Taxes may be divided into taxes upon possessions and taxes upon commodities. It is easy to tax land, but difficult to tax stock or money; the land tax is very cheaply collected and does not raise the price of commodities and thus restrict the number of persons who have stock sufficient to carry on trade in them. It is hard on the landlords to have to pay both land tax and taxes on consumption, which fact “perhaps occasions the continuance of what is called the Tory interest.”
Taxes on consumptions are best levied by way of excise. They have the advantage of “being paid imperceptibly,” since “when we buy a pound of tea we do not reflect that the most part of the price is a duty paid to the government, and therefore pay it contentedly, as though it were only the natural price of the commodity.” Such taxes too are less likely to ruin people than a land tax, as they can always reduce their expenditure on dutiable articles.
A fixed land tax like the English is better than one which varies with the rent like the French, and “the English are the best financiers in Europe, and their taxes are levied with more propriety than those of any other country whatever.” Taxes on importation are hurtful because they divert industry into an unnatural channel, but taxes on exportation are worse. The common belief that wealth consists in money has not been so hurtful as might have been expected in regard to taxes on imports, since it has accidentally led to the encouragement of the import of raw material and discouragement of the import of manufactured articles.