HC Deb 10 May 1864 vol 175 cc261-83
MR. WHITE*

rose to move for "a Select Committee to inquire into the operation and incidence of our present fiscal system, and to consider and report if any and what measures could be devised to secure a more equitable adjustment of the burden of Imperial taxation." The hon. Gentleman said, he knew the House would acquit him of obtrusiveness or presumption in rising to address them on this question. Ever since he had had the honour of a seat in that House he had been especially solicitous that this Motion should be brought before them. He thought that the appointment of a Committee to inquire into the operation and incidence of our present financial system, for the purpose of suggesting measures of fiscal amelioration and social advancement, would be a source of great satisfaction to the people of this country. This was not a party or a class topic; it affected alike the interests of every subject of the realm. He should be exhausting the patience of the House if he were to attempt to go into a full examination of this question, and he must content himself with a statement which was far from commensurate with its extent and importance. But if he were asked why he attempted it, he would point to the chronic dissatisfaction of the country with reference to taxation, and would ask whether there might not be some valid reason why men possessed of ample means were disposed to shirk and evade the discharge of their necessary burdens. He did not believe that there was anything inherent in British subjects which led them to evade the duties they owed to their Sovereign; such a proceeding could only spring from a feeling in their minds that they had not justice done to them, and which thus induced them to avoid the claims of the tax-gatherer. Since the House had now apparently acquiesced in an annual expenditure of £67,000,000, he thought the time had arrived when they should investigate how this vast sum might be raised in a manner least burdensome and detrimental to the progress of the nation. If the result of the labours of the Committee which he wished to be appointed should be a substantial approval of their present fiscal system, then it would remove the erroneous impressions which existed in the public mind; but if otherwise, then the basis would be laid of future beneficial legislation. He thought it would not be too much to say, even in a British House of Commons, that they had reached the ultimate bounds of scientific research or economic inquiry. The House would remember that until 1628 the old constitutional method of raising supplies for the service of the Crown was by direct, and not by indirect taxation. He held in his hand a treatise entitled a Declaration and Protestation against the illegal, detestable, and oft-condemned tax or extortion of Excise in general, by the celebrated William Prynne. He proved that it was not the Parliament but the King, Charles I., who originally attempted to levy excise duties. In the year 1628 two celebrated lawyers, Members of that House, Coke and Glanvil, protested against the system as a new prodigy, a monstrum horrendum. The House of Commons demanded a conference with the Lords with reference to this excise duty. They unanimously agreed that the attempt was against the law and the Petition of Right, and after this conference with the Lords they fully and unanimously resolved that it ought to be "eternally"—he would not repeat the word, which modern refinement forbad him to pronounce. At intervals since that period the prevalence of a base sordid feeling had been too commonly observed, inducing every person—he might say every class of the community—to take care of itself, and let the Chancellor of the Exchequer take the hindmost. He was disposed to think, if this Committee were appointed, a kindlier and better feeling would spring up between those who paid and those who expended the taxes of the country. If he wanted an argument in favour of the Committee being appointed, he might urge that he could not make out that there ever had been a Committee appointed on the general incidence of taxation. To some lovers of precedent that might be an objection, but he was not of that opinion. Although they had had Committees of Inquiry in reference to special taxes or exceptional burdens, and taxes affecting particular classes, yet, as far as he could discover, they had never yet had—and he thought they were now fully entitled to have—a Committee appointed that would take a comprehensive survey of our whole system of national taxation. Some weeks ago, on the Motion of the hon. and gallant Member opposite (Colonel Dunne), a Committee was appointed to inquire into the taxation of Ireland. The hon. Member for West Norfolk (Mr. Bentinck) also declared that the agriculturists were exposed to burdens from which other classes were exempt. He did not bring forward this Motion in any spirit of party or for the interest of any particular class. His object was that the Committee should dispassionately address itself to this great question, and he believed that the country would derive much advantage from its labours. He should be glad if the noble lord (Lord Stanley) would preside over it, and if the hon. Baronet opposite (Sir Stafford Northcote) would give it the benefit of his assistance. Quite recently they had a debate on the incidence of the malt tax, and the hon. and gallant Member for West Sussex (Colonel Barttelot) would have ample opportunity to bring all his facts and figures in reference to that duty before the Committee, be that the House might arrive at a proper decision upon a subject which promised to excite a large amount of public attention. With regard to the malt tax, it was connected with a much larger and greater question, and that was the revenue derived from the spirit duties. The abolition of the malt tax itself involved a sacrifice of five and a half millions, but the whole question must be deliberately looked at in the face, and it must be asked whether the abolition as now contemplated would not peril or compromise the fourteen millions from ardent spirits, which was now brought into the national exchequer. The right hon. Member for Bucks (Mr. Disraeli) in his financial statement of 1852 proposed a remission of one half of the malt duty, but he very properly accompanied that reduction with an augmentation of the house tax. This was one of the subjects to which the attention of the Committee might well be directed. If the Committee were appointed, one important consideration for them would be to determine how far the working classes were benefited by recent fiscal legislation. He very much doubted whether they had derived so much advantage therefrom as was generally supposed. It must not be forgotten that in 1857 the House in hot haste struck off the war tax upon incomes, but