COMMERCIAL LEGISLATION—THE INCOME TAX. (Hansard, 6 December 1852)

HC Deb 06 December 1852 vol 123 cc981-97 981

MR. GLADSTONE
Sir, I wish to call the attention of the House to a subject which appears to be of the utmost importance—of constitutional importance, I may fairly say—in connexion with the financial statement of the right hon. Gentleman the Chancellor of the Exchequer. On Friday last the right hon. Gentleman, I understood, announced that on Friday next he should propose to the House to augment the House tax, the inference being that the arrangement was to take place from the 5th of April next. I conclude, of course, that the right hon. Gentleman has no intention of making a change in the House tax during the residue of the current year. The right hon. Gentleman likewise stated that the subject of the Income tax might stand over until after the recess. I think the right hon. Gentleman was understood to say that the question of the Tea duties was to accompany, on Friday, the question of the House tax. I apprehend I am correct in stating that, with regard to any reduction of the Tea duties, or any other such matter, no preliminary Committee is considered necessary, but that it is the intention of the 982 right hon. Gentleman to introduce a Bill for the purpose, without any previous proceedings. If so, I take it for granted that there will be no preliminary Resolution on the Tea duties on Friday next, and that the business of that day, as at present understood, will have reference solely to the increase of the House tax. Now, the opinion which I venture respectfully to state to the House is, that such is by no means a regular, an advantageous, or, I would almost venture to say, a constitutional order of proceeding. And, without pressing the right hon. Gentleman for any declaration of opinion at the present moment, I am desirous to state to the House, and to him especially, the grounds on which I venture to found that statement. They are partly of a general and partly of a special nature. We are going to make provision for the financial year that commences on the 5th of April, 1853. Now, when we are considering the provision for that year, the first thing which necessarily strikes the mind of every man is, that on the 5th of April the Income tax, from which we derive more than one-tenth of our gross revenue, will have ceased, legally, to exist; and I put it strongly to the House and to the Government, that the first duty of this House in reference to the provision for that year must necessarily be to consider what course we are to pursue with regard to the Income tax. Are we to have the Income tax after that 5th of April, or are we not? It is on that, and not on the increase of the House tax, that the provision for that year depends; and my mature conviction is, that we shall find it impossible to give a satisfactory judgment on the House tax until we know what is going to be done with the Income tax. Suppose the judgment of the House to be that the Income tax shall lapse, or be greatly reduced; such a thing—and we don't know that such a thing may not take place—such a thing, it is clear, would have, of necessity, a most material bearing on the judgment we must form, and on the votes we must give when the House tax is under consideration. The necessity of resorting to the House tax at all, of increasing the area of the House tax, or increasing the rate of the House tax, are all questions posterior in order to the grand question of the Income tax, its continuance on its present basis, or the question of its extension. That is the general ground on which, even were there no other question as to the Income tax than that of its con- 983 tinuance, I should say that the duty of the House, in the discharge of its great functions, the providing the Ways and Means for the public service, is to proceed to consider the question of the continuance of the Income tax, before it deals with any minor question whatever—whether regarding augmentation of the revenue, as in the ease of the House tax, or diminution of the revenue, as in the case of the Tea duty. But, in the present instance, I would remind the House that there are special considerations which give tenfold force to the principles which I am endeavouring to state. We are not now to he invited to consider the question of the renewal of the Income tax; no mere continuance Bill will be brought before us as in 1845 and in 1848, and again in 1851 and in 1852; it is a reconstruction of the Income tax on which the House is to be invited to decide, and is that reconstruction of the Income tax a mere matter of mechanical arrangement and detail? On the contrary, it is right that those who feel as I do with reference to that proposed reconstruction, should now, at the earliest possible moment, intimate to the right hon. Gentleman that they entertain objections to that reconstruction of a character wholly insuperable, and that, if the question is reopened, it must be discussed, and the judgment of the House taken in the most formal and solemn manner. Now, if there are those in this House who differ fundamentally with each other as to the principle on which this tax is to be continued—one party holding one opinion and the other the very opposite—it is obvious that it will be absurd to argue that the continuance of the Income tax, in any form, is placed beyond the possibility of a doubt. The right hon. Gentleman proposes to make three great changes:—First, to include Ireland, and on that change I will not dwell at the present moment, because I take it for granted that the proposal which has been made, cannot—I will not say it was never intended to—stand as it is at present. The second change is as to the removal of exemptions, it being proposed that real property down to 50l. shall be made to pay the tax, and other property down to 100l., instead of down to 150l., as heretofore. Now, Sir, this is a question of the greatest importance, and in my mind of the greatest delicacy. But the right hon. Gentleman has followed a precedent in a former Income tax for a proceeding of this kind; and it is therefore not 984 on account of that proceeding, dangerous and inexpedient as I confess I think it to be, that I have received the impressions which I at present entertain with regard to his proposition as a whole. It is, I frankly own, in reference to that proposal of the right hon. Gentleman, which may perhaps at first sight and in the first instance be a popular proposal either in or out of this House—the proposal to vary the rate of in come tax, raising 7d. on schedule A and C, and reducing his rate to three-fourths of that amount on schedules B, D, and E. It is with reference to that proposal that I am bound to tell the right hon. Gentleman that a question of principle, a question of radical and fundamental difference, is opened among those who entertain opinions opposite to himself, of a nature so formidable that it is impossible for them not to offer to any proposition of the kind, from the first to the last, the most strenuous opposition. Now, Sir, I shall not at present enter into the details of my objections, because I only wish at this time to impress upon the House the dangerous and precarious position in which we shall be placed, if, while the Income tax remains an uncertain proposal, we were finally to deal with the House tax on Friday next. My ground of objection to his Income tax proposal, however, is that which was well stated by my right hon. Friend the Member for the University of Cambridge (Mr. Goulburn) on Friday night. It is, that it involves a breach of the public faith to the national creditor. I hope this House will not depart from the doctrine which was laid down by Mr. Pitt upon this subject in 1798. On the 3rd of December of that year, Mr. Pitt, negativing the objection which might he urged that he had no right to levy the Income tax on the holder of the