WAYS AND MEANS.

HC Deb 21 April 1864 vol 174 cc1431-50

Order for Committee read.

THE CHANCELLOR OF THE EXCHEQUER

Sir, notices having been given of Motions on the subject of Fire Insurance duty, I wish to make a short statement before you leave the chair; because, in point of fact, one of these Notices relates not so much to Fire Insurance as to the general principles on which the financial statement should be submitted and disposed of by the House. There are two Motions which are to be submitted to the House—one by the hon. Baronet the Member for Evesham (Sir Henry Willoughby), which, as it stands on the paper, does not, I believe, disclose the nature of his object; but he has teen good enough to explain his object to me, and I will explain it to the House, in order to draw the distinction between the Motion of the hon. Baronet and that of which notice has been given by the hon. Member for Dudley (Mr. H. B. Sheridan). As I understand, the hon. Member for Evesham does not propose to interfere with the financial arrangements of the Government; but he questions the judgment and discretion of the manner in which the Government, being only able to give a limited relief in respect of duty paid on Fire Insurances, give that relief by reducing the duty paid by stock in trade instead of that paid by property. We propose to give the relief to stock in trade; the hon. Baronet proposes to give it to houses, buildings, and furniture. He therefore raises a simple question. He will argue that my proposal is bad. I will take the liberty of submitting that his is bad also; but whenever it is before the Committee of Ways and Means, the Committee will be able to dispose of it without disturbing any financial principle, or placing the Government in the position of not being able to defer to the wishes of the Committee in whichever direction that wish may be. But the hon. Member for Dudley gives notice of a Motion of a different character. He says that the reduction of the Fire Duty in the manner proposed by me is not the mode of reduction contemplated by the Resolution of the House passed last Session on this subject, and that a uniform reduction of 1s. per cent on all descriptions of property liable to the said duty would be more acceptable to the country. I believe that there is some difficulty attaching to that Resolution in the pointed manner in which it alludes to a Resolution to be proposed in Ways and Means; but that is immaterial, because it can be cured; but the object of the hon. Gentleman is to pledge the House before going into Committee to make a general reduction on both property and stock in trade, and he fixes that reduction at 1s. per cent. Now, with respect to the Motion of the hon. Gentleman I wish to remind the House of our financial position; because they will do me the justice to recollect that in the midst of a long statement—or rather near the close of a long statement—when I was naturally unwilling to burden the House with long details, I, notwithstanding, stated that the proposal which we made in respect of Fire Insurance, limited as it was, was not one which we made so much on our own judgment in regard to what should be done, as out of our desire to go to the extreme of our limits, to meet a wish which we believed to prevail extensively in the House. That is material for the House to recollect, because it is the last feather that breaks the back of the horse or the camel, and the Government, which goes to the extreme of what it can in financial reduction, is not in a position to go quite as far as is proposed in this instance. Now, I stated to the House that we presented an estimate of revenue and expenditure which, without making any reductions, showed a surplus of £2,570,000; but, with respect to that surplus, it is right I should remind the House that half a million of our revenue is not dependent on resources within our reach, but, in fact, on a portion of the taxation of China, and is liable to be affected by any incidents tending to disturbance in that empire. I believe that if it is in the power of China she will pay, and I believe it is probable that it will be in her power; but that portion of our revenue must be regarded as an element of weakness in the Estimate for the year. It will be recollected, also, that I said it might be argued that we ought to provide in the Estimates of the current year for the second portion of the payment in redemption of the Scheldt dues. The sum that would be required for the purpose is £176,000. The way we propose to proceed with our surplus of £2,570,000 was this:—We began with £1,330,000 for the reduction in the Sugar Duties: and then came £800,000 for reduction in the Income Tax; making a sum of £2,130,000, and leaving still a surplus of £440,000. Against that surplus of £440,000, as I stated before, it is quite arguable that the second portion of the Scheldt redemption money should be charged; and the amount remaining of the surplus was not such as we considered it unreasonable to ask the House to leave in our hands, because it was not unlikely that between the month of April and the close of the Session fresh demands of one kind or another might be made on the public purse. And even since the 7th of April, when I made the financial statement, a new demand has arisen-—though I cannot state the amount—to affect the limited balance as I then stated it to the House. Still, with this surplus of £440,000 as we felt that we might be justified in carrying over the Scheldt redemption money to a future year in case of need, we did attempt to meet the wishes of the House by offering them a reduction of the Fire Insurance duty, as regards property limited in amount, but, as we thought, sufficient, considering all the circumstances of the case. That reduction involves a loss to the revenue of £192,000, which, with the small loss by the reduction of the licence duty for the sale of tea, reduces our surplus to £238,000; and, as I have observed, that has been reduced since by a new demand on the Government, of a kind which it was not open to us to reject. Without taking into account the £176,000 which a rigorous financier might