HC Deb 30 March 1860 vol 157 cc1660-85

Order read, for resuming Adjourned Debate on Question [29th March, "That the Bill as amended in the Committee, be now taken into consideration."]

Question again proposed.

Debate resumed.


said, it would be convenient to know when the Government intended that the adjournment for the Easter holidays should take place.


replied, that the Government hoped to move the adjournment of the House on Tuesday next, if the state of business would allow it, but at all events Wednesday.


said, he had a suggestion to make to the noble Lord (Lord J. Rus- sell) respecting the state of public business. It was unfortunate that the Budget, involving as it did an unusual number of questions, should be mixed up with the question of Reform; and he suggested that it would be better to go on with the Budget and get all those subjects disposed of, and then proceed with the Reform Bill from day to day. He knew that the Reform Bill was put off until after Easter, but the same difficulty might occur then, unless some such plan were adopted. The repeated adjournments which had taken place of late were not just to the Government, to the House, nor to the question of Reform.


said, the course which the hon. Gentleman recommended was that which he intended to take. He proposed to fix the Reform Bill for the 19th or 20th of April. By that time he hoped that the principal questions involved in the Budget would be gone through, and it would not be advisable to postpone the Reform Bill any longer. The second reading of the measure would then be taken, and at the end of April he hoped they might go into Committee. When the adjourned debate was resumed it would certainly continue from day to day on the evenings at the disposal of the Government.


said, he would remind the noble Lord that an important Bill—the Church Rate Bill—was fixed for Thursday, the 19th of April.


said, in that case, he would fix the Reform Bill for Friday, the 20th.

Question put, and agreed to.


said, he rose to take the opportunity of protesting against the unfair taxation to which Ireland was subjected as compared with England, and which was quite opposed to the spirit and the terms of the Act of Union. The revenue derived from Ireland last year was £7,000,000, but that did not represent the whole of Ireland's contributions to the Imperial exchequer. Nearly all the articles paying Customs' and Excise duties consumed in Ireland were imported from England, where those duties were paid, and were included in the taxation of England, but, of course, the Irish consumer was the person who really paid them. The amount of those duties could not be less than £2,000,000, making £9,000,000 of taxation; but to that was to be added at least £4,000,000 drawn annually from Ireland and spent in Eng- land by absentee proprietors, thus making a total drain of £13,000,000 from Ireland. Then, again, as to the expenditure, he found that nearly all the great Government establishments were in England, and the money paid to support them was again distributed over the country. He found by a Report laid before Parliament, that after paying for the different charges of Government in Ireland, no less than £2,252,000 was remitted to this country, leaving still a balance of about £1,000,000 to the credit of Ireland. By the Act of Union, the debts of the two countries were to be kept separate, but since 1824 no distinction had been made. He knew it was said to be productive of real amity between the two kingdoms that all distinctions should cease; but while he desired a real union he did not wish it to be upon the basis of considering Ireland as a province of England. The Chancellor of the Exchequer had talked of the increase of wealth as justifying the increase of the income tax, but he (Colonel Dunne) denied that there was any increase of wealth in Ireland. He found from the Returns that between 1854 and 1859, although there had been an increase upon schedule A, there had been a decrease upon schedules B, C, and D. He therefore totally denied that the prosperity of Ireland was increasing after the ratio mentioned by the right hon. Gentleman. There was actually—astounding as might be the fact—500,000 acres less land cultivated now than were under cultivation in 1847. It might be true that the farms were larger, but making them so had added to the misery of the people by necessitating evictions. Had commerce advanced in Ireland? At that moment the value of the exports and imports did not amount to more than £300,000. No doubt there had been an increase in the trade with England, for if there had been no such increase there would be no prosperity whatever. It was, however, remarkable, that the foreign exports and imports from and to Ireland were considerably less now than in 1790, ten years before the Union. At that time they were then no less than £1,000,000. Where, then, was the enormous prosperity of Ireland, which was to entitle the right hon. Gentleman to add to its taxation? There was no ground on which to base it, nor any reason to suppose that the people were more able to pay it than they had formerly been. It was true that they had removed the duties on butter and some other things. The value of the butter exported from Ireland was about £1,000,000. That was the trade between England and Ireland chiefly; but by the removal of differental duties they had admitted the competition of all the world. In other words there was free trade. In these days the mere mention of free trade seemed to be an excuse for everything, and that was the great cry which had been raised to force through the late commercial treaty with France, by which she gained and England lost everything. But then it was said, "O, this tax is necessary for increasing our defences." What had they added, he would ask, to the defences of Ireland? Had they sent her a single additional gun or raised a single additional fort? They were not even allowed to raise volunteer corps in that country. Why did not the Government, if they distrusted the Irish, tell them so at once. Yet there was no part of the British nation more loyal or more willing to come forward in defence of the country than were the Irish. The Irish, besides, had no occasion for that extraordinary preparation for defence. They had never nourished a feeling of national antipathy to the French; on the contrary, there were reminiscences and associations which connected almost every family in Ireland with France, and there was not that hostile feeling which continual wars had fostered between England and France. While, therefore, he asserted that the agricultural wealth and commercial prosperity of Ireland were not such as to justify the imposition of an additional income tax, he asserted also that there were not sound reasons for the expenditure of large sums for defence in that country. If, however, war broke out between France and England, the Irish would readily assist in the defence of England, although they objected to pay additional taxation for purposes of defence—not in Ireland, but in England. He hoped that ere long every Irish Member would come to Parliament pledged to settle the fair proportion of taxation to be borne by Ireland; but, until that arrangement was made, every Irishman ought to object to any additional taxation whatever. He submitted that it was high time that taxation as between Ireland and England should be settled on a proper basis, because at present he was perfectly satisfied that they paid what was not fair. Those were Irish considerations; but he thought also that there were strong reasons why this additional income tax should not be imposed upon England in order to fill up the deficiency occasioned by the repeal of the paper duty. Indeed, he had strong doubts whether the right hon. Gentleman would be able to pass his Paper Duty Repeal Bill without imposing a foreign import duty. He warned the Chancellor of the Exchequer that there was not then the same disposition in favour of his Commercial Treaty with France as existed two or three weeks previously, before the nature of the bargain was fully known, and before the manifestation of French policy in the annexation of Savoy, which had created universal distrust. He reminded the House that not only had France gained everything in the Treaty, but that for years she had snatched at and obtained every commercial advantage, while she had surrendered none. The people of this country were, therefore, not so favourably disposed towards the Treaty, and did not see why—for the very problematical advantages this country was to receive—an additional income tax should be levied, in direct contradiction to the assurance given in former years by the Chancellor of the Exchequer that it should come off in 1860. The subject was, therefore, a fair one for reconsideration, and he proposed that the income tax should be 9d. instead of 10d.

