HC Deb 15 March 1855 vol 137 cc581-92

said, that on several former occasions he had called the attention of the House to the great injustice of imposing the probate and legacy duties upon personal property of every description, while real property was exempt from both. This injustice had its origin in the year 1796, when Mr. Pitt brought in a Bill to subject all descriptions of property to the payment of probate and legacy duty; but the powerful landed aristocracy of that day compelled him to divide his measure into two Bills, one to impose those taxes upon personal property, and the other to impose them upon real property. Mr. Fox opposed the separation on the ground that if the tax were imposed upon one description of property, it ought to be laid upon all; and his view was strongly supported by Mr. Pitt. However, the measure, as he had stated, was divided; and while the Bill relating to personal property was carried through both Houses with little or no opposition, the other was successfully resisted. The injustice thus done had been partially remedied by the introduction of a Bill by the right hon. Gentleman the late Chancellor of the Exchequer (Mr. Gladstone), to whom the country was deeply indebted for the measure, although it only went to the extent of laying one-half of the legacy duty alone upon real property. So far, however, from blaming the right hon. Gentleman, he thought that he had acted with great wisdom and discretion in not attempting to do more. Such was the opposition with which the right hon. Gentleman had to contend, that he believed there was no other man in the country whose ability and resolution would have enabled him to carry it through Parliament. The Motion, however, which he (Mr. Williams) was going to propose, had reference solely to the probate duty, and as the circumstances both of that and the legacy duty were precisely similar, he could not conceive how any one could object to his proposition. If the right hon. Gentleman (Mr. Gladstone) were still Chancellor of the Exchequer he should appeal to him with hopeful confidence; and he trusted that he might also do so with the right hon. Baronet who now filled the office. When he (Mr. Williams) brought forward the subject on previous occasions, the only argument with which he was met was, that landed property was subject to stamp duties on conveyances and mortgages so heavy as fairly to counterbalance the legacy and probate duties. But five years ago, at a sacrifice of 450,000l. per annum, the stamp duties on conveyances and mortgages were reduced to precisely the same amount as those paid on the transfer of railway and canal property, of joint-stock bank shares, and every other species of personal property, except shares in the Bank of England, the Bank of Ireland, and the East India Company. That argument, therefore, had ceased to be valid. The House had lately voted something like 40,000,000l. for carrying on the war, and the Chancellor of the Exchequer would shortly have to provide that sum, and very possibly a great deal more money would be wanted for the same purpose. Now, if the right hon. Gentleman accepted the proposal which he (Mr. Williams) was now making to the House, he would at once obtain 2,500,000l. not by imposing any additional tax, but by doing a simple act of justice—that of imposing the same tax on land as is paid on all descriptions of personal property. The right hon. Gentleman might depend upon it that if he attempted to raise the money either by new taxation or by loan before he adopted this just principle of taxation, the country would express the strongest disapprobation of his conduct. To show the unfairness and anomalies of the present system, he might remark, that while the stamp duties on probates from 20l. to 80,000l. varied from 3 to 2½ per cent, above 80,000l. paid only 1½ per cent. Why should the larger properties be thus indulged? But this was only one specimen of the unfairness which was to be found in all our arrangements relating to taxation. Again, legacies chargeable on land paid no probate duty whatever, and the rich landed proprietors were thus exempted from taxation in providing for the younger members of their families. But how did they deal with the tenant-farmer? They valued his lease, all the improvements he had made on his farm, his stock, his implements, and everything he had, even to his wearing apparel, and they charged the probate duty upon that valuation. Houses built on freehold land paid no probate duty; but those built on building leases, which was the case with the great majority of houses in this country, paid probate duty on the full value of the lease. Land held on a lease for 1,000 years, which was as good as freehold, was made to pay probate duty in proportion to its value, while freehold land was wholly exempt. When the Legacy Duty Bill was before the House, much was said about