argue we ought not to postpone for a future year, the upshot of all this is, that the Government is not in a position to go further and dispose of more revenue, having reduced the surplus to the minimum amount of the sum I stated on a former evening, which sum has sunk since then. Under these circumstances, it is proposed, in lieu of a reduction of 1s. 6d. upon stock in trade, that we should make a less effective; reduction—or, in other words, a reduction; less likely to produce reproductive action —a reduction, namely, of 1s. upon all descriptions of property insured against fire. I know there is an opinion that house property and furniture would be quite as likely to become the subjects of increased insurance, in the event of a reduction of duty, as stock in trade, or even more so. I dispute that, I think it contrary to experience; but, at any rate, it will hardly be alleged that a reduction of 1s. upon all kinds of property would produce as large a percentage increase as a reduction of 1s. 6d. upon stock in trade alone. It is quite idle to reduce a duty of this sort by small driblets. On the first night of the discussion it was proposed to make a reduction of 6d. over all. If the House wishes to make a distinct present of so much money to those who insure, without any view to extension of insurance, I cannot conceive a better scheme for that purpose than spreading a sixpenny reduction over the whole mass of property now insured against fire. I am bound to say that I have always agreed with the hon. Member for Dudley, that if there is to be a reduction at all it ought to be a large one; and I am bound, in justice to the hon. Member, to say that, although he now proposes a reduction of 1s. the reduction which he formerly proposed—not last year but previously—as a proper terminus to arrive at was a reduction from 3s. to 1s. In that opinion he was right. I wish I could have proposed such a reduction I upon stock in trade. It was not in my power to do so with a due regard to financial considerations; but a reduction of one half of the duty is the very smallest which I would recommend to the House. It is not my intention to go into the details of the Fire Insurance question. I admit it may fairly be said that the rate of premium upon property is much lower than that upon stock in trade, and that consequently the rate of duty in proportion to the premium is much higher. In that sense and to that degree the hon. Member for Evesham (Sir H. Willoughby) may argue rightly enough that we might expect recovery upon property; but against that I place, what is of more consequence, the slackness of recovery upon property, and the rapidity of recovery upon stock in trade. But that is not the point. I have spoken of the reproductive element, and I will explain to the House how we stand. The effect of a reduction of 1s. upon all kinds of property would be about the following: — I take the revenue from the Fire Insurance duty at £1,700,000. One shilling off the 3s. amounts to £566,000. I allow 6 percent for recovery against a reduction of 1s., as I should be disposed to allow 10 per cent against a reduction of 1s. 6d., and 15 per cent against a reduction of 2s. A recovery of 6 per cent upon a reduction of 1s. would mitigate the loss by £34,000, leaving a loss of £532,000. That would be the real amount of revenue surrendered; but as the reduction only takes effect for nine months out of the twelve of the present year, the effect would be a total loss during the financial year of something over £400,000. Now, inasmuch as I am not able at present, even without taking any account of the Scheldt dues, to place my surplus at more than £200,000, the addition to the £192,000 of loss which I anticipate from the reduction of duty upon stock in trade of a sum exceeding £200,000 absolutely sweeps away the whole of that surplus and something more, and makes it entirely impossible for the Government to persevere with the proposals they have submitted to the House. If the House thinks it is better to leave the question alone than merely to deal with stock in trade, that is matter for argument. As Chancellor of the Exchequer, although I might regret that a boon should be withheld, I should have consolation in the greater security of my position. If the House thinks it is wiser and fairer to reduce upon property than to reduce upon stock in trade, I shall argue against the proposition; though I admit that if you do not extend the area of your reduction, you do not break in on the elementary principles of finance. But it is impossible for us, with any regard to our own duty, after the course we have taken and the manner in which we have stretched our proposals, with a view to meet the presumed wishes of the House, entirely to sweep away that most moderate — that even less than moderate—surplus, which experience, propriety, and almost decency require us to preserve. There may be cases in which the Government may commence the financial year without a surplus. Supposing, for example, you find yourselves, as we found ourselves at the beginning of the financial year 1862–3, with the estimated produce of the taxes exactly balancing the estimated charge of the country. At that period, I stated to the House, on the part of the Government, and the House concurred in the view, that it would not be wise to impose a tax for the purpose of creating a surplus; but that was with special reference, not only to the circumstance that if we were to have a surplus it must be got by means of a new tax—which is a very different thing from parting with an old one—but likewise to the fact that the menacing state of Lancashire rendered it impossible to form an estimate of what the wants of the country might be, and that, therefore, it would be better to wait to obtain the benefit of experience, and to do, when the proper time arrived, what experience might seem to suggest. But I hope the House will not ask us, under existing circumstances, to adopt a proposal which I believe to be unexampled in the history of Parliament— namely, when the Government have proposed a provision for the services of the year extremely moderate in its character —perhaps too moderate—perhaps open to criticism on that score, but at any rate, not extensive as regards the amount of funds which they ask the House to leave in their hands — that, with the view of meeting, not an urgent or immediate, but a general public purpose connected with the reduction and improvement of a particular tax, the whole of the surplus should be swept away and the Exchequer left to provide for new public demands without any possible means of making such provision, At the time when the Government determined upon their financial proposals, they entertained a hope that those proposals would be substantially acceptable to the House. It was with a view to make them acceptable that they extended them in the direction I have named by including the element of Fire Insurance. They have been so far acceptable that the right hon. Gentleman the Member for Bucks has claimed their authorship. I am not going into any dispute about that. We are too well satisfied with being able to obtain assent and approval, independently of distinctions of party, in matters in which all have a common interest, to encumber the discussion or retard the progress of our measures with any question as to who is entitled to the credit of the parentage. But I venture respectfully to put it to the House that we have framed our entire plan for the year in a spirit of concession—in a spirit of respect to the wishes of the House, even where they went beyond our own views, so far as considerations of imperative public policy would permit us to proceed in that direction; and I rely upon the fairness and kindness of the House not to depart from its old well-understood rules in financial proceedings, by taking out of the hands of the executive Government the whole remainder, and something more, of that very modest sum which they ask the House to leave with them in order to meet the casual exigencies of the year. Do not let the House be misled into exaggerated anticipations concerning the revenue of the coining year, from the fact that the revenue last year exhibited a large surplus over the estimate formed at the commencement of the year. The correspondence of estimates of revenue with their results is a matter beyond the control of any Parliament or of any Government. If it be true that last year the revenue yielded £2,000,000 more than the estimate made at the beginning of the year, it is also true that in 1860–1 the revenue yielded as nearly as possible £2,000,000 less. Perhaps you may say that is owing to some difference in the principles upon which the Estimates are made. There is no such difference at all. It is owing to the circumstances of the trade and industry of the country; it is owing, above all, to that great circumstance of a good or bad harvest, which at once powerfully acts upon the receipt of revenue. What does a good harvest mean? When we have a good harvest it means, first of all, that £20,000,000, £30,000,000, or £40,000,000 of agricultural wealth are put into the hands of agricultural producers which in the case of a bad harvest would not have been there. It means, in the second place, that moderate prices rule throughout the country for all the articles of first necessity, and that the money saved upon those articles is spent, in great part, upon duty-paid commodities. That was the reason why the revenue of last year was so good, and the revenue of the last part of the year better than the revenue of the first part. At the commencement of the year we were not enjoying the benefits of a very good harvest, whereas, for the last few months of the year, we had been enjoying those benefits in full. But it is impossible to guarantee these Estimates of revenue. I venture to say, comparing the estimates of 1860–1 with the present Estimates, that those for 1860–1 were simply the Estimates of the official advisers of the Chancellor of the Exchequer, adopted without minute examination, and without the slightest change. Now, I do not scruple to say that in the present year, partly with regard to the due position of the Government, and partly from a desire to find the funds with which to meet the wishes of the House, I did make a minute examination of the Estimates both of the Customs and the Board of Inland Revenue, in concert with the able gentlemen at the head of those departments, and we did make certain additions to them which, of course, swell the amount of the estimated surplus. If the House distrusts these Estimates, or thinks that there arc funds available for the remission of taxes which the Finance Minister is unduly holding back, then the House has it in its power to appoint a Committee to consider the Estimates, and say whether, in the opinion of competent judges, additions can or cannot be made to them. But in the absence of such an inquiry as that I must stand upon these Estimates, and I apprehend the House will stand upon them also. It is impossible to conceive of a practice more dangerous than for the House, upon mere vague general allegations, resting upon no distinct authority, that the country is going to be prosperous —as if we could foresee what the harvest will be at the end of August or in September—to say that we may proceed to remit taxes from sources on which, in the present state of affairs, we are not able safely to reckon. I am not now disputing so much the question of the Fire Insurance duty as pointing out that this is a proposal interfering with an elementary and cardinal principle of finance, which, as far as I know, is always respected by the House— namely, the principle that where the executive Government has on its own responsibility computed the provision required for the services of the year, with a very narrow margin and moderate surplus for unforeseen exigencies, that surplus should be accorded to them, it being impossible for them, without an entire violation of their duty, to acquiesce in the absorption of funds which, it is absolutely necessary to retain in order to meet the probable wants of the country. I beg, Sir, to move that you now leave the Chair.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."—(The Chancellor of the Exchequer.)

