HC Deb 12 April 1878 vol 239 cc1239-51

Resolution [April 11] reported. 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 Sixpence 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.


desired to make a few remarks upon the statements which were made by the right hon. Gentleman the Chancellor of the Exchequer as to the amount required for the Public Service. The statements of the Government were usually accepted without much discussion; but he (Mr. Gorst) ventured to raise the question as to whether the right hon. Gentleman had stated the real wants of the Public Service? In the Budget which the right hon. Gentleman had to put before them, he really required for the payment of the National Debt £23,000,000, and for other charges connected with Debt and for ordinary Supply purposes £53,000,000, making a total amount which he was compelled to provide for the ordinary service of the year £76,000,000, and £76,000,000 only. Of course the Chancellor of the Exchequer put his requirement in the most plausible shape he could—it was his duty to make out as good a case as possible—but those people who had to pay the taxes were obliged to look into the demands of the right hon. Gentleman, and see whether he really did want the sum he said he required. Now, in addition to the £76,000,000, the right hon. Gentleman asked for two further sums. In the first place, he asked for £4,250,000 for extraordinary Expenditure. That was not on account of ordinary Expenditure, but for military and naval preparations, rendered necessary by the existing state of foreign affairs; and he (Mr. Gorst) wished to be distinctly understood as approving of it. Besides that extraordinary Expenditure, the country was asked for £5,000,000 for the purpose of extinguishing £5,000,000 of the permanent National Debt. The first question he wanted to ask was— "Were they obliged to supply that money at all? Was it necessary?" They were liable to the national creditors, and must provide the interest of the National Debt; they must provide for their Supply Services and Army and Navy Expenditure; but they were under no obligation, except to themselves, for the extinction of that portion of the National Debt. He did not suppose the Chancellor of the Exchequer would say there was any kind of obligation thrown on the country to provide the money, or that the credit of the country would be at all affected, if they were to abstain from providing that sum of £5,000,000 for the extinction of the National Debt. The Chancellor of the Exchequer proposed to put on new taxes to the extent of £3,750,000, and to borrow the sum of £2,000,000; he proposed to raise by taxation £83,250,000, and to borrow £2,000,000. The sum of money, therefore, by which the Debt would really be reduced in the coming year was£3,000,000, and not£5,000,000. By the proposed addition to the Income Tax £3,000,000 would be realized. Was it worth while, he asked, to lay on the Income Tax the sum of 2d. in the pound, not for the purpose of spending it on the wants of the country, but for the purpose of applying it to the extinction of the National Debt. That was a question which ought to be considered by that House. It was quite clear it was not necessary to pay that sum. It might, or might not, be desirable; but it was a matter within the choice of the nation. If the money were not paid, the country at the end of the financial year would be just in as good credit as now—no additional taxes would be imposed on the taxpayer, and they would simply have suspended the operation of the reduction of the National Debt. He had the honour to be a Member of that House when the Terminable Annuities Scheme was founded, and he had also the honour of being a Member of that House when the Chancellor of the Exchequer proposed the plan of the New Sinking Fund; and his recollection was, that when the Terminable Annuities scheme was introduced, the right hon. Gentleman the Member for Greenwich, and the noble Lord who was now at the head of the Government (Lord Beacons-field), recommended it to the House, on the express ground that, if on any occasion there was any national emergency, its operation could be easily suspended. What were the arguments in favour of raising this sum of £3,000,000 by taxation? He was afraid the only argument was the extreme easiness with which it was done. The payment of the National Debt was clearly a payment that pressed upon all the payers of taxes in the country. The extinction of the Debt, therefore, would benefit every taxpayer. Was it fair to accomplish that object by burdening one and a very small class of the community? That was an argument as to fairness, and it was an argument to which no answer had been given. Another argument had been urged against the addition to the Income Tax by the hon. Member for Londonderry (Mr. Charles Lewis), who said that this proposal was in direct opposition to the pledges with which Her Majesty's Government came into Office in 1874. They knew that people when out of Office were apt to make pledges which they could not carry out in Office. Both sides of the House did that, and, as long as the present system of Government in the country continued, they would always find that to be the case. But the real question that ought to be considered was not whether the proposition to increase the Income Tax by 2d. was fair, or whether it was in accordance with the pledges of the Government; but was it, on the whole, advantageous or disadvantageous to the country? Would the country, at the end of the financial year, be better off for the reduction of the National Debt by the sum of £3,000,000, providing that that sum was extracted from the pockets of the Income Tax payers for that purpose? He did not suppose that the country would be ruined in either case; but he failed to see the wisdom and economy of the course proposed. Although he admitted that they got an advantage by the reduction of the interest which the country had to pay; on the other hand, they got a great disadvantage, because the money was withdrawn from capital and investment, and, therefore, the capital for carrying on the industry of the country was by that amount reduced. Now that the smaller incomes were exempt, the tax did not take away money which would otherwise be spent, but money which would otherwise be invested. The question really was, whether, if the £3,000,000 was left in the hands of the people of the country, they would not be able to invest it in something more profitable than Consols, in which the Government would invest it? He confessed that he had not the slightest doubt as to what was the more economical course. In his opinion, to put 2d. on the Income Tax to raise £3,000,000 for the purpose of investing it in Consols, was really to diminish the wealth of the country.


