HC Deb 18 May 1858 vol 150 cc867-79

, in moving, That in the opinion of this House Real Property and Impropriate Tithes should pay the same Probate Duty as that now payable on Personal Property; and that Property belonging to Corporations, Universities, Colleges, Bishoprics, and Deans and Chapters should pay Probate and Legacy Duties equivalent to those now levied on Personal Property, said he rose to call the attention of the House to the glaring injustice of exempting land and tithes and other real property from the payment of probate duty, while all other descriptions of property when bequeathed in a greater amount than £20 had been made to pay such duty. This legislative inequality in favour of the rich man was created in the year 1796, when a Bill was brought in by Mr. Pitt to impose upon all property, both real and personal, a Probate and Legacy Duty. The proposition was, that all descriptions of property of the value of £20 and upwards should pay the duty, but in consequence of the resistance of the aristocratic element in the House the Bill was divided into two Bills—the one imposing this tax upon personal property, and the other upon real property. The division of the Bill was accomplished against the strong opposition of Mr. Pitt, Mr. Fox, and other distinguished men of that day. The Bill by which it was intended to impose this tax on real property was lost in the House of Commons, though by only a small majority. Since that period about £60,000,000 have been obtained from personal property, while real property had escaped until lately the imposition of any tax. But if the legacy duty had been then made applicable to real property, a large amount would have been realised for the discharge of a great portion of the national debt. It was true that the inequality between the two descriptions of property had been the redressed so far as regarded the legacy duty, by the succession duty, but real property still remained free from probate duty or from the burden of any equivalent impost. He complained of the injustice that £20 personal property left by a poor man paid a duty of 2° per cent, while the nobleman might leave property in land to the value of a million sterling without paying a shilling probate duty. Let them look, for instance, at the case of the tenant-farmers, for whose welfare hon. Gentlemen opposite expressed themselves so interested. When a tenant-farmer died, his executors had to pay probate duty upon the growing crop, the live and dead stock, farming implements, furniture, and even wearing apparel, while leases for life paid nothing. Again, in the case of building leases, the houses built under those leases paid probate duty, but when the property fell into the hands of the freeholder, no probate duty was payable. This was surely a gross injustice. There was another description of property which also escaped payment of probate duty—he referred to that of corporations, universities, colleges, bishops' lands, and impropriate tithes. The property held by those corporations was enormous. The corporation of London alone had an annual revenue of £300,000, of which £50,000 or £60,000 was derived from a tax upon coals. There were 180 corporations in England and Wales, without reckoning Ireland and Scotland, and the aggregate property held by them was enormous. Then there were the City companies, some of whom had incomes as high as £40,000 or £50,000 per annum. He saw no reason why these corporations should not pay probate duty estimated upon the average life of man. Any actuary could calculate what the fair amount of charge should be. He knew that in former years Chancellors of the Exchequer had argued that landed property ought to be exempt from this tax, because it bore an equivalent, in the shape of the stamp, duties on conveyances of reality, but since that time equal duties had been imposed on the conveyances of other kinds of property, such as railway shares, property in the funds,—and there was, therefore, nothing whatever to compensate for the exemption of landed property from probate duty. He was appealing to a reformed House of Commons at a time when a call was made for further reform, and he would beg to remind them that a similar Motion to this had been made in 1796, and was only lost by a majority of two. When the present Chancellor of the Exchequer brought forward his Budget in 1852, he (Mr. Williams) submitted this Motion to the consideration of the House. The right hon. Gentleman admitted its justice, but did not think it was expedient at that time to adopt it. If the right hon. Gentleman would now support it, no real representative of the people would wish to see him turned out of office. Even the most despotic Governments on the Continent compelled the aristocracy to bear their fair share of the public burdens, and he hoped that England would not be less just to the great body of taxpayers. A succession duty had been imposed by the right hon. Member for Oxford University (Mr. Gladstone), and he (Mr. Williams) trusted the present Chancellor of the Exchequer would carry a measure for the rectification of the probate duties and thus remove a stigma; and perform an act of public justice.


seconded the Motion. He said it would require a little Amendment, so to include intestacies. He thought the principle had been conceded when the succession duty on real estate was imposed; and he asked the right hon. Gentleman opposite (Mr. Gladstone) whether, when he proposed that duty, it was not also his intention to impose a probate duty on that description of property.

