HC Deb 03 April 1879 vol 245 cc275-310

WAYS AND MEANS—considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

Mr. Raikes, Sir, before I draw the attention of the Committee to the Statement which I have now to lay before them, I hope the House will allow me to take the opportunity of returning my thanks generally to the numerous correspondents who have addressed me within the last few weeks on the subject of increased taxation. I believe I have received letters from about 300 persons, who have made something like 80 different suggestions in regard to the imposition of taxes, ranging from photographs, bicycles, and chimney-pots, down to cats and bachelors; and have taken very great pains to work out their proposals. I regret that I have not been able to avail myself of their kind assistance.

The Statement I have now to make will, I think, be most conveniently opened by a reference to that which I had to make just a year ago—on the 4th of April, 1878. At that time I stated that I anticipated a Revenue, before making any additions to taxation, of £79,460,000, and that I expected an ordinary Expenditure of £81,020,000, showing a deficit on the estimated ordinary Expenditure of the year of £1,560,000. I had also to provide for a sum of £2,750,000 of Exchequer Bonds, which had been issued in the previous year, 1877–8, in order to meet, to a certain extent, a Vote of Credit for £6,000,000 which had been taken in that year. And I had also to state that there were likely to be calls—the amount of which I could not foresee, but which I estimated at from £1,000,000 to £1,500,000—in the course of the year for further Military Expenditure. Accordingly, I proposed to the Committee to impose taxes estimated to increase the Revenue to £83,230,000. That would have left a surplus of £2,210,000 over the ordinary Expenditure, out of which I hoped to be able to pay the unascertained calls, which I had estimated at from £1,000,000 to £1,500,000, and to have a margin available to discharge a portion of the Exchequer Bonds. Well, Sir, with regard to these Estimates, the Estimate of Revenue has turned out, on the whole, not very far from correct. The Revenue, which I had estimated at £83,230,000, has actually reached £83,116,000, or, to be strictly accurate, £83,115,972, leaving a deficit of £114,000 only.

Of course, there are explanations upon one or two points with which it is not necessary that I should trouble the Committee. Reference has just been made by the right hon. Gentleman the Member for Pontefract (Mr. Childers) to the great quantity of tea recently taken out of bond; and there are, no doubt, exceptional reasons which have led to rather larger receipts in the year than were properly due to it. On the other hand, we had been robbed in the beginning of the year by a scare which took place in 1877–8, in consequence of which a large amount of tea and spirits, and other articles, were taken out of bond; and probably we lost as much in this way at the beginning of the year as we have made up in the same way now.

Well, so much for the Revenue. With regard to the Expenditure, it has exceeded the original Estimate by no less than £4,388,000; so that in place of a surplus of from £750,000 to £1,250,000, which might have been available to pay off Exchequer Bonds, I find myself with a deficiency of nearly £2,292,000. The Revenue has been £83,116,000, and the Expenditure £85,407,000, making a deficit of £2,291,000, and of course, no Exchequer Bonds have been paid off. I would point out, speaking generally, that this excess of Expenditure has been due, first, to larger calls for Extraordinary Services than I expected; and, secondly, to the Vote which has been taken in respect of the Zulu War. The larger calls for Extraordinary Services were brought under the notice of the House in August last, when I made my second Financial Statement. At that time, I explained to the House what the circumstances were which had arisen since the beginning of the financial year; and I then stated that we should require £3,270,000, instead of the £1,000,000 or £1,500,000 which I had originally anticipated. That sum was almost entirely required for extraordinary Services in the East of Europe; but it included a sum of £344,000 for the Transkei War, which had been going on at the Cape. Then, later in the year, I had also to propose a Vote of Credit in respect of the Zulu War of £1,500,000. These two sums of £3,270,000 and £1,500,000, added together, make £4,770,000, over and above what I estimated at the beginning of the year. The Expenditure, however, only really exceeded the Estimate by £4,388,000, because there was a reduction in the actual ordinary Expenditure, as compared with the estimate, of £382,000.

I will now compare the Revenue which we have actually received in the year 1878–9 with the Estimate formed in the beginning of the year. I compare it, of course, with the Estimate as it stood after the additions which were made to the Income Tax and the Tobacco Duty. The Customs estimate was £20,500,000, the actual Revenue is £20,316,000; and there was a loss, therefore, of £184,000. The Excise was estimated at £27,600,000; it produced £27,400,000, being £200,000 less than the Estimate. Stamps, which were estimated at £10,930,000, produced £10,670,000, or £260,000 less than the Estimate. These are the three heads on which there was a great falling-off. I may, perhaps, before going further, mention what the particular items were upon which the disappointments arose. In the Customs we had estimated that the duty on tobacco would produce £8,750,000, whereas it actually produced only £8,492,000. The net receipt in the previous year was £8,000,000. I expected to get by the addition which was made £750,000, but I only got a little short of £500,000; and that, under the circumstances, was not particularly bad. The fall in the consumption of tobacco was something like 3 per cent. It is said by many persons that the fall in the Revenue from tobacco was due, in some measure, to the extra duty which was placed upon it. I altogether doubt that. I do not think that it was. I believe the falling-off in the Revenue from tobacco was due to the same causes which led to the failure in other articles of general consumption; and I think it will be seen that upon several other articles there was a falling-off quite equal to, and greater than, the falling-off in tobacco. I should like to read a short extract from a very interesting communication which I received the other day from a house of business largely connected with the tobacco trade, and which, I think, supplies the answer to the suggestion that the decrease in the consumption of tobacco is due to the new duty. The writers say— That the decrease in the consumption of tobacco does not proceed from this cause can be easily proved. From midsummer, 1874, to the spring of 1876, the cost of American tobacco, with the duty combined, averaged from 4s. to 4s. 4d. per 1b., according to quality, and during this time the consumption steadily increased. From the spring of 1876 to the close of 1877, the combined cost was similar to what it now is, and yet the consumption increased. During the last 12 months, the combined cost of the lowest quality has averaged 3s. 10½d., and of the best quality 4s. 1d. per lb. This shows a difference of 1½d. per lb. on the lowest, and 3d. per lb. on the best quality, in favour of the consumer as against the period of 1874–6, and proves that the theory that the additional duty is the cause of the decrease in consumption is untenable. We doubt not that you will rightly ascribe the decreased consumption to the depression of trade throughout the country, but the above facts may be of interest. The fact is that the price of the article itself has been so very much lower than usual this year that the additional duty has not raised the price to the consumer. I may take this opportunity of referring to a question which raised some little discussion, especially between myself and my hon. Friend the Member for the Tower Hamlets (Mr. Ritchie), last year, as to the precise incidence of the duty upon tobacco. My hon. Friend made a most gallant fight upon the subject, and in consequence of the representations which he made, I thought it right to have a very careful examination made into this matter by the Inland Revenue Department. The result is this—The controversy last year turned principally upon three points—namely, the amount of moisture in the leaf, the amount of stalks, and the value of the stalks; and without troubling the Committee with the details of the examination, I may say that the conclusion at which the Board of Inland Revenue arrived, and which I accept, is that the proper duty on cigars ought not to be 5s. 4d., but 5s. 6d. per 1b., and I therefore propose to make that small addition to this duty. I may also mention the fact, as we are on small matters, that there is a little duty of a trifling character upon some new compositions of cocoa—namely, cocoatina, and some others, which will be placed on the same footing as other cocoa preparations.

Having mentioned what is the case with regard to tobacco, I proceed to state what is the case with regard to wine, which shows by far the most important falling-off in the Customs. The Estimate last year was £1,600,000. The realized amount in the year before had been £1,628,000, and we took it cautiously at £1,600,000; but it only realized £1,475,000. That is, there was a loss of very much more, in proportion to the amount of the Revenue, I believe, than has been sustained on any article of Customs for a considerable time; and it certainly seems to mark—there being no alteration in the duties—an alteration of the consuming power of the class who are consumers of wine.

