TAXES PAID BY THE PRODUCER
M. SAY greatly magnifies the inconveniences which result if a tax on a manufactured commodity is levied at an early, rather than at a late, period of its manufacture. The manufacturers, he observes, through whose hands the commodity may successively pass, must employ greater funds in consequence of having to advance the tax, which is often attended with considerable difficulty to a manufacturer of very limited capital and credit. To this observation no objection can be made.
Another inconvenience on which he dwells is that, in consequence of the advance of the tax, the profits on the advance also must be charged to the consumer, and that this additional tax is one from which the treasury derives no advantage.
In this latter objection I cannot agree with M. Say. The state, we will suppose, wants to raise immediately £I000, and levies it on a manufacturer, who will not for a twelvemonth be able to charge it to the consumer on his finished commodity. In consequence of such delay, he is obliged to charge for his commodity an additional price, not only of £I000, the amount of the tax, but probably of £II00, £I00 being for interest on the £I000 advanced. But in return for this additional £I00 paid by the consumer, he has a real benefit, inasmuch as his payment of the tax which government required immediately, and which he must finally pay, has been postponed for a year; an opportunity, therefore, has been afforded to him of lending to the manufacturer who had occasion for it the £I000, at 10 per cent., or at any other rate of interest which might be agreed upon. Eleven hundred pounds, payable at the end of one year, when money is at 10 per cent. interest, is of no more value than £I000 to be paid immediately. If government delayed receiving the tax for one year till the manufacture of the commodity was completed, it would perhaps be obliged to issue an exchequer bill bearing interest, and it would pay as much for interest as the consumer would save in price, excepting, indeed, that portion of the price which the manufacturer might be enabled, in consequence of the tax, to add to his own real gains. If for