Motion made and Question proposed.


said, he thought that the House ought to feel indebted to the hon. Member for Lambeth for having brought forward this Motion. He was one of those who thought that an undue favour was shown to the landed interest in public taxation. He should, therefore, support the Motion, the adoption of which would, he believed, yield to the Exchequer £700,000 a year. The scale of succession duties did not go beyond £1,000,000. Several men had within the last few years died in this country, each leaving property worth much more than £1,000,000, and he (Mr. Alcock) estimated that those who succeeded to their property had each paid £5,000 less than they would have had to pay had the scale of duties not stopped short at £1,000,000. The real property of this country was worth above £100,000,000 a year, and a probate duty of about £2 per cent on it would, although an exceedingly trifling burden to the owners of real property, yield a large amount to the Exchequer. In his opinion it was only reasonable and fair that the landed interest should pay taxes in the same proportion as was levied upon all other descriptions of property.


said, he did not rise to enter into the difficult subject now under discussion, but to answer one of the hon. Members for Sheffield, who asked him whether in 1853, when he had the honour to propose a succession duty, it was not declared by him on the part of the Government of the day, that it was also their intention to propose that the probate duty should be charged upon real property and upon impropriate tithes, as well as upon personal property. Directly he heard that question he endeavoured to refer to the debate as being more to be relied upon, but he had not been able to do so, and there, fore he spoke from memory, and he was sorry to say that he could not speak in confirmation of his hon. Friend's statement, As far as his recollection went, it always appeared to him that the whole state of the probate duty was unsatisfactory, and required revision before the duty was extended. But over and above the necessity of revision and reform, he was bound to say likewise that he thought, so far as the views of that Government were concerned, which of course did not bind any succeeding Government, or, far less, the House of Commons,—so far as he could bring to recollection the views of the then Government, their impression rather way that the burden imposed by the Succession Duty Act constituted on the whole a fair, moderate, and equitable settlement of the ease as between landed and personal property. He spoke subject of course to correction by documents, and without stating any positively formed and fixed opinion; he had not heard anything recently on the subject to convince him that that conclusion was indefensible in point of justice. He thought this question could not be discussed with advantage without a great deal of detail and a very full and comprehensive consideration of the subject. It was found a very serious matter indeed to carry in that House the Bill imposing the succession duty, and he could not envy the Minister whose duty it would be to carry out the wishes of the hon. Member for Lambeth, by imposing a probate duty on real property and impropriate tithes.


said, he was aware that the House, after the excitement of the yet unfinished debate, which had already lasted two nights, was not very much disposed at present to discuss the question which had been raised, although the time would come when it would be necessary to enter fully into this subject, and when it did, he thought the theory of the Government of which the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) was a member, would be very rudely handled. He had, however, only risen for the purpose of stating a case which had come to his knowledge with regard to the operation of the Probate Duty. He remembered, not long ago, speaking to a Member of the House of Commons on this subject. That hon. Member was a fortunate man. A person who was no relation of his left him a handsome property in land yielding a rental of £700 a year. At thirty years' purchase this property was worth £21,000. There was timber on the estate, which might be sold, of the value of £12,000. If that property had been left in North Western stock, or in the funds, or in leasehold buildings, or in cotton machinery, or in any of those forms of property which had not been held absolutely sacred by the House, he would have had to pay the sum of £3,200 for Probate and Legacy Duty. The right hon. Gentleman's (Mr. Gladstone's) Act had done something for him, because before that Act passed he would have had to pay nothing at all, but when he came to consult with the officers of the Government as to what he should pay, they asked him his age—it was a question they would not put to anybody who had other kind of property. He gave them his age, and then they turned to a table and said, "This man's age is so and so, and according to this table his life is worth so many years;" and then they multiplied the net annual income of this property, and they brought it to the sum of £7,000, and this gentleman, instead of paying £3,200, had to pay £700. Now it would he only to insult the understanding of the Members of the House if he were to attempt to argue for a moment that this was a case of great inequality of taxation, for which no adequate cause had ever been assigned, or attempted to be assigned, in that House. They had, some of them on this side of the House, resisted this description of unequal taxation, and, especially since the year 1841, they had been making progress towards greater justice in this matter. But unfortunately within the last five years the country had not been exactly in its senses; and whilst they had been plunged into a career of extravagance unknown in the last forty years, they had become much less careful of all questions of this nature. But he thought they had reached the worst period, and he hoped they should have some improvement. He would make this observation to the Chancellor of the Exchequer, who possibly might continue in office, not- withstanding the serious peril to which some persons thought the Government was exposed; but if be should be in office next year, he should like to see him, instead of bringing forward a budget which was so nicely trimmed, bring one forward based on broad and comprehensive principles. There were two things which the right hon. Gentleman could do, and which be believed the country would support him in. The one was to have a thorough revision of our expenditure, by which he thought large sums might be saved in many branches, and at the same time with regard to this question of taxation on property to show to the House that he desired to make matters a little more fair than they had been hitherto. He had great hopes of the right hon. Gentleman's party. He had watched them for fifteen years, and he was free to admit that they had made more progress on this question than any other party in the House—in fact they did not appear to him to be the same persons that they were fifteen years ago. Since they had got rid of the odious Corn Law question, the political atmosphere of the House had much improved, and hon. Gentlemen on the Conservative side of the House had come forward wonderfully with great advantage to themselves and to the taxpayers. He thought it was the duty of that House to look into the question of the inequalities of taxation, and show that they were really and truly the representatives of the people. As regarded the land, it had great privileges of a political and social character attached to it, and there could be no reason why in the matter of taxation any preference should be shown to it as compared with any other description of property.


