§ Order for Committee read.
§ Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."
§ MR. J. G. HUBBARD,who had a Notice on the Paper to the following effect:—
That, in view of the continued and aggravated imposition of the Income Tax pressing with special severity upon land and industry, this House is of opinion that the adjustment of 212 the Tax and its equitable administration should he no longer delayed.said, he would have abstained from asking the indulgence of the House for the consideration of an unworthy subject, or if he did not feel convinced that the statement which he should make was one founded upon facts and sustainable by argument, or unless the scheme which he had formulated was very different indeed from that which had been called a visionary project. He felt it his duty to call the attention of the House to a very important portion of the National Revenue of the country—the Income Tax—and he desired at the onset to refer to the powerful assault which was made upon his views by the Prime Minister a short time ago. The right hon. Gentleman did him the credit to say he was endowed with great courage and persistency. It was very easy to be courageous and persistent when he had got a perfectly good case. The speech which he made on this subject some months ago was not, as the Prime Minister represented it, a mere echo of a speech he made 20 years ago. Since that time he had learned a good deal from the Prime Minister himself, from observation, and from friendly communication with the officials of the Inland Revenue Department, and the consequence was that the scheme which was laid on the Table of the House last Session was very different indeed from the one which was attacked by the Prime Minister in the year 1861. As a matter of fact, while his (Mr. Hubbard's) speech was an exposition of an improved scheme, the speech of the Prime Minister was nothing more than an echo of the speech he made in 1861. The right hon. Gentleman absolutely ignored the whole of the changes which had been induced by circumstances during the last 20 years. His right hon. Friend in the course of his remarks took occasion to charge him with having enlisted the good will and support of the landed interest by concealing the fact that his scheme, if carried out, would involve considerable loss to the landed interest. The right hon. Gentleman implied disingenuousness; but the amende which he subsequently so unreservedly and courteously made more than compensated for the pain which the charge had given him (Mr. Hubbard). But the allegation remained—"that the 213 scheme which he proposed would inflict injury on the landed interest." The right hon. Gentleman the Prime Minister, when he made that allegation, alluded to the circumstances that he had many years before remarked upon, the very suffering condition of the landed interest. He had remarked that the real property of the country—houses and land—must be considered as encumbered to a certain extent with charges either for mortgages or settlements, and he concluded that according to his (Mr. Hubbard's) plan land would be charged with no less than 8½d. at a time when incomes coming under Schedule D could only be charged at the rate of 5d., thus throwing upon land an extra 70 per cent Income Tax. The Prime Minister had instituted inquiries into the amount of outgoings and charges for maintenance both for land and houses, and the conclusion at which he arrived was that 16 per cent might be taken as representing the outgoings on land and houses under Schedule A. Now, he (Mr. Hubbard) had taken, up the Inland Revenue Return of 1883, and he found this result—that Schedule D being assessed under the scheme which he proposed at 5d., while Schedule A would only have to pay 4¾d., that was to say, instead of 100 it would have to pay 95, or instead of being charged 70 per cent more than Schedule D, as calculated by the right hon. Gentleman, Schedule A would be charged 5 per cent less. Now, that was a very important discrepancy and inaccuracy in the statement of his right hon. Friend the Prime Minister; but the statement had gone forth to the world, and he desired that this correction should go forth also. He asserted deliberately and confidently in the House of Commons, that under the scheme which he proposed, Schedule A, so far from being charged more heavily than Schedule D, would be charged considerably less; less in the aggregate, but how in individual cases? The facts alleged by his right hon. Friend induced him to look very closely into the question of how individual proprietors were affected by assessment upon the gross, and he had found this most distressing and inequitable result. An estate of £2,000 a-year would, if 10 per cent were allowed for outgoings, 214 yield a net rental of £1,800. If the estate were mortgaged for £1,600 a-year, the residue, £200, would alone come into the pocket of the proprietor. But what about the Income Tax? The mortgagee would pay his tax upon the £1,600 which he received, while the actual owner would be required to pay, not upon the residue, £200, but upon £400; the tax would not be levied upon the £1,800, but upon the gross value. Now, that was one