CONSIDERED IN COMMITTEE.

HC Deb 21 July 1859 vol 155 cc221-47

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER moved the first Resolution. In reference to the question addressed to him by the hon. Member (Mr. Leatham) upon the subject of the penny stamp on bankers' cheques, the right hon. Gentleman said that it was not his intention to do anything precipitately in the matter. The reason why he hesitated in proceeding with it this year was, that a question which had arisen respecting letters passing between country bankers and their correspondents in London required previous consideration; and he should not like to proceed without taking ample time to ascertain what would best promote the public interest. As far as he knew the feeling was in favour of removing the exemption which was now enjoyed by the drawer of cheques when he himself was also the payee.

Motion made and Question proposed,— That, towards raising the Supply granted to Her Majesty, in addition to the Rates and Duties granted and now chargeable under the Act passed in the 16th and 17th years of Her Majesty's reign, chapter 34, for granting to Her Majesty Duties on profits arising from property, professions, trades, and offices, there shall be charged, collected, and paid for and in respect of all property, profits, and gains, charged or chargeable under the said Act, either by assessment, contract of composition, or otherwise, the following additional Rates and Duties, that is to say: upon any assessment made on the annual value or amount of any property, profits, or gains (except property, profits, and gains chargeable under Schedule (B) of the said Act), the additional Rate or Duty of four pence for every twenty shillings of the annual value or amount of all such property, profits, and gains, respectively; and for in respect of the occupation of lands, tenements, hereditaments, and heritages, chargeable under Schedule (B) of the said Act, the additional Rate or Duty of two pence in England, and of one penny halfpenny in Scotland and Ireland respectively, for every twenty shillings of the annual value thereof, and such additional Rates and Duties respectively shall be collected and paid with and over and above the first moiety of the Duties assessed or charged under the said Act.

SIR HENRY WILLOUGHBY

said, that though the House had had the pleasure of listening to a very able debate which embraced a vast range of subjects, yet the real question before them was, whether it was absolutely necessary to impose this addition of 4d. in the pound on the income tax. He had given notice of two Amendments to the Resolution, because he had some objection to it as it at present stood. The Committee must bear in mind that the income tax was essentially an odious and unjust tax—that it was so in the opinion of the universal public, and that nothing could make it fair or just. In former years, when the then existing income tax expired, a distinguished orator of the House of Commons proposed that the Act of Parliament which had imposed it should be publicly burned by the least respected functionary in the country. Now, in his opinion, a strong case ought to be made out before they imposed an additional tax of 4d. in the pound, and the onus probandi lay with the Government. But not only did he object to the amount of the tax, he also objected to the mode in which it was proposed to be levied—namely, by raising the whole sum in the first half-year. One point respecting which, he particularly desired information was the grounds upon which the right hon. Gentleman proposed to levy the whole tax in October next upon what was termed the Long Annuities, which expired on the 5th of January next. He had selected these long annuities as a type of the difficulty of applying the income tax to all precarious incomes; and how could the right hon. Gentleman with justice take 8d. in the pound from the long annuitants in October, when in January the long annuities would have ceased to exist? But returning to the first points to which he had adverted, he would ask what necessity there was for raising a sum of £4,000,000 by additional taxation at the present time? They had heard a great deal in the course of the debate about the enormous increase in the amount of the public expenditure, and the late Chancellor of the Exchequer seemed to be of opinion that the reduction of that expenditure could not he hoped for unless a particular line of foreign policy was pursued. He (Sir H. Willoughby) did not exactly entertain the same view, for he thought, putting aside altogether the question of military expenditure, that the House might exercise some vigilance with regard to the extravagant Civil Service Estimates. Those Estimates had been assented to this Session with very little discussion. On one night seventy-six grants of public money were passed, and some hon. Members were not even furnished with the papers which would have enabled them to determine whether or not there was ground for objecting to those Votes. He admitted that the House was placed in some difficulty with regard to the present Estimates which, having been prepared by a Government which did not propose them, and were now proposed by a Government which did not prepare them, belonged to nobody; but the only manner in, which it seemed possible for them to curtail an extravagant expenditure was by not granting larger supplies in Committee of Ways and Means than was really and necessarily required. Was it necessary that those who now paid income tax to the amount of £5,000,000 annually should be called upon to contribute to the Exchequer £4,000,000 more, and that in the first six months after the extension of the tax? For some years past the revenue of the country had been underestimated. The actual revenue in 1856 exceeded by £700,000, in 1857 by 1,513,000, and in 1858 by £1,500,000, the amounts at which it had been estimated by the Chancellors of the Exchequer. The revenue last year was £65,500,000. On what ground, then, did the right hon. Gentleman estimate the income of the ensuing year at only 64,340,000? There might, of course, be reasons for expecting some reduction in the public income; but he thought also, that a countervailing increase might be anticipated from the two items of taxation resorted to by the late Chancellor of the Exchequer, the effects of which had not yet been developed. He thought that, under the circumstances, it was quite enough to make an addition to the income tax of £3,000,000, and if the revenue was then insufficient to meet the expenditure, the deficit might be provided from some other source. Why, for instance, should not a duty be imposed upon the property of deceased persons beyond the amount of £1,000,000? He regarded the imposition of an income tax upon long annuitants, and upon persons whose income was precarious, as a tax not upon income but upon capital, and therefore amounting to some extent to a confiscation of property. The hon. Baronet concluded by moving, as an Amendment, that the additional rate of income tax should be 3d. instead of 4d. in the pound.

MR. POLLARD-URQUHART

thought that, on a fair consideration of the public finances, it would be seen that the Chancellor of the Exchequer had adopted the best mode of meeting the present difficulty. The hon. Baronet had said, that former Chancellors of the Exchequer had been in the habit of under-estimating the national income; but that was, at all events, a fault on the right side, for whatever balance there might be in the Exchequer at the end of the year was carried to the credit of the public in the following year, and, therefore, tended to reduce taxation—the Chancellor of the Exchequer might have borrowed the amount he required, or might have raised it by indirect taxation; but he thought he had adopted the most prudent course in resorting to a tax which only imposed a little self-denial, and self-restraint upon those who were called upon to pay it, while the borrowing of £4,000,000 would have occasioned a drain upon the capital of the country. The case of the poor clerk with £100 a year had been dwelt upon; but surely it was better that such a man should pay a moderate income tax than be made to contribute in the shape of heavier duties on the articles he consumed.

