WAYS AND MEANS—FINANCIAL STATEMENT.—COMMITTEE.

HC Deb 30 April 1885 vol 297 cc1129-253

WAYS AND MEANS—considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS),

in rising to move the 1st Resolution, said: Sir Arthur Otway, I will commence by asking the Committee to forgive me if, on this occasion, I do not give them as many figures in comparison of details as it has been generally the custom of my Predecessors to give. I shall have a long Statement to make to the Committee, and I would, therefore, as far as I can, shorten those parts of it which hon. Members will be able to obtain for themselves from the Papers which are now in their hands.

I will first carry back the Committee to the Statement which I made on the 17th November last, when I asked the House to give us additional Ways and Means in connection with the military operations which had been undertaken in the Soudan. I gave, on that occasion, the result up to that time of the Budget Estimates of Revenue and Expenditure, including certain additional Estimates connected with the Civil Service voted after the Budget, but excluding special War Votes; and I stated that the surplus, so corrected, might be taken at £106,000. But I said that the House had also passed a Vote of Credit for £300,000, and had later voted £1,324,000, in the shape of additional Naval and Military Estimates for the Soudan Expedition, and £725,000 for the Bechuanaland Expedition, so that, altogether, there had been an approved expenditure of £2,349,000 beyond the Budget Estimate. Allowing for some improvement in the Revenue, I calculated the deficit roughly at £2,000,000; which we proposed to meet by an additional Income Tax of 1d. in the pound, producing £1,200,000 in the last financial year, and £720,000 in the present financial year.

I was pressed, on that occasion, on two points. I was asked, in the first place, whether £2,349,000 would, in my opinion, probably suffice for the expenditure in connection with the Nile Expedition and Bechuanaland, and I was also asked for further information as to the probable improvement in the Revenue for 1884–5. With reference to the first, I stated that there had been very extravagant rumours in the Press as to the expenditure then going on; but I estimated that the amount named by my noble Friend the Secretary of State for War (the Marquess of Hartington) and by my hon. Friend the Secretary to the Admiralty (Sir Thomas Brassey), and voted by this House, would be sufficient. As to the second question, I stated that I must decline to name any particular figure, but that I thought we might look for a reasonable and a fair improvement.

And now, Sir Arthur Otway, the Committee will be glad to know what is the outcome of the Revenue and the Expenditure for 1884–5. In the first place, the expenditure on the Nile Expedition and in Bechuanaland has not exceeded, but has fallen short of, the Vote taken last year. On the other hand, two circum- stances have largely disturbed my anticipations. Three months after I spoke Khartoum was betrayed, and the Expedition to Suakin was in consequence ordered. That was one source of very large expenditure, affecting the Estimate I had made in November; and the other disturbing cause was the great delay in settling Egyptian finance, and in the consequent issue of the loan out of which a large amount of money due to the English Treasury would be paid. This, we had in November no reason to doubt, would come into the Exchequer during the course of the last financial year. The amount so due was, in all, no less than £544,000, and consisted of £ 340,000 for the Army of Occupation, and £200,000, a-year's interest on the Suez Canal shares. On the other hand, as against these disappointments, the Revenue has come in much better than we could have expected; and this, I may say, is mainly due to the energy and efficiency of the officers of the Inland Revenue Department, but partly to the fact that before the end of the financial year large payments were made at the Custom Houses in anticipation that increased rates of duty would be imposed on certain articles. The actual deficit for the year 1884–5, the detail of which I shall give in a few minutes, was £1,050,000; and if we add to this the amount of the estimated Revenue paid in anticipation of increased duties, say about £300,000, we may take the corrected deficit of last year at £1,350,000. But the sum due from Egypt, the payment of which has been postponed to this year, was £544,000, and the actual expenditure in connection with the Suakin Expedition was £964,000, giving a total of £1,508,000. Therefore, but for the betrayal of Khartoum and the consequent Expedition to Suakin, and for the delay in the payment of the money due from Egypt, my nominal surplus for the year would have been £458,000, and the real surplus, allowing for the £300,000 paid in anticipation of increased duties, would have been £158,000. The Committee will, of course, recognize that I could not possibly, in the month of November, have based any Estimate upon the betrayal of Khartoum, which did not occur until the following January, or upon the postponement of the Egyptian payments, which we then fully expected to receive before the end of March; and The Chancellor of the Exchequer that, therefore, it would have been absolutely impossible for me to have asked then, on these accounts, for additional taxation in Committee of Ways and Means. It will be, I repeat, satisfactory to the Committee to see that, but for the unforeseen circumstances to which I have alluded, we should have had in 1884–5 a nominal surplus of £458,000, and a real surplus of £158,000.

From these general considerations I will now pass to the salient features of the Expenditure and the Revenue of 1884–5. In comparing both with those of 1883–4 there is one item which I must carefully eliminate—namely, the Indian Home Charges, which we now, wisely I think, omit from both sides of the account, I will take, first, the permanent charge for the Debt, which was £28,884,000; being somewhat less than that of 1883–4 by £90,000, but the same as my Estimate. The interest on local loans was £465,000; less than that of 1883–4 by £13,000, and loss than my Estimate by £60,000. The interest on the Exchequer Bonds connected with the Suez Canal share purchase was £200,000, the same as that of last year and the same as my Estimate; and the other charges on the Consolidated Fund were £1,479,000; less than those of 1883–4 by £111,000, and less than my Estimate by £16,000. On the items which I have named nothing calls for observation except in relation to the Debt charge, as to which I will give the Committee some information further on in my Statement.

The Supply Services give the following results. The Army expenditure, including the Vote of Credit for the relief of General Gordon and all Supplementary charges, amounted to £18,955,000, exceeding the Budget Estimate by £3,024,000 and the expenditure of 1883–4 by £3,045,000. Of the total, £292,500 was voted to make good the Egyptian contribution, so that the net actual excess over the 1883–4 charges was £2,753,000. The Navy cost £11,427,000, being more than the Budget Estimate by £615,000, and more than the expenditure of 1883–4 by £698,000. Of the total, £52,000 was due to the necessary Vote to make good the part of the Egyptian contribution credited to Naval Votes, making the actual Navy charge £646,000 in excess of that in 1883–4. The grant to India for the Afghan War was £250,000, which was the same as the Budget Estimate, but less than that of the previous year by £750,000. The Civil Service expenditure was £17,562,000; more than the Budget Estimate by £318,000, and more than the expenditure of 1883–4 by £380,000. Of this increase of £318,000 over the Budget Estimate, almost the whole, or £282,000, was due to additional expenditure, under Class IV., for educational purposes. The Customs and Inland Revenue expenditure amounted to £2,745,000, being more than the Budget Estimate by £11,000, and less than the expenditure of 1883–4 by £27,000. The Post Office expenditure was £4,066,000, being more than the actual expenditure of the year before by £159,000. The expenditure on the Telegraph Service was £1,731,000, being more than the expenditure of 1883–4 by £24,000. The expenditure on the Packet Service was £729,000, being more than the actual expenditure of the previous year by £8,000. Thus the total Expenditure for the last year, 1884–5, was £89,093,000, being more than the Budget Estimate, which was £85,292,000, by £3,801,000, and exceeding the Expenditure of the previous year—which was £85,770,000—by £3,323,000.

Now, I pass to the Revenue of last year. The Customs produced £20,321,000; but of this, as I have said before, some £300,000 was due to acceleration of payment in consequence of anticipations of fresh duties being imposed, leaving the real Revenue about £20,021,000. The Excise produced £26,600,000, the two together producing £46,621,000. My Estimate for those two heads of receipt was £46,628,000, the Receipt for the previous year having been £46,653,000, including, however, an additional amount for Railway Duty to the extent of £355,000. As in previous years, I will now give the Receipts of those two Departments, eliminating from each the amount received for spirits, and then the amount of the Spirit Duties under the two Departments taken together. The amount of the Customs' receipts, corrected as to anticipated payments and less the amount of the Spirit Duty, was £15,713,000, my Estimate having been £15,650,000, and the produce of the previous year having been £15,440,000. The Excise also, eliminating Spirits, produced £12,613,000, my Estimate having been £12,478,000, and the produce of the previous year, including the additional Railway Duty of £355,000, having been £12,825,000. Under the head of Spirits, the duties collected during the past year by the two Departments amounted to £18,295,000, the Budget Estimate having been £18,500,000, and the produce of the previous year having been £18,436,000. I may, therefore, fairly sum up the general result of these figures, in connection with the Customs and Excise receipts, as follows. They show a slow and continued falling-off in the duties from spirits, and, I may add, a slight fall in those derived from wine; they show a continued slow rise in the other chief duties; and, as I am bound to state, for the credit of the gentlemen concerned, they show a great accuracy in the forecast of the Revenue Departments. I may add, in passing, that they also show a specially satisfactory progress under two heads, those of tea and tobacco, both of which are, in a large degree, indicative of the progressive well-being of the nation.

I now go from these great branches of Revenue to the Receipt from Stamps. Stamps produced £11,925,000, being more than the Budget Estimate — which was £11,490,000—by £435,000, and more than the amount they produced in 1883–4—which was £11,620,000—by £305,000. This increase is due to the special steps taken last year to bring in outstanding amounts due for Legacy and Succession Duties, a successful effort having been made to reduce these out standings to the extent of about £400,000. The Land Tax produced £1,065,000, and House Duty £1,885,000, the amount of the latter tax rising very slowly, as it has been doing for some time. The Income Tax at 6d. in the pound produced £12,000,000, my Estimate having been £11,250,000, which it exceeded, therefore by £750,000. The amount of the receipt from this tax at 5d., with some remains of the 6½d. tax, was in the previous year £10,718,000. The causes of this great increase in the production of this tax are very easy to explain. In the first place, a larger amount than we expected had been left over from the previous year 1883–4, so that the original Estimate formed from previous experience turned out to be too low to the extent of nearly £200,000; and, in the second place, we have got more than we expected out of the additional 1d. imposed in the month of November; the Act itself not having passed, in fact, until the month of December. We had at that time to guide us only one precedent of an addition to the Income Tax so late in the year; and that was the additional 1d. imposed by the late Mr. Ward Hunt in 1867–8, which produced far less than he expected. Fortunately, however, the Inland Revenue Department were able to over come the greater part of the difficulties which, having only this one precedent before them, they anticipated. But the principal cause of the great increase over my Estimate was the activity of the Department, not that they got in a larger amount, but that they got it in earlier. I may add to this that a good many collections have lately fallen in. Now, I will ask the House to put together the Receipts from taxation which I have just enumerated. They will find that the total is £73,796,000. My Estimate had been £72,303,000, and the Receipts of the previous year were £71,886,000.

Now, Sir, I pass to the Revenue which is not in the nature of taxation.

SIR WALTER B. BARTTELOT

What about the Beer Duty?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

My hon. and gallant Friend will hear more of that before I have done. The Post Office produced £7,905,000. That is £5,000 more than the Estimate, and £175,000 more than the Receipt of the preceding year. The Telegraph Service produced £1,760,000, or £40,000 less than the Estimate, and £15,000 more than it produced last year. The Crown Lands produced £380,000, which was the same as the Estimate, and the same as the Receipt of last year. The Miscellaneous Revenue was £3,175,000, or £5,000 more than the Estimate, and £68,000 below the Receipt of last year. I have corrected, as I said I would, the item of Miscellaneous Revenue by omitting the Receipt for Indian Home Charges. There is one branch of the Non-Tax Revenue on which I wish to make a remark — namely, the interest on advances, which produced £1,027,000, or less than the Estimate by £153,000, and less than the Receipt of the previous year by £169,000. Most of the items making up this total were slightly better, and the decrease was due en- tirely to one of them — namely, the non-payment by the Egyptian Government of the interest on the Suez Canal Loan, amounting to £199,000. The total Receipts not connected with taxation amounted to £14,247,000, which was somewhat under the Estimate, and very nearly the Receipt of the previous year, £14,294,000. Adding this to the Receipt from Taxes, we have for the year 1884–5 a total Revenue of £88,043,110, and a total Expenditure of £89,092,883, showing a deficit of £1,049,773, or, practically, £1,050,000.

At this point of the Financial Statement it is usual for the Chancellor of the Exchequer to give the Committee some information on the subject of the National Debt. In the last two years, there have been two very important operations in connection with the Debt. In 1883–4 we converted a large amount of Funded Debt into Terminable Annuities, and in 1884–5 we converted a large amount of Three per Cent Funded Debt into Two-and-Three-quarters and Two-and-a-Half per Cent Stock. The details of these conversions have been already laid upon the Table. On the 31st of March, 1880, the Funded Debt stood at £710,476,000; on the 31st of March, 1884, it stood at £640,631,000; and it has been reduced this year to £640,182,000. The Funded Debt has therefore been reduced since March, 1880, by £70,294,000, and during the last year by £449,000. But the conversion which was made last year into Two-and-a-Half and Two-and-Three-Quarters per Cents nominally increased the capital of the Funded Debt; and the Committee, therefore, may be curious to know what the reduction in the Funded Debt would have been if the Three per Cents were valued at par, the Two-and-Three-Quarters per Cents at two per cent less than par, and the Two-and-a-Half per Cents at 8 per cent less than par. On that basis, the reduction of the Funded Debt since 1880 would be £72,712,244, and last year it would be £2,080,587; and it should be remembered that this calculation includes the conversion some years ago of £7,750,000 Exchequer Bonds into £8,600,000 Consols and Two-and-a-Half per Cent Stock.

But we have not only to do with the Funded Debt. We have to compare the Unfunded Debt and the Terminable Annuities, and also to take into comparison the loans we have made and the state of our balances. During last year the Unfunded Debt was reduced by £77,000. The value of Terminable Annuities, calculated on the principle proposed by my right hon. Friend the Member for the City of London (Mr. Hubbard), of taking them in Consols at par, is £5,514,000 less than it was last year. To this must be added the actual reduction in the Funded Debt of £419,000, and a small diminution of other liabilities to the extent of £26,000, making altogether £6,066,000. On the other hand, we must deduct the diminution in the balances, which were less by £639,000, and the diminution in the amount of the loans recoverable, estimated at £480,000, making together £1,119,000. The net diminution of the Debt last year therefore amounted to £4,947,000; or, if it were corrected with respect to Two-and-Three-Quarters and Two-and-a-Half Stock, in the way which I have just described, the diminution of the Debt last year would have been £6,579,000, and the diminution in the five years from March, 18S0, to March, 1885, would have been £32,404,000.

Here, perhaps, I may say, in passing, that we have now paid off the whole of the War Charges bequeathed to us by the late Government—namely, £7,850,000, and all but £250,000 of the £5,000,000 which we ourselves recommended should be granted to India on account of the Afghan War; the two sums together amounting to £12,600,000 in the five years, or rather more than £2,500,000 a-year.

And now, Sir, I will pass from the year 1884–5, and the movement of the Debt in that year, to the present year, 1885–6. I will take first the estimated Expenditure, comparing it with the Estimates of last year, and giving the result. The permanent charge of Debt we put down at £28,037,000 — less than the Bud get Estimate of last year by £847,000. Of that sum £800,000 is due to the falling in of what are called the Russo-Turkish and Afghan War Annuities, constructed by the right hon. Gentleman opposite (Sir Stafford Northcote) in 1880, and £47,000 is duo to the saving from the conversion into the Two-and-a-Half and Two-and-Three-Quarters per Cents. The interest on local loans we estimate at £552,000, and the interest on the Suez Canal Bonds at £200,000. The other charges on the Consolidated Fund we take at £1,760,000—greater than last year's Estimate by £265,000, and greater than last year's Expenditure by £281,000. This increase is partly due to a charge appearing this year, as in some former years, of £110,000 for the localization of the Military Forces, but mainly to the charge of £150,000 in aid of Indian Non-Effective Charges. I promised the right hon. Gentleman the Member for Westminster (Mr. W. H. Smith) that I would, on this occasion, give to the Committee as clear an explanation as I could of the nature of that transaction, the details of which are explained in a Treasury Minute. This £150,000, then, is the first payment of the Annuity which I shall ask to create in order to make good the deficiency on account of the Indian Non-Effective Service. I have laid Papers on the Table which explain the arrangement between the Imperial and Indian Governments for the adjustment of the Indian share of Army pensions paid out of Army Votes. From those Papers it will be seen that, though the Imperial Government did not intend to pay out of British taxes any part of the charge of the Indian Army, yet, in effect, they did so; and that up to l870 the payments made by India were quite insufficient to meet the charge of Indian Army pensions on Army Votes. In 1870 a juster principle of charge, as between the two Governments, was adopted; but it was, unfortunately, agreed that the Indian share of Army pensions should be capitalized year by year. The arrangements were made, I think, without sufficient actuarial assistance. As the capitalized sums far exceeded the charge in the year of the pensions capitalized, the sums received from India should, of course, have been carried to a fund out of which only so much should have been paid to the Exchequer as represented the charge of Indian pensions paid out of Army Votes. Even had this been done, the Non-Effective Account would not have been solvent, as the rate of interest upon which the calculation rested was too high, and because, from one cause or other, the payments by India were always in arrear. But no fund was created. The sums received from India were paid over to the Exchequer direct, and thus current Budgets profited at the expense of Budgets to come. In 1881 my right hon. Friend, then Chan- cellor of the Exchequer, and Lord Frederick Cavendish, then Secretary to the Treasury, put a stop to this unsound system, which had obtained since 1870. The War Office actuaries have investigated the position of the account, and their Reports clear up what has become a very complicated transaction. In effect, they show that to make the account solvent we ought to have had, on the 31st of March, 1884, somewhat more than £4,000,000, which we had not got. After careful consideration, we have come to the conclusion that it will be better to put a stop to capitalization altogether, and to ask India only to pay, year by year, her share of Army pensions granted since the 1st of April, 1884. This, however, would create a very heavy charge on the Army Estimates in this and succeeding years, for which neither we nor our Successors are responsible; and I propose, accordingly, to create a fund in the hands of the National Debt Commissioners to transfer to them all capitalization moneys in our hands or receivable from India, and also to pay them yearly a sum of £150,000 from the Consolidated Fund. The National Debt Commissioners would pay each year, out of the funds in aid of Army Estimates, the exact sum which the actuaries report to be the charge on Army Estimates in the year, of Indian pensions granted between the 1st of April, 1870, and the 31st of March, 1884. This arrangement would be renewed from time to time. I propose shortly to bring in a Bill making the necessary arrangements to carry out this operation.

The Consolidated Fund Charges altogether are estimated at £30,549,000, which is less than the Expenditure of last year by £479,000.

I now come to the Estimates for the voted Services. The Estimate for the Army is £17,751,000; which is greater than the original Estimate for last year by £1,820,000, although it is less than final Expenditure, including the Vote of Credit and the Supplementary Estimates, by £1,205,000. In these Estimates is included a special item, not of annual occurrence, of £500,000 for the Bechuanaland Expedition. On the other hand, as I have already explained, last year's Estimates included a payment of £292,500, due to the non-receipt of the Egyptian contribution to the expenses of the Army of Occupation. The Navy Estimates amount to £12,386,000, which sum is greater than last year's original Estimate by £1,575,000, and greater than the actual Expenditure by £959,000. To be quite accurate, there are two small corrections to be allowed for of about £50,000 each; one for Bechuanaland this year, and the other in the Egyptian contribution last year, and the two just balance each other. The Afghan War grant will be this year £250,000, which is the same as last year's Estimate and grant; and I congratulate the Committee upon this being the last instalment we shall have to pay. The Miscellaneous Civil Service Estimates amount to £17,687,000; the Budget Estimate last year having been £17,244,000, and the actual Expenditure £17,5 62,000. This increase, like that of last year, is due to the Educational Estimates in Class IV., which are more by £391,000 than last year's Budget Estimate, and £109,000 more than the actual Expenditure. The other classes of the Civil Service Estimates pretty fairly balance each other. The Customs and Inland Revenue Services will cost £2,801,000; the Post Office, £4,855,000, or £189,000 more than last year's actual Expenditure, which was £4,666,000; and the Telegraph Service, £1,840,000, or £109,000 more than last year's Expenditure, which was £1,731,000. The Packet Services will cost £754,000, a trifle over the amount last year. Adding together all the voted Services, we get a total of £58,323,000; which, when compared with £54,188,000, the Budget Estimate of last year, shows an increase of £4,135,000; or an increase of £258,000 over the actual Expenditure, £58,065,000. To sum up, the total estimated Expenditure of 1885–6, exclusive of the recent Vote of Credit, is £88,872,000. This is more than the Budget Estimate of last year, £85,292,000, by £3,580,000; and less than the total Expenditure of last year, £89,093,000, by £221,000.

I now pass from the Expenditure to the Revenue; and here I think I ought to explain the basis of my forecast, with special reference to the probable state of trade and agriculture, which we have, of course, to consider, when estimating what the Revenue may be. I said, last year, that I had to deal with very conflicting considerations. Trade, I said, was depressed, the profits on land received by both owners and farmers were low, and Railway Receipts were falling. On the other hand, food was cheap, pauperism was decreasing, and the amount produced by each 1d. of the Income Tax was still slowly increasing. This year I do not think it will be possible to give quite so satisfactory an account. It is quite true that the profits from land and from trade are pretty nearly stationary; I do not think they can be said to be worse. [Cries of "Worse!"] I do not think so, judging from the information to which I have access, and which is collected with great care. It is also true that bread is still cheaper than it was last year, and that the produce of a 1d. Income Tax is still increasing. But the most remarkable fact in illustration of the prosperity of the country is that the Savings Banks' Deposits are steadily increasing. The Post Office and the other Savings Banks' Balances have increased by more than £3,000,000 during the last 12 months, and that increase is going on down to the present time. The account for the last month, compared with that for the preceding month, shows an increase of £250,000, which is just at the rate of £3,000,000 per annum. This is a most remarkable fact in connection with the progress of the country. On the other hand, pauperism appears to me to be beginning to increase; and there is an increasing desire to emigrate by no means confined to Ireland. I am sorry to say that I do not agree with Prince Bismarck in concluding that this is evidence of the prosperity of the country. Since last year there has been a still more serious fall in Railway Receipts; and these are, to my mind, an unfailing barometer of the condition of the country. Having, then, last year, framed my Estimate on evidence of a not altogether unfavourable state of matters, as affecting both the consumer and the payer of Income Tax, and that Estimate having been entirely justified, this year I shall not take quite so hopeful a view. I shall estimate on the basis of a moderately decreased consumption, a slight fall in the average of wages, and a stationary income for the middle and higher classes. That is the foundation upon which the figures I am about to give to the Committee are based.

I will proceed now, Sir, one by one, to the Estimates of Revenue. In the first place, I divide, as I did last year, and the year before, Customs and Excise under three heads—Customs, exclusive of spirits; Excise, exclusive of spirits; and spirits by themselves. Customs without spirits we take at £15,800,000, as against £16,013,000 last year. This diminution, I ought to say, is occasioned by the Revenue of this year having been, as I have described, largely anticipated by payments in March and February, made in apprehension of increases of duty under the present Budget. Excise, without spirits, we take at £12,450,000, as against £12,613,000 last year. Spirits we take at £18,100,000, as against £18,295,000. Dividing the Customs and Excise Receipts from spirits pro forma, the figures will be, Customs, £20,000,000, as against an actual receipt last year of £20,321,000; Excise, £26,350,000, as against an actual receipt last year of £26,600,000. Stamps we estimate at £11,200,000, as against £11,925,000. I have already explained what it was that swelled the Receipts last year, of which we shall not have the benefit to any great extent this year. There is, besides, a steady falling-off in the Stamp Revenues other than the Death Duties. We take Land Tax at £1,050,000, against £1,065,000; House Tax at £1,880,000, against £1,885,000; and the Income Tax we estimate will produce at 5d. £10,000,000, against £12,000,000 at 6d. I take the Income Tax at 5d., because since 1880 that has been the uniform rate, except when it has been disturbed for a special purpose, as it was twice for War Credits, and once to enable the Malt Tax to be converted into Beer Duty. We expect the Post Office to yield £8,000,000, against £7,905,000 last year; telegraphs, £1,760,000, against the same sum last year; Crown Lands, £380,000, the same as last year; and the interest on advances, £1,360,000, against £1,027,000. The last increase is due to a corresponding decrease last year, caused by the non-receipt of the Suez Canal interest. Two years' payment will be received this year, the second, under the recent Convention, at 4½ instead of 5 per cent. Miscellaneous Receipts we take at £3,200,000, against £3,175,000. The total Revenue for 1885–6, based on a 5d. Income Tax, will be £85,180,000, against £88,043,000 last year, with a 6d. Income Tax.