of the consequences of the present most unscientific, irregular, and inconsistent way of charging the Queen's taxes. Instead of following the scientific and the well-accepted principle adopted in local taxation—namely, of charging on the rateable or net value, the Queen's taxes were levied upon the gross value. Why did he lay stress upon this fact at the present moment? Because at the present time land was in a condition of depression it never was in before. In North, South, East, and West, landowners were in straitened circumstances, and farms had been very much reduced in rent, and, in many cases, had entirely gone out of cultivation. Under the circumstances, it was a cruel thing on the part of the Government to increase the operation of the tax, which, even if it operated equally, was heavy, but when it operated unequally, was oppressive and intolerant. He maintained that a tax which operated in the way he had described ought not to endure. But was that all the mischief? Of late years, rents had been so greatly reduced that the present rental of many estates hardly sufficed, indeed in some cases did not suffice, to pay interest on the mortgage. The consequence was that when they charged the owner of the property upon the nominal rental, they were charging him upon his outgoings, upon money which he never received—in fact, they were perpetrating a simple act of confiscation. That was his case, and that was the fact which he wished to enunciate in the Resolution of which he had given Notice. He objected to landed property being taxed upon the gross rental. The remedy for the evil was a very simple one; all that was needed was to change the word "gross" in the Income Tax Bill to "rateable value." No one could contest the grievances he had stated. So far from the 215 Prime Minister having questioned them, or attempted to mitigate them, he had accepted them to the fullest extent. He (Mr. Hubbard) had described the present administration of the Income Tax as unjust, unequal, oppressive, favouring wealth, and oppressing poverty; and the Prime Minister said that he (Mr. Hubbard) had not exaggerated—indeed, the right hon. Gentleman had recently declared in emphatic terms that the anomalies of the present Income Tax were cruel. But then, when one asked for a remedy for the evil, the Prime Minister said there was none; there was no remedy possible, and inequalities were incorrigible. That was a strange doctrine to be laid down in the 19th century, and in this highly cultivated Legislature of Great Britain. Instead of demonstrating that the scheme which he had proposed was an impracticable one, the Prime Minister had merely told him that however desirable the remedy or the adjustment might be, it had never yet been successfully carried out. There had been great Ministers—there was Mr. Pitt, Sir Robert Peel, and the present Prime Minister himself—and yet none of them had as yet contrived a scheme which would apply a remedy to the evil which they acknowledged to the full existed in the present system. He did not want to compare his powers upon the subject with those of the Prime Minister. The right hon. Gentleman was a man of great intellectual power, of immense and unbounded knowledge, but he was not infallible; the humblest artizan might be able to accomplish in his own peculiar art what he had in hand much better than the most scientific and most learned man in the world. Upon this question he (Mr. Hubbard) did claim to have acquired some pretence to a knowledge of the subject; be had studied the subject most carefully for at least 30 years, during which time he was afraid he had been carrying on what had been very like a controversial duel with his right hon. Friend the Prime Minister. The, position of the right hon. Gentleman, was a peculiar one. From the day on which, in this House, Mr. Disraeli brought in his Budget in which he recognized the distinction between precarious and real property, and the present Prime Minister taunted him with 216 the bad preparation of the Schedule, and beat him and turned him out of Office—from that day the right hon. Gentleman would never entertain the subject of a revision of the tax, or recognize the difference between the several classses of income. If the Bill brought in by himself and others were placed before the Heads of the Inland Revenue, he undertook to say it would make the foundation for a thoroughly good working tax on equitable principles. His right hon. Friend might taunt him (Mr. Hubbard) with the scantiness of his following, but he could quote a very important authority, and that was the House of Lords. The House of Lords, by a formal Judgment, not very long ago, decided that which was the crucial principle in the whole of his contention; the House of Lords determined that "annual value" for the purpose of assessment for taxation or rating was net or rateable value. Apply that to the subject before the House, and his contention was satisfied. He only had to make this appeal to the Government in all friendliness. Do not let them any longer persevere in setting aside one of the most important subjects they could entertain. The subject was far more important than any of