§4. We may conveniently begin by trying to define a ``tax''. The widest notion attached to the word would seem to be ``a compulsory payment to Government that is not penal'': only it must be observed that what we agree to call ``taxes'' on consumable commodities are for the most part not absolutely compulsory, as any individual may escape them by abstaining from the consumption of the commodities. On the other hand, we certainly do not include under the term ``tax'' all payments made by those who purchase any commodity of which the sale is controlled by Government: for we do not ordinarily consider ourselves taxed by the charge for postage-stamps---except so far as it exceeds the market-price of the service of conveyance for which the charge is made; though it is neither more nor less compulsory than the charge for a receipt-stamp, which is undoubtedly a tax. In short, a payment for a governmental service not priced above its market-value is not commonly reckoned a tax, if rendered to the payer by his own choice, even though Government has a monopoly of such services. And it is, I think, doubtful whether even a compulsory payment of this kind, for a specific service definitely appropriated to the payer---for instance, a compulsory rate for water supplied by the Government, not exceeding the market-value of the supply,---would ordinarily be called a ``tax''. I think usage here becomes uncertain. But, in any case, whatever term we might use, I think that we should be broadly agreed as to the equitable principle for apportioning such payments for specific services capable of being definitely appropriated to the payers: it would be held that the payment ought to be proportioned to the amount of the service rendered, as closely as is consistent with the most economic management of the business of rendering such services.
These considerations lead us to one interpretation of the accepted principle of ``equality of taxation''. It is obvious that the ``equality'' here spoken of is a proportional equality of some kind:---it is not meant that every one should pay the same sum;---and since, in a well-governed community, all taxes are payments for services rendered by Government to the governed, it seems in accordance with equity that the distribution of the payments should correspond as nearly as possible to the distribution of the services. And I think that this principle should certainly be adopted, so far as there is a substantial and definitely ascertainable inequality in the benefits conferred by the action of Government on different sections of the community: for instance, it should be applied in defraying the cost of roadmaking and other improvements, and generally, in determining the division between general and local taxation. But I regard it as only applicable to a very slight extent, in the case of the most important, and actually most costly, functions of government: because the utilities provided by these functions cannot be apportioned, with even approximate exactness, among the individual members of the community. And this is, I think, implicitly recognised in the common use of the term ``tax'': since it is just in the cases where the individual's payment to Government fails to correspond to an individualised governmental service, that the applicability of the term is most clear and unmistakable. Take, as a leading example, the case of defence against foreign foes: considering the general mildness---as regards individuals---of modern civilised warfare, it cannot be maintained that the main object of warlike expenditure is the direct protection of the life and property of individuals: and though it is undeniable that different classes in the community are personally interested in very different degrees in the maintenance of national existence, or national honour, or prestige or power---or in the defence of particular territories or treaty-rights,---it would be idle to attempt to frame an estimate of these different degrees of interest which could be taken as a basis of distribution of taxation.
So, again, it is no doubt true that (e.g.) judges and policemen are continually engaged in rendering specific services to certain individuals: but since---as Bentham and Mill urge---``those who are under the necessity of going to law are those who benefit least, not most, by the law and its administration'', it would be manifestly unjust that the cost of the judicature and the police should fall exclusively on the persons who are compelled to demand their direct assistance. And it seems impossible to apportion with any exactness the benefits of ``law and order'' among the rest of the community, who are indirectly protected by judges and policemen. At the same time, I think that the principle of proportioning payment to services rendered may reasonably be applied, to some extent, in defraying the general cost of protecting property:---as (e.g.) by making the payment of stamp duties on instruments and records of transfer a necessary condition of the admission of such documents as evidence in courts of justice. But stamp duties are a very rough mode of proportioning payment exacted to protection given: and at any rate as regards the greater part of the taxation of a community, we have to seek for some other principle.[Back to:] [Elempol, Chapter 11, Section 3] Maintenance of Government