HC Deb 08 May 1861 vol 162 cc1749-55

Order for Second Reading read.

MR. BLACKBURN,

in moving the second reading of this Bill, said that under the existing law of Scotland the assessor in the first instance found the gross rating value within his district; but by this Bill it was proposed that the assessor should fix the net value by which the rates for a county or borough should be levied, and that the rate should be assessed on that value. In the English Parochial Assessment Acts the Home Secretary applied this principle to England, and he contended that which was good for England on this subject was equally good for Scotland, and that justice required that the net and not the gross value should be the principle upon which the levy should be made. He saw that a petition had been presented against the Bill from a city in Perthshire, but, like a great many town council productions, the English was not very intelligible, and he could not understand it. It had been said that his proposal would interfere with the franchise; but that objection was founded in error, for nothing could be further from his intention than to do so, as his whole object was to provide that the assessor should return a net instead of a gross sum.

Motion made, and Question proposed, "That the Bill be now read a second time."

THE LORD ADVOCATE

was sorry he could not give his assent to the Bill. The result of it would be that the area of the franchise would be at once reduced. This question of valuation in Scotland had been very carefully considered in 1854, and at that time the task of reducing it was given up in despair. In Ireland, no doubt, a valuation founded on the net, and not on the gross value, had been established. But in Scotland, even if such a system of valuation were established, there was no uniform machinery in the country to carry it out, and that, as a consequence, the basis of taxation would, if the Bill were to pass into a law, be rendered different in different localities. The effect of the measure, moreover, he believed, would be to reduce the property tax in Scotland some twenty or twenty-five per cent, and to produce confusion, which it was desirable to avoid.

Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."

MR SOTHERON ESTCOURT

did not understand that the hon. and learned Lord objected to his hon. Friend's Bill if it could be carried into effective operation. He did not believe that his hon. Friend had any intention of narrowing the extent of the franchise; and, therefore, he thought all considerations founded on that apprehension might be given up. In England as in Ireland rateable value was assessed upon the net return, and so it ought to be in Scotland. If two returns were necessary, one of the gross, another of the net rental, he supposed there would be no objection to such a Return being ordered. With regard to the effect of the Bill he would not express an opinion; but regarding it as an attempt to bring about a desirable result, he thought it might pass the second reading, and, if necessary, be amended or even rejected afterwards.

MR. PEEL

thought it was right to point out what would be the effect of this Bill both on the income tax and inhabited house duty. The Income Tax Act expressed clearly that the value of a house should be taken at its rack rent value. In Scotland there was a valuation roll which gave annually the value of property according to its real value; and, therefore, there was no objection to that being admitted as the real value of houses upon which the income tax and the house tax might be assessed. But his hon. Friend proposed to leave the valuation rate, and to reduce the rateable value of houses by a large number of deductions, such as insurance, repairs, &c, and the consequence would be that the annual value of property in Scotland on which income tax was paid would be very much diminished. It was highly inexpedient, he thought, that such a question should be decided on by a Bill of this nature.

MR. G. W. HOPE

said, that the income tax ought not to be levied on the rent value of property any more than any other impost. As respected the Lord Advocate's objection, it seemed to be that the valuation would be uncertain and variable. But what test of value could be had better than rent? The same objection applied to valuations themselves as to the deductions to be made from the valuations. He should like to know why the right hon. Gentleman the Secretary for the Home Department proposed to take the net value in England while the Government objected to that course being adopted with regard to Scotland? All they asked was that the valuation should be made on the net value of the property, otherwise they would have one rule prevailing on one side of the Tweed and another on the other.

SIR GEORGE LEWIS

said, that in the Parochial Assessments Bill he had adopted the existing rule of English law with reference to rateability, and sought to make no alteration in the basis on which Parliamentary taxes were levied. Neither the poor rate nor any other rate would be altered; all that was altered was the mode of assessment. He understood, however, that the operation of the Bill under discussion would be to alter the basis of the income tax, as well as of the inhabited house tax in Scotland; and that being so, it was quite clear it went beyond the scope of the measure which he had laid upon the table, and that if it were to receive the assent of the House, it would be necessary to alter the basis of taxation in England and Ireland, and to increase the rate at which the income tax was levied in order that it should produce its present amount. If this Bill were to proceed at all it must be carefully limited in such a manner as to be applicable to local rates only.

MR. MURE

said, that in Ireland the assessment was based upon the net and not upon the gross value. The only difficulty, as he understood, in the way of the Bill was this question of the franchise. He thought the omission of a few words which were not inserted in the original draft of the Bill would obviate this difficulty. Uniformity of valuation might be secured by applications to the courts of law in the ordinary way.

