ftABIAN <9~AGTI1 Ro. 3~. 


A DEMOCRATIC BUDGET. 


PUBLISHED BY 

THE FABIAN SOCIETY. 

"He who, as a tradesman, a manufacturer, or an artizan, earns an income 

by daily work, may run the risk of its diminution to-morrow; and he is unjustly 
-taxed if he is expected to pay as much as t11,e man who has only to take a pair of 
scissorti and clip' coupons, or to write a receipt for the tenant who pays him rent." 
-PRINCE BISMARCK, Feb. 11th, 1881. 

PRICE ONE PENNY. 

'To BE oBTAINED oF THE FABIAN SociETY, 276 STRAND, W.O. 

AUGUST 1892. 


~ubgef. 

The N a tiona! H ousekeeper. 

Trm CHANCELLOR OF THE ExcHEQUER is the member of the Cabinet 
·Nho undertakes the nationn.l housekeeping. Every year he has to 
arrange for the expenses of the Army n.nd Navy, the Civil Service, 
the n.dministration of justice, national educn.tion, and the interest on 
tbe National Debt. When he sits down to count up what he will 
have to spend, he finds that he cannot get out of it under eighty-
odd million pounds for the year. 

I 
I 
Now, to pay this he has only got some four millions coming in 
from the profits of the Post Otlice, the rents of Crown lands, the 
interest on the shares which England holds in the Suez Canal, and 
one or two other matters. All the rest he can get only by levying 
taxes on us. And he cannot, as things stand at present, raise the 
whole sum by one sort of tax alone. For instance, if he were to 
try to raise it all by a tax on tobacco, tobacco would be made so 
dear by the heavy duty needed to make up so huge a sum, that it 
would be impossible to sell enough to bring in the tax. Suppose, on 
the other hand, that he were to propose to raise it by a direct tax 
on the incomes of rich men, the House of Commons, which wnsists 
mainly of rich men, woulil. refuse to give him the authority to collect 
such a tax. Consequently, he has to plan and contrive and calculate · 

how he may best get th money together by getting a little from one 
sort of tax and a little from another. When he has made up his 
scheme of taxation, he brings it before Parliament; and it is this . 
scheme which we call the Budget. If Parliament approves, the 
Budget is rut into an Act of Parliament, giving the Chancellor of · 
the Exchequer powe1· to collect the taxes in the Budget with all the 
authority of the Sttttc; so that the collectors and excisemen set 
about their work with practically irresistible powers of compelling 
us to pay. Thor is n app al against a tax that has been assessed 
COLTectly in accordance with Act of Parliament. If any citizen 
were to re ist it on the ground that Governments have no right to. 
con 5 cato privn.Lc prop rty for public purposes, or v\·ere to describe 
su h tt proceeding ItS" plunder" or" spoliation," or to demand compenstttion 
for hi lo s, or to object on principle to contribute moneyfor Ruch purpo cs tts making war and executing sentences of capital 
punishment, f which many persons con cientiously disapprove, he 
wouU not be listened to for a moment; he would be simply forced 
to pay xactly as if the tax were a debt which he had voluntarily 
c ntmcted. The Chancellor of the Exchequer may be the most 
1111. crupulous financier in th world for all the tax collector cares. 
One the A ppropritttion Act pas cs, it is too bte to protest, for that 
)'<'n:· <tt any rate. The citizen can only protect himself by looking to . 


A Democratic Budget. 

the matter well beforehand, and using his vote so as to prevent unscrupulous 
financiers from getting into Parliament or into office. 

In making up a Budget, a Chancellor of the Exchequer cannot 
proceed according to his own ideas of fairness. There is no use in 
his a3king for taxes which the members of the House of Commons 
are unwilling to sanction, or which their constituents will not let 
them sanction. No Chancellor dare propose a tax that will offend a 
million voters at the next election, unless it is equally likely to gain 
over to his party more than a million other voters. And it must be 
remembered that every tax offends some class of voters. The old 
taxes on hearths and windows offended everybody, because they had 
to be paid by everybody; and the same may be said of the present 
taxes on tea, coffee, cocoa, raisins, beer and tobacco. But taxes on 
armorial bearings and powdered footmen only annoy the upper classes, 
and are popular with the masses. The higher the income tax is, the 
better pleased are all those who are exempt from it, and the more 
indignant all those whose incomes are above the level of exemption. 
Generally speaking, too, indirect taxation annoys people far less than 
direct taxation, because they pay without knowing it. For example,
working-men pay a shilling for threehalfpenceworth of tobacco without 
much grumbling; whereas if a tax collector were to call and demand 
lO!d. from them every time they bought threehalfpenceworth of tobacco, 
they would regard it as a most monstrous imposition, though it 
would not in reality cost them a farthing more than the present system. 

These considerations will explain how it is that Budgets are 
always made up so as to throw the burden of taxation most heavily 
on those whose votes and political influence the Government has the 
least reason to fear; whilst the rich and politically well-organised 
classes are only asked to make up any deficiency which remains 
when the utmost has been got out of their poorer neighbors. At 
present, though the votes of the working-classes turn a large majorityof the elections throughout the country, yet they are so ill-organised, 
so easily led away by the fine phrases of the political leaders of the 
upper classes, and so deficient in any genuine, practical, business-like 
knowledge of politics and finance, that every year brings us a Budgetcrammed with anomalies and absurdities, every one of which is in 
some way advantageous to the powerful property-owning class and 
injurious to the working-man. The rich are favored at the expenseof the poor; the landlords and the capitalists at the cost of their 
tenants and wage-servants. The national expenditure, instead of 
being directed exclusively with a view to the public good, is so 
managed as to afford a large amount of what Cobden rightly described 
as " outdoor relief " for the poor relations of the aristocracy;
whilst the humbler servants of the State often receive only the wages 
of the sweater's den. The accounts of these matters, instead of being 
published in a clearly intelligible form, are purposely allowed to re· 
main involved in needless obscurity, lest the public should insist on 
reforms inconvenient to the permanent officials and their patrons.

