§ MR. DISRAELI
said, that an hon. Member behind him (Mr. Freshfield) had given notice of an Amendment upon that part of the Resolution at which the Chairman had just arrived; and he (Mr. Disraeli) wished to know whether the Chancellor of the Exchequer intended to make any general statement on the subject, because, if so, it might be advisable that the Committee should hear him before they proceeded to consider that Amendment.
§ The CHANCELLOR OF THE EXCHEQUER
I entirely concur in the opinion of the right hon. Gentleman. Considering the great importance of this question—considering that I have only had an oppor- 259 tunity of adverting to it on one single occasion, and then necessarily in conjunction with a great number of other very important subjects, I have not been able to say what was perhaps requisite to place the proposition of Her Majesty's Government clearly and fairly before the House or the Committee. I am obliged to the right hon. Gentleman for his suggestion, and I purposed to have risen when the Resolution had been read, to state generally the nature of our proposition. I wish, then, in the first place, to call the attention of the Committee to the limitation of the proposition as it stands before us. There are a great number—at least there are a considerable number—of points of great importance and very serious difficulty which we have to examine when we come to the details of the question; but most of those points I am anxious at present to leave in some degree out of view; because, in the first place, it is hardly possible to consider them until the Committee shall have under its view the precise form in which the proposition of Her Majesty's Government will be ultimately clothed; and because, in the second place, the general principles involved in the proposition are in themselves so exceedingly important as to deserve the exclusive and undivided attention of the Committee. It is most necessary that we should, in the first instance, fix our undivided and closest attention on the principle of the measure, and give a vote on the measure, in the first instance, which will strictly be a vote on the principle, before we come to consider the great multitude of minor and subordinate questions which we shall have to examine and dispose of as we go through the details. The proposition of Her Majesty's Government, as it stands before the Committee, is—"That towards raising the supply granted to Her Majesty, the stamp duties payable by law upon or for or in respect of legacies, shall be granted and made payable upon and for every succession to the beneficial enjoyment of any real or personal estate, or to the receipt of any portion or additional portion of the income or profits thereof that may take place upon or in consequence of the death of any person, under whatever title, whether existing or future, such succession may be derived." Now, Sir, the vote of the Committee is asked on the present occasion to the affirmation of the general proposition that some tax or other—(I do not now say an equal or unequal tax—that is to say, I do not ask 260 you to pledge yourselves by vote to an equal or unequal tax)—but that some tax or other should be fixed or laid on all successions to property that take place in consequence of death. And that condition—the accruing of a tax in consequence of a succession that ensues upon a death—is the pivot of the whole measure. Of course, the importance of the bearings of this measure is to be considered with reference to two great classes of property, which have hitherto been exclusively, or, in the main, exempt from all charge upon death or upon succession; firstly, real property, whether settled or unsettled; and, secondly, settled property, whether personal or real. The first thing we have to consider is, what' are the reasons that determine Her Majesty's Government, and which they hope will determine the Committee, to resort to this source for the replenishment of the revenues of the country. The right hon. Gentleman opposite, the Member for Buckinghamshire, said, a few nights ago, that we found a justification for this measure upon—if I understood him correctly—a certain character and effect which I bad assigned to it when addressing the House on a former night, namely, this character and effect, that the laying of this tax upon successions to property will do that which a great desire has been expressed, in this House and elsewhere, to effect—that is to say, it will countervail the operation of the income tax so far as that operation is too severe in its bearing upon intelligence and skill, and too lenient in its bearing upon property as compared with intelligence and skill. And the right hon. Gentleman further observed, that that being the purpose of the tax, it was obvious that the tax So considered, ought to terminate—or, at least, in the view and mind of the Government, ought to be intended to terminate—in the year 1860. Now, I certainly could not, with any great confidence, submit this proposition to the Committee, if the tax were intended to terminate in 1860, inasmuch as we shall not receive full legacy duty under the proposal in respect of any one portion of real property in England until the year 1858; and, therefore, if it were to terminate in 1860, it would be a very short duration for the tax, and would make it a tax for one very small fraction of the community alone; but, in point of fact, the right hon. Gentleman was mistaken in the construction which he put upon my words. I did state that the bur- 261 den which the income tax casts upon property is unequal, as compared with the burden which it puts upon intelligence and skill. I did not contest the opinion commonly entertained, that intelligence and skill were too hardly pressed upon, as compared with property—I pointed out that this measure would rectify that inequality—and I stated further, that I believed that this measure will rectify it, to whatever extent you may call it into existence, without raising any dangerous questions or unsettling your fiscal system, or causing it to be liable to repeated and successive disturbance; but I am far from saying that the rectification of the inequality in the income tax was the only reason on which the justification for this measure was to be based; on the contrary, it appears to me that there are many other such reasons. In the first place, it appears to me plain that the measure is essential for the improvement of the condition of the fiscal system of the country, in so far as in it he the means which will place a future Parliament in the position, at a given period, to part with the income tax if they shall think fit. That is a principal object that we propose to ourselves to effect, and by it we justify the proposal for continuing the income tax for seven years; while we propose it for a term so considerable, we shall have prepared the ground and shall have prepared that train of causes that will supply Parliament with the means of dispensing with the income tax, if they think fit, at the expiration of that time. Here, then, is another material reason for imposing that tax upon successions, and without that tax upon successions it would be impossible that we could hold out any other expectation of the termination of the income tax than that sort of vague expectation which the country from experience has learned to appreciate at its true value. Another reason for which we propose this tax is to provide a fund by means of which, during that interval of seven years, we may carry into effect great and extended measures for the remission of indirect taxation. This is an important and essential purpose of the measure; but I do not hesitate to say, that, beyond and independent of all this, there is a purpose yet more prominent, namely, the removal of an anomaly which is unjust in its nature—which is galling to the public feeling—which becomes more and more galling from year to year—which we believe it to be for the interest of all classes to settle at once and permanently, being convinced that the 262 longer you postpone that settlement the more difficult it will be to achieve when the time shall come, and the worse must then be the terms on which it can be effected. With this feeling, and with the feeling that the present state of the law cannot be made good in point of justice, I say we have a purpose in this proposal quite irrespective of all the collateral ends, important as they are, which we hope to secure by making the proposal at the present moment. Now, Sir, the first question I wish to press upon the dispassionate consideration of the Committee is, can we maintain the present law as it is? In my opinion it is totally impossible. I do not mean to say it is impossible to maintain it for this Session or for the next; I mean this—that it is impossible to look upon that portion of our fiscal system with any satisfaction—that the public sentiment of the country is decidedly adverse to its continuance in its present state—and that at some day, which I will venture to say is not a distant day, it must and will inevitably be changed. You cannot maintain it, and why? Not because there is a clamour against it—[Colonel SIBTHORP: Oh!] I am sorry to scandalise the hon. and gallant Colonel, but I should hope that when we look to the rights of the question, and not to the mere popular opinion concerning it, we shall have some small degree of his approval. [Colonel SIBTHORP: NO, Sir; never!] Well, then, Sir, I greatly regret that those principles, which in themselves ought to command his cordial assent, should be so poisoned in his estimation by the mere fact of their finding utterance from my mouth. Irrespective of the approval of the hon. and gallant Gentleman, I shall state the reason why, in my view, it is perfectly impossible to defend the continuance of the present law. In the first place—and I state first