HC Deb 19 March 1867 vol 186 cc128-39

rose to move— That, in the opinion of this House, a further reduction of the Duty on Fire Insurances would have a tendency to bring within the protection of Insurance a large amount, of the present uninsured property of the Country, and that a further reduction of the Duty should therefore be made at the earliest opportunity. He said: There was nothing contained in this Resolution that was new to the House. The House had on more than one occasion given its assent to Resolutions having for their object the reduction of the duty on fire insurance. In the course of the various discussions which had taken place on this subject in former years, the House had stated its opinion to be that if a considerable reduction in this duty were to be immediately effected great results to the revenue might be expected; and it had, under every circumstance, and notwithstanding the arguments used by those who opposed a reduction of the duty, affirmed the proposition that it was of consequence to the country that this duty should not remain at its present amount. He did not think that the House would require any apology from him for bringing this question before it at this time; as the only chance which he, or any independent Member of that House, had of obtaining a reduction of any particular duty was to submit for the consideration of the House, prior to the introduction of the general financial scheme of the Government, a Resolution of the nature he proposed. After the ample discussion the question had undergone in previous years, he should not think it necessary to repeat the figures and arguments which he had more that once submitted to the House. The House had invariably come to the conclusion that the duty was excessive, and could not on fiscal grounds be maintained; that it ought to be materially reduced, and that the reduction ought to be direct and immediate. He should then confine himself to a very brief statement of the arguments on which he and those who agreed with him generally relied for a reduction of the duty on fire insurance. He had the misfortune at the time to which he referred to come into conflict with the right hon. Gentleman who was then the Chancellor of the Exchequer (Mr. Gladstone), and who had large financial plans of his own for the amelioration of the burdens on the people of this country. Therefore no arguments that he (Mr. Sheridan) used could induce the right hon. Gentleman to look at a subsidiary question like this before he had accomplished his own great designs. But at length, yielding to the pressure of the House, the right hon. Gentleman consented to consider this question, and he proposed a reduction of a qualified character upon stock-in-trade. The objectors to the tax had invariably objected to the peculiar unfairness which characterized the levying of the duty. But having consented to a reduction to ls. 6d. on stock-in-trade, the right hon. Gentleman was induced, by a further Resolution of this House, to extend the reduction generally to all descriptions of property, and now the duty on all descriptions of insurable property stood at ls. 6d. per cent. It was entirely an experiment on the part of the right hon. Gentleman. The persons who advocated the reduction had invariably urged that the duty should not be more than ls., many said 6d. was sufficient, and some indeed proposed 1d. The reduction to ls. 6d. was a great reduction, but it had brought about an increase in the amount insured of £145,000,000. If from that amount was deducted the increase which might naturally be expected from the increase of wealth in the country, some definite conclusion would be arrived at, The Report of the Inland Revenue showed there was an increase of £65,000,000 more than was to be expected under former circumstances. But it could not be expected that this small increase would satisfy the advocates of a reduction, for they held the belief that unless the reduction was made of a wide and sweeping character, no perceptible influence would be exercised on the revenue. Therefore, he maintained that the 1s. 6d. was an experiment rather than adopted in obedience to the wishes of this House. The country was still anxious for further reduction. The House had only to refer to the petitions presented to this House to satisfy themselves that such was the case. During some two or three years nearly 1,000 petitions were presented. There were 300 this Session alone. They were not the petitions of ordinary persons, who signed without distinctly understanding their nature; but the petitions of Town Councillors, merchants, magistrates, persons in official position, and generally taxpayers. No less than 466 petitions had been presented within the last two years from Chambers of Commerce and Town Councils under their corporate seal. Also from Insurance Companies and Agents. They all favoured the