MR. H. B. SHERIDAN

said, he did not dispute the accuracy of many of the right hon. Gentleman's figures, but he differed considerably from his conclusions. He accepted the construction which the right hon. Gentleman had put upon his Resolution—namely, that, instead of a reduction of 1s. 6d. in the Fire Insurance duty on stock in trade, which the right hon. Gentleman proposed, there should be a uniform reduction of 1s. on all descriptions of property without any exception. Of course, farming stock, being now exempt, did not come within the range of his Resolution. He had consulted experienced practical men, and had received various communications from the country—among others one from the Chamber of Commerce of Birmingham, one of the most enlightened bodies of merchants in the kingdom—all pointing in the same direction as that indicated by his Motion; and they had the evidence of the Insurance Offices, that it would be impossible to carry out the proposal of the right hon. Gentleman without considerable expense, which would render the benefit little more, if more, than the proposed benefit which his proposed reduction of 1s. involved, and they would, he believed, themselves gratefully accept the alteration which he now suggested in that proposition. The Resolution he had to submit to the House did not involve an encroachment on the financial arrangements of the Budget. It did not take away the surplus which the right hon. Gentleman said he had in hand. As the right hon. Gentleman had stated, £1,700,000 was the revenue derived from the Fire Insurance duty. One third of that amount, as the right hon. Gentleman estimated, was obtained from stock in trade, or £566,000. The right hon. Gentleman proposed to remit one-half of that sum, or £283,000, by reducing the duty from 3s. to 1s. 6d. on stock in trade only. From that sum, however, the right hon. Gentleman deducted £70,000, being the amount of the fourth quarter, which he would not receive. That reduced the amount to £213,000. Then 10 per cent must be deducted for the increase anticipated by the right hon. Gentleman upon his reduction of the duty, or £21,000, which brought the loss down to £192,000. Turning next to the plan involved in his own Resolution, the figures would stand thus:—£1,700,000 was the amount of the revenue from the 3s. duty now levied; one-third of that was £566,000; and he proposed to reduce the 3s. duty by 1s., or one-third, on all descriptions of property. From the £566,000 they must deduct £142,000 for the fourth quarter. Thus they had £424,000, and not £500,000, as the amount represented by the demand which his Resolution made. How was that to be provided? First, there was the natural increase of the duty, £50,000. Then there was the further increase of 10 per cent, which the right hon. Gentleman anticipated from the reduced tax. Proceeding on the same principle of calculation, he argued that his plan of reduction would be followed by an increase of 10 per cent of the £424,000. That 10 per cent made £42,000, and £50,000 represented the natural increase of the duty. Then the right hon. Gentleman had not taken into his calculation the discount allowed to the Insurance Offices for the collection of the revenue, amounting to £21,000. That gave £330,000, or nearly that sum, to meet the £424,000. Then there were the unappropriated balances of the Exchequer, which, after the deductions to which the right hon. Gentleman had referred, still left £238,000. Thus nearly £100,000 would be the amount remaining in hand, should the House be pleased to adopt his proposal instead of that of the Chancellor of the Exchequer. But the right hon. Gentleman said they had no right to reckon on an increasing revenue in the ensuing year, although he had estimated it at something like half a million less than it was last year. Now, the House could not shut its eyes to the fact that last year every branch of the revenue increased, while nearly every branch of the expenditure diminished; and there was now a large surplus with which the right hon. Gentleman had dealt ably in every way except in respect to Fire Insurance. However, he would not depend on that argument, but on the argument that the right hon. Gentleman had enough for the purpose of satisfying the object of his Motion. But, even if the right hon. Gentleman had not enough, that was not his fault or the fault of the House. By two Resolutions passed in succeeding years, the House had called on the right hon. Gentleman to make pro- vision for the reduction of the duty. Now, his Resolution would not take the whole even of the unappropriated balance in the hands of the right hon. Gentleman, and, therefore, no embarrassment could ensue from its adoption. It was enough for him to show that there was sufficient money to provide for that uniform reduction of this duty which the country required, and which the House had declared should be carried out. The House leaned on the anticipated surplus and the probable prosperity of the country for any wants that might arise, But to say that this balance should not be applied as the House had said it ought to be applied, would be using the House in a manner he should not have anticipated. The right hon. Gentleman had based his calculations on the assumption that two-thirds of this duty were derived from the insurance of property and one-third from stock in trade. The right hon. Gentleman admitted that this was conjecture, and it must be so—he did not know where he could possibly get figures to enable him to arrive at such a calculation. It was true, he might have obtained information from Insurance Offices, but he had not said that he had so obtained it, and he was not aware that Insurance Offices could give him such information. They had no index or handy-book which would supply it. The right hon. Gentleman had not told the House that, from the experience of the whole of the Insurance Offices, he had been enabled to arrive at an equitable average. He could not help reminding the right hon. Gentleman that, in the strongest manner, he had himself condemned the use of figures that could not be