the reason which I consider to be the weakest—I shall state the reason why I do not think it is possible to defend the continuance of the present law, even as respects real property. I think, when we look back to the period of Mr. Pitt—when we reflect upon the proposal that was made by him nearly sixty years ago, and consider all that has since passed—we must feel, that, even as regards real property, its present exemption occupies but a weak and insecure position, according to the views, sentiments, and tendencies of the present day. I now speak of the exemption as a total exemption. I do not say there are not circumstances in the condition of real property that ought to be 263 considered when you examine the question in what precise manner you shall deal with it under a measure you may be about to adopt; but to say that there shall be a total exemption of real property from a tax which is made applicable to personal property, and that at a high and heavy rate is, in my view, neither an arrangement altogether justifiable, nor an arrangement that is safe, wise, or expedient with reference to the permanence of our institutions. It is, in my opinion, an exemption that is far more invidious than it is valuable, and, being far more invidious than it is valuable, I wish to get rid of that invidious and odious character that attaches to it—and to come, if we can, to a just and fair arrangement as regards the claims of real property in respect to this impost, and to a settlement of its claims on a fair and equitable principle. But if the exemption of real property is difficult to defend, how much more difficult is it to defend—in my view at least—the exemption of settled personal property. What in the wide world can be said in favour of exempting settled personal property from legacy duty? I am not aware of an argument, or of a shred of argument, that can be brought forward in defence of that exemption. With respect to the exemption of real property, it is at any rate a bonâ fide exemption. Settlements of real property are not made, and do not extend themselves, for the purpose of procuring those exemptions, for real property is exempt, whether it is settled or not. It is not so much affected by the state of the law, and there are not as regards it the some inducements to escape the law as exist with respect to personal property; but with respect to personal property we know that the astuteness of lawyers and the vigilant care for personal interests continually are at work to defeat and escape the operation of the law—to invent new modes of escaping the legacy duty—and this with such extraordinary success that although there has been an immense increase in the personal property of the country, such increase is scarcely traceable in the tables of your legacy duty: and we know this that arrangements are made for that end which may be called all but fraudulent—arrangements which are perfectly senseless, having no meaning and no justification in themselves, and no rational purpose to which they can be referred, except that of evading the law. Now, Sir, some may think that there is a countervailing consideration in the fact that settlements are made on 264 stamps; but I apprehend that that is really no answer at all. In the first place, it is no answer, because the stamps on many of these settlements are so small in amount, that they are scarcely to be taken into account. That is one consideration; but there is another. Suppose I take the settlement stamp as it now stands, at 5s. per cent. For that sum you get a document that ascertains the existence of your property after your death, and determines its course, thereby standing in lieu of a will, or letters of administration. And is not that privilege enough, independently of avoiding the legacy duty? And is there not another duty, called the probate duty? Why, Sir, the probate duty itself, quite irrespective of the legacy duty, amounts to 2, 3, 3½, or, taking extreme cases, 4 per cent. There is that percentage on probate duty alone, and the same property which exclusively pays probate duty is likewise exclusively liable to pay legacy duty. Is it not then enough that in virtue of a 5s. per cent stamp upon a settlement, a man should escape probate duty, without going on to maintain, what is perfectly monstrous, that in consequence of the stamp on settlements no legacy duty should be paid by property which has been settled? I think that they have a very good bargain, even after making a liberal allowance for the circumstance that this settlement stamp is paid during life, and therefore by anticipation—who are able, by a stamp of 5s., per cent, to escape a stamp of 2l., 3l., or 4l. per cent. I apprehend also that according to the doctrine of the law, the stamp upon the settlement is the proper correlative of the stamp upon probates. The probate is strictly a stamp duty to ascertain and validate a document; the settlement duty is also strictly a stamp duty, and has precisely the same effect:—but besides that legitimate effect of settlements they have been applied to an illegitimate purpose, and all sorts of forms of settlements have been invented and used with the object of escaping the legacy fluty. Besides, what can be more monstrous than this exemption in another point of view? When we discuss the case of realty, whether settled or not, it is very obvious and very fair to call attention to the fact, that real property is subject to many charges from which invisible personalty—so to speak—is quite exempt; and therefore that is a justification, as far as it goes, of the exemption of realty. But that does not apply to the personalty which is the subject 265 of these settlements. Funded property, free from every possible and imaginable charge, is by means of these legal arrangements, enabled to pass scot-free, when other property is called upon to pay a heavy toll. I think, then, as regards realty in the first place, as regards settled personalty much more, that it is impossible to defend the present state of the law. But there is another case far more flagrant than either of these—that is, the case of unsettled property, not real, but visible, immoveable, and therefore subject to the burden of rates and local taxation. Let the Committee look at the position of that kind of property under the present law—leasehold property in houses for instance. What is its condition? Let me contrast it with settled personalty on the one hand, and with realty on the other. There are two sets of charges, said to be full equivalents for one another: on the one side, probate and legacy duties; on the other, the land tax, greater cost of transfers, heavier taxation under Schedule A of the income tax, heavier burdens, nay, exclusive burdens, of local taxation. It is pleaded on account of this latter description of charge, that real property ought to be exempt from the former. Well, then, the case stands thus—I do not say that they exactly countervail each other—on the one hand, there is the probate and there is the legacy duty falling on personalty; and, on the other hand, there are local charges falling on realty; but here is leasehold property subject to both. Here is leasehold property subject to the cost of stamps on transfer, subject to all the extra burdens of taxation under Schedule A, subject to the land tax, subject to the full and undivided burden of local taxation, and yet subject likewise to both the legacy duty and the probate duties. How is it possible for any Parliament to suppose that when once public attention is fairly concentrated on this question, and once discovers this to be the true state of the case, any Government can maintain any longer a state of the law so entirely without foundation or warrant in truth and reason? That is the first proposition I wish to impress upon the mind of the Committee. I refer with no invidious intention to the course taken on this subject by the right hon. Gentleman opposite (Mr. Disraeli). He and the Government of Lord Derby were impressed with the belief that it was impossible to maintain the law as it stands; and in consequence they too gave a general pledge, 266 which I understood to mean that there must be some equalisation of the present system by means of a general tax upon successions; Well, Sir, it being impossible to maintain the present state of the law, will you part with it altogether? Will you say, "Yes, equality ought to be established, but it ought to be established by exempting from the tax property which now pays it, and not by subjecting to the tax property which is now exempted?" That is one course, which it is perfectly conceivable many might be inclined to take. Many political economists are of opinion that a tax on successions is by its very nature an illegitimate tax; many think that, as a tax upon property, it ought to be absolutely proscribed. I do not mean to say that that is my opinion; but I refer to it as an opinion by no means destitute of much greater authorities for its support. I must confess that it appears to me that taxation of property raises a question of vast importance, but one which, like most other questions of taxation, cannot be disposed of altogether on abstract grounds. I should say it was straining the matter too far to say that there should, under no circumstances, be such a thing as a property tax—I speak now of a property tax as distinct from income tax. The real objections to such a tax are in my view-drawn from practical considerations; from the great difficulty that attends the adjustment of such a tax; from the liability its infliction causes to renewed and continual contest between class and class; from its tendency to become a party question, and to occasion irritation among particular sections of the community. These, I repeat, are the great objections that attach to taxes on property; but these, I may remind you, are not so likely