INCOME TAX BILL.

HC Deb 30 May 1853 vol 127 cc788-820

Order for Committee read.

House in Committee.

Clause 26.

On the Motion that the Clause as amended stand part of the Bill,

MR. BARROW

rose to move a proviso of which he had given notice:— Provided always, that in estimating the income of persons charged under Schedule B, such persons shall be entitled to deduct from the estimate of such income any source of annual interest paid for money borrowed, whereby the income shall or may be diminished.

The CHANCELLOR OF THE EXCHEQUER

said, that since Friday night he had made an inquiry on the subject of the hon. Gentleman's Amendment, which he thought must have been proposed in error, for he found that persons assessed under Schedule B were entitled to deductions for interest on money borrowed in the same manner as traders under Schedule D.

MR. BARROW

said, he was happy to hear that that was the opinion of the: right hon. Gentleman, as he had proposed his Amendment in consequence of the refusal of an inspector of taxes to allow such deduction. Still, as the provisions of the Bill were very difficult to understand, and his Amendment could do no harm, and only make the matter clear, he trusted the right hon. Gentleman would agree to it.

The CHANCELLOR OF THE EXCHEQUER

said, he must object to the insertion of the words if he was to understand that there was to be a subsequent inquiry whether the Amendment was necessary or not. He had stated what was the proper interpretation of the clause, and the inspector of taxes referred to by the hon. Gentleman was in error, and if the hon. Gentleman would supply him with the particulars of the case to which he had referred, it should be set right; but; he could not introduce an Amendment into a Bill passing through Parliament merely to correct the error of a subordinate officer of the Government.

MR. BARROW

said, he thought that the mode in which taxes were to be imposed should be properly defined in Acts of Parliament, and not be left to the instructions of the Government. He would ask the right hon. Gentleman to point out the clause in the former Acts which affected the object in question.

The CHANCELLOR OF THE EXCHEQUER

said, there was no particular clause applicable to Schedule B, but there was a general clause which allowed deductions for interest on money borrowed. He might as well take this opportunity of saying that it was his intention to bring in a clause which, with relation to Ireland, would more accurately define the mode in which these deductions were to be allowed under the Act.

SIR FITZROY KELLY

said, he wished to know under what clause such power of making such deductions was given? There was no difficulty under Schedule D, because persons were assessed at the incomes which they possessed, but farmers were assesssed according to the rent they paid, and it would only be by an appeal that they could obtain the benefit of such deductions as these.

MR. BRIGHT

said, this case was not peculiar to the farmers; for manufacturers sometimes borrowed money to carry on their business, for which they paid interest, and no one pretended that they were to be allowed deductions in the income tax. If such cases were exempted, it would be impossible practically to make the Bill work.

The CHANCELLOR OF THE EXCHEQUER

said, he had already stated that there was nothing peculiar in the case now under discussion; and it was not a profitable discussion, as he had said that he would bring in a clause to put the matter beyond doubt.

COLONEL DUNNE

said, he wished the right hon. Gentleman, as the clause related to Ireland, to state its nature.

The CHANCELLOR OF THE EXCHEQUER

The clause did not relate solely to Ireland, but was a general one, which pointed out the mode in which interest on money borrowed would be deducted from income tax.

Amendment withdrawn.

Clause agreed to; as were also Clauses 27 and 28.

Clause 29.

MR. LUCAS

said, he wished to obtain some information from the right hon. Gentleman the Chancellor of the Exchequer relative to the deductions allowed in respect of the incomes of ecclesiastical persons. Protestant clergymen of the Established Church were assessed under Schedule A, but were allowed a deduction for: parochial rates, taxes, and assessments, &c.; but he did not understand that an analogous deduction was allowed in the case of the Roman Catholic priest, who was assessed under Schedule D, although a Roman Catholic priest had many disbursements which he was obliged to make of considerable amount, such, for instance, as a payment to his bishop, and he was also just as liable to parochial rates and taxes as the Protestant clergy.

The CHANCELLOR OF THE EXCHEQUER

said, he thought the hon. Gentleman had mixed up matters that were essentially distinct in themselves from one another. No favour or preference whatever was given to clergyman of the Established Church over Roman Catholic clergymen as such. The clergyman of the Established Church was assessed under Schedule A solely because his income was derived from tithe or tithe-commutation rent-charge, and the deductions allowed to him were entirely allowed upon general grounds, and in no way in respect of his connexion with the Established Church. The Roman Catholic priest was assessed in precisely the same way as the Presbyterian minister or the Dissenting minister, and in the same way also as the clergyman of the Established Church, who was connected with a church possessing no endowment. No doubt the Roman Catholic clergyman and the Dissenting minister were liable to pay poor-rates; but their case in that respect was totally different from the beneficed clergyman, who had to pay poor-rates, not only upon his house, but upon the entire fund from which he derived his maintenance. He wished, however, to say that the deductions allowed to beneficed clergymen in respect of income tax must be considered upon their own grounds of equity, without regard to any other considerations. The distress which had occurred of late years in Ireland had no doubt been severely felt by the Roman Catholic clergy, as well as by other classes of the community; but he believed that his proposal to remit the consolidated annuities would indirectly benefit the Roman Catholic clergy of that country, and he hoped it might do so, for the labourer was worthy of his hire.

Mr. LUCAS

said, he claimed no peculiar exemption for the Roman Catholic clergy; but, perhaps, if he called attention to the subject on the bringing up of the Report, the right hon. Gentleman would be willing to insert general words, allowing similar deductions for disbursements under Schedule D as were allowed under Schedule A.

MR. G. A. HAMILTON

hoped that the right hon. Gentleman would be willing to give a favourable consideration to the moderate claim which the hon. Member for Meath (Mr. Lucas) had put forward. He thought it was worthy of consideration whether some words might not he introduced to authorise deductions from the sums to be paid by the Roman Catholic clergy on the ground of certain expenses necessarily incurred in their form of worship.

Clause agreed to; as was also—

Clause 30.

Clause 31 (Tenants of Lands who are called upon to pay arrears due from former occupiers may deduct the amount from their rent).

MR. SPOONER

said, he begged to propose to add a proviso to this clause. As the law at present stood, there was a doubt whether a tenant who paid (as the law compelled him to do) a preceding tenant's arrears of a landlord's tax, could recover the amount so paid from the landlord, the landlord perhaps having received no rent from the first tenant, who might have absconded. He did not see why the landlord should be called on to pay when he might not have received rent for either house or farm, or on what principle the tenant was made responsible for the default of his predecessor. The taxgatherer ought to look after the taxes due to Government as sharply as the landlord looked after his rent. The object of this 31st clause was to clear up that doubt, and to enable the tenant to recover the rate from his landlord; but he (Mr. Spooner) submitted that neither the landlord who had received no rent, nor the tenant, ought to be made to pay the rate which was due from an absconding previous tenant, and it was with the view of carrying out that principle that he proposed this proviso.

Amendment proposed— At the end of the Clause to add the following Proviso—'Provided nevertheless, that nothing in this Act shall be construed to compel any occupier, being a tenant for the time being, to pay the arrears of Income Tax due by any former tenant or occupier of the same lands, tenements, or hereditaments, or to deduct and retain from his landlord out of any subsequent payment of rent such arrears, unless the landlord shall have received his rent for the period for which the arrear is due.'

