§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ MR. RYLANDS
said, he must express his dissatisfaction with the course the Government had found it necessary to take in this matter. When the House 191 was in Committee of Ways and Means last Monday, he had complained that the pressure of taxation had been unnecessarily increased at a period of commercial difficulty, and when the local burdens of the country had been exceptionally heavy, by the measures which had been adopted by the Chancellor of the Exchequer for the paying off of £7,000,000 a-year of the National Debt. The right hon. Gentleman the Prime Minister had urged, in reply, that his (Mr. Rylands's) argument might be carried to the extent of meeting annual Expenditure by the increase of Debt. But that was by no means his contention. He quite agreed that current Expenditure ought to be met by taxation; but, when they were adopting large measures for the reduction of Debt, they ought to consider not only the amount to be reduced, but also how far the circumstances of the time justified the addition of considerable burdens upon the taxpayers of the country. The present time and circumstances rendered, in his opinion, the reduction of £7,000,000 a-year inopportune, and added seriously to the financial difficulties of the Government. He also contended that, before adding another 1d. to the Income Tax, which pressed unfairly upon the precarious incomes of industry, the Chancellor of the Exchequer ought to have dealt with the death duties, and imposed upon real property a succession duty equivalent in amount to the probate and legacy duties now levied upon personal property. But he went further, and maintained that the Government were responsible for the additional expenditure which had been incurred, and which was the occasion for increased taxation. The Prime Minister questioned his right to criticize the Expenditure of the Government, because be said—I think I remember a speech of the hon. Member for Burnley which, instead of being conceived in the spirit of the hon. Baronet the Member for Carlisle (Sir Wilfrid Lawson), recommended and advised a war policy. My hon. Friend must really take his choice; he cannot have the luxury of making speeches of that class, and, at the same time, the luxury of protesting against the increased expenditure.He (Mr. Rylands) was not conscious of having made speeches of a warlike tendency. No doubt, the Prime Minister referred to his speech of March 6; but in that speech there was not a word 192 favourable to warlike measures from beginning to end. He had commenced the speech by denouncing the bombardment of Alexandria, and had ended it by condemning the slaughter of 6,000 Soudanese at Suakin. He need scarcely say that he was sure that the misstatement of the tonour of his speech into which the right hon. Gentleman had fallen was entirely unintentional. It was quite true that he (Mr. Rylands) had recommended, in the speech in question, a decided policy. But what was that decided policy? Not a policy of war, but a policy calculated to prevent bloodshed and the expenditure of millions of money. His argument was that the bombardment of Alexandria and the battle of Tel-el-Kebir entirely changed the position of England as regards Egypt, and added enormously to the responsibilities of the British Government. All authority in Egypt had been shattered and the National movement for the development of Egyptian liberty had been destroyed. Under those new conditions, he had urged that we had no right to "scuttle out" of Egypt, or to leave the Egyptians to "stew in their own juice." He had contended that the British Government ought to recognize the facts of the case, and accept their responsibility fully and without disguise. They ought not to set up a fiction of an Egyptian power which did not exist. The Government disapproved of the advance of Hicks Pasha beyond Khartoum; but they shrank from the responsibility of stopping him. They ought to have stopped him. A decided policy then would have prevented the destruction of Hicks Pasha and his army, and would have saved Egypt and this country from subsequent difficulties of the most serious character. Then there was the Mission of General Gordon;—it was announced as entirely a Mission of Peace. Gordon was to proclaim the freedom of the Soudanese from the loathsome tyranny and exactions of their Egyptian rulers. He was entrusted with a Firman from the Khedive to all chief notables and people of the Soudan, announcing its evacuation by the Egyptian troops, and informing them that the Soudan would be left to them, and that its Rulers would be appointed from among them. That no doubt was a decided policy, and if thoroughly and consistently carried out might have been successful. But Gordon kept this im- 193 portant Firman of the Khedive in his pocket, and within a short period adopted warlike measures, talked about "smashing the Mahdi," and sent his steamers, full of soldiers, to shoot Arabs on the banks of the Nile. Why did not the Government recall Gordon, when they found that he was entirely reversing their policy of peace? That would have prevented the necessity of the enormous expenditure now being incurred to bring him back. And then as to the measures taken for his relief—there was an impression that a more decided and active policy would have greatly lessened the difficulties of the situation. Gordon himself had said that if Berber had not fallen into the Mahdi's hands, the Expedition up the Nile would have been a "pic-nic." But Berber had fallen, and the Expedition would have to be carried out in the midst of great difficulties and at a large expenditure. It was no doubt the fact that in the various discussions on Egyptian and South African policy, he (Mr. Rylands) had taken little or no part. He entertained towards the Prime Minister feelings of the highest respect and confidence, and he had been at all times unwilling to take any course likely to embarrass the Government; but he could not refrain from expressing the belief that if a more decided policy had been pursued in Egypt and South Africa, the expenditure now contemplated would never have been incurred.