Amendment proposed, in page 2, line 3, to leave out the words "Ten Pence," and insert the words "Nine Pence," instead thereof.


said, he was afraid the hon. and gallant Gentleman had anticipated the view which Her Majesty's Government must necessarily take of the Motion he had made. His speech was broader and larger in its views than altogether suited the occasion, and, on the other hand, his Motion, though one of great importance, did not seem to belong to his speech. The gist of the gallant Gentleman's speech was, that there was no cause for assuming the capacity of Ireland to bear equal taxation, and that Ireland had a right to complain of being subject to the same taxation as England. He (the Chancellor of the Exchequer) should say at once that it was a legitimate course for the gallant Gentleman to bring that reasoning under the consideration of Parliament, but he did not raise the proper issue in moving a universal reduction of the tax. The logical sequence from his promises would have been to introduce a distinction in favour of Ireland in proposing an income tax. Not that such a Motion would have met with a more ready assent from the Government, because he was prepared to contend, that there was no real equality of rights and liberties without an equality of taxation, and he must say that the manner in which the income tax had all along been borne by Ireland showed that the people there were well aware that that was a sound political doctrine, and that exemptions and privileges granted to a country in matters of taxation were nothing more than the note of political depression and degradation. The Government always set out with assuming that it was the intention of the House to maintain the public credit and to provide so much revenue as would be necessary to meet the estimated expenditure. On that principle they could not part with the penny which the gallant Gentleman proposed to take off the tax without leaving the exchequer involved in a probable deficiency; at a time, too, when the expenditure was more than usually uncertain; because, though we were not in a state of war, yet we had a military expedition on hand which might issue in war at a distant part of the globe, and if it did issue in war there would be an imperative call for a considerable expenditure for that purpose. The provision already made for that expedition was very considerable, and in that event it would have to be increased still more. He thought it enough to state, what was undeniable, that according to all the best estimates that could be formed of the revenue and expenditure of the year, the loss of £850,000 in round numbers, which the Motion of the gallant Gentleman would cause, if carried, would leave the Government in a deficiency of about £500,000. It was true that in his speech on the Budget in the beginning of February, he assumed a surplus of £460,000, yet since then some few of the proposed minor charges had been modified, which would reduce the surplus to £360,000, and if £850,000 more was deducted there would be a deficit of half a million. He was convinced it was not the wish of the gallant Gentleman to assist in bringing about such a result. He hoped the gallant Gentleman would not believe that he was slighting his Motion. The whole argument, in fact, as he (the Chancellor of the Exchequer) had just stated it, was summed up in a couple of sentences, and it was his duty to Oppose the Motion.

Question, "That the words 'Ten Pence' stand part of the Bill," put, and agreed to.


said, he rose to beg leave to modify Clause 8 in such a way as that incomes under £150 a year should be exempted from income tax. When this tax was first proposed by Sir Robert Peel he considered it would be an act of great oppression to impose it upon incomes under £150, and this exemption continued from 1841 to 1853, although several renewals took place by different Governments in the course of that period. In the year 1853 the right hon. Gentleman brought forward a great financial scheme in which he proposed reductions of taxation on several articles which entered largely into the consumption of the great mass of the common people, and he made out that those reductions would, in the consumption of ordinary families, more than counterbalance the imposition of 5d. in the pound on incomes between £100 and £150. The right hon. Gentleman carried the House with him; but what was the consequence? In less than twelve months the taxes on the necessaries of life were increased to an enormous extent, as well as the tax upon incomes between £100 and £150, so that all the principles upon which the right hon. Gentleman obtained the sanction of the House were completely violated. In 1853 the tax was 5d. in the pound, but now in the year 1860—when, according to the promise of the right hon. Gentleman, the income tax was to cease altogether—it was made 7d. in the pound on those incomes, and, the taxes on the necessaries of life, such as tea, were kept considerably above what he had proposed. There were several classes, such as labouring men who worked extra time, clerks, small tradesmen, clergymen, and retired officers of the army and navy, to whom this tax was a severe burden, and greatly interfered with the maintenance of a respectable position, and even with the education of their children. But what was the cause for those taxes? It was to be found in this, that the Estimate for this year for the army and navy amounted to £18,000,000 more than had been required by the most eminent men that ever governed this country,—Sir Robert Peel and the Duke of Wellington. The necessity for this increase of £18,000,000 he believed nobody, except Her Majesty's Government, understood, Probably they had an apprehension of a war; but, if war should arise, they might come down then and ask for an increased grant from the House. Now, if the right hon. Gentleman would allow the Army Estimates to be referred to an impartial Committee, he (Mr. Williams) would undertake to show that a reduction might be effected without lessening the strength or efficiency of the army in any respect. And he would say the same of the Miscellaneous Estimates. For these reasons he begged to move the modification of which he had spoken, and he should take the sense of the House upon it.