Before comparing this Estimate of Income with the Expenditure, it is important to observe whether there is anything exceptional to note on either side of the account. In the first place, we have to note that we shall have this year, either as interest on Suez Canal shares, or as Army contribution from Egypt, £544,000 belonging to last year; and this double payment will not accrue in future years. We are also the better by £92,000 than we shall be in future as to Debt charges. In these respects, in future years, we shall be worse off by £636,000. On the other hand, this is the last year of the Afghan Grant, amounting to £250,000; and the Army Estimates contain a temporary charge of £500,000 for the Bechuanaland Expedition. These items, two on each side of the account, about balance. But I must also point out to the Committee that in the Army Estimates of this year there is no provision for the defence of our commercial harbours, or for the improvement of the seaward defences of our great military ports. As to these, statements were made in both Houses on the 2nd of December last; by Lord Northbrook in the House of Lords, and by my hon. Friend the Secretary to the Admiralty (Sir Thomas Brassey) in this House; and they pledged the Government to full consideration of the Reports on these subjects, and to probable proposals for large expenditure in future years. This must be borne in mind when we consider what the future normal military expenditure, not including War Credits, is likely to be.

There is also one deduction from this year's Revenue to which we are pledged. I have included in the Estimate of Revenue the receipts for telegrams at the present rate. On the 1st of August, 6d. telegrams will come into operation. If the Bill which we have introduced passes in its present form, the loss for the current year will be £40,000. If addresses are to be free the loss will be vastly more. I allow for the loss of £40,000; and, deducting this amount, the Revenue, with a 5d. Income Tax, we estimate for the present year at £85,140,000, and the Expenditure at £88,872,000, showing a deficit of £3,732,000. To this sum we have to add, first, a reasonable allowance for Supplementary Estimates, which I take at £200,000; and, secondly, the Vote of Credit for £11,000,000 adopted by the Committee on Monday last, making a total deficit of £14,932,000.

Before passing to the proposals which we have to make with a view to meeting this deficit, I will refer to one matter which may interest the Committee, I mean the net revenue of the Post Office during the last four years, disturbed as it has necessarily been by the initiation of the Parcel Post, and the preparations for 6d. telegrams. I do not include in the comparison I am about to make the expenditure out of other than regular Post Office Votes; as, for instance, that for buildings and stationery, which, I may say, is about balanced by extra receipts; although I include for 1882 the Inland Revenue expenditure on postal and telegraph stamps, which since then has been defrayed by the Post Office itself. I will now give the Committee the figures. In 1882–3 the aggregate Receipt of the Post Office was £9,010,000; the Expenditure, including that for stamps, was £6,176,000; so that there was a profit to the taxpayer of £2,834,000. In 1883–4 the Receipt was £9,475,000, and the Expenditure, £6,935,000, showing a profit of £2,540,000. In 1884–5 the Receipt was £9,665,000, and the Expenditure £7,126,000, showing a profit of £2,539,000. According to the Estimates which are now before the Committee for 1885–6, the Receipt is put at £9,720,000, and the Expenditure at £7,448,000, or a net profit of £2,272,000, £560,000 less than in 1882–3. Of course, the Committee will be aware that a very large amount of this Expenditure is and was in the nature of capital Expenditure in preparation for the Parcel Post, and still more in preparation for the establishment of 6d. telegrams. [Mr. W. H. SMITH: Exclusive of works and stationery?] Yes; excluding works and stationery on one side and extra receipts on the other.

I revert from this digression, which I hope the Committee will consider not devoid of interest, to the deficit of £14,932,000. It will be, no doubt, a matter of interest to the Committee to consider how this is to be met. It is, I believe, the largest deficit which has been placed before the House of Commons since the Crimean War; and, whatever we do to meet it, we must make a great demand on the patriotism of the people. Now, there have been two governing considerations present to me when I discussed and decided with my Colleagues how we are to meet the whole or part of this deficit. In the first place, it appeared to me that it would be overstrained adherence to a sound general rule that we should raise, in a year like the present, taxes for the whole of the deficit, and not have recourse to what is popularly called the "Sinking Fund." By the Sinking Fund, I mean the sums set aside annually, in time of peace, for the steady reduction of Debt mainly raised and required, for war; and, in my humble judgment, when war or active preparations for war on a large scale come upon us the raison d'être for the normal addition to the Sinking Fund is very much weakened. The second proposition which I maintain, and would submit to the Committee, is that the whole of the additional taxation which we have to raise on such occasions ought not to fall upon property. Among the benefits which were conferred on the community by the teaching of my late lamented Friend, Mr. Fawcett, none, I think, was more valuable than the stress which, in spite of its apparent unpopularity, he laid on this principle. Only a fraction of the present electorate pay, and a much smaller fraction of the future electorate will pay, any tax upon property, in the shape either of Income Tax or of House Tax, which is limited to houses of £20 value, and does not extend to Ireland, or of Land Tax, or of what are known as Death Duties. If, therefore, the whole of the additional Expenditure caused by war, or preparations for war, is met by taxes on property, those who will really control the military policy of the country will bear no charge for military operations. Now, on this subject, my own declarations, as well as the declarations of my right hon. Friend the Prime Minister, have been unambiguous. On the 21st of November last year, when I proposed to add 1d. to the Income Tax for the Expedition to Khartoum, I was challenged as to the unfairness of relying solely on charges upon property for expenditure of that character; and my reply was that, three or four months before the end of the financial year, it was impossible to obtain the Revenue which might be required by putting a temporary tax on articles of consumption; but I said That "it was not right to go to the Income Tax alone, except in such cases of emergency towards the end of the year;" and I quoted the language, much more emphatic than mine, used by my right hon. Friend in former years. But I do not base the proposal I have now to make either on my own arguments, or on those of my right hon. Friend, or on those of the late Mr. Fawcett; but I have carefully analyzed, with great pains, and I think with accuracy, the Revenue raised from articles of consumption and from property respectively during the last quarter of a century, and I will give to the Committee very briefly the result of that inquiry. I shall compare, then, the Revenue from articles of consumption, including tobacco and liquor licences on one hand, with the Income Tax, the Land Tax, the House Tax, the Death Duties, and establishment licences, on the other hand, at four different periods. I take as the first that of 1858–9, after the Crimean War, when our Expenditure was relatively low. I take as the next that of 1868–9, the closing year of Lord Beaconsfield's first Government, when it happened that the Income Tax was just at the same rate as now; and I take as the third the year 1875–6, a year in Lord Beaconsfield's second Government, when wages were high and consumption was high. Then I compare the results of those years with our Revenue from these sources, according to the Estimates for the present year. Now, the comparison, I admit, may not be quite perfect, because I have to omit the rest of the Stamp Revenue, which it is impossible to distribute with anything like accuracy between property and trade; but the figures which I give to the Committee I am able to guarantee. In 1858–9 the Revenue from articles of consumption was £39,800,000, while the taxes on property and establishment licences produced £13,200,000. In 1868–9 articles of consumption paid £41,000,000, while the taxes on property amounted to £16,500,000. In 1875–6 articles of consumption paid £45,400,000; taxes on property produced £13,200,000. The Estimates for 1885–6, as I have stated them, show, without any additional taxes, a Revenue from articles of consumption of £44,300,000, while taxes on property, with the Income Tax at 5d., would produce £20,700,000. From this comparison it will be seen that, while the taxes on articles of consumption produce only 11 per cent more than in 1858–;9, 8 per cent more than in 1868–9, and 2½ per cent less than in 1875–6, the taxes on property, taking the Income Tax at 5d. only, produce 57 per cent more than in 1858–9, 26 per cent more than in 1868–9, and 57 per cent more than in 1875–6. But I will make a further comparison—I hope the figures will not weary the Committee—I will make a further comparison between the Revenue from articles of consumption as estimated now and as actually received in 1875–6, dividing it between the duties and receipts in connection with fermented and spirituous liquors and the duties on other articles of consumption. Of the £45,400,000 received in 1875–6, £33,500,000 was Revenue from liquor; but of the £44,300,000 estimated now for 1885–6 only £29,800,000 is from liquor, the receipts from other articles having risen from £11,900,000 to £14,500,000. I have drawn from these facts two conclusions, which I will state with all modesty to the Committee. This first is that, during the last 30 years, there has been a gradual and moderate relief of the consumer as compared with the owner of property; that this policy should, in my opinion, be steadily persevered in; but that when a large addition is to be made to taxation, it should not be allowed to fall entirely on property. The second conclusion which I have come to is that, having regard to the change in the incidence of indirect taxation during the last 10 years, liquor, rather than other articles of consumption, should be subjected to a moderate increase of taxation.

Before, then, stating to the Committee the proposals which I intend to make as to the taxation of property and articles of consumption, I will say, in the first instance, what I do now propose to do. I do not propose any, strictly speaking, new tax; and in that respect I am afraid I shall disappoint many thousands of ingenious persons who have written to me on the subject within the last few months. There may or may not be in this country an "ignorant impatience of taxation;" but certainly there exists an amazing fertility of invention in regard to new taxes, especially when those new taxes do not fall on the inventors. I have received hundreds of proposals to tax cats, and soda water, and photographs, and bicycles, and advertisements, and even Christian names. Certainly, these would not have gone far to make good the deficit in the Revenue. But other proposals have been made to me which would, no doubt, give a much larger Revenue. I have been requested to ask Parliament to re-impose the Duty on Sugar; to increase the Tea Duty, which is already 48 per cent on the value of the article; I have also been asked to put a tax on all coal raised, and even to tax gas, and petroleum, and other oils. Well, Sir, I shall propose none of these taxes. I will have nothing to do, except in the last emergencies of war, and, indeed, hardly then, with the imposition of taxes upon raw materials, or on the necessities of life, or on the means of providing warmth and light, or with any duties of a protective character; and, therefore, I am limited to a much smaller number of alternatives, which I will explain later to the Committee.

What I do propose, then, in the first instance, is a tax upon property. I propose to raise the Income Tax, which, according to the Budget of last year, was 5d. in the pound, or which, under the Supplementary Budget of November, was 6d., to the amount of 8d. in the pound. That is to say, I ask for 3d. more Income Tax than under the Budget of last year, and 2d. more than the actual payment for that year.

Now, it should be borne in mind that the Income Tax, so increased, will be much less than it was when the military charges, about a quarter of a century ago, were increased to anything like the extent to which it is now proposed to increase them. The Committee will remember what led to the necessity for larger armaments and increased taxation in the year 1859–60. In that year the Army and Navy Estimates were increased by £5,200,000, and the Income Tax was raised to 9d., or 1d. more than I propose to raise it now. In the following year, 1860–1, when the Army and Navy Expenditure included £3,000,000 for the China War, the Income Tax was raised to 10d. in the pound, and a 9d. rate was continued both in 1861–2 and 1862–3. Remembering, therefore, what was deemed necessary at that time, I do not think that the Committee will consider me extravagant if, under the present circumstances, I propose an Income Tax of 8d. That rate of Income Tax is estimated to produce, over and above the 5d. rate, the sum of £5,400,000.

I may say here, as a matter of some interest, that in connection with this increase of the Income Tax we have made arrangements, with the full consent of the City Commission, which is so well represented by my right hon. Friend opposite the Member for the City (Mr. Hubbard), and by my hon. Friend who sits behind me, the Member for Gravesend (Sir Sydney Waterlow), from whom we receive so much assistance, to reduce the poundage paid to assessors and collectors, which would be extravagant at the present scale if the Income Tax is to be raised. This reduction will only affect the larger rate of remuneration. In connection also with the Income Tax, I wish now to fulfil a pledge which I gave last year to the hon. Member for West Norfolk (Mr. Clare Read), and other Members of this House, that I would inquire very carefully into the incidence of Schedule B on the British farmers. I have carefully studied the difference between the charge paid by the farmers in England and that paid by the Scotch and Irish farmers. With an 8d. Income Tax, for instance, the English farmers would pay on 4d., and the Scotch and Irish farmers on 3d. I am bound to say that this can only be justified as a rough-and-ready arrangement, although one not altogether inequitable. But though this provision cannot be justified on strictly mathematical principles, it is, at the same time, one very difficult to change; and I do not propose in the present year to make any change. But I have a suggestion to throw out to farmers, which I should be very glad if they would consider before the next Budget is prepared, and it is this—that instead of being charged Income Tax on an arbitrary amount having relation to their rent, why should they not pay, like every other business man, upon their net profits? Every other person carrying on a trade pays upon his net profits. Why should not farmers do the same? I know it is said that farmers are so ignorant and unbusiness-like that they do not keep books, and do not know what the net profits of their businesses are. I deny, however, that the farmers, as a class, are either ignorant or unbusinesslike; and as to keeping books, I can only say that, under the new Bankruptcy Act of my right hon. Friend the President of the Board of Trade, if a farmer gets unfortunately into the Bankruptcy Court, he will get into serious trouble if he pleads that he had not kept accounts. In the present Budget, as I have said, I propose no change in this matter; but I hope that farmers will consider my suggestion, and will not discard it merely because it is a change. I will give one reason which may have weight with them. If a farmer pays under Schedule D, he will be able to appeal, not only as now to the Local Commissioners, where he will probably meet his squire and his banker, but to the Special Commissioners, who go on circuit through the different districts of the country, and who are absolutely unconnected with the locality. That, I believe, would be a great advantage to farmers, besides the obvious benefit of paying, like other people, according to their profits.

I now pass, Sir, from the Income Tax to my next proposal. I propose to put into operation—although it will produce but a small sum this year—the final reform of what are popularly called "the Death Duties." There are two branches of the proposal which I am about to make, the one assimilating the incidence of the tax on real to that on personal property, and the other imposing an equivalent duty upon corporate property. I will first deal with the proposed changes in the taxation of real and personal property, passing from one person to another in consequence of death. As the Committee is aware, there are now four taxes which are imposed on property devolving by death—namely, (1) Probate Duty, called in Scotland "Inventory Duty;"(2) Account Duty, imposed as a defence to the Probate Duty; (3) Legacy Duty; (4) Succession Duty. Successions to personal property, including leasehold property under will or intestacy, and personal property passing under voluntary deeds, are liable to two of these taxes—Probate or Account Duty, and Legacy or Succession Duty; whereas personal property, passing by marriage settlement and successions to real property, are liable to one only—namely, Succession Duty. The Resolutions I am about to lay before the Committee will, if adopted, remedy this anomalous state of things by imposing an actual Probate or Account Duty, or an equivalent tax on all property passing on death by will or by settlement. An actual Probate or Account Duty will be imposed on all property other than charges by way of annuity on real estate and real estate itself. These two classes of estates will be charged with increased Legacy or Succession Duty, as the case may be. The new tax will not in any way be retrospective, and it will only be imposed on successions by death, which may occur after this date. The Resolutions will be three in number. The first will, in the shape of Probate or Account Duty, include—firstly, property locally situate abroad belonging to a person domiciled in the United Kingdom; secondly, all charges on real estate, other than charges by way of annuity; thirdly, real estate directed to be sold, all these being, under the existing law, now exempt from Probate Duty. The 1 per cent Legacy and Succession Duty on properties where this new Probate and Account Duty is paid will be abolished, so as to assimilate the practice with the Act of 1881, which has been most successful in its operation. The 2nd Resolution imposes, in the shape of Succession Duty, as an equivalent of the Probate Duty, a rate of 3 per cent on all properties which are now exempt from Probate or Account Duty, and do not come within the scope of the 3rd Resolution. In this equivalent rate the Succession Duty of 1 per cent is absorbed. Provision is also made that leaseholds under wills or intestacies, which already pay Probate Duty, are not to be charged with the additional tax. Reversionary rights already sold are not to be charged to the new tax. There is a further provision that, in the case of personal property settled on a husband or wife for life, with remainder to children, the duty is to be paid at once and for all. The 3rd and last Resolution imposes, in the shape of Legacy Duty, as an equivalent of Probate Duty, a rate of 3 per cent on all legacies charged by way of annuity on real property. In this equivalent rate the 1 per cent Legacy Duty is also absorbed. The scope of this last Resolution will be very limited, as it only applies to legacies by way of annuity charged on real property. When effect shall have been given to the Resolutions which I have now explained, an equal tax will have been imposed, as far as possible, on all successions to property by death, whether the property be real or personal; but it is impossible that it can be paid in the same manner. Probate and Account Duties are now payable by law within six months from the date of death; but, practically, it is found by experience that Probate Duty is paid much within the time allowed by the law, for it is the interest of the executor or trustee to take out probate as soon as possible, for without it he is not entitled to touch any of the personal property of the deceased. I propose to shorten the period of payment of Account Duty to three months, which will not create any difficulty. Legacy Duty is due when the legacy, or share of residue, is paid to, or retained for, the use of the legatee. This I do not mean to alter, nor the Succession Duty in the case of personal property, which is to be paid exactly in the same way as Legacy Duty. But in the case of real property the tax is now payable by eight half-yearly instalments, the first of which is due 12 months after the successor becomes entitled to the beneficial enjoyment of his succession. For these eight half-yearly instalments, I propose to substitute four annual payments. In future, real property to be enjoyed by a person absolutely, or as tenant in tail, will be taxed upon the capital value, and not only on the life interest; but this tax will only have to be paid, as well as the tax on charges on real estate by way of annuity, in four annual instalments. Before passing from this part of the subject, I would again observe that in the matter of Probate, Legacy, and Succession Duties there has hitherto been one law for real estate and another for personal estate. Personal estate has been subject to Probate Duty—real estate has been exempt from it. Personal estate has been subject to Legacy and Succession Duties, with reference to its full market value. Real estate has been taxable with reference only to its value for the successor's life, although he may have been in a position to sell it and put in his pocket the full market value of the estate. This inequality will be adjusted, and real estate will no longer bear what my right hon. Friend the Prime Minister has called "a very small and disproportionate share of these taxes."

The financial effect of the scheme I have thus briefly laid before the Committee will, it is estimated, be, in the present financial year, a sum not exceeding £200,000; in the second, £400,000; in the third, £550,000; in the fourth, £700,000; and, finally, £850,000. Against that gain I should set off a loss, not very considerable, to arise from the relief from the ad valorem duty of 5s. per cent upon settlements which are dispositions conferring successions. As I have already explained, this additional Revenue will be derived partly from personal estate not now paying Probate Duty, and partly from real estate, also now exempt from Probate Duty; and when it is remembered that Parliament in 1853, in passing the Succession Duty Act, sanctioned the raising of a sum of £2,000,000, whereas no greater sum than £850,000 has ever been realized from that source, I feel confident that the burdens I am now seeking to impose on real property will, at any rate, be considered as reasonable and moderate.

I now pass to the second branch of this subject—namely, the tax which I propose that Corporations should pay as an equivalent for the Death Duties. Having, by the scheme laid before the Committee, succeeded, I hope, in equalizing the burdens arising from successions upon death in real and personal estate, I will allude briefly to a class of property which enjoys the same privileges and the same protection under the law, but is exempted—and, I think, unjustly exempted—from many of the duties arising on death. Corporations are immortal; but this immortality should not relieve them from a tax falling on others who do not enjoy this advantage. The subject is one involving a great principle, rather than one which will bring in much Revenue into the Exchequer, for although I believe it will be the wish of the Committee that property held in mortmain should not altogether escape a tax on succession by death, yet I am sure that it is not my wish, or their wish, indiscriminately to lay a tax on all property vested in Corporations, irrespective of the purposes for which the property, or the income arising from it, may be applied, the time within which the property was acquired, or the nature and character of the Corporation itself. The Resolution which I shall lay upon the Table of the House, therefore, proposes altogether to exempt religious bodies and charities, and is framed with the intention of not taxing societies in respect of incomes derived from the donations and contributions of living persons. Further, it is proposed to exempt property belonging to Corporations for trading purposes, which is represented by shares already liable to Death Duties as the property of individuals, and property which shall be legally applied exclusively for the benefit of the public at large, or belonging to any friendly society, or which has been acquired within the last 30 years. The Resolution lays down that there should be imposed upon the income of the Corporations, as defined in it, a duty of 5 per cent per annum, to be charged and paid upon an account to be rendered to the Commissioners of Inland Revenue at the close of the first half of each financial year, subject to the exemptions to which I have already alluded, and others set forth in detail in the Resolution, with which I will not now trouble the Committee. It must be remembered that if a Corporation could be supposed to die, the property passing to its successor would pay on a duty of 13 per cent; but it would be unfair to suppose that the higher rate of succession to a stranger would always be incurred, and therefore I only propose to impose an annual tax of 5 per cent, my object being, as I said before, not so much to swell my receipts as to establish a principle at once fair and equitable. I need not say that I have very carefully considered the important Mortmain Return prepared on the Motion of my hon. and learned Friend the Member for Chelsea (Mr. Firth); but, though it is true that corporate property is in the aggregate large, when you come to proceed upon principle in dealing with exemptions you find that a great proportion of that property must be treated as exempt, and I do not venture to put the estimate of the yield of the tax for the year at a higher amount than £150,000. The duties which I have described, fall under the head of Stamp Revenue; but, before passing from it, I will refer to a slight additional source of Revenue in connection with stamps. Bonds and foreign securities payable to bearer only pay now a Stamp Duty of 2s. 6d. per cent on issue or first negotiation, and are then free from all transfer duty; whereas registered Stocks and Shares pay duty every time they change hands, the latter 10s. per cent. We propose to lessen this difference by imposing the original stamp of 10s. per cent on all the securities I have named, transferable to bearer. This will produce about £100,000 per annum.

I now pass to articles of consumption. The Committee will have gathered, from my earlier remarks, that I propose to deal with fermented and spirituous liquors. As to spirits, we have satisfied ourselves that they may now well bear an increased duty. It is more than 20 years since the present rates were fixed, and experience shows that we need not be deterred from raising them by the fear of smuggling or of illicit distillation. We propose, then, to raise the duty upon home made spirits from 10s. to 12s., and upon foreign and Colonial spirits from 10s. 4d. to 12s. 4d. a-gallon. This we calculate will produce during the present year, under the head of Customs and Excise, about £900,000. Of course, this is based upon some reduction in consumption. At the present time the consumption is about 36,000,000 gallons, producing above £18,000,000 a-year. If the higher duty produces only £900,000 more, a simple sum in arithmetic will show that the consumption will have fallen below 32,000,000 gallons. It is no business of mine, as Chancellor of the Exchequer, to say whether that is to be regretted or not.

I pass to the article of beer. Beer now pays 6s. 3d. per barrel of 36 gallons, or a little over 2d. per gallon. Roughly speaking, that is about 20 per cent on the value of the article free of duty. If the duty on spirits is to be raised—of which, in proportion to the population, there is probably more drunk in Scotland and Ireland than in England—I could not be a party to such a proposal, unless a fair increase were made in the duty upon beer, of which, if I remember aright, fully 11–12ths are drunk in Great Britain as compared with Ireland. Now, Sir, by increasing the duty on beer from 6s. 3d. to 7s. 3d. per barrel of 36 gallons, we hope to get during the year £750,000, or about 9 per cent more than the present Revenue. The additional £900,000 gained upon spirits is only about 5 per cent. of the existing receipts; but the increased rate of duty is slightly more in the case of spirits.

