HC Deb 05 March 1845 vol 78 cc325-64

On the Motion that the Speaker do leave the Chair to go into Committee on the Property Tax Bill,

Captain Bernal Osborne

said, that in rising to oppose this Bill, he hoped the right hon. Baronet opposite would not suppose that he was offering any factious opposition to it. But when he heard the noble Lord the Member for London and other hon. Gentlemen say, that they intended to support the measure, although they could not approve of it, he felt that he should not be doing his duty to his constituents if he did not oppose it on the present occasion. If he were only supported by one Member he should divide the House, and would, therefore, move that the House go into Committee on the Bill that day six months.

Mr. Muntz

begged the attention of the House for a few moments, while he explained the reasons why he was opposed to the principle of the right hon. Baronet of continuing the Income Tax. Although he had in the first instance voted in favour of it, circumstances were now, in his opinion, completely altered. He had voted for the Property and Income Tax on the ground that additional taxes were necessary, and because he felt satisfied at the time that any additional taxation on arti- cles of general consumption would be unjust. But the case was now different. The question now was not whether taxes should be imposed, but whether one or more taxes should be repealed; and the difference in the circumstances would, in his opinion, justify the difference in his votes. When he supported the original Bill, he expressed his objections to the tax on income on the ground of its injustice; and his opinion in this respect had been fully confirmed by what had since occurred. He had never met a single Commissioner under the Act who had not admitted that the injustice of the tax was quite evident, and that many people who had no income paid the tax merely to maintain a station in society. He did not oppose the tax in consequence of its being a Property Tax. On the contrary, he would willingly vote for its being quadrupled; but he objected to it as it now stood. Another reason why he objected to the tax was, that he considered that the House and the country were labouring under a gross misconception with regard to it, in believing that it would be removed at the end of three years. In this they were deceived. In his opinion the tax would be perpetual, and would descend not only to their children but to their grandchildren and great-grandchildren. He was inclined to admit that the country was in some degree prosperous, and that a certain amount of improvement had taken place. But the reason was evident. The right hon. Baronet had improved, to a certain extent, the condition of the industrious classes at the expense of the other classes. He had relieved manufactures by robbing agriculture. That was merely robbing Peter to pay Paul. What he wished to know was, who was to pay Peter? An hon. Member had said that the right hon. Baronet was a bird upon whose tail it was difficult to put salt. But the right hon. Baronet had succeeded in putting salt on their tails. He made these remarks with no bad feeling towards the right hon. Gentleman. He admitted that a certain improvement had taken place; what he doubted was its continuance. He could not, however, sit down without expressing his opinion that the tax on income was a tax most vexatious, inquisitorial, and unjust.

Mr. F. T. Baring

said, that if he really believed it to be in the power of the House, having a due regard to the finances of the country, to get rid of the Income Tax, no temptation to try a great experiment—no temptation to take off other taxes—would ever induce him to forget the pledge given when the tax was first imposed, or to prefer it to any other tax, his opinion being that a tax on income should be the last tax which should be imposed. But had they the power of taking off the Income Tax? What was their real financial condition? Last year, when the right hon. Baronet brought forward his Budget, he told the right hon. Baronet that he thought if the Income Tax was to be continued, the better course would have been for the right hon. Baronet to have come down to the House, and proposed its continuance for three years; and that during that period he should endeavour to employ the surplus in a manner to give relief to the country, and at the same time in a way which would not have endangered the taking off the Income Tax at the end of the term originally proposed. He did not allude to this with a view to a re-discussion of the question; he alluded to it in justification of himself, and to show that the course which he was now about to follow, he then pointed out as the best course. What was the real state of the finances? It was necessary that there should be no delusion on the matter; and that they should distinctly understand whether they had a surplus to deal with, and whether they would be able to take off the Income Tax or not. What was their position? According to the estimate of the right hon. Gentleman, the estimated Revenue, not including the Property Tax, was to be taken at 47,900,000l., and the estimated Expenditure at 49,700,000l., leaving a deficiency of 1,800,000l. Was that the whole of the deficiency? He recollected that hon. Gentlemen opposite used formerly to contend that it was expedient to leave what they called a margin to meet casual expenses, and those checks of revenue which they had so often experienced. He did not believe that they could place the finances of the country in a really satisfactory position unless they had some margin of that kind; and if they took that into consideration, he did not see how they could get rid of the Income Tax without imposing taxes to the amount of at least 2,000,000l. That was his only justification for voting for the Income Tax. He had voted for it because he was not prepared to leave the revenue of the country in a state of deficiency. He cared not what taunts were thrown out against him; but he, for one, would not be a party to creating a great deficiency in the revenue; and he must say that he did not think it would be wise, after having had recourse to so strong a financial measure, to take off the tax in question, and to refuse all the advantages resulting from it. That was a course which no man in his senses ought to pursue; and he was surprised to find that his hon. Friend near him (Captain Osborne) had thought the opposite course unintelligible. The right hon. Baronet (Sir R. Peel) said that he and his Friends around him had spoken against the tax, and yet had voted in its favour; and the right hon. Baronet asked,—"Why do you not vote against the Income Tax if you disapprove of it, and propose certain other taxes to meet the trifling deficiency?" But it was quite a different thing to opposing a tax when it was first proposed, and when once imposed, to repeal it, for the purpose of replacing it by other new taxes. By the present arrangement, it was proposed to continue the tax for three years, for the purpose of meeting the deficiency, and to take off other taxes to relieve the people; if he voted against the tax, he must impose other taxes to the amount of 2,000,000l. However hostile to the Income Tax, he was not prepared, under such circumstances, to refuse the continuance of the tax for a limited time; but he would not be a party to making the Income Tax a part of the permanent financial system of that country. He thought it would be unwise to do so, and had always opposed, and would continue to oppose, any such attempt. Admitting that some tax was necessary, and that the Property Tax was required temporarily, he had next to consider the propositions of the right hon. Baronet; and as he (Mr. Baring) had not hitherto had an opportunity of addressing the House on this question, he hoped they would pardon him for a few moments while he referred to the subject. In the first place, he could not conceive how they could argue the question of the Income Tax without going into the whole of the financial arrangements of the right hon. Gentleman and, in looking at these arrangements, he must say that he sincerely regretted that the right hon. Gentleman had, at so great a risk to the revenue, left himself with so small a surplus as 90,000l. or 100,000l. It did appear to him to be a small surplus to rely on. And on what did that surplus rest? On the Sugar Duties. And on what did the Sugar Duties rest? On the calculation that the consumption of sugar would be increased by the proposed alteration by nearly one-fifth beyond what it was in the year of the greatest consumption ever known in this country, and that that consumption would be supplied by the coming in of certain sugars at a higher rate of duty. Now, they hardly knew, at the present time, what the duties were upon which the right hon. Baronet might be obliged to fall back; but it was clear that if the classification were abandoned, there would be little prospect of a surplus. The hon. Member for Newark, late President of the Board of Trade, had warned the right hon. Baronet that he would not get the amount he expected from the Sugar Duties; and he must say that it was his opinion, as well as that of many of the more reasonable parties out of doors, that the right hon. Gentleman, having had recourse to the strongest, financial measures, had gone too far in what he himself had called a bold experiment. He now came to the taxes which it was proposed to repeal. He would at once admit that they could not take off any tax without