WAYS AND MEANS.

HC Deb 21 April 1864 vol 174 cc1450-60

WAYS AND MEANS considered in Committee.

(In the Committee.)

Motion made, and Question proposed. That, in lieu of the yearly per-centage Duty now chargeable for or in respect of any Insurance from loss or damage by Fire only, which shall be made or renewed on or after the 25th day of June, 1864, of or upon any Goods, Wares, or Merchandise, being stock in trade, or of or upon any Machinery, Fixtures, Implements, or Utensils used for the purpose of any manufacture or trade, there shall be charged and paid yearly a Duty at and after the rate of one shilling and sixpence per annum for every £100 insured; and when any such Insurance as aforesaid shall be made or renewed at any time between the 22nd day of April, 1864, and the said 25th day of June, for any period of time extending beyond the said last mentioned day, there shall be charged and paid for and in respect of the time intervening between the making or renewing of the said Insurance and the said 25th day of June, the yearly per-centage Duty at and after the rate chargeable on the said 22nd day of April, and for and in respect of any subsequent period, including the said 25th day of June, the rate of Duty chargeable according to this Resolution; and no Return or allowance of Duty, except at and after the last-mentioned rate, shall be made in respect of time unexpired, or otherwise, on any such Insurance as aforesaid which shall have been made or renewed before the said 22nd day of April, 1864."—(Mr. Chancellor of the Exchequer.)

SIR HENRY WILLOUGHBY

moved an Amendment, in the fourth line, after the word "any," to leave out the words "goods, wares, or merchandise, being stock in trade, or of or upon any machinery, implements, fixtures, or utensils used for the purpose of any manufacture or trade," and to insert "houses and buildings." Her Majesty's Government had determined to touch the Fire Insurance duties, whether wisely or not he could not say; but that being so, it appeared to him to be of great importance that they should correctly understand what class of property it was the partial remission of the duty was intended to benefit. The right hon. Gentleman had selected "stock in trade," and since the announcement was made, he (Sir Henry Willoughby) with others, had received communications from various Insurance Offices which went to show that the difficulties attending the proposed alteration would be very great. Setting aside the difficulty that would arise in defining what "stock in trade" was, he thought that that was the last class of property on which a remission ought to be made, seeing that an insurance for £1,000 would, in the course of a year, cover many thousand pounds worth of property. But the main argument upon which he asked for the support of the Committee to his Amendment was that stock in trade ought not to be benefited at the expense of houses and buildings. No species of taxation was so much harassed by taxation as houses and buildings; for besides what it had to bear towards the general taxation of the country, it bore in an especial manner the burden of local taxation, amounting to no less than from £19,000,000 to £20,000,000 annually. It was a perfect truth that real property paid one-half, and houses and buildings nearly four-tenths of the taxation of the country, and it was also as true that stock in trade did not pay a shilling. Then, again, in considering how the revenue might best recover from any reduction, the largest margin of uninsured property consisted of houses and buildings. How, therefore, stock in trade could be selected in preference to houses and buildings, he was at a loss to conceive. For the sake of justice, therefore, he should press his Amendment. He should not enter into the financial part of the question, because he was not prepared to throw Her Majesty's Government into a financial difficulty, not because it was impolitic, but that it would be most unfair to do so at that stage of their finance; but he trusted, if in the opinion of the Committee it was considered fairer to relieve houses and buildings than stock in trade, the right hon. Gentleman would have no difficulty in re-arranging the financial position of the question.

Amendment proposed, In the fourth line, after the first word "any," to leave out the words" Goods, Wares, or Merchandise, being stock in trade, or of or upon any Machinery, Implements, Fixtures, or Utensils used for the purpose of any manufacture or trade," in order to insert the words "Houses or Buildings,"—(Sir Henry Willoughby,) —instead thereof.