those which had occupied their attention for days and weeks past. The question was whether they should levy a very important portion of the Revenue of the country upon principles which were equitable, which would insure a friendly reception by the taxpayer, and which would deliver both the taxpayer and the tax-collector from the miseries and immoralities which accompanied the enforcement of an oppressive and unjust impost. It had been suggested in the course of discussion on this question that he should go back for many centuries, but he would only go back two. Two hundred years ago, Galileo was driven to prison by the Inquisition for maintaining his thesis that the earth moved; and while submitting to the irresistible tyranny of the Inquisition, he left their presence, exclaiming as he went—"E pur si muove"—"The earth moves all the same." He adopted that attitude. He did not intend to move the Motion of which he had given Notice, but would leave the subject to the sense of the House and the country, trusting that before long 217 some measure would be adopted which would relieve the Government from the humiliation of year by year reimposing on the country a tax which they admitted was accompanied by many vices, a tax which favoured the rich, oppressed the poor, demoralized the taxpayer and the tax-collector, and, as his right hon. Friend the Prime Minister said, was a tissue of cruel anomalies.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)My right hon. Friend opposite always speaks with so much clearness that it is a pleasure to hear him, and, therefore, I must confess that I do not regard the half-hour which he has spent in developing his plan as altogether a loss of time; but, at the same time, I must remind him of the position in which this question stands. My right hon. Friend brought forward this Motion—although it was then couched in different words—in April last, in a speech every word of which he has repeated on the present occasion. His Motion on that occasion became the subject of an interesting debate, and my right hon. Friend himself admits that the Prime Minister answered him with great force. Having heard the Prime Minister, and after full debate, the House divided, and my right hon. Friend's proposal was defeated by a large majority. And now, in the same year, my right hon. Friend thinks it necessary to raise the question again in order that he may, in the absence of the Prime Minister, answer the Prime Minister's former speech. This is a proceeding in which the right hon. Gentleman is in his technical right; but I appeal to him and to the House whether, when a question has been debated so very recently as this, it is usual to raise precisely the same issue merely by taking advantage of a proposal to add 1d. to the Income Tax, and to discuss the whole incidence of the tax on such a Motion, although the Mover knows that, inasmuch as the 5d. Income Tax is raised according to the system which has been in force for 40 years, it would be impossible to raise the additional 1d. on any other system? So that we have, in fact, listened to the mellifluous tones and pleasant observations of my right hon. Friend for half-an-hour, in order that he may have the luxury of answering the First Minister in his absence.
§ MR. J. G. HUBBARDI did not anticipate, and I lament, the right hon. Gentleman's absence.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)Then I suspect my right hon. Friend stands alone in expecting the First Minister to be here. It was well known that we were to meet to-day merely as a matter of form to take a stage of the Tax Bill. The whole burden of my right hon. Friend's speech is an attempt to answer the Prime Minister, and he complains that the Prime Minister based his speech on arguments derived from the discussion in 1861, and that he was not possessed of the facts and circumstances connected with the Income Tax which had been developed since that date. Now, nothing has occurred since the Select Committee of 23 years ago of which the Prime Minister had not the most complete knowledge, and, practically, no point has been raised now which was not before that important Select Committee, which, I may add, was moved for by those who wish to make the change now proposed, but which reported against any such change. There was one novelty in the speech of the right hon. Gentleman. He said he would appeal from the House of Commons to the House of Lords, and he said that the House of Lords had come to a decision which was in favour of his plan—namely, that the "taxation" of property should be upon the net and not upon the gross. But the decision of the House of Lords had nothing whatever to do with taxation. It referred to the construction of the Water Acts, and the Lords decided that the words of those Acts, properly interpreted, made the charge to be paid by householders for water based, not upon the gross value, but upon something less. It had nothing whatever to do with taxation. The very object of this Motion is not to interpret the law, but to alter the law. Therefore, when my right hon. Friend says that the decision of the House of Lords was in his favour, I challenge that altogether.
