§ Resolutions [April 24] reported.
§ Motion made, and Question proposed, "That the said Resolutions be now read a second time."
§ MR. W. H. SMITH,
on rising to move the Resolution of which he had given Notice, said, that if any apology were needed for his Motion he should find it in the statements of the public Press during the last week, in the remarks of the First Lord of the Treasury in answer to the deputation on the income tax, in the letter addressed by the Premier to Colonel Hogg, and, lastly, in the answer given by the First Lord of the Treasury last week to the Question put by the hon. Member for South Devon (Sir Massey Lopes). He should probably be met in the first instance by being told that the course he proposed ought not to be taken in the interests of trade—that the Budget brought forward three weeks ago foreshadowed a considerable reduction in the duties upon an important article of commerce which ought not to be lightly disturbed by the House. In answer, however, to the hon. and learned Member for Oxford, the Chancellor of the Exchequer said he did not intend to bind the House in any shape or way by the financial statement which it would be his duty to make on the Monday before the Recess, and that the House would be left perfectly free when it re-assembled to deal with his financial proposals as it might think fit. It was not, therefore, upon individual Members who thought it right to question the right hon. Gentleman's proposals that any charge of causing the derangement of trade could rest, but with those who asked the House to accept changes of so important a character a fortnight before it was possible that the decision of the House could be taken, and three weeks before it was possible practically to challenge them. He had a precedent in the course taken by the First Lord of the Treasury himself in dealing with the Budget of his right hon. Friend (Mr. Disraeli) in 1852. His right hon. Friend the Member for Buckinghamshire had proposed to refine sugar in bond, to remit half the malt tax and hop duty, and reduce the duty on tea. 1031 The right hon. Gentleman (Mr. Gladstone) was reported in the usual record of their debates to have said—In making provision for the service of the year the House of Commons ought not to remit taxation until you have made sure of your Ways and Means for the year, and, therefore, I may presume to say to the right hon. Gentleman that he would be wrong if he called on us to deal with the minor items of his Budget—if he called on us to settle the question of the house tax—and especially if he called on us to proceed to the remission of any duty, until he had obtained from this House a new recognition of the principle of the income tax. And, in so doing, I stated the principle on which Sir Robert Peel proceeded in 1842. At that period he was pressed from all quarters, and with much reason, because of the great inconvenience to trade in consequence of delaying the discussion of the tariff. He was requested to proceed with the discussion on the tariff before that on the income tax. He steadily refused.The position in which he (Mr. W. H. Smith) now stood was in some respects analogous to that occupied by the right hon. Gentleman in 1852. The House of Commons last year, by a large majority, affirmed the principle that relief ought to be given to local taxation. The First Lord of the Treasury, in answer to a Question put by the hon. Member for West Cornwall (Mr. St. Aubyn), promised that a Bill should be introduced next (this) year, which was to provide—"Thirdly, for equality as between the various classes of the community in respect to the aggregate contributions they make to the public burdens." A distinct undertaking had thus been given by the First Lord of the Treasury, so late as the 1st of August last year, that a Bill should be introduced to remove the anomalies and excessive contributions exacted from the ratepayers for local burdens. Her Majesty's Government, in the Speech from the Throne, at the beginning of the present Session, renewed the engagement then made. The House was now told, in the letter addressed by the right hon. Gentleman to the Chairman of the Metropolitan Board of Works—That the Government had abandoned all hope of the kind for the present year, and that if the House of Commons should definitively adopt by vote the leading propositions of the Budget it would determine its own attitude in the same sense.His justification for the present Motion was to be found in the last paragraph of the letter to Colonel Hogg. If the House of Commons accepted the Budget 1032 and the remission of the sugar duties now proposed, if it consented to lower the income tax by a penny, and to pay half the Alabama Claims in the course of the year, it was clear that there was nothing whatever to be given for the relief of local taxation. It was not only so, but it was equally clear that next year also there would be nothing available for that purpose. It was within the recollection of the House that the Chancellor of the Exchequer, having estimated the revenue at an amount quite equal to the most sanguine expectations that could be formed, had only been able to provide for the payment of half the Alabama Claims. An estimate had been presented to the House that a sum of £3,200,000 would be required for this purpose, which sum would nominally be charged against the Ways and Means out of the resources of the year. The Chancellor of the Exchequer had stated frankly, however, that although he hoped, he did not expect that the revenue of the year would admit of that payment being made out of the income of the year, and, therefore, it would be necessary that the sum of £1,600,000 should be met by Exchequer Bonds payable next year. By this proceeding he had pledged the whole revenue of the country, not only for the year ending March 31, 1874, but also for the year ending March 31, 1875. He did not expect that every hon. Member would agree with him, but if the House would give him its patient attention he would endeavour to show that his statement was not wholly without foundation. He had ventured in his Amendment to ask the Government to state their policy with respect to Imperial and local taxation. He had taken that course because he believed all taxes had been rendered more or less unsafe by the action of the Government. As hon. Members knew, there was an agitation, and a serious agitation, against the income tax, and many hon. Gentlemen had been asked to pledge themselves to the total, complete, and unconditional repeal of the income tax. So lately, indeed, as the commencement of the present Session a meeting was held at which the chair was taken by a right hon. Gentleman, who was a consistent supporter of the present Government, who had held high office, and who might do so again. That right hon. Gentle- 1033 man pleged himself and the meeting in favour of the total, complete, and unconditional repeal of the income tax. The Chancellor of the Exchequer recognized that agitation as serious, and because it was serious, he had reduced the tax by 1d. A deputation waited upon the right hon. Gentleman the First Lord of the Treasury, and they were told that the proposal for the repeal of the income tax was a very wide proposal. The right hon. Gentleman, moreover, expressed a doubt as to whether all the gentlemen present at the deputation were prepared to take up that ground, but added that his own desire and the desires of the Government were in the same direction. [Mr. GLADSTONE dissented.] He should be sorry to misrepresent the right hon. Gentleman, and what he was now stating was extracted from the Press.
said, that what he had stated was that, speaking for himself, he had as much reason as any gentleman on the deputation for desiring the repeal of the income tax.
§ MR. W. H. SMITH
thought that oven that statement was calculated to create the impression in many minds that the income tax was insecure in the opinion of the right hon. Gentleman. For his own part, he could not but regard the income tax as insecure, but its insecurity, he believed, arose not from any unwillingness on the part of the public to pay a reasonable amount of taxation, but from the unwisdom and the want of discretion and judgment on the part of those whose duty it was to administer, to assess, and to collect the tax. If in the management of the tax there had been the same discretion and judgment displayed as in the ordinary affairs of life, much of the discontent now excited by the income tax would have had no existence at all. He could not help thinking that the course adopted by the Government of giving a small reduction of 1d. instead of considering fairly the anomalies, the inconveniences, and also the suffering imposed by the income tax was in itself a very dangerous course. The hon. Gentleman the senior Member for Brighton, whose speeches were frequently heard with advantage in the House, had urged upon the Government the propriety of exempting altogether from income tax the first £150 of everybody's income, 1034 and he believed that the course which the hon. Gentleman recommended would, if the Government were bent upon touching the income tax at all, have been much better than the course they had adopted. A justification might have been found for that course, for there was a large class among the artizans and labourers in this country who were earning £150 a-year, and who were not only not paying income tax, but whom it would be impossible or, if possible, very undesirable to compel to pay. He would venture to ask the House what the policy of the Budget really was. The policy of the Budget was to swallow up every farthing of surplus which could exist this year and next year. The policy of the Budget was to deprive the House of Commons of the power of dealing with a question which it had already decided to be of very grave and serious import to the taxpayers of the country. The policy of the Budget was, he ventured to think, to embarrass the hands of any right hon. Member who might next year or the year after stand in the position now occupied by the Chancellor of the Exchequer. There could be no doubt whatever that that was the object of the Budget as it was proposed. In 1870 the right hon Gentleman the Chancellor of the Exchequer said—I think the best plan is to make a good sweeping change once for all, and let sugar have rest. The change I propose to make is to reduce the duty on sugar one-half.… I wish it to be clearly understood that, in making this proposal, I am not preparing the way fur either further reduction or for abolition, but that I have gone as far as I intend, and make this declaration in order to give stability to the trade, and free it from periodical annoyance, owing to apprehensions of change."—[3 Hansard, cc. 1642.]He thought that the mind of the right hon. Gentleman must have undergone a rapid change since that time. But the right hon. Gentleman went further, and said he was not willing to let go any branch of the revenue which was levied with tolerable ease and without any grievous pressure. He should like to ask whether the policy of Her Majesty's Government in reducing the sugar duties by one-half was not letting go a valuable source of revenue which bore with no grievous pressure on the community. Since the proposal of the right hon. Gentleman he had heard it said on all sides that what remained of the sugar duties 1035 was so small that next year the tax would have to be totally and completely abolished. Well, he should not himself object to the complete repeal of the sugar duties if he believed that such repeal would in any way benefit those whom it was supposed to benefit. He had not, however, heard of any person who believed that sugar would be any cheaper to the poor in consequence, although it had been suggested that it would not result in an increase of price. He ventured to think that the course suggested by the right hon. Gentleman the First Lord of the Treasury when he was in Opposition in 1851 was the course which ought to be taken on the present occasion. The right hon. Gentleman then said—What they ought to do was this—To adopt the principle laid down in the Motion of the hon. Member for Buckinghamshire, that the surplus they had on hand was not at the moment to be given away without the slightest reference to future necessities. … The fundamental objection to the Government plan was that it cut off to a certain extent a most valuable source of public revenue at a moment when, by the course adopted by the House with respect to the income tax, a resort to that resource might be highly essential to the maintenance of the interests of the country and of the public credit, which they all had at heart."—[3 Hansard, cxvii. 1450.]He confessed he always derived great advantage from reading the speeches of the right hon. Gentleman, and he hoped that this speech delivered 20 years ago, at a time when the right hon. Gentleman was, in the opinion of many of his friends, just as sound in his commercial policy as he now was unsound, would induce him to reconsider his determination. What was the basis of the present Budget? It was based upon high prices, high wages throughout the country, on exhorbitant prices of iron and coal, and on such general circumstances of inflation of trade as were sufficient to make every one feel anxiety for the commercial prosperity of the country for the next year or two. The general experience was that, whenever there was an enormous rise in prices, there was always, subsequently, a corresponding depression. What had been the rise in the price of coal? For manufacturing purposes it was at least three times the price which prevailed in 1870. He had received a letter from a gentleman who stated that he consumed 3,000 tons of coal per week in his works, and that while the average 1036 price per ton during 15 years had been 6s., the present price was 20s. to 25s., while the manufacture of a ton of iron represented the consumption of four tons of coal. At this moment the gentleman who wrote that letter was not paying the highest price, because he had entered into contracts which would expire in the course of the present year, but the full effect of the high prices would be felt by the manufacturers, unless there was a great re-action in the course of the present year. So that to suppose that the enormous iron trade of the country would be maintained at its present figure when the cost of the manufacture of iron from the crude material was £3 per ton higher than it was three years ago, and that solely in the article of coal, was to take a very sanguine view indeed. But, in addition to that, higher wages were now paid than formerly. There was, therefore, reason to apprehend that the present exceedingly prosperous state of the country might be followed by a considerable diminution of that prosperity—that prices must fall, that the demand for the raw material must fall also, and that there would be a diminution also in the demand for coal, and probably for iron. The consequence of such an absence of demand would be an attempt on the part of employers to reduce wages. Reduced wages would probably—he said it with regret—be succeeded by strikes, and strikes would have a very serious effect upon the consumption of the article on which the Chancellor of the Exchequer counted so much—namely, spirits. The prosperity which the Exchequer enjoyed was largely based upon the consumption of exciseable articles, beer and spirits—chiefly spirits; and although the return this year had been far higher than it ever was before, the right hon. Gentleman the Chancellor of the Exchequer calculated upon a return next year of £600,000 in excess of that of the past year; although those who desired the welfare of the country could not but fear that there must be a re-action in the prices paid for labour, in the cost of raw materials, in employment, in the rate of wages, and also, he ventured to hope, in the consumption of spirits, which he wished to see diminished instead of increased. The Estimate of Her Majesty's Government was therefore, to say the least of it, a very sanguine one 1037 —far more so than any which had been submitted to the House for the last ten years. But if he were correct in the apprehension he had expressed—and it was not confined to himself—the deficit which might possibly arise this year would be followed by a still greater deficit next year, because at least as large a sum would be required from exciseable articles for the year ending the 5th of April, 1875, as for that ending the 5th of April, 1874, in order to meet the payment of Exchequer Bonds, which would be thrown into the next year's account owing to our failing to pay the Alabama Claims in full during the present year. For himself individually, he must say he deeply regretted the course which Her Majesty's Government had taken with regard to the Alabama Claims. The right hon. Gentleman the Chancellor of the Exchequer said he felt the provision which had to be made for payment of the Award ought fairly to be made out of the revenue of the year, but he had not really made it a charge upon the revenue of the year. The right hon. Gentleman insisted on throwing it over two years, calculating the revenue and liabilities of next year upon Estimates which he (Mr. Smith) believed to be in excess, though he hoped they might not prove to be so. How, he asked, could the course taken by Her Majesty's Government be reconciled with the Resolution passed last year by the House, with the indication of their intentions given by Her Majesty's Government, or with the assurance which was to be found in Her Majesty's Speech. He ventured to assert that if the circumstances under which the House came to that Resolution last year were sufficiently strong to induce them to do so, those of the present time were stronger still. Local taxation had grown, was growing, and would, he feared, continue to grow, and that, in many respects, independently of the control of those who administered it. Parliament from time to time ordained, directed, and controlled matters affecting local taxation in a very large degree. Local taxation to a great extent was a part of Imperial policy. Parliament ordained; the Executive controlled and directed. An army of Inspectors was spread over the country to see that the directions which Parliament gave were efficiently carried out. The Resolution which his hon. Friend the Member for 1038 South Devonshire moved last year insisted upon the expediency and necessity of providing for the charge involved by police, lunatics, and justice, so far as they were now paid out of local taxes. He was very far, indeed, from desiring to relieve local bodies from the responsibility of administering their affairs in the most economical manner. That was an essential principle in local government. But they could not shut their eyes to the fact that while local taxation was spread over an area representing £120, 000,000 sterling, the property which it benefitted might be held to be coterminous with that which was represented by the returns for the income tax, and which amounted to £450,000,000 sterling. In other words, it had been the policy of Parliament to throw the whole burden of local taxation upon one class of persons, to the exclusion of those who were equally well able to pay it and derived equal benefit from it. What had the growth of local taxation been since the passing of the Resolution to which he had referred? A Return had been distributed to hon. Members within the last few days as to the poor rate levied for the year ending Lady-day, 1872, from which it appeared that the amount raised by poor rate was £12,100,000, or an increase in 1872 over the amount raised in 1871 of £500,000, and that notwithstanding a decrease of pauperism in England of 9.9, or in round numbers 10 per cent. That was the result of a policy deliberately pursued by Parliament and carried out by the Executive Government. He was not contending that that was an unwise policy, or that it was unsound in principle, but he did contend that it was a policy by which the whole population was benefited, and in which all parties were alike interested. The possessors of personal property were as much interested in the policy which was intended to repress pauperism and elevate the masses as were those who paid the rates and whose direct interest was limited to £120,000,000. But he preferred to speak of matters which came home to his own more immediate friends and neighbours, and would, therefore, take the case of the metropolis so far as local taxation was concerned; and he would mention figures which he thought would startle the House. The right hon. Gentleman the First Lord of the Admiralty, in the year 1867, spoke in that 1039 House of the heavy increase which had taken place in the local taxation of London, and he showed that the rates of various kinds paid in London in that year amounted to £3,500,000. From a Return which was laid on the Table last year it would be seen that the amount paid in the metropolis for the year ending the 5th of April, 1872, amounted to £4,452,000—an increase of more than 25 per cent in a period of five years. The actual expenditure, moreover, was £6,292,000, so that there was a debt of £1, 800,000 contracted, which would have to be paid by instalments during future years. He was finding no fault with the policy of successive Administrations and Parliaments in requiring care to be taken of the sick and poor, and improved arrangements which had involved a large expenditure; but expenditure caused by the direction of Parliament and the specific control of the Executive Government was not, properly speaking, expenditure by local authority. No local authority could build a workhouse, appoint an officer, or borrow money without the sanction of the Local Government Board. Taking the local rates of the metropolis as a poll tax, they amounted to 28s. per head, an amount which must amaze hon. Gentlemen opposite, and must confirm the view of many of them who joined last Session in the majority which affirmed the