§ (In the Committee.)
§ THE CHANCELLOR OF THE EXCHEQUERSir, on a recent evening the right hon. Gentleman the Member for Droitwich (Sir John Pakington) raised very fairly an issue with respect to the conduct of Her Majesty's Government in regard to the finances of the country. He said that with the state and prospects of the public expenditure it was not just for them to have dealt, or, as he expressed it, to have tampered with those finances in the month of February. I now refer to that statement of the right hon. Baronet for the purpose of saying that I think there can be no more proper subject of discussion: and, possibly, we may have opportunities of discussing it in passing through their various stages any measures connected with the Vote for the expenditure in China; but with these matters of attack and defence I have no concern to-night. I shall confine myself, and confine myself strictly, as in duty bound, to matters of business and to 1964 the provision which Her Majesty's Government propose to the House to make in order to meet the expenditure that has been voted in Supply. The Committee will have perceived that there stand in the paper two notices in my name: one of them is a notice to move Resolutions which are not printed; the other is a notice to move Resolutions which are and have been printed for a length of time. The former relates exclusively to the means of providing for the recent Vote with respect to China; the latter, on the contrary, constitutes that portion to which the right hon. Gentleman the Member for Buckinghamshire has just alluded—that which has not yet been sanctioned by the House, of the financial measures of the month of February. The latter I dismiss entirely for the present, and I confine myself in my present remarks to an explanation of the former.
And first, Sir, I wish to lay clearly before the Committee the exact state of the case with respect to the charge, so far as we are able to state it, that has now been incurred in regard to China; because on a former evening (for which I have myself either wholly or in some degree to blame), I do not think it was quite clearly apprehended, and the Government are very desirous that no misapprehension should exist. In the month of February we made provision for the China war as follows—For a sum of£850,000, to be charged upon the finances of the year—that is, the expiring financial year 1859–60—and for a sum of about double that amount, £1,700,000, to be charged on the Ways and Means of the financial year about to commence—the year 1860–61. These sums together—for the sake of clearness I shall speak in round numbers amounted to £2,550,000:—and that was the whole provision which we proposed to the House to make on account of the expedition to China while it was still an expedition only, and before we had any knowledge that it would necessarily have to conduct warlike operations. The sum that is further now proposed on account of the warlike operations of the same expedition is of nearly the same but of a somewhat greater amount—that is, a sum of £2,850,000. The Vote that is on the table is, indeed, larger than this; but it includes two items that are not comprehended in the figures I have just stated. It includes a sum of £500,000, for which provision was made in the financial arrangements of February, though the Vote in Supply was only taken 1965 last week; and it includes also a sum of £450,000 on account of the previous war in China—that may be called the war of 1857—a charge of which we bad uo knowledge that it would accrue in February, and for which no financial provision had hitherto been made. Therefore, Sir, the whole charge of this expedition to China arising from the occurrences at the mouth of the Peiho down to the present period, as far as Her Majesty's Government can state or can conjecture it, is£5,400,000, to which has to be added the sum of£450,000 due for the former war. And perhaps it may be a matter of interest to the Committee that I should state, in passing, the expense of a former war with China, in order that we may understand, along with other matters applicable to the subject, the tendency to a great increase of charge which is attendant on the course of our present operations. The war of 1840 must, I think, have lasted for between two and three years. I believe Sir Henry Pottinger's treaty was a treaty of 1842; so that that war extended over about two years and a half. The whole expense chargeable for it to this country was no more than £3,200,000. Thus, the total expense chargeable to the country for that war, carried on for the length of time I have named, was no more than £700,000 in excess of the sum which Her Majesty's Government invited this House to provide for the present expedition even when the occurrence of a war was a matter entirely problematical. The whole expense of that war was somewhat more, because a portion of the charge was borne by the East India Company; but the entire expense was only £4,200,000—a sum less by £1,200,000 than that which the House will have to provide—I may say has provided, or at least consented to charge in the present Session, on account of the war now commenced in China. This is the state of the case as regards the amount of charge—namely, £5,400,000 on account of the present expedition, and £450,000 on account of the war of 1857; making together £5,850,000. I have no means of stating to the Committee what has been the total charge of the war of 1857, because, although there were certain Votes not amounting to a very large sum taken specially for that war as Votes of Credit, yet the main portions of the expense were probably borne upon the Estimates under the ordinary heads of charge, and I have no; means of separating them from what 1966 was due to the general service of the country. With respect to the mode of provision that has been adopted by the Government and proposed to the House, in regard to the portion of charge which was made known to the House, and was within the knowledge of the Government in the month of February, it is as follows:—£850,000, as I have stated, was charged upon the finances of 1859–60. Happily, the provision made by the House in July last for the expenditure of that year was so liberal that the whole of that £850,000 has been paid from the produce of taxes, and not out of temporary resources. It pleased the House towards the close of the late Session to supply us with temporary means, in addition to the taxes which were then voted, by taking up one of the terms of the malt credit. The proceeds of that operation were somewhere between £800,000 and £1,000,000. But the revenue of the year was so productive that even if that malt credit had not been granted we should have been able to pay the additional charge required in the autumn on account of China, and still have had a surplus. As it was, notwithstanding the considerable addition which was made at so late a date to the charge of the year, by taking £850,000 for the Vote of Credit, the surplus of income over expenditure on the 31st of March amounted to no less £1,587,000. Therefore, Sir, it may be justly said, as respects that sum of £850,000, that full provision was made for it out of the taxes of the country. The temporary resource upon which we were enabled to draw by calling up the malt credit, together with the £250,000 which came in as a casual and unexpected payment from Spain, and was applicable to the charges of last year, both contributed to swell that surplus of £1,600,000, and were, therefore, in fact, made applicable to the reduction of the debt of the country. With respect, Sir, to the £1,700,000 which Her Majesty's Government proposed to charge upon the finances of the present year in February last, the case stood differently. I cannot say that we proposed to provide for more than about £500,000 of that sum out of the taxes of the country. For if, on the one hand, we deduct that charge from the anticipated expenditure as it then stood, and if, on the other, we deduct from the anticipated revenue the proceeds of the malt and hop credits and the further payment from the Spanish Government, the case stands thus:—That 1967 each of those two sums very nearly balances the other, the charge for China being £1,700,000 and the joint amount of the malt and hop credits, with the Spanish payment, being about £1,650,000. It follows, therefore, that the provision made by means of taxation to meet any expenditure on account of China, according to the plans of the Government as explained in February last, was very little more than the surplus of the revenue over the expenditure which was then stated upon my Estimates, or, in round numbers, about half a million of money. So stands the case, Sir, as to the provision made for that portion of the charge for the China expedition which the House was invited to take into consideration in February last.