t object he had in view, and they favoured it mostly on this ground: that it was unlike any other tax in our fiscal system—it exhibited unfairness in a most unequivocal manner. It taxed one man and let off another. All other duties—on sugar, tea, tobacco, spirits—were different; in this instance the prudent and saving man was taxed, while the imprudent escaped. It was not a tax upon property, but upon a principle of action, upon the doctrine of insurance. Unlike other taxes, too, its effect was to weaken itself; because it taxed the man who desired to take care of property which was valuable, not only to himself, but to the country. If uninsured property was destroyed by fire the loser was often unable to pay either Imperial taxes or local rates, and might, indeed, sink from a thriving tradesman into a miserable pauper. The object of the Legislature should rather be to give a man a bonus to insure than levy a tax upon him for so doing. It should rather tax the man who did not insure. Property insured was of the greatest possible value—of as much value to the country almost as to the owner. It was a security for numberless taxes, for Government taxes, for metropolitan and other improvement rates, for poor rates, and other local burdens. It was so much realized wealth. There was no nation in Europe which imposed a tax of this kind like England. It was a tax upon an idea, a sentiment, an intention, an unfulfilled resolution, upon a desire to provide one's self against a terrible social calamity. It would be far better to tax the amount insured than the small deposits. Those deposits, in some cases, had been paid for over fifty years, and yet not the smallest result been gained; therefore he contended it was unjust to tax them. The tax upon insurance was a tax upon an idea, it was a tax upon a mere expectation that if property were insured against fire, something would be obtained for the money expended on insurance. But if no fire took place nothing would be obtained by the insurer. Mr. Newmarch said it would be just as sensible to tax a person who deposited, say, 1s. 6d. at a time in a money box to provide against a rainy day, as to tax a person who deposited money in an insurance office to provide against fire. It would be just as sensible to tax the inclination of a testator to leave a legacy as to impose a tax on insurers against fire. And if the Government must tax ideas, it would be better to tax vice rather than virtue. But it could never be contended that it was necessary for the support of the Government to put taxes upon prudence. This tax had been condemned by all writers on political economy, by the Insurance Companies and their agents, by public opinion, and by the press. He proposed nothing to alarm the Chancellor of the Exchequer. He merely said it was expedient a further reduction of duty should take place. He proposed to reduce the duty from 1s. 6d. to 1s. during the next year, commencing at the June quarter, and in the following year again to reduce 6d., leaving the duty a sixpenny duty. By the Report of the Commisioners of Inland Revenue it appeared that four quarters' receipts of the duty at 1s. 6d., up to September, 1866, had amounted to £989,673. If they took this as a basis of calculation, and assumed that subsequent receipts would be on the same scale, the calculation would stand thus:—A reduction to 1s. from the 25th of June 1867, would give: One quarter at present rate, from March to June, at 1s. 6d., £247,000; three quarters, from June to March, 1868, at 1s., £495,000. The natural increase was now £50,000; with reduced duty the increase would be £100,000. The receipts for the year ending March 1868, would be £842,000; that would entail a loss the first year of (in round numbers) £147,000. In the second year the first quarter would again be at the 1s. rate—namely, one quarter, from March to June 1868, at 1s., would produce £190,000; three quarters, from June to March 1869, at 6d., £285,000. Assume the increase to be from this reduction £100,000 more than the present increase at the unreduced rate, that would give £150,000; making the receipts for the year ending March 1869, £625,000. The loss in the two years would amount to £511,000. And it might be fairly estimated that the revenue would continue at that rate to increase steadily, until a larger amount than at present received was produced. He proposed to leave the matter entirely in the hands of the right hon. Gentlemen the Chancellor of the Exchequer, merely suggesting to him the propriety of reducing this tax from 1s. 6d. to 1s. per cent on the sum assured from the June quarter, and from 1s. to 6d. in the following year. Such a reduction would not only satisfy those who petitioned the House, but would gratify the general wishes of the country, whilst a great boon would be conferred upon—nay, simple justice would be done to—the insuring public.

