.

Taxes on luxuries have some advantage over taxes on necessaries. They
are generally paid from income, and therefore do not diminish the
productive capital of the country. If wine were much raised in price in
consequence of taxation, it is probable that a man would rather forego
the enjoyments of wine, than make any important encroachments on his
capital, to be enabled to purchase it. They are so identified with
price, that the contributor is hardly aware that he is paying a tax. But
they have also their disadvantages. First, they never reach capital, and
on some extraordinary occasions it may be expedient that even capital
should contribute towards the public exigencies; and secondly, there is
no certainty as to the amount of the tax, for it may not reach even
income. A man intent on saving will exempt himself from a tax on wine,
by giving up the use of it. The income of the country may be
undiminished, and yet the state may be unable to raise a shilling by the
tax.

Whatever habit has rendered delightful, will be relinquished with
reluctance, and will continue to be consumed notwithstanding a very
heavy tax; but this reluctance has its limits, and experience every day
demonstrates that an increase in the nominal amount of taxation, often
diminishes the produce. One man will continue to drink the same quantity
of wine, though the price of every bottle should be raised three
shillings, who would yet relinquish the use of wine rather than pay
four. Another will be content to pay four, yet refuse to pay five
shillings. The same may be said of other taxes on luxuries: many would
pay a tax of 5_l._ for the enjoyment which a horse affords, who would
not pay 10_l._ or 20_l._ It is not because they cannot pay more, that
they give up the use of wine and of horses, but because they will not
pay more. Every man has some standard in his own mind by which he
estimates the value of his enjoyments, but that standard is as various
as the human character. A country whose financial situation has become
extremely artificial, by the mischievous policy of accumulating a large
national debt, and a consequently enormous taxation, is particularly
exposed to the inconvenience attendant on this mode of raising taxes.
After visiting with a tax the whole round of luxuries; after laying
horses, carriages, wine, servants, and all the other enjoyments of the
rich, under contribution; a minister is disposed to conclude that the
country is arrived