public funds, used these words; and I have no scruple in quoting them, because they have been, as it were, a charter, and the rule and standard of Parliamentary practice and doctrine on the subject. Mr. Pitt said— I shall have no hesitation in submitting to the Committee, that when a general assessment upon income is to take place, no distinction ought to; be made as to the sources from which that income may arise…Whenever an idea has been started of imposing upon the stockholders separately and distinctly any sort of tax, I have reprobated the attempt, as utterly inconsistent with the good faith of public engagement. But the matter is materially reversed when a tax is to be levied on the income of every description of persons in the realm; when it is no longer in the power of the stockholder to say, 'I could avoid this tax by 985 removing my property from the funds to landed security or to trade.' I should say to the stock-holder as one of the public, 'If you expect from the State the protection which is common to us all, you ought also to make the sacrifice which we are called upon to make. It is not peculiar to you; it does not belong to the quality of your in-come; but it is made general, and required from all.'"—[Hansard, Parl. Hist, xxxiv. 14, 15.] Those last words will make obvious to the right hon. Gentleman the nature of the objection which I take. The arrangement which Mr. Pitt proposed was a personal tax, under which he levied from each individual for the service of the year an equal proportion, exempting only the necessitous, of the profits which they might make, whether from their labour or their capital, within the year. It was a personal tax on individuals in respect of their income, but it took no cognisance of the quality of their income, and that was one fundamental and essential characteristic by which, in the judgment of Mr. Pitt, his plan was ex-empted from the charge or suspicion of a violation of public faith. But the plan of the right hon. Gentleman opposite, on the contrary, goes directly to the quality of the income—it looks to the source from which the income is derived—to the nature and permanence of that income—and it proceeds upon a principle fundamentally and diametrically opposed to that of Mr. Pitt. And now, how does this bear upon the words of the Act of Parliament? The words of the Act of 1801 are as follows:— And be it further enacted, that such contributors, duly paying in the whole sum so subscribed at or before the respective times in this Act limited in that behalf, and their respective executors, administrators, successors, and assignees, shall have, receive, and enjoy the said annuities by this Act granted in respect of the sum so subscribed, out of the moneys granted and appropriated in this Session of Parliament for payment thereof, and shall have good and sure interests and estates therein, according to the several provisions in this Act contained, and that the said annuities shall be free from all taxes, charges, and impositions whatsoever. Now, there is but one answer to those words, and it is, that they prove too much. It may possibly be said, that you already tax the funds. The reply of Mr. Pitt would be: "We do not tax the funds; we lay no tax upon that property which alters or varies its relation to any other description of property in the country." But do we stand upon the opinion of Mr. Pitt alone? It is not upon the opinion of Mr. Pitt, great and weighty as that might be 986 in a matter of finance, that we alone rest.; We have also the adoption of the opinion of Mr. Pitt by all the statesmen of two generations, by every political party in the State, and by almost every Parliament that has sat since 1798. The question was solemnly discussed then. It was solemnly discussed again in 1803, in 1806, in 1831, on the proposal to lay a duty on the transference of stock, in 1842, and again in 1848. The judgment of Parliament has been perfectly uniform on every one of these occasions; and what were the circumstances under which that opinion was so adopted? Mr. Pitt, when he introduced the measure, had in opposition to him an energetic and able party ready enough to find fault with him, and to reconstruct his measures and alter their basis; but that very party, when they acquired office, and become responsible for the government of the country, like him, took the same course, and steadily refused to look at the source or the quality of the income, thus preserving to the tax the character of a purely personal tax. But, besides, statesmen, and political parties, and Parliaments, there is another yet higher authority by which Mr. Pitt's doctrine upon this subject was received; and that is the authority of the lenders of that money themselves. Those words that were inserted in the Loan Act were words on the faith of which the money has been lent. Do not tell me, then, that Mr. Pitt's measure has already broken your faith with the public creditor, and that you may go on to something further. It has done no such thing. The Loan Act from which I have quoted was for raising 28,000,000l.; and the men who lent that sum did so subject to the Income tax. They knew perfectly well the meaning of those words. They knew that they were not intended to preclude them being subject, in common with every other person in the land, to a tax for the general service of the State; but that they were intended to prevent their being subject to taxes which looked to the quality of the income, and the source from which it was derived. On the faith of those words, and that Parliamentary and legislative construction of them, half of your national debt has been borrowed; and now after the lapse of fifty-five years, and of two generations of statesmen, including some of the greatest Finance Ministers in the history of the world, it is proposed fundamentally to alter the basis of this Act of Parliament. A great 987 deal more may be said upon this subject, but I will not trouble the House with it now. What I have said has been, in frankness to the right hon. Gentleman and to the House, to point out how much difficulty and uncertainty must necessarily overhang the whole subject of the Income tax, if we are not content to take the principle which was adopted nearly sixty years ago, and has since then been maintained without variation, but insist upon making it a measure wholly new in its fundamental principle—small, I grant, in its present dimensions, but most capable of extension and multiplication; for the day may come when those who now, perhaps, think little of the proposition of the right hon. Gentleman, because it is a small and trumpery question of whether they shall pay 5¼d. or 7d. in the pound, may find these sums doubled, or trebled, or quadrupled, under the pressure of the public necessities, and when it may be too late to assert a principle which is now, for the first time, as-Bailed and threatened with violation. If the right hon. Gentleman has adopted finally and deliberately the plan he has proposed in regard to Schedule D, and for which a great deal might be said on both sides but for the special contract under which we lie to the public creditor, I wish to show him that it involves the whole question of the Income tax in much difficulty and embarrassment. I hope that the right hon. Gentleman will be inclined to consider the question between the present time and Friday next. I should not have ventured to interfere with the judgment of the Government as to the order of submitting their propositions; but, feeling this matter strongly, and being certain that it will gradually assume a more alarming form, I could not feel justified in refraining from making these observations and suggestions to the right hon. Gentleman of what appears to me to be the wisest and most constitutional course for him to act on in regard to the order in which he should submit his finance propositions to the House.