The CHANCELLOR OF THE EXCHEQUER

said, that, in replying to the observations of the hon. Gentleman, he would for the sake of clearness separate the case of houses from the case of lands; and, secondly, the tax leviable in respect of property from that leviable in respect of occupation. He did not deal with the case of houses, beause the principle of the law, as now administered, is this—that where rent had not been received, unless there were evidence that it had been in the power of the landlord to recover his rent, the payment of income tax in respect of that rent would not be levied. [Mr. SPOONER: It is constantly done.] No doubt, in the extreme complexity of administering the law many things had taken place which would be set right if the parties went direct to head quarters, or to the Commissioners of Inland Revenue; but the maxim was as he stated it. Setting aside the case of houses, then, the great question was as regarded land. Under the present law, an occupier having recently come into possession of a farm upon which there were arrears of income tax, both under Schedule A and Schedule B, was held liable for the arrears of both descriptions of tax. The hon. Gentleman's proviso did not touch any question of liability in respect of occupiers, and there were words in the clause distinctly discharging the occupier from any liability. Therefore the question between the hon. Gentleman and himself was entirely in reference to arrears of the landlord's tax. The hon. Gentleman said it was very hard that the landlord should be held responsible, as he was now, in regard to a tax upon rent which he had never received. He had stated that, in the case of houses, the directions given by the Treasury, or the Board of Inland Revenue, would be, that where there were no means of securing the rent through the absconding of the tenant, the tax should not be levied. But looking at the principle, he had no hesitation in saying that the landlord ought to be held liable for arrears of tax, because for the recovery of his rent the law armed him with peculiar powers and securities which it did not confer on the common creditor. Being armed with these powers, if he chose to settle accounts with the tenant, and permit him to quit the farm without first discharging what he owed, he must be held responsible for the payment of the tax, because it was a charge upon the land which must be defrayed before he could grant a tenant the use of the property. The clause provided that the arrears of tax should be recoverable from the incoming tenant, who was to deduct the amount from the payment to his landlord.

MR. SPOONER

said, it was frequently the case, that notwithstanding all his vigilance, the landlord lost his rent. Suppose a man left his farm just a day or two before his rent became due, what could the landlord do? The proviso could do no harm where the landlord did not suffer the tenant to run away, and in other cases would only do justice. He must divide the Committee on it.

COLONEL DUNNE

said, that if the operation of the clause was unjust in England, it would be four times as much so in Ireland, where the practice of letting a portion of the rent, called "the hanging gale," stand over, was general. They were applying the provisions of a Bill intended for England, to a country to which it was utterly unsuited. The Irish landlord was placed by this clause in a far worse position, considering the state of Ireland, and the way in which rent was received, than landlords in Scotland or England.

The CHANCELLOR OF THE EXCHEQUER

said, that if the Irish landlord was really worse off than the landlords in England and Scotland, the hon. and gallant Member must remember the Irish proprietor had a good start of his brother, for he was not subject to the same charges. Let them take "repairs," for example, which were not a very heavy tax in Ireland. The proviso would alter the whole law of recovery; and when the hon. Member for North Warwickshire (Mr. Spooner) said the taxgatherer was bound to look after his taxes as closely as the landlord after his rent, he seemed to forget the expense of such a system. If they were to continue to raise the tax at a moderate charge, they must be satisfied with a moderate amount of labour in return. Suppose a tenant disappeared, and succeeded in spiriting away his stock from the farm without the landlord's knowing anything of the matter? The hon. Gentleman proposed that the Government should lose the tax. Now, the landlord might recover his rent at a subsequent period from the tenant as a debt; but how were the Government to recover the amount of the tax in that case?

MR. FRESHFIELD

said, the clause as it stood would entail upon landlords great hardship. They might be charged with rent they never received, when tenants had left the land without a straw upon it distrainable; for the growing crops and the straw might be sold and removed. The whole policy of the old Act was to compel the landlord only to pay the tax on rent received; for it was always provided that the tenant should "deduct" it out of the next rent—that is, the next rent paid. But now the landlord would be liable for rent not paid.

MR. FITZSTEPHEN FRENCH

said, with reference to the peculiar advantages which the right hon. Gentleman the Chancellor of the Exchequer said were possessed by the Irish landlords over those of England, he was prepared to show, from figures in his possession, that on account of the item of arrears the land of Ireland would contribute 11d. in the pound on this tax. All he called upon the right hon. Gentleman to do was to give them identity of legislation in Ireland.

MR. LUCAS

said, he wished to take this opportunity of inquiring what course the right hon. Gentleman proposed to take with reference to the three clauses postponed the other night, which bore upon the liability of the occupier to pay the landlord's share of the income tax?

The CHANCELLOR OF THE EXCHEQUER

said, the Government had remodelled those clauses to a considerable degree, and they proposed to retain the power of resorting to the occupier with reference to the case of houses, and dwelling-houses especially, apart from agricultural holdings. They intended to frame these clauses in such a way that, speaking generally, for the purpose of levying a tax on land, the resort, in the first instance, would be to the immediate lessor.

Question put, "That the Proviso be there added."

The Committee divided:—Ayes 69; Noes 145: Majority 76.

Clause agreed to.

Clause 33 (Deduction to be allowed under Schedule A for the expenses of making and repairing sea walls and embankments).

LORD NAAS

, with reference to what had fallen from the right hon. Chancellor of the Exchequer just before the division, said, he hoped the right hon. Gentleman would not call upon the House to decide to-night without further consideration upon the clauses to which reference had been made. From the remarks which had fallen from the right hon. Gentleman, an alteration appeared to be made in the whole principle of the Bill as regarded Ireland.

MR. H. HERBERT

said, he begged to join in the request of his noble Friend. The clauses in question involved a most important principle, and it would be only right to give the Committee an opportunity of considering them.

The CHANCELLOR OF THE EXCHEQUER

said, he did not wish to ask the Committee to give an opinion upon these clauses to-night. He had not the least objection, after stating what the clauses were, to print them, and propose their insertion in the Bill afterwards.

MR. FREWEN

said, there were in several parts of the kingdom—for instance, between Sussex and Kent—lands in the immediate neighbourhood of the sea which were considerably below the level of the sea at high water. The only way in which the sea was prevented from overflowing was by means of large sluices, which were open when the tide was out, but shut at other times. Very heavy charges had to be paid for the drainage of these lands in this way; and he wished to ask whether the Chancellor of the Exchequer considered this clause would not give exemption on account of the money so paid?

The CHANCELLOR OF THE EXCHEQUER

said, that he did not apprehend that any money spent upon the drainage of the land would come under the operation of this clause. If the clause had not been limited to the case of tidal rivers, the repairs done to the banks of every ditch or brook might have been brought under it, and there would have been no end to the questions that might thus have arisen.

MR. FREWEN

said, that unless these banks on the coast were kept in repair, the land in many cases would be under the sea.