said, he must deny the assertion that the landed interest was unduly favoured in respect of taxation, and he thought that one point had been overlooked by hon. Gentlemen opposite in the consideration of this question. If they took the whole class of local taxation for example, the poor rate and the county rate, upon what property did that fall? Certainly not on funded property, or that large class of property inside the cotton mills. No, it fell entirely upon real property.


said, that the supporters of this Motion always based it on the alleged inequality which subsisted between one species of property and another. The real objection to this description of taxation was an objection of principle, which equally applied to funded, personal, and landed property. These taxes were taxes upon capital, which in their incidence were most oppressive and onerous. He did not, however, think that the question could be discussed on the present occasion.


said, he believed the House would then hardly be inclined to enter into a discussion as to the principles on which the system of taxation should be generally conducted; nor did he think that he would be expected to enter into the merits of the complicated system by which our Succession Duty was raised. He would, therefore, confine himself to the two main points stated by the hon. Member for Lambeth—first, as to the alleged injustice of placing a probate duty on personal, and not on landed property; and, secondly, what might be called the negligence of the Government in not imposing, a Succession Duty upon corporations and other public bodies. The first branch of the hon. Gentleman's Motion had often been discussed, and the House was perfectly aware of the difference that existed between personal and landed property, which rendered the application of a Probate Duty easy to the one, and very difficult, almost impossible to the other. The Probate Duty was a stamp that they placed on a document, without which an executor could not avail himself of the property which he was entitled to administer. But, in the case of landed property no document existed which requires a stamp. To the greater portion of the landed property of the country the heirs could succeed without the intervention of a will or any deed whatever. Then, again, the Probate Duty put upon personal property was put upon it all at once, and might easily be obtained by a sale of part of the property; but if they wished to obtain the tax from landed property by a sale of a portion they would have to put it into the market in a manner which depreciated the value of the article and produced all the injurious consequences experienced from forced sales. But it might be said, "If there be very great and perhaps insuperable objection to the laying of a probate duty on land you ought in justice to put an equivalent tax on that species of property." Now, the most difficult thing in the world was to adjust taxation so that there should be recognised on all sides a complete equality. Equality of taxation was about as difficult to establish as equality of mental or bodily strength. The only practical mode by which equality could be secured in respect of this particular duty, and by which what was termed an equivalent could be obtained, would be by repealing the existing Probate Duty altogether and raising the Legacy and Succession Duties. If the House would look for a moment at what would be the practical effect of such a process, they would see the extreme difficulties with which, on that view of the subject, they would have to contend. If they repealed the Probate Duty they lost at once a yearly sum of £1,200,000. They now obtain from the Legacy and Succession Duties £1,800,000 per annum. Therefore, by their process of putting an end to the Probate and increasing the Legacy and Succession Duties, they would have to raise upon the new scale a sum of £3,000,000. For this purpose they must levy, in the shape of Legacy and Succession taxes, about 16 per cent. and a fraction, instead of, as at present, 10 per cent. Such a proposition, he feared, would not have much chance of passing through that House. The only alternative would be that they should terminate all the conditions of consanguinity at present discriminated, and substitute a uniform rate of 4 or 5 per cent. on all property of this description. That plan he thought would be equally unpalatable. He made these observations as to the only mode by