to attach to a tax on successions, occurring but once in a generation, as to a tax on property, which would come round again and again, with the objections to it, and the irritation gathered under it, recurring every year Then, again, though I confess I do not look to the practice of antiquity, and of remote antiquity, as of very great authority in fiscal matters—though I do not deem the extreme antiquity of this tax on successions its main recommendation—yet I may beg the Committee to remember that this is no innovation of modern times—that it is rather a revival, in a modified form, of what was originally one of the main sources of the revenue necessary to the State—namely, a tax upon every succession to pro- 267 perty, supported by a regular legal process of inquisition into its value. It is not, then, an innovation; but is it an injustice? When I speak of injustice, of course I understand that it is unjust to levy any unnecessary taxes; a tax you do not want, or a tax to support wasteful or profligate expenditure. Such a tax is an unjust tax, whatever be its amount, and lay it on what you will. I am assuming now that this is necessary, and that you will admit the purposes to which we apply the resources of the State, to be, in the main, reasonable. If, then, you want a given sum, is it unjust to raise it by a tax on successions? It seems to me that they who raise such a question as this do not sufficiently consider, that the carrying property in perfect security over the great barrier which death places between man and man, is perhaps the very highest achievement, the most signal proof of the power, of civilised institutions. I think that the ability to determine the future with regard to property, and to fix upon its course after you are in the grave—from man to man, and from life to life—passing it over from one contingency to another, and extending the private personal will of an individual into far distant years—limited, no doubt, and wisely limited, by law—is an instance so capital of the great benefit conferred by laws and civil institutions upon mankind, and of the immense enlargement that comes to natural liberty through the medium of law, that I can conceive nothing more rational than that, if taxes are to be raised at all, in the midst of these arrangements the State shall be at liberty to step in, and take from him who is thenceforward to enjoy the whole in security, that portion which may be bonâ fide necessary for the public purposes. But I will now look to considerations more immediately practical than these. Let us consider the other course—the admitted necessity of equalisation, and the possibility of equalising by abandonment. If you determine upon that, you must be prepared, at the same time, to give up the whole legacy duty, and to give up the great bulk of the probate duty, now producing over 2,500,000l.; and assuming that you retain a small stamp duty on probates corresponding to the Stamp on settlements, as a mere validation of the document, still you would have to give up a sum of between two and two-and-a-half millions of the permanent revenue of the State; and such a surrender, I am quite convinced, you would find contrary to the general sense of 268 the country. I feel certain that you are not prepared for that course; and if not, if you are not prepared to give up the principle and practice of making death, and the passing of property from predecessor to successor, the occasion of stopping and levying what you require for public purposes; then, I say, having reached that point in the argument, and being afraid of an abandonment of this principle and practice, you will come naturally to the further point, that you cannot maintain the tax as it now stands. What, then, is the thing to be done? On that question, too, I hope that the Committee will arrive at the conclusion of the Government, namely, that this tax ought, upon the principles of equity and justice, to be made a general tax, and that an effort should be made to cure its present gross and crying anomalies. Now, I appeal to the sense of justice on the part of Gentlemen opposite. I am very sorry if the necessities of the State and of our mode of government make it almost inevitable that any fiscal proposition should be more or less liable to be deemed a party proposition. I have heard it stated that this proposition has its origin in hostility to the land. I have no doubt that that is your conscientious opinion. Allow me respectfully to disclaim any such motive—for I suppose I have the same right to disclaim that you have to impute. I wish only to appeal to your sense of justice, and I trust I shall not appeal to it in vain. The ancient fable was, that when justice was banished from other quarters of the earth she still lingered for a while among the agriculturists———"extrema per illos Justitia excedens terris vestigia fecit.Whether that fable was wisely conceived or not, I may appeal, I believe, to your real love of justice, and I request you to consider whether, as before the tribunal of justice, the proposition of the Government is not one that ought to be entertained. It appears to us that as you cannot maintain or justify the present state of the law, and as you cannot abandon such a source of taxation as this, the wise course to take on general grounds, and entirely irrespective of any temporary proposals, is to make the tax general in its application. It ought to be made an equal charge, but with due reference to the various incidents of the various species of property that come under its operation. A question may occur to the minds of Gentle- 269 men whether we could not maintain some exemption—whether we could not, for instance, exempt real property? But how would you justify it? By saying that realty should be exempt because it pays local taxation—because it pays the land tax, because it pays under the income tax more heavily than personalty? Now every one of those considerations applies also to leasehold property. Would you be prepared to exempt that? If you did, you would begin to find your exemptions so enormous that they would raise to an intolerable amount the burdens of taxation on all descriptions of property left to pay the tax. Though I cannot altogether deny that it is fair to urge the burdens borne by land, yet there is some exaggeration on that question. Take the case of transfers. Very long ago it might be true that personal property could be transferred for the most part without expense, and land could not; but since those days a great mass of personal property of a species then unknown has grown up, and become subject to expense in transfer almost or altogether similar to that upon land. Take the railway shares, and you have at once a mass of property amounting to 300,000,00l., subject to precisely the same tax or transfers as land. [An Hon. MEMBER called attention to the simplification of titles, and the expense attendant upon legal conveyances of land.] Nothing would give me greater satisfaction than to see some measure pass through Parliament with the object of removing the evils to which the hon. Gentleman calls attention, and indeed I should, before I had concluded my statement, have taken the liberty of suggesting to the Committee, and especially to hon. Members connected with the land, that whilst we hear so much about comparative trifles, they leave these greater questions untouched. The succession tax, which is felt but once in a generation, would be insignificant compared with the question referred to by the hon. Gentleman opposite—namely, the simplification of titles, and the relieving of land from those enormous expenses which, from want of it, the land is now subject to. But though titles are not simplified, they are not kept as they now stand for any interest or purpose of the State; this, therefore, is wholly a separate matter, and constitutes no reason that landed property should be exempt. The fact that railway property enjoys at the present time a better Parliamentary title than landed property, 270 would be a most illegitimate reason for subjecting it to taxation. It is a most excellent reason for giving the land a similar title, I admit; but meanwhile you must not punish the railway proprietors for having a good state of the law, and compensate the landowners for having a bad, for that would be to take away their inducement to bring about a good state. I put it, then, to the Committee, supposing it seriously engaged in the consideration of the legacy duty, and in the reconstruction of the law—I put it fearlessly, that they cannot wisely, safely, or justly, propose to give to real property a total exemption from the operation of the legacy duty, for this, if for no other reason—that that exemption would necessarily entail with it the exemption of other very large classes of property, and would make so great a hiatus in the measure that the rate you would be obliged to lay on the rest would be intolerable. I assume, then, that you cannot exempt land, landed settlements, or settlements of personalty, from the tax. Perhaps you may think that settled land deserves a separate consideration from unsettled land; but Government have not been able to find grounds for any such distinction, for the reasons I have adverted to. The law of settlement opens a great question; settlement has its advantages and disadvantages. With respect to the tax in the shape of stamps, that is more than compensated by the probate duty, which you escape by settlement. But the law of settlement itself is a great question apart from all matters of taxation. I repeat, it is attended with great advantages, and likewise with considerable drawbacks. The fixing and tying up of land constitute, no doubt, impediments to its free use; but, on the other hand, the giving to family arrangements and to the possession of land a certain stability, though that idea ought