§ Order of the Day for the House to be put into a Committee read.
§ Moved—"That the House do now resolve itself into a Committee on the said Bill."
§ LORD ST. LEONARDSsaid, he was anxious that their Lordships should have a general view of the object and probable operation of this Bill. He should without dwelling on any particular part of it, take the liberty of shortly stating what he apprehended would be its operation. He had heard the noble Earl at the head of the Government (the Earl of Aberdeen), speak of this measure as a popular measure; but he could not admit that to be a justifiable assertion, although the noble Earl might have said that it was not an unpopular one. The assertion that it was a popular measure was founded upon the fact that no petitions had been presented against it; but he believed that the reason that there had been no petitions was, that the measure was not of a nature to draw down immediate opposition, because the burden of the taxation it imposed would not be immediately felt; though its effects would be felt hereafter. It was not difficult to discover the general feeling with respect to any tax that was placed directly upon individuals; but in a Bill of this sort where no individual was hit personally and immediately, it was no one's business to oppose it; and that was the reason why no petitions had been presented against it. Another reason was, that the present Bill was one which was by no means understood by the generality of mankind; in fact, it required not merely an attorney, but a very good attorney, to explain its provisions; and he could confidently assert from his own experience and knowledge of such matters, that when the present measure came into operation, no man who was hit by the operation of the Bill could live without having almost constantly a legal adviser at his elbow. It had been said that the principle of this measure had been admitted; but the fact 698 was, that noble Lords on his side of the House had had no opportunity of opposing it, and he would now call upon their Lordships to consider what the operation of this Bill really would be. This was not a party question. ["Hear, hear!"] He would repeat, this was not a party question. He spoke from his heart, and with the firmest belief that this was a measure which, if passed, would eventually be deplored by every noble Lord who then heard him; and he would remind the noble Lords opposite who cheered, that the Bill was one which would at some period probably punish some of them, and, when it did, they would remember his warning; but then he was convinced that they would not attribute the course which he felt bound to adopt to the influence of party feeling. He was at a loss to know why such a measure had been introduced, for it had not been shown, and he fully believed it could not be shown, that any necessity existed for its introduction. He felt very strongly, and spoke strongly on this subject; but he hoped that nothing that might fall from him would be construed into anything like want of respect for the noble Earl opposite. He would ask their Lordships to consider what was the pretence on which this Bill was brought forward? Equality of taxation. It was said that real property should be subject to the same charges as personal property. Now, that principle he was fully willing to admit was a just one; but now their Lordships were asked to charge real estate with legacy duty, equally with personal estate, irrespective of the additional charges on property of that nature, which destroyed the proposed equality. Real estate, however, paid legacy duty on all charges in the shape of money, the same as personal property. The pretence of the Bill was equality of taxation between real and personal property. By all means he would say let there be equality; nothing was more just. But then, to tax these two classes of property equally, real estate should be relieved of the peculiar burdens which press exclusively upon it, and from which personal estate is exempt. What were those burdens on land? The noble Earl near him put the case very strongly and very forcibly in the previous night's debate, as regarded the land tax. Heretofore the land tax was charged, not alone on real estate, but also upon personal estate; and not alone upon personal property actually in possession, but also upon money in pocket, and even upon debts due and 699 owing to the party. The land tax, however, was not paid upon personal property—in fact, it could not be levied. It was paid only on the land, therefore, because no man would have borne to divide his ready money with the taxgatherer, and to pay tax upon his debts. He (Lord St. Leopards) and those with whom he acted did not object to equality of taxation, but they objected to taxation which did not act with a common pressure upon all property. For that reason he desired that real estate should bear the same taxation as personal estate, but no more, as that would be unequal. They conceded to the Government, therefore, the ostensible principle of their Bill—namely, that real estate should be put upon exactly the same footing in point of taxation as personal estate. But the Bill proposed to tax real estate the same as personal estate, in the case under discussion, without any reference whatever to the exclusive and exorbitant charges which rested upon real property. The Government, however, did not stop there, for they said, "If you place the same duty upon real as upon personal property, inherited by descent or demise, why exclude settlements?" He could only say that no Minister had hitherto dared to bring forward a proposal for levying a duty upon settlements. Mr. Pitt, in the plenitude of his power, in the midst of a general European war, at a time when men were willing to endure almost any sacrifice in order that the honour and dignity of the country might not be impaired, never dared to ask for what the present Government., without any necessity, and in time of peace, ventured to propose. Mr. Pitt, had excluded all duty on settlements from the measures of finance which he proposed; and he could not but consider that the present Government were liable to be charged with temerity for adopting a different course. Was there any reason why settlements should be placed upon the same footing as other property? If a person kept property in his own possession till death, or disposed of it by a will which he could revoke at any moment in his life, he possessed, no doubt, the full control of that property during his life. But suppose such a person made a sacrifice as against himself, and settled his property during his life upon his child, he would by so doing part with and denude himself of such property. Hitherto the law had looked with great favour and approbation upon and regarded settlements; but now the feeling was to be completely changed by a measure 700 which he could not but characterise as "confiscation," and a proposal by a simple ex post facto law to take away from a man property which, although he had never enjoyed it, was still indubitably his property. In the case of mortgagees the operation of the Bill would be most oppressive, for it would, in fact, by retrospective operation, take from them a tenth part of what they had fairly become entitled to. There were many cases in which persons had anticipated their succession to such an extent as to have almost entirely squandered them, and in such cases the Government stepped in, and because a man had been a spendthrift, ruined him altogether. A person, knowing that he was to succeed to property, might anticipate and spend nine-tenths of its value, and, when the remaining tenth would enable him to make a fair start in life, this new tax to be imposed would entirely swallow it up. As far as the right to spend in anticipation went, a perfect right to do so undoubtedly existed. Another strong objection which he entertained to the measure was, that property might, in certain cases, be called upon to pay the duty more than once. He himself considered this question entirely with reference to its general effect; but he would call the attention of the noble Earl at the head of the Government, and of the noble Duke near him (the Duke of Argyll), and of all noble Lords who took peculiar interest in the affairs of Scotland, to what would be the operation of this measure in Scotland. As far as he understood the measure, according to the Scotch law, the direct descendants of a person who inherited property from a stranger or distant relation, 150 years ago, might still be called upon to pay 10 per cent. It was his intention to propose certain Amendments in Committee on this Bill, for the purpose of rendering the measure, if possible, more just and equitable in its character. One of those Amendments would be for the purpose of correcting that anomaly. He should move that when the tenant for life should have paid a higher duty than 1 per cent, the persons of his family who should come into it afterwards should pay only 1 per cent. He should also propose that when a settlement had been made by a man upon the marriage of any of his children, no person under that settlement should, during the settlor's life, become subject to the duty. He would, to show the necessity of such a provision, offer an illustration to their Lordships. He would take the case of a trades- 701 man who had by hard industry amassed some property, and who upon the marriage of his daughter made a settlement for life upon the husband, with reversion to the widow at his decease. The son-in-law might die, leaving a young family to be taken care of by the settlor's daughter; but the Government would, unless his Amendment were agreed to, step in and take a large portion of the capital of that fund from the daughter of the living man who had denuded himself of his property for the sake of his child's comfort and happiness, and who would thus see it dwindle away under the grasp of the taxgatherer. How often had not marriages depended upon the simple question whether the young couple would be able to meet their future expenses or not! The settlement made was often the smallest they could manage to live upon, and then upon the husband's death Government stepped in and took a succession duty from the unhappy young widow and her family. Was there any necessity for that? He would be the last man to object to it if it were indeed necessary; but necessity alone could justify it, and authorise the Legislature to break in upon past settlements. The Bill was brought in order to enable the Government still further to reduce indirect taxation; but he doubted the wisdom of carrying direct taxation too far; and he regarded with great distrust all these attempts to get rid of indirect taxation, and to substitute direct taxation in its place. He wished to point out to their Lordships the operation of this Bill. From the moment the Bill passed, no man could make the slightest disposition of his real or personal property without coming under the observation of the Government. Let not the owner of personal property lay the flattering unction to his soul that he would escape the observation of the taxgatherer. The Government had already great powers, and proposed by this Bill to take additional powers of access to all public documents. The Bank of England was open to them, as well as every other place. There could be no joint accounts kept at the Bank, which would not come to the knowledge of the Government; and there would be no settlement of property in the Empire that would not be followed by the taxgatherer. Their Lordships might judge of the facilities and powers which the Government would possess by the course which was now adopted whenever they purchased a new carriage; for a demand was made upon them for the increased duty, in some 702 cases even before the taxable article was fairly in their possession, If arrangements could be made with carriage-builders, by which such information was afforded to the Government, there could be no doubt that similar means could be found for obtaining information upon other matters. If there was one blessing incident to property more than another, or one thing more valuable than another in a free country, it was the quiet and undisturbed possession and enjoyment of property by those who had earned it. Every day the list of marriages would in future be carefully conned over, and the name of every respectable person would be noted down by the sharp-eyed tax collector as fit subjects for his inquiry; and in reply to his queries information must be given of every jointure, settlement, or encumbrance upon their property. Besides this, the Bill had this additional misfortune, that not only did the taxgatherer come to the taxpayer, but the taxpayer was bound to go to the collector and tell him that he (the payer) was chargeable with a higher rate of duty, and politely request that it should be levied upon him. He believed their Lordships would deeply regret it if they passed the Bill in its present shape. He intended to propose an Amendment in Section 18, which was less clear than he thought it ought to be as to property bequeathed by a husband to his wife, or by the wife to the husband. By the Act of 1796, and subsequent Acts, there was an express exemption of such property from duty, and he proposed to introduce a special exemption into the present Bill, which he thought would be preferable to an exemption in which this case was incidentally included at the end of a clause. There also was another clause which it would be desirable to introduce into the present Bill—namely, that whatever property was subject to the legacy duties under the Legacy Duties Acts, should not be subject to this duty. Unless some provision of this sort were made, the Bill would give rise to endless complication. He also wished to know whether it was intended that bequests to the Crown should still remain free from the payment of the succession duties, as, according to the Bill as it now stood, some questions might be raised on the subject? A question had already been asked of the Government, whether they would not put the duty upon the same footing between brother and brother, and brother and sister, as between father and son. The descent from brother to 703 brother being immediate, ought not to pay any more duty than the descent from father to son. He thought also that if a legacy were left to a brother-in-law who had married the testator's sister, he ought not to pay a greater duty than his wife, the testator's sister, would have paid. The clause, as it was drawn, stated where the person chargeable with duty was "married to any person of nearer consanguinity than himself or herself to the testator." But in 99 cases out of 100 the brother-in-law or the sister-in-law was of no consanguinity to the testator; and he should propose an Amendment to meet these cases. They were told that this tax was to be a permanent one, and a substitute for the income tax. Now, he had not the slightest hesitation in saying that before long all mankind would agree that the income tax was preferable to this. He had no personal interest in this question; he never had come into a succession, and did not expect that he ever should be hit by the succession tax. It was not personal interest, therefore, which induced him to adopt his present course with respect to the Bill, but solely a desire to save the people of England from a measure which would lead to legal strife, which would carry discomfort into every household, and finally work its own condemnation in the course of time. Their Lordships had been told of the necessity of diminishing the expenses of conveyances, and of the general wish which existed that the expenses attending the transfer of real estate should be greatly lessened. But how had the Government met this? They had met it by putting, for the first time in England, by means of a fiscal regulation, a mortgage upon every man's property throughout the Empire, and that mortgage was declared to be a first charge, which was to exclude everything else. Former Acts of Parliament made a person liable to pay responsible under a heavy pressure; but the Government were not content with that, and took an actual mortgage—for such it was—upon the property itself. The Bill said that—
No bonâfide purchaser of property for valuable consideration under a title not appearing to confer a succession, shall be subject to pay any duty with which such property may be chargeable under the provisions of this Act, by reason of any extrinsic circumstances of which he shall not have had notice at the time of such purchase.By such an enactment as this, property would be placed in more peril than it had 704 been placed in before by any Government. You introduced the subject of notice—constructive notice, notice to a man's attorney or agent—and all this you introduced at the peril of purchasers at a time when you were proposing to shorten their titles, and render those titles secure! At the proper time, therefore, he should propose the insertion of words in order to take out of the Bill the mischief which lurked under it in this form. He would now, in conclusion, say a word to the right rev. Prelates opposite. He would put it to them whether they would be parties to place this measure, with all its obnoxious regulations, upon their fellow-subjects, while they themselves were excluded from its operation? Their support of the Bill under such circumstances might be considered an act of gratitude to the Government; but he hoped and trusted that they would not by their votes help to place upon other men's shoulders a burden which had not been imposed upon themselves.