SIR JOHN TROLLOPE

said, that these sea walls were not the only barriers that were set up to resist the encroachments of the sea. In fact, they formed but a small portion of the expense for the protection of the country. In the county with which he was connected, a sum of 30,000l. had been raised for the purposes of interior drainage in connexion with these embankments, and a quantity of steam engines had also been brought into play. If allowance was made for these sea walls, surely there should be a deduction for this further preservation of extensive tracts of land. Considering the works in progress on the coast of Norfolk and Lincolnshire for the purpose of redeeming the land, these operations ought to be regarded rather in the light of national works.

The CHANCELLOR OF THE EXCHEQUER

said, that this clause referred to nothing but the cases of sea walls and embankments. If the charges for drainage to which the hon. Baronet had alluded, were levied by a public rate or assessment, that case was met by another clause, which expressly allowed a deduction to be made for any charge levied by public rate for draining or fencing.

MR. LUCAS

said, that the clause as it stood at present only applied to landlords. He thought that a similar provision should be made with respect to cases where the expenditure in question was made by the tenant.

The CHANCELLOR OF THE EXCHEQUER

said, he did not believe that the tenant ever made or repaired sea walls, or the embankments of tidal rivers.

MR. W. LOCKHART

said, he was anxious to solicit the attention of the Committee to a grievance to which the proprietors of lands and houses in Scotland were exposed, and which would be much felt in Ireland, but from which English proprietors were, under all circumstances, entirely exempt. Hon. Members were aware that in England all rates were by law a charge on the occupier, and that when a landlord took upon himself the payment of them, he received a deduction of income tax in respect to them. In Scotland, on the contrary, county rates, and—with the exception of one-half of the poor-rate, and one-half of the schoolmaster's salary—all parochial assessments, were by law a charge on the landlord, including therein the maintenance and repairs of churches, manses, burying grounds, school houses, and schoolmasters' houses. He paid these burdens out of the rents, on every shilling of which he was charged income tax; and in respect of them he received no abatement. The relations between landlord and tenant were substantially the same in both countries, and there could be no reason why landlords on the north side of the Tweed should be charged with taxes from which those on the south side were exempted. The right hon. Gentleman the Chancellor of the Exchequer had received a memorial on this subject, signed by two-thirds of the Scotch Members, and it had only recently been his (Mr. Lockhart's) duty to submit to him a similar memorial, unanimously adopted by the commissioners of supply of the county which he had the honour to represent. He had also received remonstrances from various other quarters. He trusted, therefore, the right hon. Gentleman would give his assent to the Amendment of which he had given notice. He should be equally satisfied, however, if the Chancellor of the Exchequer would undertake to bring up a clause, placing the proprietors of Scotland and Ireland on an equality in this respect with those of England. If the right hon. Gentleman, however, would not give such an assurance, he must press his Amendment to a division.

Amendment proposed, at the end of the Clause to add the following words:— And in like manner an allowance and deduc- tion shall be made for the amount of all parochial rates, taxes, or assessments charged on any lands, tenements, hereditaments, and heritages in Scotland, which by statute or custom are payable by the landlord or owner thereof.

The CHANCELLOR OF THE EXCHEQUER

said, that the hon. Gentleman had directed attention to an inequality in the tax; but the question must be regarded, not with reference to that isolated point, but to the general bearing. The inequality in question was one of a multitude, which, to a great degree, balanced one another. If on the ground of this inequality Parliament allowed the public burdens to be deducted, the consequence would be that the landlords in England would say, or would, at all events, be justified in saying, that they also had great inequalities to complain of. Which did the hon. Gentleman think ought to be a first reduction—public burdens or repairs? He (the Chancellor of the Exchequer) thought that repairs had the first claim, and ought naturally to be allowed before public burdens. Did the hon. Member consider that English and Scotch landlords stood upon the same footing with respect to repairs, and that the average amount paid by Scotch landlords was as great as in England? [Mr. LOCKHART: Yes.] He thought not. His impression was, that the charge for repairs in Scotland, which fell upon the landlord, was much lighter than that which fell upon the English landlord. This was owing in part to the practice of granting leases in Scotland, which generally carried the performance of ordinary repairs by the tenant. [Mr. LOCKHART: No!] He had known something of Scotch leases, and he had never known a case where a lease was granted in which the tenant did not covenant to bear the ordinary repairs; and this was also the custom in England, where leases were introduced. This was only a part of the main question, whether the landlord was to pay upon his gross or net rental. That House decided the other night, by a large majority, in favour of the gross rental; but the Amendment now be fore the Committee involved the breaking up of the whole framework of the tax. If the Amendment were agreed to, there would not only be a counter claim on the part of the English landlords for a reduction upon repairs, but also a counter claim on the part of householders. While repairs upon agricultural property only amounted to 5 or 6 per cent, in house property the repairs averaged from 10 to 20 per cent. The repairs of houses in England, too, were greater than in Scotland, because the houses in the latter country were better built, and constructed of more durable materials. Then, if these inequalities in Schedule A were rectified, professional men, mercantile men, and salaried officers, would put in their claims to be assessed at a different rate; and the whole fabric of the tax would be broken to pieces. He was quite sure that the attempt to remedy such inequalities in Schedule A would be attended with great injustice to landed proprietors, because claims for exemption and allowance would be made by other classes who might show a better case for deductions. For these reasons he could not give the smallest encouragement to the Amendment before the Committee.

MR. BAILLIE

said, it appeared that the right hon. Gentleman defended the injustice committed upon Scotch landlords in making them pay income tax upon public burdens, by the still greater injustice which was practised upon Scotch householders. The farm buildings in Scotland were more extensive and built at greater expense than those in England, but the repairs were not left to the tenant; the buildings were handed over to the tenant in such a state of repair that they usually lasted until the end of the lease without repair. The Scotch proprietor was, in his opinion, fairly entitled to the same exemptions as the English one, and ought to be placed precisely on the same footing. The right hon. Gentleman the Chancellor of the Exchequer, admitted the injustice which existed as far as the Scotch proprietors were concerned, and his only defence had been, that the matter complained of was not the most unjust part of the system.

MR. SMOLLETT

said, that by the existing landlord and tenant system in England, the landlord had some portion of his public burdens paid by the tenant; and the rules which were in force in England, ought, he conceived, to be applied to Scotland also. It was not equitable that in England allowance should be made for church rates, poor-rates, and county rates, and that it should not be made also in Scotland. He possessed no property south of the Tweed, and could not therefore say whether the cost of repairs fell more lightly upon the English than the Scotch proprietor; but he certainly did not think that the Scotch proprietors should be placed on a different footing from the English.

SIR GEORGE GOODMAN

said, he should oppose the Amendment. If these claims for deductions were listened to, the efficiency of the measure would be entirely destroyed.

COLONEL BLAIR

said, he thought that complaints from Scotland were of such rare occurrence, that when one was brought before the House, it did not meet with the same consideration as complaints coming from other quarters usually did. The real question was not a question of repairs; all he asked was, that the Scotch landlord should enjoy the same deductions that the English landlord did. He hoped that the right hon. Gentleman would permit the whole case to come under consideration, and that he would allow the Amendment of the hon. Member for Lanarkshire (Mr. Lockhart), to be added to the clause. In his opinion, Scotland did not receive much aid from the Budget of the right hon. Gentleman; but he hoped that he would reconsider his opinion and accept the Amendment of his hon. Friend without pressing the Committee to a division.