left the war duty on tea up to last year, and that on sugar up to within a few days ago. Whilst the war duties were kept on these two articles of universal consumption the income tax was reduced by the large amount of £5,750,000. If he wanted another reason for the appoint- ment of such a Committee it would be afforded to him in the slow process of economic science as applied to our financial system. For instance, the commercial treaty with Prance proposed by Mr. Pitt in 1787 was even more liberal than that which did such credit to his hon. Friend the Member for Rochdale. Again, in 1784, a Member of that House, referring to Adam Smith, said the principles of that great political economist would convince that century and govern the next, and as yet Pulteney's prediction remained unfulfilled. He would like the Committee to inquire whether our financial policy was based on the principles of Adam Smith. Those principles were, that every one should contribute to the support of the State in proportion to the revenue which he enjoyed under its protection, and that every tax ought to be so contrived as to take out of the pockets of the people as little as possible over and above the amount which it brought into the national treasury. As Mr. Stuart Mill said, those were the orthodox canons of an honest and a just taxation. Then he should like the Committee to test the merits or demerits of direct and indirect taxation respectively. This was a most important matter, and one on which he was glad to know the Chancellor of the Exchequer was perfectly impartial, for in the right hon. Gentleman's Budget speech of 1861 was this very amusing apologue, which he was sure the House would gladly hear again— I never can think," said the right hon. Gentleman, "of direct and indirect taxation, except as I should think of two attractive sisters who have been introduced into the gay world of London, each with an ample fortune, both having the same parentage (necessity and invention), differing only as sisters may differ, as where one is of lighter and another of darker complexion, or where there is some agreeable variety of manner, the one being more free and open and the other more shy, retiring, and insinuating. I cannot conceive any reason why there should be unfriendly rivalry between the admirers of these two damsels; and I frankly own, whether it be due to a lax sense of moral obligation or not, that as Chancellor of the Exchequer, if not as a Member of this House, I have always thought it not only allowable, but even an act of duty, to pay my addresses to them both. I am, therefore, as between direct and indirect taxation perfectly impartial. He hoped the Committee would allow those damsels, like the goddesses of old, to display all their charms, and that the right hon. Gentleman, like Paris, could award the golden apple to the Venus Victrix of Finance. The Committee would do great good if they only determined the exact burden which the consumers of taxed articles paid. That was a very important point. If the original cost of an article was £100, and it was subject to a duty of £50, it was quite obvious that ultimately the consumer must pay profit, not only on the original £100, but also on the £50 charged for duty. The Commissioners of Inland Revenue stated in their last Report that the duty on beer was a farthing a pint. Now, he was told that the remission of this duty would lead to a reduction in the price of the article to the consumer of, not a halfpenny, but a penny per quart. But political economists differed very much as to the amount by which the price of an article, over and above the sum paid to the State, was raised on the consumer by an excise or customs duly, some estimating it as much as 70 per cent, and others only at 25 per cent. He, therefore, thought the question one of very great importance, and one which would very legitimately come within the scope of such an inquiry as he wished to have undertaken by a Committee. He believed his estimate was not an extravagant one when he said that by the Excise and Customs duties of last year, amounting to £41,439,000, a sum of at least £54,500,000—that was £13,000,000 more than what found its way into the Exchequer—was taken out of the pockets of the people. Another valid reason for the appointment of the Committee was to be found in the uncertain and conflicting estimates we had of the value of the real and personal property of the United Kingdom. His hon. Friend the Member for Birmingham, in the year 1859, estimated the total value of the real and personal property of the country, excluding those persons who had under £100, at £6,700,000,000 sterling. An eminent statistical writer in the Edinburgh Review held that the estimate of his hon. Friend was £1,000,000,000 in excess; but at about the same time Professor Leoni Levi computed the real and personal property of the country at £6,000,000,000 and an American statistician of eminence had quite recently estimated it at £6,900,000,000 sterling. He confessed he thought the original estimate of his hon. Friend the Member for Birmingham correct. Mr. Coode, in his elaborate Report on Fire Insurance, had estimated the insured, the insurable, and the uninsurable property of England and Wales at £6,000,000,000 sterling, say £340 per head for every man, woman, and child in England and Wales, and added his estimate was an, extremely low one. He should like to know, too, what was the annual increase of the national wealth. The Chancellor of the Exchequer in his financial statement of 1861 asked, in speaking of the annual savings of the country— What are the annual savings of the country? May we take them at £50,000,000? Enormous as that sum is, I believe it may be taken as the amount which the skill and the capital, and the industry and the thrift of England, may be computed to lay by every year. The opinion of the Economist, an authority which the right hon. Gentleman would not deny, was that in the five years between 1854 and 1859 the annual savings of the country were on the average £114,000,000, and that the savings of last year were £130,000,000. In another statistical paper they were estimated at £150,000,000, and some statisticians had put them at £200,000,000 during the past year. It would be interesting, too, to ascertain what was the amount of the annual income of the country, for that was a point on which the authorities varied widely — between £500,000,000 and £750,000,000. The Liverpool Financial Reform Association estimated it at £650,000,000, and the Chancellor of the Exchequer, he thought, put it at £560,000,000 — at least, he assumed so from a speech made at Chester, in which he said that each person paid about one-eighth of his income to the State, and he was then obtaining some £70,000,000 a year from the resources of the people. If the Committee