§ Order for Committee read.
§ Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."—(Mr. Chancellor of the Exchequer.)
§ Mr. J. G. HUBBARD
, in rising to move the Resolution of which he had 966 given Notice, observed, that on the 31st of this month there would be not only the famous equine contest of the year on Epsom Downs, but on the same day would be celebrated the Centenary of the publication of Adam Smith's Wealth of Nations. A distinguished Finance Minister of former days would take the chair at that celebration, and another distinguished Finance Minister would discourse with eloquence upon the sagacity, wisdom, and truth of the principles inaugurated by Adam Smith. He would seriously invite the distinguished men who proposed to be present upon that occasion to give their opinions to the House on the subject now under consideration. Adam Smith had laid it down that the people of a State ought to contribute towards its expenses as nearly as possible according to their respective abilities—that was to say, in proportion to the incomes they respectively enjoyed under its protection. The proposals now made in regard to the Income Tax he regarded as being in direct violation of that maxim. It had been suggested that in proposing those additional exemptions and remissions the Government were seeking to gain popularity; but popularity hunting was the resort of feeble and expiring Administrations, and, judging from recent divisions, the present Government was strong enough to stand upon its convictions of what was right, without condescending to unworthy compliances. He found the explanations of those proposals in the warm sympathetic sentiments of the Chancellor of the Exchequer. That right hon. Gentleman had told them that the persons who would be specially benefited by those remissions would be the struggling members of certain professions, including clergymen and clerks, widows and unmarried daughters. If the right hon. Gentleman had meant industrial struggling by brain or hand, he could have agreed with him; but by including widows and unmarried daughters he meant also social struggling to obtain more comforts and enjoyments than their means afforded. He (Mr. Hubbard) maintained that while it was the part of legislation to give every possible relief to struggling industry, it was not the part of legislation to attempt to equalize the gifts of Providence. The principle of the Income Tax required to be well understood. Being a tax levied 967 for the benefit of the whole community, it should be levied upon everyone in the same proportion, so that his means remained proportionately the same as before. There were certain qualifications to be applied to that special rule. The means of subsistence with regard to unskilled labour must be considered. In the earlier periods of the Income Tax a deduction of £50 was allowed as being the measure of the cost of subsistence for unskilled labour. Subsequently that deduction had been raised to £60, and at the last revision of the tax it was still further raised to £80. That limitation of £80 was, in his opinion, most liberal, for £80 a-year was rather more than 30s. a-week, and, as everybody knew, 5s. a-day for unskilled labour was ample compensation. He knew of no sound argument either in favour of carrying the total exemption from the tax up to incomes of £150 or in favour of extending the benefit of the deduction to incomes of £400. It had been argued that whereas artizans earning £3 a-week or £150 a-year, were mainly untaxed, they should remain untaxed; but that the same exemption should be carried into other incomes of £150 a-year also. He differed from the assumption which laid at the bottom of that argument. He knew that in certain establishments mechanics receiving about £3 a-week had to be returned, by their employers to the Inland Revenue Office, and they were not untaxed. It was absurd to say that these exemptions ought to be made because of the increased cost of living. With respect to the area over which direct taxation would range if the changes proposed by the present Government were carried into effect, taking the Income Tax under Schedule D, he found that 437,000 had been charged Income Tax, and of these only 220,000 were paying on £100 and upwards, and the result of the Chancellor of the Exchequer's proposal would be still further to reduce the number who would be taxable. Look, again, at the stockholders under Schedule C. The number of these was 231,000. The number of those paying under £100 was 192,000, but the proposition of the Chancellor of the Exchequer would reduce the 39,000 now taxable by 12,000, and only 27,000 would in future be liable to taxation. If they turned from the funds to the land the conclusions were equally 968 unsatisfactory, for it might be calculated that there would be a great diminution in the number of landowners of the country liable to taxation if this scheme were passed. Here was a population of 27,000,000, half a million of whom were the chief contributors to the taxation of the country, while, at the same time, the number of electors was 2,500,000. How did this tally with the maxim so constantly urged upon them that there ought to be an affinity between electoral privileges and contributions to the taxes? Why should the line be drawn so as to include only one-fifth of the whole of the electors? If a sweeping change were to be made, all these questions should be gone into. The tax as it stood was bad enough, but the Chancellor the Exchequer was going to render it still more mischievous, and he thought the House ought to express its opinion in such a way that the Government might be led to re-consider its position. If this Resolution were carried the Government and the House might take such steps as they deemed to be necessary for the public interest. If they withdrew the exemptions, they might either reduce the amount of the tax as it stood, or make the proposed concessions in some other way. There was hardly any alternative that he would not prefer. Besides, the introduction of these exemptions would lead to great administrative inconvenience. The assessors of Income Tax now knew very well who were entitled to relief; but if fresh lines were drawn, new difficulties and new conflicts would arise. This was an occcasion when Party predilection should give way to a sense of justice. He would earnestly entreat the House to vindicate on that occasion the principles of the great political economist whose centenary was about to be celebrated. In conclusion, he asked the House to rescue their legislation from the danger of Socialism.
To leave out from the word "That" to the end of the Question, in order to add the words "it is inexpedient to extend the range of absolute exemption from Income Tax to incomes of £150, and to extend the limit of partial exemption from incomes of £300 to incomes of £400, inasmuch as these additional exemptions would injuriously affect the equable proportion in which all incomes of like nature should be assessed,"—(Mr. Hubbard,)
§ Question proposed, "That the words proposed to be left out stand part of the Question.
§ MR. LAING
said, he must give a preference for the scheme proposed by the Chancellor of the Exchequer. The view which they took of exemptions would, of course, be influenced by the opinions they held as to the desirability of the Income Tax being permanent or not. He thought those who, like himself, believed that the Income Tax was an essential and a vital part of our financial system, and that it was desirable to retain it at a moderate amount as a great instrument of financial power, would generally be found in favour of exemptions, thus throwing overboard some of that unpopularity which affected the principle of the tax generally and putting it upon a more secure foundation. As regarded the principle of exemption, he thought the fallacy which ran through the argument used against it was that it seemed to be assumed that the whole taxes of the country were levied direct. A great portion of Revenue was raised by indirect taxation, and when they came to the lower scale of incomes, especially of the labouring classes, in point of fact they spent a larger percentage of their incomes in articles which paid taxation than the man of larger income did. One great argument in favour of the Income Tax was that the tax was an instrument of great national power. By the simple expedient of adding 1d. in the pound the Government could easily raise a larger sum than foreign countries could obtain without great stress and inconvenience. The other great argument was that the tax was the means by which they could in tolerably fair proportions equalize the incidence of taxation upon the middle and lower classes of the community. The broad conclusion was that with an Income Tax producing £5,000,000 direct taxation the equilibrium between direct and indirect taxation on the different classes was very fairly maintained. If they abolished the Income Tax, they would destroy that equilibrium. The exemptions, then, he viewed as made on a fair basis and not on any Communistic principle. That being so, it seemed to be a simple question of degree whether they should draw the line at £100 or £150. He desired 970 the Income Tax to be maintained, and he therefore wished to relieve it from the unpopularity which attached to taxing a large number of small incomes for the sake of realizing a comparatively small amount. He had been alarmed ever since the right hon. Member for Greenwich (Mr. Gladstone) proposed the repeal of the Income Tax as part of the programme with which he appealed to the country at the last General Election, and, entertaining this alarm, he desired to defend the citadel of our financial system by every fair and legitimate means. It was consistent with principle and precedent to go back, as they were doing, to what might be called the old and accustomed limit which accompanied the tax for a series of years, and which had the authority of eminent statesmen in its favour. Under these circumstances, he should give his vote against the Motion of the right hon. Member for London.