which if there were injustice that injustice could be counteracted. But the question naturally arose, "Was there injustice?" It was very true that personal property was now alone subject to Probate Duty. But it should be remembered that the Succession tax had been recently fixed upon real property. Moreover, real property was liable to peculiar taxation from which personal property was exempt, for it was impossible, in considering this question, to forget that £2,000,000 a year were raised by way of land tax, to which, of course, personal property was not subject. In discussing such a question they must look to the incidents of their local taxation, to the item of poor rates, for example, and the general parochial rating of the country. When the discussions on taxation took place which the hon. Member for Birmingham (Mr. Bright) anticipated, it was much to be doubted whether the hon. Gentleman would find it easy to demonstrate the proposition which he thought so simple. The other branch of the Motion before them was of more novel interest; and the hon. Member for Lambeth was perfectly justified in drawing their attention to it. Undoubtedly, when the right hon. Member for the University of Oxford brought forward the important financial measures which had been referred to, there was an understanding—indeed, he believed an engagement-that the Succession Duty or an equivalent tax should be applied to corporations, and the right hon. Gentleman was exposed to some criticism at the time because some delay occurred in the fulfilment of his intentions. When he (the Chancellor of the Exchequer) acceded to office under circumstances which rendered it necessary for him to see what possible means he would have at his command to meet considerable demands, he remembered quite as distinctly as the hon. Member for Lambeth the engagement entered into by the right hon. Gentleman, and he made some inquiries as to what might be expected to be derived from carrying into effect the right lion. Gentleman's plan. Having to meet a heavy deficiency he would have been very happy to provide for those Exchequer bonds to which the hon. Gentleman had alluded by a resource originally devised and indicated by the right hon. Gentleman the distinguished author of that species of temporary security. The House, however, would be surprised when he told them what would be the probable result of making corporations liable to the Succession Duty. He had before him several papers on the subject, prepared by a very competent person, from which he would quote only one or two results for the information of hon. Gentlemen. The usual calculation was that there were three successions to property by death in a century and an equivalent tax to the present Succession Duty of 10 per cent., if placed upon property belonging to corporations—which never died—would, at the rate of three farthings in the pound, realise a sum of not quite £4,500 annually. This estimate was based on the assumption that 100th part of the real property of the country was possessed by corporations. No doubt that calculation was arrived at by admitting eight considerable exemptions. No one in that House was generally more opposed than he was to legislative, and especially to financial exemptions. But he was bound to say, having examined the subject, and looked into the manner in which it practically worked, that he could not see how they could apply their tax to corporate property without recognising all these exemptions. As he did not wish to weary the House, which, after the late debates, would not be anxious for a financial discussion, he did not enter into details; but, as the hon. Gentleman who introduced this Motion seemed to think that a great source of revenue had been improperly neglected, he thought it was important that the House and the country should understand that we had been under a great mistake with regard to this subject, and that if the Succession Duty was extended to the property of corporations it would produce less than £5,000 a year, which probably would only be obtained by means of a crop of lawsuits, the costs of which would exceed that amount. Under these circumstances he must ask the House not to agree to the Resolution. The hon. Member for Lambeth dealt with these subjects with great ability and with a sincere desire for the public good; and, as he should be sorry to have to divide against him, he hoped that he would not press his Motion.