MR. DUNLOP

said, that he thought the question of public rates stood in quite a different category from that with respect to repairs, and that, therefore, the Chancellor of the Exchequer might concede the deductions stated in the Amendment, without opening the large question to which he had referred. Although, however, he thought that, taken by itself, the Amendment of the hon. Member was founded on justice, he should not support it if it went to a division. He thought the English tenant was unduly burdened as compared with the Scotch tenant, and if that were so, he thought that on the other hand the Scotch landlords might very well bear a little injustice, as compared with those on the other side of the Tweed. Injustice, indeed, was perhaps not the word. He should rather say, they must put up with the rough justice that was incident to this income tax. As he stood by the Chancellor of the Exchequer, and had supported his propositions in instances where the interests of others were concerned, he should not now vote against him when his (Mr. Dunlop's) own interest as a landlord was involved.

MR. W. LOCKHART

said that, the hon. Member was going to vote not only against his own interest but against that of his constituents.

Question put, "That those words be there added."

The Committee divided:—Ayes 42; Noes 101: Majority 59.

MR. CRAUFURD

said, he wished to make some inquiry of the right hon. Gentleman the Chancellor of the Exchequer with reference to the imposition of the tax on the property of Scotch municipal bodies.

The CHANCELLOR OF THE EXCHEQUER

said, that no Member of that House had been able to tell him of the nature of the grievances of which the parties referred to complained. The only representation he had received from Scotland was a representation in favour of the total exemption of boroughs; but the principle of the law was, that the property of municipal bodies should pay, as other bodies did, for the protection afforded to them by the State; but then came the question what should be done with respect to the rates and duties which contributed to the revenues of municipal bodies? He understood the practice to be, that in the case of duties levied upon articles brought into towns, which duties were imposed by Act of Parliament, the exemption from income tax was allowed; but when such duties were levied under the authority of local by-laws, they were then subjected to the tax. Such was the statement made to him; but he had not been able to obtain any particulars, and the officers of the revenue department in London were entirely without information on the subject. If he could obtain further information while the Bill was going through Committee, he should be glad to make use of it in conformity with the provisions that governed the administration of the law. If not, it must stand over for the consideration of the Executive Government.

MR. M'MAHON

said, he understood the right hon. Chancellor of the Exchequer to object to make an allowance to the tenant for embankments to resist encroachments of the sea; and he wished to know, if the custom were ascertained to be at variance with his decision, would he have any objection to insert a clause to save the tenant as well as the landlord?

The CHANCELLOR OF THE EXCHEQUER

said, he must know the circumstances of the case before he could give any promise. The presumption generally would be, if repairs of that kind were executed by a tenant, they would be allowed for in the rent. He should be glad, however, to receive information on the subject from the hon. Gentleman.

Clause agreed to.

Clause 34.

MR. FREWEN

said, that though he had a very legitimate subject of complaint in the mode in which hopgrowers were treated under the Bill, yet, seeing the uselessness of dividing the Committee, he would, on the present occasion, content himself with reminding hon. Members of the oppressive nature of the income tax as far as that class was concerned. He had already drawn the attention of the right hon. Gentleman the Chancellor of the Exchequer to the circumstances which had led him to postpone his claim until the Budget was produced; nevertheless, that had been now done, and still the grievance was unredressed. The hopgrower paid the enormous tax of about 12l. an acre upon the raw material, and yet he was called upon to pay the income tax in addition. He should certainly avail himself of the earliest opportunity to take the sense of the House on the question.

Clause agreed to.

Clause 35.

LORD NAAS

said, he had an Amendment to move, to omit the words "one-third part of" from the clause. He thought that a very good case might be made out why landlords who were repaying loans contracted in times of Irish distress should be altogether exempted from the tax on those instalments. The right hon. Gentleman himself proposed to exclude such parties to a certain limited extent, and seemed thereby virtually to yield the principle contended for. The loans had been, as he said, contracted in times of distress—a very large portion of them not so much for the purpose of improving the land, but with the object of relieving destitution. He certainly thought it was a very hard case that the Government placed the Irish landlord in a different position from that of any other mortgagee; but they actually did so, for they charged income tax upon repayment of the principal. He sincerely hoped that the right hon. Gentleman would entertain the claim which he had made, the more especially as he believed hon. Gentlemen from Scotland would join in urging the demand.

The CHANCELLOR OF THE EXCHEQUER

said, that the clause was a general clause, and had no exclusive reference to Ireland. The general term "rentcharges" was used in the Income Tax Act, that Act having been passed without any reference to those very peculiar descriptions of rent- charge to which the noble Lord alluded, I consisting of two elements—the one interest, and the other principal. At present these rentcharges were exempt from income tax by accident, and the intention of the clause was to remedy the error. He thought it was quite clear that they ought not to be exempted. In this case Parliament, for the benefit of the landowner, had become his creditor, and for the convenience of the landowner, Parliament, instead of taking back the debt in one sum, agreed to take it by annual instalments. Now, the fact that a man was about to use any portion of his income in the payment of a debt, did not exempt that portion of income from the income tax; and they might as well exempt a man's payment of 50l. or 100l. to his butcher or his baker, as assent to the exemption of these rentcharges. If they once admitted the principle of such exemption, he was bound to say that there were a great number of other claims which would be made, and which it would be impossible to refuse. There was, for instance, the case of the repayment of sums borrowed by clergymen for rebuilding their parsonage houses from Queen Anne's Bounty Fund. The amount borrowed was repaid by so many annual instalments, and he had been urged to exempt those instalments from the income tax; but his reply was that they were no more entitled to exemption than any other debt which a man paid out of his income.

COLONEL BLAIR

said, that, representing a Scotch county which had borrowed more money for drainage purposes than any other in that country, he must urge the adoption of the noble Lord's suggestion.

MR. FITZSTEPHEN FRENCH

said, he believed that landowners were dealt with as mercifully as they could well expect, in being allowed to make a reduction of one-third; and he would advise the noble Lord (Lord Naas) to be content with the clause as it stood.

MR. GEORGE

said, he begged to call the attention of the Chancellor of the Exchequer to the case of a party who, being tenant for life, repaid the principal sum due at once, instead of repaying it by instalments extending over a given number of years, and he hoped it was intended to give such a person the benefit of the deductions that would be allowed him in case the money was paid off by instalments.

The CHANCELLOR OF THE EXCHEQUER

said, he thought that if a person, after paying five instalments of rentcharge, paid the remainder in one sum, the clause would have no bearing upon his case.

COLONEL DUNNE

thought that two-thirds would be more equitable than one-third, and there was reason why those loans should not be charged at all. In many instances the money had been expended in charity, and the landlords had received no benefit from the outlay.

Clause agreed to; as were also Clauses 36 and 37.

Clause 38.

The CHANCELLOR OF THE EXCHEQUER

, in reply to a question of Mr. Malins, said, this clause was intended as a boon to professional men. The rule with regard to trades was this, that they should pay on the average of three years. If a man were assessed on the fourth year, he would be assessed on the average of the previous three years; but if at the end of the fourth year he should show a falling off in his gains, a deduction would be made; whereas, if there had been a profit on the fourth year the taxpayer would have the advantage of it. That was the present state of the law regarding trades, and the object of the clause was to give the same advantage to professions as to trades.