§ Mr. SANDFORD
said, the right hon. Gentleman the Member for Greenwich had asserted that he was opposed to the existence of the Income Tax, and the hon. Member for Birmingham (Mr. Muntz) had in a letter which was published in a newspaper stated that he did not know a single person who was a friend to the Income Tax. He begged to undeceive the hon. Gentleman, for he (Mr. Sandford) was a friend to that tax, and he should be sorry to see property relieved of it and an equivalent burden thrown on Customs and Excise, or, in other words, on the shoulders of the working classes. When the tax was originally imposed by Pitt it was a graduated Income Tax; and it was altogether too late to say that exemptions from it rested on principles of socialism. Exemptions had been adopted by every Parliament and by every Minister by whom the tax was laid on. In his opinion the principle of exemptions was only just, because wealth did not contribute its fair share to the taxes of the country. The burden of the tax fell most heavily on the possessors of small incomes which did not rise with the price of commodities when the wages of working men did rise. Even indirect taxes were levied with some unfairness. Inferior tobacco paid 100 per cent, and the better class of cigars from 10 to 20 per cent; cheap claret paid 15 per cent, and the better quality 2 per cent; beer paid 971 50 per cent; spirits, 100 per cent; inferior tea, 23 per cent; and superior tea, 10 per cent. Thus the burden of indirect taxation fell unequally on the poorer classes, and it was only stern justice to exempt them from the Income Tax. He would have preferred that the Chancellor of the Exchequer should have exempted altogether incomes under and up to £150, and should have taken off £120 from incomes up to£400; but as they had so many amateur Chancellors of the Exchequer he would not add another to the number, and would support the proposal of the Government.
§ Sir GEORGE JENKINSON
said, that the question to consider was why the extra 1d. had been placed upon the Income Tax, and how the surplus to be obtained from it should be applied? In about six years nearly £7,000,000 of taxation had been removed from sugar, and 68,000,000 lb. in 1874, and 97,000,000 lb. in 1875, had been used for brewing. This had been caused in a great degree by the malt duty increasing the price of malt. This and other remissions that had been made would mainly benefit those who would come within the proposed exemption from the Income Tax. During the past four or five years some £3,000,000 had been added to local taxation, and the people who paid that had the first claim to the benefit to be derived from any surplus that there might be in hand. If the right hon. Gentleman carried his Motion to a division he should feel very much inclined to support him.
§ Mr. DODSON
looked upon this question of abatement and exemption from the Income Tax as one of a very serious character and he was very glad that it had been raised. He believed that there was a considerable amount of opinion upon both sides against these exemptions. No doubt the effect of them would be to create favour for the scheme of the Government for the increase of the tax; though it was possible, as had been alleged, that the proposal of these concessions had been made entirely upon its own merits. If, however, this was so, why was it not made in 1874, when the Government had a magnificent surplus of £5,500,000, the legacy of their prede- 972 cessors, and reduced the tax from 3d. to 2d. It looked very like a bid for favour that when the Chancellor of the Exchequer added to the aggregate amount of the Income Tax, two out of three persons who paid under Schedules D and E would pay less when the tax was increased than they paid at the present moment, whilst the remaining one-third would pay more. The right hon. Gentleman the Member for the University of London (Mr. Lowe) made exemptions, but he made them on be half of a more necessitous class, and when he had a surplus, when he was reducing the tax and giving relief to all who had to pay it. But it was difficult, if not impossible, to find a principle upon which the proposals of the Chancellor of the Exchequer were to rest. The right hon. Gentleman proposed to extend exemption from Income Tax to all incomes under £150 a-year. The reason assigned was that wages had considerably increased, so that more wage-earners came within the range of the Income Tax as it at present stood. It seemed to him a very odd kind of proceeding because men's wages were raised, and their incomes were increased, to exempt them from the payment of the Income Tax. And what was the reason why the Chancellor of the Exchequer had fixed on £400 as the sum below which the abatement was to be made? The right hon. Gentleman seemed to think that a man having a pound a day ought to have an abatement, but that to place the figure at £400 would look better. His right hon. Friend the Member for Greenwich (Mr. Gladstone), and the Chancellor of the Exchequer, concurred in viewing the Income Tax as an "emergency" tax to be resorted to in time of war; or urgent demand. The right hon. Member for Greenwich had contemplated abolishing it altogether in ordinary times; while the right hon. Gentleman preferred to keep it alive at a low figure, holding that it was important not to destroy its structure. But then it should be maintained as an efficient structure, not only actually but potentially. What, however, was the plan before them? The changes proposed by the Chancellor of the Exchequer involved, as he told the House, a surrender per penny of the tax of £130,000 a-year. But if an emergency arose and they had to raise the 973 tax to 1s. the loss would amount to £1,560,000 a-year; and if they had to raise it to 1s. 6d., it would amount to £2,340,000. But if to the proposed exemptions and abatements they added existing exemptions and abatements, which the right hon. Gentleman the other night told the House were £150,000 per penny of the tax, the total surrender would be, on a 1s. Income Tax, £3,432,000 a-year; on 1s. 6d. Income Tax, upwards of £5,000,000. Another objection to undermining the tax, besides diminishing its productiveness, was that the more they made it a tax which was to be voted and imposed by the many on the few, the more the objections which the many would have to war or other extraordinary expenditure would be diminished. Sir Robert Peel fixed the Income Tax at £150 when many articles were subject to taxation, which since that time had been made free. Therefore, men were in a better position to pay the tax. Did the right hon. Gentleman consider the need for the addition to the tax transitory and confined to this year? If so, he ought to beware how he undermined the structure of the tax on account of a million or so which he wanted for a particular year. But if the right hon. Gentleman did not consider the need temporary, but saw the tide of expenditure rising against him, still more ought he to beware how he undermined the structure of the tax, because in that case he might require next year another penny. If the Income Tax was to be kept alive at a low figure in ordinary times in order that they might resort to it in an emergency, it must be kept alive on a broad basis, in order to make it as productive as possible, without invidious exemptions and distinctions. It might be that such exemptions were popular, and that at this time of political apathy the classes who were injuriously affected by them were indifferent. But it was the duty of Members in that House to look beyond the popularity of the moment, and not to be apathetic, but to consider the ulterior consequences of these exemptions. The representations of the Opposition might be ineffectual; but it was all the more incumbent on Members opposite who held the same opinions to express them freely, because, by so doing, they at all events might hope to influence the Government.