MR. SPOONER

said, be wished to ask the Chancellor of the Exchequer whether he meant to make any alteration this year in reference to the stamps on bankers' cheques? He was also anxious to know whether the right hon. Gentleman proposed that a tenant whose occupation would expire at Michaelmas should pay the whole of the additional income tax, and that his successor should altogether escape that charge, or whether he intended to apportion it between the incoming and the outgoing tenant?

MR. W. WILLIAMS

expressed a hope that if the increased income tax was to extend to incomes of £100, the Chancellor of the Exchequer would introduce a clause in the Bill to exempt the wages of working men, on whom the impost was a great oppression. If the right hon. Gentleman did not do so he should feel it his duty to bring the subject before the House.

MR. ROEBUCK

asked the Chancellor of the Exchequer, before he answered the hon. Member's question, to state what difference there was, in regard to the question of imposing this tax, between a man who drove a quill all day—whether what he received was called wages or salary—and a roan who drove a plane.

SIR STAFFORD NORTHCOTE

said, that when the Chancellor of the Exchequer stated that he should require a certain sum for the service of the year it was very difficult for the House to refuse the amount. It was indeed true that it sometimes happened that the revenue exceeded the Estimate, but it would be dangerous to speculate on such a result. If they wished to make ends meet they must, there fore, be prepared to vote the whole 4d. of increase on the income tax. The Chancellor of the Exchequer, however, had not quite done justice to the criticisms offered as to the mode in which the tax was to be raised. No doubt Parliament could impose any tax on the people that it thought fit; but the sound rule was to obtain the maximum of revenue with the minimum of hardship to the taxpayer, and that principle had hardly been observed in the manner in which this tax was to be levied. The addition of 4d. to the present 5d. was in itself a hardship, but the evil was aggravated by requiring a man to pay it when one-third of the year had already expired, and his expenditure had not been regulated by the knowledge that he would be called upon for such a contribution to the State. A further difficulty was created when they made him pay in one year what he had hitherto paid in two years, and the pressure to which he would be put was certain to produce a good deal of anxiety and confusion. The Chancellor of the Exchequer had said that he would not have proposed this arrangement unless he had been assured by the heads of the Revenue Department that there would be no practical difficulty in carrying it out. Now, if the heads of that department were now satisfied with such a proposal, they must have very recently changed their opinion; because when the subject was discussed a few months ago they thought its working would be attended with serious embarrassment. How were they to deal with persons who had annuities to pay out of their incomes? Were they to deduct the whole tax from the first payment of the annuity, or to spread it over the different quarterly payments? If the former, the annuitant might die before the year was out, and then more having been deducted from the annuity than ought to have been, there would be a question whether the executors of the deceased ought not to be reimbursed for a part of the tax. The case of the Long Annuities would present a somewhat similar difficulty, as the annuitant would have to pay a whole year's tax, though he did not receive a whole year's income. There would also be a difficulty with regard to dividends from public companies, which in one half-year might be very large and in the other little or nothing at all. In this case two halves did not make a whole. If these things were unavoidable, of course we must submit to them; but he did not think that they were. He could not agree with the Chancellor of the Exchequer, that deferring the payment of the income tax till the usual period would throw an additional burden upon the year 1860, because if money had to be borrowed to be repaid, then there would be the proceeds of this tax with which to repay it. The right hon. Gentleman dealt very differently with the maltsters and the income tax payers. The maltsters' payments were anticipated by six weeks, and for that they were allowed 4 per cent discount; the income tax payers had their payments anticipated by six months, and they were allowed no discount at all. He did not say that the tax would work absolute injustice, but he was far from thinking that it was the wisest arrangement that could be made. He thought it would have been wiser to take more of the malt credit and to leave the payment of the income tax to the usual period.

MR. FRANK CROSSLEY

said, he felt inclined to think that the House had in reality very little control over the expenditure, for during the last six years it had scarcely succeeded in striking off one Vote per annum. The cost of our armaments was most enormous, amounting to £26,000,000, and of the amount charged for the army not more than £3,750,000 was charged on account of wages paid to the men. Austria employed four times as many soldiers as this country, and he wanted to know why the money of this country could not be employed as economically as that of Austria. A great portion of the charge for the navy went for the non-effective service. He thought more value ought to be obtained for the money expended. With regard to the question of the income tax the right hon. Gentleman in 1853 showed the great difficulty of making a difference between incomes arising from professions and trades and incomes arising from property, and certainly nobody could make out a case better than the right hon. Gentleman, and he was afraid there was no chance of beating him out of his argument. The expenditure was indeed so great that it was quite hopeless to expect to sec the end of the income tax, or some other direct tax in lieu of it, and therefore it behoved the House to take the matter up and see if they could not draw some distinction between fixed and precarious incomes. He believed it would be possible to levy a tax on all realized property, whether consisting of land, houses, mills, railway and banking shares, &c., and thus get rid of the income tax altogether. Although there might be some difficulty with regard to the details of such a tax, he did not believe it would be nearly so objectionable in principle as the income tax.