With regard to tea, the produce from tea in the year 1877–8 was £4,000,000. We estimated last year, partly in consequence of the large amount taken out of bond, and partly for other reasons, a revenue of £3,900,000, or £100,000 less than the produce of the year before. We did, however, receive £4,119,417. But for the "scare," the Estimate would have been pretty accurate. Those are the principal points with regard to which there have been fluctuations in the Customs, one way and another. With regard to the Inland Revenue, there has been a diminution upon the receipts for licences. The licences were estimated at £3,690,000, and they only yielded £3,635,000; and it is observable that the decrease is chiefly in the establishment licences. That, again, is a diminution which tells very much the same story, I am afraid, as the diminution in wine. It shows that those who are in easy circumstances—or comparatively easy circumstances—have found it necessary, in the course of this year, to curtail their enjoyments; and as they have reduced the consumption of wine, so also they have reduced establishments; and they have kept fewer servants, fewer carriages, and so forth.

I am unable to say at the present moment—some Returns not having been received from the Post Office—what the precise effect of the alteration of the dog licence has been; but I am told that probably there has been very little variation from what was anticipated.

With regard to the item of malt and sugar used in brewing, there we have an increase. The Estimate was £8,260,000, andtheamountproducedwas£8,390,000; and that is, perhaps, the only item upon which there has been a satisfactory advance.

With regard to spirits, the estimated yield for the Inland Revenue was £14,900,000; but the yield was only £14,600,000, being £300,000 short of the Estimate. I believe that of that £300,000 decrease £200,000 decrease is due to a diminution of consumption in Scotland, and £100,000 is due to the decrease in Ireland. I believe there has been no alteration, or none to speak of, in the consumption in England. The Railway Duty has increased from £750,000 to £775,000. I think there were some arrears due.

With regard to Stamps, there has been a falling-off of £260,000, and that is entirely owing to a falling-off in the Legacy and Succession Duty. There have been a few variations in other classes of stamps, which just balance each other, and the receipt from Probate is equal to what was estimated; but there is a diminution upon the Legacy and Succession Stamps which is attributable to a combination of causes. In the first place, there have been fewer wills; in the next place, the value of stocks and securities has diminished; and, therefore, the property has been less and the duty smaller. With regard to the curious fact that there have been fewer wills, that is accidental, and apparently it is righting itself; for within the last few weeks, at all events, whatever may be the cause, there has been a considerable addition to the number of wills proved, and the Probate Duty has come up to the full amount which, was estimated. The Legacy Duty, of course, is not collected until some time after the Probate Duty is paid; and, therefore, when you have a good yield of Probate Duty in one year you may expect a large amount of Legacy Duty in the next.

While I am speaking on this question, I would just take the opportunity of mentioning that my attention has been directed to a matter which is attracting much notice in the country, and which has been mentioned in this House more than once by the right hon. Gentleman the Member for Birmingham (Mr. John Bright), and others. It is with regard to the manner in which taxes are collected. Great complaints have been made by persons who have been compelled to take upon themselves the very unpleasant duty of collectors, and sometimes the system has worked harshly. I have prepared a scheme, with the details of which I will not now trouble the House, to alter this, and I hope it will be found satisfactory.

I have mentioned the items of Revenue upon which there has been a falling-off. I ought now to mention those upon which there has been an excess. For the Land Tax and House Duty the Estimate was £2,030,000, and the actual revenue £2,720,000, showing, therefore, an increase of £90,000. For Property and Income Tax the Estimate was £8,570,000, the actual revenue £8,710,000, therefore showing an excess over the Estimate of £140,000. The Post Office shows an increase above the Esti- mate of £40,000; the Telegraph Service, £20,000. Crown Lands are precisely what was estimated. The interests on advances for Local Works, and on purchase money of Suez Canal Shares, was £16,000 more than was expected, and Miscellaneous £223,000. Now, with regard to the Expenditure, perhaps, after what I have said, I need not go in any very great detail into a comparison of the Expenditure of 1878–9, with the grants that were made. There were certain items upon which the expenditure was less than had been anticipated. The interest on Temporary Loans for Local Purposes was £110,000 less than was expected, and the interest on other Consolidated Fund charges was £135,000 less. On the Army, Navy, and other Military Services there were savings; but, of course, they are only savings in detail upon a largo general increase. Upon the Miscellaneous Civil Services there have been decreases, and the result is that the actual Expenditure was, as a whole, £85,407,000, which is £833,000 less than the total Estimate with grants that were made in the course of the year, but is more than the amount originally stilted in the Budget by £4,388,000.

Now, comparing the Expenditure of the past year with that of the year before, it would be well to distinguish between the ordinary and extraordinary Services, the total Expenditure for 1877–8 was £82,400,000, of which £3,500,000 was on account of the Vote of Credit for extraordinary war Services. The ordinary Expenditure for 1877–8 was £78,900,000. In the year that has just closed, 1878–9, the total Expenditure was £85,400,000, of which there was £4,770,000 for extraordinary war expenditure, so that the ordinary Expenditure was £80,630,000. Thus it will be seen that the increase in the ordinary Expenditure of 1878–9 over the year preceding was about £1,730,000; and that may be accounted for thus:—For different Miscellaneous Civil Service Estimates there was nearly £1,000,000; upon the Revenue Departments about £200,000; upon the Army and Navy about £400,000; and upon the interest on Public Works Loans Accounts, £100,000, making £1,700,000. As regards the extraordinary Expenditure of the year, it exceeds that of the year before by £1,270,000. Now, it will be remem- bered that the extraordinary Expenditure was due to two things—one was the Russo-Turkish War expenditure, and the other was the expenditure on account of the war in South Africa. The first was common to the two years, and the second only belonged to the latter. The total amount that was voted for additional extraordinary war Services in 1877–8 was £3,500,000, and in the year 1878–9 it was £3,270,000. of which, however, £340,000 was due, not to the services in Europe, but to the Transkei War in South Africa. Some portion of this was paid out of the Revenue; but there still remain certain outstanding Exchequer Bonds which have been issued in these two years. The amount of these Bonds outstanding is £2,750,000 for 1877–8, and £2,000,000 which were issued in August last for 1878–9. These amount to £4,750,000, showing that there was a balance of £2,020,000 which had been met otherwise—that is, Vote of direct taxation. Besides this expenditure, there was the Zulu War, for which we took a Vote of £1,500,000. I took power, as the Committee will remember, to issue Bonds for that sum; but it was not necessary to issue the full amount of Bonds—in fact, £900,000 was paid out of the Revenue, and only £600,000 was provided for by the issue of Exchequer Bonds. If I could have foreseen that there would have been a large volume of Revenue poured in in the last week, as was the case, perhaps I should have issued even a smaller amount of Bonds than £600,000. I might easily have done with £300,000; but, as it happened, we issued £600,000, so there is a considerable addition to the Exchequer Balances. We begin the year 1879–80 with what I may describe as three sets of Bonds. The first are the Bonds for 1877–8, for £2,750,000; the second, the special bonds issued in August last, for £2,000,000; and the third, bonds of £600,000, which have recently been issued on account of the Zulu War. That makes altogether £5,350,000; but since, in consequence of the unexpected inflow of Revenue, part of the amount raised went to strengthen the balances, the amount really unpaid in respect of these Services is something less than £5,000,000. The Committee will remember that when, in 1877–8, I asked for a Vote of Credit of £6,000,000, I stated that we hoped to pay off that amount in three years, being at the rate of about £2,000,000 a-year. We have actually paid £2,020,000, and, besides that, we have actually paid off £900,000 on account of the Zulu War. If the Zulu War had not intervened, we should have paid off something like £3,000,000, or something more, if we had kept down our issue of Bonds to what was strictly necessary.