§ Mr. W. H. SMITH
said, he thought there was considerable difficulty in ascertaining the exact issue raised in this interesting debate. The arguments put forth with so much force by his right hon. Friend (Mr. Hubbard)told against there being no exemptions whatever rather than against the particular ones recommended in the Bill now before the House. Up to the present time, however, so long as there had been an Income Tax at all, there had been exemptions. Every Government who had been responsible for an Income Tax had felt that to propose to tax the lowest form of income—that arising from labour—was to propose something which could not possibly be carried into practical effect. Sir Robert Peel exempted incomes under £150. The right hon. Gentleman (Mr. Gladstone) having made great changes in other taxation, by which the lowest incomes were benefited, brought down the exemption to £100. Another right hon. Gentleman (Mr. Lowe) gave some relief on incomes up to 300 a-year. The principle, of exemptions, therefore, had been recognized by every statesman and every Chancellor of the Exchequer who had dealt with the Income Tax up to the present time, and the question now was not whether there should be any exemption, but whether the particular proposals in the Bill were so radically bad that the House should reject them altogether. The right hon. Gentleman (Mr. Hubbard) said it was improper that any class of the community should escape taxation, and there was no Member on either side of the House who would not heartily concur in that principle. But even if it were desirable to do so, it was admitted to be practically impossible to get at the wages of labour. The suggestion had been thrown out that the Government might go to employers, and not only ascertain the amount of wages paid, but, through them, stop the Income Tax on the weekly earnings of working men in their service. Now, it was not within the power of the employers to make any such stoppages, and he was quite satisfied that to attempt to carry any legislation of this kind into practice would end in miserable failure. Strong as the statement might appear, he believed it absolutely impossible to collect an Income Tax from labour throughout the country. You could not 975 reach a labouring man, because his weekly wage was not based on the certainty of annual employment. For a week or a month he was employed in one place, and then he disappeared, to be employed in another place, or not to be employed at all for some time. How could you fairly deduct from such a man a given proportion of his weekly wage? If, then, it was impossible to tax weekly wages, even though these might amount to £150 a-year—and of late working men's incomes often came up to that sum—surely it was most unfair to tax the clerk and struggling professional man upon incomes of no larger amount? If so, it was not unfair to extend the existing exemption to £150, and thereby the object of the right hon. Gentleman (Mr. Dodson) was met, for much was done to keep alive the Income Tax for future use in times of emergency by fixing it on a basis which was just and reasonable in itself, and which excited no opposition in the country. The right hon. Gentleman suggested that if the tax were raised hereafter in time of war to 1s. in the pound, exemptions would amount to a very large sum, and the productiveness of the tax would be greatly impaired. But would the Income Tax be the only tax to which the Chancellor of the Exchequer would have recourse in such an emergency? In such an emergency the Chancellor of the Exchequer would have to say to the House—"There are other indirect taxes which must be considered, and other sources of income which the House must be asked to provide for us;" and these taxes would fall directly and immediately on the persons of small incomes who would be exempted from the direct payment of Income Tax. Had any calculation ever been made of the proportion of taxable articles that must be paid by the father of a family who consumed tea, malt, and spirits, who lived in a house which paid house tax, and who was liable to rates and the other charges incident to a small income? The course which the Government asked the House to adopt would, he believed, be justified by the result. It might be true, as the right hon. Gentleman had remarked, that some people would pay less than under the present system, but the question was whether, on the whole, the adjustment was a reasonable and a proper one. In various ways exemptions from, taxation had been re- 976 cognized by the House, with a view to relieving those who were not too well off in the world, and he hoped, therefore, that the proposals of the Chancellor of the Exchequer would be accepted.
§ Sir WALTER BARTTELOT
said, the Secretary to the Treasury had made out an excellent case for absolute exemption up to £150, which used to be called the territory of labour, and which ought to be excused, but he had not said one word as to the proposal of the hon. Member for the City of London (Mr. Hubbard) against extending the exemption from £300 a-year up to £400, which was the real question now before the House. He wished to say that he thought it was an extremely inconvenient practice to bring forward Resolutions in a Budget, and get the House to accept them before they had the opportunity of discussing them when embodied in a Bill. If there had been a previous discussion, much of the difficulty which they must all experience in dealing with this question would have been avoided. For himself, he would say that he had always been in favour of a general rule of taxation and no exemptions; but the Income Tax was of an exceptional character in itself. They had admitted that there should be certain exemptions, and everyone knew that the greatest hardship was felt by the small payers of the tax. Incomes of £100 and £150 felt the pressure excessively, and there should be no cavilling up to that amount, but there he thought the Chancellor of the Exchequer should have stopped. He saw no reason why the limit which had been partially carried up to £300 should now be extended to £400, The exemption of the lower class of incomes—which were, in fact, mere living incomes—was no doubt a great advantage, especially in rural districts, where people knew each other's affairs, and where there was a dislike to appeal for remissions or reductions. The result was that the assessors were in the habit of gradually and steadily increasing the amount of the tax without any real reason for doing so, and the taxpayer submitted in silence. He was an Income Tax Commissioner, and when those additions were made he always called upon the assessors to show on what ground they made the addition, without asking the taxpayer what he had to allege against the increase. It was most unfair and unjust 977 to keep on increasing the tax on the simple responsibility of the officer with out knowing whether or not he had just grounds for doing so. While he perfectly agreed in the entire exemption of incomes under £150, he saw no reason why there should be even a partial exemption up to £300, and if they assented to the proposal of the right hon. Gentleman the Chancellor of the Exchequer he would ask—why not extend the partial exemption to £500?
§ Mr. THOMSON HANKEY
maintained that there should be only one real ground of exemption—namely, the difficulty of collecting the tax after it had reached a certain low figure. He declared that all exemptions were objectionable and vicious. He had that day been sitting for three hours in the City of London receiving appeals from householders who claimed to be rated to the Inhabited House Tax at 6d. instead of 9d. in the pound or totally exempted. He agreed with the hon. Baronet (Sir Walter Barttelot) that there were no good grounds for a partial exemption up to £300; and if the exemption was extended to £400, why not to £500, to £700, or even to £1,000?If they did that they would ruin the Income Tax, and adopt the dangerous and revolutionary principle of a graduated tax.
