PART II.

HC Deb 25 May 1876 vol 229 cc1199-219

Income Tax.

Clause 6 (Grant of duties of income tax.)

MR. KIRKMAN HODGSON

rose to move an Amendment of which he had given Notice—namely, in page 2, line 38, to leave out "three pence" and insert "two pence-halfpenny." He had perfect confidence in the Estimates laid before the House by the Chancellor of the Exchequer, and he would take them as the basis of his observations. The right hon. Gentleman estimated the Expenditure of the current year at £78,044,000, and the Revenue at £77,270,000, leaving a deficiency of £774,000. To meet that deficiency the right hon. Gentleman proposed to add 1d. to the Income Tax, from which he expected to realize this year £1,168,000, leaving a surplus of £394,000, or, including the loss of the duty on boys occasionally employed, £368,000. If his (Mr. Hodgson's) proposal of a half-penny addition to the Income Tax were adopted, he calculated that it would give this year £857,000, which, would meet the deficit of £774,000, and leave a balance of £83,000. If, however, he adopted the exemption of all incomes under £150, that would cost the Exchequer £135,000, and thus leave a trifling deficiency of £78,000—a deficiency which, looking at the extreme prudence of the Chancellor of the Exchequer's calculations, he did not think at all serious. He could only hope to succeed in his Amendment if he could touch the heart of the Chancellor of the Exchequer and induce him to give to all payers of Income Tax the boon which the right hon. Gentleman offered to only a certain portion of them. Even if the extra remissions which the right hon. Gentleman proposed to give to the possessors of the smaller incomes were taken away, an equivalent advantage would be conferred upon them by this Amendment in the form of a reduction of the extra 1d. to a halfpenny. His calculations might appear very close, but it was to be remembered that he should have no Supplementary Estimates—at least, he hoped so. As to the question of exemptions, he would only remind the House that the Government proposals had been pronounced to be a step towards graduated taxation, which had always been the dream of the Communists and revolutionists. His own view was that they ought to strike off from incomes a uniform sum of £150 or say £200—in fact, the price of subsistence. The hon. Member concluded by moving his Amendment.

Amendment proposed, in page 2, line 38, to leave out the words "three pence," in order to insert the words "two pence halfpenny,"—(Mr. Kirkman Hodgson,)—instead thereof.

THE CHANCELLOR OF THE EXCHEQUER

said, he fully recognized that no one had a better right to address the House on this question than his hon. Friend, and no one could have brought forward, his Amendment more moderately, but his proposal was not one which the Government could safely accept. Even assuming that the exemptions were retained at their present level, the hon. Member's scheme would not leave the finance of the country in a satisfactory position at the end of the year. The arrangements proposed by the Government had been decided upon after very careful and anxious considetion. He (the Chancellor of the Exchequer) claimed no credit for himself in that matter; but he could say that the heads of the responsible revenue branches of the country had been in constant communication with him for months before the Budget was settled, and that up to the last moment their calculations were revised and re-revised, and turned in every possible way. Therefore, what he had laid before the House as a prospective estimate of our finances was one by which he was prepared to stand in every particular. There was nothing in the progress of the Revenue during the last six or seven weeks to induce him to change his estimate in any respect. There had been some slight falling off in one thing and some slight improvement in another, but taking all things together he was prepared to stand by his original estimate. According to his (the Chancellor of the Exchequer's) proposal the sum of £5,218,000 would be received for Income Tax in 1876–7; if the figure proposed by the hon. Member were adopted it would yield £4,792,000, or £476,000 less than was estimated by the Government. This would leave them a deficit of £108,000, and if they added to that, as the hon. Member suggested, the exemption of all incomes under £150, the whole deficit would be something like £250,000. He (the Chancellor of the Exchequer) thought the House would agree with him that it was a very dangerous thing, under any circumstances, to commence the year with a deficit, and without making any allowance for Supplementary Estimates. His hon. Friend hoped no Supplementary Estimates would be needed; but he could never be secure against accidents which might diminish the productiveness of the Revenue. The Government had made cautious estimates, and he felt bound to say that the sanguine anticipations of his hon. Friend were not such as could safely be shared in by a Chancellor of the Exchequer. He could not take upon himself the responsibility to advise that they should commence the year with a deficit such as the hon. Member proposed; therefore, in any case it would be his duty to resist this proposal, whatever might be the view the House would take upon the question as to exemptions. He preferred to discuss the question of the substitution of a halfpenny for a penny irrespective of the question as to exemptions; and therefore, in opposing the reduction, he at present abstained from entering into the discussion of exemptions.