THE CHANCELLOR OF THE EXCHEQUER

said, that as he had dealt with the very points which had been raised by the hon. Baronet in his reply to the hon. Member for Dudley, it would not be necessary for him to go into the subject again at any length. He must divide what he had to say into two parts—one, the financial, the other the general merits of the question. With regard to the financial part of the question he quite understood the fundamental principle of the hon. Gentleman's Amendment—namely, that he was not disposed to wrench anything from the Government, but that what he wanted was what he considered a better division of the surplus. Now, his (the Chancellor of the Exchequer's) proposition was that a sum of between £190,000 and £200,000 should be given by way of relief with respect to Fire Insurance in the present year. The hon. Baronet, however, proposed to insert certain words in a Resolution which spoke of a reduction of duty by one-half. If, therefore, the proposal of the hon. Baronet was carried, it would have to be adjusted to the state of the finances. There were two ways by which that adjustment might be effected— the one by a postponement of the remission, the other by a reduction in its amount. He (the Chancellor of the Exchequer) proposed to take only three-fourths of the remission off the shoulders of the present year, so that the full force of it would not be felt until next year. But if he was to retain the 1s. 6d. rate, and apply it to twice the number of subjects, then the postponement must be of a different character, for it would not be possible to commence the reduction until the beginning of next year. And what character would that proceeding affix to the vote that night? It would be said that, wishing to do a popular thing by their constituents, and not having the money to do it out of the resources of the present year,; which alone were properly at their disposal, they voted a reduction of taxation and got credit for it, but postponed it to the following year. That, he thought, was an objectionable course to pursue, although there were instances where they had been obliged to do it; such, for instance, as the tea duties; but he knew of no instance where the House had adopted a course of voting the abolition or partial repeal of a tax by throwing almost the entire burden of it upon the next year. If the hon. Baronet's Motion was carried, the only other mode of adjustment was by halving the remission, and instead of giving 1s.6 d. upon stock in trade to give9d. upon houses and buildings. Ought that proposal to be adopted or not? The hon. Member for Dudley quoted the Insurance Offices, and correctly quoted them, as greatly preferring a uniform rate, No doubt they would, as it would simplify matters, There would be a certain amount of lahour in looking over the accounts with a view to fixing some at 3s. and some at Is. 6d. But the Companies had been well paid hitherto. But as far as the authority of the Companies was concerned they were in favour of a uniform duty, and consequently the proposals both of the hon. Baronet and himself fell foul of those Companies. But the hon. Baronet had raised an objection about the definition of stock in trade and the difficulty of distinguishing between landlords' fixtures and tenants' fixtures. But difficulties of that kind would operate plainly as much under the hon. Baronet's plan as under his. Under his (the Chancellor of the Exchequer's) proposal everybody would be trying to show that he was a trader, and that his house and furniture were stock in trade, while under the proposal of the hon. Baronet everybody would try to prove that he was not a trader. The hon. Baronet Stated that nothing was so much burdened as houses and buildings. He (the Chancellor of the Exchequer) was not quite so sure of that. He heard the hon. Member for Sheffield (Mr. Hadfield) cheer the statement when made by the hon. Baronet—but what was the hon. Member's opinion about the succession duty? Did he think it more severe than the legacy duty and the probate duty? And yet house property was taken out of the probate and legacy duty and placed under the succession duty, which was a large concession. Was it true that nothing had been done of late years for the relief of houses and buildings? The brick duty had disappeared. An enormous differential duty on timber had given place to what was called a nominal rate of duty, but which he would admit it was extremely desirable to abolish. Even in the present Session houses and buildings were relieved by the financial proposal of the Government. He doubted whether there was any class in the whole country, except professional men, to whom the reduction of the Income Tax was so great a boon as to owners of houses and buildings, for there was no class on which it operated with such severity, especially the owners of inferior houses, inasmuch as the Income Tax was paid upon the gross rental, 25 per cent of which was often expended in repairs. The question was between a reduction of 1s. 6d. on stock in trade and 9d. on houses and buildings. Now, if the House touched a tax of this kind it ought to make a liberal reduction; it was better to give a telling reduction on a small part than a reduction that would not be appreciated on a small part. The hon. Baronet said that in the case of stock in trade that property was fully insured, while houses and buildings were insured only in part. But his (the Chancellor of the Exchequer's) inquiries by no means satisfied him that there was a greater margin uncovered by fire insurance in the case of houses and buildings as compared with stock in trade. He believed that, on the contrary, there was rather less. No doubt, in certain trades and certain descriptions of trades the stock was not fully insured; but generally speaking the very large traders were fully insured. When a fire came on the large traders it spared very little. In the case of houses there was something left worth saving; and so with regard to furniture; a great deal of it was generally carried out. In these latter cases people did not insure to the full. He could only ascertain whether buildings were insured or not in about half the cases of fires in the metropolitan district; but according to the best information he could get from the Insurance Offices and the Fire Brigade, the number of fires in 1863 was 1,746 of houses and buildings. Of these there were known to be insured 682, and known to be uninsured only seventy-three. That was a very small margin. In the case of the contents of houses and buildings there were known to he insured 963, and known to be uninsured.517, which left a considerable margin of uninsured stock in trade. As to the unknown cases, according to the best estimate about one-half were found to be insured. Suppose the other half to be all uninsured, the effect would be that 500 would have to be added to the 682 insured buildings, bringing the number up to 1,182; and adding the same number to the uninsured buildings, they would then stand at 573. With respect to the margin in the case of stock in trade, the largest traders and the best trades were commonly fully insured; the smaller traders, according to his information, were deterred from insuring by the amount of the duty. He could not concur in the opinion of the hon. Baronet that real property was unfairly dealt with in this country. The system of taxation in this country bore quite as hardly as it ought to do on the consumer and the lower class of the population. His hon. Friend the Member for Bradford (Mr. W. E. Forster) came to him in presence of the representatives of the Associated Chamber of Commerce. He said that within his own knowledge the deficiency of insurances in manufactures was so great that he was convinced a reduction of 1s. would pay itself within three or four years. He (the Chancellor of the Exchequer) would not go so far as that, but the case in favour of this class of reduction was very strong. A great deal had been said about removing the charges on trade. He (the Chancellor of the Exchequer) desired to remove the charges from trade; but he denied that taking a tax off trade was a concession to the poorer classes. Taking a tax off trade was removing an obstacle from the channel between the producer and the consumer. The object was to make trade unshackled, and relieving trade was not relieving a class, but it was relieving all those who consumed the articles from which the tax was removed. Suppose the Government laid a tax of 1d. on every transaction of trade in London — would that be a tax which the trader and not the consumer would pay? With the exception of a tax on receipts and bills of exchange, he did not know that there was a single tax on trade remaining. If the House concurred in the view which he had just submitted, he thought they would do well to vote for his Resolution. He thought a reduction of 1s. 6d. preferable to one of 9d.; but he did not stand on that alone. He stood more on the proposition that reducing the duty on houses and buildings would be a relief to a class, while a reduction of the duty on stock in trade was not a relief to a class but to the general community who were the consumers of articles of trade and manufacture, that community including among its members the owners of houses and buildings. He waived at once all objections of a financial class, except that he thought his measure would prove greatly more reproductive than that proposed by the hon. Baronet.

