Note 744 — APPENDIXES

"Wherever the benefit to the individual can be even approximately estimated there is a strong presumption in favour of levying the cost incurred from him and converting the tax into a 'fee.'"—C. F. Bastable, op. cit., p. 267.

"To be properly remunerative to the State, as to a private individual, the price at which a commodity is sold must be sufficient to pay interest on the capital invested in the business, that is to say, to pay for the use of the property which must be used in producing the commodity, as well as to pay the more immediate cost of its production in wages and materials. There is no ground at all for the theory sometimes put forward that the State should deliberately abstain from making a profit from the working of an institution like the Post Office. Taxpayers are indeed nearly all users of the Post Office, and users of the Post Office are nearly all taxpayers, but there is nothing to show that people are taxed in the same proportion as they use the Post Office—the largest taxpayers are not necessarily the largest users of the Post Office. Consequently it is not a matter of complete indifference whether the State, which in this case means the taxpayers, makes a profit on the business or not. The only question difficult to decide is how much interest on the capital invested the State ought to obtain, in order to make the business remunerative but not a source of taxation. When the State has no monopoly, or only a monopoly secured by driving out all competitors in fair commercial rivalry (if such a case has ever occurred), it may charge what it can get for the commodity sold without making the business a source of taxation. But when the State has conferred on itself a monopoly of a business, it is evident that to charge the price which would bring in the largest profit would often be simply equivalent to laying a tax on the commodity. In this case, the price charged should only be such as would produce a rate of interest which would satisfy private individuals or joint-stock companies, supposing there were no monopoly. The rate of interest should be reckoned in relation to the actual market value of the property used, not in relation to what it may have originally cost the State. When the State makes a bad investment the loss should be written off once for all as soon as it is discovered. If, for instance, a State has bought telegraph apparatus for far more than it is worth, there can be no reason why the senders of telegrams, and not the whole body of taxpayers, should pay for the mistake."—Edwin Cannan, Elementary Political Economy, London, 1903, pp. 130-1.

The cost which ought in strictness to be taken is the cost of the most economical private commercial undertaking which would provide an equal service if the monopoly of the Post Office were withdrawn:—

"I do not regard the greater part of the Post Office revenue as a tax at all. If all of it were earned by doing for the public on a large scale work that no private company could do as cheaply, because it would have to do it on a small scale, then I should say that none of the Post Office revenue was a tax. That part, however, of its revenue which it gets by prohibiting others from performing services for the public is a tax."—Alfred Marshall, The Times, 6th April 1891.