MR. DODSON

said, it appeared to him the right hon. Gentleman had not satisfactorily disposed of the figures which had been propounded by his hon. Friend the Member for Bristol. His hon. Friend contended that the halfpenny, calculated at the rate adopted by the Chancellor of the Exchequer himself, would produce sufficient to meet the deficit and very nearly enough to meet the exemptions up to £150. The right hon. Gentleman had apparently challenged that calculation by allusions to the amount of Income Tax collected within the year. He was at a loss to understand why the Chancellor of the Exchequer should estimate the third penny to produce less than either of the two other pennies. The right hon. Gentleman estimated, in his Budget speech, the first and second pennies to produce this year, as last year, respectively £2,054,000, but he estimated the third penny to produce only £1,800,000. No explanation had been given of this, and he should certainly assume that the third penny would produce as much as each of the two first pennies; and he was fortified in that by the Budgets of 1868 and of 1871, when the Income Tax was raised from 4d. to 6d., and in each case the additional pennies were estimated to yield as much as the original pennies. The right hon. Gentleman now said the third penny would only produce £1,800,000, and that the exemptions would reduce the product of that penny to £1,400,000. The right hon. Gentleman in his Budget speech further reckoned that one-sixth of that amount would not be collected within the year. That appeared to be a large sum to strike off for non-collection within the year. But on the 7th April the right hon. Gentleman said he would throw off one-fifth for the sum that would not be collected within the year, and according to that calculation his surplus would be not £368,000, but £318,000. Now, whether the amount thrown off was one-sixth or one-fifth, it was a very large amount. In 1871, when the tax was raised from 4d. to 6d, the Chancellor of the Exchequer estimated the amount of non-collection for the year at one-tenth, and the result justified that calculation. If one-tenth was thrown off for the present year the proposition of the hon. Member for Bristol would produce £924,000, against the right hon. Gentleman's deficit of £774,000. This would practically leave the Chancellor of the Exchequer margin enough to remit the duty upon servant boys, and to exempt incomes under £150 from Income Tax. No doubt there might be Supplementary Estimates, and it should not be forgotten that the Supplementary Estimates last year amounted to £1,400,000, whilst in the preceding year the amount was £1,600,000. If such Supplementary Estimates were to be produced this year, neither the proposition of the hon. Member for Bristol nor that of the right hon. Gentleman himself would be sufficient to cover them. The fact was that no increase of taxation would be needed this year but for the sinking fund which the right hon. Gentleman established last year. The payment it now involved of £570,000 turned the scale against the right hon. Gentle- man, and obliged him to come down to the House and propose an increase of taxation. He ventured to think that his hon. Friend the Member for Bristol had made out his case, and showed that an increase of a halfpenny would be sufficient to meet the right hon. Gentleman's necessities for the year. It certainly would be if no exemptions were made. Then, if a halfpenny were enough, why did the right hon. Gentleman ask for two halfpennies? It came to this: the halfpenny without exemptions would be amply sufficient to meet the expenses of the year. The second halfpenny was the purchase-money which the right hon. Gentleman was willing to pay to obtain support for the increased charge. He gave those abatements up to £400,000 to reconcile a large number of parties who accepted that. The right hon. Gentleman had been remarkably studious in minimising the amount of the tax to be derived from the additional penny during the year. If the amount received should be larger than the right hon. Gentleman had stated, he might be enabled to redeem the promise given to the hon. Member for Leicester of further relief to local taxation; but, if not, the hon. Gentleman would have to be content with an I O U. He hoped that the House would, on further consideration of the matter, give a considerable amount of support to the proposition of the hon. Member for Bristol.

Question put, "That the words 'three pence' stand part of the Clause."

The Committee divided:—Ayes 227; Noes 142: Majority 85.

Clause agreed to.

Clause 7 (Provisions of Income Tax Acts to apply to duties hereby granted) agreed to.

Clause 8 (Exemptions where income is under £150, and abatement where income is under £400).