SIR FRANCIS GOLDSMID

said, he could not concur with the Chancellor of the Exchequer that the reduction which the right hon. Gentleman proposed was the one most likely to be reproductive. He supported the proposition of the hon. Baronet the Member for Evesham, not because he wished to favour the owners of houses and buildings, but for this reason— that, as far as one could learn, the rate of insurance on stock in trade was considerably higher than that on other matters. What was the conclusion from that? Not the one which the Chancellor of the Exchequer had attempted to draw from it— namely, that because persons could hardly afford to pay 6s., therefore they could not afford to pay 7s.6d—it would be much more natural to conclude that though a man might pay 1s. 6d., he might not be in a position to pay 4s. 6d. If, as in the case of stock in trade, a man paid the Insurance Office 9s. or 10s., it did not matter so much to him whether he paid the State 3s. or 1s. 6d. In the one case the ratio of reduction to the whole cost of insurance was very large; in the other almost inconsiderable, and reduction of duty on any article must be the greatest boon to the person who paid lowest for that article.

MR. HUBBARD

said, he could not but imagine that if his right hon. Friend the Chancellor of the Exchequer had been as anxious to carry out the wishes of the House, pronounced on two occasions, as he had been to evade them, the first reduction he would have announced in his Budget would have been one of 1s. 6d. on all the duty paid for Fire Insurance. The reduction in the Income Tax was one very acceptable to the House, but it was not one for which they had specifically asked. The reduction of the sugar duties was also acceptable to the House, but the House had not asked for any exact amount of reduction on these duties. However, when they came to that duty of which the House had asked specifically for a general reduction, his right hon. Friend presented them with nothing but "a delusion and a snare." The expectation of a large increase in the insurances of stock in trade was a "delusion," and the invitation to the House to stake on the event of that increase the reduction of duty on the insurance of houses, was a "snare." The rate of insurance on stock in trade in London varied from 4s. in the best dock warehouses to 21s. in warehouses throughout the town. Take the medium, and it would at once be seen how unimportant was the duty now charged by the Government, comparatively with the premium of insurance on stock in trade as contrasted with houses. Besides, it should be borne in mind that whatever was spent in the insurance of stock in trade was but one element in the price to the consumer. The trader did not abstain from insuring his stock, because he knew that whatever the sum it might cost him to do so, his customers had ultimately to pay the amount. But it was not so with the owners of houses and buildings. The fact of having to pay 3s. duty on a payment of 1s. 6d. to the Insurance Office was a greater bar to insurance than the fact of having to pay a similar amount of duty on a payment of 21s. to the office. He thought that the simplicity of a general reduction strongly recommended such a measure. The Chancellor of the Exchequer had said that the insurance tax was a tax on property. Therefore did he (Mr. Hubbard) regard it as objectionable; because a property tax should be applicable to all houses, and the insurance tax was applicable only to the houses that were insured. The houses insured were not the houses of the rich— the rich could afford not to insure. It was of no consequence to the rich to insure. With extensive property the rich found it cheaper not to insure, or, in other words, like the large shipowners, to become their own insurers. He had been informed, within the last few days, of a nobleman who had cancelled no less than eighty-one policies on his houses and buildings in one county, on the ground that he would not pay to Government, in the shape of insurance duty, what the Chancellor of the Exchequer admitted was in reality a second property tax. The other day, the right hon. Gentleman sought to equalize a burden which bore upon clergymen. Now, he (Mr. Hubbard) had received a letter from the perpetual curate of a church which depended entirely upon pew rents, out of which the whole expenses of the church had to be defrayed. In his case, the duty paid to the Government upon the insurance of the church amounted to no less than 2 per cent on the net receipts, being practically an additional Income Tax to that amount. There were other cases in which the magnitude of the tax was so much felt that the churchwardens refused to spend money belonging to the congregation upon insuring at all. As the result of a personal experience of nearly forty years, he declared that nothing could be more delusive than the propositions of the Chancellor of the Exchequer. He would infinitely rather see the question of Fire Insurance passed by altogether this Session, than see the House fall into the trap laid for it, of agreeing that the realization of the object, which, in two successive years, had been affirmed by increasing majorities should depend upon the occurrence of an impossible condition. The right hon. Gentleman, he thought, had been highly favoured by the arrival of the dinner hour, which had carried away many Members who would have taken part in the debate. He should be glad if the House were to refuse the proposition of the right hon. Gentleman. He should infinitely prefer either to leave things alone, or that the remission should apply to all property alike, so far as the means at the disposal of the Government permitted. He did most earnestly protest against accepting the Government proposition with all its prospective bearings, and he regretted that the Government had not carried out more effectively for public benefit the principle twice approved by the House in successive years by increasing majorities.