§ SIR WALTER B. BARTTELOT
said, he had always found it was the case, as it was then, that though the hon. Member for Burnley expressed a preference for a decided policy, he had always supported the Government by his vote against the Opposition, when the latter had demanded a policy of that kind. He rose, however, for the purpose of saying that he objected to the proposals of the right hon. Gentleman the Chancellor of the Exchequer, on the ground that no intimation had been given of the extent of the liabilities which the country was now incurring in different parts of the world. £1,324,000 was asked for to defray the cost of the Egyptian Expedition; but he did not think that the policy of the Government with regard to Egypt was an honest policy. They had been told that £2,000,000 would cover all the expenditure up to the end of the present financial year. They had been told nothing of the enormous expendi- 194 ture that was now going on, and that would continue to go on, with regard to the Expedition to Khartoum. He hoped that if they ever got there, they would never leave it until they had established a firm and settled Government in it. If he said he believed that the expenditure for that Expedition would amount to £6,000,000, he was sure he would be within the mark. For the Expedition to Bechuanaland they were asked to vote £725,000; but the real cost of the Expedition would, he believed, be not less than £1,000,000. The sum which must be expended on the fortifications of our coaling stations and on the Navy could hardly amount to less than £3,000,000. £10,000,000 would during the year, therefore, be wanted in all, and yet the Government only asked for £2,000,000, saying that no more would be required until the end of the present financial year. He thought that the House ought not to sanction the addition of 1d. to the Income Tax without protest. In July, 1882, 1½d. was added to the tax to meet the cost of the war in Egypt. Being asked whether it was fair always to resort to the Income Tax in such emergencies, the Prime Minister acknowledged that the tax as at present constituted fell upon too limited a portion of the community, and that it would not be always right for a Government to look to the Income Tax alone in cases of emergency, and not to other sources of Revenue. The franchise was now about to be extended to 2,000,000 people, many of whom would not pay Income Tax. Were they, in the future, or would it be right or just that they should be, exempted from contributing to the cost of such a war as the war in Egypt, a country in which they were as much interested as the rest of the community? Were the Government going to tax only a limited class, which contained numberless persons who could not afford to be so mulct? The 1d. tax thus imposed was really a 2d. tax for the half-year; and, in the present state of agriculture and industry, its effect would be severely felt. He hoped that the right hon. Gentleman the Chancellor of the Exchequer would state to the House that, should he again have to ask for money in exceptional circumstances, he would not depend upon the Income Tax alone, but would find some other sources of Revenue.
§ SIR JOHN LUBBOCK
said, that while he thought the right hon. Gentleman the Chancellor of the Exchequer was to be congratulated on having met financial demands by boldly increasing taxation, he could not agree with the hon. Member for Burnley (Mr. Rylands) in his remarks about the reduction of the National Debt. His hon. Friend said we must consider the time and amount. Now, since he (Sir John Lubbock) had had the honour of a seat in that House, he had never known those who opposed the repayment of Debt think that the time had arrived when this should be done. But if that view was to prevail, the Debt would never be reduced; and if we borrowed in times of war and did not repay in times of peace, there could be but one end—namely, national bankruptcy. Then we came to the amount. His hon. Friend said that £7,000,000 a-year was too much. To himself it seemed very moderate. At that rate it would take us over a century to repay our Debt. He admitted the importance of the question which had been raised by the hon. Member for Burnley with regard to the death duties, though he could understand that the Chancellor of the Exchequer might not consider this a fitting opportunity to make any statement on the subject. As to Egypt, he had always maintained that we should either have left the country after Tel-el-Kebir, or have taken a more decided course, if it was once understood in Egypt that there was to be a good and just Government, there would be no difficulty about Egyptian finance; and until that was understood, they would find that they would get deeper and deeper into these difficulties. He would not, however, pursue the subject which the hon. Member, he presumed, had raised principally as a personal explanation. He was anxious for a word of explanation from the Chancellor of the Exchequer on one point. He presumed that the additional 1d. of Income Tax was to be raised under exactly the same conditions as the previous amount. He had no doubt on the subject; but there was—perhaps only an apparent—ambiguity, and it would be satisfactory if the right hon. Gentleman would set the matter at rest.