I now pass to the Wine Duties. The duty upon wine, which has remained the same, with but slight change, since 1860, was fixed not solely with reference to fiscal considerations. It had been nearly 6s. a-gallon, when it was reduced to 1s., or, on stronger wines, to 2s. 6d. per gallon, in connection with the Commercial Treaty with France. Since then the Wine Duties have been more than once used as weapons to obtain Commercial Treaties with wine-growing countries. But, irrespectively of this consideration, the Committee should observe, as to the relative incidence of duty upon beer and wine, that wine pays somewhat a larger percentage on its value than even beer. The Wine Duties are, on the average, about 25 per cent on the value of that article; the Beer Duty is barely 20 per cent. We do not propose to alter the Wine Duties generally; but I have an important proposal to bring before the Committee with regard to the Wine Duties, to give effect to the Declaration with Spain of the 21st of December last, which has been laid before Parliament in the Paper "Commercial, No. 2," of the present Session, as to which several questions have been asked from various parts of the House. The Committee is aware that, in 1877, the Spanish Government withheld from British trade the benefit of certain reductions then made in the Spanish Customs Tariff, on the ground that the Wine Duties in the United Kingdom were really differential against Spain. This action of the Spanish Government led to a long correspondence, and also to the appointment of a Committee of this House, in 1879, to report on the Wine Duties. They recommended "a duty of 1s., with a limit of strength to be determined by the Executive," and that the alcoholic test should be maintained; and they pronounced an opinion that an ad valorem scale of duties would be impracticable. No useful purpose would be served by entering upon the long controversies which ensued; but, in offering Great Britain most-favoured-nation treatment in 1883, the Spanish Government went beyond the offer made in previous years, and Her Majesty's Government felt themselves fully justi- fied in agreeing to raise the limit of the 1s. duty from 26 to 30 degrees. It is of importance to trade that the arrangement between the two Governments shall take effect as soon as possible. The Spanish Government will be informed, as soon as the necessary measure authorizing this change has been passed by this House; and a date, of which public announcement will be made, will be fixed for the simultaneous application of the terms of the Declaration of the 21st of December, 1884. Our thanks are due to the several Spanish Ministers who have taken part in these prolonged negotiations, in which success has ultimately attended the labours of Sir Robert Morier, who has shown great ability and energy in overcoming serious difficulties. I must no less acknowledge the loyalty of the present Spanish Ministers in taking over in their substance the engagements entered into by their Predecessors, and the friendly and straightforward manner in which they have defended the Declaration before the Cortes. I may say that negotiations for a complete Commercial Treaty with Spain will commence in the autumn, in order that engagements which may require legislative sanction may be submitted to the Cortes and to Parliament in the ensuing Session. I may say that we do not anticipate any diminution in the Revenue from wine, for whatever loss may be expected on wines between 26 degrees and 30 degrees of strength will be made good by the increased consumption due to the higher Spirit Duty and the diminished use of spirits.

I may here mention two small changes which we propose in connection with indirect taxation. We were pressed last year by hon. Gentlemen sitting on both sides of the House to allow private brewers' licences to be taken out for a half-year only. I think that a concession in this respect may be properly made, and I propose to allow a private brewer's licence to be taken out for a half-year for 4s., where the charge for the whole year is 6s., and for 6s., where the charge for the whole year is 9s. The half-years will end in March and September respectively. I do not believe that there will be any loss of Revenue from the change.

The other change relates to Patent Medicines. The Committee are aware that a Bill has been introduced by the Lord President into the House of Lords which will meet some of the complaints in connection with the sale of patent medicines. We also propose that foreign medicines be treated, in respect of the Patent Medicine Tax, precisely as British medicines—that is to say, they will only be regarded as dutiable if they are held out as Proprietary or as specifics. Further, the stamp will be altered, so as to show clearly and make it plain that there is no Government guarantee of the medicine. The Revenue will not be materially affected by these alterations.

The additional taxes which I have enumerated account for £7,500,000 out of a deficit of £14,932,000, leaving a sum of £7,432,000 to be provided for. The Committee, I think, will have conjectured, from what I said in the early part of my Statement, how I propose to meet this remaining deficit—that is to say, out of the sum annually applied to the reduction of Debt. Popularly, as I have already said, that sum is called the "Sinking Fund;" but this is not a strictly accurate description, and I will state the exact facts to the Committee. The sums devoted by law to the reduction of Debt are so applied under several old Acts, as well as under the Act of the right hon. Gentleman opposite (Sir Stafford North-cote), passed in 1876, and under the Act which I asked Parliament to pass in 1883. They consist of virtually four classes. The first is so much of outstanding Terminable Annuities of all kinds as represents capital, and this amounted last year to about £5,600,000. The second is the difference between the sum of £28,000,000, as settled by the Act of 1876, and the charges on it, which are mainly for interest on Funded and Unfunded Debts and Terminable Annuities. That is called the "New Sinking Fund," and it amounted last year to above £500,000. The third class consists of the amount of Stock cancelled on grants of Life Annuities, compositions of Land Tax, and small transactions of that kind, and that amounted last year to nearly £1,500,000. The fourth sum applicable to the reduction of Debt is the surplus of the Income of each year over the Expenditure, which is called the Old Sinking Fund. Altogether, then, in 1885–6 the sums applied to the reduction of Funded and Unfunded Debt will amount to something under £7,600,000. But of these four sources, the only payments we propose to intercept are those under what I call No. 1—namely, that part of the outstanding Terminable Annuities which represents capital. Of course, the Old Sinking Fund, No. 4, has disappeared this year, as there will be no balance of Income over Expenditure, and it would be impracticable to interfere with the reduction of Debt in connection with Life Annuities and similar operations. Nor do we propose to touch the New Sinking Fund. All, then, that we propose now is, to intercept this year the principal of the Terminable Annuities created in 1883, extending for a year the operation of the Act; and the difference between this sum of something over £4,600,000 and the £7,412,000 will be borrowed temporarily, so far as may be necessary, in Unfunded Debt. This addition to the Unfunded Debt will not, as I have explained, exceed the diminution in the Funded; but we propose in 1886–7 to pay it off out of the capital of the Terminable Annuities, in the same way as we propose to apply for the same purpose £4,600,000 this year. We also propose to take power to meet the deficit of last year by borrowing in Unfunded Debt, if it should be found necessary. I am aware that this part of my Statement is highly technical, and almost impossible fully to elucidate at the end of a long speech; but I propose to lay on the Table a Treasury Minute which will explain the operations more fully.

I will now recapitulate the figures which I have laid before the Committee. The net deficit for the year, calculating the Income Tax at 5d. in the pound, is £14,932,000. We propose to intercept the action of the Sinking Fund during this year, so as to produce something over £4,600,000. By raising the Income Tax to 8d. we get £5,400,000. The Death Duties will produce £200,000. We calculate that the duties to be imposed on Corporate Property will yield £150,000; the increase in the Spirit Duties £900,000, and the increase in the Beer Duty £750,000. The minor charges will produce £100,000, making a total of £12,100,000, and leaving a deficit of about £2,800,000 to be met by a similar Sinking Fund operation during the coming year.

I am very much obliged to the Committee for having listened with so much attention to the long Statement which it has been my duty to address to them, and I hope I have made myself perfectly clear. I have now to ask the House to pass the necessary Resolutions, so that the increases of duty may take place to-morrow morning, although, as the Committee is well aware, such increases are always subject to repayment should the proposals of the Government not be adopted. As regards the altered Death Duties, the tax on corporate property, and the additional stamp on securities to bearer, those, of course, will not be put in operation until after the Act is passed; but with regard to the Resolutions relating to the Customs, Excise, and Income Tax, it is necessary that they should take effect at once. In conclusion, I may say that, if it will suit the convenience of the House, I do not propose to take the second reading of the Customs and Inland Revenue Bill until this day fortnight, so that there maybe ample opportunity for considering the proposals of the Government.

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-five, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Grains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of Eight Pence; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act,— In England, the Duty of Four Pence; In Scotland and Ireland respectively, the Duty of Three Pence; Subject to the provisions contained in section one hundred and sixty-three of the Act of the fifth and sixth years of Her Majesty's reign, chapter thirty-five, for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of 'The Customs and Inland Revenue Act, 1876,' for the relief of persons whose income is less than Four Hundred Pounds."—(Mr. Chancellor of the Exchequer.)

SIR STAFFORD NORTHCOTE

Sir, I only rise at this moment in order to express the thanks of the Committee to the right hon. Gentleman for the clearness of his Statement, and to assure him that we have listened to it with interest—I may say to parts of it with painful interest—but with a full sense of the difficulty of his task and the manner in which he has dealt with it. I quite agree with him that in regard to the somewhat complicated arrangements with respect to the payment of Debt, it would be better for us to wait until we have the Paper before us relating to the scheme which he has put forward. With regard to the other matters, I do not think it necessary or desirable that the Committee should at this moment enter into any discussion on their merits. The course which is proposed with respect to the Customs and Excise Duties is, I think, the usual course, and the one which I think to be quite right. I would wish to ask the right hon. Gentleman—no doubt it was included in his Statement, although I cannot call it to mind—what will be the duty on foreign beer? I suppose the addition to the duty on imported beer would be the same as upon beer brewed in this country. I think, under the circumstances, we shall do well to put off to a later day the discussion of the Budget as a whole, because there are several points in it which will require time for our careful consideration.

MR. ORR-EWING

said, he rose to call the attention of the Committee to the great injustice done by the right hon. Gentleman the Chancellor of the Exchequer to Scotland and Ireland by the proposed imposition of an additional tax upon spirits. He would point out that at the present time whisky paid a duty of 10s. a gallon of proof spirit, whilst the alcohol which was drunk in the form of beer only paid one-sixth part of that sum. When they considered that spirits were necessary as the national drink of Scotland and Ireland, and that they had to pay six times the duty paid on beer, which was the national drink of England, he thought the Committee would see that the vast injustice already existing would be greatly aggravated by the proposals of the right hon. Gentleman. For his own part, he was surprised that any Chancellor of the Exchequer should venture to increase that injustice. Again, when they considered that wine was to remain at the present rate of duty, which was not above one-half, in respect of the alcohol it contained, of the duty on spirits, it would be seen that that was really a tax upon the poor man operating for the benefit of the rich. French wine paid on the average, according to its alcoholic strength, only 4s. a gallon of proof spirit, and Spanish wine paid only 6s.; and with regard to those there was to be no increased duty at all. But in the case of the national drink of Scotland and Ireland there was to be an increase of 20 per cent, although, at the present moment, it had to pay six times as much as beer. He must protest against that injustice on behalf of the people of Scotland and Ireland, and he held that it was the duty of every Scotch and Irish Member to resist the proposal of the right hon. Gentleman, who, he said, should get his increased Revenue by doubling the tax upon beer; and then, under that arrangement, it would only pay one-third of what was paid on whisky in Scotland and Ireland.

MR. MITCHELL HENRY

said, that when he heard the Chancellor of the Exchequer say that he would not be a party to increasing the duty upon spirits unless there were also an increase of duty on beer, he was in hope that the right hon. Gentleman was about to do complete justice in the matter of the taxation of alcohol. He regretted very much that the right hon. Gentleman had not taken that opportunity of affixing his name to a change that would be at once philosophical and just. Alcohol was undoubtedly a very proper subject on which to raise Revenue; but assuredly the only just and rational mode of dealing with it for that purpose was to tax it wherever it was to be found. There could be no reason whatever why those who in one part of the country found it convenient, principally in consequence of large breweries being established in their neighbourhood, to take their alcohol in the form of beer, should be taxed at a lower rate than those who, not having the same convenience, were obliged to content themselves with taking their alcohol in the shape of spirits. He could not imagine why that subject had always been shirked by Chancellors of the Exchequer. His right hon. Friend had certainly proposed to increase the alcoholic duty on beer; but he had also increased the alcoholic duty on spirits to an extent which would produce to the Revenue something like £900,000, whereas the increased duty on beer was reckoned only to produce £700,000. That was not redressing the injustice which existed; on the contrary, he said it was rather an aggravation of it. The right hon. Gentleman, therefore, could not expect that those proposals would be satisfactory. There was another point on which he would appeal to the right hon. Gentleman in connection with this subject—he appealed to him as to whether, in the spirit of justice, he did not think that the articles of luxury paid for by the rich should be taxed at a higher rate than the articles of necessity paid for by the poor? He believed that there was a great deal of nonsense in all that was said about the Wine Duties. "Wine was really an article of consumption amongst the higher classes; they were drunk by the higher classes from the smallest claret to the most expensive champagne; they did not form part of the diet of the lower class, although they were supposed to do so. Therefore, he would ask the right hon. Gentleman whether he could not make a distinction in the Wine Duties, and impose a higher rate of duty upon bottled wine? Wines which came into this country in casks were wines of a lower order; they contained less alcohol, and were cheap, and they might possibly be consumed by the lower class, by which he meant those who had small incomes, and were obliged to economize. But, in the name of justice, he asked the Chancellor of the Exchequer, who, like other Members of the House, dined well—when they were not occupied at the House—why he could not place a higher duty on claret and champagne? That wine, and the higher class of clarets, were all imported in bottles; the duty upon them could be easily raised; it would be a just duty, and he was certain it would be a popular one throughout the country, because it would show that the right hon. Gentleman had regard to the circumstances of those who could not pay for the wines in question. With regard to the duty on Spanish wines and their alcoholic strength, he did not believe that there were any wines which contained 30 per cent of alcohol. The plea put forward by the Spaniards for the introduction of their wines into this country was that they had a higher percentage of alcohol, and that they were now unfairly weighted as compared with French wines. He had no doubt that the Chancellor of the Exchequer believed that he would let in the natural wines of Spain, as had been the case with the French wines; but he would point out that they were strengthened wines, and there was no reason why they should be introduced on the ground that they were the natural productions of Spain, and that they were not fairly treated unless the alcoholic scale of duty was raised. He rejoiced very much that the right hon. Gentleman had recognized the principle which some Members of that House had tried to induce him to see before. It seemed to him an extraordinary proposal that large masses of Debt should be paid off with money borrowed at 2½ and 3 per cent, which possibly had to be provided at a cost of 5 or 10 percent. The money raised last year had undoubtedly pressed very hardly upon those who raised it. It had pressed on the agricultural party, especially the poorer classes in Ireland and Scotland, who were very badly off in these times of slack trade and wretched harvests. He ventured to congratulate the right hon. Gentleman on the great skill with which he had jumped over that formidable obstacle; and he had only to express the hope that he would go a step further and introduce a philosophical method of taxing alcoholic drinks that would do justice to all parties concerned.

MR. J. G. HUBBARD

said, he felt that it was undesirable on those occasions to go at length into the various points of the Budget. He should not be satisfied, however, if he were not to rise and express the satisfaction with which he had listened to the eloquent Statement of the right hon. Gentleman the Chancellor of the Exchequer. He had called it an eloquent Statement; but he used the term in the sense that it was both clear and convincing. He was gratified to hear the right hon. Gentleman say that in an emergency such as that which now pressed upon the country they ought to divide the burden of the extraordinary expenditure between the present generation and those who were to come afterwards. They ought not to save the present generation entirely by placing the whole of the burden on posterity; and, therefore, he re- garded the allocation of the deficit of £15,000,000, between Debt and Taxation, as a wise and moderate proposal on the part of the right hon. Gentleman. Although he did not bind himself to the exact details of the new system, as set forth by the right hon. Gentleman, he thought that, for the most part, they were likely to be beneficial. His right hon. Friend no doubt felt, when he was proposing the addition of 3d. in the pound to the Income Tax, that it must be a severe blow to him (Mr. Hubbard), who believed that the Income Tax, as it was now administered, was a wicked tax, and that it was within the power of the Government to make it a righteous tax whenever they chose to do so. Schedule B was nothing in the world but another form of Schedule D. Farming was as much a trade as any other, although it was specially dealt with on the assumption that farmers did not keep books; that it was impossible for them to make a Return of their incomes; and that, therefore, they must be charged in a certain ratio to the rent they paid for their land. He was quite willing that that mode of assessment also should be retained; but he was satisfied that there were ways in which Schedule D might be modified, and an alleviation extended to farmers. With regard to the Death Taxes, he had been very much struck with the way in which his right hon. Friend proposed to deal with Corporation funds. He thought he was quite right in laying upon them a charge by way of a substitute for Legacy Duty, which, as Corporations never died, they had never paid. The Income Tax, properly understood, was the tax of the country; it reached all classes of the people, and he was happy to find that gradually everything was working round to the adjustment he had advocated for many years. The rates to be levied as a substitute for the Succession Duties would, no doubt, be properly adjusted by the Government. He did not rise to make a long speech, but chiefly to express his satisfaction at the general ten our of the speech of the right hon. Gentleman the Chancellor of the Exchequer.

SIR JOHN LUBBOCK

said, there was one point with regard to the increase of the Income Tax on which he should like to ask the right hon. Gentleman the Chancellor of the Exchequer to say a few words to the Committee. The Committee were aware that there were several Stocks on which the dividends were payable to-morrow morning; and the dividends would, in the ordinary course, be paid with a reduction of 6d. only. The bankers had received a Circular from the Inland Revenue Office requesting them to make certain arrangements to insure the payment of the increased amount. He presumed there was no question as to the legality of the proceeding; but still it would be satisfactory to everyone if his right hon. Friend would say something to the Committee upon the matter. He need hardly say that the bankers had every wish to facilitate the collection of Revenue, and that he had no doubt they would be justified in acting on the request of the Inland Revenue Board. He was glad that the right hon. Gentleman proposed a tax on corporate property equivalent, or partly so, to the Income Tax. The right hon. Gentleman would, no doubt, find a good deal of opposition to the proposal; but, nevertheless, it was one founded on justice. He (Sir John Lubbock) also desired to make a few observations with respect to the Post Office. He understood there was a net Revenue from the Post Office of £2,273,000. Now, there were items connected with the Post Office which went into Class I. of the Estimates, and he was not quite clear whether they were included in the sum he had mentioned. It was very desirable they should know what was received from the Post Office, because he was afraid some people went away with a very exaggerated idea of the profits derived from that Institution. He was afraid it was not possible for Her Majesty's Government to raise the whole amount of the necessary Expenditure of the year without infringing upon the Sinking Fund; at the same time, he must express great regret that now, possibly at the very beginning of a struggle, they would not only have to do away, practically, with the whole of the Sinking Fund, but have to borrow about £2,800,000 in addition. It might be necessary, under the circumstances, to do that; but he had heard that part of the Statement of his right hon. Friend with great regret.

MR. O'SULLIVAN

regretted to say that after carefully weighing all the remarks of the right hon. Gentleman the Chancellor of the Exchequer the Budget proposals appeared to him to be somewhat unfair. He quite agreed with the propriety of increasing the Income Tax from 6d. to 8d. in order to meet the present deficit. There was no fairer tax imposed by the House, if properly adjusted, and there was no tax that he paid more cheerfully than he did the Income Tax. The reason of that was, that no man was called upon to pay the tax who had not got an income. But of indirect taxation the poor man was required, as a rule, to pay more than his fair share. According to the Statement of the Chancellor of the Exchequer, about three-fourths of the Re-venue of the whole country was derived from the taxation on consumable articles, and only one-fourth was raised by taxation on property. Surely the right hon. Gentleman would not say that that was a fair state of things. Notwithstanding the fact that three-fourths of the Revenue was produced by the taxation on consumable articles, the right hon. Gentleman now proposed to add considerably to the duties paid on those articles. He (Mr. O'Sullivan) believed he was right in saying that 19–20ths of the indirect taxation of the country was contributed by the working classes, or, in other words, that a man with £10,000 a-year did not pay in taxes more than 5 per cent. upon his income; while the working man with £50 a-year, especially if he drank or smoked even moderately, paid about 10 per cent of his income in taxation, Was it fair, under such circumstances, that the right hon. Gentleman should increase the charge upon the working people of the three countries? The right hon. Gentleman proposed to put an increased duty of 2s. a-gallon upon spirits. Why should he put 2s. a-gallon on the drink which formed the almost universal beverage of the Scotch and Irish people, and only 1s. on 36 gallons of beer, which was the drink of Englishmen? If they examined the alcoholic strength of the different beverages, what was the result? It was well known by those who had studied the question that a barrel of good beer—a barrel of 36 gallons—contained about five gallons of alcohol. The duty, therefore, upon the five gallons of alcohol was 1s., or a fraction less than 2½d. per gallon. He appealed to any impartial person if it was fair that beer should be taxed so lightly and spirits so heavily? Again, the Chancellor of the Exchequer had estimated that the new tax upon spirits would yield about £900,000, and that the tax upon beer would bring in about £750,000. Had it occurred to the mind of the right hon. Gentleman that the £750,000 would be paid by 20,000,000 of the population, while the payment of the £900,000 would be confined to about 1,000,000 people? ["Why?"] For the simple reason that beer was drunk by a very much larger population. Of course, Revenue must be raised in some way or other; but he thought it was the duty of the Government to put taxation on the people who could bear it best. In his opinion, there were several things which ought to be taxed before either beer or spirits. Why, for instance, should not ground rents be taxed? As he pointed out last year, when the Chancellor of the Exchequer brought in his Budget, ground rents were altogether exempt from taxation. He maintained that ground rents were amongst the first things that should be taxed, and for the very reason that they were earned without any outlay or effort on the part of the proprietors, and in very many instances they amounted to as much as 20 times their value, owing to the buildings erected by the industrial classes upon the land. It had been roughly calculated that the ground rents of the Kingdom produced £30,000,000 annually. It would not be unfair or unjust to put a tax of, at least, 10 per cent upon those rents. If that were done, £3,000,000 would be gained by the Exchequer; and that, with the £5,500,000 produced by the extra Income Tax, would be actually more than the Government required. He maintained, also, that clubs should be taxed. Clubs, as a rule, were luxuries, though in many places they were merely drinking saloons and betting houses. It was a monstrous state of things that clubs were allowed to go untaxed. £500,000 might very easily be raised annually by such means. The next suggestion he had to make was one which, no doubt, would excite some laughter, for it was that a tax should be imposed upon every unmarried man over 30 years of age. Surely bachelors were very well able to bear taxation. He put it to the sense of justice in the House if a man with £500 a-year and a wife and children and servants to support was as well able to pay 6d. in the pound Income Tax as a bachelor, who had no one but himself to support? A tax upon bachelors would be as fair, as just, and as honest a tax as could be imposed by the House. Of course, he could not make any accurate calculation as to what the tax would yield; but he took it that the taxpaying bachelors formed, at least, one-fourth of the whole taxpayers of the country, and, therefore, 1d. in the pound ought to produce £500,000. Furthermore, bethought that the wine drinkers should pay more taxation than they were now required to do. Was it not a monstrous thing that in a time of emergency like the present, in a time when money was greatly required, the Chancellor of the Exchequer refrained from raising the duty upon such luxuries as champagne, old clarets, crusted ports, and the best sherries? He put it to the right hon. Gentleman if it was just to the working men? Working men, as a rule, drank nothing but beer and spirits; but the wealthier classes indulged in champagne, ports, sherries, and Madeira, and in a time like this not an extra 1d. was put upon the latter wines. Such an increased duty ought to be put on high-class wines and on cigars, which would bring in, at least, £500,000. There was another matter to which the Chancellor of the Exchequer might very well turn his attention with a view to the saving of Expenditure, and that was the amalgamation of the Inland Revenue and Customs Offices. He did not know what saving there would be if such an amalgamation were effected; but it was a monstrous state of things that there were two sets of Commissioners, two sets of Chairmen, two sets of solicitors, two sets of officials in every big town of the three countries, for the purpose of carrying on pretty much the same business. Now, perhaps the Committee would permit him to make a few comparisons of the duties which were paid on articles consumed by the poor, and the duties on articles consumed by the wealthy classes. In the first instance, let him take the case of gin, which was about the lowest class of spirits. What were the facts? On that article, which was largely consumed by the poorer classes, and the value of which was about 20s. to 24s. per dozen, a duty of 15s. per dozen was charged; while upon champagnes and old clarets, which were worth from £3 to £5 per dozen, and which were drunk by the upper classes, a duty of only 2s. per dozen was charged. Was that a state of things which ought to exist for another day? The people who drank claret were well able to pay 15s. a-dozen. Then he found that whisky, the value of which was about 30s. a-dozen, paid an average duty of about 18s. per dozen, or three-fifths of its value. Madeira and old ports and sherries were worth from £3 to £4 per dozen; but they were only required to pay a duty of 5s. per dozen. Upon common tobacco the duty amounted to from 3s. 6d. to 3s. 10d. per lb., while upon the very finest cigars imported, which were worth more than 10 times the value of the tobacco of the poorer classes, the charge was only from 5s. to 5s. 6d. a-box. He appealed to the Committee—was that not one-sided legislation? What would be said outside when it was found that the wealthy classes who made the laws taxed the poor in that way? It was impossible to expect the working people to be content when increased duties were put upon the articles which they chiefly consumed, and no extra charge was made upon the articles of luxuries which only came within the reach of the rich. There was no actual reduction of the duty upon the drink of the rich; but he understood that it was proposed to raise the limit of the 1s. duty on alcohol in wines from 26 to 30 degrees. The result would be that a gallon of alcohol in first-class wines would pay less than 4s., while spirits would pay 12s. a-gallon. He might make other comparisons to show the injustice and unfairness of the decision arrived at by the right hon. Gentleman the Chancellor of the Exchequer; but he had no desire to weary the Committee. He trusted, however, that Scotch and Irish Members of the House would, when the proper time came, vote against the proposal to increase the duty on spirits by 2s. a-gallon, as a protest against the disproportionate duties levied upon the beverage of the Scotch and Irish peoples and the beverage of the English people.

