easy to say of the gross postal revenue that so much is tax (i.e. the
net revenue), and so much is cost of service (i.e. the actual expenses),
though it may not be easy to justify even this distinction;[743] but
what principle is to be followed in determining whether a particular
postage charge (e.g. the letter rate or the parcel rate), or any part of
it, is taxation?

Taxes are reckoned according to the rate of charge. Thus, the income tax
is 2s. 3d. in the pound on earned incomes; but approached in this way
postage is not a tax. If the charge only covers the cost of the service,
there can be no tax.[744] And when there is a surplus (above normal
commercial profit) it cannot be argued that the whole charge becomes a
tax. The solution seems to be that in such a case it is neither tax nor
industrial price. It contains elements of both, and cannot be classed
wholly under either.[745]

The differing analyses of Post Office revenue result largely from their
being based on consideration of the balance-sheet of the Post Office, as
indicating whether postal charges are to be regarded as taxes.[746] The
character of postal charges should not, however, be determined by
reference solely to the amount of the surplus revenue. The true
classification rests on the conception that the character of public
revenue (including Post Office revenue) varies with varying
circumstances.[747]

The penny letter rate is a source of very considerable profit, and is
therefore not a pure price. Nor can it be said that this penny rate,
although it is the source of practically all the profit, is a pure tax.
In the case of a large number of letters there is no surplus beyond the
cost of the service, and often the cost is greater than the yield of the
postage on the particular letters dealt with. In such cases the rate
does not contain any element of tax. In other cases the proportion of
surplus over cost which the rate yields is exceedingly large.[748] But
in all cases it contains some element of remuneration for service
rendered. That part of it which is appropriated to cover the cost of
conducting the service is of the nature of a price for a service
rendered. The remaining part (when found), after allowance has been made
for the element of monopoly, is a tax.[749] But it does not exist in all
cases. Three categories of letters are therefore found; and the letter
rate in general may, according to the circumstances under which the
service is rende