"Financial Reform," in fact, means something difi.erent in 
the mouth of every class that professes it. Both Liberals and 


I A IJemocratic Budget. 
Conservatives clamor for it; but each party really does as little 
as it can in the matter from the working class point of view. 
Conservative finance is avowedly directed towards a diminution 
of what the party writers call the " burdens" on land, instead of 
towards an increased appropriation for the public use of that rent 
which tho labor of the community creates, and which is now pocketed 
by the idle landlord. Liberal finance is rich in promises as to the con-
version of direct into indirect taxation; but it has been, of late, poor 
in performance. Neither party exhibits any determined intention to 
bring about that Democratisation of Finance which must, sooner or 
later, follow the extension of the franchise to the working classes. 
In the following pages an attempt is made to give a concise 
account of the present system of our national finances, together with 
a program of immediate practicable reform, both in taxation and 
expenditure, that may fairly be insisted upon from any Chancellor 
of the Exchequer and any Government professing to act in the 
interests of the people. 
Where the Money Comes From. 
The main source of the national revenue to-day is taxation, 
which is of a dual character-indirect, by means of the duties of 
Customs and Excise, &c., and direct (i.e.,levied directly and avowedly 
upon the payer himself and not upon the goods he purchases), by 
means of the Land Tax, Income Tax, Death Duties, &c. The 
secondary sources of revenue consist of (1) the profits arising out 
of the Postal and Telegraph Services, and the administration of the 
Crown Lands-public property which, according to a constitutional 
fiction, is surrendered by the sovereign in return for the Royal Civil 
List ; (2) dividends on the Suez Canal shares and interest on certain 
loans; (3) the miscellaneous revenue, which is a financial hotch-
potch consisting of a variety of items such as passport and natural-
isation fees, fees paid by pedlars and London chimney sweeps, profits 
on the bronze coinage, sale of waste paper, legal fees, patent fees, 
Conscience-money, and money paid for admission to the National 
Gallery, the Tower, South Kensington Museums, &c. 
Land Tax 
Income Tax 
IIouse DutyDeath Duties 
Revenue for the yeo.r lS!J0-1. 
£ 
1,025,000 
13,144,000 
1,526,000 
7,443,000 
Total Direct Taxes .. 23,13 ,000 
Customs 
Excise .. . 
Stamps .. . 
Total Indirect Taxes. 
19,895,000 
24,723,000 
5,970,000 
50,5 ,000 
Average per Family. 
£ s. d. 
0 2 8}
1 14 9-
0 4 0}
0 19 8~-
3 1 2} 
2 12 8}
3 5 6 
0 15 9t 
6 11 0 
I A IJemocratic Budget. 
Conservatives clamor for it; but each party really does as little 
as it can in the matter from the working class point of view. 
Conservative finance is avowedly directed towards a diminution 
of what the party writers call the " burdens" on land, instead of 
towards an increased appropriation for the public use of that rent 
which tho labor of the community creates, and which is now pocketed 
by the idle landlord. Liberal finance is rich in promises as to the con-
version of direct into indirect taxation; but it has been, of late, poor 
in performance. Neither party exhibits any determined intention to 
bring about that Democratisation of Finance which must, sooner or 
later, follow the extension of the franchise to the working classes. 
In the following pages an attempt is made to give a concise 
account of the present system of our national finances, together with 
a program of immediate practicable reform, both in taxation and 
expenditure, that may fairly be insisted upon from any Chancellor 
of the Exchequer and any Government professing to act in the 
interests of the people. 
Where the Money Comes From. 
The main source of the national revenue to-day is taxation, 
which is of a dual character-indirect, by means of the duties of 
Customs and Excise, &c., and direct (i.e.,levied directly and avowedly 
upon the payer himself and not upon the goods he purchases), by 
means of the Land Tax, Income Tax, Death Duties, &c. The 
secondary sources of revenue consist of (1) the profits arising out 
of the Postal and Telegraph Services, and the administration of the 
Crown Lands-public property which, according to a constitutional 
fiction, is surrendered by the sovereign in return for the Royal Civil 
List ; (2) dividends on the Suez Canal shares and interest on certain 
loans; (3) the miscellaneous revenue, which is a financial hotch-
potch consisting of a variety of items such as passport and natural-
isation fees, fees paid by pedlars and London chimney sweeps, profits 
on the bronze coinage, sale of waste paper, legal fees, patent fees, 
Conscience-money, and money paid for admission to the National 
Gallery, the Tower, South Kensington Museums, &c. 
Land Tax 
Income Tax 
IIouse DutyDeath Duties 
Revenue for the yeo.r lS!J0-1. 
£ 
1,025,000 
13,144,000 
1,526,000 
7,443,000 
Total Direct Taxes .. 23,13 ,000 
Customs 
Excise .. . 
Stamps .. . 
Total Indirect Taxes. 
19,895,000 
24,723,000 
5,970,000 
50,5 ,000 
Average per Family. 
£ s. d. 
0 2 8}
1 14 9-
0 4 0}
0 19 8~-
3 1 2} 
2 12 8}
3 5 6 
0 15 9t 
6 11 0 

.A IJemocratic IJudget. 

Post Office (net profit) ... 
Crown Lands 
Interest, &c. 
Miscellaneous 
3,668,000430,000242,000 
2,979,000 
0 
0 
0 
0 
9 8! 
1 1t 
0 H 
7 10l 
Total Net Revenue ... 81,045,000 10 14 6! 

The Proper Principles of Taxatibn. 

The four canons of a rational and equitable system of taxation 
laid down by Adam Smith in his "Wealth of Nations," although 
never fully applied, have been accepted in theory by all economists 
and Chancellors of the Exchequer since his day as th.e fundamental 
principles of an ideal system; and attempts have been made from 
time to time to make our budgets more nearly conform to this ideal. 

Adam Smith asserted that (1) "The subjects of every state ought 
to contribute towards the support of the government, as nearly as 
possible, in proportion to the revenue which they respectively enjoy 
under the protection of the state. (2) The tax which each individual 
is bound to pay ought to be certain, and not arbitrary. The 
time of payment, the manner of payment, the quantity to be paid, 
ought all to be clear and plain to the contributor and to every other 
person. (3) Every tax ought to be levied at the time, or in the manner 
in which it is most likely to be convenient for the contributor to payit. (4) Every tax ought to be so contrived as both to take out and to 
keep out of the pockets of the people as little as possible, over and 
above what it brings into the public treasury of the state." 