Amendment proposed, in page 3, line 37, after the words "one hundred," to insert the words "and fifty."


said, there could be no doubt of the extreme pressure of this tax on the lower class of incomes. He wished to ask the Chancellor of the Exchequer whether he contemplated the appointment of a Committee to inquire into the inequalities in the operation of the tax. Some such course ought to be pursued, for the present Budget left the tax in a most uncomfortable position. The extremely unequal pressure of the tax on all property in Schedule A was indisputable. The Chancellor of the Exchequer had himself proved that the 7d. income tax was nearly a 9d. tax on property under that schedule; and he believed that the 10d. rate about to be imposed would operate at the present moment as a rate of 1s. on all real property. In a town in which he was himself interested—Leamington—there were two rentals in the ratebook—one the net and the other the gross rental. Those who paid upon the gross rental paid, in point of fact, a tax upon a tax—they paid not merely upon their income, but upon their income and taxes as well. Under the exigency of war an income tax might be tolerated, and even in peace a small tax of, say, 5d. in the pound, might be borne; but to levy so heavy and unequal a tax as 10d. in time of peace upon all incomes was contrary to the first principles of justice. He trusted, therefore, that the Government would announce their intention of endeavouring to grapple with the subject, and remove at least some of the most glaring injustices.


said, he thought that to enter upon any one or two or three of the many anomalies of the income tax would simply be to detract from that inquiry which must take place at a future period, and which ought to be attended with greater deliberation than could then be given to the subject. At that juncture a lengthened debate on the subject would be neither for the interest or convenience of the country, as the Chancellor of the Exchequer was so situated that the passing of this measure was a matter of necessity. He trusted, however, that the right hon. Gentleman would give the House some information as to the feelings with which the tax was viewed by the Government. It was a grave consideration that the income tax was about to be imposed for one year only. That a tax producing £10,000,000 or £11,000,000, so full of injustice that no statesman could justify it, should be levied for only one year, was a state of things productive of much apprehension, and the House ought to know by what means the Chancellor of the Exchequer proposed to provide at the end of the year for the revenue of the country. The Motion of the hon. Member for Lambeth was objectionable because its effect would be materially to lessen the productiveness of the tax, which the right hon. Gentleman could very ill afford. He objected to the Motion, however, upon principle. He thought that where the wages of unskilled labour ceased, and higher wages began to represent a combination of skill and capital, there Parliament might begin to levy an income tax. The incidence of the tax might fairly begin at £100, and the interval between £100 and £150 was, he thought, not unwisely chargeable with a diminished ratio of tax as compared with incomes exceeding £150. The House had nothing to do now but to pass the Bill and to assist the Government out of the difficulty in which they had placed themselves by the unwise remission of indirect taxation. He trusted that the Chancellor of the Exchequer would concur on some subsequent day in the appointment of a Committee of Inquiry, who might recommend some revision of the tax, so as to make it less objectionable, for use it at present he feared we must.


said, he had no doubt the right hon. Gentleman the Chancellor of the Exchequer wanted the money, and that the House must provide for its payment; but still he would point out to the right hon. Gentleman something of the injustice he was about to commit, not intentionally, but of necessity, and thus he (Mr. Roebuck) would show the justice of the proposition made by the hon. Member for Lambeth. The income tax was most incomplete and unequal in its operation. Take, for instance, a man possessed of many thousands in the funds, or so many acres of land, and then place under the operation of the schedule a man of brains, making £5,000 a year—and that was a high figure for a man of brains to make, let him be either a physician or a lawyer. Suppose the latter to go on from day to day, perhaps from year to year, and then all upon a sudden there came upon him a fit of apoplexy. He was destroyed, and his £5,000 a year melted to nothing, and though he might have been living like a man of £5,000 a year from land, he was from that moment rendered null and nothing. Then the lower they came, and the smaller the sum taxed, the greater was the injustice inflicted. A man who had only £150 a year spent that £150. Compare that man with the artizan. He was obliged to make an appearance in the world. Suppose that he had a family—a wife and two or three children—he must live in a particular kind of house and maintain a certain kind of appearance, and it would be found that at the end of each year his £150 had disappeared. If the right hon. Gentleman the Chancellor of the Exchequer taxed this man upon his outgoings by indirect taxes he would get out of his income all that he could. By the income tax he cut off a portion of that man's enjoyment, but it did not increase the sum in the Treasury by one penny, because the tax had diminished his power of contributing to the indirect taxation. He would appeal to the right hon. Gentleman as he had done before, though he knew his necessities were quite equal to those of the men whose cause he (Mr. Roebuck) was endeavouring to advocate. He knew the Chancellor of the Exchequer was in a most pitiable condition, and that he was providing from hand to mouth. This year he made an effort—grand he (Mr. Roebuck) would allow, pertinacious everybody would acknowledge, and successful he hoped it might be. What might follow next year? He hoped it would not be the injustice of the present year. He wished the right hon. Gentleman would draw a distinction which he (Mr. Roebuck) had pressed on the late Sir R. Peel, when that great Minister first introduced the income tax to the House. He (Mr. Roebuck) pressed upon him the justice of making a distinction in the charge on the income of men of skill, art, and science, and that on men of fixed income. Sir R. Peel told him plainly that he could not answer him, but he wanted the money. He would acknowledge the right hon. Gentleman the Chancellor of the Exchequer felt the same necessity at that time, but he hoped for some more justice hereafter. The Chancellor of the Exchequer pounced upon the poor clerk, upon the poor gentleman, who was obliged to keep up an appearance in the world; he fixed his fangs upon him, and made him writhe and twist in very agony while he took from him, perhaps, his last shilling. The right hon. Gentleman could however draw from the country an equal income without producing the same injustice, and he, (Mr. Roebuck) hoped next year to see the right hon. Gentleman in his present seat, though in these times the transitions of governments were so frequent that no man knew what might come to pass, and he would entreat of him meanwhile to consider the circumstances of this tax.