Motion of the hon. Baronet (Sir Massey Lopes). He had no wish for an indiscriminate subsidy, for nothing would tend more to increase local expenditure than a Parliamentary vote in aid of the rates, but it was quite another matter to refuse all relief, as the Government were practically doing, notwithstanding the engagement into which they had entered. He could appeal to the remarks of the Prime Minister in 1852 on the impolicy of tying the hands of Parliament or of a future Government with regard to the fulfilment of engagements. The right hon. Gentleman said—I ask you if you approve of a Government which, in submitting its plan, announces a popular principle, obtains a temporary harvest of popularity, and leaves the question of giving effect to its announcements to the chapter of accidents,Now, unless the House induced the Government to show what its policy was, the postponement for a few days of the acceptance of their financial scheme was 1040 the only alternative to leaving relief to the chapter of accidents. The latter course would be "keeping the word of promise to the ear, but breaking it to the hope." The present First Lord of the Admiralty, speaking in 1867, when local taxation amounted to £3,500,000, showed that the direct pressure upon the inhabitant of a West End house was 1½ per cent on his income, while on the artizan, assuming that he earned 25s. a-week and paid 5s. for rent, it was 6 per cent. The rates had since increased by £1,000,000, and the pressure must now, therefore, be much greater. A large proportion of the working men, in London at all events, lived in lodgings, the landlord paying the rates and necessarily charging a sum which would more than cover the rates he might expect to pay and the risk he incurred in paying them. The occupier thus paid even a larger amount than that estimated by the right hon. Gentleman. The pressure was peculiarly severe on the large class of men struggling for subsistence on incomes of £70 to £150 and £200 a-year. They were a quiet orderly class, with no organization or trade union, no means or desire of bringing masses of people together to make their influence felt by the Legislature, and the pressure of the last year or two had been most severe on them, the very prosperity of the country tending to increase their sufferings. It was notorious that large numbers of families living on small fixed incomes had been compelled to do with one fire instead of two, to dispense with some needed article of clothing, and to lessen their meals on account of the high price of meat. This class was, as a rule, virtuous and quiet, possessed of some culture, and in many respects the mainstay of society. Surely their necessities ought to be considered, and a course which disabled the House from giving them relief ought not to be persevered in. It was not necessary to the welfare and prosperity of the country that such a course as that proposed by the Government should be taken, and no greater mistake could be made than to absorb the last farthing of possible, not probable, receipts, leaving it doubtful whether at the end of the year further charges might not be incurred. The Government proposals would render relief impossible this year, and he believed next year also. The country had been 1041 prosperous, large profits had been made by trade and large sums laid by. Let this, in some respects, factitious prosperity be taken advantage of in order to do justice to classes well entitled to consideration, and let the House hesitate in a course which would not bring honour to the country, or prosperity to the party which recommended it. The hon. Gentleman concluded by moving the following Resolution:—
To leave out from the word "That" to the end of the Question, in order to add the words "before deciding on the further reduction of indirect taxation, it is desirable that the House should be put in possession of the views of the Government with reference to the maintenance and the adjustment of direct taxation, both imperial and local,"—(Mr. William Henry Smith,)
§ —instead thereof.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
THE CHANCELLOR OF THE EXCHEQUER
Sir, the Motion of the hon. Member for Westminster (Mr. W. H. Smith) precludes our going any further in the matter of reducing indirect taxation until "the House is put in possession of the views of the Government with reference to the maintenance and the adjustment of direct taxation, both Imperial and local." Now, the first answer I shall offer is, that the hon. Member ought to permit us to go on with the reduction of indirect taxation, because we have already fulfilled the condition he prescribes. We have given the House our views with reference to the maintenance and adjustment of direct taxation, both Imperial and local, for they have been enunciated, much better than I could state them, in a speech of my right hon. Friend at the head of the Government—and which speech the hon. Member may have read, for he seems to have gone through all the speeches of my right hon. Friend for the last 22 years—in which he described the two kinds of taxation, direct and indirect, as twin sisters. He made a sort of little idyll of the matter, which those who heard it will not easily have forgotten, and compared them to a double cherry, with seeming, but not actual union. That, I hope, is sufficiently prosaic to satisfy the hon. Member's longing for information on the point, and therefore I return to a very different person— 1042 namely, myself. In the course of the Budget which I laid before the House I stated distinctly that the one merit which the Government relied on in it was, that the reductions made in direct and indirect taxation nearly balanced each other, and that in their view they thought that a most desirable course. These are our opinions with regard to direct taxation. We think that direct taxation, speaking roughly, is the taxation that falls upon the rich, and that indirect taxation, speaking also roughly, is the taxation which falls upon the poor. In saying that, I do not mean to say that rich men do not pay indirect taxes, nor that some direct taxes are not levied on persons who approach very nearly to the condition of poverty; but this I say with the utmost confidence that the great mass of indirect taxation is borne by the poor, and the great mass of direct taxation is borne by the rich, so that the proportion of each, borne by the other class, is very insignificant, and may, as mathematicians would say, almost be neglected in the calculation. These being our views, and being unwilling on the one hand that the poor should escape from taxation altogether being armed with so much power as they are; being also unwilling to press hardly on the rich, we advocate, and we shall continue to advocate, the doctrine that, without any tendency to pedantic equality, as a general rule reductions in one class of taxation should be accompanied by reductions in another. Therefore, I think we have answered the hon. Member's question so far. Now comes the second point on which he requires information before he will allow me to touch our indirect taxation, and that is the question of local taxation. On that subject I have nothing new to state, but I have to state that which I think ought to be eminently satisfactory to the House. The Government, as early as the year 1871, threw out boldly to the House a proposal by which, if it had been carried into effect, something like £1,200,000 a-year would have been surrendered for the relief of local rates. Subsequently, and indeed a very short time ago, my right hon. Friend stated that the Government did not retreat from the position which they then took up. They do not pledge themselves either as to the precise manner in which they will give this relief, or as to the precise time at which it should be 1043 given; but they have no intention of withdrawing from any pledge that they have given on the subject, and they undoubtedly hold themselves bound to go into the question. That is the position which the Government has taken up in regard to local taxation. They have done nothing that is inconsistent with that, or anything that should put it out of their power to fulfil the pledge which they have given. That is the question, and really the only question, which as far as I could find was seriously argued by the hon. Member in the course of his speech. Let us see how that matter stands. We are of opinion that this question of local taxation is one most serious and most important not merely as a question of money, but as a question of the whole future of this country and of its constitution that can possibly be imagined. And although we are pledged at present to consider this question, we have determined to do nothing rashly—nothing, if we can help it, that may cause irremediable mischief. It is quite clear that we might accompany the boon of relief to local rates with such an assumption of power on the part of the Central Government as might greatly damage or even destroy our system of local self-government. It is quite possible that we might find the bodies to whom we are to pay this money in so incomposite and so distracted a state, so unfit for the duties imposed upon them, that they would not be worthy recipients of such relief, and would not properly employ the boon if so given to them. It is quite possible also, that we may find the law in such a state that if any justice is to be done either to the ratepayers or to the public, whose funds are to be applied for their relief, it will be necessary that the law should be reviewed and reconsidered. It is necessary, for instance, that the enormous exemptions which now exist should be carefully scanned, and, as far as possible, removed; and it would not be just either to the ratepayers or to the taxpayers of the country to rush into a precipitate grant of public money without sifting these matters to the bottom. Then there is the question of re-valuation of assessments and other points in regard to rating, which those who have read the pamphlet of my right hon. Friend the First Lord of the Admiralty (Mr. Goschen) will admit to be in a condition 1044 of the most dreadful, discreditable, and hopeless confusion. Before we approach the question of disbursing public money for this purpose then, it is our duty carefully to look into these things; and therefore my right hon. Friend the President of the Local Government Board has given Notice of a Bill, or rather two Bills, which he will introduce almost immediately to deal with these subjects. He has also given Notice that he will move for a Committee on another most important subject—that of the local areas which are to form the units and boundaries of local taxation. These questions, we think, must be considered, solved, and adequately dealt with before we shall be justified in approaching the question of giving public money for the relief of local rates; and we give the best evidence of our sincerity by inviting the House to consider these subjects. Therefore, it cannot be said that so far as our action on the specific matter of local taxation is concerned we have been wanting in our duty to the House in endeavouring to clear away the obstacles which stand in the way of the settlement of the question. But then the hon. Member says we have put it out of our power to do anything this year for the relief of local taxation. That is perfectly true; we do not intend to do anything; and in our view of the case we should be inexcusable, and at the same time it would be highly objectionable if, with the state of confusion the subject is now in, and with all the anomalies and difficulties attending it, we attempted to do anything so rash and premature as to deal with it in the present Session, except under the heads of exemptions and such matters: I mean if we were to deal with it by grants of public money. But the hon. Member is not content with this; he says—"No; you have also put it out of your power to deal with it during the succeeding Session. You have broken faith with the House." And he says that I have tied the hands of my successor for the next year. Sir, I should be very unwilling to do that, because I fully intend next year to be my own successor. And I am sure that the hon. Member may trust my self-love, if he will trust no higher quality, that I will not tie the hands of that most respectable person. No doubt there are hon. Members sitting opposite who are well acquainted with and understand 1045 this important question, and I think it is a great pity that some of them did not offer a little counsel to the hon. Member, because the statements which he made were scarcely worthy of an occasion so serious as the present. The fact is this—during the present year, we undertake to pay out of the current revenue of the year half the expense of the Alabama Claims. The other half we hope to be able to pay off out of the surplus not appropriated of the revenue of the year. We hope and believe that we shall be able to do so. But if we are not able to do that we shall take the power of borrowing, in which case that £1,600,000 would become part of the Unfunded Debt of the country, and would be dealt with accordingly. We hope and believe we shall be able to do so, and we are not without reason for our hope and belief, because the hon. Member spoke of the balances of the Exchequer as if they consisted solely of the increase of the accruing revenue. That is not so. They also come from other sources—from repayments of loans that we are continually making, and, as we are repaid in the form of Terminable Annuities not only the interest, but a portion of the principal, there is a continual increment accruing in the balances. I will state a fact which may, perhaps, surprise the hon. Member for Westminster. Since I have been Chancellor of the Exchequer, in addition to what we have paid off under the agency of the Parliamentary Sinking Fund, we paid off no less than £3,600,000 of debt out of the balances in the last four years. And why should it seem impossible, in the state of the balances, which were never better than they have been in my time, that we should be able to pay the £1,600,000 in the present year. But, supposing we are obliged to borrow, does the hon. Member think that we pay off Exchequer Bonds out of the current revenue of the year? He must do so, if he supposes that the surplus of my successor next year, if we are unable to pay this £1,600,000, will be applied to the payment of that sum; but there can be no greater mistake. The £1,600,000 will become part of the Unfunded Debt, and will become liable to be paid off by the Parliamentary Sinking Fund, or by any other manner of paying off the Debt. Therefore, whether we are unable to 1046 pay it off or not during the year—although there is hardly a doubt that we can—it in no way affects the prospects of the Gentleman for whose safety the hon. Member is so anxious—my successor, who will have to introduce the Budget for 1874. Therefore the whole foundation of the hon. Member's argument, on which he taxed us with breach of faith, and quoted the words about "keeping the promise to the ear," and other matters that we have heard before, falls to the ground, from an entire misapprehension on his part of the very elementary matters of our finance. I have told the House pretty clearly that the Government have placed before it their views with respect to direct taxation, whether Imperial or local, and I should, therefore, like to call on the hon. Member to withdraw his Motion and allow me to proceed with my proposals at once in Committee. I greatly fear, however, that he will not do so, and I am, in consequence, obliged to proceed, at the risk of wearying the House, to follow up my argument to a much greater extent than I could wish. The first thing, therefore, I shall endeavour to show is that the Motion of the hon. Member is really a Motion not to modify, but to destroy the Budget; for if the Motion is carried, there is an end of the Budget. I will not say what is to become of the Government after: one horror is enough at a time; but the Budget, at all events, will be gone. That we are to be allowed to carry the Resolution with regard to the income tax makes no difference, for it is ridiculous to suppose that any Government which has framed its financial scheme on the basis of dealing impartially with the claims of direct and indirect taxation will, should the hon. Member succeed in intercepting the relief which was intended for the poor, proceed with their scheme. I therefore beg to assure the hon. Member that it is not merely the question of indirect taxation which he is arguing; it is the question of utterly destroying the Budget, with such consequences as may result should he succeed in effecting that object. Now, I will give the House one or two reasons why we think it is better that the Budget should not be destroyed. It has, in the first place, contrary to the opinion of the hon. Member, been subjected to a very severe test by having been brought on immediately before the 1047 Easter holidays. Instead of having been an advantage, it could have been exposed to no more crucial test, because it was left to the criticism of the Press, not always very favourable to the Govern-meat, nor particularly favourable to me personally, during the Recess, when there was nothing special to write about. If a hole was to be picked in the Budget, there was no time better suited to the purpose, for there was nothing but my own feeble statement to criticize. Nevertheless, the Budget has been accepted by the country; and that being so, the hon. Member would, I think, have been wiser if he had not waited until our scheme had met with such general approval to make an attack upon it on grounds as it seems to me so ill-judged and unpopular. One claim I would make on behalf of this Budget is that it is moderate, that we have not sought to drive any principle or opinion to an excess, but that we have endeavoured, as far as lay in our power, to deal impartially with all classes. There is one set of reasoners who think that we might have treated the whole of the Alabama Claims as a debt, so as to have left the whole revenue of the year for the purpose of taking off taxes, and there is another class of reasoners who are of opinion that it comes within the service of the year, and that we might without much impropriety or inconvenience have paid it out of the revenue of the year. Well, we have taken neither course. We have prevented ourselves from being perhaps technically right, but also I think it will be admitted, from being substantially wrong, by doing, as far as we were able, equal justice. Now, with regard to the fact, that a great many gentlemen are much concerned because we have not paid the entire amount of the Alabama Claims out of the service of the year, the views, of those gentlemen are, I am afraid, not a little tinctured with the idea of what an agreeable situation they might be placed in if we had followed their advice. As to the income tax I need say nothing, as the hon. Member opposite accepts our proposal with respect to it, and it is the only thing we have done which is not apparently, in his opinion, wrong. We have relieved the richer portion of the community from the payment of £1,750,000, and in the justice and expediency of that proposal he cordially agrees; in fact, he 1048 swallows it, without making any wry face at all. But we have been wrong, he thinks, in the mode in which we propose to deal with the sugar duties. To that he raises every possible objection. I do not see, however, when we take into account that medical men pronounce sugar to be one of the most nutritious and wholesome of the articles of food, he should entertain these objections. The hon. Member was perfectly right in the statement which he made as to what I said in 1870 with regard to sugar. I made that statement perfectly bonô fide at the time, but I am not the only person connected with sugar who has seen reason to alter his views with respect to it. In 1870, many gentlemen of the greatest intelligence engaged in the trade, and whose lives had been spent in it, were of opinion that refining in bond would be ruinous. Now, however, they have become so much impressed with the failure of the present scale of duties and all the concomitant difficulties of the subject, which I explained in introducing the Budget, that they have come to the conclusion that it would be far better to have recourse to refining in bond, which they at one time were so unanimous in denouncing. Something of the same kind of revolution has occurred in my mind. I have looked at the question in the most careful manner, and I am of opinion that the complexity and difficulty of the present mode of taxing sugar are almost intolerable. Looking at the question as a matter of financial ethics, I doubt whether any Government ought to impose any duty on a system so complicated as that under which the duties on sugar, are collected. Having to deal, then, with a subject of this kind, was I from a childish wish to be considered consistent, or from the fear of being laughed at, to be prevented from taking a course which I deemed to be for the good of the trade and the good of the country? Why, I should be unworthy to hold the office which I have the honour to occupy, if I could be influenced for a single moment by any such motives. In the course which we propose we do not, it is true, get rid of the theoretical difficulty, but it sinks into insignificance on account of its practical smallness. I have therefore come to the conclusion that the change which we ask the House to sanction is beneficial to the community. But then hon. Gentlemen say— 1049 "That is all very well, but the remission will do no good; for as sugar will not be any cheaper in consequence of your remission, no more will be used." Now, that is precisely the language which was used in 1870, and no doubt many hon. Gentlemen believe it is so. But, there is no subject on which there are so many lies told as there are about sugar. It is said that it is an article