MR. DODDS

said, there was only one portion of the important and satisfactory Statement of the right hon. Gentleman the Chancellor of the Exchequer upon which he desired to offer a few words to the Committee, and it was that portion in which the right hon. Gentleman dealt with the Death Duties. It would be in the recollection of many hon. Members of the Committee that the subject was one upon which he (Mr. Dodds) had ventured to address the House on many occasions, and that the result of the discussion which took place in 1879, when the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote) was Chancellor of the Exchequer, and of the subsequent discussions, was that the right hon. Gentleman the Prime Minister, and then Chancellor of the Exchequer, in 1881 took up the subject, and dealt with it to a very important extent. The right hon. Gentleman then said that he (Mr. Dodds) had only dealt with the fringe of the subject; but, at all events, the changes introduced in 1881 had been found of great value to the Revenue, and of the greatest convenience to the public at large. It was, therefore, with the greatest satisfaction that, after waiting some years in the hope that further steps would be taken, he heard the right hon. Gentleman the Chancellor of the Exchequer say he was about to initiate a final reform of the Death Duties. No more important question could occupy the attention of the Chancellor of the Exchequer; and he (Mr. Dodds) hoped that the right hon. Gentleman would find that that was an opportune moment for levying certain Death Duties not levied before. As far as he could follow the Chancellor of the Exchequer in his very clear Statement, he thought he would be able to agree with the right hon. Gentleman in almost every proposition he made with regard to the Death Duties. It would be wasting the time of the Committee were he to go into the matter in detail at the present time; when they had the Resolutions in their hands they would be able to deal with the matter more fully and more effectively. If there appeared to be any necessity for it, he would have, on a subsequent occasion, to trouble the Committee with such observations as long professional experience enabled him to make on the subject. His chief object in rising now was to express his satisfaction at the Budget Statement generally, and to ask the right hon. Gentleman to give the Committee a little more information, when he rose to reply, with regard to the important subject of the taxation of corporate property. It was with great pleasure he heard the right hon. Gentleman say he proposed to deal with corporate property, and he found that his pleasure at the statement was shared by hon. Members generally. The point on which he desired more information was as to the extent of the proposed exemption of what he termed religious houses. His own county was very largely concerned in the matter—indeed, every county in the Kingdom was interested more or less in it. In the county of Durham there were from 50,000 to 100,000 acres of land, including a very large extent of coal and other minerals, held by the Ecclesiastical Commissioners. The income derived from this was enormous, and it would, indeed, be a great disappointment to everyone in the county if that property were to be exempted from taxation; it would be felt to be a great hardship if owners of land were called upon to pay the proposed new tax, whilst the Ecclesiastical Commissioners were exempted from it. That was the point on which he desired additional information.

SIR GABRIEL GOLDNEY

complimented the right hon. Gentleman the Chancellor of the Exchequer upon the generally clear way in which he had introduced his Budget, and upon the cordial reception which most of his proposals had received. There was only one point on which he (Sir Gabriel Goldney) was not quite clear, and that was as to the duties which the right hon. Gentleman proposed upon real property, as compared with personalty. Perhaps the right hon. Gentleman, in his reply, would show what effect his proposals would have upon landed property.

MR. ALDERMAN W. LAWRENCE

said, that, in the first place, he begged to thank most heartily the Chancellor of the Exchequer for the very clear and lucid manner in which he had placed this matter before the Committee. They knew that the Chancellor of the Exchequer had had a great opportunity. The opportunities of Chancellors of the Exchequer only occurred in connection with a large surplus or a great deficit. It was only on those two occasions that Chancellors of the Exchequer were enabled to make great changes in taxation. When expenditure and income were nearly balanced, those right hon. Gentlemen did not like to make any changes in taxation. The opportunity of the Chancellor of the Exchequer this year had been a great deficiency. With regard to the Death Duties, as they were called—namely, the duties on the transfer of property by death — the hon. Member for Stockton (Mr. Dodds), who had taken some interest in this matter, had alluded to his having brought it before the House some years ago. Before that time he (Mr. Alderman Lawrence) himself had had an opportunity of bringing it before the House; and the point to which he had especially directed the attention of Chancellors of the Exchequer bad been the injustice and inequality which existed between the treatment of real property and that of personal property. He had drawn attention to the fact that while leasehold property paid Probate Duty and Succession Duty, real property only paid Succession Duty; so that in the case of a man who had two houses, one freehold and the other leasehold, dying, and leaving a house to each of his two sons, the son inheriting the freehold house would only have to pay Succession Duty on his life interest, whilst the other son, for a house which might be in the same street, of equal value to the first, would have to pay Probate Duty on the full amount of the value, irrespective of what age he might be when he came into possession of the property, and also to pay Succession Duty on his life interest. That injustice had lasted for a very long time. They knew how urgently the matter had been referred to by the Prime Minister in his speeches in Mid Lothian—how warmly he had spoken of the injustice of those Legacy Duties and the Probate Duties under the last Administration, and of no remedy having been attempted. He (Mr. Alderman Lawrence) had attempted to bring the subject forward; but pressure of Business had prevented a full discussion being taken on the question. He was glad to see that the right hon. Gentleman the Chancellor of the Exchequer had risen to the occasion, and had declared that in future there should be no difference made between real property and personal property, and that both should contribute their fair share to the taxation of the country. The right hon. Gentleman had stated the manner in which this was to be done; and he (Mr. Alderman Lawrence) was inclined to think that the mode he suggested would be a great improvement upon the existing law. The right hon. Gentleman proposed to deal with it as he had already done with respect to the 1 per cent duty on real property. He thanked the right hon. Gentleman for having brought the matter before the Committee, and must say that he thought it would be received with approbation by the country as remedying a great injustice. He also agreed with the right hon. Gentleman as to the taxation he proposed to impose upon corporate property. It was a great mistake to suppose that Corporations themselves were not perfectly ready to pay the tax. What were the facts revealed in the Report of the Commission of Inquiry into the Livery Companies of the City of London? One charge brought against the Livery Companies was that they paid no Succession Duty. But that was not the fault of the Companies. The Companies were never asked to pay it; and, of course, they could not be expected to come forward voluntarily and offer to do so. Many of the Companies, however, according to that Report of the Commissioners, had stated that it would only be fair and just for them to pay that duty. But how had that statement of the Companies been treated by the Commissioners in their Report? It was not every Company that had expressed that opinion; but then it was not every Company that had property on which to pay Succession Duty. The Commissioners said that some Companies had appeared willing to pay, and they went on to state that though the Companies had notified their readiness to pay, they—the Commissioners—did not think that it came within their functions to recognize it in their Report. Now those Companies would be called on to pay the duty which had been spoken of in lieu of Succession Duty. He was not prepared to say that the amount to be paid in lieu of Succession Duty—that the amount mentioned was a fair amount; but that point would come up for consideration at some future time. It was impossible at present to say whether it was fair and just. As to exemptions, that was a great question, and it would be a very important matter to consider in the taxation of Corporations. He (Mr. Alderman Lawrence) anticipated that in future there would be grave discussion as to what Corporations should be exempted. There would be questions asked, no doubt, on that point, when the Budget Bill was brought before them. He must say that there was one thing that struck him in regard to a Resolution proposed in reference to the Spirit and Beer Duties. He was glad that the Chancellor of the Exchequer had not put an extra duty upon tea, coffee, sugar, soda water, apollinaris, or any of the teetotal drinks; but at the same time he was sure that the mass of the people of this country would feel that if alcoholic drinks were to be taxed higher than they were at present the whole of them should be affected by the change. There was no reason, if they were to raise the duty on spirits and beer—and he would not go into the question of the national drinks of England, Ireland, and Scotland—but his point was that if they were going to charge an extra tax on their national beverages they ought not to refrain from putting a tax upon wine, which was the beverage of the rich. He thought that omission to put an equal tax upon wine was the weak point of the Budget. He had no doubt that complaints would come from all quarters of the country as to that omission, and assuredly the Government would have to remedy it. It would never do to leave the upper classes of the community unaffected by that increased taxation, whilst the consumers of beer in England and of spirits in Ireland and Scotland were burdened by it. Unless some change were made, he felt convinced that a furore of feeling through the country such as the Government little expected would be created. The poor man, every time he drank a pot of beer, would know that he was paying something more for it than he had done hitherto, and he would know perfectly well that the rich man who drank his glass of wine was paying exactly the same for it as he had done in the past. The poor man would consequently feel aggrieved, whatever the right hon. Gentleman the Chancellor of the Exchequer might say to explain away the apparent injustice. The present condition of the working classes should be taken into account by the right hon. Gentleman. He should bear in mind that while he was proposing to put this additional taxation upon the labouring man who took his glass of beer, that that man's wages were not rising, and that his work was not sure. He (Mr. Alderman Lawrence) admitted that the incomes of the poor were not taxed, and that it was necessary that every class of the community should bear its share of the burden of Imperial taxation. He was not going into the question as to the relative amount of taxation upon the poor and upon the rich, and he would not commit himself with regard to the desirability of imposing a tax upon beer or spirits; but he was of opinion that an increase put upon spirits would lead to a great deal of illicit distillation, particularly in Ireland. Nothing would disabuse the minds of the wage-earning classes in England, who very seldom got anything better to drink than beer, of the idea that they were suffering under an injustice in having the tax upon their beverage increased; and it must be borne in mind that beer to the working classes was a necessity, and not so much a luxury. The hard-working man, who perhaps got very little during the day but his beer and bread and cheese, might possibly be taxed fairly enough; but it would be with considerable bitterness of feeling that he would reflect upon the fact that the tax upon the wine of the squire, and of the landlord and of his employer, was not raised, but, as a matter of fact, was lowered; because in the future that class of people would be able to obtain wine at a higher alcoholic strength than they did now for the same price. That subject was much more serious than the right hon. Gentleman the Chancellor of the Exchequer seemed to think; and he (Mr. Alderman Lawrence) was sure that it would be brought home to him and to the Government in a way they had not the slightest suspicion of. He was afraid that the Budget would be one which would create a large amount of dissatisfaction amongst the masses. He would not go into the questions which arose upon the Budget beyond those affected by that night's Resolution. He would repeat—because he did not think it could be too much impressed upon the right hon. Gentleman—that the working classes ought not to be treated in this exceptional manner; because it would be treating them exceptionally to tax their beer and spirits, whilst the wine of the rich man was left alone.

MR. CLARE READ

said, that he did not doubt that the hon. Member for Limerick (Mr. O'Sullivan) was a great authority on whisky; but he (Mr. Head) did not think that the hon. Member was an equal authority on the question of beer. The hon. Gentleman had told them that a barrel of beer contained five gallons of proof spirit. He (Mr. Read) did not think the hon. Member could ever have drunk much beer, or he would not say that. But hon. Gentlemen seemed to think that the people of England did not drink spirits. Well, he only wished they drank more beer and less spirits, because if they did that he believed they would be a healthier people. But the hon. Member seemed to think that the Spirit Duties would fall upon 1,000,000 people, while the Beer Duties would fall upon some 15,000,000 or 16,000,000— he seemed to think, in fact, that the people of England did not drink spirits. That was perfectly absurd. It seemed to him (Mr. Bead) that the Chancellor of the Exchequer bad treated both countries very much alike—both the country that produced beer and the country that produced spirits; for it must be in the recollection of the Committee that this question of the Malt Tax had often been considered in that House, sometimes with an idea of its entire repeal, but that, instead of that, they had constantly seen additions made to it. In 1840 the duty on malt was 20s. 8d. Then there was £5 per cent put upon it in that year, which raised it to 21s. 8d. In 1862 there was a further tax on brewers' licences, when the Hop Duty was repealed, and the tax was brought up to 22s. 8d. Then in 1880, when the present Prime Minister was going to confer such a great advantage upon the agricultural interest by transferring the tax from malt to beer—which he (Mr. Bead) considered was a good thing in itself; but, at the same time, the right hon. Gentleman took care to recoup the Revenue for any possible loss by raising the tax on beer, so that a quarter of malt paid something like 24s. Now, by the present addition with which they were threatened by the right hon. Gentleman, the tax on malt would be raised to 26s. or 27s., which was almost 100 per cent on the present price of barley. Then they came to the question of private brewers; and he thanked the right hon. Gentleman for the small concession he had made. He believed that a 4s. licence for six months would be appreciated by the agricultural labourers in the Eastern Counties, who brewed beer only in the hot months, for haysel and for harvest. All private brewers had been treated very badly by recent legislation. They had certain advantages before the transfer of the tax from malt to beer. They did not pay any licence. They could use what they liked for brewing, and did not require to give notice to the Excise. Now, however, they received visits from the Excise, and had to give notice whenever they brewed. Hitherto the licences had been charged upon them to the extent of some 10 or 12 per cent more than it was when they had to pay the old Malt Duty; but by the present increase the charges would be something like 15 per cent. He concurred in a great deal that had been said by the hon. Gentleman (Mr. Alderman Lawrence), and he thought that it was quite unfair upon producers in this country and upon the consumers of beer that they should have their beverages taxed higher than ever, and that there should be no extra tax imposed upon wine, which was the produce of other countries; and be did not doubt that when the poor man quaffed his pot of beer, he would not only think of the lenient manner in which the rich, who were generally supposed to indulge in champagne, were treated, but he would also think of the Aldermen and other gentlemen in a similar station of life, who, perhaps, drank a little more. He (Mr. Read) was sorry that, whatever agricultural question was mooted in that House, some hon. Members always endeavoured to raise some feeling of antagonism between England and Ireland. He was sorry there was any dispute between the countries. It must be remembered that nine-tenths of the beer was brewed from barley grown in the United Kingdom, whilst the higher luxury of wine was produced entirely abroad. Those who happened to grow barley made no complaint that there was no tax on cider; but there was a great deal of what were called non-intoxicating beverages which contained a considerable amount of alcohol, and he did object to those beverages being ex- cluded from taxation. Those things ought to contribute something to the Exchequer. But with regard to private brewers' licences, he must say that it was a lamentable fact that private brewing seemed to be dying out in the country. He regretted it, because he did believe that nothing conduced so much to the temperance of the agricultural labourers as the home-brewed beer which they could make in their own cottages. He saw that in 1882 there were 32,000 of those brewers. In 1883 they were reduced to 29,000; and in 1884, notwithstanding the increase of the limit to 9s., there were only 27,000 who took out licences. Therefore, it appeared to him that private brewing was doomed to be extinguished in this country. The proposed imposition would assuredly affect it. He could not say that he ought to thank the right hon. Gentleman the Chancellor of the Exchequer upon the result of his long and arduous study of Schedule B of the Income Tax. The right hon. Gentleman had been good enough to say that he would undertake to investigate the whole subject, and he told them that his desire was that farmers should pay the tax as all other traders did. But farmers were not traders; they were more than that—they were manufacturers; they were more than manufacturers—they were producers. Therefore, it could not be expected of them that they could keep anything like accurate accounts on their farms in the same way that accurate accounts could be kept in a shop. That difficulty of keeping accounts in connection with a farm was pooh-poohed in many quarters, and it was said that farmers might keep accounts as correctly as traders. To hon. Gentlemen who said that he would simply reply—"Try to do it yourselves." The hon. Member for Cardigan (Mr. D. Davies) amused the House last year upon this very point by telling them that he at one time had interested himself in farming, and had endeavoured to keep accounts. He had told them that, in spite of the greatest care and attention which he had devoted to the matter, he had been obliged to give up all hope of being able to keep accurate accounts in the end. A farmer's account depended not upon the amount of money he had in his pocket or at his bankers, but on the amount of stock he had on his farm; and he could not by any possibility arrive at the profits his farm had made unless he had a thorough, complete, and accurate valuation of everything upon his farm. Not only that, but it was necessary to have an accurate knowledge of the state of the farm, because it was necessary to put a great deal more into it in one year than in another; and the fluctuation in the price of stock was so great that, though one year, when he might possibly have a balance at his banker's, he might stand at a loss, in the succeeding year, when he had a very small or possibly no balance at all at his bankers, the increase in value of his stock and of his corn might give him a profit. Therefore, it was not an easy thing, even for gentlemen who had plenty of leisure and ability, and who knew how to keep accurate accounts—it was not such an easy thing for them to furnish those accounts in connection with farming. A Norfolk gentleman, whose brother generally sat opposite to him in that House, farmed his own estate admirably. That gentleman had been good enough to show him his accounts the other day. He had employed a well-known valuer to make a valuation of his stock and crops. He had found out that the way that profit was made was this—that there was an annual increase in the value and amount of stock, and therefore he showed a very fair balance indeed; but he (Mr. Read) would like to know, when there had been a decrease of something like 20 or 25 per cent in the value of stock during the last 18 months, how would that gentleman's account appear, and who was to say whether he had made a loss or whether he had made a gain? He could assure hon. Gentlemen that, however willing the farmers might be to keep accounts, they would not be able to do so. They did not keep accounts, and even if they did, when their figures came before the Income Tax Commissioners they would be most unreliable. What he (Mr. Read) had said last year had not been touched upon by the right hon. Gentleman the Chancellor of the Exchequer, with regard to the reason why farmers had been asked to pay under Schedule B on tithes as well as on their rent. That they should do so was never contemplated by the Act of 1842. In 1842 not half the tithes were commuted. What did he find in the Instructions in the Act that were given as to assessing Schedule B? Why, in No. 10 of those Instructions it said that when any landlord should be subject to any covenant or agreement to pay any parochial rate or any composition on tithes, then the annual value should be estimated exclusive of such rates and of such composition on tithes—showing most distinctly that tithes and rates were to be considered to be outgoings, and that a tenant should only be expected to pay on the rent that he paid to the landlord. It was not until some years after that Act that, in consequence of a Circular from the Inland Revenue, tithes and rent were put together, and the farmer was made to pay under Schedule B on half the amount of those two imposts. He should be very glad indeed if the original intention had been resorted to, for then the farmers would have nothing to complain of. He contended that in the original Act the proposition was fair and just—he would almost say generous; but in the altered circumstances of agriculture and the reduced profits which farmers made, the Income Tax, especially when they were made to pay it on the tithes, had been a far greater burden of late, and was one which he was sure could not be mitigated, however they might desire it, by paying on their supposed profits. He believed that if the arable farms of England were to produce accurate and complete accounts for the last seven or eight years, it would be found that, instead of having to pay the amount of Income Tax that they had been called upon to pay, they would not have been charged 1d. He had not exactly understood the right hon. Gentleman with regard to the proposed imposition on the Scotch and Irish farmers. He had said that in England they should pay on the half, which would be 4d., and that Ireland and Scotland should pay on one-third, which would be 3d. He was not aware that 3d. was——

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I did not say that.

MR. CLARE READ

said, that he knew the right hon. Gentleman's explanation, and if he were an Irish or a Scotch farmer he should object to it. However, he would leave the Irish and Scotch farmers to fight the matter out for themselves. Then they came to the other question of the imposition of full Legacy Duty on real property. As he was not the owner of much land, it did not affect him; but he did hold it to be a monstrous injustice that, if they were going to put an increased burden on the land, they did not at the same time revise the system which imposed almost the whole of the local burdens in the country upon the owners of land and houses. They should bring in the general wealth of the country in order to relieve that local taxation, if they were going to impose that additional weight and burden upon the land of England.