the hardship on heritors having to pay the duty, which only amounted to one-third of a year's rent, and for this four years and a half credit was given. If a man had a legacy of 1,000l. left him, he must pay the duty in sixty days. If a man engaged in commerce died, leaving stock and book debts valued at 20,000l., though his estate might only pay 10s. in the pound, the administrator had to pay duty on the full amount, and there was the greatest difficulty in getting any portion of it back. As an example of the anomaly of this tax, he would take the Duke of Bedford's estate—that in Covent Garden—the leases had recently expired; the property had passed into his Grace's hands, and was not liable to a farthing of duty. His other estates about Russell Square were still under lease; and the leaseholders were liable to the duty. By the law of Scotland, houses built on another man's freehold were considered part of the freehold, and paid no probate duty. The case was the same with mortgages. The result was, that property of this kind in Scotland was wholly exempt. Another instance of the injustice of the tax as at present levied was afforded by the late Duke of Portland's estate. He left one of the largest estates in England, which was inherited by his heir; he also left personal property of about 1,000,000l., on which, if left to the younger children, they would have to pay 1 per cent legacy duty and 2½ per cent probate duty. Legacies were left to the servants, and they actually had to pay 10 per cent. legacy duty and 2½ per cent probate duty. The result was that the younger children paid on the personal property seven times more duty than the young Duke paid on his freehold estate, and the servants paid thirty-seven times as much as he did. Recently Mr. Benyon de Beauvoir died, leaving property worth 7,500,000l.; of this 1,000,000l. being personal property, paid probate duty; and all the rest escaped. The late Chancellor of the Exchequer had brought all kinds of property to his net in the Succession Duties Bill; but he was told that lawyers could still contrive to evade it; and those evasions all applied to the legacy duty, not the probate duty. Lord Stowell, one of the most eminent lawyers of the day, had transferred his property to his son by a regular deed, to evade paying legacy and probate duties; the son died before him, and he had to apply to the Court of Chancery, and contrived to evade the payment of the duty. The late Mr. Porter, in his Progress of the Nation, said that not three in ten of the estates of persons who died paid any probate or legacy duty at all. It appeared that in 1848, on the property of only 26,000 persons who died, probate duty was paid, the property left by 17,000 of whom was of less than 250l. value; showing that the duty was evaded to a great extent. Ho estimated that a revenue of 2,500,000l. might be derived from extending the probate duty to real property. At present the average payment was 2 per cent; he understood the same amount ofproperty very nearly paid the legacy duty and the probate duty; and including impropriate tithes, corporations, colleges, bishoprics, and deans and chapters' property, the amount he had named would be greatly increased. The corporation of London obtained 60,000l. a year by taxing all the coals which came within twenty-five miles of London—why should they not be taxed to the probate duty? It might ho said, because corporations never died; but means might be devised of bringing their property to charge. There were also the livery companies, all which had large incomes—they ought also to be charged in the same way. He would also extend the tax to the two Universities, to bishoprics—not touching the present income of the bishops—and to deans and chapters. Including these, he thought 2,500,000l. a very low estimate of the amount to be raised by the proposed tax. In rendering holders of real property liable to it, landlords would only be paying the same tax as their tenants and menial servants. Nothing could be more consonant with justice than the proposal he now made. Both the late Chancellor of the Exchequer and his predecessor had acknowledged the partiality of the existing probate duty; the latter Gentleman had said that he saw no difference between a privileged noble and a privileged tobacconist. He could not conceive on what ground his Motion could be opposed. It had been said by the Opposition that land was more heavily taxed than any other property. This he denied, and was prepared to prove that the industrious classes were far more heavily taxed than landowners. It was commonly said out of doors that our representative system was on its trial, and nothing could bring it into greater contempt with the people than for the aristocracy to make use of it to exempt themselves from taxation. Could any man oppose this Motion, and call himself a just man and a Christian?


