WAYS AND MEANS.—COMMITTEE.

HC Deb 11 April 1878 vol 239 cc1105-81

WAYS AND MEANS—considered in Committee.

(In the Committee.)

Motion made, and Question proposed, That, on and after the first day of June, one thousand eight hundred and seventy-eight, in lieu of the Annual Duty of Five Shillings imposed by the Act of the thirtieth and thirty-first years of Her Majesty's reign, chapter five, there shall he granted and charged the Annual Duty of Seven Shillings and Sixpence for and in respect of every Dog of the age of Two Months or upwards, for which a Licence to keep the same shall be taken out under the said Act, such Licence terminating on the thirty-first day of December following the day on which it is granted.

MR. CHILDERS

Sir, when the Budget was introduced, it was understood that the present would be the proper occasion for its consideration as a whole. I, therefore, now propose to address to the Committee a few observations on its general character and scope. Perhaps the present Budget stands almost alone among those recently brought before Parliament in that it deals so much with the financial affairs of two years that it is almost impossible to treat those two years separately. During the last few weeks of the past year, and the early part of the present year, a very large Expenditure has been incurred, no part of which will be met by fresh taxation imposed during last year. The Budget, therefore, is framed so as to meet the additional charge of two years—not only the year in which we now are. Looking at the Budget from that point of view, I would point out what is involved in the financial arrangements of the Chancellor of the Exchequer. For the last financial year there was a surplus of £860,000, and for the present financial year there is an anticipated deficit of £1,560,000—that is to say, for the two years an anticipated deficit of £700,000. I am speaking now exclusively of the ordinary Revenue and ordinary Expenditure. The Chancellor of the Exchequer has for the first time used these words, ordinary and extraordinary Expenditure, and I cannot but follow him; but, remembering French and Indian Budgets, I much regret their use in our Accounts. As to the ordinary Revenue and ordinary Expenditure of the two years, 1877–8 and 1878–9, there is, then, a deficit of £700,000. That deficit is, practically, spread, not very unequally, over the two years; because the year 1877–8 has been credited with a considerable amount of Revenue which really belongs to the year 1878–9, and because the Expenditure of the year 1878–9 differs from that of its predecessor in including, for the first time, the charge for prisons. Well, Sir, we have, therefore, first this fact to deal with—that the ordinary Expenditure of the two years is greater than the ordinary Revenue; and as to this I shall have something to say. But to this deficiency the amount of the extraordinary Expenditure has to be added. The Chancellor of the Exchequer has not been very precise as to the figures of the extraordinary Charge in 1878–9. I do not blame him for caution at such a crisis as the present; still, when special taxes are raised in order to produce a specific amount, it is very inconvenient not to know what are the special Charges in the mind of the Chancellor of the Exchequer. I take, however, his figures. Three and a-half millions have been spent last year out of the Vote of Credit. A million and a half may be wanted this year. With the £700,000 deficit, we thus, in all, have to provide for something like £5,750,000. The Chancellor of the Exchequer, in the present year, proposes out of that £5,750,000, to raise by additional taxa tion something like £3,750,000, by increasing the Income Tax from 3d. to 5d., and by increasing the tobacco duty by 4d. per lb. That would leave about £2,000,000 to be provided in 1879–80; and, assuming that the deficit in the ordinary Revenue to meet the ordinary Expenditure will remain the same, it is clear that we shall have to raise next year, in 1879–80, pretty much the same additional taxation as for the year 1878–9—or, in other words, that the imposition of the additional Income Tax and the extra 4d. per lb. on tobacco will have to be borne not only in the current year, but also till 1880, even if there is no increase in the ordinary Charges. I hope I have made that clear to the Committee.

If that is so, let me point out to the Committee how the policy of the Government has brought on us additional burdens since the year 1874. I think it is fair to take the year 1874 as a starting point, because the Chancellor of the Exchequer came into Office in that year under circumstances unparalleled in Public Finance. I do not suppose that on any other occasion did a Government come into Office finding between £5,000,000 and £6,000,000 a-year at their disposal with which to relieve the burden of taxation, and thus enabled to adjust on a permanent footing the relative incidence of the direct and indirect taxes. The Chancellor of the Exchequer knew what was contemplated by his Predecessor in Office—if not the whole story, a good deal of it. He knew, at least, this—that it was intended to devote a considerable amount of that surplus to the entire repeal of the Income Tax. But the Chancellor of the Exchequer did not adopt what was known to be proposed by his Predecessor. He took a deliberate review of the whole field of taxation; and, instead of repealing the Income Tax, he only applied a small amount of the surplus to its reduction. Let us, then, see how subsequent changes have affected the deliberate adjustment of 1874. In 1876, he added 1d. to the Income Tax, and he adds 2d. now—the 5d., with the new remissions, producing £9,000,000, as against £4,000,000 produced by 2d. under the old system. With the help of £750,000 from tobacco, £5,750,000 has thus been added to our taxes since 1874. Now, I think it will be incumbent upon the Chancellor of the Exchequer, if he desires to reconcile the great settlement of taxation which he made in 1874 with his present proposals, to explain to Parliament why, having further sums to demand of the country, he totally alters the proportion—proposing to raise seven-eighths by direct, and only one-eighth by an increase of indirect taxation. That seems to me to be a question which the Chancellor of the Exchequer must satisfactorily answer.

I will pass from this to the Budget itself, and I will first take the ordinary Receipt and Charge. The figures are very simple. This year we are asked to authorize an ordinary Expenditure of £1,560,000 in excess of the ordinary Revenue. Let there be no mistake on this point. Do not let it be imagined that, after all, the Army and Navy Estimates, as laid before us, have any reference to the extraordinary Expenditure going on. That is not the case, and the Chancellor of the Exchequer took great care to leave us in no misunderstanding on that point. On the contrary, the fact of the extraordinary Charge being met by a Vote of Credit, enables the spending Departments to keep their ordinary Estimates low. How, then, does the present relation of ordinary Expenditure to Income compare with that with which the present Government started in 1874? Let us look first at the Revenue of the present year, and compare it with the Revenue which the Government found when they came into Office. In 1873–4—the year towards the end of which the Chancellor of the Exchequer took Office—the Revenue received from Customs, exclusive of the Sugar Duty, was £18,339,000. The Estimate for the present year is £19,750,000, so that the normal increase during the four years is something like £1,400,000. The Excise receipts in 1874, deducting the Horse Duty, were £26,692,000; the Estimate this year is £27,500,000; the Stamp Duty gave £10,550,000, as compared with £10,930,000; the Land and House Taxes gave £2,324,000, against an Estimate this year of £2,660,000. I will take the Income Tax as if there were no change. Strictly speaking, there is a considerable improvement in the yield of the Income Tax within the last four years. The Income Tax at 2d. yielded, in 1873–4, £3,600,000; the Estimate at the same rate for 1878–9 I will put down at a like figure. The Post Office, in 1874, yielded £5,240,000—the Estimate this year is £6,200,000; the Telegraph Service yielded then £1,210,000, as against £1,315,000 this year; and the Crown Lands £375,000, as against £410,000. I omit altogether the enormous increase of the Miscellaneous Receipts, as to some extent it is a matter of Account. Now, what is the result of these figures? They show that, taking all the items of taxation precisely upon the same basis as existed when the Chancellor of the Exchequer took Office, the Revenue of £68,330,000 for the year 1873–4, has risen to £72,365,000 for the present year—showing a normal growth in the four years of not less than £4,035,000. That has been the progressive increase in the great branches of Revenue. But it will be said that the Government, with the approval of Parliament, added largely to the Expenditure for the relief of local burdens, and had to meet legacies from their Predecessors, and that these additional charges far more than balanced the normal increase of the Revenue. Let us examine this. The total increase in the charge for the relief of local burdens is £2,068,000. The increase in the charge for Public Education is £1,253,000. Then, there is the increased cost of the Post Office and Telegraph Departments to be considered in the comparison, and this amounts to £410,000. These items for the relief of local burdens, for Public Education, and for the Telegraph and Postal Departments, represent an increased charge of £3,731,000, the normal increase in the taxation, on a comparison of the two years, being £4,035,000; so that £300,000 more has been produced by the normal growth of the Revenue than the special expenditure which, on former occasions, was put forward as justifying increased demands on the taxpayer. That appears to me to be a very important fact, which ought to be well weighed by the Committee and by the country. What, then, is the conclusion? Why, that while the natural growth of the Revenue has been more than sufficient to provide for the special increases of charge, we have 2d. added to the Income Tax—1d. in 1876, and 1d. in 1878—due exclusively to the gradual increase of Departmental Expenditure in every branch of the Administration. The Chancellor of the Exchequer has found the spending Departments too strong for him, and the addition of 2d. to the Income Tax is the result. Take, for instance, the Naval and Military Estimates of the present Government in 1874, including the Supplementary Estimates of 1874, and those Estimates this year. I find that the Estimates of 1874–5 amounted, after deducting the extra receipts, to £23,394,000; while the Estimates for this year, also deducting extra receipts, amount to £25,457,000, showing an increase of £2,063,000. The increases in other Votes account for the remaining £1,500,000 raised by the additional 2d. Income Tax.

But, let me now revert to the way in which the Revenue has been increased. I have shown that of the whole of the additional taxation since 1874, no less than seven-eighths has been, or is to be, levied by an increase of the Income Tax, and only one-eighth is to be raised by other means. I do not deny that, under certain circumstances, the Income Tax is a powerful weapon for raising large sums of money, and in a short time. Of that there is no doubt. But I believe some hon. Members on both sides of the House will agree with me, when I say that, considering the altered character of the incidence of the Income Tax during the last two years, it is questionable, and even perilous, to raise very nearly the whole of our additional taxation in this way. It will be remembered that when, two years ago, the Chancellor of the Exchequer added 1d. to the Income Tax, he altered its incidence by considerably increasing both the amount entitled to absolute exemption, the amount up to which a deduction had to be made, and the amount of that deduction; and it was stated at the time—I think not only on this side of the House—that there was much peril in making that change, because its effect would be that a great many persons would actually pay less tax after the rate had been increased than they had paid in the year before. We did not, however, get at the time actual figures showing the results of the altered incidence of the tax. It was only when we were in possession of the Report of the Commissioners of Inland Revenue, circulated at the beginning of the present year, that we could obtain any idea of the effect produced by the change. They state that it is not in their power to give approximate figures of the number of persons, returned under Schedules A, B, and C, who will be relieved from the payment of Income Tax by the alteration made in 1876; but they give the numbers for Schedules D and E, under which almost exactly one moiety of the tax is now being collected. The number of persons under these Schedules, who were relieved altogether from the tax by the Act of 1876, was 244,000; and if the same number be assumed for Schedules A, B, and C, we may fairly conclude that 500,000 persons have been altogether relieved from taxation under the operation of the change made by the Chancellor of the Exchequer in 1876. In addition to this 500,000 altogether freed from taxation, several hundred thousand persons were taxed much lower under the new scale. If the area of the incidence of the Income Tax has been so narrowed, is it not perilous to look to it for seven-eighths of all additional taxation? To throw upon a small class the whole burden of war or extravagance, to popularize in this way increased expenditure, is, to my mind, no small political danger. It is, of course, not for us to suggest what other source of Revenue should be employed. We have done our duty by showing that the raising of the whole increased Revenue from virtually only one source, has not been proved to be necessary, and may be very dangerous.

I wish to say a few words, in passing, upon one of the items of additional taxation proposed by the Chancellor of the Exchequer—namely, the increase of the Dog Tax. The number of dogs that are expected to come within the operation of the law this year is, if I am not mistaken, about 1,500,000; and 2s. 6d. additional tax, even with the proposed exemption, would certainly produce a larger sum than the £100,000 estimated by the Chancellor of the Exchequer. [The CHANCELLOR of the EXCHEQUER: From the 1st of June!] The Chancellor of the Exchequer says—"From the 1st of June;" but my right hon. Friend forgets that the tax is payable in the month of January; so that in January, 1879, he will receive 7s. 6d. on all dogs; and the effect of the additional tax, commencing in June instead of April, must be extremely small. However, that is a point of not much importance, and no doubt the right hon. Gentleman will make some explanation respecting it. As to the increase itself, he did not give the Committee a scintilla of a reason or an apology for making that proposal. Perhaps, he thought that it would, in some way, tend to check the number of stray dogs, especially in the country. Well, I have made inquiry on the subject, and am informed by persons experienced in these matters, that the effect will probably be exactly the reverse, and that more dogs than ever will be turned loose to escape the tax-collector's visit. But there surely ought to be given some reason why, in the same Parliament, the rich man's horse has been exempted from taxation, while the tax on the poor man's dog is to be increased. I entirely concur in the wisdom of exempting collie dogs used by shepherds; but I hear that hound-whelps are also to be exempted, and this will require clear justification. There is another small class of dogs which I think ought to be exempted from taxation—I mean those employed in guiding the blind. There are, perhaps, only a few hundred of these animals; but, considering the poverty of their owners, and how dependent they are upon the dogs that lead them along the streets, I think there could be no objection to exempt this class from taxation.

THE CHANCELLOR OF THE EXCHEQUER

I have had a clause drawn for that purpose, and I am obliged to the right hon. Gentleman for that intimation of his opinion upon the subject.

MR. CHILDERS

I am extremely glad to hear the announcement, and I feel sure that the Committee will receive it with satisfaction.

