COMMITTEE. (Hansard, 23 July 1861)

§ THE CHANCELLOR OF THE EXCHEQUER
said, he would withdraw Clause 57, which might possibly admit of some modification.

§ THE CHANCELLOR OF THE EXCHEQUER
said, that Clauses 58 and 59 would complete the first Bill, but he wished to make some explanations with regard to the clauses relating to the land tax, which had passed through inadvertence. He thought the Committee would agree that the clauses would prove useful; but if any hon. Gentleman wished to enter into discussion upon them, he would move that the Bill be recommitted for that purpose. The Committee would be aware that every parish was charged with a fixed quota of land tax, and also that in almost every parish there was a great increase in the value of property. That gave rise to a difficulty, because in parishes where the property was large and the quota small it was hardly possible to express the amount by a rate, and a considerably larger sum had to be raised than was necessary for the payment of the year. In these cases the money was not collected annually but periodically, and held over to meet the annual payments. It was obvious that that was inconvenient, and that it would be very desirable to provide a simple and efficient machinery, by which facilities should be given for redeeming the tax. That, however, was 1364 not the object of the clause, and it might be said that these were exceptional cases. But there were many parishes which were largely increasing in value, which could not be considered exceptional, and the operation of the law was very inconvenient as regarded them. In these cases a surplus was raised each year over the quota, and by the Act of 6 George IV. it was provided that that surplus should be held over and paid in aid of the assessment of the next year. That gave rise to great inconvenience. It necessitated a minute examination of the collections, and in many cases it was impossible to obtain a satisfactory result. Taking the parish of Brixton, for instance, it was found that the assessment between 1828 and 1855 collectively exceeded the quota by £30,201.

§ LORD HARRY VANE
In whose hands do those sums remain?

§ THE CHANCELLOR OF THE EXCHEQUER
In the hands of the collectors; but he made no charge against any one— the fault was in the system. What was proposed was to provide a means of legally, certainly, and rapidly, applying the surplus to the redemption of the tax. In the first place, the surplus land tax in every parish was to be paid to the Receiver General of the Inland Revenue, and by him into the Bank of England to the credit of the Commissioners for the reduction of the National Debt to the land tax account, and when the amount standing to the credit of any parish was sufficient for the redemption of such tax the Commissioners were to certify the fact in the proper quarter. He would not give an unjust description of the scheme if he were to say that, without interfering with the discretion of the Land Tax Commissioners, or the local machinery with respect to assessment and collection, the effect of it would be to make the Board of Inland Revenue responsible for the management of those surpluses, for their due recovery, and for their application in redemption of the tax. Any remarks that hon. Gentleman had to make might, he thought, be very properly made when the Bill was recommitted.

MR. HENLEY
said, it was a matter for much consideration whether the present holders of property ought to pay, however small, any sum for the redemption of the land tax for the benefit of their successors. He was afraid that if the proposed machinery were set up, the collector would be bound to be much more minute and troublesome 1365 in his collections than he was at present. He wanted to know, supposing an estate were divided, and the land tax to be apportioned among the separated portions, who was to have the power of apportioning it?

§ LORD HARRY VANE
said, that the object which the Bill sought to effect was a very desirable one. He believed that within each parish there was a power of re-apportioning the land tax. If the Bill should come into operation, he did not think that the Land Tax Commissioners were quite capable of giving effect to its provisions, and he thought that a permament officer should be appointed who should attend to the different interests involved under the Bill.

§ MR. BARROW
said, that it appeared to him very desirable that when there was a surplus it should be duly accounted for, and employed in the way proposed by the right hon. Gentleman the Chancellor of the Exchequer.

§ SIR WILLIAM JOLLIFFE
said, that according to the plan of the right hon. Gentleman the Chancellor of the Exchequer those who had redeemed their land tax would have no benefit at all. He approved of the object of the measure, but the question was whether the mode proposed was the best and most equitable in which to accomplish it. He thought the proper course would be to have a Select Committee previous to legislation.