§ MR. ONSLOW
said, that the House and the country would expect the Chancellor of the Exchequer to state to-night 196 exactly how much he thought our liabilities would be, and whether the sum now asked for would carry the Government over the present financial year. They were now going to vote sums for two Expeditions, and they had good authority for believing that a further amount would be required for Egypt. It would be, therefore, more honourable for the Chancellor of the Exchequer to say at once what our liabilities were likely to be. The noble Marquess the Secretary of State for War (the Marquess of Hartington) had stated that there was every reason to expect that the Expedition up the Nile would complete its operations and return before the hot season, and either the noble Marquess or some other Member of the Government had said that they hoped to leave a settled form of Government behind them at Khartoum. If that was the intention of Her Majesty's Government, it would take many years and many millions of money before it could be done. Did anyone suppose that, with a number of tribes opposed to one another in the country, we could establish a settled form of Government there before the hot season in March, supposing that our troops were to get to Khartoum in January? Surely, the right hon. Gentleman opposite (the Chancellor of the Exchequer) must see that the sum now asked for would be enormously exceeded. He (Mr. Onslow) was one of those who thought that the money to meet the cost of the Expedition was a burden which ought not to fall on the shoulders of one particular class, and that a class not able to bear it. No doubt, we must do all we could to bring back General Gordon, at whatever cost, for we all looked upon him as a hero; but those sitting on that (the Opposition) side of the House maintained that, if the Government had taken a bolder course, if they had been guided by wiser counsels, and if there had not been dissensions in the Cabinet, all this expenditure might have been avoided. The arrival of our troops at Khartoum, whether at the end of this year or the beginning of next, would be a matter of enormous difficulty—he doubted whether they would ever get there at all—and the cost would be very great. Of course, the Income Tax was a very easy mode of getting the money—they had only to put on the screw and the thing was 197 done; but it was preposterous to think that if more money was wanted, the whole was to be obtained from the Income Tax.
§ SIR GEORGE CAMPBELL
said, he was rather surprised to find, as was the case, that the objections to this proposal should come from the advocates of a "spirited foreign policy," the very persons who were always urging the Government to do that for which this money was required. Those who were in the habit of voting for fighting should pay the taxes required to be levied for that end; but he denied that the working classes of this country were in favour of war; on the contrary, they were in favour of arbitration, for they had not the same interest in these Egyptian wars as those who paid Income Tax. He hoped when they had an extended franchise, and a more complete representation of the people in Parliament, that they should be much less likely to get into these wars than at present, and more inclined to enter on an era of peace. He believed that these wars were mostly made by the middle classes—by the newspapers and their supporters—who paid the Income Tax; and, therefore, he was very glad that the tax was laid upon these people. He hoped that the additional 1d. would suffice, but a good deal more might be required; but he had no doubt that, if England established a civilized Government in Khartoum, the ratepayers would have to pay heavily for it, and that a further 2d. would have to be added to the Income Tax. In that case, he trusted that the Chancellor of the Exchequer would not shrink from putting on 2d., if need be. The lower middle classes already bore more than their fair share of taxation, and he had no wish to see the Income Tax go to a lower class than it did now.
§ MR. SALT
said, he entirely demurred to the statement made by the hon. Gentleman who had just sat down (Sir George Campbell) to the effect that the Members of the Opposition were responsible for the war in Egypt. It was both unfair and ridiculous. He maintained that when the Government of the country was involved in war, they ought to ask, and they had a right to ask, for the generous support not only of their Friends, but of both sides of the House. The Opposition might not be able to give their assent to the policy of the Go- 198 vernment; but Her Majesty's Ministers had a right to ask for help from both sides in the circumstances he mentioned, and they ought to receive that help. It was in that spirit that he met the claim of the right hon. Gentleman the Chancellor of the Exchequer for aid. He quite agreed with a great deal that was, said by the hon. Member for Burnley (Mr. Rylands). The question really before the House at that present time was, How were they to meet the Expenditure, and were they meeting it in the best way? In that matter they must trust very much to the Chancellor of the Exchequer; and although he (Mr. Salt) felt, and the right hon. Gentleman must also feel, how grievous a thing it was, at a time when trade and agriculture were in a depressed condition, to call for 2d. in the pound increase of the Income Tax, still, when the Chancellor of the Exchequer stated that it was the best, and perhaps the only, way he had of raising the money required at the moment, they must accept what he said. They might condemn and dislike the policy of the right hon. Gentleman, but they must for the moment support him. With regard to the general question, he (Mr. Salt) did not wish to complain so much of the Expenditure as the quality of the Expenditure. They were constantly saying that the Expenditure was