MR. J. G. HUBBARD

said, he had an Amendment to propose which was of an entirely different character from the last. That proposed to land the Chancellor of the Exchequer in a deficit. He, however, was anxious to land him with a surplus; and to do so by carrying out at the same time the general feeling of the House, expressed in the debate of the other night. On that occasion there were three points under consideration. One was the entire remission of the tax upon incomes up to £150;and the other two were an increase of the abatement from £80 to £120, and an advance of that abatement upon incomes from £300 to £400. It was perfectly plain, the ground on which the House admitted and accepted the absolute exemption of incomes of £150. There was, as the Chancellor of the Exchequer said, an administrative difficulty which made it impossible to collect the tax on incomes below that amount. Against necessity there was no law; and without admitting for a moment that persons receiving £150 a-year ought not to pay their quota towards the expenses of the government of the country, he bowed to the necessity, and threw upon the Government the responsibility of the declaration that it was impossible. It was, however, exceedingly necessary to be clear as to the principle on which exemptions were made. The Chancellor of the Exchequer said something about exempting weekly wages, but what had that to do with the question? Could he say that a man with £500 a-year, who received it in weekly wages of £10 a-week, should be exempted? In truth, the only admissible argument was that of the impossibility of collection. But the Chancellor of the Exchequer said that it was only fair that the exemption of weekly wages should apply also to clerks receiving a similar amount who might be paid quarterly, and he thought that that argument prevailed with the House in agreeing to the total exemption of incomes under £150. With regard to the second and third points, to which he had referred, they were of a different class altogether; and here, again, it was necessary to find out the principle on which they were proceeding. The real and only rule to govern the amount of exemption was the cost of subsistence for unskilled labour. It was perfectly clear that unless labour was remunerated beyond the point of subsistence it could not be taxed, and, as that rule had been established, how did the matter stand? At first £50 or £60 was considered a fair sum; but for many years past £80 had been fixed upon; and that he considered was a liberal allowance as the cost of subsistence for unskilled labour. The next point was how to deal with incomes above £150 a-year, which would be entitled to a certain remission, and those incomes, it was now proposed, should be carried up from £300 to £400. The hon. Member for West Cumberland said if there was no socialism in abatements up to £300 there was none in abatements up to £400. There was no vice in figures—there was no vice in £300 a-year or in £400 a-year—but they must look at the motive on which the change was to be made. If the sum had originally been £400 there could be no objection; but the question now was, why should it be raised to £400? If there was no motive beyond the fact of £400 being a higher figure, what was to stop them from going to £500 or £600, or, indeed, to stop at all? There was distinct socialism in going from one sum to the other simply because it was the higher. The duties on wine, tea, and spirituous liquors could not be varied from year to year according to the wants of the Treasury, and it must be further remembered that these were spontaneous contributions to the revenue. No one was bound to drink whiskey or brandy and water, and these taxes were gifts to the general exchequer. The difference between them and the Income Tax was that the taxpayer gave his contribution to the Exchequer through indirect taxation, but his contribution through direct taxation was taken from him. The Income Tax properly adjusted, was the fairest, wisest, and best tax the country could have. The Chancellor of the Exchequer said the other day to a deputation that he could make no promises, because taxation depended upon circumstances which arose from year to year. But that was most unsatisfactory, as we should be obliged to place our fiscal system on accident. On the contrary, this question of the Income Tax ought to be dealt with on its own merits. As regarded the exemption of £150, that was capable of being justified on administrative grounds, and did not touch the principle; but if without necessity, and without change of circumstances, they increased the amount of abatement and then enlarged the incomes to be exempted, they were taking a step towards favouritism of classes which could not but have the most unfavourable consequences on the whole fiscal system of this country. His Amendment was directed to one point only, but it would save time if the House would consider that it was dealing at the same time with all three questions, and the decision upon the present clause would then settle the whole matter. He trusted that the Chancellor of the Exchequer, who in the discussion of the Amendment of the hon. Member for Bristol (Mr. Hodgson) had evinced so laudable an anxiety to secure a surplus, would not refuse the contribution of a few hundreds of thousands which by the present Amendment he proposed to make towards that surplus. If his Amendment were accepted, it would save the House from what he was certain would be hereafter a source of unending regret and self-reproach. The right hon. Gentleman concluded by moving, in page 3, line 21, after "and," to leave out to "pounds," in line 24.

