WAYS AND MEANS— FINANCIAL STATEMENT.

HC Deb 08 April 1869 vol 195 cc363-434

Considered in Committee.

(In the Committee)

THE CHANCELLOR OF THE EXCHEQUER

Mr. Dodson—In the long and intricate statement which I am afraid it will be my duty to submit to the Committee, I feel I shall have extreme need of their kindness and indulgence. I am quite aware that under no circumstances could I be equal to discharge adequately the task which is imposed upon me; but there are certain difficulties and disqualifications peculiar to myself which make my discharge of it more onerous to the Committee than it might have been in other hands, and I therefore earnestly hope to receive their patience and indulgence. With these few words of preface I address myself at once to the Financial Statement which it is my duty to make, and in which there seems to me to be wanting no element of difficulty and embarrassment.

In order to make the observations I have to submit on the Accounts of last year as clear as possible, I think it will be advisable to eliminate from them all matters connected with the Vote for services in Abyssinia which I obtained some weeks ago from this House. The Vote of Credit was given by the House; but the Ways and Means have not yet been provided, and by introducing that large sum into the calculations, I should, I think, only disturb them. It will be fair to the right hon. Gentleman the Member for Northamptonshire (Mr. Hunt) in the analysis of his statement which it will be any duty to make, to do so without refer- ence to this specific matter, which, though introduced into his financial year, had really nothing to do with it. The Committee will, therefore, please to understand that, in the analysis I submit, I omit at present the subject of Abyssinia, except so far as it was present in the mind of the right hon. Gentleman when he moved the Estimates in Parliament on the 23rd April last, reserving a full consideration of it to the time when I have gone through what I have to say with regard to our Estimates. The right hon. Gentleman on the 23rd of April last year estimated the Revenue for the current year at £73,150,000. The actual Receipts for the year have been £72,591,991—showing a receipt less than the right hon. Gentleman estimated amounting to £558,009. The Estimate of the right hon. Gentleman, as compared with the actual receipts, stands thus—The Customs he estimated at £22,800,000; the Customs have fallen short of that amount by £376,000: the Excise he estimated at £20,330,000; the Excise has exceeded that estimate by £132,000: the Stamps he estimated at £9,650,000; the Stamps have fallen short of that amount by £432,000: the Taxes he estimated at £3,540,000; the Taxes have fallen short of that amount by £46,000: the Property Tax he estimated at £8,700,000; the Property Tax has fallen short of that amount by £82,000: the Post Office he estimated at £4,650,000; the Post Office has exceeded that estimate by £10,000: the Crown Lands he estimated at £350,000; the Crown Lands have exceeded that estimate by £10,000: Miscellaneous he estimated at £3,130,000; they have exceeded that estimate by the large sum of £225,991. So that the Receipts are less than the Estimates by the sum of £558,009. Having made that comparison, I proceed to compare the Revenue of the year 1868–9 with that of the previous year. I find that the total Revenue of 1868–9 amounted to £72,591,991; while the Revenue of the previous year amounted to £69,600,219; so that there was an increase of receipt over the former year of £2,991,772. It will be interesting to the Committee to know under what heads the Income last year fell short, and in what it exceeded the previous year. The receipts of the Revenue during last year have exceeded the receipts of the year before, in the Excise by £300,000, in the Property and Income Tax by £2,441,000, in the Post Office by £30,000, in Crown Lands by £15,000, and in Miscellaneous Receipts by £769,772; while there has been a falling off in the receipts from Customs of £226,000; in Stamps of £323.000; in Taxes of £15,000; the net increase of Income on the year being £2,991,772. With regard to these items one remark occurs at once—it is, that the articles of consumption by the wealthier class have, on the whole, held their ground and even improved; while the articles of consumption by the poorer classes have, I am sorry to say, apparently suffered most. On tea there has been a falling off of £234,000, on sugar of £153,000, on coffee and chicory of £50,000, on tobacco £41,000; whilst on wine there has been an increase of £51,000, and on spirits, those consumed by the rich, such as brandy, there has been an increase of £200,000; while on British spirits there has been a falling off of £350,000, and on rum of £175,000. On malt there has been a gain of £210,000: that, however, is attributable to our dealing with the duty last year. There is a decrease on marine assurance of £80,000, occasioned by alterations in the law by the right hon. Gentleman the Member for Buckinghamshire in 1867. The legacy and succession duties have fallen off, curiously enough, to the extent of no less than £170,000—a matter, I must say, in justice to the right hon. Gentleman, of sheer ill-luck, for although death has been busier than usual he has avoided striking at those whose death would enrich the Revenue. As these things, however, compensate themselves in cycles, we may—I must not say hope—but expect a corresponding increase in these duties next year. The large increase of the income tax is due to the imposition first of 1d. and then of 2d. The next comparison I have to make is between the Estimate and the Expenditure of 1868–9, including the Estimate and Supplementary Estimate of the right hon. Gentleman as compared with the actual Expenditure of the year. The case stands somewhat thus—The interest of the Debt charged on the Consolidated Fund he estimated at £26,700,000: it was less than that by £81,674. The other charges on the Consolidated Fund he estimated as £1,865,000: they were above that sum by £22,286. The Army expenditure he estimated at £15,456,000: it was short of that by £456,000. The Navy expenditure he estimated at £11,157,000: it exceeded that by £209,545. The Miscellaneous Civil Services he estimated at £9,249,000: and they fell short of that by £265,981. The' Revenue Departments he estimated at £4,968,000; and they exceeded his estimate by £53,302. The Post Office Packet Service he estimated at £1,089,000; and it exceeded that by £7,338. So that the Expenditure, omitting that on account of Abyssinia, was less than the estimate of the right hon. Gentleman by the large sum of £511,184—which very nearly balances the amount by which the Receipts fell short of the Revenue.

Having stated the Estimates for the Revenue and the Expenditure, it now remains to compare the two together. The result, still excluding Abyssinia, is that the Revenue for the last year actually collected was £72,591,991, and the Expenditure actually incurred, £72,972,816: so that there was an. excess of Expenditure above Revenue of £380,825, which was the deficit for the past year. If to that we add the £2,000,000 voted last month, it will give a deficit, in round numbers, of £2,381,000. That, however, is a matter which I have purposely excluded, because it would appear to swell the deficiency, and I wish to deal only with the Expenditure which the right hon. Gentleman contemplated when he framed his Estimates. He estimated the deficit at £202,000, but the deficiency really has exceeded his estimate by £179,000.

I now pass from this subject to the more interesting one of the Estimates for the present year: and I shall pursue the same course in leaving out Abyssinia, except so far as it was dealt with in the Estimates of the right hon. Gentleman. I am sorry that the Estimates are not in the hands of Members. The difficulties in the way of getting them ready have been many and various, but I trust that in a day or two they will receive them. At any rate I will compare my estimate with that of the right hon. Gentleman. So far as the interest of the Debt is concerned the amount is absolutely identical, and stands at £26,700,000. The other charges on the Debt are £1,700,000. The right hon. Gentleman estimated them at £1,865,000; the difference of £165,000 being occasioned by the transfer of the charge for the Diplomatic Services from the Consolidated Fund to the ordinary Estimates, and is therefore a mere matter of account. Our estimate for the Army this year is £14,230,000: the estimate of the right hon. Gentleman last year was £15,456,000, showing a reduction £1,226,000,. The Navy we estimate at £9,997,000: it was estimated last year at £11,157,000,—being a decrease of £1,160,000. The Miscellaneous Estimates tell a very different tale. We estimate them at £9,530,000: the right hon. Gentleman estimated them at £9,249,000—so that there our estimate exceeds his by £281,000. I will state how the difference arises presently. We estimated the Revenue Departments at £4,976,000: the right hon. Gentleman estimated them at £4,968,000—so that there is an increase of £8,000 on our part. The Post Office Packet Service we estimate at £1,090,000: the right hon. Gentleman estimated it at £1,089,000, showing an increase of £1,000 on our part. The effect of the two Estimates as compared with each other and excluding Abyssinia is that our estimate is £68,223,000, whereas, that of the right hon. Gentleman—also exclusive of Abyssinia—was £70,484,000—showing therefore a gross reduction in our Estimates of £2,261,000—a reduction for which we are mainly indebted to what I will venture to call the heroic efforts of my two right hon. Friends, the Secretary for War and the First Lord of the Admiralty, who have conferred an obligation on this country which the Committee, highly as they may think of it, will not be able fully to appreciate until they have heard the whole of the Financial Statement which it will be my duty to make. I will offer no observation upon the Estimates for the Army and Navy, because my two right hon. Friends have already had an opportunity of making their own statements on this subject; the only item to which I will refer is that one to which I have paid most attention—the excess upon the Miscellaneous Service Estimates of no less than £287,000 over those of last year. Of course this is not the time, nor would the Committee have patience, if I attempted to go into the details of the Estimates, and show how every item came there; but I have selected two items which go to swell the amount. One is a mere matter of account, being a transfer from one part of the Estimates to another; and the other is a thing of spontaneous growth, over which the Government have no control. In the first place there is an increase in the Vote for Primary Education in England of £59,000. That is a matter of purely spontaneous growth, depending on the number of children attending the schools and passing the examination. Then there is an increase in the Estimate for Irish Education, which is pretty much in the same position—that is an increase of £13,000. Then there is £15,000 additional for superannuation, a matter over which the Government have no control, as it depends upon the rules that have been laid down by Parliament. Then there is an increase of £20,000 for the metropolitan police, which depends upon the contributions made by the metropolis itself. Then there is an increase of £16,000 for the county police, which arises in the same manner, arising from a grant made by the Government as against so much contributed by the counties. The diplomatic services which have been removed from the Consolidated Fund to the Miscellaneous Civil Service Estimates, are not less than £148,000. Then there is the expenditure of the House of Lords, which has hitherto been managed by that House itself, but which now appears in the estimates: it amounts to £46,000. Adding these different items together I find that I have shown, as against an increase of £287,000, new items, either occasioned by changes in the manner of keeping the accounts, or by the spontaneous growth of charges over which we have no control, amounting to £323,000. So that I hope we stand excused from any charge of wilful extravagance, because it is quite possible for an Estimate to grow to an inordinate size without the Government having the slightest power to check it.

I now come to our estimate of the Revenue of 1869–70, which I will also compare with that of the right hon. Gentleman for 1868–9; and I beg the attention of the Committee to this matter, because it has a bearing upon the degree in which they may be justified in relying upon the figures that will be submitted to them. The estimate we have made for the yield of the Customs is £22,450,000; the actual receipt of the Customs for the past year was £22,424,000, so that our estimate exceeds that of last year by £26,000. Considering how this Department has fallen off, I think we have gone quite far enough in the way of caution when we have placed ourselves so nearly on a level with the actual receipts. The estimate for Excise is £20,450,000: and the actual receipts were £20,462,000; the estimate, therefore, has gone within £12,000 of the actual receipts. We have not allowed ourselves to entertain any hopes of any sudden changes for the better, because things are very bad; we have thought it better to take our stand on things as they are, and to look circumstances fairly in the face than to attempt to gloze them over by sanguine and inflated anticipations. Stamps are estimated at £9,350,000: the actual receipts were £9,218,000—so that the estimate is £132,000 above the receipts. That, I believe, is mainly due to the fact which I have mentioned—the extraordinary absence of mortality among persons having money to leave. We apprehend that this will be compensated for some day, for it is a matter which depends not in the least upon the state of trade or the affairs of the country, but is governed purely by the chances of life; hence we have a right to expect that there will hereafter be a turn in our favour. There is no property tax at the present moment; but taking it at 6d. in the pound I calculate it will produce £8,800,000: the receipts for the last year were £8,618,600, so that the estimate exceeds the receipts by £182,000. The Post Office we take at £4,880,000; last year it was £4,660,000—so that we estimate the amount at £220,000 more than last. year. The Crown Lands we take at £375,000; last year they were £360,000—so that we estimate an increase of £15,000. Miscellaneous we take at £3,000,000; last year they were £3,355,991; but last year, as hon. Gentlemen are aware, the amount was swollen by the course which was adopted by Parliament. We took upon the Estimates the charges for the Irish Court of Chancery, and we sold the stock which was formerly liable to those charges, and paid the amount into this branch of the Revenue. As we must not expect that to occur every day, we cannot anticipate that the Revenue will maintain itself as it did under these exceptional circumstances. The estimate for these Miscellaneous Taxes is £3,000,000 and the actual receipts were £3,355,991. We estimate, therefore, a decrease of £356,000. The estimate of the Revenue for the current year amounts altogether to £72,855,000, and the actual Receipts of last year to £72,591,000—so that the net increase of Revenue in the Estimates for the now coming financial year is £263,000.

1 will now proceed to compare what is the really interesting point—the Revenue for the year 1869–70, with the Expenditure for that year, still exclusive of the Vote for Abyssinia. The Income for the year 1869–70 is £72,855,000, and the Expenditure, exclusive of Abyssinia, is £68,223,000—so that if Abyssinia were out of the way we should have a surplus of £4,632,000.

Having gone through that part of my duty, I will now state, as succinctly as I can, the case with regard to Abyssinia—an element which hitherto I have studiously excluded, in order to do as much justice as I could to the right hon. Gentleman opposite (Mr. Hunt) by keeping this foreign element out of this discussion. The Committee is aware that, basing our Estimates upon the best information we could get, the whole expenditure of the war in Abyssinia will be covered by a sum of £9,000,000. But, yesterday, after it was far too late to attempt to make any change, if change were necessary, I received a telegram from Mr. Charles Turner, the gentleman whom we employ in Bombay to look after the expenditure in respect of the war, and to check it on our behalf. It is dated the 4th of April, and this is what it says— Total Abyssinian charges in Bombay account, £0,618,000, including over £1,000,000 paid in Calcutta and Punjaub. Final and total —some substantive is left out here— when vessels and stores are sold, will not exceed £6,830,000. Details by post. So that if we are to take this as the literal basis of our calculations, we are better off than we supposed with regard to Abyssinia by a sum of £170,000. But, I think, the Committee will agree with me, comprising, as it, does men of great experience, that, as men of business, though it might be very agreeable for us to rest upon this telegram—and I dare say it may be true—it would not do for us to assume that we have heard the last of Abyssinia. This very gentleman—of whom I speak with the utmost respect, for he is a man of the soundest business habits, an excellent and energetic public servant—telegraphed to us in December last that the total would be over £7,000,000. It is, in fact, impossible for him or for any man, in a matter so complicated and so large, to state within a small amount what the cost will actually come to. And, therefore, although it is my duty to lay this telegram before the House, it does not alter my view of what it would be wise for us to adopt as the basis of our financial proceedings; and I think we shall be fortunate if we can assure you that this estimate of £9,000,000 will not be exceeded. I myself, on behalf of the public, should be very glad to draw the stakes at that amount, if any Gentlemen felt inclined to guarantee us against any excess. The Committee will remember how we stand in regard to Abyssinia. In November, 1867, the right hon. Gentleman (Mr. Hunt), then, I think, Secretary to the Treasury, proposed a Vote of £2,000,000 in respect of Abyssinia, and found certain Ways and Means for that purpose. Last year in his Budget he provided £3,000,000 more for Abyssinia; £2,000,000 of which were paid, and £1,000,000 borrowed upon Exchequer Bonds issued in September last against the arrears of income tax which would be collected in the year. £4,000,000 therefore were paid, and £1,000,000 borrowed by the right hon. Gentleman; but it is due to him to say that he borrowed it against the proceeds of a tax which he himself imposed for the purpose of meeting it. Having obtained Certain information that we were £4,000,000 short, in February last I, obtained from the House a further Vote of Credit for the sum of £3,600,000. I did not ask the House for any Ways and Means to supply that Vote. I left that till my present Financial Statement. What we did was to borrow £2,000,000 to meet the current payments on account of the expenditure of the Abyssinian Expedition. £1,000,000 we borrowed from the Bank, and another £1,000,000 we took from the balances. These balances now stand at about £3,775,000; but we are really debtors to the Bank for £1,000,000 which we have borrowed from it; and therefore, for practical purposes, we must regard the balances as standing at the exceedingly low figure of £2,775,000. It is impossible to leave matters so; and we have, therefore, to provide for the £2,000,000 obtained in that manner, just as if we had not paid them at all. It is a charge which we have to meet, and it must be added to the expenditure. Thus there is £2,000,000 more—making the total expenditure £9,000,000. On the other hand, there are certain army payments, estimated at £400,000, which will come to hand and can be applied for the purpose of reducing this £2,000,000. The sum, therefore, we shall require will be £1,600,000, which, added to the £2,000,000 that I have previously spoken of, brings us up to £3,600,000. Then there are the Bonds upon which the right hon. Gentleman opposite borrowed £1,000,000. I do not say that we should be bound to provide for that amount, inasmuch as it was borrowed against arrears of taxes; but it would obviously not be fair if we were not in a position to meet this £1,000,000 when it falls due. This, therefore, raises the total Abyssinian charge to £4,600,000.