It may, perhaps, interest the Committee if I take this opportunity of mentioning how the Account of this Vote of Credit stands. The Vote of Credit for the War in Europe amounted to £6,000,000, of which £3,500,000 were issued from the Exchequer; but the Account, as audited by the Auditor and Comptroller General, allowed only £3,197,000 for warlike preparations, and so forth; so that only that amount was finally charged to that Account. Then, in the following year, we have a Supplementary Estimate, and after deducting the amount which was due to the Grant for the Cape, we find that came to £2,927,000; so that the total charge for the Services on account of the War in the East has been £6,125,000. Now, considering that when we formed the original Estimate we knew nothing of what would take place later, and considering that the events of last year were events of no inconsiderable magnitude, I do not think we came out so badly as calculators, when we find that the expenditure, which we originally estimated at £6,000,000, has turned out to be no more than £6,125,000. Possibly, when the Accounts are audited by the Comptroller and Auditor General, it may prove less by a small amount. Well, that has been the case in regard to the European complications. With regard to South Africa, hon. Gentlemen must bear in mind, when we speak of the Zulu War, that there was another War—the Kaffir. These are matters which it is far from pleasant for the Chancellor of the Exchequer to mention; but it is well that we should understand our position, and we must face it. Well, in 1877–8, the warlike preparations for the Transkei War began—in August, 1877—but they did not involve any very heavy expenditure until about the close of the year. Excluding the pay of the Queen's troops, and the ordinary charges which would have been incurred on their account in any case, whether they were at home or abroad, the expenditure amounted to £386,000. I will not go into details, but the total charge to extraordinary expenditure, on account of that war, was £308,000 in one year, and £284,000 in the other, making £592,000. The summary is this—that the preparations in connection with the Russo-Turkish War cost us £6,125,000, the Transkei War, £592,000, and the Zulu, £1,559,000; making £8,225,000 expended in those two years on those three wars, I see that in 1877–8 we raised by loan £2,750,000, and in 1878–9, £2,600,000, making altogether £5,350,000; and deducting this from the total expenditure, it will be seen that there has been defrayed out of the taxes, in that period, £2,900,000 on account of those wars. I think we ought to bear this in mind, because there is an impression abroad that we are going on entirety by borrowing money, and not paying anything out of taxation. I am sorry that our arrangements have been complicated by the wholly unexpected war in Zululand. If we had been spared that, we should be in a position to be able to fully redeem, and more than redeem, the promises that we gave originally that we would pay off the £6,000,000 in three years, iii point of fact, we have paid off one-half, and have prospects of paying off the other half rapidly.

I come now to the Estimates for the year 1879–80. The Expenditure will be as follows:—The charge for the Debt, and the Consolidated Fund charges, which last year came on the whole to £30,268,000, I estimate this year at £30,620,000. There is an increase of £125,000 upon interest for Local Loans; and there is an increase of £135,000 on other Consolidated Fund charges, and of £90,000 upon Exchequer Bonds. The Army is taken at £15,645,700—that is, £2,000,000 less than last year; the Home charges of Forces in India are taken at £1,100,000; the Navy is put down at £10,586,894, which is £1,375,000 less than last year; the Civil Services are taken at £15,084,851, being £110,000 more than last year; the Customs and Inland Revenue are taken at £2,865,383; the Post Office at £3,368,825; the Telegraph Service at £1,115,195; and the Packet Service at £766,725. This gives, therefore, a total estimated Expenditure of £81,153,573. We next come to Revenue, and, first of all, with respect to the Customs. The Estimate for last year was £20,500,000, and the actual payments into the Exchequer were £20,316,000. I take the Estimate for the coming year at £20,000,000, as I think that, under the circumstances of the time, we should not be justified in taking what is called a sanguine Estimate. The Excise we also estimate below the amount actually received last year. It yielded last year £27,400,000, and the Estimate for the next year is £27,270,000—that is, a decrease of £130,000. Stamps we estimate at £10,780,000, being an increase on the amount—£10,670,000—received last year. We make that increased Estimate on account of the prospect of receiving a larger amount of Legacy Duty. The Land Tax and House Duty we take at £2,700,000, or £20,000 less than the yield last year. The Property and Income Tax, which, of course, is swelled by the remanet of the additional sum laid on last year, we estimate at £9,250,000; the Post Office at £6,250,000—that is an advance of £10,000 over the amount actually received last year; the Telegraph Service we estimate to yield £1,310,000, being an advance of £5,000 over the actual payments into the Exchequer last year; Crown Lands, £390,000, instead of £410,000 last year, the decrease of £20,000 being due to the same causes which affected landed property generally, both mining and agricultural. The interest on advances for Local Works and on purchase money of Suez Canal Shares we think will produce £1,175,000, or about £83,000 more than last year, when it produced £1,091,751; and Miscellaneous Revenue, which last year brought in £4,223,000, we take at £3,900,000. The result is that we get an estimated Revenue of £83,055,000, instead of £83,115,972 realized last year—that is, we estimate for a total decrease of Revenue to the amount of about £60,000. Under these circumstances, the Committee will perceive that, taking the Expenditure at £81,153,573 and the Revenue at £83,055,000, we have a surplus of £1,900,000; but this does not include any further provision for the South African War, nor does it include any provision for paying any portion of the Exchequer Bonds.

There is one matter which I will just mention now, because it would be desirable to notice it, though I do not invite discussion upon it, and that is the question of a loan to India. It has been mentioned to the House that it is in contemplation to propose that a loan not exceeding £2,000,000 should be made to India without interest. There has been some misunderstanding, I think, upon the subject, for I find that some persons have imagined that we are going to lend this amount, and at the end of a definite period of time we are going to ask to have the £2,000,000 handed back again. But this is not the nature of the proposal. The proposal is that the sum shall be advanced for a period of seven years, and be repayable in annual instalments. Therefore, we shall begin to receive, not in 1879–80, but in the next year, 1880–81, instalments at the rate of nearly£300,000 a-year. That arrangement, if adopted by the House, will, of course, in seven years extinguish the loan. Therefore, the only provision that I think it necessary to make is for the interest upon £2,000,000 for half-a-year.