could not say that the proposals of the Government met with his entire satisfaction, or that the expectations held forth as to improvements in fiscal legislation had yet been realized. In reference to the Customs and Inland Revenue Bill, which was carried yesterday, his right hon. Friend the Chancellor of the Exchequer would recollect that he was one of a deputation that a few weeks ago waited upon him to point out cases of hardship and grievance resulting from the House Duty. They asked, in the first place, that they should be charged for Queen's Taxes upon the rateable value, and not upon the gross—in other words, that they should be charged upon the net, and not the nominal rent. The next wish of the deputation was of a more simple character; it was that, in ex-empting offices from Inhabited House Duty, the distinction between trade and professions should be done away with. And, further, they pointed out other anomalies in the Inhabitable House Duty. The gravest of these anomalies was left unredressed by the present Bill. With regard to the Income Tax, everybody knew that it was temporarily originated in the Dark Ages of finance. It had been continued from year to year, although everybody knew its iniquities; and he seriously asked how Ministers of the Crown could go on year after year acknowledging the iniquities, and not taking measures to cure them? Within the last 12 months, a suit had been prosecuted by the Inland Revenue in the Court of Exchequer. It was the case of Knowles and Others v. Macadam. The parties were colliery owners, and, in making up their accounts, they made a reduction in their profits, in part compensation for the exhaustion of mineral—a practice justified by the hon. and learned Member for Durham (Mr. Herschell), who conducted the case for the appellants with great ability. The hon. and learned Attorney General, on behalf of the Crown, argued that Knowles had no right to make such reduction; for he contended that, although the practice of allowing for depreciation was warranted by the rules of political economy, yet that the Income Tax, according to the law, disregarded any such rule, and permitted no such deduction. The decision of the Court was wholly in favour of the appellants, and established in the legitimacy of deductions for exhaustion, the principle already accepted in local taxation that rents and profits ought, previous to assessment, to be subjected to the abatement necessary for ensuring the continuance of the income assessed. The result of that case showed the want of revision in the matter of Imperial Taxation. The questions at issue should be put into the hands of the excellent officials of the two Departments—the Inland Revenue and Local Government Board—and they should prepare a measure which would satisfy the intelligence and the moral sense of the country. The Income Tax had been painted in very dark colours; but it was not an Ethiopian who could not change his skin—it was rather a chimney-sweeper, who had been distorted and soiled by the filthy and tortuous work to which he had been doomed; but who, if he were cleansed and straightened, would be found conspicuous for purity, symmetry, and strength. He committed to the Chancellor of the Exchequer the responsibility of the necessary transformation—confident that, if it were undertaken with good will, the worst tax that they had would be converted into the very best.