The LORD CHANCELLORsaid, that so large a portion—indeed, almost the whole—of the observations which had been addressed to their Lordships by his noble and learned Friend, had turned upon the details of the different clauses of the Bill, that it might have been considered a justifiable course on his part simply to allow the House to go into Committee, and to answer, clause by clause, the observations which his noble and learned Friend had made upon it, as each should then come before them. Some of those observations, however, were of a more general character than the rest, and there was throughout the whole of them such gross exaggeration—he did not at all wish to use the term offensively—such an extraordinary colouring with regard to the supposed operation of this Bill, that he felt he should not be justified if he did not make a few remarks before putting the Motion, that their Lordships do resolve themselves into Committee. His noble and learned Friend had commenced by observing, that there was nothing to show that this measure was popular in the country: he had, however, been obliged to follow that observation by another, to the effect that unquestionably there was nothing to show the measure was unpopular. Now he (the Lord Chancellor) asked their Lordships if, in respect of any tax which the imagination of man could devise, they could expect more than that it should not be unpopular? What popularity could be gained by proposing to 705 tax any one? Popularity for a tax was perfectly out of the question. His noble and learned Friend had followed this observation by the remark, that he was afraid the operation of the Bill was not understood in the country. Now, without meaning to doubt the sincerity of his noble and learned Friend, he (the Lord Chancellor) believed the real objection felt by him and the noble Lords by whom he was surounded, was, that they thought the measure was understood throughout the country. It was felt throughout the country that this was an attempt to tax the extensive properties of the landed proprietors, so as to equalise as much as possible the burden of taxation which fell upon the community. The noble Earl (the Earl of Derby) had described it the other night as a discreditable feeling on the part of those subject to the legacy duty to wish to extend the tax also to real estate. Now, far from concurring in this sentiment, he viewed that feeling as the foundation of the justice of this Bill. At present there was a legacy duty chargeable on the succession to personal estate, and those who bore that tax—who, speaking generally, were confined to the middle and poorer classes—felt that landed proprietors ought to be put into the same category as themselves in that respect. That was the principle of this Bill. There were but two principles, so to speak, involved in the measure. The first was, that whereas the legacy duty had heretofore been paid only in respect to legacies of personal estate, real estate was now subjected to the same burdens. Now, a wish to effect this object might be a bad feeling in human nature, as had been suggested by the noble Earl (the Earl of Derby); but he was sure they must all admit that such a feeling must necessarily find its way into the human heart. That was the first principle of the Bill. The second was—and it was one of a cognate nature—that whereas heretofore legacy duty had been imposed only in the case of persons dying in possession of their property, and leaving it to others by will, nobody should now be entitled to withdraw himself from the obligation of contributing in this way to the national exchequer by making a settlement, instead of leaving the property to be disposed of by his will. These were the two principles of the Bill; and, if they were recognised, there could not be any possible reason why the House should not resolve itself into Committee. But if, on the other hand, those principles 706 could not be carried into effect without interfering so violently with the convenience and comfort of mankind as had been represented, he admitted that that of itself presented a reason for not proceeding with the measure. But was that so? His noble and learned Friend to-night, and the noble Earl (the Earl of Derby) a few evenings ago, had exerted all their ingenuity and ability in bringing forward extreme cases, which they contended would be productive of enormous hardship under this Bill; but he should like to hear the noble Earl or his noble and learned Friend point out any imaginable tax of which the same thing might not be said. They were now proposing to tax a great and powerful class, and it was not to be wondered at if there should be cases of occasional hardship. The truth was, that when you once came to impose a tax, justice, such as they were ordinarily disposed to consider it, could not be attained; it was impracticable. The object of justice was to secure people in the possession of their property; but the moment you imposed a tax you said, in effect, "I am coming to take away a certain portion of your property;" which was an injustice, except so far as it was warranted by the exigencies of the State. All that could be done, therefore, seeing that in taxing any one, perfect and absolute justice was unattainable—was to make the nearest approach practicable to it, and to see that they adopted the best machinery they could find to meet the different difficulties of the case. His noble and learned Friend had said how very unjust it was in the case where property came from a stranger, where a tenant for life had it, and then, perhaps, his son succeeded him, and the son's children—how very unjust it was that the son should pay the stranger's duty, and the children pay the stranger's duty afterwards. Was that so very unjust? Why, that was the case with regard to the legacy duty; that was the way in which it was paid with respect to all personal and all leasehold estate. It was the law now with regard to that class of property; and, moreover, real estate even now under this Bill would not practically bear its full burden, and would not pay so much as personal estate, because the duty would be calculated upon a different principle, infinitely more beneficial in the case of real estate. Take a case. Suppose the father died, and that, by the dreadful, iniquitous, retrospective operation of this Bill, the son was charged with duty on 707 succession to his real estate. He (the Lord Chancellor) shrank from those enormous figures with which their Lordships had been terrified the other night, and with which he was quite unable to cope. Suppose, instead of taking 50,000l. a year, they were to take the case of a man who succeeded to an estate of 100l. or 1,000l. a year. Suppose the son succeeded at the age of 39; what was the enormous grievance to which he would be subjected? Succeeding at that age, the 100l. a year would be worth 15 years' purchase, and therefore the whole sum upon which duty would be paid would be 1,500l. But take the case where the estate was worth 1,000l. a year. The sum upon which duty would have to be paid would then be 15,000l. What was the charge upon that? 150l. How was it to be paid? By eight different instalments, commencing at the end of one year. In other words, he would pay four yearly instalments of 37l. 10s. upon a net income of 1,000l. a year—that was to say, he would pay 7l. 10s. more than he paid now for income tax, and after that he paid nothing. Was that a grievance of such enormous magnitude that it was to rouse the indignant feelings of their Lordships? The noble and learned Lord had endeavoured to raise a feeling about the manner in which this Bill would affect poor tradesmen; but settlements were almost unknown to persons in that condition of The truth was, that the introduction of settlements, just as the introduction of real estate into this Bill, was felt to be but just, because it was only another mode of subjecting to this tax that species of property which, belonging generally to the rich and to the powerful, had been ordinarily withdrawn from the operation of taxation by arrangements, and deeds, and management, to which the poorer classes were entirely strangers. He trusted that their Lordships would, in spite of the address of his noble and learned Friend, have not the least hesitation in forthwith going into Committee, feeling, as he was sure they might, that it was a Bill in unison with a spirit of universal justice—a Bill the propriety of which had been felt by the country at large—and which, having passed the other House of Parliament by large majorities, and having been received by universal approbation throughout the country, he trusted their Lordships would not incur the dangerous responsibility of resisting.
The EARL of WINCHILSEAcontented 708 that, whether they considered this Bill on the ground of injustice, of giving ground for litigation, or on the ground of oppression and cruelty at a time when, above all others, human nature required support and consolation, this was one of the most corrupt, the most detestable, and the most odious Bills that had ever been placed upon the Statute-book. No other species of property was taxed to the extent that real property was taxed at this moment. Did personal property contribute one single farthing to the poor-rate, the land tax, or the county rate? Not one farthing. It was true enough that their Lordships, in the generality of cases, might not be called upon to pay the tax sought to be imposed by this Bill, but those who came after them would have to pay. He maintained that the result of the operation of such a measure would be, that the title deeds of all the lauded property in England would be investigated, and that from the imperfect manner in which numbers of settlements were made, legal ingenuity would find many a flaw in them, which, but for such an inquiry, would have remained unknown, and which would lead to costly and endless litigation. He looked back to the time when the bold Barons of England resisted the imposition of those oppressive taxes which were sought to be levied on the people in feudal times; but he contended that there was no tax to be found on the Statute-book of this country half so odious or oppressive as that which this Bill sought to inflict on the community. When this measure passed, their Lordships and those who came after them would, indeed, be in the hands of harpies. At a time when they would require all the consolation that could be bestowed on them by human means, the taxgatherer would step in—their title deeds would be demanded, lawyers would be consulted, and few, indeed, of the settlements of property would be found in which some flaw would not be discovered. As to the statement of the noble and learned Lord on the woolsack, that this Bill was popular because the country understood it, he (the Earl of Winchilsea) would venture to affirm that in the course of a short time this tax would create more excitement and popular indignation throughout the length and breadth of the land, than any tax that had ever been imposed by any Government in this country. No Amendment could ever reconcile him to the principle of the Bill; he thought it was an odious, unjust, and de- 709 testable measure; and he deeply regretted that circumstances prevented his being present on the second reading of the Bill, for he should certainly have divided their Lordships upon it; or, at all events, his name should have gone down to posterity in connexion with the strongest protest that he could have drawn, and put on record, against this most infamous measure.
