HC Deb 08 April 1856 vol 141 cc640-58
MR. MUNTZ

said, that before bringing forward the Motion of which he had given notice, he hoped he might be allowed to read a letter he had received from a gentleman in Ireland, whose name he only knew from the receipt of that letter. The writer was a clergyman, who stated that he was the rector of a small parish near Dingle, and his whole income was £158 a year, out of which he had to pay poor rates amounting to £45 5s. 7d., and £10 18s. 9d. for income tax, so that, after paying £62 for life insurance, he had only £40 left for the support of his family. The writer also stated that he had submitted his case to the Income-Tax Commissioners, in the hope that they would modify their demand, but his appeal had been fruitless. He therefore hoped that some modification of the tax would take place. He (Mr. Muntz) knew that not only in Ireland, but in many other parts of the kingdom, the operation of the tax was equally oppressive. He regretted to say that he was old enough to remember the effect of the income and property tax in the former war. In 1814, 1815, and 1816, there was a strong feeling with regard to its inequality. Not that he objected to an income tax, or rather to a property tax, in the strict sense of the term; but it was because the present income tax was so unjust, and it was so impossible to make it just to society at large, that he objected to it. When the income tax was reimposed in 1842, by the late Sir Robert Peel, he (Mr. Muntz) supported it, because, under the circumstances in which the finances of the country were placed, there was no other remedy; and, unjust as he thought it, he preferred an attempt to restore our finances by means of a temporary income tax rather than by taxes on the necessaries of life, which would have pressed with great severity upon the poorer classes. He supported it, therefore, on that ground, though he thought, and stated that he thought, it inquisitorial and unjust in its nature. He had thereby subjected himself to much obloquy, and the Whigs, who then opposed it, abused him because he voted for it. But he supposed that when the time at which Sir Robert Peel had pledged himself to remove it—and but for that pledge he would not have supported it—he supposed when that time came that the parties who had abused him for voting for the income tax would have got rid of the tax, but, instead of that, every one of them voted for it; it was reimposed, had continued ever since to the present day, and had been added to, the last addition being for the purpose of carrying on the war, which was, no doubt, a good reason for continuing it. In his opinion, a tax on property was about the best you could have, for it forced people to pay a large amount who could afford it, and you got it from many persons who would not otherwise contribute to the support of the State. There was, however, a wide difference between a tax upon property and a tax upon income, and he thought it most unjust to levy the same rate of taxation upon industrial and professional incomes and upon real property. It was only fair that those who had property to take care of should pay higher taxation than those who had no property. There was an old saying, that the wise conquered difficulties by daring to attack them, while the slothful and foolish shivered and shrank at the sight of toil or danger. So it was in the case of this tax. Unjust and unequal as its operation was, no attempt had been made to remedy it. Some time ago a Committee recommended that some alteration should be made, but nothing had been done. It was not at all an uncommon case for his constituents to apply to him in order to ascertain whether they had any remedy for the injustice and oppression to which they were exposed under the present Income-Tax Act. A demand was made upon those persons for a certain amount of income tax, to the payment of which they objected, on the ground that the demand exceeded the amount for which they were liable. The only resource they had was to show their books to the Commissioners; but those Commissioners, in the majority of cases, were either opposed to them in trade, or their bankers. Consequently, they often declined to produce their books, and the result was a denial of justice; for to make a man rob himself was as gross an act of injustice as could possibly be perpetrated. The next question for consideration was, if the tax could not be collected fairly, ought it to be maintained? He contended that it ought not; but he believed that it could be collected honestly in England as in other countries. No difficulty was experienced, for example, in the State of New York, where, if a man objected to his assessment, he had an opportunity of making an affidavit, which was held to be final. He saw no reason why the same system should not be adopted in England. Another grievance connected with the tax was that certain kinds of property did not pay at all. Furniture, plate, jewelry, and property of that description escaped the tax; but a poor man, who had none of these things, was called upon to pay on what he earned. In short, the rich were allowed to escape a portion of the tax, while the poor were compelled to pay to the utmost farthing of their incomes, and in many cases even more. Within the last few months the case of the engine drivers on the railways had been represented to him. They had shown clearly that they were not paid £100 a year, after deducting certain things which they were obliged to provide at their own expense; but the only redress the poor men had been able to get, so far as the past year was concerned was, not that they should be exempt from the income tax, as they ought to be, but that they should only be taxed on an income of £100 a year, while they were not legally liable to the tax at all. The levying and collection of this tax was pursued as a mere matter of expediency, with the determination to get as much as could be got by it, whether right or wrong; and a man in business must submit to be surcharged year after year, if he did not like to expose his books and all his affairs to the world. Such a system could not be advocated by any man who had a respect for justice. Again, the tax pressed with undue severity upon the owners of house property. Take the case of a man deriving a gross annual income of £100 from, say, three houses. His payments were—property tax, £6 13s. 4d.; ground rent, £12; insurance on £600, £1 7s.; repairs, £6; probable loss of rent in case of voids, £2 10s.—in all, £28 10s. 4d.; leaving a net income of £71 9s. 8d. Yet he was taxed upon a rental of £100, or at the rate of 1s. l0½d. in the £1 on his net income. In the case of small house property the injustice of the tax was still more glaring. Take, as an example, thirteen houses at 3s. per week rental, giving a gross annual income of £101 8s. The payments were—Property tax, £6 13s. 4d.; ground rent, 612; insurance on £600, £1 7s.; repairs, £13; voids and runaways, £10; poor rates, £6 13s.; borough taxes, £6 13s.—in all, £56 6s. 4d.; leaving a net income of £45 1s. 8d.; on which the owner was called upon to pay at the rate of 2s. 11½d. in the £1. Thus it appeared that while landowners and fundholders were taxed at the rate of 6½ per cent, the owners of middling and small house property were compelled to pay at the rate of 10 and 15 per cent. That certainly could not be called just or right. There were other classes—for instance, those who carried on what was termed jobbing business, who were not required to pay at all; in short, the present system of collecting the tax was most unjust and oppressive, and the sooner it was changed the better.