eventually benefiting the industry of the country; but there were certain taxes the repeal of which would operate more rapidly than others. He could not see in the proposals of the right hon. Gentleman anything to charm the lower classes. No doubt the reduction of the duty on sugar would be a great boon; but unfortunately the right hon. Baronet could not deal with it on the principles of free trade. He was obliged to except it from the general rules of common sense; and the reduction proposed could not be expected to produce the benefits which it would have done if it had been effected in a more rational way. He was very much afraid that the course proposed to be adopted by the right hon. Baronet would neither give the benefit to the revenue nor the consumer. He next came to the glass duties; and he believed that the abolition of those duties would be a great relief to the trade. Having said thus much, he must add, that he doubted much whether the lower classes would be much benefited by the repeal. They would gain indirectly by the repeal of the glass, or any other duty; but the direct benefit would be very small, and be long before it came into effect. There was another duty which the right hon. Baronet proposed to remit. The right hon. Baronet need not rely on any support of his with respect to the remission of the auction duty. For his part, he would have preferred a reduction of the duty on marine assurances, or on soap, to that of the auction duty. Indeed, there was not a single tax, but a strong case could be made out in favour of its remission, by reference to the Reports of the Commissioners of Excise. The most perfectly conclusive and satisfactory evidence against any given particular tax might be adduced from these Reports. Now, they should consider on the present occasion the selection made by the right hon. Baronet with reference to a remission of taxation. The Budget had been called the poor man's Budget. It was true they gave the poor man something; but did the proposition of the Government touch the poor man's immediate necessaries? No; it did not touch the poor man's bread, nor cheese, nor his butter, nor his soap, nor his tea, nor his tobacco, nor his coffee — though, he admitted, that some relief had on a former occasion been shown with regard to the latter named article; but he did not think the right hon. Baronet did all that he might, or ought, with his surplus revenue. He was not so enamoured of the right hon. Baronet's proposal as many of his supporters in and out of the House had expressed themselves. But the right hon. Baronet said, in the calculations he had entered into, and the changes he proposed, one great object he had in view was to get rid of the Income Tax in the course of three years. He doubted whether the performance of the right hon. Baronet in this matter would equal his promises. He had no doubt that the right hon. Gentleman as to the Chancellor of the Exchequer had a firm conviction that he would be enabled to do without that tax. The right hon. Gentleman said no man could speak positively what might occur in three years hence; but looking at the premises, he felt satisfied that the revenue would right itself before the expiration of that time. When the right hon. Gentleman used that language, it reminded him of certain opinions ascribed to a gentleman, named Prosperity Robinson. But he would ask the right hon. Baronet opposite, and the House, one question, and that was, did they expect the revenue to increase to the amount of 5,000,000l. by-taking off 3,000,000l., or 4,000,000l. of taxes. He did not think such a result would be the case, although he had the greatest possible confidence in the strength and elasticity of the resources of this country, and had never, whether at one side of the House or the other, joined with those who indulged in the language of despondency; but he could neither agree with the expectations nor figures of the right hon. Gentleman. The right hon. Gentleman had directed attention to the year 1816, and the state of the revenue at that period, when 3,000,000l. of taxes were taken off; and had stated that the revenue soon righted itself. But the right hon. Gentleman had forgotten the Income Tax which then existed. In 1815 the ordinary revenue paid into the Exchequer had been 71,900,000l. [The Chancellor of the Exchequer: Including the Income Tax.] Exactly so; he thought the right hon. Gentleman had forgotten the Income Tax, which made a difference of no less than fourteen millions and a half. In 1815 then, as he had stated, the ordinary revenue had been 71,900,000l., while in 1819 it was but 52,155,000l., thus showing a loss of above 19,000,000l. That was not a very consolatory result for the very first case on which the right hon. Gentleman relied. It was on those grounds that the Cabinet had taken up their impression that the Income Tax could be taken off at the end of three years. Other cases were more clear. On the decline of trade in a bad year, taxes were taken off to relieve it; in another year, trade revives and the revenue improved; and then it was said that this was the result of the remission of taxation. To a certain extent he admitted this. But when he came to look into the Returns on the Table of the House, he did not see anything to justify the position which the Government had taken. He would take two different periods, and would group certain years in two distinct classes, for the purpose of ascertaining the comparative state of the revenue at those respective times. In the years 1822, 1823, 1824, 1825, and 1826, there had been a large amount of taxation taken off. From the years 1832, also, to the year 1836, a large amount of taxation had also been taken off. At both those periods there had been a great reduction in the amount of taxation. Now, for the first period he had named, taking the average amount of the revenue for the years 1820 to 1824 or 1825, and comparing it with the average amount of the revenue for the years 1827, 1828, and 1829, the right hon. Gentleman would find that after having taken off 13,000,000l. of taxes, the revenue had not righted itself; but that a loss of be- tween 3,000,000l. and 4,000,000l. had been sustained. If the right hon. Gentleman would turn then to the second period, and compare the average amount of taxation for the years 1827, 1828, and 1829, with the average amount of the years 1837, 1838, and 1839, when taxes to the amount of 9,600,000l. had been taken off, the loss to the revenue he would find had been about 4,600,000l. By reference to Returns moved for by the hon. Member for the Tower Hamlets, it would be seen that beteen the years 1815 and 1830 the amount of taxes taken off had been about 18,000,000l., and the result was during the period a loss to the revenue of between 7,000,000l. and 8,000,000l. The House would recollect that in the whole of the right hon. Gentleman's explanation upon this subject, he said that in taking off the taxes he proposed to remove, he would not only be conferring a certain amount of relief on a large portion of the community, but that he would be borne out in doing so by the history of the acts of those who had preceded him in office. From the year 1815 to the year 1833, about 33,000,000l. of taxes had been taken off, by which no less than 22,000,000l. were lost to the revenue. And now he would ask the right hon. Gentleman how he proposed to persuade this House that in his financial statement he meant to carry out the pledge he had given relative to the alleviation of taxes? There was one point to which he wished particularly to allude; but that he considered it of importance he would not trespass upon the attention of the House. When first the right hon. Gentleman, in the year 1842, proposed the Income Tax, he then held out expectations that the tax might be taken off at the end of three years. He (Mr. Baring) pressed him at the time to explain by what means such a desirable conclusion was likely to be produced; and argued that no such increase of revenue was probable as would enable the right hon. Baronet to fulfil the expectations he was raising. The answer of the right hon. Baronet was this—that there were two sides of the account which he might look to—the income and the expenditure—that it was not only on the increase of income which he relied; but that he had also expectations from the diminution of the expense. It was now time to test these expectations of the right hon. Baronet. Now, he (Mr. Baring) had looked at the amount required for defraying the expenses of the great services of the country; and he had compared the estimates of the right hon. Gentleman opposite for those services, with the expenses incurred in 1841, the last year of "Whig mismanagement," and he had found that the estimates of the right hon. Gentleman in this item alone, exceeded by half a million the expenditure of the last year of "Whig mismanagement." He did not complain of the amount, if it should be deemed necessary for the sustainment of the honour of the country; on the contrary, he would not shrink from his share in the responsibility; but he could not avoid saying that, after all they had heard from the right hon. Gentleman of reduction of taxation, and after the manner in which the Whig party had been held up for "mismanagement" and "jobbing"—it was not very satisfactory to have it announced that half a million more would be required this year for the army and navy estimates than was expended for the same purpose during the last year of "Whig misrule and mismanagement."