MR. HUBBARD

expressed his disappointment that the only means the right hon. Gentleman the Chancellor of the Exchequer could find to extricate himself from the financial difficulty of the day was by an aggravated use of that obnoxious and most mischievous impost—an unreformed income tax. As it appeared to him that the whole fiscal policy of this country tended to shift the burden of our imposts from indirect to direct taxation, it was the more important that this mode of taxation should be subjected by the House to such a severe scrutiny as would make it as equitable in operation as any other tax that could be devised. It was humiliating to the Government to find that they made such large use of a system of taxation, the injustice of which there was not a man among them that was not ready to admit. This arose either from a want of science or a disregard of justice, neither of which was he willing to ascribe to his right hon. Friend who at the present time had charge of the finances of the country. But he rose more immediately for the purpose of calling attention to the case of the holders of long and terminable annuities. The amount of those annuities he believed to be correctly stated at £2,000,000, and when the annuitants were paid their dividends for the present year the House would have seen the last of them. Those annuities, in fact, represented an old debt which the Government of the day incurred many years ago for the purpose of meeting a national emergency—the last instalment of which would be paid off in the course of the present year. He believed he was correct in stating that 98 parts out of 100 of this payment represented capital rather than interest; and he held that Government had no more right to diminish the capital of those annuities than they were at liberty to diminish the capital of Exchequer bills or Exchequer bonds. He said it with a full conviction of its truth, that there was no more morality in the Government of England diminishing the capital of this debt by their income tax than there was in the operations of some of the Transatlantic states which had notoriously made a settlement with their creditors by a forced composition. This was a transaction which, on the Exchange, or in Mincing Lane, would be called a compounding of credit, and he called upon the House to pause before they sanctioned a measure so discreditable in a commercial point of view. If they gave their consent to the imposition of this tax as proposed by the Chancellor of the Exchequer, they would levy an additional tax of £1 13s. 4d. in the £100 of these annuities, making in the whole £2 14s. 2d. taken from the public creditor. The Chancellor of the Exchequer said that there were £2,000,000 of these Long Annuities, but about one-half had been paid off, leaving only £1,000,000 remaining to be paid of the debt, and yet the Chancellor of the Exchequer just managed to resuscitate this tax, and make it retrospective, so as to inflict the whole twelve months charge upon the unfortunate holders of these annuities. Nothing on earth could be said in favour of such a measure except that it was a necessity, or that it was difficult to dissever these Long Annuities from the ordinary annuities. It might be said that the holders of these annuities were mostly large capitalists, corporations, or banks of great wealth; but would the Committee accept the doctrine, that whilst they refrained from oppressing the poor man they might rob the rich? Such a system would discourage the accumulation of capital, which constituted the strength of the country, and undermine the confidence of the public creditor; and would moreover seriously embarrass all the future endeavours of Chancellors of the Exchequer in this country when they again resorted to the public market for the purpose of negotiating loans. He concurred in the spirit of what had been said by the hon. Baronet (Sir H. Willoughby), and was delighted to support his proposition to relieve this portion of the public debt from an unfair burden.

THE CHANCELLOR OF THE EXCHEQUER

This discussion, although not a long one, has covered a considerable breadth of ground, and included a variety of questions besides the one raised by the hon. Baronet the Member for Evesham. The hon. Baronet has asked me, as a point of fact how the Long Annuities will be taxed. My answer is that they will be taxed in respect of the half-yearly payment like other public securities which are payable half-yearly. I believe that the case is entirely analogous to that of any other annuitant or fund holder who feels the burden of the tax, although the burden is greater of course in proportion to the shortness of the duration of the annuity. I think, however, it will not be convenient that we should now discuss the case of the Long Annuities. It is by no means a novel one to this House and the difficulty which it involves is a difficulty inherent in the nature of the income tax. I will, therefore, address myself first to the Motion of the hon. Baronet, who proposes to reduce the sum of 4d. in the pound to 3d.; and this he does on this distinct ground, that Chancellors of the Exchequer, as he says, have an inveterate habit of underestimating the income of the country; ergo, that I have done so; and that therefore we might safely add £1,000,000 to the estimate I have given, and cut down the Ways and Means by that amount. Now, I am bound to say the hon. Baronet has omitted from his view two very essential particulars, which determine its whole merits. It is not true that there is a systematic habit on the part of Chancellors of the Exchequer of under-estimating the financial receipts of the country. The Estimates of income are formed, so far as I know, mainly and almost exclusively according to the deliberate judgment of the beads of the Revenue Departments. I never, but once, presented an estimate of income to this House that I bad not received from or prepared with the assistance of the heads of the Revenue Departments and that was of a comparatively small sum as to which there was no precedent to guide them. I believe the practice of those gentlemen is on all occasions to make the estimates with perfect bonâ fides; but it is impossible for them to make them in such a way as that they shall anticipate all the vicissitudes of the year. The hon. Baronet has said that for three years the revenue has been under-estimated—once by £700,000 and twice by £1,500,000—and that may be true. But on the other side I may quote a memorable case in which the right hon. Gentleman the Member for Portsmouth (Sir Francis Baring) was concerned. In 1840 he presented to the House an estimate of the revenue of the country; but, when the day of reckoning came and we had to compare the actual with the estimated receipts, we found the revenue had fallen short of the estimate by, if I recollect rightly, something like £2,000,000. The right hon. Baronet was much criticized on account of that shortcoming; but in point of fact he was not in any manner to blame. You are dependent upon the harvest, upon peace, upon commercial prosperity, upon the crops of sugar, upon the supplies of tea, upon the state of the vine, and upon a great multitude of other particulars for the bringing up of your revenue, with respect to which it is impossible to form a perfectly accurate estimate beforehand. The practice of the heads of the Revenue Departments has been to form as full an estimate as they could consistently with tolerable safety; and, that being so, I submit to the House that it would be unwise to break in upon a practice which has now been long established, and which is maintained without distinction of person or party—namely, the practice of framing as accurate an estimate as possible of the probable yield of the revenue, always taking care to be on the safe side. So far from wishing to under-estimate the resources of the country, since I came into office I have asked the heads of the Customs and Excise to reconsider their estimates, and see whether, in consequence of the lapse of time, they could make any additions to them. The result of that inquest on my part has been that certain small additions have been made to the estimates both in the Customs and in the Excise, because matters have been going on well. Under these circumstances, I entirely dispute the proposition of the hon. Baronet, that it would be a safe practice for Parliament to assume that, although the heads of the Revenue Departments and Chancellors of the Exchequer may not mean anything wrong or fraudulent, yet that Parliament might venture to add a million or two to their estimates. But the hon. Baronet has overlooked another point—namely, that the expenditure of the year is as apt to exceed the estimate as the revenue. He quotes the excess of revenue over the estimates of last year; but forgets that the expenditure also exceeded the estimate, so much so, indeed, that although the actual revenue exceeded the estimate by £1,500,000, yet it exceeded the expenditure by only £800,000. What has been done with that £800,000? So much of it as was available under the law has been applied, not to the extinction of permanent debt, but to the redemption of deficiency bills. It is quite obvious, moreover, that you cannot reckon upon a continuance of those favourable circumstances which may have distinguished the last year; and, upon the whole, I maintain that the House of Commons would entirely depart from the rules upon which it has always acted if it wore to dispute estimates which are framed by disinterested and impartial persons, and which hitherto have been well borne out by the facts. Upon that ground, and because it is impossible, especially at the present time, to say absolutely that the expenditure shall be kept within the specified limits, I think the hon. Baronet will see that his proposition cannot be sustained. Various other points have been mentioned in the course of this debate. I have been asked whether I intend to bring in a Bill with respect to drafts or cheques. The only reply I can give to that question is, that I shall not bring in a Bill without giving the House ample notice of my intention to do so, nor until I have satisfied myself as to the precise terms in which such a measure ought to be couched. I have also been asked by the hon. Member for North Warwickshire, what will be the case of the tenant who holds his farm from Lady Day to Michaelmas, and who then quits it. My answer is that the tenant referred to will have held his farm for the six months in the present year in which the additional income tax takes effect, and that he will consequently be liable to pay it. But I ought to say here that there is some misapprehension with respect to the period at which the additional income tax will be paid. There is no undue or extraordinary suddenness in the demand which will be made. In 1854, the House, before we went to war with Russia, did the very thing which we now seek to do. The income tax, which was then 7d. in the pound, was doubled for the first half of the year. It is true that, before the new law took effect, the House had reason to double the tax for the second half of the year also, but the alteration was made in precisely the same manner as upon the present occasion, the only difference being that whereas the demand laid upon the taxpayer for the first half of the year was 7d. in the pound, now it is only 6½d. The hon. Member for Lambeth has put to me a very formidable question. He first asked whether we would exempt the class of persons having incomes under £150 a year, and then, receding from that demand, and falling back upon something which he thinks so excessively mild that it is hardly possible for any one to refuse it, he appealed to us to exempt workmen's wages when they are paid in weekly amounts. If the hon. Member were responsible for the carrying of an income tax Bill he would find, when he proposed that every man who had his income paid to him by the year should be liable, but that those, on the other hand, who were paid by the week, although their incomes might be larger should not be liable, that all those persons who would be left subject to the tax would contrive to have their incomes paid to them by the week, and that, moreover, it would be a perfect hopeless task to endeavour to pursuade the House to draw a distinction at once unsound in principle and injurious, not to say dangerous, in practice. It is not true that a workman who has £100 a year derived from weekly wages is a poorer man than the clerk or other person who derives a similar income from the labour of his brains; on the contrary, it would be more true to say, though I do not assert it, that a workman with £100 or £120 a year is richer than the man who, living by the work of his brain, has only the same amount of income. I trust, therefore, that my hon. Friend will not press his demand. I do not know that I should follow the late Secretary to the Treasury over the ground which he has traversed, because the question raised by the Amendment before the Committee is not connected with his remarks. He has spoken of what he calls the mode of payment. The real question, however, is not the mode of payment, but whether a certain sum of money shall be raised within the year 1859–60 which is wanted to meet the demands of 1859–60, or whether a portion of the wants of 1859–60 shall be provided for out of the taxes payable in 1860–61. When the right hon. Baronet tells me that I shall not be laying a burden on 1861 by postponing the payment of the additional income tax, I beg to ask him whether I shall not be laying a burden upon that year if, when I arrive at the 31st of March, 1860, and have to pro pose the Ways and Means for the year 1860–61, circumstances compel me to make a demand upon the taxpayer for the purposes of 1859–60? It would, no doubt, be very agreeable to postpone the additional tax, as it would be more agreeable still to borrow the money outright; but the question is, what principle will the House adopt? Will it, or will it not supply the wants of the year out of the taxes of the year? That is the question which must now be decided. I trust that, for the reasons I have stated, the hon. Baronet the Member for Evesham will not persist in his Motion for reducing the additional tax from 4d. to 3d., unless he can show us how we may reduce the expenditure for the year. If he can do so no one will rejoice more than myself; but if not, do not let him, by vague speculations as to the increasing prosperity of the country, endeavour to persuade the House to refuse those Supplies which are absolutely necessary to maintain the public credit.