were appointed, no doubt all these points would be set at rest. The right hon. Gentleman, in his last financial statement, deliberately and authoritatively told the House that the time was come when the country ought to consider, and Parliament ought to decide, what course it ought to take with regard to the income tax. Now, as far as he (Mr. White) could judge, the country had already decided that the income tax, on account of its obvious inequalities, was an elaborate injustice, and Parliament would have long since abolished this odious impost did not our financial extravagance make it necessary that some other tax should be substituted in its place. No one had more vigorously denounced this tax than the right hon. Gentleman himself. The right hon. Gentleman said in 1858 that the income tax tended more than any other tax to demoralize and corrupt the people. In a recent article in the Economist there were some excellent remarks on this subject. The writer urges in favour of a direct tax on the propertied classes— The Customs yield a revenue of £24,000,000; but there is hardly an article of luxury charged at the Custom House. Speaking roughly, the Customs duties are taxes on physical necessities (or what have become such) or physical enjoyments. We have been abandoning Customs duties paid by the rich, and have been taxing for a vast revenue articles consumed by the lower and middle order of mankind. We need not observe that in a country like England our taxation ought not only to be fair in reality, but fair in seeming—conspicuously fair. The rich alone impose the taxes which poor as well as rich pay; and unless, therefore, there is some large unmistakable tax, which no one can overlook, that taxes very rich people much the most, there will always be, perhaps there ought always to be, bitterness and dissatisfaction. He did not agree with the hon. Member for Buckingham, that the inequalities and injustice inherent in the income tax could be removed. But if the Committee could devise some fair direct tax as a substitute for that on incomes they would confer a great benefit on the country. Of the £70,000,000 of revenue, but £15,000,000 were now raised by taxes which affected only the owners of the visible property of the country. It might also inquire into the best mode of remitting or reducing the taxes which confessedly pressed heaviest on the comforts and the means of the working classes. According to a Return moved for by the hon. Member for the Tower Hamlets, there were in existence on the 31st of December, 1862, 332 Co-operative societies with a capital of £429,315, and a sale of goods amounting in the year to £2,341,640. He had seen a calculation, based on the actual sales of some of those societies, in an excellent pamphlet by Mr. Francis, of Manchester, which proved that a working man with a wife and three children, earning from £50 to £60 a year, paid in indirect taxes £11 18s. 7d., or about 20 per cent of his entire income; and the Liverpool Association calculate that a family of the same number, earning 25s. a week, would ordinarily pay in taxes and consequent charges on sugar, tea, coffee, tobacco, and beer, to the amount of 5s. 9d. a week, or nearly 3d. in every shilling of their earnings. It should be borne in mind that the duty levied was out of all proportion to that which it ought to be on articles which had now become, if not absolute, at all events conventional necessaries of life. Even at the present reduced rate he found that tea now paid on an average 83 per cent; that consumed by the poor 100 per cent; while sugar now paid quite 33 per cent, and coffee about the same amount. For himself he believed that the present fiscal system pressed unduly on the working classes. The working classes might be said to pay a property tax of 20 per cent, their wages being their only property, and those wages were mulcted 4s. in the pound by the present system of indirect taxation. Mr. M'Culloch, recently writing on this subject, pointed out that, while nearly all the duties levied on commodities which contributed to the luxurious enjoyments of the rich were abolished, the duty on spirits, which were in some respects the luxury of the poor, had undergone successive augmentations. There were, however, other considerations connected with ardent spirits beyond increasing the area of consumption, and the policy pursued by the Government with respect to them—namely, obtaining the largest amount of duty from the smallest possible area, was in his opinion correct. With reference to the spirit duties he might further observe that he found we raised from the Excise and Customs duties on home, foreign, and colonial spirits, £13,250,000, or about one-fifth of our entire revenue. He would also say, with regard to the tea and sugar duties, that he thought the House ought to be prepared to entirely abolish them before reducing the spirit duties, inasmuch as the best interests of the working classes were bound up with the ability of procuring tea and sugar at the lowest possible price, Reverting to the pressure of taxation on the working classes, he learnt from a good authority (Mr. S. C. Kell, of Bradford), that an artisan was practically taxed by our system of indirect taxation at the rate of 4s. per week, assuming that he earned only 20s. Now he need hardly remind the House that any tax levied injuriously on the rich, because they happened to be rich, would operate almost as prejudicially on the poor as if levied on themselves, and it might be equally true that any tax levied injuriously on the poor might re-act to the disadvantage of the rich. Let the £7,000,000 they paid annually for poor's rates, and the incessant demands upon the rich, be accepted as the penalty which the rich must pay for disobeying the laws of a sound and just system of taxation. Justice in this case was the truest expediency. As the Emperor of the French once said, "Providence never designed that one class should be made happy at the expense of another." The Chancellor of the Exchequer told the House last year that of the £41,000,000 levied by the customs and excise quite three-fourths, or some four millions more than the whole amount of the interest on the National Debt, were raised from consumers so poor that the great majority of them were compelled to expend all their earnings in obtaining the barest necessaries of life. In this country the annual consumption, of tea was only 2¾ lb. per head, whereas in Australia it was 14 lb. per head. In the Northern States of America the consumption of tea was only one-half what it was in England, but then their consumption of coffee was six times greater than ours. The truth was English statesmen had never taken sufficient account of the magic influence of a full belly. He would not trouble the House with a reference in detail to the continental