THE CHANCELLOR OF THE EXCHEQUER

said, he was rather surprised at the very remarkable amount of importance which was attached to the proposals contained in the present Bill, as though they were of a novel character. They had been spoken of by the right hon. Gentleman as if they were the introduction of a new system of exemptions; but if hon. Members would bear in mind the history of these exemptions they would find that there was nothing novel in them, but that they were in entire conformity with the principle with which Parliament had been long familiar. He should like to refer, by way of contrast, to the system of exemptions introduced by his right hon. Friend (Mr. Gladstone), of which the present was only an extension, and to the circumstances under which the right hon. Gentleman (Mr. Lowe) gave further extension to those exemptions. When they proposed those exemptions they rested the argument for them upon grounds that were now said to be fraught with evil; whereas he (the Chancellor of the Exchequer) rested his argument on other grounds, and grounds of an arithmetical and practical, and not a sentimental character. In 1862, when the right hon. Member for Greenwich made these deductions from incomes of a small amount, he said that in principle there was no injustice in his proposal, but only a wider and larger kind of justice. That was the language the right hon. Gentleman employed when proposing to make the original deduction of £60 from incomes under £100. The year after he had done that he still spoke of the stringent mode in which the Income Tax operated upon the lower classes of incomes; subsequently, some years afterwards, the right hon. Member for the University of London (Mr. Lowe) introduced into his Budget a proposal to further extend this relief by raising the amount from which deduction was to be made to £300, and the amount of deduction from £60 to £80;and the ground on which he made the proposal was that there was no class of taxpayers who felt the pressure of taxation so severely as persons whose incomes were under or about that amount. He did not find fault with these right hon. Gentlemen for proposing to make these remissions; they were assented to by Parliament without anyone breathing a word about socialism; and he was bound to say that since that time public opinion had not been stimulated in that direction. Well, if he chose to follow in the wake of the other side, he might say there was a precedent for the course he had adopted. But he begged to assure the Committee that his proposals had been made upon wholly different grounds. He had never in his arguments admitted the principle that his desire was to show any particular favour or mercy to the particular class of the community with which he proposed to deal. He had carefully abstained from anything of the kind. The Government were not so soft-hearted as to try and conciliate one class at the expense of another. He had simply started upon the assumption that the total remission of Income Tax should be carried from £100 to £150 a-year. That alteration he proposed upon purely practical grounds, because there was very great difficulty, and in some cases an almost impossibility, of levying the tax from persons whose incomes were below a certain amount. Well, that point having been reached, the next question to be considered was merely one of an arithmetical character. Exemptions being granted up to £150, the question arose, what was to be done with incomes immediately above that amount? Were they to be subjected to full taxation? This was the principle acted upon originally by Sir Robert Peel; but it made the tax fall heavily on incomes just above the amount of exemption. With a limit of £150 it meant, for incomes just over that, 150 and odd pence for every penny of tax, or more than 450 pence with a 3d. tax. This was too sudden a jerk, and it was objectionable on the ground that it exposed men to the temptation of endeavouring to keep under the margin by offering so large a bonus. The hon. and gallant Member for Galway (Captain Nolan) suggested that £150 should be deducted from all incomes; but that was open to the objection that incomes just above £150 would have to be taxed upon one or two or a few pounds, which would be impracticable, for it would not be worth while to collect the tax upon the first £10; and it was open to the further objection that it would be absurd and involve an unnecessary waste of revenue and a great deal of unnecessary trouble to deduct it from incomes of thousands a-year, the possessors of which would not feel it. There remained the third alternative—to adopt the system at present adopted, make £150 the total limit of exemption, and above that amount deduct such an amount as would make the first payer of Income Tax pay upon something like a sensible proportion of his income. With the deduction of £80 from £100, the first payer paid upon £20, which at 3d. was 60d. more than the man who paid nothing. With the deduction of £80 from £150, that income would pay three times 70d., or 210d. more than the income that did not pay at all. It appeared to them that was too great a difference, and that by raising the deduction to £120 the income of £150 would pay upon £30, or, at 3d., 90d. At present the first who paid would, at 3d., pay 60d.; at the £150 limit he would pay 210d.; but by raising the deduction as proposed to £120, he would pay 90d. These were the reasons why it was considered the raising of the limit of exemption ought to carry with it the alteration of the limit of deduction and the amount of deduction. At present the man of £300 paid on £80 more than the man below him; this was a difference of about 26½ per cent. If he paid on £120 more the difference would be 40 per cent, which would be too great a jump; but by carrying the limit of deduction up to £400 the difference, which was now 26½ per cent, was only raised to 30 per cent. These were the calculations on which they proceeded in fixing the limit of deduction at £400. The result might be arrived at in another way—they raised the limit of exemption from £100 to £150, or 50 per cent; raised the amount to be deducted by 50 per cent, or from £80 to £120; and might have raised the limit of deduction by 50 per cent, which would have brought it to £450. That did not seem to be a reasonable amount to propose; it lay between £400 and £500, and they gave the benefit of the doubt, in the anti-communistic sense, by putting it at £400. Until the matter came to be discussed in the House, he did not think the feeling or interest of any particular class was ever mentioned. For a considerable time past the matter had been discussed outside the House, and various suggestions had been made in favour of some extension of exemption and deduction in respect of small incomes; and he believed it would have been difficult, if not impossible, to have resisted altogether some Motion in that direction. He, therefore, believed the Government had acted wisely, if only with the view of settling the question, in making proposals of a moderate character, analogous to the existing arrangements, and containing no elements of danger. It was said, without much reflection, that they were doing a dangerous thing in not calling upon a large number of persons to bear some of the burdens of the country. That objection might possibly be taken with regard to those who were exempted altogether; but it must be remembered that persons with incomes between £150 and. £400 were not exempted altogether, but only to a certain extent relieved. He had now told the simple history of this proposal, and he really did not think there was anything in it which should call forth the alarm which had been expressed. He fully agreed that if it were proposed to tax the poor more lightly than the rich it might lead in a dangerous direction at some future time, but that was not the principle on which they proceeded. The principle on which they proceeded would be rather a safeguard against such a proposal, and the power of maintaining an equal balance between direct and indirect taxation would be strengthened.