said, he would suggest that orders should be given to the assessors to do their duty with all possible forbearance. Nothing could be more disagreeable to gentlemen who acted as Commissioners of the income tax in the country than the ordeal which small tradesmen had to undergo before them under cross-examination. The grocer was required to disclose all his transactions both with his customers and with the wholsale dealer. The publican, in the same way, had to give the quantity of beer and spirits, and the profits were then calculated. The same with the baker and his transactions with the miller. Such a mode of examination was painful to everybody, while it was lowering to the character of the Government that imposed the tax. A small amount of forbearance on the part of the assessor would afford a considerable mitigation of the grievance. He knew it was a great difficulty to make the income tax palatable to any one. But the word of a gentleman or a merchant was taken without question, whereas these country traders, with small incomes, were rigorously examined. In short the tax was most obnoxious from its inquisitorial character.


said, he was most anxious that the incidence of the tax should undergo a thorough investigation, with a view to relieve incomes between £100 and £200 from paying the full rate of income tax. He suggested to the Government that it was desirable such an in- vestigation should take place in the course of the present year, in order that they might have an opportunity of considering the proportions in which the tax should be levied in a future year.


said, he wished to remind the right hon. Gentleman (the Chancellor of the Exchequer) that he would have saved himself and the public business much inconvenience had he consented to the appointment of the Seleet Committee which he (Mr. P. Urquhart) had proposed at the beginning of the Session. He hoped that the right hon. Gentleman would see that the sooner he consented to the appointment of that Select Committee the better. He quite agreed with the hon. Member for Lambeth (Mr. W. Williams) that incomes of £150 a year deserved the greatest commiseration, for to make use of the words of the right hon. Baronet the Member for Carlisle (Sir James Graham) there was no class of society which felt the pressure of the income tax more than that "where the fustian jacket ends and the cloth coat begins." He sincerely hoped that a Select Committee might be appointed as soon after Easter as possible, with a view to soften the inequalities of the tax, so generally complained of.


said, he would suggest that the Chancellor of the Exchequer should take into consideration the propriety of adopting the scheme proposed by Sir Robert Inglis some years ago to the effect, that relief should be given to small incomes by applying the tax only to the amount by which they exceeded the point of exemption. In this way, if a person had £150 a year, £100 would be deducted, and he would be taxed only on £50, and the same rule would apply to other incomes up to a certain amount. If that proposal were applied to incomes up to £300 or £400, it would afford great relief to those persons to whom allusion had been made, namely, clerks, clergymen, and others, whose small incomes were so deeply affected by this tax.


said, that before he gave his vote he should like to know what difference was likely to be effected if the Motion of the hon. Member for Lambeth were carried. He (Mr. Sheridan) was of opinion the difference would be in amount almost equal to that given away by the repeal of the paper duty, if not a great deal more.


said, he entirely sympa- thized with the views and arguments of the hon. Member for Lambeth, and would be most happy if he could relieve from the pressure of income tax those who were immediately contemplated by his Motion. But then they were in duty to the country bound to maintain the Budget which had been brought in by the Chancellor of the Exchequer, based on certain principles, and on that ground he should reluctantly be compelled to vote against him. He had another reason. The House was to a certain extent guilty of great extravagance, and he did not care how universal was the outcry against taxation re-echoed in that House if it would only lead to something like care in the public expenditure.


Without referring to all the statements and arguments that have been urged in the course of this conversation, I will ask the permission of the House to allude to some of the principal points that have been raised; and, first, I will take the appeal of my hon. Friend the Member for Buckingham (Mr. Hubbard). He absolves the Government from the duty of shadowing out their policy for seven years to come, but confidently hopes they may not refuse to sketch out the general view of what they are likely to propose in 1861. Now, in point of fact, if we were in a condition which would permit us to state by anticipation what we were likely to do in 1861, perhaps we should not find it so difficult to go further; but the truth is this, that in times when the expenditure of the country is in a stable and what may be called normal condition—when you have no reason from the state of public affairs and the public mind to anticipate any great change in the scale of national expenditure, nothing could be more reasonable than to endeavour to form plans for a more extended future than that of twelve months only with respect to taxation, and to sketch out its probable operation and effects; for then you have got a certain basis to work upon, inasmuch as the expenditure of the country must regulate the amount of taxes to be imposed. Those who think that the expenditure of the country is now in a normal state, may very well draw from that opinion the further conclusion that it is reasonable to assume that the expenditure is a fixed quantity, and that a permanent provision may be made for it accordingly. But that is not my view. I do not assume that our expenditure is in a normal state. I doubt the wisdom, I doubt the safety, I doubt the possibility, without serious danger to the country, of continuing such an expenditure in time of peace; and on that account the Government have not thought it wise to attempt to sketch at the present moment the future of the case when the most important elements are necessarily in a state of some uncertainty. For that reason I think it impossible to venture on any distinct indication of what might be the view of Government, supposing them to hold office twelve months hence, with respect to the expenditure at the time which will then have arrived.