MR. MALINS

said, that professional men now made a return of their profits at the end of every year; and he thought, in many cases, it would be a disagreeable thing if they were called upon to return their average profits for three years. He was far from thinking this clause a boon.

The CHANCELLOR OF THE EXCHEQUER

said, he did not see any reason for objecting to it, for no one could be a loser by it. He must repeat, he considered it a boon; but if the hon. and learned Gentleman were desirous that the present mode of assessment should remain, so that the party assessed should have the option of choosing by which mode his gains should be tested, he would consider if it might not be allowed to remain.

Clause agreed to; as were also Clauses 39 and 40.

Clause 41.

The CHANCELLOR OF THE EXCHEQUER

said, he wished to explain that its provisions were meant to enact that an abatement of duty should be allowed to those persons who had made insurance, or contracted for a deferred annuity, on the lives of themselves or wives, in respect of the annual premiums made. He would move the addition of certain words in order to meet the objection of the hon. Member for Greenock (Mr. Dunlop) and others, namely, that those clergy in Scotland who contributed, in accordance with private Acts of Parliament, certain sums in respect to the Widows and Orphans' Fund, should be allowed the benefit of the exemption contained in this clause.

In reply to a remark of Mr. T. CHAMBERS,

The CHANCELLOR OF THE EXCHEQUER

said, that the words in this clause, "Any person who shall have made insurance on his life or on the life of his wife, or shall have contracted for any deferred annuity on his own life, or on the life of his wife, in or with any incorporated company, or any company or association registered under the Act passed in the eighth year of Her Majesty 'for the registration, incorporation, and regulation of joint-stock companies,'" were introduced in order to induce certain companies which had not yet been registered to register themselves. He considered that the Income Tax Act would confer great benefit on insurance companies by the encouragement which it held out to the public to insure; and he thought this was not an unsuitable occasion to induce those companies to conform with the provisions of the Act passed in 1844 respecting registration, which would be useful as affording authentic public information.

Clauses 41 to 46 inclusive were then agreed to.

The CHANCELLOR OF THE EXCHEQUER

said, that as to the form of the clause he would now propose, he might call it an Amendment to Clause 13, because the form of such a clause would be preserved. The proposed clause was the same as the 13th, up to the 37th line, where it goes on to say that "the assessment of the said duties in Ireland, chargeable under Schedules A and B, shall be paid by the landlord or lessor; or if it shall appear to the Commissioners to be necessary or proper, the assessment shall be made upon such persons as are liable to the rate for the relief of the poor." He now proposed to add a proviso to the clause, to the effect of enabling the party assessed, who could show that the annual value of the land was less than the poor-law valuation, to do so in the way of an appeal. The proviso would likewise give to the landlord the power of reducing the poor-law valuation to the standard of the actual amount of rent, in all cases where the poor-rate valuation was greater than the amount of rent received. And in cases where the rent was greater than the poor-law valuation, the party would have the benefit of the difference. The remaining portion of the clause was framed in accordance with what he believed was the general view of Parliament on the subject. They would observe that it was the intention of the Government, if the clause were agreed to, to have the assessment made on the landlord and immediate lessor, and not upon the occupier, except in special cases. They might be asked, why they retained a discretion on that subject? He would answer that question. They had come to the conclusion that it would be better for the peace and contentment of Ireland, as well as more advantageous to the collection of the tax, that in the agricultural districts it should be ordinarily levied on the landlord or immediate lessor. But the case of messuages and the case of towns was very different. In towns and cities the occupier was the proper person to place the assessment upon. Generally speaking, in respect to dwelling-houses, factories, and a variety of other tenements, the natural and simple course would be to levy the tax from the occupier. In respect, however, to the agricultural population, he thought that the best mode was to levy from the landlord or lessor. But he thought it was necessary to retain the right of levying upon the occupier, in order to get at the immediate lessor. There might be a difficulty otherwise in coming at the proper party. There was one class of considerations connected with the working of this tax which he thought it was his duty to point out. They took for the basis of their assessment the poor-law valuation. In some cases in Ireland that valuation might, however, be above the actual rental, and in others below the actual rental. Wherever the actual rental was below the poor-law valuation, if they levied upon the occupier, they must require him, in the first instance, to pay according to the poor-law valuation, but they would leave him a remedy of recovering the surcharge. Assuming that 100l. represented the poor-law valuation, and that 90l. represented the actual rent, by the Bill they must levy upon the 100l.; and the occupier, in paying himself, could only deduct 90 sevenpences from the landlord. The remaining 10 sevenpences he will be obliged to seek for by a process pointed out in the clause. This, however, was an inconvenience which could scarcely occur more than once; for, on the real facts being made known to the proper officers, the demands made upon him in future would be levied according to the amount of the actual rent. After the people of Ireland had been given to understand that they were to be relieved from the consolidated annuities, and that in lieu thereof there was to be imposed an income tax which would be borne exclusively by persons having 400l. a year and upwards, he thought it would be difficult for them to reconcile it to themselves that they should be called on in the first instance to make these payments, even though they had afterwards to get them returned from the immediate lessor. They were not familiar with that course of proceeding, and he (the Chancellor of the Exchequer) was afraid that it would tend to great dissatisfaction. It was upon the joint effect of these considerations, then, that the Government had come to the conclusion to propose to the Committee to frame the Act of Parliament in such a way as to show that the intention of Parliament with regard to the owners of land in general was, that the assessment should be made on the immediate lessor—reserving, however, in cases of necessity, the power of resorting to the occupier. The clause would contain two important provisoes—one giving any person assessed, whether the immediate lessor or occupier, on the poor-law valuation, the right of appeal to reduce the valuation to the actual annual value; the other meeting the case of the landlord whose rent was less than the valuation, and which would prevent him from being assessed to a higher amount than the rent. As to the course which ought to be taken with regard to this question, it would not be fair to press the Committee for a decision before it had had time to consider the matter. He thought, therefore, the best course would be for the Committee to allow him to introduce the clauses now, insert them in the Bill, and read them in conjunction with the other clauses, so that hon. Members might have a better idea of their effect than if they were printed with the Votes. Should that be the opinion of the Committee, he would propose the insertion of these clauses, together with the clause of the hon. Member for the University of Dublin (Mr. G. A. Hamilton), then get the Bill reprinted, and fix a day for the third reading, when hon. Gentlemen would have ample opportunity of discussing and deciding upon the question.

LORD NAAS

said, he did not rise at that moment to oppose the clauses of the right hon. Gentleman; but he thought their operation would be to create an entire new mode of assessment—a mode of assessment for which hon. Gentlemen on that (the Opposition) side of the House were not in the least degree prepared, and which was without precedent in this country. The proposal was such that it would take some time before hon. Members would be able to form an accurate opinion of what its probable effects would be. The right hon. Gentleman asked them to consent now to the insertion of these clauses in Committee, and defer the discussion of the principles at issue until the third reading of the Bill; but that was a course which hon. Gentlemen on that side of the House could hardly with fairness be expected to assent to. He would suggest, therefore, whether they had not better report progress, give notice for the printing of the proposed clauses, and let the discussion be taken upon the question next Thursday. Hon. Members from Ireland would thus have an opportunity—a brief one, certainly—of considering their effect. It was a most unusual proceeding, however, to ask them to forego that legitimate course of fair discussion which they had in Committee, and in Committee alone, upon what, in point of fact, was an entirely new Bill.

