Fines

Houses

tifications. He (the Chancellor of the Exchequer) did not think that business could be very conveniently conducted by the House if attempts were made to combine subjects between which even the ingenious mind of his hon. Friend had failed to show any natural relation beyond that they both related to figures, nor would he follow the example set by his hon. Friend. His hon. Friend complained, in the first place, that the Government had provided, or rather that the Legislature had ordered, that provision should be made for the expense of certain fortifications by means of annuities instead of by the more usual method of borrowing and creating a funded debt; and he also complained of the mode in which the money had been found in order to take up those annuities. As regarded the first point, if his hon. Friend objected to the proceeding of Parliament, he ought to make a Motion to alter the provisions of the Act. The Government had no choice but to obey, but yet they thought that the mode proposed by the Act was the wisest way of making the neces sary provision. The hon. Member for Peterborough (Mr. Thomson Hankey), who was not then in his place, had on a former occa, sion shown conclusively that his hon, Friend opposite was entirely inaccurate in his statement that raising money by annuities was in all cases a wasteful method of borrowing. His hon. Friend complained that the Government had made sales in the open market, but had not made the buyers of stock acquainted with all the circumstances under which the stock was sold. Now, even assuming that the facts were so, he was not aware that it was the custom of those who sold stock to make known the whole of the circumstances which might have induced them to sell; but, however that might be, his hon. Friend was entirely mistaken as to the substratum of his argument. The sales in the open market, which he had so severely censured as contrary to prudence, and even morality, had not taken place. He did not say absolutely that since those annuities were first created there had been no sale in the open market; but if there had been, it was of an entirely trivial character and by way of exception. The money had been procured by Her Majesty's Government not by sales in the open market, but by way of transfer from their buying to their selling account. The principal of the accounts with which they had to do was that for creating life and permanent annuities.

greater number of the best houses the outgoings did not reach 5 per cent, and yet to the proprietors of these his hon. Friend proposed to make a present of 16 per cent. There were, on the other hand, a great number of owners of house property whose outgoings reached 25 or 35 per cent; and what comparatively was a boon of 16 per cent to them, even if it were an absolute boon? His hon. Friend's proposition would not only introduce inequality and injustice in a new form, but would do something more; for, when his hon. Friend said that he would lay on the owners of house property 3d. additional in the way of tax, it was unnecessary to say what an enormous amount of taxation the plan of his hon. Friend would lay on large classes of house property owners, who at present paid a tax on at least 25 per cent in excess of their net income. His hon. Friend's plan appeared to be unjust, inexpedient, and impracticable. So long as his hon. Friend talked of deducting from certain schedules, he would find plenty of willing listeners; but when, on the other hand, he stated that it would be necessary to increase the rate of tax on some schedules, then all ears, except those of the most favoured classes, to whom he gave 33 per cent, would be closed against him. His hon. Friend would, however, have succeeded in confronting class in the most painful and odious warfare with class. When the struggle about free trade was brought to a close, it was thought that that painful warfare arising out of an erroneously sup. posed opposition of interests between classes was in a great measure got rid of; but the plan of his hon. Friend would do much to revive all those angry feelings. He trusted, however, that on every occasion when the subject was brought forward his hon. Friend would fail to obtain a vote from the House of Commons favourable to his plan, just as he failed to do so from the Committee, which, without adverse prejudices, examined his plan fairly. With respect to the Motion, the first portion, in the form of a tabular statement, could be given; but, as to the latter portion, there was an objection to public departments giving Returns founded on computations.

SIR FREDERICK HEYGATE said, that as a Member of the Select Committee of last Session he desired to say a few words. It was essential that in every matter of this kind justice should be adhered to; and he had come to the conclusion, upon an examination of the whole question, that