I now come to the question how we were to make provision for the remaining portion of the charge. That remaining portion is£3,300,000, the Vote authorized last week being £3,800,000; £500,000 of that sum having been included in the financial statement of February, and in the provision that was then made. I have therefore to go back to the period of February as the basis of my calculation of the means by which this sum is to be provided. And there is no reason, I think, why I should depart from the Estimates either of revenue or of expenditure which I then made. As respects the revenue of the country, estimating it by its proceeds up to the close of the month of June, I think, considering the circumstances, the condition of that revenue is eminently satisfactory. It is very difficult,—indeed, it would be hazardous, to form an anticipation of the year's revenue from the revenue of the quarter, especially, too, in a year when very considerable changes, reductions, and commutations, so to call them, of taxes have been made. But the result of it, I think, entirely comes up to, and even exceeds, the expectations of the Government. Still I should not recommend the Committee, and should not view it as consistent with the rules of prudence, to improve upon the estimates of revenue which I ventured to submit in February. Because there is, in the first place, a tendency to partial stagnation in some descriptions of business, connected either with the actual condition of the times or with the temper in which men's minds are disposed to view them; and there is likewise the important element of the harvest, which must certainly be late, and may too probably be defective. All these influences, 1968 though they might not act very seriously upon the anticipated amount of the public income, I think would render it unsafe for us to make those additions to the Estimates of February which, under more favourable circumstances, I should not at all have hesitated or scrupled to recommend.
Then, starting from the revenue of February last, I have now to state to the Committee the manner in which the Government propose to provide for the charge which has just been authorized in Committee of Supply. The total of that charge is £3,800,000, taking the Votes as they stand and as they have just been sanctioned. I first set aside or deduct from that amount the sum of £500,000, which, as I have already stated, was included in the provisions of February last. I then come to the question how far the small surplus which was then estimated as likely to arise upon the revenue of the year over the expenditure remains still available. That surplus, as was to be expected, in the course of long and detailed financial discussions almost of necessity involving a variety of changes more or less important, while the measures of the year were passing through this House, has undergone some vicissitude. It is not, however, altogether disposed of. I cannot undertake to enter into very minute details with respect to the estimates of minor taxes, in regard to which great exactitude and great confidence in each particular are totally impracticable, and where the best that can be hoped is, after using every care and attention, that the general result may not be far wide of the mark. Proceeding upon that principle, I should say that we stand thus with respect to the surplus which I estimated in February last:—I then placed that surplus at £464,000; but in the estimate for the collection of the revenue which was furnished to me at that early period, and which did not take into consideration the practical effect of some of the financial measures of the year, particularly of the increase of the income-tax, there was an error which is not immaterial. That estimate of the expense of collecting the revenue was too low by above £200,000. The Committee will also remember that an important item in the general result of the revenue was made up of a variety of new charges which were about to be imposed. In the course of the discussion of those charges, with a view to mitigate their pressure, especially upon the commercial community, who were called upon 1969 to submit to a number of minor taxes falling almost all of them directly upon the profits of trade—with a view to making those charges as little onerous as possible, various modifications were introduced which led upon the whole to a loss, as compared with the estimate which I made in February, of £180,000 a year. Taking these two items together on the adverse side, they require us to deduct from a surplus of £460,000 about £400,000. On the other side of the account, whereas it was first proposed that the abolition of the paper duty should take place from the 1st of July, it was found more convenient for several reasons that it should be postponed till the 15th of August, and the effect of that postponement was to relieve the Exchequer by a sum of about £200,000. Therefore the total loss upon the surplus estimated in February is about £200,000. After balancing the various items which I have mentioned, there remains about a quarter of a million, or to be more particular, £264,000, which is avilable in part to meet the charge of the China Vote. I come, then, now to the proceeds of the paper duty, presuming that it shall be the pleasure of the House that it should be retained throughout the financial year. If that be so, of course it will make an addition not immaterial to our resources. The loss estimated to arise upon the paper duty, as its abolition was proposed in February, would have been £1,000,000. The loss which would have arisen from abandoning that duty, according to the terms of the Bill which passed this House, would have been 800,000. I cannot say how much of that will be recovered in consequence of the rejection of the Bill. I doubt whether the whole of it will; but I think it very possible that £600,000 may be recovered. Perhaps we may take it at £700,000. That is upon the presumption that the duty remains payable until the close of the financial year; and therefore, if it is the pleasure of the House that that duty should continue to be levied throughout the financial year, a sum of £700,000, in addition to the amount which I have previously named, may be taken as available in part to meet the charges of the China Vote. The three items which I have mentioned—£500,000, £264,000, and £701,000—give a total of £1,464,000; and, deducting that from the whole sum which the House has voted in Supply—£3,800,000, there remains to be provided a sum of £2,336,000, to which I have 1970 now to invite the attention of the Committee. Out of the amount already provided—£2,664,000, a sum of £1,478,000 has been taken out of the taxes of the respective financial years, and a sum of £1,186,000, according to the statement made in February and the plan then proposed, would not have been taken from the taxes of the year, but would have been chargeable upon those extraordinary resources which Her Majesty's Government invited the House to call in aid, under the peculiar circumstances of the time. We propose to apply to the sum which we still require the same principle of a divided method of provision which we adopted in regard to the sum with which we have already dealt—that is to say, we ask the Committee to give authority for raising that sum in part by taxation and in part from sources other than taxation. In so doing, we follow the rule which is commonly applicable to war expenditure. It is the opinion of Her Majesty's Government that that is a rule which ought justly to be applied to a case like this of China—first of all, because the scale of the expenditure is such that the country can hardly be expected, especially at a period when charges are rapidly growing under other heads, to provide the whole from the proceeds of the annual taxes. I may perhaps say that there is another special reason which is certainly applicable to this case, although the value to be assigned to it may vary in the minds of different Members of the Committee. I mean that there is already an outstanding debt in hard cash due from China to ourselves, and that a further demand has been made upon China which ought to result in a further payment from her resources in aid of ours. I am not surprised that by some Members of the Committee that statement should be received in a manner which shows that they are not sanguine as to the general principle, and I confess that if there were some great middle man