systems of taxation. A Return on the subject was laid on the table of the House in 1842, setting forth the population and respective amounts of direct and indirect taxation in various countries. That Return, owing to the efflux of time, was not now quotable, but according to the Almanach de Gotha and the Statesman's Year Book it would, however, appear that the weight of taxation on the Continent fell on those by whom it could be best borne, and it was those who possessed most that paid most. It appeared from a Return laid upon the table of the House, that the present average annual taxation of Great Britain per head was 53s., an instance of fiscal exaction, in a time of peace, unexampled in the history of the world. The ten years before the Russian war the average taxation per head of Great Britain and Ireland was 38s.; seven years after the war the average annual taxation was 48s. per head. So that while the population had increased but 5 per cent the total Imperial taxation; had increased more than 25 per cent.; Supposing the Committee for which he asked were appointed, it would be interesting to take some evidence of the system of taxation in America, particularly as to how direct taxation was levied in some of the best ordered of the Northern States. For local or State purposes he believed it was usual to levy a direct pro- perty tax varying from ¾ to 1 per cent, the poor man paying according to his little and the rich man according to his much, each knowing how much he paid and what he paid it for. The population of the State of Massachusetts last year was 1,300,000, and the direct taxation of the State was £1,300,000, or £1 per head. Supposing the estimate he had quoted of the real and personal property of the United Kingdom, to be correct—namely £8,000,000,000, a tax of 5s. per cent would give £20,000,000 per annum, which would enable the Government not only to abolish the income tax but the customs duties on tea, sugar, pepper, and other articles of domestic consumption. The late Sir Robert Peel, when he introduced the income tax, said that the persons who paid it would be more than compensated by the reduction on articles of consumption; and he (Mr. White) was encouraged to believe that a perseverance in the same policy would be attended with like results, The hon. Member for Rochdale, in a remarkable letter read at the Social Science Association last year, said— No one can deny that Customs and Excise duties, and other indirect taxes, are more costly than direct taxation; and no one can doubt that they have injured commerce, and checked the production of wealth. Seeing that the poor and other rates, amounting to £19,000,000, are now annually raised by direct taxation, is it not well worthy of legislative inquiry whether the £60,000,000 or £65,000,000 needed for Imperial purposes might not be mainly levied after the same fashion, in lieu of the present octroi or wretched "Tally" system of indirect taxation. Next to the poorer classes who would be benefited by a revision of taxation, I entertain a confident belief that the class who would most benefit would be the landed proprietors. Land is a certain quantity, and cannot be increased, while capital is a variable quantity, and has a great tendency to increase. Landed proprietors, therefore, would be benefited more than any other class, except the poorer classes of the country. Considering what advancement had been already made by the remission of duties, it would be impossible to over-estimate the stupendous results which would follow if the whole country became one free port to all the world, and everything were allowed to come in and go out without let or hindrance. It would vastly increase employment to the people of the country; it would augment the consumption of tea, coffee, and other articles of food, not only to double, but to treble the present extent. If the condition of our people were raised to that pitch at which they would be enabled to procure all that was necessary to sustain them, in a healthy and vigorous existence, the prosperity of this country must be immensely promoted. The poor's rate would dwindle away, and in the interest of the poor themselves it might be found advisable to abandon compulsory relief. Seeing the marvellous prosperity which had resulted from the commercial legislation of the last twenty-five years, through which our Foreign trade had so rapidly increased from £100,000,000 to a grand total of £444,000,000, or about one-and-a-half million for each working day of last year, they had every encouragement to go forward without faltering in the same direction. It was worth the while of the Legislature to inquire why, with this great prosperity, such a vast amount of poverty existed even now in the country. At the present moment one in every twenty-three of the population was a pauper, and there were in the United Kingdom not less than 1,347,495 paupers, to say nothing of the millions that were on the brink of pauperism. Besides this, there was the vast amount of poverty relieved by private means, and the indigence reluctant to receive relief, as evidenced by the occasional deaths by starvation, to which was to be added the increase of the crime of infanticide. He hoped the day would soon arrive when the poorer classes of the people would be relieved from paying an undue quota of the taxation of the country. It might scarcely be believed that in the eighteen months prior to the 30th June, 1862, there were found dead in ditches and other places 921 children under two years of age, and the total number of children of the same age who had met with untimely deaths in the same period was 5,547. He must he permitted to anticipate an objection which would probably be made to his Motion. No doubt he would be told that, supposing there was an abolition of the duties upon the various articles to which he had referred, it would not benefit the working classes, but that in the course of time wages would accommodate themselves to the altered state of things. That was a great argument in the time of the anti-Corn Law agitation. They were persistently told that wages would certainly fall just in proportion as the price of corn was lowered, but what was the fact? He found that so far from wages falling with the price of corn, they had risen, especially in the manufacturing districts. He thought he could interpret the feelings of the working classes when he said that they did not wish for exemption from Imperial taxation; but what they complained of was the disproportionate amount of taxation which now pressed upon them. He would ask the House whether it was not degrading them to mix up the cost of food, drink, and of Government together in their system of taxation, and to make them pay the excessive cost of that bad mixture? He believed the Committee which he moved for would be