§ On Question, agreed to.
§ House in Committee. Clause 1 agreed to.
§ On Clause 2,
§ The EARL of DERBYrose to move the Amendment of which he gave notice on a previous evening. Having already, at very considerable length, stated the objections he entertained, almost as strongly as his noble and learned Friend, not only to the principle, but to the details of the Bill, he should hold himself inexcusable if be did more than state briefly the nature of the Amendment to which he now asked their Lordships' assent. But as this was the first Amendment which had been proposed, he thought he might be permitted to answer a preliminary objection hinted at by the noble Earl opposite, and insisted on by the noble and learned Lord in the course of that afternoon, with respect to the clangorous consequences which, he told them, might arise from their Lordships making alterations in the Bill. He was perfectly aware that, according to the privileges of the House of Commons, in the case of an Amendment being introduced in a Money Bill by their Lordships, there was sometimes a matter of difficulty in inducing the other House to accept that Amendment; but, at the same time, he knew also that Amendments in Money Bills had been introduced into this House, and that the House of Commons had an easy mode—of which they had frequently availed themselves—of reconciling the assertion of their privileges with an assent to such Amendments introduced by their Lordships' House. He remembered one instance of which he had been reminded in the course of that day by a noble Lord who entertained a very strong objection to the principle of this Bill, but who was absent on account of a domestic calamity. That noble Lord, when he filled the office of Chancellor of the Exchequer, had introduced a Bill, as a measure in his Budget, for the purpose of varying and altering the stamp duties. An Amendment was made in their Lordships' House, materially affecting the character of that 710 Bill with regard to the Budget. The Bill so amended was sent down to the Commons; the other House, it was true, did not assent to it, or accept their Lordships' alterations; but, though technically they did not do so, they moved that the Bill, as amended, should be laid aside; they then suspended the Standing Orders, and reintroduced a Bill totisdem verbis, the same as the amended Bill which had been sent down to them; and, having passed it through all its stages, sent it up as a new Bill to their Lordships, and being passed in the shape so sent, became in due course the law of the land. He was ready to admit that the House of Commons was quite right in vindicating its technical privileges, as well as guarding its bonâ fide control over the money of the country; but at the same time he would say this—that if measures were to be introduced into the House of Commons altering the whole financial arrangements of the empire—measures imposing new and unheard-of taxes on new and extraordinary principles of taxation—and it was asserted that their Lordships were to have no power of altering a single word, of correcting even a mistake, or of rectifying errors into which the House of Commons might have fallen—that was in effect to say, their Lordships' House was a useless portion of the Legislature, and that, so far as financial measures were concerned, they had only to record the Bills framed by the other House of Parliament. Though he respected the privileges of the other House of Parliament, he hoped that whenever a measure iniquitous in its provisions, or containing gross errors, should come before it, their Lordships' House would not consent to abrogate all legislative functions, so far as to say that the magic words, "This is a Money Bill," would be enough to preclude them from exercising any consideration on a subject of so much importance. He regretted very much that when a noble Friend of his (the Earl of Malmesbury) on a former occasion attempted to persuade their Lordships to appoint a Committee of Inquiry into the probable working of this measure before it came up from the Commons, that Motion had been refused; for if it had been acceded to, many useful suggestions might have been made, and much explanation given, by which the Bill might have been made less objectionable, and the difficulty of obtaining the concurrence of their Lordships' House have been greatly removed. But the proposition of his noble Friend had been rejected, and they were 711 now compelled to deal with the Bill as it came from the House of Commons, with all the inconveniences attending the making alterations in it wherever it might seem objectionable. Before he went to the particular Amendment he was about to propose, he must be permitted to comment on the extraordinary tone and language which had been adopted by the noble and learned Lord on the woolsack, and the strange inconsistency between his assumptions and his arguments. The noble and learned Lord told them, first, that no tax of the kind could ever be popular. The noble Earl opposite said this particular Bill had been received with universal approval and acclamation, He could not see how the silence which prevailed in the country could be taken to signify any feeling of the kind. The noble and learned Lord, at the commencement of his observations, said the Bill was popular in the country, because it was thoroughly well understood, and was understood to be aimed at the large landed proprietors of the country; that it was subjecting them to a tax which they were called on by every claim of justice to pay for the purpose of putting landed on the same footing as other descriptions of property; and that being an assault on the large landed proprietors, and so understood, the Bill was received with universal popularity. Now, assuming the fact to be as the noble and learned Lord had stated, he must say he had too good an opinion of the sense and justice of his countrymen at large to believe that if the Bill was an attack on the landed proprietors, it would be a recommendation of its principle to their feelings of justice. But having told them that, the noble and learned Lord proceeded to say he did not propose to deal with its operation with regard to figures so high 20,000l. or 40,000l. per annum—such sums he knew nothing of—but that he would consider the measure as it affected, not those large landed properties, whirl he had just said it almost exclusively affected, but small properties from 100l. to 1,000l. a year. Having, in the first place told them that the popularity of the measure was caused by its imposing a heavier tax on large lauded property, when he came to the sums to be realised by the Exchequer, he found it convenient to diminish the sum, and referred only to estates o 100l. or 1,000l. a year. Now, he thought the noble and learned Lord exceedingly mistaken with respect to the tax; and 712 when he told them that small properties acquired by tradesmen or persons in the middle classes were not frequently the subject of settlements, he believed he had fallen into a serious error; his own belief was that among those middle classes and the owners of settled property the pressure and hardship of the Bill would be felt more severely than it would be among those whom the noble and learned Lord wished to lean upon heavily. The annoyance, vexation, and pressure, indeed, might be felt with regard to both; but let their Lordships recollect that with respect to the small properties, of which very little had been said as yet, but of which much would be said hereafter, the proportion of the legal charges, and the burdens on the taxpayer, without coming into the finance of the country, would be felt much more severely than among the larger proprietors; and his conviction was that the amount of the tax would not be so oppressive as the lawyers' bills, which would exceed the amount of the whole tax among the middle classes. The noble and learned Lord said there were two principles involved in the Bill—first, that of placing real and personal property on the same footing; next, placing devised and settled property on the same footing. He admitted the two principles involved in the Bill, but he was prepared to contend that there was a great difference between them. With regard to the first of these principles—namely, the placing those two descriptions of property on the same footing, all he could say was, that the Bill imposed a new tax on a description of property which was already most heavily charged, and which had burdens which no one attempted to deny. With regard to the other principle introduced into the Bill, of placing settled property, whether real or personal, for the first time, on a similar footing with unsettled personal property, he could not believe it was a principle that was founded on justice—it was a principle that was entirely new to the English law, and could not be founded upon justice: but apart and distinct from other objections, it must have to a great extent a retrospective operation when imposed upon property that devolved by settlement. The Amendment he was about to propose went on this principle:—Place, if you would, settled property and devised property on an equal footing—place, if you would, real and personal property on an equal footing—subject them to the same posthumous charges, but, at all events, 713 don't make the imposition on one or other retrospective, when it was impossible for persons who settled or devised property to make any alterations in their disposition of it. Take the case of devised property. The present clause would come into operation—not after the passing of the Act—not after notice, so that persons might make such a distribution of their property as would enable them to meet the changes introduced, so that each member of their fatally might be enabled to pay the tax in proportion, but they were about to apply a new legacy duty to real property, and to all wills which had been made previous to the 19th of May in the present year. Consequently, if they passed the Bill now, and a man knew it, he could make a new will, and make such a disposition of his property as he pleased; leaving so much in proportion to his younger children, and so much to the eldest son; but in the other case the Government came in, and made a new will for him. They stepped in, and, not permitting him to alter his testamentary disposition—for he was dead—they imposed a new tax, which would have the effect of altering the proportion in which he left his property under the sanction of a former law. He could quote a case in confirmation of the view he took of this point, in the course taken by the Legislature on a former occasion, in order that they should not interfere with testamentary dispositions by an ex post facto law. In the year 1838 a Bill was introduced to prohibit and check a plurality of church benefices, and thus to get rid of a great abuse and an evil which every one admitted; but so cautious was the Legislature of that day not to interfere with the subsisting rights of persons even in that which was in itself a gross abuse, that provision was made in the Bill to the effect that any person having had left to him, previous to the passing of that Act, the reversion of the next presentation to a living, though it was a plurality, should not be barred from the advantages of the will of his predecessor by that Act; and in the course of the last year there had been a case in which, after the lapse of fifteen years from the passing of the Act, a person had succeeded to the reversion of a living secured to him by the provisions of the Act of 1838 under a will dated in 1837. But there was no gross abuse to be got rid of in this case—no great object to be gained. The sole motive for passing this Bill was to put a certain por- 714 tion of money into the hands of the Chancellor of the Exchequer, in order to supply a deficiency caused by his own act. Her Majesty's Government had thought fit to take off other taxes, the amount of which would be amply sufficient to render unnecessary the application of this tax at all; but the Chancellor of the Exchequer, having thought fit to reduce a large surplus to a deficiency without the amount to be raised under this Bill, proposed to patch up the deficiency so caused by a measure, which, contrary to all precedent, and contrary to all justice, as he contended, they applied by a retrospective operation to the will of a man who died a month or six weeks ago, and thereby disturbed the whole of his testamentary dispositions. But if that were a strong objection with regard to legacies, how much stronger was it with regard to settled property. When they so applied it, they did not apply it merely to cases in May last, or at the beginning of the present year, or of the present century, but they applied it retrospectively to every family settlement; they applied it to cases where estates had been mortgaged and money borrowed, and subsequent settlements made; and where arrangements had taken place between a hundred different parties during the last one hundred or two hundred years—the whole of them were about to be disturbed and unsettled by the ex post facto operation of this Bill, which, so far as the principle was concerned, might as well be made prospective, but which, for the purpose of obtaining instantaneous benefit, was applied in a manner that was inconsistent with all good faith. The principal clauses to which he should apply his observations, were the 1st, 2nd, 3rd, 5th, 15th, and 24th. The first clause provided for the interpretation of the different terms contained in the Act; but the second clause provided that—