SIR FRANCIS CROSSLEY

said, he approved of the Budget as a whole, and, on that principle, he had voted that evening with the majority, though, if he had looked to the question of Fire Insurance alone, he should have taken a different course. He regarded the question of Fire Insurance as the weak part of the Budget, otherwise a very good one; and regretted that, having dealt satisfactorily with the two great questions of the Sugar Duties and the Income Tax, the right hon. Gentleman should have touched the subject of insurance, not having a sufficiently large balance to do so with good effect. To reduce the tax generally from 3s. to 1s., would have been a substantial boon; but to reduce it from 3s. to 1s. 6d. upon a single branch was altogether unsatisfactory. He had been surprised to hear the right hon. Gentleman lay such stress upon arguments as to the increase which might be expected upon insurances of stock in trade. The great factories and warehouses from their enormous value were insured almost as a matter of necessity now; but the owner of a private house having to pay the Government 3s. for every 1s.6d of insurance, very often thought that the cheapest thing he could do was to be his own insurer. In the division which had just taken place he had supported the right hon. Gentleman, and should support him again, because he regarded the Budget as a whole; but, with regard to the particular question of insurance duties, he believed that the Chancellor of the Exchequer was in error. His proposal would produce immense complication of accounts, and would not, he hoped, be regarded in anywise as a settlement.

MR. H. B. SHERIDAN

did not think that the cause of the Fire Insurance duties would be helped on by a division being taken then. He thought it would be better for the hon. Baronet to leave the matter as it stood. The principle of reduction had been admitted, and next year with renewed agitation they might hope for a more substantial remission.

SIR HENRY WILLOUGHBY

said, he would not press his Motion to a division.

MR. HUBBARD

wished to renew his solemn protest against this measure, which he deemed to be of a most delusive character.

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

Main Question put, and agreed to.

Resolved, That, in lieu of the yearly per-centage Duty now chargeable for or in respect of any Insurance from loss or damage by Fire only, which shall be made or renewed on or after the 25th day of June, 1864, of or upon any Goods, Wares, or Merchandise, being stock in trade, or of or upon any Machinery, Fixtures, Implements, or Utensils used for the purpose of any manufacture or trade, there shall be charged and paid yearly a Duty at and after the rate of one shilling and sixpence per annum for every £100 insured; and when any such Insurance as aforesaid shall be made or renewed at any time between the 22nd day of April, 1864, and the said 25th day of June, for any period of time extending beyond the said last-mentioned day, there shall be charged and paid for and in respect of the time intervening between the making or renewing of the said Insurance and the said 25th day of June, the yearly percentage Duty at and after the rate chargeable on the said 22nd day of April, and for and in respect of any subsequent period, including the said 25th day of June, the rate of Duty chargeable according to this Resolution; and no return or allowance of Duty, except at and after the last-mentioned rate, shall be made in respect of time unexpired, or otherwise, on any such Insurance as aforesaid, which shall have been made or renewed before the said 22nd day of April, 1864.

House resumed.

Resolutions to be reported To-morrow.

Committee to sit again To-morrow.