MR. HUME
begged to ask the right hon. Gentleman the Chancellor of the Exchequer whether in the order of proceedings with regard to our future finance, it would not be better first to determine whether the Income tax was to be permanent or temporary. In 1842 it was imposed as a temporary measure for three years, and was demanded by Sir Robert Peel in order to give him a margin in carrying 988 out his plan of financial reform, and at the end of three years it was continued because that plan was not finished. He (Mr. Hume) could not agree with the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone), that we were to be bound by the opinion of eminent men of former times; for the progress of later times might probably enable us to improve on those opinions. At all events, an inquiry had taken place into the Income tax, and the evidence taken bore out the opinion which he (Mr. Hume) entertained, that a Property tax should be paid by every individual according to his means. He thought the right hon. the Chancellor of the Exchequer had decided wisely and justly with reference to the principle of. his Income tax. He (Mr. Hume) thought that the Income tax, as it was now constituted, and which the right hon. Gentleman the Member for the University of Oxford wished to continue, was not consistent with equity or justice. He was anxious to press on the right hon. the Chancellor of the Exchequer that he feared that there would be a difficulty in coming to a decision on Friday with regard to the House tax and the Income tax. Where so large a question as a tenth of the revenue, or 5,500,000l., depended on that tax, the course of the right hon. Gentleman should be to ascertain what the House would do with regard to the Income tax first of all; he ought to confine himself entirely to that, leaving all details for the future.