Every past or future disposition, of property, by reason whereof any person has or shall become beneficially entitled to any property or the income thereof upon the death of any person dying after the time appointed for the commencement of this Act, either immediately or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation, and every devolution by law of any beneficial interest in property, or the income thereof, upon the death of any person dying after the time appointed for the commencement of this Act to any other person, in possession or expectancy, shall be deemed to have conferred or to confer on the person entitled by reason of any such disposition or devolution a 'succession.'The third clause, however, went further, 715 for it provided that if he, for instance, and any other person were now in their own right in joint possession of any property, and if the other possessor were to die, and he, the survivor, were by means of, or in virtue of any previous existing agreement or legal claim to obtain the benefit of survivorship in the remainder of his own property, and to come into the full enjoyment of that of which he had before had only a divided possession, then the taxgatherer would come down and enforce the payment of the tax on that benefit of survivorship, just as if it had been a new and absolute succession. With regard to the 5th clause, its vexations, as applied to future legacies, would be interminable; but he would not go into them, as he was now contending against the application of the principle to bygone transactions, and to an already existing state of things. Every one of their Lordships who had succeeded to property subject to any annuities or jointures, whenever that property should be increased by the death of any one of the persons now receiving jointures or annuities, would be called on then to pay the tax, though they did not succeed to property in the slightest degree, but simply because a charge upon the property which was theirs before had fallen in. It was a monstrous case of hardship, and one not at all necessarily deducible from the principle of the Bill itself, that any one should be taxed on the removal of a charge which had been imposed on him by a bygone instrument. The 15th clause, too, appeared to him to create a case of gross prospective injustice: it said that if any person should dispose of his reversionary interest in any property, then at the time of the death of the person to whom he stood in the relation of reversioner, the person who bought his reversionary interest, and paid the full value for it, should be placed in the position of the party who sold it; and if the seller had succeeded to the property by the death of his father or uncle, or any relation at all, the purchaser would have the same deduction made from his income as would be made if the seller of the income had not sold it, but succeeded to it himself. If the purchaser succeeded to the property of a person that succeeded as a son to his father, he was taxed or plundered 1 per cent of that which the law had already given him; but if the person from whom he had purchased the reversion happened to have inherited from a distant relation, or no relation at all, then the purchaser, 716 instead of being taxed 1 per cent, would be taxed 10 per cent. Thus, two transactions might take place of this nature, at the time of the purchase exactly alike; but when the reversions fell in they would be materially altered—a great injustice would be committed on both, but on one it would be tenfold greater than on the other, without there having been the slightest difference in the terms of the two purchases. He should very much like to hear any suggestion from Her Majesty's Government by which they could palliate this injustice. The 34th clause committed this great injustice, that while it made allowances for all incumbrances on a property not created by the successor, yet, to whatever extent he might have incumbered his reversionary interest himself—whether for his own benefit or that of his relations, no matter for what motive, good or bad—no allowance was to be made for such incumbrances as he himself had created, and which at the time of creating them he could not foresee would lead to such consequences. He was not quite sure that he understood correctly that part of the Bill where reference was made to the amount of burden to be thrown upon the person who should succeed in fee-simple. By the 21st clause they were told that the tax was to be charged according to the value of an annuity equal to the annual value of the property, and in another part that was to be charged as an annuity of ninety-five years. The only clause where the successor in fee-simple was mentioned, was the 27th, relating to corporations. Take the case of an estate of 50,000l. a year, and suppose it inherited from a person not immediately connected with the successor, and suppose the possessor to come into possession of it at the age of twenty-five, it would be no slight deduction to have to pay in the first four years 85,000l., which would be the tax, which, under the circumstances he had mentioned, would have to be paid to the Chancellor of the Exchequer. And this might be repeated, moreover, toties quoties. He ventured to doubt the answer given by the noble and learned Lord as to the rule for future successions. His own interpretation, of course, was worth nothing; but he had consulted persons well qualified to judge, and their opinion was, that the original liability—the original absence of relationship in the first instance, would fall upon every subsequent successor, inasmuch as each successor would be held to take, not from his immediate predecesor, but 717 from the person who instituted the original settlement. Every subsequent relationship would, therefore, be traced to the person who originally formed the entail, and in proportion to the relationship which he bore to his immediate successor, so would the tax be rated for all time to every person succeeding for ever after. There were many such cases as this in Scotland; he knew of a property there which had lately been newly settled, in the first instance, upon a distant relative, and, if his interpretation of the clause were right, that property in all time to come would be chargeable with the heaviest rate of duty, even if it succeeded for twenty generations in an unbroken line from father to son. Where was the justice in saying that one entail should for all generations pay 1 per cent, while another in a neighbouring county should pay 10 per cent, in consequence of the relationship of the parties? If the interpretation of the clause were not such as he had stated, then he supposed the Government would not have any objection to insert words stating that such was not the intention of the Bill; but if he (the Earl of Derby) did not mistake, a proposition had been made in the other House of Parliament to meet the difficulty, which met with the opposition of Her Majesty's Government, who, by a small majority, succeeded in rejecting that interpretation of the measure. The first Amendment which he should move would be in this clause, to leave out the words "past or," so that the clause would run—"Every future disposition of property." If their Lordships rejected this Amendment, it would be idle to propose similar Amendments in the succeeding clauses; but if they consented to it, it would be necessary for him to propose similar Amendments with regard to the succeeding clauses, so as to make them consistent in spirit. If he were successful in persuading their Lordships to introduce these words, though it would not affect his opinion of the abstract impolicy and injustice of the Bill, yet it would considerably mitigate those insuperable objections which he now felt to the Bill in its present form, as inflicting the grossest injustice upon innocent parties.
§ The EARL of ABERDEENbegged to make a few observations on the Amendment which had been moved by the noble Earl. In the first place, he must observe that he was still unable to understand the course which the noble Earl had taken. 718 The noble Earl (the Earl of Winchilsea) who had spoken early that evening spoke with perfect consistency; he denounced the Bill as iniquitous, odious, and detestable, and spoke of the measure in terms scarcely less qualified than those with which the noble Earl who moved the Amendment had stigmatised the Bill; and he declared that he would have opposed the second reading. The noble and learned Lord opposite (Lord St. Leonards), complained that he had no opportunity of voting against the second reading of the Bill; he (the Earl of Aberdeen) did not know what opportunity the noble and learned Lord desired, but it appeared to him that the noble Lords opposite had had an ample opportunity of doing so, and if they meant to be consistent they ought to have acted upon it; and if the noble Earl (the Earl of Winchilsea), who had only lately appeared in the House, had been present, they would, he was sure, have been compelled to act upon it. But what was the reason which the noble Earl (the Earl of Derby) assigned for not doing so? The noble Earl said that this measure was "the corner stone and foundation of the financial system of the year;" he said that the whole Budget and financial arrrangements of the year depended upon this tax. He said so truly, and he assigned that as a reason for not proposing to oppose the second reading of the Bill, in order that he might not by so doing destroy "the corner stone and foundation of the financial system of the year." He could understand that reasoning, and agree in it if the alterations proposed by the noble Earl were consistent with the preservation of the edifice which he had described; but as this first Amendment would totally destroy the whole building, he would leave their Lordships to say what credit for sincerity and tenderness he should get when he declared his desire to preserve this "corner stone and foundation." So far as he (the Earl of Aberdeen) understood it, the practical effect of the Amendment of the noble Earl would be this, that for the first year the revenue would not receive one farthing from this tax, and that hereafter, in regard to all settled property, it would postpone the tax for another generation—for thirty years, or it might be fifty years—and that was what the noble Earl called preserving "the corner stone and foundation of the financial system of the year." The noble Earl must be aware, although he might declare and affect great regard 719 and tenderness for the smaller proprietors who would be affected by this measure, that, in point of fact, the settled estates were altogether those of the considerable and large proprietors of the country. The noble Earl must know that the middle classes of the country rarely made such a settlement as was called creating an elder son. The evidence of the witnesses examined before their Lordships' Committee, some years ago, in reference to the burdens upon land, showed most clearly, that in nine cases out of ten the wills of persons in the middle class of life were so made as to subject the property to the incidence of the legacy duty. Therefore the persons for whom the noble Earl professed such tenderness were, in point of fact, at this moment, liable to the legacy duty, in consequence of the disposition they made of their property, in nine cases out of ten. It was, therefore, true, as the noble Earl (the Earl of Winchilsea) who had spoken early in the debate said, a matter which particularly affected the interests of "the bold Barons;" and to do them justice, judging from appearances, they seemed disposed to act upon the principles which actuated the Barons of old in the preservation of their own feudal exemption from the burdens borne by the rest of their fellow countrymen. It is the object of this Bill to apply to these bold Barons the same system of taxation which is applicable to the rest of the community; and it is in that sense alone that the tax can be said to be popular. It was perfectly true as stated by the noble and learned Lord on the woolsack, that although no tax could be positively popular, yet popularity might attach to the principle of applying a tax equally to all classes. It was all very well to say that the tax was not well understood in the country, and that that was the reason why no petitions had been presented against it; but if it had been possible to get up petitions against it, there would have been found persons well able to enlighten the people on its injustice; and if the want of that communicated knowledge had been the real cause of the abstinence from petitioning, no one need doubt there would have been a plentiful crop of petitions by this time. The noble Earl who spoke early in the evening, accounted for the absence of petitions against the tax by saying, that the people had no confidence in Parliament. It was singular, however, that this want of confidence should operate in the manner described by 720 the noble Earl as regarded the succession tax alone. There was now lying before him a return of the petitions presented to the House of Commons during the present Session up to the 15th of July, from which it appeared that while whole pages were filled with petitions against almost every tax it was possible to name, not one had been presented against the succession tax. Might he not therefore say, if it were a contradiction of terms to say that any tax was popular, that the absence of petitions against this tax proved that there was a general opinion that it was just? The short answer he had to make to the noble Earl opposite when he said that he did not oppose this Bill on the second reading, because he could not think of destroying the corner stone of the financial scheme of the Government, was this—that his first Amendment totally overthrew the whole structure; that if it were carried it would prevent the tax having any profitable existence until a period so remote that it would be impossible to calculate upon it. The noble Earl had referred to the practical and parliamentary effect which would be produced by the adoption of his and the other Amendments proposed, which would, in fact, almost remodel the Bill throughout. Now he (the Earl of Aberdeen), without wishing to undervalue any of their Lordships' privileges, or to interfere with their due exercise, must say that since the assertion by the House of Commons of their exclusive right to originate and conduct Money Bills through Parliament, no proceeding in the least degree similar to that now proposed had ever taken place. Only the other night a noble Friend of his submitted to their Lordships a proposition respecting the income tax which he (the Earl of Aberdeen) thought very ill-judged and injudicious. Still it was possible that the House of Commons might have assented to that, because it would not have altered by a single farthing the produce of the tax, but merely referred to the mode of its collection; and the other House, in 1826, did actually agree to certain alterations and amendments made by their Lordships in Mr. Canning's Corn Bill, because they did not affect the amount or produce of the tax. It was therefore just possible that the Commons might have agreed to the proposition of his noble Friend in regard to the income tax. But it was clear that the Amendments proposed in the present case would alter not only the mode of taxation, but 721 the essence and amount of the tax which was to be imposed. He did not know what the House of Commons might do in this case; but certainly it was his duty to declare that it was impossible for Her Majesty's Government to accede to an Amendment which would destroy the whole essence and productiveness of the tax. The objection on which the noble Earl (the Earl of Derby) chiefly relied was untenable. The noble Earl denounced what he conceived to be the injustice of a tax wheel would affect existing settlements; but their Lordships must perceive that almost every tax that was imposed affected the existing interests of parties to whom no notice had been given. Nay, this very Bridget contained a strking instance of this. Parliament had this year increased the duty upon Scotch and Irish spirits. Now, a Scotch distiller might have engaged to furnish a given quantity of spirits at a price regulated by the old law, of the alteration in which he had no notice; and he would be bound to fulfil his contract, even at the risk of ruin, under the new law. The principle was exactly the same in that as in the present case. But then the noble Earl said that Her Majesty's Government had imposed this tax for the purpose of supplying a deficiency which they had themselves created. But let him ash the noble Earl why, if he thought this tax so abominable, so oppressive, so injurious in every respect, he had consented to those remissions of taxation which the Government had proposed? Was it that he fount it less agreeable, and perhaps less popular to contend for the preservation of an old tax, than to oppose the imposition of new one. It was true that a noble Friend of his, whom he did not now see in his place, had proposed to defer for some time the Bill repealing the soap duty. [The Earl of DERBY: So did I.] True; but not because of the alleged injustice of the tax by which the deficiency, caused by the remission of the soap duty, was meant to be supplied. The argument advanced for deferring the repeal of the soap duties was, that it was desirable not to diminish our fiscal resources at a moment when war might break out. He (the Earl of Aberdeen) certainly thought that a very insufficient reason for depriving the people of the benefit that might have accrued from the repeal of the duty on soap; but he was quite willing to leave to the House of Commons to provide for the prosecution of our wars. But further, although the noble 722 Earl denounced this tax as so abominable, he (the Earl of Aberdeen) could not help thinking that the late Government contemplated the imposition of a tax founded on the principle of a tax on successions, although not perhaps precisely in the same form as that contained in the Bill before the House. In truth, the fact that they did so was announced more than once—
§ The EARL of MALMESBURYNo, no; I will explain that.