SIR GEORGE CAMPBELL

said, he had listened with great attention to the able speech of the right hon. Gentleman the Chancellor of the Exchequer, and there was no doubt that the right hon. Gentleman had dealt with the fact that there was a deficit of £15,000,000 as pleasantly as possible. On the other hand, as had been said by the hon. Member opposite (Mr. O'Sullivan), taxation pressed unduly on the poorer classes; and he was bound to say that he thought the right hon. Gentleman had shown a great want of courage in dealing with the duties on alcoholic liquors. One would have thought that the Chancellor of the Exchequer, in dealing with them, would have done something to diminish the inequalities which existed in respect of the duties charged; but, instead of that, he had done what would have the effect of increasing them. The impression he had formed whilst the right hon. Gentleman was delivering his speech was that he was going to put the increase of duty upon beer, and not upon spirits. It might be a question whether they should have an additional tax placed upon them, whereas the case with regard to beer was quite different. Beer was notoriously the national drink in England, and the inequality with regard to it was so monstrous that it had seemed to him impossible that the right hon. Gentleman should not have done something to remedy it, and that he would have raised a great part of the money required by placing additional taxation upon that article of consumption. It might be questioned whether, as the hon. Member for Limerick had said, there were five gallons of spirit in a barrel of beer; but whether it contained five or six gallons of spirit, it was clear that infinitely less taxation was paid on the alcohol contained in beer as compared with the alcohol contained in spirits. Therefore he had been astonished when he heard the right hon. Gentleman the Chancellor of the Exchequer state to the Committee that he was about to place 20 per cent additional duty on spirits, and only 15 or 16 per cent upon beer. That appeared to him to be so gross and monstrous a wrong that he could not but express his surprise at the proposal of the right hon. Gentleman. It might be that spirits would bear an additional duty if it could be collected without the increase of smuggling, and he, for one, would not object to that; but he did say that they, as Scotchmen and Irishmen, and all who, like the worthy Alderman (Mr. Alderman Lawrence) who had spoken that evening, wished to see fair play, should insist that there should be something approaching to equality—not an exaggeration of the inequality which now existed. He thought the Chancellor of the Exchequer would not find that the worthy Alderman, although he took up another point, was the only one who thought that the right hon. Gentleman would not get through his Budget arrangements without immense dissatisfaction being shown towards his proposals by people of every class, especially in Scotland and Ireland, for the reason he had already stated—namely, that not only had he done nothing to diminish the existing disproportion, but that he had exaggerated the difference of duty between spirits and beer, and also as between spirits and beer together and wine. Thanks to the beneficent finance of the right hon. Gentleman who was now Prime Minister, those who liked claret and similar foreign wines had the privilege of drinking them at a small cost. He drank claret himself; but what did the Chancellor of the Exchequer now propose? He proposed to admit port and sherry at the same duty of 1s. He (Sir George Campbell) believed that, under the proposals of the right hon. Gentleman, whisky would be exported, used in the manufacture of port and sherry, and then brought back again into this country. That, he thought, constituted a grievous inequality; and the worthy Alderman had, in his opinion, done good service in drawing to it the attention of the Chancellor of the Exchequer. With regard to the Income Tax, he would not go at length into the question of that tax, but would say that as it was now becoming a permanent and increasing impost on the country, he agreed with a much higher authority on the subject than himself—namely, the right hon. Gentleman the Member for the City of London (Mr. J. G. Hubbard)—that the Chancellor of the Exchequer must redress its inequalities, and make a distinction between property and income in the application of the tax. He denied that that was now a tax upon property, and he hoped the right hon. Gentleman opposite, who might be said to have made the subject his study for a long time past, would keep up his opposition until there was a distinction made between the income derived from property and the income derived from labour. With regard to the matters dealt with subsequently in the speech of the right hon. Gentleman, he confessed that, having regard to the very great events before them, it might not be possible to do that which all but Chancellors of the Exchequer were bound to do—namely, honestly to pay their way. He understood the right hon. Gentleman to give the Committee figures to show that the National Debt was only to be reduced by £6,000,000 per annum—he understood that he proposed to raise £7,500,000 by stopping the action of the Sinking Fund. [Dissent.] The right hon. Gentleman had certainly proposed to raise one-half of the deficit of £15,000,000 by taxation, and the remainder by other means. He wished to point out that, in his opinion, the proposal of the right hon. Gentleman was not so liberal as it appeared to be, because he (Sir George Campbell) held strongly that the cost of a war such as the Soudan War, which Her Majesty's Government had maintained, and which they now admitted to be a disastrous war, which would not advantage posterity, but would be the source of difficulties to future generations, should be paid for by this generation. If the right hon. Gentleman would take the advice he would venture to offer, and put 2s. or 3s. additional taxation upon beer, he might get all the money he wanted by a mode of taxation which the country was well able to bear. He agreed that there was too much taxation placed upon the poor and too little on the rich, and that their policy should be greatly to reduce the burdens on the poor and greatly to increase the burdens on the rich—seeing that, in his opinion, justice was not done in that respect, he contended that the Government were bound to put something more upon the rich and something less upon the poor. Still he thought that they ought to make the poor feel the burden of war; that the labouring classes ought not to get off scot free, and that they should learn the lesson that when the country plunged into war they would have to bear their share of the cost. For those reasons he looked on the tax upon beer as a politic tax, and as one of the best means by which the poorer classes might be made to feel the evils of war.

MR. SALT

said, the Budget put before the Committee might be regarded either in reference to its details or in reference to its general features. It was a Budget of great interest and importance; and although he did not intend to trouble the Committee with many observations upon it, or to put the right hon. Gentleman the Chancellor of the Exchequer to the trouble of answering at that time any questions he might raise, he wished to point out to him that his statement presented many points of detail which at the proper time would require ample scrutiny and consideration. The right hon. Gentleman had proposed an alteration in the Death Duties. That was a very difficult question, and such as would require time for consideration, and when the time arrived it would be necessary to discuss it with reference to a considerable number of details. When they spoke of making duties on personal property and real property alike, it might be a good thing to do so; but it should be borne in mind that there was a great difference between the character of personal property and the character of real property. The two classes of property had each their special and distinct qualities, and these they should bear in mind when they proposed taxes which would bear heavily upon them. Then with regard to the taxation of corporate property, all he would say was that it did not seem to him to be a very easy thing to carry out, when, as the right hon. Gentleman himself had acknowledged, it must be ac- companied by a vast number of exemptions; and he was not sure whether, for the take of the small sum which the right hon. Gentleman expected to gain by it, it was worth his while to make such a proposal. There was nothing so difficult with regard to taxation as exemption; if they exempted one man some other person would expect exemption too, and it was very difficult indeed to draw a line. He thought it would be found especially difficult to draw a line with regard to corporate property, and to say where exemption was to cease and taxation to begin. Then with regard to the Sinking Fund; when the proposals with regard to the Sinking Fund came before the House, they would be in a better position to understand clearly what the right hon. Gentleman proposed than they were now. Therefore, he would not say more at that moment except that it was a most remarkable thing that a little more than 12 months after the Government had established a system of Terminable Annuities, which the House was told to regard as a matter for congratulation as a means of paying off the National Debt—a little more than 12 months after that place had echoed with sounds of congratulation, they were told that the whole thing was to be suspended for one or two years, and, perhaps, if circumstances turned out badly, for an indefinite period. There were two other points raised by his right hon. Friend as addenda to the other subjects dealt with in the Budget Speech. His right hon. Friend spoke about the settlement of Indian Charges. That, as the Chancellor of the Exchequer had said, was an intricate matter of finance; and he would observe that when the time came to discuss it on the Bill which it was proposed to introduce, something, at any rate, should be said with regard to the Treasury Minute relating to the appropriation of a considerable amount of money which he believed had arisen from outstanding balances. He did not wish to trouble the Committee by going into the question then; but he thought it looked as if further explanation were needed, because a balance appeared to have been appropriated for certain purposes which had neither been contemplated nor sanctioned by Parliament. Then with regard to the farmers' Income Tax, whether they could ascertain what was the real income of farmers throughout the country was not an easy question. He was himself frequently in the habit of talking with farmers of every class—from the men who farmed five, six, 10, or 30 acres to those who farmed 200, 300, or 1,000 acres. Of course, the smaller farmers were much more numerous than the large farmers, and he believed that it was extremely rare for those of the former class to keep an accurate account of their business. He would go further and say—and he believed his hon. Friend (Mr. Clare Read) would bear him out—that if a man entered on a farm in a certain condition it would be impossible to ascertain what the profits were before a period of four or five years had elapsed; in that respect the business of a farmer was not like some businesses in which the books could be made up and the profits ascertained at the end of the year; it was almost impossible for a farmer to make out the actual sum spent and the actual amount of profit. And with regard to asking them to pay Income Tax on the actual profits, all he would say was that the result would probably be not very satisfactory—namely, that no Income Tax could be claimed from them at all. So much with regard to this view of the Income Tax. He did not wish to trouble the right hon. Gentleman the Chancellor of the Exchequer with any questions on the subject of the Income Tax that day. He regretted that so much detail had been introduced into the Budget Statement of the right hon. Gentleman. They were in the presence of a deficit of £15,000,000, and possibly in presence of an enormous expenditure of scores and hundreds of millions; and what Gentlemen on those Benches wished to know was how the financial difficulty of the position was to be met. To go into the small details was, perhaps, of little importance on that occasion. As had been said, they must regard the Budget on broad and general principles. He must say that a Budget of this character, coming after five years of finance carried on by the right hon. Gentleman the Prime Minister and the present Chancellor of the Exchequer, was most disappointing and most distressing. In 1880, if anyone, however much opposed to Her Majesty's Government, had told them that a Budget like that could by any possibility be produced in that House, the person who made the statement would have been regarded as a wild dreamer. He would speak for himself alone; he felt bound not to add, by a single word or expression, to the cares and anxieties which pressed so heavily on the right hon. Gentleman. It was possible that foreign affairs might turn in such a direction that a great financial strain might be put upon the country, and therefore he repeated that he would be the last to add to the difficulties with which the right hon. Gentleman had to deal; but it was upon that consideration, and upon that only, that he abstained from treating the Budget of this year as he believed it really deserved to be treated. So long as the interests of the country required it, he, for his own part, should put those interests far beyond any Party feeling or considerations, and give to the right hon. Gentleman, so far as the interests of the country might need it, his loyal support.

MR. A. M'ARTHUR

said, he should wish to say a few words on one point connected with the Budget which, in his opinion, was deserving of consideration. He was one of those who thought it most desirable that all classes of alcoholic drinks should be taxed as far as it was possible to tax them without running the risk of promoting smuggling. But he hoped that in carrying out that policy they would act fairly towards all those concerned in the matter. Although he was not present in the House when the hon. Member for Galway (Mr. Mitchell Henry) spoke on this question, he understood that the hon. Gentleman had stated that he did not believe that any wine contained a stronger percentage of alcohol than 30 degrees, if so much. Now, their Colonies had been for many years past labouring under a serious disadvantage in respect to the question of Wine Duties which they felt very acutely. He was not aware whether the right hon. Gentleman the Chancellor of the Exchequer had directed his attention to the question; but he might mention that in the time of the late Government he had had the honour of being a member of one or two deputations which waited on the Chancellor of the Exchequer of that day (Sir Stafford Northcote), who stated that in con- sequence of the position of affairs, and especially with regard to Spain, he could not see his way to make any alteration in the duty upon Colonial wine. He (Mr. M'Arthur) was glad to see from the statement of the Chancellor of the Exchequer that evening that the standard for (Spanish wines had been raised to 30 degrees. But he understood that some of the Australian wines had a standard of 32, and if the standard for Spanish wines, as had been stated by the right hon. Gentleman, bad been fixed at 30 degrees, it would be brought very nearly up to the Australian standard. He thought, especially at the present time when their Australian Colonies had manifested so much sympathy and had shown their desire to assist this country in every way, that it would be very unfortunate if, as he had just said, they were to bring up the standard for Spanish wines very nearly to the Australian standard, and leave their Australian Colonies as it were out in the cold. Therefore, he drew the attention of the right hon. Gentleman the Chancellor of the Exchequer to that point, and in doing so he ventured to express a hope that he would consider it with the object of making it possible for the Australian Colonies to introduce their wines on the same terms as other countries. The Australian Colonists were very large wine producers, and it would certainly be a great injustice if they were to exclude or handicap their wines; it would be injurious to them, and undoubtedly produce on their minds a bad impression. He hoped the right hon. Gentleman would take that matter into consideration, and so reduce the standard for Australian wines as to allow them to come into this country on as favourable terms as the wines of other countries.

MR. CROPPER

said, there were two points he desired to refer to in connection with the Budget Statement of the right hon. Gentleman. In the first place, he had been disappointed on listening to the Chancellor of the Exchequer to find that the rule which related to the farmers' Income Tax was not to be altered. He could not see any reason for a distinction being made with regard to the Income Tax as between English and Scotch farmers. In other times, when the Irish farmers and the Scotch farmers had less chance than they had now, there might have been some reason for a distinction being made; but at the present time he could see no reason for it. It might be, as the Chancellor of the Exchequer thought, that the English farmers kept accounts; but, for his part, he had a very great doubt on the subject, except with regard to those who farmed, on a large scale. As one of the Income Tax Commissioners, he was inclined to think that farmers were of that class which kept no accounts. When they knew that, at the present time, there was great distress and depression in the agricultural interest, it appeared very hard to the English farmers that their competitors should be placed in a position in which they were more lightly taxed than themselves. He hoped that before the debates on the Budget were over, the right hon. Gentleman the Chancellor of the Exchequer would deal with that question in a more fair and equitable manner than that in which it had been dealt with hitherto. Further, he wished to say that he, in common with many persons in the country, desired to see some alteration in the Wine Duties. He did not think that, whereas the tax on spirits and beer was to be increased, the duty on wine should practically remain the same. He thoroughly appreciated the excellent remarks which had been made by the hon. Member who preceded him, and he strongly desired that the Australian Colonies should be placed on the best footing possible in respect of the importation of their wines into this country. When they considered that a bottle of champagne, which cost 6s. or 7s., only paid 6d. duty, it appeared strange that those who could afford to pay for that luxury were not to pay increased taxation, while the man who drank beer had to pay an increased duty to the Government. He trusted that in the debate which would follow means would be pointed out of adopting his suggestion. If the right hon. Gentleman the Chancellor of the Exchequer were to adopt it, he would add greatly to the popularity of his Budget and draw to his side all classes of the people.

MR. BIDDELL

said, there were one or two points on which he wished to offer a few observations. He thought that the proposals with regard to the Income Tax would meet with general approval, because the payers of that impost had really expected a much larger increase than was suggested. Much had been said as to the taxation of real property, and he regretted that the Chancellor of the Exchequer had not met one hardship which was felt by the owners of such property. Under the present arrangements no deductions were allowed for repairs. On the generality of farms the cost of repairs amounted to 10 or 15 per cent of the rent, and it was felt by real properly owners to be very hard that they were not allowed, when making their returns, to deduct the sum expended upon repairs. He regretted also that the Chancellor of the Exchequer had not dealt with the inequality in the assessment of Scotch and English farms, for the right hon. Gentleman himself admitted that the English farmer was taxed to the extent of 25 per cent more than the Scotch farmer. The agricultural interest had taken great pains to call attention to that inequality; but the Chancellor of the Exchequer had always declined to deal with the subject on the ground that it was one of considerable difficulty. He (Mr. Biddell) failed to see the difficulty. With regard to farmers being rated on their absolute profits, he thought there was much more difficulty than the Chancellor of the Exchequer imagined. He (Mr. Biddell) was convinced that no farmer could make a correct balance sheet without engaging a professional man to value everything on the farm. That would lead to great expense, and would in reality be perfectly impracticable. As to the relative taxation upon beer and spirits, he well remembered the great authority on finance, the Prime Minister, saying that it had always been the object of the Government in taxing spirits heavily to check the consumption and at the same time reap as much Revenue from that source as was possible. He (Mr. Biddell) was convinced that the hon. Gentleman the Member for Limerick (Mr. O'Sullivan) over-estimated the alcoholic strength of beer. If the hon. Gentleman would come to Suffolk, he would soon be convinced that there was not a vast amount of alcohol in the beer consumed there. The calculation of the Government was that a bushel of malt made 18 gallons of beer. If that was so, the beer could not be very alcoholic. The Prime Minister had at various times increased the Malt or Beer Duties. The Malt Duty used to be 20s. a-quarter; under this Budget, the duty was equivalent to 29s. a-quarter. At the same time there had practically been a reduction in the Wine Duties, for better wines would in future come in under a lower duty. He approved of the taxation of cider, for he did not see the equity of the taxing the drink of the Eastern Counties while that of the Western Counties went untaxed. If the right hon. Gentleman the Chancellor of the Exchequer had increased by 1½d. or 2d. the Tea Duties, the Chinaman only would have suffered from the diminished consumption, whereas the increase on spirits and beer would injuriously affect the farmers of the country in the diminished demand for barley. The right hon. Gentleman also said he would not tax any raw materials, In that he was pretty right; but he (Mr. Biddell) would like to see Customs duty put upon manufactured materials coming into this country. If a 10 per cent duty, for instance, were to be imposed upon such goods, trade would be stimulated and much of this increased taxation would be avoided. He was glad of the change in private brewers' licences, but he thought the licence paid by cottagers might well have been reduced to 2s. yearly. It would have made very little difference in the Budget, but it would have done much to promote private brewing. He agreed with the hon. Member for West Norfolk (Mr. Clare Bead) that where they found private brewing they found temperance and less temptation to frequent the public-house. It was most gratifying to hear from the right hon. Gentleman that the deposits in the Savings Banks were increasing. He (Mr. Biddell) attributed the fact to the greater prudence and foresight of the working classes rather than to their general prosperity. He quite approved of the increase of the Property Tax, and of the staying of the reduction of the National Debt; but he thought that the minor parts of the Budget might be considerably improved.

MR. FIRTH

said, there were one or two points in the Budget to which he wished to direct the attention of the Chancellor of the Exchequer. As to one of them—namely, the proposed charge upon corporate property—he would make an appeal to the right hon. Gentleman. Two or three years ago, he ob- tained a Return, to which the Chancellor of the Exchequer had alluded that night, of all land in mortmain. That was a Return of the utmost value, but in its present form it was perfectly valueless. Its size was so great that the cost of printing it was considerable—too great for the Treasury to undertake. At all events, that was the opinion of that economist the hon. Member for Liskeard (Mr. Courtney), when he occupied the position of Secretary to the Treasury; but those days of economy, in more respects than one, were gone. He (Mr. Firth) should suggest that the printing of that Return was a matter of the truest economy, especially now that the Government had recognized the great principle that property of the hind dealt with by the Return ought to be taxed. Having moved for the Return, he watched its preparation very carefully, and when it was completed he looked upon it as a very remarkable production. He was anxious that more light should be given to it, and he appealed to the Chancellor of the Exchequer to order, in the public interest, the printing of the evidence obtained with regard to lands held in mortmain. The right hon. Gentleman expected that a 5 per cent duty upon that property would yield £150,000. In his (Mr. Firth's) opinion, the right hon. Gentleman would find he would get very much more than he estimated. He ventured to suggest to the Chancellor of the Exchequer that he might very usefully consider the form in which the Return should be made. At the beginning of the century there were under the control of Corporate Bodies considerable masses of property which had now disappeared altogether, and, therefore, he trusted that the form of Return which the Corporate Bodies would be asked to make would be such as would show the property from which the income was derived as well as the income itself. After proposing to exempt from the tax property acquired within the last 30 years, he would like to know how the right hon. Gentleman arrived at the conclusion that 5 per cent would be a just rate to charge? Those were points on which he should like some expression of opinion from the Chancellor of the Exchequer. The hon. and worthy Alderman the Member for the City (Mr. Alderman Lawrence) had suggested that the City Companies were extremely anxious to be taxed. His (Mr. Firth's) impression was that they were extremely anxious to be let alone. According to a report in The Times a few weeks ago, a few of the Companies had considered the question amongst themselves. Some of the larger Companies, assuming for the nonce unusual virtue, expressed a willingness to be taxed for the purpose of Succession Duties. He did not wish to misinterpret them, but he apprehended they supposed that if they accepted such a guileless resolution no one would suggest they should be taxed, and that they would be left to pursue their courses perfectly irrespective of any relation to the duties they had to the public at large. He was glad to see they would find themselves mistaken in their resolution, and that they would find themselves mistaken in the result. There was another suggestion of the Chancellor of the Exchequer to which he wished to call attention, and that was with respect to the telegraphs. He (Mr. Firth) found that the Telegraph Service did not pay. It scarcely paid its own expenses, and he presumed it could not pay any proper interest upon the enormous and extravagant and unjustifiable amount expended in the purchase of the telegraphs from the Telegraph Companies. He thought that, apart from the improvement which the Chancellor of the Exchequer was about to make in reducing the telegraph charges, he ought to consider the advisability of improving telephonic communication. The great electric problem of holding telegraphic and telephonic communications on the same wire had been solved, and he thought it was due to the public that a great Department like the Post Office should offer telephonic as well as telegraphic facilities. Those were the only matters to which he ventured to allude; they were matters to which he had given some attention, and as to which he should be glad to have an expression of opinion from the Chancellor of the Exchequer.

MR. GREGORY

said, the right hon. Gentleman the Chancellor of the Exchequer had been placed in a very difficult position, but he had discharged his duty with judgment and ability. There were, however, one or two points on which further information was required. He could not see why the right hon. Gentleman should draw a distinction between English and Irish farmers with reference to the Income Tax. If the two classes were put upon the same footing; it would give a good, deal of satisfaction to the farmers of this country; it might reconcile them to the increased taxation, and really it would make very little difference to the Exchequer. He was quite in accord with the right hon. Gentleman with respect to the imposition of duties on spirits, for he thought it was a very fair and reasonable imposition to make. But, now, there was another question with which, perhaps, he had some acquaintance—namely, the question of taxation of real property. The new proposals in that respect involved some very serious consideration. He did not quite follow the purport of the right hon. Gentleman's Resolutions on the subject, or the manner of their operation. It was, no doubt, a very intricate and difficult subject, and therefore he (Mr. Gregory) might be excused for saying he wished to reserve full freedom of action when those proposals subsequently came to be dealt with. He confessed he did not understand how the right hon. Gentleman would assess his duties in the case of successive limitations. The same devise might extend to various successions to the same property, and he would like to hear from, the right hon. Gentleman whether a new Probate Duty—for that was what it came to—would accrue with respect to each of those devolutions of the property; and, if so, whether in cases of a collateral devise the Legacy Duty would also attach to such devise? [The CHANCELLOR of the EXCHEQUER (Mr. Childers) dissented.] The right hon. Gentleman shook his head; but he (Mr. Gregory) did not see anything in the Resolutions to prevent such an operation. He wished, however, to reserve that point for future consideration and discussion. When they considered proposals for new taxes they must look at them in all their incidents. This was, he understood, in cases of direct descent to supersede and in other cases to be an addition to the Succession Duty. Was it to be on the same footing as the Succession Duty? If so, it might operate with the greatest hardship. In respect of the question of the descent of the title to property, there was a provision in the Succession Duty Act which had had an effect which even the framers of the Act never contem- plated. For instance, by the construction put upon the words "predecessor in title," there had been imposed on certain successors to a title a charge of 10 per cent, whereas if the property had been personal property the charge would only have been 1 per cent. Such questions as those they should have carefully to consider, and it was for the purpose of showing the necessity of considering them that he had made those observations. The right hon. Gentleman had said he had received, owing to the exertions of the officials of the Department, considerably more Revenue than might have been expected. They had no doubt exerted themselves to the greatest extent to whip up the Revenue, and, perhaps, in doing so, they had acted somewhat harshly and had created a certain amount of discontent. It was not desirable that they should create any unnecessary discontent in the collection of taxation. He did not say that in that case anything the officials had done was unnecessary or uncalled for by their instructions; but he ventured to point out that, for the purposes of the Income Tax, Returns might be allowed to stand for a period of three years, instead of having to be made out every year. He did not think such a practice would lessen the Revenue, and it would, undoubtedly, give great satisfaction to the country. There was also another point which arose from the proposals for new taxation, particularly upon that of real property. It was the rule that time did not turn against the claims of the Crown. This frequently operated with the greatest hardship and, he might add, injustice. He knew at that moment a case where a claim had been made upon a property 40 years ago, and in which not only the duty but 40 years' interest was charged, and that he thought a principle which the House of Commons could hardly continue to sanction. He certainly thought it was time to relieve the public from an imposition of that kind, and for the House to take the matter into its serious consideration. When they proposed a heavy taxation, though the country would readily bear it, the method of its imposition should be tempered with moderation. And it was in vain that they struggled to facilitate the transfer of land if they left the claims of the Crown upon it in their present position. No one would be safe in taking an estate under the proposal now made until the duties were cleared off.

MR. ARTHUR ARNOLD

said, that he had pressed upon the Chancellor of the Exchequer from time to time the subject of the taxation of lands held in mortmain, and he was, therefore, very glad that the right hon. Gentleman had abandoned the resolution he had formed last year not to deal with the subject except in connection with local government. He could not, however, join with the hon. and learned Gentleman the Member for Chelsea (Mr. Firth) in his congratulations to the Chancellor of the Exchequer, because the proposals of the right hon. Gentleman did not show much valour. If he had understood the Chancellor of the Exchequer rightly, he proposed to exempt all lands of a religious and charitable character. What lands held in mortmain in this country by Corporations were not of that character? The hon. Member for East Sussex (Mr. Gregory) had just addressed the Committee, and he was Treasurer of one of the London hospitals. That hon. Member was, therefore, conversant with the affairs of those Institutions. There were also the lands of the Ecclesiastical Commissioners, the lands of the Charity Commissioners, the estates of the Universities of Oxford and Cambridge—all those lauds would be exempted by the proposal made that night. The value of land held in mortmain in this country was not less than £12,000,000 a-year; and if the proposals of the Chancellor of the Exchequer were carried out as they ought to be the income derived from a tax of that sort should produce not less than £600,000 a-year. It seemed to him that it would be a great hardship upon the landed gentry, and that they would have room for serious complaint, if those great landed Corporations were exempted from taxation, while they, the private landowners, were subjected to taxation and to all local burdens. Such exemption, in the case of religious and charitable institutions, had been spoken of by the Prime Minister as a grant. When the time came he hoped he should be supported by the Representatives of the lauded interest in the House—when he made a further objection against the limited proposals of the Chancellor of the Exchequer that night.