Then, with respect to another point of great importance, namely, the inequalities of the income tax, which has been raised and discussed by the hon. Baronet the Member for Evesham (Sir H. Willoughby), the hon. and learned Member for Sheffield (Mr. Roebuck), and others, I have only to say that in the main I admit what is stated with respect to those inequalities. I think, however, that upon a minute and careful examination, we shall find that other taxes have likewise many gross inequalities in their operation, which, however, are veiled and concealed in a very considerable degree; while those of the income tax have, at any rate, the merit of being tolerably patent on an examination of the case. Apart from the great and vital question whether it is just to tax incomes at a uniform rate without any reference to how far they are permanent, there are great inequalities in the income tax. If you take the single case of Schedule A, there is a great inequality between houses on the one hand and lands on the other; and house property, no doubt, is much more severely taxed than landed property. If, again, you take house property of different classes there is very great inequality; because the repairs of houses, according to their condition, and the period at which they were built, according to climate and exposure, and many other circumstances, will vary from 5 to 25 or 30 per cent. Now, the question is asked whether Government are prepared, on their own responsibility, to propose a Committee to inquire into the income tax with a view to the removal of these inequalities. I am bound to say, on the part of the Government, that we are not prepared to propose any such inquiry, and for a reason which I will distinctly state to the House. I do not think it the duty of the Government to submit, on their own responsibility, the subject of a great, gigantic tax like this to the scrutiny of a Committee of the House of Commons with a view to the removal of certain evils and defects, unless the Government be conscientiously persuaded that it is in their power to make proposals to the Committee and lay plans before them which are likely to undergo the ordeal of examination and issue in the removal, or at any rate in a great modification of the defects and evils of the tax. If we could see our way to such a result, I admit nothing would be more rational than to invite the attention of a Select Committee to this subject. But we do not see our way to such a result, and, until we do, I think it will be admitted that it would be an unworthy attempt to escape from our proper responsibility and catch popularity by encouraging an expectation with regard to our own views and opinions as to the income tax, which the issue might not fairly justify. But what has been stated with respect to inquiry during the present Session has been this—There are many Members of this House, hon. Gentlemen of experience and ability, who represent large bodies of the people, who are more sanguine in their views with regard to the great question of the reconstruction of the income tax than the Ministers of the Crown now happen to be; and it is my duty, on the part of the Government, to state that we look on the position of the House of Commons, with respect to an inquiry of this kind, as by no means the same with that of the Government; because, if there be a strong desire on the part of the country, and a large portion of the House to institute an inquiry of this kind, the legitimacy of the object—namely, the removal of the inequalities of the tax being admitted, it may be very proper that such a desire be gratified, and such a Committee be instituted. Under those circumstances, therefore, the Government would certainly not think it their duty to oppose any resistance to the appointment of a Committee. In 1851, when my noble Friend the Foreign Secretary was at the head of the Government, such a Committee was instituted, although I am not aware that any sanguine expectations or definite view were then entertained that it would be practicable to reconstruct the tax or the mode of assessment, but the question was very properly and becomingly submitted to the House of Commons; and always assuming that the Committee will be composed of men of sincerity of purpose, who will go fully into the question, and develope the whole difficulties of the case with the view to find out, if possible, a good plan which they may recommend, whatever the result may be, that will of itself do something to give contentment and satisfaction to the country, which never expects of its representatives more than what is practicable relief. That is the position of the Government with regard to the appointment of a Committee of Inquiry into the income tax. There are two great questions that may be raised besides those of the inequality and justice of the income tax—one is the adjustment of the schedules according to the nature of the income which those schedules represent; and the other is the exemption, or partial exemption, of lower incomes from taxation. The question of the adjustment of schedules, opened to-night by several hon. Gentlemen, is one which would no doubt come under the view of a Committee, and would probably be one of the principal objects of the Committee. Upon that, however, I do not feel it necessary to enter, especially as it has been my duty at other times to trouble the House at great length by stating in very full detail the reasons why I am not prepared to be responsible for making any proposal to that effect.