§ The EARL of ABERDEENVery well. He did not say that the late Government had such a measure actually prepared; but he was warranted in saying that they had considered the principle of an imposition of a tax upon successions. It was always the custom to refer to Hansard as a species of authority in these cases, and in that record he found that on the 3rd of December it was stated in another place—
§ The EARL of DERBYI rise to order. It certainly is frequent that references are made to Hansard, and it is also a practice more honoured in the breach than in the observance to comment upon debates said to have taken place in the other House. But I can save the noble Earl some trouble, and prevent him from committing an irregularity in referring to reports of what is said to have taken place in the other House of Parliament, by simply assuring him,, upon my own knowledge, that no proposition nor scheme for imposing a tax on successions was at any time submitted to my consideration, or to the consideration, as far as I know, of any single member of the Cabinet of which I was the head.
§ The EARL of ABERDEENwas understood to intimate that, although the noble Earl opposite had risen to call him to order, his own remarks were not strictly in conformity with the rules of the House.
§ The EARL of DERBYI beg pardon. I was strictly in order. I spoke to order on the part of the noble Earl, who was, I thought, about to read a newspaper report, of what he supposed to have taken place during the present Session in the other House of Parliament; and, with all due respect to the noble Earl, I contend that to do this is a breach of the orders of your Lordships' House.
§ The EARL of ABERDEENUnquestionably, according to the strict letter of their Lordships' rules, it was a breach of order, and he asked pardon of the noble Earl for having had the audacity to do anything so unparliamentary. No doubt it was out of ardor to refer to the proceed- 723 ings of the other House of Parliament; but still he believed that any noble Lord who addressed the House frequently must sometimes be guilty of that offence. The noble Earl opposite had informed the House that his Government did not intend to propose the imposition of a succession tax. Well, that might be so; but still, as the extract which he held in his hand was very short, he would take the liberty of reading what he had read in a public paper. This formed part of a speech which was afterwards published by authority, and therefore no longer rested on a newspaper report. On the 3rd of December last the late Chancellor of the Exchequer was supposed to have said—
At the same time, we have not neglected carefully to examine the question of the stamp duties and the probate duties; and we think it not impossible to bring forward, on the right occasion, a duty on successions that will reconcile contending interests, and terminate the system now so much complained of."—[3 Hansard, cxxiii.]He had read from what he conceived to be the most authentic record of what was said; but another record, it was true of a more ephemeral character, but also of high standing, had precisely the same passage, except that the concluding words, "the system now so much complained of," were changed into "the injustice so much complained of," This was not all. On the 16th December he found by the same record that the late Chancellor of the Exchequer was supposed to have said—We had to consider the whole question of the stamp duties with reference to those real burdens upon land—upon the transfer of land, which must sooner or later be dealt with; and a question of the utmost difficulty, which must also not long be neglected—the question of the legacy and probate duties. We had to consider whether it was possible to propose to Parliament a duty on succession, which, in connexion with the total reform of the burdens on the transfer of land, would be an equitable and just settlement of the question, and one which was for the welfare of all classes."—[3 Hansard, cxxiii. 1651.]He did not say that the late Government were prepared to bring in a Bill like the present, but, looking to all that had passed, he was justified in saying that they were prepared to consider the subject of such a tax as not of that singular atrocity which the noble Earl now represented it to be. That was all he meant to imply by the extracts he had read. They had only now to deal with the first Amendment which had been proposed by the noble Earl, and 724 he should not, therefore, enter upon all the points to which he had adverted in his speech. He apprehended however, that the noble Earl was completely mistaken in the case he had put with respect to the Scotch entails, and had, with reference to that point at least, fallen into a complete mare's nest. Most of the cases put by noble Lords opposite were singularly extravagant; but this case was still worse, for it was inconsistent with the facts. The noble Earl had supposed the case of an entail being settled by a stranger, and of the heirs for twenty generations consequently continuing to pay the 10 per cent duty upon each descent. It should, however, be recollected that each heir in a Scotch entail succeeded as the owner in fee-simple, except in as far as was provided by the special articles of entail. It was quite true too that of old a Scotch entail might endure for ever; but a father and son could now as in England cut them off; and they must therefore be very queer people who chose to go on paying the heavy succession duty for twenty generations, when they could avoid it by cutting off the entail. The proposals of the noble Earl opposite if acceded to amounted to nothing else than this—it was an endeavour to do that in Committee which, for reasons best known to themselves, he and the friends who acted with him did not attempt to do on the second reading—namely, to effect the destruction of the Bill. As such, he regarded this Amendment; and if they carried it, it would then be for the House of Commons to deal with the Bill as they thought fit.
§ The EARL of HARDWICKE,as a Member of the late Cabinet, denied having heard from any Member of the Government a suggestion for the imposition of a duty on successions. He felt quite as much as noble Lords on the opposite side of the House that strict justice was the most important feature in the taxation of the country; and if that sort of justice had been observed throughout the whole of the taxation of this country, the present Bill would not have been introduced. He had not voted against the second reading of this Bill, because he could not oppose a measure which proposed to impose a fair tax upon successions. But although he had given his assent to the principle of levying duties upon successions, he was not bound to agree to the details of this measure:—he reserved to himself a perfect right to deal with them as he might 725 think best. The noble Earl at the head of Her Majesty's Government had spoken in a manner which he (the Earl of Hardwicke) could not quite understand. The noble Earl was pleased to speak of the "bold Barons" of old, as if he insinuated that their Lordships wished to act unjustly towards the people of this country. Such language proceeding from the lips of the Prime Minister of the Crown was not very respectful to their Lordships—nor was it very much calculated to preserve the institutions of this country. He was convinced that there was no set of men so desirous as their Lordships to do justice; and he believed that there was not a more liberal body of men, nor a more liberal Legislature in Europe, than that which the noble Earl had sneeringly called the "bold Barons" of England. He (the Earl of Hardwicke) regarded the clause under discussion, and that which followed, peculiarly unjust to the persons to whom it was intended to apply. What justice was there in taxing a settled estate with a devised estate? A settled estate was, in many instances, tied up under very many Acts of Parliament, forbidding the borrowing of money, or the sale of a single acre; and how, he would ask, could they deal with that estate in a similar manner to an estate which had been devised free to sell, and free to raise money upon? Believing the proposal contained in the Bill to be unjust, he should vote for the Amendment for striking out the words.