§ The CHANCELLOR OF THE EXCHEQUER
Sir, I collected from the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone), that he rose to make some objections to the course proposed by the Government. One was a technical objection as to the mode in which we propose to bring our measures before the House, and the others were objections to the policy of one of the principal measures we propose. With regard to the first objection—namely, to the course recommended by the Government, that we should go into a Committee, and in Committee should propose Resolutions, all I can say, with great deference to the opinion of so distinguished a Member of the House, is, that I am still of opinion that the course which I have proposed is the correct one. If I am in error, I shall be, I am sure, set right by that authority to which we must all bow; but I assume, from all I have read and inquired, that the proper course for me is to ask the House 989 to go into Committee, and in Committee to propose Resolutions.

MR. GLADSTONE
What Committee? As to the Tea duties?

§ The CHANCELLOR OF THE EXCHEQUER
As regards the Tea duties and the House duty both, it will be necessary that the House should go into Committee. If I am in error, I can be corrected, but at present I apprehend that I am not in error. With regard to the second point, to which the right hon. Gentleman rather personally adverted—namely, as to what he called the extension of the Income tax to funded property in Ireland, I believe I am not in error if I say that the Income tax is at present extended to funded property in Ireland, and that, if there be any funded property in Ireland which does not pay it, it is by special exemption. Under schedule A the tax, as regards land, is limited to England, and therefore does not apply to Ireland; but as regards schedule C, it is extended to all funded property, whether in Ireland or wherever it may be. Therefore the whole of the argument with which we have been favoured by the right hon. Gentleman, appears to be a fallacious one, and I shall be perfectly prepared to enter into the consideration of the question at the proper time. The third point is that on which the right hon. Gentleman questions the policy of the Government with regard to the reconstruction of the Schedules of the Property and Income tax. It is not, in my opinion, expedient to have a general discussion upon the principle of this measure on the present occasion. It will not be expected, therefore, I should prolong a discussion on an important and weighty topic, which Her Majesty's Government will be shortly prepared to bring under the consideration of the House. Of course the Government have well weighed the important topic to which the right hon, Gentleman has alluded, and our conviction is that there is no breach whatever of the agreement with the public creditor; our conviction is that the course which we have laid down as to the reconstruction of the Schedules is in principle just. We believe that no Income tax would be just that was not constructed on those principles; and, with the greatest deference to all the high authories to which the right hon. Gentleman referred, I be-live it to be rather the duty of the Ministry to act in accordance with what they think to be just and proper, than in deference to the opinion of other Ministers. I shall be 990 quite prepared on the proper occasion to assert and to vindicate the justice of the course which we recommend, and it will be for the House to determine upon it. With regard to the general conduct of those Resolutions, I shall place them on the table probably to-night; at all events, on Wednesday morning there will be placed in the hands of hon. Gentlemen the policy I recommended in the financial statement I made the other night, in the form of a series of Resolutions. I do not suppose that at this time of year it would be possible for us to come to a decision on all these Resolutions; but so far as Her Majesty's Government is concerned the Resolutions must be taken as a whole, to stand or fall by the decision of this House. And if it is the distinct wish of the House, we can have the issue next Friday night. I thought in taking this course I did that which was not, perhaps, the most favourable to Government, but the most agreeable to our opponents. I have no other wish than to obtain the general verdict of the House upon the whole of the financial scheme brought forward; and, in asking the House for a decision upon the question of the House duty and the Tea duties, I thought it was taking that course which would prove the most practical on the part of the Government. At present I cannot say that we have any reason to regret that course, nor are we at all disposed to change the line which we have marked out.