§ THE CHANCELLOR OF THE EXCHEQUER
said, he must admit there was great weight in the objection, that the collection of the tax, where only small sums were to he collected, might be unduly pressed. At the same time, he thought the general conduct of the Commissioners of the Inland Revenue did not expose them to that charge. It would be observed that he did not propose to meddle at all with the present machinery of the collection—it was only a plan to take care of the surplus after it was collected.

§ MR. SOTHERON ESTCOURT
reminded the Committee that at present the collection was made without any public charge, the collectors considering themselves reimbursed by holding the balances. If the plan were adopted all the collectors must be paid. He thought the clause would create a great deal of difficulty throughout the country, and upon the whole it would be better that the Bill should be recommitted.

MR. HENLEY
said, he wished to ask 1366 one question. Suppose a gentleman had been paying in surpluses for twenty or thirty years, and then proposed to redeem the land tax, would he get any benefit from the surpluses?

§ THE CHANCELLOR OF THE EXCHEQUER
said, he would in this way—when the surpluses had reached a certain sum the land tax would be reduced to that amount, and of course it would be reduced in the case of each landholder.

§ MR. NEWDEGATE
said, he would beg to ask what would be done with the surpluses while they were, accumulating, and further, whether it was to be left to the discretion of the Commissioners when the redemption would take place?

§ THE CHANCELLOR OF THE EXCHEQUER
The surpluses would remain in the hands of the National Debt Commissioners. The point at which redemption should take placed was fixed in the Bill.
Clause 37 (Proceedings for enforcing payment of succession and legacy duties),

§ MR. BOVILL
complained that the power of appeal en the assessment of the tax was too narrow.

MR. PHILIPPS
said, there was nothing in the Bill of a mitigatory character. Everything pressed against the landed interest. It seemed as if the right hon. Gentleman was animated with a feeling of animosity towards the landed interest.

§ THE CHANCELLOR OF THE EXCHEQUER
said, he had no objection to the Amendment of the clause to meet the objections of the hon. and learned Member for Guildford.

MR. HENLEY
asked what was the necessity for this clause, and why the law should be made more stringent than it now was? He should like to know what inconvenience the Crown had sustained by the law as it now stood?

THE SOLICITOR GENERAL
said, that the clause would substitute a simple and cheap process for the cumbrous and expensive one of proceeding by information, as at present, and would be beneficial not to the Crown only, but to the payers of the duty.

§ MR. BOVILL
proposed the insertion of words by which the power of appeal would be given both for and against the Crown, as the case might be.

THE SOLICITOR GENERAL
said, it was not intended to take away the power of appeal, and, therefore, he would consent to introduce words into the clause which would secure that object.

§ MR. BOVILL
also proposed the insertion of words which would make the Crown liable on the cost of proceedings where proceedings against any party were discharged.

§ MR. WALPOLE
said, when the sue cession duties were first introduced the right hon. Gentleman intimated his intention to introduce a law to extend the principle of the Act to corporate property. But nothing more had been heard of such a Bill. His own opinion was that it was not right an exception should be made in favour of any property, and, therefore, he wished to ask his right hon. Friend what were his intentions in regard to the matter?

§ THE CHANCELLOR OF THE EXCHEQUER
said, it was true that when he was a member of the Earl of Aberdeen's Government he had stated his intention of considering the propriety of subjecting corporate property to duty. He was not able to consider the subject before leaving office. The question was taken up by his successor, but it was thought the sum likely to be realized was too small to justify action on the part of the Government. It was calculated that not more than —5,000 a year would be got from a duty on corporate property, and, therefore, the matter was not pressed. He was not quite satisfied that so small a sum would be derived from corporate property, but he had not been able to turn his attention sufficiently to the subject to arrive at any definite conclusion. He fully admitted the principle, however, that corporate property ought to be subject, in common with other property, to the payment of duty.

§ SIR WILLIAM JOLLIFFE
said, the longer the discussion lasted the more he was satisfied of the impropriety of going on with legislation at that period of the Session. The succession duties had been in operation for nearly ten years, and there ought to have been an inquiry into their operation. His own opinion was that they operated most unjustly and unequally. He urged that the proposal should be withdrawn—that next Session an inquiry should be made both into the operation of the law and into the state of corporate property, with a view to taxation, and then to legislate with a mature consideration of the whole matter.