too large—larger than it was five, 10, or 20 years ago—but the real point was not what was the Expenditure for the moment, but what was the amount that was required for the interests of the country for the time being. The Government ought to show—and he did not think that they had sufficiently shown—that the Expenditure proposed was really necessary for the wants of the country for the year for which it was asked. Would the proposed Expenditure increase the trade, strengthen the resources, and promote the interests of the Empire. But this was not the moment to press a point of that nature, and he only mentioned it to say that, when the proper time came, he should call attention to it. There was another point of a general character, and that was whether the money asked for was sufficient. He was doubtful in the matter, and almost wished that the Chancellor of the Exchequer had asked for the full amount at once. The right hon. Gentleman, no doubt, 199 had the facts at his disposal; but, still, he (Mr. Salt) could not help feeling that the amount was far from sufficient for the purpose for which it was required. He could only say that if the sum now asked for was sufficient, it would be very much to the credit of the Chancellor of the Exchequer, and would give satisfaction to most hon. Members. He should like to put a case with reference to the 2d. to be added to the Income Tax. A Company paid, in the first half of the year, 4 per cent, and in the second half 6 per cent. The 4 per cent, they might say, had been earned up to the 30th of June, and the 6 per cent up to the 31st of December, 1884. Under those circumstances, what was the Income Tax upon the second half of the year? It was not equal. That was a matter 'which was not provided for in the Bill. Were they to pay upon 4, 5, or 6 per cent for the half-year? There were other points of that kind which he did not wish to bring before the House at that stage, but which would come up for consideration in Committee. The larger question, however, as to Expenditure at the present time and Expenditure in the future was one of very great importance.
§ MR. ILLINGWORTH
said, he was of opinion that it was very clear that they knew very little of the amount of the expenditure which this country was incurring in Egypt as regarded this Expedition up the Nile. He most heartily protested against the Protectional suggestion which had been thrown out by several Members on the Opposition side. He did not think they could realize how highly impolitic and against trade interests and against commerce generally, it was to put a tax upon the necessaries of life. Neither did he think that any Chancellor of the Exchequer, who found himself in the position of the right hon. Gentleman who now held the Office, would be able to raise the sum that was required from any other tax than the Income and Property Tax. There was a strong feeling that the taxes paid by the humbler classes were in excess of the means they possessed; and the Income Tax must really be called upon to bear a great deal more before the Government placed further burdens upon the necessaries of life of the people at large. If the votes of hon. Members were analyzed, he believed it would be found that those who voted in support of war- 200 like expenditure were mostly connected with the counties and the small towns, and the county Members were not in touch with the working classes.
§ MR. H. S. NORTHCOTE
said, he wished to join in the protest of the hon. Members for Stafford (Mr. Salt) and Guildford (Mr. Onslow) against the doctrine of the hon. Member for Kirkcaldy (Sir George Campbell) that the Conservatives were, in any way, responsible for the expenditure upon the Expedition for the relief of General Gordon. That Expedition was one for which the Government must be held responsible. When they sent General Gordon out, they took the 100 to 1 chance that he might, by his personal presence and prestige, insure the pacification of the country. Had he proved to be able to do so, he would have added enormously to his own credit and reputation, but a certain amount of the credit would have fallen to the share of the Government; but they had no right to anticipate his success, and they had only themselves to thank if he had failed in the object for which he was sent out. He hoped the Chancellor of the Exchequer would give some indication of what the probable cost of the Expedition would be, in the event of its not being brought to a happy conclusion before the next hot season set in? A good deal had been said about the lavish expenditure and insufficient Estimates of the Conservatives for Abyssinian, Afghan, and South African Wars. While the Government were in a strong position, it would be much to their advantage if they would confide a little in the public, and let them know in what liabilities they might be involved in the course of the next few months. He wished to subscribe to the doctrine that the cost of such Expeditions ought not to be borne by the middle and the upper classes alone, upon whom the Income Tax fell. The Government depended upon the support of the working classes, and it was very unfair that they should "run with the hare and hunt with the hounds." He thought it a dishonest policy to ask the working classes to support a particular line of action in foreign affairs, and then to put the cost entirely upon other classes of the community. If the support of the working classes was worth anything, they would make a sacrifice for the policy of the Government. A Conservative Government did 201 not shrink from putting the support of the working classes to the test by an addition to the duty upon tobacco. If the Government wished us to believe that they were supported by working men, let them call upon working men to pay something for the foreign policy of the Government.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS),