I stated that our surplus, irrespective of the Abyssinian transaction, amounts to £4,632,000. Putting aside the £32,000, which is a very small matter when we are dealing with figures of this magnitude, I may say, with strict accuracy, that for all practical purposes the two sums about balance each other, bringing us to an equilibrium. We have, as matters stand, neither surplus nor deficiency. That is the upshot of the Accounts which I have the honour to lay before the House.

I cannot make that statement, which although not over pleasant must still be satisfactory to the House, without once more acknowledging the obligations under which the country has been laid by the efforts of my two right hon. Friends; to their exertions we owe it that the balance was not turned against us. Of course, if we like, we may rest there—that is to say, not exactly rest, for it would not be a bed of much repose; we have an equilibrium established as far as expenditure and surplus go; we can pay off, as far as we know and. believe, existing liabilities with regard to Abyssinia. But we should have nothing to spare, and the balances at present are in such a low state that we should have no surplus to look forward to at all. I think such a position would not be creditable to the country; and I should feel it my duty, if we were to stop there, to submit to the House whether it would not be their duty to impose some tax—I do not say what—which would have the effect of placing us in the position of having at our command a reasonable surplus to raise the balances from their present very dilapidated condition. We have at this moment almost every element of ill-luck that can beset a Government. We have a deficit of £381,000; we have a Revenue which shows not the slightest symptom of elasticity—indeed, it is much more like the flaxen thread that the spinner draws out than the band which rushes back to the place from which it has been dragged: we have these depressing circumstances to remember, and we have no surplus whatever. Accordingly, if we were to stay as we are, it would be the duty of this House to discover, or, at any rate, it would be my duty to urge this House to adopt, some mode of replacing the sum to be withdrawn from the balances to cover the amount of the Abyssinian outlay.

I have now to beg the Committee to allow me to make a digression which they will find is really to the purpose, and, leaving the subject of finance for a moment, just as Ariosto leaves his two knights shivering their lances with equal fortune, and, leaving the balance and the Abyssinian debt to fight it out between themselves, I wish to investigate for a short time a totally different subject. The subject to which I wish now to draw the attention of the Committee is one that has not, perhaps, received the attention it deserves. The attention of great financiers has been mainly occupied by the Customs' Department—probably owing to the very large sums raised by it, and to the very exciting nature of the Free Trade controversy which has been so long connected with it. But, there is another field of finance, on whose flowery walks I may be permitted to tread, and which is well worthy of attention; I refer to that class of taxes known as the Land and Assessed Taxes. These taxes consist of a number of items which seem to have very little to do with each other—and, indeed, I may say, have nothing in common except that they are collected by the same hands and at the same time. They consist of the land tax and the inhabited house tax, each of which realizes more than £1,000,000, the tax on male servants, on carriages, on horses, on horse-dealers, on armorial bearings, and on hair powder. They produce altogether the sum of about £3,250,000 of Revenue. They are collected not, by officers of the Excise, but by a machinery which has antiquity to recommend it, and I think little else. The House is aware that every year we pass a Bill for appointing Land Tax Commissioners, who form the body to whom is ultimately intrusted the duty of collecting these taxes. They appoint certain selected members of their body to collect the income tax, and they appoint local assessors and collectors for each parish. Thus, these taxes are, in fact, in amateur hands—that is, in the hands of persons who serve the public gratuitously—nobody being paid, except the clerks who get a certain percentage, and the collectors who receive a poundage. The collection of these taxes, therefore, is in the hands of persons who have not been brought up to the business of tax-collecting. There is, I suppose, a sort of constitutional feeling in the matter—namely, that the subject should not only be allowed to tax himself in the House of Commons, but should be himself allowed to collect the taxes which he has voted. It is to the credit of Scotland that this system does not exist there—these taxes there are collected by officers of the Government, I believe, with the best effect. I may also mention that we have lately excepted one assessed tax from this rule in this country—we have turned into an Excise license the tax upon dogs. The change made with respect to this tax has been attended with remarkable results, showing the greater efficiency of professional as compared with amateur collection, for within one year no less than 600,000 dogs have been brought by the Excise under taxation who had previously evaded it. Then, as to the way in which these taxes are collected, I will beg the Committee to distinguish between the land tax and the inhabited house duty, which for the moment I put aside, and the other assessed taxes. The assessed taxes are collected in this way—They are collected for the financial year upon the largest number of articles liable to taxation which any person has possessed in that year. Therefore the tax does not become due until the whole year in which, the tax is incurred has expired—because of course until the whole year is over no one can tell what is the largest number of any article he may have kept during the year—particularly if he has members of his family who stimulate the growth of the tax. At the end of the year the tax is assessed. The year ends for financial purposes at the beginning of April; so that about the end of the year the tax is assessed, and it is then collected in two halves—one half on the 10th of October in the same year, and the other half on the 10th of April in the following year. Now, let me give an illustration of the working of this system. Take the year 1868–9. From the 5th of April, 1868, to the 6th of April, 1869, people are liable for the largest number of articles liable to taxation that have been in their possession during that year. Say, for example, that a man buys a horse on the 7th of April, 1868, and sells him on the 8th of that month—he is liable for the tax upon that horse after the year has expired. After the year is over comes the assessment. If he has a very good memory, and he is very honest, he recollects the fact that he possessed the horse, and he includes it in his return to the assessed taxes; but if his memory is either short, or his honesty doubtful, he leaves it out, in the confidence that it is quite impossible for the Government to detect the omission. After the assessment has been made the collector comes round for the first half of the tax on the 10th of October; and on the 10th on April in the following year he comes round for the second half. So that it is actually the case that a tax may be incurred in one year, assessed in the second, and collected in a third. The taxation from the time it is incurred until the time it is paid occupies a whole space of two years, the tax being incurred in one year, and the other years being taken up with the assessment and payment. That is a state of things which is fraught with enormous mischief to the public interest. The tax is an annual tax imposed upon what a man has in the course of the year, and yet although it is not of very large amount, it is collected in two separate instalments—that is to say, the public is put to the expense of sending collectors to collect the tax twice a year when it might just as well be collected at once, and the Excise is put to the expense of having twice a year a circuit of officers, as it is called, for the purpose of receiving the money produced by it from the parochial officers. There is also great loss owing to the manner in which the tax is collected. The assessment coming so long after the time when the article is kept it is very difficult to check the return and to trace the number of articles kept by a person during the previous year, and the result is that an. immense number of articles elude taxation. Again, the payment coming so long after the assessment the Revenue loses considerably by deaths, bankruptcies, and removals, which would not be the case if the tax were collected in a more prompt and business-like manner. These are, to my mind, evils of a most serious nature. The system, moreover, is most unjust to the tax-payer himself, because it enables a great number of people to elude taxation, and the burden in consequence falls heavier upon those who do pay. Therefore, speaking on behalf of the Revenue as well as on behalf of the taxpayer, I say that it is impossible to imagine a more unsatisfactory system. It is also a vexatious system, for a man honestly desirous of doing his duty and paying his fair proportion of the taxes is called upon to remember every change that takes place it may be in a very large establishment, and to recollect whether a certain horse died, and whether another was or was not bought to fill its place; it is very embarrassing to him, and it has been felt so vexatious that it has been very popular among gentlemen to compound, for their animals, not with any idea of saving money, but simply to save the plague and bother of all this. I have, therefore, no hesitation in saying that it would be a great practical improvement if we could alter this mode of collecting these taxes, and could collect them once instead of twice a year by officers of Excise, who thoroughly understand their business, instead of by parochial officers. The taxes would then be collected from dishonest and oblivious persons who now evade them, and the Revenue would be correspondingly improved, and at nobody's expense, save of those who ought to be made to pay. I know few practical improvements that more deserve the attention of the public than the one I am suggesting, and I earnestly recommend the subject to the consideration of the Committee.

I now pass to another head of taxation—the Income Tax—still under the view of its collection. The income tax is, the Committee will recollect, not so much one tax as an aggregation of different taxes under one head. It is collected in two different ways. Under Schedules C and E the fund holders and the recipients of Government salaries have their income tax deducted from what they have to receive. That is a most economical and efficient system of collecting the Revenue, and no one can wish to interfere with it. But the case is different under Schedules A, B, and D. In this country of anomalies the collection of the income tax, is the greatest. The first and second quarters of the tax are collected together in October, the third is collected in January, and the fourth in the April following; and thus the payment is spread over two financial years. The result of this system appears by the fact that the right hon. Gentleman opposite (Mr. Hunt) was obliged to borrow money on bonds because he could not get the amount due upon this tax when he required it for the public service. The mischief of collecting the tax in the way I have mentioned depends mainly upon the amount of the sums in which it is collected. I will give the Committee a few curious details illustrative of this matter. Thus, for all houses under a £10 rental the landlord pays the tax, which, at 4d. in the pound—an amount which seems to be regarded by some persons as the normal state of the tax, though if any one prefers to take it at 6d. he can easily rectify my figures—the tax on a £10 house amounts to 3s. 4d., and therefore the landlord has to pay to the Government officer who collects it 20d. in October, 10d in January, and l0d. in April. I cannot imagine a more melancholy waste of public time and money than such a system as this. Going a little further, we find that the income tax on houses of a rental of from £10 to £30 is paid by the tenant, and is deducted by him from the rent he pays his landlord. These houses form the large majority of those that come under Schedule A. The whole tax upon the lowest of these rents amounts to 40d. while that on the highest amounts to 10s., and these sums have also to be paid in the way I have stated. Taking the higher class of from £10 to £30, they pay, perhaps, 5s. in October, 2s. 6d. in January, and 2s. 6d. in April. Therefore just look at the waste of time, public money, and trouble involved in this. Then take persons with a £200 house. If the income tax be 4d., they pay £3 6s. 8d.—that is to say, 16s. 8d. a quarter, so that they are waited upon three times for that. Then we go to Schedule D. Those persons who take advantage of the exemptions of Schedule D pay income tax on £40, when their income is £100; that is to say, those persons pay 13s. 4d. income tax. 3s. 4d. a quarter is demanded from them—and these persons form two-thirds of Schedule D. Imagine, therefore, the scale on which this absurdity is carried out! But take one more instance; take the case of the counties of Nottingham and Bedford. In Bedfordshire there are 30,000, and in Nottinghamshire there are 52,000 persons paying income tax on houses. The average sum on which those persons pay income tax is £28—that is the average; so that, of course, there is a vast number of cases in which the amount is much below that sum. A very large number of those persons pay 11s. a year, or 2s. 9d. a quarter, and very many of them a great deal less. There, again, I think a case is made out to show that the present manner of collecting the income tax is eminently unsatisfactory, and in that case also we might take the example of Scotland, where the income tax is collected only once a year. I never heard that there was the slightest complaint of that. Indeed, I am persuaded that this mode of collecting it must be popular; because, to the poor, it must be an immense vexation to be dunned for shillings and sixpences, while rich people would rather, I presume, pay the tax at once and be done with it. Practically, the Scotch system is adopted also in the great towns of England. In London, Manchester, Liverpool, and Birmingham, I believe, the tax is never collected but at the end of one year or the beginning of the next, in consequence of the difficulty of making up the assessment. I think I may add, that, if these taxes were collected once a vear—collected at one time—an enormous saving would be effected—a saving of not less than £100,000. There would be saved in poundage £30,000, that being the additional poundage given when the collection of the income tax in January was commenced. The persons who collected it required that additional poundage, and it was only fair that the request should be granted. Then there would be only one circuit of the 240 surveyors, who go round to collect the tax from the parochial authorities, instead of three, which would give a saving of £3,000. On assessed taxes there would be a saving in poundage to clerks of £23,000; in the travelling expenses of clerks a saving of £5,000; in salaries a saving of £25,000; in the meetings and surveys a saving of £8,000; in paper and printing a saving of £6,000—making a total saving of £100,000. I have to thank the House very much for their patience; but they will see when I get a little further that it was necessary I should state these things, although in advance I was unable to show them how it was necessary.