not to be pushed too far, yet was an ancient part of our policy, and I am not prepared to say that it is one I would wish to see abandoned. It would be going, however, too far to say, not only that that settled property should escape the probate duty, but that it should likewise escape every description of tax which the State may levy from other kinds of property on successions. I therefore assume that with regard to settlements in general, and even as to settled land, you cannot maintain the principle of total exemption from legacy duty which now exists. The question of settled personalty, it would be a waste of time to argue anew. But 271 perhaps you may say there ought to be consideration for settlements now in existence; that all property now settled ought not to be subjected to any duty on successions accruing under existing settlements. The answer to that appears to me to be obvious, and it is this—that the intention of the provision of the law which enables a man to settle is not to escape succession duty. Settlements have been made use of as the means of escaping the succession; but that was not in the spirit or intention of the law, and efforts have been made to enable the law to reach cases of that description. It appears, then, to me, on the grounds which I have briefly stated, that it is impossible to maintain with satisfaction, with justice, or with hope of permanence, the system of exemption that now exists; and I may likewise say incidentally with regard to the point which I last touched upon—namely, the exempting of settlements now in existence, that if you should think fit to adopt a provision of that kind, you would retard the operation of the Act perhaps for more than half a century. If the provision were demanded by justice, this consideration ought to form no bar to its enactment; but in my view it is not demanded by justice, and therefore there exists in the consideration I have adverted to a strong reason against the suggested provision. Now, Sir, as I have said, we do not propose at this moment to ask you to vote upon anything except the mere principle contained in the present Resolution. We have adopted, I believe, a form of proceeding as nearly analogous as we could to that adopted by Mr. Pitt in corresponding circumstances—namely, that of submitting the subject to you in the first instance in very general terms, which might have the effect of directing your views upon the principle, and reserving for your future consideration a number of important collateral questions which you will eventually have to dispose of. No doubt there are many of these important collateral questions. It must not be concealed that amongst other questions there is the question of the scale of consanguinity, which gives rise to a great difference of opinion, and which is a subject for grave consideration. It is known probably to the majority of the Committee that the scale of consanguinity as it is now fixed runs immensely in favour of direct succession—that direct succession is subject to a tax of only 1 per cent—that succession to a stranger (and with succession to a stranger are ranked 272 many remote degrees of consanguinity) pays 10 per cent. There are several intermediate rates, on which it is unnecessary for me to dwell. The latter rate is highly productive. Although that tax falls upon a comparatively limited portion of property that passes by death, yet, owing to the high rate of the duty, the proceeds of that rate form a considerable proportion of the whole amount of the legacy duties which comes into the Exchequer. The returns which have just been laid on the table will serve to show the Committee that while the 1 per cent levied on direct succession, which touches far larger masses of property, yielded last year 238,000l. of legacy duty to the Exchequer, the 10 per cent levied on a much smaller mass produced no less than 490,000l.; and since the year 1797, whilst the 1 per cent levied upon the enormously greater mass of property has produced 8,322,000l., the 10 per cent levied on the other class has produced 17,583,000l. Now, Sir, two very important questions arise with respect to the scale of consanguinity, which I will at this time do no more than hint at. The first is, that it is in our opinion equitable that a considerable difference should be made between the tax upon direct succession and that on the succession of strangers, or of persons of remote consanguinity. It appears to me that this principle is neither unjust nor impolitic. Speaking generally, those who enjoy direct succession are educated in expectations founded on that succession, are trained up, and have their habits and mode of life formed with relation to the property they look forward to enjoying. Upon them, therefore, it would be a great hardship, were the State to step in and take away any material portion of that property which they have been taught to expect. On the other hand, succession of strangers, and of persons not within traceable degress of consanguinity, are successions very commonly of an accidental character, and are unconnected with any training or expectation. These are successions, too, in relation to which caprice takes a large range. It does appear, therefore, very reasonable that a scale founded on degrees of consanguinity should be maintained. And I wish also to point out to the Committee that they must make up their mind in this matter between two things. They may maintain the present scale of consanguinity, or they may alter it. But, if they determine materially to lower the rate of 10 per cent, and so materially to reduce 273 the amount paid into the Exchequer from property subject to that rate, they must also very considerably raise the rate of 1 per cent, or we shall not get our money. At this period I do not wish to enter upon a very full discussion of the question to which I have adverted more than once in the course of these remarks—namely, the question whether, even though you may think there is no ground for maintaining any absolute exemption of any great class of property, yet there may be good and sufficient reasons for adopting a very different machinery, and practically, if not nominally, a different rate of tax with regard to certain classes of property from what you lay on others. It appears to me that the present law is not only wrong in drawing too broad a distinction—that is to say, the distinction between a tax on one side, and no tax at all on the other—but it is especially wrong in the manner in which it strikes that distinction. And we propose therefore to make a change which, although not precisely described In the words of the Resolution, and which, although you are not asked to give an opinion on it at this moment, is of so much importance—is, I will at once say, of such vital importance to the plan of the Government—that it would be wrong if I were altogether to omit to notice it. We propose, instead of distinguishing, as the present law distinguishes, in favour of all settled property and all real property against unsettled personalty—we propose to abolish that distinction altogether—and to draw a new distinction between property which I will describe not in legal phrase, but in a way that will be more popular and generally intelligible—we propose to distinguish between what may be roughly called rateable property, whether real or personal, on the one side, and non-rateable property on the other. The advantage we propose to give will be given to rateable property, whether it be real, whether it be leasehold, or whether it be copyhold, or under whatever description it may fall—and the full burden of the tax will fall on invisible and non-rateable property. It appears to us that in that distinction there is something like a principle. This is a very fair matter to take into view when you are considering the measure and amount at which you shall fix your legacy duty or tax upon succession for these respective descriptions of property. The proposal, therefore, which we shall make with regard to rateable property is this— 274 that the person succeeding to it shall never be charged with the duty upon any higher interest in the property than a life interest. We do not propose to establish different rates of duty. Now, you may perhaps ask me what will be the effect of this plan compared with that of charging on the perpetuity. That is a matter of computation, and may admit some latitude of opinion; but I shall not be very far from the mark if I say the effect of this distinction, with the collateral provision with which we draw it, will be, that rateable property will, when held in fee upon the whole, pay one-half, or a trifle under one-half, to the legacy duty of that which will be paid by property not falling within that description. Property not falling within the description of rateable property—that is to say—invisible or non-rateable property—will not in all cases be charged on the perpetuity. A person succeeding to the absolute dominion over the property will pay on the perpetuity; whilst a person succeeding to a lower interest will be charged on that lower interest. The question may be asked, not only, why favour rateable property, but also, why favour rateable property in this particular form? As to the first, it is on account of the other charges to which it is subject, and not borne by the property to which we propose to apply the full rate. And, further, I think it is a policy worthy of some consideration, not only to give something that may tend to countervail the special burdens borne by real property, but likewise to take care that you so adjust the payment of the tax in regard to property of that description, that you do not allow it to become an engine of great and serious evil, by forcing changes in the possession of the land. In order to prevent a consequence of this kind, your tax ought to be kept within