The Chancellor of the Exchequer

said, there was so much in the opening of the right hon. Gentleman's speech, in which he (the Chancellor of the Exchequer) was about to concur, that he did not feel it necessary to follow the right hon. Gentleman at great length in the several topics which he had submitted to the House. He need not advert to the right hon. Gentleman's statement of the Revenue and Expenditure of the country, because from the figures which had been stated by his right hon. Friend on a former occasion, and which the right hon. Gentleman had repeated, there was no dispute as to facts. Considering the increased expenditure which it was necessary to incur in the course of the ensuing year, and putting out of account those extraordinary resources which could not be looked upon as regular revenue, there was no doubt that, independent of the Income Tax, there would, at no distant period, be a deficiency which would require some means of supply, and that formed one ground on which his right hon. Friend had recommended to the House the continuance of that tax. If the only object had been to make up the deficiency which would have existed, of about 1,800,000l., other means might have been open for Parliament to discuss as available to supply that deficiency; but his right hon. Friend, agreeing in this with the right hon. Gentleman, thought, that a change of taxation not imperiously called for, was an aggravation of taxation; and knowing that the Income Tax, during the period it had been in force, had been paid with willingness on the one hand, and had been most productive to the revenue on the other, the Government thought it well worthy of consideration—whether it was not expedient to continue that tax, and to raise a larger amount than the immediate exigencies of the Public Service required; giving to the people at large relief from burdens which pressed heavily upon them, and at the same time invigorating the Revenue, and affording an incentive to the industry of the country. That was the ground upon which a continuance of the Income Tax was proposed; and, as he understood the right hon. Gentleman, to the continuance of that tax he made no particular objection; none, at least, which would induce him to offer opposition to it. The right hon. Gentleman, however, had gone into some criticism upon the whole plan submitted to the House on the part of the Government, as comprised in the Budget of the year. In the first place, the right hon. Gentleman had complained of the surplus of Revenue on which the Government calculated, as being less than under ordinary circumstances they ought to rely upon. In that he was not disposed to differ from the right hon. Gentleman. The right hon. Gentleman said truly, and he agreed with him, that on ordinary occasions, unless there was some great end to be attained, some prospect that the measures about to be taken would infuse fresh vigour into the Revenue, it was not prudent to reduce the surplus Revenue to 100,000l. or 200,000l. in a year; but what was the case on the present occasion? The Government had adopted measures which they thought were calculated to give vigour to industry, and to promote increase in the Revenue of the country; and as they had for the two years to come, as in the year preceding, the China money, which in other years would not exist, they thought they were justified in leaving the surplus Revenue within that limit which, under ordinary circumstances, it was proper it should attain. The right hon. Gentleman had also expressed very great doubt with respect to the general bearing which the reduction of taxation proposed by his right hon. Friend on a former occasion might have on the comforts of the lower orders of people; and, if he had not misunderstood the right hon. Gentleman, he ex- pressly stated that, with the exception of the reduction of the Sugar Duties, which he said would have a material effect upon the interests of the lower orders, the taxes repealed were not calculated to afford them any particular benefit. Upon that point, he begged to differ entirely from the right hon. Gentleman. There were two modes by which the repeal of taxation affected the lower orders of the community—either by diminishing the price of an article which they consumed, or by extending the means of employment amongst them, and thereby affording them the means of purchasing articles from which they would be otherwise debarred. It was a narrow view of the question to say that benefit was not conferred upon the lower orders, because the tax taken off did not in the first instance affect that which they consumed, but affected other interests, supposed to be those of the manufacturer or trader, and to make no reference to the effect which it necessarily had upon the interests of the lowest classes of the community. Take the article of glass, for instance. It was possible that the effect of the removal of the glass tax upon the poor consumer of glass might for a certain time be limited; he might be unable perhaps to renew that glass which he had not at any time been in the habit of consuming in considerable quantity; but if the removal of the glass tax brought into operation new productions of that article, the investment of capital in the erection of new works, and the employment of an additional number of persons, for the purpose of extending trade, either in new inventions, or in new applications of the skill elicited by the remission of vexatious regulations—he said, then, that the poor man did derive most effectual assistance from the repeal of that duty, by the additional employment which he obtained; and by the means it placed at his disposal of purchasing articles essential to his comfort. Look at the cotton tax again. Although the reduction of the duty on cotton might not affect light articles manufactured from that substance worn by the upper classes, it would in a greater degree affect fustian, and those heavy articles of which the clothes of the labouring population were usually composed—he did not entertain a doubt that it would operate sensibly upon articles made of cotton, and constituting, generally speaking, the clothing of the poor. But he had a stronger confidence in the advantage which it would give the manufacturer, and in the extended employment which he would be thereby enabled to offer to the poorer classes. The right hon. Gentleman had said that if one looked into any report upon a tax it would be found to be reprobated and condemned for some reason or other. That might be very true, but the question was this—when one of two taxes were to be repealed, which was the more eligible? And it was only upon a comparison of the nature and effects of taxes that a judgment could be formed, and a decision come to upon that question. With regard to the right hon. Gentleman's complaint respecting his misapprehension of the right hon. Gentleman's opinion; as to the auction duty, he begged, if he had been understood as represented by the right hon. Gentleman, to withdraw the statement. But the right hon. Gentleman had said that the Government would have done better if they had taken off not the auction duty, but the duty on tea, or soap, or tobacco, or some other article of general consumption among the poor. Upon that point he differed from the right hon. Gentleman; for, if there was only the sum of 250,000l. to be disposed of in the way of reducing taxation, it should be disposed of in the manner likely to be most beneficial to the community. It was not a fair argument to point to other and larger taxes than that selected, and say that by repealing them there would be a greater benefit to the public. Why, if he were to repeal half of the duty on tea, or a third of that on soap, or the whole of that on tobacco, no doubt either of those reductions would be a benefit to the population; but that was not the point to be considered. From tea there was derived 3,000,000l., between 3,000,000l. and 4,000,000l. from tobacco, and near 1,000,000l. from soap; if the reduction to be made could extend no further than 250,000l., not more than a mere fraction of any of those duties could be taken off, and the advantage of such a small reduction would never be felt by the public, for it would go into the pockets of the trader, or the retailer only, and thus, as far as the general benefit of the community was concerned, that sum of 250,000l. would be entirely thrown away. He did not deny that there were other taxes which pressed heavily on the public; but, taking into view the limited amount to be applied to the purpose, he thought the right hon. Gentleman must admit that it had been judiciously applied. He should be prepared to show, as had been already shown by those who had inquired into the tax on auctions, and laid the reasons for their opinions before the House, that of the taxes producing that amount, or nearly so, that was the most unjust in its principles, and the fittest to be repealed; and that its repeal was not the less essential because it caused considerable and complicated evils in its collection, and throw great burdens and difficulties upon the department which managed it. After having objected to the Budget itself, the right hon. Gentleman had proceeded to express his opinion as to the probability of the Revenue recovering within the time specified; but the right hon. Gentleman must give him leave to state what was the argument he had raised upon that point, and how much of it the right hon. Gentleman made use of, as well as how much he excluded from his consideration. First of all, he had stated that there was not any certainty in matters of this kind. On that he never gave a positive opinion; no man could do so; but he had simply made this declaration, that there was a probable ground for supposing that the Revenue, diminished as it would be by the reduction about to be made, would, after the expiration of three years from the present period, leave Parliament in a better condition, and with a larger discretion to decide as to the renewal of the Income Tax for a further term. He had stated that his hopes for the future were founded on his experience of the past; and he referred at the same time to facts in relation to the operation of this very tax. He had shown that the tax having been proposed in October, 1842, the ordinary revenue at that period, had been reduced to the extent of about 1,400,000l. But, comparing the state of the Revenue at the corresponding period last year, the amount thus withdrawn from the ordinary revenue was found to have been actually recovered; the amount of the ordinary revenue being the same in October, 1844, within a very few pounds, as it was in October, 1842. In that instance, then, he had shown that under the operation of the Income Tax the Revenue recovered itself in the course of two years; and that instance was strictly in point, carrying with it all those elements which the right hon. Gentleman thought necessary to establish the case. "But," said the right hon. Gentleman, "you referred to antecedent periods." He admitted that he had done so. He had attempted to show that there had been great increase of reve- nue consequent upon reduction of taxation at other periods. The right hon. Gentleman had said, that the Income Tax ended in 1816, and should, therefore, be taken into account in speaking of the revival of the Revenue at that time. Undoubtedly, there was great weight in that observation. He did not deny it. The Property Tax having ceased, the effect was to place a great deal of money in the hands of consumers, and thus to give a stimulus to trade and commerce. But that argument of the right hon. Gentlemen would not apply to subsequent periods; and the same results were found to have arisen, when no assistance was derived from a Property Tax in the repeal of other taxes. But the great argument of the right hon. Gentleman was this,—that where 13,000,000l. of taxation were taken off, only 5,000,000l. were recovered; and where 9,000,000l. were taken off, only about 4,000,000l. were recovered. Why, that, as far as the basis of the argument went, only proved the proposition which he had advanced. The only difference of opinion between the right hon. Gentleman and himself was as to the last instance quoted, whether the sum recovered would be equal to that which the ordinary revenue had previously lost. All that he had put to the House was, that the repeal of taxes to a considerable amount did give that stimulus to the industry of the country which justified the expectation of the recovery and increase of the Revenue within a limited period. The fact had been admitted, and proved to a large extent; and the last instance, under the operation of the Income Tax between 1842 and 1844, completely bore it out. The right hon. Gentleman, in the last place, had adverted to the augmentation of supplies which his right hon. Friend had thought it his duty to propose; and the right hon. Gentleman had taken some credit to himself and to the Government of which he was a Member; because, during the period he remained in office they were not called upon to make such additions to the annual Estimates for the Public Service. They had now arisen from necessity which could not be controlled, and not from any measure of the present Government. The necessity for those additional expenses had arisen from the introduction of a new element of warfare—steam—which, during the period when the right hon. Gentleman was connected with Administration, was, to a limited extent only, brought into operation in the world as an element of warfare. That new mode of warfare, coupled with the entire change of armaments which all nations had adopted with respect to maritime forces, had necessarily, and must necessarily have imposed upon the Minister for the time being, whomever he might be, the duty of placing the army and navy of this country upon at least an equal footing, as to equipment, with other nations. And expense was not only created by that particular armament, but by the necessity of putting the different ports of this country into a proper state of defence against this new system of warfare. Therefore, whatever new charges were in the Estimates, they did not arise from any disposition on the part of Her Majesty's Government to abandon any principles of economy they had professed. Those charges could not have arisen under ordinary circumstances, but they were called for by that change in the general armament of the world which a new power had introduced, and which it was impossible for a great nation like England to overlook or neglect. He had congratulated himself for some time that the right hon. Gentleman concurred with him in the propriety of renewing the Property Tax; and if the right hon. Gentleman now entertained a different opinion from that of Her Majesty's Ministers, he was sure that the time would come when, as in former days, the right hon. Gentleman would be in a situation to acknowledge that the reduction proposed had been attended with benefit to the Revenue, and conducive to the ultimate prosperity of the country; and, with that expectation, he trusted that the House would not agree to the Amendment of the right hon. Gentleman.