With respect to the other subject—that of the Amendment now before us— the hon. Member for Lambeth has moved that we should make a total exemption of all incomes under £150. An hon. Gentleman has asked, and asked very properly, what difference the Amendment would make in the receipts of the tax. The hon. Member for Lambeth is perfectly convinced that the practical effect would be such a reduction of expenditure as would render the adoption of his Amendment entirely innocuous. I do not doubt the honesty of his conviction, but what likelihood is there that he will succeed this Session in imparting the same conviction to the majority of this House, so as to induce them to adopt in a working form such a reduction of expenditure? I cannot, therefore, say I am prepared to part with some £500,000 or £600,000 a year on the speculation that the hon. Gentleman will be able to bewitch the House into doing with extraordinary celerity what seems so impracticable. I must be content, then, to meet the proposal by saying that its adoption would impale the financial provision for the service of the year, and leave a balance on the Wrong side of the account. I think we could not estimate the loss to the revenue from this proposal at less than £600,000 a year; and I am afraid that amount could only be made up by what I am almost afraid to mention—a further addition to the tax on the other classes of incomes. I admit that this Motion is not to be disposed of by a simple reference to temporary difficulties. It practically involves the most painful portion of the whole case. Everybody must feel that perhaps the most dangerous of all propositions that could be made in a country like this would be an attempt upon abstract principles to devise a graduated tax on incomes, aiming at an adjustment of different rates of assessment, according to the means of the taxpayer. On the other hand, to a very limited extent, and cautiously guarded by wisdom and experience, the income tax does contain, and always has contained, a principle of total or partial relief in favour of the most numerous class in the community. The hon. Member for Buckingham (Mr. Hubbard) said that the limit of £100 a year is the dividing line between skilled and unskilled labour. I think it would be more just to say it is, on the whole, the point that divides between the labouring classes, who subsist on weekly wages, and those who derive their subsistence either from property or from labour employed in other forms. From the time when the income tax was first introduced by Mr. Pitt down to the year 1815, when it underwent considerable alteration, the principle of remission was applied up to a point higher than that which it now applies, because at present everybody with £150 a year and upwards pays the maximum rate, whereas, until 1815, there were remissions for incomes under certain schedules up to £200 a year. Without giving countenance to the general principle of a graduated tax, it may yet always be a question for fair consideration by the House up to what point total or partial exemption should be carried, subject, however, to the most vigilant maintenance of the rule that we will, on the whole, confine ourselves within the limits which our forefathers adopted for themselves, because prescription and experience are better guides in determining what is safe than any abstract idea or opinion of the moment. When he introduced the present income tax, in 1842, Sir Robert Peel, in lieu of the old system of exemp- tions, adopted one fixed limit of £150 a year. That plan was recommended by simplicity of operation, and also by the circumstances under which the tax was reimposed, the rate being moderate, and there being an obvious prospect—which was afterwards realized—that at the end of a certain number of years the House might be enabled to dispense with it if they thought fit. In 1853 the aspect of things had materially changed, and there was not the same probability that the tax might be got rid of at an early period. There was, then, an impatience of the impost on the part of those who were paying it; and, on a careful examination of the effect produced on the expenditure of different classes by the large remissions of duties that had taken place since 1842, it was found that the saving to those whose incomes were between £100 and £150, as the consequence of the new commercial policy, was so large as to render it only just that they should be called upon to bear their fair share of this national burden. In the main, I think, the same thing still holds good. It would be inflicting, not remedying, an injustice to pretend now to revert to the form of the tax introduced by Sir Robert Peel, and to say that all those receiving less than £150 a year have derived so little from the remission of duties, and are so unable to pay, that they shall be relieved altogether, but that all those receiving above £150 have derived so much benefit from that remission, and are so well able to pay, that they shall be left liable to the maximum amount. I do not think that would be a reform or improvement in the incidence of the tax at the lower extremity of the scale, where, unquestionably, its chief difficulty arises. The discussion, however, of changes in the form of a tax is more opportune when you are proposing to renew it for a term of years, instead of, as in this case, merely for a twelvemonth. Another modest remission suggested by the hon. Member for Hertfordshire (Sir M. Farquhar) is, that a sheer deduction of a certain amount from the lower incomes should be made, leaving the residue subject to assessment. That proposal likewise deserves a careful consideration, if the House should entertain any plan for mitigating the burden on the lower incomes. Something, however, may be said against it. No doubt, as has been stated, it would be satisfactory to a man with £105 a year to know that he had to pay on the odd £5 only; but those charg- ed with the care of the public revenue would hardly view the matter in the same light, for such a tax would not nearly cover the expense of collection. When Sir R. Inglis proposed a deduction of that kind his idea was to apply it to all incomes, those of the millionnaire included. But it can hardly be said that the circumstances of a man with many thousands a year required that £100 or £150 should be deducted from his assessment. Such a principle is obviously absurd, and would only inflict a great loss on the Exchequer without good reason. My hon. Friend, however, proposes that this deduction should only be made on incomes up to £300 a year. That would not avoid the difficulty, that a man with a lower income will be richer than a man with a higher income, because, if at present the man with £99 a year is not so rich as the man with £100, the same thing will happen if your transition point is fixed between £299 and £300. A person once made the statement to me that his employers, without his solicitation, fixed his salary at £149 that he might escape this tax at the time when it did not go below £150. This man, taking a very strict view of his obligations, insisted on paying up his arrears of the tax for all the years during which that arrangement was in force, and he even offered to give the Government interest on the money besides. Certainly that was a very remarkable case of conscientiousness. I think I have given conclusive reasons why we should not now entertain any proposal of this kind, and why, if we ever do entertain it, we should follow the safe guidance of experience and tradition rather than lay down new and arbitrary methods of settlement.