who would deal with us upon these terms—that we should make over to him entirely and bodily the whole of the compensation that we expect from China, both retrospective and prospective, and that he should on his part undertake whatever future charge may arise on account of the war over and above what has been stated to the House and what is known to the Government—I think that financially we might do very well to close with such an offer. At any rate, a portion of these sums is actually 1971 due under the Treaty of Tien-tsin, and they constitute an element in the case which ought not to be put altogether out of sight. The sum which we propose to raise by taxation, out of the £2,336,000, will amount to about £1,000,000. The mode in which we propose to raise it is by an immediate addition to the duty upon ardent spirits. I will enter, I hope sufficiently for explanation, but at the same time very briefly, upon the special considerations that are applicable to that duty, and upon the present condition of that important branch of the revenue, but I will state at once that the addition which we contemplate is one of 1s. 11d. per gallon on the various descriptions of ardent spirits which are chargeable either under Excise or under Customs, and that the effect of the measure will be to make British spirits liable to a duty of 10s., colonial spirits to a duty of 10s. 2d., and foreign spirits to a duty of 10s. 5d. per gallon. These duties will be particularized in the Resolutions which it will be my business, Mr. Massey, to place in your hands. In proposing to the Committee this augmentation of the duty upon spirits, Her Majesty's Government set out from what they consider to be the recognized and established, as well as the sound and healthy, principle of taxation in regard to that particular commodity. That principle they conceive and understand to be this—that it is a commodity from the consumption of which you ought to levy the maximum of obtainable revenue. It differs from other commodities in this—that when you deal, for example, with tea or sugar your object is to promote consumption as much as possible consistently with obtaining the money you want; but when you approach the article of spirits the rule is precisely inverted. Your object then rather is to limit the consumption as far as possible, but always subject to the same condition which I will by-and-by consider—the obtaining the money that you want; for it is a mistake to suppose that by the mere increase of a duty you can continue ad libitum to increase the proceeds. The question is, how much will the article bear without defeating the purpose of the duty, first by adulteration, and secondly by illicit distillation? That is the necessary question; and under all circumstances of doubt, and of greater or less difficulty, still it is one that does not altogether defy the calculations of the prudent and experienced persons who have charge of the public reve- 1972 nue. The real question then is, can we get the money? Upon that subject it would be unfair, considering the difficulty of the case, to say that even the most experienced and most capable public officers can give an opinion upon which any absolute reliance can be placed; but, taking a calm and impartial view of the present state of the trades connected with the production of spirits, and endeavouring to draw every fair inference from the important experience of the last seven years, the conclusion at which Her Majesty's Government have arrived, borne out and sustained by their proper advisers, is that there is no reason why the Committee should not now proceed to that which has long been looked upon as the natural conclusion of our legislation in regard to the duty upon spirits, and at once fix it at a standard of 10s. per gallon. That is not the highest duty which has been levied upon British spirits. So late as 1823 a duty of between 11s. and 12s. was charged upon spirits in England. That duty was too high, and smuggling was encouraged by it. It was reduced in consequence to 7s., and at 7s. it has remained, only subject to some successive and small modifications, rising to 8s. 1d., for a period of forty years. But the circumstances of the country and the means of levying the duty effectively have been immensely improved during those forty years. Public opinion is now much more adverse to illicit proceedings, and the efficiency of the revenue departments is far greater than it was in 1823. What has taken place in Ireland is full of instruction—it is more instructive than the case of Scotland, because that, in point of fact, had practically been settled, in the opinions of most men, by the experience before we came to deal with the case of Ireland. In 1842 an addition of only Is. per gallon to the spirit duty in Ireland was found so to stimulate smuggling that it was necessary to repeal the Act in 1843; but when a similar experiment was made in 1853, not only was it not attended with a similar failure, but it was followed by a further increase in 1854, by a further increase in 1855, and by either one or two subsequent augmentations the duty in Ireland was equalized with that in Great Britain. It now stands at 8s. 1d. per gallon. In the short space of five years, between 1853 and 1858, it was raised from 2s. 8d. a gallon to 8s.; and at the same time that this operation was effected, and that a considerable addition was made from 1973 an unexceptionable source to the permanent revenue of the country, no stimulus was given to illicit distillation. Sir, in a matter of this kind—so far, at least, as regards illicit distillation—Ireland is naturally looked upon as the peccant part of the Empire; and whatever apprehensions we may feel in respect to the productiveness of the spirit duty naturally direct themselves, in the main, to that quarter. The case of Ireland with respect to illicit distillation I believe to be this—that the manufacture of spirits in Ireland, as well as in England and Scotland, has immensely improved; that more capital, more skill, and more machinery are applied to it; that the views of those who produce the spirits are much more directed to an extended trade in spirits as a great article of merchandise, and even of export, than to a mere local and partial supply; but, above all, this important fact is to be taken into consideration in the case of Ireland—I do not speak now of those topics which are of a general character, and which, perhaps, more than any others lie at the root of the whole case, the great changes, namely, which have taken place in the social condition of the country, in the demand for labour, and the general market for produce—that whereas until the last few years we were dependent for securing the collection of the revenue in Ireland upon a very limited corps, called the Revenue Police, and under the direct superintendence of the revenue authorities, that duty has now been transferred for about five or six years to that most efficient body, the Irish Constabulary, which, with the greatest intelligence, with entire fidelity, and with a strength tenfold that of the Revenue Police, has conducted this important business on behalf of the public in a manner the most satisfactory and effective. These are the general considerations which led the Government to believe that, as far as respects illicit distillation, there is no reason in the circumstances of any one of the three countries why we should not carry forward the duty upon spirits to the point I have mentioned. There is another point which I need not discuss at length—namely, the loss which may arise from adulteration—that is to say, from dilution—which is a matter that stands in a somewhat different catergory. Dilution is, I believe, normal in the spirit trade. It would not be too much to say that in ordinary spirit shops there is hardly such a thing as the sale of spirits in a state 1974 perfectly pure as they come from the distillery. If that be an exaggerated statement, and if any hon. Gentleman, which I should not like, should feel bound to resent it on the part of his constituents, I should be sorry to deny him his privilege; but I may, at all events, say with perfect truth that dilution prevails largely, and that it has a tendency to increase in proportion as the duty upon spirits is augmented. But the proper mode of dealing with the risk, whatever it may be, of dilution is by making a fair and reasonable deduction from the probable yield of an increase