§ Mr. GOSCHEN
said, he thought they were greatly obliged to his right hon. Colleague (Mr. Hubbard) for having brought forward this most important question. The Secretary to the Treasury had not, in his opinion, done justice to the Government by confining his argument to the case of the small taxpayers, and leaving untouched the different case of the larger taxpayers, except by saying that they could make their wishes known in that House, while the smaller taxpayers could not. That appeared to him to be a very dangerous argument indeed. The House should in all cases decide on the taxation necessary to meet the wants of the country, and then levy it equally, without any reference to the representations of classes or interests who might have the power of making representations to that House. The hon. Member admitted that logically there should be no exemption at all; but he argued that all Governments had admitted the principle of exemption in the case of the smaller incomes. That 978 was true; but the novelty in this case was that the Government proposed to carry the figure at which exemption would end to a higher point than it had ever been carried before, while, at the same time, the income taxpayers above that point were to pay additional taxation. He did not see how that course could be justified—to increase the taxes of one class at the very time when they were decreasing the rate of taxation in another. The figures placed before the House by his right hon. Friend the Member for Pontefract (Mr. Childers)—and they had not been challenged—showed that the number of persons who would be benefited by the plan of the Government were 400,000, while there would be only 170,000 above the line of £400—that was to say, that the great majority of the payers of Income Tax under Schedules D and E were to have a remission of taxation at a time when about one-third were about to have the charge upon them increased. Finance of that kind was, he maintained, dangerous and impolitic, and by no means Conservative. Indeed, he must call the proposed exemptions not exemptions at all, for they would, so far as numbers were concerned, be the rule. Now, according to the statements of the Prime Minister, as quoted by his right hon. Friend the Member for Pontefract, an increase in direct ought to be paralleled by an increase in indirect taxation, and that argument the Chancellor of the Exchequer had attempted to parry by saying that it was one which might be applicable when the Income Tax stood at 4d. but not when it was only 2d. in the pound. It struck him, however, that the principle that where there was a general increase of taxation it was desirable that it should be felt by as many classes in the community as it could be made to cover, and not that it should be levied on one particular class, was applicable to both cases. That was the interpretation which he put on the statement of the Prime Minister that direct and indirect taxation should proceed together, while the way in which the Government acted up to that statement was by proposing that there should be an increase in direct taxation only, and that the addition thus made should not be paid by all taxpayers who contributed to the Income Tax, but by a portion of them only. He could not help thinking 979 that, although the Chancellor of the Exchequer might, as was said, be disposed to be warm and sympathetic, it was scarcely the time to exhibit those feelings towards one class of the community when he was putting the screw upon another; and the circumstances were, he contended, now very different from those which existed in 1853 and in 1873, when remissions of taxation were made. He regretted, he might add, that any man occupying the position held by the Secretary for the Treasury should have admitted—for his language amounted to that—that, although there might be large remissions of indirect taxation, greatly benefiting those on whose behalf they were made, nevertheless, even in time of war, it would be impossible to retrace the step with respect to the Income Tax which the Chancellor of the Exchequer now invited the House to take. He did not know whether the hon. Gentleman had seen in the newspapers that the question was one which had been debated in the colonies, in France, and in other parts of Europe. If so, he should like to ask him whether this country was to set the example of an increasing class of exemptions with the view to relieve those whose incomes were between £100 and £150 a-year? For what did the Government want the additional 1d. of Income Tax? They did not want the whole sum to provide for additional expenditure. The Chancellor of the Exchequer admitted that he required this additional 1d. in order that he might have a surplus to redeem the promises he had made in providing further relief for local taxation during the present year and next year. The House was, therefore, going to vote the additional 1d. of Income Tax partly to meet a deficit, partly to meet prospective promises in the relief of local taxation, and partly in making exemptions in order to render the Income Tax more popular. The hon. Member for Orkney (Mr. Laing) said that the Government threw over board the unpopularity of the Income Tax by these exemptions, and that opinion was endorsed by the Secretary to the Treasury. They had, therefore, come to this—that in their present state of prosperity, with a Conservative Government in power, having at their command a majority of 100, they could not maintain an Income Tax except by cutting 980 off from liability all incomes below a certain amount. They were so afraid of imposing taxation on those on whose votes they relied for maintaining that majority that they had recourse to this immoral and dangerous proposal. Although he indulged at times in a little Party language—[Ironical cheers]—just as the cheers he now heard were Party cheers, and just as hon. Gentlemen opposite also occasionally indulged in a little Party language—yet they must admit that he had to-night abstained from saying anything of a Party character. He had only supported one of his Colleagues for the City, and he had used no stronger language than his right hon. Friend had done. He confessed he did not think the proposal of the Government was either wise or Conservative. Was it Conservative to say that they would relieve the majority, on whom until now it was a responsibility to pay this tax, and to throw it upon the minority? Was it a Conservative proposition to say that, because a Party was able to make itself heard in that House, therefore they would deal differently with them from the rest of the community? He had never heard a less Conservative proposal. He would freely admit that it was a philanthropic, a warm, and a sympathetic proposal, but it was not Conservative. It was not advisable to introduce too much philanthropy into politics. The proposal of the Chancellor of the Exchequer might win the Government considerable applause, but philanthropy in finance was thoroughly dangerous. There was no step more likely to promote democratic agitation than to grant exemptions which would lead to demands for further exemptions, in which there was no principle and no bottom, and which could be argued from precedent to precedent until they reached that graduated Income Tax which was the dream of many Socialists and Communists. If those observations were warmer than those with which he commenced his speech it was because hon. Gentlemen opposite wished that a warmer character should be given to his observations. He would admit that his right hon. Friend and Colleague had made an unpopular proposal; for no doubt among the 440,000 persons exempted there were probably an immense number who were borough electors. Well, he would share in his 981 right hon. Friend's unpopularity, and, should he go to a division, he would gladly "tell" with him, so that, irrespective of political differences, two Members of the City of London might on this occasion make a protest against the proposal of the Government.