MR. POLLARD-URQUHART,

in seconding the Motion, said he did not agree with the hon. Member for Birmingham that landowners did not pay their fair proportion of their tax. In the case of land the expenses of management and other necessary charges amounted to a considerable proportion of the rental, and thus the proprietors were taxed to a greater amount than they ought to be. The tax was particularly hard upon those landowners whose estates were incumbered, for they had to pay not only to the full extent of their incomes, but even upon the sums which went to their creditors. It would be impossible to exaggerate the severity with which the tax pressed upon professional incomes and life annuities, and it was the manifest duty of the Government to capitalise all incomes, and thus make the tax fair and equitable. An attempt had been made by the Government of Lord Derby, in 1852, to modify the system, and he believed that the real reason why that plan did not give satisfaction was to be attributed to the construction of the schedules; but he was quite convinced that it was possible so to modify the present system as to greatly remove its unjust operation. If the income tax was merely a temporary tax—if it was merely a financial experiment, or even a war tax, inequalities might be allowed to exist; but believing, as he did, that in consequence of the system of commercial policy commenced in 1842, and which must be carried even still further than it had at present extended, the income tax must form a permanent part of the system of taxation, he was satisfied that it was absolutely necessary it should be considerably modified, and he sincerely hoped the Government would consent to the Motion of his hon. Friend the Member for Birmingham.

Motion made, and Question proposed, That, in the opinion of this House, an equitable adjustment of the Income and Property Tax is essential to the interests of the country, particularly as regards the rates of payment upon industrial and professional incomes, compared with those derived from fixed property.

