Income Tax.—The experience of the (British) Indian Government in attempting to raise revenue from the taxation of incomes, or by an income tax, is exceedingly interesting, and ought to be most instructive to the people of other countries. As a rule, the annual revenues of the Government of India do not and for a lengthened period have not equaled its annual expenditures, and the increase in the public debt of the country in recent years has accordingly been very considerable.[1] The major part of this debt, however, has been incurred for the construction of ordinary roads and railways, which in turn have not been unremunerative, and have made possible a large export sale of wheat and other commodities, which before their construction was impossible. The debt, or expenditures resulting in debt, has therefore contributed greatly to the welfare of the people of India. At the same time the demand and necessity for constantly increasing expenditures, continually confronts the Government with the most difficult problem of how to increase its revenue—a problem that very recently has been threatened with increasing embarrassment, owing to the position of not a few people in England, who, with more of sentiment than discretion or knowledge, have opposed the continuance of the present governmental monopoly of the production and sale of opium. A large increase of taxation in any form is regarded as not feasible in India; not so much because of an unwillingness on the part of the people to pay, for they are accustomed to pay all dues which they regard as fairly claimable by the sovereign power, and more especially when the demand is accompanied with control of force; but by reason of the extreme poverty and consequent actual inability of the masses of the people to pay. Experience has, moreover, shown that the natives of India are particularly opposed to all forms of direct taxation, other than on land, and more especially to taxes on houses, vehicles, and trades; and so extreme are their prejudices in this respect that any new levies of such character are only imposed by the Government with the greatest caution.
Something in the way of an income tax, exempting all incomes derived from agriculture, was probably imposed by some of the old-time native rulers of India. But the first attempt on the part of the British Legislative Council of India to revive such a form of direct taxation was made in 1860. What followed is thus forcibly set forth in a speech by Mr. Hope, before the Council, in January, 1886:
"Instead of a native model for direct taxation, softened and adapted to our circumstances, we unfortunately set up that of the
- ↑ For the year which closed on March 31, 1896, there was an estimated surplus of about 9,500,000 rupees.