in reply to the suggestion of his hon. Friend the Member for Burnley (Mr. Rylands), that the expenditure for the Soudan Expedition might have been provided for out of the Sinking Fund of the National Debt, said, that it was quite true that under the Act passed by the late Government, the net charge for the interest and Sinking Fund of the Debt would be rather more than £28,000,000 this year and a little over £27,250,000 next year. But a quarter of a century ago, when the population of the country was one-quarter less than it was now, and when the trade of the country was not half of what it now was, the charge was £28,500,000. If we were now to reduce the charge for the Debt, we should be in the unsatisfactory position of setting less aside than we did a quarter of a century ago with greatly increased Means and Revenue. If the Prime Minister had misunderstood the speech of the hon. Member for Burnley last Session, his right hon. Friend had erred in common with others, for the speaker, who on that occasion followed the hon. Member for Burnley, began by saying that he had come out as a "real, rampant, roystering Jingo." He (the Chancellor of the Exchequer) did not believe that of the hon. Member; but there could be no doubt about the impression produced by the speech he made on that occasion. The suggestion that other taxes besides the Income Tax should be resorted to had been answered already quite conclusively. This was the month of November. How was it possible, within three or four months of the end of the financial year, to disturb our taxation by putting a temporary tax upon any article of consumption? Was there to be a sugar duty, or an increased tea duty? What was to be done in lieu of increasing the Income Tax? That was a very pertinent question, and it was not to be got rid of by platitudes, or by merely suggesting that something else should be done. The truth was, 202 that any Government, under the same circumstances, must resort to the Income Tax, as the Conservative Government did in 1867–8, in the month of November, for the Abyssinian War. Towards the end of the year there was practically no alternative. Hon. Gentlemen had asked questions as to the total expenditure for the Expedition. It was not his duty, and that was not the time—when it would be possible to discuss the prospects of this expenditure in future years. If there was any time for discussing them, it was when the expenditure was voted in Supply. His business was, when the House had voted what was considered necessary for this financial year, to ask the House how it would provide for that amount; and he said distinctly that, for this financial year, he believed that the amount they were asking as the proceeds of the 1d. Income Tax was sufficient to meet the charge of about £2,250,000, allowing for the small improvement now visible in the Revenue. As to whether £2,250,000 was a fair amount to take as the probable charge for the present financial year, that was the estimate given by the Departments and criticized by the Treasury, and so far as drafts on the Treasury Chest indicated the probable total charge, they considered the estimate was a fair one.
§ MR. ONSLOW
said, that the right hon. Gentleman talked of the drafts that had already come in; but the argument he had to meet was as to what would be spent up to March.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)
said, that they had two things to go by—namely, the rate at which drafts had come in and might be expected to come in, and the estimates of the Department; and based on those data, the amount they had asked for was enough. Then he was asked, whether he thought that the only source of taxation to which they should resort when they wanted large sums for military purposes was the Income Tax; and his hon. and gallant Friend (Sir Walter B. Barttelot) asked him whether he should in future depend on that impost, while the hon. Member for Guildford inquired what he would do in his next Budget. Now, he must keep his next Budget to himself; but he entirely agreed with what the Prime Minister said in 1852—namely, that the Income Tax was a 203 simple weapon which they must use for dealing with warlike expenditure, but that it was not right to go to the Income Tax alone, when a large expenditure was being incurred, except in cases of emergency towards the end of a year. The hon. Member for Exeter (Mr. H. S. Northcote) had held up what had been done by the late Government as a pattern to them. Now, the late Government raised certain sums for Military Expeditions by taxation, and still larger sums by incurring Debt; for, instead of paying their way as they went, they threw on future years about £8,000,000 or £9,000,000. The whole amount that was raised by indirect taxation by the late Government for those wars was a flea-bite.
§ MR. H. S. NORTHCOTE
explained that, in the reference he had made, he had merely spoken of the principle that was followed.
THE CHANCELLOR OF THE EXCHEQUER (Mr. GUILDERS)
said, that practice was much better than principle. The whole sum raised by the additional Tobacco Tax was as nothing compared with what was raised by the Income Tax and what was borrowed. The hon. Baronet the Member for the University of London (Sir John Lubbock) had asked whether there was any difference between the incidence and the machinery of the present Income Tax Act and the new Bill. It would be a little difficult to discuss these technicalities on the second reading; but he would explain any point, which might appear novel, in Committee. With regard to trading profits, as to which a question had been asked, there would be no practical difficulty in assessing them, as the tax on them was practically paid in the first quarter of the calendar year. They would then be charged only 6d. for the whole year. In conclusion, he hoped that the House would now give the Bill a second reading.
§ Question put, and agreed to.