MR. EDWARD CLARKE

said, he thought that the observations of the hon. and learned Member for Chelsea (Mr. Firth) a little while ago showed an interesting characteristic in the history of the Parliamentary Return for which the hon. and learned Gentleman had moved. Coming as it did from an economist, it was one of the most interesting stories the House had heard for a long time. It appeared that the hon. and learned Gentleman had moved for a Return of lands held in mortmain, which his Friends in the Government had promised to give. When the Return was produced it was found to be two feet thick. It was too bulky to be carried about, and it was put on a chair, and occasionally visited by the hon. and learned Member, to see if it was quite safe. The hon. and learned Member now confessed to the Committee that the Return was of no value whatever.

MR. FIRTH

My hon. and learned Friend altogether misunderstands what I said. What I said was that it was of no utility—that is to say, that it could not be used in itself. Its intrinsic value is enormous, but its bulky nature renders it impossible to use it. You cannot get at it.

MR. EDWARD CLARKE

said, that his hon. and learned Friend had followed up the statement by saying that the cost of printing it would have been so enormous that even his extravagant Friends on the Treasury Bench would not incur that cost. He did not know whether his hon. and learned Friend had yet offered to repay to them and to the public the cost of that useless set of documents. One part of the hon. and learned Gentleman's speech showed that he recognized the importance of the occasion, for he had said, parenthetically, that the age of economy was past. That was about the only authority they had heard from the Ministerial side of the House which had done any justice to the importance of the present occasion. He thought the Chancellor of the Exchequer had good reason to complain that people had been squabbling about the amount of alcohol there was in so many gallons of beer or of spirits, and the details of a particular tax, failing to realize that this night was one of the most important nights ever known to the financial history of the House of Commons. It was a most important epoch, for, for the first time in the history of the country, the Chancellor of the Exchequer had come down and proposed Estimates exceeding£100,000,000. The effect of the alteration made in the keeping of public accounts in 1880 was to strike out from those accounts a sum of £100,000 in connection with extra receipts, so that if the Estimates were altered, as they ought to be altered, the result would be that now, at a time when they were at peace with the whole of Europe—he said at a time of peace, because he looked upon the war in the Soudan as only one of those wars which had been the habitual evils of this country since 1880—they had Estimates presented to them of over £100,000,000. With regard to what were called special preparations, no one knew better than Her Majesty's Government that by those preparations they were only filling up, under the pressure of immediate public emergency, the lapses of past years. They knew perfectly well that they were only now restoring to their proper condition of strength those defensive resources of the country which ought to have been kept up to a proper-strength for some years past. It was most remarkable, when they had a deficit of £15,000,000—it was put at a figure just below £15,000,000—namely, some £l4,952,000—that the Chancellor of the Exchequer should come down and throw over all the old canons of financial action which had been pro-a pounded by him during the time he had held his present Office. No one could have sat in the House without remarking the contrast between the speech the right hon. Gentleman had delivered that night and that he had made last year. A year ago he bad come down and made a polemical and controversial Budget. He had made the Budget the means of a Party attack, and in that Party attack he had denounced the Conservatives because they had not borne out of the Income of the year the Expenditure of the year. He had denounced them for having left a legacy of debt to their Successors, and for having suspended the operation of the Sinking Fund; but now the right hon. Gentleman, for £7,500,000 out of the £15,000,000 he required, had to resort to the very practice he had denounced so emphatically. The right hon. Gentleman was about to suspend the operation of the Sinking Fund, and to ask for a temporary loan which, if circumstances were unfavourable, would become a permanent loan, and would be left as a legacy to his Successors. The Committee, he thought, should recognize the importance of the position the right hon. Gentleman had occupied that night, and it was a pity that this conversation should go on without the right hon. Gentleman being congratulated upon the fact of his having, at all events, marked a new epoch in their financial history.

MR. ILLINGWORTH

said, that he so far agreed with the hon. and learned Gentleman who had just sat down as to think that the discussion had run too much into detail. In regard to increased Expenditure, and the imputations which had been made by the hon. and learned Gentleman, he wished to point out that there had been some Members on that (the Ministerial) side of the House who had been quite willing to act as a check on the extravagance of, and even to fight counter to, the right hon. Gentleman the Chancellor of the Exchequer and the Government he belonged to. But, unfortunately, the spirit of economy which had been manifested by those few Radical Members bad not met with the support of the Party opposite. He must confess that the strictures of the hon. and learned Gentleman came with a very indifferent grace at a time when they were called upon to pay for the extravagance in which they had been indulging, seeing that the Party opposite had contributed so largely to that extravagance. The only complaint which had come from the other side of the House, from time to time, in regard to the Estimates, was that the figures were not large enough, that the schemes propounded were not great enough, and that they would be more happy if enlarged burdens were placed upon the people of the country. He (Mr. Illingworth) ventured to join in the expression of opinion which had fallen from all parts of the Committee as to the able statement they had heard from the right hon. Gentleman the Chancellor of the Exchequer that night. He (Mr. Illingworth) thought that in his scheme the right hon. Gentleman had combined both courage and caution. It was true that he had had a great deficit to deal with; but it was due to him to say that he had really met that deficit in the main out of the taxation of the year. ["No, no!"] Yes, he (Mr. Illingworth) maintained that in the main the Expenditure of the year was to be met by its taxation. It was true the Kinking Fund was to be suspended; but notwithstanding the Expenditure which had been incurred, it was all to be met from the Income of the year. He was very glad indeed that the right hon. Gentleman had determined upon suspending the Sinking Fund. On previous occasions, hon. Gentlemen on the Ministerial side of the House and on the other side had doubted the policy of that hard-and-fast line for the reduction of the National Debt. The present was a time when the country—all classes of the country—were joining in a chorus of complaint as to the poverty which was universal amongst them—at such a time it did seem to him altogether pedantic to adhere to a hard-and-fast line with regard to the reduction of the Debt. It was impossible at such a time to keep up the reduction at the same level as could be done without the burden being felt when the country was in a prosperous condition. The hon. Baronet the Member for the University of London (Sir John Lubbock), who did not now happen to be in his place, had replied to some observations made by the hon. Member for Galway (Mr. Mitchell Henry) to the effect that the great majority of the taxpayers of the country who were in business had had lately to borrow money to carry on their businesses at the rate of 5, or 6, or even more per cent. The hon. Baronet had said that the only thing that the Chancellor of the Exchequer did with the capital which he extracted from their pockets was to relieve them from a burden of 3 or 2¾ per cent. Therefore, he (Mr. Illingworth), for his own part, hoped the time was distant when they would revert to that system of paying a fixed sum every year for the reduction of the National Debt. But the hon. and learned Gentleman (Mr. E. Clarke) had gone on to say that this enormous Estimate of £100,000,000 was produced at a time when they were at peace with all the world. He (Mr. Illingworth) could not admit that they were at peace with all the world. They had been carrying on a war in Egypt and the Soudan——

MR. EDWARD CLARKE

I said at peace with the Great Powers of Europe. I mentioned that we were engaged in a war in the Soudan, which was only one of those wars which we had been habitually engaged in since 1880.

MR. ILLINGWORTH

said, that the hon. and learned Gentleman seemed to make a geographical distinction in this question of wars; but that distinction was of no practical value in the discussion in which they were engaged. He (Mr. Illingworth) supposed that a war, whether in the Soudan or in Europe, had to be paid for. [Mr. EDWARD CLARKE: Hear, hear!] Well, he was very glad that the hon. Member for Eye (Mr. Ashmead-Bartlett) and other hon. Gentlemen on that side of the House who, for the other 364 days in the year were urging on expenditure, had now put on the white sheet, if it was only for one night in the year, and turned round upon the right hon. Gentleman the Chancellor of the Exchequer to complain of the heaviness of the expenses which the people of the country were called upon to pay. This war in Egypt and the Soudan had been a most costly business. As had been pointed out by the hon. Gentlemen who had preceded him, it had not been a very fruitful business; but that was the characteristic of most wars, and all that he could say was that if wars were made cheap their very cheapness would add another horror to them. He was thankful that when they were indulging in those wars, they were now and then called upon to face the question of raising the money wherewith to meet the expenditure that was entailed. He was disposed to think that the Chancellor of the Exchequer had laid the burden fairly across the shoulders of all classes of the people. A very small point had been raised—so small a detail as to be scarcely worth noting—on this Budget, and that was the inequality that prevailed between the burden imposed upon the farmers of England, Scotland, and Ireland. He was bound to say that the alternative that the right hon. Gentleman offered the farmer for the present system of assessments was not likely, in his (the right hon. Gentleman's) day at least, to be realized. He believed that, taking the great majority of the farmers, not only did they not make up accounts in that correct and scientific form that would stand the test of the Income Tax Commissioners, but he believed that it was impossible for them so to makeup accounts. The trade of farmers was a fluctuating one—the nature of their business made it almost impossible for them to do so. But, on the other hand, if that were so, the question they had to ask, when the scheme was put forward for the modification of the present system was, was the present system an equitable one? It might be that there was no cause for the distinction which existed between the Scotch and Irish farmers on the one side, and the English farmers on the other. If the distinction were in the proportion of 3d. to 4d., as the Chancellor of the Exchequer had told them it was, then he would say raise the amount paid by the Irish and Scotch farmers. ["Oh, oh!"] Well, he made the suggestion on the strength of this fact, that the charge was not a heavy one upon the farmer.

An hon. MEMBER: Look at the enormous rates they have to pay.

MR. ILLINGWORTH

said, farmers had no more rates to pay than any other taxpayers. He knew that hon. Gentlemen connected with land enterprize were ready to urge the excessive burden of taxation upon land; but if they were connected with some of the towns in the country, and looked into the question of assessments, and the manner in which the rates were levied, he thought they would be only too thankful that they were not assessed as were the residents in towns. He (Mr. Illingworth) only wished to say that his right hon. Friend the Chancellor of the Exchequer had given them some valuable information in regard to the incidence of taxation as between the direct and the indirect taxpayer. It was true that there had been for many years past a modification going on in this respect, and that taxation had been more extensively levied indirectly than directly. The fact was, that in times past the House of Commons was very little representative of the people, being almost entirely representative of property, and the result was that the taxes had been almost wholly laid upon the working classes, instead of on property, as they ought to be. He believed that there was even yet a great inequality to be overcome, and that there was ground for laying heavier burdens upon realized wealth. The country, he thought, would appreciate the courage which had been manifested by the right hon. Gentleman the Chancellor of the Exchequer in his dealing with the Death Duties, and he only trusted that the exemptions would not be made too numerous. He did not say that there could not be some argument used for exemptions, particularly where the purpose was purely charitable—in the case of hospitals, for instance; but when they came to ecclesiastical property, he wanted to know why that should be exempted? There was no charity in this case, where national wealth was appropriated by one religious body in the country, and that the wealthiest class of the community, and he did not think their claim for exemption should be considered while much poorer classes were ready to bear their share of such national burdens. He should be glad to support the hon. Member for Salford (Mr. Arnold) in the course he had intimated it was his intention to pursue, so far as ecclesiastical property was concerned, believing that there was no ground for those exemptions. Reference had been made to the propriety of making an increase in the Wine Duties. He should probably have to refer to that subject at a later stage, and the right hon. Gentleman the Chancellor of the Exchequer had given them one good reason why that question should not be gone into at that moment. After a long negotiation they had come to an understanding with Spain, a Treaty having been agreed to between the two countries, allowing the introduction of British produce into Spain on more advantageous terms, on condition that a relaxation of four degrees in alcholic strength should be made by this country in respect of Spanish wines. He supposed many of them only looked upon this as a very clumsy way of dealing with their neighbours; but, at the same time the great majority of the House and of the country had supported the view that the Chancellor of the Exchequer was taking; and he believed that the Government were accredited by the commercial community with the efforts they had made to bring to a successful issue those long and tiresome negotiations. ["No, no!"] At any rate, when it came to be urged that, as there had been an increase put upon the duties on spirits and on beer, the same rate of increase should be put upon wine, the right hon. Gentleman would be able to show that those people were wrong to argue that the people of this country got nothing which could be regarded as a quid pro quo. As far as he knew the views of the commercial community in the North of England, this Commercial Treaty was looked upon with great approval.

MR. GORST

said, that the hon. Member for Bradford (Mr. Illingworth) had made it almost impossible to follow the usual course on the introduction of the Budget. When the discussion had been almost exclusively directed to obtaining elucidations from the Chancellor of the Exchequer, in burst the hon. Member for Bradford with talk about economy, in a speech which they had heard over and over again. The hon. Member not only would not himself follow the advice of the Prime Minister, but he made it almost impossible for the Prime Minister himself to follow that advice. Talk about economy seemed that night a little out of place. It was out of place in this Parliament. He remembered that in the last Parliament the economists had had it all their own way. There was then an extravagant Conservative Government in Office. The armaments of the country were bloated, and the Expenditure was extravagant; and every night the sort of speech they had just listened to was made. They had had those speeches made even while the present Government had been in Office. Indeed, the right hon. Member for Birmingham (Mr. John Bright) had said, prior to the last General Election, that no Government deserved the confidence of the country that could not get on with a sum of less than £70,000,000 a-year. One hon. Gentleman opposite, who had enlarged upon that theme before his constituents, had been good enough to tell the House how sorry he was that he had done it when he knew that even a Liberal Government could not carry on the country at a smaller expense. Now, that night they had a Budget of which the ordinary Expenditure amounted to between £89,000,000 and £90,000,000. The Conservative Party had not acted that night as their opponents used to act in the last Parliament. They did not come forward and say—"You ought to carry on the Government of the country at a less cost." The hon. Member for Bradford came forward and found fault with them for not complaining of the Government for bringing in those large Estimates. But, the Conservative Party did not find fault with the Government on that head, because they knew that whether a Liberal or a Conservative Government was on the Front Bench opposite it was necessary to pay the legitimate expenses of the country. They knew that in a country like this Expenditure must go on increasing from year to year. Even if the hon. Member for Bradford himself were Chancellor of the Exchequer, he would find it impossible to carry on the Government of the country for £70,000,000 a-year. He would be obliged to bring in increasing Budgets, and to admit the increasing Expenditure, and would not be able to govern the country either for the £70,000,000 spoken of by the right hon. Gentleman the Member for Birmingham, or the much larger amount of £89,000,000 or £90,000,000 mentioned by the Chancellor of the Exchequer. Under those circumstances, would it not have been better with the Budget under discussion if the advice of the Prime Minister had been followed, if Liberal Members had refrained from the discussion of details on the first night, confining themselves to questions to elucidate the statement, and putting by patriotic speeches on economy to a more convenient season? He rose for the modest purpose of putting a question to the Chancellor of the Exchequer, to ask for information as to one point of the statement which he had failed entirely to understand. He understood the Chancellor of the Exchequer had to provide, in round numbers, for £15,000,000, and that sum he divided, providing for £7,500,000 by increased taxation, leaving the other half to be provided for. Of that £7,500,000, £3,000,000 he did not provide for at all, he left it a deficit. He used round figures for the sake of clearness; it was about £3,000,000—£2,800,000 was the exact sum. If he were tempted to follow the example of the hon. Member for Bradford (Mr. Illingworth), he might say something about not meeting the Expenditure of the year by taxation within the year; but he would leave that to the adjourned debate, the second reading of the Customs and Inland Revenue Bill or some more convenient season. But out of the £7,500,000, £4,600,000 was to be provided for by what the right hon. Gentleman called suspending the Sinking Fund. Now, if he understood the right hon. Gentleman rightly, what he called the suspension of the Sinking Fund was the suspending the operation of the Terminable Annuities; that of the whole amount payable in Terminable Annuities, that part which went to the reduction of Debt by the repayment of the capital of the Debt—the extinguishment of the Debt—was to be this year suspended, and that compensation would be afforded to holders of Annuities by the lengthening of the term of the Annuities.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

The Government are the holders.

MR. GORST

Bat whoever were the holders they were compensated by the increase in the length of the Annuities. Now, he was surprised—for he thought he understood the operation as the Chancellor of the Exchequer described it to the Committee—he was astonished when the right hon. Gentleman came to name the amount that would give him £4,600,000. He recollected pretty well the terms stated in the House last year; but since the Chancellor of the Exchequer spoke, he (Mr. Gorst) had refreshed his memory by a reference to the Library. The Returns he found there rather puzzled him, because, in the Return of the issues from the Exchequer for the service of the National Debt, he found that the amount of payment of capital by the automatic operation of Terminable Annuities had been increasing steadily from year to year during the last 10 years for which the Return was given, and in 1883—the last year the Return included—the amount paid was £6,300,000 in round figures. Well, there was another Return given about the same time which showed the actual operations of the Commissioners for the reduction of the National Debt, and the various sums they had received from the Exchequer for Terminable Annuities, and there was given a complete list of all the Terminable Annuities in existence at that time—the beginning of 1884. He found from that, that the total sum paid to the holders of Terminable Annuities who, he understood, were different Departments of Government—he believed hardly any others were held by the general public—they were all Commissioners for the reduction of the Debt, Trustees in Chancery, and functionaries of that description; but the total was £7,900,000, and of that £1,900,000 represented interest, and £5,900,000, or nearly £6,000,000, represented the payment of capital. Those two Returns were a little inconsistent the one with the other, for the one represented the payment of capital by Terminable Annuities as £6,200,000, and the other as about £6,000,000, but they were sufficiently near. No doubt the difference was explicable, they were sufficiently near not to afford much of a puzzle over the operation. But when this Return set out the amount of payment of capital as about £6,000,000, how was it that the operation the Chancellor of the Exchequer proposed during the present year would produce only £4,600,000—less by £1,600,000 than one would naturally expect from the Return furnished to Parliament? No doubt, that could be explained; but he thought the Chancellor of the Exchequer would admit that, so far as his statement went, the explanation was not apparent, and he (Mr. Gorst) would be very grateful to the right hon. Gentleman if, when he came to answer the various observations made in Committee, he would kindly explain how it was that so small a sum comparatively, so much less than would naturally be expected, was anticipated by the operation in Terminable Annuities he intended to effect during the present year.