THE CHANCELLOR OF THE EXCHEQUER

It would be difficult, Sir, for the House to exaggerate the importance of this Motion, although the hon. Member for Birmingham has not gone very fully into the subject nor stated either at any length or with great distinctness the grounds upon which he asks the House to agree to reverse the policy which has been followed by this country with regard to the income tax since it was introduced by Mr. Pitt; and yet his Motion is of such extent, that, although it is brought forward in the form of an abstract proposition, it would, if agreed to, pledge the House to undertake the arduous task of the reconstruction of that tax. I will first state shortly what is the present condition of this tax. The present income tax is at the rate of 1s. 4d. in the pound, which is £6 13s. 4d. per cent, and by the existing law it is to be continued for one year from the 5th of April succeeding the ratification of peace. From April, 1858, it will fall to the rate of 5d. in the £1, and, according to the same law, it will altogether cease in 1860. Under these circumstances the hon. Gentleman invites the House to take a course which would render it necessary to enter upon the task of making an alteration in the principles of the existing law, and, in calling upon the House to commence that arduous undertaking, he has abstained from indicating anything beyond the most general principles upon which that reconstruction is to be effected. Hon. Members will doubtless remember that Dr. Johnson, in his Lives of the Poets, referring to a criticism upon Dryden's translation of Virgil, at the end of which the critic had placed a translation of his own, to show how it ought to be translated, says, that, whatever we may think of his verses, at all events, he is entitled to the praise of being the fairest of critics. Now, I wish I could bestow a similar praise upon the hon. Gentleman (Mr. Muntz). I wish that, while he was condemning the principle and details of the income tax, he had at the same time told us what was the nature of the tax which he would wish to substitute for it. In a Committee of Ways and Means, when we come to consider how we may best provide for the service of the year, it will be quite competent for the hon. Gentleman to move Resolutions on the subject, and if he do so, I hope that the nature of the tax which he proposes to substitute may be indicated. All taxes, whether direct or indirect, are open to serious objections, and there is no person possessing any ingenuity or any knowledge of the subject who may not be able to point out disadvantages in each individual tax. It is the very nature of taxation that every tax will produce some inconvenience, but as it is allowed that, on the whole, Government is a useful institution, and at the same time that it cannot be carried on without taxation, the only question left to be considered is what are the least bad taxes which a Government can impose. If a Finance Minister were to wait until he had discovered a tax which was absolutely perfect, or one to which no specious objection, or one to which even no valid or sound objection could be offered, I am afraid that he would have to present himself annually to the House with an empty Budget. Now, with regard to the income tax, the sum derived from it last year was £16,418,000, and it is very natural that a tax producing so large a revenue should not be levied without giving rise to many complaints; but those complaints would not justify this House, upon the general principles laid down by the hon. Gentleman, in consenting to abolish this tax before they have any opportunity of comparing it with the tax which is to be substituted in its place. The hon. Gentleman who moved this Resolution, and the hon. Gentleman who seconded it, although they differed upon some points, agreed in the principle that the rates of payment upon industrial and professional incomes ought to be lower than that upon incomes derived from fixed property. The subject appears to me to resolve itself into the question whether we should have an income tax or property tax; and, as I understand the hon. Member for Birmingham, he wishes the income tax to be repealed and a property tax substituted for it. Now, in the first place, I would wish to point out for his consideration some facts connected with the introduction of this tax. It was first introduced by Mr. Pitt during the late war, and after its introduction it underwent various alterations from 1797 to 1816, when it was repealed, having furnished the sinews of war during that great contest in which this country was then engaged. In the year 1842, the late Sir Robert Peel, profiting by the experience of Mr. Pitt, introduced it in its present form, departing in some particulars from the tax as instituted during the war, but in the main adhering to its principles; and now the hon. Gentleman (Mr. Muntz) calls upon us to depart from a system founded upon long experience, and substitute for it one of which he tells us little or nothing. I will call the attention of