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2 The Tax Authorities and Wine¹

[vol. 1, p. 243. “Le Fisc et la vigne.” January 1841. n.p.]

The production and sale of wines and spirits must of necessity be affected by the treaties and laws on finance that are currently the subject of deliberations in the chambers.

We will endeavor to set out:

1 The new obstacles that the draft law dated 30 December 1840 is threatening to impose on the wine-producing industry;

2 Those obstacles implicit in the formal rationale that accompanies this draft ;

3 The results to be expected from the treaty signed with Holland;

4 The means by which the wine-producing industry might succeed in freeing itself.

§1. The legislation on wines and spirits is a clear departure from the principle of equality of duties.

At the same time it places all the classes of citizen whose industry it regulates in a separate, heavily taxed category, it creates among these very classes

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inequalities of a second order: all are placed outside common law; each is held at varying degrees of distance.

It appears that the minister of finance has taken not the slightest notice of the radical inequality we have just pointed out, but on the other hand he has shown himself to be extremely shocked by the secondary inequalities created by the law: he considers as privileged the classes that have not yet suffered from all of the rigors it imposes on other classes. He is devoted to removing these nice differences not by relaxing them but by making them worse.

However, in pursuit of equality thus understood, the minister remains faithful to the traditions of the creator of the institution. It is said that Bonaparte originally established tariffs that were so moderate that the receipts did not cover the costs of collection. His minister of finance drew to his attention the fact that the law annoyed the nation without providing the treasury with funds. “You are an idiot, M. Maret,” replied Napoléon. “Since the nation is complaining about a few impositions, what would it have done if I had added heavy taxes to them? Let us first accustom them to the exercise; later we can adjust the tariff.” M. Maret realized that the great captain was no less an able financier.

The lesson has not been lost, and we will have the opportunity of seeing that the disciples are preparing the reign of equality with a prudence worthy of the master.

The principles on which the legislation on wines and spirits is based are clearly and energetically expressed in three articles flowing from the law dated 28 April 1816:

Art. 1. Each time wine, cider, etc., is taken away or put somewhere else, a circulation duty will be paid. . . .

Art. 20. In towns and villages with a total population of two thousand people and more² . . . the treasury will levy an entry duty . . . , etc. . . .

Art. 47. When the wine, cider, etc., is sold retail, a duty of 15 percent of the said sales price will be levied. . . .

In this way, each movement of wine, each entry, and each retail sale lead to the payment of a duty.

Side by side with these rigorous and, one might say, strange principles, the law establishes a few exceptions.

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With regard to circulation duty:

Art. 3. The following will not be subject to the duty levied under Art. 1:

1 Those wines and spirits that an owner has transported from his press or a public press to his cellars or storehouses;

2 Those that a sharecropper, farmer, or holder of a long-term lease for rent hands over to the owner or receives from him by virtue of official leases or customary use;

3 The wine, cider, or perry3 that is dispatched by an owner or farmer from the cellars or storehouses in which his harvest has been deposited, and provided that it is the produce of the said harvest, whatever place it is sent to and the standing of the person to whom it is sent.

Art. 4. The same exemption will be granted to traders, wholesalers, brokers, middlemen, agents, distillers, and retail traders, for the wines and spirits they have had moved from one to another of their cellars situated within the confines of the same département.

Art. 5. The transport of wines and spirits that are removed for dispatch abroad or to the French colonies will equally be exempt from circulation duty.

The entry duty did not allow any exceptions.

With regard to retail duty:

Art. 85. Owners who wish to sell the wines and spirits they produce at retail will be granted a discount of 25 percent on the duties they will have to pay. . . .

Art. 86. However, they will be subject to all the obligations imposed on professional retailers. Notwithstanding this, inspections by agents will not take place within their domiciles provided that the premises on which their wines and spirits will be sold at retail are separate from these.

Thus, to summarize these exceptions:

Exemption from circulation duty for the wines of their harvest that owners send from their own property to their own property elsewhere throughout the entire territory of France;

Exemption from the same duty for the wine that traders, merchants, retailers, etc., have had transported from one to another of their cellars situated in the same département;

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Exemption from the same duty for wine that is exported;

A discount of 25 percent of the retail duty for owners;

Exemption from inspection visits by agents within their own domiciles where the premises on which this sale is made are separate from these.