hoped the House would not listen to any proposal to change their policy in respect to the repayment of the National Debt. He trusted the Government would keep to their resolve to pay off some portion of the Debt every year, because it was certainly their duty to do something to reduce it. He was not going into the details of the Income Tax. They all knew what the Income Tax was. It was no use calling it infamous; all taxes were infamous, if you like, all taxes were bad. He considered the Chancellor of the Exchequer did wrong in putting 2d. on the Income Tax. Their Expenditure was increasing year by year from various causes, and it was the duty of the Finance Ministers to consider how and why this was so, and where their money was to come from. It was good statesmanship to get rid of the difficuty by throwing 2d. on the Income Tax. Some other scheme would have to be devised; for, in case of war, the Income Tax would be our sheet anchor. The right hon. Gentleman the Chancellor of the Exchequer ought to spend as little as possible, because no country could prosper if its indebtedness was constantly growing. The right hon. Gentleman ought to take care of the expenditure, and meet it in such a way that the public would not grumble.


desired to make a few observations in reference to the proposed increase of the Tobacco Duties. They were still considering the Resolutions of the Committee of Ways and Means, and they were not actually bound to carry them out. The amount by which it was proposed to increase the Tobacco Duty was 4d. in the pound. It had been represented to him, and he confessed with some force, that that would operate with considerable hardship upon the retail dealers. The retail dealers in country districts sold their tobacco in quantities amounting to half-ounces, and the greater part of their sales took place in that quantity. Fourpence in the pound was so small a rate that it could not conveniently be levied on half-an-ounce. The tax would, therefore, fall upon the retail dealer, and not upon the consumer. A 6d. increase in the tax would operate much better than a 4d., and it would also increase, to some extent, the indirect taxation which would be required. He would much prefer that only 1d. should be added to the Income Tax, and that the remaining sum requisite should have been raised by indirect taxation. In reference to the point raised by the hon. and learned Member for Chatham (Mr. Gorst), the Chancellor of the Exchequer had laid down a principle that a certain sum should be annually applied to the reduction of the National Debt—a principle which he hoped the right hon. Gentleman would wisely adhere to.


said, it was quite clear now that the Income Tax must be a permanent source of their taxation; and, that being so, what remained to be done was that the Chancellor of the Exchequer would attempt to make it a just tax by removing the inequalities which now existed. The right hon. Gentleman the Member for Pontefract (Mr. Childers) had said, that by the increase of the minimum from £100 to £150, something like 250,000 persons had been exempted from, the payment of the Income Tax. He was glad to hear that, because he considered it a just and proper exemption. He maintained that the Chancellor of the Exchequer had imposed on the classes which only paid indirect taxation a substantial liability for the cost of the military preparations now in progress.