MR. ARTHUR O'CONNOR

said, he was decidedly of opinion that it would have been better if, after the statement of the Chancellor of the Exchequer was concluded, the debate had been adjourned in order that the Vote of Credit might have been taken at a sufficiently early hour to be disposed of that night. The Prime Minister suggested that the Committee should do little more than elicit information from the Chancellor of the Exchequer that evening, reserving a more serious and detailed discussion for a subsequent occasion. That would have been a very reasonable recommendation to follow but for an intimation the Chancellor of the Exchequer gave to the Committee before he resumed his seat. At Question time that afternoon, he (Mr. A. O'Connor) inquired of the Prime Minister whether the Go- vernment intended to urge on the House any Vote in Committee that day? He imagined he must have been misunderstood; he was not speaking of Committee of Supply, but of a Vote or Resolution in Ways and Means. The Prime Minister said the Chancellor of the Exchequer would be left to exercise his discretion in the matter; and what did the right hon. Gentleman say? He informed the Committee that it was absolutely necessary, for reasons he did not specify, that all these Resolutions should be at least passed by the Committee of Ways and Means that night. Under those circumstances, it did seem desirable to offer such observations as he thought right that evening instead of deferring them to a future occasion. A number of Members had concurred in expressing admiration of the ability, the success, and the courage with which the Chancellor of the Exchequer had submitted his proposals to the Committee; and he was perfectly prepared to admit, and fully appreciated, the singular mastery of his work the right hon. Gentleman manifested. But he failed to see the courage of the performance, and he failed to discover in the proposals anything meriting any very great admiration. The Chancellor of the Exchequer was compelled to admit to the Committee that this Government of "peace, retrenchment, and reform" found themselves now, after they had been five years in Office, and while they were still at peace—for they had not yet declared war even in the Soudan—compelled to come down to the House and propose to Parliament Estimates discovering a deficit greater than had ever been presented to Parliament since the days of the Crimean War. Under such circumstances, he failed to see the consistency of those congratulations taken up so equally not only on the other side, but on the Opposition side, whence might have been expected something like healthy, manly criticism. It had often struck him that Members who took part in discussions on the Budget night were content to deal in a fragmentary and insignificant way with little portions of the Financial Statement which interested them individually, and very seldom dealt with the whole in a comprehensive manner. When the hon. Member for Bradford (Mr. Illingworth) passed his criticism upon those who had preceded him in addressing the Committee, it might have been supposed he was about to follow the Budget at large; but he simply followed the example he had condemned, and contented himself with desultory observations upon isolated portions of the Budget. He was afraid his view of the proposals of the Chancellor of the Exchequer would not find anything like general assent or approval in the House. He entertained opinions on finance and the incidence of taxation in this country, and especially as regarded the present proposals, very much at variance with the majority of the Committee; but that was no reason why he should not—perhaps it was why he should—say clearly what he thought about the Budget proposals of the Chancellor of the Exchequer. He had listened with very great care to all that had fallen from the right hon. Gentleman, and took the most careful note he could of his figures and proposals; but he was bound to say that, after having used his best endeavours, he had been absolutely unable to comprehend the statement, and portions of it he failed to follow. When the right hon. Gentleman was speaking about the Death Duties, though he had some professional acquaintance with questions connected with Succession Duties, and therefore was as able as most Members to get a general notion of the drift, he was utterly unable to comprehend the extent of the proposed alterations. Then, again, in reference to the National Debt, though he had gone over all the Returns, and had studied finance accounts from end to end, he could not understand how the right hon. Gentleman proposed to make up the deficit by the suspension of what he called the Sinking Fund. The right hon. Gentleman would, he thought, have done much better, would have treated the Committee much more fairly, if, instead of having all these Resolutions passed at once, he had consented to postpone discussion until something like a clear apprehension had got into the minds of, at any rate, a portion of the House as to what his proposals really were. The Chancellor of the Exchequer had followed, in his statement of proposals, and in laying before the Committee his accounts of Revenue and Expenditure for the past year, and his Estimates for the coming year, the old and recognized rule of adopting a sepa- rate form of account, and that form, to his (Mr. A. O'Connor's) mind, was a very misleading and difficult form to understand. He could not understand why Finance Ministers, in their explanations of the financial condition of the country, should not adopt the same simple, straightforward, common-sense plan, such as would do equally well for a nation or an individual. In regard to the individual, they could understand there were five, and only five, main sources of income, and the sources of income to a nation corresponded to those of the individual. There were five sources—first, the property which a man owned, and from which he derived an income; secondly, the business he carried on, and which brought in an income; thirdly, debts paid to him by his debtors in return for money advanced; fourthly, the money which he obtained gratuitously either by gift, or legacy, or theft, or good luck, or in any other way; and fifthly, and finally, the income he derived from those who consented to lend him money when he went into debt. Those were the five possible sources of income an individual could turn to, and it was precisely the same with the nation. There were the National property, the Crown property, hereditary sources of revenue, corresponding to the first-mentioned class; there was the corresponding second-class in those Departments of Government which rendered services to the public which were paid for, certain Departments carrying on business and receiving income in connection therewith; thirdly, the payments by those who received advances; fourthly, that source which corresponded to the gratuitous source of an individual's income, the revenue received from the Colonies, or from foreign countries, or what was raised by taxation, which was very often very like theft, or what was received by windfalls of one kind or another; and, fifthly, when all other sources were exhausted, as they were with the Chancellor of the Exchequer this year, they were obliged to resort to the last remaining source of revenue, and incur further obligations. The whole Expenditure of the country, in like manner, flowed out in five channels, corresponding to the five sources of Revenue. There were the expenses connected with the administration of property; there were the expenses con- nected with those Departments which carried on business at a profit; thirdly, the advances in the way of further loans; fourthly, that which corresponded to the individual's personal expenditure, his riotous living —the national wars—his litigation, or what not, those were corresponding channels of expenditure; and, fifthly, the payment of money borrowed. He never could understand why Finance Ministers could not adopt such a plain common-sense arrangement of figures as he had indicated. If the Chancellor of the Exchequer had done so, he was perfectly certain the Committee and the country at large would be able to follow the financial arrangements very much better, and would be far better able to appreciate the proposals of the right hon. Gentleman. That had not been done, and the consequence was that most Members of the House and most people throughout the country listened to the speech, or would read it as it would be reported in the newspapers on the morrow, and would carry away with them a very hazy notion indeed as to the financial condition of the country and the mode in which the existing difficulties were to be met. The Chancellor of the Exchequer had made certain proposals in regard to taxation—for he passed now to the subject-matter, saying no more about the method—and passing over the first three sources, the property of the nation, upon which he had no observations to make, and the Post Office and other matters upon which he had nothing to say; but with regard to existing taxation and the arrangements which the Chancellor of the Exchequer proposed for the future, he should like to say a few words. It seemed to him, with the country in the condition in which it was, with something like 700,000 men, women, and children in the workhouses, and with another 750,000 keeping manfully outside the workhouses, but just on the verge of pauperism, with hundreds and thousands—he might almost say with hundreds of thousands—of men and women without employment—there were 20,000 in Birmingham alone unable to find work—it seemed to him to talk about throwing further taxation upon the industrial classes instead of on the property class, was to mock the struggling classes. A number of taxes were left which, in justice to the people, should have been removed; they did not bring in very muck to the Exchequer—he would not say they were not worth collecting, though some might be dropped without any loss at all, they brought in such small sums; but they had an injurious effect on the commerce and industry of the country, and any enlightened Finance Minister who had taken the trouble to notice the effect of the abolition of a tax of the kind, not only in the time of Sir Robert Peel, but from 1853 to now, would have, had he considered the matter, some doubt as to whether it would not be better to remove those taxes even under the present disadvantageous circumstances. Those taxes were enumerated in the Statistical Abstract of the United Kingdom, which, no doubt, the Chancellor of the Exchequer had carefully studied, and he would refer to pages 56 and 57 for the list of what he meant. It was a list of imported articles, and it showed the amount consumed per head of the population since 1869. There were articles which were imported, and had been for years, free from taxation — bacon, ham, butter, cheese, eggs, potatoes, and sugars. Now, the result of having those articles untaxed was this—whereas in 1869 the consumption of bacon and ham was 3 decimal 68 lbs. per head per annum, the consumption in 1883 was no less than 10 lbs. decimal 96 per annum; butter increased in a similar manner from 4 decimal 52 to 7 lbs. decimal 18; cheese from 3 decimal 52 to 5 decimal 51; eggs from 14 per head to 26—nearly double; and potatoes from 6 lbs. to 16 lbs. per head of the population; corn from 155 lbs. to 250 lbs.; sugar from 38 decimal 83 to 61 decimal 87; refined sugar from 3 decimal 73 to 9 decimal 87. That was to say, when commerce and industry were left unchecked, unfettered by taxation, in every single ease there was a considerable increase in the consumption per head, in some cases to two or three times the former consumption. The page also contained a Return showing the history of the articles still taxed, and which taxation he objected to this year—currants, raisins, cocoa, coffee. In 1869 the amount of currants and raisins consumed per head of the population was 4 lbs., and the consumption since then had not increased; cocoa was less than 1 lb. per head, and it was still less than that; coffee was decimal 94 per head, and now it was decimal 89; the consumption had decreased. Thus, while the articles left untaxed had increased in consumption, those upon which the wretched little taxes were placed had not increased at all, the country was debarred from the reasonable use of them, and commerce and industry were injuriously affected. It was the poorer classes alone who suffered from the taxes on dried fruits, coffee, cocoa, and chicory. Similarly in regard to tea, which, in 1863, or, at any rate, before 1869, had the duty reduced to 6d. from. 1s. 6d. He would draw the attention of the Government to the fact that whereas in 1869 the amount of tea imported was 139,000,000 lbs., and therefore the tax amounted to that number of sixpences, in the year 1883 the importation was 222,000,000 lbs., and the tax levied was 222,000,000 sixpences. But there was a very great change in the value of the tea—a very great change in the amount of capital invested in tea. In 1869 the tea imported was valued at something over £10,000,000; in 1883 it was valued at £11,500,000—that was to say, in 1869, £10,300,000 worth of tea was consumed, but only 139,000,000 sixpences paid in duty, and in 1883, on £11,000,000 worth, 222,000,000 of sixpences were paid—the value of the tea had increased some 8 per cent, and the taxation at the rate of 70 per cent. In other words, the tea which in 1869 paid 6d. per 1 lb. would for the same value in 1883 have paid 9d. Therefore, instead of taking credit to himself for not having increased the taxation on tea, the Chancellor of the Exchequer ought to have come to the House and proposed a reduction of the duty on tea to 4d. in the 1 lb. There were other duties which were simply burdens upon industry and reasonable commercial enterprize, and which any Minister deserving the character of courage, which had been so lavishly accorded to the Chancellor of the Exchequer that night, would willingly have proposed to repeal—for instance, the duty on marine insurance and the duty on life insurance. It seemed to him great unfairness that people should be taxed because they protected themselves against the dangers of the sea and against the consequences of their death. Then he would refer to the tax on solicitors' certificates. He never could understand why that unfortunate class of men, solicitors, should be called upon to pay to the Government year after year a tax for permission to carry on their business. The Government did not impose any tax upon doctors. He believed the Government brought in a Bill last year imposing a registration fee, but it was a very small affair, and the fee was nothing in comparison with the taxation levied on solicitors. Then there was another question which he had no doubt would in a few years come very prominently to the front—that was the question of licensing every house whore spirits, wines, and intoxicating drinks generally were sold. They had had within the last two years a considerable agitation on the subject of Local Option. One step in that direction he believed would be the transfer of the sums paid for licences of houses where drink was sold from the Imperial Exchequer to local funds. Perhaps they might have some distinct information as to whether from that point of view Local Option was desirable or not—at any rate, he thought it would go a long way towards solving the difficulty of the question by throwing out a hint for the consideration of Chancellors of the Exchequer in future years. Coming now to the subject of Debt, he pointed out that the debt of a country, like the debt of an individual, might assume one or other of three forms. It might be that the nation was bound to pay a certain fixed sum by a fixed date, and that was what this country did when it issued Treasury bills; it might be that the debt was never to be repaid in principal, but that only a certain annual interest was to be paid to the creditors of the State, and that was the usual form of most of the Funded Debt of the country; and, finally, there was the intermediate course, in which the interest and principal were paid off together by instalments, which was the form of Terminable Annuities. With regard to the Sinking Fund which the right hon. Gentleman the Chancellor of the Exchequer proposed to suspend, he was inclined to agree with what most persons suspected to be in the mind of the right hon. Gentleman—namely, that all this talk about Sinking Funds was absolute nonsense. The Sinking Fund idea was a financial error—a ridiculous delusion, which well-meaning men started in times when ideas were not at all clear with regard to financial matters, and had continued as a sort of financial will-of-the-wisp for some time in the House of Commons—it involved a great deal of work, and was sometimes very useful, perhaps, for the purpose of throwing dust in the eyes of persons who indulged in inconvenient criticism. He regretted that the right hon. Gentleman the Chancellor of the Exchequer had not boldly continued the plan which he began last year of converting the Three per Cent Stock into Terminable Annuities, which had, at any rate, the advantage that it forced the present generation, the Government, and the House of Commons to pay off debt in a certain given time, and, although it might be true that certain other debt had to be incurred in the meantime, yet if they had not a system of Terminable Annuities there could never be anything like a substantial reduction of Debt at all. In 1881 the right hon. Gentleman the Prime Minister, who was at the time Chancellor of the Exchequer, proposed a system for the reduction of the National Debt which, if it could have been carried on, would have been decidedly satisfactory; but, for some reason or other, that scheme unfortunately never passed through the House of Commons, and no subsequent Bill was introduced to carry out that portion of the right hon. Gentleman's proposal. He was not, as a rule, an admirer of the Prime Minister's schemes; but, from a financial point of view, he thought that the proposal of the right hon. Gentleman in 1881 was a good one, and that it was to be regretted it had not been carried into effect. There was just one other point in connection with the question of Debt to which he desired to call the attention of the right hon. Gentleman and the Committee. Hon. Members would be aware that every now and then Treasury bills were paid off, and that certain others were issued. Now, Treasury bills were for either three or six months. The Chancellor of the Exchequer knew that the three months' bills were more costly than those at six months—that was to say, he had to pay a higher rate upon them—and therefore why the right hon. Gentleman should increase the number of Treasury bills at three months and decrease the number of six months' bills was a point which he was entirely unable to comprehend. That might be one of those small points which sometimes tested the capacity of Chancellors of the Exchequer, and he thought that the increase of three-months' Treasury bills during the time in which the right hon. Gentleman had held the Office of Chancellor of the Exchequer did not speak to his carefulness in that matter of finance. He was aware that there was the existing deficit to deal with; notwithstanding that, he would still venture to propose to alleviate the taxes which pressed on the poor as forming a burden on industry and commerce which was much more serious than the small sums which those taxes brought into the Exchequer. He would be asked how he proposed that the deficit should be supplied. Well, his proposal was not likely, as he had said before, to meet with much acceptance in that House at the present time—it would, perhaps, be more heard of in the next Parliament than in this—he was certain that before many years had passed it would be forced into the forefront of finance and politics. There was an immense area of land unemployed in this country; he knew not how many acres there were in that condition, but the number was very great. There were in the South of England, for instance, many landlords who had farms which they could not let; they could not sell them; they could not get tenants on their own terms who would work the soil, and they could not turn it to any proper account themselves. He asked whether it was beyond the power of legislation to touch that subject, to provide machinery by which some of the idle hands in the country could be brought to work on that land? To whom did that land belong? It belonged to the whole human race; but a large portion of the land of this country was in the hands of a certain privileged class; that privileged class did nothing themselves, but extracted from the industrial portion of society an enormous rent—an enormous tribute for leave to live and work and die on the face of England; those men, whenever they chose, could turn out, and had turned out, many and many an industrious tenant. Over the face of the South-Western counties of this country there was an enormous number of farms unoccupied. Why should the landlords be allowed to hold those lands without the State deriving any Income Tax from them? Because they were empty, and they were able to plead that fact as a reason why they should not pay Income Tax. Well, then, what was his proposal? There were for Income Tax purposes two Schedules, and under Schedule A there was a certain tax on the value of land. The right hon. Gentleman the Chancellor of the Exchequer now proposed to make the Income Tax 8d. in the pound. The greater portion of the amount to be derived from that tax would be drawn from the industrial classes, tradesmen, manufacturers, and professional men, and the smaller portion of it would come from land. Why should that be? The people who were allowed to enjoy an exclusive beneficial ownership of the land of the country should, he thought, be called upon to pay a consideration to the Exchequer for that exceptional enjoyment and privilege. If it were necessary to increase the Income Tax and raise further Revenue, why did not the Government raise it from those who possessed this land from which the industrial classes were kept off? Therefore he suggested the consideration whether it would not be fair and just, however unpopular it might be in such a form as this, that, instead of having incomes all round taxed at 8d. in the pound, an Income Tax of 2s. in the pound should be put upon the value of the land—that was to say, 2s. upon the rent paid for land, or upon the value of the land in the occupation of the owner. That, after all, would only be a tithe of the annual value, and would be reverting to what was the old Constitutional custom in this country. Time was when the land had to bear the expenses of the country, when the Crown was dependent on the revenue derived from land, and it was only when feudal government was done away with that the present system was established. If a gradually increasing tax were placed upon land the country would become the sole rent receiver, and the money, or consideration tax, or whatever it might be called that was paid for occupation, would be paid, not to a small privileged class of idlers, but to the community who were the real owners of the land. If they taxed land as he suggested, the Government would be able to raise their £11,000,000 with, out difficulty, and the landowners now unable to turn their land to account would, in many instances, be glad to get rid of it. The land would get into the market and then into the hands of men who would make a good use of it, and it would be made available for relieving the distress and pauperism in the country. Finally, he wished to say a few words on the extraordinary proposal of the right hon. Gentleman the Chancellor of the Exchequer in regard to the taxation of alcohol. They were told that whereas Spanish wine of a strength of 26 degrees had hitherto paid a duty of 1s. a-gallon, the same duty was to be levied on Spanish wine henceforward even of a strength of 30 degrees. But, while the right hon. Gentleman was prepared to admit Spanish wines with an increased amount of alcohol without raising the duty upon them, he was about to charge a very considerably increased duty, amounting to 8 or 9 per cent, on the alcohol produced in Ireland and Scotland. The right hon. Gentleman proposed to raise the tax on Irish and Scotch spirit from 10s. a-gallon to 12s. a-gallon, and the tax upon beer from 6s. 3d. to 1s. 3d. a-barrel; but he proposed, at the same time, to reduce the tax on Spanish wine in the proportion of 30 to 26. A more extraordinary proposal, he supposed, was never submitted to the House of Commons. The right hon. Gentleman was going to benefit Spanish producers at the expense of Scotch and Irish producers; they were, in other words, to be burdened for the benefit of Manchester.

LORD RANDOLPH CHURCHILL

said, the hon. Gentleman who had just sat down had made a most interesting speech, and one which the Committee ought to have listened to with advantage, because he had produced with remarkable force all those remarkable doctrines as to the ransoming of property in land which the right hon. Gentleman the President of the Board of Trade (Mr. Chamberlain) had expounded to the electors of Birmingham and Ipswich in the course of the autumn. And if the Committee had listened a little more attentively to the hon. Member, and had respected the elaborate care and attention with which he had worked out those doctrines, they would, he thought, have been able to see clearly the ultimate results which the doctrine of the right hon. Gentleman the President of the Board of Trade would produce to the country. He thought, however, that the hon. Member was, perhaps, not following the right hon. Gentleman, but that the President of the Board of Trade was a follower of the hon. Member for Queen's County, who was only a little ahead of him. He could not but appreciate and admire, although he could not imitate, the great generosity which had that evening characterized the Members of the late Tory Government, for they had not taken advantage, as they might well have done, not only in their own interest, but in the interests of the public, of the opportunity to comment upon some of the leading features of the statement of the right hon. Gentleman the Chancellor of the Exchequer. But he supposed they were reserving themselves for one of those opportunities which ex-officials regarded as decent and proper, and that they left to Members below the Gangway, to whom generosity was unknown, the duty of criticism. He should not have intruded on the Committee were it not with the full assurance that Her Majesty's Government would not proceed at that late hour with any other Business of great importance, and if it were not for some remarks which were not his own, but which he asked to be allowed to lay before the Committee. The Prime Minister had been kind enough the other night to allude to himself and to his hon. Friends the Members for Hertford (M. A. J. Balfour), Portsmouth (Sir H. Drummond Wolff), and Chatham (Mr. Gorst) as young Members of the House, and he was sure that his hon. Friends deeply felt that compliment. For himself, he did not know whether he could claim altogether the position of a young Member of the House, having sat in it for nearly 12 years—however, as a young man, he might say that he had been quite taken aback by the appalling picture which the right hon. Gentleman the Chancellor of the Exchequer had painted of the state of the National finances. They had had a Liberal Government in Office for five years; necessarily on that account they had had applied to the finances of the country all the cardinal principles of exact finance, with the clear result that there was now a deficit of £15,000,000 and an Ex- penditure of £100,000,000, leaving £3,000,000 to be provided for it was impossible to say bow. Now that was a very extraordinary state of things, one which would not have been remarkable under the old Tory Governments, but which certainly was not what the country was led to look forward to, or what Her Majesty's Opposition, benighted as they were, were led to look forward to when the right hon. Gentleman and his Friends were installed in Office. He had said that he should offer a few remarks, not of his own, but of a person of far greater weight—politically and financially. What was the first great feature of this Budget? It was the great increase of expenditure. The next great feature was that it did not provide for the expenditure of the year; the next was that it suspended the plan for the reduction of the National Debt; and the next that it presented the House with a deficit to be met of £3,000,000. That that was clear, on the face of the Budget, no one could deny; and as he had listened to the right hon. Gentleman the Chancellor of the Exchequer putting those features before the Committee one after another, he could not help thinking of the series of speeches which were made very recently—only last year—by the First Lord of the Treasury. Not quite a year ago, in August, 1884, the right hon. Gentleman addressed his constituents in Mid Lothian, and he had been fortunate in finding in the Library of the House a corrected and authorized copy of the speeches delivered by the right hon. Gentleman. The Prime Minister defended the four years' finance for which his Government were responsible, and he found that he also defended himself from the charge of having unjustly attacked the late Government. Now this was what the right hon. Gentleman said— I found fault with the late Government for the enormous increase of expenditure; I found still more fault with them for having broken every rule of sound finance. I quite admit that under given circumstances an increase of expenditure may sometimes be desirable and unavoidable. But the proposition that I lay down to you is this, that there are certain laws still more important than economy in expenditure, and one of these is that whatever you do you should take care to pay your way. Now that was a most extraordinary sentence, because it was the only sentence which he had been able to discover in any one of the speeches of the First Lord of the Treasury which had not a shadow of qualification about it. It was clear from that sentence that there were certain laws still more important than economy, and one of them was that "whatever you do, you should take care to pay your way." Now, it would be extremely interesting to know whether the right hon. Gentleman the Chancellor of the Exchequer had submitted this Budget to the Prime Minister before he submitted it to the Committee? He was extremely curious to know, and the public would be curious to know, how it was that the Prime Minister had sanctioned a Budget which neglected entirely that cardinal principle which the right hon. Gentleman had laid down. But the First Lord of the Treasury went further, and said— It may be that in some places Tory speakers will take upon themselves to open up this question of finance. They would, undoubtedly. There certainly was no doubt that Tory speakers, whatever they might have done up to to-day, would certainly, after the Budget of to-night, do as the Prime Minister supposed, and would "open up this question of finance." The right hon. Gentleman went on— I say if you wish to have honest and sound finance you must pay your way. And again there was no qualification, whatever. The speech he was quoting from was delivered by the First Lord of the Treasury in the Corn Exchange at Edinburgh on the 4th of December, 1884. [Mr. GLADSTONE: What is the page?] He was quoting from page 29. There was one more remarkable passage which he should like to quote to the Committee; it was from another speech of the right hon. Gentleman, and it was a singular instance of what a Liberal periodical, The Spectator, called "The Irony of Providence." The writer of the article, no doubt, knew what he meant; but he imagined that the passage he was about to read would throw some light on the meaning of the article. One of the features of the last Budget introduced by the right hon. Baronet who was Chancellor of the Exchequer in the late Government, was that he suspended the Sinking Fund which he had himself created; and when, after making his Budget Statement, the right hon. Baronet sat down, the present First Lord of the Treasury rose, and knowing well the position he had at that time acquired in the country, he thus commented on the proposal of the right hon. Baronet to suspend the Sinking Fund in order to meet the financial deficit. The date was the 11th of March, 1880, and the right hon. Gentleman said with a bitter sneer— The Chancellor of the Exchequer is called upon finally to offer up a victim upon the alter of—I know not what—evil fortune, or political justice—be it what it may, upon some alter or other he is called upon to immolate his own offspring, the New Sinking Fund, which, some four or five years ago, the House adopted on his recommendation; and, if I recollect right, by very considerable majorities."— (3 Hansard, [251] 835–6.) That was within a few months of the General Election of 1880. That was the way in which the right hon. Gentleman spoke of the suspension of the Sinking Fund under the late Government. [Mr. GLADSTONE dissented.] The First Lord of the Treasury shook his head; but this was a quotation which he could not in any way evade. The country was now again within a few months of a General Election, and it might be said, having regard to the Budget presented to the Committee that night, that the Chancellor of the Exchequer, in the words of the First Lord of the Treasury was "called upon to immolate his own offspring, the New Sinking Fund, which two or three years ago the House adopted by a very considerable majority." This, no doubt, was what might be considered "the irony of Providence." It certainly was an instance of retributive justice, and he should have shown, if the Vote of Credit had come on that night, that the present position in which the Government found themselves had resulted from the very serious political features of their foreign policy during the last few years. Before returning to the wise and invaluable remarks of the First Lord of the Treasury, he might perhaps be allowed to comment on a remark which had fallen from the hon. Member for Bradford (Mr. Illingworth). That hon. Member complained bitterly of the Tory Party; but he had no comment to make on the Budget. He had no fault to find with it, and it was a most singular feature in connection with the discussion of that evening that, although the Budget presented an enormous deficit, not a single Radical economist had uttered an expression of lament, regret, or mortification at the terrible and unexpected condition of the finances of the country which the statement of the Chancellor of the Exchequer had presented to the Committee. The hon. Member for Bradford, no doubt, felt that condition of the finance of the country; but he had turned it upon the Tory Party, and said that they had never been able to make any efforts for the country because the country had not supported them. He thought that was a singular statement for the hon. Member to make. He recollected that about three years ago the greatest economist of all the Radical Party opposite—the hon. Member for Burnley (Mr. Rylands)— got up and moved a Resolution, after long Notice, practically directing, as an Order of the House, a reduction in the charges of Civil Service Expenditure. He made a great speech, and the Tory Party came down prepared to support the hon. Member, who was answered by the First Lord of the Treasury. The right hon. Gentleman accepted the Motion of the hon. Member for Burnley on condition that he inserted words which deprived that Motion of any value whatever. The words were "consistently with the efficiency of the Public Service," and by their addition the object of the hon. Member was frustrated and destroyed. With the permission of the Committee, he would like to refer to another point in the statement of the Chancellor of the Exchequer. The right hon. Gentleman had been extremely impressive and virtuous on the subject of not placing the whole of these charges on the class who owned property. It was necessary, he said, in the interest of sound finance—and he quoted Professor Fawcett—that articles of consumption should be taxed in order that the masses of the people might feel that political power brought with it some political disadvantage. How did the right hon. Gentleman work it out? He provided for £6,000,000 or £7,000,000 by taxation, and by his equal distribution of taxation between property and articles of consumption he apportioned £5,000,000 to the former and £1,500,000 to the latter. He should be loth to argue with so great a financial authority as the Chancellor of the Exchequer; but he doubted, and he believed that many others would doubt, that the great and sound principle of finance so insisted upon by Professor Fawcett, and quoted so grandiosely by the right hon. Gentleman, had been in any degree carried out. Now, the Chancellor of the Exchequer made a remark about having paid off War Charges entailed on the present Government by their Predecessors. That was a favourite argument of the present Government, and no one had resorted to it more frequently than the First Lord of the Treasury. He resorted to it in the speech at Mid Lothian to which he had referred. Excusing the high expenditure of the present Government, he said— I do not hesitate to say this, that the main cause of the present expenditure of the country being so high is the Military Charges, which are mainly due to the policy of the foregoing Government and the engagements they have saddled on those who have succeeded them. He should not think of introducing any elements of discord into the present debate by discussing that subject; but he thought anyone could scarcely charge on the late Government the £6,500,000 which were being taken for special preparations to meet the advance of Russia on India. This was a great feature of the present Budget. There was a deficit of £15,000,000, which arose out of the policy of the present Government, and with which the late Government could have had no connection whatever. There were other charges undoubtedly, and the Chancellor of the Exchequer said they had been bequeathed to the present Government by their Predecessors, and in the same speech from which he (Lord Randolph Churchill) quoted, the First Lord of the Treasury said that— The four last balance sheets of the late Government presented an aggregate deficiency of £7,330,000. Of course, that was a very telling observation to make to an audience in the country; but he would suggest to the First Lord of the Treasury and the Chancellor of the Exchequer and their followers, who generally took anything offered to them with the devotion of the followers of Mahomet, whether they were not pressing that argument a little too far. Of course, it was not altogether certain that when the next General Election had been held, and when the new electors had been consulted and had given their verdict—it was not absolutely certain that the present Govern- ment would be able to occupy the Treasury Bench, and were they not setting an example to their possible Successors with regard to this bequest argument which they might use with effect hereafter? How would the case stand if right hon. Gentlemen on that side of the House took the place of those on the Treasury Bench? They would then begin to talk about the bequest argument; they would find that when they left Office in 1880 the National Expenditure stood at £83,000,000; but they would also find that the present Government had bequeathed to them a National Expenditure of £100,000,000; they would find that when they left Office in 1880 they bequeathed to their Successors a deficit of £7,000,000, and they would find when they came into Office that they succeeded to a legacy of £15,000,000. Those were matters which he thought were not unworthy of the consideration of the House of Commons, and he certainly thought they ought to have the close attention of the country. He would not congratulate the right hon. Gentleman the Chancellor of the Exchequer on the clearness and ability with which he had made his speech, because any congratulation coming from him would be altogether superfluous, as he had already received it from the authorized quarters; but he did congratulate the right hon. Gentleman from the bottom of his heart on the extraordinary success with which he had supplied his opponents with arguments for conducting the political campaign which would shortly open, and for having enabled them to prove to the country beyond all possibility of doubt the absolute superiority of Tory finance.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

