INCOME TAX AND MADRAS

2011 marked the end of the year long celebrations commemorating 150 years of Income Tax India. I happened to go through a small pamphlet brought out by the IT department (available on the website), which traced the origins of Income Tax in India and proceeded to trace its progress over the 150 year period. Mentioned rather appropriately in the pamphlet was James Wilson, the man behind the levy of Income Tax.

This post is about a man who played an equally important and interesting part in the introduction of Income Tax in India,Sir Charles Trevelyan, Governor of Madras from 1858-1860, a man who is seldom mentioned in discussions regarding the origins of Income Tax in this country.

Sir Charles Trevelyan, born in 1807 joined the East India Company's Bengal Civil Service as a writer in 1826 and gradually moved up the ranks, becoming Deputy Secretary to the Government in the Political Department and later Secretary to the Sudder Board of Revenue, before returning to England in 1838. During his tenure, he earned a reputation for promoting the cause for education and it was thanks to him that the Government decided in favour of the promulgation of European Literature and Science amongst the Indians.

His experience in Indian conditions meant that he was seen as a perfect choice to replace Lord Harris, who had resigned as Governor of Madras in 1858. Thus, he returned to India in 1858, this time as Governor of Madras.It was around this time that the administration of India was undergoing a change. Soon after the Mutiny of 1857, the Government of India Act, 1858 was passed that placed India under the direct rule of the Queen, thus bringing to an end the East India Company rule.

The Mutiny had left in its wake a tremendous deficit that needed to be overcome. An increase in customs duty was proposed, which led to widespread protests, especially in Bengal and Madras. A need was felt for the presence of a person who would be the panacea for the financial mess the government was finding itself in. Thus came into picture James Wilson, a man known to be of great financial ability. Little would he have imagined then that his brainchild would go on one day to become the country's mainstay of revenue.

James Wilson, in the first ever Budget Speech in India, delivered on 18th of February 1860, proposed to bridge the gap between revenue and increase in public debt through an increase in import duties, a tax on home-grown tobacco, a small and uniform license duty upon traders of every class and the temporary imposition of an income-tax on all incomes above Rs 200 a year, but with a reduction for those not exceeding Rs 500 per annum. Needless to say, these proposals were to meet with considerable opposition.

Sir Charles Trevelyan was quick to raise in protest against the proposed taxes, and Income Tax in particular. He was of the view that it was not proper to impose the burden of the expenses caused due to the Mutiny on a Presidency that was least affected by it. A public meeting was held at the Pachaiyappa's Hall in George Town (then known as Black Town) to garner support against the imposition of Income Tax.Joining hands with Sir Charles Trevelyan in the protest was Sir Henry Nelson of Parry and Co, who was then the Chairman of the Madras Chamber of Commerce. Trevelyan also found fault with the imposition of the tax on people who had no representation in the Legislative Council. Needless to say, this did not go down well with the powers in England and led to the recall of Trevelyan.

The whole episode had an ironical ending. James Wilson did not live to see his efforts bear fruit as he died of dysentery in August 1860, thus leaving a sizable hole to fill in the Finance Department. In one of those ironies of life, the man chosen to replace him was Trevelyan himself, who returned to India in 1862 as the Finance Minister, thus being made in charge of implementing a levy he had so vehemently opposed. And thus came to stay Income Tax, in the face of ongoing protests led by Madras particularly. After an unsteady initial period in the 1870s(when it was abolished in 1873,only to return 5 years later), Income Tax became more or less a permanent feature.

Trevelyan and his tenure in Madras as Governor is remembered even today in the city. It was he who mooted the idea of developing a public space for the city, a green lung that would serve as a place for people to congregate and also provide a mode of recreation. Thus came into being the People's Park right next to where today the Central Station is, on an area of 117 acres. This park would later go on to house famous Madras institutions such as the Zoo (which functioned from there until the 1980s, when it moved to Vandalur)and the magnificent and historic Victoria Public Hall (built in 1887,currently undergoing renovation). Sadly, all today that remains of this huge green space is a garden called the My Ladys Garden, which is functional and can been accessed through Sydenhams Road. A fountain christened the "Trevelyan Fountain" was put up on the grounds of the Victoria Public Hall when it was built, thus commemorating the man who developed the space. This fountain, though dysfunctional can be seen even today, recently having been relocated inside the grounds to facilitate the Metro Rail work. Another place commemorating Trevelyan in the city is a road called the Trevelyan Basin road.

ACKNOWLEDGEMENTS:

1. CHAMPIONING ENTERPRISE (2011): A COFFEE TABLE BOOK COMMEMORATING 175 YEARS OF THE MADRAS CHAMBER OF COMMERCE, Authored by Mr.V.Sriram