THE EVOLUTION OF PROVINCIAL FINANCE IN BRITISH INDIA - Page 89

74 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES

Besides this legal fiction of State landlordism there was also another economic principle which was taken to be the justification for the enhancement of the land revenue. There is reason to believe that the Physiocratic doctrine of produit net had its influence in the management and fixing of the land tax in India. We find high officials in India arguing in the early stages of the revenue management that “whether or not the principle of the French Economists of laying all the taxes on the land be......erroneous or otherwise, it is certainly conformable to the prevalent system in India; nor is that theory supported by the French alone, but by respectable authorities in England, who contend that all taxes fall ultimately on the products of the soil, and that in advancing a different doctrine the eminent author of The Wealth of Nations is at variance with himself, inasmuch as his previous data lead to that conclusion.” [1] Whatever may have been the reasons for augmenting the land tax, few can deny that a heavy consolidated impost on the first exertions of any species of industry absorbing the whole or nearly the whole of its profits in ruinous and impolitic. It becomes an effectual bar to the creation of that produce on which the future exertions might be profitably employed and through the medium of which individual wealth and public revenue may be increased to an almost inconceivable extent. A land tax of this nature was sure to blast the very production of that wealth which industry would have otherwise brought into being. The land tax was so heavy that the system of tax prevailing in India might well have been called a near approach to the single tax system. [2]

1 For this remarkable controversy, which has escaped even the comprehensive eye of Baden Powell, see House of Commons paper 306 of 1812-13.