MR. GOSCHEN

said, he hoped the speech of the Chancellor of the Exchequer had removed the doubts which had arisen in the minds of hon. Members who sat on the benches behind him in regard to this proposal; but he must say he had puzzled many Members on both sides of the House by his arithmetical calculations. Indeed, the right hon. Gentleman appeared to have some difficulty in explaining his arithmetical puzzle to himself. The result of the proposal, however, was that they were to lose a large tax-paying power between incomes of £300 and £400, and exemptions were to be extended when a considerable body of taxpayers were called upon to bear additional burdens. The right hon. Gentleman had said that his right hon. Friends the Member for Greenwich (Mr. Gladstone) and the Member for the University of London (Mr. Lowe) had in their exemptions placed the argument on sentimental grounds while he placed it on arithmetical grounds; but why did he not adduce that argument on introducing his Budget? He then spoke of the struggling tradesman, the widow and the orphan.

THE CHANCELLOR OF THE EXCHEQUER

said, there was no such statement in his Budget speech. When he made that statement it was in reply to a Question which had been put to him.

MR. GOSCHEN

accepted the explanation. The right hon. Gentleman had himself resorted to the sentimental argument, and his arithmetical puzzle was only produced when hon. Members opposite seemed to think the subject had been sufficiently discussed. He thought the right hon. Gentleman had been guilty of a little mystification; and if his scale meant anything it meant graduation of the Income Tax. He (Mr. Goschen) thought it was deeply to be regretted that such exemptions were to be granted at a time when the majority of the ratepayers were to have fresh burdens imposed on them. There were many who, with incomes above £150, would actually be paying less with a 3d. tax than they did before. It showed how dangerous it was to advance from step to step and point to point. They should look at the matter broadly and clearly, and ask if it was right to raise a new class of exemptions from £300 to £400. That was the real issue. The only excuse which the right hon. Gentleman had to offer for his policy was that the Liberal Party had set him the example, but that was really no excuse at all. He hoped the Committee would not be carried away by the arithmetical calculations of the right hon. Gentleman. He should support the Amendment of his right hon. Colleague.

MR. GREGORY

regretted that the Chancellor of the Exchequer declined to give way on this point. For his part, he had a very strong objection to these exemptions. He thought that they had carried too far the principle of exemptions. It was one not to be justified, and he hoped it would not be extended.

MR. P. A. TAYLOR

said, that the speeches made on the opposite side ignored the most important element in the case, and that was indirect taxation. They had now two systems of taxation, the direct and the indirect, between which, as had been shown, there was this diversity, that under direct taxation a man paid in proportion to his means, while under indirect taxation he paid in the inverse ratio; the tax falling heaviest on the smallest means. He did not think it came well from perhaps the richest Assembly that ever met in the world to say to the necessitous classes of their countrymen that if they gave up all the little luxuries of life they might exempt themselves from taxation altogether. Taxation upon tea, which was now in almost universal use, might be regarded in the light of a tax. Tables had been elaborately made out which showed that the poor man with £50 or £60 a-year paid in indirect taxes 8, 10, or 15 per cent on his income, while the loudest complaints were made in that House over a three-penny income tax, which amounted of course to 1¼ per cent only. It was idle, therefore, to talk of the introduction of socialism by means of exemptions, when those who were exempted had to pay 10 or 15 per cent on the articles they consumed. He did think that as there was to be an increase of taxation the Government had chosen the right mode of laying on the increase and of extending the exemptions.

Amendment negatived.