of duty. But, Sir, what I think the most important and perhaps the clearest argument, if I can state it as I ought to the Committee, to show that the proposed increase of the duty on spirits is practicable and timely, and with probably the anticipated results, is that for the last three years—that is to say, both immediately before the equalization in Ireland and ever since—a further increase of duty has been confidently anticipated by the trade, as shown in the increase of the deliveries which have immediately preceded in each of those years the financial statement of the Chancellor of the Exchequer. In 1858 the right hon. Gentleman the Member for Bucks made his financial statement on the 19th of April. Between the 1st and the 17th of April, as compared with the corresponding period of the previous year, there was an increase in the deliveries of spirits, yielding an excess of duty of no less than £250,000. The spirit duty is so heavy that an anticipated delivery implies in itself a very considerable charge, and therefore it is not a measure to which traders ever would resort, unless in their opinion there was a serious probability that Parliament and the Government would be disposed to have recourse to an increase of duty which it would be worth their while to escape by an anticipated release from bond. The case of 1858 was chiefly an Irish case, because it was in that year that, by the wise resolution of the right hon. Gentleman the Member for Bucks, the duty upon Irish spirits was raised to an equality with that in England and Scotland. But in 1859 there was no such element in the case. The duties throughout the three countries were then equal, and the conclusion that the trade had then come to was, that when once equalization was established an increase would necessarily be the next step. The financial statement was made 1975 on the 18th of July. Between the 1st and the 16th of July there was an excess of deliveries from bond, as compared with the corresponding period of the previous year, which yielded an augmentation of revenue to an extent of not less than £287,000. A still more pregnant illustration is afforded by the experience of the present year, because it shows that the fact of last year having passed away without an increase of duty by no means convinced the trade that Parliament and the Government had abandoned the idea; on the contrary, they reasoned thus—that, as an increase had not taken place in 1859, it would certainly be made in 1860. And what happened was this. The financial statement was made on the 10th of February, and in the term of three weeks, ending on the same day, there was an augmentation of delivery of spirits from bond which yielded an increase of revenue, as compared with the corresponding period of the previous year, to the extent of £554,000. These circumstances taken together appear to us to constitute a solid foundation for the measure we propose. At the same time, when I have stated that we estimate that that measure will yield something over a million in what remains of the financial year, I must remind the Committee that there are some peculiar causes of uncertainty by which it is affected—causes, I mean, special to the article, and not connected either with the topics to which I have alluded, or with the general condition of the country. The special circumstances are these:—First of all, it is only in the present year that foreign spirits have been admitted to a real competition with British spirits, and at so early a date after that change has taken place we cannot say that the two kinds of spirits have yet found their equilibrium in the market, nor tell precisely what will be the course of competition between them, which would affect the relative yield of duty from the Customs and Excise. There is, again, the competition of wine. There is not the smallest doubt that the competition of wine with spirits will stand upon a different footing from what it has hitherto done. Lastly, the competition of an article in which many Gentlemen in this House—particularly those sitting on the opposite benches, feel a lively and almost tender interest—I mean the competition of malt liquor. Whenever there is a considerable increase in the duty on spirits, it serves to a certain degree to stimulate the process of malting, and in Scotland, and more particularly in Ireland, 1976 there takes place a considerable augmentation in the consumption of beer, which is traceable, apparently, to no other cause than its greater cheapness as compared with spirits. In recent years, owing to the alterations which Parliament has introduced into the law, there are special causes which produce some peculiar uncertainty into the estimate of the productiveness of the duty; but the uncertainty is on the face of the case, rather than in the substance; because, if an increase of the spirit stimulates the consumption of another duty-paying liquor, you get on the one side of the account what you have lost on the other. I may mention, in passing, that in case the Committee should think fit to adopt the proposal of the Government, it will be necessary to introduce a small modification into the duties on wine as fixed to take effect on the 1st of January next, in order to guard against the danger of a fraudulent introduction of spirits in the form of wine; but that is a subject to which I will call attention at a future stage. I will now state to the Committee the computed produce of this duty, and it is important that the Committee should know it, because the weight of this subject is not to be estimated simply by what is added to our financial resources in the present financial year, but by the effect of the proposition in enlarging a most important branch of revenue in a permanent form available from year to year. The increase of 1s. 11d. duty on British spirits, chargeable on the whole annual consumption, taken at a fair and moderate estimate, would produce—making no allowance for diminution of consumption, dilution, adulteration, or increase of price—would produce no less than £2,252,000 a year, and that without taking into view the proceeds of the increased duty on foreign and colonial spirits. But prudence necessarily requires us to make allowance for some diminution in the total consumption of spirits, in consequence of the additional duty, which might have the effect of adding something like 20 per cent, or nearly 20 per cent, to the price. Instead, therefore, of assuming the augmentation of duty to be £2,250,000, I shall only assume the augmentation of revenue to be £1,000,000 from the increase of Excise duties on British spirits, and that sum of £1,000,000 would be—allowing for a diminution in the quantity consumed of about 10 or 11 per cent—the annual yield of this increased duty of 1s, 11d. per gallon, if we had the whole 1977 financial year to deal with. But I am now addressing the Committee on the 16th of July, and about six weeks more must be added to that, because it is the practice of the Department to charge the duty in one of its six-weekly rounds and to raise it in the next. Looking, therefore, to what may come into the Exchequer before the 1st of next April in consequence of this measure of increased duty on British spirits, and assuming that for the whole of one year the increased duty would yield £1,000,000, I can only take credit for about £650,000. To this amount I am about to make an important addition by a countervailing or compensating increase from the duty on foreign and colonial spirits. That, of course, as all Customs duties are taken at ready money, would be reckoned from the time I now speak—from the deliveries of to-morrow:—and the proceeds of the increased duty, making a reasonable allowance for a diminution in consumption, would be about £400,000; making together, with the increase from British spirits, the sum of £1,050,000. That is the provision which the Government mean to make from taxation during the remainder of the present year towards meeting the charge in which we are involved by the war with China. And they make a proposal which is permanent in its nature, though the charge is temporary, because they consider this a measure which is in itself sound and salutary, which Parliament has been expected to adopt, which Parliament may very reasonably desire to adopt, and with respect to which, for some years past, the only question has been as to the precise moment when its adoption might be consistent with prudence.