said, he cordially seconded the Motion, believing that the existing law was in a very unsatisfactory state. He had been under the impression that there was an understanding come to with the late Government that the probate and legacy duties should be extended to real property. It was high time that those hateful distinctions between one class of property and another were done away with. While between 18,000,000l. and 19,000,000l. of taxation were contributed by the industrious classes, the aristocracy were almost wholly exempt from the general burdens. He trusted the right hon. Gentleman who now fills the office of Chancellor of the Exchequer would entitle himself to the thanks of the country by removing all odious distinctions in the taxation of different classes.

Motion made and Question proposed— That, in the opinion of this House, it is expedient that Real Property and Impropriate Tithes should be made to pay the same Probate Duty as is now payable on Personal Property, and that Property belonging to Corporations, Universities, Colleges, Bishoprics, and Deans and Chapters, should pay a Duty equivalent to the Probate and Legacy Duties levied on Personal Property.


said, he could not avoid expressing his regret that the hon. Member who had brought this Motion before the House should have adopted the course of stating his views in the form of an abstract Resolution. It was quite competent to the hon. Gentleman, if the House were in Committee of Ways and Means, to bring forward any plan for continuing or extending the probate duty, and had the hon. Gentleman taken that course it would then have been in the power of the House to form a judgment as to the exact nature of the proposition which he submitted to its consideration. But in the present shape of the Motion it became extremely difficult for the House to form any clear judgment as to the plan the hon. Member would wish to have pursued. The hon. Gentleman, according to his speech, appeared to have confounded the legacy and the probate duty, for in many cases he had applied to the probate duty an argument which referred exclusively to the legacy duty, and he had omitted to state the precise nature or the precise object of the distinction between real and personal property upon which the present probate I duty was levied. The system of proving wills had grown out of the jurisdiction of the Ecclesiastical Courts. Those Courts from an early period of our history exercised jurisdiction over the personalty of deceased persons, whether testate or intestate, the jurisdiction, however, from the nature of the Ecclesiastical Courts themselves being limited to personal property only. The law of England did not require that a will devising real property should be proved in an Ecclesiastical Court, which had not by its machinery or plan any means of deciding upon questions affecting the land. The consequence of this state of the law had been that the probate duty had necessarily fallen upon wills affecting personal property. If it were proposed to extend that duty to real property, it would be necessary not only to take the simple course which the hon. Member appeared to indicate, but also to alter the whole law of real property in England, exempting such wills from the jurisdiction of the Ecclesiastical Courts, and further to alter the jurisdiction and powers of those Courts, which now were not applicable to this class of property. That was a difficulty which met them at the very threshold of the question, but if his hon. Friend had, as he had previously observed in Committee of Ways and Means, submitted a distinct plan to the consideration of the House, they would then have been able to form a judgment as to the manner in which he proposed to overcome that difficulty, and deal with the practical questions surrounding this particular mode of taxation. If, however, it were proposed to consider the matter in a more general view upon the merits of the case, he must be permitted to refer to the extensive measure affecting the legacy and succession duties, introduced two years ago by his right hon. Friend the Member for the University of Oxford (Mr. Gladstone) who had preceded him in the office he had now the honour to hold. That measure went most extensively into the relations of real and personal property as affecting the question of succession; the whole subject was thoroughly exhausted in discussion, and a settlement was come to, adjusting those respective claims, which he confessed he was not prepared to advise the House now to disturb or rescind. The probate duty must be considered as more or less involved in that settlement, and as determined by the decision to which the House then came with respect to the proportion in which personal property should be taxed, the question of the legacy duty. It was further to be borne in mind, if they looked to the specialities of the case, that there were charges to which the transfers of real property were subject, not pressing on personal property in an equal degree. No person could deal in land to any great extent without being constantly required to pay stamp and other duties imposed on it. Although there were circumstances in which the transfer of personal property was liable to duty, these were of much less frequent occurrence, and it might be stated with truth, that great inequality in the working of the law affecting transfers existed in favour of personal and against landed property. There were, besides, many local charges affecting the land, from which, no doubt, it derived benefit, but still forming special burdens on it. He was, therefore, not prepared to accede to the first branch of the Motion of his hon. Friend, as it was presented to the House. He ought, perhaps, to congratulate himself in having found so able a coadjutor, who presented to the Exchequer a gift of not less than 2,500,000l. Although in the present state of the finances he should feel not slightly relieved by so great a donation, he could not but fear that the exemption of wills of real property from probate, would very considerably diminish the sum. The hon. Member said he wished to make wills of real property subject to probate, but there was nothing in his Resolution which bore any such meaning. The Resolution did not propose to alter the law respecting probate of wills of real property, but merely the law respecting the probate duty. The hon. Gentleman had also commented on the inconsistency of leases for years being subject to the probate duty, whilst leases for lives were exempted. That was in consequence of the general law of the country, which made leases for years a chattel interest, while leases for lives were freehold property. There was the same distinction between houses on lease and freehold houses. The latter being real property were necessarily exempt, whilst houses on lease, constituting a chattel interest, were included under the duty. His hon. Friend had alluded also to the scale of probate duty. If his hon. Friend had submitted a distinct and articulate proposal to the consideration of the House, he (the Chancellor of the Exchequer) should have been ready to meet it by argument, but when it was made merely matter for an abstract proposition, it became very difficult to deal with. The same remark applied to the hon. Member's comments on the evasions of the law, which might perhaps exist even at the present time, for which perhaps a remedy might be found, but in regard to which it was necessary to frame specific measures. With respect, therefore, to the other branch of the Resolution, he regretted his inability to accede to it. He had only one further remark to make with reference to impropriate tithes, which the hon. Member said were real property, but which were very often held as a chattel interest, so that in case of any person dying, and making a will bequeathing them, they became subject to the probate duty. With respect to the latter part of the Resolution, proposing that property belonging to corporations of deans and chapters should be made liable to probate duty, he begged leave to say, that a Bill dealing with the whole subject had been brought to a stage of considerable maturity by his right hon. Friend who preceded him. He had not yet had time to make himself master of the details of the Bill, which required careful consideration; but should he find it possible to arrange those details in a satisfactory shape, he should feel disposed, at the proper time, to submit a measure on the subject to the House.