MR. T. BARING

observed, that the allusion of the Chancellor of the Exchequer to the manner in which the increased income tax was levied previous to the Russian war was very unfortunate, and might lead to the suspicion that he intended to pursue the course adopted upon that occasion—namely, making an addition to the income tax in the second as well as in the first half of the year. Did he propose now to levy an additional 4d. in the pound to be paid in the first six months, with the view of proposing an additional 4d. payable in the following six months? If that were the case it was not fair treatment of the House. He was surprised to hear the right hon. Gentleman propound the doctrine that the income of the year should always meet the expenditure of the year, because in 1854, when he filled the office which he now occupied, he did not hesitate to borrow in anticipation of the incoming revenue. The right hon. Gentleman the Chancellor of the Exchequer came upon the taxpayer all at once, when he did not expect it, and told him he must pay in the first six months what was only due at the end of the year. If he wanted to make an income tax more obnoxious to the public than ever it had been, he could not have taken a more certain mode of effecting his object. He stated that he took this course because he did not want to draw upon his balance with the Bank of England, and because he wished to avoid borrowing on an income of which he was perfectly assured. But why did he thus press unduly on the taxpayer, by taking him suddenly in the way he proposed, when it could be of no possible advantage to the country? He must say he could not understand on what principle the right hon. Gentleman had adopted his present plan, except with the view of having another 4d. before the year had expired.