§ MR. NEWDEGATE
said, that the right 1368 hon. Gentleman must feel the difficulty of taxing corporate property, for how could they assess the value of successions on property which never lapsed? If taxed at all, he thought the tax must operate like the land tax. All which had passed convinced him that he was right in opposing the original Bill.

§ MR. SOTHERON ESTCOURT
asked whether the succession duties clauses were to form one Bill?

§ THE CHANCELLOR OF THE EXCHEQUER
stated that it was intended to have three separate Bills, of which the clauses under discussion relating to the legacy and succession duties were to form one.

§ MR. SOTHERON ESTCOURT
asked whether it was intended to read the new Bills a second time?

§ THE CHANCELLOR OF THE EXCHEQUER
said, the next stage of the Bills would be the Report.

§ MR. SOTHERON ESTCOURT
said, it no doubt might be argued that the principle of all these three Bills was discussed when the Inland Revenue Bill was read a second time; but he thought the course proposed to be taken a very inconvenient one.

§ SIR JOHN PAKINGTON
observed that the course they were taking was a most unusual and highly objectionable one. He should like to hear from the Chairman whether there were precedents for such a course, and, if so, he should like also to know whether there were good reasons for following such precedents on that occasion. Clauses were to be submitted to them which made very important changes in the Succession Duty Act, and they were told that the next stage would be the Report. He asked whether it was fair to introduce a Bill of that nature at the end of the Session? Financially the Succession Duty Act was a failure, as it deserved to be, and it was detested by the country; and now they were asked at that period of the year to pass a new Bill on the subject.

§ MR. MASSEY
said, that the Committee was acting in pursuance of the instructions of the House to divide the Bill, and it was not proper for the Committee to question those instructions. The course taken was not without precedent. In consequence of the instruction of the House to the Committee to divide the Bill into 1369 one or more Bills; he had referred to the course of proceedings, and he found distinct precedents on their records. In pursuance of those precedents he had ventured to take the liberty of guiding the Committee.

§ MR. AYRTON
said, he was surprised to hear right hon. Gentlemen opposite question the power to divide Bills in Committee, when that was the very course they themselves recommended in the case of the paper duties.

§ MR. SOTHERON ESTCOURT
said, they were not disputing the power of dividing the Bills, but the way in which it was proposed to be done. That point, however, had been decided from the Chair, and he had only to ask whether the Bills would afterwards go through their stages, as if they had been introduced as separate Bills?

§ THE CHANCELLOR OF THE EXCHEQUER
said, he would remind the Committee that the Resolutions on which these clauses were based were passed on the 28th of June, and that they had been delayed only that hon. Members might have a full opportunity of considering them. No objection was taken to the Resolutions when they passed, and it was not necessary, therefore, to go back to the earlier stages to discuss the new Bills. He wished to remind the Committee that he was not responsible for the division of the Bill, which was done in consequence of instructions from the House, in order that the House of Lords might have an opportunity of giving its attention to each of the subjects separately.

§ SIR JOHN PAKINGTON
said, he did not question the right to divide the Bills, but he doubted the propriety of dealing with subjects so delicate at that period. He would, therefore, take the sense of the Committee as to the propriety of proceeding further.

§ THE CHANCELLOR OF THE EXCHEQUER
said, the whole object of the present clause was to extend to Ireland certain provisions that had been found to work well in Scotland in the collection of the duties. When they came to the clause relating to the succession duties that would be the proper time for the discussion which his right hon. Friend wished to raise.

§ SIR HUGH CAIRNS
said, his right hon. Friend did not propose to oppose the present clause, but he objected to going on with the Bill, which in the 40th Clause reversed a decision of the House of Lords.

MR. HENLEY
said, they were getting 1370 into position in which he had all along expected they would find themselves. The Resolutions on which the present clauses were founded passed through the House without discussion. At the end of the Session they saw an Omnibus Bill brought into the House, and before they knew what they were about it was proposed to make two or three tax carts out of it. He was afraid that at that period of the Session they would hardly be able to pass these measures in a satisfactory shape.

