Himalayan Times (1958)

March 9

Bern

■ ' privileges of the East
India Company but also
initiated radioal changes
affeoting administrative
praotioe in the tub conti-
nent—praotices which owed
their origin to Maoaulay.
Even more important,
- 1858 signalised the first
enthusiastic efforts to in-
troduce in India a sound
finaneial system of tax-
collection and expenditure,
the practices and prece-
dents of whioh survived
until the last day of
British rule and were 'in
a large measure incorpo-
rated in the setup of free
India,

It was left to Lord
Canning, first as Governor-
General and then as Vice-
roy and Governor-General,
to initiate and implement
this financial practice
through Mr. James Wilson,
deservedly known as the
"Father of -Indian Finan-
ce" When events of 1867
shattered the oountry'a
finances beyond repair
and with it the old pat-
tern of money-raising
hitherto adopted, Lord
Canning hit upon the
device of imposing increa-
sed oustoms duties to
meet the 1869 budget
defioit.

This resulted, in an
immediate furore and the
entire merchant commu-
nity (led by the BritUli)
rote in revolt. Harrington,
who aoted as the Finanoe
Member to Lord Canning,

had to face the full fury
of this opposition.

In this atmosphere
there arrived from England
in December 1859. Mr.
James Wilson to lay the
foundations of modern
finance. Wilson had all
the requirements to tackle
the task entrusted to him.
The distinguished founder
of the London "Econo-
mist" (1843), he had also
held a aeries of minor
Cabinet posts in England
mostly connected with
commerce ami finance. ,

Even then he has
shown the preference, in'
fiscal problems, for the
system of direct taxation
through a medium pf
assessed taxes as a better .
means of raising revenue
than customs and excise.
He was well-known to his
oontemporaries as a poli- .
tieal economist, having
played a prominent part
in the. repeal of the Corn
Laws and with his power-
ful advooaoy of free trade.

And, until the arrival
of Wilson there was some
truth in Disraeli's famous
statement that, while Eng-
land had given to India
many generals, she hsd
not sent one Chancellor
of the Exchequer !

Wilson found India an
ideal laboratory for his
monetary theories. The
principles of his first bud-
get were explained by
him on February 18, 1860.
Confronted with a heavy

deficit, Wilson proposed
to bridge the gap with
a number of import duties,
tax on home grown tobao- *
eo, a small and uniform,
lioenoe duty upon traders
o"f every olass and, V last ^
but not least, by \%fcr~~
imposition of an - income-
tax on all incomes above
Ra. 200 a year.

Thus was - born the
child of 'income tax' that
has grown into a monster
with ferocious tentacles,
extending its unwelcome
grip wider and . wider
through each succeeding
year. ' •.

Permanency
In point of fact, a
good many years were to
elapse before, income-tax
became a permanent fea-
ture of the Indian tax
structure. In those early
days, it proved to be no
more than a small per.
funotory contributor to
the oountry's total revenue.

" For instance, out of
the total revenue of £42.9
million in 1860, income-
tax amounted to the in-
significant figure of £1
million only By 1866,
this figure fell to a mure
£10,000; so it was decided
to drop income-tax with
immediate effect. Alas, a
later genius restored it in
1869 with status of
permanency I

The revival naturally
aroused a great deal of
opposition, spearheaded