I now come to the point to which the Chancellor of the Exchequer devoted the greater part of his speech, and which, I think, deserves the most careful attention of the Committee—I mean the condition of the Debt, and the effect on the Debt of the present system of loans from the Exchequer. My right hon. Friend gave us no figures in his Budget Statement of the actual amount or reduction of the Debt. I took upon myself to remark that he had made this omission for the first time in a long series of Budget speeches; and he afterwards read the figures. I beg the Committee to bear with me, while I put before it, as shortly as I can, the result of the explanation which my right hon. Friend gave. The condition of the Debt, on the 31st of March, 1874, was this—the Funded Debt amounted to £723,514,000; the valuation of Terminable Annuities, to £51,290,000; and the Unfunded Debt, £4,480,000; the total being £779,284,000. The balances in the Exchequer were £7,442,000; so that the net total Debt, on the 31st of March, 1874, was £771,842,000. Now, what was the state of things on the 31st of March last? The Funded Debt was £710,867,000; the Terminable Annuities were valued at £46,338,000; the Unfunded Debt was £20,603,000; making a total of £777,808,000. The balances of the Exchequer were £6,243,000. So that, against a net Debt, on the 31st of March, 1874, of £771,842,000, there was, on the 31st of March last, £771,565,000; shewing a total reduction of the Debt, in four years, of £277,000, or £69,000 per annum—this being the result of the working of the new system for paying off the National Debt. After all that we have heard as to the magnificent results to be achieved through the operation of the second Sinking Fund, I can conceive no lower bathos than the fact that in four years, the Government have only succeeded in reducing the Debt by£277,000. The right hon. Gentleman meets us with the plea—"Oh; but you must remember we have greatly increased our assets;" but what would be said of such an excuse in private life? Let us suppose that a gentleman, with an estate of £10,000 a-year, had upon it mortgages to the extent of £100,000, and that his steward had, during a series of years, contrived to pay out of the savings of each year, sometimes more and sometimes less of the charges on it. The gentleman appoints a new steward, who says to him—"You have a heavy mortgage on your estate, and I propose to you a magnificent plan for paying it off. We will open a new folio in the estate ledger, and credit it with a fixed sum yearly, and, I promise you, in the course of a few years, that you will greatly reduce your mortgages." Well, after four years, the £100,000 is found to be £100,000 still, with this difference—that, whereas the old mortgages were for long periods, some of the new ones had to be paid off in a few months. What would be said of the explanation? ''True, I promised that I would reduce your mortgages; and I have not paid off a snilling. But I have lent your savings to your poor relations, who want to improve their properties, and I believe I have taken excellent security." The real fact is that, instead of reducing the Debt to a larger extent than formerly, the result of the operations of the Exchequer since 1874 is the entire suspension of reduction, and the substitution of extensive loans to public bodies. The exact extent of these loans it has been difficult, until lately, to ascertain; but there is a Return moved for by the First Lord of the Admiralty, which gives the total amount of outstanding loans to localities in England, Ireland, and Scotland, and the Colonies—whether made through the Exchequer Loans Commissioners or the Public Works Department, Ireland, or in any other way, at the 31st of March, 1874. The whole amount was then £12,741,000; but, according to the last Finance Accounts, this had reached, on the 31st of March, 1877, £22,870,000—an increase in three years of £10,129,000. The President of the Local Government Board told us the other day, that this had been further increased by £4,000,000 in nine months; and the House is now asked to add £6,800,000 during the next year. I cannot but describe this state of things as extremely serious. It is evident that we have increased these loans by £15,000,000 since the present Government came into power, and the rate of increase is now £5,000,000 or £6,000,000 a-year—that is to say, far more than the nominal reduction of the National Debt. Nothing startled me so much as the short speech I heard on the night of the Budget from my hon. Friend the Member for Birmingham (Mr. Chamberlain). Some remark had been made by the Chancellor of the Exchequer about loans to the town of Birmingham. I think he said that Birmingham had got something like £ 1,000,000 last year, and wanted another £1,000,000 this; and the hon. Member spoke as if Birmingham had a sort of right to this advance, if she gave good security. Birmingham contains some 400,000 inhabitants. In two years, then, £5 a-head is to be lent to Birmingham. The United Kingdom contains about 32,000,000 people. If other parts of the Kingdom had the financial aptitude which my hon. Friend (Mr. Chamberlain) has shown in Birmingham, what would be thought of demands during the next few years, say, for £160,000,000? I hope, ere long, the Chancellor of the Exchequer will have the courage to bring down to the House some proposal by which this money-lending system will be checked. He alluded the other day to the large amount of the Education Loans for which he wished to make the late Government responsible. Now, the entire amount which they had proposed to lend was estimated at between £2,000,000 and £3,000,000, and before they left Office all that they had engaged to advance was £1,714,000. During the three years from 1874 to 1877, this has been increased to £8,265,000; and I must protest against the idea that the Government have not absolute discretion as to the aggregate amount they will sanction in each year. This year, however, I observe that only £1,063,000 is to be granted for school loans. The Sanitary Item, on the other hand, is yearly becoming more serious, and accounts for £5,000,000 in 1878. In fact, unless something is done promptly to limit these loans, Government will become, before long, a great money-lending institution for all purposes which can be pretended to be of public utility. The National Debt will steadily increase—indeed, this year 1878–9, the increase cannot be estimated at less than £3,000,000. I acquit the Chancellor of the Exchequer of any blame in this matter; but I cannot acquit those who have made popularity for the present Government out of the system. There is one aspect of the matter which the House must consider before long—that is, the absolute certainty that when these debates are forgotten, claims will be made on the Government to remit a large proportion of these loans. They are made for terms of 30, and even 50 years; and the succeeding generation will plead that they were not the borrowers, that the transactions were improvident and unjustifiable; and good-natured Governments, wanting political support, will be ready to lend an ear to pleas of this kind. A Bill is at this moment on the Table of the House, containing a proposal to remit one of these loans contracted not so long ago. Will the House allow me to read the reasons assigned for this remission? A Commissioner was appointed to examine the works, and he reported that— In certain events they would become most valuable; but, having regard to the difficulties of the case, and to the works remaining to be done, it appeared to him that the justice of the case would be met by the remission proposed. Why, Sir, such a vague excuse as this might be made in the case of any unsuccessful investment for which a loan had been obtained. The House should remember that, according to the Return which I have quoted, the remissions up to 1874 came to within a trifle of the entire interest paid from the commencement of the system; so that over a long series of years, the Exchequer had lent millions without receiving back anything beyond the principal. I trust that before next year the Chancellor of the Exchequer will come to us with some remedy for this great evil. When I warned him last year, his only reply was that the system was not one of his creation. I repeat the warning, but in no Party spirit, or with any hostile object, and I hope he will so receive it.

MR. CHARLES LEWIS

said, he would not detain the Committee except for a few minutes; but, as he had always taken great interest in the Income Tax, he desired to call attention to one or two matters of great importance in respect to that tax. Before he referred to that, he desired to make a remark with respect to an observation made by the right hon. Gentleman at the commencement of his speech, referring to the unparalleled position in which Her Majesty's Government found themselves, because, when they came into Office, they found a surplus with which they had been so often taunted, and which had been so often thrust down their throats—a surplus which the late Government handed over to the present Government. He did not profess to be a financier; but it seemed to him that the large surplus of the late Government must have arisen from their over-taxation. In many years large surpluses arose from unnecessary taxes. During the last three or four years of the late Government, the Income Tax was renewed, at higher rates than was necessary, year after year. In consequence of the exces sive Estimates made out, they had this desirable surplus; but it seemed to him that the taxpayer should be reminded that these surpluses were not matter for undivided satisfaction, but showed that unnecessary taxation had been levied in order to raise them. The Chancellor of the Exchequer had frequently been found fault with as to the leanness of his Estimates, and the close approximation between Income and Expenditure; and, if he might be permitted to make the remark, he would thank him, because it did appear to him to be a bad system to take out of the people £2,000,000 or £3,000,000 a-year that was not required. That was not an operation that was entitled to be regarded with satisfaction, and it seemed to him that a Chancellor of the Exchequer was entitled to more credit who was opposed to unnecessary taxation being levied. He regretted to say, on this occasion, with reference to the Income Tax, that he humbly concurred in a great deal that had been said by the right hon. Gentleman who had just sat down. He had never hesitated, when he stood alone, of protesting against the practice being pursued of adding to, instead of diminishing, the inequalities of that tax; and he could not help saying that the recent act of the Chancellor of the Exchequer to increase the line of exemption was most unfortunate. It was one of those evil birds that would come home to roost. If the Chancellor of the Exchequer thought the Income Tax agitation was an expiring thing, he would surely find that the Income Tax agitation would come up with increased force, when the rate of the tax substantially increased. They had heard from the right hon. Gentleman who had just spoken, that there were not less than 500,000 persons who had been entirely exempted from Income Tax under the recent arrangement. They had been told by Her Majesty's Government, and by a large majority of the. House who had voted on the subject, that the country was in a state of great national emergency, and that, in the crisis the country was going through, it was necessary to make increased Expenditure to meet that emergency. It was serious that the Chancellor of the Exchequer should have exempted from that operation no less than 500,000 of fellow-subjects who, primâ facie, were in a position to give contributions to the national emergency. The extension of the line of exemption was, he conceived, most delusive, and likely to lead to most disastrous results. He did not say for a moment that the Chancellor of the Exchequer had any indirect motive in view; but if he made further exemptions, when increasing the tax, that was a system which must end in confiscation sooner or later. If the Income Tax were to become part of the system of taxation of the country, a real attempt should be made to place this tax on something like an equitable basis—on some basis that should have regard to equity and justice. He saw no justice in saying to a person who had £5,000 in the Funds, producing £150 a-year—"You are so poor a person that we are not entitled to have anything from you," while they went to a small tradesman, who was making a small income by working from morning to night, and took Income Tax from him, because, nominally, he had a larger income. As a Member of that House, he had never allowed the Income Tax to be imposed without protesting against the whole system as one based on injustice, as one that produced fraud, and as a tax, which, at least, in its present form, ought not to take a place in the permanent taxation of the country. What was the position? The Government wanted a sum of money. According to all precedent, they were accustomed to look to the Income Tax, and almost all other suggestions were got rid of by turning to the Income Tax. He, for one, felt that those who sat on the Ministerial side of the House had given to Her Majesty's Government on this great Foreign Question a consistent support, and he did think that they had some right to complain of Her Majesty's Government in having attempted to raise so much by extra taxation during the present year. When the Chancellor of the Exchequer spoke on this matter, he was understood to say that the Vote of Credit would be spread over three years. Practically, it was only spread over two years, and the present year was made to pay the greater part of the burden. The right hon. Gentleman who spoke last, asked—"Why did you go to the Income Tax?" He confessed it seemed to him that the legislation of recent years had reduced the House to this position—that, whenever a question of increased taxation arose, the Government looked to the Income Tax, and nothing else. A vast number of articles of luxury had been relieved from taxation. He conceived that it was nothing short of a discredit and a disgrace to this country, that we were actually driven to this state of things—that if the people of the United Kingdom were to become a moderately sober people, the country could not pay its way, except by an enormous increase of the Income Tax. But for the drunkenness and insobriety of the people of the United Kingdom, the country would be in an insolvent position, and would need to have recourse to an enormous Income Tax. He knew the idea would be scouted if they attempted to replace duties on many of the articles which had been relieved. The first thing the Chancellor of the Exchequer did on coming into Office was to give away the Sugar Duty, producing £1,800,000 a-year. He should like to ask the right hon. Gentleman why it was that he had followed the practice of his Predecessors, of reducing the number of sources of Revenue, and, so as regards increased taxation, had left the House very little choice in the matter—instead of retaining an item of Revenue which, he should humbly submit, would have been, in a crisis like this, of the greatest possible advantage. But he sacrificed the duty on articles of consumption, like sugar, the very first thing when he came into Office, diminishing thereby a large amount of the so-called surplus which had been left him by his Predecessor on the other side of the House. When the Government were challenged, as they were now, he would ask the right hon. Gentleman opposite what items of taxation he had left them? That right hon. Member wished the Committee would increase the duties upon spirits. For his part, from inquiries he had made, he confessed that there was a good deal of reason for believing that, if that were done, it would fail in its object, and would not increase the Revenue. For 35 years the Income Tax had been retained, in defiance of all the pledges made by Sir Robert Peel—and, in defiance of all the pledges made by successive Chancellors of the Exchequer, it was continually renewed, notwithstanding its injustice, notwithstanding the inequality of its incidence, and notwithstanding the manifest evils which followed from it. What would be the result in a time of crisis? Suppose the country were to be involved in the horrors of war—the Chancellor of the Exchequer would come down to the House, and ask that the Income Tax might be increased to 1s. Was the line of exemption which now existed to be then allowed to stand, or were their burdens to be still further increased? The course which had been pursued already by the extension of the lines of exemption made the evil of the tax still worse. It seemed to him that the Income Tax had been dealt with in a haphazard way, so as to make things pleasant from time to time with regard to the Expenditure, and had never been dealt with in a statesmanlike manner. He knew the difficulty of dealing with the Income Tax; but, again, on behalf of those suffering persons—a vast number of the professional classes, who had no permanent income, and who lived from day to day by the exercise of their abilities, who might be struck down by illness or by family misfortune, and deprived of their living—he must protest against the injustice of levying upon them the same rate as was drawn from those persons who derived their incomes from landed property or money invested on good security. This was one of those inequalities and evils which demanded, and should receive, the attention of statesmen, however difficult a problem it might be to solve. It was one of those evils which they expected statesmen to deal with. What did statesmen live for, if it were not to apply their great intelligence and experience to the removal of such an injustice as this? On the side of the House on which he sat these arguments were not fashionable; but there were many things connected with the Income Tax which were not fashionable. What sense was there—what reason could be given for the way in which farmers, for instance, were assessed to the Income Tax—for assessing the farmer at half his rent? He was made to pay too much or too little. And illustrations could be given from other businesses, to show the grievous inequalities that the tax worked. It would be just as equitable, under the same state of circumstances, to assess the grocer or the wine and spirit merchant at half his rent. They were told, of course, that farmers never made any profits; that the sun never shone for them; that it was always raining; that their cattle were always dying of disease; and that there could be no possible balance at their bankers. That was but one of the inequalities which continually arose; and the fact of the injustice was admitted, for when Sir Robert Peel revived the Income Tax in 1840, he expressly stated that it was for a temporary purpose only; and if hon. Members would look through the debates they would find that when these questions were brought up the invariable answer given by successive Chancellors of the Exchequer was—"Oh! the tax is only temporary; it is not intended to be permanent; it is no use dealing with these great questions now; they are too difficult, far too involved, to be dealt with by us." In that way they had been told it was only a temporary tax, and they had been led on from point to point, until now it seemed as hopeless to expect to get rid of the Income Tax as to expect to do without any taxation at all. That was only an additional reason why they should knock louder and louder at the doors of the Government, and endeavour to get some alleviation of the present system. It would be possible to place 20 or 30 illustrations before the House to show the differences in the nature of the income enjoyed by different persons. To take the case of some men who lived practically on an annuity. Numbers of persons lived on the rent of long leaseholds, which, perhaps, had 30 or 40 years to run. There the lease was daily running out, and from day to day those persons were receiving partly interest and partly capital—for the whole sum being received from a leasehold house, by way of rent, the property would be worthless to themselves or their families 30 years after. Yet those persons paid exactly the same amount of taxes as was levied upon an income which remained for ever. What was the case with professional men? He formerly belonged to a Profession where, if a business were sold, however good, or however long established, whether surrendered entirely or an active partner taken, it was absolutely impossible to get more than five years' purchase. Sometimes, even only three years' purchase could be obtained, and five years was the highest possible period. But those persons were taxed upon their incomes—which varied from year to year, which might be very good one year and very bad the next—just as if the income were derived from permanent property. The same thing might be said of the surgeon, of the doctor, and of the artist—the latter might paint a picture for the Exhibition one year which fetched a good price, and another year he might not get a picture into the Exhibition at all. Yet each and all of those persons were laid upon the same Procrustean bed. This was an old story. Over and over again had it been urged upon the Government; it had been dinned into the ears of successive Chancellors of the Exchequer, with the result of being told for the first 20 years that it was only a temporary tax, and, therefore, it need not be touched; and, since that period, that having existed so long, the matter was too difficult to be dealt with. What would be the result if, as in the case of the Crimean War, 1s. 6d. in the pound were raised from the Income Tax? The middle and professional classes would be grievously oppressed, while many would be exempt from almost any taxation at all. An undue advantage was granted to those possessed of large resources derived from permanent property, who ought justly to be made to pay a larger proportion than those classes he had mentioned. He raised his voice, humble and feeble as it was, against this injustice, because, as an independent supporter of Her Majesty's Government, he had some concern for their reputation in this matter. Just before Her Majesty's Government came into Office there were two competitors for public favour—one issued a long address, the other a very short one. The right hon. Gentleman the Member for Greenwich (Mr. Gladstone), who issued a very long address, stated that it was his policy to get rid of the Income Tax. In his short address, the noble Lord now at the head of Her Majesty's Government said that it had always been the policy of the Conservative Party to get rid of the Income Tax. In the first Session of the New Parliament the Prime Minister was reminded by him of his promises with regard to the Income Tax. Since that time he had not ceased to remind him; and, whether it was palatable or not, he would, on the part of a vast number of payers of Income Tax in this country, go on reminding him of his pledge. He would continue to tell Chancellors of the Exchequer that the tax had not been fairly dealt with by successive Ministries, and that it was fully time to consider its inequalities. Ought they, in a state of great national emergency, to levy the money required from the great body of the people, or, practically, from a small and narrow circle?—for that was the result which immediately followed from the legislation of Her Majesty's Government exempting certain classes from the operations of the Income Tax altogether. On taking up this ground he was not inconsistent, for when the exemption was proposed two years ago he voted against it. His belief was, that the system of exemption was a system of delusion—to make things pleasant for those who had to pay. At the same time, one of the great evils of the Income Tax, as he had always maintained, was the inducement that it gave to Ministries to become wasteful and extravagant, while it put an unnecessary check upon the patriotism of the people. During the last two years one of the greatest difficulties with which Her Majesty's Government had had to deal had arisen from this. In this way, he meant—take the case of two men going home to their out-of-town residences; one would say to his neighbour—"Jones, if you vote for war, it means just a 1s. 6d. Income Tax." Now, Jones had but a moderate income, and he had five daughters to dress, so he went to a Radical meeting in the evening and signed a Petition in favour of neutrality. That was one side of the question. The other was, that so long as Chancellors of the Exchequer, at any time of deficiency in the finances of the country, could raise so large a sum of money by one or two turns of the Income Tax screw, so long did the country give up one of the greatest checks against wasteful and extravagant expenditure. For that reason, also, he attacked the Income Tax, and not only because he believed it was even more unfair now to what it was during the time of Sir Robert Peel; but it was because he thought any continuance of the system under which the Income Tax had been used and altered by Her Majesty's Government was likely to be injurious to them as a Ministry, and to the Party to which he belonged, that he strenuously urged upon the Government not to proceed further in the course they had adopted, but so to alter the system and deal fairly and honestly with the Income Tax as would produce an equitable distribution of taxation amongst the various classes of society.

