SUPPLY—TAXATION. (Hansard, 7 August 1848)

§ MR. EWART
said, that nothing, at this late period of the Session, and at this hour of the evening, would have induced him to introduce his proposal for a "Revision of our present System of Taxation," except his deep conviction that the Parliament ought not to part without some consideration of that important subject. He had sought for opportunities of bringing it forward sooner, and he had been disappointed, He desired, in limine, to guard himself against the charge of desiring to propose any sweeping theoretical change in the system of our customs duties. So long-as we had such enormous charges to meet, we must derive a largo proportion of our taxes from this source. But the question was, whether they might not be reduced with immediate benefit to the consumers, and with ultimate benefit to the revenue. Cur whole system of taxation, however, required to be reviewed. It was still "a mighty maze, and all without a plan;" every portion of it should be reduced into harmony and order. Eighteen years had elapsed since Mr. Poulett Thompson proposed its revision. He suggested a Select Committee on the subject. But to him (Mr. Ewart) it appeared advisable that the Government should not devolve on a Committee, but should itself assume, the responsibility of so vast an inquiry. They had the means of investigation; they had the instruments of action; they should inquire, and they should act. It had been hoped that something in the spirit of the reforms so successfully made in our taxa- 1182 tion by Sir Robert Peel would have been accomplished in the present Session. But what had they done? They had been constantly engaged, it was true. They had Patched up the sugar duties, and they had abolished the duty on copper ore; but they had spent their time in a sort of "strenuous idleness;" of much motion and of little progress. And yet, if over there were a time when consideration was due to the conduct, as well as the condition, of the people, it was now. Amid the convulsions which had shaken Europe, amid "this rocking of the battlements," England almost alone remained calm and unshaken. Was not sonic requital due to the sound Common sense and wise sobriety of the people? Two modes of requiting them were obvious: by extending their commerce, and increasing their employment. The state of the Continent of Europe had closed many sources of our Continental trade. Now, therefore, if ever, was the time when we should open our trade with China and America. It was well known that our exports to the European Continent amounted generally to about 26,000,000l. sterling. They had decreased, on the 5th of May this year, by 2,500,000l. It was probable that in this month (August) the diminution was at least 4,000,000l. sterling. But he (Mr. Ewart) confessed that he was principally urged to make this pro-position by a sense of our duty to the poor. No political economist denied (he apprehended) these propositions: the labouring) art of the population pays the greater Proportion of our customs duties; the relative proportion of duty paid by them on the cost price of the article is much greater than that paid by the rich; as the cost price goes on decreasing, the disproportionate pressure on the poor goes on increasing also (this remark had been made by Mr. Huskisson); lastly, the poor were the principal, often the only, sufferers by adulteration of the articles consumed. But they suffered prospectively as well as actually; because our present system of taxation, by limiting the extent of our trade, limits the extent of their employment. The first change which should be effected in our customs duties was obviously a reduction of the duty on tea. In the consumption of all such articles a great social revolution had been silently creeping on. They were once a luxury of the rich; they had now become a necessity of the poor. Half a century ago the tea duty must have fallen principally on the luxurious—it was 1183 now principally paid by the working, classes. In 1785, only 768.520 lbs. of tea were consumed; we now consumed between forty and fifty millions yearly. The same change had taken place in other articles. The question was, therefore, whether by lowering the duty we could not extend the consumption still further—whether we could not make it descend, as it were, into a lower stratum of society. That we could do so was probable, because in our colonies, where the duty is so much lower, the consumption is so much greater than it is in the mother country. In some colonies, it was even stated to be ten times as great for each individual. Again, let us consider the question in reference to our trade and manufactures. The duty on tea has been truly described as a duty on our manufactures. This part of the subject was abundantly elucidated before the Committee on the China trade last year. Recent facts have additionally confirmed it. In the first six months of this year, the export of our plain calicoes to China had fallen from about 46,000,000 yards, which they were in 1844, to about 23,000,000 in 1848. The export of our printed calicoes had fallen in the same period from about 2,700,000 yards, to 800,000. Consequently our shipments of tea from China had declined. They had declined by nearly 4,000,000 lbs. since April, as compared with the same period last year. The shipments of the United States, on the contrary, had increased in the same period, by about 1,250,000 lbs. And at this time he was assured that our manufactures had almost ceased to be exported. Yet what could be more promising, even to the