Motion made, and Question proposed, That, in the opinion of this House, a further reduction of the Duty on Fire Insurances would have a tendency to bring within the protection of Insurance a large amount of the present uninsured property of the Country, and that a further reduction of the Duty should therefore be made at the earliest opportunity."—(Mr. Henry B. Sheridan.)


said, that the hon. Gentleman had acted most consistently in bringing this question before the House, and he had done great good on former occasions by bringing it forward. He regretted, however, that the hon. Gentleman had brought the matter forward on this occasion; because, on the Motion of the hon. Member for Edinburgh, a Committee had recently been appointed to inquire into the whole of the system pursued by insurance companies, and as to the best means of securing property from fire. The property in the metropolis was worth £900,000,000. Only about one-third of that was insured. The insurance companies were the only parties who protected property in the metropolis. That cost them £25,000 a year. If the owners of the uninsured property could be induced to insure it, the insurance companies would then be able to expend £75,000 a year in protecting the property of the metropolis. He thought the Government ought to protect the property of the country against fire, as the French Government protected property in France. The French Government protected not only the property but the lives of the people against fire. Last year he believed there were 1,200 or 1,300 fires in the metropolis, attended with great loss of life! Therefore this was an important Imperial question, which materially affected the Government, and which must be carefully investigated by the Committee on Fires. They might as well put a tax on fenders and fireguards as upon insurances against fire. The insurance rate was so high that he had known cases in which it was found that the destruction of property by fire caused less outlay than the insurance of it would have cost. He spoke of farm buildings in his own county. The small amount of property insured in this country proved at once that there was something wrong in this tax. He thought the tax ought to be abolished altogether. Whatever it produced to the revenue, he thought it was a vicious tax. It would be as just to tax the arms by which a man defended his life, as to tax insurance against fire. The loss of life by fire in the metropolis and in many large towns was lamentable; and he thought the Government, as in great cities abroad, ought to be the parties to whom the people should look for protection against fire instead of actually making a profit out of insurance. This question had always been brought forward by the hon. Gentleman with great ability, and he had always supported him. Still, he could not but think that it was not opportune so soon after the appointment of the Committee on Fires to have brought it forward now, and he hoped the hon. Gentleman would not ask the House to divide.


said, he was not only opposed to the duty on fire insurance, but also to the duty on marine insurance. He would venture to ask the hon. Gentleman to withdraw his Motion, not because the subject required investigation, but because it had been so often investigated. He thought the obnoxious nature of this tax had been fully acknowledged by public men on both sides of the House, and the House itself had repeatedly expressed a wish for its abolition. The total abolition of the tax was a mere question of time. It was due, however, to the position of the Chancellor of the Exchequer that at this moment the proposal should not be forced upon him. He could not doubt that the Chancellor of the Exchequer was exceedingly desirous of meeting every fair claim, and of redressing every grievance that might be brought tinder his notice. Not long since the right hon. Gentleman had yielded to the representations of Irish Members in reference to the extension of time for the repayment of loans to Irish railways; and no doubt in the matter of the tax on insurance he would be equally ready to listen to the views that might be pressed upon him.