substantiated. What, then, was the basis of his argument? Fire Offices could not supply the figures, for another good reason. They had been holding meetings, and expressing the difficulties they had in understanding the words "stock in trade." If the right hon. Gentleman had not heard of these meetings, he probably would. If he had not received a communication from the Secretary of the "Sun," he no doubt would. Out of a million and a half of policies issued, one-third might possibly contain items only of stock in trade; but that was a very different result from saying that one-third of this duty was received on stock in trade. If the traders in insurance were not themselves agreed as to what the term "stock in trade" might affect or include, how could they possibly give the Chancellor of the Exchequer the calculations on which he rested? But these were not the only parties who had difficulty in understanding the meaning of "stock in trade." He had received, and no doubt others had received, many communications on this subject. Insurance Offices were in great perplexity, and the right hon. Gentleman would have many questions put to him—whether, for instance, the handsome plate-glass fronts, fittings, and ornamental work of shops, were utensils or stock in trade; whether the horses and vans employed by Pickford were stock in trade, or utensils of trade. Houses built for the purpose of selling were stock in trade—would they be excluded? The mills at Bradford and other places must be utensils of trade. Merchants might say that their ships were either stock or utensils of trade. Certainly all the fittings of those ships, their luxurious accommodations, their plate-glass, their linen, their wines, would be stock in trade. The stock of innkeepers and hotel-keepers, with the whole property in their houses, must be stock in trade. But what would the right hon. Gentleman say to the rolling stock of railways and their stations? Surely these must be stock in trade or utensils? The right hon. Gentleman had raised a distinction as to machinery used for the purpose of manufacture and machinery used for the purpose of trade. These formed two distinct items in his calculation. Who was to decide between them? A thousand-and-one other objections would naturally suggest themselves to persons who understood this question; and endless difficulties, vexations, and perplexities would be occasioned. The proposition of the right hon. Gentleman was impracticable; or, if at all practicable, it would end in litigation and annoyance. Such being the conditions attaching to the proposal, what were the reasons which had induced the right hon. Gentleman to make this distinction? There must be some substantial reason to induce the right hon. Gentleman to propose that the House should consent to alter the Resolution they passed only a year ago. What were the reasons which had induced him to wade into the by-paths of this question, that could only end in doubt and perplexity, when the open road lay before him in the Resolution of the House? The right hon. Gentleman gave two reasons. The first was that there was the greatest possible difference of opinion as to the self- recovering power of the Fire Insurance duty. He should like to know where he found those opinions. Whoso opinions were they to which he referred? Who was it that said there was doubt as to the recovering power of this duty? The right hon. Gentleman had not adduced any authority on the subject. The right hon. Gentleman had not produced a single authority in support of his view. The more correct way of putting the case would be, that the opinions of writers on the subject were all the other way—they were all unanimous in their conclusions with regard to the reproducing power of this duty. M'Culloch, Porter, Newmarch, Samuel Brown, all the practical men on the question, and those who felt the pulse of the people in regard to it, combined in opinion that a moderate reduction of the duty would be followed by a replacement of revenue. But the public pointed to a reduction of 2s. per cent in the duty, and that, he had no doubt, would be ultimately effected. Stock in trade was insured nearly to its limits, whereas it was calculated that 80 per cent of houses and furniture were yet to be insured. The only person who appeared to entertain the opinion of the Chancellor of the Exchequer on this point was Mr. Coode, the counsel for the Exchequer, to whom the right hon. Gentleman so largely referred last year. It would be desirable to know what were the authorities upon which the right hon. Gentleman justified his conclusions. The next argument of the Chancellor of the Exchequer was that taxes on trade and industry replaced themselves more easily and more rapidly than taxes upon property, and the illustration given by the right hon. Gentleman was very amusing. He gave the instance of the assessed taxes. Was it possible that the House could be brought to accept such an illustration? The assessed taxes were compulsory taxes, levied upon all ascertained property of certain kinds, and it was perfectly monstrous to suppose that duties which were compulsory, with penalties attaching to attempted evasions of them, could be likened to a voluntary tax which might be paid or not, without any liability to penalties. There was no analogy between the two cases. If the assessed taxes were reduced to any slight extent, what expectation could there be of an increase of revenue from that source? No one would in consequence set up another carriage, or keep another dog, or wear more hair powder. And yet the right hon. Gentleman told the House that because the assessed taxes would not maintain themselves or increase after reductions in the rates of duties, therefore the income from Fire Insurances would equally fail to recover or increase after reduction. That, too, was assuming that the duty upon Fire Insurances was a tax upon property. He disputed that view. He denied that it was a tax upon property as much as it was a tax upon income. A person with an income of £500 a year, and insuring for £3,000, would, if the duty upon insurances were