§ EARL GRANVILLEsaid, he would readily admit, after the statement of the noble Earl opposite, that the subject of a succession tax had never been discussed in the Cabinet—that there could be no doubt it had never been a subject of discussion there; but in reference to the words quoted by the noble Earl (the Earl of Aberdeen) as having been spoken in the House of Commons by the late Chancellor of the Exchequer, the noble Earl, by contradicting them, showed that he could not have been present at the discussion; for he (Earl Granville) could appeal to a noble Lord on the opposite side of the House, whom he remembered seeing under the gallery of the House of Commons when that speech was made, as to the fact of the passage referred to by the noble Earl having been spoken, and as to its having been loudly applauded by those persons in that House who were most anxious to have a measure of the description now before their Lordships passed into a law, Still, as the de- 726 claration then made by Mr. Disraeli was, at the time, neither contradicted in their Lordships' House—nor at the Mansion House, which was sometimes found convenient for the purpose of contradiction—and as it was, in fact, generally understood that that right hon. Gentleman and the Government to which he belonged considered that at some time or other such a measure ought to be proposed, he (Earl Granville) thought their Lordships and the public had a right to assume that there was some foundation for what they had heard. He (Earl Granville) had, indeed, observed that there was not a very intimate connexion between the speeches and votes of Members of the late Government in that and the other House of Parliament. He (Earl Granville) thought that the noble Earl the other evening acted in a most statesmanlike and public-spirited manner, when he rose and deprecated any premature discussion on foreign affairs, at the same time expressing the strongest wish that the same course should be taken in the House of Commons, and asking the noble Earl at the head of the Government to use his influence to prevent any such discussion taking place; and he (Earl Granville) was sure that many noble Lords were, as he himself was the very next morning but one, surprised to learn that the right hon. Gentleman who was supposed to be the leader of the Opposition in the House of Commons had pressed that House to come to an immediate discussion on that question. But he (Earl Granville) admitted that it was not fair to consider the noble Earl bound to everything that might be said by his political adherents in the other House of Parliament; but he could not avoid attaching weight to the statements of the Finance Minister, when detailing the intentions of his Government on finance to an assembly most anxiously listening to every detail. The noble Earl who had last spoken (the Earl of Hardwicke) had charged his noble Friend (the Earl of Aberdeen) with having excited feelings against those who voted against the Bill, by what he had said about the "bold Barons." He (Earl Granville) could assure the noble Earl that no taunt was thereby intended by his noble Friend. It must be obvious to their Lordships that his noble Friend only quoted an expression which had been previously used by another noble Earl (the Earl of Winchilsea), who had taken a strong course in denouncing the Bill. With regard to the Amendments the noble Earl 727 opposite was about to propose, he (Earl Granville) must say he entirely agreed with the argument of his noble Friend at the head of the Government—that if their Lordships admitted the principle of the Bill by agreeing to the second reading, he could hardly conceive how they could alter those clauses on which that principle rested, after Government had made out their logical connexion with the original proposition. With regard to the noble Earl's objection to a tax upon settled property, and to what the noble Earl called the retrospective effect of the Bill, he (Earl Granville) thought it better to defer the consideration of that question until they came to the clauses particularly relating to it. The noble Earl had remarked upon the peculiar conditions in which he said the Government had placed the House, and stated that Her Majesty's Government were disposed to introduce a new doctrine into the House by asserting the impossibility of their Lordships making the slightest alteration in a Money Bill that came up from the House of Commons. Now, he (Earl Granville) would say, in the first instance, that that was not a doctrine held by Her Majesty's Government; and, in the next place, he would say that if it were so held by them, it would not be a new doctrine. He would read the opinion of Lord Chatham upon this point. Lord Chatham said—
Taxation is no part of the governing or legislative power. The taxes are a voluntary gift of the Commons alone. In legislation, the three estates of the realm are alike concerned; but the concurrence of the Peers and the Crown to a tax is only necessary to clothe with the form of a law. The gift and grant is of the Commons alone, the concurrence of the Peers and the Crown in the imposition of a tax being only necessary to clothe it with the form of law.He (Earl Granville) believed he stated the opinion of all his colleagues when he said that they did not agree with the doctrine there laid down—that they did not agree with the doctrine of non-interference on the part of their Lordships' House, nor did they deny the right of their Lordships, if they thought proper, to interfere with or make alterations in a Money Bill. But what his noble Friend at the head of Her Majesty's Government had maintained was, that there never was an occasion in which it would be so unwise and so inexpedient for their Lordships to follow any such course as the present. When the noble and learned Lord (Lord St. Leonards) disclaimed any personal feeling in this mat- 728 ter, he (Earl Granville)entirely went with him. It was worthy of remark, that not twelve Peers in their Lordships' House had any personal interest in the matter; and he believed if their Lordships were to look over the Votes on this question tomorrow morning, they would find that; very one of those persons who would be actually affected would be actually those who would support the Government proposition. But this was an argument which it would be an insult to their Lordships to use for one moment. If, however, this Bill should be rejected, the country would think that their Lordships had acted not indeed from personal but from class feelings and prejudices. It had been shown; had the present position of the small landed proprietor under the present legacy tax was a very bad one, and that he would be much better circumstanced under a succession tax which limited the assessment to the life interest that he possessed in the estate. It was, therefore, on the larger estates that this tax would most heavily fall; though not equally with, but about 50 per cent as compared with the tax on personal property. He knew it was very idle for a person like him to attempt to use arguments against such an opponent as the noble and learned Lord who first spoke that evening (Lord St. Leonards); but what he (Earl Granville) rested his case upon was, first of all, that no measure of any importance had ever passed both Houses of parliament, without there having been some persons on the Opposition side, eminent in every way, who had conjured up imaginary grievances and difficulties, which in the result had proved to be entirely without foundation. But he relied still more upon the fact that if there was the slightest foundation for the prophecies of the noble and learned Lord, there would have been a double foundation for those prophecies fifty-seven years ago, when the tax on personalty was imposed. But noble Lords, while arguing as to the manner in which this measure would affect property, entirely forgot that large estates held both in this country and in Ireland, as lease-told instead of as freehold, must have had to endure this tax; during those fifty-seven years, however, none of those disadvantages and grievances which had been described had arisen; no litigation had taken place such as had been predicated would arise from this measure. But it was the act that during the last fifty-seven years he incidence of this tax upon these estates 729 had not been followed by any of those difficulties or any of that litigation which were anticipated as the result of its imposition on freehold land; and he thought, therefore, that he might venture to ask their Lordships to consider these fact well before they allowed themselves to be guided by the advice or the prophecies to which the noble and learned Lord had given expression on the present occasion.
§ The DUKE of CLEVELANDcomplained that no opportunity had been afforded to their Lordships for sufficiently considering the nature of the several provision of this Bill between its introduction into the House and the second reading. Had be on that occason known its tendency and probable effects, he should certainly have opposed its being read a second time Both in the year 1842 and 1846 ten days elapsed between the Bill on the income tax being introduced into their Lordships' House and being read a second time.
§ The EARL of ABERDEENbegged to assure the noble Duke that the arrangement for the second reading of the Bill was made in concert with the noble Earl opposite (the Earl of Derby).
§ The DUKE of CLEVELANDadmitted that all persons ought to pay a like tax on property, no matter from whatever source their income might be derived; but there existed a strong feeling against the income tax altogether, and the Chancellor of a Exchequer was only able to carry it by this sop in the pan—the succession tax. His objection to the proposed tax was on the ground of the inequality and the unfairness of manner in which it would operate. He was not one of those who would put forward factious objections to any measure that the Government might propose; but in this instance he felt himself called upon to support the Amendment of his noble Friend.
The DUKE of ARGYLLsaid, he would remind the noble Duke that time injustice, of a tax must be considered in relation its comparative incidence. If a servant were left a small annuity charged upon estate, and had to pay 10 per cent, being a stranger, whilst he found the estate itself passed to the next heir without any tax, he would consider that comparatively an injustice; and as it must be admitted that such an inequality and injustice existed the operation of the existing legacy duties, it was to rectify the sense of that injustice which had long existed, and was gradually 730 growing, that Her Majesty's Ministers had brought in the present measure. He thought he could show their Lordships that two great misunderstandings ran through this debate. The first had, perhaps, been increased by the habit of speaking of this Bill as extending the existing legacy duties to real property, whereas it extended a certain proportion of the principle, but not the real burden. The noble Earl who moved the Amendment had repeated over and over again that they were about to lay the same burden upon real as upon personal property. That was a grave mistake, for instead of laying the same burden, it was a burden of less than one-half that borne by personal property? That great difference was made on account of the rateability of landed property to local taxation; and the question was, could they carry that difference further? Supposing two properties, one liable to rates and the other not liable to rates, the natural thing was to deduct the rates and charge the tax on the residue. But time Government proposal went further than that—they not only deducted the rates and all outgoings necessary to the management of landed property—which were not deducted under the income tax—but, in respect to those feelings of affection which attached to landed property, in respect to the comparative difficulty of selling bits of land, to selling portions of stock, and not wishing to compel the breaking up of landed property against old family feelings, the duty was not to be raised upon the capital value, but on the life interest only. He did contend that was a great consideration, which was not sufficiently attended to by noble Lords opposite, nor by his noble Friend on the cross benches, who had made a most able and most moderate speech against the principle of the Bill. But the distinction could not be carried further. They could not say, because the incidence of local taxation was unfavourable to landed property, landed property should be altogether exempted from those taxes which fell upon other persons succeeding to property. He begged to direct their Lordships' attention to another point. The noble Earl opposite, the other night, and again to-night, made a distinction between personalty and realty, as though that distinction entirely corresponded with that between property subject to local rates, and property not subject to local rates. The noble Earl must be perfectly aware that those two definitions were not coincident. Under the existing law there 731 was a vast amount of property technically rated as real property which was liable to all the incidents of personal property. Leasehold property was treated as personal property, and it paid the full amount of the legacy duty, on the capital value, and not on life interest—but it was also subject to local taxation. What was the effect of the Bill of Her Majesty's Ministers on this large class of property? It effected an enormous reduction of taxation. Instead of taxing it, as now, on capital value, in future it would be taxed on life interest alone. He appealed to their Lordships whether that great feature had been sufficiently brought under their notice, and whether it had not been slurred over by all who had spoken on the opposite side of the House? With regard, then, to a large class of property, all leasehold property, this Bill effected enormous relief as compared with the effects of the legacy duty under the existing law. He wished to say a few words on the special Amendment proposed by the noble Earl. He rejoiced that the noble