MR. W. HOLMS

said, that the actual receipts last year amounted to £617,000 beyond the expenditure. But when they compared the way in which the Revenue of last year was raised with the mode in which it had been levied in previous years, he thought there were some features that were of an extremely unsatisfactory character. They had been accustomed to regard the amount of Revenue derived from Customs and Excise as a kind of barometer of the progress and prosperity of the country generally, or the reverse. He found last year—1876–7—the amount derived from Customs was £19,922,000, whereas in 1877–8 it was £19,969,000; there was, thus, an apparent increase of £47,000. But they had been told by the Chancellor of the Exchequer that, owing to an anticipated increase in taxation, some of the Customs rose to the exceptional amount of £150,000 during the last week of the financial year. Therefore, they had to deduct £47,000 from £180,000, and it could be then seen that the Customs, in reality, produced £103,000 less than in the preceding year. This was in very striking contrast to the continued increase in the Customs duties in the five years previously. Taking the five years before 1876, there was in each of them an average increase of £800,000. When they came to look at the Excise, matters would be found still worse. In 1876–7, the amount raised was £27,736,000; while last year it was £27,464,000, showing a falling off of £272,000; but, as during the last week of the financial year, owing to the anticipated increase in the rate of taxation, no less than £200,000 more than usual was paid into the Exchequer, there was an actual decrease of £472,000. That was a marked contrast to the preceding years, for in the five years before 1876 there had been an annual increase of something over £1,000,000. In 1872 the Revenue, to use the expression of the hon. Member for Greenwich advanced "by leaps and bounds," and there was an actual increase of £2,000,000. If the Customs and Excise were taken together, what was the position? They amounted, in 1876–7, to £47,658,000; and last year they fell to £47,433,000, being an actual decrease of no less than £225,000. Adding to that £350,000, received during the last week of the financial year on account of the anticipated rise in the duties, the actual decrease would be found to be £575,000. That state of things called for the gravest consideration, when it was compared with the steady increase going on for many years before. In his opinion, these facts pointed to the lightening the burdens of taxation on all the necessaries of life. It also behaved them to look out for some other tax to supply the deficiency. There was no difficulty in finding one. Stamps, for instance, yielded £10,956,000 in the past year, as compared with £10,890,000 in the preceding year, being an increase of £66,000; and, under the head of Stamps, there had been a remission during the last 10 years of taxes amounting to £1,321,000, while the Revenue from them had increased by £1,738,000. It must also be remembered that under the head of Stamps, Legacy and Succession Duties were included, and he saw no reason why they could not apply the same principle to real estate as to personal property. Some suggestions had been made with regard to the Budget of the Chancellor of the Exchequer for increasing the duty on spirits; he was glad the Chancellor of the Exchequer did not make any such proposal, for if he had done so both Irish and Scotch Members would have asked for an increased duty on malt. Then, the next demand would have been for an increased duty on wine. It was well known that there was at present the greatest difficulty in concluding Commercial Treaties with wine-growing countries, owing to the high duties imposed on wine; and he thought the Committee generally would agree with him that, on the whole, the Budget of the Chancellor of the Exchequer was by no means unfair. It was perfectly true, that during the 15 years preceding 1856, no additional duty had been imposed upon articles of consumption; but so great had been the increase in the consumption that, notwithstanding remissions of taxation, a much larger Revenue had been derived from those sources, and the Government had been enabled, from time to time, to make very large reductions in the general taxation of the country. In fact, during those 15 years, no less a reduction had been made than £27,085,000. He desired to call the attention of the Committee to the way in which those remissions had been made. There had been a diminution of taxation on articles consumed by the working classes to the extent of £7,000,000; while articles consumed by the upper and middle classes had received a reduction of £19,000,000. Of course, a great amount of direct taxation had been diminished, while an increased amount of indirect taxation had been levied. As a rule, direct taxation was paid by the upper and middle classes, while indirect taxation was usually borne by the working and lower classes. It had been acknowledged by the Chancellor of the Exchequer last year in that House that this change had taken place. He said— That about 15 years ago the direct taxes were 35 per cent of the whole amount paid. They were now about 30 per cent. The indirect taxes then were 65 per cent, and were now 70 per cent."—[3 Hansard, ccxxxiii. 1486.] At the same time, the right hon. Gentleman, with very great clearness, said that as a set-off to the increased proportion paid by indirect taxation, the Income Tax was liable to be imposed to meet emergencies. In all that had been said by the hon. Member for Londonderry (Mr. Charles Lewis), as to the desirability of revising the incidence of the Income Tax, he concurred; but he ventured to say that so long as they had the Income Tax it ought to be used in cases of emergency like the present; otherwise, the greatest injustice would be done to the working classes, who would have to bear more than their fair proportion of the burdens imposed. It had been argued by the right hon. Member for Pontefract (Mr. Childers) that 2d. in the pound was too much increase to put on the Income Tax; but he would remind the Committee that the Income Tax had been, for 12 years, at least, out of the last 20 years, over 5d. in the pound. Let them, for the moment, consider the effect of the proposals of the Chancellor of the Exchequer. He proposed to raise £3,000,000 sterling during the year from the Income Tax, and £750,000 from tobacco. The £3,000,000 would be paid by the upper and middle classes; but of the £750,000, about one-half would be paid by the working classes, and the other by the middle classes. Therefore, the upper and middle classes would be taxed to the extent of £3,375,000, while the working classes would have an additional burden imposed upon them of £375,000. That, in his opinion, was a fair arrangement, and it would go far to bring back the proportion of direct and indirect taxation to what they were 15 years ago, although it did not quite make the proportion what it then was. For his own part, therefore, he considered the Budget fairly satisfactory, and thought that the Chancellor of the Exchequer had gone as far as he could in a direction that was fair and reasonable.

MR. SAMPSON LLOYD

wished to remind the right hon. Gentleman the Member for Pontefract (Mr. Childers) that the surplus left by the late Government had been applied to the remission of taxation and the relief of local burdens, and the result seemed to him (Mr. Sampson Lloyd) most satisfactory. With regard to the Expenditure on the Army and Navy, that had been applied with the view of increasing the efficiency of those Services. He believed the result to have been that they now had a much more contented Army and a much more efficient Navy than before; while the number of ships afloat, or in process of completion, and the quantities of stores and equipments in their Dockyards, was a matter on which, at a time like the present, the country might congratulate itself. If hon. Members took the trouble to go fully into these items, they would find that the money expended by Her Majesty's Government had been fairly and satisfactorily accounted for; and that not only had they refrained from what could be charged as waste, but they had merely responded to the wishes of the nation. The hon. Member for Londonderry (Mr. Charles Lewis) had, in the speech he had recently made to the House, said some things with which he (Mr. Sampson Lloyd) concurred, and some with which he totally disagreed. He entirely disagreed with the hon. Gentleman in condemning the policy pursued by Her Majesty's Government in relieving the poorer class of taxpayers from the incidence of the Income Tax. For his own part, he considered that that was a perfectly sound and wise policy, especially when he remembered how much, in proportion to their means, this particular class were in the habit of paying in the shape of indirect taxation. In saying this, he was speaking not only of the working man, but also of those who were employed as clerks, and so on, and whose incomes were only of very moderate dimensions. Although the late Government promised to abolish this tax, they had given no indication of how they intended to do this, and the remedy might, possibly, have been worse than the disease. And if the present Government had put on an extra 1d. in 1876, it should be remembered that they previously took 1d. off in 1874. Then, again, the hon. Gentleman had said something about the course pursued by the Government in relieving the rich man's horse at the expense of the poor man's dog. This, however, was hardly a fair way of putting it; because when the Horse Tax was remitted there were at least three horses belonging to the poorer class, as against one race-horse or hunter belonging to a rich man, that felt the relief. In fact, he believed it was essentially a remission, of which one-half, if not two-thirds, went to benefit the poorer class. Without going further into these matters, he should like to say a few words about the Income Tax. He agreed with what had fallen from the hon. Member for Londonderry, to the effect that it would be wisdom and policy, now that the Income Tax had been so greatly increased, that even the most sanguine persons must be convinced there was no hope of its abolition, or even immediate reduction, if the Chancellor of the Exchequer, or the permanent officials under him, or both, would give their minds seriously to the best mode of doing away with the admitted injustice arising from the unequal incidence of this tax, both as regarded taxing annuities for a short term of years at the same rate as perpetuities, and taxing professional incomes at the same rate as incomes from perpetuities based on property, and so forth. He did not believe in the doctrine of non possumus as applied to this matter. He was old enough to remember the time when a Minister sitting in that House stated that—"The man must be mad who would propose to repeal the Corn Laws;" and when it was seen that a statement of that kind could be so completely falsified by events, he was sanguine enough to believe that the Chancellor of the Exchequer would, sooner or later, be able to find a way to redress the anomalies which still existed in regard to the Income Tax. At any rate, an approximation to justice was better than no justice at all. He would not refer to the tobacco duty, because that subject would be fully discussed at a later period of the evening; but he might be permitted to make the remark that, in his mind, it was very questionable whether, while an 8d. or even a 6d. increase of the duty would have produced more Revenue than a 4d. increase, it would, at the same time, have cost the consumer any more. Fourpence per lb. meant 1d. per quarter lb., or ¼d. per ounce, the latter being the quantity usually purchased by the poorer class of persons; and as farthings were not commonly charged, the retail dealer would charge ½d. per ounce beyond the previous price, and put the farthing into his own pocket. If the duty had been raised to 6d., he did not think it would have cost the consumer any more, while the Revenue would have benefited to the extent of at least £200,000 or £300,000 a-year. There was another point he should like to mention with regard to the Income Tax. He referred to a grievance that had been alluded to last year, and for which, he regretted to say, no remedy had yet been found. He meant the tyranny and injustice of compelling unwilling persons in the country districts to collect the tax. The oppressive character of this compulsion could scarcely be conceived by those who had not lived in country districts and observed its operation. In the smaller towns there was generally someone to be met with who was glad enough to discharge such an office in addition to his other work for the sake of the small additional emolument it afforded; and in the very large towns the poundage of 1½d. was sufficient to remunerate a collector for the work he had to perform, because of the large sums he was enabled to get in; but in some of the rural and suburban districts in the vicinity of large towns, where the houses were numerous but scattered and the collector had long distances to go, the compulsion referred to operated, in numerous cases, as a very great hardship. In some instances very many small sums were collected by the unfortunate collector, from 6d. to £2 and £5. How was it possible that he could be remunerated for his trouble and loss of time? He might be a hardworking tradesman, who had to attend to his own business for 14 hours a-day, and who could ill afford the time necessary for the performance of his compulsory duties; but if he refused to perform them he was fined £20, a fine which there was great difficulty in getting remitted. He might mention a number of cases. He knew of one in which a gentleman was associated with a colleague who could neither read nor write; of another in which an English gentleman living in Wales, and who could not speak a word of Welsh, had to collect the tax from Welsh-speaking people over a district consisting of six miles of bog and mountain. In another case a gentleman was called upon to pay £300 for taxes that he had not got in. Again, he had heard of a manager of a large railway who had to pay a man for the discharge of the duties, and who was liable, to the extent of some thousands of pounds, if that man should happen to run away. Then there was the case of a collector at Stockton-on-Tees, where the Government had neglected to get the man's sureties' signatures to the bond, so that the sureties not being liable, the Government, instead of putting up with the loss sustained by the collectors default, actually re-assessed the whole amount of the defalcation on the unfortunate taxpayers who had already paid their contribution—a few, who resisted the double charge, having their goods seized. But there was another great injustice arising out of this indefensible system—namely, the power it gave to one tradesman of looking into the affairs of a rival. He could not see why any man should be compelled to do this work more than any other work of the State. The State was rich, and could pay; why, then, should it not find proper persons to discharge these duties? He believed they need not go far to find a remedy. Why should not the Inland Revenue officers do the work, payment being made by fees proportioned to the work done? He knew, from good authority, that they were perfectly competent; all that was needed was a short enactment enabling the districts to be divided for the purposes of collection, and these divisions could be arranged according to convenience, whether they were in the same counties or not. Last year the right hon. Gentleman the Chancellor of the Exchequer had promised that he would look carefully into this matter, with a view of seeing whether a remedy could be applied; but, although 12 months had since elapsed, nothing had been done. The matter was a very simple one, and he earnestly hoped the right hon. Gentleman would not neglect the application of some remedy.

MR. D. DAVIES

congratulated the Chancellor of the Exchequer on the fairness of his Budget. He had not agreed with the right hon. Gentleman as to the bill he had presented in the shape of the Vote of Credit; but as that bill had been incurred by the House, he did agree with the Chancellor of the Exchequer as to the mode in which he proposed to pay it. He had had no sympathy with those hon. Members who had voted for the £6,000,000; but now that the debt had to be paid, it would ill become the House to grudge the money. He thought that if there was one thing more mean than another, it was to give an order for an expenditure of money, and then to grumble at having it to pay. He had given his vote against the £6,000,000; but he would not vote against a Budget which he regarded as a very fair one, with the single exception that he should have preferred the 7s. 6d. to be charged as Dog Tax to have been raised to 10s. He hoped that there would be greater care than heretofore in collecting the money. If the proportion were the same throughout the country as it was in the district with which he was acquainted, there must be hundreds of thousands of dogs which were not only a wretched nuisance to the public, but for which the tax was never paid. He believed that a 10s. tax would produce as much as the 5s. tax did at present; while it would have the effect of ridding the country of something like three-fourths of the dogs. With regard to the Income Tax, he thought it a very good tax. It was a very ready and handy impost, and it fell on those who had the money to pay it; because if people had no incomes they had nothing to pay with, and if they had incomes they, of course, possessed the means of meeting the demand made upon them. He regarded the tax as a very proper one, provided it was properly levied; and he believed it was fairly levied, and in such a way as to injure no vested interests. If a man had £500 a-year in land he could not make it more, and the tax took a certain sum out of that amount, and to that extent it might be considered inconvenient; whereas, if it fell on a man engaged in trade—as had been put by the hon. Member for Londonderry (Mr. Charles Lewis)—he might have to pay £75 out of £1,000, which certainly was a drawback; but then he could exert himself to make it up, while the other man, who had his means tied up, could not do this. There was one thing he wished to suggest, and that was if the country should unfortunately be plunged into war—and he hoped there was not the slightest chance of such a catastrophe—he hoped the Chancellor of the Exchequer would take care that whatever the cost of that war might be the expense should be paid as we went along, and not impose it as a mortgage on the State. Let the country pay the bill fairly and honestly year by year; if it took £30,000,000 or £40,000,000 a-year to fight the Russians let the money be raised, and let the bulk of it fall on the Income Tax. If they were to go to war he, for his part, should not be sorry to see a 2s. 6d. Income Tax. He knew the feeling abroad at the present moment, and that people were clamouring for war. If anyone asked them why they were to go to war, they could not tell; but, wherever he went, and whoever he saw—whether it was a doctor, or a parson, or anybody else—one and all were clamorous for war. Now, if these people had to pay a 2s. 6d. Income Tax—he did not care whether it was the doctor or the parson, a small proprietor or a large proprietor—they would soon find out that they had had enough of it, and they would soon get as heartily sick of the cost to which they were put as they now were eager to rush into the fray. If they did go to war, he was afraid it would be a long war. He knew a great deal about Russia and the resources of that country. Those resources were very great, and the Russians could fight at a cheaper rate than the British. They would remain on land, and we on the water, and we should endeavour to starve them; but in doing this we should, to some extent, be starving ourselves. He did not think there would be much blood shed; we should not attempt to do much with our Army; for, supposing we were to land 100,000 men, what would be the use of such a force against the 500,000 they could bring against us? It would, undoubtedly, be a very costly affair. He hoped the Chancellor of the Exchequer would give heed to his suggestion, and that if we should happen to be at war when he brought in his next Budget, and he wanted £15,000,000 or £20,000,000, he would draw the bill straight away, and cover the whole cost of the year in the one Budget. He did not see anything wrong in resorting to the Income Tax. He believed in the principle of calling upon every class to pay its proportion towards the expenses of the country, because he thought every class was thus directly interested in keeping out or getting out of war. He was willing to give the Government every credit for doing what they could to keep the country out of war; and, upon the whole, he thought that during the recent two nights' debate they had come out of it uncommonly well, and that they on that—the Opposition—side had not made much way against them. He trusted they would continue their efforts to keep the country out of war; but that if they should be dragged into war, let the Chancellor of the Exchequer arrange to pay the bill as we went along. That was all he had to put to the right hon. Gentleman.