said, he thought the right hon. Gentleman had not fully answered the arguments of the hon. Member for Lambeth (Mr. W. Williams), and should give his support to the Motion, which he regarded as founded in justice.


said, that he should be sorry to throw any damp upon the feelings of gratitude which the Chancellor of the Exchequer had expressed towards the hon. Member for Lambeth, but he must beg to remind him that the latter part of his speech went to show how easily and successfully the existing probate duty upon personal property was evaded, so that if the arguments of the hon. Member for Lambeth (Mr. W. Williams) were worth anything, it was that the probate duty upon personal property should be removed rather than extended to real property. The hon. Member for Sheffield (Mr. Hadfield) had spoken of the inequalities of taxation in this country; but the hon. Gentleman himself had with much candour admitted that personal property was not subjected to a stamp when it changed hands, though real property was. They had been told that a hateful distinction and inequality existed in the taxation of this country, but certainly neither the distinction nor the inequality would be found to be in favour of the landed interest. But there were other burdens beside this to which the land was subjected, and from which personalty was exempt. And, indeed, if personal and real property were placed precisely on the same footing, and made liable to precisely the same duties; if, upon the transfer of personal property, and its mortgage and reconveyance when the mortgage was paid off, it were placed on the same footing as realty, he believed that in a pecuniary sense personalty would have nothing to gain. He contended, moreover, that it was most in harmony with the spirit of our free commercial code that personal property should change hands as easily, freely, and readily as possible; whilst it was equally in accordance with the spirit of our territorial constitution that the land of the country should change hands as seldom as possible, and that it should rest in the possession of certain families and be identified with certain names. ["Oh, oh!"] Upon this subject he had no less an authority than that of the late Chancellor of the Exchequer (Mr. Gladstone), who, when making his financial statement in 1853, showed that, whereas personal property paid the income tax upon the gross amount of revenue, the same as real property, 16 per cent ought to be deducted from income derived from real property for repairs, management, and other outgoings inherent to the possession of land. From this the right hon. Gentleman deduced, that whilst personal property was only paying 7d. in the 1l., landed property was paying at least 9d. in the 1l. But he went even further than this, and showed that owing to the power of self-assessment which traders and manufacturers possessed, and which the landed interest did not possess, the latter were suffering under a still greater inequality than that. The right hon. Gentleman took the case of some personal property that was to be removed to make way for certain public purposes. He stated that twenty-eight individuals possessing that property claimed compensation for its destruction to the extent of 48,000l. a year. A jury was empannelled, who assessed the income at 27,000l. a year. But what was the gross return of income made by these twenty-eight individuals? Why, 9,000l. a year; so that, in point of fact, whilst the landed interest was paying 9d. in the 1l., the trading and manufacturing interests were paying only 7d. in 3l. When he (Mr. Peacocke) first became acquainted with this statement, he owned that he felt very much in the position of the plaintiff in an action at law who, after listening to the pathetic statement made by his counsel in his behalf, burst into tears, and exclaimed that until that moment he had never known what an injured man he was; and certainly until that statement the landed interest was not aware of the full extent of the inequality of taxation to which it had been subjected. Nor did the inequality cease there; for, according to the Report of a Committee of the House of Lords, the landed interest was subjected to local burdens, which pressed upon it to the extent of 23 per cent. Yet, in the face of this declaration, the