Sir, I have now got rid of the formidable Vote of £3,800,000 excepting so much of the sum of £2,336,000 as is not provided for by the increase of the spirit duties; and the increased spirit duties £1,050,000 being deducted form £2,336,000, leaves a sum of £1,286,000. This sum we propose to provide for without any further resort to the taxation of the year. The balances in the Exchequer are in a state so satisfactory that probably they might well adimt the withdrawal of that, and even if necessary, of a somewhat greater sum. The surplus revenue wisely provided by the House in the arrangements of last year is, of course, available under the provisions of the law, in addition to the balances of the present, and the proper course obviously is to apply in aid those balances when the taxation of the year 1978 is insufficient, rather than to go through the operose and needless double process, first, of applying a sum of money to the extinction of debt, and then of going to the market for the contraction of new debt. I will lay shortly before the Committee the state of the balances. On the 1st of April the balances in the Exchequer—which the Committee should be aware by no means represents the whole amount of public deposits in the Bank, but only those for the Consolidated Fund and Supply—was £7,972,000. On the 30th of June the balance was reduced to £6,594,000; but that sum does not represent the real reduction, owing to the fact that the collection of the income tax is by no means equable in the four quarters of the financial year. It comes in lightly in the first and third quarters, and heavily in the second and fourth quarters; and, as we are now coming to one of the heavy quarters, I anticipate that the balance in the Exchequer on the 30th of Steptember will, perhaps, be materially better than on the 30th of June. Looking to the demands of the public service, I feel no hesitation in saying, though of course there will be a drain from China in order to supply the Treasury chest there, that I think it quite unnecessary to take any Supply measure to meet this expenditure, inasmuch as the means actually at the command of the Government (the proceeds of last year's revenue), will enable them to defray it without difficulty. I say that if it be necessary to make the demand on the balances we could draw therefrom without inconvenience the remaining £1,286,000, and indeed the demand on the balances could be extended, if necessary, from £1,300,000 to about £2,000,000. It may be necessary for Government to make application for power to re-borrow £1,000,000 now outstanding on Exchequer bonds which would fall due in November next; but no embarrassment or inconvenience would be attended on that transaction. It is quite possible, if circumstances should be favourable, that it may not be necessary to re-borrow the whole of that sum; and, if necessary, there would be no difficulty whatever in conducting the operation, because these Exchequer bonds are in the hands of the Commissioners for the Reduction of the National Debt, and form for them a convenient and profitable investment, and with them they can remain.
This is the statement I have to lay before the Committee; and if there are any 1979 particulars in which I have failed to convey clearly my meaning it will give me great satisfaction to answer any question that may be proposed to me. I have still, however, to state two points. The first is that it will be my duty, as on all occasions when an increase of Excise duty is proposed, to ask the Committee for an immediate Vote. The purpose of that is, of course, well understood. It is not in any degree with the view of binding the discretion of the Committee, but to secure the charge of the duty on the commodity, so that no loss to the revenue may take place pending the time when the House is considering whether or not it would be right finally to adopt the proposal. The rule, that the augmentation of Customs' duties should be immediate on the proposal, is not in itself so entirely urgent and imperative as the rule with respect to Excise duties; but in the present case it is quite plain that what we do with respect to the Excise must be done with respect to the Customs; for if we impose an Excise duty of 10s. on spirits, and do not impose the Customs' duty till next week or so on the competing article, there would be immense deliveries of foreign and colonial spirits, to the great injury of the revenue and of the home trade. That is what I have to state with regard to the proposals which I have submitted to-night. The further Resolutions have been long under the consideration of the Committee, and stand in a category altogether different. But in regard to the present proposal, I ask, in accordance with uniform practice, for an immediate Vote, without in the least degree binding the discretion of the House. Of course the Government will appoint such a day as may meet the convenience of hon. Members for taking the discussion on what I may call the merits of the measure, and that will accordingly be made a matter of arrangement. But as there is another subject involving a charge upon the country which has not been brought before Parliament it is right I should allude to it for a moment. It is that of the Vote for fortifications, which remains up to the present time without explanation, and with regard to which, of course, the Committee will be desirous of knowing the intentions of the Government. What I have to say upon the subject is that though it could not be conveniently combined with the very heterogeneous matter with which I have now been dealing, it is the intention of my noble Friend (Vis- 1980 count Palmerston) to explain the mode in which the Government propose to apply the sum of money which has been reserved for the Vote of fortifications, and likewise to explain their views respecting the Report of the Commissioners recently laid before the House. My noble Friend will probably do this upon an evening which he will select antecedently to the day when the House will be asked to give a decisive vote upon the proposals I have now submitted. All I need now say is that, so far as the Government are concerned, if the House will accede to our proposals, it is not our intention to make any further demand in the shape of taxation upon the country for the services of the present year. Thanking the House for the attention with which it has heard my statement, I will now conclude by moving the First Resolution.
§
Resolution moved—
That, towards raising the Supply granted to Her Majesty, there shall be charged for and upon every gallon of Spirits of the strength of Hydrometer proof which, on or after the fifteenth day of July I860, shall be distilled in the United Kingdom, or be in the stock, custody, or possession of any distiller in the United Kingdom, or of any person in trust for him, or for his use, benefit, or account, or which having been distilled in the United Kingdom shall, on or after the said day be in any Duty-free warehouse, or on removal to any such warehouse, and be taken for consumption in the United Kingdom, the Duty of One Shilling and Eleven Pence, and so in proportion for any greater or less quantity, or any greater or less degree of strength, in addition to the Duty chargeable on such Spirits under any Act or Acts in force, or under any Resolution of this House, passed during the present Session of Parliament.