MR. DISRAELI

As bearing upon the Motion of the hon. Baronet the Member for Evesham, and also upon the course taken by the Chancellor of the Exchequer in so far as respects the estimates both of income and expenditure, I would refer to the case of that particular estimate which the right hon. Gentleman noticed so fully in the course of this evening. In the observations I made to-night, I spoke of a surplus of £1,500,000 in the estimate which I made last year. The right hon. Gentleman in his speech said he knew nothing of this surplus of £1,500,000—spoke of it as a fancied surplus—and observed that at the conclusion of the year we found that the actual surplus of income over expenditure was only £800,000. Now, the facts of this case furnish, I think, a complete answer to the Motion of the hon. Member for Evesham, as well as to the Chancellor of the Exchequer himself. What happened after the financial statement of 1858 was made? Two demands were made upon the Government, neither of which could have been foreseen, one arising from some remaining payments for the Russian war, and the other on account of the war with China. The amount of these was certainly not much less than £800,000, and thus reduced the surplus to the amount which the right hon. Gentleman had described. I am sure the hon. Baronet the Member for Evesham must feel that a Chancellor of the Exchequer, with no documents before him to lead him to expect that a claim for the Russian war would arise, could not take such expenditure into account in his estimates, and that therefore in all such cases a wide margin must be taken, otherwise a fallacious estimate of revenue will often be the consequence. But this is also, as I have said, an answer to the Chancellor of the Exchequer, because these demands for the China and Russian wars could again arise, and the surplus of £1,500,000 in my estimate was a bonâ fide surplus in calculating the resources of the ensuing year. It will be obvious from what I have said that I cannot support the Motion of the hon. Member for Evesham. But perhaps I may be permitted to say a word or two on the point which I noticed at the commencement of the evening, and which has been so strongly objected to by the Chancellor of the Exchequer—I mean the mode in which the tax should be levied. The question appears to me to lie in a nutshell. I did not lay any undue stress on the hardships that will accrue to the taxpayers by the course taken by the right hon. Gentleman. I knew that it may be distressing in its pressure on the holders of Long and Terminable Annuities; but I know that the House, in considering the question of the income tax on occasions like the present, cannot lay any great stress on cases like these. Injustice has always been committed on the feeble interest represented by the terminable annuitants, but has baffled all who have been responsible for the management of affairs in this country to be able to alleviate their position or meet their case; and I do not believe that at almost the last moment of their existence it would be possible or advisable to enter into any exceptional legislation with reference to them. My objections to the plan of the right hon. Gentleman mainly rest on this—that you are aggravating to all the taxpayers the severity of a tax, already objectionable, beyond the necessities of the case. You ought to make the levy of this tax fall as lightly as you can on the taxpayer; but you are doing what you can to increase the grievance and the burden of it. All the principal arguments of the Chancellor of the Exchequer appear to me to terminate in one fallacy. The fallacy is, that the right hon. Gentleman regards the proposition I have thrown out for his consideration as a proposal for borrowing money. I totally deny it. The money that will be paid will be paid out of the revenue of the year, and there will be nothing in it practically of the character of a loan. The Committee, as I assume, wishing to act on sound principles of finance, and being of opinion that this demand on the resources of the country, great and grievous as it undoubtedly is, should be defrayed out of the revenue of the country, their object must be to get it defrayed in a manner least burdensome to the taxpayers. When we ask the right hon. Gentleman to distribute this tax over the year we give him the best possible security to enable him to raise the sum of £4,000,000 for the public service, and it depends on his own adroitness and skill how he will best do it. The mode we propose is strictly analagous to that which he himself introduced—namely, the mode of raising money by Exchequer bonds. It is only necessary that there should be an arrangement between him and the Bank to enable him to raise that in the first six months which will be paid out of the revenue of the country in twelve months. The Bank of England must have fallen greatly in character and resources in the short time that has elapsed since I had transactions with her if any impediments to a satisfactory arrangement of this transaction is thrown in the way from that quarter. It is not desirable that money should be borrowed, if by borrowing is understood to be an increasing of the debt of the country. I entirely repudiate such a notion; but it is my opinion that the sum should be raised out of the revenue of the country, and that the burdens on the country should not be increased; but there is no objection that the Chancellor of the Exchequer should have a power given to him to raise the sum he requires, on the condition that he raises it in the most easy and least burdensome manner for the taxpayer. We indicate the mode which would be the least burdensome to the people, by pointing out the precise course which the right hon. Gentleman has previously adopted himself. We say that the country and the Bank of England, which assisted him before, are equally prepared now to assist him in the accomplishment of his object, by giving him all the funds necessary for the public service, in a manner the least burdensome to the community at large.

Motion made, and Question,— That, towards raising the Supply granted to Her Majesty, in addition to the Rates and Duties granted and now chargeable under the Act passed in the 16th and 17th years of Her Majesty's reign, chapter 34, for granting to Her Majesty Duties on profits arising from property, professions, trades, and offices, there shall be charged, collected, and paid, for and in respect of all property, profits, and gains, charged or chargeable under the said Act, either by assessment, contract of composition, or otherwise, the following additional Rates and Duties, that is to say: upon any assessment made on the annual value or amount of any property, profits, or gains (except property, profits, and gains chargeable under Schedule (B) of the said Act), the additional Rate or Duty of three pence for every twenty shillings of the annual value or amount of all such property, profits, and gains, respectively,"— put and negatived.

SIR HENRY WILLOUGHBY moved, pursuant to notice, in line 16, after the word "thereof," to insert "and for every one pound of dividend on the Long An- nuities, expiring in January, 1860, one farthing in the pound." He wished to raise the distinction involved in his Amendment for the consideration of the Committee. He understood the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli) to say that in this matter of the Long Annuities the House of Commons had for so long a time practised an injustice it was too late now to remedy it. Now, that in his opinion was anything but a strong argument. The injustice, however, had never been so flagrant as at that moment, and he could not believe that the Committee, if they really understood the question, would vote against it. The question in substance was this—were they prepared to make the dividend of £1 pay precisely as much as if it were of the value of £33, which was the value of a perpetual annuity? Did the right hon. Gentleman mean to charge the dividend to be paid in October with 4d. additional tax? If so, to what was it attached? It could not attach to that which was to come, for there was no dividend to be paid in next April. The Long Annuities would cease to exist in three months from October next. Well, then, it must attach to the other principle—they should go back and touch retrospectively the payment already paid and discharged. They must do one thing or the other if they rejected his proposition.

Amendment proposed, In line 16, after the word 'thereof, to insert the words 'and for every one pound of dividend on the Long Annuities expiring in January 1800, one farthing in the pound.'