Sir, my hon. Friend who has just sat down has made an appeal to the hon. Member for Dudley to withdraw his Motion, and has founded that appeal upon the conviction he entertains that the Chancellor of the Exchequer will make provisions for complying with the wish which the hon. Member says this House has repeatedly expressed that the tax upon insurance shall not continue. I do not think the hon. Gentleman is accurate in his declaration that the House has more than once expressed a desire for a reduction of this tax. I do not think such an opinion has been expressed since the reduction of the tax to 1s. 6d. I shall be glad if the hon. Member for Dudley withdraws his Motion; and the opinion that I shall express in reference to the tax is not one which ought to deter him from that course. I would object to any Motion the effect of which would be to fetter the discretion of the House in forming its impartial judgment when the revenue and Estimates are before us, as to whether we have any means of granting remissions, and if so, what those remissions should be. Both in office and out of office I have uniformly contended for that principle. It is a very disagreeable office which the Finance Minister has to perform, in interfering with the very natural, reasonable, and often very legitimate desires of hon. Gentlemen with regard to particular taxes. That Minister has to hear many representations of grievances, those who come to him caring only for their own particular grievances; and, as happened at the doors of Westminster Hall on Monday morning, those who came to hear the Minister tried to outrun each other, and none of them cared what became of those who were left behind. I do not wish that the repeal of this tax should depend upon the energy or activity of the Members who are the advocates of such repeals; but that it should depend in part upon the judgment of the Government, who must take the initiative, and supremely upon the judgment of the House. To make it satisfactory to the country it is in general necessary, though there may be cases of exception under extraordinary circumstances, that that judgment should be formed by the House when it has the opportunity of considering at once and comprehensively the whole state of the finances, and of balancing one claim against another. Upon that ground I hope that the House will not accede to the Motion. In any case, I feel it my duty to support the Chancellor of the Exchequer in the discharge of a disagreeable duty, from which I understand he does not intend to shrink. The principal error—if he will forgive the for using the term respecting one who has so deeply studied the question—into which I think the hon. Member for Dudley has fallen, is, that if the tax were reduced the revenue would be recovered through the augmentation in the number of insurances. That, I contend, is an entire delusion. The reduction of taxes on articles of consumption affecting the masses of the people enormously widens the field of consumption; and we know from experience that those reductions—great as they have been—result in a positive increase of revenue even on the article itself. The Customs revenue of the pre- sent year—after the vast operations performed on it—will be almost larger than in former years. But this is not true with respect to taxes upon property. I know no case in which loss caused by the reduction of taxes upon property has been recovered. Let us not, therefore, entertain expectations that cannot be realized, but look to the case as it stands. I think my hon. Friend the Member for Buckingham has distinctly shown to us two things: first of all, that this is a tax upon property; and secondly, that it is a bad tax upon property. Still, in the present relative position of the taxes upon property and upon labour, it is a serious matter to abandon taxes upon property without obtaining compensation from other taxes upon property. I own, and I will even urge, that the tax upon insurance demands, upon the first convenient opportunity, the consideration of the Government; and that the object of that consideration should be, in the first place, to reduce that tax itself to a point so low that it cannot be a sensible restraint upon insurance. We might, perhaps, meet the objection to relieving property from taxation while taxes press so heavily upon labour which has so much higher claims to reduction by finding another means of taxing property in lieu of it—means that would be equal instead of unequal. It should not be a tax upon the virtue of prudence, but should be entirely independent of it, leaving that virtue to operate thoroughly in its own field. We should leave the whole community to insure their buildings, and everything requiring to be insured, I will not say without a tax, because our condition requires us to tax those transactions of trade and industry that are the life and vigour of the community. I would not, therefore, propose a total exemption, for that would strike at the root of the whole system of taxes, with which we cannot dispense; but we might go down to something so near the nature of a nominal rate as to make insurance easy, but couple with it the condition that we ought not to make that the opportunity for relieving property, the taxes upon which at this moment are anything but extravagant, and which have been lightened by the reduction of the income tax. Leaving property to bear its burdens, we should accede when possible to the reduction of the tax to a low point, analogous to some of the small taxes which are so low that they do not interfere with the transactions to which they relate, I strongly support the Go- vernment in refusing to give a pledge that will fetter the future discretion of the House, while I hope that in a proper manner, and in conjunction with other collateral arrangements, the existence of this tax, with the evils it produces, will receive the early attention of those competent to deal with it.


said, he should support the Motion, the adoption of which he thought would induce a larger number of persons whose property was now uninsured to provide against losses which would result from fire. He did not see that there was any difficulty in the way of the Government giving a pledge that at as early a period as possible the tax would be reduced. He considered the tax immoral, injurious, and intolerable, and could not long rest on its present footing.