MR. MAGUIRE

said, he approved of the principle of the Chancellor of the Exchequer's new clauses, but he could not understand upon what ground the right hon. Gentleman asked a man to pay a tax in the first instance to which he was not at all liable. Nothing could be more vexatious and harassing than to ask a tenant to pay this tax, or to be liable to have his goods seized for it when the law said that the tax should not be imposed upon him, but upon his landlord. For the same reasons which induced the right hon. Gentleman to exempt the tenant-farmers from the operation of this tax, he recommended him to apply the same principle to the inhabitants of the towns.

LORD JOHN RUSSELL

said, if the clauses were inserted now, he should have no objection to the recommitment of the Bill, provided it was distinctly understood that the discussion would be then confined to the subject-matter of the clauses themselves.

LORD NAAS

said, he would willingly concur in the suggestions of the noble Lord, with that understanding.

MR. I. BUTT

then proposed a clause providing, that in calculating for the purpose of the tax any income derived from the rent of lands, the calculation should be made upon the net amount, after allowing for the poor-rate chargeable against the landlord. This question could not arise in England, because in this country the tenant paid the poor-rate. In Ireland, on the other hand, the tenant paid it in the first instance, but when he came to pay his rent he deducted one-half of it; and the law avoided any contract made between landlord and tenant, by which the tenant would undertake the entire rate. In every instance, therefore, in Ireland the landlord's real rent was his nominal rent, reducing half the poor-rate; and the clause he proposed was absolutely necessary to place the Irish landowner in the same position as the English. An illustration would make this plain. Let him suppose two farms of exactly the same value, one in England, the other in Ireland, each of the gross value, without reference to poor-rates, of 110l. If the poor-rate in each case were 10l., the tenant taking the English farm would pay the whole poor-rate, and he would give for the farm 100l. a year; but taking the Irish farm, he would pay only half, and the rent would be fixed at 105l.; but when he came to pay his rent he would hand over as part of it a poor-rate receipt for 5l.; and the landlord would receive exactly the same sum of money as the English one—100l. But the income tax would be paid by the English landlord on 100l., the sum he did receive; by the Irish landlord on 105l., the sum he did not receive. But, in fact, the principle for which he contended was conceded in the Bill applicable to England, because there was a clause that if in any case the landlord contracted to pay the poor-rate, his income from the rent should be calculated after a deduction of the amount. Now, in Ireland the law made this very contract in every case. If the landlord in England contracted to pay half the poor-rate, it would be deducted from the rent on which he was to pay income tax. In Ireland, in fact, every letting was made subject to such a contract. It was manifest justice that the same consequences should follow.

The CHANCELLOR OF THE EXCHEQUER

said, the general basis of the Bill placing the rate on the poor-law valuation showed the intention of the Government, because that rate was made by law on the value of the holding after allowing for the poor-rate. The intention, therefore, was to make the allowance contemplated by the hon. and learned Gentleman. But the hon. and learned Gentleman would see that it was impossible for him to carry the clause as he proposed it. If that clause were adopted in every case in which the landlord's rent exceeded the poor-law valuation, the landlord would have the deductions twice over: first, in being assessed on a valuation in which allowance was made for this very deduction; and, secondly, according to the hon. and learned Gentleman's proposal, in being allowed it as a deduction from the income of his estate. It might, perhaps, be necessary to bring up a new clause providing for cases in which the rent was below the poor-law valuation; and if on consideration he found that such a clause was necessary, he would bring it up on the third reading, but it was impossible for him to accede to the clause proposed by the hon. and learned Gentleman.

MR. BUTT

said, that upon this assurance he would withdraw the clause; but the right hon. Gentleman would find it absolutely necessary to make some provision like that he had pointed out. The cases in which the rents in Ireland were below the poor-law valuation were by no means rare. The estate of an hon. Baronet near him (Sir Arthur Brooke) was set at an annual rental 1,500l. below the poor-law valuation.

Clause withdrawn.

MR. BLACKETT

said, he would now bring forward the clauses of which he had given notice. The principle of the first two was identically the same, and that principle was simply this—that it was desirable to limit, as far as possible, the discretionary power at present exercised by the Income Tax Commissioners, and to lay down some fixed rule in cases where there at present prevailed nothing but a contradictory practice. It was, he believed, a common impression that persons assessed to the income tax were only chargeable with the tax upon the amount of money actually received; but this was quite an erroneous notion. If they would turn to the Act of 1842, they would find it enacted that "no deduction was made for any debts except bad debts, proved to be such to the satisfaction of the Commissioners respectively." Now, he confessed that, in his opinion, the fairest rule would be that no man should be called upon to pay income tax on any greater amount of money than he actually received into his pocket; but he did not propose to go so far, or to establish any principle that would interfere with the amount of revenue which the Chancellor of the Exchequer calculated upon receiving. He only proposed to take the two extreme cases in which a debtor either declared himself bankrupt or entered into a composition with his creditors, and in which cases all chance of recovering the debt was gone, and to enact that in those cases the creditors should be rated upon the sums they actually received. With respect to the second clause, which referred to deductions for wear and tear of machinery, there was no provision made in the original Act; but it was indisputable that in many cases such deductions were made, although he must say that all the witnesses were agreed that they were not fairly allowed under the provisions of the Act, and that the practice of the Commissioners varied considerably in different districts. Now, he thought it was desirable to lay down some fixed rule either for or against these allowances, and not to leave the matter in the present unsatisfactory state. The principle of his third clause was, not to establish a new Court of Appeal against the decisions of the Commissioners, but merely to facilitate the access to the very indifferent kind of court which at present existed.