Moreover, in an advanced and densely populated industrial community, 
taxation of unearned incomes is the only effective way of 
reclaiming for the benefit of the whole community "the unearned 
increment," or advantages derived from natural monopolies. 

Taxation as it Now is. 

Under our present system of taxation, every one of these rules 
is set at naught. Not only is there no serious attempt made to 
secure the unearned increment, but more than two-thirds of the 
revenue is raised by means of taxes which flagrantly infringe the 
fundamental principles of equality of sacrifice, certainty and simplicity, 
convenience, and economy.

In the first place, the revenue from indi1·ect enormously exceeds 
that from di1·ect taxes. Out of every twenty shillings we raise in 
taxes, 14s. 5td. is collected in the form of Customs and Excise 
duties. These taxes, though they are spent for the benefit of the 
whole nation, have to be paid wholly by the consumers of the particular 
commodities on which they are levied. This system of taxation 
is condemned in theory by all economists, and indeed by all 
statesmen when they are in opposition to the Government. Even 
by statesmen in office it is being gradually abandoned. 

In 1842 there were 1200 articles in the English Tariff of ImportDuties. Now there are less than fifty. The principal articles which 


now contribute to the Customs revenue are beer, mum, spruce,
chicory, cocoa, chocolate, tea, coffee, currants, figs, prunes, raisins 
and other dried fruits, rum, brandy, gin and other spirits, tobacco, 
cigars, snuff and wine-a sufficiently long list for a country boastingof its adherence to Free Trade principles. The revenue raised from 
Customs and Excise amounts to £44,500,000 annually, of which 
£19,300,000 come from spirits, £1,300,000 from wine, £9,400,000 
from beer, £9,700,000 from tobacco, £4,200,000 from coffee, cocoa, tea, 
&c., and dried fruits, and £600,000 from a number of smaller items. 

6 A Democratic Budget. 
Who Pays the IndireCt Taxes. 
Taxes upon food and other necessaries of life are obviouslyobjectionable, and as a general source of revenue are no longeradvocated in this country by practical politicians. The present 
remnant of these taxes is maintained on the ground that without 
them the working-classes would not contribute to the taxation of the 
country at all. But this argument misses the crucial point of modern 
industrial life. If idle men grow rich on the rents and dividends 
produced by the labor of workers, it is folly to pretend that the 
Income Tax paid by such rich men is not contributed by the workingclasses. It is by the deduction of rent and interest from the 
worker's share of what he produces that his wages are reduced 
either to bare subsistence point, when taxation is impossible, or to 
within such a small distance from it that every addition to his 
burden in the shape of taxation necessarily tends to render his 
position more precarious than ever. As Mr. Gladstone once said, the 
taxes on the earnings of the people " form in no small degree a 
deduction from a scanty store which is necessary to secure them a 
sufficiency, I do not say of the comforts of life, but even of the primenecessaries of clothing, of shelter, and of fuel." 
But the present Customs and Excise Duties press much more 
heavily on the poor family than on the rich. From the particularsgi\'en in a return of Working Men's Budgets issued in 1889 by the 
Board of Trade (C-5861), it has been calculated that whilst the 
income tax payer pays 7-!-d. in the £, the average artizan purchaseshis exemption from income tax by paying 15}d. in the £ in indirect 
taxation. Tea at 4d. a pound is taxed at the same rate as that sold 
at one guinea an ounce. For every shillingsworth of tobacco boughtby the poor man, lO~d. is tax; whilst the rich man who smokes 
cigars a ls. a piece, oul.y pays from 2d. to 6d. tax, because the same 
rate of duty is paid on the common tobacco as on the finest leaf for 
making cigars. For every shilling spent ou cocoa, lid. goes for the 
tax ; for every shillingsworth of coffee bought, 2~d. is tax ; for 
currants ld., and for raisins 2~-d.; and these are all articles of daily 
use among the masses. 
The proposal to remedy the admitted grievance of a dispropor-
tionate tax on tea and tobacco bv the establishment of duties 
graduated according to value, has ·always been met by an official 
declaration that this is impossible. Probably the oHicials are right; 

A Democratic Budget. 

b ut this matters little, as such taxes, instead of being tinkered, must 
be swept away as the last remnant of an antiquated fiscal system. 
"l'hey not only transgress every one of Adam Smith's canons, but 
.are precisely analogous to hundreds of the taxes long ago repealed 
in the name of Free Trade. They are unequal in their incidence, 
uncertain in their amount, and costly to collect-in many cases they 
·cannot repay the cost of collection. As a recent writer has pointed 
-out, "it takes the same army of watchers, collectors and superintendents 
to prevent the revenue being defrauded when the taxes 
.are small as when they are large. No port can be left unwatched; 
.and the fact that so many ports do not yield enough in duties to pay

the cost of the staff in charge, is an argument used by many for the 
total abolition of import duties." 

The Evils of IndireCt Taxation. 

One objection to indirect taxation is that the individual tax-
J>ayer has no easy means of ascertaining exactly how much he i:'l 
paying year by year, and consequently does not feel the burdcc.. 
The indifference engendered by this fact is the main cause of the 
maladministration of public funds, and the corruption and extrava.
gance that are more or lese characteristic of the public departmentsand other bodies which spend the n3.tion's money. If all taxation 
-weTe direct, every voter would be able to tmnslate into £ s. d. th~ 
exact cost to himself of a war or othe1· piece of national policy fm· 
which he had voted at an election, and thus his pecuniary 1·esponsibitity 
would be bronght home to him. The vast incubus of our National 
Debt, which was placed upon our shoulders surreptitiously, has been 
-tolerated so long and with so little grumbling only because the 
:interest on it is drawn from indirect taxation. We do not realize tha,t 
year by year an average of £3 6s. 3d. per family, or 13s. 3d. per

person, is being paid as interest on a debt incurred generations ago. 

Although the bulk of the revenue arising from indirect taxation 
:is collected by means of the duties of Customs and Excise upon 
articles in general use, there are a few other forms of this kind of 

tax that have not even the merit of contributing very largely to 
the national revenue. The Stamp Duties-other than the Death 
Duties, which are collected by means of stamps-are many of them 
:insignificant and pettifogging, such as the duty of 2s. 6d. which is 
payable upon indentures of apprenticeship, a term which includes 
·every writing relating to the service or tuition of any apprentice, 
·clerk or servant placed with any master to learn any profession,
trade or employment. Others, such as the legal fees and stamps on 
various kinds of commerci<1.l documents, are obstacles to the free 
-course of justice and unnecessary restrictions on the development o~ 
-trade and industry.