the House as shortly as I can to the grounds on which this great change seems to be recommended. I believe that the persons who engaged in the discussion of this question, on both sides, assumed as an axiom the well-known dictum of Adam Smith upon the subject of taxation; it was taken as the principle to which each party agreed to refer the solution of the question. Adam Smith says, "that the subjects of every State ought to contribute towards the support of the Government as nearly as possible in proportion to their respective abilities." Well, Adam Smith goes on to explain his meaning as follows—"that is, in proportion to the revenue which they respectively enjoy under the protection of the State." Now, he does not say in proportion to the property which they respectively possess under the protection of the State, but he says, in proportion to the revenue which each subject respectively enjoys. That is a distinction to which the attention of the House should be particularly directed. In imposing a tax of this sort, the State ought to look not to property, but to income. The ability of each person to pay ought, in my opinion, to be measured simply by the annual revenue which he possesses. The bargain which the State seems to make with the taxpayer is this:—"We will give you protection for a year, and you will pay your taxes for a year." Beyond that period, or some other such limited period, the State cannot be held responsible for extending protection to private property. Taxation, in my opinion, cannot be considered prospectively. It is not what may be the prospective value of the property to the owner on which the property tax is founded. What alone ought to be regarded is the present value of the income which the owner has to enjoy and use, and not what may be its value if it were to be sold. The question of market value is quite irrelevant to the argument as a matter of taxation. But if, on the other hand, you adopt the principle of the hon. Gentleman, and tax not income, but property, let us see what consequences it will involve. I will, with the permission of the House, read an extract from a Report which the late Mr. Hume proposed to be adopted by the Committee appointed to inquire into the income and property tax in 1852, in which Committee the question of property as contra-distinguished from income was very fully considered. The views of Mr. Hume were fully embodied in this Report, and with this recommendation concludes:— Your Committee submit, finally, that the taxation of this country is not based on any intelligible principle; and that it becomes more and more apparent every year, especially if the property tax is to be a permanent tax, that the whole of the present system of taxation must be revised; that the best tax, the tax most easily levied, offering the fewest obstacles in the collection and the least likely to encourage evasion and fraud, will be found to be an equal tax on the realised and industrial property of the United Kingdom. I believe everybody who reads that passage will come to the conclusion that, if the principle of that Report be worked out, we must sweep away the whole of our present system of taxation—Income Tax, Stamps, Excise, and Customs, and substitute for it a simple and equal tax on the realised and industrial property of the United Kingdom. That seems to be the legitimate conclusion to which this doctrine must lead, and which my hon. Friend, I infer, is ready to adopt. Sir, the distinction indicated in the Resolution before the House is that commonly drawn between permanent and precarious incomes. But it appears to me that those who argue upon the distinction of permanent and precarious incomes resolve all property into incomes consisting of those two sorts, and assume that it is correct to say that there is a certain set of incomes which are permanent and a certain set of incomes which are precarious, and that under one or the other of these two heads all incomes must fall. Now, I confess that that assumption appears to me to be founded entirely in error; and that no such distinction does exist in any other sense than this, that there is a scale of income arising from sources of the most permanent to the most precarious nature; but that between these two extremes there is an infinite number of degrees, and that it is scarcely possibly to define where the sources of a permanent nature end and those of a precarious nature begin. Therefore, though when we speak in general terms of permanent and precarious incomes, we know what is meant; yet, when an attempt is made to establish a system, of taxation on that distinction, then I contend that the greatest inequalities will immediately be found to result. I will just suggest one of those obvious cases as illustrative of what must inevitably occur were such a system to be acted upon. Everybody knows what an estate in fee simple is. The owner sells it for the highest marketable price which he can obtain for it, estimated by so many years' value. We also know what is meant by a professional income, and