said, he quite concurred with the right hon. Gentleman the Chancellor of the Exchequer that the House did not wish for a long financial debate, and he only rose to speak because, if any blame attached to the successors of the right hon. Gentleman the Member for the University of Oxford for not having proposed the extension of this duty to the property of Corporations, it attached peculiarly to himself, because he had had more time for the consideration of the subject than the right hon. Gentleman opposite. He did consider the subject; he arrived at the same conclusion as had been stated by the Chancellor of the Exchequer, and he believed that that conclusion would be fully borne out by the investigation of a Select Committee. After allowing for the property of charities and other descriptions of property which would be exempt according to the present state of the law, and making deductions for the cost of the litigation which this species of taxation always produced, he believed that the balance would be against the public. That was that the cost of collection would exceed the amount of revenue paid into the Exchequer. Under these circumstances, he arrived at the conclusion that it was undesirable to propose the extension of the Succession Duty to the property of Corporations. As to the extension of the Probate Duty to real property, he concurred generally with the re- marks of the Chancellor of the Exchequer, but that right hon. Gentleman had inadvertently described this duty as a stamp upon deeds. [The CHANCELLOR of the EXCHEQUER said, he had not intended so to describe the tax.] The fact was, that Probate Duty was exclusively applicable to wills; and the real difficulty in the way of extending it to real property was, that wills relating to real property did not require Probate, but, in the language of the "proved themselves." At present the same will frequently related to both real and personal property, and when such a will was proved no duty was paid for the realty. If the law was merely altered so as to make the realty in such a case liable to duty, the result would be that where both realty and personalty had to be left conveyancers would make two wills instead of one; they would prove the one relating to personalty in the Court of Probate, but the other would require no proof, and therefore pay no duty. Therefore, without some further alteration of the law as to the disposal of real property by will, this duty would in a short time be unproductive. This was a fatal objection to the simple alteration of the law as proposed by the hon. Member for Lambeth, and then would arise the necessity for having recourse to the plan of increasing the Succession and Legacy Duties, which would lead to the oppressive consequences which had been explained to the House by the Chancellor of the Exchequer.


said, he quite agreed with his hon. Friend the Member for Evesham (Sir H. Willoughby), that if the House went into this question they would also have to look into a variety of subjects such as local taxation, the land tax, and so forth. The hon. Member for Birmingham (Mr. Bright) had put a strong case, but the real merits of the subject had not been touched upon by any speaker who had yet addressed the House; no one had referred to the subject of stamps upon deeds. The hon. Member for Birmingham had alluded to the case of the fortunate gentleman who had lately acquired an estate of £30,000, upon which he hail only paid a tax of £700. Let him remind the hon. Member that that was not the only anomaly, and that if that property were transferred by conveyance, a very heavy stamp duty would have to be paid; whereas, if it consisted of £30,000 in the funds instead of in land, it could be transferred without any tax at all. That there were anomalies was quite clear, but it was equally clear that they were not all on one side.


said, he would remind the right hon. Gentleman that there was already a tax upon the transfer of railroad shares, and almost every description of personal property, except the public funds. He should support the Motion of the hon. Member for Lambeth, because he had for many years been endeavouring to get equal laws for real and personal property—a subject which he intended at some future opportunity to bring under the notice of the House.


said, that, although he should oppose the Motion of the hon. Member for Lambeth, he wished not to be misunderstood, as he was a Member of the Government of the Earl of Aberdeen who passed the Succession Duty, and was a party to the engagement to which his right hon. Friend had referred, that a proposition should be made on the part of that Government to extend the Succession Tax to corporate property. He was not, however, satisfied with the calculations as to the amount which would be produced by a Succession Duty on corporate property, that had been read to the House by the Chancellor of the Exchequer. It was estimated that when the Succession Duty was in full operation it would produce £1,500,000 per annum; therefore, if the corporate property chargeable amounted to only one-hundredth part of the land of the country, the proposed extension ought to produce, not £4,000, but £15,000 a year. The suggestion of the right hon. Gentleman the Member for Radnor (Sir G. C. Lewis) was a very good one; for he could not conceive how a Committee of that House could be better employed than in investigating the question what would be the produce of the extension of the Succession Duty to corporate property. He doubted whether the exceptions would be so numerous as was supposed. Some of those which had been mentioned were of a very doubtful validity. He could see no reason why the property of charities should be exempted; and, on the whole, he thought the produce of the tax would by no means be so small as was imagined.


replied, that he would venture to say that instead of the whole corporate property of the kingdom yielding only £4,000 a year, that belonging to the City would yield ten times that amount.

Question put.

The House divided:—Ayes 68; Noes 172: Majority 104.