Earl had elected to take a division on this Motion, because it was one which he was satisfied could not for an instant bear a close investigation. He considered that a great deal of confusion and misapprehension had been caused by speaking of the clause under discussion as a retrospective clause. It was not a retrospective clause. On the contrary, it would not become retrospective unless the Amendment of the noble Earl were carried. [A. laugh.] The noble Earl laughed; but what was meant by a retrospective clause? It could only be retrospective as regarded the action of the intended law, and that action was only to charge persons coming into possession of property by inheritance. It would be perfectly fair to say it was a retrospective clause if the duty were imposed upon any one who had already succeeded to the possession of the property; but it did no such thing, and it was not retrospective, therefore, as regarded the incidence of the tax which was only applicable to those persons who for the future should inherit possessions. What the noble Earl meant by calling it a retrospective clause was not as regarded persons, but as regarded title deeds of existing families. That was a totally different thing, and the answer to it was, that no tax could be imposed by Parliament which should not in that sense be retrospective. Let them take the case of the income tax, to the imposition of which the noble Earl was himself 732 a party, and see how it would tell on settled property. He would take the case of a person inheriting an estate of 5,000l. a year without incumbrances. The noble Earl started with horror at the idea of imposing on the future possessor of an estate of 5,000l. a year unencumbered, an annuity for four years of something like 1781.; but he had consented to charge for an indefinite period, probably in perpetuity, an annuity of 145l. 16s. on the same property, under the name of income tax. What, then, was the difference of principle in taxing an estate of 5,000l. a year under the income tax and under this tax? In both cases they commuted the tax into an annuity; and the only difference was that in the one case the annuity would certainly terminate in four years, and in the other, the income tax, under the arrangement contemplated by the noble Earl, would probably last for ever. He confessed, therefore, that he could not agree with the noble Lord opposite, that the continuance of the income tax would be preferable to the adoption of this measure. With regard to settlements, he could not see why the present measure should not be applied to that description of property; and he did not see any injustice in making it subject to a succession duty. In looking at that branch of the subject, noble Lords opposite had been led away by the name of the thing; but surely it was justifiable, if it were admitted that there was no injustice in making such properly liable to income tax, to substitute a tax which was less onerous. He saw no justice, no common sense, no argument, in any distinction, for surely if persons were entitled to succeed to settled property free of all future taxes, they must be entitled to receive the property free of income tax as well as of succession duty. Noble Lords opposite were carried away by the mere name of the thing—a duty on succession to property; but he did not see any difference between the income tax and this duty. Let them consider the effect of the Amendment if it were carried. Under the present legacy duties, there were two great classes of property exempt, settled personalty and realty, whether settled or unsettled. The Amendment would have the effect of freeing from this tax during a whole generation all existing settled personal property. There was another grave misapprehension as to the practical effect of this measure, in the speeches of noble Lords opposite, 733 which had perhaps been assisted by the language which had been employed by some noble Lords on his side of the House. It was not correct to say this Bill was chiefly aimed at, or would chiefly affect real property. There was an immense amount of personal property which escaped taxation under cover of deeds of gift, and under various forms of law, made really for the avoidance of the existing tax. One of the chief objects of this Bill was, to levy a tax on that species—personalty. Whatever might be said with regard to the incidence of local taxation on real property, whether settled or not settled, that argument would not apply to settled personalty. It was not liable to local taxation, and there was not a shred of argument for exempting it from the existing legacy duty. In the calculations of the Chancellor of the Exchequer, he set first and foremost the amount which he expected to realise by this tax from that immense amount of accumulating capital arising from industrial pursuits and the enormous success with which our manufactures had been conducted, and which, under the existing law, escaped the incidence of the tax altogether. But the tax could not be extended to settled personalty without being extended to settled realty; and if they took the life annuity, and did not levy upon the capital value, he did not know why it should not be so extended. Having said so much, he must emphatically deny the assertion of the noble and learned Lord who opened this debate (Lord St. Leonards) that this was a measure gratuitously brought forward by Her Majesty's Government. He contended, on the contrary, and asserted distinctly, that the immediate necessity for this measure had arisen from the financial policy of the late Government. He believed his noble Friend the late Secretary of State for Foreign Affairs (the Earl of Malmesbury) gave, the other night, a very fair and straightforward account of their position. He agreed with him that the late Government were bound in honour to make certain proposals, on which they were ultimately defeated. No one rejoiced more than he did that when next they returned to power, which, in the ordinary vicissitudes of party warfare, would probably occur, they would return unencumbered with former opinions, which drove them into the adoption of mistaken principles of finance; but he would repeat that it was the reckless, unweighed, rash 734 proposal of the late Government with reference to the income tax which imposed on Her Majesty's present Government the necessity of immediately proposing this succession duty. He did not say that the succession duty could, in any event, have been long delayed; he believed there was a growing feeling in the country of the inequality in the incidence of the legacy duty, between personal and real property, and that whatever course the noble Earl opposite had taken, this tax must, in a very few years, have been proposed and carried—levied then perhaps not on life interest, but on capital value. But with regard to the immediate necessity of dealing with this measure, it was attributable to what he should always call the rash and reckless proposal of the noble Earl as to the differentiation of the income tax—
§ The EARL of DERBYbegged to repudiate altogether that word "differentiation."
The DUKE of ARGYLLHe could not use the word "discrimination" because that word implied justice; but as there was no justice in the scheme of the late Government with regard to the income tax, he used the word "differentiation." The noble Earl late Secretary of State for Foreign Affairs said, he would prefer the income tax to the succession duty; but perhaps he had not gone into the figures. Taking an estate of 5,000l.a year, the income tax, without any allowance for repairs, would amount annually, at 7d. in the pound as long as the tax should exist, to 146l. some odd shillings; but the succession duty, supposing the estate went in the direct line, as was most frequently the case with landed property, would be 178l. only for four years. He contended, therefore, if by this plan there was a chance or hope of getting rid of the income tax—and without it to get rid of that tax was impossible—Her Majesty's Government had proposed a measure which would not tell against, but in favour of the landed interest.
§ LORD ST. LEONARDSsaid, he wished to make an observation on the speech of the noble Duke. The noble Duke had stated that he could not comprehend the retrospective operation of this measure, and had endeavoured to show how much preferable this tax was to the income tax. Now the noble Duke had entirely overlooked that the Government were about to favour the country with both. Then, as to the retrospective operation which the noble 735 Duke denied—suppose an estate settled on a father for life, and remainder to his son, the father's life interest was not charged, but the son's interest was; yet the interest of the son was as much property as that of the father, although not actually in possession, but only in reversion; it could be sold or charged, as if it were so, and was practically property, which was vested in him at this moment, and which would be taxed by the Bill before their Lordships, coming into operation as it would long after the title to that property had vested. The noble Earl at the head of the Government had stated that there was a very small amount of personal property under settlements in the hands of the middle classes; whereas the noble Duke had avowed that the first great "haul" of the Chancellor of the Exchequer would be upon the middle classes—upon the industrial interests of the country.
§ The MARQUESS of LANSDOWNEwished to remark on the fallacy of the statement of the noble and learned Lord, that the income tax and the succession tax were both to act concurrently. Now the whole character of the scheme of finance, of which this Bill was the most important feature, was, that they should not act concurrently, but that as the proceeds of the succession tax came by degrees to be realised, year by year, the income tax should descend, and be finally extinguished; and that the very action of the succession tax should ultimately make provision for the abolition of the income tax. He was not enamoured with this tax, nor with the income tax; but the adoption of both was founded on the belief that it was not expedient to carry indirect taxation further; and if they did not carry indirect taxation farther, where was it more natural to place positive and direct taxation than on the shoulders of those who, under the income tax, paid for the enjoyment of an income during life, and who, in virtue of the same state of civilised society in which they were placed, were enabled to exercise that other great privilege of an advanced state of society, namely, that of succession to property? and what was more natural than to call on them to pay that tax at the moment when the succession was enjoyed? He had heard with surprise the supposition entertained that this tax was aimed at any particular class in this country:—on the contrary, he conscientiously believed that it had been aimed at all classes. He did not consider that the position of the owners of land would be impaired by ren- 736 dering them amenable to the same law as their fellow subjects: on the contrary, should their Lordships give it a ready and willing consent, he believed it would place them on a higher eminence and a broader foundation, as evincing a disposition to bear an equal burden. It was not to exemptions of any sort that the great families owed their present position. Did any man suppose that the Duke of Norfolk, who stood at the head of the Peerage, had attained that position of importance and dignity from having escaped the legacy duty? No: the fortunes of that noble person, and of every other great proprietor in this country, rested on the prosperity of the country, and its free and glorious institutions. Would the great families gain nothing by this system of finance? He would assert that the great proprietors would gain infinitely more than the value of the legacy duty, or than all the duties which their Lordships could impose upon them:—they would gain that which it was the object of this system of finance to maintain—that which would alone render the proposed system justifiable—the means of enlarging the prosperity, the industry, and production of the country. And who that had seen the experience of the last three or four years could doubt that, upon the estates and position of landed proprietors, great or small, the increase of that production and industry had not been materially telling in a way infinitely more important and compensating than any privations or taxation which had been imposed upon them? He had been told that this measure was to be objected to because it was retrospective in its character. Why, all taxation must from its very nature, if it touched land, be retrospective. The income tax was retrospective—the stamps were retrospective which imposed heavy duties upon mortgages, the natural result of settlements. But was he to be told in that House, that, because landed and settled property were affected by a tax, it was, therefore, not to be imposed? And was he to be told this in a House which not long since passed a poor-law tax for Ireland?—a tax which overturned and affected settlements to an immense extent—ten times more than the tax proposed. The poor-law tax was indeed confiscation; it deprived many heirs apparent of that income which they were justified in expecting. But in passing that Bill, he had never heard it argued in that House that because settlements would be effected by it, that therefore all settled property ought to be ex- 737 empted from its operation. It would be in the power of Parliament ultimately to make its selection, and to decide whether they would adopt this tax or continue the income tax; and in the meanwhile the revenue derived from the tax would relieve the people from burdens which affected the industry of the country. He considered the system of finance of which this Bill formed a part, to be sound, because, while it left the wealth and property of the country at full liberty to increase, it at the seine time gave security that ultimately only one great direct duty should be preserved.
§ On Question, their Lordships divided:—Content 68; Not Content 102: Majority 34.