§ MR. J. G. HUBBARDI stated that the decision of the House of Lords was in favour of the principle I was contending for.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)But the House of Lords was not deciding principles. 219 In its judicial capacity, it was interpreting the words of an Act of Parliament; and it said of a particular Act that it levied the water-rate, not on the gross, but on something less than the gross value of the house supplies. Therefore, the decision of the House of Lords has nothing whatever to do with the present question. But I am not going over the whole of this long argument over and over again. It was so fully discussed before that it would be wasting the time of the House to go over it again. I will answer carefully, however, that part of the speech of my right hon. Friend which claimed, in opposition to the declarations of the Prime Minister last Session, that his proposal would lead to an alleviation of the burdens upon land. The Prime Minister stated last Session, in the course of an unanswerable speech, that it would not. To-day my right hon. Friend has simply repeated his old argument, but has altogether passed by the Prime Minister's answer. The proposal of my right hon. Friend is embodied in his Bill to amend the administration of the Income Tax, which he brought into the House of Commons on the 6th of February last year. He there states clearly what are the deductions he would allow on the different Schedules of the Income Tax, so as to arrive at the net assessment which he proposes. In the 1st Schedule of the Bill he says there should be deductions of 5 per cent on land without buildings, and 10 per cent on land with buildings, and other deductions are set out. Then, in the 2nd Schedule, he sets out the percentage of deduction which ought to be made from the profits of professional gentlemen, traders, and others. And he not only gives the principles, but he gives illustrations of these deductions, so that we may more easily see what would be the actual result. I have taken pains to ascertain what would be the effect of these proposals, and I venture to think the House would be interested in seeing how far it would justify the contention of my right hon. Friend. I will assume that the amount to be obtained from the Income Tax is the amount we propose to obtain this year—that is to say, about £12,000,000 sterling. It would be obtained, on the present system, by an Income Tax of 6d. in the pound. Under that computa- 220 tion, the amount to be paid by land would be £1,575,000; the amount to be paid on houses would be £2,775,000; the amount on occupation profits would be £385,000; the amount to be paid by traders would be £5,775,000; about £1,000,000 on dividends, and about £675,000 on salaries. These figures altogether make up a trifle over £12,000,000. Now, we will suppose the same amount to be levied under my right hon. Friend's system. It would require an Income Tax of 7d. in the pound, instead of 6d. Let us see what the result would be. The amount to be paid on land would be £1,691,000, as against £1,575,000, so that the landowners would have to pay £116,000 a-year more than they do at present. The tax on occupation profits would be £380,000—about the same as now. House property would yield £2,595,000, as against £2,775,000; trade, £5,364,000, as against£5,775,000; dividends and salaries, £1,924,000, as against £1,675,000, and the total produce would be just £12,000,000. Therefore, if my right hon. Friend's proposal were adopted, there would be a much heavier charge on land, and on all persons who receive dividends or fixed salaries; and, on the other hand, those who receive their incomes from trade would pay so much less. I ask those who will be disposed to vote with my right hon. Friend, are they prepared, in re-adjusting the Income Tax, to put a heavier burden on land or the recipients of salaries or dividends? Because the direct effect of the change would be to place a heavier charge on them, if we attempt to alter or amend the admitted anomalies of the Income Tax by picking out the particular anomalies to which my right hon. Friend has referred, and adjusting the Income Tax according to his plans. I say nothing of the other anomalies, which are far greater than those mentioned by my right hon. Friend. It is a consideration to which the attention of the House and of those who take an interest in these subjects ought to be very carefully drawn. I will repeat here what the Prime Minister said last Session. In one word, the Income Tax is full of anomalies. The Prime Minister has shown his sense of that, because it was he who went to the country proposing to repeal the tax altogether. The country did not respond to that appeal, 221 and the Income Tax is still one of the principal sources of our Revenue. But I say, as he said, that you will introduce or leave many more and worse anomalies if you deal with the matter in the way proposed by my right hon. Friend. If the Income Tax is to be a part of the permanent law of the country, it must be taken with its anomalies, such as they are, and the particular plan which my right hon. Friend proposes would throw a larger burden on the land. On those grounds I think his proposal is not likely to be acceptable to the House. I had made up my mind to say as few words as possible in reply, and I hope the House will admit I have confined my remarks within as small a compass as possible. The figures which I have given I should like to see criticized, but they are such as, in my opinion, are fatal to the proposal of my right hon. Friend.
§ MR. J. G. HUBBARDsaid, the Chancellor of the Exchequer had forgotten to make the distinction that a very large proportion of both lands and houses belonged not to owners at all, but to capitalists. If that was taken into account, the right hon. Gentleman would find a very different result.
§ Motion agreed to.
§ Bill considered in Committee, and reported, without Amendment; to be read the third time upon Monday next.