removed, save 2d, in £1, and a person with £250 a year income, insuring for £1,500, would save an equal amount. It was in such cases an income tax, but it certainly could not be called a tax upon property. The House had come to a Resolution upon this subject so long ago that lie hardly liked now to trespass upon their time to show how incorrect was the description of the tax given by the Chancellor of the Exchequer, but he would just give one illustration to show its real nature. He would take a street with houses of equal value and furniture of similar amount on either side. The inhabitants of the houses on one side might insure, and then they would pay the tax; but the inhabitants of the houses on the other side might decline to insure, and then they would pay no tax. That illustration would prove that the tax was not a tax upon property, but upon the act of insuring. How, then, could the right hon. Gentleman call it a tax upon property, and draw a parallel between it and the assessed taxes, and then call upon the House to come to a conclusion based upon such an assumption? He could not understand why a distinction was to be made in favour of stock in trade. The right hon. Gentleman's figures were hardly reliable, his reasons were erroneous, and the parallel he drew between the assessed taxes and the tax on Fire Insurance would not hold. Was it possible that the right hon. Gentleman had remembered that those who had pressed upon him hardest for a remission of the duty were the dwellers in houses, the masses, the millions of the people, whom he now passed over by the distinction he made, the middle classes, the workmen with their small stocks of furniture and tools, whom he chose to style property-holders? Did he wish to tell those classes that they had been too urgent in their demands, had pressed too hardly upon the Government for the remission of this tax, and therefore he took this opportunity of saying to them, "You must stand by and let others be served first?" It was difficult to believe that such could be the right hon. Gentleman's meaning, but some such idea would present itself to the minds of those who would be excluded from all benefit of the proposed reduction. It was possible that the right hon. Gentleman might have a better argument on the last point which he had put forth, as to the exemption of farming stock. The Chancellor of the Exchequer naturally was shocked at that exemption, and had not hesitated to express the indignation he felt at it. The right hon. Gentleman said, "There is something very invidious on the present exemption of farming stock. That exemption was unfairly granted." He (Mr. Sheridan, quite agreed that the distinction was invidious and unfair, and he had been anxious to discover how the right hon. Gentleman proposed to remedy it. The right hon. Gentleman told them he proposed to mitigate that exemption by a reduction of one-half the duty upon Fire Insurance upon stock in trade. That was a proceeding which it was difficult to understand. An exemption was condemned, and the cure proposed was the creation of another and a similar wrong. Thus two wrongs were supposed to make right; but that was a novel way of legislating upon a vexed question. What did the public out of doors think of that proposition? There had been at first a feeling among the public that the exemption of farming stock was due to the fact that the farmers had so many friends in that House; but that feeling died out when it was found that the beat friends to the general reduction of the tax were the country Gentlemen and the owners of land, who, to their credit, had, without regard to party views, always been the most earnest supporters of a universally remedial measure. Now, however, it was proposed to establish another exemption that was equally as objectionable as the former, The result would be confusion worse confounded, more ill blood created, and the existing wrong to the great body of the public heightened, and that was called a mitigation of the first exemption. Of course, the people out of doors grumbled at that; they were not worthy of a Chancellor of the Exchequer who looked after their interests in that way. But the fact was that there was a great disinclination among the public to receive this proposition as a boon. It was impossible to find in the reasons which had been assigned any excuse, he might even say any apology, for the proposition now made by the Chancellor of the Exchequer. The right hon. Gentleman told them it was in deference to the formal indication of the opinions of the House that the Government had thought it their duty to deal with this tax, although they were not prepared to make a reduction of any great extent. But the House knew, before it passed its Resolution, that the Chancellor of the Exchequer was not prepared with an immediate and large reduction. The proposal that he (Mr. Sheridan) had made to the House was a reduction of 1s. in the duty on all insurances all round, and after two or three years a further reduction of another 1s. The right hon. Gentleman accepted that Resolution as an instruction to the Government, but it was possible that he had not understood fully the effect of that Resolution, and had mistaken the meaning of the House in passing it. The right hon. Gentleman had told them what his object was without the slightest attempt at concealment. He hoped that the House would not allow itself to be trifled with, but that it would support his Resolution, which involved a general reduction of the Fire Insurance duty, instead of the reduction of a particular portion. The House should at once show the right hon. Gentleman that its Resolutions must for the future be binding, and that it was not prepared in every instance to be implicitly guided by the right hon. Gentleman. Was the House to have no opportunity of giving force to its views and to those of its constituents? The petitions which had been presented upon this subject did not originate from a portion of the people, but were participated in by the bulk of the community. The hon. Gentleman concluded by moving his Resolution.