SIR JAMES LAWRENCE

moved, in page 3, line 26, to leave out "is less than," and insert "does not exceed," on the ground that it had been found that, wherever the former words were used, they led to numerous evasions.

THE CHANCELLOR OF THE EXCHEQUER

was reluctant to change the words as they stood, though he did not think whichever set of words were used it would make any material difference.

Amendment, by leave, withdrawn.

Clause 9 (Certain offices to continue chargeable under Schedule E, and other offices transferred to Schedule D).

MR. THOMSON HANKEY

said, it was proposed in this clause to do away with an easy, cheap, and simple mode of collecting the tax, in order to substitute a most expensive, offensive, and objectionable mode of collection. The Income Tax paid by clerks in the Bank of England and in the Departments of the Civil Service, by officers of the Army and Navy, and by persons in the employ of joint-stock firms, was now collected by the authorities or by the respective firms under Schedule E, and handed over in lump sums to the Income Tax Commissioners. It was now proposed by Clause 9 to abolish that system in the case of joint-stock firms, and to bring the clerks in these cases under Schedule D, when they would have the benefit of being allowed to be taxed on the average of their previous three years' income, instead of being taxed upon that of the single year. Thus the clerks in the Bank of England would be treated differently from the clerks in the London and Westminster Bank; but if it were an advantage to them to have the three years' average, why should not the Bank of England clerks enjoy it as well as those in the London and Westminster and in other Banks? In his opinion, the system of a three years' average of income was meant for persons in trade, who suffered from the vicissitudes of trade, and might have profits amounting to £1,000 in one year and no profits at all in the year following. The system was not meant to apply to clerks whose salaries were either fixed or were subject to an annual increment; but if the system were an advantage to clerks it was unjust to make it exceptional. Another objection to the clause was that it would greatly increase the labour of collection, for in the City of London alone 18,000 persons would be separately assessed under Schedule D who were now returned by the heads of 50 or 60 establishments in which they were employed. He should propose to leave out the whole of Clause 9.

THE CHANCELLOR OF THE EXCHEQUER

said, this was a matter which had been suggested to him by the Board of Inland Revenue. There appeared to be considerable inequality in the manner in which clerks and other persons employed by private firms were treated, as compared with such persons when they were in the service of joint-stock companies. The absurdity had frequently occurred that when a private firm became converted into a limited company, the clerks employed by it were immediately transferred from Schedule D to Schedule E, and so lost the advantage which they had previously enjoyed of having their incomes calculated upon an average of years instead of upon a single year. It was not a matter of very great importance as affecting the receipt of revenue; but he was told by the authorities of the Inland Revenue, who must be the best judges of the matter, that the proposal in this clause would greatly simplify the working of the Act, and that the balance of advantage was in favour of making the change, which would, no doubt, operate more in the City of London than in any other place. Nobody would be the worse for the proposal, and it would meet a certain number of cases. He had referred the matter to the Board of Inland Revenue.

MR. GOSCHEN

said, they ought, no doubt, to accept with great respect the opinion of the Inland Revenue authorities; but, at the same time, he thought the Chancellor of the Exchequer had not met the arguments adduced by his hon. Friend (Mr. Hankey). Indeed, he did not think the right hon. Gentleman had thoroughly mastered those arguments. If the change would benefit one class of clerks, surely it ought to be extended to all clerks. His hon. Friend had had such great experience in this matter in his official capacity as a Commissioner of Income Tax that his opinion might be fairly set against that of the authorities of the Inland Revenue. He trusted that the Chancellor of the Exchequer would re-consider the matter.

MR. J. G. HUBBARD

thought the proposed change was greatly to be deprecated. It would be injurious to the tax and unjust to the taxpayer, and therefore he hoped the right hon. Gentleman would accept the Motion of the hon. Member for Peterborough.

THE CHANCELLOR OF THE EXCHEQUER

said, that this was really a matter of a technical character, and as he was quite prepared to admit that the hon. Member for Peterborough had a very large experience in the collection of the tax in the metropolis, where the change would operate most forcibly, he attached great weight to what his hon. Friend said. Although he found that the officers of the Inland Revenue were not satisfied with the arguments which had been adduced, and although they thought the loss of advantage on the one side was more than counterbalanced by the gain on the other, yet the arguments were so fairly balanced that the Government would not be doing an ungraceful thing by accepting, at least for this year, the advice of his hon. Friend the Member for Peterborough, as the matter was one of comparatively little importance.

Clause negatived.

Remaining Clauses agreed to.