Now, Sir, it is very difficult to say what may be the calls that may be made upon us for the expenses of the Zulu War. I am afraid that, having consulted with my right hon. Friends at the head of the War Office and of the Admiralty, I am not in a position to give any definite or distinct estimate with regard to it. But, finding that I have a surplus of £1,900,000, I think I may fairly assume that that sum will be quite sufficient to cover any calls likely to be made upon us in respect of that charge in the current year, and also in respect of the sum of £600;000, which remains as debt raised on Exchequer Bonds. But, at all events, if it fails to pay the £600,000, I have every hope that the surplus of £1,900,000 will be sufficient to meet the charge, whatever it may be, that falls upon us in respect of the Zulu War. Then we remain face to face with the Bonds of 1877–8, amounting to £2,750,000, and the Bonds of 1878–9, amounting to £2,000,000, making together a total of £4,750,000, which, according to our original plan, ought to have been discharged at the end of next year, and would have been discharged but for the Zulu War. How are we to deal with these sums which are thus outstanding? Obviously, we have the alternatives either of raising a considerable sum by taxation in order to pay off the whole of the Bonds, or one or two sets of them, or we might add the deficits in some shape or other to the permanent Debt; or there is another process—we can throw upon another year a portion of the payment. If we decide upon raising the money by taxation in order to meet this amount, where are we to look for it? There is no doubt whatever of the ability of the country to raise that, or a very much larger sum. The addition of a penny to the Income Tax would give £1,400,000 in the year, and a tax upon some of the leading articles of consumption, such as those the dealers in which have shown such sensitiveness lately, or other items, would readily yield an amount sufficient to pay off the charge, and if we were to do so, we should the next year, or the year after, be in a position to deal with a surplus of some £5,000,000 or £6,000,000 which it might be very popular to have to remit in taxation. That, it must be admitted, is a prospect which would be very captivating under certain circumstances to a Chancellor of the Exchequer. But I must point out to the Committee that this is not a question of popularity or unpopularity, or of anything of that kind; it is a question of what is really most for the true interests of the country. We have to take into account that at the present time our Expenditure is very great, and that it is likely to be so while this war goes on, and that we have, at the same time, a condition of the country which is undoubtedly very far from being satisfactory. I do not join in all the language which I hear used about the great depression of the country. I rather agree with the observations that I have seen made by the right hon. Gentleman the Member for Birmingham (Mr. John Bright) that there have been times, not so very long ago, when there was quite as much reason for anxiety as at the present time. But, without drawing comparisons between one period and another, I think it must be admitted that there are plenty of indications that trade is not what it should be, that agriculture is not in a flourishing state, and that the condition of the people—especially, I would observe, the condition of those who are described roughly as the lower middle class, or, it may be, even the upper middle class—is one which should make us very careful in putting additional burdens upon them. The indications which I have noticed, the reduction in the establishments, the reduction in the consumption of wine and other matters, all show that the present is not a time in which additional taxation would be borne without distress. But considerable distress does not mean merely a great amount of complaint and grumbling; it means a diminution in the spending power which necessarily affects the trading and agricultural communities and tends to keep down the condition of the country, which we hope to see advance and improve. For my own part, I must say that, unless under a sense of strong necessity and absolute duty, I should look with very great reluctance upon any proposal to make, at the present time, a large addition to the taxation. That is what I have got to say with regard to what I call the "heroic process." Then there is the unheroic process of carrying this sum to the permanent Debt. I cannot conceive anything more mischievous or enervating than that. I think the plan of adding a deficiency of this kind to the permanent Debt of the country would be bad in itself and bad in the example it would set. I prefer the via media. I hold that the true principle of finance is that you ought in ordinary years to maintain a good surplus of Revenue over Expenditure sufficient not only to provide for the Expenditure, but also to leave a margin for the reduction of the National Debt. I hold that you ought to make your taxation as little fluctuating as you possibly can; that you ought not to be in a hurry when you get an accidental surplus to give it away; and that when you nave an accidental deficit you ought not to be in a hurry to put on taxation. I think that frequent fluctuations in our small number of taxes are very much to be deprecated. We must always bear in mind that the finances of this country now depend upon a very small number of sources of Revenue, and that it is not convenient or safe either to give away Revenue or to be continually putting up or down those taxes which we have still in use. The Income Tax was used for many years as a sort of make-weight in the financial system. In a bad year a penny or two was put on the Income Tax, and in a good year a penny or two was taken off. But that is not convenient to the country generally, and it becomes more and more inconvenient when you have to bear in mind the principles so justly laid down by the hon. Member for Hackney (Mr. Fawcett), and others—that on an occasion of asking for additional taxation, you ought not to place it on the income tax only, but you ought to accompany it with some call upon indirect taxation. Adding to taxation upon our articles of consumption, if it is only done for a short time—say for a year or two—deranges trade, causes agitation, and a great deal of disturbance without any adequate results. When you see that your Revenue is permanently too low for your permanent Expenditure, then it is comparatively easy to add duties which will have to be kept on, and to which trade will accommodate itself. But when you have to provide only for one or two years, I think that then it will be found inconvenient. Under these circumstances, the inclination of my mind decidedly is that we should do that which is entirely in accordance with the spirit of the proposals we originally made in 1877–8, when the Vote of Credit was first proposed—namely, that we should extend payment of that debt over one year more. [A laugh.] Hon. Gentlemen smile at that, and perhaps they smile with all the greater pleasure because they have two advantages. In the first place, they escape very unpleasant taxation, and, concurrently with that they enjoy the delightful amusement of abusing the Chancellor of the Exchequer. I do not at all begrudge thorn the pleasure which they derive from that combination of circumstances. But I have no doubt that it may be in the minds of some hon. Gentlemen that in proposing we should extend this charge over an additional year, I am, in fact, violating the canon which I myself laid down, that we ought not to get into the dangerous practice of adding Expenditure to Debt. They may say that we are making an addition to the Debt of the country. I wish to call the attention of the Committee to the very great difference which exists between taking a sum of £2,000,000 or £3,000,000 or £5,000,000, or whatever it may be, and simply adding it to your permanent Debt and so putting it out of sight, and postponing the repayment of Bonds for another year, and so keeping your debt before your eyes, until you have satisfied yourselves that you can pay it. If hon. Gentlemen cannot see the distinction between those two principles, I must say I have a very low opinion of their financial skill. Let me ask what would happen, supposing we were to take the course of adding the £5,000,000 to the permanent Debt of the country? We could do so, and could say that the interest on it was to be paid out of the £28,000,000 which we annually apply to the charge of the permanent Funded Debt. The result would be that you would get rid of the sight of these £5,000,000 altogether. You would have nothing more to pay, because our present taxation provides that £28,000,000 a-year, and then you would have a surplus, and might begin to take off taxation, and think of bringing the Income Tax down by another penny. But, according to the principles upon which I proceed, I keep the Income Tax and other duties up to their present rates, for the purpose of getting rid of that charge, in consideration of which it was that the House agreed, two years ago, to raise the rate of Income Tax. I can, of course, understand that these things may be put in various and in very ingenious ways, and we may be told that we are doing something which financially is very discreditable. I have no doubt that we shall have very fine distinctions drawn between what I am doing now and what was done in former times, when Exchequer Bonds were postponed from year to year, and when there was a series of Exchequer Bonds renewed and renewed again for a period of perhaps seven, eight, or nine years. We shall be told, no doubt, that what we are doing now is very bad, and that the expedients to which recourse was had in former times, such as calling up the Income Tax in advance, were very good. I am not at all afraid, however, of meeting discussion upon those topics.