§ LORD JOHN RUSSELL
Mr. Speaker, I did not suggest any course whatever to the right hon. Gentleman on Friday night. Many of his propositions, of course the greater part of them, were new to me, and I only said it was of importance that the House should know what course the Government intended to adopt. The right hon. Gentleman stated that he should propose on Friday to take, as I understood, the Resolutions in respect to the House duty and the Tea duties. [The CHANCELLOR of the EXCHEQUER: First.] Yes, first on Friday night; and I certainly stated that I had no objection to that course being taken. I think, however, that there is great force in what the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) said, as to the necessity of taking both the Income tax and the House tax, before we are asked to concur in any Resolution with respect to the relief of taxes. On both these questions there may be great differences of 991 opinion, and the proposition to renew the Income tax in a different form to that hitherto adopted may give rise to new propositions from independent Members of the House which may materially alter the character and diminish the receipts from that tax. I am certainly not going into that question which the right hon. Gentleman started with reference to any breach of faith in the proposal to alter the proportions to be paid on schedule D; but I must, say that I cannot conceive any graver question that can be brought before this House, and I shall certainly be prepared to take my part in that question whenever it comes forward, with a due sense of the very great danger there is of making any alteration in the principle of the Income tax as it has been established by successive Parliaments. Again, if you admit that there are certain kinds of income which ought to be separately charged, other cases may perhaps be made out which the House might think had equally strong claims to be considered. Another thing struck me very forcibly with respect to the proposed Income tax, which is, that it appears to be very much in contradiction of the principle which the right hon. Gentlemen himself laid down in the last Session of Parliament, and again on Friday night, that if you are to have a system of direct taxation, it ought not to be grounded upon a system of exemptions, that is a principle which appears very plausible and just, but which, I think, is inapplicable when you endeavour to reduce it into a law. But what is evident is this, that the right hon. Gentleman's proposal is founded, not on one, but on various exemptions, whereas in the present tax, although you may complain of an exemption, it is at all events the one broad and general exemption of all incomes of not more than 150l. a year. The right hon. Gentleman proposes the exemption of persons receiving less than 50l. a year from the funds, and the exemption of persons engaged in trade whose incomes are below 100l. a year, and that with respect to the tenant-farmers there shall be an exemption of their incomes under 150l. a year. I know the right hon. Gentleman avoided this last statement by saying, the present proportion of rent to income is not just, that instead of one-half it should be only taken at one-third. Thus it is obvious that while persons in trade, mercantile men, clerks, and other persons in that condition of life hitherto exempt, having 110l. or 120l. a year, are brought under the charge, no 992 farmers in the country shall be subject to it whose rent does not exceed 300l. a year. Now, this may be a just exemption, although the right hon. Gentleman does not state any reason whatever for making the difference. This is, however, an exemption, and it appears to me that this new tax, instead of being free from exemptions, stands upon, a greater number of exemptions than the existing tax. This and other matters may, however, be more conveniently discussed when the Income tax is brought under our consideration. I leave it to the right hon. Gentleman to decide whether he will bring on the House tax before the Income tax, or the Income tax before the House tax; but I do say, after what I heard on Friday night, I conceive that the safety of the financial system of this country is in great peril. I think that both these taxes—the Income tax, which will expire in April next, and the House tax, which as it stands does not supply the means for the reductions proposed by the right hon. Gentleman—should be considered by Committees of this House before we agree to any reduction or abrogation of duties whatever.

§ MR. GOULBURN
said, his right hon. Friend near him (Mr. Gladstone) had so fully and ably expressed his feelings on this subject, that he would not have thought it necessary to say a word, but for the fear that some misunderstanding might exist with regard to the clause of the Income-tax Act which subjected funded property in Ireland received by persons in Great Britain to this tax. That was not an exclusive burden. If any gentleman in Ireland deriving his property from land, resided in this country and received his rents here, he paid the full amount of the tax. If any Irish gentleman having funded property resided in England, he paid 7d. in the pound upon the property he so received; but there was this distinction, that if the income derived from Ireland was received in Ireland, it was exempted from the tax. The right hon. Gentleman the Chancellor of the Exchequer proposed to make a distinction, and upon that question, when it came on for discussion, he (Mr. Goulburn) would have something to say hereafter; but he thought the right hon. Gentleman had entirely failed to vindicate what he (Mr. Goulburn) regarded as a violation of the contract entered into with the public creditor. He would not attempt on this occasion to follow the hon. Member for Montrose (Mr. Hume), into his defence 993 of the measure proposed by the Government. With regard, to the form in which the question would be brought before the House for discussion, he presumed the right hon. Chancellor of the Exchequer would propose on Friday to go into Committee of Ways and Means, and would give precedence to one of the taxes—either the Income tax or the House tax. [The CHANCELLOR of the EXCHEQUER: I shall propose to go into Committee of the whole House.] He (Mr. Goulburn) doubted whether the right hon. Gentleman would not find it necessary to go into Committee of Ways and Means, if he proposed to impose upon the public for the service of the year a tax double the amount of that to which the country was at present subject, and to extend the tax to a class of persons who had previously been altogether exempt from it. In the case of the Tea Duties, as that was a matter of trade, the right hon. Gentleman would have to go into Committee of the whole House; but with respect to the House tax, he thought it most important that the House should adhere to the principle which required that a tax for the service of the year should be moved in a Committee of Ways and Means.