§ THE CHANCELLOR OF THE EXCHEQUER
said, he was sure no one could object to the tone of the speech of the right hon. Gentleman who had just sat down—that it certainly could not be objected to on the ground of its having infused a little life into what had been for some time a rather dull debate. The speech of his hon. Friend the Secretary for the Treasury, which was of a reasoning and temperate character, did not compare in vivacity with some portions of the speech of the right hon. Gentleman, but no one could object to Party feeling in that House. He thought they were a good deal too scrupulous in the matter, for he did not see why persons engaged in the conduct of business which raised questions between Party and Party should be so very squeamish about using language of a Party character. There was, however, one thing to which he did object in the speech of the right hon. Gentleman, and that was when divesting himself of a Party character he put himself in the position of a Conservative, and from that point of view spoke on the question now before the House. Now, throughout the whole of this discussion, and especially so in the speech of his right hon. Friend the Member for the City of London (Mr. Hubbard), they ran the danger of falling into a kind of argument which was both dangerous and inconvenient. They had been promulgating theories which, however plausible they might be, were not capable of application. He was not disposed to enter into a discussion with his right hon. Friend as to the merits of the quotations he made from Adam Smith, or as to the precise construction to be put upon the doctrines laid down by that great and distinguished man; and used as these arguments had been by his right hon. Friend on this and other occasions, and by other Gentlemen who had taken part in this debate, he feared they might be led to follow them up carelessly to very inconvenient conclusions. The point upon which the argument of his right hon. Friend turned seemed to be this—that they could make 982 taxation perfectly equal and just to all persons, and, moreover, that this particular tax could be made so that it would bear equally upon all classes of persons. Taking that as his starting point, his right hon. Friend said by these exemptions they were destroying that equality, and therefore he condemned the exemptions. In arguing thus his right hon. Friend had this advantage over the Chancellor of the Exchequer, that he was able to discuss theories and lay down abstract propositions without running the risk of being asked to put them to the test of application. If difficulties arose his right hon. Friend could get over them by a mere shrug of the shoulder; whereas if he(the Chancellor of the Exchequer) indulged in such speculations he might get into serious difficulties. If the Income Tax were made the sole tax they would have to raise it to so high a figure that complaints would certainly come from those upon whom it most pressed, and there would then be a real danger of the bugbear with which they were now threatened—that of a graduated property tax. Their proposal was not, he thought, open to the objections that had been urged against it. Arguments might be used against it which would give it the appearance which hon. Members opposite had attributed to it; but he could not see how the tax, with the proposed exemptions, differed in any degree in principle from the tax as it had existed from the first. He could not see that the extension of exemptions changed the principle by one jot from what it was under exemptions proposed in former times. In Pitt's time, when the tax was first suggested, it had a direct reference to the amount of the assessed taxes paid, but it very speedily took another form, founded always on the principle of certain exemptions from the smallest incomes. When Sir Robert Peel introduced it in 1842 the limit was fixed at precisely the same point which was now reached—that was, £150a-year—and it must be remembered that at the time Sir Robert Peel did that, he was taking off considerable burdens of taxation from persons who did not possess that amount, and the Government were being taunted, as had always been the case, when alterations were made in taxation, that in taxing some persons they were relieving others. Sir 983 Robert Peel's exemption continued until 1853, when the right hon. Gentleman the Member for Greenwich reduced it from £150 to £100, and what was the reason he gave for fixing it at the lower figure? It was in order to exempt what he called "the territory of labour," which he defined at £100 a-year. He (the Chancellor of the Exchequer) put it to the House whether that territory of labour was not better defined by the sum of £150 than by the sum of £100. The key to what the Government proposed was that they believed that men living by wages did in great numbers make wages fully equal to £150 a-year, but could not be made to pay the tax. His right hon. Friend said they ought to be made to pay it. In theory this opinion might be a sound one, but the difficulty was how to get them to pay. There was a discussion the other night upon this very point, and three or four employers of labour confirmed his statement that it was not only inconvenient but impossible to exact the tax from men who were living by wages. A working man receiving £3 a-week might be thrown out of employ before a month was over, and might not, therefore, get £150 in the year, and it was practically impossible to make him pay. This being so, great injustice was done to the class who were living side by side with these working men, who were obliged to keep up a better appearance, and who, living in fixed residences, could not escape from the tax. It was not from any sentiment, softheartedness, or philanthropy, but from a sense of the justice and prudence of the course they were taking, that the Government proposed to exempt such persons from the tax. Another reason given by the officers practically concerned in the collection of the tax was that it was among this class of persons in receipt of small incomes that the greatest amount of difficulty and friction was met with. He had been asked—"Why do you now extend the exemption to £150? Why did you not do so two years ago?" The reason was that two years ago the Government had but just come into office, and that it was very difficult to treat the Income Tax definitively. He had then stated that he did not think the Government would be justified, on so short a notice, in making any definite proposals, and that they reduced the tax by 1d. in 984 the pound having regard simply to the requirements of the year, and reserving any other question. As a matter of fact, the figures upon this very point were then taken out; but the Government thought it inexpedient to deal with the question until they saw the real position of the country. They had now come to the conclusion that, taking into account the probable condition of the country for some time to come, it was desirable to maintain the Income Tax at a low figure, and keep it in reserve as an emergency tax. He stated in 1874, and he repeated it the other day, that the arrangements were made on the faith of their having a true picture of the necessary expenditure of the country presented to them as left by their predecessors; and when, after more careful inquiries, they found that this expenditure must be increased, they saw that to keep the Income Tax at 2d. was to keep it at too low a rate. In fixing the amount of the tax it was not a question of popularity or sympathy, but what was the real strength of our financial system, and the strength and power of appealing to that tax in cases of emergency depended on its being put on incomes as now proposed. As to the number of persons to whom the exemptions applied it was difficult to give any positive answer, many persons being taxed under more than one Schedule; but he was prepared to accept the general and rough statement that had been put forward by the right hon. Gentleman the Member for Pontefract (Mr. Childers), that between 200,000 and 300,000 persons would obtain entire remission, and about 200,000 would receive benefit from the exemptions. [Mr. CHILDERS: Between 400,000 and 500,000 would be benefited.] Probably the number might be 450,000 or 460,000 altogether, or say 500,000, of whom one-half perhaps would have the benefit of total exemption. No doubt a certain number of persons were freed from the Income Tax; but if it ever became necessary to raise large sums by taxation for any particular purpose, other kinds of taxation would, of course, be resorted to. It might be theoretically wrong to increase taxation in a direct form only; but that principle ought not to be pushed too far in practice. For his own part, he did not think a Finance Minister ought to lay down 985 and slavishly adhere to any abstract doctrines. What he ought to do was to endeavour to raise his taxation in the way most in accordance with the general interests of the country, and the least injurious to trade and credit. The whole aim of the Government was to give solidity to our financial system. They were endeavouring to put the Income Tax on a footing which would enable them to raise it without difficulty in a great emergency, and they were endeavouring to deal with the Debt of the country in such a way as both to keep its credit good and to have a reserve to which recourse might be had in case of necessity. By reducing the pressure upon struggling professions the Income Tax would be made more tolerable, and by making it more tolerable it would be rendered more available. As to remissions, it was as well to bear in mind what the history of the tax had been. When the right hon. Gentleman the Member for Greenwich first proposed a 7d. tax on incomes above £150 and a 5d. tax on those between £150 and £100, they heard very little about the evils of graduated taxation, and that system, with some variation, continued for nine or ten years. At last, in 1863, the right hon. Gentleman, acknowledging the unfairness of the tax, introduced the principle of deductions, fixing the deduction at that time at £60 a-year. Subsequently he again spoke of the pressure of the tax on small incomes; and although he did not himself propose any further dealing with it, the Chancellor of the Exchequer under him as Prime Minister did again in 1872 propose a further extension of the system. The ground on which it was proposed was the inconvenience arising from too sudden a jump from the point at which a man was exempt from Income Tax. A sort of graduated system was introduced, on very scientific principles, according to which the sum of £60 was to be deducted where the maximum of exemption was £200, and £80 where the maximum was £300. It was now proposed that the amount deducted should be not £80, but £120, because of the arithmetical proportions of those figures, and that the deduction should be carried up to the higher figure of £400, instead of £300. The real key to the proposal was the deduction or remission of the tax up to £150, and, as the natural corollary to 986 that, the deduction of £120 instead of £80. The principle on which the whole proposal rested was identically the principle on which these remissions had been founded for many years past. Some of the criticisms they had heard he thought could hardly be said to have been advanced seriously. He thought the criticism that it would be right to do this if they were reducing the tax, but wrong when they were raising it, was very difficult to follow or appreciate. They had been told that this was an emergency tax, and that they ought to take care not to do anything which, if the tax were raised to 1s. or 1s. 6d., would sacrifice a considerable amount of the revenue we might get from it. But if that argument was to be held good for anything, we ought to do away with the exemptions that already existed. By putting the Income Tax on the basis on which the Government proposed to put it, the House, instead of giving a stimulus to what he regarded as a most dangerous policy—namely, that of a graduated tax—would carry out further the exemptions which tended to prevent that danger. In conclusion, he hoped that the House would adopt the scheme of the Government instead of the view put forward by the right hon. Gentleman (Mr. Hubbard), which, though ingenious in theory, would not be found suitable in practice.