738| List of the CONTENT. | |
| DUKES. | Stradbroke |
| Cleveland | Talbot |
| Montrose | Verulam |
| MARQUESSES. | Wilton |
| Bath | Winchilsea |
| Downshire | |
| Exeter | VISCOUNTS. |
| Salisbury | Castlemaine |
| EARLS. | Gage |
| Aylesford | Hereford |
| Beauchamp | Strangford |
| Bathurst | BARONS. |
| Cardigan | Abinger |
| Clancarty | Alvanley |
| Delawarr | Boston |
| Dartmouth | Bateman |
| Derby | Berners |
| Donoughmore | Calthorpe |
| Enniskillen | Clarina |
| Glengall | Colchester |
| Hardwicke | Colville |
| Huntingdon | Crofton |
| Harewood | De Ros |
| Leven | Downes |
| Longford | Dynevor |
| Lonsdale | Grantley |
| Macclesfield | Hastings |
| Malmesbury | Polwarth |
| Manvers | Rayleigh |
| Mayo | Redesdale |
| Mornington | Sandys |
| Orford | Southampton |
| Orkney | Sondes |
| Powis | St. Leonards |
| Rosse | Tenterden |
| Sandwich | Walsingham |
| Selkirk | Wynford |
| List of the NOT CONTENT. | |
| The Lord Chancellor | MARQUESSES. |
| Archbishop of York | Breadalbane |
| Camden | |
| DUKES. | Donegal |
| Argyll | Headfort |
| Atholl | Huntly |
| Buccleuch | Lansdowne |
| Leeds | Ormond |
| Newcastle | Sligo |
| Norfolk | EARLS. |
| Roxburgh | Aberdeen |
| Wellington | Albemarle |
| Bessborough | Norwich |
| Bruce | Oxford |
| Burlington | Salisbury |
| Chichester | BARONS. |
| Craven | Ashburton |
| Clanwilliam | Beaumont |
| Devon | Broughton |
| Ducie | Byron |
| Durham | Blantyre |
| Effingham | Camoys |
| Fingall | Churchill |
| Fortescue | Colborne |
| Galloway | Cremorne |
| Granville | Cowley |
| Glasgow | De Tabley |
| Harrowby | Dacre |
| Haddington | Dufferin |
| Home | Erskine |
| Ilchester | Elphinstone |
| Kenmare | Foley |
| Kintore | Gardner |
| Lucan | Hatherton |
| Romney | Howden |
| Somers | Keane |
| Scarborough | Kinnaird |
| Spencer | Leigh |
| St. Germans | Lilford |
| Uxbridge | Lyttelton |
| Wicklow | Manners |
| Yarborough | Monson |
| VISCOUNTS. | Overstone |
| Canning | Poltimore |
| Enfield | Portman |
| Falmouth | Panmure |
| Hardinge | Rivers |
| Massareene | Say and Sele |
| Sydney | Stanley of Alderley |
| Torrington | Suffield |
| BISHOPS. | Truro |
| Hereford | Wharncliffe |
| Llandaff | Wodehouse |
| Manchester | Wrottesley. |
§ Amendment disagreed to.
§ In answer to an objection taken by the Earl of DERBY,
The LORD CHANCELLORstated, that in every past or future disposition of property by reason of which, upon the death of any person, any other person should become entitled to a beneficial interest, the case with respect to the duties to be imposed would be exactly the same upon real and settled personal estates as it now was in respect to bequeathed personal estate, including leasehold property; and each person interested in the succession would pay only upon the value of the capitalised income of his life interest. If the noble Earl should have 20,000l. settled upon him for his life, with a reversion to his son, and afterwards to his son's son, the noble Earl would pay upon his life interest, at the proper rate, his son would do the same for his life interest, and his son's son would pay the same upon the capital sum.
The EARL of WICKLOWsaid, it might be fair to tax a stranger who succeeded to 739 an estate 10 per cent, but it would be most unfair to tax the son who succeeded him more than 1 per cent.
§ Clause agreed to.
§ Clauses 3 to 9 agreed to.
§ On Clause 10, regulating the Duties of Successions,
§ The EARL of DERBYasked what was the intention of the Government as to corporations sole, with regard to which he supposed it would be necessary to bring in a Bill some time or other?
The LORD CHANCELLORsaid, that corporations sole were almost all ecclesiastical bodies, with regard to which there was not, strictly speaking, a succession of property. If ecclesiastical persons were paid by salaries, nobody would think of saying that they were liable to succession duty; but instead of salaries they had real estates, which devolved to them one after another, as their remuneration. Now all the Judges were paid by salaries, but up to a recent time the Master of the Rolls received great part of his emolument from a very valuable estate called the "Rolls' Estate." It would have been preposterous to treat the Master of the Rolls as liable to succession duty; and in like manner it appeared to the Government that ecclesiastical corporations were in such a predicament as to render it impossible to make their succession to property come within the meaning of this Act.
§ Clause agreed to.
§ Clauses 11 to 21 agreed to.
§ On Clause 22, providing that in estimating the annual value of lands, houses, &c., an allowance should be made of "all necessary outgoings,"
§ The EARL of MALMESBURYrequested the noble and learned Lord opposite to define the meaning of the words necessary outgoings." He wished to know if payments to stewards, and rates, were to be included within the term "necessary outgoings?"
The DUKE of ARGYLLsaid, it had been found impossible to enumerate in an Act of Parliament all the specific outgoings upon estates which would be included in the term. There were certain classes of deductions which might have been specified, but it had been thought better to leave this matter to the ordinary course of administration by the Commissioners.
§ The EARL of MALMESBURYasked if rates and payments to stewards were to be included?
The LORD CHANCELLOR,said, the 740 term would include all that was necessarily expended before the person managing his estate, whether he managed it himself or by his agents, could derive benefit from it.
§ Clause agreed to.
§ On Clause 23 (Rule as to Timber),
§ The EARL of DERBYobjected that it compelled those persons who should cut timber to the extent of 10l. in value to make a report to the Commissioners of all the circumstances connected with it, and if they did not do so they would be liable to certain penalties. The clause would be found to be one of great annoyance and vexation, and he hoped it would be omitted from the Bill.
§ Clause agreed to.
§ Clauses 24 and 25 agreed to.
§ On Clause 26 (Rule as to Manors, Mines, &c.),
§ The EARL of DERBYsaid, that this was an impossible clause. It provided that the principal value of a mine should be ascertained, in order that the duty might be charged upon it; without stating how it was to be ascertained. It was a simple and absolute impossibility to comply with the provisions of this clause. Then, if the value were ascertained, although the mine might be worked for 200 years, the owner was still charged with 3 per cent interest upon the value ascertained by this unknown process.
§ EARL GRANVILLEsaid, that within his own experience valuations of mines had been made for the purpose of letting them.
§ The EARL of DERBYsaid, that the ordinary manner of letting was, by the tenant paying rent according to the value of the coals which were obtained from them.
§ The EARL of HARDWICKEobjected to give the Commissioners power to value, which he considered a very serious proposal.
§ Clause agreed to.
§ Clauses 27 to 33 agreed to.
§ On Clause 34 (What allowances to be made for Incumbrances),
§ The EARL of DERBYwished to point out what appeared to him to be a gross injustice. According to this clause, if any incumbrance rested on a property placed there by a former proprietor, the reversioner was entitled to deduct that incumbrance from the value of the estate. But if the reversioner had himself anticipated 741 his income, and created this incumbrance, then, when he came into the property so diminished, he was to be taxed upon the use he had himself made of the property, and charged as if there was no incumbrance whatever. The consequence of this would be that land, which was originally worth 20,000l., but which was reduced by the incumbrance to 10,000l. would be taxed upon the original sum, which the reversioner would of course never receive. If he parted with the property, if he sold it, they could not subject him to the tax; but because he raised money upon it, and placed it under mortgage, he was not allowed to deduct that mortgage from the succession duty. He would not, in the present state of the House, trouble their Lordships with any Amendments, but he would repeat that this clause was grossly unjust in principle, and would be seriously oppressive in practice.
§ EARL GRANVILLEsaid, it was quite impossible to meet individual cases in a general Act of that kind, and without that clause the Bill would be comparatively of little value—it would be open to evasion. But he denied the injustice which the noble Earl attributed to it. Suppose he was about to succeed to a property worth 120,000l., and that he raised 100,000l. on it for the purpose of paying duty on 20,000l., would it be fair to exempt him for such a purpose from paying duty on the whole amount?
§ The EARL of DERBYsuggested that they should insert words limiting the operation of the clause in this respect to cases where incumbrances were created after the passing of the Act.
§ The DUKE of NEWCASTLEsaid, the Amendment was at variance with the whole principle of the Bill. There was not only the possible evasion of the tax to be guarded against, but he would take the case of a man who borrowed money upon security of land which he had on reversion, with which to go into trade; would any of their Lordships say that the mortgage which enabled him to go into trade ought to be exempted, when it was yielding him perhaps from 10 to 20 per cent? Then there was another case. Many landed gentlemen had borrowed money on the security of their estates, to embark in provincial banks; and he had no doubt that many gentlemen had raised money on their reversions. Now whether these speculations were successful or otherwise, surely they 742 ought not to be exempted from the operation of this Act.
§ The EARL of DERBYwould accept that very case in support of his argument. Suppose the man had raised money on the security of property, to embark in some mercantile concern, he would be taxed on the profits of that trade or business, and not only would he be made to pay income tax on the money raised, but he would have to pay the duty on the whole amount of his property, as if the money had not been borrowed, and he was thus taxed twice over.
The LORD CHANCELLORdenied that the noble Earl had made out his case. If a man with a reversionary interest in 10,000l. got some one to advance 5,000l. on that security and went into trade, he was not charged on that money; but when his father died, and he came into possession, he was charged on the whole amount of his property, because he had the benefit of the whole of it. If once they made an exception, because a person anticipated the enjoyment of his money, it was impossible to say where they would stop. There was at present in London an association called the Reversionary Fund Society, whose business it was to purchase up reversions under every possible contingency; and it was a singular thing that not a single word of complaint had been heard, nor a single petition presented from these persons, who were the only body likely to be practically affected by the Bill.
§ Clause agreed to.
§ Clauses 35 to 48 agreed to.
§ On Clause 49 (Production of Books and Documents),
§ The EARL of HARDWICKEasked, how it was proposed to secure the silence of the Commissioners with respect to the documents which were produced before them?
The LORD CHANCELLORsaid, that disclosure would be a misdemeanour, and punishable in the usual way by the Criminal Courts.
§ The EARL of MALMESBURYobjected strongly to giving a power to the Commissioners of compelling the production of title deeds.
The LORD CHANCELLOR,said, that in considering the arguments which had been urged against this power, a pang of fear had often crossed his mind that in prosecuting their legal prejudices, they ran the risk of losing sight of common sense 743 and common justice. The case of the Corporation of Newcastle, who had lost 7,000l. by the production of their title deeds, had been cited as an instance of the great hardships which such a power might inflict; but that was a case in which it had been discovered that the Corporation had been in enjoyment of funds which did not really belong to them. He would venture to prophecy, that if they had been talking of the Bill in 1863 instead of 1853, there would not at that period have been a single instance of the production of title deeds having been enforced.
§ Clause agreed to.
§ Clauses 50 to 53 agreed to.
§ On Clause 54,
§ The EARL of MALMESBURYasked, why the 19th of May had been fixed as the day from which the operation of the Bill was to commence? Was it the Chancellor of the Exchequer's birth day, or what?
§ The EARL of DERBYsaid, he had originally intended to propose a clause to limit the duration of the Bill to five years; and, though he had now relinquished that intention, he felt confident that the Bill as it stood, would not, as it professed in its preamble, form a part of the permanent revenue of the country.
§ Clauses agreed to.
§ Clause 55 agreed to.
§ Bill reported, without amendment; and to be read 3a on Thursday next.