Before we part with this question, I will ask the Committee to indulge me for a few moments while I review shortly the state of our Debt. Our Funded Debt on the 31st March, 1878, stood at £710,843,008, and the value of the Terminable Annuities running off in stock was computed at £46,335,589, making altogether a total of £757,178,597. In mentioning the calculations of the values of the Annuities, I ought to thank my right hon. Friend the Member for the City of London (Mr. J. G. Hubbard) for an interesting criticism he has passed on the mode in which the value of these Annuities is calculated. He has been at the trouble of going carefully into the way in which the calculation is made; and he has ascertained—and we entirely admit the justice of his calculation—that the principle adopted is one which tells very much against the State, and that, in point of fact, the proper value of the Annuities ought not to be taken at £46,000,000, but at a sum of £4,000,000 or £5,000,000 less. The valuation is made in accordance with a principle which has been recognized by the National Debt Office for a number of years. It is convenient, and made for the purpose of a comparison year by year; but undoubtedly it does give an incorrect idea of the true value of the Annuities in stock, and I propose to have an inquiry made into it, in order to correct the calculation in accordance with the view of the right hon. Gentleman. That, however, has nothing to do with the comparison that I am now making. The result is that the Funded Debt and the Annuities together amounted to £757,178,597 at the beginning of the last financial year. On the 31st March, 1879, the Funded Debt amounted to £709,402,000, while the Annuities were estimated at £42,776,000, making a total of £752,178,000, or a reduction on the Funded Debt, including Annuities, of just over £5,000,000 in the year. Then the Unfunded Debt of all kinds stood on the 31st March, 1878, at £20,603,000, and on the 31st March, 1879, at £25,870,000, so that the increase of the Unfunded Debt was £5,267,000, or £250,000 greater than the decrease in the Funded Debt. Hon. Gentlemen must bear in mind, however, that of that increase only about one-half was advanced for Supply Services, and that we have advanced to local bodies £2,566,000. Therefore, we have really reduced the Debt, Fundedand Unfunded, by something like £2,500,000. Thus, although we have had a deficiency of Income as compared with the Expenditure of the year amounting to nearly £2,300,000, we must bear in mind that we have reduced the Debt by almost the same amount. Hon. Gentlemen never allow me to exclude from the calculations of additions to Debt the amount which is borrowed for Public Works; but it is most unfair and unreasonable if you do not exclude it, because it stands on a wholly different footing. If you are comparing the amount borrowed and applied to Supply Services you are right; but if you compare what you have borrowed and lent again you come into a different field. I do not for a moment deny that the question of borrowing for Public Works is a matter that requires the serious consideration of the House. I desire that it should receive such consideration, and I hope the House will be found willing to support me in giving a fair discussion to the principles of the Bill which I have introduced this year on the subject. I am glad to see that the lion. Member for Birmingham (Mr. Chamberlain) has returned in the nick of time to his place, for he is more critical, perhaps, on this subject than he is upon the Expenditure of the country generally. At all events, I hope that we shall be able to keep this matter distinct from the consideration of our Imperial financial policy. If you are of opinion that the system ought to be altered, then by all means alter it; if you think that it ought to be maintained, do not allow it to make a wrong impression as to the real progress we are making. I wish to point out that if the Bill to which I have just referred should be passed in its present shape it will relieve us for the future, in all probability, from the necessity of borrowing anything more for Public Works at all, because it will put the Commissioners for the National Debt into direct communication with the borrowing bodies—with, of course, the intervention of the Treasury, in order to see that what is done is right. It will put the borrowers into direct communication with the Commissioners, instead of indirect communication through the Exchequer, and we shall thus get rid of a great deal of confusion which results from borrowing on the one hand from the National Debt Commissioners, and lending, on the other, to the municipal authorities. I also wish to point out to hon. Gentlemen that this process of the reduction of the Funded Debt is one which is steadily going on, from year to year, at the rate of 5,000,000 a-year, by the joint operation of the running down of the Terminable Annuities and by the application of the Sinking Fund. Therefore, the Committee must not imagine that we are adding materially to the Debt of the country, when we allow for a single year a sum of £2,000,000 or £3,000,000, raised for an exceptional purpose, to stand over. I would call the attention of the Committee to the very great strength which that silent process for the gradual reduction of the Funded Debt lends to our financial system. If there comes a great emergency, you have here a resource to fall back upon which is of the utmost value. You might use it in ways of which it is very easy for anyone to conceive; and I do most earnestly press and entreat the Committee not to adopt any policy which would trench upon that valuable reserve, for any inferior purpose. It is open to two dangers. First, there is the danger of giving way lightly to the temptation of getting rid of taxation and throwing an undue burden on the Debt; and, again, there is the danger of carrying what I call the "heroic policy" too far, and thus producing a re-action which might upset a system which we ourselves believe to be of such service.

I feel very much indebted to the Committee for the attention it has given me while making these proposals. I make them after a very full and careful examination, and with a full conviction that we are taking a right course. It is not my intention to propose any addition to the taxation of the year. I propose that we should take power at the proper time for renewing the Exchequer Bonds for another year. That will probably take £2,000,000 for next year, and£2,750,000theyear after. The formal Resolutions, which I shall have to place in your hands, Sir, relate to the renewal of the Tea Duty at its present rate, to the small alterations which I have mentioned, in the matter of cigars and of the Crown Duty, and to the renewal of the Income Tax at its present rate.

(1.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the Duties of Customs now charged on Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and seventy-nine, until the first day of August, one thousand eight hundred and eighty, on importation into Great Britain or Ireland (that is to say): on

£ s. d.
Tea the lb. 0 0 6."
MR. GLADSTONE

I do not rise with the intention of discussing the very important Statement which has been made by my right hon. Friend the Chancellor of the Exchequer, and it is, perhaps, fortunate that he is not in a condition which required him to ask the Committee for an immediate Vote. If it had been part of his financial plan to ask for an increase in taxation, of course the House would, in accordance with its usual practice, have assisted him by at once enabling him to levy additional duties, while reserving its decision on his proposals. That is a practice arising out of a practical necessity; but it must be a matter for congratulation that, on the present occasion, we are under no such necessity. The Resolution read by you, Sir, is laid before the House, and there is no reason we should proceed to discuss it except at such a time as will suit the convenience of the Government and assist the general course of Business. What I desire to do is to remind the Committee that the usual practice of formers years, although it has been materially invaded during very recent years, was to reserve entirely the discussion of the Financial Statement of the Chancellor of the Exchequer from the evening on which it was delivered to such another evening as might be appointed for its practical consideration. I believe that that was a very wise and a very convenient practice. Of course, it does not preclude the putting of questions to the Chancellor of the Exchequer for the elucidation of the actual facts and figures of his Statement. For my own part, so far as I was able to follow my right hon. Friend, who was, perhaps, a little rapid in some of the arithmetical portions of his speech, his Statement appeared to me to be exceedingly clear, and there seemed little upon which anyone can desire to make any objection at the present time. It is not in derogation of what seems to me a convenient practice, that every question necessary for a clear understanding of his exposition should be addressed to the Chancellor of the Exchequer immediately after the delivery of his Statement. Beyond that, I venture to hope that on this, as on every future occasion, we shall not go, but reserve the discussion of the substance of the Statement itself. Although my right hon. Friend has made no proposal for additional taxation, the House will understand that circumstances have led—and, indeed, probably have required—him to go very far beyond the mere mechanical portion of his duty in simply submitting the Estimate of Revenue and Expenditure. In that Estimate the right hon. Gentleman has shown a surplus of £1,900,000; but then he has proceeded to give us his views of the coming charge for the unhappy war in South Africa. Having done that, he has likewise been led—and I am not in the slightest degree blaming him for it—into a discussion of the utmost importance with regard to the policy which this country ought to pursue in dealing with its National Debt; with regard to the mode in which an annual surplus or an annual deficiency ought to be met as it appeared; and with regard to the different policies to be adopted, and a comparison between them. He has also raised another most important question, least of all suitable for discussion at present, with respect to the advances that are now so largely made from the Treasury for the purpose of assisting local communities for various public purposes. There are, in fact, a number of important questions of principle raised in the Financial Statement which, undoubtedly, it will be necessary for this House calmly to consider. For my own part, I would carefully avoid saying a single word on the present occasion that may in any manner prejudice that consideration. All I would say is this—that the consideration of the question of a particular tax that may be proposed this year, and may again be dealt with in another year, is that that is a very trivial matter compared with the principles and rules upon which surpluses and deficiencies are generally to be dealt with, and with the views we take of the great question of the maintenance or reduction of the National Debt as it stands. I desire to reserve, for my own part, a perfectly free discretion with regard to the very important subjects of principle involved in the Financial Statement; and if I may venture respectfully to tender a recommendation to any other Member of the House, it will be that the observance of a similar course will enable us all to approach the discussion of these matters at a more convenient time, and with far greater advantages, and do much fuller justice to a matter in which, the interests of the nation are involved.