Now, here is the text of the draft law put forward by the minister of finance:

Article 13. Exemption from circulation duty on wines and spirits will be allowed only in the following cases:

1 For wines which the harvester has transported from his press to his cellars and storehouses or from one to another of his cellars, within the confines of the same village or a bordering one;

2 For wines and spirits that a farmer or the holder of a long lease hands over to his owner or receives from him, within the same limits of a single village, by virtue of official leases or customary use.

Article 3 of the law dated 28 April 1816 and Article 3 of the law dated 17 July 1819 are repealed.

Article 14. Wines and spirits from their harvest that owners have transported from one part of their own property to another, outside the limits laid down in the preceding article, will be exempt from circulation duty, provided the owners acquire the necessary permit and are subject at the place of destination to all the obligations imposed on wholesale merchants with the exception of the payment of a license.

Article 25. The provision of Article 85 of the law dated 28 April 1816, which allows to owners who sell at retail the wines and spirits of their own production an exceptional discount of 25 percent of the retail duty that they have to pay, is repealed.

We would greatly exceed the limits we have set ourselves if we carried out a comprehensive examination of the points raised by the draft law, and we will have to limit ourselves to a few short observations.

First, does Article 13 of the draft law repeal Articles 4 and 5 of the 1816 law? An affirmative answer appears to result from the following absolute phrase: Exemption will be allowed only if . . . , which implies the exclusion of all categories not listed in the remainder of the disposition.

However, a negative answer may be concluded from the disposition that ends Article 13, since, by repealing only Article 3 of the 1816 law, it apparently maintains Articles 4 and 5.

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In this last case we consider that there is a certain anomaly in reserving for traders and retailers within the confines of the département a right that is restricted for owners to the limits of a village.

Second, since the new measures aim to increase revenue, we should no doubt expect them to be burdensome for taxpayers. It is possible, however, for these measures to exceed their aim and lead to disadvantages out of all proportion to the advantages hoped for.

In effect, these measures deal a deathblow to large-property owners through Article 13 and to small-property owners through Article 20.

As long as exemption from circulation duty was limited to the confines of a département, it could have resulted only in exceptional evils. The ownership of vineyards in several départements is rare, and where this occurs owners will have cellars in each of these départements. However, it is very frequent for an owner to have vineyards in several neighboring villages that do not border on one another; and in general, in this situation, it is in his interest to gather his harvest into the same cellar. The new law obliges him either to increase the number of his buildings, making surveillance more difficult, or to bear the cost of circulation duty for a product that is already very heavily taxed and whose sale will perhaps take place only several years later.

And what will the exchequer gain? Very little, unless the owner, as M. de Villèle hopes, drinks all his wine to recover the duty a little earlier.

It will doubtless be said that Article 14 of the draft will counteract this disadvantage. We will wait and examine the spirit and effect of this later.

On the other hand, small owners draw a very considerable advantage from retail sales: that of keeping their wooden barrels from year to year. From now on, they will be obliged each year to make an outlay oft en in excess of their means to buy them. I will say without hesitation that this disposition contains the cause of total ruin for a great many small owners. The purchase of wooden barrels is not something that they can avoid or delay doing. When the harvest arrives, it is essential, whatever the price, to acquire the wood in which to store it; and if the owner does not have the money, he is at the mercy of the sellers. Wine producers have been seen to offer half their harvest to obtain the means to house the other half. Retail sales would avoid this extreme situation, one that will oft en recur now that this possibility will in practice be forbidden to them.

The two modifications or, as the minister puts it, the two improvements to existing legislation, which we have just been analyzing, are not the

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ones contained in the draft law dated 30 December. There are two others on which we ought to make a few comments.

Article 35 of the law dated 21 April 1832 had converted the circulation, entry, and retail duties into a single tax, levied at the entrance to towns, thus allowing free circulation within these towns and abolishing customs investigations.

According to Article 16 of the draft, this single tax will now replace only the entry and retail duties, with the circulation and license duties continuing to be levied as they were in 1829, so that one could say of it, in chorus with the singer,

That this single tax will have two sisters.

Another difficulty arises here. In order to establish the single tax (1832 law, Article 36), “The sum of all the annual yields, from all the duties to be replaced, is to be divided by the total value of annual production.”

Since circulation and license duties are no longer included in those to be replaced, they should not be part of the dividend; this being so, since the quotient will be correspondingly lower, the general public will be subject to the old barriers, with no benefit for the treasury.

The implication is that if the minister intends the yield of current taxation to be maintained, circulation and license duties will be levied twice, once directly by virtue of the new law and a second time through the single tax, since they are included as elements in the calculation of this tax.