THE CHANCELLOR OF THE EXCHEQUER

moved, in page 2, after Clause 4, to insert the following Clause:— (Alteration of duties on licences to retail wine for consumption on the premises.—Section 14 of 6 Geo. 4, c. 81, repealed as respects wine licences.—Alteration of scale of abatement to meet alteration of duties.) (4a.) In lieu of the Duties at several rates now payable under the Acts of the sixth year of the reign of King George the Fourth, chapter eighty-one, and of the third and fourth years of Her Majesty's reign, chapter seventeen on licences to retailers of foreign wine, and under the Act of the twenty-third and twenty-fourth years of Her Majesty's reign, chapter twenty-seven, and the Act of the same years, chapter one hundred and seven, on every licence to any licensed keeper of a refreshment house to sell therein by retail foreign wine to he consumed on the premises, there shall be paid for each such licence the uniform duty of £2 4s. 1d. So far as regards any such licence as aforesaid to be granted under the said Act of the sixth year of the reign of King George the Fourth, chapter eighty-one, the provisions contained in the fourteenth section of the said Act are hereby repealed. In lieu of the scale of abatement contained in section nine of the Act of the twenty-fourth and twenty-fifth years of Her Majesty's reign, chapter ninety-one, the following scale shall be substituted, and the said section shall be read as if the said scale therein contained had been as follows (that is to say):—

"Where the house and premises in respect of which such licences shall be granted shall in England be under the rent and value, or in Ireland under

The right hon. Gentleman said, that the object of this clause was to substitute a uniform system of taxation for the privilege of retailing wine, and to place it at £2 4s. 1d. There were two scales of wine licences at present. If a licence to sell spirits was taken out, then the wine licence was £2 4s. 1d., but if there was no wine licence then there was another duty. It appeared that, in point of fact, there were very few cases in which the distinction applied, but it told rather hardly on some classes of persons. The loss to the Revenue would be less than £5,000;but the abolition of the distinction he considered to be necessary. The duty of £2 4s. 1d. would apply to all houses retailing wine.

MR. BRISTOWE

asked, was the object of the clause to abolish the distinction which existed in the licences paid by the owners of houses rated under and over £50, £5 5s. in the one case, and £3 3s. in the other? He should like to have some further explanation of the proposed provision. Was the object to abolish this distinction, and make all pay £2 4s. 1d.?

THE CHANCELLOR OF THE EXCHEQUER

said, that was the object.

Mr. BRISTOWE

thought they should have an explanation why the higher rate was to be abolished and £2 4s. 1d. substituted.

THE CHANCELLOR OF THE EXCHEQUER

said, he was sorry the Home Secretary was not in his place at the present moment. The fact was the Board of Revenue had suggested this clause to him, and he had referred to the Home Secretary for the purpose of ascertaining his opinion, whether it would in any degree affect the principle of the licensing law, because he was aware it was the intention of the Revenue authorities to make no distinction in that respect, and he understood from the Home Secretary that he saw nothing in it which would create any difficulty as to the rating of the houses. As to the third class of licences to which incidental allusion had been made, he should make inquiry on the subject to see in what manner they would be effected by the alteration of licence duty, and mention the matter on the Report.

Mr. FORSYTH

said, that wine retailers in houses under £50 a-year paid for a £3 3s. licence, and those over £50 for a £5 5s. one, whereas licensed victuallers paid for a £2 4s. 1d. one. The object was to place wine retailers and licensed victuallers on the same footing, but the beerhouses had nothing to do with the matter. The clause was a just and equitable one, and he hoped it would be agreed to.

Mr. WHITWELL

thought the clause did not go far enough. Something ought to be done to make the licences more equal.

Clause read a second time.

On Motion "That the Clause be added to the Bill,"

Mr. DODSON

expressed a hope that the words of the clause would be made more clear than they at present appeared to be.

Clause agreed to.