I now come to what the Government propose in this state of things. They think it most desirable to reform this method of collecting taxes, and they propose to reform it in this manner—They propose to convert the assessed taxes, as distinguished from the land and inhabited house tax, into Excise licenses, just as the dogs were converted—the dogs having been the pioneers in this reform. They propose that these licenses should be granted at the beginning of the year prospectively, not retrospectively—not after the year is over, with all the disadvantages I have already pointed out, but prospectively anticipating the expenditure of the year—and that the persons who are to pay should be required to send to the Excise a return of the number of taxable articles they have in their houses on the appointed day—say the 1st of January—so that they would not be embarrassed with any question as to what they had in the previous year. They would merely have to make a catalogue of dutiable articles, on which they would have to pay accordingly. On that the license would be issued, and the tax would be collected. The estimate is that this arrangement would apply to a sum of £1,160,000, but there would be a saving of great expense and trouble, and I think it would be very desirable to place the matter on that footing. I believe, also, that in order to make the system work well, it is necessary that the taxes should be simplified. They are now exceedingly complicated. For instance, there is one duty paid for a pony that draws a carriage, and another for a pony that does not. There are all sorts of exemptions and qualifications. We propose to make some sacrifice of what would perhaps be exact justice in order to simplify the thing, so that the person who will have to make the declaration on which the license is to be granted should be able without much trouble to make a catalogue of the articles on which the tax is to be paid. We believe that a simplification of that kind is essential to the success of the change. The difficulty in these things is not as to the ultimate result, which is quite clear, but it is in the transition, so that we may do no injustice or cause no hardship during the transition. Remember, these taxes are incurred in one financial year, assessed in the beginning of the following year, and paid in the October of that year and the April of the next. We propose, therefore, that taxes already incurred—the taxes for 1868-9—shall be paid on the old plan. As so assessed the first moiety will be payable on and after the 10th of October, 1869, and the second on and after the 10th of April, 1870; but after that time there will be no more collection in that way. We propose on the first of January next year to issue licenses; and the House will observe that those taxes are now imposed for a year already expired. We purpose that from April in this year until January next year there shall be no fresh tax of that sort; so that throughout that period there will be a sort of halcyon day during which the tax will not be levied. But we propose that on the 1st of January next year the system of Excise licenses shall come into operation. The taxes now paid at the end of the year we propose shall be paid at the beginning. In fact, all Excise licenses are so paid, and it is necessary for the working of the system; but in order that this may not come hard on the persons who have to pay, we interpose an interval of nine months during which no tax will be levied. Now, with regard to the land tax and the inhabited house tax they stand in a different position. They are levied in a sensible manner, so far as time is concerned, being levied in the current year, because for this year they will be levied in October, 1869, and April 1870. So far no fault is to be found with them. But look at the anomaly of the system. You have these two sets of taxes in the same division of the assessed taxes, the one of which you collect in one year and the other in another year. The only evil in the collection of the land and inhabited house taxes is that they are collected twice in the year instead of once. They are annual taxes, and we do not see why people should be put to the trouble of paying them in two payments. We propose that they should be collectable—or, perhaps, I should say, "collegible," although I do not know that this is a received word in the Revenue Department—at the beginning of the next year and once for all. We now come to the income tax; and with regard to it we propose the same arrangement. We propose that it should be collected once a year, and that at the beginning of the year, when people make up their accounts and know what their income is. Those who are most experienced in the matter think that is the most convenient time; and we propose that the income tax shall be collected for the whole year at once. But we are aware that neither the income tax nor the land and inhabited house duty can be collected entirely during the first three months of the year. There always will be arrears in these cases, and Gentlemen need not therefore fear that everything will be demanded at once. We do not want to be precipitate. The danger is that the payment may still extend over a large portion of time. That is the nature of the proposal we make. I will recapitulate its details. We propose that the assessed taxes for 1868–9 already incurred shall continue to be levied on the tenth of October and the tenth of April; we propose that the land and inhabited house duty should be levied, not on the tenth of October, as it has hitherto been, but that grace should be given till the beginning of the year, and that then it should be levied on the first of January for the whole year; we propose that the income tax should, be levied for the whole year, as it. is in Scotland. I think that is for the interest of small tax-payers, and that it will be found for the interest of the wealthier classes also. At any rate, it seems to me to be out of all reason that the annual debt of the tax-payer should not be paid within the year, or that the Government should not for its own purposes, but for those of its debtors, break up the debt into small instalments at great trouble and expense, which must ultimately fall upon the tax-payer himself by the additional expense of collection. There is one other consideration to which I have not yet alluded, and that is that, owing to the nature of the machinery brought into use during the last few years—our iron-clads, our guns of precision, our railways, and our electric telegraphs—the character of our modern warfare has entirely altered, and wars, for the future, instead of being long torments, will be short agonies. Not only will they not last for twenty-two years, as was the case in the war which we waged with the Emperor Napoleon, but the Seven Weeks' War in Germany the other day may be reduced even further, and resolve itself into a campaign on an equally grand scale of seven days. There is no doubt that the vast improvement of late years in scientific appliances as devoted to purpose of destruction, and the increased facilities afforded by the perfection of the telegraphic system push us to the conclusion that the arbitrament of war will in future be sharp and decisive. And it is evident that with this state of things it will be impossible for financiers to provide the necessary means for carrying on these wars with the antiquated means of taxation. I know no greater weapon of strength than the power of levying the taxes at one sweep without the needless delay and circumlocution attending the present system of collection. This appears to me to be a consideration of the highest importance, and I therefore recommend it to the attention of the House. We believe this to be a great administrative reform; we believe that it will not only be a great improvement in itself as to the mode of collecting the Revenue, but that it also contains within it the germ of many other improvements. And the Committee will, I hope, observe that the alteration will do very little hardship to anyone. We have striven to avoid all hardships to the tax-payers as much as it was in our power to do. With the assessed taxes we go nine months without levying of taxation. If we are to pass from one system of taxation to another, to pass from quarterly payments to annual payments, T know no way in which we can facilitate the tran- sition better than, by giving a certain rest between the two. As regards the income tax, the change on the whole will be rather for the benefit of the taxpayer. At present the first and second instalments are collected in October, the third in January, and the last in April. We forego the collection of the first and second quarter in October, and therefore the tax-payer has the interest of half the money lying by him for three months longer. On the other hand, the April payment will be accelerated. The January instalment is not affected by the alteration, so that the effect of the change, as far as the taxpayer is concerned, is that he obtains forbearance on two quarters and acceleration on one. So what a person loses by having to pay his April instalment three months earlier he more than gains in having to pay his two October quarters in January. The January payment does not count, as he is only called upon to pay it as usual. With respect to the land and house taxes the same thing occurs—forbearance in October and acceleration in April. The Committee will, therefore, I think, see that in making these financial changes we have endeavoured, as far as is in our power, to make the transition as easy as possible. No doubt, when prompt payment is required instead of the two and a half years' credit hitherto allowed there must be a sacrifice on the part of some one. But if the House should be convinced, as I am, that the change, while very much enriching the Revenue, will lead to the taxes of the country being collected with greater facility and at less expense—if they should be convinced, moreover, that it will furnish the State with a valuable financial engine in case of war, and that its advantages will be shared alike by the Revenue and the general tax-payer they will not, I think, hesitate to adopt it. Supposing the Committee should believe the alteration a beneficial one, there will follow certain financial alterations to which I will now refer, and it is on this account that I have troubled the Committee at such length on the subject. I trust the Committee will understand me. The Government are very much in want of money; but we are not so poor as to be compelled to resort to a new plan of raising taxation, unless we could devise a scheme which while doing what we desire would confer benefit on the country at large. It would be far better to impose taxes, however galling they might be, than to do anything unfair or unjustifiable in itself, although we might thereby gain a little popularity. If it can be shown that the change is not justifiable on its own ground, I do not desire to carry it any further; but undoubtedly its collateral results as regards the question of finance will be very beneficial to the Exchequer. The House will observe as regards the assessed taxes that we propose to commence levying them in the beginning of the year. These Excise licenses will be reduced in amount by deductions which I will mention presently from £1,167,000 to about £1,000,000. We reckon that we shall collect in the first quarter about £600,000. Therefore, as regards this year, the matter will stand thus—we shall collect the taxes which are due for the year 1868–9 as heretofore, in October, and shall collect in addition £600,000 of the license duty which is to supply the place of those taxes. There would consequently be a gain for this year of £600,000; and £400,000 would fall due next year. Then, take the land and inhabited house taxes. Instead of collecting half in October and half in April, we shall collect the whole in January. They amount to a little more than £2,000,000. We reckon that we shall collect £950,000 in the month of January, and to that extent we shall be gainers. Then we come to the income tax. We shall collect as much as we can in the whole year, and though we shall not be able to collect all, we reckon we shall be able to collect so much as to increase the receipt of income tax by £1,800,000. Putting these together, we should receive £3,350,000 as the result of the alteration—a result which, I need not say, would be very agreeable at the present time; though, I repeat, I do not desire that the change should, be adopted if the Committee should think it unfair or unjust. On the other hand, unless you have made up your mind to go on with the present system, you cannot adopt the change at a better time than now when the matter has been fairly brought before you. Then I ought to state, with regard to next year, there would be to the good the last half-year of the assessed taxes of 1869, and from this source £600,000 would be payable in April. This is, of course, a thing that comes but once; it is not to be relied upon under similar circumstances. I cannot express how strongly I feel that the change, even if it did not bring a single shilling into the Exchequer, would be extremely beneficial, while I may repeat that at no time could it be introduced with less burden to the public than at the present moment, and at no time will the collateral and pecuniary advantage arising from the change be more acceptable.

Supposing the Committee to agree to this alteration, the next step is to consider in what manner we should employ this windfall which thus appears to offer itself. But I may first remark that I beg the House not to imagine that we necessarily impose any large sacrifice because the operation is large. The sacrifice as far as I can mate out—and I have studied it well in every possible way—is of a very insignificant character, though this amount of money can hardly be collected without its pressing a little on some one. Now, supposing the House gives a favourable reception to the proposal I have made, comes the question in what manner should we employ the funds thus placed at our disposal. You would have, as I have stated, from the income tax £1,800,000; £600,000 from the Excise licenses which are to replace the assessed taxes; and £950,000 from the land and inhabited house taxes. This would give a surplus from these additional receipts of £3,350,000; and to this we may add £4,632,000, the surplus on the ordinary Budget. Deduct from the total of £7,982,000 the total Abyssinian claims, which amount to £4,600,000, and we shall have a total surplus to deal with of £3,382,000. Nothing would be more agreeable to me than to propose a large remission of taxation but it would be thoroughly unfair of us to do anything unjust to the tax-payer, and it is a subject on which we are ready to meet the most careful inquiry. But if we are to make this change, I do not know how to make such a change—unless we determine to throw our money in the dirt—except by taking some such risk. Unless we make some classes favoured above their fellow-citizens, and exempt them from the payment of taxes, I do not know how to avoid appropriating this money in the way I have proposed. Let us, then, consider in what manner we may employ it. The first suggestion which we have to make on the subject is, that as the additional 2d. of income tax was imposed as the means of carrying on the Abyssinian War, the payers of that tax should be the first to feel the relief consequent upon that war being terminated; which relief, under ordinary circumstances, would not be felt in the next year, but which it is in the power of the Committee, as I have shown, if it chooses to use that power, to accelerate by a year. We should, therefore, certainly think it to be our first duty to apply this windfall to the reduction of 1d. of the income tax. The next item of taxation that we should wish to take off is one that has a very curious history, seeing it was put on at first on the ground that it was no tax at all, and yet it yields a revenue of £900,000. The Committee will doubtless perceive that I must be alluding to corn. Sir Robert Peel seems curiously to have thought that a tax of 1s. per quarter on corn, or of 3d. per cwt., as it is now paid by weight instead of by measure, was really no tax at all. For so great a financier the language that he holds upon this matter is very remarkable. In his speech in 1846 he says— I propose therefore that one article of grain, which I believe may be applied to the fattening of cattle, shall henceforth be imported duty-free; I mean maize. I propose that the duty on maize shall be merely nominal."—[3 Hansard, lxxxiii. 256.] That is to say, he imposed a duty of 1s. per quarter upon it. Now, that nominal duty on maize amounts to 3 per cent at least on the value of the article, and of course it presses in that degree upon the farmer. That this duty is something more than a mere registration duty is evident, I think, from two considerations. The first consideration is that it is perfectly easy to register the arrival of corn without it; in fact, it is no more difficult to register the arrival of corn without levying a duty of 1s. per quarter upon it than it is to roast a pig without burning down a house. Again, it cannot be called a mere registration duty, for you have an enormous number of collateral duties on articles like tapioca, arrowroot, sago, flour, meal, and so on, all kept upon your tariff for the purpose of acting as outworks and bulwarks to protect this particular duty. You may put a duty on these articles for the protection of the Revenue; but why should you do it for mere purposes of registration, which can easily be effected without it? It was clearly the intention of its founder that it should operate only as a register; but it really is, and it has now come to be regarded as, a source of Revenue. And what sort of a source of Revenue is it? It is impossible to imagine any tax which combines more of the qualities that make a tax odious—that is, it is a duty on an article that is produced in England with no countervailing Excise duty upon it; it is therefore effectual as a protective duty—that is to say, it not merely raises the price of the portion of the article that pays it, but also raises the price of the portion of the article that does not pay it. It, therefore, inflicts on the subject a burden much more considerable than the benefit it confers on the Revenue. If we want to get at the real evils of the tax, let us imagine ourselves applying to it the same rules as we apply to all other protective taxes, and put a countervailing Excise duty on the home-grown article. Just fancy the exciseman let loose upon the barns and the stores of the farmer and the corn-dealers, collecting a tax of 3d. per cwt. on their corn all over the country. What a sensation it would create! The case is not altered by the fact that the Government raises the tax all over the country; and as the price of wheat is raised by the tax, the Government should apply a remedy instead of taxing the consumer, according to the exploded system, for the benefit of the producer. But the case of this tax is still worse than that. The consumption of wheat in this country is about 22,000,000 quarters annually; the imports are about 8,000,000 quarters, and the home growth about 14,000,000 quarters. I do not mean to say that the price of the whole 14,000,000 quarters grown at home can be sensibly raised by this tax, but I feel no doubt that the price of a considerable portion of it is, and no one can exactly say how much. Then consider how hard it is. Why, it is a kind of poll-tax, of which we hear so much in olden times; but it is graduated in a peculiar fashion, because it falls heaviest on the poorest of your people. It has been computed by persons who have inquired into the subject that if a man and his family ate nothing but bread—which is the case of the very poor—this duty would be equal to something like an income tax of 1½ per cent upon the whole means of the family. But if the man rises in his scale of diet, and eats meat, eggs, butter, and the like, he then lives on articles that are duty free; and therefore this tax presses with its greatest severity on the poor—that severity increasing in the ratio of their very poverty. Again, it is a tax on a raw material in its very rawest state; and this 1s. a quarter—or whatever it is—has to bear the profit of the millers, the retailers, and all the different persons through whose hands the corn passes before it reaches the poor man in the form of a loaf. In fact, in every way it violates all the principles of political economy; and the only thing that can be said for it is that it is a very little tax, though it yields a considerable sum of money to the Exchequer. If, however, the argument that the tax being small it can therefore do no harm is to prevail, then I say we have found the philosopher's stone of finance, because, whatever may be the difficulty of putting on a good tax, nothing will be so easy as putting on a little tax or a number of little taxes. Thus, if amount is to be looked at, and not principle, you may have a system of taxation which violates every rule to which every tax should be subject. The object is to find a good tax. The proportion of this tax is not large, but the sum raised is large. Although in the case of a small duty of this kind we cannot trace its exact incidence or measure the exact amount of the mischief it does, surely there is such a thing as faith in politics as well as in religion; and if we cannot at this time of day trust enough to the doctrines of political economy and Free Trade to believe that when you raise nearly £1,000,000 sterling from the very poorest of your people you do an immense amount of mischief, what is the use of abstract science or speculation at all? If we can take nothing on the strength of abstract reasoning, and everything must rest upon statistics, which it is impossible to obtain in such cases, then we may as well burn our books on political economy, and economic science is altogether useless. But if political economy be true, these mischievous effects are certainly produced, even though we may not be able to trace them. But I hope we may yet do some good in this matter. Then there is another point that also appears to me to be of the greatest importance, and that is the amount of trade that might exist in this article if it were not for the duty. I have called for Returns on this subject, and with the permission of the Committee I will read them, to show how little of an exporting country England is. I hold in my hand a Return of the exportation of foreign and colonial corn and grain; and of course the thing derives more weight when we consider that England, with her enormous trade, is fitted by her splendid geographical position between America on the one hand and the corn-growing countries of the Baltic, Russia and Poland, on the other, to become more and more the commercial entrepôt of the world for these and other commodities. Well, this is the Return for the years 1864, 1865, 1866, 1867, and 1868. The corn exported from the warehouse, or after payment of the duty, was in 1864, 21,455 quarters; in 1865 it was 10,851 quarters; in 1866, 17,648 quarters; in 1867, 65,453 quarters; and in 1868, 83,086 quarters. And that is all that England exports of an article for the trade in which her geographical position, as I have said, fits her to be the entrepôt of Europe. There were also, in the year 1864, under transhipment, 54,164 quarters of foreign and colonial corn and grain; in 1865, 9,239 quarters; in 1866, 49,071 quarters; in 1867, 169,467 quarters; and in 1868, 154,902 quarters. Observe how much larger the quantities under transhipment are than the quantities exported from the warehouse—plainly showing the evil effect of the duty in preventing the establishment of a great corn depot in this country. I have here another table, which I wish to read, giving the average importation of corn in the seven years from 1861 to 1867. In those years there were imported 28,000,000 cwt. of wheat, of the value of £16,000,000 sterling; on an average of those years, at the price of 11s. 5d. per cwt., and, taking the duty at 3d. per cwt., the tax on that wheat must be estimated at about 2 per cent of its value. Of flour 3,800,000 cwt. were imported, which sold at the rate of 14s. 11d. per cwt., making at 4½d. per cwt. a tax of about the same amount. Of barley, 6,500,000 quarters were imported, which sold at 7s. 8d. per quarter, making a tax of 3 per cent; of oats 6,800,000 quarters, which sold at 7s. 8d. per quarter, making also a tax of 3 per cent. Thus it appears that during the whole of this time very considerable sums have been levied by means of a tax which was in itself small in amount. I do not wish, however, to labour this subject further, and nothing but its importance to the poorest and most helpless class of the community could justify me in saying so much as I have done. In doing what we propose I am satisfied we shall be doing that which will greatly tend to their benefit, and be laying the foundation of a great entrepôt trade which will not only be of enormous advantage to the mercantile classes, but which will have the equally desirable result of creating that abundance to which the existence of an entrepôt so largely contributes by circulating traffic and sensibly lowering prices. Another remission which we propose is one with respect to which I shall not enter into any lengthened argument, because it has often been discussed in this House, and because the House has pronounced an opinion on it. As the Committee possibly anticipates, I allude to the duty on fire insurance. The fire insurance duty has been the subject of much metaphysical discussion, but it has never, I think, been better defined than by my right hon. Friend at the head of the Government when he described it as being an income tax with two great exceptions—the one in favour of a person who was rich enough to be his own insurer, and the other in favour of the man who might be rich enough, but yet was too improvident to insure at all. I will not, as I said before, enter into the subject at any length, since it has already been exhausted, and I can add nothing new to its discussion. I agree with those who maintain that it is in vain to expect a revival in a tax like this, if merely diminished, such as you expect from a remission of taxation on articles of consumption. It is a tax upon prudence, and the same improvidence which deters a man from insuring now would be likely to operate still if the tax were lowered. It is, besides, a tax which appears to me to have many faults. It is an optional tax, and any person who wishes to escape it may do so by taking what may be looked upon as a very foolish and improvident course. It is, in fact, a sort of penalty imposed upon the exercise of providence, and I mention this because I cannot agree with the hon. Member for Dudley (Mr. H. B. Sheridan), whose attention I would invite, as the subject is so intimately connected with the discussion on his Motion next week. He seems to be of opinion that there is great recuperative power in this tax; but he must not forget that, if we go below a certain point, new arrangements must be made for its collection, while the expenses of that collection would not be diminished. Entertaining these views, and seeing the strong feeling that has existed on the subject, the Government have deemed it to be the best course to pursue to repeal the tax altogether. ["Hear!"] I am afraid I must moderate the satisfaction of those hon. Gentlemen who cheer by stating that when the duty was lowered from 3s. to 1s. 6d. the reduction did not come into effect until Midsummer, and as we have entered upon this quarter, and as an Act of Parliament will be required to do away with the tax altogether, we propose that its abolition should date from Midsummer next.