THE CHANCELLOR OF THE EXCHEQUER

said, that the question now raised was one of the difficulties inherent in a uniform income tax. It was true that if the tax could be recast and re-adjusted an exact standard might be set up by which the value of every annuity ought to be reckoned. But such a scheme of income tax differed altogether from that now before the Committee. The existing impost was a uniform tax which entirely declined to take cognizance of any return of capital in the form of income. Income was the sole test which it recognized, and every one who chose to have his capital returned to him in the form of income, which was the case of every annuitant for life or a term of years, knew that he did so subject to any tax which Parliament might impose. Were this Motion to be adopted it would lead to inextricable confusion, and the Com- mittee would find themselves entangled in a hundred other cases, some even stronger than that on which the hon. Baronet insisted. The question had been fully considered by the House of Commons when the present Home Secretary was Chancellor of the Exchequer, and in 1842, when the income tax was first imposed. At the latter period Mr. Ricardo brought the subject under notice, and moved a Resolution akin in principle to that of the hon. Baronet; but the House decided against it and in favour of the present arrangement by 252 to 117. He was sorry that any inequality should exist, but he was sure that it would be most impolitic, and not agreeable to justice, to adopt the Motion.

MR. HUBBARD

said, that the annuities referred to which were charged with the rate of 8d. had not a year to run; and with respect to them, therefore, the Chancellor of the Exchequer would be resuscitating a past payment in order to make it liable.

THE CHANCELLOR OF THE EXCHEQUER

said, that the case of the long annuitant would exactly correspond with that of the fundholder.

SIR WILLIAM JOLLIFFE

said, that the Committee did not understand from the right hon. Gentleman whether the tax was prospective or retrospective. With regard to these Long Annuities, it seemed to be retrospective, and levied, in fact, upon a past dividend, for they would not be in existence during the last three months of the year.

THE CHANCELLOR OF THE EXCHEQUER

said, he did not understand what the hon. Baronet meant by a retrospective tax. In one sense this tax was certainly retrospective, because it was levied in respect of a term which commenced on the 1st of April, whereas this was the 21st of July. But the same might be said of most of the Income Tax Acts passed in this country. The first passed was on the 22nd of June, 1842, and was therefore retrospective in precisely the same sense. The tax, however, was not levied on the year's but on the half-year's income.

MR. WALPOLE

said, it was clear that you could not, as regarded the new income tax, draw a distinction between the old and the new one, and if you subjected the Long Annuities to the tax, the argument went to show that as they expired in 1860, they ought only to be charged at the rate of 3d. in the pound. But the right hon. Gentleman said that the mode of levying the tax proposed was consistent with justice

THE CHANCELLOR OF THE EXCHEQUER

I only said that it would not be just to adopt the Amendment.

MR. WALPOLE

was glad to hear that, because they would not be precluded from that point in the consideration of the income tax next year; and if it was reimposed it must be rearranged, so as to make some difference between fluctuating and fixed incomes.

SIR JOHN TROLLOPE

confessed he did vote for the income tax of former years; but he would suggest that the nature of these propositions was somewhat different to the present. They had now no guarantee whatever that the Chancellor of the Exchequer would not come again within the year for another 4d. additional. He considered that to levy the whole addition in one payment was most unjust and would be received with great dissatisfaction by the people.

After a few words from Mr. MALINS and Mr. BARROW,

Question "That those words be there inserted," put, and negatived.

MR. DISRAELI

then proposed the omission of the last sentence of the Resolution, which provides that the whole addition shall be paid with the first moiety of the tax. He had assented to the raising of the sum of £4,000,000 by the addition to the income tax; but he objected to making the whole payable in the first six months. He proposed that it should be distributed over the whole twelve months.

Amendment proposed, in line 16, to leave out from the word "thereof," to the end of the proposed Resolution.

Question proposed, "That the words proposed to be left out stand part of the proposed Resolution."

THE CHANCELLOR OF THE EXCHEQUER

I regret that the right hon. Gentleman has made this Motion, for, though he says he assents to the raising of £4,000,000 for the necessities of the year, by this addition to the income tax, in fact, he does not assent to it. The Ways and Means of the year are the moneys paid in the year, and taxes which are granted by Parliament to be paid in a future year, whatever else they may be, are not Ways and Means of the year. The hon. Member for Huntingdon (Mr. T. Baring) says I ought to be content with getting £2,000,000 this year, and £2,000,000 in 1860–61, because in 1854 I proposed to the House of Commons to raise money by Exchequer bonds in anticipation of half-a-year's income tax and malt tax which could not be raised in the financial year. My answer to that is twofold. In 1854 we asked the House to impose £12,000,000 of new taxes, but would it have been the same thing to ask for £12,000,000 of new taxes within the year as it is to ask for £4,000,000? I could not help myself then, for it would have been impossible to get the £12,000,000 of new taxes within the year. My second reason is, that we have had a great deal of experience since 1854—quite enough to show that that was not a desirable experiment. The language held by the Government in 1854 was that the war might cease before the £5,000,000 or £6,000,000 of additional taxes came in, and that then, as these war taxes came in, they might be applied to the redemption of the war bonds. The war did cease while the money was outstanding; it came in, but Parliament did not chose to recognize it as applicable to the Exchequer bonds. It applied £2,000,000 of it to that purpose, but the rest went into the regular Ways and Means of the year. The right hon. Gentleman says that the outstanding income tax will be a first-rate security to borrow on, but that is not the question. It is whether we shall provide for the necessities of the year within the year. The proposition of the right hon. Gentleman may be more popular with the country, inasmuch as his proposal, like many other proposals made in this House, is for the convenience of the present at the expense of the future. I must say this to the right hon. Gentleman and to the Committee—and I entreat the Committee to listen to my words, because they are words full of meaning—the proposal which we have made is that which we deem to be the smallest required by the state of the public interests and the demands upon the public exchequer. I have already pointed out to you to-night some of the demands that are coming upon us, including a sum of £600,000 a year for packets and telegraphs, which have not been sanctioned by Parliament. But I must tell you that there is more in reserve—that there are other questions of finance not at the present moment so matured as to enable me to declare definitively the views of the Government with respect to them, but upon which, before many days elapse, they will perhaps be prepared to announce their views. It has been our absolute duty to take into account those exigencies that will shortly have to be explained to you, and the consideration of those exigencies enters essentially into the nature of the proposal which I am now making. It is not my desire to use any reserve with the Committee, and I hope the Committee will be disposed to negative the proposal of the right hon. Gentleman, if not upon general grounds, yet upon this ground, that as a responsible Minister of the Crown I give you the assurance that you have not yet measured, that you cannot yet measure, the demands that are coming upon you in connection with the wants of the empire. I hope that upon that ground the Committee will be disposed to give us that provision for the wants of the year which we have asked. The question raised by the right hon. Gentleman need not, so far as he is concerned, be finally decided to-night. This Resolution, inasmuch as it asks for an increase of taxation, must be moved in Committee, in order that I may bring in a Bill framed upon it; but the proposal of the right hon. Gentleman, which would reduce taxation, may be moved in any of the stages of the Bill; and I would suggest to him that he would better consult the public interest and the demands of the public service by postponing the trial of this question until the Bill should have been introduced. If the right hon. Gentleman thinks fit to adopt that suggestion we shall of course be prepared to consult his convenience in affording him an opportunity of bringing forward this question; but if, on the other hand, he should persist with his Motion, I can only once more recall the attention of the Committee to the words I have used, and used with a full knowledge and a very deep sense of the responsibility under which they were uttered.