§ MR. VANCEsaid, that he fully agreed that there ought to be no limit to the taxation on ardent spirits until it reached an amount that would defeat its own object; but he thought the increase now proposed would enormously stimulate the illicit distillation of spirit—in Ireland at least—and that the consumption of duty-paid spirit would, consequently, fall very short of what the Chancellor of the Exchequer anticipated. The Chancellor of the Exchequer had seemed to draw an argument in favour of his proposed increase from the fact that the trade had anticipated his intended increase. It was only natural that the trade should entertain such anticipations, because the right hon. Gentleman had never before, as he had on the present occasion, announced that he had arrived at a final limit. But it was scarcely any inconvenience to the trade to anticipate by a month or two the delivery of spirit from bond; and he did 1981 not therefore, think, the Chancellor of the Exchequer was using a fair argument when he said that because the trade had looked forward to what might happen, that therefore what did happen was right and reasonable. He was, however, particularly desirous on the present occasion of impressing upon the Chancellor of the Exchequer that this was a favourable opportunity of doing justice to the home trade. When home-made spirits were placed in bond the duty was eventually, upon their being taken out again, levied upon the number of gallons which the cask originally contained when it entered the Queen's stores; but when foreign spirits were taken out of bond the duty was charged only upon the actual number of gallons the cask contained. He trusted the Chancellor of the Exchequer would give his attention to this, and consider whether it was not possible to place the home and the foreign trade on the same level. Beyond this, also, another grievance relating to the home trade was that the allowance for leakage and evaporation while in store was much smaller than it actually amounted to.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that the point to which the hon. Gentleman had called the attention of the Committee was one the importance of which the Government fully acknowledged, and that they had under consideration at that moment various points connected with the more equitable adjustment of the rules of Excise in favour of the distillers. The present state of things was a natural consequence of their being subjected for the first time to a real foreign competition.
§ MR. CRAWFORDasked what were the contemplated changes in the wine duties as recently settled by the House, to which the right hon. Gentleman alluded as consequent upon the proposed alterations in the spirit duties?
§ THE CHANCELLOR OF THE EXCHEQUERsaid, in the event of the House adopting the 10s. spirit duty, there would be no change in the wine duty at the present moment. The 3s. duty now leviable would remain so to the first of January next without any change, because that was a duty that gave rise to no serious apprehension with regard to its affecting the amount derivable from spirits. But he thought it probable he would have to make the following propositions:—That in the 1s. duty on wine of less than 18 per cent proof strength there should be no change; that to 1982 the 1s. 6d. duty on wine above 18 per cent and under 25 per cent strength an addition of 2d. or 3d. per gallon should be made; and that to the 2s. duty on wine between 25 and 40 per cent strength an addition of either 4d. or 5d. per gallon should be made.
MR. M. SMITHsaid, he could scarcely comprehend what the Chancellor of the Exchequer meant by describing the Exchequer as being in so flourishing a state, when there were deficiency bills to meet to the amount of £1,500,000.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that nominally such an amount of deficiency bills were in existence, but as far as he was able to form a judgment at the present moment, he believed that no interest would be payable on such bills during the present quarter.
§ MR. W. WILLIAMSinquired whether any change would be made in the relative position of colonial and foreign spirits?
§ THE CHANCELLOR OF THE EXCHEQUERstated that foreign and colonial spirit would stand on precisely the same footing relatively as at present—the duty on colonial spirit would be 10s. 2d. a gallon, and that on foreign spirit 10s. 5d. per gallon.
§ SIR STAFFORD NORTHCOTEinquired whether the wine drawback had been paid out of the expenditure for the year ending March last or out of that for the present year?
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that in estimating, on the 10th of February last, the probable charge on the country for what remained of the financial year, he took £350,000 on account of wine drawback. That sum was provided for out of the revenue of last year, and formed no charge on the revenue of the present year. That sum was not, however, actually obtained out of the revenue of last year before the expiration of the year, because the Government had not obtained Parliamentary authority to pay the drawback. Almost all the payments had now been made, and the result was that the whole charge on the public in respect of drawback, as the cost of effecting this great operation of the reduction of the duties, would be under £200,000, instead of £350,000, as he had expected.
§ LORD FERMOYsaid, the Chancellor of the Exchequer had very quietly availed himself of the amount thrown back upon his hands by the refusal of the other House of Parliament to agree to the Re- 1983 peal of the paper duties. But he (Lord Fermoy) did not think the right hon. Gentleman in doing this was acting fairly to those who, like himself, did not consider the question settled. The right hon. Gentleman too was the last man in the world who ought to endeavour or appear to dispose of this question by a side wind. By availing himself of the law as it stood the right hon. Gentleman placed them in this position—that whereas if the House were disposed to send the Bill back to the Lords there was now this difficulty interposed, that the right hon. Gentleman had admitted that as financiers the Lords had proved themselves more capable than he. The right hon. Gentleman might have left the amount, which he said was about £700,000, as a surplus. It would have been better if the right hon. Gentleman had refrained from taking any active step upon the law as it at present stood. He protested against this mode of getting rid of a difficult question by a side wind. He, and those who thought with him, were prepared to face all the difficulties of the question, and he was sorry to see the right hon. Gentleman disposed to act differently.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, in making this statement to the Committee he had endeavoured, as far as it was possible to do so, to avoid prejudicing any question or any proposition that the noble Lord or any one else might submit to the House. As a Member of the House of Commons, he was ready, when the question at issue with the House of Lords came to be debated, to enter into it and to assert his opinion without disguise. But he did not consider it to be his duty on every incidental occasion that might occur to refer to his individual opinion on that point. He had cautiously avoided giving offence, or taking too much responsibility on his own shoulders, for he had said that the money should be available in case the House should so please.
§ MR. BALLregretted that the Chancellor of the Exchequer, having got £700,000 by the paper duty, had not set that amount against the malt duty credits, and thus conferred a great boon upon the agriculturists.