MR. GOLDNEY

said, the Chancellor of the Exchequer had so far endeavoured to meet the views of the hon. Gentleman who had just spoken, as was involved in his endeavour to meet the extraordinary expenditure that had been found requisite, by levying the larger part of the amount on the present year. He had regarded the Chairman (Mr. Raikes), and the right hon. Gentleman the Chancellor of the Exchequer on the Budget night, as like two gentlemen in the pillory, with everybody throwing all sorts of heavy figures at them—and it must have been with a feeling of relief that they were able at last to emerge from their position, with an explanation on the part of the right hon. Gentleman that must have been satisfactory to everyone. The right hon. Gentleman opposite (Mr. Childers) had introduced such a mass of figures into his speech that it was almost impossible to follow him, and in some cases he had gone into the topics he had discussed in a manner that was not exactly fair to Her Majesty's Government. He had denounced the large proportion borne by the new direct taxation, as compared with the increase in the indirect taxation, without at all considering that it was the duty of the Chancellor of the Exchequer to see that the taxation he imposed did not affect more onerously than it ought to do the progress of trade throughout the Kingdom, and the general condition of the people. In 1854, at the time of the Crimean War, the right hon. Gentleman the Member for Greenwich (Mr. Gladstone) was Chancellor of the Exchequer, and the proportion of Income Tax he imposed as against indirect taxation was five-sixths—that was to say, the direct taxation came to £6,557,000, as against something over £2,000,000 of indirect taxation. In the following year, when Sir George Lewis was Chancellor of the Exchequer, he reversed the process, saying it was absolutely necessary that he should consider the state of the country at the time—his proposition being that there should be no fixed proportion for direct or indirect taxation, but that each must be regulated by the exigencies of the country. He then proposed £3,000,000 of indirect, as against £1,500,000 of direct, taxation. Presuming that the Income Tax was now, as it was stated to be, in excess of the average of a number of years, he was one of those who contested the argument of the hon. Member for Londonderry (Mr. Charles Lewis) with regard to the principle as to fixed property and fluctuating incomes. If they were to apply the Income Tax to fixed property alone, it would have a prejudicial effect on the Revenue. He desired to direct the attention of the Committee to those corporate bodies whose property contributed nothing to the Revenue, either in respect of the Probate or Succession Duties, while they enjoyed all the advantages accruing from such property equally with the rest of the community. He had made a calculation to the effect that, with regard to copyhold estates, the property in England, either by purchase or death, changed ownership, directly or indirectly, once in every 11 years, and that it changed hands by succession something like once in 14½ or 15 years. He believed it was also calculated that within the Metropolis one-fifth in area and more than one-fifth in value of the property was held by corporate bodies. This proportion would give an idea as to the enormous amount of such property there must be in the whole Kingdom. From an actuarial calculation he had had an opportunity of going through about a fortnight ago, it was estimated that the exemptions, owing to the property of corporate bodies not coming under the Succession Duty, amounted to very nearly £5,000,000 per annum. He thought that was a matter which ought to be fairly considered in any Financial Statement, assuming that the taxation of the country would be increased without reference to the difficulties in which they were at present placed. The right hon. Member for Pontefract (Mr. Childers) had made a calculation, showing that in 1873 and 1874 the public expenditure was much less than it was at present; but it should be borne in mind that since that time Parliament, in its wisdom, had determined that there should be a much larger expenditure. They had imposed on the Government the necessity of carrying the Education Act into effect, and charges had also been imposed in consequence of other local burdens. Therefore, this question of the Succession Duty being put on all classes of property throughout the Kingdom ought to be fully and fairly considered. He hoped the Chancellor of the Exchequer would have an opportunity of doing that, although he was aware it required a great deal of courage to grapple with a subject of this sort. He would now direct attention to the subject on which the Committee were really engaged. The Chancellor of the Exchequer proposed to meet the deficit by an increase of taxation in the present year, leaving, however, nearly £1,500,000 to be provided for in future years. As the ships and stores purchased now would be of advantage to next year, he thought they were dealing fairly and honestly by meeting their engagements out of their income at the present time, and leaving nothing over to next year, except that for which next year would have full value received.

MR. HIBBERT

wished to thank the Chancellor of the Exchequer for what he had done with respect to a question on which manufacturers felt very strongly—namely, the allowance in the assessment of Income Tax for depreciation in the value of plant and machinery. As the Income Tax had to be increased it was very fortunate that the right hon. Gentleman had been enabled to bring in a clause to provide what would be an alleviation of a hardship which affected a very large number of persons engaged in manufactures in all parts of the country. He desired, however, to ask the Chancellor of the Exchequer what would be the exact effect of his proposal in point of law? It appeared to him that the clause was entirely of a permissive character. He did not know whether this was the intention of the framer of the clause; but it certainly seemed to be drawn in such a way as to give to the Special Commissioners, who were to be appointed, power either to allow a fair sum for depreciation, or to refuse to allow it. If the clause were intended to be merely permissive, then those who were interested in this question would submit proposals which would have the effect of compelling the Special Commissioners to allow a reasonable sum. He should also like to know whether it was intended to make allowance for depreciation in the case of buildings? In his opinion, it was quite as necessary to make allowance for depreciation of buildings as it was for depreciation of plant and machinery, used in the process of manufacture. He also wished to draw the right hon. Gentleman's attention to another matter upon which a large number of people engaged in trade in Lancashire felt very strongly. In the town which he represented (Oldham), and in various other towns in Lancashire, a great number of joint-stock mills had been erected of late years for manufacturing purposes. These mills had been erected, to a considerable extent, by working men, and by working men's capital, and they were generally worked by Boards of Directors, which were composed principally of men who were engaged in work at other mills during the day, and who met at night to carry on the business of these joint-stock mills. Well, these men were charged Income Tax on the small allowances made to them year by year for looking after these concerns. The hardship arose from the fact that scarcely one of these men was liable to pay Income Tax, because they had not a sufficient amount of income to be assessed directly, but yet they said they were compelled to pay Income Tax. It might be answered that they could appeal if they liked to do so; but it appeared that it was a greater expense to them to lose their day's work and to have to travel three or four miles from home for the purpose of getting back what they had paid, and the consequence was that they paid the Income Tax instead of taking any means of appeal. It might, perhaps, be difficult to meet a case of this kind. There were a number of joint-stock concerns in which the Directors were properly assessed to the Income Tax, and it might be said that it was impracticable to make a difference between them and concerns which were worked by a particular class of persons. Still, he should like to know whether the Chancellor of the Exchequer could see his way to deal with this matter? Upon the general question, he must say he considered that the present expenditure of the country was extremely serious, and that it had been gradually increasing during the past few years. In his judgment, the time would soon arrive when the people of this country would find serious fault with the Government on account of this great increase of expenditure. It might be said—and, indeed, it had been said that night—that many items of expenditure had been increased in consequence of the provisions of Acts of Parliament which had been passed by the late Government, and which had received the general assent of that House. He admitted it was perfectly fair and just for the present Government to say—with reference to the Education Votes, for instance—"We are no more responsible for this increase of taxation than are those who sit on the other side of the House." But when he came to consider the increase in some other branches of expenditure, he must express his opinion that the Government were responsible for it. Take the Army, the Navy, and the Civil Service Estimates. He did not know that any greatly increased number of men were required for the Army this year; and, certainly, there was no addition in the number of men voted for the Navy. For the increase in the Civil Service Estimates he could only see one reason, and it was a reason for which hon. Gentlemen opposite were responsible. He referred, of course, to the large amount which was thrown on the State funds for the relief of local taxation. They were actually paying at least £2,000,000 more than they were three or four years ago for the relief of local burdens. That had been done with the assent of Parliament, and, consequently, Parliament was responsible just as much as the Government was; but he must say it was relieving one very much at the expense of another. They had now so large a sum imposed upon them for purposes of this sort, that he thought it was quite impossible they could ever hope to see the Income Tax abolished. It was entirely owing to the policy of perpetually throwing upon the State expenditure which had much better be borne by the local authorities themselves, that they were launched into this greatly increased expenditure. He could not himself suggest any way of reducing this large amount. It seemed to him to be entirely a matter for the Government to undertake. Unless a determined attempt were made to effect greater economy than they witnessed now, they would find the expenditure increasing year after year, and in the end there would come a strong and a united demand for a great reduction of the expenditure which took place in times of peace. The continued increase of expenditure must add to the difficulties experienced by all classes of persons in carrying on their business transactions successfully, and in meeting their pecuniary engagements.

MR. ORR-EWING

observed, with regard to the loans recently made by the Government, that the money was as secure as the National Debt itself. The right hon. Gentleman the Member for Pontefract (Mr. Childers) had alluded to the large sums of money which were devoted to educational purposes. Well, he ventured to think that neither in England nor Scotland would the Acts of Parliament have been carried out in the spirit in which they had been carried out, unless the Government had given to local authorities the power of borrowing money at a low rate of interest, and repayable after a certain number of years. He desired to thank the Chancellor of the Exchequer for exempting collie dogs, which were used by farmers and shepherds in charge of sheep. He wished, however, that the right hon. Gentleman had raised the tax on other dogs to 10s., instead of 7s. 6d. He would suggest that a list of all the dog licences taken out should be placed in the hands of the Superintendents of Police in all counties and boroughs, so that they might have an opportunity, when going their rounds, of ascertaining what dogs were not paying the tax at all. Since the reduction of the Dog Tax in Scotland the number of dogs had been increasing to an enormous extent; many of them were ill-fed and ill-cared for, so they went about the country hunting and killing sheep, to the serious injury of the farmers. He thanked the Chancellor of the Exchequer for his proposal to allow manufacturers, who had balanced their books honestly, to make deductions for the depreciation of their plant and machinery. He feared, however, that the words in the clause would fail to carry out the intention of the right hon. Gentleman, for he agreed with his hon. Friend (Mr. Hibbert) that the wording of the Proviso was very vague. He concurred with his hon. Friend's suggestion, that allowance should be made for the depreciation of buildings. He would point out to the Chancellor of the Exchequer that no provision was made for mine-owners—inasmuch as the value of the plant employed in bringing up the coal and iron was small in comparison with the enormous sums which were expended in sinking the pits. Why should not a coal or an iron-master deduct for depreciation, taking into account the length of time the pit would be required to exhaust the minerals? He regretted the increase of the Income Tax; but, of course, the temptation to increase it was very great. The Chancellor of the Exchequer had, however, one great field which, if properly cultivated, would yield an enormous harvest. He alluded to the duty on the alcoholic drinks consumed by the people of this country. It was admitted that nothing could be more unsatisfactory than the state of our fiscal laws relating to the duty paid on spirits, wines, beer, ale, and porter. They were unequal and unjust to Ireland and to Scotland, and likewise to the countries which supplied us with wine. He wished the right hon. Gentleman had had the courage to grapple with this question. He admitted, indeed, that there were many difficulties in the way; but, at the same time, he held that no difficulties ought to prevent the removal of injustice. He would propose to abolish the Malt Tax and the duties on brewers' licences, and to tax all alcoholic drink, whatever might be its form, according to the quantity of alcohol which it contained. That would be satisfactory to Spain, Portugal, and France, all of which countries complained of the existing system. The system he proposed would, moreover, be just to Ireland and Scotland, and it would bring in a Revenue of something like £36,000,000, more than the Malt Tax yielded. He would like to point out to the Committee the present system of collecting Revenue from those sources. Wine imported into this country below 26 per cent of alcoholic strength paid a duty of 1s. per gallon. If the wine had an alcoholic strength of 26 per cent it paid 2s. 6d. per gallon duty. From 26 to 42 per cent strength there was no increase in the duty charged; but over 42 there was an increase according to the percentage of alcohol contained in the wine; and then they came to proof spirit. But, as a matter of fact, there was no wine imported into this country of a greater alcoholic strength than 42 per cent. It came to this—that supposing wine contained 25.9 per cent of alcohol, it paid 1s. per gallon duty; and if it contained 26 per cent, it paid 2s. 6d.—or, in other words, there was an increase of £150 per cent for an addition of one-tenth of a degree of alcoholic strength. Then the wine-growing countries had, he thought, great reason to complain; because, under the present system, France paid 4s. per gallon of proof spirit, and Spain and Portugal paid 6s. Proof spirit in Scotland paid a duty of 10s. per gallon, while the proof spirit in ale, porter, and beer only paid at the rate of 1s. 8d. per gallon. Why should an article like whisky be taxed more heavily than ale, beer, and porter? Some hon. Gentlemen argued that whisky or spirit drinking tended to foster immorality, and that whisky was more hurtful than beer. Well, he differed from that, believing that the person who drank beer or porter to excess suffered a great deal more than if he took too much whisky. He objected to the fiscal duties being framed upon any moral principle whatever, and it ap peared to him that drinking whisky was no worse than drinking beer. There were no people in the world more peaceful, law-abiding, and industrious than the Scotch, and it was unfair to tax them on the score of morality. What they had to consider in the House was how to get a large Revenue, to maintain the Army, Navy, and other institutions of the country; and it was most unfair and unjust that some of the national beverages should pay to the Revenue six times as much duty as other drinks did. That was a question he thought the Chancellor of the Exchequer ought to have the courage to grapple with—not by raising all duties at once to the amount of that paid on spirits—let the principle be acknowledged, and the Malt Tax be abolished, and the duty paid upon the manufactured article. He hoped the Chancellor of the Exchequer would give some attention to this question, and so arrange the duties as to be fair and just to the wine-growing countries, and to the people of England, Ireland, and Scotland.

MR. HOPWOOD

said, the part of the Budget to which he wished to call attention was rather a humble item. It was the question of the Dog Tax, and the effect that the imposition of an extra duty would have upon a great many of those who possessed four-footed favourites in this country. The Dog Tax was now before them in a new form, for in the old assessed tax days only what he might term the dogs of luxury was taxed. Those dogs were then taxed heavily, and this was so because it was assumed that persons who followed sports in which dogs were used could afford to pay pretty well towards the expenditure of the nation. That had, however, been reversed by the system of seven or eight years ago, by which the tax of 5s. had been inaugurated; and what he rose now to protest against was the proposed increase of the tax to 7s. 6d. He was quite aware that one of his hon. Friends had called "Hear, hear!" and had rather stimulated the suggestion that the tax should be raised from 5s. to 10s. One of the feelings that had prompted this suggestion was probably that sheep were worried by stray dogs; but he would remind the Committee that stray dogs would not be taxed under the new system. But what he objected to was, that as there was an idea of sport in this country among all classes, and a dog was a possession much delighted in, in many humble households, an endeavour should be made to make the keeping of a dog a luxury to be enjoyed by the rich and not by the poor man—that, from the passing of the Act raising the duty, the House would sign and seal the death-warrant of many humble favourites throughout the Kingdom. He only hoped that if the Act were passed, and if the possessors of dogs were compelled to part with their poor favourites, the former would remember it at the next Election. He believed that the tax would affect people to an extent the Chancellor of the Exchequer hardly realized. But, whether it did or not, he was rather concerned for those who, in poverty, were content to share their merest crust with some pet animal belonging to them. He was speaking for that class which had no organization to protect itself; and here hon. Members sat—rich men, or they were supposed to be such—fixing 7s. 6d. as the amount of the Dog Tax; and, what was more, fixing a means of collecting the tax which could not be evaded. Hitherto, successive Chancellors of the Exchequer had been content to treat the tax as one to be collected in a perfunctory manner, and not to be followed up too closely, but those who were intrusted with the duty were to collect it as they could. Now, as he understood it, the tax was to be collected thoroughly in the future; it was to be—save us all!—collected by the police. He saw the Home Secretary in his place, and wished to inquire whether that right hon. Gentleman altogether approved of the proposal to cast this duty on the police? If there were one thing they ought to take more care of than another, it was that the police should be felt by the lower class not to be tyrants nor oppressors, and not have cast upon them in these days the additional duty of being vexatious tax-gatherers. The tax-gatherer had been, from the remotest antiquity, the object of hatred and dislike, and now this duty was cast on the police. Let them mark how it would go. A costermonger had his favourite dog—his trusted companion. Hon. Gentlemen thought much of having a four-footed friend, who would lick their hands even while he was being beaten; but who, when something hostile and foreign appeared, would, in their defence, turn upon and rend it. Well, the police went to such a man, and said—"The Chancellor of the Exchequer says we are bound to have 7s. 6d. from you for your dog; the fact is, we have been bound to collect 5s.; it has not been looked after, and now we will look after it in earnest." Costermongers were not the most influential class of men in the world, but they were not powerless. He did not speak of costermongers alone, because the same arguments would apply to any of the poorer classes that hon. Members might think of as they passed in review the different pursuits and callings that men were attached to, of a somewhat roving kind, in which they worked to secure something like a sustenance for themselves, and yet were attended by some such creature as they made the subject of the Resolution before the Committee. He thought it would be the greatest pity; and he asked the Chancellor of the Exchequer whether it was a wise thing to set the police to perform such a duty as this—whether it was the sort of thing to make them popular? He did not believe that, as a rule, the police were popular now. He asked the Government, further, to consider what right the Executive had to order policemen to perform this duty? Policemen were, as he understood the law, not the subjects of a Central Administration, except in a portion of London which was under the jurisdiction of the Metropolitan Commissioners of Police. Go into the City of London, and the Government had, strictly, no right to impose such a duty on the police. He knew that an Act of Parliament could over-ride everything, and would give the same power in this instance as it had in others, and perhaps the same results would follow. It might be said that the object was not only to diminish the number of dogs that might be likely to rend sheep, but also that there was an objection to seeing persons of a low estate having dogs which might be invidious to the neighbouring preserves. The Gun Tax which had been levied operated mainly as against the lower classes, and was, he believed, originally intended to supplement, if not actually to take the place of, the Game Laws. He would not enter upon any controversy upon this point, and would certainly not charge any hon. or right hon. Gentlemen on the opposite side with having been responsible for it; but he could not help saying that the tendency of Parliamentary action seemed to be more and more to assert the rights of game to protection, and so to make legislation in favour of the wealthier as against the poorer classes, who were to be shut out altogether from participation in the sports which so much delighted hon. and right hon. Members of that House at certain periods of the year. He therefore asked for a concession on behalf of the humble favourites of the humblest in the land; and, in doing so, he felt bound to express an opinion that the mode by which the tax was proposed to be levied was a most objectionable one. Further, he ventured to say that an increase of the tax would be equivalent to killing the goose, whose habit it had been to lay eggs of gold. The addition of 2s. 6d. per dog per annum would gradually, perhaps, but still effectually, reduce the number of dogs to such an extent, that the amount raised by the tax would be smaller than was now derived from the impost of 5s. per annum per dog. Much had been said about the horrors of hydrophobia in support of the proposal to increase the Dog Tax; but he was strongly of opinion that the disease was propagated to a much larger extent by pet dogs, who were kept in a state of semi-confinement, than by the class of comparatively worthless dogs, who were the free companions and favourites of persons in the humbler walks of life.