that its value depends upon the exertions of the individual—upon his health, skill, and capacity, whether he be a barrister, a physician, or of any other profession. On these two bases—an estate and a profession—the revenue of each party rests. But between these two descriptions of incomes there are a variety of intermediate cases. Such, in regard to land, is the very common case of an estate for life. Now, is an estate for life a precarious or a permanent property? It is a freehold estate according to the law of England, but, nevertheless, a life estate is oftentimes a very insufficient provision for a man and his family. For instance, a parson of a parish has an estate for life in the benefice which he holds, although the income arising from it may not exceed £150 or £200 a year; and is he to be called upon to pay the full rate of the property tax, while you allow the banker or the merchant, who is receiving a profit of perhaps £20,000 or £30,000 a year, to be exempt from taxation, because theirs is a precarious income, being derived from business? Everybody must see, if you wish to construct an income tax upon principles of justice, that that is not a case that will suit your purpose. But there is an infinite number of estates which can be carved out of a fee simple estate by means of marriage settlements, wills, and other descriptions of legal instruments. There are estates in reversion, estates for life in remainder, estates for life expectant, estates for life conditional, all dependent upon an existing life interest; in what way do you propose to deal with the interests of persons situated in that manner? If the House were to attempt to adopt a property tax to meet all these various interests, it would find itself involved in an undertaking in which the human mind would find itself absolutely bewildered. According to the principle of the hon. Gentleman, all incomes derived from trade are to be held precarious—that is to say, all incomes derived from banks, from distilleries, from breweries, from trading companies—some of which establishments have a character of stability, stamped most strongly upon them, and which enable those who are interested in them to enjoy large incomes during their own natural lives, and to make provisions for their children after them. Yet it is proposed to hold all these incomes precarious! But, Sir, if by "ability" you mean to make a distinction between a man's income at the present time and what may hereafter be the probable demands on a man's income, you must take into consideration a number of circumstances, besides the permanency or precariousness of its source. You must take into consideration his family circumstances and his means of obtaining assistance from others. There are hardly any two cases, if you were to go into an accurate investigation of a person's ability to pay, in which you would not find it necessary to make a distinction when adapting an income tax to them. In the Income Tax Act of 1805, it was attempted to make an allowance in certain cases—namely, abatements were made to persons having more than two children; where the annual income was £60 and under £400, for each child above two the abatement was 4 per cent; £400 and under £1,000, the abatement was 3 per cent; for £1,000 and under £5,000, the abatement was 2 per cent; and for £5,000 and upwards, it was 1 per cent. But that enactment was not of long duration. It was repealed in the year 1807, and never afterwards revived. But when you endeavour to estimate with critical accuracy the precise measure of a man's ability, it is essential that you should not only regard his sources of income, but the demands upon them. An attempt to construct the income and property tax upon principles of strict justice would involve the necessity of making a special schedule for almost every taxpayer in the kingdom. So various are the circumstances of each individual, that, unless you descend to a degree of minuteness such as fiscal legislation has never yet attempted, I doubt whether you will make the least approach to a satisfactory solution of the problem which the hon. Member has submitted to the consideration of the House. How are the principles of sparing particular descriptions of revenue and of imposing additional taxation upon permanent sources of income consistent with our system of indirect taxation? If we are to adopt the doctrines so strenuously advocated by the hon. Member for Birmingham, how is it possible that we should go on levying one single indirect tax? From the very necessity of the case, such a tax falls with equal pressure—as far as amount is concerned—on the landowner with £100,000 a year and on the mechanic, whose wages do not exceed 15s. a week. They each pay the same duty on sugar, coffee, and tea. No attempt has ever been made to adjust the impost in proportion to the relative circumstances of the persons who are liable to it. But this must be all changed, if the arguments of the hon. Member are allowed to prevail. If he means to be consistent in his views, he must