MR. HADFIELD

, in seconding the Amendment, said, he was convinced that the revenue would suffer considerably if the present mode of taxation were adhered to. Ono of the railway companies, paying £1,000 a year for Fire Insurance, of which sum two-thirds was on account of the duty, had determined to insure themselves, and the consequence was that the revenue had suffered severely from the exorbitant amount of the rate. This example was also being followed by other railway companies.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, such a reduction of the Fire Insurance Duty as that contemplated by the Resolution of the House passed last Session would be best effected by an uniform reduction of one shilling per cent on all descriptions of property liable to the said Duty,"—(Mr. Henry B. Sheridan,) —instead thereof.

THE CHANCELLOR OF THE EXCHEQUER

said, he would endeavour to curtail his remarks as far as possible, and he should therefore begin by throwing aside all the arguments connected with the hon. Gentleman's interpretation of his motives, which really had nothing whatever to do with the subject under the consideration of the House. He would also draw a distinction between those of his arguments which were relevant and those which were not. The argument employed by the seconder of the Amendment (Mr. Hadfield) though they might apply to the Resolution of the hon. Member for Evesham, were not relevant to the question, which was purely a financial one. He need not dwell upon what the hon. Gentleman had said about the absence of any authorities on his part. The hon. Gentleman had, however, in his arguments put entirely aside the testimony of all those who had been responsible during a long series of years for the proper conduct and management of the revenue of the country, and of all those whose duty it was to have formed a responsible opinion upon the subject. It was not, however, necessary to dwell further upon that portion of the question. The hon. Gentleman had asked him where he had obtained his estimate. He did not think that it was at all necessary to give an answer to that question; but he would state that he had obtained it by requesting the persons connected with the Board of Inland Revenue to wait on the largest and best of the Insurance Companies, and he believed that that estimate was the best that could be arrived at. The hon. Gentleman was wrong in supposing that there was any greater difficulty in determining stock in trade than there was in defining farm stock. The hon. Gentleman had made two statements. One was, that he did not wish to take away the means he (the Chancellor of the Exchequer) had, and that his Amendment would leave him sufficient means for the public service; and the second was, that if he had not sufficient means it was his own fault. Now, he would confine himself to those two statements. What did the hon. Gentleman mean by saying that it was his fault if there were any insufficiency in the revenue after the reduction of the tax as proposed by the Amendment? His meaning was that Her Majesty's Government had been wrong in proposing the reduction of the Income Tax from 7d. to 6d. The meaning of the hon. Gentleman was that they should have reserved that sum, and have applied it to a more liberal reduction of the Fire Insurance duty instead. There were undoubtedly arguments for each course, but he believed the preponderance to be against the plan proposed by the hon. Gentleman. The hon. Gentleman to be honest, ought not, however, to have moved a Resolution which would have the effect of leaving him with a financial deficit—he should rather have proposed a Resolution blaming Her Majesty's Government for their proposed reduction of the Income Tax, and, at the same time, suggesting as a substitute the reduction of the Fire Insurance duty to 1s. The hon. Gentleman had said that the fault was his if he had not the money; but where did the hon. Gentleman expect him to find it? He had already stated on the part of the Government that sugar had the first claims on the surplus, and that the Income Tax ranked next in importance. The hon. Gentleman must either agree to those propositions or dissent from them. If he did coincide in the views expressed in them, it was useless to talk about a further reduction of the Fire Insurance duty at the present moment. It was really surprising to see how the hon. Gentleman had dealt with his figures. If