MR. BLACK

said, that this change, if made, would apply principally to the local assessments. It should be remembered that there was a Committee now sitting on the income tax. There were gas and water companies, and if the rateable value of property were reduced, these bodies would be deprived of a large portion of the income which had been secured to them by legislation. He hoped the House would not assent to the second reading, seeing that the people of Scotland were almost unanimous in their opposition to the measure.

SIR EDWARD COLEBROOKE

thought the Bill would either be nugatory, or it would place very undue powers in the hands of assessors. He contended that the system of assessments in Scotland was superior to that adopted in England and Ireland, and he thought if any change were made, the latter should be altered so as to be assimilated to the former.

LORD JOHN MANNERS

thought the hon. Baronet was quite right in preferring the Scotch to the English system, but believing that the Irish was superior to either, and that the Bill in the main tended to bring the Scotch more into accordance with the latter system, he should give it his support.

MR. FINLAY

said, he had not heard any argument convincing him that the principle of the Bill was wrong, for no one could doubt that in the abstract it was fairer that assessments should be levied on the net than on the gross value. It appeared to him that inasmuch as all properties had not the same deductions, if you took the gross rental some properties must pay much more in proportion than others. That, he thought, was a serious objection to the present mode of assessment. While, however, he fully agreed in the principle of the measure, he admitted that there were many objections to the details.

THE CHANCELLOR OF THE EXCHEQUER

said, that from his present information as to the existing state of the law in Scotland, and comparing it with the provisions of the Bill under discussion, he felt bound, as being responsible for the finances of the country, to offer the most uncompromising resistance, at every stage, to this Bill and to every Bill of a similar character; because it was a Bill involving principles which must tend in the first instance, and if continued, step by step, have the effect of breaking up the principles on which the income tax in England and Scotland was founded. In dealing with the subject he excepted and cast aside the income tax of Ireland. Ireland was not originally subject to the income tax; and when in 1853 a burden was laid upon that country from which it was before exempt, Ireland was placed in different circumstances. Landlords in Ireland were placed under liabilities to which they were not subject in England. Powers were by the Act given to the Government of making an assessment on the landlord or the immediate tenor of the landlord in Ireland, placing him under liabilities which did not exist in Great Britain. Along with those liabilities there was granted to the landlord a certain mode of valuation which was required by the circumstances of the case and the state of the law in Ireland. It had been said that the only point of resemblance was that the Commissioners made use of Government officers to value. But the instincts of Scotch Members were not so low as not to have discovered, by no very difficult or intricate process, that a Government valuer was by far the best that could be found. They were by far the cheapest to the country, and were a great expense to the Treasury. The case of Scotland, however, stood substantially on the same footing with that of England, and the proposition was that the assessor should deduct the annual cost of repairs and insurance, and other expenses necessary to maintain the property in its actual state. These annual charges, both upon agricultural property and buildings, in Scotland were very much less than in England, and if this measure were passed with regard to Scotland, with what justice could the same provisions be refused to English proprietors when they came next year to ask for them? But that would not be the end of the mischief, because if once the relations between Schedule A and Schedule D were disturbed, the whole machinery of the income tax would be broken in upon. There was a strong feeling in the country, cropping up at intervals, that Schedule D was taxed higher than it ought to be in relation to Schedule A, and, though that feeling from various motives had been hitherto resisted, if those who came in under Schedule A broke up the present arrangement of the tax, he must warn them that the result might be that they would have a much larger lump laid on their backs to adjust the difference between them and Schedule D.

SIR JAMES FERGUSSON

said, the right hon. Gentleman's objections were entirely removed by the fact that his hon. Friend the mover of the Bill was ready to except the income tax from the Bill altogether. He thought, therefore, it would be very unfortunate if the Bill were rejected from any fear of injury to the favourite tax of the Chancellor of the Exchequer.

MR. POLLARD-URQUHART,

differing from the Chancellor of the Exchequer, thought that everything which went to diminish the injustice of the present mode of levying the income tax, so far from breaking it up, would tend to make people more tolerant of it.

MR. BUCHANAN

asked what was to be expected from this Bill, if parts were to be struck out, and other clauses were about to be added? He thought they ought to deal with the Bill as it stood. He for one should vote against the Bill.

MR. BLACKBURN

said, he had been quite astonished to hear from the right hon. Gentleman what effects were about to follow from this Bill, of which he had no idea whatever. If it were necessary he had no objection to make such alterations in the Bill as would exempt the income tax from its operation, but he could not see why the income tax should not be estimated on the net instead of the gross value. With regard to all other taxes, he still adhered to the principle of the Bill.

Question put, "That the word 'now' stand part of the Question."

The House divided: —Ayes 78; Noes 146: Majority 68.

Words added.

Main Question, as amended, put, and agreed to.

Bill put off for six months.