Mr. Ewart

did not coincide with his hon. Friend the Member for Birmingham, nor with the right hon. Gentleman the Member for Portsmouth, and he intended to vote against the Amendment. He thought in the latter part of the administration of the Exchequer by his right hon. Friend, that the real tendency, which had been pointed out by the wants of the times, was, that they should not impose any more taxes upon imports, but that they should revert to taxes upon property. His right hon. Friend touched those two keys of taxation; he tried his 5 per cent. upon imports, and found that fail him; but when he tried his 10 per cent. upon the assessed taxes, he obtained an increase of revenue. He (Mr. Ewart) was convinced that, so far as it could be done, gradually and prudently, it would be wise to revert more to the principle of direct taxation, and relieve the indirect taxation which pressed so heavily upon the commerce and manufactures of the country. He believed that if his right hon. Friend (Mr. Baling) was really anxious to see the duty upon tea, tobacco, soap, and other articles which had been enumerated as bearing with peculiar hardship upon the poor, repealed, he must gradually approach towards a system of direct taxation as the only means of fully relieving the poorer classes of this country. With reference to the subject more immediately under discussion, he begged to observe that some exemptions were loudly called for, one of which was regarded by Mr. Pitt. When he introduced his Income Tax in 1798, he said: "There is one case which, with a view to that class who are really willing to save for the benefit of those for whom they are bound to provide, demands some modification. It is in favour of those who have recourse to that easy, certain, and advantageous mode of providing for their families by insuring their lives. In this Bill, as in the assessed taxes, a deduction is allowed for what is paid on this account." This, he thought, was a most important exemption; but he did not profess himself to be a friend of the Income Tax, which he thought ought to be distinguished from a Property Tax. His opinion was, that the resumption of that sound mode of taxation which prevailed in the time of Walpole—namely, taxation upon property—was the only wise system of fiscal legislation.

Mr. Barclay

was opposed to the Amendment. He considered the Property Tax to have been administered in a mild and merciful manner, and that on the whole, the returns to it had been honourably and fairly made. It was his intention to give his best support to the measure before the House; but he, at the same time, should say that he did not think his right hon. Friend the Chancellor of the Exchequer had correctly understood the feelings of the House on the subject before them, when he had attempted to excite their hilarity by some of his observations. He considered the reductions in taxation which were proposed to be made by the right hon. Baronet opposite were calculated to prove of the most important utility to the country. He believed the intended abolition of the duty on glass would be most useful, and he anticipated from that measure in particular the greatest possible benefit to the Empire. He was also one of those who entirely approved of the remission of the auction duty. It would be a great relief to the country, and would materially facilitate the transfer of property. Much of the duty heretofore payable on sales by auction had been constantly evaded, and in these cases the benefits of the evasion were always derived by the wealthy, while the duty was imposed where the distresses of individuals prevented them from taking advantage of the means by which its payment might be evaded. But while he willingly consented to the imposition of an Income Tax, as a means of effecting these desirable objects, he did not like to contemplate the probable perpetuity of it. He trusted—from the increase of manufactures and the general prosperity of the country — that their revenue would be found to advance annually, and that they would find themselves in a position in three or four years to relieve the country from the imposition of such a burden. He would take the liberty of suggesting to his right hon. Friend the Chancellor of the Exchequer whether he might not possibly find that at the conclusion of the present year he would be in a position to commence a reduction of the Income Tax. Supposing that the right, hon. Gentleman would, at the end of that time, take off one-third of the tax, and at the end of the second year another third, and so on, they would at the end of three years have but a tax of twopence to pay.

Mr. Hawes

said, he could see nothing in all that had been addressed to the House that, evening to warrant him in offering anything short of the most determined opposition to the measure then before the House. He did not think the right hon. Gentleman the Chancellor of the Exchequer had made out a case for a continuance of the Income Tax. The right hon. Gentleman had stated in his place in Parliament that there would be no deficit in the Revenue for the present year, but that on the contrary there would on the 5th of April, 1845, be a surplus, amounting to about 5,000,000l. in the national Exchequer. The right hon. Gentleman, in making that calculation, did not take into account the revenue derived from the duty on corn, or the amount of the China compensation money; but when the right hon. Baronet altered the Corn Laws, both with reference to England and to Canada, he evidently intended that a regular importation of corn should take place into the country, and that a regular amount of Customs' income should be derived from that source of revenue. He could not, therefore, concur in the propriety of leaving the corn duty altogether out of the question in dealing with the revenue of the country in future years; and if they added to the income thus obtained, the amount of the China money, they would have an additional sum of 2,000,000l. to take into account in meeting the expenditure for 1846. But in addition to that surplus, he felt he was justified in reckoning on a still greater increase in other points than had been estimated by the right hon. Gentleman. In calculating the Estimates for the year ending the 5th of April, 1846, the right hon. Gentleman estimated the increase in the Customs and Excise Departments as but half a million more than the amount which, they would produce in the present year. Now, if there was any truth in the anticipation of so prosperous a state of things as that which the right hon. Gentleman the Chancellor of the Exchequer had held forth to them, when he wished to encourage the hope that they would be able to cover the repeal of the Properly Tax at the end of three years, then he would maintain that they were entitled to take credit for a larger income from the Customs and Excise than the right hon. Gentleman had anticipated. He did not, however, think that any speculative view of that kind would alone justify him in opposing the renewal of the Income Tax. But he thought that the system pursued with regard to other taxes was not of a nature that was calculated to impart a stimulus to industry, winch would enable the country to bear up against the infliction of such an impost. He took a totally different view of this part of the case from that put forth by the hon. Member for Dumfries (Mr. Ewart). There was nothing produced such injurious consequences to industry as a tax upon capital. He considered that any over-taxation of capital was infinitely more mischievous in its results than the taxation of any of the great articles of consumption. It was productive of serious injury to the commercial prosperity of the country. What was it that in former times drove Chancellors of the Exchequer or the Prime Ministers of the day to lighten particular branches of taxation? It was not from any voluntary desire on their part to make such a movement. No tax was removed by the voluntary motion of the Minister, but its repeal was in all cases found to arise from its being unproductive to the Revenue, or from the necessity of making some concession to popular feeling. But, by the imposition of an Income Tax, the House made the Government perfectly independent of those fluctuations which showed the state of prosperity in which the country happened to be at any particular time. He considered an Income Tax, therefore, to be a formidable barrier to the further progress of commercial reform. Whenever the Revenue yielded less than the necessary sum for carrying on the public business of the country, the Minister had but to add a certain sum to the direct taxation of the State, and he would then be no longer driven to look into the general taxation of the country as a necessary step towards remedying the deficiency which had arisen. He believed that if the Income Tax had not been consented to in 1842—if the Government had been driven to other means for maintaining that public credit which he trusted the House and the country would ever continue to maintain — then, in order to again recover the necessary income of the country, the Ministry must of necessity have looked into all the taxes that bore upon consumption. They must have looked to the Sugar Duties, to the Corn Laws, to the Cotton Duties, and to all the other principal sources of revenue; and they must have adopted such alterations in these taxes as would have restored the Revenue to its proper and necessary condition, and as would have been best suited to advance the consumption of the country. Now, when Mr. Deacon Hume had been examined before the Import Duties Committee, what was the result of his evidence? The right hon. Gentleman opposite never failed to rely on any authority which he was able to bring forward in support of his views; and on the same principle he thought he had a full right to claim the evidence of Mr. Deacon Hume as no trifling authority in favour of the view which he was then supporting. When that gentleman was examined before the Import Duties Committee, he was much pressed by the hon. Member for Coventry as to the effect which might follow if free-trade principles were introduced, and he was asked whether this result would not follow—that certain branches of manufactures might fail, or be deeply interested by the adoption of the principles of free trade? Mr. Hume frankly admitted that if "free-trade policy were suddenly introduced, there might be an injury sustained in some branches of manufactures;" though that was a doctrine which in his opinion, was open to some doubt; but Mr. Hume then went on to state the following most remarkable opinion; "If," he said, "protection generally were abolished, and if all duties were levied for revenue, and revenue alone, there was nothing to prevent a rise in the Revenue of this country to fully one-third the present amount, without the imposition of any additional tax whatsoever." He was quite of that view. He believed if they were fairly and faithfully to look to the Customs' Duties simply as a source of revenue, and not as a protection to particular interests, either colonial or home, that they would find in them a means of augmenting the Revenue to an amount far beyond the present deficiency. Now what stood between them and that object? What interfered with them in effecting that most desirable result—that most productive source of revenue? In his opinion it was the Income Tax. He thought the Income Tax stood as a bar to the advancement of the principles of free trade—principles on which alone he considered this great commercial country could rely. He believed the right hon. Gentleman would not have dealt with the Timber Duties in 1842, if he had not the Income Tax to fall back upon; and certainly the alterations in those duties, made upon that occasion were the most unfavourable that could be well conceived to the Revenue, without producing any benefit to the consumer. The duty on Colonial timber was fixed at 1s., and on Foreign at 25s., an arrangement which would never have been attempted if the right hon. Gentleman had not the Income Tax to fall back upon. Again, what was taking place at the present moment with respect to the Sugar Duties. He would not, of course, go into the question of the Sugar Duties on that occasion, farther than as they bore upon his present argument. Did the right hon. Gentleman, in dealing with the Sugar Duties, act upon the broad and intelligible principle of increasing the consumption to the largest amount? No such thing. He found it still a necessary and advisable policy to consult the Colonial interest, and in order to advance their ends, he sought to exclude, as far as he could, certain classes of sugar from consumption in the market of this country. Now he would wish to put this hypothetical case to the right hon. Gentleman. Suppose, looking to the Sugar Duties as a source of revenue alone, he had imposed a duty of 20s. a cwt. upon all Muscovado sugar, and other sugar entering into ordinary consumption, exclusive of the very fine qualities — supposing he had adopted that course in order to get rid of the Income Tax, what would be the result? There could be no doubt but that he would raise a very considerable revenue by that course alone. The consumption of sugar in this country was at present about 200,000 tons a-year; and that, at 20s. a cwt., would bring in a revenue of 4,000,000l. Now by the plan which the right hon. Gentleman adopted, he sacrificed about 1,300,000l., and be would sacrifice much more, because he thought it would be found very difficult to maintain the scale of duty upon which the right hon. Gentleman meant to rely. But that was not the only instance in which a large amount of revenue was sacrificed on the same principle. The Timber Duties, the Sugar Duties, the Corn Duties, would all form part of their Customs, and would all—if the principle which he recommended were adopted — become solid and permanent sources of revenue, advancing according to the increase of the population of the country. If, however, they resorted to the plan of an Income Tax, and adopted the principle advocated by the hon. Member for Dumfries, namely, that of direct taxation, then they ought to show that an Income-Tax was the most advisable mode in which it could be imposed. He did not think there was any tax so likely to be evaded as an Income Tax. The proposition that the amount of the Income Tax should be fixed by the simple declaration of the party, when brought forward, was rejected on all sides of the House, because it was thought they could not rely on the oath or declaration of individuals throughout the country; and yet, in point of fact, they adopted no other test in ninety-nine cases out of one hundred. He would admit that they had great powers in addition to resort to when necessary, and probably the apprehension of these powers being exercised had a salutary effect in inducing many parties to give an accurate return; but he should deny that, generally speaking, the tax was not evaded; for if it were not, it was perfectly clear that a tax of 3 per cent. on the property of the country would produce much more than three millions a-year. But he confessed when he heard that the tax was administered mildly, he was still more astonished. A case had been brought before the notice of the House, some time since, to which he would refer as an instance of the manner in which the tax was administered. He knew himself cases of extreme hardship and oppression, of the correctness of which, though they did not come under his immediate notice, he had no doubt. He did not wish it to be supposed that he alluded to the conduct of the commissioners or surveyors; but what he stated was, that from the nature of the tax it was impossible that it could be mildly administered. The case to which he meant to direct their attention was that of the hon. Member for Oldham (Mr. Fielden). That hon. Member had returned his profits to the commissioners as nil.; but they, notwithstanding, assessed him at an income of 12,000l. a-year. Mr. Fielden remonstrated, but the commissioners insisted on their demand, and charged him 350l. or 360l., as the amount of the annual tax which he should pay on an income of 12,000l. The matter was referred to the right hon. Gentleman opposite, who, as might be supposed from his usual courtesy, took some interest in the matter, and, according to the statement of Mr. Fielden, interfered with the commissioners, by requesting them to reconsider their decision. The commissioners, however, did not do so, but persisted in their original determination. Mr. Fielden offered to produce the books of his firm, and to lay his balance sheet and all other accounts before them, showing the profits of his concerns. They, however, would not examine the books, but proceeded to enforce their decision, by a seizure and a sale by auction, of a sufficient quantity of goods to produce 350l. He did not think that a tax under which such an occurrence had taken place could be said to be mildly administered. He thought it was a tax which could not be justified, unless an overwhelming necessity existed for imposing it—such a case of necessity as that which had existed when it was originally proposed. When the Minister had, such as in time of war, no leisure for hesitating or adopting other' measures, but when he should at once find means for the protection of the country, then, indeed, a Property Tax was an impost to which the Government would be justified in resorting. But when no such emergency existed, he thought it was utterly unjustifiable, especially as long as they neglected to put indirect taxation on a just and equitable basis. If they placed their Customs' Duties on a basis in which they could be most productive to the Revenue, and if they were then found ineffectual in meeting the wants of the country, then, he admitted, they had a right to see whether property should not bear a farther amount of taxation; but, until they did so—until they placed their system of indirect taxation on a just and equitable basis—then he would maintain that the granting an Income Tax to the Minister was in effect giving to him the means of effectually resisting the claims which the trade and commerce of the country had a right to make upon him. With such a resource to fall back upon, the Minister could always resist every demand; since he had the means of supplying any deficiency from other sources of revenue, by some two or three millions of income derived from a Property Tax. He denied that the deficit which would have to be met in 1846 would be as large as the right hon. Gentleman had stated, since he had omitted to take into account two considerable sources of revenue to which he had before alluded. But, even taking the statement of the right hon. Gentleman to be correct, he would wish to hear from him how the surplus which would be in his hands on the 5th of April would be disposed of? There would be a balance of more than five millions sterling in the Exchequer at the end of the financial year, and of that he believed one-fourth would go to the Commissioners for the Reduction of the National Debt; but he would be p-lad to know how it was intended to dispose of the remainder?