I have now stated three remissions which we propose to make—that of 1d. in the pound in the income tax, the corn duty, and the duty on fire insurance; and I proceed in the next place to deal with another part of my subject which does not involve the mention of such large figures, although it is nevertheless exceedingly important, and if I mistake not will be found by hon. Gentlemen to be exceedingly interesting. I only hope it may in some degree tend to relieve the very dry nature of the statement which it has been my duty to lay before the Committee. I said, as the Committee will remember, that it was necessary, in order to work the system of Excise licenses which we propose to substitute for the present assessed taxes, that we should have recourse to a system of simplification and do away with a great deal of the complexity which attends the payment of these taxes, at the risk of relieving the rich from something which they ought to pay, and charging, I am sorry to say, a little more to the poor. We have deemed it expedient, in fact, to make the duty uniform in order to insure the permanence of the taxes, and to prevent them from becoming an intolerable nuisance to those who will have to send in declarations. Having said thus much, I will go through those lesser taxes in which we propose that remissions should be made. The duty on hair powder is the first which presents itself. It yields a revenue of £925,000 a year. [A laugh.] I mean £925 a year. I beg the pardon of the Committee, but it is one of the many difficulties of the subject that the figures with which I have to deal are in some instances so exceedingly large, and in others, comparatively speaking, so small, that it is not always so easy for one so inexperienced in financial statements as myself to bear in mind their relative proportions. I believe, however, I am correct in saying that we realize £925 a year from the duty on hair powder; and the best thing I think which we can do with that tax is to abolish it altogether. I now come to the tax on armorial bearings, which is a tax which is very singular as well as unsatisfactory. It is of this nature. If a person possesses a carriage, on which he would have to pay at the present rate of duty £3 10s. a year, he has to pay for armorial bearings £2 12s. 9d.; but if he does not possess a carriage he has to pay only 13s. 2d. It is not necessary that he should put the armorial bearings on his carriage. A physician, for instance, who has no carriage may have a seal, for which he would have to pay a duty of only 13s. 2d., but if he has a carriage and drives about to visit his patients he will have to pay a tax of £2 12s. 9d., instead of 13s. 2d. for armorial bearings, even though he does not put them on his carriage. That is not a very satisfactory state of things, and I should be glad if I could get rid of the duty altogether, inasmuch as I do not think it is based on any sound or good principle. But as I cannot get rid of it the best thing it appears to me which I can do is to increase it a little. I propose to alter the present rates of duty, and to charge the £1 1s. for armorial bearings and that is for all armorial bearings other than those on carriages, and if a gentleman likes to put his armorial bearings on his carriage, then I propose that he should pay another £1 1s.; so that there will be, in fact, two taxes of £1 1s. each, which will bring to the Revenue, it is computed, an additional sum of £8,000 from this source. I come, in the next place, to carriages on four wheels. At present, if drawn by two horses, they pay as high as £3 10s. in the shape of duty; but if only by one horse, and the wheels are small enough to make it a case of extreme cruelty to animals, they pay only £1. Now, with a view to secure that uniformity to which I have already referred, we propose to reduce the tax on four wheeled carriages from £3 10s. to £2 2s. But there is a class of four wheeled carriages, such as those drawn by a pony under thirteen hands—almost too weak to draw at all—and the wheels of which are not more than thirty inches in diameter, which seems to me to demand some consideration at our hands, because they are carriages which are very much used by ladies and invalids and persons advanced in age, and very frequently by persons whose circumstances are comparatively straitened. Now, I should be unwilling to impose upon that class of carriage a heavier rate of duty than is put on a barouche or a landau; and what we propose is that they shall be taxed at the rate of two wheeled carriages—that is to say at 15s. and that there shall be no longer a distinction drawn from the wretched pony and wheels, but only from the weight of the carriage, which we propose to take at 3 cwt., so that it shall really be a light carriage for pleasure, and not one of a solid and permanent character. I believe it will be found that almost all pony carriages will come under that weight, and it will, no doubt lead to an improvement in their manufacture, by making the exemption rest on weight rather than on the wheels and the pony. It is proposed to retain the tax of 15s. on all two wheel carriages. There are something like 100,000 gentlemen who drive gigs, and I should like to put a little additional charge on them; but, after carefully considering the matter, I thought it better not to interfere with so large an army, and to leave matters as they are. Then comes the tax on horse-dealers which is also somewhat anomalous and peculiar. A horse-dealer in London has to pay a tax of £27 in the shape of license duty for the exercise of his trade, while in the country the horse-dealer pays only £13 15s.—the idea no doubt being, when the tax was imposed, that the business was carried on in London on a larger scale than in the country. That I believe has ceased to be the case. It is proposed therefore to reduce the higher rate of these taxes, to make them equal, to impose a tax of £12 10s. on each horse-dealer, and to abolish the £27 tax. Next, as regards men-servants. At present the assessed tax on a man-servant is £1 1s.; but there are many exceptions, for one under eighteen years of age it is 10s. 6d., and there are exceptions in the case of under-gardeners and gamekeepers who are not charged at all. With a view of facilitating the filling up of declarations on which licenses are granted we have thought it desirable to make the tax uniform, and we also propose to take a kind of middle course between the present taxes and the exemptions; to impose a uniform tax of 15s. a head on male servants, and to do away with exemptions altogether. Another remission which is suggested by the Government the Committee will easily anticipate—it is the taxes on locomotion. It is unnecessary for me to go into any detailed argument with regard to those taxes; they have been given up by default for a long time; it has always been admitted that whenever they could be reduced or remitted they should be; and I hope the time has now come. I will tell the Committee the principle on which we propose to proceed, and I will then go through the individual taxes and show you how we apply that principle. We propose generally to abolish all exceptional taxes on locomotion, to abolish the distinction between carriages and horses kept for pleasure and those kept for profit, so as to make all persons pay the same duty for the same kind of carriage, whatever use they put carriage and horses to—except, of course, that we do not intend to touch horses kept for husbandry and matters of that kind. Proceeding on that principle, I take first the item of stage carriages—omnibuses and others. They pay now a £3 3s. license for a vehicle to carry more than eight persons, and 10s. 6d. for one carrying less than eight, and also ¼d. on every mile travelled. We propose to do away with these duties, and leave the stage carriage to pay duty just like any other carriage, according to the number of horses employed to draw them. Then on horses we propose to lower the duty. At present a trade horse pays 10s. 6d. and the gentleman's horse £1 1s. I do not speak of racehorses; they are too high game for me to fly at. We do not sec how we can raise the tax upon the large number of horses. The horse is essential to locomotion—horses are the very life and soul of locomotion, and will continue to be so until they are supplanted by velocipedes. I think we cannot do more to advance our object, which is to advance the free circulation of Her Majesty's subjects, than we shall do by reducing the duty on horses from £1 1s. to 10s. 6d.—excepting, of course, race-horses. I now come to another subject of great interest—that of hackney-carriages; or, as I will call them for the sake of brevity, "cabs." No business in this, and hardly in any other, country has been so much oppressed as the hackney-carriage business. For some reason, which may be explained historically, and which certainly cannot be defended logically or reasonably, they have been picked out by Governments as objects of taxation. It may be said—it does not matter, because whatever you take from the producers or proprietors they will take from their customers, the consumers; but Government has met them here, and limited the amount they can demand, so as to make it impossible for the proprietors fairly to recoup themselves for the taxes levied on them. It is most monstrous in London. Every cab pays a license of £1, and 1s. for every day it goes out. A cab which works seven days a week pays £19 5s., and a cab that works six days, £16 13s. a year to the Government. Of course, as cabs are so heavily taxed, and we limit the demands of the owners on the public, they have only one recourse—they take it out in badness. The vehicles are ricketty and dirty, and badly appointed; the horses are bad and miserable; and for all this the poor people are not to blame, but the Legislature that has settled on them an intolerable burden, and precluded them from recouping themselves by the means which are open to others—of throwing it upon the consumers. We propose, as a matter of justice, to repeal entirely the present duty on cabs; and the effect of that will be the four wheel cab will pay a duty of £2 2s. per annum, and if it employ two horses it will pay £1 1s. more, which will make £3 3s. instead of £19. The Hansom cab will pay still less, as its carriage duty is only 15s.; and the difference is in other respects a sacrifice to that uniformity which we have set up, not as a blind idol, but as an object it is desirable to attain. I suppose the right hon. Gentleman the Home Secretary will have something so say on the subject I am about to mention. Cabs are inspected and looked after by the police in London at a cost of £12,000 a year, which has justly been borne by the Government that made £111,000 out of them; but when we have got rid of the tax I hope my right hon. Friend will introduce a Bill by which a moderate tax of, say, £2 a cab and £3 an omnibus may be imposed to defray the expenses which they render necessary, and which it is obviously expedient to incur. However, having washed my hands of the £111,000 a year, I also wash my hands of the payment of £12,000 a year. Next I must refer to the duty on post horses. The duty on post horses is £5 on every horse a man keeps for hire; he may also for that keep a carriage; and the tax rises by an ascending scale in a complicated manner for so many horses and so many carriages. The duty was, probably, justifiable in its first imposition; it was imposed at a time when it fell almost exclusively on the rich, when every gentleman travelled in his own carriage, and post horses were the means of locomotion. The change in human affairs has brought things round to the contrary; the tax is not paid by the rich at all, it is not paid by people who drive their own carriages—people now seldom drive their own carriages, except with their own horses—the tax is paid mainly by the middle classes—by those who travel for the purposes of trade, or who employ flys and carriages for short journeys into the country; and its incidence is most injurious to the railway interest, which has made everybody's fortune except its own. This duty, and that on cabs, has deprived people of access to the smaller railway stations; so that we have presented the absurd spectacle of millions spent on a railway, and the people for miles round its stations cut off from their use by the taxes imposed by the Government. I have known a cab three times set up and three times knocked down, until at last it has been given up in despair, and the station remains inaccessible, except to those who have their own carriages or who can walk to it. We shall gain immensely by abolishing these duties; the railways will be sensibly benefited, and the public still more. I have now gone through the items except one, which is a small matter, but one to which I attach much importance. It is £73,000 realized by tea licenses. There is nothing that tends to check the sale of tea to the poorer classes more than these licenses, and prevents tea being sold near their homes, while there is always a public-house close by. Without dwelling on the subject, I believe the remission of these duties will do something to promote temperance.

Speaking of these reductions on assessed taxes, and of taxes on locomotion, the effect of all these reductions is this—the amount of the present Revenue is £1,533,900; after reductions it will amount to £1,113,000—that is to say, there is a reduction to £420,000. If I reckon the fire insurance duty, the corn duty, and the 1d. on the income tax, the whole amount of the Revenue dealt with is £14,053,000; after the remissions it will be £10,993,000; the net remissions come to £3,060,000, and the remissions which will fall within the present year will come to £2,940,000.