§ MR. NEWDEGATE
said, he wished to express his thanks to the Chancellor of the Exchequer for having so divided the Bill as not to preclude the House of Lords from dealing with it. As the House had decided to proceed, he thought the best course was now to go on, but he hoped the House would never again place itself in a similar position. At the proper time, however, he would cordially vote with the right hon. Member for Droitwich against the succession clauses.

§ SIR STAFFORD NORTHCOTE
said, they were told when the Resolutions were passed that the right time for discussion would be when the clauses were before them. They had now those clauses before them, and he hoped no more time would be lost in discussing the present clause, which was of comparatively little importance, and that they would proceed without delay to take up the clause relating to the succession duty, which really was of vital importance.

§ THE CHANCELLOR OF THE EXCHEQUER
explained that the clause taken in connection with the Amendment upon the paper had had for its object to render liable to probate duty voluntary debts to be paid upon the death of the person who contracted them, or payable under any instrument which should not have been bonâ fide delivered to the donee three months before the death of such person. Debts contracted as portions for younger children or by way of marriage settlement were not considered "voluntary debts" in law, but debts for a consideration, and were, therefore, not included within the operation of the clause. What they wished to touch was debts contracted for the purpose of evading the probate duty. The term "voluntary debt" was, therefore, confined to two cases—one where it should 1371 be expressly payable on the death of the person who had contracted the obligation, and the other where it should be payable under an instrument which had not been delivered during the lifetime of the deceased. In order to secure bonâ fides in the case of an instrument, it was required that the instrument should be delivered three months before the death of the person who had contracted the obligation.

§ MR. BOVILL
said, the effect of the clause would be to tax a residuary legatee for property that had actually gone to another. The object of the clause was to prevent evasion of the payment of duty. That object should, therefore, be clearly explained. He proposed that the words to be added should be "any voluntary debt contracted for the purpose of evading payment of the duty."

THE SOLICITOR GENERAL
said, the effect would be to neutralize the clause, for constant litigation would be necessary to decide what was and what was not a debt contracted for the purpose of evading the duty.

§ MR. NEWDEGATE
asked, whether the clause would touch property given to a son in the lifetime of a father?

§ THE CHANCELLOR OF THE EXCHEQUER
said, the clause had no relation to such a case.

§ SIR HUGH CAIRNS
said, he would not oppose the clause, provided the duty were not leviable on the estate of a person who might have died after a date to be fixed by the Bill. The clause, as it stood, would have a retrospective effect where persons died twelve months back, and the duty had not been yet levied.

§ THE CHANCELLOR OF THE EXCHEQUER
said, that he would fix the day from which the clause should take effect for the 28th of June, 1861, when the Resolutions on the subject were introduced.

§ THE CHANCELLOR OF THE EXCHEQUER
said, that the object of the clause was merely to give effect to what he believed to be the intention of the House in passing the Succession Duty Act in 1853. The principle upon which the Act was framed was that the duty should be paid on the whole estate that was liberated by the death of its possessor, and passed into other hands. But the House of Lords had decided judicially, though after long discussion and deliberation, that where a suc- 1372 cessor had been previously to the death of his predecessor possessed of an estate, which at the predecessor's death he was bound to relinquish, then he was only called on to pay the difference between the estate he received and that he relinquished. That decision did not, in the opinion of the Government, give effect to the intention of the House in passing the Act. As the law stood, supposing A was entitled on the death of B, his uncle, to £2,000 a year, and that A, possessing some money, bought an annuity of £2,000 upon the joint lives of himself and his uncle B, when B died A might claim to be exempt from paying the succession duty, and, according to the decision of the House of Lords he would not be liable. So that it would be in the power of persons by purchasing annuities to evade the operation of the Act. That was a state of the law which required a remedy. The inheritance into which the man came was the entire inheritance, upon which, according to the view of the Government, it was perfectly plain the duty ought to be paid. He was anxious to have the opinion of the Committee on the subject, and if they thought more time was required for its consideration, he would not press it farther at that time.