The Chancellor of the Exchequer

explained, that two millions of the surplus to which the hon. Member alluded would be expended in taking up the Exchequer Bills issued in advance on account of the Opium Compensation, and the remainder would be carried either to augment the revenue for the year, or else expended under the provisions of the Act of Parliament for the liquidation of the National Debt. An account would be taken on quarter-day, and the surplus fund then existing would be carried on to the succeeding quarter-day, and so on to the end of the year, when one-fourth of the balance would be applied to the liquidation of the National Debt. The balance existing on the 5th of September was then on the Table of the House, and amounted to 6,254,000l.

Mr. Hawes

had that Return before him; but what he wished to know was, how the balance of upwards of 5,000,000l. which would exist on the 5th of April, would be applied? A portion of it was carried on in the shape of a balance, and was applicable to the public service under the Estimates; so that there would be a certain addition from this source to the Revenue of 1846. There was a certain balance, independent of what the right hon. Gentleman said was applicable to the public service; and, as far as that balance would extend, there could be no danger of any deficiency, even if the House were at that moment to refuse granting the Property Tax altogether; and he wished to learn what the amount of that balance would be. There was another point in the right hon. Gentleman's speech upon which he wished to offer a few remarks. The right hon. Gentleman seemed to take a good deal of credit for the relief which the remission of taxation by the present Government had afforded to the industrial classes of the country, and for the indirect augmentation which had thus accrued to the Revenue. Now, he should say, that when the right hon. Gentleman and Her Majesty's present Ministers came into power, the state of things was singularly fortunate for them. There had been a crisis in the commercial world, and he might almost add in the natural world, for there had been a succession of bad harvests for some years before. But this crisis had ceased; and the opportunity for doing good was, therefore, most favourable. He was perfectly willing to do justice to the Government in the reductions which they had made in taxation; but he denied the great merit of these reductions, or their effect upon the prosperity of the country. On the contrary, there was not a shadow of proof to connect the commercial policy of the Government with that prosperity. He fully admitted that the reductions which had been made in taxation, would hereafter produce beneficial results to the Revenue; but he denied that these beneficial results could be traced, either directly or indirectly, in the income of 1845. The returning prosperity of the country was, he felt convinced, owing to the good harvests with which the country had been blessed; to the stimulus which had been given to commerce by the settlement of the condition of the United States, and by the opening of the China trade; and not to any measures which the Government had adopted or introduced. He believed the Income Tax, and, if he might be permitted to add, the measure of the right hon. Baronet with regard to banking, were calculated to injure rather than to increase the prosperity of the country; and while he admitted that other measures of the right hon. Baronet were calculated to produce advantages hereafter, he should again repeat that he did not think they had been as yet productive of any perceptible benefit to the Revenue; while he considered the Income Tax to be an impost which must of necessity cause material injury to the country, as well to the labouring classes as to those who had to contribute to it. The hon. Gentleman concluded by expressing his intention to vote in favour of the Amendment.

The House divided on the Question that the words proposed to be left out stand part of the question:—Aves 96; Noes 23: Majority 73.