We will now return to the point which, I fear, I left some two hours ago, when I said that the payments for Abyssinia and the surplus assets for the year established pretty nearly an equilibrium, leaving a balance of £32,000 in favour of the Revenue. If it should be the pleasure of the Committee to agree to the proposals of the Government respecting the change in the manner of collecting these taxes, and thus acquire the sum of £3,350,000, the financial results will be these—I add to this sum of £3,350,000 the surplus of £32,000 of estimated Revenue over Expenditure. Then I must deduct from that amount the sum of £2,940,000, which is the amount of the remission that will take effect during the present year, and when I have made that reduction the result will be a surplus of £442,000. The one drawback in this scheme—I mention it because I wish to be perfectly frank with the Committee, and to conceal nothing—is, undoubtedly, that we should have more money than is desirable in one quarter, and less than we desire in other quarters. That, no doubt, is a very considerable mischief; but it seems childish to say that we are to go to extra expense and trouble in collecting the Revenue merely to preserve a balance of equality between the different quarters of the year. When the Revenue is due it ought to be collected. If it is an annual payment, then it ought to be collected once for the year, and we ought not to be put to the expense of dunning people over and over again for these miserable sums. I can only repeat that it is a great administrative reform that we propose. If the House does not choose to accept that reform, we must make other provision for meeting our position. We cannot leave things exactly as they are. Meanwhile, there is our plan, and the Committee is free to accept or to leave it. If the Committee thinks that the present state of things should be maintained, we must accept that opinion and act upon it; but supposing—as I hope without presumption for the sake of argument we may—that the House accepts our proposals, just look what we shall accomplish. We shall have paid off in one year £4,600,000 of unforeseen obligations, which none of us had the least idea of six months ago. We shall have established, at all events, the nucleus and the germ of a thoroughly sound and sensible mode of collecting taxes—one which will not only yield a much larger sum to the Revenue, but which will be infinitely easier and less troublesome to the tax-payer; and, in addition, we shall have removed one of the most crying social evils of this country—namely, the enormous obstacles that are now placed in the way of locomotion. It is not merely that in our proposals on this head we reduce taxation—wo set men at liberty. At present, the taxes upon locomotion are not only exorbitant in amount, but the very essence of their mischief is that a man shall not be at liberty to use his own property in the way that he thinks proper. Say, that I am travelling, and want to go from a railway station to a town; there is no fly, but there is a man in a gig who would be glad to take me, but dares not do so for fear of the tax, so it is obliged to stand doing nothing; and there is in this way an immense waste of the national resources. Everyone must have felt that this requires reform—that the moment the great lines of railway communication wore established the other moans of locomotion must be brought up to that standard, and enable persons to provide the means of locomotion without undue interference from the State. I look upon our proposal in this respect as an enor- mous blessing, and one not to be measured by the £400,000 or so, which is the amount remitted. It will give to locomotion an amount of freedom and of ease which it is impossible, I think, to estimate too highly. Well, then, as good wine needs no bush, I shall say nothing about 1d. off the income tax further than this—that it seems to point to a return to that blessed state of things when the income tax was not quite so high as it now is. Nor will I dilate on the remission of the duty on fire insurance; nor—seeing that I am addressing a number of Gentlemen, every one of whom is, I am sure, anxious to remove the least semblance of hardship to the poor—can it be necessary for me to urge a single additional argument in favour of the taking off the corn duty. I hope the Committee will now see that though I have detained them at some length, it was necessary to do so, and I can only express my hope that I may have been fortunate enough, on behalf of the Government, to make propositions which the Committee will be inclined to accept. Of course, if they are not accepted, we shall have no other resource than to abandon the remissions we suggest, keep the income tax at 6d., and in some other way make provision for the claims upon the Exchequer. One word more as to the floating debt. There is still a sum of £2,300,000 of floating debt in the shape of Exchequer bonds which fall due in this year, and they are the only ones now outstanding. After paying so large a sum as £4,600,000, I feel that we can hardly be expected to go farther in the way of paying debts, and that it is not fair to assume a greater burden in one year. But I have £600,000 in reserve, and I cannot help hoping that some part of the great remissions which are proposed will find their way back into the Exchequer, putting us in a position which will make it unnecessary to take further measures to strengthen our balances and enable us to meet our floating debt as it falls due. There are £5,500,000 of Exchequer bills, so that our whole floating debt is under £8,000,000—a smaller amount than it has been in the memory of any living man. I say, then, that this proposal of the Government has many and great advantages. It finds us with a deficit; it leaves us with a surplus of £400,000. It finds the Revenue embarrassed and sinking; it gives us the greatest reason to hope that by remissions of taxation we may raise that Revenue again so as to command a considerable surplus. It effects a great administrative reform in the collection of the taxes. By a sort of Parliamentary magic it raises money not anticipated by those who collect it, for the plan dawned upon them by degrees. It does all these things, and, as far as I can see, it has no other corresponding disadvantage than this—that it does make one quarter of the year rather fatter than the rest. These are the recommendations of the measure. I humbly submit it to the consideration of the Committee, and nothing now remains for me but to place in your hands, Mr. Dodson, the formal Resolutions which are necessary for carrying out the proposals of the Government.

Motion made, and Question proposed, "That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1869 until the 1st day of August 1870, on the importation thereof into Great Britain and Ireland: viz. Tea the lb. 0s. 6d."

MR. HUNT

There is one point on which we must all agree, and that is that the right hon. Gentleman need not have made any claim on the indulgence of the House. He has placed the matter before us in a way which enables us fully to understand the proposals of the Government. There is a remarkable difference between the commencement of the right hon. Gentleman's speech and the close of it. He opened in a very lugubrious strain. The purport was most mournful; everywhere he saw great financial embarrassment and difficulty; at the close he threw a couleur de rose tint over the landscape, and allured us with large proposals for the remission of taxation. Perhaps that was only the dramatic art of the right hon. Gentleman. He tried to frighten us at first, in order that we might afterwards give the more cordial reception to the boons he had in store. Sir, the right hon. Gentleman separated very fairly the Abyssinian expenditure from the ordinary financial results of the last year; and I think the Committee will agree with me that, considering the great increase that war occasioned, we have reason for congratulation that things are not worse than they are. I have already stated that the increased charge for the Abyssinian War came upon me as a great surprise and a great blow. On a previous occasion I fully explained the circumstances under which the estimate for the Abyssinian War was made, and that I was wholly unprepared for so large an increase. I shall not, therefore, repeat this explanation; but as I am responsible for the administration of the finances during a great part of the last year, the Committee will allow me to take a short retrospect of the results of that administration. The Committee will remember that the finances of the country had been considerably disturbed and disorganized by the financial crisis which happened at the commencement of that period, and,: therefore, those Estimates, prepared in the usual manner on the basis of those of previous years, are found to be in practice not so trustworthy as usual. Though the Revenue of the country was more than £500,000 below the estimated amount, yet the two ends were very nearly made to meet. It must, I think, be a very great difficulty to a Chancellor of the Exchequer when he finds that his Revenue falls off by more than £500,000 to bring things so close as they were brought last year. I should like to explain to the Committee how that was done. When the first quarter's Revenue was made up last year, after discussing matters with the heads of the Departments, I felt perfectly sure we should not realize the Budget Estimates, and I wrote in the strongest manner to the heads of Departments urging them to use every exertion to keep down the expenditure. At the end of the second quarter, when the first part of the year had expired, I thought the time had come when we might form an opinion as to what the difference from the original estimate would be. Accordingly in the month of October I went through the Revenue of the country, and arrived at very nearly the particulars which the right hon. Gentleman has stated have been the actual result. I ascertained the Revenue of the country was likely to be £500,000 less than I had estimated in April, and I thereupon called my Colleagues together and put the matter before them. A decision was in consequence arrived at that the expenditure should be reduced as much as possible. The right hon. Gentleman has stated to-night that the reduction of ex- penditure below the original estimate very nearly meets the deficit in the estimate of the Revenue; therefore I think the Committee will be satisfied that every step was taken by the late Government that a prudent Government could take to prevent any serious financial difficulty arising out of the deficiency in the Revenue. I think I may say that I believe, if the late Government had remained in Office, there would even have been an excess of saving over Revenue. That which took place when the Navy Estimates were being discussed would, I think, satisfy the Committee of this; because it had been agreed by the late Board of Admiralty that certain payments were to be postponed. When the change of Government took place, that decision was reversed, and the payments were made in the last financial year that otherwise would have been made this year. Of course it may be said that postponing payment is merely putting off the evil day. Nevertheless the present Government has reaped the benefit of the payment being made in the past year. The right hon. Gentleman stated that the deficit upon the year was, I think, £380,000. But I must recall to the recollection of the Committee that in April last year I estimated for a deficit. The deficit was at the time £278,000, but the actual deficit then estimated for was £202,000, and we took steps to meet the deficit by asking the House for power to issue bonds. The difference between the estimated difference of last year, £202,000, and the actual difference stated to-night, namely—£380,000, was nearly the sum we have lost by the lack of wealty testators in the usual proportion during the year, for we have lost, by death striking the poor instead of the rich, £170,000. I was aware that there was under that head a large deficiency; but we took this consolation, that winter was coming on, and that we might, therefore be compensated in the last few months of the financial year for the losses sustained in the summer months. However, the winter has been exceedingly mild, and wealthy testators appear to have been unusually long-lived. The probability is that with the good luck which has attended the Chancellor of the Exchequer since he has assumed Office he will have a great crop of rich testators dying during his financial reign. The right hon. Gentleman has stated to-night the differ- ent heads of Revenue upon which there has been a deficit, and amongst others he stated property and income tax. I wish he had given us more particulars under that head, because up to the time that I left Office, the income tax was coming in to a much greater extent than I had anticipated. I should have liked him to explain whether the falling off was really a loss of Revenue, or was merely a postponing of collection; and I shall be exceedingly glad if he will clear it up should he address the Committee again this evening. To pass on, however, from the retrospect of the past year to the right hon. Gentleman's estimate for the coming year, I wish to point out that when he estimated his receipts for the coming year he estimated the balance which we should have had at our disposal, but for our liabilities on account of the Abyssinian War, at £4,632,000. I think there was a little fallacy in the statement, because, in order to arrive at this sum, the right hon. Gentleman took the income tax at 6d. The income tax would never have been at 6d., however, but for the Abyssinian War. He ought, therefore, to have taken that tax at 4d. and not at 6d.; and, therefore, the splendid surplus the country would have had but for the egregious folly of the predecessors of the present Ministry in embarking in the Abyssinian War would not have amounted to anything like the sum he estimated, but would have fallen short of it by some £3,000,000. I suppose, however, that we must not be too critical in scanning these little financial artifices, because of the difficulties which the right hon. Gentleman is under in consequence of the debt he has had left him by his predecessors—a debt which I, for my part, heartily regret—on account of the Abyssinian War. The right hon. Gentleman took very great credit for some of his Colleagues in regard to reductions, and no doubt the system of lauding Colleagues is exceedingly pleasant—very pleasing to those who offer those panegyrics, and very delightful to those who receive them. I am not disposed to withhold my encomiums upon my right hon. Friend the First Lord of the Admiralty and my right hon. Friend the Secretary for War for keeping down the expenditure—an object I have always had in view since I entered the House. But I cannot say that I see any of those heroic qualities about their conduct which the right hon. Gentleman has attributed to them. First of all, the right hon. Gentleman the First Minister of the Crown presented a grave indictment against the late Government for their extravagance, and when he found that the Irish Church question was not so acceptable to the electors of Lancashire as he had anticipated, he found it necessary to run another horse—Economy. After all that was said of economy during the South Lancashire campaign, it was absolutely necessary that the Estimates should be considerably reduced; and they have been considerably reduced; but do not let us talk about their having been reduced by the exercise of very heroic virtues. As regards the navy, it was very candidly admitted by my right hon. Friend opposite (Mr. Childers) that £600,000 of the reduction would have been made if my right hon. Friend the late First Lord (Mr. Corry) had remained in Office; and I would ask how much of the rest could have been spared if it had not been that the predecessors of my right hon. Friend (Mr. Childers) had put the navy in an efficient state? It is all very well to make reductions one year. You may make them in one year, or in two years; but if you go on continually making reductions and diminishing the efficiency of the service, there will come a time when more money must be spent. Whether it is in public or in private life, when you find that those who have preceded you have spent the requisite amount to keep the service or the property in a state of efficiency, then it is possible to make some reduction without serious disadvantage; and I believe that is the state in which my right hon. Friend opposite found the navy as left by my right hon. Friend on this side of the House. With regard to the Army Estimates, my right hon. Friend the present Secretary for War (Mr. Cardwell) has in the most candid manner admitted that a very considerable proportion of the reductions made were due to alterations and improvements and reforms in the War Office made by my right hon. Friend the late Secretary of State for War (Sir John Pakington). Therefore, so far as those reductions go, I think credit should be awarded where it is due. No doubt very considerable reductions have been made besides those which are due to the right hon. Gentle- man's predecessor. But how has he effected them? He has done so by reducing the strength of the army by 11,000 men. I pass no opinion upon whether it is right or wrong; but do not let us understand that the reduction of over £1,000,000 in the Army Estimates is to be attributable to any heroic qualities on the part of the right hon. Gentleman, because it requires no very great deal of heroism to strike 11,000 men off the rolls of the army. The right hon. Gentleman has carried out the policy, which was commenced some years ago, of leaving the colonies to do more in their own defence than they have been accustomed to do, and the consequence is that he has been able to reduce the strength of the army. I am not finding fault with it, but I certainly see nothing heroic in it. I shall now pass on briefly to consider the propositions which have been made by the right hon. Gentleman. He says that this artificial surplus, as I call it, of £4,600,000, about as nearly as possible meets the liabilities of the Abyssinian campaign, and then he goes on to make certain proposals to which I shall refer. With regard to his proposed changes in the assessed taxes and licensing duties, I may mention that I am not likely to be a very strong opponent of that proposition, seeing that I myself was the pioneer in this very field by effecting a change in the taxation upon dogs. That measure has proved perfectly successful, and when I introduced my Financial Statement last year I called attention to that fact. I then suggested that it would be desirable to adopt the same course with respect to other assessed taxes. Doubtless I was of some service to the right hon. Gentleman in this respect, for he perhaps found in the pigeon-holes of Downing Street a Bill to carry out the very changes he has proposed in the collection of these duties. In fact I may justly be considered the parent of the scheme. But as regards the particular mode which the right hon. Gentleman has adopted of dealing with these assessed taxes, I must reserve my criticism, as it is quite possible when I have time fully to consider the scheme that I may not agree with him upon details. The result of making the contemplated changes from assessed taxes to licensing duties will bring into the Revenue a large sum of money at an earlier period than it would be brought in by the taxes under the present system. The changes will, in point of fact, have the effect of shortening credit. According to the present arrangement the assessed taxes form a system of credit, whilst the licensing system is a ready money system. The consequence will be that at the immediate point of transition from the one system to the other, by collecting that which is due for the previous year, and taking also that which is due for the coming year, a very large amount of money will be drawn into the Revenue. The right hon. Gentleman will, however, by his plan sacrifice one half year's assessed taxes at the period of transition. I understood him to say that he collects all the assessed taxes due in April, but remits them in October. If that be so the effect, as I have said, will be to remit a half-year's assessed taxes. Should the right hon. Gentleman make this proposal in the shape of a Bill, I would suggest that an exception should be made in the case of those who do not take out licensed duties. Such a scheme was in my own contemplation. The right hon. Gentleman finds it so excessively convenient to get this large amount of money put into the Exchequer by making this change in the collection, that it has occurred to him whether he could not obtain remission for the income tax and land tax duty all at once for the whole year. That is a proposition which certainly did not occur to me to make, and I do not feel sure that such a change can be effected without being much more burdensome to the tax-payer than the proposed change in the assessed taxes. I should not like at present to express any definite opinion upon the matter, seeing that we have not heard of it till it was expounded to-night; but the Committee, I think, ought not to sanction the measure without giving it the most careful consideration. I can easily conceive that in the case of poor persons, who possess no realized capital, and whose income entirely depends upon the earnings of the year, excessive hardship might be imposed upon them by having at the commencement of the year to pay the whole of their taxes for the year. This is a matter which ought to be dealt with cautiously and only after the most careful consideration. Supposing the Committee were to assent to the propositions and make the changes, I think it must be obvious that this great windfall, as it is called, can only be expected at the period of transition. Therefore I say it will require great caution and deliberation on the part of the Committee to treat the sum which will be so realized as part of the ordinary annual Revenue; because, in consequence of getting such a windfall, taxes are to be remitted to a large amount, and it might be found in future years that there is no such windfall to be calculated upon. The right hon. Gentleman, having started with a most lugubrious prophecy as to what we had to expect, waves his fairy wand over his financial propositions, and deals out remission of taxation right and left upon the strength of this accidental windfall. Supposing the Committee should accede to the propositions with regard to the changes in the collection of the assessed taxes, and they should become law, the very serious consideration would have to be dealt with whether future Chancellors of the Exchequer would not be left to meet deficiencies which might arise from the remission of taxation based upon the windfall. These propositions come upon us now for the first time, and they require great consideration. It does certainly, judging necessarily of the thing somewhat hastily, appear to me that the right hon. Gentleman, in doing what he proposes in this respect, is being generous at the expense of posterity. The Committee, I think, will agree with me in the desirability of looking to the future as well as the present, and the necessity of taking care not to create deficits in coming years by taking advantage of what are called windfalls in the present. Then with respect to the balances. The right hon. Gentleman has paid out of the balances £1,000,000 to the Government of India for the Abyssinian War. I would remark here that he would not have been able to reduce these balances so well had I not, when in Office, issued £1,000,000 of Exchequer Bonds by means of which the balances were very much strengthened. Last year I stated that the balances at the commencement of the financial year were reduced to £4,700,000. I also stated that I did not think the balances left sufficient behind, and to that opinion the present head of Her Majesty's Government gave his marked assent. Well, what do we find with regard to the state of the balances as left by the right hon. Gentleman? After taking the £1,000,000 out of the balances to give to the Indian Government the Chancellor of the Exchequer says that these balances were reduced at the commencement of this year to £3,775,000, about £1,000,000 less than they were last year. Now, the present Prime Minister agreed with me last year that the balances were too low, and yet he sanctions their reduction this year. As I understand the right hon. Gentleman the Chancellor of the Exchequer's proposal, he only proposes out of the surplus he is to get to strengthen the balances by the addition of £422,000. If I am wrong in this statement, I hope the right hon. Gentleman will correct me. If that be so, it will only bring up the balances to something over £4,000,000, which, in the opinion of the right hon. Gentleman (Mr. Gladstone) last year, was too low. There are, of course, occasions, such as the war in Abyssinia, when unexpected demands are made on the Exchequer when the balances might fairly be drawn upon; but the question is, whether we should make any large reduction of taxation, leaving it to future Chancellors of the Exchequer to propose plans for recouping these balances. That is a matter which must be again adverted to before we assent to the propositions of the right hon. Gentleman. I hope that the right hon. Gentleman before asking the Committee to assent to any proposition for the imposition of the income tax at any fixed rate, will introduce his Bill which is to deal with the changes in the collection of the taxes, because, supposing the Committee should refuse to assent to the principle of these Bills, it will be necessary for him to re-consider his propositions for the remission of taxation. I will not detain the Committee further upon this occasion, but thank the right hon. Gentleman for the fair manner in which he referred to the financial proceedings of his predecessors in Office, and for the retrospect of finance which he gave.