The CHANCELLOR OF THE EXCHEQUER

said, he fully admitted that the questions involved in the hon. Gentleman's clauses were difficult and important; but it was not without serious consideration that he had come to the conclusion that it would not be wise to adopt them. With respect to the first of these clauses, what he had to observe was this, that it proposed a departure from the entire principle on which profits were at present calculated for the purposes of the income tax. The whole principle upon which the income tax proceeded was, that the payments under Schedule D were to be computed, not upon the receipts but upon the profits of the year. Now, the proposal of the hon. Gentleman was, that they should entirely depart from that principle, so far as debts, either bad, or supposed to be bad, were concerned; and he (the Chancellor of the Exchequer) must say that he was very apprehensive of the effect of this change of principle. He did not see why, as the law at present stood, it should not work in a manner generally satisfactory. He had teen told by what he might call the highest authorities, that the proper course would be, that when a debt was alleged to be bad, or partially bad, but where there was a prospect of future dividends, a fair estimate should be formed of the value of the debt, and that the tax should be charged in accordance with that estimate. It appeared to him, that if any alteration was to be made in the present clause, that would be the proper mode of proceeding, because then there would be no departure from the principle of the Act. If the hon. Gentleman thought it desirable to move an addendum, providing that debts might be valued, he should not probably object to that. With respect to the second of these amendments, he confessed he doubted whether it was an improvement at all upon the law as it stood, which already provided that deductions might be made for the supply, or repair, or alteration of machinery. If the objections of the hon. Member were that there was no allowance for wear and tear, the fairest way of considering that would be to see whether wear and tear should not be specified among the articles to be deducted. His objection to the proposition was, that it first left it to the discretion of the Commissioners to decide whether it should be allowed at all, and then, when once determined on, fixed irrevocably at 5 per cent. He thought the better way would be to provide that, where necessary, wear and tear should be regarded as a matter of fair exemption; but that the amount to be allowed for it should be left to the discretion of the Commissioners. The third clause appeared to him to be very objectionable, because it would saddle the public with the cost of a double set of Commissioners and a double investigation. A man would first take his chance with the local commissioners; and if they pressed him too hard, he would then go to the Special Commissioners. The present principle of the law was, that a man should exercise his option, but he must do so at once. It might be that the hon. Gentleman was not satisfied with the local tribunals. Then the proper mode of dealing with such a question was to see whether they could amend that machinery. He confessed that he felt considerable prejudice against the machinery as it at present stood, and believed that it might be most beneficially improved. He did not, however, pretend to say that he was able, pressed as he had been with other business, to say at once what would be the best way of approaching that question, and would only say that there was every desire, on the part of the Government, to adopt such steps as, without mixing it up with the consideration of financial measures, would admit of well-considered improvements in what must be considered as an old and somewhat crude system.

SIR JOSHUA WALMSLEY

said, he hoped, whatever the fate of the first and second clauses might he, that the Chancellor of the Exchequer would give his best attention to the first. As a mercantile man, he could speak emphatically of the great inconvenience which arose, in practice, from the Commissioners refusing to take any cognisance of bad debts unless under acts of bankruptcy, and where dividends were paid. The cases were numerous in which a merchant made a bad debt quite equal to his ordinary income on the year; and yet, under the present system, no allowance was made for bad debts of this nature.

MR. G. BUTT

said, that the answer of the right hon. Chancellor of the Exchequer was far from satisfactory, more particularly after he had admitted that it was very unfair to tax a man for debts which were clearly bad. The principle which the hon. Member for Newcastle-upon-Tyne (Mr. Blackett), proposed, affected the case only where debts were "ascertained" to be bad. They were not to speculate, for he admitted there was great difficulty in ascertaining the value of debts about which there might be some doubt; but it appeared to him that there was something very tangible and exceedingly clear in the 1st clause. When there was a bankruptcy the whole of the debt was to be deducted from the profits of the year in which it was declared, and in subsequent years credit was to be given for the dividend as part of the profit of those years in which a dividend was paid. He thought that this was an extremely fair proposition; and he could imagine nothing more unfair than that a trader should be called upon to pay upon the whole of his debts, and then, if a bankruptcy occurred, and all was positively lost, that the duty should not be remitted. Clearly, the tax either ought not to be taken in the first instance, or if taken, and the money were lost, it ought subsequently to be remitted.

The CHANCELLOR OF THE EXCHEQUER

said, as there appeared to be some discrepancy among good authorities as to the practical working of the first clause, perhaps the best way would be to leave the clause in his hands, with the view of its being further considered, and he would endeavour to meet the case which it involved.

MR. GEORGE

said, he was in favour of all the clauses proposed by the hon. Mem- ber for Newcastle-upon-Tyne, and he hoped the Committee would adopt them.

MR. E. EGERTON

said, with reference to the third clause, that the present working was far from satisfactory, and that, in the absence of any other proposition from the Chancellor of the Exchequer, he should support it.

MR. CHEETHAM

said, he should support the second clause. Many manufacturers had 20,000l. worth of machinery, and paid 1,000l. or 2,000l. annually in depreciation. Still they had to pay upon the whole of this, and he considered it most unjust.

MR. J. PHILLIMORE

said, that great inconvenience arose from different principles being acted upon by local commissioners in different districts, and he would beg to express a hope that the Chancellor of the Exchequer would agree to the third

MR. ALEXANDER HASTIE

said, he could also speak to the inconvenience resulting from the want of uniformity in the practice of the commissioners: there were different regulations with regard to the depreciation allowed to shipowners in Glasgow from those that prevailed in Liverpool and Hull.

MR. BRIGHT

said, the Chancellor of the Exchequer appeared to wish the Committee to believe that it was not essential that a Bill under which a large amount of money was to be raised should be properly contrived and arranged, but as it was essential to the right hon. Gentleman to raise the money, he seemed to think it a little unreasonable that any one should object to any of the clauses. The right hon. Gentleman was not aware of the difficulty which the second resolution was intended to remedy. It was the custom for manufacturers to expend a large sum annually in keeping their machinery in good working order, and he knew that the deduction of 5 per cent proposed was considerably less than the depreciation of the machinery in the manufactories of Lancashire and Yorkshire. He was satisfied the right hon. Gentleman would not deny the abstract justice of the principle of his hon. Friend (Mr. Blackett), and, if so, he could not see what objection he could have to introduce the clause, because it was most desirable to produce uniformity in the practice of the commissioners. As to the third proposition, he must say the system by which the local commissioners were appointed, was bad, and he urged on the Chancellor of the Exchequer the propriety of considering his proposition that they should be elected by the income-tax payers. The right hon. Gentleman might certainly adopt some mode of making the operation of the law more acceptable to the public, and he thought the Committee ought to insist on inserting the required alterations in the Bill. Let him make such concessions as were reasonable, in order that there might be no complaints of the tax for the future.

SIR WILLIAM CLAY

said, that if manufacturers had a claim to deductions on account of machinery, shipowners had a much stronger claim, as their property was depreciated by wear and tear to a much greater extent.

The CHANCELLOR OF THE EXCHEQUER

said, that there were three propositions before the Committee. With respect to the first, he was willing to admit that it seemed to demand that something should be done regarding it. With respect to the second, it amounted to a general allowance for depreciation. This might be an equitable ground for deduction, and he was not prepared to say that it was not; but if they were to consider depreciation in machinery and ships, they would have further to consider how the admission of the principle would be affected with regard to the other great classes of taxpayers. The expenses of repairs and management being already allowed under Schedule D, it would be well for the Committee to consider how far they would be justified in making further concessions. If any hon. Gentleman could discover some mode of reconstructing the income tax, with greater justice and fewer oppressive incidents, in Heaven's name let him do it; but he warned the Committee how it carelessly opened the door to those other concessions to which hon. Gentlemen had referred.

MR. J. B. SMITH

said, that the absence of a right of appeal from the decision of the local commissioners had often led to great injustice. Mr. Fielden, formerly of that House, preferred to have his goods sold by public auction, than conform to that which he believed to be unjust.

MR. BLACKETT

said, in reply, that the encouragement he had got from hon. Members was sufficient to induce him to take the sense of the Committee on the first proposition with reference to bad debts. With regard to the second proposition, he believed it would be necessary to leave the definition of what was machinery to the discretion of the Commissioners.