the hon. Gentleman could also give him the power of counting his money twice over he would undertake to repeal the Fire Insurance duty tomorrow. He had stated that the hon. Gentleman proposed to deprive him of a trifle over £400,000; but the hon. Gentleman had charged him with omitting to take into consideration the natural increase of the revenue. He had, of course, made the omission, because the increase had already been once provided for—it was taken into account when the estimate was made. The hon. Gentleman had said that he would obtain £21,000 more by means of the discount, but that discount had already disappeared in the reduction. The discount was chargeable equally on the whole of the £1,700,000, and, whether they deducted it upon a larger or upon a smaller sum, the proportion of discount would disappear with it; and, therefore, in point of fact, with the exception of some £5,000 or £10,000, in which his statement as to the reproductive powers of the tax differed from that of the hon. Gentleman's, the case would stand precisely as he had at first stated it to the House. If the proposal of the Government was a bad one, let the House reject it; and if they thought the proposal of the hon. Member for Evesham a better one, let them take that: but the hon. Member for Dudley proposed to take away every rag and shred of the surplus which, in deference to the wishes of the House, he proposed to hold, and would land him in all probability in financial bankruptcy. If the proposal of the Government could be improved, let that improvement by all means be made; but they should on no account permit that improvement or pretext of improvement to be the ground for violating those wider principles which were essential for the welfare of the community, and for the' maintenance of the public credit.

MR. HUBBARD

rose amid loud cries of "divide." The hon. Member said that he would not detain the House more than a quarter of an hour—[Great laughter— whereon the hon. Gentleman sat down]

MR. DISRAELI

Sir, I will not speak for a quarter of an hour, but only for two minutes. I wish merely to explain the vote I shall give. I think that the principle laid down in the Amendment, as distinguished from the proposition of the Government, is the right principle. I have, first of all, to consider the Resolution which the House has arrived at, and then to consider the difficulties in the way of taxing stock in trade—a consideration which weighs much with me, though the Chancellor of the Exchequer holds it light. At the same time, I entirely agree with the right hon. Gentleman that, after the financial statement which he made to the House, no alteration ought to be made in that arrangement, and that we ought to confine ourselves to appropriating the sum understood to be at our disposal, in the manner best calculated to carry out the views adopted by the House. Therefore, though I shall vote for the Amendment of the hon. Gentleman, I shall, in case that is carried, move, when it becomes a substantive Motion, the omission of the words, "1s. per cent," and then it will run— That in the opinion of this House the reduction of the Fire Duty in the manner proposed by the Chancellor of the Exchequer is not the mode contemplated by the Resolution of the House passed last Session on this subject, and that the uniform reduction of duty on all descriptions of property liable to the said duty will be more acceptable.

MR. T. BARING

said, that he should vote against the Resolution, because he was against the sacrifice of revenue.

SIR HENRY WILLOUGHBY

also felt bound to vote against the Amendment, as he did not think it proper, after the House had accepted the main principles of the Budget—the reduction of the sugar duties and the reduction of the Income Tax—now to introduce any Motion destroying the surplus altogether.

SIR STAFFORD NORTHCOTE

explained that his right hon. Friend the Member for Buckinghamshire did not propose to interfere with the surplus; but, thinking the proposal of the Chancellor of the Exchequer with respect to the Fire Insurance duty not satisfactory to the country, intended, in case the Amendment became a substantive Motion, to move the omission from it of those words which, according to the Chancellor of the Exchequer's calculations, involved a sacrifice of revenue.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 170; Noes 117: Majority 53.

Main Question put, and agreed to.