eye of sober reason, than the futurity of our China trade? The great northern port of Shanghai had been opened to us. Shanghai was the Liverpool of China. It was the great centre of water-communication; and, unlocking to us the north of China, might largely extend the demand for our woollens. There was another reason for the reduction of the tea duty. If, at any time hereafter, the consumption of tea increased on the Continent of Europe, it was most desirable that this country should become the great depot of tea, as of every other article. But he (Mr. Ewart) reverted to the employment of the people as his main object; and he would conclude his remarks on this subject with the words of Mr. Macculloch: "Nothing can justify the magnitude of this simple duty (the tea duty); beyond all question the most ob- 1184 jectionable on our tariff." At some future, he hoped no distant, period, the tobacco duty would demand the consideration of the Government. It was true that tobacco was a good subject of duty; but at its present high rate, the duty was not only (like that on tea) oppressive to the poor; it was most injurious to their morality. On the one hand tobacco was largely smuggled; on the other, it was largely adulterated. The duty to the poorest consumer (in relation to the cost price) was almost in the proportion of 1,000 per cent. Yet it was stated before the Committee on Tobacco, in the year 1844, that nine-tenths of the consumers were among the labouring poor. Could the temptation to smuggling be, in such a case, withstood? Could the Custom House itself withstand it? He found that Mr. Dean (late Chairman of the Board of Customs) made this avowal: "After what has been discovered, it is clear that no increase of pay to our officers can guarantee their morality." Since that declaration was made, the facilities of smuggling had been increasing. The augmentation of our Continental and American steamers—of our coasting vessels—encouraged it. On the other hand, the progress of chemical science facilitated adulteration. Under those circumstances, it was no wonder that in one year 800 persons were committed for smuggling tobacco; (how many more cases were compromised or undiscovered!) it was no wonder that children were taught smuggling in a regular school of contrabandists; and that adulteration was an established business of our tobacconists. But in a commercial point of view, in reference to our trade with the United States; in a pacific point of view, as binding together two great nations, the tobacco duty must come under future, and no distant, consideration. This country had, thirty years since, been the great European entrepôt of tobacco; he hoped it was destined to become so hereafter. In the meantime, as a kind of modified reform, he recommended the Chancellor of the Exchequer to abolish the excise survey on tobacco (as had been done in the case of tea and wine); especially as tobacco had now been proved, in its natural state, to contain sugar, the presence of which, on analysis, had been hitherto deemed a test of adulteration. He would now willingly have entered on the question of the wine duty. Material as he deemed its reduction to the interests 1185 of commerce and the concord of two great nations, he acknowledged that, like tobacco, it was a subject of prospective, though not remote, consideration; and the present agitated state of France diverted attention to questions of more indispensable necessity. But he still maintained a strong opinion that it was a link in the series of required commercial reforms. But turning from our Customs Duties to our Customs Board, he asked whether it might not be possible to effect a saving in that department? A vast number of duties had been reduced, but no salaries. In the Excise Department, on the other hand, he remembered that a saving had been effected, by reduced salaries, to the extent of 54,000l. a year. If, indeed, a sufficient reduction could hereafter be effected in the tobacco duty, there appeared to be no reason why the coast-guard might not be dispensed with, and the country thereby spared the cost of 300,000l. or 400,000l. a year. It would be remembered that a Commission was appointed a few years since on the subject of frauds in the Customs Department. They had recommended certain reforms in detail, but no comprehensive measures. It appeared from a return which he had procured, that these suggestions had been to a great extent adopted. But he feared it was a case in which the old Lucretian doctrine è nihilo nil fit would apply; and the deeds of the Board had kept pace with the projects of the Commissioners. He turned now again to the Excise Department, in which many reforms had been accomplished most beneficial to the people. The system of surveys and permits had been almost abolished. Duties had been repealed on such articles as sweet wines, starch, and vinegar. More recently Sir Robert Peel had wisely repealed the auction duty, (a reform founded on the soundest principles,) and lastly the abolition of the glass duty had been a boon to commerce, society, and art. In 1848, in his work on Taxation, Mr. Mac-culloch had made the following prediction, which events had fully justified:—" Were the duty on glass abolished, the fair presumption is that it would be used to an incomparably greater extent in mirrors, for prints, (thus encouraging the arts,) and in the windows of shops and houses." No one could walk through the new streets of any suburb of London, of any town, almost any village, without perceiving that this prediction had been not only accom- 1186 