on which the grocers make no profit, while others contend that whatever you take off, the duty goes into the pocket of the seller or manufacturer, and that the consumer gets nothing. Well, what happened in 1870? We then took off half the sugar duties. Since then the increase in the consumption of raw sugar and the revenue derived from it has been 17 per cent; while on refined sugar, the article mainly used, the increase has been 47 per cent; and I ask the House now to pursue the same course, confident that it will be followed by similar results. I will not follow the question of sugar any further, especially as the hon. Member's Resolution is couched in abstract terms and does not mention sugar, but speaks of indirect taxation. Whether the hon. Member felt some compunction in bringing before the House a point which involved the letting the people have their sugar a little cheaper, or whether he thought it more befitting this momentous debate to refer to it under the head of indirect taxation, I, of course, cannot tell, and I shall not trouble the House at any great length about the matter. This, then, is our Budget, and it is evident you cannot omit sugar from it, and leave the rest. If you make the omission, you destroy the principle on which it is based, and the whole edifice falls to the ground, and will have to be re-constructed anew either by its own architect, or by some other architect on the other side of the House. I will now proceed to another part of the subject, and that is, as to the effect of the Motion. The hon. Member does not appear to be aware of the full force of the missile which he would launch; or, if aware of it, I can hardly think his advisers would have counselled him to expend it on the Budget. This Motion is not merely a refusal to enter into the question of indirect taxation—it is not merely a blow levelled at the Budget—but it is a Vote of Censure on the Government; for, if agreed to, it is as much as to say that the House refuses 1050 to trust us any further with the management of the Business of the country, but that it requires us before going further to give them our views with regard to the maintenance and adjustment of direct taxation. They call on us, as persons suspected, to give an account of our principles and conduct. It is impossible to conceive a more decided, a more flaming insult to a Government than is contained in such a proposal—and we will meet it in that sense. I do not blame the hon. Member in the slightest degree for the course which he has thought it right to adopt, but I should have wished him to consider a little more what must be the necessary result of carrying his Motion. We have had of late a little experience in such matters. Does the hon. Member wish to see that which happened a few weeks ago played over again? Perhaps hon. Gentlemen opposite who support the hon. Member will tell us what view of the case they take should the Motion be successful; and what proposal they will be prepared to offer for the consideration of the House? Are we to have another instance of splendid abnegation? Are we to have another fortnight employed in walking backward and forward, and coming to a conclusion which everybody foresaw before the thing happened? It seems to me that in the former ease they might say—" Like rebellion, it lay in their way and they fell into it." But, now, it is no action of ours that brings on this crisis; this is an entirely spontaneous Motion of the hon. Member for Westminster on their behalf, and therefore, in the fewest possible words, I say we have brought forward a Budget of which I take the liberty of saying in passing—although some people have been good enough to say it is not my Budget—it is my Budget not only technically but actually; it is not only my Budget, but I am proud of it, and I mean to stand by it. We have brought forward this Budget, which I think is generally, and I will say deservedly popular, and the answer which the hon. Member makes to us is this Resolution, which is nothing less than a Vote of Censure. I should like to know, and I suppose my wish will be gratified, in the course of the debate, what hon. Gentlemen opposite will do if this Vote of Censure is carried? That, however, is a subject so painful that I will not anticipate it; but I will 1051 go a little further, for I have not yet done justice to the Budget. I must request the House to observe how carefully the Motion of the hon. Member is worded—That before deciding on the further reduction of indirect taxation, it is desirable that the House should be put in possession of the views of the Government with reference to the maintenance and the adjustment of direct taxation, both imperial and local.Well, Sir, that means that, of course, the House should refuse to deal with indirect taxation till it is put in possession of our views with regard to direct taxation, Imperial and local. When it is put in possession of our views, what then will it do? Suppose our views are not satisfactory, will it then go on with the reduction of indirect taxation? Clearly not. For it can only be if our views are satisfactory that the House is to proceed with the further reduction of indirect taxation. If our views are unsatisfactory, the House is not to proceed in that direction. Therefore, I do no violence to the Resolution when I state its effect to be this—that they will not even take into consideration the question of the reduction of indirect taxation until not only we state our views, but until they are satisfied with our views with regard to direct taxation, Imperial and local. Then we must go a step further yet. What would satisfy the hon. Member? I have stated the views of the Government, and, as I have said, there is nothing new in them—nothing which was not known before, it is quite clear these views will not satisfy the hon. Member or hon. Gentlemen opposite. It is quite manifest from the wording of his Resolution, and from his whole tone and manner that this is what would satisfy both him and them. In the first place he and they would have a penny off the income tax, but without any reduction of indirect taxation with which we accompanied it. They have accepted that, and they stick by it. Then they must "have our views on indirect taxation"—what does that moan? It is quite manifest that taken in connection with the whole of the Resolution, it means there must be a declaration from us that there is a chance of a further reduction of direct taxation. The effect of that would be to strike out of the revenue a large sum of money now paid mainly by the rich; and that done, they 1052 say they must have "local taxation considered." They will insist, as a condition of allowing us to proceed with our Budget at all that they will not only have a penny off the income tax given them, not only will they have some promise of remission of direct taxation given, but over and above this—out of the revenue so manipulated—that is a revenue in which the contributions made to it by the poor remaining the same, while the contributions made to it by the rich are considerably diminished—out of that revenue they will have a large contribution for the relief of the land in the case of local taxation. And it is only after this treble tax they are prepared to levy on the poor that they will consent to take into consideration for a single moment the propriety of repealing any indirect taxation whatever which really falls on the poor. That is the position which the hon. Member and those acting with him take up. They ask for a treble remission of taxation for the rich. First a penny off the income tax; second, the remission of some other direct taxation, for which we are absolutely to engage before they will allow us to get at indirect taxation; and, finally, they take out of the revenue thus manipulated a large sum of money to compensate for the local rates. I hope that will be understood both in Parliament and out-of-doors. I say that it is a proposal which is in the highest degree unequal and unjust. I say it is reversing the policy of Robin Hood, and stripping the poor to feed the rich. I say that any Government belonging to the party which I have the honour to obey, which would consent to entertain such a scheme, or to touch it with the tip of their little finger, would be disgraced. Such a policy would keep the sugar trade hanging between heaven and earth, with trade utterly paralyzed waiting till the whole battle had been fought out for local taxation. I have said that this Motion will be injurious to the interests of the poor and to the interests of trade; but, I further say, such a measure is not only unjust, but unwise and dangerous, for these are not days when we can afford to give just cause for discontent to the working classes. More than that, remember what we were told the other day—that Dissenters had lost their power in England because hon. Gentlemen opposite had placed power in 1053 democratic hands. What is the meaning of that? Do hon. Gentlemen opposite suppose that, having put power into the hands of the lower classes, they will tamely submit to see taxation modified against the poor and in favour of the rich? What is their view of the character of the poor? Do they consider that the poor are saints, or that they are idiots?Beasts that lacked discourse of reason.If the poor do not see these things which are so palpably plain, they are absolutely devoid of common sense; but if, on the other hand, they do see them, and, seeing them, they give their support to those who make such a proposition, why they must have the most extraordinary self-denial and the most wonderful patience of any people on the face of the earth. This, however, I would say, let hon. Gentlemen opposite beware lest in digging a pit for us they fall into it themselves. It was not for this that we have been endeavouring to economize the public money. Our efforts were directed to another object. We wished the rich to remain in possession of their riches, and that there should be no heart-burning in the country; but we wished also that justice should be done to the poor; and miserable indeed it would be to reflect after laboriously economizing the public revenue, that it was to come to this at last. I have no right to presume to offer advice to hon. Gentlemen opposite. They know their own game; but if I might suggest what I think would be a more prudent course than that they are taking, I would say they would do wisely to give up this Resolution, crossed by all the elements I have pointed out—they will accept the Committee, and wait for the introduction of the Bills which my right hon. Friend will bring in almost immediately. In doing that I trust they will wisely assist us with their local knowledge and experience in endeavouring to get rid of the numerous defects which now deform and mystify the whole question of local taxation; and when all that has been done, if they find that we or any Government that may be in power are not willing to redeem their pledges which have undoubtedly been given on the subject, let them bring forward any Vote of Condemnation which they may think proper. At present, the whole movement is entirely premature, and the grievance, if any 1054 such exists, not worthy of a moment's consideration.
§ SIR STAFFORD NORTHCOTE
It is, Sir, one of the principal functions that appertain to your high office to address Her Majesty in the name of this House, and pray that Her Majesty will grant to the House free liberty of speech. I am not at all sure it may not be necessary, after the oration to which we have just listened from the right hon. Gentleman the Chancellor of the Exchequer, that we, the independent Members of the House, and especially those who have the misfortune to sit on this side, should apply to you to make a similar request of Her Majesty's Government, that we may have accorded to us that liberty of speech which has been granted to the House generally, for after the language which the right hon. Gentleman has indulged in, it must be with a feeling of great hesitation that anybody could possibly rise on this side of the House to criticize any measure whatever that Her Majesty's Ministers may bring forward. My hon. Friend the Member for Westminster (Mr. W. H. Smith) complains that Her Majesty's Government have not favoured us with all the explanations that we think should have been given of the views of the Government with reference to the important question of direct taxation; but after what we have heard from the right hon. Gentleman he must see that he is entirely wrong in making such a complaint. My hon. Friend ought to express gratitude to the Government for giving any explanation at all, for it would seem as if all they had to do, is to tell us what they choose to propose and what measures must be adopted, and if we refuse to accept them we must take the consequences. Now, the Chancellor of the Exchequer made use of an expression which goes rather beyond the ordinary latitude of Parliamentary language when he said that this article of sugar had been the subject of more "lies" than any other he was acquainted with. I am not fond of that word, and I think it would have been better if he had described the fallacies as "imaginative statements." But if there be "imaginative statements" with respect to this article, I am bound to say a more coloured "imaginative statement" than that which the right hon. Gentleman made when he endeavoured to represent the Motion submitted by my hon. Friend 1055 as a Motion intended to take taxes off the rich and to leave them on the poor I never heard, and I give the most direct and flat contradiction to that reflection on my hon. Friend's Motion. I will undertake to say that that can be neither the meaning of my hon. Friend's Motion, nor the inference which can in justice be drawn from it. What is the real position of the question? The right hon. Gentleman the Chancellor of the Exchequer says that the matter is broader and more important than my hon. Friend chooses to describe it, and that we are raising an important question of principle. Let us see what that question is, because the right hon. Gentleman has entirely misapprehended, or, if he has not misapprehended, he has entirely misstated it. With regard to Financial Statements, undoubtedly it is in many eases sufficient for a Chancellor of the Exchequer very briefly to lay down the proposals which he has to make with respect to the income and expenditure of the coming year. But from time to time conjunctures arise when it is important, and when it has been usual, for Finance Ministers to enter somewhat more fully into the principles of our Financial System, and to invite the House and the country to proceed in the regulation of the finances upon the principles which he lays down. Now, one of the most important of these conjunctures occurred in 1842, when Sir Robert Peel for the first time proposed the income tax with a view to improve and reform our system of indirect taxation. Sir Robert Peel found our system of indirect taxation in a most hopeless situation, and that in consequence of the condition of the revenue being derived mainly from that source, the country was anything but prosperous, and we were continually met by deficits and financial embarrassments. Sir Robert Peel introduced his great measure in 1842 with this view. He said, "I will lay on for a time a tax on income to enable me to reform the system of indirect taxation, and improve the finances of the country." It was a strictly temporary measure which was then proposed. His policy, however, was successful, more successful than he anticipated, and he carried it further than he originally intended, and the consequence was, that he renewed the income tax for the purpose of making further reforms, and that tax continued 1056 a portion of our system during the whole of Sir Robert Peel's administration. After his administration it changed to some extent its character, and it came to be regarded not so much a temporary as a permanent element in our system of taxation; and when it came to be so regarded, complaints were made as to its incidence, and proposals for its readjustment. When, in 1853, the present Prime Minister, as Chancellor of the Exchequer, took up this question, he dealt with it in one of the greatest, perhaps the greatest, of all his financial speeches; and what was the general character of what he said? Having explained the footing on which Sir Robert Peel had placed the income tax, he showed by arguments which had never been answered, that it was incapable of being re-modelled. He admitted that it was a tax rather fitted for a temporary purpose than for a permanent source of revenue, and he proposed a measure which was to carry out certain reforms, and then to put an end to the tax. I will not go into the details of the circumstances which prevented the execution of that great design; but in 1860, when it should have been carried into effect, the right hon. Gentleman found himself unable, in consequence, to some extent, of circumstances over which he had no control, to give effect to the policy of 1853—that is, complete effect, for he moved still on the same lines, and he looked to the ultimate, if not the early extinction of the income tax. But at the time the right hon. Gentleman was tempted by the Treaty of France—which was then in its cradle, and is now, I am afraid, on its bier—to give up the idea he had formed of asking the House to remodel the tax, and he was compelled to ask an increase of its amount, in consequence of having to go further than was contemplated in reducing indirect taxation. The result was, that from that time to this the income tax has remained on a sort of Mahomet's-coffin-footing, suspended between the idea of being a permanent portion of our financial system, and a temporary tax, some day or other to be removed. Now, what we want to know I is, what is the view which the Government takes of the character of the tax? Is it to be considered as part of our permanent system, or is it to be shortly removed? The right hon. Gentleman will 1057 naturally say—"That is a very interesting question, but why have you not asked it any time these last 10 years or more?" The tax, no doubt, for the last 10 years or more has been looked upon as one not likely to be got rid of; but there are two or three circumstances which induce us now to put that question to Her Majesty's Government. The first of them is this—The progress of the prosperity of the country and of the revenue has been so great that now people are beginning to say that it would not be such a wild idea to attempt to get rid of the income tax altogether in a reasonably short time as a few years ago it appeared to be. The consequence is, that a considerable agitation has sprung up in the country which cannot be disregarded, which may have very serious and mischievous results, and which seems to demand some statement on the part of Her Majesty's Government. What is the nature of that agitation? I think we can see pretty well how it arose. We find some town-councillor of an intelligent turn of mind who has been reading in the newspapers the report of some speech by the Prime Minister as to the prosperity of the country, which is advancing "by leaps and bounds." Then he has been reading a Budget Speech by the Chancellor of the Exchequer, in which he complains that his balances are inconveniently large, and that money is tumbling in upon him at such a rate that he has to appeal to the Chairman of Committees to know what he is to do with it. Then comes the right hon. Gentleman the Member for Pontefract (Mr. Childers), who says that the expenses of the country are cut down in the most marvellous manner. Well, the intelligent town-councillor reads all this, and he goes home with a glow of satisfaction at the thought that we have a Government which is dealing in this extraordinarily successful manner with the finances of the country But what is the first thing he falls in with at home? It is a notice paper from the tax-gatherer that he has been surcharged upon his income tax. He is surprised that he should have been so surcharged, but he thinks there must have been some mistake. He goes out, and he meets a friend who is in great indignation because he also has been surcharged. It is here surcharge, there surcharge, and everywhere surcharge. 