The host of licences that have now to be paid annually by appraisers, 
auctioneers, game-dealers, hawkers, pedlars, bouse-agents, 
pawnbrokers, refreshment-bouse keepers, tobacco manufacturers and 
Qealers, plate-dealers, patent medicine vendors, playing-card makers, 


A .Democratic Budget. 


cabmen, and London chimney-sweeps, are absurd restrictions oo 
industry, and cost more to collect than they are worth. Whenever a. 
licence is required for registration or other purposes, there should be· 
no fee charged for what is demanded only for the public convenience. 

The extent to which industry is hampered and ordinary daily 
occurrences obstructed by vexatious duties and licences may be-
illustrated in a homely way :-John Smith, the licensed pedlar,. 
being engaged to be married to Mary Jones, the licensed refreshment-
house kc8per, purchases the marriage licence, and agrees with a. 
licensed house-agent to take a house-the agreement for which has to-
be stamped. On the wedding morning, after chaining up his licensed 
dog, he hires a licensed cab, driven by a licensed cabman, and goes. 
to the cha,pel licensed for the solemnization of marriages, in the 
company of his best man, who is a licensed tobacco-dealer. At the 
chapel they meet the bride, who is accompanied by her uncle the· 
licensed game-dealer, and her aunt the licensed pawnbroker. After 
the ceremony has been performed, the wedding party adjourns to a 
licensed hotel where a meal has been 'prepared, taxed beer being 
brought for the gentlemen and taxed wine for the ladies. The 
breakfast over, the gentleman light up their taxed cigars and drink 
a cup of taxed coffee. The ladies prefer a cup of taxed tea and a slice 
of wedding cake, every raisin and currant of which has been duly 
taxed. The bride and bridegroom once more have recourse to the 
licensed cab to be driven to the station where they take their tickets, 
on which Railway Passenger Duty has been paid, for the place at 
which they are to spend their already taxed honeymoon. 

It is therefore clear that the establishment of the Free,
Breakfast Table (the repeal of the taxes paid on tea, coffee, 
chicory, chocolate and cocoa) about which the Liberals are now 
talking, must include also the abolition of the duties on currants, 
figs, raisins, prunes and other dried fruits; and even then 
the work would be far from complete.* 

* For instance, there would remain untouched the taxes on alcoholic liquors, 
now amounting to £29,000,000 annually. But this question is less within the 
domain of taxation than within that of local administration. The populardemand for the local control of the drink traffic is strictly on Socialist lines; 
but there is great need for careful definition of tho extent to which Local Optionshould be carried. The main evil of the drink traffic arises from the fact that 
the manufacture and sale of alcoholic liquors are in private bauds, and that consequently 
the quality of liquor sold, and the way in which it is sold, are regulated, 
not by consideratior.s of the public welfare, but entirely for the private profit of 
those who sell it. To incite their customers to drink as much as possible, and 
especially to get them to drink the kind of stuff on which there is the largest 
amount of profit, is the natural aim of every private publican. What is wa.nted 
is tho ostab!'.shment of cafes and halls, where, for the expenditure of a few pence,
the Engli hn~an may sit and enjoy himself in the same free and comfortable 
manner as his continental brethren. Let the public house be a place where a. 
man can take his wife and children, and where he shall not be pestered to drink. 
There is no need to abolish the public house, one of the few remaining incentives 
to social life; but the public reading room and the mu~ic hall should be grafted 
on to it. :;-...et us municipalize the public-house and the music hall. 'rhe promised 
Parish Councils, as well as the exi ting Town Councils (and in London th& 

A Democratic Budget. 

DireCl Taxation. 

Our direct taxes do not so glaringly infringe the canons of Adam 
Smith in principle; but they fall deplorably short of his ideal. 
They must be simplified, increased, graduated, levied with equity,
and with some regard to convenience. The present direct taxes ar& 
the Land Tax, the Income Tax, and the Death Duties. 

Land Tax. 

The history of the Land Tax is a most damning illustration of 
the fraudulent way in which the Landlord Parliaments of the pasthave relieved land from the burden of taxation by shifting it on t<> 
the backs of the people. There is an absolute consensus of opinion 
amongst constitutional authorities, that the land of the kingdom is. 
the property of the Sovereign as the head of the State, and that it is 
inalienable except temporarily and on certain conditions. The right of 
resumption by the Crown has never been given up. Prior to 1660 the 
whole burden of military service fell on the landholders of the country.

The State-tenants in the Convention Parliament of Charles II. in 
1660 abolished all the conditions upon which they held their land. 
and, in place of the payments to which they were liable, substituted 
E xcise duties on the drink of the people.

Experience proved that the government of the country required 
some further source of revenue ; and in 1692 it was enacted that a. 
tax of four shillings in the pound should be paid by " every person, 
body politic or corporate, etc., having any estate in ready monies, or-
debts owing to them, or having estate in goods, wares, merchandise, 
or chattels, or personal estate whatsoever within this realm or-
without." By the third section of the Act the profits and salaries 
of all persons having office or employment of profit (except naval 
and military officers) were subjected to the same tax; and then the 
fourth section proceeds to enact a tax on land : " And to the end 
that a further aid and supply for their Majesties' occasions may be 
raised by a charge upon all lands, tenements, and hereditaments with 
as much equality and indifference as is possible by an equal pound 
rate of four shillings for every twenty shillings of the true yearlyvalue, be it enacted that all manors, messuages, lands, and tenements, 
and quarries, mines, etc., tithes, tolls, etc., and all hereditaments of 
what nature soever they be, shall be charged with the sum of foUl"' 
shillings for every twenty shillings of the full yearly value." 

The express enactment, coupled with the rules for assessment. 
shew that the tax was levied as much upon personal estate as upon 
land, in fact that it was a general property tax. The valuation of' 
1692 was most imperfectly made, and is not above suspicion of fraud. 