Last, a fourth modification introduces a new basis for conversion of spirits into liqueurs.

This is not all. The minister makes it clearly felt that it will not be long before he raises the tariff on wines and spirits to the levels of 1829. Many distinguished authorities, he said, considered that it was the right time to cancel the exceptions allowed in 1830.

Many other such authorities consider that if the minister refrains from making a formal proposal in this respect, it is to allow the Chamber of Deputies the honor of this initiative.

We will now leave the reader to measure the space that separates us from the July revolution. Ten years have scarcely elapsed, and here we are with our legislation on wines and spirits shortly to be indistinguishable from that under the empire or restoration, except for an increase in charges and severity.

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§2. If only this growth in severity had as its aim just the current interest of the tax authorities, we could at least hope that it satisfies their requirements in full. But it does not even leave us this illusion, and by proclaiming that they wish a particular dispensation to carry the day, the tax authorities are warning us that we have to expect new requirements until such time as this dispensation has been fully implemented.

“We have considered it just (says the “statement of the reasons”) to restrict the exemption to circulation duty in favor of owners to the just limits within which it might be legitimately claimed; that is to say, to restrict it to the products of their harvest which they intend for their consumption and that of their family, in the actual place of production. Beyond this, it was a privilege that nothing justified and that violated the principle of the equality of duties. For the same reason, we propose to cancel the discount of 25 percent to the wine producer who sells the wines of his production at retail.”

Now, from the instant the government has the equality of duties as its aim, with the understanding that this language means the subjection of all the classes affected by the law on wines and spirits to the full total of the obstacles weighing on the most maltreated class, then for as long as this aim is not reached, the most rigorous measures can be only the prelude to still more rigorous measures.

We should fear it above all in the knowledge that the master⁴ has carried out and recommended a pitiless but prudent tactic in this connection.

We have seen that the 1816 law extended the owner’s exemption from circulation duty to the entire territory of France.

Shortly afterward it was restricted to the limits of the département or to bordering départements (law dated 25 March 1817, Article 81).

Later it was reduced to the limits of bordering districts (law dated 17 July 1819, Article 3).

Now, the proposal is being made to circumscribe it to the limits of a village or bordering villages (draft law, Article 13).

One step further and it will have totally disappeared.

And this step undoubtedly will be taken, for while these successive restrictions have circumscribed the privilege, they have not destroyed it. There still remains one case in which the harvester consumes a wine that has circulated without paying circulation duty, and it will not be long before it is said

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that this is a totally unjustified privilege, which violates the principle of equality of taxes. At the level of application, therefore, the tax authorities have compromised with principle but have also, in principle, made clear their intent, and is it not enough for once that they have come down from the district to the commune without stopping at the canton?

Let us be quite sure, therefore, that the reign of equality is coming and that in a short time there will be no exceptions at all to this principle. On each removal or displacement of wine, cider, or perry,⁵ duty will be levied.

But should this be said? Yes, we will be expressing our entire thoughts, even though we may be suspected of giving way to exaggerated distrust. We believe that the tax authorities have perceived that, when the circulation duty is extended to all without exception, equality will have reached only half of its career; it will still subject owners to the yoke of customs inspection.

We consider that in Article 14 the tax authorities have sown the seed of this secret intention.

What other aim could this measure have?

Article 13 of the draft restricts the exemption from circulation duty to the limits of the village commune.

The rationale is careful to declare that anything exceeding this exemption is a privilege that is totally unjustified.

And Article 14 immediately restores the right that Article 13 removed from us; it gives it back without limits, provided that the owner subjects himself to the obligations imposed on wholesale merchants.

A concession like this is designed to arouse our mistrust.

This floury sack bodes no good.⁶

Note the specific character of this Article 14.

First, it appears to be a corrective. Article 13 may have seemed rather harsh; Article 14 comes to offer some consolation.

Second, it goes somewhat further than sugar-coating the pill; it hides the pill and hints at the customs inspection without referring to it explicitly.

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Last, it pushes prudence to the point of being optional; it goes even further, it makes Article 13 optional. How can we complain? Can we not escape circulation duty by taking refuge in customs inspections and find shelter against customs inspections in circulation duty?

Let us hope we are mistaken! However, we have witnessed an increase in the tariff, and we have witnessed an increase in circulation duty; we are right to worry that customs inspections will increase, too. As the teller of fables told us: “What is small will grow large . . . , provided that God keeps it alive.”⁷

The gradual progress toward equality is also shown in the development of retail duty.