of great public advantage, and that the time was eminently favourable for the calm, deliberate, and dispassionate discussion of this great question, owing to the total absence of any party rancour or feeling. He had not brought forward this Motion in any spirit of self-seeking, for he would be content to occupy the humblest place in that Committee; but he submitted his Motion with the earnest desire to direct the attention of the House to a subject which sooner or later must attract universal interest. He hoped the present Parliament would not be amenable to the same reproach as was recorded against the one of 1796. He found it written in the latest and best summary of their constitutional history by the accomplished Gentleman who sat at the table (Mr. Erskine May), that the Commons of that age were ever ready to mulct the people at the bidding of the Minister, and were yet unwilling to bear their own proper burden, and refused to grant to Mr. Pitt such a tax on their landed property as he proposed, and which, in 1853, a reformed Parliament, intent upon sparing industry, imposed in the form of a succession duty, at the instance of the right hon. Gentleman the Chancellor of the Exchequer. He cherished the profound conviction that the House, whatever might be the result of his Motion, would act on the sound State policy contained in a paper written by the ever-to-be lamented Prince Consort, which declared that the interests of all classes, too often contrasted, were identical, and that it was only ignorance which prevented them from uniting for each other's advantage. The hon. Gentleman, in conclusion, moved for a Select Committee to inquire into the operation and incidence of our present fiscal system, and to consider and report if any and what measures could be devised to secure a more equitable adjustment of the burden of Imperial taxation.

MR. POLLARD-URQUHART

rose to second the Motion, in the firm belief that the proposed inquiry would be for the benefit of all classes, not excepting the owners of land. About two years since the right hon. Gentleman the Member for Bucks compared the landed interest to a milch cow; and that figure might be accepted when it was borne in mind that a milch cow upon a dairy farm was much better fed than a cow upon an ordinary farm, where all the turnips were sent to market. And so it would be better for the landed interest to submit to some well-devised plan of direct taxation, which would enable the country to get rid of those taxes which now pressed heavily upon the working classes, and to a certain extent were injurious to the owners of land. If they looked back to what took place after the close of the last great war, they found that in 1821 landowners were described as being in great difficulties, although at that time the landed interest did not contribute directly to the Imperial taxation. Now, however, land was rising in value, and there were numerous competitors for any vacant farm, although the landed interest now did contribute a moderate sum to the taxation of the country. One of the great objects of his hon. Friend the Member for Brighton (Mr. White) was to get rid of any taxes still existing which crippled the industry and pressed on the resources of the working classes of the population, and which indirectly kept down the value of laud. The results of the fiscal changes which had taken place since 1842 might be gathered from the value of the fixed property of the country; and, notwithstanding the imposition of the income tax and the great changes in the Customs duties, it appeared from Schedule A that this had risen upwards of 40 per cent in value. It might be said that the increase was owing mainly to the number of additional houses; but landed proprietors, he thought, would gladly receive building instead of agricultural rents; and in land alone there had been a rise in value of upwards of 10 per cent between 1844 and 1861, while in that time the increased taxation cast upon land by the income tax had not been more than 7 per cent even during the height of the Crimean war. Before the House of Lords' Committee it had been stated that railways generally raised the value of adjoining properties from 6 to 16 per cent. There was, however, a much shorter way by which his brother landowners could procure the benefits of these lines than by imposing mortgages upon their properties, and that was by removing all restrictions upon the industry and enterprise of the people, and by taking upon their own shoulders a moderate portion of the taxation necessary for that purpose. If measures of this kind were not adopted there was only too much reason to fear that the attractions offered by the colonies, and the facilities for reaching them, would prove too great for the classes whom it should be their object to keep at home. The industrial history of Europe afforded many examples of nations which had been ruined by unwise taxation. England was quite as much exposed to competition in the neutral markets of the world as they had been; and if capital and industry died away, as in Spain, or remained stationary, as in Holland, British landowners might whistle for their rents. No one was a more competent witness on this subject than the right hon. Gentleman the Member for Buckinghamshire, who in his interesting tale Sybil depicted most truly the heavy sufferings entailed on the working classes by the iniquitous system of taxation which, to use his own words, "began in the time of the Venetian oligarchy." Since the time when that work was written a great deal had been done to alleviate the pressure of such taxation. But he asked those conversant with the circumstances whether it was altogether a thing of the past, or whether there was not ground for such a Motion as that before the House, and reason to hope that beneficial results might follow from it? The more these subjects were studied and understood, the more it would appear that rich and poor had no divergent interests, but that what was for the universal good was also for the good of the individual. The hon. Baronet the late Secretary to the Treasury (Sir Stafford Northcote) in his able compendium of financial policy for the last twenty years had shown how much more closely classes had been brought together during that period, and how much more harmony there was between them. He appealed to the right hon. Gentleman the Chancellor of the Exchequer, whose influence with a large section of the House was so great, to continue the beneficial policy begun in 1842, of which he had been so firm a supporter; to the representatives of the landed interests, from which he himself derived almost everything he possessed; and to the Members of the House of Commons generally, to support a Motion having for its object to promote the welfare of so important a section of the community.

