt tax presses on every man, woman, and child in the same way. The beggar must pay just as much of it as the Prince or rich trader; for salt is as necessary to human existence as air or water. It is more oppressive than ordinary taxes on food. A tax might be levied on every cultivated food, and still the poor man, unable to pay it, might live on herbs, or slugs, or caterpillars; but there are three things he must have—air, water, and salt— and in India we tax heavily one of these three essentials of life. The blood cannot be formed without salt, which indeed forms more than 50 per cent of its incombustible ingredients. All the animal juices likewise contain it. Hence every human being must consume a definite quantity each year, so that a salt tax becomes a universal poll tax. And it is upon this absolute essential to life that there is to be an increase of 40 per cent of tax levied from the inhabitants of Bombay and Madras. The famine in these districts has scarcely passed away, and upon their weakened populations this increased tax is to be levied. A tax on salt is especially heavy on a population like that of India, which chiefly lives on starchy food. Less salt is necessary with an animal diet than with one which has for its staple such food as rice or potatoes. We recollect how much salt the Irish used with their food before the potato famine, and the same requirement is felt by the rice-feeding people of India. If the supply of salt be stinted in such conditions, the health of the population suffers materially. In the districts of France, which purchased immunity from the Grande Gabelle, the consumption of salt was 181b per head. But in the, taxed districts it was slightly over 9lb This experience has also occurred in India. Formerly the consumption in India is said to have been 15 to 161b per head; in Bengal it is now 10 to 111b. In Bombay, under the discontent of a severe law, it sank down a few years ago to the minimum of 9–71b. Below that even the new tax can scarcely depress it. But diminished consumption means diminished health of the people, so that the expected surplus of £500,000 may soon vanish in the heavy charges which result from a decreased productive power of a population. I 483 would point to another fact, which shows that no worse means could be found for increasing revenue than an augmentation of the salt tax. Salt is one of the most important materials of manufacturing industry. The products coming from it are essential for the bleaching of cotton goods, for the manufacture of soap, of glass, of earthenware, and many other industries. If any Chancellor of the Exchequer ventured to re-impose so low a duty as 5s. per ton on salt in England, he would produce such agitation among the leading industries of this country that he could not hold his office for three weeks. The new equalized duty in India is not 5s. but 140s. per ton. How can India be expected to gain any industrial or commercial prosperity while she is burdened by such a tax? Even the curing of food cannot be properly carried on in India; and I observe in the last Report on the material condition of India that complaints are made of the Madras people eating imperfectly cured fish in order to save salt, and a timid proposal is made that a few yards in Madras might be opened for curing fish with salt supplied by the Government at a cheap rate. Sir John Strachey refers us to France, and I would remind the House that France liberates her salt for curing food, for the purposes of agriculture, and for the feeding of cattle. But India is very timid in all these matters. I see that the Bengal Government allows salt to be imported into Calcutta for earthenware, and this is a step in the right direction. But manufactures in India are of less importance than formerly. Where are now the exports which once wore so characteristic of Bengal? In the last Report on India only three-quarters of a page is given to the whole Subject of manufacture. If the old manufactures of India ceased to be in demand in the markets of Europe, surely it was the duty of the Indian Government to stimulate the growth of fresh industries. But this is impossible with a heavy salt tax, producing one-sixth or seventh of the whole revenue. The cotton growth in India might be made into saleable goods, were it not for the enormous tax on the salt, which is required to produce the soda, the soap, and the chlorine to bleach it. India has ample materials for glass and earthenware, but the salt tax again strangles these industries. It is quite true that 484 the larger subject of the tax of £6,000,000 upon salt is scarcely raised upon the presentissue of increasing it by £500,000. But the impolicy of the tax forces itself upon our attention when it is again used as a means of augmenting the revenue. The whole sum is a small one, and might surely have been provided from a less objectionable source. Considerably more than that amount has been saved since the time of Lord Mayo by improvements in provincial administration. Surely economy in other directions might have prevented the imposition of £500,000 on the salt consumed by famine-stricken populations. We have now the opportunity of expressing our disapproval of this proceeding, and such an expression of opinion may in the future have an effect in mitigating the severity of a tax which now diminishes the free use of this necessary of life, and which stunts the growth of manufactures in India.
§ MR. ONSLOW
suggested that hon. Members were entering into discussion of these matters rather in the dark, seeing that the Budget of Sir John Strachey was not yet officially before the House. The hon. Member for Kirkcaldy (Sir George Campbell) had used very hard words against the salt tax; but this was not the only tax in India against which hard words had been uttered. The opium tax had also come in for its share of reprobation; but if those taxes were reduced or done away with, he feared the finances of India would not long be in even so satisfactory a position as they were in now. This was an exceptional time in India; the finances of that country had been stretched to a great degree. Sir John Strachey had thought it advisable to raise additional taxation, and the question was, how that additional taxation should be raised—whether by again imposing an income tax, by a universal licence tax, or by enhancing the duties on Customs. This salt tax was a portion of a great scheme. No doubt it did affect a large portion of the people of India; but in such an emergency as the present, it was the duty of everyone, high and low, to assist Her Majesty's Government in extricating the finances of India from their present state. It was the duty of everyone, whether in India or in this country, to contribute something towards the maintenance of the State. It, therefore, seemed to him right to enhance, to a 485 certain extent, the duty on salt. It should, however, be remembered that the tax would be decreased with reference to the majority and enhanced only on the minority. As to the rich not being taxed, it should be remembered that during the last few years local taxation in India had increased to an enormous extent, and that these local taxes hardly touched the poorer classes in the different Local Governments, but fell almost exclusively on the rich. [Sir GEORGE CAMPBELL: No, no!] It was said that Lord Lytton feared the Press; but if that was so he was the first Viceroy of India that ever did. He could not help thinking that Sir John Strachey had exercised a wise discretion in proposing this additional small burden on what might be called the necessities of the poorer classes; and he trusted that the hon. Gentleman opposite would not, in the absence of Sir John Strachey's Budget or official information, think this the proper time to press his Motion.