plished but surpassed. Glass was moulding itself into a thousand new forms. Art, as well as trade, was deriving benefits from the change, of vast and unforeseen importance. Would not our success in this amendment encourage us to proceed? The soap duty was a subject of increasing reprobation. We had just passed a Sanatory Reform Bill. Could we add a more obvious or indispensable corollary to such a measure than a repeal of the duty on soap? He believed that the soap trade (including the manufacture of alkali) employed 100,000 workmen. The present duty discouraged enterprise and science. As formerly in the glass trade, as now in the brick manufacture, an article spoilt in making a new experiment in the soap trade still paid the soap duty. An eminent manufacturer, now retired from an occupation which he could no longer pursue with satisfaction, had made the following statement:— No improvement has been introduced into the soap manufacture during the forty years we have been in the trade." "It is a purely chemical operation. But the interference of the Excise precludes that class of experiments which alone can lead to new processes. In 14 years 449 traders have withdrawn from the trade…… We attribute this constant change to the temptation afforded by a high duty to a class of men who evade it, and who steadily destroy the respectable maker. He believed it to be a fact, that the liabilities of the soap manufacturers who had failed in Liverpool alone, in 1846, amounted to 700,000l. And those with whom he had corresponded, attributed such failures to the effects of the high duty, which tempted speculation and dishonesty to disturb the regular application of capital and the steady course of trade. But if we could not repeal this duty, we might follow the advice of Mr. Macculloch and the Commissioners of Excise Inquiry, and reduce it (without involving a serious loss of revenue) to the rate of 1d. in the pound. The paper duty ought also to be a subject of early fiscal reform. It combined three bad qualities. It was a tax on an implement; on an implement of business; and on an implement of instruction. The processes it involved were more worthy of the Perverse ingenuity of China than of the direct simplicity of England. Need he advert—he had before adverted—to such burdensome complications as labelling, writing, numbering, dating, weighing, recording, and stamping. Then, if the paper was to be 1187 exported, the labels were to be cancelled. But the consequence of the duty (notwith-standing the concession of a drawback) was, that we had scarcely any export. There was no complaint, he believed, against the Excise Board as a body, but against the system. He did not believe that a man existed more inclined to give facilities to trade, or more capable of appreciating and comprehending their value, than the Chairman of the Excise Department, Mr. Wood. But trade, under the excise system, was often not submitted to the discretion of a department, but to the mercy of an individual. The trader might have confidence in the equity of the Board, but how could he trust to the equity of the officer? He (Mr. Ewart) had already argued for the repeal of the paper duty, on account of its oppressiveness on the literature and language of the country. By the enlargement of our commerce, our language must gradually become, to a great extent, the language of the world. He considered therefore the paper duty and another (to which he should afterward allude)—the duty on advertisements—to be most hostile to literature and trade; and he trusted we might live to see them both abolished. But, if neither the soap duty nor the paper duty could be repealed, another obnoxious duty might be sacrificed—he meant the brick duty. Mr. Pitt who proposed, Sir Henry Parnell who investigated it, both coincided in deeming it an unjust duty. It was scarcely felt where there happened to be a stratum of stone. It stinted the building of cottages for the poor. When first imposed it only amounted to 2s. 6d. on the thousand bricks; it amounted now to 6s. In the United States there was no such duty. He had learnt that the cost of bricks there was 12s. 6d. per thousand; on our great brick grounds (for instance at Cowley) the cost was about 24s. Even in France, bricks used in the country for cottages were free from duty. He had shown last year that the material of bricks might be made an instrument of art—as we saw in our great buildings, at Hampton Court, in our ancient mansions, and elsewhere. He therefore reiterated against this duty the charge of the Commissioners of Excise Inquiry in 1836, "that it was one of the most impolitic of duties "—the admission of Mr. Pitt, and the conclusion of Mr. Macculloch, that it was "partial and unequal in its pressure." He now turned from the Customs and Ex- 1188 cise to duties of a loss general character. Among them the first duty which might be abolished was the duty on advertisements. This was a tax on a vehicle of commerce. In this respect it resembled the auction duty. The proportion of advertisements published in the United States (where no such duty existed) was enormous as compared with this country. Mr. Poulett Thompson (the late Lord Sydenham) had many years ago represented it to be more than ten to one. Such a duty was disgraceful to a commercial nation. It was against the interests of literature. Beneath its influence the humblest applicant for the meanest situation suffered equally with the most extensive advertiser. Its amount, combining Great Britain and Ireland, was only about 162,000l. It would be an act of policy and