abolish all taxes imposed under the heads of Customs, Excise, and Stamps. Nor is this all. He will also have to remodel all the local taxes. Those taxes, which yield a revenue of more than £10,000,000 a year, are not levied on the principle of the property tax, but strictly on that of the income tax. They are charged to the occupier in proportion to the annual value of his land or house to let. The occupier who is an owner pays no more than the occupier who is not an owner. If the views advocated by the hon. Member should find favour with the House, and if we should declare, as he calls upon us now to do, that the principle on which the income tax is founded is unjust and inequitable, it is manifestly impossible that we should leave standing, and without alteration, a system of local taxation which yields upwards of £10,000,000 annually, and which, as I have already remarked, rests upon the basis, not of the property, but of the income tax. The produce of Schedule D during the last year was £5,101,000; of Schedule A, £7,666,000; of Schedule C, £1,852,000. The number of persons who contributed under Schedule D was upwards of 282,000. With regard, however, to that schedule, it should be borne in mind, when comparing it with the others, that all taxation under the others is charged on property before it comes into the hands of the taxpayer. It is impossible that any such practice should prevail in the case of Schedule D, which, be it remembered, is a self-assessing schedule. I am far from desiring to cast any imputation on the honour or integrity of the professional and commercial men who are classified under that category, but it is in human nature that when men are required to assess themselves for the purposes of a tax they should make their calculations on principles more lenient and indulgent than they would be likely to adopt if they had been required to perform the same duty for other people. It may safely be assumed that in cases of uncertainty they will not hesitate to give themselves the benefit of the doubt, and that they will put upon their own liability as limited a construction as possible. It should also be borne in mind that no inconsiderable quantity of property, which may justly be regarded as commercial, is included under Schedule A—such, for instance, as quarries, mines, ironworks, gasworks, waterworks, canals, railways, and fisheries. There is in many respects a great analogy between this class of property and that included in the commercial schedule; yet the hon. Member for Birmingham would draw a marked distinction between them, and apply a very different rule of treatment to each. Nor must we, in contrasting these schedules, forget that, since the discussion which took place some four years ago on the subject of the income tax, a new tax has been proposed, which to a certain degree alters the relative positions of Schedules A and D—I allude to the tax upon successions. That is an impost of very considerable magnitude, paid at certain periods in large sums, and which falls exclusively upon property classified under Schedule A. All these compensating circumstances must be taken into account, and, when we have examined and contrasted the claims and conditions of each schedule respectively, we shall probably arrive at the conclusion that taxation, under whatever system, is at best but a rough adjustment of rival rights and liabilities. In entertaining a proposal the effect of which would be most materially to diminish the burdens in Schedule D, and to aggravate those in Schedule A, it must not, I repeat, be overlooked that since the time when this question was last under discussion a new tax has been imposed which disturbs not a little the proportions then existing. Bearing in mind this fact, and remembering also that the treatment of this question by my right hon. Friend the Member for the University of Oxford (Mr. Gladstone) when the matter was first mooted, was so minute and ample as almost to have exhausted the subject, I had hoped that the question would not have been so soon again renewed, and that we should have been spared the not very profitable discussion which the Resolution of the hon. Member for Birmingham has this evening provoked. I have stated the reasons which appear to me to show that this is not a favourable moment for the entertainment of this subject, and I trust that a dispassionate consideration of all the circumstances of the case will deter the House from adopting an abstract proposition which could never be advantageously reduced to practice. Now that the chief object of the hon. Member for Birmingham has been attained—that of subjecting this matter to periodical discussion—I hope that he will rest satisfied, and not seek to pledge the House to a proposition the consequences of which may be far too vast and too important to render it desirable that the question to which it relates should be decided upon a partial and limited view. I shall therefore conclude my observations on the Motion of the hon. Gentleman by moving the previous question.