I can assure hon. Gentlemen on both sides of the House that I am sincerely anxious to relieve them from the necessity or occasion of listening to me in any statement or argument upon this important question; and, after listening to the speeches that have been made it occurs to me that I may possibly, by putting a question at the outset, relieve the House altogether from that necessity, and remain, except in so far as the very few words I am about to say, a silent Member on this occasion. I noticed that the hon. Gentleman the Secretary to the Treasury in his speech confined his defence absolutely and exclusively to that portion of the proposal of the Government which raises the limit of total exemption from the Income Tax from the sum of £100 to £150 a-year; and my right hon. Friend the Chancellor of the Exchequer, following the Secretary of the Treasury, delivered a careful and elaborate defence of that single portion of the proposal 987 which raised the limit from £100to £150, and although he offered, amidst what I may call the emphatic silence of hon. Members on that side of the House, some apology for the remainder of the proposal—namely, that of raising the deduction from £80 to £120, and the maximum under which that deduction applies from £300 to £400—though he made that kind of apology for these portions of the proposal which I fully admit decency required, yet, on the whole, the impression left on my mind was that it was not disagreeable to him, at all events it was not intolerable to him if at once we were to offer him some assistance in throwing overboard that portion of his cargo, and that it might shorten our proceedings if he were to give us an explicit explanation on that point. I think I am justified in asking my right hon. Friend whether he is prepared to assure us that provided the House is ready to adopt the alteration of the limit of absolute exemption from £100 to £150 he on his part is ready to abandon the two other proposals of raising the deductions from £80 to £120, and the limit of incomes upon which that deduction is to be made from £300 to £400. I make no excuse whatever in offering my right hon. Friend and the House a distinct bribe on the subject, because he will get away at least half-an-hour earlier from a discussion which I myself wish to avoid.
§ THE CHANCELLOR OF THE EXCHEQUER
I will not stand in the way of my right hon. Friend proceeding with his argument.
Though I esteem the statement of my right hon. Friend as a very high personal compliment, yet I would willingly forego it if he would explicitly state what I think he has implicitly done in the observations he has made. I really think he might as well spare himself the trouble, whether I am right or wrong, of pushing those two portions of his proposal, because unless I mistake the genuine feeling of the House itself it is a feeling of dislike to those two proposals. Therefore I must, under protest and under compulsion from the Members of the Government who will not relieve me from the necessity, proceed to state why I think this is an important matter, and upon what footing I place the remarks I have to make. I do not think it necessary to 988 answer many of the points in the speech of my right hon. Friend, because I am extremely anxious to keep out of this discussion whatever belongs to the distinction between the two Parties in this House; but one observation of his I must meet with a mild protest and objection. He objected to the speech of my right hon. Friend the Member for the City of London (Mr. Goschen), on the ground that he had assumed and taken upon himself to denounce this measure from a Conservative point of view. Says my right hon. Friend the Chancellor of the Exchequer—"You have no right to denounce this measure from a Conservative point of view. What have you to do with Conservatism? What do you know about it? Hold your tongue on the subject." But my right hon. Friend forgets, I will not say the established slang, but I will say the established formula of each of the two Parties. A Conservative when he goes to his constituents says—"I am a Conservative, but I tell you also the Conservatives are the best of Liberals." If he is a Liberal, he will say—"I am a Liberal, but I tell you also the Liberals are the best Conservatives." I know from my own personal experience that the professions of my Friends on this side of the House are perfectly sincere. But the right hon. Gentleman says it is impossible for the language of a Conservative to be also that of a Liberal, or that the language of a Liberal can be that also of a Conservative; and, therefore, I am afraid he thinks that the corresponding professions by Gentlemen who sit behind him have not at all the same character and stamp of sincerity as undoubtedly belong to those made on this side. Let us get rid, however, of expressions of this kind. Sir, I feel this is an occasion on which the entire responsibility of the decision that is to be given lies with the majority in this House. You, the Members of the majority, have it in your power to carry the proposals of the Government. For us, it is no very difficult matter to make our protest, and to point out what we conceive to be the rights of the case, and the danger of the course on which you are inviting us to enter. If the communications that have been going on upon the Treasury Bench have led to an alteration of intention, and if the right hon. Gentleman is now prepared to say he will dispense with this portion of the 989 proposition, I beg that the right hon. Gentleman will interrupt me at any moment. I shall be most happy to acquiesce. But I wish it to be clearly understood that the decision of this question is wholly and peculiarly in the breasts of the Conservative majority of this House. There are occasions—we have had occasions even in the present Parliament, on which the persistent and determined adhesion of the minority to their opinions—wherethey felt they had a very strong case in their hands and a very special duty incumbent on them, in particular where even that minority, however divided and disspirited it may have been at the commencement of the present Parliament, has been enabled to procure from the majority an ultimate concurrence in its views. But this is not one of those cases. It is, undoubtedly, not as Liberal Members of Parliament in particular that we are called upon to oppose a measure the obvious purpose of which is to relieve the larger and more numerous classes of society at the expense of the more limited and wealthier. That duty belongs to us as men of honour, and, I think, as prudent men. Of course, these considerations apply equally to the majority; but the Members of the majority, according to the professions they make with an unequivocal sincerity, are likewise the special guardians of all matters which have to do with the security of property in this country. Therefore I am very glad that this debate has not been carried on from this bench or from this side of the House, and that the Motion upon which we are apparently about to take a decision has been made by one of the most staunch and respected Members of the Party opposite. I could have wished that there had been more numerous speakers from the independent benches of that Party; but, still, I think it is very likely that a great number of Gentlemen who are sitting opposite are carefully considering in their minds, even at this moment, what vote they shall give. Let me point out the nature, in a technical and formal sense, of the vote which we shall be called upon to give. You, Sir, will put from the Chair, the Question that the words proposed to be left out stand part of the Question, namely—the words for your leaving the Chair, and our going into Committee. If that Question is carried, we then affirm the 990 whole plan of the exemptions of the Government as it stands. I do not mean to say we deprive ourselves of the power of subsequently correcting the vote, but we give an affirmation to the plan by determining, against the Motion of my right hon. Friend, to go into Committee without giving any adverse opinion on any part of the plan. Therefore, let it be understood that those who vote for the words proposed to be left out to stand part of the Question, vote for the system of exemption as it is now proposed; that the Chancellor of the Exchequer has declined to make that separation of the parts of the system which I have humbly and enticingly solicited, and that, on the contrary, by voting with my right hon. Friend we shall in no way forfeit or prejudice our right to accede to that portion of the plan which alters from £100 to £150 the limit of exemption, but shall simply get quit at once and finally of the other two portions of the plan to which objection is felt. My right hon. Friend the Chancellor of the Exchequer has entered into the history of the tax, and though I think there are one or two points upon which he is not perfectly accurate in his statement, I need not follow him into them, because they are not material enough to require that I should endeavour to present my statement of the facts. But apart