We have seen that current legislation allows owners two forms of exemption in this respect: first, by giving them a discount of 25 percent on the duty; second, by exempting the owner from home inspections when the point of sale is in a different location.

For the moment, current legislation merely limits itself to calling for the withdrawal of the first of these exemptions. However, the principle of equality is not satisfied, since owners continue to enjoy a privilege denied to café owners, that is to say, the privilege of not having to open their houses, their bedrooms, and their cupboards to the gaze of customs agents, always provided that, in order to sell their wine, they rent premises on an official lease.

§3. If we redirect our gaze to France’s external relations and how these relate to the sale of wine, we will find scarcely any grounds to console us for the internal regime that burdens our industry.

We cannot examine here all the matters that relate to this huge subject. We have to limit ourselves to a few considerations on a question currently being negotiated, a trade treaty with Holland.

After having announced during the session on 21 January that according to this treaty: “Our wines and spirits in barrels will be exempt from any customs duty upon entry into Dutch territory; should they be imported in bottles, they will enjoy a discount of three-fifths of the duty on wine and half for spirits,” the minister exclaimed:

“You will be aware, sirs, that in all sales negotiations carried out by the government, one of its most pressing considerations has always been to expand as far as possible the market for our wine production by opening up new outlets in foreign countries. It is with particular satisfaction that we

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submit to your approval the means of relieving the sufferings of a sector of trade that is so worthy of our solicitude.”

From this pompous preamble, who would not think that our wines are going to enjoy considerable sales in Holland?

To measure the amplitude of the concessions that our negotiators obtained from the Dutch government, you ought to know that foreign wines and spirits are subject to two different import duties in Holland: customs duty and excise duty.

If you consult the table at the end of this article,⁸ you will see that the Dutch government has combined its reductions so cleverly that our luxury trade (wine in bottles) enjoys a tax relief of 10½ percent for the Gironde and 21 percent for the Meuse, and our essential trade (wine in barrels) 12 percent for the east and 1⅓ percent for the west of France. This fine outcome has caused such great satisfaction in our negotiators that they have been quick to reduce by 33⅓ percent the duties on cheese and white lead⁹ made in Holland.

§4. When a significant sector of the population considers itself to be oppressed, it has just two means of regaining its rights: revolutionary means and legal means.

It appears that successive governments in France have vied with one another to instill in the wine-producing classes a disastrous prejudice to the effect that their sole hope of escape lies in revolutions.

As a matter of fact, the 1814 and 1815 revolutions at least won the wine-producing classes a great many promises, and we see from the actual text of the laws of the time that the Restoration claimed to be keeping indirect taxation only as an exceptional resource, which was essentially temporary (law dated 1816, Article 257; and law dated 1818, Article 84).

Scarcely had this empowerment consolidated somewhat, however, when its promises evaporated along with its fears.

The 1830 revolution,¹⁰ to do it justice, promised nothing, but it did effect some notable tax relief (laws dated 17 October and 12 December 1830).

We can already see that it was thinking not only of returning to the old legislation but also of giving it an aspect of rigor that was unknown in the great days of the Empire and the Restoration.

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Thus, in troubled times, the tax authorities make promises, compromise, and relax their severity.

In peaceful times, they retract their concessions and march on to new conquests.

We repeat that we are surprised that the authorities do not fear that this comparison will strike people’s minds and that they will not draw this deplorable conclusion: “Legal means are killing us.”

This would certainly be the most dreadful of errors; and experience, which may be invoked in this regard, proves on the contrary that no reliance should be placed on promises and alleviations wrung through fear from a tottering government.

A government newly come to power may well, under pressure of circumstances, temporarily renounce part of its revenues; but too many charges weigh on the new government for it to abandon totally the intention of regaining them. More than any other government, has it not certain ambitions to satisfy, persons to reassure, prejudices to overcome? Domestically, a government newly come to power has given rise to jealousy, bitterness, and miscalculations; does it not have to develop some apparatus for policing and repression? Externally, it arouses fear and mistrust; does it not have to surround itself with walls and increase its fleets and armies?

Therefore, seeking relief through revolution is an illusion.

However, we believe, and strongly, that the wine-producing population can, through an intelligent and persevering use of legal means, succeed in improving its situation.

We draw its attention in particular to the resources offered by the right of association.

For the last few years, manufacturers have acknowledged the advantage of being represented by special delegations to the government and the chambers. Manufacturers of sugar, woolen cloth, and linen and cotton fabrics have their committee of delegates in Paris.