County Council), should have power to establish a.nd maintain a. sufficient number 
of places for the supply of alcoholic drinks, the proceeds going to the benefiL 
of the community. Thio "municipalization of the public-house" ha.s been in successful 
operation in Sweden a.nd N orwa.y since 1865. The really "public" housa 
should become, under public management, the poor man's club. 


10 A .Democ1·atic Bttdget. 
But although the Act of 1692 was the first of the Land Tax Acts, 
it was not until1798 that the tax was imposed precisely in the form 
which has been preserved to the present day.
Up to 1798 the tax was continued by annual Acts of Parliament, 
the rate varying from four shillings to one shilling in the pound. Bytwo Acts passed in the reign of George III. (38 Geo. III., c. 5 & c. 60) 
the Land Tax was made perpetual at four shillings in the pound on 
the valuation of 1692, on all "manors, lands, tenements, here-
ditaments, mines, ironworks, salt springs and works, parks, chases, 
warrens, woods, fishings, tithes, tolls, annuities:" that is, on all 
profits arising out of real property. The amount to be raised was put 
at £2,037,627. The apportionment of the tax to the various counties 
of England, Wales, and Scotland is still maintained. Each parish is 
now charged with precisely the same amount of land tax as was im-
posed upon it in 1798, except in so far as the tax has been redeemed. 
In no case is the original four shillings in the £ paid at the presenttime. The amount paid varies from 9~d. in the £ in Buckingham-
shire to Oid. in Lancashire; or if the proportion is taken by parishes, 
there are cases in which the rate is as low as a hundredth of a penny in 
the £. In London the tax varies from nothing at all in Paddington 
to lld. in St. Anne's, Soho, and 1s. 3d. in St. Paul's, Covent Garden. 
By the operation of the power of redemption upon payment of a 
lump sum the receipLs have dwindled down to little more than 
£1,000,000. From £3,000 to £1,000 iti redeemed every year. The 
old tax must be got rid of by a compulsory redemption of the out-
standing quotas, and the way left clear for dealing with the whole 
question of the land in the light of modern ideas and knowledge. 
· The Unearned Increment. 
The most pressing point in the laud question to-day is how to 
divert the flow of the unearned increment from the landlords to the 
community. The increased value of land caused by the growth and 
concentration of population, local improvements, the discovery of 
minerals, etc., must be brought into the public pocket. 
In London alone the unearned increment during the twenty-oneyears from 1870 to 1891 amounted to £7,154,844 in annual rental, 
representing a growth in saleable value of more than one hundred 
and ten millions sterling, or over four millions sterling every year. 
It is obvious that the only final method of appropriating the 
unearned increment is by the nationalization or municipalization of 
the land. But as the fee-simple of all the land cannot be appropriated 
at once, and the matter is one of extreme urgency, some other plan 
must be put into operation, if the present daily spoliation of the 
community by the landlords is to be stopped. 
Taxation is the only immediately practicable means of tappingthe unearned increment. 
This is why we must teach our Chancellors of the Exchequer to 
look upon their Budgets, not merely as means of 1neeting the neces-
sary expencliture of the community but also, as Bentham long ago 
10 A .Democ1·atic Bttdget. 
But although the Act of 1692 was the first of the Land Tax Acts, 
it was not until1798 that the tax was imposed precisely in the form 
which has been preserved to the present day.
Up to 1798 the tax was continued by annual Acts of Parliament, 
the rate varying from four shillings to one shilling in the pound. Bytwo Acts passed in the reign of George III. (38 Geo. III., c. 5 & c. 60) 
the Land Tax was made perpetual at four shillings in the pound on 
the valuation of 1692, on all "manors, lands, tenements, here-
ditaments, mines, ironworks, salt springs and works, parks, chases, 
warrens, woods, fishings, tithes, tolls, annuities:" that is, on all 
profits arising out of real property. The amount to be raised was put 
at £2,037,627. The apportionment of the tax to the various counties 
of England, Wales, and Scotland is still maintained. Each parish is 
now charged with precisely the same amount of land tax as was im-
posed upon it in 1798, except in so far as the tax has been redeemed. 
In no case is the original four shillings in the £ paid at the presenttime. The amount paid varies from 9~d. in the £ in Buckingham-
shire to Oid. in Lancashire; or if the proportion is taken by parishes, 
there are cases in which the rate is as low as a hundredth of a penny in 
the £. In London the tax varies from nothing at all in Paddington 
to lld. in St. Anne's, Soho, and 1s. 3d. in St. Paul's, Covent Garden. 
By the operation of the power of redemption upon payment of a 
lump sum the receipLs have dwindled down to little more than 
£1,000,000. From £3,000 to £1,000 iti redeemed every year. The 
old tax must be got rid of by a compulsory redemption of the out-
standing quotas, and the way left clear for dealing with the whole 
question of the land in the light of modern ideas and knowledge. 
· The Unearned Increment. 
The most pressing point in the laud question to-day is how to 
divert the flow of the unearned increment from the landlords to the 
community. The increased value of land caused by the growth and 
concentration of population, local improvements, the discovery of 
minerals, etc., must be brought into the public pocket. 
In London alone the unearned increment during the twenty-oneyears from 1870 to 1891 amounted to £7,154,844 in annual rental, 
representing a growth in saleable value of more than one hundred 
and ten millions sterling, or over four millions sterling every year. 
It is obvious that the only final method of appropriating the 
unearned increment is by the nationalization or municipalization of 
the land. But as the fee-simple of all the land cannot be appropriated 
at once, and the matter is one of extreme urgency, some other plan 
must be put into operation, if the present daily spoliation of the 
community by the landlords is to be stopped. 
Taxation is the only immediately practicable means of tappingthe unearned increment. 
This is why we must teach our Chancellors of the Exchequer to 
look upon their Budgets, not merely as means of 1neeting the neces-
sary expencliture of the community but also, as Bentham long ago 

A .Democratic Budget. 

-recommended, as instruments for redressing inequality in the distribution 
of wealth. The special taxation of unearned incomes is the 
·simplest plan of distributing the landlord's rent among the people-who create it. 

Death Duties. 