§ THE CHANCELLOR OF THE EXCHEQUERobserved that the malt growers would be rather benefited than injured by an increase of the spirit duties.
§ MR. DARBY GRIFFITHcontended that the Chancellor of the Exchequer, notwithstanding the answer just given to the noble Lord, had, by the statement he 1984 had made that evening, precluded himself from taking that "action" which was spoken of with so much boasting the other night with reference to the rejection of the Paper Duty Repeal Bill.
§ Resolution agreed to.
§ Also Resolutions 2 and 3, fixing the duties on spirits imported from Foreign countries, and from the Channel Islands.
§ THE CHANCELLOR OF THE EXCHEQUER moved the Fourth Resolution:—
§
Resolution moved—
That, towards raising the Supply granted to Her Majesty, the 12th Section of the Act passed in the sixth year of the reign of King George the Fourth, chap. 81, which enacts that it shall not be necessary for any person or persons to take out an Excise Licence for the sale of any foreign goods or commodities, for the sale of which in any manner an Excise Licence is required; while such goods or commodities shall be and remain in the warehouse or warehouses in which the same shall have been deposited, lodged, or secured according to Law, before payment of Duty upon the importation thereof, shall not extend to exempt any person from liability to take out an Excise Licence for the sale of any Foreign Wine or Spirits.
§ MR. HANKEYsaid, the effect of this Resolution would be to compel importing merchants—merely because they had imported some few casks of spirits in the course of the year, passing their goods through the Custom House, and having nothing to do with the Excise—to take out an Excise licence. That certainly never was understood. It was extremely difficult to follow up these Resolutions. They had been on the paper sometimes in one shape, sometimes in another; and he knew not where they were in regard to them. He was quite sure the Chancellor of the Exchequer did not intend to take any of the trade by surprise; but, having referred to the Act, he did not think it would bear this interpretation.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he was very sorry his hon. Friend appeared to object so much to the Resolution. It was within his (the Chancellor of the Exchequer's) own knowledge, that it was known and understood by those who had thought fit to give it their attention. The way in which the case now stood was this: Up to the present time there had been but a very slight competition between the ordinary established wine and spirit merchants of England, and a class of persons who went about the country as agents for various houses, and dealers in wines and spirits, which were in bond; or as canvassers for British houses, perhaps, 1985 but always with respect to the article when it was in bond. Now, at a time when they were going to have a very sharp competition in all probability in that trade, and when there were so many new channels of supply to be opened, it was absolutely necessary to remove that anomaly, and to require that everybody who dealt in wines and spirits in bonds should be liable to pay the same tax for Excise licences, as those who dealt in wines and spirits free. Then he came to the main question—what were they to do with the West India importers of rum? He frankly owned that he had not been able to discover any satisfactory mode of exempting them from duty. They were dealers in spirits in bond; they could not get rid of that definition; but if they really thought it worth contending for, and if they had any good mode of drawing the distinction, he did not know that the House might not be willing to consider it. He could not say that be thought they had a very strong claim, or that theirs appeared to be a very heavy burthen. He begged to remind his hon. Friend, that they had got a penny more protection on their rum than they were entitled to. ["Hear!"] He could assure his hon. Friend that, owing to the way in which one arrangement came across another, it was perfectly clear that that was the fact; indeed, he was not quite certain that they had not got 3d. At all events, he could assure his hon. Friend that they got more protection on their rum than they were entitled to. It was the best and fairest arrangement which could be made upon the whole; and if it were looked into, it would be found that their position, on the whole, was quite as good, or, perhaps, a shade better than before. The Resolution had been some months in its present shape; and he trusted that, on the 16th of July, he should not be asked to postpone it.
§ MR. CAVEsaid, the West Indian importers did not allow that any great advantage was possessed by them over the distiller, for they had a very long voyage, and they lost a quantity of the spirits by leakage during it. There were a great many other disadvantages, too, which practically made the position of the West Indian importers very much worse than that of the distillers, who had everything under their eyes, and had not to carry their products any distance to the market. With regard to the immediate question, there was a considerable difference between an importing merchant and an agent taking 1986 orders for a foreign or British house. Although not considerable in amount, there was something entirely unprecedented in the present proposal, and he felt sure it could not be difficult to find words to exempt the importers.
§ MR. CRAWFORDsaid, as an occasional importer of spirits in bond, he should be very glad if he felt himself at liberty to claim exemption from the charge. But there were good reasons for some charge being imposed upon a class of gentlemen who represented establishments abroad, especially on the Continent. It was very evident that, if they felt it worth while to obtain orders for their wines and spirits in bond by personal solicitations, they must have an advantage in doing so, which was in competition with the regular wine merchants who paid the licence.
§ MR. AYRTONsaid, there seemed to be three or four classes of persons involved in the exemption, whose conditions were very different. First, the merchants engaged in the importation of foreign spirits; then the second class, those who did not import, but sold for consumption in this country; and then the third class, who dealt in commodities in bond; and he understood that the right hon. Gentleman wished to put the tax on the latter class, who came immediately into competition with the ordinary wine merchants. To that there could be no objection; but he trusted the proposed change would not be carried the length which was implied in the clause. The result would be that almost every general merchant of England would have to take out a licence, because in the course of the year he might have some transaction, for a constituent perhaps, to the extent of a parcel of wine, fie hoped the Resolution would be confined to its legitimate object. The agents of whom the right hon. Gentleman spoke might not, under the Resolution, be taxed at all, because it was the principal who must take out the licence.
§ THE CHANCELLOR OF THE EXCHEQUERThe agents will not be allowed to act, unless he acts for a principal who pays the Licence.
§ Resolution agreed to.
§
Resolution moved.
5. That, towards raising the Supply granted to Her Majesty, the time limited for payment of the Duty of Excise on Malt by every maltster or maker of Malt who shall have given security in the manner directed by the Act passed in that behalf, in respect of all Malt begun to be made on after the first day of October, 1860,
1987
shall be six weeks in lieu of twelve weeks after the making of such account or return of Duty as in the said Act is mentioned.
§ Resolution agreed to.
§
Resolution moved.