1058 The consequence is, that people get indignant; they hold meetings in order to get up memorials and representations against the income tax. But that is, perhaps, a matter of comparatively little consequence. But see by how much more important persons this movement is taken up. My hon. Friend the Member for Westminster referred very properly to the great meeting held in the beginning of this year, before Parliament assembled, at the Mansion House, under the presidency of the magistrate of the first City of the Empire. That meeting was of the greatest possible importance. It was attended—not only by persons of consequence belonging to the City, but by 18 or 20 Members of Parliament, the majority of them being of the Liberal party, and among them men of a position which enabled them to speak with authority on the subject. Reference has been made to the right hon. Member for Tiverton (Mr. Massey), who moved the first Resolution. Well, what is the position of the right hon. Member for Tiverton? He for many years sat in this House, he has known the course of legislation, he has sat in that Chair, he has listened to, and presided over, ninny of the most important financial debates, he has held the great position of Financial Minister in India, he has made himself master of this question, and he comes forward voluntarily at a meeting at the Mansion House, at a meeting in the City of London with which he has no connection in the world, and. moves the first resolution. Well, that certainly challenges attention, because the right hon. Gentleman is not a man likely to get up and make rash statements and hasty speeches. On such a subject he would speak, and he did speak, with authority, moderation, and deliberation. Well, let us see what the right hon. Gentleman said, because he states the case in a way that deserves the attention of the Government. The right hon. Gentleman moved a resolution to the effect that the income tax was inquisitorial in its character, unjust and unsatisfactory in its operation, and demoralizing to the national character. He added that it was quite unnecessary for him to deal with the several points of the proposition that the only solid argument that had ever been urged in favour of the tax was the necessity of providing for some overpowering emer- 1059 gency, that no such emergency now existed, and that if ever there was a fitting time for demanding the repeal of the tax, the present was that time. The right hon. Gentleman urged the meeting to express their opinion in terms that the Ministry could understand, and assured them that they must not expect any time in the future more favourable for their purpose. These are sentiments which are strongly, but not intemperately expressed. They are urged in the spirit not of a heated and ignorant orator, but in the spirit of a responsible Member of Parliament who has been in office and may be in office again; they are urged with care and deliberation, and when the country hears such statements as those put forth at great meetings by such authority, it is not unnatural that the country should be excited on the subject. The Government, moreover, must feel that it is not desirable uncertainty should prevail as regards their intentions in this matter. If it should not be the intention of the Government to repeal the income tax, they should put a stop to these agitations by a plain assurance that they think the income tax to be a permanent portion of the taxation of the country. The Government, however, not only does not do this, but, as we have been reminded, the Prime Minister held language a few days ago to a deputation clearly of a character which would lead people to understand that he did not look upon the abolition of the income tax as anything out of the question. I should like to ask the right hon. Gentleman whether he was correctly reported in the newspapers, which represent him as having said—With regard to the reduction of the tax, whatever tended to bring it clown must bring it more nearly within the discretion of Parliament. He could not say they would he prepared to take up at once the consideration of the claims of the income tax for reduction from time to time with a view to its repeal.If that language be correct, and the right hon. Gentleman does not challenge it, what possible inference can be drawn from it than that there are reasonable grounds for expecting the ultimate extinction of the income tax? If it be not so, what is the fact? If the House will consider the effect of keeping the income tax at command as a sort of make-weight, it will at once see the 1060 great importance of this question. If the income tax is to be moved up and down as a sort of balancing entry in the Budget, a very little reflection will show that a great deal more is involved in this question than the mere question of taking taxes off one article and putting them on another; and I maintain, and would urge upon the House, that it is important to determine whether we consider the income tax as a means of providing money for an emergency or to carry out reforms, or whether we regard it as a permanent engine of taxation. If we maintain it as a permanent engine of taxation, we are tempted to spend 2 whatever it is pleasant to spend, and to take off whatever it is pleasant to take off. The income tax is always at command to be raised to 4d. or 6d. as occasion requires, and you have not that; pressure put upon you to study economy I as you would otherwise have. You may, in fact, go as far as you please in any direction which is pleasant, because you would always be able to set the matter right by shifting the income tax. By adopting this rule you have in the past been tolerably free in admitting new items of expenditure, and very liberal in striking off taxes; but the consequence has been that a number of sources of revenue have been brought down to a dangerously low ebb. The Chancellor of the Exchequer told us the other day that he expected to derive no less than £19,000,000 of revenue this year from spirits alone. Does the House see what is involved in that statement? £19,000,000 out of a revenue of £73,000,000, or more than one-fourth of the entire revenue of the country, is to be raised from spirits alone. That will not only suggest many reflections of a painful, but some also of an alarming character. If you are trusting to the income tax to set you right, and continue to cut off one source of revenue after another, you will some day find yourself with a demand you are unable to meet. The Chancellor of the Exchequer says, of course you will have to fall back on the income tax as the matter stands at present. [The CHANCELLOR of the EXCHEQUER: I never said so]. I am pointing out that the House will have to fall back upon the income tax. If the right hon. Gentleman would listen, instead of engaging in conversation, these mistakes would not be made. Let us look at the reasons offered by the 1061 right hon. Gentleman for the reduction which he proposes in the sugar duties. He has discovered in the fifth year of his period of office that the complications of the system of the sugar duties are quite intolerable, and that it should be a point in financial ethics to get rid of them. The right hon. Gentleman must excuse us, if we say there are other people who might be allowed to enlarge upon the complications of the income tax, and if we may be allowed to measure financial ethics on the one side against financial ethics on the other, I am not at all sure that the moral philosopher would not give a preference to striking off the income tax. But that is not the main reason which has influenced the right hon. Gentleman. He has told us also that the sugar duties form a tax upon the food of the people. Strictly speaking, however, sugar connot be described as the food of the poor; it has been demonstrated, in an interesting work on the subject, that the consumption of sugar by the upper and middle classes is much higher in proportion to the consumption by the lower classes than is the case with many other articles. Sugar, however, is a very important article of the food of the people, and, therefore, enters largely into the food of the poor; but if we are to go on this new principle of remitting an equal amount of direct and indirect taxation, looking out for taxes on the food of the people and reducing them, to what extent is this principle to be extended? Are you to go on reducing the duties upon sugar, tea, and coffee until we reach a point at which it will be better to abolish them altogether? If so, can you in justice refuse to do the same for another article which also enters largely into the consumption of the people—I mean malt? Malt may not be among the food of the people, but it enters more largely into the consumption of the people than sugar. Surely, whatever our charitable feelings may be, we must consider the financial result of these reductions. We have often been told that Sir Robert Peel's remissions have given great relief to the people, and at the same time have involved no loss to the revenue, because of the increased consumption. From the observations made by the right hon. Gentleman to-night, you will think he intended to create the same inference with regard to sugar for he points out 1062 that when the duty was reduced, consumption was largely increased. But largely as the consumption may have increased, sugar does not yield the amount of revenue which it formerly produced. In Sir Robert Peel's time the duty was 24s. a cwt., and the revenue £5,000,000. The duty is now 4s. a cwt. and the revenue has fallen to between £3,000,000 and £3,500,000, with a great increase of population, and an enormous increase in the consumption of sugar per head of the population—namely, from 19lbs. to between 40lbs. and 42lbs. per head. If, therefore, you reduce, and still more if you take off, these taxes, how are you going to make up the deficiency? The popular answer is—"You must tax the wealth of the country;" and apparently the right hon. Gentleman thinks that by the income tax he is taxing the wealth of the country. Now, in whose hands is this wealth? A curious and interesting estimate has been made by Professor Leone Levi that of the total annual income of the country £500,000,000 is in the possession of the upper and middle classes, and £400,000,000 a-year is in the hands of the working classes. That is a rough estimate, but it indicates an enormous amount of wealth in the hands of the working classes, who do not pay income tax. How is that wealth to be got at? You cannot tax it directly. You tax it indirectly, by taxes upon articles of consumption, which fall not upon the poor exclusively, but upon poor and rich together. You tax it not by a system which applies a grinding and inevitable pressure to every man, whatever his circumstances. You lay your taxes upon articles which he may, if he chooses, deny himself, and upon which he need not pay any contribution to the State at all, and you really leave it to him to pay much or little towards the national revenue at his option. Now, as Professor Leone Levi points out, taxation falls tolerably fairly upon both classes; that is to say, out of a total taxation of £90,000,000, £60,000,000 is paid by the upper and £30,000,000 by the lower classes. [The CHANCELLOR of the EXCHEQUER: But the one pays out of his abundance; the other out of his necessities]. Let us see how that is. The man who pays out of his necessities—that, is, as I suppose, the working man—pays 79 per cent of what he is taxed upon luxuries, 17 per cent upon 1063 necessaries, and only pays 4 per cent of taxes which he cannot escape. I call taxes upon luxuries taxes upon spirits, malt, wine, and tobacco. I call taxes on necessaries taxes on sugar, tea, coffee, and some other articles. The question is an important one. It is not raised in the most convenient way, but that we cannot help. It would have been more convenient had the Government come to us and said—"These questions concerning the income tax and local taxation raise a difficult problem as to the proper mode of adjusting taxation. We will, therefore, give you the facts and apply the principle to the facts, producing our plan of taxation." Instead of doing so, the Government simply call upon the House to vote upon two propositions, without observing what the acceptance of these propositions involves, except that the Chancellor of the Exchequer now says—"They involve terrible consequences to the Budget and the Ministry;" they do not, however, show what effect they will have on the financial system of the country. Meanwhile, the Government throw upon those who venture to differ from them the awkward task of calling for explanations, and pointing out difficulties when we are not able and should not be justified in proposing any plan to meet them. "Are you prepared with a plan?" asks the Chancellor of the Exchequer. My answer is, that it is not our duty to prepare any plan, nor would it be right to do so; because the question which would be raised in such a contingency as the possible abolition of the income tax would be of the gravest, the most complicated and delicate nature, and it would be impossible, as well as wrong, for the Opposition to say what they would do under such circumstances. On that point I wish to guard myself, for it may be supposed, and perhaps not unnaturally, from what I have been saying, that I am advocating the abolition of the income tax. Sir, I am not advocating its abolition; I express no opinion upon that question; I say it is a point on which there is a great deal to be said on one side, and a great deal to be considered on the other; for if you did away with the income tax your whole system of finance would be altered, and you must, of course, redress the balance between direct and indirect taxation. All these are questions of the gravest character, and I am not attempt- 1064 ing to express any opinion upon them; I am merely pointing out the danger of allowing this matter to go on as it is now going on. Here, however, are men legitimately encouraged to believe that the question is open for consideration, and that the Government do not desire to preclude discussion. Accordingly, they address their constituents and address public meetings, making pledges, and saying—"Let us get rid of the income tax." Are these Gentlemen, then, blindly to support in this House propositions which will, in fact, render the abolition of the income tax almost impossible. It may be right to give up the idea of abolishing the income tax; but if so, let us have our financial system re-constructed accordingly. Do not lead us to take steps in the dark. As regards local taxation, the matter is in some respects graver, because you have on record not only speeches to constituents and answers to deputations, but solemn votes of this House passed by overwhelming majorities. You have also measures proposed by the Government to which they have told you quite recently they adhere, and yet in the same breath they say you must vote for proposals which, as the Prime Minister declared in his letter to the Chairman of the Metropolitan Board, if adopted by the House of Commons would put it out of their power to give relief in the matter of local taxation. [Mr. GLADSTONE: During the year.] They ask you to wait till Thursday for their measure, but meanwhile you are to empty your pockets, which is like inviting you to attend a charity sermon, and to leave your purse at home. If the House should re-affirm the Resolution of last year, the Government have their answer ready—"We admit you are quite right in asking for this concession, but we have got rid of our surplus; we have nothing to give; and what is more, you have agreed to the financial proposals which have brought about this result." In his letter to the Chairman of the Metropolitan Board, the Prime Minister says that "if the House should sanction the principal provisions of the Budget, we shall not be able to do anything." Now, "there is much virtue in an 'if.'" What you are really told is that you have no latitude or liberty; and in that case what we are now doing is a mere formality, and these discussions might as well be put an end to. If those who have the 1065 same opinions on these subjects differ from the views entertained by Her Majesty's Government, and if that divergence of opinion is not only between the Government and hon. Gentlemen on this side of the House, but between the Government and a large number of those hon. Gentlemen who usually sit behind them—if there is a divergence of opinion such as was expressed by the vote of last year, then I say the House has a right to demand the fullest explanations before it allows itself to be concluded with reference to taxes. My hon. Friend the Member for Westminster, who has so many things upon his mind that he has probably not given so much attention to our financial system as the Chancellor of the Exchequer has, fell into an error undoubtedly with regard to the effect of the arrangements that are now proposed upon the finances for next year. Of course, we know that the £3,200,000 will be paid out of the revenue of this year, that if the revenue be insufficient to pay the whole of the £3,200,000, the Chancellor of the Exchequer can issue Exchequer Bonds to meet the deficiency upon the finances of the year, and that deficiency will be met as other deficiencies have been met, out of the balances—that is to say, the balances will probably be diverted from going to the reduction of the National Debt. But if the provision which the Chancellor of the Exchequer makes ex abundante cautela, with regard to Exchequer Bonds be required, and if those Bonds have to be provided out of the Ways and Means of next year, then of course my hon. Friend is right. But I do not think anybody believes that will be the case; and if that should not be the case, then there will be a very considerable fund in your hands next year, provided all things go well. It would then, no doubt, be possible either to deal with local taxation or, if desirable, to make a further reduction in the income tax. I may be asked—"Why, then, could not you leave things alone till you come to next year?" Well, if the Government had taken the plan which I confess for a long time I expected they would have taken—if they had said—"We will pay the whole of the Alabama Indemnity out of the revenue of this year, and we will then come to the House and say local taxation is a very difficult and complicated question; we 1066 are not prepared to deal with it at present until further inquiries are made; we are going to propose measures for making further inquiries; and we therefore ask you to hold your hands with regard to any other financial measure until we know what we shall do with regard to local taxation," I think they would have had a very strong case. But when they come forward and say—"We ask you now, while the matter is sub judice"—it is hardly sub judice yet—"to consent to a remission of taxation very large in itself, and which is proposed on a principle which must lead to very much greater indirect taxation," they are asking what is unreasonable. I have very few words more to say, but they are important, because I feel it necessary to refer to some observations made by the Chancellor of the Exchequer last year. The right hon. Gentleman says that if you take off the sugar duty you benefit the poor. I have pointed out that a very large amount of the wealth of the country must escape taxation if it is not taxed indirectly. I have pointed out that a great portion of that wealth is consumed in a costly expenditure upon luxuries—upon malt, spirits, and tobacco. I have further pointed out that if you make any great reduction in the revenue which you derive from that source you must make it up from some other source, and I presume that source is to be what is called the wealth of the country. Well, I say the line which divides the income tax payers from the rest of the country is by no means a line identical with the line which divides the wealth of the country from the poverty of the country. I say that among those who are payers, of income tax, there is as much poverty and as much suffering as you could find among the working classes. Well, that is a bold statement to make, but I have high authority for what I am saying. I am going to quote in proof of it some observations made by the Chancellor of the Exchequer himself. He told us in March last year—There is no class of the community who are so severely pinched by taxation as the lower class of income tax payers. Everything seems to hit them. They pay income tax, they pay house tax, and their principal consumption is the consumption of articles on which taxes are and still will be retained. Their tea, their coffee, their sugar, their spirits, their beer, all contribute to the taxes; and then they are 1067 heavily amerced in taxation in the shape of local rates. I do not think that any class pay so much as the poorer part of the income tax payers."—[3 Hansard, ccx. 624.]The right hon. Gentleman, I suppose, will tell us that he is going to benefit this unfortunate class of the community by reducing the duty on their sugar. Well, I do not dispute that a reduction of the duty on sugar will be of some benefit to these persons. I do not at all join in the cry that when you take the duty off any article you do no good to the people who consume the article. I am perfectly willing to admit that the reduction of a farthing in a pound will be of some benefit, and of greater benefit, perhaps, than the amount of a farthing to the consumers of sugar. But will the right hon. Gentleman or will the House look at the matter in that way? If you take off taxation and reduce the revenue on one hand you must make it up on another. Let us assume, for the sake of argument, that we strike off the whole amount of the sugar duty instead of a half—that would be about £3,500,000. If you lose £3,500,000 in that way you must lay 2d. on the income tax, which would represent exactly the same amount. Now, will the House consider for a moment what would be the relative advantage to a member of this unfortunate class, to which the Chancellor of the Exchequer solicits our attention and our sympathy, of taking off not the half but the whole of the sugar duty, or of taking 2d. off his income tax, which is the same thing to the revenue. Suppose a family of five persons which pays tax on an income of £240. These persons come strictly within the category which the right hon. Gentleman presented to the House. The extent to which they would be benefited by a total remission of the sugar duty would be 8s. per annum; but if 2d. were added to the tax which this family pays on income, that addition would amount to 40s. per annum. Does the House think they will not see the difference, and fondly imagine that the reduction of a farthing per lb. on sugar will compensate them for the retention of a penny in the pound on the income tax? These are considerations which apply, I think, to the position in which we stand. In conclusion, I must say that we do not attempt to lay down any canon, or to 1068 propose any counter-policy to the policy of Her Majesty's Government; we say that we are perfectly right in demanding from them a full and explicit statement of their views, and the principles on which they propose that these financial matters should be regulated for the future, and that it is injurious to the interests of the country that this sort of agitation which is going on against the income tax should continue. One advantage, however, we derive from this discussion is, that we at all events, or those who may vote with us, may free ourselves from becoming the accomplices, before the fact, of the non possumus plea which I suppose will be put in on Thursday.