The restoration of the national property to the community can 
l>e materially assisted by means of death duties. The fundamental 
principle of the limitation of the right of bequest by the taxation of 
_property changing hands at death needs no justification. It haa 
been recognised as a legitimate source of revenue for the last three 

hundred years. In 1694 there was a fixed payment of 5s. in the case 
-of every estate over the value of £20, which four years later was in·
creased to lOs. In 1779 an ad valm·em scale was first introduced. 

Drastic reform is, however, required to mo.ke the present death 
·duties equitable. For, notwithstanding the fact that the commercial 
-classes, as distinct from the landed gentry, have had the political 

power in their own hands for fifty years, the landlords have managed 
·to keep the tax on land down to the lowest possible point. There 
are now five death duties going by the names of Probate, Account, 
Legacy, Succession, and Estate duties. Personal property is charged 
·with Probate or Account duty varying from 2 to 3 per cent. Land 
pays Succession duty only. The Estate duty is payable upon both 
real and personal property. An estate consisting of £15,000 in personal 
property, and descending to lineal descendants, pays £600 in 
death duties ; but if the property be land, the Succession duty only 
amounts to £189 where one successor inherits the whole, or to £93 

:if two successors inherit in equal shares. 

Legacy duty is charged on the full value of personal property, 
and has to be paid at once. Succession duty is only charged on 
the life-interest of the successor: thus, on an estate of the capitalvalue of £10,000, and producing £300 after payment of all outgoings, 
if the successor be 4 years old, duty will be charged on a capital 
value of £5,786 Ss.; if 21, on £5,159 lls.; if 40, on £4,462 lOs.; 
·if 50, on £3,728 18s. 6d.; if 70, on £2,032 7s. ; if 90, on £400 7s. 
In the case of personalty, the Legacy duty would in all these cases 

be charged on the full £10,000. Above all, the payment of Succession 
-duty is spread over 4! years. If a second death occurs before the 
-expiration of that time there is a loss to the revenue of the unpaid 
:bstalments. 

Graduated Death Duties. 

All the anomalies of the present death duties must be swept 
away, and a simple duty applicable equally in cases both of real and 
personal property must be substituted, and must in every instance be 
levied upon the capital value of the property. The principle of 

_graduation should be introduced. Estates under the value of £500 
should be subject to a nominal tax, if not absolutely exempted; and 
:the relationship of the deceased and the beneficiaries should be dis



regarded. All property left to the nation or to any national institution 
should be free, and the existing exemption of the Royal familyabolished. 

At the present time the different methods of collecting the Probate, 
Legacy and Succession duties make it difficult to estimate the· 
immediate financial result of their unification. The unified dutymight therefore be collected for one year, after which the graduatedscale might be introduced. 

As a preliminary measure, the present death duties should 

12 A J)emocratic Budget. 
at once be trebled. The revenue from this source would then 
be £22,500,000. 
Property and Income Tax. 
This tax, which is generally called simply the Income Tax, was. 
first imposed in 1798 at the instance of Mr. Pitt, as an "aid and 
contribution" for the prosecution of the war with NapoleonBonaparte. In the following year a duty on incomes was imposed 
at the rate of 10 per cent. All persons were required to make-
returns of the whole of their income from all sources ; exemption 
was granted to all whose incomes were under £60 a year, and was. 
graduated above that amount. In 1816 the tax was dropped, and 
not revived until 1842, when Sir Robert Peel reimposed it, not as a. 
war tax, but as a means of meeting a deficit, and in order to afford 
some relief to the manufacturing industry. Though it is one of the-
most equitable taxes in existence, it is surrounded by so manyvexatious red-tape regulations and accompanied by so much official 
inquiry into private affairs, that it is perhaps one of the most un-
popular, and the most evaded. Although in its present applicationit contravenes the principle of equality of sacrifice, it may easily be: 
brought into complete harmony with it. 
It is now assessed under various heads or schedules :-
A. Lands, tenements, hereditaments, payable by the owner. 
B. Occupation of lands. 
C. Annuities, dividends, etc. 
D. Trades, professions, employments, etc. 
E. Public Offices, salaries, pensions, etc. 
All incomes of under £150 a year are exempt; and from £150 to-
£400 an allowance is mltde in respect of £120. 
The Income Tax now brings in £13,000,000. The first Income· 
Tax brought in £750,000 for every 1d., whereas now 1d. produces. 
£2,200,000. 
•Taxation of Unearned Incomes. 
The principle of equality of sacrifice demands that the income-
tax should be graduated and differentiated. A distinction must be, 
made between those incomes that are earned and those that are· 
unearned, between workers and idlers, poor and rich. " On the. 
whole," said Mr. Goschen in 1889, "I think it will be generally 

A Democratic Budget. 

recognized that it is the men whose fortunes are considerable who 
pay least in proportion to their aggregate income and property." 
This disproportion must be remedied. 

A fair margin of income, say £400, should be exempted in accordance 
with the principle already adopted, and the practice of allowing 
the deduction of life insurance premiums should be continued. 

The most feasible method of graduating the tax, and one which 
would remove the necessity for an elaborate system of repayments, 
would be an extension of the present abatemen t. From all incomes 
proved to depend for their continuance upon the continued personal 
labor, in any form, of the recipient, an abatement of one-third 
might be allowed. From the incomes received by persons whose 
total incomes from every source do not amount to £1,000 per annur:G, 
a further abatement of one-third might be allowed. Thus a person 
receiving £500 per annum from his own exertions would be entitlell_ 
to an abatement of one-third in respect of the source of his income, 
and of another one-third in respect of its amount. If the tax, no\7 
6d., were fixed at ls. 6d. in the £ to begin with, he would pa:;· no 
more than at present. A man having an unearned income of £900 
per annum from investments would now pay £22 lOs. as income tax. 
while under the proposed new tax, being entitled to deduct £300 
for an income under £1 ,000, he would pay £45. A man in receipGof £10,000 from investments would be taxed £750 instead of £250. 

What the Budget Ought to Be. 

Whilst it is impossible to transform at one blow a system of 
taxation that is the growth of centuries, removing every anomal< 
and inaugurating a new financial era, it is quite feasible to make at 
once some sweeping alterations both in the incidence of taxation, 
the methods of collection, and the manner ancl purposes of expenditure 
; so that the burden now breaking the back of the workers maybe shifted on to the broad shoulders of the landlord and capitalist.