said, he had not expected that a general discussion would have been raised to-day, but on Monday. Of course, it was equally convenient to him that these difficult points should have been brought under discussion now, as at a later stage. With regard to his hon. Friend the Member for East Sussex (Mr. Gregory), he thought he could only say that a 4d. rate upon tobacco had been viewed upon the whole as a fair proposal. He did not think it would be desirable now to enter into the question of altering that rate for a higher one, and he hoped it would not be found to lead to the difficulties which some people had anticipated. He was aware of the small purchases that were made by the mass of consumers, but there seemed to be a natural ignorance of the fact that farthings were used to a very large extent by the lower classes. He would not go into the subject further at present. With regard to the speech of his right hon. Friend the Member for the City of London, (Mr. Hubbard) there was something in it which he agreed with, and which the right hon. Gentleman had expressed with force and ability. There were also points in his speech upon which he had never been able to agree with him, and he was afraid he was in the same position yet. He was always ready to re-consider these matters, and he could assure the right hon. Gentleman he had given, and at all times was disposed to give, consideration to his representations. The case of Knowles and Others v. Macadam was one which required consideration; but he did not think it went the length that his right hon. Friend seemed to think it had done. If the view of his right hon. Friend was borne out by the decision in the case, he might as well leave the law alone. With regard to the Income Tax generally, he must demur from the view of his right hon. Friend, that this tax on chimney sweepers, as he had called it, could be made generally agreeable. He was satisfied that, do what they would, they could never make it such a tax that would fairly supersede the great mass of taxation. His right hon. Friend complained that the alterations which he had proposed in the present Budget were not sufficient to meet all the exigencies of the case, and he pointed to three griev ances brought before him by a deputation the right hon. Gentleman accompanied. He had dealt with two of the three things, and he thought his right hon. Friend would admit he had done so satisfactorily. The third matter had reference to the Queen's Taxes being levied upon the net, and not gross value. That opened out a large subject for consideration, which, in due time, he would be prepared to discuss. All he could now point out was that if they did alter the basis of their assessment, and if they levied on the net, instead of the gross, they would, of course, reduce the yield; and, therefore, if they wanted to get the same income, they would have to raise the tax, and that would increase the tax upon every kind of property, and, according to the present estimate, also upon trades and professions. If that system were adopted, unless the incidence of taxation on trades and professions were altered, lawyers and doctors would pay an unfair share of the tax. He would also point out, that if they adopted this principle, they would have to re-adjust the House Duty. At present that duty fell on all houses above a certain rental. The result of the proposition of his right hon. Friend would be, that many houses now taxed would be exempt. There was another grievance which the right hon. Gentleman intended to bring forward in Committee on the Valuation Bill. It related to the taxing of a shop with a dwelling-house over it. There were certain distinctions in that case, and it would, therefore, be more convenient to discuss the subject when the clause bearing upon it was brought up. He thought he ought to show that there was not sufficient ground for the alteration proposed by the hon. and learned Gentleman the Member for Chatham (Mr. Gorst). The subject was exceedingly well argued, and his hon. and learned Friend, starting from the point he did, arrived at conclusions which he had not expected he would desire to place before the House; but which evidently were the logical conclusions from the premises he started from. He began by taking notice of the amount of the charge which would go this year towards the reduction of the Debt. The hon. and learned Member pointed out that it would be possible—instead of raising this money for the reduction of the Debt—by stopping the operation of the new Sinking Fund, and also by converting a certain class of the Terminable Annuities into Consolidated Stock, to meet the extraordinary Expenditure of the year without increasing their taxation. Obviously, that was the case to a certain extent, but the hon. and learned Gentleman must not take the whole £5,000,000 as capable of being converted. Still, he admitted, there was a certain proportion of annual payment which was going on for the reduction of Debt, which might, if Parliament wished, be divided for such purposes, so that they need not add to taxation. It seemed to him, that the argument of the hon. and learned Member would make it their duty to keep the taxes in the best possible state, without making any provision for the redemption of the National Debt. That was, virtually, the policy of Mr. Hume, who thought it better to employ money in taking off taxes than in buying Consols, and it had prevailed for some time—the Debt, meanwhile, remaining undiminished. It was a policy he admitted well worthy of consideration—it was a policy which, to a certain extent, was adopted by the right hon. Member for Greenwich, in 1860, for he chose to reduce taxes, rather than Debt; he proposed to reduce taxation instead of keeping up the system of Terminable Annuities. Ten years afterwards, the right hon. Gentleman took the opposite course. He never liked to lay down an absolute course on such a point as that, for he thought there were times when they ought rather to reduce taxation instead of Debt, and there were times when they ought to take steps for the reduction of Debt. All he desired to say was, that it was a matter of considerable importance to this country that, having deliberately established this system some years ago, they should not lightly depart from it. He should consider that, to give it up on an occasion when it was necessary to raise a sum of £5,000,000 or £6,000,000, would be virtually to destroy the whole plan. He quite admitted to his hon. and learned Friend, that if they were engaged in a great national struggle, and had to make provision for a large extraordinary Expenditure, they must in some way put a stop to this operation. But he would point out to him, that one of the sources of their financial strength was, that by simply devoting the sum now applied to paying off the Debt to the payment of interest, they could raise a very large sum without adding to taxation. That financial strength they would lose, if they tampered with this system on the very first occasion they had to meet a slightly painful necessity of an addition, such as was now proposed, to that taxation. He earnestly hoped—indeed, he was sure—that the House had courage enough to resist any such proposal. He did not know that there was anything else that he need at present enter upon. They should have the discussion of the details of the Budget on the clauses of the Customs and Inland Revenue Bill, and hon. Members would then have an opportunity of calling attention to any other points they might wish to raise.