List of the AYES.
A'Court, Capt. Bruce, Lord E.
Adderley, C. B. Bruce, C. L. C.
Aglionby, H. A. Buller, Sir J. Y.
Antrobus, E. Busfeild, W.
Arkwright, G. Cardwell, E.
Bailey, J. jun. Carew, W. H. P.
Baillie, Col. Chetwode, Sir J.
Barclay, D. Clerk, rt. hon. Sir G.
Baring, rt. hon. F. T. Clive, hon. R. H.
Baring, rt. hon. W. B. Colebrooke, Sir T. E.
Barneby, J. Colquhoun, J. C.
Barrington, Visct. Corry, rt. hon. H.
Baskerville, T. B. M. Cripps, W.
Benbow, J. Darby, G.
Bentinck, Lord G. Dickinson, F. H.
Boldero, H. G. Duncombe, hon. A.
Borthwick, P. Escott, B.
Broadley, H. Ewart, W.
Broadwood, H. Farnham, E. B.
Brotherton, J. Fitzroy, hon. H.
Flower, Sir J. Newport, Visct.
Forbes, W. Nicholl, rt. hon. J.
Forster, M. Peel, rt. hon. Sir R.
Fuller, A. E. Philips, M.
Gisborne, T. Pringle, A.
Gordon, hon. Capt. Rolleston, Col.
Gore, M. Russell, Lord J.
Goulburn, rt. hon. H. Ryder, hon. G. D.
Graham, rt. hon. Sir J. Sandon, Visct.
Greene, T. Smith, rt. hn. T. B. C.
Gregory, W. H. Smythe, hon. G.
Grimsditch, T. Somerset, Lord G.
Halford, Sir H. Somerton, Visct.
Harcourt, G. G. Spooner, R.
Henley, J. W. Stewart, J.
Hepburn, Sir T. B. Stuart, Lord J.
Herbert, rt. hon. S. Stuart, H.
Hindley, C. Thesiger, Sir F.
Hope, hon. C. Vivian, J. E.
Hope, G. W. Wakley, T.
Inglis, Sir R. H. Wall, C. B.
Johnstone, H. Wellesley, Lord C.
Legh, G. C. Wodehouse, E.
Lincoln, Earl of Wood, Col.
Lowther, Sir J. H. Wood, Col. T.
Lygon, hon. Gen. Wortley, hon. J. S.
Mackenzie, T.
Mackenzie, W. F. TELLERS.
Manners, Lord J. Young, J.
Masterman, J. Baring, H. B.
List of the NOES.
Anson, hon. Col. O'Connell, M. J.
Bouverie, hon. E. P. Plumridge, Capt.
Buller, C. Pulsford, R.
Christie, W. D. Rice, E. R.
Curteis, H. B. Sheil, rt. hon. R. L.
Duncan, G. Strickland, Sir G.
Ebrington, Visct Strutt, E.
Hawes, B. Tancred, H. W.
Humphery, Ald. Wawn, J. T.
Marshall, W. Winnington, Sir T. E.
Morris, D. TELLERS.
Muntz, G. F. Osborne, R.
Murray, A. Blewitt, R. J.

House in Committee.

On the Motion that the blank in Clause 1, be filled up with the word "three,"

Mr. Curteis

rose for the purpose of proposing that the duration of this Bill should be only for two instead of three years; and he trusted that he should receive the support of a large number of the Members present. He saw several of the free-trade Members around him; and he hoped that they would be induced to vote with him, as no doubt they would be willing to believe that the right hon. Baronet would be able to carry out his free-trade notions within two years; or that the state of the Revenue might be such as to render the continuance of the tax beyond that period unnecessary. He conceived that it was not constitutional to levy this large amount of five millions of taxes additional per annum for three years. He should prefer having the measure only an annual, instead of a triennial one. He believed, however, that many Gentlemen present would rather support him in proposing that it should only be for two years, who would not do so if he proposed that it should be only for one year. He could not help expressing his surprise at the apathetic conduct of the City of London with regard to this tax. Why did the citizens not imitate the example they set with respect to it about thirty years ago, when a petition against it received 50,000 signatures, and otherwise the strongest opposition was manifested against it. The consequence was, that when Mr. Vansittart proposed only a modified tax, he was defeated by a majority of thirty or forty votes in an unreformed House of Commons. It appeared that the City of London had changed their opinion respecting this tax. The right hon. Baronet should, therefore, double it on them. The quiescent state in which the City of London was respecting this tax would, he hoped, induce the right hon. Baronet to do so. He did not oppose this from any party feeling, as he should have done had it been brought forward by the noble Lord the Member for London. As an independent Member he had very much admired the course pursued by the young Members on the Bench occupied by the Member for Shrewsbury (Mr. Disraeli) and his Friends. The hon. Member concluded with proposing that the blank in the clause be filled up by the word "two," instead of "three."

The Chancellor of the Exchequer

hoped that the hon. Member would not think that he intended him any slight in abstaining from following him, as it appeared to be the general feeling of the House not to enter upon a debate of the details at that stage.

The Committee divided on the question that the blank be filled with the word "two;" — Ayes 17; Noes 69: Majority 52.

List of the AYES.
Anson, hon. Col. Fitzroy, Lord C.
Blewitt, R. J. Hawes, B.
Bouverie, hon. E. P. Humphery, Mr. A.
Busfeild, W. Morris, D.
Butler, hon. Col. Osborne, R.
Christie, W. D. Strickland, Sir G.
Duncan, G. Tancred, H. W.
Wakley, T. TELLERS.
Wawn, J. T. Curteis, H. B.
Yorke, H. R. Muntz, J.
List of the NOES.
A'Court, Capt. Herbert, right hon. S.
Adderley, C. B. Hindley, C.
Aglionby, H. A. Hope, hon. C.
Antrobus, E. Hope, G. W.
Arkwright, G. Johnstone, H.
Baillie, Col. Legh, G. C.
Baring, rt. hn. W. B. Lincoln, Earl of
Barneby, J. Lowther, Sir J. H.
Barrington, Visct. Mackenzie, W. F.
Benbow, J McNeill, D.
Bentinck, Lord G. Manners, Lord J.
Boldero, H. G. Masterman, J.
Borthwick, P. Newport, Visct.
Brotherton, J. Nicholl, rt. hn. J.
Cardwell, E. Peel, rt. hn. Sir R.
Chetwode, Sir J. Philips, M.
Clerk, rt. hon. Sir G. Pringle, A.
Clive, hon. R. H. Rice, E. R.
Corry, rt. hon. H. Rolleston, Col.
Cripps, W. Ryder, hon. G. D.
Darby, G. Sandon, Visct.
Dickinson, F. H. Smith, rt. hon. T. B. C.
Escott, B. Smythe, hon. G.
Ewart, W. Somerset, Lord G.
Farnham, E. B. Spooner, R.
Fitzroy, hon. H. Stewart, J.
Flower, Sir J. Stuart, Lord J.
Forbes, W. Stuart, H.
Forster, M. Thesiger, Sir F.
Fuller, A. E. Vivian, J. E.
Gordon, hon. Capt. Wellesley, Lord C.
Goulburn, rt. hon. H. Wodehouse, E.
Graham, rt. hn. Sir J. Wortley, hon. J. S.
Grimsditch, T. TELLERS.
Halford, Sir H. Young, J.
Harcourt, G. G. Baring, H. B.

Blank filled up with the word "three," and clause agreed to.

On the 2nd Clause,

Mr. Aglionby

thought that some means ought to be taken to insure something like an equality in the decisions of the assessors under this Act, as throughout the whole country the assessors had indulged in all sorts of freaks. In many parts of Cumberland there were pieces of pasture land which were let from the beginning of April to Candlemas-day (the 2nd of February). These lands were put up annually to a sort of auction, and let to the highest bidder; and they were seldom let to the same tenant for two consecutive years. In such cases, it was manifest that the landlord paid all the charges and taxes. The result, then, was that, under this Act, the charge should not be on the gross rental, but on the rental after deducting the assessment under the Tithe Commutation Act and the poor and the other rates. The local assessors, however, determined that the charge should be taken on the gross annual rental; and all relief was refused, although on appeal being made to the Board of Stamps and Taxes, that body declared that the law had been evidently misinterpreted by the assessors. He would suggest that further power than they now possessed should be given to the Board of Taxes, in the shape of control over the assessors. All the power which that Board now had was to recommend or advise, but they had no means of enforcing it. He hoped that the Chancellor of the Exchequer would look into the matter.

The Chancellor of the Exchequer

had never heard of the present grievance until that moment, but he would look into it.

Mr. Wakley

said, that instead of increasing the power of the Board of Taxes, he held a proposition in his hand, which he should propose at a subsequent stage of the Bill, to give all the powers under the Act to the Local Commissioners, and to take it away from the Board of Taxes. He, however, had risen for the purpose of pointing out a serious grievance and injustice under the operation of the Bill. It appeared that although a tenant might abscond without paying any rent, yet the landlord was compelled to pay this Property Tax on the rent, although he had not received any. It appeared that in such case the local commissioners had no power of absolving the landlord from the tax under such circumstances; this, he conceived, was a very great hardship. He held in his hand the statement of a case of this kind, which occurred in the Holborn and Marylebone divisions, where a gentleman of the name of Chaloner, residing in the Edgware-road, addressed to the local commissioners a complaint of this kind, and they referred him to the Board of Taxes. On his making an application in that quarter he received an answer, in which he was informed that the circumstance of the landlord not receiving his rent was no ground for the remission of the payment of the tax; for the rent, under the circumstances stated, became a debt, which might be hereafter recovered by the debtor. Now this was a very hard case; and he put it to the right hon. Baronet whether this tax should not be levied in such a manner as to fall as lightly as possible on those who had to pay it. He said this, because he believed that a Property Tax was one of the best forms of taxation which could be adopted in this country, and, above all, if it was on a sliding scale. With respect to the working of the tax, he confessed that, in operation, it had not been so bad as he had anticipated; but when such a grievance as this existed it ought to be remedied. The right, hon. Gentleman said, when he proposed this tax, that the most urgent necessity could alone justify the imposition of an Income Tax. As to the tax on Property, he thought it roost desirable, as well as just towards the poor, as its existence had enabled the right hon. Gentleman to remove many taxes pressing heavily on that class; but then the right hon. Gentleman should take care to make it as little obnoxious as possible, and not to let it bear unjustly on anyone. He would, on bringing up the Report, move a provision to give local commissioners power to absolve landlords circumstanced as he had described, and when they were not likely to receive their rents, from the payment of the tax on such rent.