MR. LAING

said, that if the Motion were pressed to a division, he should certainly vote against the Resolution of the hon. Member for Birmingham on the simple ground that, however legitimate or convenient it might be for the House to affirm a broad principle on certain general questions of policy, and leave to the Government the responsibility of working it out in detail, such a course was wholly inapplicable to financial subjects. No tax could be named against which very plausible objections could not be urged; and therefore nothing could be more dangerous than for the House, by coming to popular votes of this description, to assert abstract principles without seeing its way to a substitute for the impost proposed to be remitted. Indeed, it would be well for the House to adopt it as an axiom that it ought not to judge any particular tax merely upon its own merits, but chiefly in relation to the mode in which the void in the Exchequer which its repeal would occasion was to be supplied. That, however, did not imply that the income tax was perfect in all its arrangements. So far from that being the fact, it was indispensable, before this impost was incorporated with our permanent system of taxation, as would, no doubt, have to be the case, that those portions of it to which public opinion was most repugnant should undergo revision, with a view to render them more acceptable to the country. It was impossible to deny, as an abstract proposition, the distinction existing between incomes derived from precarious sources, such as trades and professions, and those obtained from realised property; and it was hardly fair to charge those who advocated a modification of the present system with aiming, in a matter of this complexity, at such chimerical objects as the assessment of the country on principles of theoretical equity, by which every man would have to pay in an exact ratio to his ability and means. The substitution of a property tax for one on income was no doubt a visionary project, and we must, therefore, take income as we found it, and levy a certain impost from it; but the right hon. Gentleman the Chancellor of the Exchequer had himself pointed out the broad line of demarcation between Schedules A and D, the latter, unlike all the rest, being a schedule under which the taxpayer assessed himself to the amount on which he should be chargeable. Thus the Government was placed between the alternatives of a severe and stringent inquisition into the private affairs of individuals on the one hand, and of the opening of the door to extensive frauds on the other. That was a state of things which it was most desirable to correct. Much of the difficulty encountered by eminent financiers in mitigating this evil arose from the impost not being calculated upon by them as a permanent part of our fiscal system. Introduced in 1842 by Sir Robert Peel for a limited period, it was subsequently renewed from time to time; and when the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) propounded his celebrated financial scheme as Chancellor of the Exchequer, that ex-Minister looked forward to its gradual extinction at no distant date. The time was, however, now come when we ought to make up our minds to the continuance of this tax, at least for the lives of the present generation. At the same time, it was certainly his opinion that its pressure might be considerably alleviated and its machinery readjusted, so as to check fraud and evasion while obviating its obnoxious inquisitorial operation. With that view it might be found practicable—following a suggestion of the right hon. Member for the University of Oxford—to raise a part of our revenue by a system of licences for trades and professions in lieu of assessment under Schedule D. Whatever might be done in this or in any other way to make the tax more palatable, could not, however, be successfully achieved unless it were carried out under the direction of the Government. The construction of the forthcoming or any future peace Budget would present a great and honourable task to the laudable ambition of the Chancellor of the Exchequer; and it was earnestly to be hoped that the right hon. Gentleman who now filled that important office would address himself to the revision of our entire system of finance in a comprehensive spirit, and with a desire to place it on a sound and healthy basis, and one calculated to endure throughout the long and prosperous career of peace which it was to be hoped lay again before this country.

MR. W. WILLIAMS

said, he wished to call attention to a hardship in the working of the present measure which he thought had only to be mentioned to be altered. He knew that when the weekly wages of working men did not amount to £100 per annum some of the assessors had taken into account the little extra gained by these men working over hours, and this brought them within the impost, whereas in other districts the assessor did not adopt that plan, and those men were relieved from the payment of a tax which the others were subject to. He therefore hoped that the Chancellor of the Exchequer would consider this, and give instructions to the assessors not to calculate the incomes of hard-working men in the manner he (Mr. W. Williams) had stated.