Sir, I am hardly satisfied with the tone of the right hon. Gentleman respecting the tax now under consideration. The trumpeter gives an uncertain sound. The right hon. Gentleman appears to be quite prepared to assent to, though not to propose, the appointment of a Committee to inquire into the character and incidence of the income tax. He says that ten years ago, when the noble Lord the Secretary for Foreign Affairs was First Minister, such a Committee was proposed and carried in this House. It is quite true. The tax had then been some ten years in existence, and there had been no Committee to inquire into its character and operation. When Sir Robert Peel revived the tax, after an interval of thirty years, he was guided in the regulations which he established by the traditionary experience which he found existing in the public offices; and, applying that with admirable tact and talent to the circumstances with which he had to deal, he framed an Act which, upon the whole, operated, so far as the revenue was concerned, very satisfactorily. It was only after some years of experience, after the country had been disappointed in its expectation that the burden would last for but a limited time, and when it seemed probable that this tax must continue for a considerable period, that there arose that general feeling of discontent which about 1850 was so strong both in the country and in this House. Then it was that the Government assented to inquire into the principles and operation of the tax. But what was that Committee? The right hon. Gentleman says that a Committee to inquire into such a subject ought to be formed of men highly qualified by their earnestness of purpose and scientific acquirements for the investigation of such a question; and that its investigations ought to be conducted with an entire devotion of time and ability. Well, what was the Committee of 1850? It was formed of the best men in the House. Its proceedings were chiefly conducted by the late Mr. Hume, a very earnest man, one who had had great experience upon financial subjects, and one who took an interest in the operation of this tax which, as will be remembered by those who sat in Parliament with him, was of a remarkable character. That Committee sat for two years, and if ever any Committee exhausted a subject it was that Committee on the income tax. There was not a philosopher, there was not a practical man, whose information or whose thought was calculated to enlighten us, who was not examined before that Committee. You had examined great economists, like Mr. Mill, and the most experienced actuaries, like Mr. Newmarch. You had these characters multiplied before your Committee to give you the result of their labours, their knowledge, and their experience. As I have said, that Committee sat for two years, and you have in your library the valuable results of its labours and its lucubrations. What was the practical consequence? Very shortly afterwards there was a change of Government. Of the Government which was in office when the in come tax expired I happened to be a Member. There was then in the country great discontent with the tax, and in this House a feeling which I am not exaggerating when I say that it was one which no Government could pass by with indifference. The Government, after deep deliberation, determined to make a moderate, but absolute difference between the assessments under Schedule A and Schedule D. On what condition did they make that difference? But on condition that you should entirely put an end to all exceptions, to all remissions, and to all exemptions, and that you should levy the tax upon incomes as low as was consistent with the collection of the tax. I do not say whether we were right or wrong, but at any rate the principle of making a difference between permanent and precarious incomes was applied with moderation, and upon conditions of the most rigid character, and totally opposed to those propositions that we now hear of from both sides of the House. Why, where is the man who can draw the line between wages and income? Who can define what is manual labour? Is the clerk who gains £150 a year by the hand which is always driving a quill to be plaecd in a different category from the man who uses a spade or operates as an auxiliary to a machine? Well, Sir, we arrived at that conclusion. Right or wrong, it was not arrived at without deep consideration, and was not adopted except upon rigid conditions, the essence of those conditions being that there should be an end for ever of exemptions, exceptions, and remissions. Our policy was opposed. It was opposed, Sir, with great ability and with success by the right hon. Gentleman the present Chancellor of the Exchequer. He separated the income tax from all the other taxes of the country, and said, "This is an immoral tax. This is a tax not to be tolerated except for a moment in an emergency of the country—at some public exigency, when, in fact, philosophical and scientific criticism on the principles of taxation ceases, and all men are ready to make sacrifices for the assistance of their country. This is a tax, he said, which is not to be tolerated as a permanent feature of the taxation of any country, and the policy which you recommend must be stigmatized and put an end to." What was the policy which we recommended? It was our opinion that an income tax of moderate amount must be— I do not say a permanent feature, because that might be looked upon as an extravagant phrase even in these days, but that it must be a feature of our financial system for a considerable time. Therefore, we had to deal with a tax which we thought must be a feature of our financial system for a considerable time with reference to public opinion and upon conditions which we thought would be conducive to public safety. The present Chancellor of the Exchequer, then in Opposition, would not listen to anything of the kind. He said, "This is a moral enormity. We find it a necessity owing to the state of the finances of the country; but we cannot at all adopt your principles of financial policy. We must put an end to this tax. We must find a Government that will terminate its existence, and will grapple with the question in a statesmanlike and efficient manner." Well, you have grappled with the question in an efficient manner. The Government of 1852 were turned out of office because they did not deal with the income tax in a scientific and satisfactory manner, and because it was necessary that that tax should not be a permanent feature of your system of taxation, but that an expeditious method should be had recourse to to abolish it for ever. Then you had that great scheme upon which I need not touch, which is known as the subject of the most successful oration of modern times. Since the oration of Demosthenes' De Coronâ nothing has been more successful. It gained for the eminent orator who delivered it a fame which has lasted for seven years. For seven years he has been the idol of the country, because the people knew that in 1860 they would be relieved from the income tax. I must say that in the history of man I know no destiny so much to be envied and so successful as that of the right hon. Gentleman. The bottle conjuror was successful, but he was successful for only forty-eight hours. No doubt those forty-eight hours were hours of great excitement. That the country should believe that at the end of forty-eight hours he would be able to enter into a pint bottle was an amount of credulity that must greatly have elevated the man who had produced it in his own opinion; but the right hon. Gentleman has enjoyed the position of the bottle conjuror for seven years. That is a long time. You take a house for seven years; it is the term of a lease; and the person who has been the hero of a popular delusion for seven years enters into one of the first categories of human achievement. The Chancellor of the Exchequer will not allow even these passing remarks upon the events of his distinguished career, because he says that circumstances occurred after he had entered into this engagement with the country which entirely released him from the promises which he had made to an admiring nation. We have all touched upon that subject once or twice, and it is quite unnecessary to dwell upon it. Unfortunately, the Chancellor of the Exchequer will always defend himself, which is remarkable in a person of his surprising abilities, because if he did not defend himself, his position would be a very good one. We all recollect that in 1853 he most unnecessarily entered into a compact with the country. It was not a contract that in 1860 the income tax should be put an end to. It is absurd for a moment to suppose that. A Minister must of course defer to the circumstances with which he has to deal. He is the creature, and often the slave, of events which are ever occurring. If the Chancellor of the Exchequer found in 1860 that the finances of the country did not permit the repeal of the tax, the continuance of which he had impressed upon the nation would sap the morality of the country, he would have appealed to the people not in vain upon high reasons of State to bear it a little longer. The Chancellor of the Exchequer entered into a special contract with the public. He told them that in 1860 there must necessarily be a considerable remission of taxation by the falling in of terminable annuities to the amount of upwards of £2,000,000. He stated that those £2,000,000 would form a fund upon which the country might count, and that there was a fair certainty that his prescient policy would be realized and consummated. But the right hon. Gentleman this year has actually come forward and with those £2,000,000 in his hands has ostentatiously appropriated them to another purpose and for another result. I have never heard from the Chancellor of the Exchequer in the moments—I will not say of his insolent, but of his triumphant, rhetoric, or of those milder tones in which he addresses us over the table when he tries to persuade us that the income tax is the best tax in the circumstances, an answer on that subject. To-night, instead of denouncing the income tax as an immoral tax, as an unconstitutional tax, as a tax which saps all the principles of domestic happiness and public security, the Chancellor of the Exchequer has told us there is a good deal to be said against the income tax, but, after all, the same may be said against every tax. Contrast this confession of the Chancellor of the Exchequer with those oratorical invectives which in the seven years during which the country has been so fondly expectant of the felicitous consummation of 1860 we have heard from the right hon. Gentleman. But I am not doing justice to the Chancellor of the Exchequer when I say that he entered into a contract with the public upon which he has successfully traded that he would, at least as far as the terminable annuities were concerned, attempt to relieve the country in 1860 of this burden. Hon. Gentlemen who were then Members of the House must recollect his speech on the Budget of 1857. The Chancellor of the Exchequer tells us now that circumstances have occurred which have prevented the accomplishment of his promise and the fulfilment of his policy. I shall not stop to say that the circumstances to which he refers, and by which a great increase of the National Debt has been occasioned, were brought about mainly by a Cabinet of which he was an eminent member, and by his influence in the Cabinet on the subject of our finances, which I believe was injurious to the honour and interests of the country. Let that pass. But in 1857 you had a Budget brought forward by a right hon. and much respected Gentleman who is now a colleague of the Chancellor of the Exchequer—I mean the right hon. Baronet the Secretary of State for the Home Department. You heard that Budget; it was received with great respect and listened to with great attention; but the Chancellor of the Exchequer, who then sat below the gangway, could not contain his indignation at that Budget. He denounced it, he denounced all the principles of taxation which had been laid before us by his present colleague as worthy of our acceptance; but the right hon. Gentleman did more than that. In 1857 he adhered to the policy of 1853, the policy which, during the interval he had always sustained, and he told the House that if, by any combination of circumstances, he should preside over our finances in 1860—which was then less likely than it has since turned out to be—he would be prepared to consummate the policy which he had laid down in 1853—