the persons under Schedule D not only suffered no injustice, but that they actually possessed several advantages over the persons assessed under the other schedules. The chief axiom of the hon. Member for Buckingham (Mr. Hubbard) was, that a tax should press equally on all members of the community, and that the income tax was not a tax of that description. Now, on looking at the different classes of taxation he was at a loss to discover where any such principle could be found. For instance, the duty on insurances fell chiefly on the owners of house property, and the probate duty was a tax on survivors only. The very exemption of incomes under £100 a year is made on the same principle ; an exemption which he thought it would be only fair to extend to those under £150 a year. There was no tax, he contended, that pressed equally on all classes of the community. The hon. Member for Buckingham had made use of the argument that the unfair pressure of taxation under Schedule D led to a great amount of fraud in making the returns. If that were so, it arose, not from the amount these persons had to pay, but because they had the power of selfassessment. Now, this was in itself a great advantage which the persons assessed under Schedule D possessed over those assessed under the other schedules. The late Mr. Wilson proposed to divide incomes into three classes. From the first class, which comprised realized property, he proposed to make a reduction of 12 per cent. From the second, which comprised incomes partly derived from realized property, and partly from the personal exertions of individuals, he proposed to deduct 25 per cent. From the third class, comprising all persons under the operation of Schedule D he proposed to deduct 50 per cent. Mr. Wilson fixed upon the sum of £530,000 as the amount which it would be fair to deduct from the various Scho dules, principally Schedule D, before assessment to the Income Tax. That was in 1853. Now, it appeared to him (Sir F. Heygate) that in considering this question the succession duty on land had been entirely overlooked. It should be borne in mind that the succession duty was proposed by the Chancellor of the Exchequer with the view, among other objects, of remedying any injustice the owners of property which came under the class of Schedule D might be supposed to suffer. The right hon. Gentleman the present

"It is said that the legacy duty is in the nature of a tax upon property. It is a tax upon property, and because it is a tax upon property it meets the views which have been so much favoured by a large portion of this House and by public opinion-namely, that if the income tax is to bear unequally upon intelligence and skill, as compared with property, then that inequality ought to be redressed in some way or other. I think this is a safe mode in which to redress that inequality; and if this is a tax upon property, it is divested of the danger that attends the taxation of

property generally." [3 Hansard, cxxv., 1395.] The hon. Menrber for Rochdale (Mr. Cobden), in his speech on the budget and income tax in 1853, also said—

"At the same time I have presented to me another portion of the budget, which I believe not only goes far to redress the inequalities which sider a bold and honest proposal; and, whatever be the fate of this budget, the right hon. Gentleman (the Chancellor of the Exchequer) and his colleagues have earned for themselves, I think, great honour for their straightforward and resolute conduct in grappling with a question which defeated Mr. Pitt in the plenitude of his power, and with which no one has ever since dared to meddle-I mean the legacy duty. I must say that, looking at the income tax, coupled with the legacy duty-taking them together, viewing them as the keystone of the arch of this budget-I take them both, and I take them with both hands. I feel as strongly as any man in this House the case of professional men; but I have not found in the north of England any very active opposition to

existed in the old income tax, but which I con

the equal rate of duty upon all classes

It will not, I think, benefit the professional man or the small trader in rural districts; but the legacy duty upon real property-although I should wish to view that question per se, and not as a compensation, though we are made up

of checks and compensations in this countrywill be some compensation to the professional and trading community, and will somewhat tend to reconcile them to the tax in its present form." [3 Hansard, cxxvi., 691-2.]

Now, the sum which Mr. Wilson had fixed upon as representing the amount of in justice inflicted on the taxpayers under Schedule D was £530,000; but the succession duty exceeded that amount, the duty having produced in each of the last two years more than £600,000. Now, when the hon. Member for Buckingham talked of the unfair pressure under Schedule D, he entirely overlooked the advantages which these persons derived from the privilege of being allowed to take the average of three years, as well as from the privilege of self-assessment. To show how that operated, it must be observed that from the enormous increase in our trade it

crease under Schedule D. But while from 1854 to 1860 our exports have increased from £115,821,000 to £155,692,975, the amount of the income returned for assessment under Schedule D had shown an increase of no more than £2,417,000, the amount in 1854 having been £93,022,000, and in 1860 not more than £95,439,000. Now, either the trading classes under Schedule D, for whom such a piteous case had been made out, had carried on an enormous trade without profit or with only a small profit, or else they were able by some peculiar process known only to themselves to neutralize those returns. Mr. Till, the intelligent clerk to the Commissioners of Income Tax for the City of London, stated to the Committee, that each penny of tax under Schedule D produced from the beginning £50,000, and no more now, although trade had so increased. On looking at the large increase in the value of land around large towns, and at the general prosperity of the manufacturing and trading classes, as shown by the increased price of every article of luxury, it was impossible to believe that in ten years they had not received a larger accession of income than £2,417,000. It was of essential importance that the subject should be grappled with at once. For his own part, he could not see that the taxpayers under Schedule D were subject to any special injustice, and his confidence in his fellow-countrymen was so strong as to induce him to believe that the moment it was proved to them that such was the case they would desist from all agitation on the subject. He must, however, remark that all the evidence taken before the Committee went to show that the income tax was essentially a bad tax, and that it ought to be reduced to as small an amount as possible. The facility with which such large sums were raised, was a temptation to extravagance, and he believed the Estimates would not pass so readily if the House had not the income tax to fall back upon. If that tax was only resorted to in times of danger, instead of quarrelling who should bear the most or the least, he believed the people would come forward like good citizens and bear their share of it fairly and honestly.