MR. GREENE

said, he supposed the hon. and learned Gentleman who had just addressed the Committee possessed the reputation of being a very learned lawyer, but it was clear that he knew very little of law; for he had suggested that dogs which developed a liking for poaching or for the worrying of sheep might be shot by the persons aggrieved. The hon. and learned Gentleman ought to know that people who thus took the law into their own hands were liable to have actions brought against them by the owners of the dogs. He had himself, on one occasion, caused a dog to be shot; but he was very careful to have it buried at once, in order that in case an action was brought against him, there should be no evidence in its support. If such a circumstance should again arise, he certainly should not retain the hon. and learned Member for Stockport as his counsel. If he had any complaint to make at all of the proposal of the Chancellor of the Exchequer, it was that he had not raised this particular tax to 10s. per dog instead of to 7s. 6d., for there was no point on which the country was so unanimous as upon the Dog Tax. He sympathized with the men who kept dogs, and made favourites and companions of them, and was not one of those who thought men should not be allowed to keep such animals because they occasionally got into the covers and killed or disturbed the game. Hydrophobia had been made a subject of laughter by people who held that the fear of it was a sort of needless panic; but he could assure the Committee that it was no laughing matter—the cases having been much more numerous of late than some people seemed to think. The hon. and learned Member had made a sort of Election speech in opposition to the increased tax. He had no intention to follow the example, and for one reason, because he thought an Election was a very far-off event; but, even if an Election were close at hand, he should not alter his tone, because he believed the farmers would approve a tax which would relieve them from a part at least of the danger under which they lay of having their sheep worried; and the humbler class of agricultural electors would not be so likely to get their children bitten by stray mongrels. His hon. Friend (Mr. Orr-Ewing) had suggested that beer should be taxed in precisely the same proportion as spirits, and had contended that spirits were just as harmless as beer, adducing Scotland, where the usual beverage was whisky, as a country distinguished by the peaceable and sober character of its people. This might be so; but, as everyone knew, the pulse of a Scotchman, and his physical nature generally, were low and slow, and it was necessary that he should take whisky in order to bring him up to the ordinary heat and level of Englishmen. On the whole, he had no fault to find with the proposals of the Chancellor of the Exchequer, except that the Dog Tax had not been sufficiently increased; and, to some extent, he thought there was weight in the objection that had been raised to the police being employed as tax-collectors. At the same time, the difficulty in collecting the tax as at present assessed was very great, and he thought the new arrangement would, on the whole, work very well.

MR. MUNTZ

disapproved of the proposal to tax dogs after they had reached the age of two months. As a breeder of dogs himself, he knew that it was most difficult to tell at two months which of the dogs in a litter ought to be kept; and he thought the limit ought to be extended to three or four months. He disapproved, also, of the proposal to increase the Income Tax, as, owing to its altered incidence, the burden was much more severely felt than it was some few years ago. As the law at present stood, a person with an assured income from real property or funded money of £300 a-year got relieved from payment of tax upon a considerable part of it; but the struggling tradesman, farmer, or professional man, who had a fluctuative income of £500 a-year, or thereabouts, got no relief at all. He had always objected to the system of exemptions and abatements, because he thought everyone ought to pay the tax according to his means, and because, if it should become necessary to raise a very large sum by means of the Income Tax, the number of those who came within the exemption provisions would create a very large deficiency in the Revenue. With regard to the Excise duties, the policy of successive Governments had been to exempt first one article and then another from taxation; and if the people generally were to follow the advice of his hon. Friend the Member for Carlisle (Sir Wilfrid Lawson), and cease from the use of spirits and beer, there would be very little Excise duty left; so that it would become necessary to raise an additional sum of about £30,000,000 a-year by means of a new system of taxation. He had never been able to understand why a large number of taxable commodities should be entirely freed in this country from impost of any kind, while in other countries they had to bear a portion of the national burdens. A smaller taxation on a particular article might increase the Revenue derived from it by causing a largely increased consumption; but to exempt it from taxation altogether would shut it out as a source of Revenue entirely. He saw no reason why, if the poor man's dog and his tea were to be taxed, a tax should not also be imposed upon the luxuries which were imported into this country for the pleasure of the rich. He would not put a tax upon articles of food or upon raw material so imported; but he maintained that a tax, ranging from 5 to 10 per cent, upon articles of luxury, would bring a large amount of Revenue, and would also leave it to the option of the taxpayers to pay or avoid payment of the impost by using, or refraining from the use of, the luxuries upon which the tax was imposed. As far as the Dog Tax—or, as he would prefer to call it, the Puppy Tax—was concerned, he hoped the Chancellor of the Exchequer would be able to see his way to not imposing the tax upon dogs until they had reached the age of three or four months.

MR. STORER

said, it could not be denied that the farmers of this country made incomes; but, owing to the vicissitudes of the seasons in the last few years, very many of them had been paying tax upon incomes which they had neither earned nor received. This was partly owing to the conduct of the farmers themselves, and partly to the mode of assessment, for many men would rather pay tax upon an income which they had not made than admit to the assessors the fact that they had earned nothing. The presumption now was that a farmer made an income equal to half his rent; but, owing to the very low average of late years, this amount had not been reached; and he thought the justice of the case would be fully met by assessing farmers at a third, instead of half, the amount they paid in the shape of rent, which was the principle now adopted. There might be exceptional cases in which farmers might make incomes amounting to more than half their rent; but, as the principle of the tax was to proceed upon average incomes, he thought it would be much more fair to go upon the third than upon the half. Another reason why this should be done was that, unlike manufacturers, farmers could not claim abatement for the depreciation of their machinery and plant. It was, in his opinion, somewhat hard that manufacturers of grain and beef should not rank in the same category with manufacturers of cloth and bricks. He saw no reason either why Scotch and Irish farmers should enjoy an exemption which was not accorded to English far mers, the first-named class paying only ¾d. in the pound, while the latter paid 1d. It was notorious that Scotch farmers were the best in the world; and, though the Irish indulged freely their natural love for grumbling, he had little doubt that they made as large profits as found their way into the pockets of English agriculturists. He supposed the practice was a relic of the past, which, with other similar institutions of ancient date, might very well be got rid of. The Irish people were always calling out for assimilation with England, and this was a point on which their desire might very well be gratified. He did not think any sufficient ground had been made out for the exemption of hound puppies from taxation; but he thought the Chancellor of the Exchequer might, without injuring the Revenue, or acting in a way that could lay him open to a charge of unfairness, retain the present limit of age, and not render puppies of less than six months' old liable to taxation.

MR. MONK

agreed with the hon. Member who had spoken last in thinking that the existing limit of age at which dogs should be liable to taxation ought to be retained, and contended that hound puppies ought not to have allowed to them an exemption which was not given to puppies of other breeds. Some remarks had been made as to the destruction of sheep by straying or ownerless dogs, and he agreed that much harm was so done; but he had never heard that puppies of less than six months' old had taken to this form of amusement, and he could not, therefore, see that sheep-worrying would be checked by taxing all dogs of over two months' old. He did not approve the proposal to exempt masters of hounds from taking out licences for puppies under 12 months' old; because it must be well-known that puppies "out at walk," between the ages of six and 12 months, were far less under control than other sporting dogs at that age. In order to test the opinion of the Committee on the subject, he would move that the word "six" be substituted for the word "two," in the Resolution before the Committee. He saw no reason for adopting the compromise of three or four months which had been suggested, especially as the police were to be employed in seeing that the pay ment of the tax was not evaded. In conclusion, he wished to thank the Chancellor of the Exchequer for the clause which he had inserted in the Customs and Inland Revenue Bill, exempting from duty the licences relating to alterations in ecclesiastical buildings and churchyards.

Amendment proposed, to leave out the word "Two," in order to insert the work "Six."—(Mr. Monk.)

Question proposed, "That the word 'Two' stand part of the Resolution."

MR. ASSHETON

said, the Chancellor of the Exchequer looked upon the Dog Tax mainly as a source of Revenue; but he regarded it in the further light of a weapon against the large class of worthless dogs which paid no tax, and did a vast amount of harm by worrying sheep and hunting game. He did not look at the matter exclusively from the game preserver's point of view; but, at the same time, he could not but think that if a man chose to preserve game he had a right to its protection, just as he had to the protection of any other kind of property which he might possess. He saw no reason why a rattling good tax should not be imposed—say, a tax of £1—and why it should not apply to all classes of dogs and hounds alike. Then there was another difficulty about the tax. It was not at all localized. If anybody wanted to know whether he paid the tax for his carriage, he would probably inquire of the nearest collector of taxes where he lived in the country, and perhaps in the town. If neither of them said he took out the licence, in all probability he did not. The same thing could not be done with the Dog Tax, however; and he would suggest that it should be localized and collected like the Carriage Tax. He had thought of suggesting that the police should issue the licences and collect the tax in future, and that they should be allowed 2s. in the pound for the collection. He had not seen the Resolutions, but understood there was something of that kind in them. The same persons who issued the taxes would then look after them, and see that they were paid. Another thing he had to say was about an expression, rather frequently used, about "The poor man's dog and the rich man's horse." Well, they were not all rich men that kept horses, and they were not all poor men that kept dogs. The poor man's dog, and the rich man's horse, were, in fact, animals more imaginary than real, and he did not believe in them. There were packs of hounds and sporting dogs and other dogs kept by well-to-do people. These were not "poor men's dogs," and no one could object to their being taxed. There were dogs kept by shepherds, and these were now to be exempt. Then they came to his enemies, who came out of the towns on Sundays with their dogs. He did not think they were people who should have much consideration. When they had taken those classes out of their consideration, what had they left? Notwithstanding these objections, he was grateful to the Chancellor of the Exchequer for having put on an additional half-crown, and should be still more so if he would only put on five more half-crowns.

GENERAL SIR GEORGE BALFOUR

said, he felt it his duty to protest against the increase to the Dog Tax. For a long time past he, and other Scotch Members, had been grumbling about the 5s. Dog Tax, and fighting a battle in Parliament to procure its reduction, and now they were to be rewarded by the Chancellor of the Exchequer putting on the dogs a further tax of 2s. 6d. If he did not rise and protest against such a proceeding, he could never face his constituents again. And the Chancellor of the Exchequer was not content with putting on that additional 2s. 6d., but he taxed dogs before they became dogs—for there was no pretence for saying a puppy was a dog. The Chancellor of the Exchequer had shown himself disposed to make experiments in trying to reduce the burden of local rates, and he thought he ought to have given some assistance to Scotch farmers, who greatly needed relief from the yearly augmenting rates and taxes; instead of which, he had increased the tax on their dogs by 2s. 6d. Let anyone go among the Scotch farmers and hear their just grumbling against the Gun and Dog Taxes. They had now to depend for many more purposes on dogs, because the children were kept at school, and they generally kept three or four dogs, in order to aid in herding, previously done by the young of both sexes. He feared that the Chancellor of the Exche quer was not acting justly in this matter. He taxed all usefully employed dogs alike, whether puppies or dogs, but he exempted hound-puppies under 12 months' old. He said that was not just. They should apply the same treatment to the rich man's hounds as to the poor farmers' dogs; and, looking at the difference in the means of the two classes, he did not think this proposal of the Chancellor of the Exchequer at all fair. But, in this matter, there was one part of the Kingdom he must complain of particularly, and that was Ireland. In Ireland nearly the same number of dogs were kept as in Scotland; but the Dog Tax there only realized £30,000, or 2s. a dog, and that was all the Irish paid. The Government further made different conditions for Ireland to what they did for this country; and he had, on that account, voted with his Irish Friends, because he wished the Parliament to do justice to that country, and until they did justice to Ireland they must expect political and financial difficulties such as they now experienced. There should be but one law for the three parts of the Kingdom in these arrangements. With regard to the Dog Tax, why did they not act towards Scotland in the same way as with regard to Ireland? They laid £33,000 on Irish dogs, or 2s. each, and, when they had raised the money, they handed it over to the counties and the towns; and the local authorities, who were thereby subsidized, went on revelling in the dog money, some of which, also, got into the hands of hangers-on of Public Offices in Ireland, or was used in paying clerks' fees, and perhaps as much as 1s. per dog was finally handed over in diminution of the local burdens. With regard to Scotland, which had about the same number of dogs as Ireland, they so laid on the tax that the money paid by the farmers of that country was paid into the London Exchequer, and Ireland benefited by the Scotch dog money, in the form of large public grants far in excess of the sums paid to Scotland. He, therefore, said the Chancellor of the Exchequer was not acting fairly between the two countries. He was aware, however, of the present financial position of the Chancellor of the Exchequer. He had allowed the public expenses to run up to such an extent, that it was impossible to adjust the present large Expenditure as it should be adjusted in any other way than by increased taxes. Of course, there was the Income Tax, to which an addition was also to be made; but that did not make things better. If he were told that £81,000,000 of Revenue were required for purposes of Government, he maintained it was not needed if economies which could be effected were enforced. He thought that when so much money was required for Civil, Naval, and Military Establishments, it was absurd to seek to get so small a sum from dogs, and thereby excite feelings of anger in the minds of farmers who usefully employed dogs in their farming operations. He knew that the Chancellor of the Exchequer had no real control over that great Expenditure; but he did submit that until they got the Public Expenditure voted in the first instance, irrespective of any increase to the taxation of the country, it was useless to attempt any reduction whatever in the existing taxes—and now, when the right hon. Gentleman the Chancellor of the Exchequer was asking for more taxes, he was not just to the poor in levying it on useful dogs. The Chancellor of the Exchequer might, of course, ask—What tax would you put in its place? He would say, let him take a portion of the additional Revenue which he could obtain from more strictly enforcing the due payment of licences for the killing of game, instead of increasing the Dog Tax. If he was so poor, let him get an income through the Inland Revenue from the right of selling game, which he might do by requiring all owners of preserves who sold their game to dealers to pay the licence-fee. Year after year, there were extensive evasions going on with regard to Game Licences of all kinds. There was at present a licence to deal in game, and every small dealer paid it; but Lords and others who sold their game were exempted; but there should also be a licence-fee paid on all men employed to watch game. If the right hon. Gentleman put a higher tax on that class of game protectors and watchers, he (Sir George Balfour) was sure the right hon. Gentleman could get a considerable increase to the Revenue; and he had no hesitation in saying, that in other cases—with regard to servants kept for luxury, for instance—if the right hon. Gentleman would levy the taxes in a different way, and at higher rates for those kept for pure objects of show and luxury, there, again, he would find other sources of Income—small, indeed, but enough to enable him to get rid of the tax on usefully-employed dogs. He did most strongly object to this tax on dogs kept for farming operations; and he submitted that there was no part of the community better entitled to be exempted from this taxation than the small farmers of Scotland—a class of people who lived in great moderation, and had great difficulty in carrying on their business. They were very poor, exposed to suffer from bad seasons, and every year they found their taxation and rates increasing; and now they had to meet an additional tax on dogs. And as he knew it was vain to try and prevent this addition, he would conclude by saying that it was with great regret, indeed, he saw that the right hon. Gentleman had increased a tax which was already burdensome and unjust.

