Ricardo, at the end of his masterly consideration of the effect of
taxation variously levied, comes to the general conclusion that the
best tax is that which is least in amount. Adam Smith and the older
economists held that one test which a well-devised tax had to satisfy
was that it should take the money from the taxpayer insensibly,
indirectly. Now, all taxes that thus insensibly drain the taxpayers
invariably take more in gross from them than reaches the Government.
To raise L40,000,000 by customs and excise costs about L3,000,000; so
that the people have to pay L43,000,000, while the Government gets
L40,000,000. In direct taxes, as income taxes, property rates, the
cost of collection is very small--about two-pence in the pound. In
public as in private business it is much more economic to look
payments in the face and make them with our eyes open than to let the
money slip away in driblets. Moreover, modern politicians think, in
opposition to Adam Smith, that it has a good moral effect on the body
politic to be made to feel exactly what taxes they pay, so that they
cannot help knowing whenever taxation is increased.

A serious objection to indirect taxation is that it always falls with
unfair weight on the poor, as in the case of tea duties stated above.
It may be urged that the existing duties are (except tea) nearly all
on luxuries, as beer, spirits, tobacco. But the English have drunk
beer for many hundred years; the taste for beer is largely fixed by
inheritance; beer as supplying sustenance in a form that _rapidly_
assists exhausted nature is, to very many at least, as much a
necessary of life as tea is. Whether we believe tobacco to be
injurious or not, we have no right to impose on an article so very
largely consumed a duty which amounts to taxing the poor out of
proportion to the rich.