The key-note of a Socialist Budget would be the taxation of property 
and the exemption of labor. Rent and interest would be the 
sources of revenue for current expenses; and the taxation imposed 
upon them would be avowedly directed to aid in the recovery of the 
land and capital for the people. Abnormal salaries and profitsshould be placed on the same footing as rent and interest. A 
Socialist Chancellor of the Exchequer in devising new taxes would 
not only take into account the necessity of providing for the ordinaryexpenses of the public administration, but would specially consider 
the efficiency of his proposals in restoring to the common purse some 
of the national wealth which now annually finds its way into privatepockets. Consequently, his first move would be to abolish all those 
taxes which are not consistent with this general principle. 

The following changes are the least which we ought to expectfrom the very first Budget of a really popular Government:Abolition 
of all Customs and Excise Duties on the of Food 
the People, and on Tobacco. 


14 A .Democratic Budget. 
Abolition of all Fees and Stamps on Licences for Employ-
ment. 
Abolition of the present Land Tax and House Duty, in order-
to make way for more effective measures. 
Reduction of postage rates and increase of pay to postalworkers, so as to absorb the present illegitimate postalprofits. 
These reductions would cause a loss of revenue of about 
£21,000,000. To meet this, we should require to have:-
The Death Duties simplified, consolidated, graduated, and_ 
trebled in total yield. 
The Income Tax graduated, differentiated, and trebled in 
nominal rate, but with complete exemption for incomes 
not exceeding £400. 
These two changes would yield about £27,000,000 more revenue~ 
making a nett gain of over £6,000,000, which would not only enabla 
the immediate enactment of 
Payment of all Members of the House of Commons, 
but with the addition of our present expenditure of more than 
£10,000,000 on Poor Law relief, would go far to make it possibleto substitute Universal Pensions to the aged and infirm for the work-
house and the parish dole. 
The First Socialist Budget. 
Taxes Repealed. 
Land Tax ... 
Customs Duties :-
Tea 
Coffee 
Chicory ... 
Cocoa 
Chocolate 
Currants..• 
Raisins ..• 
Figs, Plums, Prunes, &c. 
Tobacco, Cigars and Snuff 
Inland Revenue:-
Excise Duties. 
Coffee l\Iixture Labels ... 
Chicory ... 
Tobacco (home grown) 
Railway Passenger DutyStamp Duties. 
Licences. 
Hawkers, Pedlars, &c. 
Inhabited House Duty. 
Post Office Profit 
Total of Taxes Repealed 
Present Tax. Loss of Revenue. 
1,025,0{)()> 
4d. per lb. 3,000,000141-per cwt. 186,00013/3 per cwt. 64,0001d. per lb. 105,0002d. per lb. 
2/-per cwt. 118,500 
7/-per cwt. 157,200 
7/-per cwt. 48,600 
From 3/2 to 5/-per lb. 9,700,000 
13,379,300> 
!d. per t-lb. 2,570 
1,600 
130 
£2 to £5 per cent. 325,000Fees and Stamps on 
various Documents 1,000,000 
Various rates ... 53,0002d. to 6d. per £ 1,525,000 
2,907,300 
3,600,000---... 20,911,600 
14 A .Democratic Budget. 
Abolition of all Fees and Stamps on Licences for Employ-
ment. 
Abolition of the present Land Tax and House Duty, in order-
to make way for more effective measures. 
Reduction of postage rates and increase of pay to postalworkers, so as to absorb the present illegitimate postalprofits. 
These reductions would cause a loss of revenue of about 
£21,000,000. To meet this, we should require to have:-
The Death Duties simplified, consolidated, graduated, and_ 
trebled in total yield. 
The Income Tax graduated, differentiated, and trebled in 
nominal rate, but with complete exemption for incomes 
not exceeding £400. 
These two changes would yield about £27,000,000 more revenue~ 
making a nett gain of over £6,000,000, which would not only enabla 
the immediate enactment of 
Payment of all Members of the House of Commons, 
but with the addition of our present expenditure of more than 
£10,000,000 on Poor Law relief, would go far to make it possibleto substitute Universal Pensions to the aged and infirm for the work-
house and the parish dole. 
The First Socialist Budget. 
Taxes Repealed. 
Land Tax ... 
Customs Duties :-
Tea 
Coffee 
Chicory ... 
Cocoa 
Chocolate 
Currants..• 
Raisins ..• 
Figs, Plums, Prunes, &c. 
Tobacco, Cigars and Snuff 
Inland Revenue:-
Excise Duties. 
Coffee l\Iixture Labels ... 
Chicory ... 
Tobacco (home grown) 
Railway Passenger DutyStamp Duties. 
Licences. 
Hawkers, Pedlars, &c. 
Inhabited House Duty. 
Post Office Profit 
Total of Taxes Repealed 
Present Tax. Loss of Revenue. 
1,025,0{)()> 
4d. per lb. 3,000,000141-per cwt. 186,00013/3 per cwt. 64,0001d. per lb. 105,0002d. per lb. 
2/-per cwt. 118,500 
7/-per cwt. 157,200 
7/-per cwt. 48,600 
From 3/2 to 5/-per lb. 9,700,000 
13,379,300> 
!d. per t-lb. 2,570 
1,600 
130 
£2 to £5 per cent. 325,000Fees and Stamps on 
various Documents 1,000,000 
Various rates ... 53,0002d. to 6d. per £ 1,525,000 
2,907,300 
3,600,000---... 20,911,600 

A Democratic Budget. IS 

Taxes Increased. 

Expected Increase. 
Probate, Succession and Legacy, &c., Duties. 

The duty on real property to be made 

identical in rate and mode of assess


ment with the duties on personal pro


perty, and the present rate trebled £15,000,()()()
Income Tax. 

The rate to be one shilling and sixpence

in the £, or treble the present rate. 

The expected yield is as follows:


Present nett assessments . .. £561,000,000

Add income exempt and abated under 

present assessment ..• 108,000,000 

£669,000,000

Deduct Estimated amount of incomes 

not exceeding £400 per annum (to

be wholly exempted) . .. £108,000,000 

Estimated amount of earned in


comes, £282,000,000 (to abate one-

third) . .. 94,000,000

Estimated amount of incomes 

over £400 and not exceeding £1,000, 

£393,000,000 (to abate one-third) 131,000,000 

-----333,000,000 

Proposed nett assessment 336,000,000 

Proposed yield at 1/6 in the £ ... 25,200,000 

Deduct Present yield 13,144,000 

:.:.2,056,()()()


Total Increase ... £27,056,()()() 
Estimated Surplus, £6,144,400. 

