INCOME TAX (No. 2) BILL. (Hansard, 26 May 1854)

§ SIR HENRY WILLOUGHBY
trusted that the right hon. Gentleman had not entirely given up the hope of removing some of the glaring inequalities of this tax. Upon those inequalities he would not now dwell; but he could not help mentioning one of them—the case of the Long Annuitants. The Long Annuities would expire in 1860, and it was likely that the Russian war would last until then. Now, to supposing a person had invested 88l. on the 1st of May in Long Annuities, he would have to pay 1l. 2s. 2d. a year for income tax; whereas if he had invested the same money in three per cents, he would only have to pay 3s. 6d.; and, supposing that the war lasted till 1860, he would have to pay altogether 5l. 8s. 5d. on the Long Annuities whereas He would only have to pay 1028 16s. 2d. on the three per cents. It was a breach of faith to tax this class of property in this unequal manner. A great quantity of algebra had been expended before the Income Tax Committee, in order to show that if the income tax were perpetual it would come to the same thing if they invested their property in either way; but as nobody could expect to live for ever, he did not think that that was very satisfactory. He did not deny that the Long Annuitant ought to be taxed, but he had a right to be taxed fairly; and, in a case where a question of justice was involved, no argument ab inconvenienti ought to be allowed for a moment to prevail.

§ THE CHANCELLOR OF THE EXCHEQUER
said, the hon. Baronet had raised one of the most important and one of the most intricate and difficult questions that had ever attracted the attention of Parliament, at a moment when not one-tenth of the Members were in the House, and when not one-tenth of those who were actually present, were attending to the subject. It could hardly, therefore, have been introduced at a moment more unpropitious for any real progress towards the solution of a problem which he for one thought never could be solved. But whether it could be or not, his answer must be this—namely, that it was a very grave and difficult question, which, whenever considered at all, could not possibly be considered, or justly considered, with reference to one class alone. It was true that the case of the Long Annuitants differed from that of other classes, inasmuch as it admitted of a very clear and arithmetical statement; but, as regarded the substantial justice of the matter, the Long Annuitant was not differently circumstanced from other persons possessed of temporary incomes. He had never given any promise to attempt the adjustment of the tax upon temporary and permanent incomes, and he rejoiced that he had not, for that would have been a promise which he owned he should not be able to redeem. But nothing could be more irrational than to say that he ought select one class of persons having a temporary interest and give allowances to them, and leave every other class of persons having temporary incomes to the full sweep and stroke of the tax. He doubted whether the case of the Long Annuitants was, after all, the strongest that might be adduced. A great portion of these Long Annuities were created in the midst of war, when they were subject to an income 1029 tax of 10 per cent, and when there was a reasonable prospect that they would continue to be liable to deduction; and therefore, if theirs was the only case they had to deal with—if there were no professional men, no merchants, no traders, no poor widows living on annuities, and with children unprovided for—or if there were none of those countless myriads or hardships that would start up around them as soon as they fairly approached the question, it was doubtful whether they (the Long Annuitants) would be entitled to relief. So, too, if they looked at the matter merely with reference to our own times, they must remember that they had now had an income tax for twelve years, and every bargain which had been made in Long Annuities during that time had doubtless been made with the fullest expectation that they would be liable to deduction on that score. What he wished, then, to impress upon the Committee was, that it would be the grossest injustice and a gross piece of legislative favouritism to attempt to make any exception in favour of any one class of temporary incomes, especially in favour of a class like the Long Annuitants; and that it was quite impossible that Parliament could ever consent to entertain a proposal so partial, so exceptionable, and so unequal as that which had been made by the hon. Baronet.

MR. HUME
said, he could not sit still and hear the right hon. Gentleman treat the proposal of the hon. Baronet in the manner he had just done. The hon. Baronet had not asked for a special exception in the case of the Long Annuitants. He had denounced the tax as being full of irregularities, and he had merely quoted the Long Annuitants as one example, and had naturally asked whether there was any hope of an amelioration. The truth was, there was not a corner in the tax—not a single clause in the Bill—which did not involve an injustice; and that injustice was of a nature that admitted of an easy remedy. He must say he had never known the Report of a Committee that contained so many incontrovertible facts, and that had met with so little attention as that upon the income tax. No matter what the difficulties might be, the Government ought to grapple with them, as a gross injustice had been shown. He hoped they would take the question of these adjustments into their serious consideration next year.

§ MR. WILKINSON
said, the case of the Long Annuitants involved a breach of faith, 1030 because there was a special contract that the finds should not be taxed.

COLONEL DUNNE
complained of the uncertainty in Ireland in the mode of levying the tax, and of the hardships to which landed proprietors were subject, through the tax being charged on the poor-law valuation, where the property was let on a long lease at a low rent. The consequence was that the proprietor often paid on more than he received. It was said the parties might get the tax so paid remitted, but this could only be done after a long interval, and with a great deal of trouble. Steps ought to be taken to regulate the practice which prevailed, of either charging the tax on the tenant or the owner.

§ THE CHANCELLOR OF THE EXCHEQUER
said, that if the hon. Gentleman had brought forward this matter at the time when the income tax was extended to Ireland, his representations would have been listened to. The Act was to a great extent experimental; and last autumn the Government had thought it right to appoint two Special Commissioners. The Government had heard no complaints, and though they had anticipated much difficulty in levying the tax in Ireland, it had turned out comparatively an easy financial operation. The cases referred to by the hon. Gentleman must be isolated instances. Ample provision had been made for appeal, not to the assessors, but to the special Commissioners. The first half-year's tax, obviously the most difficult, had now been collected; and so little necessity had there been for the interference of the Special Commissioners that the Government had not thought it necessary to continue their employment, and one of them had already been removed to England. Any particular cases of annoyance or inconvenience that might be represented to the Treasury would receive due attention.

MR. URQUHART
begged to corroborate the statement of the Chancellor of the Exchequer as to the facility with which the tax had been collected in Ireland.

§ THE CHANCELLOR OF THE EXCHEQUER
said, the object of this new clause was to provide for the payment of the tax on Exchequer bills, and other property, for fractional parts of a quarter. Its effect was to make these securities only liable to the 7d, tax until the 5th of April last, 1031 and to the tax of 14d. from that date till the day on which they expired in June.

§ MR. HENLEY
asked if the clause would apply to mortgages?

§ THE CHANCELLOR OF THE EXCHEQUER
said, that was an entirely different case. Mortgages did not, like Exchequer bills, necessarily expire at the end of the year, but were of a more permanent character. Exchequer bills passed from hand to hand, the practice being for the buyer to pay the interest for the current half-year to the seller, allowance being made for the tax. Without some provision of this kind, those who had purchased Exchequer bills in the last three or four weeks would be out of pocket, having only calculated the half-year's income tax at 7d.

§ MR. WALPOLE
said, that the holders of funded property would all be taxed unduly, as well as the holders of Exchequer bills.