§ SIR FRANCIS GOLDSMID
said, that the object of the clause was to repeal the effect of a decision of the House of Lords. He presumed, as the reason for introducing the clause, that the Inland Revenue Commissioners must have persuaded the right hon. Gentleman that the law, as settled by that decision, would enable persons to evade the payment of succession duties in cases in which it was contemplated by the Act that they should be paid. He contended, however, that if the clause were allowed to pass, it would cover cases which did not fall within the reasons stated by the Chancellor of the Exchequer, and in which it would be clearly unfair that the tax should be imposed. The effect of the 38th Clause of the Succession Duty Act was to impose a tax upon any person becoming entitled to property in consequence of the death of another, the amount of tax being proportioned partly to the relationship of the parties, and also to the amount of property itself. The clause, however, proposed to impose a duty not in accordance with that principle; but the effect would be to tax a man whose income increased by £500 a year to the extent of £1,000 a year; in some cases to tax a 1373 person whose income did not increase at all, and in other eases to tax a man twice on different events happening in respect of the same property. No plea founded on the ground of evasion could justify the Committee agreeing to a clause which would operate unjustly. He should move that the clause be omitted.

THE SOLICITOR GENERAL
contended that it was unreasonable to make a deduction from an estate when it fell to a man because that man had been previously in receipt of an annuity, for which he had paid no tax whatever. Yet that was the decision of the House of Lords in the case of Lord Braybrooke, and in the case of the Attorney General v. Sibthorpe. So that if a man in expectation of a large estate, and having property of his own, used that property in the purchase of an annuity of the same annual amount as the rents of the estate and determinable when he came into possession of the estate, he was not bound to pay succession duty on the estate because he lost the annuity. That was not the rule of law with regard to the legacy duty. He did not mean to dispute the decision of the House of Lords in law; but, supposing their judgment to be right, the conclusion to which they must come was that the House had failed to express its own intention. He, therefore, hoped the Committee would not be led away by any appeal to its modesty as to interfering with a decision of the House of Lords, so as to prevent it from correcting what was after all its own mistake.

§ SIR HUGH CAIRNS
contended that the Amendment was entirely unnecessary and very complex, and could only be applicable to whimsical and extravagant cases. At the same time, he would remind the Committee that they need not discuss the remedies for simply evasive practices, because the Act as originally passed contained the singular and remarkable clause, giving power to the Judges to assess the tax where it appeared to them that it was intended to evade the Act of Parliament. It was not either for the Government or the House to decide what their own intention was in passing the Act, but to take the plain meaning of the words. That Act was intended to tax beneficial succession, and the only definition of a beneficial interest was to consider what a man got as compared with what he lost. That was what the House of Lords had done in its decisions, and what the Government now 1374 proposed to reverse by the clause. He admitted that the legacy duty was not levied in the same way, but the reason was that the Legacy Duty Act did not make the provision that was contained in the Succession Duties Act.

MR. HENLEY
said, he thought the case was a very narrow one. He would state a case which had happened in his own experience. A father gave his son during his lifetime a portion of his estate, and at his death left him the rest. He supposed the Government would not make that heir pay for the whole. But suppose the father did not give him the acres, but a rent-charge upon the acres—why should he pay in the last ease more than the other? He thought a man ought not to pay for what he had not got.

§ THE CHANCELLOR OF THE EXCHEQUER
remarked, that, notwithstanding what had fallen from the hon. and learned Member for Belfast, he must say that they were bound to legislate for whimsical and extravagant cases, because there was nothing so whimsical or extravagant that certain persons would not do to evade payment of the duty. He had listened to the criticism of the clause which had taken place, and he hoped the Government would profit from it in any future effort they might make to legislate on this subject. After what had passed, however, and in accordance with his declaration when the Bill was introduced, it was not his wish to press upon the House at that period of the Session any provisions that might be thought open to objection. He would, therefore, move that the clause be negatived; but he hoped at some future time to bring in a Bill on the subject.

§ MR. CAYLEY
said, the right hon. Gentleman the Chancellor of the Exchequer spoke of bringing in another Bill. Did he mean this Session or next?

§ THE CHANCELLOR OF THE EXCHEQUER
said, he meant, as a matter of course, next Session.

§ THE CHANCELLOR OF THE EXCHEQUER
said, he would propose Clause 15 (relating to wine licences), with the view of making it into a separate Bill. He did not anticipate any discussion.

§ MR. AYRTON
intimated that there would be a long discussion. [Laughter.]