The First Step towards Taxation Reform. 

The great obstacle in the way of taxation reform is the composition 
of the House of Commons, which votes the taxes, and which 
at present consists mainly of landlords and capitalists. As long a~ 
the wealthy classes possess a practical monopoly of Parliamentaryrepresentation, no really thorough-going measures for the readjustn1ent 
of the taxes will be carried. Until laws are passed for the 
PAYMENT OF MEMBERS, and of their election expenses, it will be 
impossible for the workers to send to the House of Commons men 
who are not pecuniarily interested in exempting property from taxation 
at the expense of labor. No Parliamentary candidate should 
be supported who will not pleage himself to vote for this elementaryreform. Insist on a pledge to press for 

Payment of All Members of the House of 
Commons on the very First Budget. 

G. STANDnuw, Printer, 7 & 9 Fiusbury Street, Loudon, E.C. 

T
T
HE FABIAN SOCIETY consists of Socialists. A statement 
of its Principles, Rules, Conditions of Membership, etc., a list 
of lecturers, with their lectures and terms, and the following publications, 
can be obtained from 

The Secretary, at the Fabian Office, 276 Strand, London, W.O. 

"FABIAN ESSAYS IN SOCIALISM." 
(26th Thousand.) 

A full exposition of modern English Socialism in its latest and maturest phase. 

Library Edition, 6a.; or, direct from the Secretary for O~h, 4/6 (postage 4td.J 

Cheap Edition, Paper cover, 1s. ; ditto, plain cloth, 2s. At all booksellers 
or post free from the Secretary for 1s. and 2s. respectively. 

FABIAN TRACTS. 
No. I.-Why are the Many Poor I' Pnce 6 for 1d.; IS. per 100. 
No. 6.-Facts for Socialists. A survey of the distribution of income and 

the condition of classes in England. 40th thousand. 16 pp., I d.; or 9d. per doz. 

No. 7.-Capltal and Land. A similar survey of the distribution of pro. 
perty, with a criticism of the distinction sometimes set up between Land and Capital 
as instruments of production. 3rd edn.; 15th thousand. 16 pp., 1d.; or 9d. per doz.. 

No. 8.-Facts for Londoners. 56 pp., 6d.; or 4/6 per doz. 

No. 9.-An Eight Hours Bill. Full notes explain the Trade Option 
dause and precedents on which the Bill is founded. A list of literature dealing with 
the hours of labor is appended. 2oth thousand. 16 pp., 1d. ; or 9d. per doz. 

No. 10.-Figures for Londoners. 4oth thous. 4 pp.,6 for 1d.; rs. per 100. 
No. 11.-The Workers' Political Programme fully explains the politics 
of to-day from the working class point of view. 2oth thousand. 20 pp-, I d. ; or¢. doz. 
No. 12.-Practicable Land Nationalization. 4 pp., 6 for Id.; or Is. 100. 
No. 18.-What Socialism Is. 8oth thousand. 4pp.,6 for 1d.; or Is. per 100. 
No. 14.-The New Reform Bill. A draft Act of Parliament providing for 
Adult Suffrage, Payment of Members and their election expenses, Second Ballot, and 

a thorough system of Registration. 15th thousand, 20 pp. 1d.; or 9d. per doz. 
No. 115.-English Progress towards Social Democracy. HI.; 9d. doL 
No. 16.-A Plea for an Eight Hours Bill. 4 pp., 6 for 1d.; Is. per 100. 
No. 17.-Reform of the Poor Law. 20 pp., rd.; 9d. per doz. 
No. 18.-Facts for Bristol. x6 pp., ld. each; or 9d. per doz. 
No. 19.-What the Farm Laborer wants. 4 pp., 6 for rd.; or 1j-per 100, 
l!ro. 20.-Questions for Poor Law Guardians. 4 pp., 6 for Id.; or 

1/· per 100. 
No. 21.-Questionsfor London Vestrymen. 4pp.,6for 1d.; or Is. penoo.
No. 22.-The Truth about Leasehold Enfranchisement, Why

Socialists and Radicals oppose it. 4 pp., 6 for Id. ; or Is. per 100. 
No. 28.-The Case for an Eight Hours Bill. 16 pp., Id. each; 9d. a dozen, 
No. 24.-Questionsfor Parliamentary Candidates. 6 for 1d.; Is. per 100 
No. 2ts.-Questions for School Board Candidates. ,
No. 26.-Questions for London County Councillors. , ,
No. 27.-Questions for Town Councillors. ' ,. , 
No. 28.-Questions for County Councillors. , ,
No. 29.-What to Read. A List of Books for Social Reformers. Includes 

all the best books on Economics, Socialism, Labor Movements, Poverty, &c., 

with suggested courses of reading. 32 pp., 3d. each, or 2/3 per doz. 
No. 80.-The Unearned Increment. 
No. 31.-London's Heritage in the City Guilds. 
No. 32.-Municipalisation of the Gas Supply.
No. 83.-Municipalisa.tion of Tramways.
No. 84.-London's Water Tribute. 
No. 815.-Municipalisation of the Docks. 
No. 86.-The Scandal of London's Markets. 
No. 37.-A Labor Policy for Public Authorities. 


Nos. 80 to 87 form the Fabian Municipal Program. The 8 for ld., or ls. per 100 

No. 38.-A Welsh Translation of Tract 1. 4 pp., 6 for I d.; Is. per 100. 
No. 39.-A Democratic Budget. 16 pp., Id.; or 9d. per dozen. 
No. 40.-The Fabian Manifesto for the General Election of 1892. 


16 pp., Id. each, or 9d. per dozen. 
I No. 41.-The Fabian Society: What it has done; and how it has 
done it. 32 pp., ld. · or 9d. per dozen. 


• I No. 43.-Vote I Vote I! Vote I ! ! A persuasive to use tho vote; suitable 
for any party at any election. 5s. per 1000. 
The set po1 t free for two shillings.