such bounds that it may by proper efforts and exertions be paid out of the annual income, without forcing the possessor either into parting with the property, or into doing that which after the lapse of a certain time would become still more deplorable—loading it with successive incumbrances, which would leave the nominal master no real interest in the property. Now, these are our reasons for favouring rateable property. But it may be asked, why, if you think it ought to bear a less share of the tax—and this is a most important question—why do you choose this particular form for conferring that advantage, namely, the form of saying that a person suc- 275 ceeding to the possession of rateable property, shall never be charged on anything higher than a life interest? It may be said, why not charge him on the perpetuity if he succeeds to it, but at a lower rate? I wish to state that question clearly, and to bring it fully before the Committee, because I consider it one of very great difficulty, requiring in my view a very impartial and careful consideration; and it is one from the discussion of which I trust every collateral Consideration connected with the fate of parties, of Ministers, and of Government, may on all sides be excluded, because those arrangements which we have now to make are arrangements materially bearing on the social system of this country, and which will therefore require the greatest care and forethought in their adjustment. Now, I admit it is not a self-evident proposition that when you have determined that rateable property is entitled to some comparative favour under a plan of this kind; therefore, you ought to give it in the particular form of a charge for a life-interest only. The objection to it is this, that it takes away from the life tenant the advantage that you propose to confer upon that class of property as compared with the other, because the life tenant succeeding to a leasehold or real estate would, under the plan proposed, be liable to pay as heavy a percentage for his inheritance as if he were succeeding in perpetuity. Therefore it fails so far in giving effect to the principle laid down. But when we take a comprehensive survey of the way in which different classes of property are dealt with under the laws which relate to points of this kind, I think it will be seen that there are much greater objections to the other mode of proceeding—namely, that of charging the successor to real or rateable property upon the perpetuity when he gets it. For, firstly, it is quite obvious that if you adopt the rule of charging the liferenter of an estate on his life interest, and the person who comes into absolute possession on his death on the perpetuity, you would establish a system of law that would work in favour of the great landed proprietors, and against the smaller holders of land; you would create a division and contrariety of interests amongst different descriptions of landed proprietors, which it would be most undesirable, to say the least, to introduce. You would be legislating in a most invidious sense. Those Gentlemen who sit here are generally Connected with the settled property of the 276 country, and it would be invidious, indeed, were they to adopt a proceeding which would favour the landed estates held by them at the expense of the smaller landed proprietors. But I must confess that, when we look closely into the matter, I think we shall see that the relation between the life-renter of realty, and the absolute possessor of realty, is not at all analogous to the relation between the liferenter in the funds, and the absolute possessor of funded property or other mere personalty. Among us, the life possessors of realty have every advantage from the property except the power of alienation, and, looking to the general rule, their successors are their children. Entail makes the natural provision for those who come after them, and for whom, but for this provision, they must provide by some other means. The advantage of the possession of an entailed estate in this country, with the social and political influence it confers, is very great; the position of a landed gentleman or Peer of England is a noble position; there is nothing like it in the whole world; the commanding station of those who are so situated opens to them the avenues that lead to distinction and to power. It is a position which although in a narrow pecuniary view it may be inferior to that of absolute possession, is one attended with great social advantages; and there is no real distinction to be drawn between the great landed proprietors possessed of entailed estates, speaking generally, and the yeoman, which would justify a distinction in the imposition of this tax. Such, I think, is the principle of the course we propose to pursue; that is to say, our rule will be never to charge any interest higher than a life interest, but in the case of an estate of less than a life interest, to charge upon that lesser interest. I think that any other course would undoubtedly, besides being less just in itself, have a dangerous tendency to bring about a pressure upon the present law of entail and settlement such as I should not wish to see—a pressure, the result of which would probably be a tendency to abolish that system in consequence of its being associated with invidious privilege. Were you to give too much advantage to settlement and entail as compared with other property, I am afraid that the whole law of entail and settlement might be put in some jeopardy, and be subject to the risk of being considered, not on its merits, but with regard to the narrow interests of class which would thus be 277 brought into the field. These are the principal reasons—first, why we should propose to draw a distinction, not as the law now draws it, but upon a more just principle in favour of what I call, though but roughly and colloquially, rateable property; and, secondly, why it should be drawn in the form of a provision under which you would never charge any interest higher than a life interest. But there is another case to which I wish particularly to call the attention of the Committee, because it is very important in its social bearings; and the Committee will see that by this mode of proceeding we are able to meet the case, which we could not do by any other—I allude to the case of heavily encumbered estates. Now oh our principle of charging upon the life interest in the case of heavily encumbered estates, the mode of proceeding would be this: In the first place, you would ascertain the age of the party succeeding; and, having his age, you have the number of years' purchase of his interest which you are to charge. You would then take the gross rental of the property. From the gross rental you would make the deductions necessary to arrive at the net rental—because there is no reason, such as prevails with respect to the income tax, to compel us to go upon the gross rental in a case of this nature; It is much better, and it is the principle of the present law, that the net rental and the net interest should be taken as the basis of taxation. Having ascertained the net rental, you will then deduct the incumbrances. In such a case it would sometimes happen, I fear, that the net rental remaining on which the life interest would have to be computed, would be of an extremely small amount, and yet at the same time—and it is the conjunction of these two things to which I wish to call your particular attention—there might be in the property a very large amount of dormant capital value. For example—if we take a large estate worth some 500,000l., with a gross rental of 16,000l. or 18,000l. a year, and a net rental of 13,000l. or 14,000l.; and if we suppose the estate to be saddled with mortgages to the extent of 300,000l., the mortgages would absorb some 12,000l. of the rental, and leave but 1,000l. or 2,000l. a year to the possessor, which will represent the annual value of the life interest; while, at the same time, there would be an excess of capital value over and above the mortgages, reaching to 200,000l. Now, I think if you charge upon the capital value, there 278 is no way in which you could meet that case so as not to give the tax the effect and character of an engine for displacing the present possessor. I may be told that it would be best in many of these instances—that it would be a wise act—for the possessors, under such circumstances, to displace themselves. I have no doubt there are many such cases. The Legislature has recognised that principle in Ireland, and made provision for facilitating its operation. There may be a time—I hope that it is not come, nay, that it may yet be very distant—when you must be prepared to adopt in England, something more or less like the plan which you have adopted with regard to Ireland. But I think it would be an invidious, an offensive, an unwise, and an unjust measure not to facilitate the parting with property by persons disposed to part with it, but to lay on a tax in such a way as would have the effect of forcing them to part with it; and there is no tax, however moderate it might be, if it were fixed on the capital value of such an estate as I hare described—when you consider how attenuated the income would be—there is no tax which would not have the effect of compelling the possessor to bring his estate into the market. The provision we propose to make is this—that the person succeeding to such a property shall be charged with the net life interest, according to his age and the number of years' purchase his life may be worth; but if that gentleman chooses at any time to bring his estate into the market, and to realise the 500,000l. instead of the life interest, the balance, after discharging the encumbrances of 300,000l. will represent the data upon which he will have to pay the tax upon his succession. That is obviously the fairest way