justice to repeal it altogether. There were, however, various duties to which—if the principle of repeal or reduction could not be applied—we might at least apply the principles of commutation or equalisation. Might not the window duty be commuted? Under the present system of sanatory reform it was almost impossible that the window duty could continue to exist. It had always appeared to him that a house duty (not interfering with trade) or some other direct and impartial tax, would be better than a window duty. Might not the impolitic and almost immoral duty on insurances be commuted? Mr. Macculloch recommended its reduction to to per cent. and affirmed that the property insured would be nearly doubled in amount. In applying the principle of equalisation, the most obvious subject of it was the Stamp Duties, Their inequality, especially in reference to the poorer classes, had often been complained of. In a speech, which he thought never had been answered, Mr. Cobbett had formerly called the attention of Parliament to this subject. It was elucidated by Mr. Baxter and other experienced legal authorities in their evidence before the Committee of the House of Lords two years ago, on "The Burthens on Land," and by Mr. Macculloch in his various works on Taxation and Revenue. To these authorities he begged to refer, as proving the grievance. It was especially on the transfer of land in case of poor capitalists—a transfer which it was now deemed most politic to promote—that the inequality was experienced. For instance, in the case of a 20l. purchase of freehold property, the stamp duty amounts 1189 to 2l. In the case of 200,000l. or 300,000l. purchase it is only 1l. 5s. So, likewise, if in conveyances or assignments, covenants for the production of title-deeds are required, the stamp duty is the same, whether the purchase he for 20l. or for 200,000l. And in the case of mortgages he believed that the stamp duty amounts to 2s. per cent for 50l., but only to 6d. for 100,000l.: the proportions being eighty times as great on 50l. as on 100,000l. In short, as Mr. Macculloch suggested, two: reforms were required in the Stamp Duties: "a simplification of the acts, and a just adaptation of the ad valorem principle, instead of an inversion of it. "Again, the application of the Stamp Duties to settlements was most unfair. It appeared that the only settlements liable to stamp duty were "definite and certain sums of money," and "definite and certain amounts of the Government funds, or Bank or East India or South Sea stock." Under these terms many kinds of personal property, and all landed property, were exempted from the stamp duty on settlements. Yet, as had been most justly observed by the eminent economist whom he had already quoted, "the settlement of landed property is one of the fairest subjects of taxation: the object of a settlement being to withdraw land from commerce" The operation of the stamp duty on probates and letters of administration also was unfair. Great properties were in this case also favoured, to the detriment of proper parties. He would avoid detail on this subject; since it was abundantly illustrated in the works of Mr. Macculloch and other political economists. Here, however, our attention was naturally called to the ex-emption of landed property from the Probate and Legacy Duties; a subject which had often engaged the attention of Parliament, and often would again, until either directly or indirectly that inequality should be removed. In reference to the whole of this subject, he thought the recommendation was a sound one, that we should abolish the present probate and administration duties, and replace them by a new duty equally affecting all legacies or beneficial successions, whatever their nature or amount. Lastly, he thought the Government was bound to inquire at least, and satisfy the public, whether any difference could be made between the taxation of fixed property and income. The next thing to the removal of an evil was to show that it could not be removed. What 1190 then was the brief object of his (Mr. Ewart's) Motion? That the Government should inquire. It was his firm opinion that they ought to have reviewed the whole subject last year. But now the necessity for their doing so was still more obvious and urgent. The Chancellor of the Exchequer might answer, "Your scheme is only a comprehensive theory; show me a plain and practicable plan." He (Mr. Ewart) then proposed this plan; one, in his opinion, not beyond the powers of a resolute and energetic Chancellor of the Exchequer. Let him reduce the tea duty: repeal the soap duty, the paper duty, or the brick duty. Let him repeal the advertisement duty. Let him replace these by direct taxation. Let him com-mute the window duty: let him rearrange and extend to the now-exempted parties the probate and legacy duties; and let him reform and render just the stamp duties. He (Mr. Ewart) thought that the accomplishment of some such scheme would do immense good. He thought that it was worth the while of those who owned the property of the country to consent to the proposal. The property of the country ought to come in aid of the commerce of the country. Even a small addition to direct taxation would enable us to accomplish considerable good. He had endeavoured to show last year that an approximation to a more direct system of taxation would be attended by greater cheapness of collection. This must be the case, he repeated, as society advanced. Capital would be more and more invested in publie undertakings and in loans: and in almost all those cases the tax