In this way, no tax or customs measure likely to affect these industries can be passed without enduring the crucible of a long and rigorous inquiry, and everyone is aware how much the domestic producers of sugar owe the success of their struggle to the vigor of their association.

If the manufacturing industry had not introduced the system of delegation, perhaps it would have fallen to the wine-producing industry to set the example. But what is certain is that the wine-producing industry cannot

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refuse to enter the arena into which others have gone before. It is only too clear that inquiries in which its voice is not heard are incomplete and further that it has everything to lose in leaving the field open to interests that are oft en rivals.

In our opinion, each wine-producing area ought to have a committee in the town that is located at the heart of its commercial activities. Each of these committees would nominate a delegate, and the association of delegates in Paris would form the central committee.

Thus, the basin of the Adour and its tributaries, those of the Garonne, the Charente, the Loire, the Rhone, and the Meuse, and the départements that make up the Languedoc, Champagne, and Burgundy would all have their own delegates.

We have had discussions with several people in this institution without encountering a single one who disputed the usefulness of our proposed legislation, but we have to answer a few objections they made to us.

We have been told:

“The wine-producing industry has its natural delegates in its deputies.

“It is difficult to obtain the assistance of such a large number of interested parties, the majority of whom are scattered throughout the countryside.

“The financial situation of France does not allow any hope of the abolition of indirect taxation; besides, indirect taxation has indisputable advantages alongside a great many disadvantages.”

1. Are deputies delegates of the wine-producing industry?

Clearly, when an electoral body invests a citizen with legislative functions, it does not reduce this mission to matters pertinent to industry. Other considerations determine its choice, and we should not be surprised if a deputy, even when he represents a wine-producing département, has not beforehand made an in-depth study of all the questions relating to the trade in and the duties on wines and spirits. Even less, once he has been nominated, can he concentrate his attention exclusively on a single interest when so many serious matters claim it. Therefore, in the special committees that deal with sugar, iron, and wine, he can see nothing but an advantage in having available the information and documents which would otherwise be physically impossible for him to seek out and coordinate on his own. Besides, the precedents established by the manufacturers remove any value from this objection.

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2. It is also said that it is difficult to obtain long-lasting assistance from people scattered about the country.

We, for our part, believe that this difficulty is exaggerated. It would doubtless be insurmountable if active and painstaking assistance were to be expected from each person concerned. But, in situations like these, the most active participate on behalf of the others, and towns act on behalf of the countryside. This does not cause a problem when their interests are identical, and since there is a wine-producing committee in Bordeaux, there is no reason why there should not be one in Bayonne, Nantes, Montpellier, Dijon, or Marseilles, and from these to a central committee there is just one further step to take. It is when difficulties are exaggerated that nothing is achieved. It is certainly easier for three hundred manufacturers of sugar rather than several thousand manufacturers to reach agreement and organize themselves. However, just because something does not happen by itself it should not be concluded that it cannot be done. It should even be recognized that if the masses find it harder to organize themselves, they acquire through organization an unstoppable momentum.

3. Last, the objection is made that France’s financial situation rules out any hope that it would be able to give up the income from consumption tax.

But that again is to circumscribe the question. Does the organization of a central committee establish in advance that its sole mission would be to pursue the total abolition of this tax? Would it have nothing else to do? Do customs questions relating to wine not arise every day? In the discussions that resulted in the treaty with Holland, are people sure that the intervention of the committee would have had no influence on the terms of this treaty? And, as for indirect taxation, is there nothing between total abolition and the total maintenance of the current regime? Do not the method of collection, the means of preventing or repressing fraud, and pertinent powers and jurisdictions offer a vast scope for reform?

Moreover, it should not be thought that everything has been said with regard to the principal question. It is not our place to formulate an opinion on the consumption tax; there are leading authorities and great examples both for and against it. Consumption tax is the rule in England and the exception in France. Well, now! This problem has to be settled. If the system is bad in principle, it has to be abolished; if it is deemed to be good, it has to be improved, its exceptional character has to be removed, and it has to be

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both less heavy and more productive by its being generalized. Here, perhaps, lies the solution to the great ongoing debate between the tax authorities and the taxpayer. And who can say that the movement of minds generated by the setting up of industrial committees and the regular exchanges of views made either between them or by their agency, between the general public and the government, will not hasten this solution?

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IMPORT DUTIES IN HOLLAND