of proceeding, and I doubt whether anything less would do full justice to the Exchequer and to the relative claims of other classes. In the event of a subsequent and voluntary alienation of property, the claim of the Exchequer will revive; but in the event of the successor continuing to hold the property, the charge will only be on the net life interest. I think every Gentleman who looks into that matter will find powerful reasons in support of that provision. [An Hon. MEMBER: Will the claim of the Crown revive during his whole life?] It will. The claim of the Exchequer will revive in the event of alienation at any period during the holder's lifetime. At his death there must be a new succession; but if the 279 alienation of the property takes place at any period during his life, the claim of the Crown will revive against the actual possessor for the difference between the amount of legacy duty which he may have paid upon his original life interest, and the amount of legacy duty due upon his life interest in the realised value, after allowing for the incumbrances. I believe there are other more purely legal and technical considerations connected with the tenure of landed property, which would likewise dictate such a course as has been proposed with regard to the general mode of charge on real property; and I think I am right, though I have not made reference lately to the point, in saying that the plan of Mr. Pitt in the legacy duty which he proposed was of a similar description, and that he likewise in cases of real estate proposed to charge the duty upon life interest. Those, Sir, are the main points to which I think it necessary to call the attention of the Committee at the present moment. But I think it necessary I should say a few words upon one other subject, and that one other is the probable produce of the tax; because I have seen in various quarters anticipations of the produce of the tax which I am utterly unable to follow or comprehend. Some of them are sanguine only, others are utterly irrational and extravagant, and will not bear one minute's examination upon reference to the documents by which they purport to be supported. With regard to Ireland I have heard it stated and even assumed in debate, that the additional legacy duty which we shall derive from Ireland will be 300,000l. a year. My belief is that the additional legacy duty which we shall derive from Ireland will be somewhere between 60,000l. and 80,000l. a year. This is very disappointing no doubt. It takes the colour, the life, and the beauty out of the pictures that have been drawn, and brings them down to a very humble and mean aspect and proportions indeed; but at the same time that is the best computation I have been able to obtain, aided by all the experience and ability we can bring to the consideration of the subject. I will not enter at this late hour minutely on this computation of amount; but I will venture to hope I may, not offensively, call the attention of the House, and especially of hon. Gentlemen opposite, to the many sources of fallacy which exist with respect to the legacy duty. I had stated I expected an addition of two millions to the 280 public resources: and upon this, although such an idea never entered my mind, and never passed my lips, it was immediately stated that it was intended to levy two millions a year on the land. [Mr. DISRAELI; No!] The right hon. Gentleman seems to deny having such an impression, and I do not impute it to him that he so misunderstood me; however, not only in newspapers out of doors, but by Members in this House, it has been distinctly asseverated in reckoning the probable proceeds of the tax from land. One source of fallacy I think is this: the landed class in this country hold the first place in regard to influence, station, and power; and I hope they will long keep it. I have said they hold the first place—but if not the first place, certainly a foremost place. They have immense influence, station, and power, in this country; but the income of the landed class, as a class, is not in proportion to their influence and power. There are a great many cases similar to that I have adverted to, of extremely reduced incomes, the possession of which still leaves to the person owning them great influence and power—social power and station, and direct or indirect political power. I think for that reason there is a strong disposition to exaggerate the amount of landed income in the country. Now the fact is, the amount of landed income, or landed property, when compared with the rest of the income of all the other masses of property that will be subject to legacy or succession duty, is comparatively trifling. I am almost afraid to say how small I anticipate will be the proceeds of this tax from mere land. On a former occasion I ventured to state that it appeared to me that land paid 9d. in the pound, or thereabouts, to the income tax, while other classes paid 7d. in the pound. It was deemed I proved too much, and we had to pay the penalty in a long debate, and a great division. Perhaps a similar result will attend an elaborate examination of the present question. The proposition that out of the two millions I expect to gain, the proportion proceeding from the land will be but small, rests upon two considerations; not only because we say the land, together with other rateable property, ought to bear the charge at a lower rate, but likewise because landed income really forms but a moderate proportion of the incomes subject to the tax. I think it was the hon. Member for Belfast (Mr. Cairns) who, on a former night, when I was unfortunately prevented by indisposition from 281 attending the House, in an able speech, discussed this question, and by the light of his own experience as a professional man gave an opinion to the effect that the amount I should receive from settled personalty under a tax of this kind, when made liable, would be very large indeed. That, no doubt, is the reason why I reckon upon a very large income from personalty, and I also look for a fair and moderate increase of the revenue from land. And when I speak of land, of course it must be remembered there are two important classes of property connected with land, but which are not land—first, the income accruing to creditors of landed proprietors upon mortgages; and, next, the income proceeding out of settlements upon land. I do not think it possible, with fairness, to draw any distinction between personalty settled upon land as compared with any other personalty. The incomes, for example, of younger sons, growing out of charges fixed on land, are not more liable to local burdens than the money of merchants or of bill brokers, or of any other purely undeniable personalty, or than money in the funds. It appears to me that that description of property, which is connected with and related to land, although not land, must take its chance with other personalty, and bear the full burden of the tax. As well as I can compute, I should suppose that the produce of the tax from property of that description—of settled personalty and charges on the land—will probably be 200,000l., or something more. As to the produce of landed property proper, I will not at this moment venture into details, since there will be a future opportunity of discussing them; but I may state my opinion, that the amount of the tax which landed property, as distinguished from houses and other messuages in the three kingdoms, will pay, cannot rationally and safely he estimated at more than about 400,000l. a year. I have not heard anything stated nearly so love as that; but I will tell the Committee the mode in which I have proceeded in making my estimate. I have stated to you distinctly, mind, that I have separated and struck off from this item the consideration of house property and other messuages, and I am now taking only estates properly territorial and agricultural. I stated the other night, in answer to a question, that we had no secret sources of information on the subject, and the chief basis of calculation is equally 282 open to any Gentleman in this House—I mean the figures of the income-tax returns. Under Schedule A, we find the gross amount of landed property charged with the income tax, and I think it is 49,000,000l. a year. There are the deductions to come off that amount. The deductions, I think, if we take them roughly, because we have no means of estimating precisely the difference between gross and net, we may put at 16 per cent. That reduces the 49,000,000l. to 41,000,000l. I must then make the addition of Ireland. The valuation of all—not only landed, but the whole rateable—property in Ireland, amounts to 11,200,000l. in round numbers; but of that I must strike off that portion which is not landed property—house property and other messuages. I suppose probably it will leave from 7,000,000l. to 8,000,000l. landed property; and that, together, gives a net income from land in the three kingdoms of about 48,000,000l. From that 48,000,000l. I have then got to deduct the interest of mortgages and other incumbrances, which of course every successor is allowed to deduct before he is charged with the tax. What this may be we are ail alike able to judge—we are all on an equality in this respect—we may all guess and conjecture at pleasure; but if you take the interest of mortgages, and other incumbrances, of settlements and all other charges on land, at 25 per cent, it leaves 36,000,000l. net annual landed income. Now, that 36,000,000l. of annual income represents a capital value of about thirty times as much. But then how often do successions come? It seems not irrational to say once in thirty years. ["Oh, oh!"] At any rate it is open to Gentlemen to take any standard of calculation they please. I wish to show distinctly, only avoiding minute details, the steps by which I come to the ultimate calculation.