Mr. J. W. BARCLAY

moved the following clause:— (Gun licences, exemption for farmers.) Guns used by farmers or persons employed by them exclusively for the protection of their crops, shall be exempted from Licence Duty. The hon. Member said, that the depredations committed on farms in Scotland, and no doubt in England, every winter and summer by wild birds were so extensive that it was necessary to have some one employed with a gun for their protection. Owing to the protection which had been afforded to wild birds by the Legislature, their number had enormously increased and they had become a source of irritation to the farmer, as often as he saw the damage which they did to his crops. It was quite true that the farmer had power under the Act of Parliament to use a gun with his own hands; but it was specially provided that he should only use it for the purpose of killing vermin or of scaring birds away. If the farmer shot a bird, and did not possess a licence, he was subject to a penalty. There was great difficulty felt by farmers in Scotland in getting boys to scare away the birds from the farms, and the farmers considered that they had a grievance. He appealed to the Vice President of the Council, who was opposed to the employment of young children, whether farmers, in the existing state of things, should not at least be allowed to use firearms, either themselves or by some one they might employ, for the purpose of protecting their crops. The right hon. Gentleman the Chancellor of the Exchequer had told him last year that he did not consider that it was a grievance to the farmers that they should have to pay this 10s.—that it was a matter of little consequence. But the right hon. Gentleman had dealt with a much smaller grievance in the matter of the Income Tax, for the 10s. licence on a gun was equal to the income tax on an income of £160. The grievance the farmers experienced was keenly felt because the tax was an unjust one. The Chancellor of the Exchequer might count upon the patience with which farmers bore this taxation, and the other grievances to which they were subjected; but he would venture to warn the right hon. Gentleman that to this patience there was a limit, and he had no doubt that by-and-by, when the farmers found that they could not get redress, they would give effect to their views. He did not propose the total abolition of the licences, because on former occasions he had not been supported by the Representatives of boroughs, although it was a matter which concerned such hon. Members to a considerable extent; but irrespective of other interests concerned, he based his clause for exemptions on the grounds that it was necessary in the interests of the farmers. There was no reason why a farmer should be prevented from using a gun, either himself or through his agent, in the terms of the clause, exclusively for protecting his crops, unless the licence was intended to be an additional Game Act. He had no doubt that in many instances it had that effect, and hon. Members opposite no doubt knew that it had considerable effect in the protection of game.

New Clause—(Mr. James Barclay,)—brought up, and read the first time.

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

GENERAL SIR GEORGE BALFOUR

reiterated his often repeated statement that he would be glad to see the gun tax abolished, and supported the clause. He had frequently advocated the transfer of these taxes and others of a like character from the Imperial Exchequer to the localities, and he reiterated this advocacy. He thought if the Chancellor of the Exchequer could not see his way to a remission of the tax, both the gun tax and the dog tax might be collected and used for local purposes, and in diminution of the grant now so unwisely made from the Consolidated Fund in aid of, or rather, it might be said, as an encouragement to local extravagance in outlays. This, he thought, would be a financial benefit, inasmuch as the taxes would be made to realize larger returns than at present, for with the assistance of local knowledge it would be easy to graduate the rates of the two taxes, so as to levy high rates on those who kept useless or pet dogs, and those who kept and used guns for luxurious or enjoyable objects, in contradistinction to low rates on guns and dogs now obliged to be kept by parties for useful purposes. These changes would prevent evasions of the tax, and remove much of the dissatisfaction that existed among farmers with regard to both.

THE CHANCELLOR OF THE EXCHEQUER

reminded the Committee that every person who carried a gun was liable to a small tax, with certain exceptions, and among them this—that gun licences need not be taken out by the occupier of any lands for the using or carrying a gun for the purposes of scaring birds or killing vermin upon such lands, or for any person so using the gun upon any lands the occupier of which should have a licence for killing game. The object was to tax the farmer who required the gun for other purposes than these. He thought that the law provided sufficiently for the protection of crops, and any person who required a gun for other purposes should pay the tax. The Amendment would not limit the use of the gun to the particular lands, nor to the scaring of birds or to the killing of vermin. Under the Amendment a farmer might invite any number of friends, saying he employed them, to have a day's rabbit shooting for the protection of his crops. This would break down the whole principle of the Bill, and therefore he could not assent to the Amendment.

SIR GEORGE CAMPBELL

said, he had always looked upon the gun licence as a game-law in disguise, and the words of the Chancellor of the Exchequer confirmed him in that opinion. The hon. Member for Forfarshire (Mr. Barclay) complained of the want of support from the borough Members; but he (Sir George Campbell) willingly supported any proposal directed against the gun tax, and wished that his hon. Friend as a county Member, had extended his exemption to boroughs, and not restricted it to his agricultural constituents.

SIR ALEXANDER GORDON

said, that the tax operated unjustly upon small farmers, who were prevented by it from using means to protect their crops. He took exception to the use of the word "persons," believing that this might indirectly encourage poaching by affording an excuse for that class to carry guns under the pretence of protecting their crops. He suggested that "farm servants" should be used instead of "persons."

Question put.

The Committee divided:—Ayes 44; Noes 106: Majority 62.

Bill reported; as amended, to be considered To-morrow.