§ MR. W. M. TORRENS
said, that as one of the Members who last year voted with the hon. Baronet the Member for South Devon (Sir Massey Lopes), he wished to state the reasons why he thought the hon. Member for Westminster (Mr. W. H. Smith) should be content with having raised that discussion, and why he would not strengthen his case, if he went to a Division. For his own part, he should give his support to any proposal for revising the incidence of local taxation, independently of the consideration whether the Chancellor of the Exchequer for the time being had a surplus or a deficiency to deal with, for it was an undoubted fact that Imperial charges were laid upon what were called rates, and the time had arrived when the House was bound to lend its ear to the claim of justice on behalf of the lower middle classes, upon whom those burdens pressed with undue weight. It had been truly said by the right hon. Gentleman who had just sat down that no persons suffered so severely as those who formed the class which lay between the wage-earning class and the wealthy class—namely, curates, clerks, surgeons, small shopkeepers, and small farmers, and if ever there was a time when it was the duty of Parliament to apply itself to the consideration of the exigencies of that class, it was the present. It had been stated over and over again that the country was in a highly prosperous condition. To a great extent that was true, but it was the prosperity of the country that was prosperous. The rich were getting richer, and the wage-earning classes exacted better terms for themselves by the means of trades 1069 unions. Large fortunes were being made with astounding rapidity; and speculation, whether legitimate or gambling, never yielded so quick a harvest as at present. But in that prosperity the lower middle classes had no part. The price of meat, of fuel, and of house rent had largely increased, and there appeared no chance of its being reduced to its former level; and the consequence was that persons in the lower middle classes found it almost impossible to clothe and educate their children and to bring them up in decency. That was a good reason why an unjust and popularity-hunting system of finance should not be forced upon the country. The Corn Laws were repealed not in order to enable manufacturers to make cent per cent on their money, but because it was believed that the best way to relieve the lower middle classes, who were suffering severely at the time, would be to make bread cheap; and it was now the duty of the Government to throw upon the Imperial Revenue burdens which were in too large a degree borne by the classes to which he referred. He had heard, not with surprise—because the right hon. Gentleman the Chancellor of the Exchequer had lost the faculty of surprising anybody, but with admiration, although mingled with regret for his use of that unspeakable maxim of oratory—l'audace, l'audace, et toujours l'audace. He had heard that right hon. Gentleman state that those who sought to revise local taxation were endeavouring to exempt the property of the rich at the expense of the poor. He would ask the Chancellor of the Exchequer to condescend to facts for a few moments. What they wished to do was to procure an equality of burden; and how could they say that the burdens of local taxation were equal now, when, from the circumstance of long leases being outstanding, the largest proprietor in the borough he represented drew £90,000 a year from it, without paying a shilling to the rates in consequence of his not being subject to assessment; and when another noble Lord, the possessor of property in the borough, in which the population was of the poorest description, struggling to live, often unable to send their children to school, and being constantly threatened with executions for non-payment of the rates, drew £20,000 a-year from it, and did not contribute 6d. to the rates, 1070 although those rates had increased within a generation or two from 1s. to 2s. 8d. in the pound. Yet when he (Mr. Torrens) asked that the police rates, the rates for the administration of justice, and for the lunatic asylums, should be charged on the general taxation of the country, so that all should contribute their share—he was met with the official taunt, as a person anxious to tax the wealth of the country for the benefit of the poor. He would ask the Chancellor of the Exchequer for whose benefit chiefly gaols, penitentiaries, and the whole mechanism of justice were maintained. Was it for the benefit of the man whose domicile was of the humblest description, or that of the man who was surrounded by luxuries? On the hustings—he begged pardon, he had almost forgotten that there were such things as hustings after listening to the right hon. Gentleman's speech—such a statement as the right hon. Gentleman had made would be termed a misrepresentation, if it were not met with a more monosyllabic denial; and he had no hesitation in denouncing such a remark, calculated, though it might be, to call forth thoughtless and reckless cheers, as unfair and untrue. It was invidious and perilous in the present state of society, to discriminate, as the Chancellor of the Exchequer had done, between different classes of society, but if such a discrimination was entered upon, he (Mr. Torrens) was bound to say that it was not for the poor they maintained their system of criminal justice, but especially for the rich whom they exempted from rating. Why, it would be as absurd to rate property in Wales for the support of the Welsh Fusileers, or the rateable tenements of Fermanagh to clothe and arm the Enniskillin Dragoons, as the poor of London for the support of the constabulary of London. Police and justice were maintained for national reasons, but the charge ought to be borne by all the property of the country, instead of by £120,000,000 out of £700,000,000 or £800,000,000. In fact, he would say, without hesitation, even if he thought it would imperil his seat in that House, that it was unjust, shallow, and idle to treat that question as one of land against town. Representing an exclusively town constituency, he declared that without regard to creed, party, or class, men were una- 1071 nimously of opinion that that was emphatically a townsman's question, and he had uniformly told the hon. Baronet the Member for South Devon that if he did not regard it in that light he would not vote with him. He must, in justice say the hon. Baronet agreed with him. Wishing to see last year's majority of 100 remain, he was against a Division on a side issue like the present; but it would be impossible for the Government in the long run to avoid adopting some measure for properly adjusting the incidence of taxation. He felt that it would be best to wait and see what the Ministerial plan was; but if, as he thought the First Minister intimated, it was to be framed on the same lines as the unlucky scheme of the right hon. Gentleman the First Lord of the Admiralty (Mr. Goschen) before his change of office, the fact that that scheme wont down by the head before it had well cleared the port was a warning to the Government against indulging in any hope of success. The substance of that proposal was a division of the rates between the owner and the occupier. Now, rateable property was of three kinds. First, there was the property held under lease, and two-thirds of the rateable property of London was of that description, and in reference to it a question was very properly asked the Government, within 24 hours after their late measure was introduced, whether they proposed to effect their object by breaking the covenants of existing leases? That question was answered by the right hon. Gentleman (Mr. Goschen) in the negative, after, as he (Mr. Torrens) supposed, a fitting consultation with his Colleagues upon so important a problem. [Mr. GOSCHEN said, that part of the Bill existed before he introduced it into the House, it having been founded on a decision of a Committee of the House of Commons.] Well, that made matters worse, because it thus appeared they had brought in a Bill which they knew beforehand would not have touched two-thirds of London. Next there were tenants at will, or tenants from year to year. He would ask anyone how it was possible by Act of Parliament, when houses were very plentiful, to prevent landlords from bearing the whole burden of local taxation, or when they were scarce, to prevent tenants from bearing it? A third-class—and it was one in which he felt deeply interested— 1072 was that growing class who, out of small means, had acquired small tenements, and had thus become their own landlords. 'It should be the desire of the House to see the number of such persons multiplied, for they were the pith and marrow of the community, and afforded the best support to true Conservatism; but so far as they were concerned, the proposed division of the incidence of the taxation would be putting into the right hand pocket what had been taken from the left. He hoped that the Government would introduce a measure which would be one of solid, real, bona fide justice, and that object could only be secured by extending the area of rateable property so as to include the £600,000,000 or £700,000,000 per annum whose owners were all interested in the preservation of order. Either the incidence of local taxation should be extended to the entire income of the country, so that taxation for really Imperial purposes, should be borne by the State, instead of by local communities.
§ MR. KAVANAGH
said, he had listened with no small interest and pleasure to the able speech of the hon. Member for Westminster (Mr. W. H. Smith), in introducing his Motion, but it was with surprise he had listened to the words which fell from the right hon. Gentleman the Chancellor of the Exchequer in reply to it. The right hon. Gentleman's speech was devoted to raising false issues and attributing false motives to his hon. Friend; to an endeavour to set class against class; to create dissension and ill-will. It was a speech unworthy of a Cabinet Minister whose object should be to encourage peace, not to promote discord; it savoured more of an oration on the hustings, than of a speech in the House of Commons; and he supposed that it was due to the fact that that institution had passed from among them, that they had been treated to it that night. Notwithstanding the threats of the right hon. Gentleman on the possible result of the debate, he heartily supported the Motion of the hon. Member for Westminster, and he thought it was one on which that House should pronounce its opinion in no uncertain sound. In it, to him, there seemed to be involved two very grave and important issues. First, the financial one, in which the large majority of the population were materially concerned—whether any por- 1073 tion of the local burdens were to be defrayed by the Imperial Exchequer; and, secondly, the constitutional one, in which the interests of the whole nation were concerned—whether it was the proper policy of Her Majesty's Government to pursue, utterly to disregard and ignore the pronounced opinion of the House of Commons. The financial aspect of the question, to which he would allude first, had become inseparably associated with the name of the hon. Baronet the Member for South Devon (Sir Massey Lopes), from the zeal and ability with which he had so often brought it before the notice of that House and of the public. He would not attempt to occupy the time of the House by any retrospective reference to the history of that great question, which, as it came to be more clearly understood, was daily growing in magnitude and importance. The speech of the hon. Baronet in the debate of last Session recapitulated the dates and terms of the different Motions upon the subject, which he, from time to time, had brought before that House, and of the illusory promises by which Her Majesty's Government prevailed upon him to withdraw them. At last, however, the question was brought to a direct issue, and in April of last Session that House, by a majority of 100, passed the following Resolution:—That it is expedient to remedy the injustice of imposing taxation for National objects on one description of property only, and therefore that no legislation with reference to Local Taxation will be satisfactory which does not provide, either in whole or in part, for the relief of occupiers and owners in counties and boroughs from charges imposed upon ratepayers for the administration of justice, police, and lunatics, the expenditure for such purposes being almost entirely independent of local control.As to the general justice of the Motion which was then carried, it was hardly necessary that he should add his testimony of approval. He only regretted that the hon. Baronet should then have seen fit to admit its terms, and not to include within it the maintenance of the poor, thus endorsing the justice of the words uttered by the Leader of the House in 1850—The maintenance of the poor had been recognised, not only by the dictates of political prudence, but as the fulfilment of a religious duty; and, if so, it was a duty which applied equally to all property. As a matter, therefore, of essential justice, there was nothing more 1074 clear than that it was desirable that property should be in some manner made liable for the support of the poor."—[3 Hansard, cviii. 1208.]Strongly, however, as he was in favour of that extension, he felt that no good would be gained by his raising that phase of the question. There were, however, peculiar bearings in the question as regarded Ireland to which he thought it was right to call the attention of the House. Not only was that Budget framed in an apparent spirit of indifference to her interest, selecting for reduction the two items of taxation which could afford the smallest amount of relief to her; but the action of the Government for years past had been in direct opposition to the spirit of the Motion to which he had already referred. But what had been the course of legislation in Ireland. It had been to throw upon local taxation the expenses of national objects. Of late years they had to provide for the expenses of carrying out lunatic asylums, the Vaccination Act, the registration of births, deaths, and marriages—on last Tuesday that House voted £46,450 to defray that charge for England—the registration of Parliamentary voters; and, now, the expenses of carrying into effect the new Juries Bill, the results of which seemed likely to form an epoch in the legal world. Every Session Resolutions and Petitions flowed into that House from the different Boards of Guardians in Ireland, praying that a part of the salaries of their clerks and of their medical officers might be defrayed out of the Imperial Exchequer, as part of their time was occupied for national objects. Those were impositions which had passed, and it was not difficult to foresee the shadow of others yet to come. They had now before them on the Paper for the second reading that night, the new Valuation Bill, one-half the expense of which was to be borne by local taxation, although it was wholly and entirely for the benefit of the Imperial Fund. That he could easily explain to the House in a very few words. The tenement valuation which that Bill proposed to raise afforded, no doubt, a basis for levying the poor rates and county cess, which were the two principal local taxes raised in Ireland; but in those two cases, the gross sum that was required for those local purposes was determined by the requirements and irrespective of the 1075 valuation, and the necessary poundage rate was struck to levy the same; the fact of the valuation being high or low would only affect the poundage rate, not the gross sum. On the other hand the effect, as regarded the Imperial Exchequer, was very different—the higher the valuation was raised, the larger would be the gross sum which the income tax would produce. As far then as Ireland was concerned, Her Majesty's Government proposed by the Budget to take off one penny in the pound of income tax, and by the new Valuation Bill to put it, or more, on again. It was curious, if not instructive, when considering these matters, to refer to the Act of Union, 39 & 40 Geo. III., c. 67, and to read in the 7th Article the principles upon which the Legislature then thought it fair to base the relative proportions of the taxation in the two countries. The Article ran thus—That for the space of twenty years after the Union shall take place, the contribution of Great Britain and Ireland respectively towards the expenditure of the United Kingdom in each year shall be defrayed in the proportion of fifteen parts for Great Britain and two parts to Ireland.Although the provisions of that Article were long obsolete, and the respective conditions of the two countries, he was glad to say, far different now from what they then were, it threw a strange light upon the present policy of Her Majesty's Government. On the one hand, they had the Chancellor of the Exchequer selecting for reduction the two taxes from which Ireland would derive the smallest benefit; and, on the other, they had the Legislature, with unremitting consistency, yearly saddling on the local rates burdens and charges for national objects. It was not only of the fact that their burdens were thus increased that he complained, but that from year to year they were deluded by false hopes, by promises of remedial legislation, which, notwithstanding the opinion and judgment expressed by that House in favour of such a course, were never realized. For two consecutive years, in the Speech from the Throne, legislation on that subject had been promised. But what did the Budget show? Not only that such was never contemplated, but that if they adopted these proposals then, they precluded the possibility of any step in that direction for the year to come. Not only was all the available surplus of the 1076 present year absorbed, but a portion of the surplus of the future, which might never accrue, was mortgaged to pay a debt of the present. It was impossible to relieve the local rates without throwing a proportionate burden upon the Imperial Revenue. It might be effected in two ways, but that fact remained the same. They could either transfer from the local to the Imperial Fund some charge, or proportion of some charge, or they could hand over an item of taxation to aid in bearing the whole, or a portion of the local burden; but, unless that item of taxation was one of new creation, the result would remain the same. A precedent for that latter mode was afforded by the tax on dogs now in force in Ireland. The amount levied by that tax was allocated to the aid of the county cess, or what would be called in England the highway rate but it was not his province, nor was it his intention, to suggest methods or schemes to carry out what, in his opinion, Her Majesty's Government wore bound to do. And that brought him to the second issue involved in the Motion, and which appeared to him to be by far the more important of the two. It was this—whether it was—A constitutional course for Her Majesty's Government to pursue, to ignore and disregard the expressed opinion of the House of Commons.The Resolution of the hon. Member for South Devon, to which he had already alluded, was carried by a majority in that House early in last Session—quite early enough for them to have taken some action upon it, if they were so disposed. However, nothing was done. In the Speech from the Throne, at the commencement of the present Session, no doubt a paragraph was devoted to the subject, and a measure had been promised, but carefully deferred, till after the Budget; and when the Budget was introduced, they found that it was so framed as to preclude the possibility of local taxation being dealt with in any practical form that year. And that that was the opinion of the Prime Minister, they might gather from his letter to the Chairman of the Metropolitan Board of Works, in which he was reported to have said—If the House of Commons definitely adopts the leading propositions of the Budget, it will determine its own attitude in the same sense.If he (Mr. Kavanagh) might venture to translate the utterings of the oracle, 1077 that meant if they accepted the Budget as introduced by the Government, and which he might presume they intended we should accept, we must repudiate our Resolution of last Session, and leave the question of local taxation as it was. So much for the intention of Her Majesty's Government to carry out the expressed wishes of the House. As for the future, he must confess the prospects were not cheerful. These leading propositions of the Budget not only absorbed the surplus for the year, but mortgaged no small sum of what it was hoped would be realized next year. He might be presumptuous in offering his ideas on such a question, but he could not help cordially endorsing the opinion expressed in The Times of Saturday last as to the grave impolicy of attempting to fetter the financial arrangements of the future by suggested assignments of surpluses which might never accrue. He trusted that House would now, having a due regard for its own dignity, confirm its decision of last Session, and by supporting the Motion of the hon. Member for Westminster, express its unequivocal disapproval of the line of policy adopted by Her Majesty's Government.