§ MR. DISRAELI
You make your estimate on the income-tax returns; but you have not taken the returns on the assessments under 150l
§ The CHANCELLOR OF THE EXCHEQUER
If so, then that will be a certain addition, and that addition can be very easily ascertained, because the income tax gives it to us. But I think, on reflection, that I have included it in the 49,000,000l Unless I am very much mistaken the 49,000,000l is the gross assessment under Schedule A, irrespective of any distinction between properties under, and 283 properties over, 150l I am afraid there is no addition to be made on that account; but I am obliged to the right hon. Gentleman the same for having suggested it. Well, then, if we have 36,000,000l of income, the next question is, how often do successions occur? I think we may take an average at thirty years; but by reference we may ascertain that point, We have, then, successions every thirty years, landed property worth thirty years' purchase, and 36,000,000l of landed property on which to lay the tax. The next element of the calculation is, at what rate will that landed property pay the duty? The legacy duty at present, on an average, is levied at a rate of 2 4–5 per sent. It is quite plain the call on landed property must be at a more easy and lighter rate, for two reasons—first of all, because we tax no interest higher than a life interest, which reduces the tax by one moiety; and, secondly, to a certain extent, because landed property runs more in a direct line than personalty. If property is left to strangers, it is more generally out of personalty, whilst realty in general descends to children or near relatives. If that is the case, and if under the present scale of consanguinity the present duty only averages 2 4–5ths per cent, it is quite plain that landed property will not average more than one moiety, or 1 2–5ths per cent. One per cent gives on thirty-six millions 336,000l., and 12–5ths per cent would be something under 500,000l. But when I make allowance for the greater frequency of direct succession to landed property than to personalty, I am sure I must make a considerable further reduction; and I cannot estimate the proceeds which will be realised from landed property, properly so called, at materially more, than 400,000l., or considerably less than half a million. I have now stated briefly the grounds on which I have arrived at that conclusion. I have endeavoured to state them plainly, and you can sift, examine, and judge of them yourselves. The estimates—estimates I can hardly call them—the dreams, I was going to say, of certain wiseacres—but I will not use so offensive a term—the dreams in which some persons have indulged, have tended to propagate dangerous delusions on this subject, and have exhibited me in the light of a Minister of monstrous rapacity, who would attempt to raise from the land sums of money far beyond what is necessary for 284 the exigencies of the State. If it can be demonstrated that a great deal more money will come from the land than I have anticipated, nobody will lend a more willing ear to such a demonstration than myself. Only let us see what are the real and bonâ fide grounds on which we are to base our expectations that the revenue will be larger, and I shall sincerely rejoice at so satisfactory a result. I will not go into the question of personalty. There, again, we have to trust to the income-tax returns; and I may state that as with regard to realty, so with regard to personalty, there is a large portion of income that does not come under the tax at all. I will not now go into the question; but I venture to hope the produce from personalty—with house property and messuages—will be such as to raise the gross additional amount of revenue which I expect from this measure within the period of five years—I take this opportunity of correcting my carelessness in stating four years on a former occasion—to two millions per annum. I will now explain the mode of payment of the tax on real and rateable property, and the time within which parties succeeding will be expected to pay. Speaking generally, where the successor to landed property is not also the residuary legatee, the first rent that accrues does not belong to him, but the second rent is his. We, therefore, propose that he shall not be subject to the payment of any duty until twelve months after he has succeeded to the property: the second rent, which does belong to him, will then have been paid him; and some time will commonly have elapsed before the demand is made. Then we propose that he shall be liable to pay the tax in eight equal half-yearly instalments. In cases of direct succession, that arrangement will make the tax payable without material inconvenience; and also in cases of near indirect succession. In cases of 10 per cent succession, it will be a harder case. In respect to land, no doubt, even on a life interest, the tax will take up during those four years a considerable share of the income. As far as the State is concerned, it will be perfectly open to consideration whether there shall be a further prolongation of the time; but I very much doubt the general policy of that course, for I am afraid it would tend to bring about an accumulation of encumbrances. It will be better to leave it in the form of temporary difficulty, giving discretion to the Executive Government, as I rather think is the case under the Legacy Acts, 285 to give an extension of time in cases where there is real necessity for that indulgence. Generally speaking, therefore, it will be understood that the basis of the tax, with respect both to real and rateable property, is to charge in no case higher than the life interest, to make all proper deductions for encumbrances, and to allow in all cases a period of one year before making any demand in respect to the tax; after which it is to be levied in eight equal half-yearly payments. I adverted before to one distinction which it is proposed to make between cases of succession in fee and succession in life interest, namely, this—that if a person succeeds to the life interest, and dies before he has paid the entire tax, before the whole of the instalments have become due, as he succeeded to nothing but the life interest, and as that passed away with his death, the outstanding instalments shall abate; but if a person succeeds to the fee, and dies before the instalments become due, as he has had a continuing interest, and as he plainly became liable to the entire charge by his succession to the property, in this case, however short his life may be, the remaining instalments will become a debt to the Crown. I hope I may now release the Committee from the fatigue of attending to these remarks. I have endeavoured to confine myself as closely as possible to the question, and to the various points which have seemed to me to arise out of it. And I venture to express the hope—I do not challenge either contradiction or assent—but I venture to express a hope that the statement I have made will show that the Government, in making this proposition, have not been influenced by the motives imputed to them in some quarters; that they have endeavoured to examine the real right and justice of the question; that they have endeavoured, as far as they could, to settle this great question permanently upon the basis of equity and fair dealing, by which alone it is their desire, not only that the whole of their own proceedings may be regulated, but likewise the proceedings of every body of men who may, from time to time, be entrusted with the care of the interests of this great country. The right hon. Gentleman then moved the Resolution as follows:—
Motion made, and Question proposed—
That, towards raising the Supply granted to Her Majesty, the Stamp Duties payable by law upon or for or in respect of legacies, shall be
granted and made payable upon and for every succession to the beneficial enjoyment of any real or personal estate, or to the receipt of any portion or additional portion of the income or profits thereof, that may take place upon or in consequence of the death of any person, under whatever title, whether existing or future, such succession may be derived.