Motion made, and Question proposed, That a Select Committee be appointed to inquire into the operation and incidence of our present Fiscal System, and to consider and report if any and what measures could be devised to secure a more equitable adjustment of the burden of Imperial Taxation."—(Mr. James White.)

THE CHANCELLOR OF THE EXCHEQUER

Sir, I was in hopes that a subject of such great importance, and treated at such length, and with such force and clearness by my hon. Friends, might have led other Members to lay their views before the House; for I feel that the question of inquiry into our present system of taxation is one which the Government ought not to take exclusively into its own hands. But as no one has risen to address the House, I will venture to make this observation, which I think must have occurred to my hon. Friends who moved and seconded the Motion, that the very circumstance I have mentioned proves that, at present, there hardly exists in the House that degree of interest in so vast a question which would be absolutely necessary to enable the House to grapple with the enormous labour of the proposed inquiry. We must not conceal it from ourselves—I am sure my hon. Friend does not conceal it from himself—that his Motion bears no relation or resemblance whatever to an ordinary proposal for a Committee. When I observed the terms of his Motion upon the notice-paper that fact was at once obvious to me; but after the speech of my hon. Friend, I must say the terms of his Motion fell very short indeed—I will say immeasurably short—of the wonderful dilation and distension of probable labour which he has sketched out for us. In point of fact, it would be much more difficult to say what topics relating to taxation my hon. Friend has shut out from his inquiry than to enumerate those which he has included. Had my hon. Friend limited his proposal to any one of the subjects on which he has touched, the responsibility of undertaking the inquiry would still have been serious. But whether it be owing to the sanguine disposition of my hon. Friend, or to some other cause, it does appear to me that in the construction which he assigns to the terms "incidence and operation of taxation "he has acted so much in accordance with his own liberal disposition that he has laid on the prospective Committee, and on the prospective Chairman — of whom, by the way, in the person of the noble Lord the Member for King's Lynn (Lord Stanley), I must say my hon. Friend has made an exceedingly judicious choice—a burden which will infallibly break their backs. My hon. Friend proposes to inquire into every branch of revenue, and every tax included in every branch. He proposes to consider it from every point of view from which it is capable of being regarded. For example, he would investigate the operation of each tax as it bears on each of the three kingdoms, and then on each class of society in each country. He would also investigate the matter with reference to the distinction between direct and indirect taxation. He aims not only at a fiscal, but a statistical result. My hon. Friend will not be satisfied with the noble Lord and the Committee unless they bring out by the inquiry an elaborate account of the capital value of the whole property of the country, its annual income, and the annual increment of that income. And as my hon. Friend cannot form a judgment of the bearing of our system of taxation without investigating those of other countries, he would, doubtless, extend his regards to the system of taxation abroad. The taxation of the United States is to be brought within the purview of the Committee; and, indeed, such is my hon. Friend's zeal in seeking for information wherever it can be found, that every country that has an organized scheme of taxation will supply useful hints and suggestions. This is not an exaggerated, but a very slight and hasty sketch of the view he takes of the duties of the Committee. Now, I submit, that a plan of this nature, if it were ever reduced to practice, would require that those who propounded it should begin with a process very disagreeable to a man of philosophic mind—he must break up his scheme into pieces, and be content to deal with one member of it, or, at least, with some one or more restricted and manageable number of the very numerous and profoundly important topics that he has started. He appears to think that there exists in this country a chronic discontent, an ineradicable disposition to escape from the payment of taxes; and he seems to think that this is a phenomenon peculiar to ourselves, and due not to any ordinary or prevalent vice or infirmity of mankind, but due rather to the faults of our fiscal system, which might, by judicious care, be corrected. There, again, I differ from him. Now, Sir, whether it he that approaching age which chills a man's views of life and human nature I cannot tell, but I confess I do entertain a lower estimate of human nature in this respect. I am afraid that, labour as we will, and patch and cobble and make and mend as we may, we shall never get rid of that disposition, which a large portion of mankind cherish—perhaps unknown to themselves—to reduce to a minimum the sum they contribute as individuals towards the necessities of the State. My hon. Friend appears to think that this disease is local, temporary, and peculiar. In my opinion it is cosmopolitan, everlasting, and universal; in no country in the world where taxes are paid are they regarded as otherwise than a pestilent grievance. But has there been no improvement in our taxation? Happily, our system of taxation has undergone, within the last twenty or thirty years, a radical change. I am by no means of opinion that nothing remains to be done; but neither do I believe that any such changes, either in principle or amount, remain to be effected as those of the last twenty or thirty years. My hon. Friend seemed to argue, from the great reduction which had taken place in indirect taxation, that we might go on progressively to its extinction. I do not deny that from certain points of view direct taxation has undoubtedly immense advantages. It has this immense benefit—you take from the pockets of the taxpayer nothing but what you put into the public treasury—except of course the cost of collection, In indirect taxation, on the contrary, you take from the pockets of the taxpayer a great deal that does not come into the Exchequer. I do not deny that the direct tax is the perfect tax. But what is the use of knowing that, when you have not to devise a theory or elaborate a system as philosophers, but to