said, he should support the Motion. The hon. Member for Dudley (Mr. H. B. Sheridan) had to contend with the usual obstacle which beset private Members when pleading for the remission or reduction of a duty—the inconvenience which the Chancellor of the Exchequer for the time being would be sure to insist would result from choosing so inopportune a time for the proposal. But for the perseverance of the hon. Member for Dudley, there would have been no reduction of the duty. He was right in enforcing the consideration of the subject again on the House; because, from the reduction having been insufficient, the question had not had a fair trial. The effect of the tax at the present time was that a vast amount of property was uninsured; the owners being deterred from insuring by the excessive tax they would have to pay for so doing. The right hon. Gentleman the Member for South Lancashire had stated that he had never known a case in which the reduction of a tax upon property had been followed by recovery; but the right hon. Gentleman had forgotten the case of the income tax. When a high rate prevailed there was a great amount of evasion of the tax; but when the rate was lowered a greater amount in proportion was received.


Sir, I do not intend to enter into the merits of the question, and I must reserve my opinion upon it until flu proper time arrives; but I must ask tin House to support me in resisting the Motion of the hon. Gentleman. It appears to me that it is extremely incon- venient, and I think disadvantageous to the public service, that upon the eve of a statement of the general condition of the finances of the country, and the consequences of that condition, the House should be called upon to pledge itself to a Resolution of this kind, which must not only be a source of great embarrassment to the Minister, but also to the House. The House has had experience of the in convenience of Resolutions of this general character—as, for example, that in regard to the income tax; and I trust the House, recollecting that, will not sanction further a course which every one connected with the finances has found to be inconvenient. The hon. Gentleman has had an opportunity of placing before the House his views upon the matter. It is a question which he completely understands, and always expounds with great ability; and if, after mature consideration, the House should agree with him, it will be due to the information which he has placed before them, and which may influence their judgment. But what I ask the House to do is, that they should keep themselves perfectly free as to the course which they may see fit to sanction when they are in complete possession of the financial condition of the country. It is said that the House may, by waiting for the financial statement, lose the opportunity of expressing its opinion on what should be the financial policy of the Government. That, however, hardly applies to existing circumstances. When the statement is placed before the House it will have sufficient power to control any course which it may think fit to suggest. Such course will depend upon the wisdom and expediency of the recommendations which I may offer. I trust therefore the hon. Gentleman will not press his Resolution to a division. As I do not wish to give any opinion upon the merits of the question which has been brought before us, I must, if the hon. Gentleman does not yield to the requests of his friends and supporters, move the Previous Question.


said, he could quite understand the argument which the right hon. Gentleman had addressed to the House. It was the usual argument which was addressed by Gentlemen placed in his position who did not like the House to make any suggestions to them as regarded the disposal of their surplus finance. He quite differed with the right hon. Gentleman in thinking that there was anything in this Resolution which could be construed into an embarrassment. The Resolution was nothing more than the expression of an opinion that a further reduction of the fire insurance duty would be very desirable. There could be nothing in such a Resolution which would dictate to the right hon. Gentleman. He had to congratulate the House upon the speech of the right hon. Gentleman (Mr. Gladstone), who had to-night frankly admitted for the first time that this was a tax which could not be defended on any sound principle, and which ought not to be maintained if there could be any mode devised by which it could be reasonably got rid of. The noble Lord (Lord Stanley), in a speech at Kings Lynn made on the 20th of October, said the worst tax beyond exception which we had was that on fire insurance; that it discouraged prudence and encouraged gambling. Fortified by such an opinion as this, and believing that there was nothing whatever in the Resolution which had to do with the position of hon. Members on either side of the House, he should feel it his duty to take the sense of the House upon the Resolution which he had moved.

Whereupon Previous Question put, "That that Question be now put.—(Mr. Hunt.)

The House divided:—Ayes 156; Noes 215: Majority 59.