EARL PERCY

said, he did not intend to dispute with the hon. and gallant Baronet who had just sat down, as to whether puppies were dogs. That was a question of Natural History, upon which he was not prepared to enter; but he thought the hon. and gallant Baronet was rather unjust to the Chancellor of the Exchequer, when he complained of the position in which farmers would be placed by the Bill which he was about to introduce. It might be true, no doubt, that a farmer required more dogs in the pursuit of his calling than would be covered by the exemptions contained in the Bill; but, so far as his experience went, he found that it was not to the fact itself of their having to pay the tax that they objected, but that they had to pay a tax of the same kind and amount as those who kept dogs simply for purposes of pleasure—in the field or in the chase. He thought, however, that was now to a great extent removed by what the Chancellor of the Exchequer proposed to do. There was one probable effect of the Chancellor of the Exchequer's proposals in which he took much interest, and that was the reduction of the number of stray dogs. If he did not hope that stray dogs would be decreased in consequence of the increase of the taxation upon them, he should look on the right hon. Gentleman's proposals with less favour than he did. One point had been touched on by two speakers that evening, on which he wished to make a few remarks, and that was the exemption which the Chancellor of the Exchequer proposed to make in favour of hound-whelps under 12 months. He could see no reason for that exemption, though he was about himself to take a pack of hounds, and he thought they should pay their fair proportion of the tax. In the case of dogs which were kept, no doubt, as a matter of whim, but which yet gave great satisfaction to their owners, and when those owners belonged to the poorer classes, it seemed to him that it was invidious to exempt dogs kept equally for purposes of pleasure, and the property of those who could well afford to pay the small addition proposed by the Chancellor of the Exchequer. He had endeavoured to calculate what the difference would be; and he admitted it was probable that, in many cases, they would have to pay about double the amount they did now; but if there were any real force in the objections to exemptions from this taxation—and he thought there was a great deal of force in them—they applied with still greater force in the case to which he was referring. They applied, as it seemed to him, to the case of dogs used for shooting purposes. He wished to say a word on another point. He had wondered why an exemption had been made in favour of servants employed in racing-stables. It seemed to him that no useful purpose could be gained by that exemption; and he trusted that, when the Bill was before them, it would be given up. He should certainly vote for the exclusion of that clause.

MAJOR NOLAN

said, he wished to congratulate the hon. and gallant Baronet the Member for Kincardineshire (Sir George Balfour) on his determination to vote with the Irish Members. He believed that the hon. and gallant Baronet not only voted with Irish Members, but that his vote was always on the side of the people, and on that, also, of good sense and good judgment. He thought, however, he could not have been much in Ireland. He had put a very important point to the Government respecting dogs in Ireland. In Ireland the tax produced between £30,000 and £40,0000; but it must be known to the hon. and gallant Baronet, and he might prove it for himself, that where there was a peasant population, there was nothing they found more useful than their dogs. There was a large peasant population in Ireland; and in that country—and, in fact, wherever that was the case—there was no tax so unpopular as the Dog Tax. There was no country in which a Dog Tax could be so unpopular, and that for the reason that there was a large peasant population. The hon. Member for North Nottinghamshire (Mr. Storer) thought there might be an increased tax on Irish farmers, and other hon. Members opposite thought increased taxes should be placed on Irish cattle. He was sorry those hon. Gentlemen put forward such suggestions; but if they did, they ought not to be surprised to find many Irish Members ranged against them and their constituents. In the North of England, farmers had an enormous advantage from the existence of the coal-fields in that part of the country, as they afforded many outlets for their produce; but Irish farmers had to send their produce to the English markets. They should remember, too, that the Income Tax, when first imposed, was put on in a slight form. Some advantage had been given in that respect; but, on the whole, the balance of taxation was against Ireland. The great tax in their country was six times as much as that paid in Scotland and in England—the tax on spirits—and simply because the common drink of the people in Ireland was more largely alcoholic than it was in England. That was a manifest injustice; and as to the Income Tax, it was smaller in Ireland only because the country was poorer. When they came to look at the amount of Revenue paid by the two countries, they found that poor Ireland came out in her proper proportions, she paying £3,500,000 as spirit duty against £20,000,000 for England, or one-fifth. Everybody knew that England was five times greater than Ireland, notwithstanding what the habits of the people were, and her being a poorer country. He trusted the right hon. Gentleman the Chancellor of the Exchequer would bestow some consideration on those points; and if he would consent to put the duty at 5s. a-gallon, he did not think the Income Tax would make so much difference.

MR. ONSLOW

said, he should like to make a few remarks on the Dog Tax. He was reading, lately, The Life of Pitt, and he found from it that it was a gentleman named Dent who first introduced the tax. It was first put at 2s. 6d. on each dog, and Dent always went afterwards by the name of "Dog Dent." In the discussion to which the proposal gave rise, a great deal was said about hydrophobia. It was contended that hydrophobia would be lessened. The same thing was said now; but he did not think it would reduce hydrophobia in this country. On the contrary, he thought it would lead to more dogs roaming about without masters than now. The Chancellor of the Exchequer had agreed to make exceptions in favour of hunting dogs and kennels; but he could see no reason why they should not be taxed equally with other dogs. He did not think either that packs of harriers and beagles should follow a different rule, but that all classes of dogs should be taxed equally. He was quite unable to agree with the suggestion that the tax should be raised to £1 on all dogs. On the contrary, he thought that even 7s. 6d. was a somewhat high tax. If there were any kind of dog, however, on which a tax of £1 should be levied, he should say it was on those wretched creatures called "ladies' pets;" for, of all nuisances in the shape of dogs, ladies' pets were by far the worst. The hon. Member for Gloucester (Mr. Monk) had, by a subsequent Notice of Motion, declared his opinion that the duty was unjust in the case of dogs under six months old, and there was, no doubt, something to be said in favour of that view; for the tax collector came round and insisted that the licence should be taken out even on the youngest dogs. He thought, however, two months was too short, and six months too long, an exemption, and that dogs should only be taxed when they were three months old. He thought that then anyone could see whether a dog was worth anything or not. To adopt six months would be increasing the opportunities for frand which at present existed. No doubt, there was an immense deal of fraud going on in collecting the tax on dogs; and whatever the Chancellor of the Exchequer did, he hoped he would see that it was better carried out than in previous years. While his own limit of two months was too short, he hoped he would not agree with the proposal of the hon. Member for Gloucester, for six months was certainly too long.

THE CHANCELLOR OF THE EXCHEQUER

said, he did not propose to interfere at any length with the discussion of the general subject of the Budget, as many hon. Members, no doubt, wished to take part in it; but as they had much discussed the question as to dogs, and there was a specific Motion before them respecting dogs, he thought it would conduce to the convenience of the Committee if he spoke on that subject alone, reserving until a later stage what he had to say on other points connected with the Budget. The right hon. Gentleman the Member for Pontefract (Mr. Childers) had asked him on what grounds he had fixed at £100,000 his Estimate of the amount of Revenue which might be expected from this source under the increased duty? The Estimate had not been made haphazard, but had been founded on careful calculation. The actual number of dog licences taken out last year was taken, and was found to be 1,392,000. It was estimated that the number that would be taken out in the ensuing year would be 1,430,000, or 1,450,000, if they included all sources for the year. Deducting from that number 160,000 for farmers' dogs, there remained 1,290,000. A certain number of those would not come into charge immediately, as tickets would not be taken out for them before the 1st of June. A certain number would thus be charged 5s., and thus the number arrived at would be 1,290,000, of which 1,165,000 would be charged 7s. 6d. The increased duty would probably be £110,000. He did not know that those figures were interesting; but they might serve to show that the Estimate he had given was really an Estimate, and had been arrived at, not by guess, but by calculation. The proposed addition to the tax had, of course, been suggested by a desire to reduce the number of stray dogs, and of dogs doing mischief and escaping taxation. It was not his wish, or the wish of the Government, to have any considerable increase in the tax upon the dog. They felt that it was undesirable to lay a heavy burden upon the dog of the poor man; and that was the reason why they had resisted urgent recommendations to make the duty £1. Seven and sixpence could not, he thought, be considered a very severe tax. Now, in regard to the question of age, he was bound to say that a great many representations had been made to him, not only within that House, but from a large number of persons outside interested in the breeding of dogs, and otherwise affected by the question; and the result was that he had come to the conclusion that it was going too far to lay a burden upon such very young dogs as those of two months' old. No doubt, a very large number of puppies must be expected to die in their early years; but, notwithstanding that, he now thought it better to trust for their money to the improved system of collection they hoped to introduce, rather than to make any alteration in the duty-paying age. By the new regulations proposed to be adopted, by throwing the burden of proof as to the age of a dog upon the owner, and by insisting upon a stricter system of collection, he hoped to be able to put a stop to the evasion of the tax without altering the age from six to two months. As compromises were generally undesirable, the simplest course for him to take would be to accept the Amendment of the hon. Member for Gloucester (Mr. Monk), retaining the age as at present.

LORD RANDOLPH CHURCHILL

said, it might be in the recollection of the Chancellor of the Exchequer that not very long ago, when the Dog Tax was 12s. 6d., masters of hounds made an arrangement with the authorities which was called "compounding," and under which they paid a lower duty than persons keeping a single dog or two dogs. He was now simply going to put it to the Chancellor of the Exchequer whether he would look into the old system referred to, with the view of seeing whether he could provide that masters of fox-hounds should be at liberty to compound with the Treasury for the duty upon their packs. He had the more assurance in making this appeal, because the Chancellor of the Exchequer represented one of the best sporting counties in the Kingdom—Devonshire—the home of wild sports and of the red deer.

DR. CAMERON

contended that the natural corollary of the change of policy which had induced the Chancellor of the Exchequer to consent to the law remain ing as it was in respect to young dogs was, that puppy-hounds should not be exempted from the taxation they had at present to bear. It would, indeed, be extraordinary for it to go forth that, in a Budget imposing fresh taxation, the only exemption should be made in favour of those who were wealthy enough to keep packs of hounds. That might seem a very trifling matter; but it was nothing more nor less than close legislation to exempt from taxation the very persons who could best afford to pay it. Unless the right hon. Gentleman gave way on the point, he should consider it his duty to oppose the proposition at a subsequent stage of the Bill.

MR. PARNELL

merely wished to say that he was unable to agree with the Chancellor of the Exchequer in his determination to revert to the old system of making six months the age at which the duty should commence. It had been pointed out by the Chancellor of the Exchequer himself, and by various other Gentlemen, that it was highly desirable to prevent large numbers of useless dogs being kept, and to assist the collectors, as far as possible, in the realization of the tax. To his mind, there were two very excellent reasons for adopting the Chancellor of the Exchequer's original proposition, that the non-paying age should be limited to two months. Now, if they were going to insist upon the collection of the tax in every case, as they did in Ireland, the result would be this—that puppies, instead of being drowned at an early age, when they would feel the process less acutely—[Laughter]—he was speaking now in the interests of the dogs themselves—would be deliberately preserved for the six months, in order to see if they were likely to turn out sufficiently valuable to make it worth while paying the tax for them; and, in that way, they would have experiments practised on whole families of dogs that would result in extreme cruelty. To his mind, it was far better that dogs should be drowned when they were young, than that they should be kept for six months simply to ascertain if they were worth paying for. In the interests of the dogs themselves, and in the interests of the Revenue, it was desirable that the Chancellor of the Exchequer should adhere to his original proposition. Now, it had been suggested by several hon. Members that the Dog Tax should be ex tended to Ireland. But it so happened, that Ireland did at that moment pay a Dog Tax, the only difference being that in that country it went in relief of the county revenue, whereas in England it was contributed to the Imperial Exchequer. In Ireland, the collection, or rather the enforcement, of the tax was entrusted to the police, and, as the result, there was not, as he believed, a single dog in the country that did not pay duty. The police were a body about 15,000 strong, and in many of the districts the men had little else to do than to look after the dogs. It might be objected that the employment of such machinery in England would be too expensive; but, unless they could devise some means of the sort, there was every probability that persons would continue to evade the tax in the future as they had in the past. Irish dogs contributed a far larger amount of Revenue, in proportion, than English dogs; and there was this noteworthy fact in connection with the former, that sheep dogs were not exempt, having to pay a licence of 3s. 6d. per head.

MR. WHEELHOUSE

asked, whether an exemption ought not to be made in favour of dogs used for leading blind men about?

MR. MONK

thought the Chancellor of the Exchequer had acted very fairly in making the concession asked for by the Amendment; and, by way of re-assuring him, he desired to point out that the loss to the Revenue would be very slight, inasmuch as the exemption would really apply only to puppies born between the 1st of July and the last day of October in each year. The tax would have to be paid twice on dogs born before July before they were a year old.

LORD RANDOLPH CHURCHILL

repeated his request that the Chancellor of the Exchequer would look into the "old arrangement," with the view of enabling masters of hounds to compound with the Treasury for the duty on their packs, intimating that unless the right hon. Gentleman gave some assurance that he would do so, he should be obliged to place an Amendment on the Paper.

THE CHANCELLOR OF THE EXCHEQUER

That is a point which I think ought to be discussed, not upon the Resolution before the House, but in Com mittee. I may say that I have had this question of compounding under my consideration; and, when we get into Committee, I shall be prepared to state my views in reference to it.

MR. O'DONNELL

protested against both the theory and the practice of giving increased facilities for the breeding of hounds. If there were one class of dogs more than another which ought to come under pains and disabilities, it was these hounds. Why, he asked, should the Public Revenue be made to suffer in order to provide amusement for a particular class? It should be remembered that this question of encouraging hunting by legislative sanction was on all-fours with that of excessive preservation of game. Gentlemen who liked hunting had a perfect right to indulge in the sport; but they had no right to ask for their amusements special facilities and exemptions, which could only be given at the cost of the Public Exchequer.

MR. BULWER

confessed that he was greatly surprised to hear one, who called himself an Irishman, express such sentiments as those uttered by the hon. Member who had just sat down. He had always been led to believe that if there was one sport more congenial than another to an Irishman it was hunting. He did not wish to follow the hon. Member into a disquisition of the merits of hounds compared with other dogs; he simply desired to say that in his experience hunting was an amusement not confined to a class, but shared in by all classes. Without stopping to inquire whether puppies would suffer less in being put to death at two months than at six months, he would suggest to the Chancellor of the Exchequer that in the same way that shops made a reduction for articles taken in a "quantity," he might establish a graduated scale of tax, by which the owners of kennels would not be required to pay the full duty for each dog.

MR. STACPOOLE

was perfectly astounded at the observations of the hon. Member for Dungarvan (Mr. O'Donnell). He did not believe there was another Irish Member in the House who would have made use of such language. He did not believe the hon. Gentleman knew anything at all about Ireland. The Irish people were very fond of hunting—all classes of the com munity joining it; and the last thing in the world they would think of would be to depreciate the sport in any way. He hoped that when the hon. Member for Dungarvan next spoke about Ireland, he would take care that he knew what he was talking about.

MAJOR O'BEIRNE

pointed out that hunting was fostered by the farmers of Ireland, because it promoted the breed of horses for which Ireland was so celebrated. If, then, the tax on hounds was increased to such an extent as to interfere with hunting, the breed of horses would become deteriorated, and a great loss of wealth to the country would ensue in the consequent injury to an important branch of trade.