Sir R. Peel

would suggest to the hon. Member, as it had already been declared by a large majority, that this tax should continue for the period of three years only, whether it was worth while to make such small amendments. They should, however, in considering a suggestion like that of the hon. Member, take care that while they adopted a proposition with a view to give relief, they did not open the door to fraud. No doubt there might be particular cases in which the demand of the Income Tax might be a grievance, and when the enforcing the payment was not consistent with equity; but in attempting to remove this they afforded opportunity to the commission of fraud. He did not know what the circumstances of the present case were. [Mr. Wakley: The tenant was a bankrupt.] Then there was a bonâ fide necessity to pay rent; but if they adopted the suggestion of the hon. Gentleman, how easy would it be to evade the payment of the tax by some collusion between the landlord and tenant. He hoped the hon. Member would not press his Amendment.

Mr. Wakley

said, if the right hon. Gentleman would state positively that he would abandon this tax at the end of three years, he would be the last roan to interfere, as he thought that this general financial scheme of the right hon. Gentle- man not only entitled him to the confidence of the House, but to that of millions of the poorer classes. He was confident that it was the intention of the right hon. Gentleman to benefit by his measures the poorer classes; but he very much feared that at the end of three years they would be asked to renew it as it was for three years more. Thus they would go on from time to time, without any amendments being introduced into it. If the right hon. Gentleman said that it was his intention to resist all alteration in the Bill, he would sit down, believing that on such questions it would be useless to resist the Government. If the right hon. Gentleman would say that that part of the Bill relating to the Income Tax should be repealed at the end of three years he would not say a word more.

Sir R. Peel

said, that it was impossible to say what would be done at the end of three years. Perhaps by that time, the people might become so enamoured with the whole of the measure as the hon. Member now was with the Property Tax. In saying this, however, he would state, at the same time, that he did not despair of their being able to get rid of it altogether at the end of three years. If, however, the House of Commons preferred having the Bill for five years, on condition of adopting this Amendment, he would not object.

Mr. Spooner

had given notice, that he should, in Committee on this Bill, propose four Amendments, to this effect:— Clause enabling persons assessed under schedule D to deduct from the profits of their trade such sum or sums of money as would have been a fair remuneration to persons, not members of their family, for services performed by any member of their respective families. Clause to enable parties assessed under schedule D to deduct poor rates, and other parochial and local rates, paid in respect of premises used by them for the purposes of trade. Clause to enable parties charged under schedules D and E to deduct from the profits of their trade the amount of premiums paid for insurance upon their lives. Clause to authorise deduction on account of certain articles kept for the purposes of trade, though such articles may occasionally be used for other purposes. He found, however, that it would be more convenient to propose them on bringing up the Report; he should accordingly do so. He regretted that the right hon. Baronet would not assent to alterations being made in the Bill; for at it was on the points which he had mentioned, he knew that many cases of injustice had arisen. He hoped, however, before the bringing up the Report, that the Chancellor of the Exchequer would reconsider the subject matter of his proposed Amendments, and thus get rid of many just grounds of complaint against this measure.

Lord J. Russell

did not wish to be considered one of those whom the right hon. Baronet opposite supposed to be desirous of continuing the Income Tax without any modification. The tax might be viewed in two aspects—first, it might be thought by some parties that, under the plans proposed by the Government, a sanguine expectation might be entertained that the reduction of taxation they proposed might lead to so large an increase of the Revenue, that at the expiration of three years the Income Tax might be relinquished. He had listened very attentively to the debate which took place before the House went into Committee on this Bill, and he certainly thought that the right hon. Chancellor of the Exchequer had entirely failed in showing there was any probability that at the end of three years this tax could be abandoned. If those three years should be marked by as large a degree of prosperity as they had ever yet experienced, this was hardly probable: but if those three years should be years of commercial depression, there could not be the slightest hope that the tax could be dispensed with. But, secondly, this tax might be imposed for three years with the intention, then, should the revenue be found insufficient, to propose its continuance for two or three years longer. But, if there was a probability that this would be the case—and he entertained a strong opinion that it would be so—he thought that they should endeavour to obviate those inequalities which this tax undoubtedly involved. Seeing the course the Government had pursued, the large and comprehensive nature of their plans for the reduction of taxation, he wished they had carefully and minutely considered how they could alleviate the hardships of the Income Tax, and render its operation more equal as regarded permanent and fluctuating income. But, as the Government had not adopted this course, he felt obliged to the hon. Gentleman opposite (Mr. Spooner) for bringing some of those hardships under the notice of the House. With re- gard to one of the propositions of that hon. Gentleman, at least, he considered so strong a case could be made out, that he hoped his object would be accomplished, although he must admit there were some practical difficulties in the way. He referred to the third of those propositions, which was to allow persons to deduct from the profits of their trade the amount of premiums paid for insurance upon their lives. He was not aware that the hon. Member for Birmingham (Mr. Spooner) could not propose the Resolutions of which he had given notice in Committee; but he would be ready to support the modifications proposed by the hon. Gentleman when they were brought forward. He regretted that the Government had not proposed some such modifications; for the continuance of the Income Tax for three years longer was now unavoidable, although he thought there would be great danger in continuing that tax with all its objectionable features. The Government were about to give up a large amount of revenue; they were about to make a great experiment, from which they could not recede. It was true that there was not at the present moment a very strong feeling in the public mind against the Property Tax, for the attention of the people had been directed to those taxes which the right hon. Baronet opposite proposed to modify or repeal. Public attention had been diverted from the consideration of the hardships of the Income Tax to those taxes which the right hon. Baronet proposed to remove, and to others with which he had not interfered—such as the window tax and soap duties. But what security had they, if the obnoxious features of the Income Tax were retained, that in a year or two there might not be a strong and general outcry against it? and if, from any circumstance that tax should be repealed, the effect upon the Revenue would be most injurious. He thought, therefore, that Government should endeavour to render the tax as little open to objection as possible.

Dr. Bowring

said, that be, for one, did not indulge the hope that the Income Tax would be removed at the end of three years; for he believed that public opinion was gradually strengthening the right hon. Baronet opposite in the position he had taken. He (Dr. Bowring) would be glad to see the Property Tax considerably increased, because they might thereby be enabled to alleviate those burdens which pressed principally upon the working classes. It was a delusion to suppose that the Property Tax would cease at the expiration of three years; and he certainly should regret to see the right hon. Baronet retreat from the position he now held. He believed the measures proposed by that right hon. Gentleman would effect a great diminution of public misery, and a great augmentation of public felicity. He had heard some objections made to the removal of the auction duty; but he thought the benefits that would result from the repeal of that tax were not fully appreciated. He. (Dr. Bowring) did not know any tax the collection of which was more costly, embarrassing, or annoying, or which gave rise to more complicated accounts; and he had no doubt that its repeal would enable the Public ervice to dispense with the assistance of many hundreds of individuals. He thought it was most honourable to the right hon. Baronet that he proposed the removal of such a tax, more vexatious, and less productive, he believed, than any other. He (Dr. Bowring) hoped that the principle of direct taxation, which had now been adopted, would be more fully developed. He should have been much gratified if the Government had been able to obviae those inconveniences and that injustice which the collection of the Income Tax at present involved; for then this tax might be made—as he believed it ought to be—a permanent source of revenue. The objection which had been in the first instance manifested to a Property Tax had, in his opinion, greatly diminished; and he believed that there was now not only a general feeling in favour of the equity of a Property Tax, but that persons would be ready even to pay a larger tax on property and income derived from permanent sources. He considered, however, that the tax with regard to merely transitory income ought to be abandoned. He thought, also, that Irish property—but not Irish poverty—should be taxed; for he saw no reason, why, if there was wealth in Ireland, it should be allowed to escape fiscal jurisdiction more than wealth in England.