§ MR. WHEELHOUSE
said, it was with a feeling allied to regret, he might almost say with one of pain, that he had listened to some of the observations made by the Chancellor of the Exchequer, more especially to the statement that the beauty of the present Budget consisted in the fact of the remission of direct and indirect taxation this year balancing each other. He (Mr. Wheelhouse) must confess to the hope that such a state of things was accidental rather than premeditated. If the basis of this, or indeed any other Budget, was to be dependent, in every year, on a remission of direct and indirect taxation, in equal money parts alone, he ventured to think that such a view of financial policy was not merely erroneous in itself, but contained, perhaps, the greatest fallacy, fiscally considered, that was ever uttered from a Treasury bench. He wished it to be understood in limine, that if this principle were once adopted, there would and must be a wreck of all sound financial policy. In this country the lines of wealth and poverty, or even the struggle to live, were so impalpable as to make any attempt to legislate solely in that directions illusory, 1078 if not even dangerous. There were a thousand other matters which in every good system of finance must enter into the calculation, and without which any Budget must be at best but an imperfect scheme. Another fallacy against which he for one most emphatically protested, was contained in the allegation of the right hon. Gentleman, when he stated something to the effect that the Motion of the hon. Member for Westminster (Mr. W. H. Smith) was an attempt to intercept the relief intended by the Budget for the poor. In no sense of the word could any such tendency be imputed to the Motion now before them. Was the representative of a constituency such as that of Westminster, with all its thousands of working men, or that of Finsbury, with probably still more, or himself, if he might say so, as the Member for Leeds, at all likely to be unmindful, or to forget the claims of that class? Indeed, he thought it would be very difficult to superinduce any such conviction upon the mind of the House, and he, for his part, could only say that when the right hon. Gentleman suggested that the hon. Member for Westminster was by this Motion endeavouring to intercept the relief intended for the poor, nothing could be further from the actual fact. He hoped that he (Mr. Wheelhouse) might, without offence, say that he looked upon that statement as being one uttered merely ad captandum vulgus. He could assure the right hon. Gentleman that neither he himself nor his hon. Friend were likely to be indifferent to the claims of that class, or be parties to the taking from it of that to which it was justly entitled. He supposed that the right hon. Gentleman had not any poor in his own constituency, and, judging from his speech, he seemed to know very little or nothing about their wants and requirements. He could assure the right hon. Gentleman that if he had delivered his speech of that night before a mass meeting in the North of England, where these questions were largely discussed, and pretty clearly understood and appreciated, the ideas to which the right hon. Gentleman had given expression would have been met with the voice of something approaching to ridicule. It was upon the poor, properly so known, that the great grievance and hardship of taxation really fell. It was a matter of slight consequence comparatively, per- 1079 haps, even to Members of that House, or to the wealthy generally, whether they paid a few pounds—or, possibly, a few hundreds, more or less in taxation, but on the poor, strictly so called, whatever their station in life might be, any undue impact of that kind operated most oppressively. It was of all important consequence to the poor clerk, or to the widow with a family to support out of a small, fixed income, who were endeavouring to struggle through the world, and with but very scanty means to keep up the respectability of their position. He knew that there were many people who believed that indirect taxation was an evil, but he was free to confess that he dissented completely and entirely from any such view. He thought that every man ought to pay upon the articles he consumed, and that if a man were able to afford luxuries he might fairly expect if they were taxable to be charged upon them. Arthur Jones, the workman, who earned his £90 a-year, contributed indirectly to the revenue in respect of such taxable articles as he consumed; but beyond this it was somewhat difficult to get at him; but in the cases of Sir Arthur Jones the baronet, the merchant, the manufacturer, and the shopkeeper, not only were they called upon to pay—and did pay—on necessaries used by them, but they were taxed directly also. To the latter class it was as if the Chancellor of the Exchequer said—"I have a deficit to meet this year of a couple of millions. I have exhausted all the resources of indirect taxation at my command, it is too much trouble, or it would be dangerously unpopular just now, if I were to attempt any real revision of taxation with the view of more closely equalizing the burthen; besides, I dare not try to impose taxation in a certain form. You must remember that it was only last year or the year before that the disastrous explosion arising out of my match business very nearly brought the whole fabric crumbling about my ears; a second attempt, therefore, in the same direction is utterly out of the question; to you, and to you alone, I look for the remainder of what I want, and, as you perceive, my leverage is irresistibly strong." If he (Mr. Wheelhouse) might use the illustration, a tax so collected reminded him not a little of the days of the Border Reivers and Rob Roy, while it approximated far too closely to be 1080 pleasant to the old-fashioned levy of black mail. Local taxation might be considered especially easy from the Imperial stand-point of the Exchequer, but the truth really was that Imperial and local taxation had become so mixed up together that when they, the residents in the country, tried to deal with questions of local taxation they found themselves constantly interfered with, governed and grooved in great measure by Downing Street and Whitehall. It was well known that rules and lines were laid down for their guidance, from which local bodies were not allowed to depart. What was done, for example, in the Metropolitan districts? Every species of tax which could—reasonably or unreasonably—by possibility be placed on the revenues of the entire country was so dealt with; and the consequence was that Leeds and other large towns—in addition to their own local burthens—were compelled to bear a proportion of that which ought to be the expense of the Metropolitan district locally borne. What would be said to him, as Member for Leeds, if he came to that House asking the Government to pay the salary of the stipendiary magistrate for that borough, or to build the police courts there? He should be laughed at. Still it must be remembered that he and his people were indirectly compelled to contribute through the Imperial Treasury a proportionate part of the cost incurred by the magistracy and police of Metropolitan districts. Could there be any principle in such a system as that. And he might add that this was only one out of a large number of similar instances which it would be very easy to adduce. He had read with much pleasure the letter of the hon. and gallant Member for Kincardineshire (Sir George Balfour) which appeared in The Times of that morning, but while he agreed with much that the hon. Gentleman had laid down, he differed 'widely from the conclusions to which he had come, so much so, indeed, that he thought he might claim the vote of the hon. Member in favour of this Motion, especially since the speech of the Chancellor of the Exchequer was utterly irreconcilable with that letter. Had the Government proposed to meet the whole of the Alabama Claims this year, and to discharge them out of such surplus of revenue as they had, he for one 1081 would not have objected; but when, instead of doing so, they took off merely a fraction per pound from the sugar duties, they were doing that which he believed they had not at first intended, and which in his opinion they had far better have left alone. If they had permitted the surplus to go in reduction of the income tax, the benefit would have been felt by every class in the community, but taking off part of the sugar tax meant only, he feared, putting some thousands of pounds into the pockets of the wholesale dealer or broker in that article, and was sacrificing upwards of £1,000,000 to subserve the views of one small, though very rich interest, while scarcely one single particle of good was likely to be derived from the remission by any other person in the realm. Again, had it not been thought desirable to pay off the whole of the Alabama Claims in the first instance, then it became perfectly clear to him that it was but right that the Treasury should be asked immediately to consider the whole question of local taxation, whether it stopped the Budget or not. Young as he was in that House, he was yet old enough to remember that this would not be the first instance of a Budget having been stopped—and aye, moreover, wholly recast in his time. That which had been done once might be done again. Was no notice to be taken of the Resolution proposed by the hon. Baronet the Member for South Devon (Sir Massey Lopes), and by a large majority deliberately affirmed in that House? Were they quietly to ignore all remembrance of the determination to which the House came in regard to that vote? Surely not. Could the country care about the reduction of a duty which merely affected a single trade, and scarcely touched the general community at all? The Chancellor of the Exchequer had told them that night that he did not propose to do anything this Session; he did nothing in this direction either last Session or the Session before. But when did he propose to do anything? They were told that next year, though it was doubtful whether they might expect it, that something or other might possibly be done, and so the promise might go on ad infinitum. Was either the House or the country inclined any longer to lend a willing ear to these promises so continuously postponed, and would it agree to set 1082 aside a Resolution so deliberately passed? Hope deferred made the heart sick. The country was, indeed, becoming very sick of the want of such legislation; and he ventured to predict, whether the present Chancellor of the Exchequer in the early part of next year should be his "own successor" or not, as he seemed somewhat confidently to suppose, that when the General Election came the country would manifest its feeling in a manner about which there could not be the slightest mistake.
§ DR. BREWER
said, he looked on the Budget of the Chancellor of the Exchequer with monstrous satisfaction, because, while it gave relief to the middle classes of tradesmen in the diminution of the income tax, it also gave relief to the humbler classes who depended very much on sugar for their nutriment. He referred to that very humble class who depended almost entirely upon what was called "tea;" but which consisted of only a very small infusion of that article, with a large quantity of sugar. The hon. Gentleman opposite (Mr. Wheelhouse) said it was of no use to reduce sugar by one half, as it would not benefit the consumer; but statistics clearly showed the contrary; and there was positive evidence that not only was the poor man benefited by the remission of indirect taxation, but there had been a great increase in the importation of these productions, which were now deemed necessaries of life. He regarded the Motion of the hon. Member for Westminster (Mr. W. H. Smith) as most unfortunate under the circumstances, because it brought the question of local taxation, which ought not to be made a political question, into direct antagonism with the financial scheme of the Government. At the same time he was willing to admit that since the Government had laid their hands upon local taxation the public burdens had largely increased, and he certainly could not look upon direct assistance towards local expenditure out of the Imperial Exchequer without grave apprehension as to its effect upon local government. And not only that, but the more they lessened the responsibility of those who administered these funds the more reckless they would become in their expenditure. He found that the amount collected had not been sufficient to meet the expenditure, and if the question were considered apart 1083 from all political influences, he thought a Committee might be resorted to to say whether the Imperial Parliament could not give assistance to local rates without trenching too far on items which were the subject of so much dispute. He hoped, he might add, that his hon. Friend the Member for Westminster would not press his Motion, his unfortunate Motion; if he did, he should be obliged to vote against it.
§ MR. SCLATER-BOOTH
said, he had an objection to the proposed reduction of the sugar duties, on the ground that it was premature to re-open the question in the case of an article off which only two years ago £2,500,000 of duty were taken. It was to be regretted, he thought, that the Chancellor of the Exchequer should within so short a time falsify the views which he had then expressed on the subject. A precisely analogous case had occurred when the present Prime Minister was Chancellor of the Exchequer, for he, having reduced the tea duties to 1s., and having stated that he would carry the remission no further, had, nevertheless, two years after, reduced them to their present rate, the action in the case of both right hon. Gentlemen looking very like as if with a large surplus they sought to evade touching the malt tax, by making remissions which the consumers did not expect, and upon which the trade looked with something like alarm. The Chancellor of the Exchequer, he might add, though challenged three or four times the other evening, gave no explanation of the course which he asked the House to sanction. That night, however, had let the cat out of the bag, for it now appeared that he was influenced by the consideration that the diminution of the sugar duties would furnish an exact equivalent for the reduction of the income tax. He would not travel over the ground which had been so ably traversed by his right hon. Friend the Member for North Devon (Sir Stafford Northcote) to show how mischievous it was that in a matter of taxation class should, as it were, be set against class, and would content himself with objecting to the reduction of the sugar duties on the additional ground that it would render it necessary to incur a fresh debt next year. If, no doubt, the Chancellor of the Exchequer could pay the whole of the Alabama Indemnity out of the 1084 balances this year, the finances of next year would not be compromised. There were very good grounds, however, for believing that he would not find himself in that position. The right hon. Gentleman had, as on previous occasions, compared the grants of the past year with the Estimates of the present, which was in his opinion a very foolish mode of estimating expenditure, and had forgotten to take into account those Supplementary Estimates to which the House was now so much accustomed, and which would in all probability add £500,000 to the Estimates of the present year. The consequence might be that a deficit would occur next year instead of a surplus as calculated. There was, for instance, the scheme with regard to railways, which would necessitate a Supplementary Estimate, and it must be presumed that some attempt would be made to give effect to the determination at which the House had by a large majority arrived with respect to local taxation. The Chancellor of the Exchequer might argue that he could pay half the Alabama Indemnity out of the balances. But how had these balances been swollen of late years? Mainly by the difference between the revenue and the Expenditure from year to year. The Expenditure had been greatly over-estimated, and a large amount of revenue had, therefore, been returned to the Exchequer. Was that, however, he would ask, an indication of good administration? He thought not, and the Committee on Public Accounts had shown that a very large surrender of public money had been made to the Exchequer beyond the necessities of the case, and that the Estimates had in late years been inflated beyond all reason. That remark, for instance, applied to the Education Vote, which had been inflated to such an extent in two years that £450,000 had to be repaid into the Exchequer, because it could not be spent. Again, in Class I. of the Civil Service Estimates £250,000 had been annually repaid, and during the four years the Chancellor of the Exchequer had held his present office not less than £1,500,000 had, he believed, been so repaid under these two heads alone, so that that amount was taken out of the pockets of the people quite unnecessarily, and a remission of taxation to that extent withheld from them unjustly—[Mr. GLADSTONE: The surplus of the Education 1085 Vote has nothing to do with the balances.]—The balances, surely, must be all the better for the non-expenditure of that amount of public money. Then, in the case of the telegraphs, £1,000,000 had to be borrowed to repay the sums taken out of the revenue, in order to carry on the capital expenditure of that service. It was evident, also, that large further sums, to the extent, he believed, of £2,000,000, were likely to be required to meet the unexpected calls on the telegraph service from railway companies and others. Under the head, too, of Works and Buildings, there was a large expenditure to be met, unless a great loss was to be inflicted on the public. The New Courts of Justice, which had been so long delayed, must be proceeded with rapidly, or else the whole of the labours of the Judicature Commission and the operation of the Bill now before the other House were to be completely sacrificed. Beyond that, there certainly could be no economy in putting off the building of those Courts, for the interest on the cost of the piece of ground which was now lying waste was, he believed, not less than £30,000 or £40,000 a-year. With reference to the balances and the prospect of paying the Alabama Indemnity out of them, he begged to observe—and this could not fail to be appreciated—that in a year when there was a surplus the new mode of collecting the revenue tended unduly to swell the balances at the close of the quarter and the year, therefore the balances at the end of March afforded no indication of what they would be at the other quarters of the year. The balances, however, that would be affected by the payment of the Indemnity would be the balances of the autumn. What had those balances been for the last five years under the system pursued by the Chancellor of the Exchequer? Last October they were undoubtedly considerably greater than they had been for some time. They amounted, including England and Ireland, to £4,200,000; in 1871, which was also a year of prosperity, they were £1,200,000; in 1870 they were only £1,000,000; and in 1869, £1,100,000. In fact, the state of the balances in those years cost the Treasury no small amount of anxiety; and there was no reason to believe that they would stand at a very satisfactory figure in October next. That showed that if 1086 the sugar duties were repealed there was every chance that it would be necessary to make use of the power of borrowing on Exchequer Bonds, and they ought to be provided for out of the Ways and Means of the coming financial year, or else it would be contrary to the usual practice. The right hon. Gentleman the Chancellor of the Duchy of Lancaster came down on Thursday evening with a very carefully prepared and elaborate statement; but it had little to do with the subject before the House, and it certainly was not provoked by anything that had been said by his right hon. Friend the Member for North Northamptonshire (Mr. Hunt). The right hon. Gentleman (Mr. Childers) made use of arguments ad hominem, but they tended very little to show that the Government had redeemed the pledges they had made at the hustings. He went back to the time of the Crimean War, and showed what had been the course of legislation and the financial position of the country from that time to the present; and in regard to that his right hon. Friend (Mr. Hunt) had never said that he had not increased the expenditure in 1867—nobody denied that; but that increase of expenditure was sanctioned by Parliament. The right hon. Gentleman (Mr. Childers) further showed that the present Government had taken off £2,000,000 out of the £3,000,000 which had been put on in 1867; but there was no great credit in that, seeing that in 1867 the finances had been disturbed by the crisis of 1866, which told on the revenue for two years, and that the armaments of France, which had been a source of anxiety to the country, no longer existed. The right hon. Gentleman would have done better had he compared the Estimates of the current year with the Expenditure of 1870; those Estimates being for the present year, in a time of profound peace, no less than £4,000,000 more than they were in 1870. There was no justification for maintaining that scale of expenditure. He had no Latin quotation to throw at the right hon. Gentleman's head; but considering the number of times the right hon. Gentleman had rehearsed the statements he had made on this subject at Pontefract and elsewhere, he could not help reminding him of the adage Qui s'excuse, s'accuse.