THE CHANCELLOR OF THE EXCHEQUER

said, he wished to supply two omissions in his statement. One was with reference to colly dogs in Scotland. It was proposed to place the tax on the tenant instead of the shepherd. There was another point. There was at present a duty of £1 upon foreign beer, while the duty on beer manufactured in this country was only 6s. 9d. It was proposed to reduce and equalize the duty, so that the Customs' duty would just counterbalance the Excise duty. This would admit the Vienna beer at the same duty as was paid by the beer of this country.

MR. GOLDNEY

considered that the right hon. Gentleman (the Chancellor of the Exchequer) made a very fair and equitable distribution of his surplus amongst all classes of the community. As he understood the right hon. Gentleman, he estimated the difference between his receipts and expenditure at £4,600,000, which would meet more than the debt of the Abyssinian expenditure; and by the alterations he proposed to make in the mode of levying taxes, he would receive a further sum of £3,350,000 applicable to remission of taxation. The remissions proposed were 1d. in the income tax, £900,000 duty on corn, and the remission of fire insurance. There was, however, one objection to his mode of collecting the large amount of income tax in one sum in the early part of the year, which deserved consideration. The property tax was paid by the tenant in the first instance, and in some cases it would be six or twelve months before he could recoup himself from the mortgagor or landlord on whom the tax was to fall. The right hon. Gentleman ought to remember that he was going to deal with £9,000,000 or £10,000,000, much of which was now collected from parties who were not ultimately liable, and who would have to make advances to Government out of their own pocket. It was rather hard that a tenant should have to advance for six months an amount of taxation which he was not bound to bear in the slightest degree, and for the collection of which he was merely a machine. The right hon. Gentleman said that unless this was done he would have no other resource of provision for the remission of taxation. He could, however, show him how a very large amount of taxation might be obtained. The Board of Inland Revenue, in their Report, intimated that if Schedule D could be collected without fraud on the part of those who were liable to it, a 6d. income tax would produce £1,300,000 additional revenue. This was a great hardship on those who paid upon land, houses, salaries, and pensions. The Commissioners had taken proceedings in the Court of Exchequer against defaulters, which had not been defended, and it appeared that some parties who returned their income at £750 had paid a surcharge of £4,900. The aggregate incomes returned wore calculated to be 130 per cent lower than they ought to be, and therefore the obligations of the tax should be made more stringent. He had asked a question the other day in regard to charities and the expenses connected with them, and the right hon. Gentleman replied that there were no resources out of which to pay the expenses of the Charity Commissioners. Now, he thought that the very last thing that House ought to do was to subsidize the charities. He agreed with the right hon. Gentleman the Chancellor of the Exchequer in thinking that there was no possible ground or reason why charities more than any other description of property should be exempted from the income tax. Few persons were aware of the enormous extent to which these charities were growing, and of the difficulties entailed upon the Charity Commissioners in their management. A few years ago an Act was passed enabling the Commissioners to appoint special trustees, and this function was being largely developed upon them, through the neglect and indifference—first, of testators, and next, of their executors. The sum of money paid to the Charity Commissioners during the last eight years amounted to £4,000,000; and these funds, while enjoying in the future all the advantages and protection of the national system, made no contribution to the National Exchequer. Supposing that the system of charities could not at present be grappled with, there was another matter to which the Chancellor of the Exchequer might usefully give his attention. The right hon. Gentleman had intimated that upon the Civil Service Estimates there would be an excess; in all weathers and in all seasons these Estimates seemed to grow with rapidity. Twenty-eight years ago they stood at £2,500,000; and they have grown, year by year, till they now reached the sum of £9,500,000, jumping at the rate of about £500,000 a year. The Chancellor of the Exchequer had explained how, owing to the increase of population in the country and our educational system of payment by results, some increase of the Civil Service Estimates was inevitable; and this, with the transfer from another branch of the diplomatic establishment, accounted for £365,000 cut of the £500,000. But still there remained a balance illustrative of his assertion that these Estimates themselves were continually on the increase. Now that the total approached £10,000,000, it was necessary to investigate and to grapple with the evil; and if the Members of the Government, who themselves received estimates from the different public offices, were powerless to effect the desired reductions, Members must only come down in great numbers to the discussions upon the Estimates. The scheme which the right hon. Gentleman had shadowed out for the collection of taxes he was disposed to regard as sound in principle, if the wrong could only be got rid of which was done to the man who had to pay in the first instance, and who would, undoubtedly, be advancing money to the Government.

MR. GLADSTONE

I rise, Sir, not to offer any lengthened observations, but, in the first place, to enter my protest against some principles laid down by the right hon. Gentleman the Member for Northamptonshire (Mr. Hunt) in the retrospective portion of his speech. I do not wish to make it a matter of controversy now, possibly I did not understand him rightly; but I understood him to say that in the summer of last year he considered measures for reducing the expenditure of the country, and perceived that the Revenue of the country was not likely to equalize the Estimates made in the spring. I likewise understood him to say that later in the year he took measures for postponing certain payments, and throwing them over into the next financial year. I hope I did not understand him rightly; but if he did really give utterance to those statements, I cannot too strongly protest against them; I cannot too strongly condemn the practice to which they refer, as one which, if pursued, would be destructive of the integrity of our national administration. But it is not the time now, when we have evidently a great deal of matter before us and in prospect, to pursue this question further; nor will I refer to the remarks which the right hon. Gentleman made as to the relative reductions contemplated by the late Go- vernment and effected by the present Government. I wish to put all that behind me. What is really important is, that we should, if possible, arrive at some understanding with regard to the method of proceeding upon the Bills intended to be brought in by my right hon. Friend the Chancellor of the Exchequer; and that, in reference to the somewhat onerous steps necessary to be taken upon them, we should adopt a course fair to all parties and satisfactory to the House and to the country. The right hon. Gentleman (Mr. Hunt) has stated, with considerable truth, that with respect to these proposals of my right hon. Friend—of some of which he approves, and even claims their parentage—and as to others, of which he reserves his judgment—some time will be required in order to enable the House and the country to judge of them. Now, among the Resolutions which have been placed in the hands of the Chairman (Mr. Dodson) there is one which will enable my right hon. Friend at once to initiate that portion of his plan. A Bill for the general amendment of the laws relating to the Inland Revenue will, I apprehend, contain all that is necessary with respect to the alteration in the time of the payment of the taxes, and the administrative changes contemplated by my right hon. Friend. I think it would be convenient that the Bill should be introduced at the earliest possible moment. However sound the principle of a Bill may be, time must elapse before it can obtain even a second reading, still more before it can get into Committee. And it might happen that the House would disapprove the second reading; or, reading it a second time, might object to important matters in Committee, which would equally determine the fate of the Bill. And therefore I am anxious to make a suggestion to the right hon. Gentleman on the propriety of adopting a course, which the Government cannot press, except with the acknowledgment of intelligent men that there is reason in the method pointed out. In ordinary cases, undoubtedly the practice of the House is to take the substantial discussion on the financial as distinct from the administrative proposals of the Government at the earliest stage. But if that course be adopted in the present year, inconvenience will result in one important respect—namely, with regard to the collection of income tax. Members of the House generally may not be as well aware as those conversant with the administration of affairs that it is of the greatest consequence to the Board of Inland Revenue to get the income tax passed at a particular period of the Session. At a certain period of the year the loss of an additional week or ten days in the passing of the Resolution meant that you could not levy your whole Revenue within the financial year, and therefore the result would be not merely a matter of inconvenience, but would amount to an absolute disturbance of the financial arrangements of the country. It is impossible that this inconvenience can be entirely avoided on account of the claim put forward by the right hon. Gentleman opposite for time to consider the proposed alteration in the time of payment; but we should gain a good deal if it could be arranged that the preliminary stages on the financial Resolutions could be taken without delay, the substantial decision with regard to the alteration in the time of payment being postponed until we go into Committee upon the Bill embodying the Resolutions, although I admit that the demand for time to consider the administrative changes made by the right hon. Gentleman opposite is a fair one. It is, of course, a necessary part of that arrangement that the corn duties must be dealt with in a manner different from the usual course, which is, that when a reduction or the abolition of a Custom's duty is proposed, it takes effect the very next day after it is made, upon the condition that the money shall be recoverable if the House should think fit not to sanction the change. In the case of the corn duties, however, if the House will agree to the proposition provisionally, the proposed change will not take effect until the House has had an opportunity of arriving at a judgment upon the substantial question. I hope that the House will agree to the suggestion, as it will undoubtedly be for the public advantage, and I also trust that the right hon. Gentleman will give his assent to the arrangement.

MR. HUNT

I quite understand the proposition of the right hon. Gentleman. It is that we should pass the Resolution provisionally, reserving to ourselves the right of opposing the administrative Resolutions at a later stage. I have every desire to facilitate the Public Business; but what strikes me is that what the right hon. Gentleman calls the administrative changes will really have great financial results; in fact the financial arrangements of the year depend upon the passing of these administrative Bills. The consequence is, that in the event of their not being accepted by the House, we shall not be in a condition to part with the 6d. income tax, and therefore we might be compelled, after agree-to the 5d. income tax, to have to pass a Resolution to re-place the income tax upon its present footing.

MR. GLADSTONE

It is proposed that we shall first take a 6d. income tax, with the understanding that if the administrative Bills are passed it shall be reduced to 5d.

MR. HUNT

Seeing that the proposed changes in the collection of the taxes will affect a large majority of the tax-payers, I should strongly object, on public grounds, to the Resolutions being passed through the House in any hurry. Every tax-payer should have full opportunity for considering how the proposed changes in the collection of the Revenue will affect him.

MR. GLADSTONE

We propose to take the 6d. income tax pro formâ, because it will be more easy to reduce the amount from 6d. to 5d. than to raise it from 5d. to 6d.

MR. HUNT

I wish to refer to what fell from the right hon. Gentleman at the commencement of his remarks. In my opinion, when a prudent Chancellor of the Exchequer finds that the Revenue is not likely to come in at the rate anticipated, he should take care that the rate of the expenditure is diminished in a corresponding proportion. I assent to the general proposition of the right hon. Gentleman that a payment due in one year should not be postponed to the next; but there may be circumstances where it may be just and proper to postpone a payment, as in the case, for instance, where a tax has not been collected in the first year, but will come in in the next.

MR. C. FORSTER

said, he could not refrain from offering his congratulations to the right hon. Gentleman the Chancellor of the Exchequer for the change he proposed in the mode of collecting the taxes, and all the more that he had himself had the honour of bringing this question under the notice of the House at the commencement of the present Session. He advocated the removal of tax collection from the parochial officers to the Excise on the double ground that it would be a been to the tax-payer and a gain to the Revenue. He wished he could induce the right hon. Gentleman to go a little farther, and hand over the collection of the house tax, the income tax, and the land tax to the Excise, for there was no Government but our own that did not undertake the duty of collecting its own taxes. He warned his right hon. Friend that he would encounter great opposition to his scheme from the whole host of surveyors, and clerks, and their employés, who had managed to defeat a similar plan of the right hon. Gentleman now at the head of the Treasury, in 1864, which, though it passed through nearly all its stages without any opposition, was thrown out on the third reading by a majority of 4 votes. He hoped a happier fate would attend the plan of his right hon. Friend, and he hoped the borough Members would attend regularly in their places, and change a system which was productive of so much irritation and discontent among their constituents.