from the historical narrative, the case, it appears to me, stands thus. We have complained of the right hon. Gentleman's proposals mainly on three grounds: First, we maintain that you cripple the tax in time of war. It has been shown that the present exemptions cost a great deal, and the exemptions proposed by the Chancellor of the Exchequer nearly double that cost. The Chancellor of the Exchequer says—"You have no right to mention the present cost, because if you think the exemptions are illegitimate they ought to be got rid of." I cannot admit that plea. The present exemptions are admitted because the considerations that recommend them, and which make them matter almost of necessity, are considerations of such weight and urgency as even to make that cost worth incurring; but what we contend against my right hon. Friend's exemptions is that they nearly double the cost without any of this necessity at all, and that if you suppose a case in which the tax is raised to a high rate, or to its 991 maximum, the deduction from its efficacy becomes an enormous deduction. If the tax were raised to the amount of 2s., at which it stood for many years together during the revolutionary war, the total deductions from the tax by the exemptions would be very little short indeed of £10,000,000 a-year. If the sum of 2s. should seem to some Gentlemen a visionary sum, I may remind them that even in the Crimean War, which only lasted a little more than a twelvemonth as to its active operations, and when we had peace within two years from the time war was declared, even in that short and most fugitive war we raised the tax to the sum of 1s. 4d. Then, in the next place, we say this is a mode of securing the perpetuity of the tax. But the hon. Gentleman the Secretary of the Treasury says that is perfectly true, and that is the merit of the proposal. He stated for the first time from the Treasury Bench that the tendency of this proposal to perpetuate the tax was one of the merits which had commended it to the approval of the Government. The hon. Gentleman since he has been in office cannot have had time to refresh his memory on the subject of the declarations of the manifesto or counter manifesto issued by the Prime Minister at the time of the General Election. The hon. Gentleman has forgotten that at the time when it was my duty to point out that we had a state of things in which we could part with the Income Tax, and we recommended parting with it, the right hon. Gentleman the Member for Buckinghamshire disputed entirely our title to make ourselves the patrons of the abolition of the Income Tax, and said—"The Liberals are those who have always kept on the Income Tax; the Conservative Party are those who have always striven to take it off." The Secretary of the Treasury, forgetful of the solemn declarations of his Leaders, which amount almost to the profession of a political creed, says that because this proposal tends to the perpetuity of the tax it is considered as one of its recommendations in the eyes of the Government. It has been truly said that this is a proposal by which, I will not say you bribe the majority, but by which you induce the majority of the actual taxpayers to acquiesce in the increase of the tax by making that increase positively and absolutely beneficial to 992 them. You encourage them to run in upon the minority, for you are going to make the increase of the taxation of the minority re-imburse and compensate the State for the relief you are going to give to the majority. Is that a safe principle? What does my right hon. Friend say upon that? He says it was the very thing Sir Robert Peel did in 1842. I take issue with him. I ought to know something about that, for it was my duty to fight the tariff of 1842 through the House of Commons. He forgot that the tariff of that year was not directed to the remissions it made to the relief of the great articles of consumption bearing upon the subsistence of the people. It was directed to the liberation of trade by the abolition and the reduction of duty upon raw material. Let my right hon. Friend mould his proceeding upon the basis of Sir Robert Peel, and we shall have very little to object to in it. My right hon. Friend says it does not signify whether you make these exemptions when the tax is increased or when it is diminished. I protest against that doctrine. I have serious doubts whether we were right in 1872 in raising the maximum up to which the deduction was allowed from £200 to £300; but I say it is a totally different thing to do what is done by my right hon. Friend—namely, to purchase the relief of one man under the same act and law at the expense of another, who is called on to pay for the relief as well as his own share of the tax. I must say a few words to the House, and especially to the majority, upon the nature of this proposal as to the principle it involves. My right hon. Friend showed a not unnatural disposition to get rid of the discussion of principle under the name of theory. It is not at all a bad plan—and my right hon. Friend seems to have adopted it in his speech—when you find the discussion of the principles of finance to be inexpedient to disparage and denounce them as theories, and as not fit to be entertained in an assembly of practical men. However, I do not think the theories of finance at all irrelevant to the discussion of practical measures of finance. Those who have been soundest in the theory of finance have been those who have brought about all the practical improvements in the practice of finance. I object to these two proposals, putting them in a totally 993 different category from the first of the three proposals—namely, that which raises the limit of exemptions from £100 to £150 a-year. I do not desire to join issue with the Government, and do not now make appeal to the House on any limited and narrow ground such as would be the subject of discussion so long as it was confined to £150 a-year. It is true that was the original minimum of the Income Tax, and it would be idle to attempt to reproach any Government that thought that circumstances made it desirable to return it to that limit. I should only have to say I thought the time was unfortunately chosen, for I do not think a period when a tax is raised is the right period to give relief to a large class of payers of the tax. But I do not desire to enter into that, as I do not think it involves any principle of taxation. The question raised with regard to the other two classes is of a totally different character. Besides the number which my right hon. Friend admits will be entirely relieved from the operation of the tax, another 200,000, having incomes between £150 and £400 a-year, will be relieved under Schedules D and E. That number is an absolute and considerable majority of the entire number of persons paying Income Tax above £150 a-year. The portion upon whom you are going to increase the tax does not consist of more than 150,000 or 160,000 persons; the portion upon whom you are going to diminish the tax, after putting aside those whom you are going to relieve from it, is about 200,000.Schedules A, B, and C contain an uncertain but very large number of persons that ought to be added to those figures; and this, as everyone acquainted with the tax must know, must largely increase the majority of those whom you are going to relieve, and largely reduce the minority on whom you are going to place increased burdens. Is this a safe proceeding? What is the virtue of this figure £400? I never but once happened to hear the figure 400 introduced as a figure of cardinal virtue and power in matters of finance. The people of England are eminently Conservative in matters of taxation and finance. We do not find the labouring classes in this country desirous to enrich themselves at the expense of the State or their richer neighbours. But once I did read a pamphlet that did appear to be full of the 994 most mischievous trash, but the very proposal in the pamphlet was to a certain extent in sympathy with the proposal of my right hon. Friend the Chancellor of the Exchequer; for the writer laid down this fundamental doctrine—that every man ought to have a fixed minimum income secured by the State, and he was led evidently by the same directing genius that has moved the mind of my right hon. Friend; only he applied his principle more largely and consistently, to fix upon the income which should be secured to every man by the State the sum of £400 a-year, £200 for the maintenance of his wife and family, and £200 for his own recreation, enjoyment, and satisfaction. My right hon. Friend said—"If you object to exemptions on £400 you object to exemptions altogether." If that is to be said, what argument could be used when some future Minister, who was still more warm and sympathetic in his nature than the present one, raised the limit to £500 a-year. Is there a danger in this way of handling the Income Tax, or is there not? That is the question which I wish in all sincerity and earnestness to address to every one of you who sit on the opposite side of the House, because I know those on