§ MR. MAGNIAC
said, that while giving the hon. Member for Westminster (Mr. W. H. Smith) credit for sincerity—he could think his Motion no better than a political sham, for it was nothing less than a Vote of Want of Confidence in the Government. No result having followed a very strong and decisive attack on the Government, what other result could be expected under the present circumstances? The Motion was also most unbusinesslike, for the hon. Member knew it must upset a great and most important trade. Advantage must be taken of this occasion to make a manifesto against the income tax; but no party could, in present circumstances, go to the country with a cry, however popular it might be, to repeal the income tax. Nothing could give greater dissatisfaction than that the revenue of this country should be raised from indirect taxation, and that the large share which was derived from the income tax should be taken off, no matter how great the inequalities of the tax might be. Direct taxation was, in his opinion, already too light as compared with indirect. The only standard of comparison it was in our power to take was past experience, and for the last 15 or 18 years the relative proportion of direct and indirect taxes was as 31 to 66 per cent, and every year something was done to lighten the load of direct taxation. By the present Budget it would be reduced from 31 to 25 per cent. He found, to his great regret, that the Estimates for the coming year exceeded the actual Expenditure of the past year by no less a sum than £1,157,000—an excess of which the Government would probably hear more from that side of the House. He put it to the hon. Member for Westminster, under those circumstances, whether it would not be better to withdraw this unfortunate proposal. [Laughter.] Hon. Members laughed; but he gave this advice in all sincerity, because one need not rejoice when an adversary whom he respected put himself in a false and ignominious position. What would be the use of carrying the Resolution? They had been told that the party opposite had no policy to go to the country upon, and therefore that there could be no Dissolution. It had been even said that it was quite impossible for a party to have a policy unless it was sitting on these (the Ministerial) benches. 1088 Therefore, if the hon. Gentleman carried his Resolution, hon. Members opposite would be no better off, while the commerce of the country would be completely upset. He was glad, however, to say that the Motion would be defeated, for there were in that House Members who would take care that rich and poor alike should receive equal justice.
§ MR. FAWCETT
said, it certainly seemed to him somewhat unfortunate that the vitally important question raised by the Motion of his hon. Friend the Member for Westminster (Mr. W. H. Smith) had been obscured by these party recriminations. What was the question which the hon. Member asked the House to express an opinion upon? It was simply this—and it seemed to him impossible for any hon. Member to place a more important issue before their consideration—they had to decide whether, before proceeding to consider the question of reform of local government and local taxation, the House should be pledged to the principle of granting public money in order to relieve local finance. It appeared to him that the most conclusive argument which had been offered in that debate against the Motion of the hon. Member for Westminster had been supplied in the speech of the hon. Member for North Hants (Mr. Sclater-Booth). That hon. Gentleman stood high in the confidence of the Conservative party; he had concerned himself in local taxation, and he was a great financial authority; but in the speech he had made he did not once refer to the question of local taxation. From what he (Mr. Fawcett) had said on former occasions, it would be known that he was not an enthusiastic admirer of the financial proposals of the Chancellor of the Exchequer. In the first place he had declared it unworthy of a great country in a time of exceptional prosperity to borrow money to pay a charge of the year; in the second place, he had objected that the relief to the income tax payers was infinitesimal, producing the minimum of advantage to those whom it was supposed to benefit; and thirdly he had expressed the opinion that the Chancellor of the Exchequer was taking a far too favourable view of his financial prospects. But the circumstances under which he had expressed this opinion differed from the present. The opinion of the Opposition, judging 1089 by their applause, seemed to be unanimous in favour of paying the Geneva Award out of the revenue of the year. That being so, he regretted deeply the party had not the courage of its opinions, and that it did not challenge the proposals of the Chancellor of the Exchequer by a Notice of Motion the same evening they were submitted. Such a Notice of Motion would have been courageous and straightforward, and it would have warned the trade concerned not to count too certainly on the adoption of the Budget proposals. So strongly did he feel on the subject, that reckless of the result, he would have risked a Ministerial crisis by voting in favour of a Motion he believed to be wise, just, and patriotic. Now, however, the circumstances had altogether changed; judgment had gone by default. But the speech of the hon. Member for Westminster had pointed to a different issue from that suggested by his Motion. The hon. Member and his supporters had in their speeches raised the question that too much taxation was being remitted. The Motion suggested that remission was being made in the wrong direction. If the Chancellor of the Exchequer had really over-estimated his probable receipts, then the Motion should be rejected, because by adopting it the House would be pledged to make still further expenditure out of the Imperial Exchequer for the relief of local burdens. The opinions expressed by the Chancellor of the Exchequer that evening in answering the Motion, therefore, he cordially endorsed. Adopting the views of the Prime Minister, he had submitted that taxation should be remitted by reductions, partly of direct and partly of indirect taxation. The right hon. Gentleman described direct and indirect taxation as twin sisters, and grew quite pathetic over their union. It was to be hoped he would not forget the union when the time came for imposing taxation. It would not do when occasion arose as it did two years since, that the unfortunate payers of direct taxation should be made to bear the whole burden. Returning to the Motion he construed it as an adoption of the programme of the hon. Baronet (Sir Massey Lopes), and as an invitation to grant public money to help local taxation. ["No, no!" and "Hear, hear!"] If it did not mean that, he did not know 1090 what it meant. Surely the legitimate construction to be put on the Motion was, that the sugar duties should not have been remitted, and that the money accruing should have been given in relief of local taxation. It was not expedient that so great a question should be prejudged by a Resolution of the kind submitted, and that it should be said no relief ought to be given, for those who had studied the question knew that the reform of local taxation involved questions of infinitely greater importance than getting a million or two of Imperial taxation. In fact, they would be crippled in discussion, and hampered in the consideration of this great subject, if they pledged themselves beforehand to grant public money for such a purpose. He therefore wished to point out a few of the evils involved in the question. In the first place, as Imperial grants for local purposes were increased, exactly in the same proportion would local self-government be diminished. He ventured to submit that the country would insist that national funds should not be administered by local authority, but by a national authority. Consequently every additional penny paid out of the Imperial Exchequer to augment local funds weakened the guarantee for economy in local expenditure. It had been repeatedly said that if public grants were made in aid of lunatics and police, you need not fear a less economical administration of the funds than there now was. Now, he would repeat an anecdote which bore on this subject. In the last Parliament there sat on the Opposition benches a county Member distinguished for great ability, zeal, and devotion to business—the beau idéal of a county Member. Visiting the county for which this Gentleman sat just before the General Election, he (Mr. Fawcett) said—"I suppose Mr.—is certain to be returned?" "No," was the reply; "he has not the least chance of re-election. He voted for a pension to the superintendent of an asylum, and the ratepayers think he voted £50 a-year more than ought to have been voted." This Gentleman, therefore, retired from the representation; but suppose the pension had been derived, not from local, but from public sources—he might then have safely voted for a pension of four times that amount, and, instead of thereby weaken- 1091 ing his position in the county, it would have been thought that he had done a meritorious act, for public money was no one's money. Take another fact bearing on the finance of the metropolis. Five years ago an Act was passed constituting a common fund for the relief of the poor in the metropolis; but although since then pauperism had diminished and exceptional prosperity had prevailed, the relief of the poor had been marked by such prodigality that it cost half as much again as it did five years since; and if those who administered this common fund could have put their hands into the Imperial Exchequer, double or three times as much would have been spent. The hon. Member for Westminster showed a wise discretion in discussing this question as the Representative of a great borough, for many of those who pushed this question to the front would be grievously disappointed at finding that, in the opinion of the country, local taxation was not so much a landowner's, or land occupier's, as a house occupier's question. Taking an average throughout the country, the rates in the rural districts were not half what they were in the towns. For instance, in Wiltshire the average rates were 3s. 10½d. in the pound, while in Salisbury they were 7s. 10d. In Devonshire they were 3s. 2d. in the pound; in Plymouth they were 7s. 1d. In Norfolk they were 3s. 2d. in the pound; in Norwich, 7s. 2d., and in King's Lynn 7s. 3d. Nor was this all, for charges upon land had been constantly diminishing, while those upon houses and business premises were constantly increasing. In 1841 half the total amount of local taxation was contributed by land; at present land contributed only one-third. Again, certain exemptions were enjoyed by the land which were absolutely indefensible. Mansions were rated too low; game preserves were not rated at all; coal mines did not pay their share. Compare the local taxation in these cases with the rating of railways and waterworks, which were assessed, by some unintelligible process, upon profits. When, therefore, the question came to be examined, the country would come to the conclusion that farmers and landowners were not the people who bore the chief burden of local taxation, but house-occupiers. Never 1092 was there a greater delusion than that attempted to be palmed off upon the tenant-farmers than that they as a class would benefit from large remissions of local taxation. That might be so during the continuance of a lease, if a man had one; but, in other cases, if a farmer's rent were £1,000 and his rates £200 a-year, and if the £200 were made an Imperial charge, the landlord would at once increase the rent to that amount, and you would therefore simply put the money in the landlord's pocket. There was another point in the question to which he wished to draw attention—namely, that in towns great injustice was done to ratepayers by the recklessness with which local authorities borrowed. In Imperial finance we were constantly boasting of a surplus of £3,000,000 or £4,000,000, yet in local finance we often had a deficiency of £10,000,000 or £12,000,000. Every facility was given to local authorities to get into debt, and in London in one year the authorities borrowed as much within 20 per cent as they raised by rates, raising £3,700,000 by rates and borrowing £3,000,000. Such finance was as reckless as that of Turkey, and that system of paying for improvements out of borrowed money sanctioned every species of extravagant expenditure. The system further involved a peculiar injustice connected with the mode in which local authorities effected improvements. They did so by means of loans which were to be repaid in a limited number of years; and for the purpose of repaying a loan they increased the rates, to which the owner of property contributed not a shilling. When the property of an owner was made more valuable by means of the increased rates paid by his tenant, the owner raised the rent. He hoped the Government would not on Thursday next commit the mistake they did two years ago, of proposing the abandonment of a portion of Imperial taxation in order to reduce local taxation. A wise and statesmanlike settlement of the intricate questions of local government and local taxation would-require on the part of the statesman who would undertake that settlement a financial and administrative capacity like that displayed by the Prime Minister when d dealing with the Irish Church Bill and the Irish Land Bill.