MR. GRANT DUFF,
after pointing out that Sir John Strachey had been a most zealous advocate of various schemes for increasing the supply of salt, and referring to a speech which, when travelling in India, he had heard Sir John Strachey deliver at Sambhar, regretted that this moment had been chosen for raising the salt question, and said that while agreeing with all that had been said by his right hon. Friend (Mr. Lyon Playfair) as to the importance of salt to the Natives in India and to manufactures, he felt sure that the Budget of Sir John Strachey had been absolutely dictated by circumstances. There was a very large deficit to fill, and how was it to be filled? His hon. Friend the Member for Kirkcaldy had shown that it could not be filled merely by a diminution of expenditure; and with that he himself entirely agreed, very little remaining to be done in that way. Well, then, was the income tax to be revived? His hon. Friend did not say in so many words that it ought; but his whole speech pointed in that direction. He himself had never hesitated to declare his opinion in favour of a light income tax as a permanent source of revenue in India; but, surely, this would have been a particularly unlucky moment to have chosen for renewing the income tax. No one would suggest that it 486 should be imposed merely upon the rich Natives. They could imagine what an outcry would be raised if that had been proposed; nor was it a time to impose it on the European population, which had lately suffered greatly from the rates of exchange. Were we, then, to have a tobacco tax? He did not think his hon. Friend would be prepared to propose such a tax at a sufficiently high rate to fill this deficit. There were other taxes to be proposed, but they were considered one by one by Sir John Strachey and rightly put aside. Were we to fall back on an increase on the Customs duties? We had lately listened to denunciations of Customs duties upon cotton, with which he (Mr. Grant Duff) entirely sympathized, and were Sir John Strachey to propose an increase, he would be likely to hear a good deal against it. Nothing could be done in the circumstances, he thought, but by this slight addition to the salt tax and the other taxes proposed, to which he did not understand his hon. Friend to object. Although by this Budget the price of salt would be considerably augmented to a portion of the people, it would be slightly diminished to a much larger number; and he conceived that the measure, as a whole, was intended to arrive at that equalization of the salt tax, which was one of the things that every person who had seriously considered Indian finance desired to arrive at as soon as possible. He conscientiously believed that both Sir John Strachey and Lord Lytton, in all their dealings in this matter, did what they believed was best for India, and were not in any way actuated by fear of Press attacks. He had the pleasure of knowing personally both of those gentlemen, and he was sure that they were not men who would be turned away from any course which they thought right and just by the clamour of the Indian or any other Press. With regard to the conduct of Lord Lytton, he had come to a conclusion very different to that which his hon. Friend had formed. He had read State Papers his Lordship had written; he had narrowly observed his conduct; and had been struck—he might almost say surprised, considering that his previous training had been diplomatic and literary—at the great amount of administrative ability exhibited therein.
§ GENERAL SIR GEORGE BALFOUR
asked the noble Lord (Lord George Hamilton) to apply his intelligence and influence to some measure for obtaining additional revenue from a new source, and that new source he might find in a field already open to him—namely, in encouraging the cultivation of waste land, of which there were some 20,000,000 acres in the Madras Presidency. The noble Lord had forgotten that while the consumption of salt in Bengal was only 101b per head, in Madras it was 181b her head, for the simple reason that the food used in the two Presidencies differed so greatly. The surplus revenue of the Madras Presidency was at least £3,000,000, which was used for constructing railroads and other public works in different parts of India. He was of opinion that we had in every way insulted the Madras Presidency, which had always been loyal to this country. We had lowered the Army, taxed the people, and done all kinds of things that were wrong. At one time even the very dancing girls were taxed. With regard to the famine, he hoped the Secretary of State would take into consideration the question of taxing the Madras people for a famine which was owing to the neglect of the Government of India, for the money uselessly spent at Madras might have saved the people from such a visitation, if it had been expended carefully on proper means of providing an abundant supply of water. As to salt, nothing was more important to the health of the people of India than salt supplied at a cheap price.
§ MR. HIBBERT,
although he could not quite agree in all the strong remarks which had been made against Sir John Strachey's proposals with respect to the salt tax, nevertheless regretted that gentleman had not sought to provide in some other way the £500,000 which he proposed to obtain by an increase of that tax. He could not understand why, when he had an opportunity of levying the amount he required by an Excise duty on cotton goods manufactured in India, that opportunity had not been used. That was no new idea. Lord Northbrook had suggested that if it was impossible to take off the import duty on Lancashire cotton goods sent to India, it might become expedient to impose an Excise duty on similar goods manufac- 488 tured in India. Now, he did not see much present chance of the repeal of the 5 per cent duty on English cotton goods imported into India, which yielded £700,000 or £800,000 per annum; and, therefore, they might fairly raise an Excise duty on similar goods manufactured in India, where the millowners not only increased the number of their mills every year, but exported their goods to other places in competition with the manufacturers of this country.