might be collected in transitu, without the intervention of any system of collection whatsoever. On the other hand, the liberation of commerce would reproduce capital and call labour into life and action. Our present position had been foreseen by statesmen of the most comprehensive views on commercial and financial questions. These were the words of Mr. Huskisson; he (Mr. Ewart) had heard them with his own ears in the year 1830; the memorable year in which Mr. Huskisson died:— The profits of stock and the wages of labour pay more then their just share of taxation. If we are in danger of falling into this state of things, may we not guard ourselves against it by some change in the principle and distribution of our taxation? I know I am treading upon tender ground. It is impossible to touch upon it without coming into collision with the interests of many, and those, perhaps, the most powerful in this 1191 House and in the country. But I fool myself bound to state a strong doubt whether we shall afford adequate relief without removing a large amount of those taxes which press directly on income arising from capital engaged in industry, and upon the income of labour to which that capital gives employment: transferring the burden upon all that class of income which arises from capital not so employed. Subsequently the late Lord Sydenham assented to this doctrine as one "which would be beneficial in the highest degree to the industry and improvement of the country;" and it was supported by the authorities of Sir Henry Parnell and Lord Althorp. In conclusion, he (Mr. Ewart) asked for no sweeping change. What he demanded was, a reconsideration of the subject, for the general good of all. So far, amid the perturbation and chaos of Europe, our situation had been secure. But, while we maintained order as indispensable to the security and improvement of society, let us promote improvement as the best justification of the maintenance of order. Let us do justice to our working classes. While other nations are trying visionary and Utopian schemes of labour; spinning their cobwebs in the sunshine (or rather in the storm) of their newly risen constitutions, let us, at least, set them a different example. Let us pursue the more old-fashioned, but sounder, system of extending our commerce, developing the powers of labour, and doing justice to a suffering and deserving people. The hon. Gentleman then moved— That it is expedient that there be a revision of our present system of taxation; especially with a view to extend the commerce of the country, and to increase the employment and comforts of the people.

§ The CHANCELLOR OF THE EXCHEQUER
was aware that it was his duty to do that which his hon. Friend had called upon him to do, namely, to consider the taxation of the country. In a great deal of what his hon. Friend had said, he expressed his concurrence; but he was not prepared to deal so largely as to reduce duties amounting to 9,000,000l., and to impose that sum upon the realised property of the country. [Mr. EWART: I did not propose that.] He must have proposed a much larger increase of taxation than he had done if he had intended to repeal the duties mentioned by the hon. Member. And the reception which he had met with, in proposing an increase of taxation, had certainly not been such as to induce him very lightly to make a similar 1192 proposition to that recommended by his hon. Friend. To a large and considerable extent the principle recommended by his hon. Friend had been of late years carried into effect. But at this time of the Session, and at that hour of the night, he should not be consulting the wishes or the convenience of the House if he went into a long discussion of the points raised by his hon. Friend. He hoped the hon. Member would permit the House to go into Committee.

§ MR. HUME
considered it unfortunate that his hon. Friend had not had an opportunity of introducing the subject at an earlier period of the evening, before the attention of the House had been exhausted. The stamp duties were in no country so unjust and so oppressive as in this, nor did they anywhere else bear so heavily upon the poor man, or so lightly on the rich. Under our excise laws also, all articles paid double or treble what they ought to pay, not only in the direct tax, but in the interference with labour and industry at every stage. He believed that if there were no excise duty on soap, that article would be manufactured better, and in greater quantities, and that it would become an article of export, instead of being, as it was until lately, an article of import. The Chancellor of the Exchequer had not the money to spare to carry out the views of his hon. Friend. Why, he never would have the money to spare, because in proportion as he increased the income, the expenditure was increased. The whole of the income-tax might been avoided; but as soon as they added 5,000,000l. to the taxation, the expenditure had increased in a direct proportion. The assessed taxes ought to be removed, interfering, as they did, with the labour and industry of the country. The tax upon carriages, to take one instance, was highly injudicious. Then there was the probate duty; why should one class of property be exempt, while another paid? Why, the country gentlemen, after they had passed the tax on personal property, would not pass the further vote which would have extended it to real property. It was to be hoped that Parliament would occupy itself with this whole subject next Session; but there was no hope from the Government, unless Parliament interfered.