The CHANCELLOR OF THE EXCHEQUER

said, he did not expect, after what fell from the hon. Gentleman (Mr. Blackctt) in his opening speech, that he would divide the Committee upon his clauses. If that intention were persisted in, he (the Chancellor of the Exchequer) must point out one matter so objectionable that he would be compelled to resist the clause. The hon. Gentleman proposed, "Whenever a composition shall have taken place between a debtor and his creditors, such sums only shall be liable to income tax as shall have been actually received by the several creditors within the year for which their respective returns are made." Upon what principle should that be allowed? When a composition had once been effected, the debt could no longer be considered a bad debt, or why should not all debts due be considered bad debts?

MR. BLACKETT

said, that as a young Member of the House, he was most unwilling to appear to act any way vexatiously; and if the right hon. Gentleman would promise to introduce a clause embodying the principle, he (Mr. Blackctt) would not divide the Committee.

MR. G. BUTT

said, he could not see why compositions with creditors should not be treated by the Chancellor of the Exchequer as similar cases in insolvency. If the hon. Gentleman who proposed the clauses persisted, as he hoped he would, in taking the sense of the Committee upon them, he (Mr. Butt) would gladly support him.

MR. MILES

said, he hoped the hon. Member who moved these clauses would consider what had fallen from the right hon. Chancellor of the Exchequer. It would be hardly fair to pin the right hon. Gentleman to a clause without affording him an opportunity of consulting the law officers of the Crown upon it, particularly after the principle had been admitted. He should recommend the hon. Gentleman (Mr. Blackett) to leave the matter in the hands of the Government. With respect to the exclusion of machinery employed in manufactures, he would remark that some machinery was used now in agriculture; and if one exemption was allowed, the other must follow. But he thought the Chancellor of the Exchequer had done as much as could be expected from him in promising to consider the first proposition.

MR. MITCHELL

said, he saw no reason why a man should not set off the value of his bad debts from his income. As the right hon. Chancellor of the Exchequer was willing to consider the propriety of framing a clause to meet the evil, he should recommend his hon. Friend (Mr. Blackett), to whom great credit was due for introducing the matter, to withdraw the clauses.

MR. BLACKETT

said, he had hoped for a more distinct announcement from the Chancellor of the Exchequer; but he thought the Committee would agree that he was acting safely in withdrawing the clauses.

The CHANCELLOR OF THE EXCHEQUER

thought the principle of the hon. Member for Bridport (Mr. Mitchell) was correct; and if there was anything to add in the shape of a specific provision for bankruptcies, he was willing to do so.

The first and second Clauses were then put, and negatived.

Upon the 3rd Clause being put,

MR. M. CHAMBERS

said, he must beg his hon. Friend not to withdraw that clause, which he considered to be most important. One objection to the income tax was, its inquisitorial character, and anything that could be done to remove the annoyance and vexations attendant upon it should be done. The object of the clause was to prevent unnecessary exposure before local commissioners, who might be the rivals in trade of the appellant. He thought the proposition was just, fair, and equitable, and likely to make the tax palatable.

Clause negatived.

MR. J. BALL

said, he would now beg leave to bring forward the clause of which he had given notice. He believed it desirable that they should go as far as was possible in recognising the principle of exempting precarious incomes from the tax. The object of this clause was to extend the principle which had been recognised by the right hon. Gentleman in that very important modification of this tax which he had introduced into the 41st section of the Bill before the Committee. It was desirable, he thought, to go as far as possible, without altering the principle of the tax itself, in recognising the claims of the possessors of precarious incomes. His object, therefore, was to provide a mode by which, secure from fraud and imposition, every possessor of precarious income should be enabled annually, or at such time as he was enabled to do so, to invest, for the future support of his family, or of those legally dependent upon him, such portion of his annual income as he was disposed to lay aside for that purpose. He proposed that there should be an official trustee, who should be the depositor of the sum so invested, and that every individual should be allowed the discretion either of receiving himself the interest of the sum invested, or of allowing those sums to accumulate for the benefit of the persons in whose favour the trust was drawn up.

The CHANCELLOR OF THE EXCHEQUER

said, he saw several objections to this clause. First, he doubted very much the expediency on general grounds of holding out such a decided premium to the locking up of large accumulations of capital as would be created by enabling persons who transferred sums of money to an official trustee for the benefit of their wives or children, to claim as deductions from their incomes the amounts so invested. Again, such an arrangement would be objectionable, because it would operate in favour of Schedules E and D, to the exclusion of the rest of the schedules. And, lastly, he denied the expediency of creating a machinery of this kind, so exceptional in its nature, and tending to bring about a particular disposition of property upon a large scale, and thereby interfering with the natural course of property, until Parliament had at least determined whether the income tax was to be a permanent part of the revenue of the country. If the tax was intended to be made permanent, then he could perfectly understand this proposition, although even then its expediency would admit of discussion; but surely nothing could be more irrational than to appoint official trustees and give people a bonus upon whatever funds were placed in their hands, and thereby to bring about a great concentration of property under a highly artificial form for the sake of exemption from the tax, when at the same time they were holding out the hope that Parliament might discontinue the tax. The question of the duration of the tax would in few years have to be considered; upon that point he had already expressed his own opinion; but whether its duration should be temporary or permanent, at all events do not let them prejudge that question by a collateral arrangement like the one now proposed, which would be absurd unless the tax was to be permanently continued.

Clause negatived.

MR. I. BUTT

said, he would now propose the addition of a clause, the object of which was to place the trader in Ireland upon as advantageous a footing with regard to appeals as the English trader. As the Bill at present stood, the Irish trader had no power of going to the Special Commissioners in the first instance with his complaint respecting the assessment, but could only go before them on appeal from the decision of the Land Tax Commissioners; whereas, the English trader had the option of going with his case before the Special Commissioners as a tribunal of first instance.

The CHANCELLOR OF THE EXCHEQUER

said, that the Irish trader was placed by the Bill upon precisely the same footing as the English trader. The Commissioners of Inland Revenue appointed the persons who were to mate the assessments; and if the hon. and learned Gentleman supposed, as he seemed to do, that the Special Commissioners were independent of the Commissioners of Inland Revenue, he was entirely mistaken. What appeared to mislead the hon. and learned Gentleman was the fact that in England under ordinary circumstances, although the assessment was realty made by the inspectors or surveyors of taxes, yet the parties could only be served with the notices under the authority of the local commissioners; where in Ireland there were no local commissioners, and all the proceedings that were taken with regard to any assessment must have the previous saction and authority of the Commissioners for Special Purposes.

MR. I. BUTT

said, that if the right hon. Gentleman was right in the construction he put upon the Bill, and it was really the case that the Irish trader was equally privileged with the English trader, nothing could possibly be more absurd than the collocation of words contained in the two clauses which the Committee had passed with regard to assessments and appeals in Ireland.

MR. G. BUTT

said, he hoped his hon. and learned Friend would not press this matter to a division, but would leave the clause for reconsideration.

MR. I. BUTT

said his mind was fully made up as to the necessity for the clause, but he did not wish to press it against the feeling of the Committee. He begged to give notice, however, that when the Bill was recommitted on Thursday next, he should again move the adoption of the clause.

MR. KIRK

said, he thought that there being, first, an appeal to the Commissioners for Special Purposes; and, secondly, an appeal to the assistant barrister, there could be no doubt that substantial justice would be done to all parties assessed under Schedule D. He saw no necessity, therefore, for the supposed clause.

Clause negatived.

The House resumed; Bill reported.