pay the daily charges of the Treasury, and when you have to deal with the flesh and blood of mankind? When you attempt to realize this theory of direct taxation you are met by this obstacle—impossibility. In addition to £18,000,000 of taxation required for local objects, you have to raise from £65,000,000 to £70,000,000 for Imperial purposes. How to raise this sum by direct taxation is a matter which debating societies and clubs may dispute as long as they please, but towards which we can make no sensible approximation by any measures for which a British Minister would be responsible, or which a British House of Commons would pass. Let it not be supposed, meanwhile, that our direct taxation is increasing in amount. It is difficult to determine with precision what is indirect taxation. We see plainly that the Customs and Excise are indirect taxes. The taxes raised for local purposes—the income tax, the succession duty, the land tax, and one or two others are direct taxes. There is between the two a margin of disputable ground; but it cannot be said that at the present moment our fiscal system shows any preference of one class over another. There never was anyone more anxious to reduce the class of indirect imposts than the late Sir Robert Peel; but towards the end of his life he was of opinion that the direct taxes of this country for a time of peace had very nearly reached their furthest limit. My experience is that flesh and blood form the great obstacle to the extinction of indirect taxation, and that obstacle will remain. During the time that I have held the office of Finance Minister—and I presume that my predecessors would say the same—there has not been a single day in which I have not received representations illustrative of the difficulty of levying direct taxes; and I speak within the mark when I say that though our direct taxes, as far as the Exchequer is concerned, form but a small proportion of the public income, at least 49–50ths of all the trouble, personal vexation, annoyance, and discontent incident to the payment of money for the purposes of the State, arise out of direct taxation. I grant that if we go back twenty-five years ago, when our commercial and fiscal laws were of the most complicated character, the case was very different. They were then full of every sort of inconvenience. At every stage the whole operations of commerce bristled with points at which trade and industry were interfered with, thwarted, baffled, perplexed, and annoyed by the provisions of the law. But the long and constant labours of this House have essentially altered this state of things, and I believe that it is now rare to meet with anything that can be properly called vexation and annoyance connected with the payment of the indirect taxes—I mean, of course, by those who pay them in the first instance. My hon. Friend has placed some difficulty in the way of a Motion of this kind, by indicating with ingenious candour the nature of the changes that are likely to result from the labours of this Committee. If this were the time, and the circumstances were favourable, it would be necessary for those who acceded to the appointment of the Committee, to indicate to what extent these changes were to be taken into their contemplation. My hon. Friend speaks of the abolition of the income tax, and likewise of a large amount of the indirect taxes of the country. I perfectly agree with my hon. Friend as to the benefits that have resulted to the landed interest from our recent commercial policy; but still we must remember that that policy has not consisted in the extirpation of indirect taxation. It has, indeed, often been so described, sometimes by its friends, but more frequently by its opponents. Let the fact stand on record, that our indirect taxation, after all its pruning, is more vigorous and more productive now than it has ever been. Therefore, the inferences which might be drawn, within the limits in which Parliament has been acting, are not fair, and must be founded upon measures of a more sweeping and, if I may say so, of a more revolutionary kind. My hon. Friend has indicated the means by which indirect taxation would be extinguished. He would impose a property tax of ¼ per cent, and when he says ¼ per cent, he thinks the dose so mild that no man can possibly feel any difficulty in acceding to a Committee which is to end in a proposal of so moderate a description. And my hon. Friend thinks, also, that he would derive advantage, not only with the rest of the community, but even a peculiar benefit from the adoption of this plan. He would have to pay this per cent, it is true, but then he would be free, on the other hand, from the income tax, which is 2½ per cent, from the tea duty, from the sugar duty, from the duty on coffee, from the duty on pepper, from the wine duty, and from the duty on beer. [Mr. WHITE: Not at a ¼ per cent.] Well, then, with the raised to a ½ per cent, the thing would be easy. But this ¼ per cent which sounds so innocent and so modest, is a war income tax of 10 per cent on the landed proprietors. No doubt the landed proprietors would be willing to pay this tax in case of need or in war; but if this plan of my hon. Friend were to be applied as a fiscal reform, the landed proprietor would naturally ask whether everybody else were going to pay in the same proportion? My hon. Friend says there are a thousand millions' worth of property in the country. But in that he includes every chair and every table in every cottage of the country. I think my hon. Friend would have enormous difficulty in carrying his plan into effect. I am told he would never get over the first preliminary difficulties of valuation. I do not think he has ever weighed the amount of practical obstacles with which his plan would be impeded in the very matter of valuation. My hon. Friend refers us to the Northern States of America. I find in the New York Almanac that every man who has a house in New York is set down and in a parallel column the amount of his property. But then there is a process called "sweating down," which must have been awfully applied to the fortunes of the citizens of New York. It is notorious that there are in New York a considerable number of gentlemen who may be called Merchant Princes, and there are several in that city who are worth many hundred thousand pounds a piece. I have looked through this book, and it appears from it that there is not a single man in New York who is worth £100,000. Well, if it be true that these New York gentlemen are in the habit of writing down eighty, sixty, or fifty, where they ought