MR. PARNELL

thought the remarks of the hon. Member for Dungarvan (Mr. O'Donnell) had been somewhat unfairly interpreted. He (Mr. Parnell) protested against Gentlemen setting themselves up as the only judges of hunting. He had hunted both in England and in Ireland; and it was not until he came to this country, that he saw any craning and road-riding. If English gentlemen would just run over to Meath and Kildare, they would see there some riding to hounds that they had no idea of at present. Now, his hon. Friend (Mr. O'Donnell) did not object—as it seemed to be assumed he did—to hunting, nor to the improvement of the breed of horses; he simply objected to owners of large kennels enjoying facilities and exemptions that were not given to ordinary farmers. He was at a loss himself to see why the owner of a kennel of foxhounds should have his young dogs exempted for 12 months, while another man was compelled to commence his payment of the tax at six months or two months from the date of birth. The hon. Member desired that both English and Irish gentlemen should indulge in their amusements to their hearts' content; he only protested that, because they did so they should be relieved of burdens which were cast upon other persons.

MR. O'DONNELL

said, he thought he had been misapprehended. What he complained of was, that an exemption for which he saw no reason was made in favour of masters of hounds, and it was not too much to say that if people liked hunting to hounds they should not object to pay for it.

MR. STACPOOLE

said, the hon. Member (Mr. O'Donnell) did not understand the subject, or he would not persist in his objection. Fox-hound puppies were kept in confinement for a considerable time, to see whether they were worth anything or not, and it would be very hard if a man were asked to pay for them before he knew whether they would be fit for hunting or not.

Question put, and negatived.

The word "Six" inserted.

MR. WHITWELL

called the attention of the Chancellor of the Exchequer to several matters which he hoped would receive attention in his reply. It would be very desirable if some arrangement could be come to, whereby all taxes would be collected by regularly appointed collectors, so that the duty should not in any case be thrown upon private individuals. By the present system, a curious person could pry into the affairs of his neighbours in many cases; while, on the other hand, there were many persons to whom the office was naturally distasteful. It would be a great public advantage if the system of private collection were done away with. He also wished to draw attention to the mode in which it was proposed to make allowance for the wear and tear of machinery. It appeared to him that the hon. Member for Oldham (Mr. Hibbert) had drawn attention to the subject in a very practical manner, and he trusted that his arguments would be met by the Chancellor of the Exchequer consenting to make the clause upon this subject something more than permissive. In all previous statements of the right hon. Gentleman, there was a subject which he had touched upon, and which it might, therefore, be permissible to refer to on the present occasion. He should feel obliged if the right hon. Gentleman, in the answer which he was about to make to the discussion which had taken place, would state the position of the old and long-continued deficiency in the Savings Bank Funds. He had told them that he hoped to reduce that deficiency by the profits to be made upon the Post Office Savings Bank. At least, the right hon. Gentleman was understood to say so; but, in the large and very comprehensive Statement which he had made, there was no allusion to this point, although it was one in which the country took a very great interest. He hoped they would be informed whether there was any proposal to deal with this deficiency in the present year.

THE CHANCELLOR OF THE EXCHEQUER

I am sorry to say I cannot, off-hand at this moment, state the exact condition of the account with regard to the Savings Bank; but I think I shall be able to show to the hon. Gentleman, that upon the one side the receipts have been greater than the loss upon the other. I believe I am correct in saying, with regard to these receipts of the Post Office, that they are rather more than equivalent to the amount we shall be called upon to pay. We began the discussion this evening with a very able and elaborate speech from the right hon. Gentleman the Member for Pontefract (Mr. Childers); and I wish to say at once, with regard to the greater part of that speech, that I have received it as being by no means a measure of hostile criticism, but as being criticism of a kind which is decidedly valuable to a Chancellor of the Exchequer, and one which, though it finds fault with the Government and blames us with severity for our expenditure in various ways, a Gentleman with his official knowledge of these matters and in his position, does exceedingly good service in bringing forward from time to time. There is, no doubt, a tendency in this country—and, I think, there must necessarily be such a tendency—to increasing expenditure. And, no doubt—I can answer for the Treasury—ever since I have been connected with it, there is a constant struggle upon the part of the officers of the Treasury to keep down the expenditure as far as possible. To a very great extent, I think, their exertions have been successful; and we know we are very unpopular with a great many other Departments, because of the necessity we are under to refuse applications from them for increase of expenditure. But, notwithstanding that, it is necessary, from time to time, to accede to the demands that are made, and which are supported by references to the continually increasing demands of the country. It is impossible not to see that, as the country increases in wealth, in population, and in the demands of civilization, there must be a continual pressure for a larger and larger expenditure. Any stranger who came to the House, and watched the debates for a short period, even, could not fail to be struck very much with the anxious, and almost painful, desire manifested by Parliament, to promote measures aimed at improving the condition of the people—to promote measures for improving their dwellings and their general sanitary condition, for relieving certain classes from the overwork to which they are subjected, for promoting the education of the people, and for many other reforms which are extremely valuable, and which it is certainly most desirable to introduce. But, after all, when these measures are adopted, it is found that they are attended with one disagreeable consequence—namely, that they involve expense, which expense must, somehow or other, be met. Now, what happens? The first mode of meeting the expense thus arising, is to throw it on the ratepayer. ["No, no!"] Yes, the ratepayer. If any great work is to be undertaken, the first step to be adopted would be, naturally, to throw it on the ratepayers. But, then, it is felt not fair that the ratepayers—who may be only one particular class of the community—should bear the whole cost; and, therefore, in order to relieve the ratepayer, some subvention, in one form or another, is made by the general taxpayer. That is the case in such a matter as education. Education involves a very large expense to the country, and it involves a large and increasing charge upon the taxpayer. But, observe what would be the case if you chose any other course. You throw a certain burden upon the ratepayers; and then, if you did not come to their aid, that burden would be felt to be an enormous one, falling upon a particular class of the inhabitants. How are you to deal with that state of things? You must deal with it by making the outlay fall upon all classes, and making the rates, in one sense, fall upon all classes. Or, would you meet it by making personal property liable to the rates? That is met by a difficulty, and one which cannot be satisfactorily overcome; and, therefore, the simplest, and, as has been thought, the better, mode is adopted, of allowing the general taxpayer to come forward in aid of the ratepayers, upon whom burdens are thus thrown—to aid the ratepayers out of the Central Funds, in order to render that which is a burden upon them by the Central Legislature more tolerable, and to cause the burden to be more fairly met. If you go into the question of what the charges to the ratepayers are since the new system was adopted, you will find that, although, no doubt, large charges are thrown upon the Treasury, still the charges upon the ratepayers have also been added to in certain directions—that new rates have been imposed and new burdens thrown upon them. Therefore, you must be prepared, if you are to pursue this policy upon which we have entered, to do justice to the ratepayer and to give him some help from the Central Government. That may be in the way of subventions, or of loans made at low rates of interest, and made to promote some object which Parliament deemed desirable. In that way, there is, no doubt, a constant tendency to increase the Public Expenditure. Well, the right hon. Gentleman goes into some of these questions, and he says—"You have been adding to your expenses very largely, and you ought not to meet them by adding so considerably to the Income Tax." A large proportion of the increased expenditure arose from causes of a temporary character, and the question just comes to this—were we to throw it upon the Income Tax, or upon the rates? I think it is not very unreasonable, as the Income Tax is spread more equally over persons of the higher and middle class, that we should, on the present occasion, resort to the Income Tax rather than to more widely spread taxes—rather than to those taxes which fall upon a large number of people. That is a point which, I think, ought to be borne in mind. But I think it is a mistake to attempt to lay down rules by which you are to say that expenditure is to be raised in such and such proportion by one kind of tax, and in such and such proportion by another kind of tax. Whenever you have to deal with a demand for increased taxation, you must endeavour to make your taxation in accordance with the circumstances, and with the general view of what the country can and should bear, in such proportion as may seem requisite to meet the justice and the necessity of the case. You must, in such a case, take into consideration the nature of the demand for which you are called upon to provide. Let me say, in a case like the present, where you have to provide for an increase of taxation, which we may hope may be requisite for only a short period, it is far better that the increase should be met by resorting to the Income Tax in a large measure rather than by reviving old taxes or by increasing largely other taxation. I do not say that, in the event of a large and continued strain being placed upon our resources, we should meet it in this way; and I do not say that we are always to meet every new demand in this way. If we should have to meet a large increase in the demand upon our resources, no doubt we would have to consider this question. But we hope that this is simply a passing exigency, and we hope we have presented a plan sufficient to meet the requirements of a limited time. That is the state of matters with which we undertook to deal, and we chose this plan because we thought it would cause the smallest amount of disturbance and the least inconvenience. That is why we propose to raise the money by increasing the Income Tax. Now, Sir, the right hon. Gentleman has given us certain figures as to the increase in expenditure that has taken place. No doubt, there has been an increase, and there is no desire upon the part of the Government to deny that increase. But I would say, with respect to a good deal of that increase, that it has been of a character which the House and the country entirely approved of, and that if the things had to be done again, they would be done. There can be no doubt about it, that a large portion of the increase to which the right hon. Gentleman referred was in consequence of the enhanced cost of our Army and Navy. He puts the increase about £2,000,000, and I should say it is about that sum, or possibly a little more. You have to consider that this is an increase which has been occasioned, in the first place, because of the necessity we have been placed under, if we would deal fairly with our soldiers, to increase their pay. We found labour increasing in price; and, having reference to the comfort of the soldier, and the means which persons like himself have of gaining a livelihood by their labour in other pursuits—we felt, if you wish to get the class of men you desire, and keep them as servants of the State, that it was fair and right that we should increase the pay of our soldiers. Other measures were taken with a view to the greater efficiency of our Forces. Everyone knows perfectly well the unfortunate tendency of the march of invention at the present day—that it is directed to the discovery of new forms of weapons of war which are of a most costly character. So, too, everybody knows, that it would be impossible for any Government—Conservative or Liberal—to omit to supply the Naval and Military Forces of the country with the best arms and the best description of inventions. This is a very expensive proceeding; but what we have done in this respect, and the nature of the weapons, have been brought under the notice of Parliament at various times, and Parliament has not interposed to prevent the adoption of these discoveries. I can only say that I regret that these matters have led to an increased expenditure; but I do not see that we would have been doing our duty if we had resisted the demand for that expenditure. Then, there is an increase to which reference has been made, of local grants for education, and other local grants. This increase has been £3,500,000. Then, there is an increase, which the right hon. Gentleman does not seem to have sufficiently considered, though it has had some share in bringing up the total amount of the increase. I mean the increase in the charge for the Debt. That charge has added to the Debt about £937,000 since 1873–4. That is partly owing to the introduction of the Sinking Fund, which was for the redemption of the Debt, and partly owing to those charges which were thrown upon the nation, not by the present Government, but by their Predecessors, in the form of sums that were to be raised for fortifications and sums to be expended upon local barracks. These have been expensive undertakings; but I do not at all say that the sums thereby incurred were not properly spent. At all events, they have been expensive undertakings, which we inherited from our Predecessors, and which we were compelled to carry on. If you take out of the Expenditure the increased charges for the Army and Navy, the charges for Debt, and the charges for those services of education, and the other matters with regard to which the obligations to make local grants have been put upon us by Parliament—I think if you consider our expenditure, apart from these matters, you will find that not only has there been no increase, but there has actually been a decrease. I am bound to say, however, that, considering the growth of the population, the charges for these Services are not unsatisfactory. I would just say, before I leave this matter, that the increase of the burdens upon the taxpayer do not represent altogether an increase of the burdens of the ratepayer. I see from a statement before me, that the increase which took place in the charges falling upon the ratepayer is very remarkable. In the year 1875–6, the total of the new and nominally unrelieved rates in England amounted to £22,699,000; whereas, in the following year, 1876–7, the amount was £23,617,000; showing a very considerable increase to the amount required to be provided out of the rates. Now, had we not put part of the burdens thrown upon the ratepayers upon the taxpayers, the burden of the ratepayers would have been enormously increased, and that for services undertaken in obedience to the directions of Parliament, and for national purposes. The right hon. Gentleman has made some remarks, which I was so far from quarrelling with, that I felt obliged to him for making them. I allude to his remarks upon the Funded Debt, which had been occasioned by the Government borrowing, in order that they might make loans to localities—a subject upon which I myself made some remarks in a speech delivered some little time ago. I am rather sorry that the right hon. Gentleman condescended, in making that statement, to make some reference to the Sinking Fund—the new system for reducing the National Debt. I thought that was a little petty; because it seems to me that he spoke as if the two matters were connected, and as if we were borrowing with the one hand and paying with the other, whereas there is no connection at all between them. I think it quite right and proper, when we speak of the reduction of the Debt, which is by no means unimportant, that the House should be reminded that another Debt is being run up. I do not wish to conceal it, but will the right hon. Gentleman tell me what possible connection it has with the system of the new Sinking Fund? The system of the new Sinking Fund has been adopted for the purpose of gradually reducing the Funded Debt of the country, and it is operating for that purpose. Then, there is a system which may be good or bad, and which certainly requires to be carefully watched—that of borrowing money to lend again. The system was adopted in this fashion. A locality was called upon to execute certain works for which it was to provide the money, and it was fairly said, on behalf of the locality, that as the Government put this burden upon it they should give it the advantage of their credit, in order that its representatives might borrow money at a rate within their means. That may or may not be a proper system; but it has nothing whatever to do with the Sinking Fund. It is a system which ought to be considered upon its own merits, and that calls for careful criticism and supervision. I candidly admit that it is going further than I was prepared to find it would go. I think it is necessary that some precautions should be taken to prevent it becoming a matter of serious embarrassment. It has grown very rapidly indeed. It began three years ago, and it has been carried on since. It was put into operation in the case of the Education Act. Now, with regard to that Act, there is absolutely no limit placed on the time for which a loan was to be made, or as to the amount to be borrowed; but there is a strict provision in the Act that the rate should be 3½ per cent, and there was no power to make any alteration in that. In the case of the Sanitary Act, there is a clause providing that 3½ per cent, or such rate as will secure the Exchequer from loss, shall be charged. I think it will be necessary that some precaution should be taken, seeing the way in which these loans are advancing, in order to enable the Exchequer to secure itself against the risk of loss. With respect to the Education Grant, I may say that the education arrears have been pretty nearly wiped out. Perhaps, in a year or so, we shall have raised or lent out as much money as will be necessary for the purpose of carrying out school extension throughout the country. But, then, you will have the regular increase which, of course, is expected to go on as the population increases. I have endeavoured to bring about an arrangement between the Public Works Loan Commissioners, who have rendered us most valuable services in this matter, and the Education Department. I think the arrangement that has been made may, to a certain extent, restrain some of the more improvident loans which we have lately been making under that system. No doubt, the Education Department will naturally desire to carry on and promote the work of education, and they have pressed for loans to be made on terms which certainly appear to be unremunerative to the Exchequer; but I hope that has, to some extent, been checked, and that loans will not be made in the future as they have been in the past. With respect to the point I mentioned the other day—namely, the disadvantage we have from the interest not being taken till the end of the year—that is a matter we propose to correct. No legislation will be required on the subject, as it can be done by Orders which will be given. But, then, when we come to the question of the sanitary advances and the advances for artizans' dwellings, there is no doubt that those are a very serious burden, and it will be necessary that regulations should be laid down by the Treasury which may place some limit upon these loans. That is a matter we are now considering; and I think there will be no great difficulty in devising such regulations, subject, of course, to it being said that we are, to some extent, hindering the development of good work. We cannot help that, for we must really take care that the Exchequer is properly protected in this matter. I think it will be possible, by limiting the amount that is to be advanced, to throw these bodies upon the use of that Act, which we passed a year or two ago, for the express purpose of relieving the Treasury and certain local authorities. I should like to say this also—that, when we have passed the new County Government Bill, there will be a great facility given to the county authorities to borrow for the purposes mentioned, without coming to the Treasury; and that, I think, will be a great advantage, and will relieve the Treasury of some of the calls that are now made upon the Public Works Loan Commissioners. The right hon. Gentleman made a good many remarks upon the impropriety of our raising so much additional Revenue by means of the In come Tax, especially when the basis of that tax has been narrowed by its falling upon a smaller number of persons. I thought at the time—and I think now—that the alteration we made in extending the exemptions was a very right and proper one. I thought so, not merely upon grounds of what are called humanity and philanthropy, but because it really makes the working of the tax a great deal easier. [Mr. GOSCHEN: Hear, hear!] But I quite admit that the making the tax easier renders it important that we should be more careful in the application of it. That I do not for a moment deny. At the same time, I would point out that, when we are taken to task for raising a large proportion of additional taxation by means of the Income Tax, at a time when we consider that an emergency has arisen, making it necessary for us to make an appeal to the country, it must be borne in mind that some years ago it was the habit of our Predecessors—and especially of my right hon. Friend the Member for Greenwich (Mr. Gladstone)—to make large and frequent additions to the Income Tax, not to meet a national emergency, but for the purpose of taking off indirect taxation; and I think that if it is justifiable on the part of one Minister to raise the Income Tax to 10d., 1s., and larger sums in the pound, for the purpose of taking off indirect taxation, it can hardly be very wrong for another Minister, when it is necessary, for national purposes, to raise a certain sum, to raise a considerable proportion of it by the Income Tax, rather than by having recourse again to indirect taxation. There is no doubt that if we are to raise any very large sum by indirect taxation, it will be necessary to consider whether we should not revive some of the old taxes which have been taken off; and I wish distinctly to say that I see no reason why that course should be considered to be absolutely out of the question. I do not think it ought to be taken for a merely temporary emergency, as great inconvenience must necessarily attend it. Therefore, I think we do better and more wisely by making an arrangement, for what we believe to be a temporary demand, in a manner which, upon the whole, will cause less disturbance and less inconvenience than any other we could have thought of. There are a good many other matters that have been mentioned in the course of this discussion. I am afraid I can hardly, without wearying the Committee, go through the whole of them; but there are one or two points upon which I think it is right that I should say a few words. The hon. and learned Member for Oldham (Mr. Serjeant Spinks) has spoken upon the question of the depreciation of machinery. I would point out that, of course, that is a question which, like many others that have been mentioned in this discussion, might be more properly considered in the Committee on the Bill when we come to the clauses; but I can at once assure the hon. and learned Gentleman, and others who have spoken on the same point, that the intention is not to make the clause permissive, but to make it the duty—indeed, the language is such as amounts to a direction to the Commissioners of Inland Revenue to make an allowance for depreciation. It was at first attempted to draw a clause that should lay down something in the nature of a cast-iron rule as to the mode in which depreciation should be ascertained; but it was found so difficult, that, after very careful consideration and discussion with those well acquainted with the subject, it was thought better to leave the matter more elastic, and to enable rules to be laid down according to the circumstances of the case. I am afraid we cannot undertake to extend the same exemption to buildings. That would be going beyond what was contemplated; and I do not think it is possible to go that length. The hon. and learned Gentleman has also spoken of the tax being taken from persons who are connected with co-operative undertakings, and to whom it is alleged to be a great hardship that they should be put to the trouble of going to get the tax remitted to them. I am afraid that is a difficulty which arises in a great many cases—a difficulty of having to ask for a return of the tax; but I will consider whether anything can be done to meet the case. There was a Question put by the hon. Member for Plymouth (Mr. Sampson Lloyd), and I think, also, by someone else, on the subject of the collection of taxes by private individuals. My hon. Friend has reminded me, that two years ago a deputation waited upon me on this subject, and that I then admitted—as I still admit—that it is a hardship upon private persons in many cases to be compelled to undertake this duty, and I still hope we may be able to relieve them of it. We have been waiting for that which would greatly facilitate the change—I mean the passing of the Valuation Bill; and I should be quite prepared, if that Bill passed, to have the change brought into operation at once. But, even if that should not be so, I have conversed with my friend, the Chairman of the Inland Revenue Board, and I have great hopes we shall be able, in any case, to make an improvement in the next year. I quite admit the grievance; it comes very hardly, indeed, upon many persons—though, on the other hand, I must remind the Committee, as many hon. Members may not be aware of the fact, that when attempts were made in former years to take the collection of the duty into the hands of Government officers, great resistance was offered on the part of some of the present collectors to such a step, and there were many complaints. I do not know that there are any other points upon which I can venture to detain the Committee at the present time. I quite admit that the speech of the right hon. Gentleman the Member for Pontefract (Mr. Childers) has treated of matters that require very serious attention. The increase of Expenditure is a matter of interest to us all, and of painful interest, certainly, to the Chancellor of the Exchequer, who finds himself obliged to provide the funds to meet the increased expenditure. But I can conscientiously say, we have always done the best we could to keep down unnecessary Expenditure, and I do believe that what has taken place has been inevitable. Our efforts will be directed to do what we can to keep a further hold upon the spending Departments. As regards Public Works Loans, that is a matter which is engaging our most serious attention. I by no means wish to stop at merely calling attention to the subject; but I would point out, that the calling attention to it is a very important part of business, because, unless public attention is called to it, and unless the House is aware of what the difficulties are that we have to meet, we shall find ourselves overwhelmed with the claims made by one or another important place for a very good object; we shall always be told that we are defeating the intention of Parliament, and we shall not get support here; but, on the contrary, we shall find that pressure is put upon us. I hope that what has passed will strengthen our hands, and enable us to effect the changes we are endeavouring to bring about.