hon. Member opposite speaks of hateful disproportionate taxation in favour of the land. A great statesman of the Whig school once told a rising financier of his party, that whenever he intended to impose additional taxes, he should always select the landed interest for that purpose. They could be sheared like their own sheep, but beware, said he, how you lay a finger on the manufacturing or trading interests; if you touch one of them, you will have the whole tribe about your ears. Now, what- ever the Whig party had been in other respects there could be no doubt that it had been faithful to its tradition. But although the country party had submitted to forego the privileges they once enjoyed, and been content to accept the national wish that unrestricted competition should be the law of the land, they would not sit quietly down with folded arms and submit to unjust exactions. The present was certainly not the proper moment to reopen the great question of agricultural burdens, when the country was at war, and its capability for bearing taxation was likely to be strained to its utmost tension; but whenever peace should be again established, he contended that it would be the duty of the agricultural party to demand of Parliament what equivalent it proposed to give for the restricted cultivation of the soil, the unequal burden of local taxation, and the unequal and unfair pressure of the income tax, so ably and graphically described by the late Chancellor of the Exchequer. It would then be the imperative duty of the Legislature to review the entire financial system of the country, to take into consideration the burdens with which the landed interest was exclusively saddled, and to seek by every means in their power at all events to alleviate, if they could not effectually remove them.


said, he was favourable to the principle of the proposition, having always been of opinion that the probate duty on personal property was oppressive and unjust. By the measure of the late Chancellor of the Exchequer that duty was extended to land, but in a very unmerciful manner, for he held that the duty on legacies in money ought then to have been reduced to one-half its former amount. There were burdens pressing on land more heavily than on any other species of property, and he held that the question ought to be examined more minutely before they declared that probate duty should be extended to transfers of landed property. As the right hon. Gentleman the Chancellor of the Exchequer had said that the case of ecclesiastical corporations should be fully considered, he thought the hon. Member for Lambeth should be satisfied with that declaration, and not press the Motion to a division.


said, he must deny that the burdens on land were, in every instance, greater than those on personal property, for he was aware that, in some cases, the contrary was the fact. Horses that were employed for commercial purposes were subject to taxation, but when used for agricultural purposes they were exempt. Again, insurances of commercial or personal property were subject to taxation, but insurances of agricultural produce were free from duty. He was not in favour of the abolition of probate duty on personal property. He thought that when a man came into the possession of property, to obtain which he had not had to lift his little finger, it was a good time for an officer of the Chancellor of the Exchequer to step in and demand something for the support of the state. He thought, too, that the Chancellor of the Exchequer ought to feel obliged to the hon. Member for Lambeth for having brought forward this Motion. The Government, most probably, would have been glad enough to have supported it, but, fearing that they had not sufficient strength to carry it, they had thought it prudent to withhold their support, in order that their tenure of office might not be cut suddenly short.


said, he objected to this tax altogether, and was therefore unwilling to support the inconsistency of extending it to a larger portion of the community. It was a bad tax, and if the hon. Member for Lambeth would move its total repeal he would give him all the assistance in his power.

Question put.

The House divided:—Ayes 61; Noes 84: Majority 23.

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