6. That, towards raising the Supply granted to Her Majesty, the Duty of Excise, which for the time being is or shall be chargeable on Hops growing or to grow in Great Britain, shall be payable on the first day of March, 1861, and afterwards on the first day of January next after the curing thereof,
§ LORD HARRY VANEsaid, although the hon. Member for East Sussex (Mr. Dodson) who had given notice of an Amendment for the repeal of the hop duty was now absent, he wished to say a few words on the subject. He was glad the Chancellor of the Exchequer had proposed a reduction of the duty, which, as far as it went, was a step in the right direction. He wished, however, that the right hon. Gentleman had felt himself justified in moving the total repeal of this tax, which operated most unfairly and oppressively on the hop-growers. It was only consistent with a free trade policy that this objectionable impost should be abolished, and he therefore trusted the Chancellor of the Exchequer would include its abolition in some future scheme of finance.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, however dull of comprehension a Chancellor of the Exchequer might be, he was certain somehow or other to learn before he had been long in office the sentiments and the case of the hop-growers; and he had himself had full opportunity of appreciating their statements in that respect. He was glad to be able to propose a small reduction, and should have been glad had it been in his power to propose a greater.
§ SIR JOHN SHELLEYsaid, the hop-growers of this country had now come to view the prospect of free trade in hops without fear or horror, believing that they could compete with all the world. He hoped the Chancellor of the Exchequer would before long concede the total abolition of this Excise duty.
§ Resolution agreed to.
§
Resolution moved.
7. That, towards raising the Supply granted to Her Majesty, there shall be charged and paid upon Chicory, or any other vegetable matter applicable to the uses of Chicory or Coffee, grown in the United Kingdom, for every hundredweight thereof, raw or kiln-dried, until the first day of; April 1861, the Duty of Three Shillings; and on and: after that day the Duty of Six Shillings, and so in proportion for any greater or less quantity than a hundredweight.
§ Resolution agreed to.
1988§ Also Resolutions 8 and 9, fixing the Duties upon Contract Notes and Assignments or Leases.
§
Resolution moved.
10. That, towards raising the Supply granted to Her Majesty, in lieu of the Stamp Duty now chargeable upon the instruments hereinafter mentioned, there shall he charged and paid the Stamp Duties following:—namely,
For and upon any Policy of Assurance or Insurance, by whatever name the same shall be called, whereby any sum of money shall be assured or agreed to be paid only upon the death of any person from, or by reason of, any cause incident to or consequent upon travelling, whether by land or water, or any accident or external violence, or any cause whatever other than a natural cause; or whereby any compensation shall be assured, or agreed to be made or paid, for personal injury received from any cause whatever; or whereby both a sum of money upon death and a compensation for personal injury as aforesaid shall be assured and agreed to be paid:—
| s. | d. | |
| Where the premium or consideration for such Assurance or Agreement shall not exceed two shillings and sixpence | 0 | 1 |
| And where the same shall exceed two shillings and sixpence and shall not exceed ten shillings | 0 | 6 |
| And where the same shall exceed ten shillings and shall not exceed one pound | 1 | 0 |
| And where the same shall exceed one pound, then for every twenty shillings, and also for every fractional part of twenty shillings | 1 | 0 |
§ MR. AYRTONsaid, that this Resolution imposed a stamp duty of 1d. upon all assurances where the premium did not exceed 2s. 6d. Such a duty would press very unfairly upon a class of assurances applicable to passengers by railways, who took a ticket of assurance for a single journey, for which they paid 2d., 4d., and 6d., according to the class in which they travelled. A charge of 1d. would be a tax of 50 per cent on third-class passengers, which would press very unfairly upon them. He would, accordingly, suggest that the new duty should only be leviable on premiums above 6d., so as to exclude this class of assurances.
§ THE CHANCELLOR OF THE EXCHEQUERthought the view of the hon. Member not unreasonable. He did not believe that any new duty would be charged under this Resolution upon any instrument not now liable to duty. The Resolution ran "In lieu of the stamp duty now chargeable upon the instruments hereinafter mentioned." In case of doubt, a financial Resolution was always construed in favour of the public. The matter, however, should be looked into, and care taken to exclude these assurances.
§ MR. MALINSbelieved that the clause would have the effect of imposing a duty of 1d. upon railway assurances unless it were altered.
§ MR. AYRTONtrusted that benefit societies would be exempt, in accordance with the assurances of the Chancellor of the Exchequer at the early part of the Session.
§
Resolution moved.
11. That it is expedient to amend the Acts relating to Stamp Duties.
§ "Resolution agreed to.
§
Resolution moved.
That towards raising the Supply granted to Her Majesty, there shall be charged and paid for and upon any Promissory Note made, or purporting to be made, out of the United Kingdom, for the payment within the United Kingdom of any sum of money, the same Stamp Duty as on an Inland Bill of Exchange for the payment, otherwise than on demand, of money of the same amount.
§ Resolution agreed to.
§ THE CHANCELLOR OF THE EXCHEQUERwished to explain the course which he proposed to take on the Report—and which he believed would not be opposed by hon. Gentlemen opposite—with reference to the Resolutions upon the spirit duties voted to-night without notice. A Bill regulating the sale of spirits, and containing, in fact, the whole of the law upon that subject, now stood for a third reading. This Bill would be reported to-morrow, and he should propose to recommit that Bill for the purpose of inserting these Resolutions in the Bill. The Resolutions would then stand in the Bill as a portion of its provisions, the Bill would be reported as amended, and would then stand for a third reading. The debate on the Resolutions might either be taken on the report of the Bill as amended, or on the recommittal of the Bill, and a day might be named for the debate.
§ MR. WALPOLEsaid, that the right hon. Gentleman had proposed to take a most unusual course. He proposed to insert new Resolutions in a Bill which would thus evade a discussion upon the second reading. He was not aware that in any Taxing Bill such a course was ever adopted as to insert Resolutions into a Bill that stood for a third reading, thereby saving the first two stages, and inserting new Resolutions upon the recommittal. He could not help thinking that exception would properly be taken to such a course.
§ THE CHANCELLOR OF THE EXCHEQUERsaw great objection to any course that limited the power of the House to dis- 1990 cuss such Resolutions on the recommittal of the Bill.
§ House resumed; Resolutions to be reported To-morrow; Committee to sit again on Wednesday.