MR. GOSCHEN

said, the Chancellor of the Exchequer need be under no misapprehension that he was about to detain the Committee for more than a very few minutes. The right hon. Gentleman had just now stated that it was sometimes useful to call public attention to a subject, even though no action were taken; and so, once more, he (Mr. Goschen) begged to call public attention to that which was the prominent point of the Budget—namely, the raising of the greater portion of the additional funds necessary to meet the expenditure by the system of increasing the Income Tax. The Chancellor of the Exchequer had just informed the Committee that by the system of exemptions he had rendered the working of that tax easier. That was precisely the point which was foreseen when those exemptions were made. The Chancellor of the Exchequer had made its imposition so easy, that by turning on the screw of the Income Tax, he was enabled to make the simplest possible Budget by raising £3,000,000 from that source. The Chancellor of the Exchequer had diminished, as his right hon. Friend (Mr. Childers) had stated, by, perhaps, 500,000 persons the number of those who were affected by the tax; and he (Mr. Goschen) recommended the reflection to hon. Members opposite, that by the simple expedient of placing this charge upon a smaller number of persons, the right hon. Gentleman had rendered it infinitely easier to impose the tax. That seemed to him to be a very convenient, but not a very high-principled or very equitable, mode of dealing with finance. He trusted that the Committee would forgive him if he reminded them that on an occasion when they had to discuss great political changes in prospect, he drew attention to the fact that under the new system, with the new constituencies, on every possible occasion when additional money had been required for the purposes of the State, the Income Tax had been resorted to as the easiest way of raising the funds, and that no Chancellor of the Exchequer had attempted by any proportionate increase of indirect taxation to test the patriotism, which he believed existed, of the masses of the country. The Chancellor of the Exchequer had again followed the rather unfortunate precedent of former years. Here was a case where the Government considered that a great emergency existed, and they had to raise large sums of money to provide the means necessary for meeting it; but, instead of appealing to the country at large, they had recourse to the tax, the working of which they had made easier by exempting large masses from its incidence. The result was, that while they raised £3,000,000 increase by direct taxation, not more than £750,000 was derived from indirect. Let him enforce once more the point urged with such ability by the right hon. Member for Pontefract that, looking to the whole financial career of the present Government, seven-eighths of the additional sum required had been raised by the Income Tax, as compared with one-eighth raised by indirect taxation. He had responded to the invitation of the Chancellor of the Exchequer by calling public attention to what he considered to be a matter of serious public importance, a point which had been fully seized by the Conservative Press; for they had also called attention to it, and he believed it was felt by many hon. Members opposite. He must confess that the defence of the Chancellor of the Exchequer of placing on this occasion the burden almost exclusively on the Income Tax had, in his judgment, not been adequate. The right hon. Gentleman had sacrificed to financial and temporary considerations a really great political axiom, and that was that the whole of the country should be made to feel the burden of increased taxation. He would admit the force of the observation of the Chancellor of the Exchequer, that if the demand were simply temporary, the Income Tax furnished a convenient opportunity of raising funds, because it did not disturb trade. He thought that was the best defence which the right hon. Gentleman had offered; but still, it was inadequate, for this reason—that of the 3d. which had been imposed, as an addition to the 2d. which existed before, they could not, he was afraid, hope that any large portion would be remitted. [Admiral Sir WILLIAM EDMONSTONE: 2d.] He could assure the hon. and gallant Admiral that it was a 3d. Income Tax. ["No!"] He was glad the hon. and gallant Gentleman did not feel it, and that he did not know the difference between an addition to taxes which he paid of from 2d. to 5d. and 3d. to 5d. But 3d. had been imposed under the auspices of his Friends, who came into Office pledged to diminish the amount of the Income Tax. The hon. Member for Londonderry (Mr. Charles Lewis), in an able speech earlier in the evening, had reminded the Chancellor of the Exchequer that the First Lord of the Treasury (Lord Beaconsfield) said that the Conservative Party were as much pledged as the Liberal Party to the reduction of the Income Tax. [An hon. MEMBER: The remission.] Well, the remission of the Income Tax. He understood the Chancellor of the Exchequer, in answer to that, to offer an argument to prove that the Income Tax was the best tax to resort to when they required an additional income. What a perfect change of front! The Chancellor of the Exchequer cited the example of his right hon. Friend the Member for Greenwich (Mr. Gladstone), under whom he had studied the great lessons of finance. He might also have quoted that of Sir Robert Peel. He said that the right hon. Member for Greenwich increased the Income Tax in order to make remissions of taxation, and that, therefore, it was now fair that the Income Tax should be increased while the indirect taxation was not raised. That was in flagrant opposition to the declarations of the Prime Minister when he came into Office. But he would pass that by. Why did the right hon. Member for Greenwich increase the Income Tax? Was it for the purpose of meeting increased Expenditure? No. It was imposed in order to effect great financial reforms in indirect taxation, and the result of the measures of his right hon. Friend in that direction had been that indirect taxation had yielded immense results. The temporary increase of the Income Tax by his right hon. Friend answered its purpose by making indirect taxation more fruitful than it was before; and, therefore, there was no analogy whatever between the present case and the case cited. He deeply regretted that on this occasion the Chancellor of the Exchequer should have sacrificed a great political principle to the convenience of the moment. They might have to deplore this precedent, which was again set at a time when the popular voice had so much to say in all their Executive and legislative action—namely, that, when a bill was sent in for the nation to pay, as the result of its Executive and legislative action, that bill should have to be discharged by a constantly diminishing number of the taxpayers of the United Kingdom.

THE CHANCELLOR OF THE EXCHEQUER

said, he could not allow the statement made by the right hon. Gentleman to pass unchallenged. In reply to an observation from his hon. and gallant Friend behind him (Sir William Edmonstone), the right hon. Gentleman had put it that the present Government had increased the Income Tax from 2d. to 5d. during its term of Office. Would the right hon. Gentleman be kind enough to tell the Committee at what figure his Government left the Income Tax? The present Government reduced it from 3d. to 2d., and had since raised it to 5d.; but if statements like that made by the right hon. Gentleman were to go to the country, they would mislead it. The tax was found at 3d.; they then reduced it to 2d., and afterwards raised it to 5d.; to say that they raised it from 2d. to 5d., was a misrepresentation. Why did the right hon. Gentleman say that they had proposed to raise the sum required entirely by indirect taxation? That was a misrepresentation; and, if it was a maxim to raise money in such a case partly by direct and partly by indirect taxation, how long had that been a maxim? And, when it was necessary to raise money thus during the existence of the Government of which the right hon. Gentleman had been a Member, when was recourse had to anything but the Income Tax?

MR. GOSCHEN

would be charmed to answer. He did not charge the present Government with anything; he stated that, since 1867, on all occasions recourse had been had to the Income Tax, and the right hon. Gentleman therefore could not say there was any misrepresentation in that. In the next place, the late Government had been covered by the very exception he had laid down—that it had been for a temporary purpose. The tax had been laid on in order to meet the Alabama claim. He had admitted that the strongest argument used by the right hon. Gentleman had been with regard to the temporary character of the tax. But, with the steadily increasing expenditure of the present Government, it was not desirable. He did not wish to make a Party attack; speaking against his own Party, he had called attention to the subject during the present Session, and pointed out the political danger of an increase of the Income Tax in a time of national emergency. It was a weak, inconvenient, and inequitable political proceeding. The right hon. Gentleman had said that the Liberal Government had left the tax at 3d. Was it a misrepresentation that the Government had reduced it to 2d., and then raised it to 5d.? How had they reduced it? By their—the Liberal—surplus. Was there a single Member who denied that? The cash had been in the till—and that was the fairness of the Chancellor of the Exchequer. They—the Ministerialists—had thought the Earl of Beaconsfield intended to reduce the tax. They had been very much mistaken, and Lord Beaconsfield, who had, during the Elections, un-contradicted by the present Chancellor of the Exchequer—[The CHANCELLOR of the EXCHEQUER: I beg your pardon.]—then he had contradicted it; and, even during the Elections, they had had two voices in the Cabinet. This was a most marvellous communication—that, at the time of the Elections, the Chancellor of the Exchequer had gone on a different platform from his Leader's—a most startling communication—he had contradicted the Prime Minister, who had said there would be no Income Tax. Then, the right hon. Gentleman had thought it would be the engine of his financial measures. If it went forth to the country that the Conservative Government had reduced the tax from 3d. to 2d., and afterwards increased it to 5d., he hoped the right hon. Gentleman the Chancellor of the Exchequer would make a foot-note to that Statement, saying that they were able to reduce it from 3d. to 2d., and to do a great deal more, by the surplus which the Liberal Party had left them.

MR. LAING

quite went along with the Chancellor of the Exchequer in what he had said as to the system of local loans by the State being quite apart from the general Sinking Fund. That was not a Debt at all. If the security were good, he was perfectly satisfied with that part of the Statement; but it was very important to keep in view not to allow the amount of Unfunded Debt to become too large. He saw no objection to there being a certain amount of Funded Debt—as £20,000,000 or £30,000,000—represented by assets of that amount. But there was a great danger if that were represented by Unfunded Debt, which might come on them at an inconvenient moment. As to the general Budget, having advocated a moderate amount of Income Tax, and supported the exemptions, he could not concur with the criticisms which had been thrown out. In raising the tax to 5d., they were not exceeding the fair limit in which they had a proper relative adjustment of direct and indirect taxation. To what possible alternative could they resort? They could not tax spirits, or tea, or sugar. The decision of the Government was, on the whole, a wise one.

MR. COURTNEY

said, the Paper had been drawn up in a singular way, and contained an obvious misrepresentation. At page 3, the actual Exchequer issues were stated to be £78,900,000, and, afterwards, £82,400,000. Those two statements could not both be right; and it might be said both were wrong, since in one case the additional expenditure was thrown forward, in the other backwards. It was excluded in the comparison of the past year with the year before it, in order to make the past year look better than it was. It was included in comparing the past year with the coming year, in order to make the coming year better than it was. The increase of taxation was not wholly a question of a policy, inasmuch as there was a large deficit, apart from abnormal expenditure. As to the local Debt, the floating Debt of £28,000,000 exposed the Treasury to very great peril in the event of financial crises. The objections to the Dog Tax were so strong, that they must reserve their liberty of action on it when the question was submitted as a clause in the Bill.

THE CHANCELLOR OF THE EXCHEQUER

said, that the one sum referred to was that one explained in the expenditure. He had used those figures, because his Statement was concerned with the Vote of Credit.

MR. COURTNEY

was quite aware of the reason, but thought that people might be misled by the mistake.

MR. THOMSON HANKEY

confidently asserted, that it might be most injurious to the public interest that any great excess of public money should be lent for public works, whether on funded or unfunded securities. His objection was, that the Government had become first borrowers and then lenders of money. There was no objection to raising money on the floating debt system, because the Chancellor of the Exchequer took advantage of the present state of the country.

Main Question, as amended, put, and agreed to. Resolved, That on and after the first day of June, one thousand eight hundred and seventy-eight, in lieu of the Annual Duty of Five Shillings imposed by the Act of the thirtieth and thirty-first years of Her Majesty's reign, chapter five, there shall be granted and charged the Annual Duty of Seven Shillings and Six-pence for and in respect of every Dog of the age of Six Months or upwards, for which a Licence to keep the same shall be taken out under the said Act, such licence terminating on the thirty-first day of December following the day on which it is granted.

MR. GORST

said, the Chancellor of the Exchequer would not be surprised if the discussion of the increase of the Income Tax should come on at some stages of the Exchequer and Inland Revenue Bill.

Resolution to be reported To-morrow, at Two of the clock;

Committee to sit again To-morrow, at Two of the clock.