§ SIR CHARLES WOOD
said, that it was possible the right hon. Chancellor of the Exchequer might have been led into an error as to the mode of proceeding by the course which he (Sir C. Wood) took the year before last, in reference to commuting the tax upon houses levied according to the number of windows into a tax levied according to the value of houses. Between that day and Friday, however, the right hon. Gentleman would have time to ascertain what was the most correct mode of proceeding. What he (Sir C. Wood) had proposed was to reduce a tax, which could be done without a Committee of Ways and Means; but the right hon. Gentleman now proposed to double a tax, and, giving an opinion without reference to authorities, he (Sir C. Wood) agreed with the right hon. Member for the University of Cambridge (Mr. Goulburn) that it would be necessary for the Chancellor of the Exchequer to go into Committee of Ways and Means in order to propose the increased tax. He (Sir C. Wood) had abstained on a former occasion from giving any opinion as to the proposals of the Chancellor of the Exchequer, and he would pursue the same course tonight, because both then and now his only object had been to speak as to the course 994 of proceeding to be adopted by the House. He thought, however, he could not too strongly enforce the arguments of his noble Friend (Lord J. Russell), that, considering the capacity of the proposals which the right hon. Gentleman was about to make, and the discussions to which it was obvious those proposals would give rise, it was essential for the safety of the public credit that the right hon. Gentleman should be sure of the renewal of the taxes which he proposed to continue before he ventured to put the revenue in jeopardy by the repeal of taxation. It was equally obvious—for he thought it was only fair towards the right hon. Gentleman the Chancellor of the Exchequer—that the proper course would be for the House to comply with the invitation that right hon. Gentleman had given them, to consider on Friday next, not simply one of his propositions, but to treat those propositions, to a certain extent at least, as a whole, so that the entire Budget might be brought under discussion, although it might be impossible, according to the forms of the House, to come to a decision upon more than one point. He thought the most convenient course would be to go into Committee of Ways and Means, when a Resolution might be proposed for the maintenance of the Income tax, or the increase of the House tax, and upon that Resolution they might discuss the whole of the propositions. That seemed to him the fairest course they could adopt towards the right hon. Chancellor of the Exchequer, as he would then have the fullest opportunity of answering any objections that might be made to his propositions.

§ MR. WALPOLE
said, he was far from wishing to prolong the discussion, but he was desirous of stating that Her Majesty's Government had no intention whatever of putting the financial condition of the country in any degree of jeopardy by not obtaining from the House, in the first instance, a deliberate judgment upon the more important points of his right hon. Friend's propositions. The House would not be called upon on Friday to determine whether they would agree to the whole of the Resolutions which would be placed upon the table, for time could scarcely admit of their being discussed in one evening; but such Resolutions would be brought before the House as would raise the whole question of the financial policy of the Government, and he did not see how that question could be better raised than by the Resolu- 995 tions to which his right hon. Friend the Chancellor of the Exchequer had referred, and which dealt with the extension of the House tax, and the remission of the Tea duties. No doubt, the questions arising upon the Income and Property Tax must be determined before the House could come to any conclusion as to any considerable remission of taxation; for if 5,000,000l. a year was taken away from the ordinary revenue of the country, no remission of taxation could take place, nor would they, indeed, be able to go on without some additional taxation to supply the deficiency. He freely admitted that the question whether they were to retain the Income tax, either as it now stood, or with the variation suggested by the Government, was one that must be discussed before any great remission of taxation was decided upon. He thought, however, that the fair issue and the main issue between them as to the financial policy of the country could not be better determined than by asking the House to sanction an addition to the taxation of the country to the amount of about 1,000,000l. before they proposed the remission of any portion of those duties which they thought might be repealed with advantage to the people.