It may be convenient I should state that the right hon. Gentleman is entirely at fault as to what I said.


Matters of fact are stubborn things, and they are not disposed of when the Chancellor of the Exchequer, rising in a very irregular manner, gives you to understand, on his ipse dixit, that you are mistaken. I make that statement upon my recollection, upon the authority of the records of this House, and I believe upon the recollection of every hon. Gentleman now present who was a Member of the last Parliament. We are now told it is not convenient to deal with a tax of these gigantic proportions. A tax of gigantic proportions! Who, let me ask, has made it so? There was a Minister once who said it was a tax so intolerable, so immoral—for that was the favourite anathema—one so injurious to the domestic happiness and so fatal to the public spirit of the country that, not only it could not be tolerated except in an emergency, but that immediate steps must be taken for its gradual and certain abolition. You have an Act of Parliament framed for that purpose. Can it be believed that the same Minister who took measures to insure that every year a portion of this tax should cease has come forward in 1860 virtually to propose doubling that tax, and accompanying his proposition with what statement, let me ask? Does he tell us, as the noble Lord the Secretary of State for Foreign Affairs tells us every night, that the country is in danger, and that we are on the eve of grave events? On the contrary, the Chancellor of the Exchequer says that he could not feel justified in making this proposition if he thought it likely to be a permanent arrangement. I want to know on what grounds the Chancellor of the Exchequer thinks it will not be a permanent arrangement. But what I wish the House to observe is that after all the promises and professions we have had as to the reduction of a tax which struck at the morality of the country we have this tax now proposed to be doubled by the very same Minister who has for seven years obtained and enjoyed the confidence of the public because we believed it was his policy to terminate the obnoxious impost. And how is this proposition introduced to our notice? Strange to say, by a declaration that, so far as the right hon. Gentleman can judge, though there are great objections to the income tax, these are objections to which every other tax is liable. What, then, is the conclusion to which we must arrive? We must believe either that the Chancellor of the Exchequer in 1853 had not sufficiently considered this question, had not gone into all the bearings of a tax of which he spoke in language so unmeasured, or that his conduct must have been, what I do not believe it could have been, characterized by a little of that immorality which he ascribed so freely to the income tax. That is totally impossible, and therefore I can only suppose that in that eager moment, on that memorable occasion in 1853, when the Chancellor of the Exchequer laid down his policy respecting the income tax, he had not considered the subject sufficiently, and that he spoke in a crude and immature spirit. The only other conceivable supposition is that the right hon. Gentleman, after the experience he has had, feels it his duty to come forward now and propose that which he denounced before, and which I myself believed to be most unwise—namely, that he should throw off himself and the Government the duty of directing the country upon this important tax, and should endeavour to lay upon the House of Commons, by appointing a Committee of inquiry, a responsibility which no Minister, but, of all Ministers, which he should never for a moment attempt to relinquish.

Question put, "That the words 'and fifty' be there inserted."

The House divided:—Ayes 24; Noes 174: Majority 150.

Bill to be read 3° To-morrow.