to write one hundred, and if the same plan be pursued in this country, then our thousand millions' worth of property will shrink, and the ¼ per cent property tax will have to raise its proportion inversely; the 10 per cent income tax which I have described, will grow to an income tax of 15 or 20 per cent; and what the end of this process which begins under such promising auspices may be I will not say. I, for one, think it my first duty to avoid holding out any expectations to Parliament or the country with regard to which I do not feel a reasonable hope that our legislative labours of one kind or another would be likely to realize them. And if that be so, I must say, I think it is for the House of Commons to avoid acceding to any proposal, be it what it may, which aims at fundamental changes in our system of taxation—first, because I believe those changes are not required in justice, and secondly, because I am convinced they will be found impracticable, in consequence of the obstacles which would encounter any attempt to give them effect. I do not mean, however, to apply the doctrine of finality to legislative finance. It would be perfectly easy to point out—and in this all sides of the House would concur—that we have abundance of taxes which still call for the reforming hand; but I hope they would also concur in this, that it is better not to talk too much about their removal until we have made the best of the relation between income and expenditure. What I would say is this—that any Committee which contemplated occupying even a small portion of the field which my hon. Friend has traced out would require to be appointed not merely with the general concurrence, but with the general desire of the House of Commons, and to be proposed under the auspices of the executive Government of the day, whatever that Government might be, and unquestionably not at a period when we may hope that a full moiety of the Session is already past. My hon. Friend is aware that if he were to obtain a Committee of this kind his first steps would be necessarily some of the most formidable of his labours, and he would hardly have overcome the first of these preliminary difficulties before he would find that the members of his Committee were gradually disappearing into the country, and his labours for this year were at an end, I am far from discouraging him from attempting anything which. may be brought within the scope of an ordinary Committee, but I think his own views would require to be reduced within much narrower limits. For the present, I trust he will be satisfied with having had an opportunity of making known to the House and to the country a great deal which he deems of importance in this matter, and that he will not ask the House to pronounce an opinion upon his Resolution.

MR. O'REILLY

said, that the Resolution of the hon. Member for Brighton (Mr. White) deserved the serious consideration of the House, though the hon Gentleman, in the speech in which he had introduced it, had rather damaged his case by enlarging too much the scope of his inquiry, and to a certain extent prejudging the issue by pointing out so strongly the conclusions which he thought would be arrived at. It would be clearly impossible that any Committee could enter into all the details of the taxation not only of this, but of other countries, and decide upon all the disputed points. But, as our finance had now got beyond a state of empiricism, and I we had been endeavouring to place our; taxation upon a sound basis, he thought that the time had come when we might inquire into the principles of taxation and endeavour to discover in what direction our further steps should tend. He was, therefore, of opinion that the Resolution indicated a line of investigation which was sound in itself, and adapted to the powers of a Committee of that House. There had been a time when the only principle of taxation recognized in this and other countries was to get at the money of the people in any way it could be done, and the grand object was to conceal from the taxpayer the fact that the Chancellor of the Exchequer was drawing any money from him. That principle we had abandoned. The early period of our history had been one of direct taxation; and it was not until a time much more advanced that we commenced that system of indirect taxation which now weighed so heavily and unjustly upon so large a portion of the community. We had slowly and gradually been retracing our steps; but still three quarters of the amount produced by our taxes was raised indirectly. Abroad, however, the case was different. In Belgium nearly one-third of the taxes was raised by direct taxation, in France between one-third and one-fourth, in Denmark nearly half, and in Italy the greatest portion. It should not be considered for a moment that the attention of the Committee should be directed to the details of taxation. They should rather endeavour to define the principles by which taxation should be governed, and to determine the relative amounts produced by the two methods. They might also devote some attention to many collateral subjects such as the effects of taxation upon the inhabitants of Ireland, He believed that it would be found that the Irish sustained a greater pressure than did their neighbours in England, because the taxation upon the necessaries of life must always press the hardest upon a poorer population. The examination of the Committee would, he believed, have the effect of, at all events, disproving one fallacy—namely, the belief that the taxes always weighed most severely where the amount contributed per head was the largest. It would also strengthen the position of future financial Ministers, by laying down principles by which they would be guided, and to which they would refer as a justification of their conduct. He thought, however, for the reason given by the right hon. Gentleman the Chancellor of the Exchequer, the hon. Gentleman could not press his Motion for a Committee this year: and he thought that when he brought it forward next Session he would act wisely if he made the terms of reference less extensive.

MR. W. EWART

thought it a deplorable fact in our' fiscal history that, whereas in foreign countries at least two-thirds of the national income were derived from direct taxation, with this country it was just the reverse. He believed that in time the labouring classes, as they increased in intelligence, would press for a more extended application of the system of direct taxation. Time would be the best friend of the hon. Member for Brighton.

Motion, by leave, withdrawn.