MR. SPOONER

fully agreed with his hon. Friend the Member for Birmingham that, according to the terms of his Motion, "an equitable adjustment of the income and property tax is essential to the interests of the country," but he could not concur in the declaration contained in the Resolution, that such an adjustment was particularly needed "as regards the rates of payment upon industrial and professional incomes compared with those derived from fixed property." Unquestionably great injustice and great inequality prevailed in the mode of assessing professional incomes, but was there no such inequality in the case of the possessor of landed property? A person possessing an estate of £1,000 a year paid income tax upon the whole of that amount, although he did not receive it, for any one acquainted with landed property knew that the charges upon it amounted to at least twenty per cent. If they took the case of a mortgaged estate, the mortgagor received the interest of the money he had lent without any deduction except for property tax, and had no county contributions to bear and no expenditure for repairs to meet. A person, also, who had money in the funds paid the property tax simply upon his receipts, and was not subjected to any of those other deductions which pressed upon the landed proprietor. He (Mr. Spooner) could not, therefore, agree to that portion of his hon. Friend's Resolution which declared that the inequality of taxation applied entirely to the commercial and industrial interests, as if landed proprietors had no reason to complain of such inequality. It must be remembered, too, that landed proprietors had to pay the property tax of their tenants as well as their own, for when a man took a farm of course he calculated the payments to which he would be liable as an occupying tenant, and deducted certain items from his calculation of the amount of rent he ought to pay. He (Mr. Spooner) regretted that the Chancellor of the Exchequer did not exhibit any inclination to consider whether the property tax might not be rendered more equal in its operation than it was at present. Compare, observed the hon. Gentleman, the difference between a gentleman possessing a landed property of £400 per annum, and a clergyman possessing a living of the same amount. In the former case the property is worth thirty years' purchase—in the latter perhaps three, four, or five years, varying acccording to the age of the incumbent—yet these individuals are taxed to the same amount under the present law. To do justice they ought to deduct from the income of the clergyman such a sum as was sufficient to provide for his family when that income should cease. The former transmits his property to his family, while in the latter case the whole is gone. The hon. Member for Birmingham had very properly called the attention of the Chancellor of the Exchequer to the different modes of assessment adopted in various parts of the country. He (Mr. Spooner) might mention that some railway companies paid their servants a given sum of money for wages, agreeing at the same time to allow them a further sum for clothes, for travelling expenses, and for other purposes. In many of these cases the actual wages were below £100 a year, but the allowances for clothing brought the income above that amount. In some instances the surveyors had held that persons in this position were liable to the tax, while in others persons so situated had been exempted; and he thought it most desirable that some definite rule should be adopted on the subject. The inquisitorial powers which were frequently exercised by the assessors occasioned loud complaints and great dissatisfaction. It not unfrequently happened that honest men were required to submit their books to inspection, and if it became publicly known, as it sometimes did, that they had not made certain profits, their interests were very injuriously affected. He thought it would be well to allow persons, under such circumstances, to make a solemn declaration that, after having allowed for all the deductions permitted by the Act of Parliament, their income did not exceed a certain amount; the deductions authorised to be made being clearly and specially laid down. He hoped the Chancellor of the Exchequer would consider whether it was not possible to make some change in the law in this respect. If the House went to a division, he (Mr. Spooner) would vote for the previous question.

MR. MACKIE

said, he wished to remind the right hon. Gentleman the Chancellor of the Exchequer that last year he had promised to relieve the Scotch landlords from a grievance with respect to this tax which a deputation had pointed out to him.

THE CHANCELLOR OF THE EXCHEQUER

said, he must admit that the Scotch landowners had some claim to the consideration of Government. He had given their claim his attention, and when the proper period arrived it would be taken into account. It was not competent, however, for him to propose a separate measure.

SIR HENRY WILLOUGHBY

said, he desired to call the attention of the House to the inequitable operation of the tax upon property in the public funds. Long Annuities, which expired in 1860, when it was assumed the income tax would terminate, were taxed the same as perpetual annuities, thus making them pay a tax of twenty per cent. This was nothing less than extortion and robbery, and could only be justified by the overwhelming necessity of war. If the hon. Member for Birmingham wished his Resolution to be supported, he should extend it to all cases in which injustice was felt. Inequality pervaded all the schedules; and if there was one case of hardship greater than another, it was the one he had mentioned under Schedule C.

MR. MUNTZ,

in reply, said, it was a mistake to suppose that his objections to the tax were confined to any one class of the community. He believed that all were robbed alike, and that the landowners had a claim for redress as well as professional men and traders. All he asked was that the House should express its opinion that an equitable adjustment of the income and property tax was essential to the interests of the country.

Whereupon Previous Question put, "That that Question be now put."

The House divided:—Ayes, 63;Noes, 194: Majority, 131.