An inquiry into the nature and causes of the wealth of

731

Adam Smith

It must always be remembered, however, that it is the luxuries,

and not the necessary expense of the inferior ranks of people, that

ought ever to be taxed. The final payment of any tax upon their

necessary expense, would fall altogether upon the superior ranks

of people; upon the smaller portion of the annual produce, and

not upon the greater. Such a tax must, in all cases, either raise the

wages of labour, or lessen the demand for it. It could not raise the

wages of labour, without throwing the final payment of the tax

upon the superior ranks of people. It could not lessen the demand

for labour, without lessening the annual produce of the land and

labour of the country, the fund upon which all taxes must be fi-

nally paid. Whatever might be the state to which a tax of this kind

reduced the demand for labour, it must always raise wages higher

than they otherwise would be in that state; and the final payment

of this enhancement of wages must, in all cases, fall upon the

superior ranks of people.

Fermented liquors brewed, and spiritous liquors distilled, not

for sale, but for private use, are not in Great Britain liable to any

duties of excise. This exemption, of which the object is to save

private families from the odious visit and examination of the tax-

gatherer, occasions the burden of those duties to fall frequently

much lighter upon the rich than upon the poor. It is not, indeed,

very common to distil for private use, though it is done some-

times. But in the country, many middling and almost all rich and

great families, brew their own beer. Their strong beer, therefore,

costs them eight shillings a-barrel less than it costs the common

brewer, who must have his profit upon the tax, as well as upon all

the other expense which he advances. Such families, therefore,

must drink their beer at least nine or ten shillings a-barrel cheaper

than any liquor of the same quality can be drank by the common

people, to whom it is everywhere more convenient to buy their

beer, by little and little, from the brewery or the ale-house. Malt,

in the same manner, that is made for the use of a private family, is

not liable to the visit or examination of the tax-gatherer but, in

this case the family must compound at seven shillings and sixpence

a-head for the tax. Seven shillings and sixpence are equal to the

excise upon ten bushels of malt; a quantity fully equal to what all

the different members of any sober family, men, women, and chil-

dren, are, at an average, likely to consume. But in rich and great

families, where country hospitality is much practised, the malt li-

quors consumed by the members of the family make but a small

part of the consmnption of the house. Either on account of this

composition, however, or for other reasons, it is not near so com-

mon to malt as to brew for private use. It is difficult to imagine any

equitable reason, why those who either brew or distil for private use

should not be subject to a composition of the same kind.

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732

The Wealth of Nations

A greater revenue than what is at present drawn from all the

heavy taxes upon malt, beer, and ale, might be raised, it has fre-

quently been said, by a much lighter tax upon malt; the opportu-

nities of defrauding the revenue being much greater in a brewery

than in a malt-house; and those who brew for private use being

exempted from all duties or composition for duties, which is not

the case with those who malt for private use.

In the porter brewery of London, a quarter of malt is com-

monly brewed into more than two barrels and a-half, sometimes

into three barrels of porter. The different taxes upon malt amount

to six shillings a-quarter; those upon strong ale and beer to eight

shillings a-barrel. In the porter brewery, therefore, the different

taxes upon malt, beer, and ale, amount to between twenty-six and

thirty shillings upon the produce of a quarter of malt. In the country

brewery for common country sale, a quarter of malt is seldom

brewed into less than two barrels of strong, and one barrel of small

beer; frequently into two barrels and a-half of strong beer. The

different taxes upon small beer amount to one shilling and

fourpence a-barrel. In the country brewery, therefore, the differ-

ent taxes upon malt, beer, and ale, seldom amount to less than

twenty-three shillings and fourpence, frequently to twenty-six shil-

lings, upon the produce of a quarter of malt. Taking the whole

kingdom at an average, therefore, the whole amount of the duties

upon malt, beer, and ale, cannot be estimated at less than twenty-

four or twenty-five shillings upon the produce of a quarter of malt.

But by taking off all the different duties upon beer and ale, and by

trebling the malt tax, or by raising it from six to eighteen shilling’s

upon the quarter of malt, a greater revenue, it is said, might be

raised by this single tax, than what is at present drawn from all

those heavier taxes.

In 1772, the old malt tax produced.........  £722,023: 11: 11

                           The additional.............. £356,776:  7:  9¾

In 1775, the old tax produced.................. £561,627:  3:  7½

                           The additional.............. £278,650: 15:  3¾

In 1774, the old tax  produced  ............... £624,614: 17:  5¾

                           The additional...............£310,745:  2:  8½

In 1775, the old tax produced   ................£657,357:  0:  8¼

                           The additional...............£323,785: 12:  6¼

                                                                 £5,855,580: 12: 0¾

Average of these four years  .....................  £958,895:      3: 0

In 1772, the country excise produced........£1,243,120:  5:  3

                  The London brewery                 408,260:    7:  2¾

In 1773, the country excise........................£1,245,808:  3:  3

                  The London brewery                405,406:     17: 10½

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