MR. POLLARD-URQUHART said, he could not but deprecate the line of argument by which it was sought to uphold that the income tax did not press unduly on Schedule D, because, by leaving a door

open for the commission of fraud by means of making false returns, its pressure might be mitigated. He regretted that the Chancellor of the Exchequer had not acceded to the whole of the Motion, for the Returns moved for would have shown the country what would have been the real effect of the readjustment proposed by the hon. Member for Buckingham. Great injustice was at present done to the landowners, and to those who derived their incomes from certain kinds of house property, and the time had come when something should be done for their relief. He was the more anxious that the income tax should be placed upon a sound basis, because he desired to see it permanently established, believing that it had enabled the present and past Governments to improve our fiscal system, and that future Governments would find in it the means of taking off those indirect taxes which still restricted our commerce, and lessened the comforts of the great body of the people.

SIR HENRY WILLOUGHBY said, he must decline to discuss the income tax, because, do what they would, they could not make it agreeable. It was a most detestable impost, incapable of amendment, and the best plan would be to get rid of it as soon as possible. Such a tax ought not to exist in time of peace; and if, as they had been told by the right hon. Gentleman the Chancellor of the Exchequer, £65,000,000 was a revenue amply sufficient even during the Crimean war, there was some reason to hope, that if things went quietly, at least one-half of the income tax might be taken off next year. But what he wished to remark upon at that moment was the objection taken by the hon. Member for Buckingham (Mr. Hubbard) to the Chancellor of the Exchequer, when authorized by the Legislature to raise annuities, being permitted to sell those annuities practically to himself. It appeared that a large portion of the Fortification Annuities had been taken by the savings banks. Everybody knew that the manager of the savings banks had nothing to do with such transactions, which always took place between the Chancellor of the Exchequer of the day and the Commissioners for the Reduction of the National Debt. Now, the Chancellor of the Exchequer was a leading Commissioner, and practically he had sold the annuities to himself. That was a most vicious system, and he hoped the House would stamp it with its reprobation.

SIR STAFFORD NORTHCOTE said, he would suggest that the hon. Member for Buckingham, in accordance with his own plan for the readjustment of the income tax, should distinguish in the Return for which he had moved between trades and professions generally and joint-stock companies. The proposal of the hon. Member was to allow trades and professions generally to deduct one-third from their incomes; but he would not permit joint stock companies carrying on business to make any deductions at all. Such a plan, if adopted, would operate most injuriously, and it was only right that the real effect of it should be made known to the country. His hon. Friend would by no means get rid of the difficulty and injustice of the income tax by his plan. He mitigated them only in a very insignificant degree. Nothing was easier than to point out anomalies in its incidence; but that fact only showed that they ought not to lay that stress on it they were now doing

that it was desirable to reduce the pressure to the minimum, and that they should only have recourse to the tax in an emergency, and for great objects; but the scheme proposed by his hon. Friend was full of objections and inequalities. Thus, for instance, there was no doubt that landed proprietors whose property was subject to mortgages were unjustly treated by the system of charging upon the gross rental; and he understood his hon. Friend to say that by his plan he would get rid of that injustice, by relieving the proprietor from a proportion of the charges of management; but that really was not sufficient, and would still leave him liable to more than his fair proportion as calculated upon his net income; and the proposal to increase the tax upon real property in order to relieve the taxpayer under Schedule D would increase the injustice, and make the proprietor of landed or house property liable to perhaps more than he paid then. His hon. Friend drew a line which would cause the greatest dissatisfaction, and give rise to questions that would go on spreading from year to year until the tax became perfectly odious, and utterly useless for all purposes of finance.

MR. HUBBARD replied: He should have been very glad to have his Return rectified according to the suggestion of his right hon. Friend the Member for Stamford; but he found that the Board of Inland Revenue could not, without much trouble and delay, distinguish the returns