MR. THOMAS BARING

said, he wished to set himself right with the right hon. Gentleman and the Committee. The right hon. Gentleman had charged his right hon. Friend the Member for Buckinghamshire with wishing to borrow money, and to borrow it in the most objectionable form, and he had referred to the course pursued by the right hon. Gentleman in the year 1854, for the purpose of showing that he had himself in that year carried the principle in dispute further than was at that moment suggested by his right hon. Friend. If the right hon. Gentleman meant to say that such was the state of the country, in the opinion of Her Majesty's Government that it was important they should have the money within six months, he for one should not oppose the proposition of the Government. But the right hon. Gentleman was quite aware that although the whole of the money should not be received within the six months, such arrangements could be made as would render the second portion of the additional income tax available for every purpose of this year's expenditure. The right hon. Gentleman knew as well as he (Mr. Baring) did that in past times revenue to come had been made available for existing purposes by means of an arrangement with the Bank of England, and that arrangement might again be adopted. He feared that the right hon. Gentleman's observations indicated a foregone conclusion to put on another 4d. in next February or March. With regard to the application for £600,000 for contract it was in the power of Parliament to refuse them if it thought proper.

MR. HENLEY

said, he did not see how it would be possible to levy this tax on the Consols, one half year of which was already past and gone, the next half year not being payable till January next. The effect would be that the holders of Consols would only pay half the tax. However, if the money must be got in within the year, the House could not do otherwise than agree to the proposal. However inconvenient the proceeding might be, still, if the Government really wanted the money within the financial year, he would not refuse it them, although money to be received in the next financial year could be made applicable by Exchequer bills. The right hon. Gentleman's words certainly held out a very alarming prospect of something looming in the distance.

THE CHANCELLOR OF THE EXCHEQUER

, with reference to a remark of the hon. Gentleman the Member for Huntingdon, denied that he had any "foregone conclusion" as to the taxes that must be imposed next year. It was his official duty to labour to keep down the expenditure as much as he could. That was a very unhopeful task just now, and he should not he able to succeed in it without help from both sides of the House. He would always urge the House as far as possible to meet the burdens of the day in the day.

MR. DISRAELI

This question has, in consequence of the observations made by the Chancellor of the Exchequer, assumed a very different and a very serious Commons its present and prospective posi- aspect. I confess I was never more surprised than when I listened to those observations. I will not dwell for a moment upon the passing allusion to contracts and guarantees amounting to £600,000 per annum. We all know very well that contracts are in the power of the Government. We all know very well that no Government would enter into any contract on which there was any probability of their being called upon to make good their guarantee. The allusion of the right hon. Gentleman to contracts and guarantees was, I think, mere Parliamentary adroitness on his part. But the right hon. Gentleman has made other communications to the House, which appear to me to be of a very serious character. I have always thought that, however disagreeable might be the information which the Chancellor of the Exchequer might have to impart to a Committee of Ways and Means or to a Committee of Supply, there was at least this compensation—that the truth and the whole truth was placed before the House. I did apprehend, after the Budget which was opened the other night, that we did clearly understand the depth and extent of the liabilities of the country. I thought that under these circumstances we were proceeding to consider with candour and in no hostile spirit the propositions which the Government have brought forward. But I collect from the Chancellor of the Exchequer that it is the unenviable position of the Committee of Ways and Means—for the first time certainly in my memory—not to have been made fully acquainted by the Minister with the full extent of the liabilities of the country. The Chancellor of the Exchequer has addressed the Committee in words of mysterious import. I want to know what are these liabilities that have not been explained? I want to know what are the engagements that have not been expressed? I think it is the right of the Committee of Ways and Means to be informed—if not to-night at least before it decides on the legislation proposed by the Government—of the nature, character and extent of these liabilities. It is a mere mockery and delusion to consult the Committee of Ways and Means, if, after having given a statement our best, and, I may say, dispassionate consideration, the Minister particularly responsible for the administration of the Finances tells us, "You have formed a rash and precitate opinion; it is true I made, a few nights ago, as you thought, a full and complete statement of the condition of the finances of the country, of the responsibilities of the nation, and of the engagements of the Government. But you are mistaken. I wish to treat you without reserve, but there are certain high interests that prevent me from communicating to you the whole truth." I admit the force of the appeal of the right hon. Gentleman, and I cannot take the responsibility of asking the Committee to take a particular course while they are acting in the dark. They ought at once to be put in possession of the information which would enable them completely to understand their position. After the statement of the right hon. Gentleman, if I wave on the present occasion the proposition I have submitted to the House, I do think it is due to the Committee and to the House that in the interval between this evening and the time when the House must pronounce its opinion upon the measures proposed by the Government, the right hon. Gentleman should enter into a full revelation to the House of those mysterious financial engagements and responsibilities which he has hinted. As to the policy of the Government in other matters, we may be told, as we have often been told before, that foreign politics are matters above the ken and comprehension of a mere House of Commons; diplomacy may not deign to reveal its intricacies to the country; but in matters of finance and taxation, that touch the purse and hearth of every family in the kingdom, in those at least the Chancellor of the Exchequer will condescend to enter into a complete and sincere explanation.