§ SIR MASSEY LOPES
said, they would be prepared to meet some of the argu- 1093 ments of the hon. Member for Brighton (Mr. Fawcett), when the Government brought forward their proposals on Thursday with reference to local taxation, that, and not this, being the proper occasion on which those arguments should be considered. The House was now discussing the Budget of the Government on the Motion of his hon. Friend below him, the Member for Westminster (Mr W. H. Smith.) For his own part, he deeply regretted that, with so large an available surplus, the Government had in no shape whatever considered the acknowledged grievances of ratepayers and in no way suggested any proposal for giving them relief in regard to the exceptional taxation now imposed upon them. This omission on the part of the Government was all the more remarkable after the very decisive view which the House expressed on the subject last Session, and he held that it was imperative upon the Government to give at least some effect to that Resolution. Instead of that, however, they had done nothing. They had set at nought the most authoritative vote ever recorded in the House of Commons; they had totally ignored the will and wishes of that House. Such a course was not respectful to the House, neither was it a constitutional proceeding. It was not in the power of any private Member to deal with any subject connected with finance, except by proposing an abstract Resolution. The questions of the abolition of the corn duty, of the window duty, of the fire insurance duty, and of the paper duty were introduced by abstract Resolutions proposed by private Members. They were forced on the Government by that means, and that means alone; and not one of those measures was ever carried by a greater majority than the Resolution which on his Motion was carried last year, a majority formed not only of one section of the House, but of Members on both sides of the House. The Government had lost a golden opportunity of alleviating a great grievance. When he last Session advocated the claims of the ratepayers who suffered from this grievance he was asked where the money was to come from. The Chancellor of the Exchequer answered that question when he announced an estimated surplus of £4,750,000. When, in the year 1869, he asked the Government to grant a Royal Commis- 1094 sion to inquire into the amount, incidence, and effect of local burdens, the right hon. Gentlemen the then President of the Poor Law Board told him that the only tribunal to which he could appeal was the House of Commons. The First Lord of the Treasury said that the points in question were Budget considerations, and that the Government would not delegate their powers to a Royal Commission. Well, he appealed to the House of Commons. The response was no dubious or uncertain one. The verdict was decisive and emphatic, and he maintained that the Government were not justified in treating the deliberations of the House with silent contempt, simply because the opinion of the House was not in consonance with the views of the Government. In 1868 he first introduced this question. In 1869 he was buoyed up by vain hopes and expectations held out by the Government; nay, more, by the promise that they would themselves undertake the settlement of the question, and inaugurate a new system of local taxation. What had occurred during the interval? In the four years from 1868 to 1872, there had been added to our local burdens upwards of £1,500,000—£1,000,000 to the poor rate levy alone, increasing the levy by 10 per cent. An addition had been made to what was called the relief of the poor out of that sum to the extent of nearly 8 per cent; while to county, borough, and police, the addition during those four years amounted to 17 per cent. Instead of relieving our grievances the Government had aggravated them—instead of listening to our expostulations they had mulcted us more severely, and without wishing to use harsh language, he could not help characterizing the conduct of the Government in this matter as adding a vast deal of injury to a great deal of injustice. Not only had they added during the past four years £1,500,000 to our local burdens, but they had added an unknown quantity to that sum by means of the Education Act, which would result in imposing a 6d. rate, amounting in the whole to £2,500,000. To the aggregate so made up must be added the further sum which would have to be paid under the Sanitary Bill, turnpikes also were looming in the distance, and it was no thanks to the Government that we had not to provide out of our rates for the erection 1095 of Militia barracks at a cost of £3,000,000, for election expenses under the Ballot Bill, and for the expenses of criminal prosecutions. Instead of advancing, we were continually retrograding on this subject. In 1870 the Government proposed to admit our grievances by giving £1,200,000 of house tax. They were not now acting fairly toward us. They were dangling these things before our eyes, and at the same time continually imposing upon us fresh obligations. The hon. Member who had just sat down had stated that he (Sir Massey Lopes) had last year proposed to impose certain definite charges for certain definite purposes on the Consolidated Fund, but the terms of his Resolution were that it was expedient to alleviate and remedy the injustice of imposing taxation upon one class of property for national objects. It must be borne in mind that, although he had proposed a remedy for that evil, he by no means felt bound to stand by that remedy if the Government could suggest a better one. The answers of the right hon. Gentleman opposite (Mr. Gladstone) were sometimes so obscure that it was almost impossible for ordinary mortals to understand them; but in answer to a Question he had put to the right hon. Gentleman the other night, he had understood him to say that, while he admitted the grievances alleged, he did not approve the remedy proposed, although he was at the same time quite prepared to propose another remedy of his own upon the old lines he proposed in 1871. He (Sir Massey Lopes) could only say that if the right hon. Gentleman proposed to relieve us in the shape of the house tax, the assessed taxes, or any other Imperial tax of a local character, and give them in aid of local burdens, he would not cavil at that mode of relief, although he thought it would amount to pretty much the same thing whether the burdens were placed upon the revenue, or a portion of the revenue was given up to assist the rates. But whatever the Government proposed, he would point out that as they gave relief from the Imperial Exchequer, the Exchequer must be pro tanto reduced and affected and its equilibrium disturbed. Now, there was no definite proposal of any kind of relief in the Budget. There was no margin left, and there was therefore no instalment of justice at all. In fact, it completely shut 1096 the door to such relief being afforded on a future day by surrendering so large a portion of the revenue derived from indirect taxation, and thus the deliberate decision of the House of Commons on this subject was set aside. The proposal which he (Sir Massey Lopes) had made in aid of local burdens had, at all events, this advantage, that it would have given equal relief to town and country. He defied any hon. Member in that House to say that he had advocated the claims of land as against the claims of towns, and the remissions which he had proposed would have given the lion's share of relief to the towns. He considered that their interests were identical, and he was not going to ask anything for the country which he was not prepared to ask for the towns. Under these circumstances, he was not open to the charge that the Chancellor of the Exchequer had brought against him. He trusted that the right hon. Gentleman would show more consideration for the towns than he had done for the country, because he had never lost an opportunity of giving a "dig" at the latter; neither did he ever lose a chance of needlessly exasperating those interested in land. Thus, when the malt tax deputation waited on him the other day, he told the deputation that they were being bamboozled by their landlords. He also said that he had no surplus; but that was before the Ministerial crisis, and the Government had altered their note since that had occurred. Again, in 1871, the right hon. Gentleman had hinted at his desire to tax the motive power of the agricultural interest, and the other night, in reply to a Question put to him by the hon. Member for West Norfolk (Mr. G. Bentinck), the right hon. Gentleman had said that the landed interest appeared quite to have forgotten the indulgence that had been shown them under Schedules A and B. But what was the fact—that the landed interest was the only one which paid income tax upon its gross, instead of on its net income, and that no allowance was made to it for repairs, insurance, bad debts, agency, and so on. In 1852 the present First Lord of the Treasury (Mr. Gladstone) had clearly proved that while trades and professions were only paying 7d. in the pound, land was paying 9d., and at the present moment land was paying 5d., while professions were only paying 4d. 1097 in the pound. The right hon. Gentleman had further taunted the farming interest with having made a good thing out of the enhanced value of the commodities they produced, whereas the price of corn was regulated, not by the home production, but by the foreign supply, and the price of meat was enhanced by reason of imported cattle disease. The price had risen because the supply was reduced, and the farmers were not deriving any benefit from these high prices. The Budget showed the animus, it showed the temper rather than the talent, of the Chancellor of the Exchequer. The object of the Budget was in prospect of an approaching Dissolution, to please everybody, but such an attempt seldom pleased anybody. The object of the Budget was not only to conciliate everybody, but to win back the prestige which was so irretrievably damaged, to bolster up a faltering dynasty. The Government might reduce indirect taxation as much as they pleased, but whatever their exigency might be they would never succeed in re-imposing it. The Chancellor of the Exchequer must have had a lesson from his attempt to impose a match tax; ex luce lucellum ought to have taught him a lesson. The consumer by the reduction of one half the sugar duty could never derive any appreciable benefit from it. Where a small reduction of duty was made it did not go into the pocket of the consumer, but of the producer and the merchant. That was his view of the reduction of the sugar duty. If the right hon. Gentleman had reduced the income tax by a penny in the pound, and limited the payment of the Alabama Claims to one-half the amount due, he would only have absorbed £3,000,000. If he had considered the claims of the ratepayers, and given them one-half the cost for lunatics and one-half the cost of the police, he would have given them an instalment of justice; never was Imperial taxation so light, and never was local taxation so strongly felt as at the present moment. The Government had not only shut the door against the advocates of the reduction of local taxation for the present year, but they had endeavoured hermetically to seal it hereafter. By throwing over the payment of one-half of the Alabama Claims to another year the Government had placed it out of their power to give any relief to local taxation next year, for 1098 they had mortgaged their resources to that extent. The Government would have conferred a greater boon if they had relieved the taxpayers from some of the national obligations which pressed upon them. They would have done more to stimulate the employment of capital, and to sweeten the toils of the working man than they could possibly do by the proposition which they had submitted to the House.
§ MR. GOSCHEN
said, he shared the surprise of the hon. Member for Brighton (Mr. Fawcett) that those who were anxious that the Alabama Claims should be paid out of this year's revenue had not raised the question before the House voted the reduction of the income tax. The hon. Baronet who had just sat down contended that no margin was left to carry out the objects he had so persistently advocated; but why did he not consider this before he became a party to the reduction of the income tax? His right hon. Friend the Chancellor of the Exchequer had suggested that it would be better to discuss the matter of the income tax and the sugar duties together; but both those who would pay the Alabama Claims out of this year's revenue and those who would reduce local taxation had allowed that portion of the Budget to pass—the portion which affected the income and the property of the country—and then raised an issue on indirect taxation alone. The hon. Baronet would raise the income tax in order to be able to diminish the burdens of local taxation. ["No, no!"] At all events, that course had been advocated in the debate. Why did not the hon. Baronet boldly raise the question? [Sir MASSEY LOPES: I never said so.] What did the hon. Baronet never say? [Sir MASSEY LOPES: I never advocated any increase of income tax.] The hon. Baronet the Member for South Devon (Sir Massey Lopes) had advocated an increase of the area of taxation, and that personal property should be liable to rating. This appeared to him to be much the same as recommending an increase of income tax. ["Oh, oh!"] The argument was, that the banker who derived great profits should pay as well as the householder, and that means should be found to reach income not derived from houses or land; and it was pointed out that, while the income of the country was £700,000,000, only 1099 £300,000,000 contributed to the rates. What was the meaning of that but that contributions should be obtained from the rest of the income of the country—that of the widow and the working classes as well as that of the millionaire? ["No, no!"] He was glad to hear the notion for the first time distinctly repudiated; but on these occasions we did not hear of the widows and others with fixed incomes whom some hon. Members on other occasions professed themselves so anxious to relieve; and in the general statements that were made, the income of the working classes was added to that derived from property, and it was called wealth. The hon. Baronet spoke of the aggregate earnings of the country as constituting its wealth. Earnings might produce wealth, but they were not wealth; and it was not fair to say that there was so much wealth escaping taxation. It appeared to him (Mr. Goschen) that the Motion of the hon. Member for Westminster (Mr. W. H. Smith) was very craftily arranged, but happily such expedients did not succeed, and it was evident how false a move he had made. Knowing that there was considerable feeling in some parts upon the question of income tax, he endeavoured to avoid running the local taxation question against it, and to combine the two parties—those opposed to the income tax and those who would lighten local taxation—in support of one another at the expense of indirect taxation. However, it was not possible to conduct a debate with such an alliance, and as a fact, the hon. Member for Brighton noticed a remarkable omission from the two speeches made from the front Opposition benches—the omission of any allusion to local taxation. The right hon. Baronet opposite and the hon. Member for North Hants (Sir Stafford Northcote and Mr. Sclater-Booth), on the other hand, discussed the financial proposals of the Government from the Chancellor of the Exchequer's point of view, which was the Imperial point of view, and their friends had made the absence from their speeches of allusions to local taxation a subject of complaint. On the other hand, the hon. Baronet the Member for North Devon had been very severe upon the Budget because it did not involve any speculative finance, and said the time had come when the Government ought to make a 1100 declaration as to their future policy with reference to the income tax. The hon. Member for Westminster, however, took a totally different line, and said the Government ought not to promise remissions of taxation which they were not sure they would be able to carry out. It would be contrary to the advice given by the hon. Member for Westminster, and to the advice he quoted reproachfully against the Government if they endeavoured now to obtain popularity by stating that they intended to reduce the income tax by a penny every year for three consecutive years. The Government thought it would not be right in the interests of the public to place before the House of Commons a scheme of prospective finance for three or four years to come. It might be said, indeed, that his right hon. Friend now at the head of the Government did state some prospective finance in 1853, but he did not carry out the predictions which the circumstances of the time, perhaps, justified him in making, and it was not a precedent which his right hon. Friend was likely to follow again. All the evils described as resulting from abstract Resolutions would be brought about to a certain extent, if the Government were now to state their abstract views of the merits of various taxes. The Government had looked at the facts which presented themselves at the present time. They found there had been a surplus which the hon. Baronet the Member for South Devon (Sir Massey Lopes) spoke of as amounting to £4,750,000. When, therefore, he said that sum was at the disposal of the Government for the purposes to which he alluded, the hon. Baronet did not assume that part of it would be devoted to the payment of the Alabama claims. However, the Government provided for a portion of those Claims, and they had next to consider how the remainder of the surplus could be best disposed of. He would not balance the sugar duty simply against local taxation, but he would balance it against the income tax. Why had the indirect taxes been chosen for the present attack? A portion of that attack had been distinctly and avowedly made on the ground that the time had come when the Government ought no longer to remit indirect taxation. That was no doubt an intelligible issue, but he must state most emphatically that the 1101 Government did not think the position was such that they ought now to deal simply with remissions of direct taxation, on the ground that they had reached the limit of remissions of indirect taxation. He doubted whether any hon. Members on that side of the House were of opinion that future surpluses ought to go into the pockets of the payers of income tax alone, and that the great body of the people who constituted the consuming classes were not to have the benefit of any reduction at all. The right hon. Baronet the Member for North Devon said he was prepared to prove that the Chancellor of the Excheque4 was wrong when he represented this as being to a great extent a question between the consumers who belonged to the poorer classes of the community and the rich. The right hon. Baronet further selected the poorest classes who were liable to the income tax, and pitted them against the consumers of sugar. Of course, there was no tax which did not press hardly on some of the persons who paid it, but was that a sound reason for abandoning another penny of the income tax or abolishing the tax altogether? The right hon. Baronet had quoted a speech of the Chancellor of the Exchequer in which his right hon. Friend said that the lower classes paid most towards the revenue. This was a perfectly correct quotation, but his right hon. Friend never said they paid most on account of their being the poorest classes. That the Government thought the income tax payers were entitled to consideration was shown by their proposal for the reduction of a penny in the pound, but in the course of the present debate the great point which had been made was with reference to the poorest class of those who paid income tax. Indeed, the right hon. Baronet even referred to those who had an allowance of £80 made on their incomes. The right hon. Baronet might have said—"Why remit a penny of the income tax to everybody; why not deal with this class alone;" but instead of that, the House was invited not to reduce the tax which fell on the consumers of sugar, in order that a tax might be maintained which, though it might press hardly on some persons who were poor, was undoubtedly paid in an enormous proportion by the rich. The hon. Baronet the Member for South 1102 Devon correctly said he had never asked with regard to land for assistance which he was not prepared to extend to the towns. But the hon. Baronet owned that the towns had the larger balance, and accordingly said—"Let us get up an alliance of those who have a similar grievance, and take advantage of the larger grievance to ask for a common remission." To take the figures referred to by the hon. Member for Brighton, the hon. Baronet opposite argued somewhat in this way—"A county town pays 7s. and we pay 3s. Thus the town has a grievance and so have we. Now we know the House of Commons will pay attention to the great burden of the 7s., and therefore we will try to get 1s. off each." In the same way as the hon. Baronet made common cause with the ratepayers in the towns did all the payers of income tax rank themselves with the overburdened class at the lowest line of the income tax. The case, however, for the consideration of the House was, he submitted, not whether there should be a reduction of local taxation, but whether as between direct and indirect taxation, the proposals of the Government were such as to commend themselves to the country as a whole. For his part he thought they were, and the House, he believed, would not think that in the Budget the Government had unduly favoured either one class or the other. His hon. Friend the Member for Finsbury (Mr. W. M. Torrens) had spoken of two inhabitants of his borough who had respectively £90,000 and £40,000 a-year, and who paid nothing whatever to rates. But surely that was no reason why they should also be exempted from income tax? He did not propose, on that occasion, to state the views of the Government on local taxation, because the Chancellor of the Exchequer had already distinctly announced that this year no provision would be made in the financial arrangements for any contribution from the Imperial Revenue to local purposes. The hon. Baronet the Member for South Devon (Sir Massey Lopes) had assumed that his Resolution of last Session was to be accepted and acted upon in a literal sense; but all he (Mr. Goschen) could say was that the Government recognized the grievance of which the hon. Baronet complained, and all the Government had promised was to remedy the grievance 1103 in a manner consistent with their principles. They had not tied themselves down to any particular scheme, and any inference that might be drawn that the Government intended to legislate in the line laid down in a former debate on this subject would be erroneous. The President of the Local Government Board would explain to the House in detail, and at the earliest possible moment, the views of the Government; but he trusted that the House would not hang up the question of the sugar duties in order that they might first see the proposals of the Government on local taxation. The hon. Baronet had considerably exaggerated some of the charges on local rates. He had alluded to the charge for barracks, which were not thrown upon the local rates.
§ SIR MASSEY LOPES
I said that we had not to thank the Government that the barracks were not thrown upon the rates.
§ MR. GOSCHEN
said, that the hon. Baronet had, he believed, on a former occasion thanked the Government for relieving the local rates from this charge. He seemed, therefore, to have rather a short memory on the subject. He had also alluded to turnpikes in connection with highway rates; but was the House not to proceed with the sugar duties in consequence of the hon. Member's anxieties about turnpikes? The Government had to look to the interests of the whole community. It had been truly said during the debate that the whole community were interested in the progress of finance; and nothing was more to be deprecated than that the notion should prevail among the great body of the people that the House and the Government had arrived at the end of all further remissions of indirect taxation. One of the most powerful inducements to economy in the public expenditure would be lost if it were thought that all future remissions would go to direct taxation alone; and as it was right that the working classes should bear a share in the burdens imposed upon the community, so they ought to retain their interest in the reduction of the public Expenditure. The right hon Baronet the Member for North Devon had alluded to the allegation of sugar being an article of luxury to the poor. [Sir STAFFORD NORTHCOTE: I called it a 1104 "necessary."] He (Mr. Goschen) was about to call attention to that very word. Were the Opposition, then, coming to this—that there was to be no more remission of taxation on the necessaries of the poor? The Government would always endeavour to hold the balance aright between direct and indirect taxation; but if hon. Gentlemen opposite thought to force the Government to any prospective finance, or to get any declaration from them that might be utilized against the income tax, they would find themselves in error. What the Government had pledged themselves to was to do justice to all classes; but they would not pledge themselves to go forward on one line and on one line only. He trusted the hon. Member (Mr. W. H. Smith) would be satisfied with the consequences of his Motion, because if so, the Government could not but share his satisfaction after the differences which had been expressed on the hon. Member's side of the House. He presumed it was to be gathered that hon. Gentlemen opposite would prefer the remission of direct taxation to the abolition of the malt tax. ["No, no!"] He thought from their speeches it was against direct taxation they were now waging war. That rather complicated matters, and he should like to know whether they would allow the income tax to be completely abolished before they dealt with the malt tax. It was impossible for a Government to deal with these abstract questions. All that a Government could do was to meet them in a fair and equitable manner as they arose. Here was a surplus to be disposed of, and it was not the duty of the Government to run one claim against another and one tax against another; and those who advocated any such course would find, when the division was called, that they would not get a majority.
said, it was desirable that the debate should proceed. He should therefore like to hear what the right hon. Gentleman had to say upon the subject.
§ Motion agreed to.
§ Debate adjourned till Thursday.