Viscount Sandon

said, it had long struck his mind most forcibly that the time was approaching when they must look more to direct and less to indirect taxation; and the connexion he had the ho- nour to hold with regard to a great commercial community had tended to confirm this conviction. This country was gradually reaching a position which rendered direct taxation less inconvenient, while indirect taxation became more inconvenient and oppressive. The property of the country was increasing to an enormous extent, and a very small per centage upon that capital would produce a large positive amount. One great objection urged against the Income Tax had been the danger of driving away capital from the country by imposing so large a weight of taxation upon it; but he thought when a tax of 3 per cent. would raise 5,000,000l. or 6,000,000l., there was not much danger of capital being driven away; and a tax of this nature enabled them to dispense with a large amount of indirect taxation. It was their duty to endeavour to provide occupation and employment for the labouring classes; and how was this to be effected? By promoting the industry of the country in every possible way. But what was the great obstruction to the progress of industry? The taxes imposed upon every description of manufacture, through the Customs and the Excise. He thought, therefore, that direct taxation was becoming more and more advisable; and he should be extremely sorry if the House pledged itself to abandon the Income Tax at any given period. At the same time there was no doubt that, if the Property Tax were made a permanent source of revenue, some alterations would be necessary. But in making such alterations, hon. Gentlemen must remember that fixed property was subjected to burdens and incumbrances from which other kinds of property were exempt. They must not forget the amount of taxation to which landed and fixed property was liable, and the expenses of repairs and improvements connected with such property, which rendered it less productive than property of other descriptions. Keeping in view the modifications which he hoped would hereafter be introduced in this measure—the increasing property of the country, which enabled them to realize a large amount of revenue by a very small per centage—and the importance of providing employment for their growing population, he thought that the House ought to maintain this tax. Some hon. Gentlemen urged that a repeal of the Corn Laws would be advantageous to the industry of the coun- try, but in that opinion he did not agree; for he believed that by repealing the Corn Laws they would do more to destroy industry than to promote it.

Mr. Forster

said, since he had had the honour of a seat in that House he had not heard a speech which had given him more satisfaction than that of the noble Lord who had just sat down. He congratulated the noble Lord on the admirable principles he had enunciated, although, in his opinion, the value of the noble Lord's declaration was materially qualified by his concluding observations. He (Mr. Forster) supported the Income Tax—first, because he was in favour of direct taxation; and, secondly, because he was aware that, without its continuance for three years, they could not expect that large and beneficial remission of taxation by which the right hon. Baronet was enabled to compensate them for the Income Tax. At the same time he regretted that the Bill was brought forward in such a shape as to preclude any amelioration or improvement in Committee. He had not heard any complaints against the tax itself, although he had heard many objections to the manner in which it was carried out. The hon. Member for Lambeth had said that he objected to direct taxation, as having a tendency to drive capital out of the country; but he (Mr. Forster) considered that indirect taxation had a far greater tendency to produce such a result. He found there was some technical objection to the proposal of the Amendment of which he had given notice, That the owners or lessees of mineral works, quarries, lime works, and other similar undertakings, now assessed under schedules A and B, be allowed to make their returns in the same manner, and with the same option of privacy, as other trading companies assessed under schedule D. And he therefore would not press it now, but would renew it on bringing up the Report. He would like to know on what ground this Motion could be objected to.

The Chancellor of the Exchequer

said, as the Motion was not properly before the House, he must decline making any statement on the subject; but he would say that he could not assent to the proposal of the hon. Member.

Viscount Ebrington

believed that the numerous taxes levied for the benefit of monopolists had tended to drive capital out of this country, and to injure its manufac- turing prosperity. But he could not agree with the hon. Member for Finsbury (Mr. Wakley) that the right hon. Baronet (Sir R. Peel) deserved great gratitude for the benefit he had conferred on the labouring classes. They asked for bread, and what did the right hon. Gentleman give them? They asked for a repeal of those duties which affected the necessaries of life; but in the first Tariff there were no reductions calculated materially to benefit the labouring classes. The reductions proposed by the right hon. Baronet chiefly related to articles used in manufactures. Indirectly, those remissions might be beneficial to the labouring classes; but they certainly were not calculated to benefit those classes directly. He had felt some surprise at the speech of his noble Relative opposite (Lord Sandon). He little thought that Liverpool was so soon to be added to the list of those commercial towns which, by the mouths of their Representatives, would speak out in favour of free trade; but the conclusion of the noble Lord's speech had considerably damped the anticipations he had formed from its commencement. He believed that, abstractedly considered, merely as a question of political economy, direct taxation was more economical, and involved far less difficulty in its collection, than indirect taxation; but he strongly objected to this tax, because it combined all the disadvantages both of direct and indirect taxation.

Mr. Darby

was aware of the great inconvenience of discussing general subjects in Committees of this description, and he should, therefore, touch neither upon the Sugar Duties nor the Corn Laws, which had been attempted to be dragged into this debate; he only rose to say that he feared the right hon. Baronet at the head of the Government would find himself in a considerable difficulty, if at the end either of three or five years he attempted to bring forward a different Budget; for he thought, from what he had heard in the course of the debate, that the House would force the Income Tax on the right hon. Baronet, whether he would or not. He had supported the imposition of the Income Tax, because he believed there was a necessity for it; but he regarded it as a tax that should only be imposed in times of necessity.

Mr. Wakley

Would it not be better, after what has already transpired, that the right hon. Baronet should state whether he will resist every amendment? The right hon. Gentleman will, I am sure, be candid with the Committee, and if it be his intention to resist every amendment, he will save a good deal of time if he will say so at once. That this Bill ought to be amended cannot be questioned; yet if it is to be distinctly understood that the tax is not to be continued beyond three years, I believe that the Bill as it is may be employed very beneficially. But I can tell the right hon. Gentleman that there is an under-current out of doors which is gradually rising and which will at length burst, in thunder. A Property Tax is felt to be just, but an Income Tax is objectionable in the highest degree; not, however, in my opinion, in consequence of the way in which it has been carried into execution. I don't think that. I complain of the state of the law, and not of the manner in which it has been exercised. The noble Lord the Member for Falmouth (Lord Ebrington) said that the people "asked for bread." He did not say what the right hon. Gentleman had given them instead; but I know that in a certain Union the people asked for bread, and the noble Lord gave them bones.

Sir R. Peel

I should certainly be very discourteous were I to say that I should resist every alteration that can be proposed; but I may tell the hon. Gentleman that I have the strongest impression that it will be consistent with true policy to continue the Bill for the present. But it we admit the hon. Gentleman's Amendment, we shall have a whole host of Amendments forced upon us, which will render it quite impossible for us to conclude our arrangements before the 5th of April. The noble Lord the Member for London states that he shall support the Amendment of my hon. Friend the Member for Birmingham, for the insertion of a clause to enable parties charged under Schedules D and E to deduct from the profits of their trade the amount of the premiums paid for insurances on their lives. But why is that to be confined to profits on trade only? Why is not the clergyman and every one whose income is temporary to enjoy the same privilege? My hon. Friend the Member for East Somersetshire (Mr. W. Miles) is going to propose an Amendment to relieve tenant farmers; and if we admit any of these we shall have claims made by every person who derives his income from temporary sources, in contradistinction to those who derive their income from permanent sources. Without saying, therefore, in an arrogant manner, that I shall resist every Motion, I will say, as courteously as I can consistently with my sense of duty, that I think it right to adhere to the present Bill, and I think that by saying this I may perhaps prevent an immense consumption of time at present. When the "under-current" shall have greatly swelled, which the hon. Gentleman (Mr. Wakley) does not think it will be till the end of three years, then will be the time to consider whether or no the principle, of the Bill shall be altered. I hope that the noble Lord opposite will consider this question,—whether, as the Act is to be continued for only three years, this is the time either for the admission or the discussion of small alterations? I think it is not.

Lord J. Russsell

If I thought that this Bill was intended only for three years, I should be ready to give the right hon. Gentleman the advantage of it with all its objections; but, as I do not expect that it is a Bill for three years only, after the reduction of taxes that the right hon. Gentleman has made, I am ready to agree to any proposition which, as it seems to me, will make it less objectionable. The right hon. Gentleman says, truly, that if the Amendment of the hon. Gentleman opposite, the Member for Birmingham, is carried, others would be equally desirous to obtain some exemption; but if the principle of the Amendment, which I think a just one, be agreed to, I should then suppose that the Government would take it into consideration, and would say how far the principle should be carried, and where it ought to stop; and that on a future day they would declare their intention to modify the Bill.

Sir R. Peel

At an early part of this discussion we were blamed for having contracted so narrowly our surplus. We were told that it was not enough to have a surplus of 100,000l. The noble Lord strongly condemned us for having so narrowed our surplus; but, if the noble Lord is going to confine the operation of the Income Tax, that must, of course, still more and very materially reduce our surplus. If the House overrule our Income Tax, the House will, I hope, then at least allow us to reconsider what are the taxes which we should propose for remission and abolition.

Lord J. Russell

I think, if I were bound to help the right hon. Gentleman at all in this matter, I should say that if any diminution were made in the Income Tax receipts, he might get his money back by making a more rational proposition with respect to sugar. I do not, of course, mean from money paid into the Exchequer on account of sugar, but from that which it is proposed to devote to the benefit of the West India proprietors.

Mr. Spooner

was acting, not on the principle of reducing the Property Tax, but of doing justice. Was it fair that a man whose income ended with his life should pay out of it the same sum as the man who left his income behind him? He should persist in moving an Amendment on the first opportunity, and he did hope and trust that the noble Lord would give him his support.

Clause agreed to.

The remaining Clauses agreed to. The Bill passed through Committee.

The House resumed. The Report to be received.