MR. NEVILLE-GRENVILLE

said, he was afraid the scheme of the right hon. Gentleman, with its accumulation of assessments at the end of the year, would render obsolete the old English congratulation of a merry Christmas and a happy new year; but still he thought the plan of the right hon. Gentleman was a good one, and he was glad the right hon. Gentleman had followed in the course of the right hon. Gentleman below him (Mr. Hunt), who, finding the success of his dog license last year, pointed that out as a legitimate mode of levying various other taxes. He might add that he was glad not only that the right hon. Gentleman had followed the example of his right hon. Friend, but that he let the dogs alone; for when he saw so many Petitions coming up from the North against the tax on shepherds' dogs, he was afraid there would be introduced a system of exemptions, and that every ragged animal would be considered a shepherd's dog. As one who had supported Sir Robert Peel in the repeal of the Corn Laws, he had supported him also in the imposition of a 1s. duty, which he believed then and believed still to be a mere nominal one; but if it was of the slightest disadvantage to any portion of the community, and especially if it was found to press upon the poorest class, he, as a county Member, representing a large agricultural constituency, was ready to vote for its removal. He would not give an opinion as to the proposed manipulation of the assessed taxes; but he thought it would be hard to tax a boy who was learning his trade, who generally broke or destroyed more than he was worth, at the same rate, as an old and valuable servant. He thought his hon. Friend the Member for Chippenham (Mr. Goldney) had thrown out some valuable hints about the tenants prepaying the income tax, and also about the taxation of charities. He believed the Budget was pretty sure to be adopted in toto. He thought the scheme was a good one, and they ought to be obliged to the right hon. Gentleman for it. With respect to the taxes on locomotion, he believed they all agreed with the Chancellor of the Exchequer. At any rate, he congratulated his Irish friends that they were still free from any assessed taxes whatever.

MR. CRAWFORD

said, he desired to reserve his judgment on the propositions of the Chancellor of the Exchequer until the large constituency which he represented had had an opportunity of expressing their opinion on some portions of the scheme. He referred not to details so much as to the great changes proposed to be introduced into the system of the payment and collection of the Revenue as it affected the balances of the Government in the hands of the Bank of England. At present the charges and the means of meeting them were so well understood that the system worked with perfect regularity; but he could not avoid foreseeing that the time would come when the proposed changes would disturb the existing arrangements. It would, he believed, be necessary to devise some special method of meeting this difficulty; but, whatever method might be suggested, it would, of course, have to be taken into consideration at some future time. He could not help thinking that there would be some difficulty in carrying out this part of the Budget; but he had no doubt that in the hands of the right hon. Gentleman that difficulty would be seen to and provided for. He would not occupy the time of the House by criticizing the details of the right hon. Gentleman's statement; but there was one point on which he wished to make a few remarks. He understood the Chancellor of the Exchequer to say that dealers in tea in the country would be relieved from the license they now had to obtain. Now in almost all the villages in the country there were a number of small shops, the proprietors of which were licensed to deal in tea, coffee, tobacco, and snuff. He apprehended that the same class of persons would still continue to sell tea, but they would have to take out a license to sell the other commodities he had just mentioned. Consequently the relief afforded to these small dealers and their customers would not be so great as it would have been if the duties on the other articles had been abolished. He was not aware of the amount which these small duties brought to the Exchequer; but he should regret that the advantage which the right hon. Gentleman desired to confer on the purchasers of these articles in the country should be in any way lessened by the circumstance he had just mentioned. Generally speaking, he thought the Budget was an ambitious one, and he believed it would give satisfaction throughout the country. There was one matter in particular on which the Government deserved to be congratulated—they had kept their secret remarkably well.

MR. SCLATER-BOOTH

said, his only object in rising was to dear up some doubt which he entertained as to the comparison drawn by the right hon. Gentleman between the total sum proposed to be taken in the Civil Service Estimates in the current year, and the total sum taken last year. He understood the right hon. Gentleman to say that, comparing the Civil Service Estimates of last year with those of this year, there was an apparent increase—in round numbers—of £260,000. Subsequently the right hon. Gentleman accounted for that in the manner which he would presently notice. Although the Civil Service Estimates for the current year had not yet been presented in detail, there had been laid on the table a Paper giving the total sums asked for in the present and the past year. Now, on comparing them, it appeared that the difference between the two totals was not £260,000, but £386,000. He was unable, therefore, to follow the right hon. Gentleman in this part of his statement. By way of explaining the apparent increase, which presented, as he said, a disagreeable contrast to the satisfactory state of the Army and Navy Estimates, the right hon. Gentleman pleaded in excuse two heads of items—first, those items which appeared in the Estimates for the first time; and, secondly, those items the increase of which was owing not to any fault or laches on the part of the Government, but simply to the necessary progress of the public service, and over which increase the Government had, therefore, no control. Now he readily admitted that the now items must be taken off before a comparison could be made. But taking off the new item for the House of Lords of £45,800 odd, and other items amounting to £158,000 odd, making together £204,000, the difference between the Estimates of the past and the present year was £182,000. He could not admit, with the right hon. Gentleman, that such items as an increase of contribution to the police force in the metropolis, in the English counties and in Ireland, could be fairly pleaded in extenuation of the excess of these Estimates. The late Government were subjected to a very severe attack last autumn by the right hon. Gentleman now at the head of the Government, and by his right hon. Friend the present First Lord of the Admiralty (Mr. Childers). It was said that the late Government had increased the Civil Service Estimates by £1,000,000, and that it was not enough for them to plead that a great part of such increase arose from the necessary growth of the requirements of various localities, over which growth the Government had no control; but it was urged that, for such additional requirements, compensation ought to be made by thrift and reduction in other items. He thought, therefore, that the right hon. Gentleman could not consistently use the argument he had put forward in extenuation of the excess which appeared on the Civil Service Estimates. He was far from wishing, however, to make any elaborate criticism on those Estimates at present. Their tendency was to increase, and it was extremely difficult for the Treasury to resist the demands which were being continually made for increased expenditure on part of the various Departments, which grew in a way not only justifiable in their point of view, but in a way which was appreciated and approved by the public at large. He believed, indeed, he could show that not less than £100,000 a year had been added to the Civil Service Estimates within a comparatively short time, in consequence of the requirements of localities in regard to local self-government and other local objects. However, he would not go into that on the present occasion. He congratulated the right hon. Gentleman on his proposal to extend that reform in the mode of collecting and levying the assessed taxes, which had been initiated by his right hon. Friend the Member for Northamptonshire (Mr. Hunt). It would be an undoubted improvement to collect local taxes by means of Government officers, if the right hon. Gentleman could carry that reform through. It was only a very short time ago that the right hon. Gentleman now at the head of the Government failed in his endeavour to persuade the House to consent to a measure of that kind. His hon. Friend the Member for Walsall (Mr. C. Forster) happily represented a constituency which had smarted under the malversations of some local collectors, and he and his constituents were, no doubt, prepared to submit to the levying of the taxes by Government officers. But, unless his memory greatly deceived him, other large towns held a very different opinion on the subject a few years ago. He trusted the right hon. Gentleman would be prepared to withstand the opposition which would be raised on that score, and would resist the applications which would be made for compensation to those collectors in large and populous districts who were receiving large incomes under the old system, and who would certainly not fail to put forward their claims. The right hon. Gentleman took credit to himself for abolishing the taxes on locomotion. That sounded very plausible, and no doubt it would be a satisfactory thing to accomplish such a purpose. But was it accomplished by the right hon. Gentleman's scheme? How could it be said that the taxes on locomotion were abolished, while the railway passengers duty was retained? He had always understood that the railway passengers duty was a matter which required, at all events, serious attention on the part of the Chancellor of the Exchequer. It used to be said—"You cannot touch it without going into the whole question of taxes on locomotion." Yet the right hon. Gentleman now proposed to abolish the taxes on locomotion, so far as cabs and omnibuses were concerned, but to retain them as far as they were dependent upon railway enterprize. The railway tax produced something like £500,000 a year, and he did not understand how the right hon. Gentleman could hope to maintain it after after abolishing all the other taxes on locomotion. Even if that tax were retained, he thought it might be placed on a more satisfactory footing. The tax of 5 per cent on railway traffic was a very onerous one for the railways to bear. He believed that abolition of the exemption for cheap traffic and a uniform duty on a reduced scale would be fair towards the railway companies, and would enable the Government to dispense with the large staff of clerks and accountants now employed in the supervision of the railway traffic. He could only repeat that it appeared too much for the right hon. Gentleman to assume that he had put an end to the taxes on locomotion when this glaring anomaly was allowed to remain.

MR. MELLY

rose to thank the right hon. Gentleman for his excellent Budget, and especially, as a Liverpool man, to express his acknowledgments to him for the abolition of the duty on grain. That measure would greatly increase the trade of the country, and he believed that it would not, eventually, involve any real loss to the Revenue. He wished to ask the right hon. Gentleman a question with regard to the mode of collecting the assessed taxes. As far as he understood the right hon. Gentleman's proposal, the taxes due for the year ending the 31st of March, 1869, would be due on the 1st of April, and would be payable some time between that date and Christmas. On the first of January, 1870, those who were liable to pay assessed taxes would be required to take out a license for the coming year for whatever taxable articles they might desire to keep. Did the right hon. Gentleman propose that articles now liable to taxation should, between the 1st of April of the present year and the 1st of January next, go duty free. He congratulated the right hon. Gentle- man on having introduced so able and satisfactory a Budget, and especially a mode of collection which would be attended by loss evasion of taxation than hitherto.

MR. HERMON

remarked that it appeared to him that the remissions of taxation proposed by the right hon. Gentleman were to be satisfied out of a surplus arising from the anticipation of revenue—a surplus which, of course, would only occur once. The right hon. Gentleman proposed that the income tax should be paid on the 1st of January. Did he also intend to deal in the same manner with the Government annuities and so forth, and make income tax on sums derivable from those sources payable at that date instead of its being deducted, as it had been hitherto, without trouble to anyone, at the time the dividends were paid?

MR. M'LAREN

, as an illustration of the ease with which the income and assessed taxes were collected in Scotland, said that though the taxation in the town which he had the honour to represent (Edinburgh) was greater in amount than that of Leeds, Bristol, Manchester, or Sheffield, when an investigation took place, a few years since, with reference to the registration of electors there were only four persons in arrears. He believed that the plan they had listened to that evening would be found to work admirably. With reference to what had been said about the license tax on tea, he might observe that a very large dealer in tea with whom he had been conversing a short time since, said that if this license duty were abolished the additional sale and consumption which would ensue in the remote villages and hamlets of the country would more than compensate the Exchequer for the loss. He had recently presented Petitions asking for provisions similar to those now proposed respecting locomotion, and he had the honour of supporting them in the House. He believed nothing could be more beneficial than the course the Government intended taking in this respect. It had been urged that charitable institutions ought not to be exempted from paying property tax. He shared in that opinion, and he might add that when, a few years ago, an attempt was made to browbeat the Chancellor of the Exchequer when he proposed to tax these institutions, and when the right hon. Gentleman was waited on by an English deputation, headed by a Royal Duke, not a single Petition was sent up from Scotland in support of such an exemption. The right hon. Gentleman had referred to the largo balance in his hands to meet the current engagements. It was usual to look at the whole amount invested in a bank in different accounts, so that the overdrawn account might be compensated by the overpaid.

MR. POCHIN

congratulated the right hon. Gentleman upon the very happy thought by which he had been enabled to overcome the difficulties which beset him. One difficulty, however, with regard to the proposal of the right hon. Gentleman appeared to be that a very large amount of money would be received in the month of January, or soon after, of every year. He quite conceived that the right hon. Gentleman might be enabled to meet the deficiency of the previous part of the year by the large payments that would be made him at that time; but when he reached the next year he would have to look forward a good while before he should receive any large sum again. The right hon. Gentleman had referred to the large balances that he had to meet current engagements. He would suggest that the balances of the Government should, as a matter of banking, be treated very much as business men treated their balances at the bank. It was, no doubt, a matter of considerable convenience to business men to have several accounts with their bankers; but it was a very common arrangement that those accounts should be treated as a whole, and not separately, and the consequence was that a deficiency on one account stood against a credit on another. If, then, there was a balance on the whole of the accounts taken collectively no difficulty whatever would arise in the banking arrangements. It was a matter of astonishment to him that the Chancellor of the Exchequer, in order to meet the engagements of such a country as this, should find it necessary to keep an aggregate of balances to the enormous amount of upwards of £3,000,000. He threw out that suggestion because it must be evident to everybody that there would be considerable difficulty in meeting the engagements that would arise during the current year.

MR. RATHBONE

, on behalf of his constituents, returned thanks to the right hon. Gentleman for having taken the 1s. duty off corn. It had become of much greater importance than might at first sight appear that the duty should be taken off, because it had seriously interfered with this country becoming the depot of foreign nations, and a strong deputation had waited on the Chancellor of the Exchequer this year to urge the removal of the duty. Formerly the corn supplies used to come only from neighbouring countries, but now a large proportion of them came from places so distant as Australia and America, and, consequently, the supplies could not be regulated with extreme nicety. Speaking from considerable experience, he could say that it had often been a matter of close calculation whether an order received in Liverpool could be executed, as it depended on whether the parties could find wheat on board ship which could be transferred to another ship without incurring the 1s. duty. It was not the mere amount of the duty that told, but the increasing difficulty of the working. He considered that the country owed a deep debt of gratitude to the Government for doing away with this tax, not alone on account of the beneficial effect it would have on the main food of the masses of the people, but also the benefit it would confer on the trading community. He agreed with the previous hon. Gentleman, that the Budget was one calculated to prove satisfactory to the country.

MR. ASSHETON GROSS

said, that no one rejoiced more than he did in the reduction which had been shadowed out in the statement of the right hon. Gentleman. He rejoiced at the total abolition of the fire insurance duty, and also that the last 1s. upon corn had been taken off. Not that he believed that the 1s. duty upon corn had the effect which the Chancellor of the Exchequer would have the House to suppose, or that it had increased the price of wheat throughout the country. Still he rejoiced that even the suspicion of a tax on the food of the poor man should be taken away. If ever there were taxes which were inconvenient, and, to all appearance, without system, both from the way in which they were imposed, and the manner in which they were collected, it was the assessed taxes, and he rejoiced at the alteration which was now proposed. But, having said that, he might be permitted to add a hope that we should be able to afford all those advantages which were offered to the country. That was the only doubt on his mind. He had always understood that the remission of taxation was so nice, easy, and pleasant, that the only difficulty was to find out when they could afford it. In other words the question was, could they afford "to make things pleasant all round"—a phrase which had been used not for the first time in that House? Well, the right hon. Gentleman had made things pleasant all round, and the only question was, could they afford it? The right hon. Gentleman had started with this somewhat extraordinary proposition, that we were in very great difficulties, and if it were not for some happy thought that struck him some time ago, instead of removing taxes he should have had the unpleasant duty of framing some new taxation—he had not the slightest notion what it would have been. Well, what was that happy thought? It was simply this—that by a great administrative reform, and one which he (Mr. Cross) believed would be of great advantage to the country when it was carried out, the right hon. Gentleman should get possession of a large sum of money much earlier than otherwise would have been the case! That was to say, when the right hon. Gentleman had a bill upon the country which he knew would be paid in the course of time, instead of waiting until it was due he would send it to some banker and discount it. In fact it was a pure matter of nine months' discount, and when the right hon. Gentleman had got the money in his pocket, he seemed to think that it would fall to him every year for the future. He was quite aware that the right hon. Gentleman had stated that it was a windfall that would not happen again; but at the same time he spoke of it as income. ["No!"] He was quite sure the right hon. Gentleman had made use of the word "income" with respect to it. In fact, the right hon. Gentleman was using this windfall as if it was income, and was not only discounting his bill but was making use of this large sum as if he was quite certain it would fall in every year.

