SUPPLY—COMMITTEE. (Hansard, 25 January 1878)

§ MR. LAING,
resuming the debate, observed that the question relative to an income tax for India was by no means so simple and easy as some persons supposed it to be; it was a question which must be decided very much in this country by the weight of authority. Viceroy after Viceroy, and Finance Minister after Finance Minister had gone out to India greatly prepossessed in favour of an income tax; but a very short experience had convinced them that an income tax in that country was a very great evil, and a thing only to be resorted to in the last emergency. He was himself in that position, having gone to India with all his prepossessions in favour of the system of direct taxation which Sir Robert Peel had made the means of relieving the springs of industry at home; but he had not been six months in India before he was converted by the weight of authority, and the solid arguments which were brought to bear against an income tax for that country. Lord Canning, who was a most courageous and conscientious states- 489 man, and about the last man in the world to yield to mere clamour, came deliberately to the conclusion that, right or wrong, an income tax in India was so excessively unpopular with the Natives that its imposition constituted a great political danger. A remarkable saying of Lord Canning to himself on that subject was that, danger for danger, he would rather govern India with 40,000 European troops without an income tax, than govern it with 80,000 with an income tax. Lord Northbrook had also come to the same conclusion. That arose mainly from the extreme difference between Indian society and English society. In India the circumstances of a Native were rarely known. They might see a man in the street who to all appearance looked like a beggar, and yet they would be told that he was almost a millionaire or had a large fortune. They had no means of ascertaining in the great majority of cases what a man's property or income was without a great amount of inquisition; and if there was one thing which an Oriental detested more than another, it was an inquisition of that kind. Cases were said to have occurred in which Natives had hanged themselves through fear and alarm of an inquisition into their private affairs. It was all very well to say that statesmen could legislate in these matters on abstract principles; but he maintained that they should not ignore the feelings or even the prejudices of a great nation, and no wise statesman would enforce abstract considerations of political economy so as to exasperate the feelings of the mass of the community. Again, in levying an income tax, they must rely to a very great extent on Native officials, who would in many instances make the tax an instrument of extortion. But the most cogent argument, perhaps, against an income tax in India was that it produced a miserably small sum. If he were responsible as Finance Minister, and could raise £6,000,000 or £7,000,000 by an income tax, and get rid of the salt duty altogether, he was not prepared to say that he would not brave the unpopularity of such a measure. But there they had the maximum of unpopularity with the minimum of result, for no income tax in India had given them over £1,000,000, and they could 490 not expect more from it—for the sake of such a sum it was not worth while imposing a tax, which, as Lord Canning said, was such a political danger that they must govern with a large Army to guard against it. The question, in fact, was political as well as fiscal. He did not say that the import duty or the salt tax was good, but it would, be difficult to get rid of either of them without imposing the income tax or letting the deficit run on. In his own mind he doubted whether any hon. Member who had spoken against the salt tax would venture to take it off if he had on his own responsibility to find a substitute. His experience in these matters was that it was best to support the Government unless they made any palpable and considerable blunder.

§ MR. O'DONNELL
called attention to the social and political drawbacks attending the income tax, the land tax, the salt tax, and the opium tax. The first three crippled the resources of the country, the land tax being also a hindrance to any effective steps being taken to check the recurrence of famine; while the opium tax was likely to involve us in hostility with China, a Power whose military strength had been too much underrated. The time was, he considered, come for re-casting the whole system of Indian taxation, and reducing the expenditure of the Government.

§ SIR GEORGE CAMPBELL
intimated his willingness not to press his Amendment at the present moment, when hon. Members were not in full possession of the Papers. He stated that he would have no objection to a licence or tax on trades, provided the Government met the deficiency without resorting to the salt tax.

§ MR. FAWCETT
agreed with the Under Secretary for India that the House could not consider this question properly unless it was in possession of the whole of Sir John Strachey's financial proposals. He wished to ask the noble Lord whether, if he moved as an unopposed Return for Sir John Strachey's speech, there would be any objection to produce it?

§ LORD GEORGE HAMILTON
said, he intended to lay on the Table of the House not only the Financial Statement of Sir John Strachey, but the whole of the discussions upon it in the Indian 491 Council, but he should prefer that no Motion was made on the subject.