desired to direct the attention of the Chancellor of the Exchequer to the great anomaly which was perpetuated from year to year in connection with the present Land Tax, and to suggest to him whether some attempt to remove the anachronistic character attaching to that tax might not be of great use towards lightening the burden of other taxes, as well as introducing something like symmetry into the Budget at large. The Land Tax yielded about £1,000,000 a-year, and the law said that that sum was the result of a rate of 4s. in the pound, levied on the full annual value of the land in Great Britain. But, when they looked at the full annual value of the property included within the scope of the Land Tax, they found that 4s. in the pound ought to produce some £39,000,000 a-year; so that the first thing which must strike them about the present Land Tax, was the extraordinary contradiction between the actual return of the Land Tax and that which would be its return, if it were carried out.


I have to point out to the hon. Member for Dungarvan, that he has given Notice to call the attention of the House to this matter on going into Committee of Supply, and that he cannot anticipate that discussion.


I do not wish to take the opinion of the House, but only to throw out some suggestions as to the Land Tax in relation to the present Budget.


It is not open to the hon. Member to anticipate the discussion, he having already given Notice that he will take that discussion on going into Committee of Supply.


wished to say a few words on the subject of the reduction of the National Debt. The weakness of the present position appeared to him to be this—that they were reducing the National Debt by means of a Sinking Fund, while they were adding to the taxation of the country in order to meet increased Debt. Suppose a man owed £10,000, and took measures to reduce the debt; but, at the same time, went on borrowing—how would he stand? It seemed to him, it would be more logical, instead of borrowing any money, as they were doing at present, to cease paying off what they owed before, and thus to avoid the increase of taxation, which, he thought, was almost a more dangerous thing than even the amount of the National Debt. He had always thought that a great fallacy underlaid the proposal to reduce the National Debt by means of a Sinking Fund, which rendered it necessary to draw upon the resources of the country, and to tax the people. He did not think that thereby any really substantial benefit was gained. In his opinion, the true way to pay off the National Debt would be by diminishing taxation—thus adding to the wealth of the country, and enabling the people so relieved to consume a larger amount of duty-paying articles. Every diminution of taxation was, pro tanto, a diminution of the Debt, because it meant an increase really of the resources and wealth of the country. If a man had a mortgage on his property, there were two ways of reducing it—either by borrowing, or obtaining money in some way or other to pay off the debt, or by increasing the value of the estate. If he increased the value of the estate, to that extent he diminished the burden of the mortgage. Their National Debt, although very large, was not so much as the Debt of some other countries. Certainly, in proportion to the resources of the two countries, the Debt of France was much larger than that of this country. He really thought that, having regard to the wealth and resources of this country, the National Debt was not anything which they should fear. There was an old saying—he forgot who originated it, but it was used by Mr. Joseph Hume—that the best thing they could do was, instead of taking money in the shape of taxes, to leave that money to fructify in the pockets of the people; and, certainly, if there were a period to which that doctrine was especially applicable, it was the present time, when there was a depression of trade, which had now more or less prevailed for several years. He did not make these remarks with a view of offering any opposition to the Budget of the Chancellor of the Exchequer—which, from the point of view of his right hon. Friend, was, he thought, a very good Budget—but by way of entering his protest against the policy of increasing Debt with one hand, and paying it off with the other.

Resolution agreed to.

Instruction to the Committee on the Customs and Inland Revenue Bill, That they have power to make provision therein in pursuance of the said Resolution.