MR. NORWOOD

, while entirely approving the exemptions and reductions one by one, was not altogether satisfied as to the reduction of the duty on corn. He could see very well that the upper and middle classes would be very much benefited by the proposed reductions and remissions, but, when he came to reflect on what the working man was to get, he found it was only a remission of 1s. upon corn. The poor man, in his opinion, would benefit extremely little by this reduction. He differed entirely from the hon. Member for Liverpool (Mr. Rathbone) that the remission of this 1s. duty would have the effect of making this country the entrepôt for the supply of grain to other countries. England was the only country in the West of Europe which was habitually a heavy importer of corn. And then let the House consider how very small was this duty compared with the expense of landing the grain and storing it. The only countries which imported corn to any great extent were France and Spain, when their own harvests happened to be deficient, as was the case perhaps once in four or five years. Representing, as he did, a large number of working men, he must say that he did not see in all that great remission of taxation—in every item of which he agreed as a matter of principle—where his poorer constituents were to derive any appreciable benefit. A reduction of the duties on tea, sugar, coffee, or dried fruits would, on the other hand, be the greatest possible been to the poor and also advantageous to trade.

MR. W. FOWLER

I will not detain the Committee, but I wish to make a few remarks on a point which is of much importance to the money market. I am afraid the right hon. Gentleman thinks the money market can take care of itself, but this is not quite correct. I think that much inconvenience may arise from the payment of so large a sum of taxes in the first quarter of the year, and I ask the particular attention of the Chancellor of the Exchequer to this point, that he may discuss it with the authorities of the bank. I hope too that while we are making things so pleasant, finding that 1d. is taken off the income tax, when we expected to have one added, the House will not forget the vast increase in the expenditure on the Abyssinian Expedition beyond the Estimate. I trust that a Committee will soon be appointed to inquire into this matter. I agree with the hon. Member behind me that while there is much that is very good in this Budget. I should have been better pleased had something more been done towards the relief of the great class of consumers. I think it would have been more becoming in a Parliament which represents so great a body of working men, if more had been done in this way. It is a good thing to repeal the duty on corn, but it would have been far more so to have reduced the duty on tea or sugar. And now I wish to call the attention of the Chancellor of the Exchequer to a great source of income which has been hitherto neglected. My hon. Friend the Member for Chippenham (Mr. Goldney) has recommended us to tax the property of charities. I can point to a much more important source of revenue. I refer to the succession and probate duty. The state of these duties is a scandal and a disgrace to the nation. If a man succeeds to personal property he pays duty on the whole property, but if he succeeds to land he pays only on the value of his life interest. Ten years ago the right hon. Gentleman the President of the Board of Trade referred to a case in which a Member of this House—a young man—received from a stranger a landed property worth £32,000, and he only paid £700 as duty, whereas, had the property been personal, he would have paid £3,200. The succession duty had been a disappointment to all Chancellors of the Exchequer, because it was in the beginning something very like a "a sham." Take, too, the case of the probate duty. The vast leaseholds in this City pay probate duty, but a man succeeding to a freehold estate in Middlesex pays no probate duty. I say, Sir, that these distinctions are as unjust as they are absurd, and I feel it my duty to protest against them on this occasion, when we are asked to approve the Budget. I will give the right hon. Gentleman an. idea of the value of the property involved in this question. It appears that the annual value of the property assessed to income tax in Schedule A. in 1864 was £147,000,000; and the value of the houses and lands alone was £118,000,000. From this the House will see the importance of the question, and I hope shortly to bring it before the notice of the House in detail. I know what hon. Gentlemen opposite will say. They say— "We are so heavily charged by local taxation that we can afford to pay no more." I reply—"If you are unjustly treated, show it, and we will remedy the evil;" but I say it is utterly wrong to try to compensate one unfairness by another unfairness. I repeat my protest against the injustice and inequality to which I have referred.

MR. GRIEVE

congratulated the Chancellor of the Exchequer on his excellent Budget, and felt grateful to him for proposing to sweep away the last rag of Protection—the 1s. duty on corn. While thanking him also for the reduction of 1d. on the income tax, he expressed the opinion that the proposed remission of the duty on fire insurance was one of the most important parts of the financial scheme.

MR. CANDLISH

believed they had not had an abler statement or a better Budget than the present since the time when they were favoured with the brilliant financial statements of the right hon. Gentleman now at the head of the Government. Nearly £1,000,000 sterling of taxation was proposed to be remitted on the article of corn, but everybody knew that not only would that amount be saved to the working classes, but 1s. per quarter also on all the grain grown and. consumed in this country. He could not see, therefore, why it should be said that the Budget had been conceived in the special interest of the middle class. The hon. Member for South Lancashire (Mr. Cross) had overlooked one important fact—namely, that under a normal balance-sheet no less a sum than £4,630,000 would have been available for the reduction of taxation this year but for the extravagant expenditure of hon. Gentlemen opposite on the Abyssinian Expedition. ["Oh, oh!"] Why, hon. Gentlemen opposite knew very well that a more extraordinary miscalculation had never, perhaps been placed before a representative Assembly than the estimate for the war in Abyssinia, by which the late Government had so much misled the House and the country in the early part of last year.

MR. ALDERMAN W. LAWRENCE

congratulated the Chancellor of the Exchequer on the Budget he proposed to the House. He found himself with a prospective revenue barely sufficient to meet the expenditure for the year; and yet, by simply adopting a different mode of collecting the taxes, he was enabled to propose a large reduction of taxation. For this he was entitled to the praise and thanks of the country. "Pay," he said to the taxpayers, "in advance, and I shall be enabled to remit the insurance duty on fire, the 1s. duty on corn, and reduce the taxes on locomotion, which so much interfere with the movements of all classes of the community." And at the same time that he did all this, he effected a reduction in the expenses of the collection of the revenue. But what was to be done in the case of those who had paid their fire insurance duty seven years in advance? Were such persons to be allowed a drawback? ["No, no!"] Probably many hon. Members had not paid their insurance in advance; many others, however, had done so, and they would assuredly claim a remission. He repeated his praises of the chief characteristics of the Budget, and hoped the Chancellor of the Exchequer would have the opportunity for some years to come of carrying out other equally felicitous schemes.

MR. STAPLETON

, though thankful for what the Chancellor of the Exchequer had promised, felt some regret that he had not to some extent reduced the postage charge for newspapers. The subject had been before the House, but in connection with, and subsidiary to, the reduction of the postage on circulars, a subject respecting which he knew little and cared less, for he believed no one ever experienced any pleasure at receiving circulars through the Post. The reduction of the postage on newspapers, however, was a matter of universal interest, and it especially interested rural districts, where none but the most wealthy afforded themselves the advantage of a London newspaper by Post, because the carriage amounted in the case of 1d. paper to 100 per cent, and in the case of ½d. paper to 200 per cent. The Chancellor of the Exchequer would not incur a loss by making the reduction he asked for. At present 69,000,000 newspapers passed through the Post, 37,000,000 bearing the official stamp and 32,000,000 bearing the adhesive stamp. The postage amounted to £260,750, so that if the rate were reduced to one-half and there were no increase of newspapers carried the yield would be £130,375. There would, however, undoubtedly be a large increase, probably four-fold. At all events, only a small portion of this £130,000 would be risked, and putting it at one-third the Chancellor of the Exchequer would risk some £50,000, and would most probably find that instead of a loss he would have a large gain. He could not understand the Post Office, which, after all, was only a common carrier, objecting to extend its business on grounds of economy.

MR. MUNTZ

, after expressing his approval of the proposal that the re- venue officers should undertake the collection of taxation, instead of the present collectors, said, it was most unfair that the late Government should be made responsible, as they had been that evening, for the Abyssinian War. If the honour of the country were to be preserved in that case, there was no alternative but war; and if he had been in the House at the time, much as he disliked war, he should have supported the Government. England had been peculiarly fortunate in that war too. Had Theodore been as wise as he was valiant, and retreated to the hills, the war would have become a protracted one, and proportional expensive. But the lesson of the whole transaction was that, however admirable the object of missionaries—and he honoured them as the pioneers of civilization all over the world—they must distinctly understand that they could not hope for the support of the country, if they chose to insult foreign Kings. European missionaries had denounced Theodore as a heathen, and he naturally insisted on their being-more polite, or he would lock them up. If the Queen of Spain or the Emperor of Austria had been the persons insulted, the missionaries would have been locked up, as a matter of course, and England would have said, "Serve them right." Well, the Abyssinian business had cost the country £10,000,000; and all the return for it was a slight prestige. But for the Abyssinian War, we might have had £10,000,000 to apply in diminution of taxation. He hoped it would be a long time before the House of Commons, or any Government, encouraged the folly of men who, through being more zealous than wise, got us into these difficulties.

MR. MACFIE

rose to congratulate the country that there was so much public spirit and so little party spirit in the House of Commons. The country would learn with delight that every allusion to the abolition of the corn duty had been received with applause by the opposite side of the House. It must be remembered that this first-rate Budget of the right hon. Gentleman was the result of a short occupation; but if, as he hoped would be the case, the right hon. Gentleman should continue in Office, he hoped that next year the right hon. Gentleman would then bring forward, if not a heroic, a more ambitious Budget than the present. With reference to the Income Tax Returns, he was sorry to observe, from the Report just issued by the Department of Inland Revenue, that his own class, the mercantile community, were sadly demoralized, and that many of them were delinquents. He would propose, as a remedy, that the name of one out of every fifty taxpayers in a given district should be put into a bag, and that the person whose name was drawn out should have his affairs investigated to the very letter. This would have a wholesome effect on the whole, and on all individuals under schedule D., however bad the state of their morality might be. He invited the Chancellor of the Exchequer's attention to the extra charges on goods lodged under bond. A Member of the House had stated that his firm had paid £1,000 in one year in these charges. He (Mr. Macfie) would be glad to see something at credit of the British Balance Sheet from the colonies, and would also be pleased that the "free breakfast table" were realized, though ready to relinquish oven that, if it were requisite, in order to carry out an earnest scheme for paying off the National Debt, in consonance with declarations to which he had responded in heart when given forth, in former years, by the right hon. Gentleman now the First Lord of the Treasury.

THE CHANCELLOR OF THE EXCHEQUER

I must tender my grateful acknowledgments to both sides of the House for the kind manner in which they have received my proposals, which, of course, will require much consideration, and perhaps some revision. There are a few questions to be answered, which I shall briefly reply to. The hon. Member for Hampshire (Mr. Sclater-Booth) asked me why I had done nothing for the railways, and said that I could not be said to have reformed the duties on locomotion without beginning with railways. The answer is a very plain and simple one. The railway question is one which can be settled only by an arrangement being come to between the Government and the railways; it is not all on one side. We have a good deal to ask from the railways as well as to give them. I shall be glad to enter into negotiations with the railway companies on the subject, for I am quite willing to consider the possibility of doing anything in reason to relieve them if they will entertain such propositions as the Government may make with regard to public convenience, the carrying of letters and troops, and other matters. It is quite possible that if they take this hint some arrangement may be come to which may be advantageous to both parties. Of course, the railways form the principal means of locomotion, and could I have regulated the terms of a contract the railways would not have been omitted from the Budget. With regard to the Civil Service, my estimate is not irreconcileable with that previously submitted to the House, and the Secretary to the Treasury will to-morrow, on going into Committee, explain the matter in more detail. I did not intend to exhaust the subject, but I showed plainly that the increase in the estimate is accounted for by causes over which the Government have no control. I have been asked whether I propose that people shall be taxed in respect of the period that will elapse between the months of April and January, and whether a man who marries in April will be taxed for his establishment? I say, if he marries in April and if his matrimonial speculation turns out unfortunate, and he hangs himself on the 29th of December, there will be no tax upon his establishment. That will be a period of remissions, of compensation for the change from paying taxes at the end to paying them at the beginning of the year. It has been pressed upon me by the hon. Member for South Lancashire (Mr. Cross) and others that I am doing an improvident thing because, on the strength of the money I receive by this single operation, I remit permanent taxation, and that objection would be conclusive if it were well-founded; but I think it is not well founded, because the question is as to the appropriation of that money. I have spoken of it, no doubt, in my Budget speech for convenience, as being the sum which enables me to remit taxes; but it does not do so, except by setting at liberty other sums of money which enable me to remit taxation. I put it in this way—Suppose the Indian Government, being ashamed of having run up so large a bill, should take it into its head to pay off £3,000,000 of this Abyssinian difficulty, should I not then be in a condition to remit the taxes; and what does it signify whether the Indian Government pay it, or I obtain it in this way? It is true, the money will never come again, but then the debt will never come again. Then I have been asked to state what will be the effect of the repeal of the corn duties with regard to other duties, such as the duty on arrowroot. Of course, they will fall with it. This change will not only remove the duty on corn, but that on fourteen other articles. One hon. Gentleman reproached me because I have not taken the duty off currants. I should be glad to do so, but there is an obstacle in the way. The state of the case is this—Currants are subject to an export duty in Greece; they are the subject of monopoly, and if I were to take off the duty in England they would put it on in Greece, we should lose revenue, and we should not be a bit nearer a free breakfast table. The worthy Alderman the Member for the City of London (Mr. Alderman Lawrence) asked whether we should return insurance duty to any gentleman who was patriotic enough to pay insurance seven years in advance; and I think we should not. When the duty was reduced from 3s. to 1s. 6d. I never heard of any one being patriotic enough to come forward and pay us the difference then; and, after the course taken by the hon. Member for Dudley (Mr. Sheridan) on this subject, they would be very imprudent persons who would have paid insurance seven years in advance, and would well deserve to lose their money. An hon. Member asked me whether we hoped to have the income tax collected by the 1st of February. All that is proposed is that the income tax shall become due on the 1st of January, but we cannot hope to collect the whole of it in the first quarter, between January and April. It is right to mention this, lest it should be supposed that we contemplated employing some extraordinary means to collect the tax. We would be content to collect it as it has hitherto been received. Again thank the House for the manner in which my statement has been received.

MR. HUNT

wished to know whether the loss on the income tax was a real loss to the revenue, and also what was the estimated amount of the balances in the Exchequer at the end of next year?

MR. STANSFELD

replied, that the deficit of £82,000 on the calculation of the income tax was, as far as he knew, only a postponement, and was estimated in the revenue for next year. With reference to the question of the balances, he thought the right hon. Gentleman was under an entire misapprehension. His right hon. Friend said that after deducting the advance of the Bank of England there would remain a balance of £2,775,000, but if the balance was carried on to the end of the year there would be £2,000,000 to be advanced out of Ways and Means. This, with the surplus anticipated in the Budget, would bring the balance up to £5,317,000.

Question put— That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1869 until the 1st day of August 1870, on the importation thereof into Great Britain and Ireland: viz.

	s.	d.
Tea the 1b	0	6

THE CHANCELLOE OF THE EXCHEQUER

said, he understood that there would be no objection to the Resolutions.

MR. HUNT

said, it was most unusual to take any Resolution the same evening as the Budget was proposed, but he had no objection to the Resolution with regard to tea. He wished to know when the whole of the Resolutions would be before the House in print?

THE CHANCELLOR OF THE EXCHEQUER

said, he would not press the Resolutions, and asked whether there would be any objection to take the Resolution on which the Bill was founded in reference to the transfer of the collection of the assessed taxes?

MR. HUNT

said, he did not object to that course being taken.

Motion agreed to.

(1.) Resolved, That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1869 until the 1st day of August 1870, on the importation thereof into Great Britain and Ireland: viz.

	s.	d.
Tea the 1b	0	6

(2.) Resolved, That it is expedient to amend the Laws relating to the Inland Revenue.

House resumed.

Resolutions to be reported To-morrow;

Committee to sit again To-morrow.