§ SIR JOHN SHELLEY
said, it appeared to him to be unnecessary, with regard to the remission of the duty on tea, to go at once into the question of doubling the House tax; and he would put it to the Government whether it was fair towards those whom he had the honour to represent, who were peculiarly interested in that tax, to press it forward so hastily without allowing householders time to ascertain how they would be affected by such a proposition. Before proposing any remission of duty, he thought the question of the Income tax ought to be fully considered.

§ LORD JOHN MANNERS
said, that there appeared to be a mistake on the part of some hon. Gentlemen, who seemed to suppose that the proposition for increasing the House tax would materially raise the Ways and Means of the next year, while the remission of the Tea duties would only diminish the revenue by some 400,000l. The fact was, that the proposed increase of the House tax would not yield more than about 500,000l. additional to the revenue, while the reduction of the Tea duties would probably lead to a loss exceeding the increase on the House duty. He thought the proposal now made by the Government was one which fully met the views of hon. 996 Gentlemen opposite, for they had fairly stated that the whole subject of the Budget must be more or less considered on Friday. It was utterly impossible that all the details to which the noble Lord opposite (Lord John Russell) had adverted respecting the Income tax could be discussed before the House adjourned for the Christmas recess; but he (Lord J. Manners) thought the House should have a fair and satisfactory opportunity of discussing the main principles upon which the Budget was founded, and that there was no proposition which would test more fairly and completely the views of hon. Gentlemen opposite than that which it was intended to bring forward on Friday.

§ MR. SIDNEY HERBERT
said, the objection taken by his right hon. Friend (Mr. Gladstone) did not appear to have been understood by the noble Lord who had just resumed his seat. The noble Lord said the additional tax would not produce above 500,000l. for the next year. If so, and there was any danger of the Income tax being lost, it was the more necessary to secure that on which depended a tenth part of the income of the country before passing a Resolution raising about 500,000l., but which had coupled with it a Resolution for a reduction of duties which amounted to about the same sum. The danger was this: that after passing the Resolutions, if the Income tax should fail, there would be a deficiency of 5,500,000l. It was very objectionable to proceed to cut down taxes as if they had a large surplus, without knowing whether the Income tax would be carried or not. The objection was raised by his right hon. Friend, not so much to the particular Schedules as to show that if the principle of the Income tax was to be debated, there might be so much difference of opinion as to endanger the carrying out of the system.

§ MR. EVELYN DENISON
said, it was impossible not to feel that the principle of direct taxation was threatened with new dangers, and surrounded with new difficulties. There was a great disinclination on the part of many hon. Gentlemen to proceed with the reduction of duties on any article until the main question of the renewal or non-renewal of the Property and Income Tax had been settled by the House. The right hon. Chancellor of the Exchequer had stated that he thought his proposal would afford the most convenient means of discussing that subject; but, so strongly did he (Mr. Denison) feel the obligation 997 of maintaining the national credit, that though he might he disposed to think favourably of a reduction of the Tea duties, or of the duties on other articles, he would decline to pledge himself to that reduction hy vote so long as the renewal of the Property and Income tax was doubtful or unsettled.

§ SIR HENRY WILLOUGHBY
said, the difficulty which he experienced was this. A Resolution was to be proposed with regard to the House tax, and decided one way or the other. Now, if on future discussions any great alterations should take place in the Income tax, in what position would the House be placed? He concluded, therefore, that it was absolutely necessary to deal with the Income tax first, and to know what would be the result of that discussion. If that tax should be extended to Ireland, it must be extended to every class of property there as it was in this country. In that case there would be some increase in the amount of receipts, and the House would then be able to approach the second question. He confessed that he had no predilection for a double House tax. He did not mean to say that he should not vote for it if he considered it absolutely necessary; but it appeared to him that that question should be considered at the end of the financial proceedings, and not at the beginning.

§ MR. JOHN MACGREGOR
said, that the House, before meddling with any other question of taxation, ought first to consider the Income tax; otherwise the whole credit of the country would he thrown into a state of suspense and dissatisfaction. He took a similar view both as regarded the order of discussing the right hon. Chancellor of the Exchequer's Resolutions, and as to the extension of the Income tax to Ireland, for he saw no good reason why it should not be levied upon every description of property in that country as well as upon funded property.