MR. THOMSON HANKET

wished to ask the Chancellor of the Exchequer some questions with regard to his Statement. There was an apparent discrepancy in what he said with regard to the reduction of the National Debt. Was it not the case that the reduction would be £3,500,000, and not £5,000,000?

MR. WADDY

sought some information with regard to the amount expended under the Vote of Credit in connection with the Russo-Turkish War. The sum of £3,500,000 was put down to the Vote of Credit for the Russo-Turkish War as the actual amount of Exchequer Bonds issued in 1877–8. He believed that the sum actually drawn on that account was only £2,500,000. He should like to know how this difference was accounted for? There was another point in the Revenue Accounts. The Estimate for the Customs for 1878–9 was put down at £20,316,000, and in 1877–8, £19,969,000. He would call the right hon. Gentleman's attention to the fact that in the printed Statement for last year, the Estimate for 1878–9 was not put down at that sum, and he should like to know the reason for the difference?

THE CHANCELLOR OF THE EXCHEQUER

said, the hon. and learned Member for Barnstaple (Mr. Waddy) was right in saying that the Vote of Credit expired when only £3,500,000 had been spent; but he (the Chancellor of the Exchequer) had explained that in subsequent quarters further Votes had been taken for the same kind of Services, which amounted on the whole to £6,000,000. It was true that the National Debt had only in the present year been reduced by £2,500,000 instead of by £5,000,000, because the increase in the Expenditure must be set off.

MR. CHILDERS

I will very carefully follow the line indicated by the right hon. Gentleman the Member for Greenwich, and will reserve any criticism to a future occasion. I will now merely ask some questions of the right hon. Gentleman the Chancellor of the Exchequer, with a view to the elucidation of certain points, and in order to afford the right hon. Gentleman an opportunity of making some explanations. I wish, in the first instance, to ask a question about the number of years over which the deficit is to be spread. In the Budget speech of April 4 last year the Chancellor of the Exchequer stated that the deficit from the previous year, 1877–8, was nearly £2,750,000; and he estimated that, after providing for the extraordinary Expenditure connected with Eastern affairs during 1878–9 he would have a surplus of from £700,000 to £1,200,000 to go in reduction of that deficit, and that the balance would be paid off in this present year, 1879–80. Thus, according to the then Estimate, all the extraordinary charges would be defrayed in the three years, 1877–8, 1878–9, and 1879–80; but now this spreading operation is to extend, not to one, but to two more years, and will not cease till the year 1881–2. I should like to know whether, comparing the two Budget speeches, this is so? Then, with regard to the £1,900,000 surplus, the difference between Revenue expected this year and ordinary Expenditure, the right hon. Gentleman has said that it will cover the whole cost of the South African War during the present year, together with a sum of £600,000 already expended. Therefore, what the right hon. Gentleman anticipates is that a sum of £1,300,000 shall cover the whole expenditure on account of the Zulu War during the present year. Now, I wish to ask if the Chancellor of the Exchequer has duly considered that Estimate, seeing that during the last financial year the right hon. Gentleman has taken £1,500,000 on account of that expenditure, exclusive of the Transkei operations, and considering that the most serious part of that expenditure was incurred during the last few months? The Committee ought to know what are the grounds which have led the military and naval authorities to conclude that £1,300,000 will be sufficient to meet that expenditure. It must not be forgotten that, in the event of the war being terminated within a short time, the expense of bringing the troops home will have to be met; and, as everyone who has been connected with the Admiralty knows, that expense is likely to be very heavy, I think that the Chancellor of the Exchequer should give some kind of evidence as to the calculations upon which he has based his Estimate, for, so far as past expe- rience goes, he seems to have estimated very much below the mark. There are one or two other matters of detail connected with the Revenue upon which I should also like some information. The receipts of the Customs last year were £20,316,000, and are estimated this year at £20,000,000. But that Estimate implies that the true receipt of the year would be £20,300,000 at least, as £300,000 belonging to the year was received last year. In other words, he anticipates that the Customs Revenue will continue to rise. Is this so? He also omitted to give us any explanation as to the aggregate amount of the special duties collected by the Customs and Excise. Perhaps he will explain to us how it was that the Consolidated Fund charges were so much smaller last year? It is important that we should know the reason for this, for these charges are from £100,000 to £150,000 less than they were in the previous year. There are other questions which I should like to have asked; but it is probably better that we should discuss them at some future time, as suggested by my right hon. Friend (Mr. Gladstone).

COLONEL BARNE

supposed that it was useless at such a period as the present, and "with a Budget like that just presented to them, for him to talk about the remission of the Malt Tax in order to benefit the agricultural interest. But he would venture to suggest to the Chancellor of the Exchequer that he might help agriculturists to a certain extent by adding slightly to the tax on sugar used in brewing, and, in that way, increasing the amount of barley used by brewers. Again, without hurting the small consumers, he might double the last year's increased tax on tobacco. Some old salts among his constituents complained that they had to pay a farthing on the ounce more for their tobacco, one-half the farthing going into the pocket of the shopkeeper, and doing no good to the Revenue. By doubling that tax, the Chancellor of the Exchequer might double his revenue, without putting any further pressure on the small consumers.

SIR GEORGE CAMPBELL

said, he would like to say a few words as to the Chancellor of the Exchequer's proposals on the extraordinary Expenditure, especially with regard to the unhappy war in South Africa. It did seem to him that in taking so small a sum as £1,300,000 for what might be called a great expedition, the Chancellor of the Exchequer had hardly taken into account the enormous cost of campaigning in that country, and the enormous charges made by the Colonists. He understood that the very large Estimate of last year was not only spent, but largely exceeded. They were told that the season would be very favourable; but it must be borne in mind that the cost of forage and of transport would be very great, and it did seem to him that these Estimates were too small. Then he observed that the Chancellor of the Exchequer had only mentioned the Zulu War in his extraordinary Expenditure, and had taken for his careful expenditure in the matter of the Eastern Question. But was it safe or prudent to assume that they would hear no more of the Eastern Question? The Government might be called upon to take part in the occupation of Roumelia; and considering the way in which we had stood between the people of that Province and their deliverers, he felt that we were bound to do all that lay in our power to secure their safety. Yet that occupation, if it had to be undertaken, would certainly cost us money. As the Eastern Question was not concluded, expense might arise; and it was not prudent, considering the many wars we had in various parts of the world, for the Chancellor of the Exchequer to put all that aside, and to assume that there would be no expenditure on the Eastern Question, or on the other matters we were engaged in, and the great charge that would be made by the Colonists for assistance given. The Estimate of £1,500,000 made last year would not only be reached, but would be exceeded. We were told that there would be an extreme necessity for an enormous amount of carriage that must be paid for at enormous rates. Therefore, taking the most favourable issue of this campaign, looking at the enormous number of the troops and the large amount of carriage, the Estimate was a great deal too small. He would ask, was the Eastern Question concluded, and would there be no further question in connection with the question, and would the expenses of the Zulu War be so small as was anticipated?

MR. NEWDEGATE

complained that it appeared, according to the recent policy of the House of Commons, as if that House, so far as finance was concerned, had determined to wash its hands of all attempts to relieve the distress which was now admitted to be so prevalent throughout the country. He was quite aware that until the Revenue suffered severely, financial arrangements of this kind would not force themselves on the attention of the Chancellor of the Exchequer; but, at the same time, he could not help feeling that there would certainly be a disposition among the distressed classes, when they heard of the Budget, to feel that they were treated with great negligence. After all, the House of Commons was not a mere taxing machine; but its duty was to represent the great body of the opinion of the country. He wished to ask the Chancellor of the Exchequer whether he was right in understanding that they would not be asked to go into Committee of Ways and Means before the Easter Recess? If that were so, he should be glad to know if the Chancellor of the Exchequer could name the day at which they would be called upon to conclude this discussion?