this side of the House do not desire to have it addressed to them. I do not wish to preach to the converted. I am far from thinking that with the dispositions that prevail in this country the theories of Socialism and Communism have for us the real danger which they present on the Continent of Europe. I believe we may commit many faults, and play a great many pranks—dangerous and mischievous pranks—and still the good sense of the people of England would save us from Socialism and Communism. But they are evils of such a character that I should like to keep the margin between us and them as broad as possible, and I object to these proposals because it trespasses on that margin. I will endeavour to prove what I say. Of all the taxes on our Stature Book the Income Tax is the only tax through which it is possible that Socialism or Communism, or anything like them, can, in the nature of things, find an entrance into our system. It cannot be done by indirect taxation, indirect taxation seeming to hit all alike, while it probably hits with greatest severity the poorer classes. It cannot be done through our 995 stamp laws, for, speaking generally, they are rigidly impartial. For the most part, though they may fall on the property of the country, they fall upon it within measure, and I have never heard it spoken of as unjust that the property of the country should pay largely and liberally for the advantages it derives from government. I do not believe it unjust that the rich man should pay more liberally than the man of lower position. But the unrestrained adoption of that doctrine is full of danger to the State; and I ask whether it is wise for us to give the smallest scintilla of countenance to that doctrine by adopting any proposal such as that now before us, unless on grounds very much stronger than those stated by the Chancellor of the Exchequer and the Secretary to the Treasury? Take the case of those other taxes which fall upon property—the succession and legacy duties. These duties can never be made the means of introducing gross inequalities, because the very nature of them, requiring the realization of the property in order that the money be paid, absolutely forbids the doing of injustice. On the contrary, in the Income Tax we have a law admitting of being dealt with in a very different manner, and in one which would have given satisfaction to the Commune of Paris. We have only to strike the pen through the figure in one line, and in lieu of that to insert some other figure. It is the real and only avenue through which these dangerous principles can be introduced. Of course, I do not mean that the Chancellor of the Exchequer intends to introduce these principles. He is as much opposed to them as we, though not more; but I am not speaking of intentions, I am speaking of the tendency of the right hon. Gentleman's proceeding. It has always been felt that the Income Tax had its dangers. In the old Income Tax there were various forms of exemption, which, when it was renewed in1842, it was felt to be wise to get rid of. Since that time we have endeavoured to stand on a principle. It is intelligible, and the Income Tax has boasted of its equality—at least of its theoretical equality. It is a blot in it, and starts from a basis where it can be shown that it sins at its outset against its own first principles. At the same time, it was felt impossible to levy the tax upon the smallest incomes. It was impossible to levy it upon the wages of 996 labour, and that led to the principle that the wages of labour should be exempted. This, then, is the principle upon which the tax has stood from that day to this. It was necessary to ascertain the proper point of transition from the wages of labour to those incomes that were taxable in the sense that they could be got at, and as very cruel anomalies arose it was thought better to graduate the transition. This is the history of the mode in which the subject has been dealt with. If it has been dealt with too liberally, I feel confident I shall carry your assent when I say that is not a reason for going forward. It is, I say, an additional reason for stopping short. If we have already done too much, it is a reason for not doing more. It is impossible to say that incomes between £150and £300 a-year are now unjustly taxed, and it is impossible to say that the revenue officers have found any difficulty in levying upon these incomes. It is impossible to say with regard to incomes between £300 and £400 that any of those considerations can apply which originally dictated the exemption of incomes below £150. Now, Sir, this is not a question upon which we should indulge a mere sympathetic feeling. If sympathetic feelings are to govern our discussions you may surrender tax after tax, and limit after limit, and your operations will never come to an end. We should adhere to the wise practice of former years, when necessity was the cause of exemption; and if we have given too liberal an interpretation already, and have come too near a danger, that is a great reason why we should come no nearer. These are considerations of such importance that I have felt it my duty to lay them before the House. I have no disposition to push my views with regard to the class of incomes between £100 and £150; but I earnestly hope these classes of exemptions now proposed by the Government will receive careful attention, and that Gentlemen speaking from the other side of the House, and with more authority and more favour than I can command, will back the appeal I have made and save us the necessity of any division on the question now before us.
§ Mr. J. R. YORKE
said, he was opposed to the first part of the Amendment, but he was favourable to the second—namely, that it was inexpedient to extend the limit of exemptions to incomes of 997 from £300 to £400. He could not, however, assent to the doctrine of the right hon. Gentleman the Member for Greenwich, who asked them to vote for the Amendment, as he believed the effect of carrying it out would be fatal to the Bill. In Committee every Member could give effect to the opinions which he entertained.
§ CAPTAIN NOLAN
said, he would vote for the exemptions, not because he approved them altogether, but because the principle upon which they were founded approached what was right. In his opinion, incomes under £300 should be entirely exempt. The right hon. Member for Greenwich seemed to have forgotten that the poor man paid in indirect taxation much more in proportion than the rich man paid.
§ Mr. FLOYER
said, nothing could have been more clear or convincing than the arguments of the Chancellor of the Exchequer with respect to the exemptions up to £150, and though there was some objection to raising the sum to be deducted from £80 to £120, yet that objection was not very material. He felt, however, that there was a strong objection to make the deductions from incomes under £400 instead of £300; and he thought the right hon. Gentleman himself was not altogether satisfied with that part of his proposition. If, therefore, he voted against the Motion of the right hon. Member for the City, he desired to guard himself against being precluded from voting against a portion of the proposal of the Chancellor of the Exchequer.
§ Mr. PERCY WYNDHAM
trusted the Government would not at that stage of the Bill make any change in their proposals. It was entirely without precedent for a Government to make promises of remission of taxation in a Budget speech and then of their own accord to depart from the pledges they had given. There was no new principle involved in what the Government proposed—it was a step, and a very short step, in the direction taken by right hon. Gentlemen opposite. They were now told that by fixing on the limit at £400 they were touching the verge of Communism; but that they were quite safe when the limit was £300. He was not frightened by any such assertion. He hoped the Government would not depart one jot or tittle from their proposal. At an election which had recently 998 taken place in the North of England the constituency had received the proposal of the right hon. Gentleman with the greatest favour.
THE MARQUESS OF HARTINGTON
said, he did not wish to prolong the debate, but he would say a word as to the effect of the Amendment. If the hon. Member (Mr. Floyer) thought he was more likely to obtain his object by opposing the proposals of the Government in Committee, he was of course at liberty to do so, though he could surely accomplish this result more effectually by supporting the Amendment. But the hon. Member (Mr. J. R. Yorke) was under a misapprehension in supposing that the Amendment, if carried, would stop the progress of the Bill. The only result would be to negative the Motion that the Speaker do "now" leave the Chair; and if the Amendment were then carried, it would be in the power of the House to amend it.
§ Question put.
§ The House divided:—Ayes 241; Noes 121: Majority 120.
§ Main Question, "That Mr. Speaker do now leave the Chair," put, and agreed to.
§ Bill considered in Committee.
§ Committee report Progress; to sit again upon Monday next.