THE CHANCELLOR OF THE EXCHEQUER

The right hon. Gentleman has given in the course of his animated speech what I suppose he thinks a correct version of something that had fallen previously from me. He says that I have professed—and he even went the length of putting words into my mouth—that I had made a full and complete statement of the coming financial exigencies of the empire. That is what I understand the right hon. Gentleman to state. But even on this very night I stated as plainly as I could, in following the right hon. Gentleman, that such was the state into which the public finances had been brought—very much by the practice of making prospective engagements which has been a growing evil for several years—I stated then that, even with regard to English finances, it was not in my power to convey fully to the House of tion. But there are other questions than those of English finance—questions which we must have specially in view. But the right hon. Gentleman says, it is my absolute duty to communicate to the House of Commons everything which hears upon the question of finance. The right hon. Gentleman has been sixteen months in office as Chancellor of the Exchequer, whereas I have only been in the office for one month, and yet he expects me to give him a clear and comprehensive statement of our financial position. But the right hon. Gentleman ought to know that it takes some time to learn what are the financial exigencies of the empire; for unless I am mistaken, a proposition was made by the Government of which the right hon. Gentleman was a member describing a considerable deficit, amounting to £7,000,000, in the Indian treasury. There, at any rate, was a clear statement; but scarcely had that statement gone forth to the world when the right hon. Gentleman, who was in full possession of the exact state of the case, and of everything which could hear upon it, in conformity with the constitutional doctrine which the right hon. Gentleman is always ready to preach when he sits upon the Opposition benches, comes to the House and tells us that that sum is far from complete, and that an additional sum of £4,000,000 or £5,000,000 will be necessary. As to the interests and considerations of high political significance to which the right hon. Gentleman has referred—if I conveyed to the Committee an idea that it was owing to political causes that any covert demands were about to be made, I can only beg pardon of the Committee and of the right hon. Gentleman. If I conveyed that meaning, I had not the slightest intention of doing so. But with regard to the public finances, I recognize as strongly as the right hon. Gentleman the duty and advantage of bringing fully to the notice of the House everything within the knowledge of the Minister. But my power of communicating that information is limited by my own knowledge. When we are connected with a worldwide empire, when demands come in upon us day by day, it is only after some lapse of time they reach such a maturity as to enable us to make them the subject of an intelligible statement. I submit, therefore, to the right hon. Gentleman that the high constitutional doctrine he applies to the Chancellor of the Exchequer is limited, like all human things, by the restrictions of time and place. Subject to these restrictions, it is my desire to make a full statement to the House of Commons at the earliest moment. The right hon. Gentleman is entirely at liberty to postpone the question he wishes to raise, till he is in possession of all the knowledge he requires. I hope I have vindicated myself from the charge of having surreptitiously kept anything from the knowledge of the House that ought to have been communicated—a charge that I think ought not to have been made from any quarter, still less by the right hon. Gentleman.

MR. DEEDES

felt called upon to consider what was the best course to follow. It seemed to him that they stood in this position. The Chancellor of the Exchequer made a statement the other night showing a deficiency of £4,000,000, which must be made up in some way or other, and he proposed that the deficiency should be made up by income tax. He (Mr. Deedes) wished to see the time when they might look at the whole taxation of the country with a view to putting it on a sound and substantial footing; and if they threw impediments in the way of those who had executive duties to carry out this would probably be deferred to a later period than they desired. However tempting the proposition made against the proposals of the Government might be he felt bound to resist it, because he should be throwing away a chance. In matters of this kind they were justified in throwing on the Exchequer the responsibility of the mode in which they should raise the Ways and Means.

Resolved— Provided always, That where any dividends, interest, or other profits or gains becoming due or payable half-yearly, are assessed or charged half-yearly with the Rate or Duty under the said Act, there shall be charged upon the first assessment or charge which shall be hereafter made on such dividends, interest, profits, and gains, the additional Rate or Duty of eight pence for every twenty shillings of the half-yearly amount thereof; and where any profits or gains becoming due or payable quarterly are assessed or charged quarterly with the Rate or Duty under the said Act, there shall be charged upon the first two quarterly assessments or charges respectively which shall be hereafter made on such last-mentioned profits and gains, the additional Rate or Duty of eight pence for every twenty shillings of the quarterly amount of such last-mentioned profits and gains; and the said additional Rates and Duties charged in such half-yearly and quarterly assessments respectively shall be collected and paid with and over and above the Rates and Duties assessed or charged therein respectively under the said Act.

The following Resolution was then put— That towards raising the Supply granted to Her Majesty, the time limited for payment of the Duty of Excise on Malt by every Malster or Maker of Malt, who shall have given security by bond in the manner directed by the Act passed in that behalf in respect of all Malt begun to be made on or after the first day of October 1859, shall be twelve weeks in lieu of eighteen weeks after the making of such Account or Return of Duty as in the said Act is mentioned.

MR. PULLER

said, the alteration would vitiate the sureties and render necessary new bonds in every case. As it would be the doom of the small maltsters, and would throw the whole trade into confusion, he doubted whether the Chancellor of the Exchequer's expectations would be realized.

THE CHANCELLOR OF THE EXCHEQUER

said, it must be admitted that if ever the system of malt credits was to be modified at all, it could not be modified more gently than was now proposed. It was proposed to reduce the credit only by six weeks, and to allow discount in respect of those six weeks, in consideration of the late period at which the financial statement was made. A strong intimation had even been thrown out from the other side that the maltsters ought to have been dealt with more stringently. He would examine into the matter of the bonds, but he did not anticipate any serious difficulty.

SIR JOHN SHELLEY

thought the Chancellor of the Exchequer had treated the maltsters too lightly, and hoped he would take the hopgrowers in hand.

MR. DODSON

remarked that the hop-growers were in quite a different position from the maltsters, and it would be unjust and impolitic to make them pay sooner. The maltster could always make malt, but the hop grower was not always sure of his crop of hops.

Resolved, That, towards raising the Supply granted to Her Majesty, the time limited for payment of the Duty of Excise on Malt by every Maltster, or Maker of Malt, who shall have given security by bond in the manner directed by the Act passed in that behalf in respect of all Malt begun to be made on or after the first day of October 1859, shall be twelve weeks in lieu of eighteen weeks after the making of such Account or Return of Duty as in the said Act is mentioned.

House resumed.

Resolutions to be reported To-morrow.