MR. DODDS

regretted very much that the Chancellor of the Exchequer had not seen his way to accepting the suggestion he had made to him last year, at any rate, to some extent. He had, however, made a remark upon it to which he should like to allude. He had admitted that the deficiency in the Stamp Duties was attributable altogether to the falling off in the Legacy and Succession Duties. The Chancellor of the Exchequer had further told them that the amount of the Probate Duty was almost exactly what he had estimated it at. In this item of stamps, the Chancellor of the Exchequer, in answer to the hon. Member for Wexford (Mr. O'Clery), stated some time ago that the deficiency was about £350,000. Since then, he had reason to believe that it had very considerably increased, and could not now be put at less than between £350,000 and £400,000. The Chancellor of the Exchequer thought this falling off in the Legacy and Succession Duties was partly to be attributed to the smaller number of wills proved during the year, and partly to the diminished value of Stocks, which had to be taken into account in assessing the amount to be paid. But, so far as the number of wills was concerned, he would remind the Committee that, inasmuch as the Probate Duty was about the same that it was estimated to realize, this result could not have been in any way affected by a decrease in the number of wills. Another circumstance to which the Chancellor of the Exchequer had not referred, and to which he believed was attributable the greater part of the falling off, was the alteration made in the regulations for collecting the Legacy and Succession Duties, from the 1st of April in last year. Very little notice was given of the change, and he first heard of it after it had come into operation. Consequently, there was not time for Gentlemen in the same position as himself to express an opinion on the subject until it was too late. For his part, he believed that to that change alone might be attributed the greater part, if not the whole, of the falling off in the Legacy and Succession Duties. It had certainly caused a considerable amount of inconvenience. Before 1878, all these duties outside the Metropolitan district were payable through the distributors of stamps, and that was found to be a very convenient course. Without any notice, the whole of these regulations were altered, and the amounts now had to be paid direct to the Receiver General. He wished to ask the Chancellor of the Exchequer if he could tell the Committee the relative amounts received for these duties within and beyond the Metropolitan districts? That information was not given in the Returns; but the Chancellor of the Exchequer could very easily get it, and if he was rightly informed, it would be found that in the Metropolitan districts where there had been no change, there had been no falling off in the duty—or, at the most, only a very slight falling off—in the extra-Metropolitan districts it had fallen off by 40 or 50 per cent. If he was rightly informed, that showed that it was not expedient to make any change, and he would suggest to the Chancellor of the Exchequer that the old state of things should be restored. He saw, by the Report of the Commissioners of Inland Revenue, that they thought the new system would be convenient to solicitors, executors, and administrators living in the country, because it enabled them to bring their business directly to a conclusion. His experience was directly opposed to that opinion. He should like to allude also to the question of discounts. In his opinion, it would be found advantageous to allow a greater discount on Legacy and Succession Duties than 4 per cent. The advantage would be similar to that which accrued to the Exchequer when the right hon. Gentleman the Member for the University of London (Mr. Lowe) made the assessed taxes payable on the 1st of January. There were other topics in the Budget to which he would like to allude; but for the present he would confine himself to these two topics. He hoped, however, to have another opportunity of bringing the Probate and Legacy Duties under the consideration of the House.

MR. ONSLOW

would not follow hon. and right hon. Gentlemen opposite through their criticisms, but would merely say that he thought this was a Budget which would be appreciated by the country. There was one particular item, however, as to which he did desire some information. There was a falling off in the item of "Miscellaneous Revenue." Now, the Committee were aware that a great part of this Miscellaneous Revenue came from India, and as there was a considerable diminution in the item, he hoped the right hon. Gentleman would tell them whether this was owing to the receipts from India being less than in former years, and, if so, for what reason?

MR. SAMPSON LLOYD

said, he knew it was useless to speak of the Income Tax that year; but now that it must be regarded as a permanent tax he did hope the Chancellor of the Exchequer would keep his attention turned to the subject, and endeavour to remedy some of the unnecessary injustice attending its assessment and collection. There was especially a grievance connected with that tax to which he had once or twice drawn attention. People were compelled, against their will, to collect the Income Tax. The regulation produced a great deal of friction, irritation and discontent; and as he knew, from personal inquiry, that the Government Departments were ready to undertake the collection of the tax, he did not see why they should not.

MR. SHAW LEFEVRE

asked on what principle the Estimate of the Income Tax was made for the coming year? Last year it produced £140,000 more than the Estimate, which was a very remarkable fact in face of all that they had heard about the depression in trade. As, however, incomes were estimated on the three years' average, the full effect of that depression might only now be felt.

THE CHANCELLOR OF THE EXCHEQUER

said, that, with regard to the Estimate of the Income Tax, a greater advance would have been anticipated, but for the depression of trade. A very considerable allowance had been made for that depression. The increase on Schedules A and B also, which might be expected from a new assessment, had only been taken at half its usual amount; and, unless there was a recurrence of the great commercial disasters of the past, he felt certain that this Estimate might be relied on as correct, and it was an Estimate which he submitted with considerable confidence, as not likely to prove excessive or too sanguine. As to the grievance to which the hon. Member for Plymouth (Mr. Sampson Lloyd) had called his attention, he was afraid the hon. Member did not catch what he said about the collection of the Income Tax, for he had already announced that, after Easter, he should, be prepared to propose certain alterations in the collection of the tax. He was also asked by the hon. Member for Guildford (Mr. Onslow) what were the causes of the diminution in the Estimate of the "Miscellaneous Revenue." It would be remembered that it comprised a very large number of various small items; but with regard to the Indian charges, the hon. Member might relieve his mind, for there was no material alteration there. The receipts in the year 1878–9 from the Indian Revenue amounted to£1,180,000, and, for the coming year, they were estimated at about £1,100,000. The difference was not very important, and he might add that last year they received £214,000 from the Post Office Savings Bank on account of the arrears of postage which had not been charged to that branch. Then they had also sold a site to the Post Office Savings Bank for £70,000. The hon. Member for Stockton (Mr. Dodds) had adverted to and condemned the change in the mode of collection of the Legacy and Succession Duties, and had referred to that as one explanation of the decrease in the receipts of the past year. It was a curious fact that, during the last six or seven weeks of the year, the number of wills proved in the Metropolitan district had exceeded by at least 40 or 50 the number in the corresponding week of the previous year. The Probate Duty was paid first, and then the Legacy Duty, so that the year 1879–80 would probably be a good year for Legacy Duty. Probably there was a certain amount of dissatisfaction at the change that had been made, and he would inquire into the reason for it. He was not able to give the figures as to the Metropolitan district, and those outside; but probably the hon. Gentleman was correct in speaking of the districts outside the Metropolis. The right hon. Gentleman the Member for Pontefract (Mr. Childers) had asked him over what years it was proposed to spread the repayment of the £6,000,000. In reply, he could only say that when he proposed that loan on his Budget for 1878, he proposed to spread the repayment over the three years next following, beginning with 1878–9. That was his original idea; but when he brought forward the Budget last year, he had hoped that affairs would be settled quickly; that the whole of the £6,000,000 would not be required; and therefore he had said that he really thought the matter would be cleared off in the present year. That hope had, however, not been fulfilled, owing to the course events had taken, and he did not now expect that the final repayment would be made till the year after next. With regard to the question which had been put as to the cost of sending the troops to Zululand, and whether the sum of £1,900,000 would suffice for the Zulu War, a very large proportion of that expense had been already paid out of the £1,500,000 granted last year. Although considerable expense had, no doubt, been incurred, it was not the case that the whole of those troops would have to be brought back; because at the time of their being sent a certain proportion of them were on their way to India under the usual orders. Then there were also certain repayments due to the Government from the Colonial authorities, which of course they would get; and though he would not venture to give an Estimate, yet he hoped they would not be inconsiderable. Under all the circumstances of the case, although he had not ventured to submit an Estimate, matters would, he hoped, turn out as he had anticipated. His right hon. Friend asked how the Customs' Estimate had been taken, and said that the whole Customs revenue last year was £20,300,000, of which £300,000 belonged to the present year. That was not quite an accurate statement, because though, in one sense, the year had been robbed of £300,000, yet they had been robbed the year before of £100,000, on tea, and, he thought, £200,000 or £300,000 on spirits, so that they lost more in the beginning than they gained in the end of the year. With regard to the Customs' Duties on spirits, they bad exactly come up to the Estimate, though there had been a falling-off of £300,000 on the Excise. Very careful Estimates had been made for the coming year, and a considerable reduction had been taken in tea, which last year produced £4,120,000. The Estimate for the current year was £3,890,000, and if they had made £100,000 one year and lost £300,000 another, £200,000 expressed the difference. He repeated that he thought the Estimate for Customs had been made very carefully, and he did not consider it by any means a sanguine Estimate. He had now had the opportunity of watching these Estimates for two or three years past, and was, therefore, able to speak with some knowledge of the subject. In reply to the question as to the Consolidated Fund charges, referred to by his right hon. Friend, he might say that last year that Fund was affected by the difference between what was estimated for miscellaneous purposes, and the actual expenditure; the Estimate being £287,900, and the actual expenditure being only £171,000. The explanation was, that it had been thought that it would, be necessary to pay a sum of £153,000 for the interest and commission on the Ottoman Guaranteed Loan of 1855 for one year, in consequence of a belief that that payment would not be made by the Ottoman Government. As a matter of fact, a portion of it—the greater portion—was paid; but still some £60,000 was left unpaid, and was provided out of that amount, the result being that the expenditure had been less than the Estimate by £115,000. He need hardly discuss the question of the Malt Tax, and with regard to the Sugar Duties, he believed they were fairly assessed, regard being had to the quantity of saccharine matter, and that the amount was an equitable one. It was a matter, however, which they desired to keep before them. As to tobacco, he did not think there had been a great falling off in the consumption in consequence of the duty; but he did fear there had been considerable moistening of the tobacco, which tended to injure the tobacco, and the Revenue too. In conclusion, he hoped that in view of the holidays the Committee would agree to adjourn the further discussion of the Budget to that day three weeks, that being a convenient day, he thought, for all to postpone it to.

