THE SINGLE EXCISE TAX. An excise tax, as that phrase was used before differentiated from import duties, implies an assessment levied on the producer or the dealer in the expectation that its payment will be transferred to consumers in proportion to their respective expenditures. The propriety of calling an excise tax a single tax rests upon the assumption that the basis of its levy is the domestic budget. It is a single tax in the sense that it is imposed on family or personal expenditures.
The enthusiasm with which excise taxes were regarded by the eighteenth century was due to the thought that none could avoid them. Consumption being the only fact of life common to all citizens, a tax on consumption was accepted as a means of securing universality of contributions for the sup port of the State. It was a part of the doctrine of eighteenth century liberalism to approve the excise taxes, and of conserva tism to oppose them; for the liberals in this controversy were the middle classes, on whom public burdens rested after the de cay of feudalism, while the conservatives were the nobility and clergy, who, according to common practice, were exempt from many of the pecuniary burdens imposed by the State. But it cannot be denied that the simplicity of the excise tax, as it was at first conceived, was greatly in its favour, and that this argument, common to all schemes of single taxation, could be urged, so far as formal logic was concerned, in favour of an ex clusive and comprehensive excise tax. It is not strange, there fore, that " the excise taxes of the seventeenth and eighteenth centuries were regarded by financiers as the principal form of taxation destined, if not to replace all other kinds of im post, at least to hold the principal position in the fiscal system." No extended argument is needed to show wherein this theory erred. An excise system is a single-tax system in name only, for, although it accepts expenditure as the basis of payment, it does not bear a common significance to all classes in the community. Expenditures develop with ex panding income. They follow certain more or less rigid psychological and social laws. Commodities vary in their economic character according to the grade or persistence of the want they are designed to satisfy. As the sense of equity in taxation grew, being one phase of the growth of demo cratic sentiment, these psychologic differences in the varying sorts of expenditure led to the classification of commodities, and to the assignment of different rates of taxation to each class; that is to say, the demand for equity in the administra tion of excise taxes led to the adoption of measures which destroyed the simplicity of the system, and in this manner broke the force of one of the arguments by which the theory of a single-tax excise was supported.
It is not necessary to rely for analysis upon this conclu sion. In no country in the world have excise taxes been used as a system of general taxation without drifting into a con fusion of imposts, and calling sooner or later for radical re forms. In 1672 William Temple declared of the Holland system of excise taxes that any one who ate a dish of fish in Holland paid thirty different taxes when settling the bill. In the year 1817 there were in force in Prussia fifty-seven tolls and excise tariffs comprising 2775 articles. The financial reform which took place in England in the nineteenth century resulted in the abandonment of the general import duties, these being regarded as excise duties within the mean ing of this discussion, and the substitution for them of an import duty on a few carefully selected commodities. Thus the history of the excise taxes, where they have been tried, shows that they cannot retain their simplicity and at the same time retain their character of a general excise system. The demand for justice of payment as between citizens must destroy inevitably the simplicity of the tax in its original form.
There is another reason why " taxes on consumption " cannot be accepted as an adequate basis for a fiscal system. They are not universal in proportion to income, for their payment may be evaded by a penurious system of living. This consideration was regarded lightly so long as the classi cal doctrine of capital building retained its influence. Ac cording to this doctrine capital was built out of personal savings. and, should one evade payment for the support of the State by curtailing expenditures below what is socio logically warranted by his income, he must nevertheless of necessity serve the public, because what he saved would be converted into capital for the advantage of the public. This is no place to consider the economic theory of capital, but, to state the situation in mild language, the doctrine that the industrial development of a nation is dependent upon the per sonal savings from private incomes has been surrounded by so many modifications as to render it of comparatively little importance in the discussion of any industrial or financial question.
For two reasons, therefore, it is not possible to consider excise taxes as a satisfactory basis of the system of single taxation. Its simplicity is apparent rather than real, and it does not guarantee universal contribution from those who pay taxes in proportion to ability to pay.