§ MR. BRIGHT
I wish to ask the right hon. Gentleman a question with regard to a very important description of property, on which I think he has not given the Committee sufficient information. He proposes to draw a new line between rateable property and property not rateable. Now, I want to know upon which side of that line he intends to put railway property, which is a property as hon. Gentleman know, very great in amount? Railway property already pays rates to a very large amount; it will be seen how large, when a return which I have moved for shall be laid upon the table, as it will be in two or three weeks. I should like, if the right hon. Gentleman has considered the point, that he should state to the Committee upon which side of the line he intends to place railway property.
§ The CHANCELLOR OF THE EXCHEQUER
That is a question, Sir, of some difficulty. Primâ facie, no doubt, it will appear that railway property is liable to rating; but, on the other hand, the value of railway property in the market is a value acquired after allowing for that deduction. At the same time, I must frankly own that the case of railway property has not as yet been specifically considered by the Government. It will, therefore, probably be better that I should take time to look into the subject, rather than that I should upon the moment give an answer to the question of the hon. Gentleman.
§ SIR JOHN PAKINGTON
said, it would be impossible, at this hour of the night (a quarter to twelve), to proceed satisfactorily with the discussion. He would therefore move that the Chairman do report progress.
§ MR. FRESHFIELD
suggested that when the Committee next sat he should be allowed to propose the Amendment of which he had given notice, and that the debate might then proceed upon it.
§ The CHANCELLOR OF THE EXCHEQUER
The view that the Government take, and that which I think the House approves, is, that there is a necessity for passing the Legacy Duties Resolution, and for getting the Income Tax Resolution through Committee before we proceed to 287 part with existing revenue. It is there fore, a matter of great regret to see our evenings shortened. At the one end there is a lengthened discussion upon personal questions, and at the other end we are met by a Motion which induces delay. I do not complain of that; the time lost on each occasion is small, but there is an old Scotch proverb of which I may remind hon. Gentlemen—"Every little makes a mickle." I do not intend to oppose the Motion that the Chairman report progress, but I hope the Committee, bearing in mind the vacation before us, will come to a decision on this Resolution to-morrow evening. It is impossible at present to enter into details, the principle being the only question, and I trust that will be the view of the Committee.
§ MR. NEWDEGATE
I do not understand whether the right hon. Gentleman has stated how the several percentages are to be charged in reference to consanguinity. Perhaps he will have the goodness to explain his views on this point.
§ The CHANCELLOR OF THE EXCHEQUER
What I stated was this—that I could not represent the maintenance of the existing scale of consanguinity as being absolutely vital to the measure; but I wished to put it to the Committee that it was vital either to maintain the existing scale of consanguinity, or, if they think fit to reduce the tax now charged upon the succession of strangers, then in the last case they must be prepared materially to increase the tax upon direct successions. The preference of the Government is most decidedly in favour of the former course; and their proposal will be to maintain the existing scale of consanguinity.
suggested that a schedule, or some analogous measure, if it could be prepared, showing the various ways in which it was proposed to assess property on successions would better enable the Committee to judge of the merits of the question, than the explanations they had just heard.
§ The CHANCELLOR OF THE EXCHEQUER
replied that there was no option in this respect for the Committee. They must pass the Resolution, and the Bill would contain the information required by his hon. Friend.
had then no hesitation in saying that, under such circumstances, the sooner the Resolution was passed the better, because then the country would be in possession of the actual details of the measure, 288 There were many details under the existing Legacy Act, and it was desirable to see how they were affected by the new measure.
§ MR. CHRISTOPHER
inquired whether it was intended to introduce one Bill only, and to make it applicable to the whole of the United Kingdom, or a separate Bill for each part?
§ MR. E. BALL
said, there were various successions on death, which he thought should come under some principle. A man might settle property upon his widow while she remained unmarried; which property, upon the second marriage, would go to the children of the first. There were various other successions of the like nature. How did the Chancellor of the Exchequer mean to tax them?
§ MR. MALINS
observed, that the succession to property was dependent on many other events than death. For instance, a man settled property on his widow as long as she remained unmarried. In the event of her contracting a fresh marriage, would the person to whom the property would pass, be called on to pay the duty?
§ The CHANCELLOR OF THE EXCHEQUER
I have said that the tax was always to accrue in consequence of a death; but I did not say it was always to accrue in consequence of a death that had immediately preceded the succession. In this principle of the measure I think the learned Gentleman will find the key to his question.
§ MR. MILNER GIBSON
said, a question had been put in the early part of the evening relative to a measure closely connected with the succession tax, namely, the registration of settlements. He wished to ask what was the right hon. Gentleman's answer, as he did not exactly comprehend it? He understood there was to be no provision for the registration of settlements in this Bill, and he wished to know whether there was to be a measure to bring about a compulsory registration of settlements?
§ The CHANCELLOR OF THE EXCHEQUER
said, the right hon. Gentleman had, in point of fact, asked two questions: one, whether a Bill for the registration of settlements was to go forward; and another, whether the Bill he was about to introduce, if the Resolution were passed, was to include or imply a provision for the registration of such documents. The Committee would judge for themselves, when they saw 289 the Bill with regard to the succession tax, whether the machinery was sufficient to ensure the levying of the tax. This was the main point. If the registration of settlements was a good measure, let it be passed; but let the House find the best possible machinery for levying the tax which was the subject of this Resolution.
§ MR. AGLIONBY
said, it had been admitted that there were inequalities between rateable and unrateable property in the assessments for local purposes. He, therefore, wished to ask the right hon. Gentleman whether it should not come under the consideration of the Government to devise some scheme for the more equitable assessment of such property for local purposes?
§ The CHANCELLOR OF THE EXCHEQUER
In the first place, I do not feel, in my position as Chancellor of the Exchequer, that I have any strength to spare at this moment in order to deal with the subject suggested by the hon. and learned Gentleman; and, in the second place, neither am I authorised on the part of the Government to enter into it. It is a subject of immense importance, which muse be considered upon its own merits.
§ SIR WILLIAM JOLLIFFE
said, the right hon. Gentleman had not in his statement touched upon the manner in which the valuation and appraisement of estates should be made on succession. The expense of such valuations at present was enormous; and he wished to know whether any allowance would be made for that charge?
§ The CHANCELLOR OF THE EXCHEQUER
That subject has not escaped my attention, but I thought it was one which must necessarily be reserved until we had the Bill before us. It is not a subject altogether new. The present Legacy Duties Act embraces it of necessity. All visible property, which is not real property, is already subject to all these considerations; and I think the machinery now proposed will be found adequate to the disposal of the question as affecting real property. I will only remind the hon. Baronet that there is no question of valuation of property, so called. With capital values in regard to real property we shall have, generally speaking, nothing to do. The whole basis of the proceeding will be the net annual value.
§ MR. HEATHCOAT
inquired who was to give the rental in succession? Was the 290 heir to return his own rental, or was the assessment to the poor-rate to be taken?
§ The CHANCELLOR OF THE EXCHEQUER
The necessary process will be, that the party coming into possession will be called upon to give his own statement of the gross rental upon which he is taxable, together with the deductions which he claims; and those deductions will have to be settled according to general rules.
§ House resumed.
§ Resolution to be reported To-morrow.
§ Committee report progress; to sit again To-morrow.