MR. GOSCHEN

said, he would suggest to the right hon. Gentleman the Chancellor of the Exchequer whether Monday fortnight would not be a better day. As it was, with the Holidays intervening, the time was rather long between the discussion that night and the important debate which must take place on the Budget upon another occasion. He wished it to be clearly understood that there had been no discussion that evening; not that they thought that discussion unimportant, but because it was so very important it was held to be better to adjourn it until another more favourable occasion. Therefore, he trusted no one would misintrepret this abstention from discussion on this occasion. The hon. Member for Guildford (Mr. Onslow) had said that this Budget would be appreciated by the country. Perhaps the hon. Gentleman would have preserved a better neutrality, and conveyed better sense, if he had said that this Budget would be seen through by the country, and he ventured to suggest that that was what he meant by appreciation.

MR. ANDERSON

asked the amount spent on the Universities?

THE CHANCELLOR OF THE EXCHEQUER

said, £601,000. He said the Government appreciated Monday for their own Business, and he should prefer Thursday for the resumption of this debate.

MR. WHITWELL

said, that last Session the Chancellor of the Exchequer was good enough to answer a Question on the subject of the contribution to the expenses of the war by the Cape Government. He thought, before the Budget was finally settled, they should ascertain how much the cost of the war would be. The hon. Member for Blackburn (Mr. Briggs) had said that a certain sum had been raised; but they could hardly consider actual expenditure until the House knew something of the contribution it might fairly expect from the Cape. There was another point, more in the shape of an intimation than anything else, with reference to the question of the Afghan War expenses. When the Vote was taken, it was understood that the Indian Revenue should be charged with those expenses, although the Chancellor of the Exchequer said that he did not mean by that the Indian Revenue would be saddled with the whole of the charges. The question of the ultimate proportion of expense to both Governments seemed to him to have been left rather an open one. As that war had assumed a very different complexion to that which was anticipated when it was first undertaken, he thought it would be valuable for them to have full information on the subject before finally determining the Budget.

THE CHANCELLOR OF THE EXCHEQUER

said, he was not prepared at that moment to give information as to the final arrangements with the Cape as to their share of the expense of the war. Correspondence was still proceeding on the subject. As to the second question he thought a more suitable occasion for discussing it would be in connection with the Indian Budget.

Resolution agreed to.

(2.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the following Duties of Customs shall he charged on and after the 4th day of April 1879, on Cocoa or Chocolate, ground, prepared, or in any way manufactured, imported into the United Kingdom of Great Britain and Ireland, in lieu of the Duties now payable on Paste or Chocolate (that is to say):—

£ s. d.
Cocoa or Chocolate, ground, prepared, or in any way manufactured the lb. 0 0 2"

Resolution agreed to.

(3.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the following Duties of Customs shall be charged on and after the 4th day of April 1879, on Tobacco Manufactured, viz. Segars imported into the United Kingdom of Great Britain and Ireland, in lieu of the Duties now payable thereon (that is to say):—

Tobacco Manufactured, viz.:— £ s. d.
Segars the lb. 0 5 6"
MR DODSON

suggested that, as there was an alteration with regard to the duty on cigars, it would be well to defer taking that Vote.

THE CHANCELLOR OF THE EXCHEQUER

said, the House knew very well that where there was an increase of duty that was not the Vote to stop. If they deferred the Vote, all the cigars would be taken out of bond to avoid the duty.

MR. RITCHIE

said, he must express his acknowledgments to the Chancellor of the Exchequer in having yielded to his argument which be advanced last year, and given him what he then asked. He felt so strongly on the subject that he then ventured to press the matter upon the House. He felt that an injustice was being done to a large body of cigar makers in this country to so great an extent that he would be justified in trying to bring the Chancellor of the Exchequer to reason; and he was very glad to find that he had now come to a better frame of mind. He only regretted that his unfortunate clients, the cigar manufacturers, had been mulcted 2d. a-pound more than should have been demanded of them; but he did not suppose there was any use in asking the Chancellor of the Exchequer to refund the money. He personally felt in a very awkward position as being responsible for the only increase of taxation this year. He was glad to acknowledge that the Chancellor of the Exchequer, having been convinced that he had been in the wrong, had given all the reparation in his power.

MR. WHITWELL

said, he was extremely glad to hear that the Chancellor of the Exchequer had had his attention drawn to the way in which tobacco was adulterated at the present time. He was informed that tobacco was frequently adulterated not only 8 per cent, but as much as 50 per cent, the result being that the poor working man not only got a very inferior article, but also had to put up with the loss of 10 or 12 of his matches before be could get a light. Various matters were introduced into tobacco to assist the absorption of water. A general Order bad been granted, making no objection to the use of acetic acid in the manufacture of tobacco. This acid was sometimes pure; but in the manufacture of cheap tobacco the quality of the acetic acid was frequently deleterious, and the quantity of water absorbed made the tobacco really prejudicial to the health as well as to the pocket of the consumer. He hoped that the Chancellor of the Exchequer would extend his care to the tobacco consumers, to protect them from infusions of deleterious matter and the adulteration of tobacco by water.

Resolution agreed to.

House resumed.

Resolutions to be reported To-morrow;

Committee to sit again To-morrow.

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