Sir Arthur Otway, I think the time has come when I should endeavour to answer the questions put to me in the course of this debate, and I will do so as briefly as possible. I may say at once that it will not be my duty to reply to any statements made this evening other than those which have been addressed to me in order to elucidate any points in my Statement which may not have been sufficiently clear. The right hon. Baronet the Member for North Devon (Sir Stafford Northcote) has expressed very clearly what is the custom on these occasions—namely, without entering into a long discussion on financial policy, to endeavour to obtain [from the Chancellor of the Exchequer such explanations of his speech as may be required, and then to go to a formal vote on the several Resolutions placed before the Committee, so that those Resolutions may be reported and a Bill introduced as soon as possible. I say, therefore, having listened with great care to the financial proposals of the hon. Member for Queen's County (Mr. A. O'Connor), to which he devoted the greater part of an hour, that he will, perhaps, forgive me for not going into those questions, because I do not consider that this is a fitting time for their discussion; and it is, therefore, from no disrespect to the hon. Member that I do not enter upon them. My hon. Friend the Member for the University of London (Sir John Lubbock) has asked me whether the Circular which we put forward in regard to the payment of dividends tomorrow is in accordance with custom and legality? My answer is, that it is a Circular in accordance with custom and legality. It has always been the practice, when Resolutions for raising taxes have been adopted by Parliament on an occasion like the present, that those taxes should come into operation on the following day, and the necessary instructions have always been given by the Treasury. It is particularly necessary that this rule should be followed on the present occasion, because it is very rarely the case that the Budget is postponed until the last day of April, and on the 1st day of May very large sums have to be paid from which Income Tax has to be deducted. With regard to the duties on spirits, wines, and beer, several hon. Gentlemen who have spoken to-night appear to think that the taxation of those articles has hitherto been placed on the same footing—that is to say, that some regard has been had to the quantity of alcohol in wine, beer, and spirits respectively—and that if the taxation on spirits were increased there must necessarily be an equivalent increase of taxation on the alcohol in other beverages. I say at once that that has never been the principle adopted by Parliament. The principle on which the Spirit Duties proceed is perfectly well known, and it has no regard to the quantity of alcohol contained in other articles on which duties are imposed. But I have been asked whether the pro- posals I am now making are not unfair towards Ireland as compared with Scotland and England? I will explain to the Committee the effect of the proposals we have made so far as the relative payments by Ireland and by England are concerned. Spirits are consumed per head in England to a less extent than in Ireland or Scotland. Beer is almost exclusively drunk in England— that is to say, the amount of beer drunk in Ireland or Scotland per head is far less. But if we add together the consumption of the three countries so far as beer and home-made spirits are concerned, the additional sum which I estimate will be received under the Budget from spirits and beer will fall to the extent of 73 per cent on England, 14 cent on Scotland, and 13 per cent. on Ireland. Now, I think that these percentages cannot be said to be unfair to Ireland; and I shall be glad to show to the hon. Gentleman opposite, if he wishes it, the foundation of my statement. Foreign spirits are almost entirely consumed in England; and if they are included the proportions falling on Ireland and Scotland will be much less. My hon. Friend the Member for Stockton (Mr. Dodds), whom I thank for his kind words with regard to the Budget, has asked me, with respect to the taxation of corporate property, to what extent property held for charitable purposes will be affected by our proposal? I must ask my hon. Friend to leave that question until the Bill is printed, when he will see what proposals we make with regard to the taxation of charitable property. One or two hon. Members have referred to the Wine Duties, and have said that if the duty on beer were to be increased we should also increase the duty on wine. Now, I was very careful to state to-night that since the year 1860 the ordinary fiscal principles which have been applied to the taxation of articles of consumption have not been understood to be applicable to the article of wine. The duties on wine have for the last quarter of a century been connected with our commercial arrangements with the great wine-growing countries. That has been a cardinal point in our finance for the last 25 years. The reduction in the Wine Duties from 6s. to 1s. and 2s. 6d. per gallon, which took place in 1860, was contemporaneous with a great increase in the Spirit Duties; but the two operations had no connection whatever. Then I am told that if you increase the duty on beer you should also increase the duty on wine, because wine at the present moment, in comparison with beer, pays a lower duty. Now, Sir, that is a mistake. The present duty on wine averages above 25 percent. of its value, whereas the duty on beer is only 20 per cent. Taking into account, again, only alcoholic strength, the duty on beer is not nearly as high as that on wine. The hon. and learned Member for Chelsea (Mr. Firth) has asked some questions with regard to the taxation of corporate property, and whether I would agree to the printing of a Return, of which I must confess that I know little or nothing. I cannot undertake to print the Return without seeing more of it; but, if I find it desirable, I will do so. Reference has also been made to the telephone business which we have been asked to acquire, and so improve our telegraph revenue. But I certainly am not disposed to take over the business of the Telephone Companies until I know much more, not only as to their present, but as to their future solvency. This is, therefore, a matter for serious inquiry, respecting which I cannot off-hand satisfy my hon. and learned Friend. The hon. Member for East Sussex (Mr. Gregory) has asked several questions involving points of technical detail with reference to the proposed increase of taxation on the succession to real property. I think it is hardly worth while, on the present occasion, to reply to highly technical questions; but on this subject the House will be shortly in possession of full details. My hon. Friend the Member for Bradford (Mr. Illingworth) also spoke of the proposed exemptions in the tax on corporate property, and perhaps he will do well to wait until he sees the Bill and recognizes the difficulties that surround it. When the Bill is before the House we shall be very glad of whatever assistance he can give us in debating it. The hon. and learned Member for Chatham (Mr. Grorst) asked me some questions as to Terminable Annuities. He quoted from some Return, but he did not tell me exactly what it was. [Mr. GORST: The Return of 1884.] I do not think that is a Return of mine. I do not think it is the Return that professes to give the Terminable An- nuities under the three heads laid down in 1883. If he will refer to the Return of 1883 he will find that these Terminable Annuities were divided under three heads, and that the amount of capital to be paid off under them was altogether about the sum I named for this year. There are other Terminable Annuities and other methods of reducing the Debt now in force; but with these I do not propose to deal. When Life Annuities are granted Stock is cancelled, and Annuities are granted instead; but with these I do not propose to interfere. Nor do I propose to touch the New Sinking Fund, or the Stock cancelled under Land Tax and other operations. All these methods with which we do not propose to interfere cancel Stock to the extent of something like £2,000,000 a-year. It will be found that the amount which we propose to raise to make good the deficiency of the present year is not far from the amount of Stock cancelled under these three heads; so that in point of fact, though not in point of form, what we shall have to intercept this year will be as nearly as possible the exact amount of Funded Debt cancelled this year; but if we interfered with these three processes we should cause great inconvenience, so that we only interfere with the Terminable Annuities under the Act of 1883, leaving the other processes alone. I said in my original statement that it was extremely difficult to understand, not the Terminable Annuities, which are perfectly simple, but the other operations by which the Debt is reduced or Stock cancelled, and that therefore I would lay on the Table a Treasury Minute, which would explain the operations. I have been asked a question, which really has nothing to do with the Budget, by the hon. Member for Queen's County (Mr. A. O'Connor). Upon the operations he refers to I can give him further details if he wishes; but the result of what we have done we conceive to be satisfactory. I shall be glad if the Committee will now pass all these different Resolutions, in order that they may be reported as soon as possible, and that we may found our Bill upon them. The effect of passing them, I repeat, where they relate to questions of Customs and Excise, or Income Tax, will be to enable us at once to raise the new duties, though, if the Budget pro- posals are absolutely rejected, there will be no authority for the additional payments beyond the statutory rates of duty, and those who have paid on the increased scale will be entitled to be repaid the excess. It is absolutely necessary that what I propose should be done with regard to these duties. With respect to the Death Duties and the Corporation Duty, the present rates of duty will not be increased until the Bill has received the approval of Parliament. If I have not made myself clear, and any hon. Member will put a question to me, I shall be very glad to give every explanation in my power.

LORD GEORGE HAMILTON

said, that he only rose in consequence of one of the last observations of the right hon. Gentleman the Chancellor of the Exchequer. As he understood, the right hon. Gentleman stated that the] Resolutions upon which a Bill containing an alteration in the Death Duties would be founded would not be passed that night.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

No, no!

LORD GEORGE HAMILTON

The Resolutions upon which to found the Bill will not be passed to-night?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I am afraid I have not made myself clear to the noble Lord. The Resolutions will be passed to-night. We shall ask for them in order to found a Bill upon them. We cannot introduce a Bill without Resolutions; but those relating to the Death Duties, the Corporation Tax, and the Stamps on Bonds, will not be acted upon until the Bill is passed.

LORD GEORGE HAMILTON

said, then he wished to put a question upon that, and he should have done so before the right hon. Gentleman rose, only that he had seen the Chancellor of the Exchequer had risen immediately upon an hon. Member sitting down in order to reply, and he (Lord George Hamilton) did not desire to interfere between him and the House. He understood the proposal to increase the Death Duties was for the purpose of equalizing the payments which those inheriting real and personal property respectively made. The right hon. Gentleman estimated that he would get by his increase on equalizing the Death Duties an additional sum of £200,000 a-year. Now, that £200,000 was only a 75th part of the deficiency which he hoped to supply. He also asked the right hon. Gentleman if he had considered what the effect of his proposal, if it were logically carried out, must necessarily be? Ashe understood, every person who inherited real property, or had an interest in real property, was hereafter to pay exactly the same sum as a person who inherited an equivalent sum in personalty?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

Practically the same.

LORD GEORGE HAMILTON

Very well. He wanted the right hon. Gentleman to consider what the effect would be as regarded a large number of humble persons who under recent legislation had acquired and would hereafter inherit an interest in real property. Take the case of the tenants in Ireland. Every single tenant in that country had an interest in real property—that was to say, an interest in the farm which he occupied.

MR. GLADSTONE

No, no; that is personalty.

LORD GEORGE HAMILTON

Let them follow it out. The landlord had a certain property. That property was estimated to be of a certain value. But the whole of that value did not belong to the landlord. A certain portion of it belonged to the tenant, unquestionably, and under recent legislation the Government had transferred that portion from the landlord to the tenant.

MR. GLADSTONE

I say that that is a personal interest.

LORD GEORGE HAMILTON

No; it was not a personal interest. Under the legislation of the Land Act a certain portion of the value of a farm was transferred to the tenant, and if the landlord was assessed upon his interest in that holding it would fall short of the full value of the holding. Well, that being so, the interest was one which was derived from real property. It was an interest which was recognized by law, and which could be bequeathed by law; and it was an interest upon which the tenant could raise money. Now, he understood that that interest was not to be subjected to an increased Death Duty. Then who was to pay the increased duty on that portion of the property which did not belong to the landlord? [A laugh.] The Prime Minister laughed; but the property had a certain value, and only a portion of it belonged to a certain individual. Who was to be taxed for the remainder? Somebody must be taxed; and it was plain, if it was not the landlord, that it was the tenant. Upon that matter he wished to have a clear statement from the Chancellor of the Exchequer. There was a movement taking place in the country by which the number of proprietors was being increased; but if this proposal of increasing the Death Duties were pushed, as he understood the Chancellor of the Exchequer intended to push it, to its full conclusion, it was clear that all those who had an interest in land would be subjected to a taxation from which they had previously been exempted. [The CHANCELLOR of the EXCHEQUER dissented.] The Chancellor of the Exchequer shook his head; but would he say who had to pay that tax?

THE CHANCELLOR OF THE EXCHEQUER (Mr. GUILDERS)

said, that the interest of the tenant in his holding was personal property, in the same way that the ownership of a lease was personalty. Whenever a person who was in the enjoyment of leasehold property died, and that property passed to somebody else, the new inheritor, whoever he might be, had to pay on the amount as personal property. The landlord's interest in it did not come to be subjected to duty until the landlord died.

LORD GEORGE HAMILTON

This is not leasehold property.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GUILDERS)

said, that the two did not come under the charge at the same time. The leaseholder's property was charged when he died; the landlord's property when he died.

SIR STAFFORD NORTHCOTE

I am sorry to trouble the right hon. Gentleman once more; but he was understood to say that the Estimates which had been presented to the House do not even now, with the Vote of Credit, represent the expenses which the Government contemplate. It was understood that there would be an Estimate for the expense of protecting our coaling stations abroad. I hope the right hon. Gentleman will explain whether that expense is included in the estimated Expenditure for the year?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

No. What I said was that, in describing the Expendi- ture of this year, my noble Friend (the Earl of Northbrook), in "another place," said that as to future years there might be certain expenditure connected with the protection of our military and commercial harbours for which no provision has been made. I merely made that remark as a caution, and, I think, a very necessary caution. The only item that I referred to as not included in the Estimates was a margin of £200,000 for Supplementary Estimates.

SIR MICHAEL HICKS-BEACH

I should also like to ask whether we are to have a Supplementary Estimate for the expenses of Sir Charles Warren's Expedition to Bechuanaland? I do not understand that any provision for this Expedition has been made in the Vote of Credit, nor does it, so far as I can gather, come in the Estimate for the present year. As the Expedition is now doing its work, some provision should be made for the expenditure this year.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I am sorry that I have not made myself clear to the right hon. Gentleman upon that point. What I intended to say was that the expense of that Expedition—namely, £500,000—is provided for in the regular Army Estimates.

COLONEL NOLAN

said, he did not think the right hon. Gentleman the Chancellor of the Exchequer had answered the hon. Member for Limerick (Mr. O'Sullivan) on the very important question of the extraordinary increase of taxation upon Ireland. They should remember that the taxation pressed very heavily upon that country. It should also be borne in mind that in England the people had the consolation of knowing that it was their own Ministers who put additional taxation upon them; but in Ireland the people knew that none of their Representatives belonged to the Administration, except one Law Officer, who had nothing to do with the imposition of this taxation. The Chancellor of the Exchequer had diminished the case of the Irish Representatives by the very simple and obvious expedient which all Chancellors of the Exchequer adopted when they were mistaken. He had underrated the result of the tax. He had put the figure down at some £900,000; but he (Colonel Nolan) should not be surprised if it amounted to £3,000,000 or £4,000,000. There were £3,000,000 paid on spirits in Ireland, and if they increased the duty 20 per cent he did not believe that would diminish the consumption very materially. The duty was already so high that the people who could afford to drink spirits would go on drinking them, even though they had to pay a halfpenny per glass more. A man would be almost as able to pay 3½d., which would include the increased duty, as he was to pay 3d. The duty would be 2s. There would be 64 glasses in a gallon of whisky, which was sold by the glass in Ireland, and that would come to 2s. 8d. There was no middle money. The publican could not put on a farthing, and therefore he would be sure to put on a halfpenny, so that they were now putting on every glass of whisky in Ireland an extra halfpenny, and that he (Colonel Nolan) considered a very serious thing. This one commodity was already frightfully overtaxed. He did not believe there was too much alcohol drunk in Ireland. He had no doubt that that which was consumed was unequally distributed—that was to say, that he had no doubt that some people drank too much, and that other people were too poor to pay for it, and drank too little. He did not agree with those who condemned the use of alcoholic beverages. The best medical authorities said that a certain amount of alcohol did good, instead of harm; and he must confess that his own experience confirmed that view. He felt it his duty to enter a warm protest against the manner in which Ireland was being treated in this matter. He could understand the reason of it—it all came of the fact of Ireland being subject to England, and of her having no Representatives in the Cabinet. Ireland was not allowed to have any voice in the question of going to war. The question was not submitted to the House of Commons. Members were told that it was unpatriotic to ask Questions, and the result was that Irish Members, even in the House, had no control whatever over the question of peace or war. Not only were the Irish Members without a voice in these matters, but also in matters so closely affecting them as the imposition of increased taxation upon commodities in general use in their country. The Government picked out one of those commodities and put the heaviest tax upon it. Already it was taxed 150 per cent over its value, and that tax was now to be increased to 300 per cent. Every time a man in Ireland drank a glass of whisky he would have to thank the English Prime Minister, the English Chancellor of the Exchequer, and the English Cabinet, who had brought up its price to such an enormous amount by their taxation consequent upon their spirited foreign policy. He did not wish to raise a quarrel with the hon. Member for West Norfolk (Mr. Clare Read), who really represented the agricultural interest so well in that House. The hon. Member said it was a pity that when any agricultural question was introduced the interests of England, Ireland, and Scotland should appear to be opposed to each other. He (Colonel Nolan), however, thought that beer was getting on better than spirits. He had lived a sufficient length of time in England to know that the English people were fond of their glass of beer. He did not think it was as wholesome as whisky; but still he thought that a certain amount of alcohol taken in the form of beer very good and proper. But he wished to point out that the alcohol in beer was only taxed at 40, while that in whisky was taxed at nearly 60. Already they were taxed four times as much in Ireland, in proportion to the population, as they were in England, and it was now proposed to still further increase that enormous disproportion. The result of the action of the Cabinet would only be to make the Irish people more and more feel that they were made to bear the brunt of wars entered into by the Government, and which were not by any means popular in Ireland. The question was not merely between Ireland and England, but between the working classes and the rich; the poor paid nine times as much in the shape of taxation upon their beverages as the rich paid upon their wine. It appeared to him that this was rather a rich man's Budget; certainly it was more an English than an Irish Budget. The Chancellor of the Exchequer had declared that the Wine Duties stood on a special basis, because they were the outcome of Fair Trade arrangements with foreign countries. Perhaps the right hon. Gentleman objected to the phrase; still he had pointed out that the Wine Duties, as they at present stood, had been fixed in consideration of certain advantages which we had received from the foreign countries in which the wine was produced. If the interests of foreign counteies were to be considered, surely the Irish people had a right to demand consideration for their interests. But how did the Irish people know that any representations they made would be attended to? Who had they on the Front Ministerial Bench to speak for them? It was true that they had the Solicitor General for Ireland; but did anyone suppose for a moment that that hon. and learned Gentleman ever interfered in any question which was not of a legal character? He would reserve his opinion with regard to the question of taxing corporate property, simply observing that that proposal might be made most oppressive in Ireland. If it had not been for some answers the right hon. Gentleman had given to the hon. Member for Bradford (Mr. Illingworth) and the hon. Member for Salford (Mr. Arnold)—whom he (Colonel Nolan) had been astonished to find introducing this question—it would have seemed to him that such bodies as looked after the schools in Ireland would have to carefully consider this matter. He was glad to hear that on that question Ireland had nothing to fear from the Chancellor of the Exchequer. He trusted he was not mistaken, and that in Ireland all those who managed those schools would find that they had no additional taxation to pay.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, that the Irish people would gain rather than the reverse in the matter referred to. With regard to the larger question of the duties upon beer and spirits, he would ask hon. Members to defer raising it to the second reading of the Bill which would have to be founded upon the Resolutions. The Government were anxious to get the Resolutions passed, so that the Bill might be set up without delay.

MR. R. H. PAGET

said, the right hon. Gentleman had given them figures with regard to taxation of property covering four different series of years. Would the right hon. Gentleman be good enough to lay upon the Table of the House, in the form of a Return, the figures he had given them with the details showing how those figures had been arrived at? In those figures he had contrasted the incidence of taxation on articles of consumption with the incidence of taxation on property. He had assured the Committee that the figures had been decided upon after mature consideration, and might be relied upon as perfectly correct. He (Mr. Paget) did not dispute that; but it would be interesting to go into details as to how the figures were made up. He would ask the right hon. Gentleman to be good enough to lay on the Table of the House a Return of the groups of figures showing those details. There was one other question he should like to put to the right hon. Gentleman. The right hon. Gentleman's explanation a few minutes since was that he proposed to place real and personal property, so far as it was possible, on a footing of perfect equality; and he (Mr. Paget) wished to ask the right hon. Gentleman whether he was prepared to introduce that equality in the manner in which the Income Tax was levied on realty and on personalty? On real property Income Tax was levied on gross rental; but not so on personalty. The point was one to which he wished to direct the attention of the right hon. Gentleman; because, to be consistent, and to put those two descriptions of property on a footing of perfect equality, they must make a change in the incidence of the Income Tax as it fell at present upon land and upon houses. It fell at present upon the gross rental without any deduction; and in the case of land, and still more in the case of houses, the actual receipts could never reach within a very large percentage of the gross rental on which the Income Tax was charged. If those two descriptions of property were put upon a perfect footing of equality, and funds and railway shares and other stocks were taxed in the same way as the rental of houses and land, a change must be made in the incidence of the tax upon realty. The right hon. Gentleman had recommended the farmers of England to show their accounts, and to allow their Income Tax to be charged upon the profits which they really made. Would he extend that to those farmers of England who were yeomen farmers, owning their own land, so that they might treat the whole of their interest in that land as a business? Would they be allowed, where they could show a profit, to be charged Income Tax on that profit; and where they could show that there had been no profit at all, would they be permitted to enjoy the same treatment that was given to the owner of every other kind of property? The man who farmed his own land had to pay the landlord's tax whether he made a profit or not. The only exemption he could claim was that of the occupier's tax.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, that was a question as to the incidence of Schedule A, and he had no reason to believe that the incidence of Schedule A was not perfectly proper. He was not prepared to admit that it should be altered. As to the other question put by the hon. Gentleman, he (the Chancellor of the Exchequer) had recommended that the incidence of taxation on real property on transference on the occasion of a death should be made as far as possible the same as the incidence on personalty; but he had said nothing about the Income Tax. As to the Return asked for, he thought it might be possible to present it; but he would consult those who would be able to help him in framing it. It would certainly be a useful Return.

MR. MAC IVER

wished to raise an emphatic protest against that portion of the Budget which related to the Spanish Wine Duties. He hoped to state at greater length on another occasion his objections to the proposal to reduce those Spanish Wine Duties, and all he would say now was that it was most mischievous, and that it would have to be very carefully considered. It was part of a general commercial arrangement with Spain which would, no doubt, suit the hon. Member for Bradford (Mr. Illingworth) and certain other hon. Members who represented constituencies in the North of England; but it would not suit the country at large. They would not get equal freedom under it, and if such proposals were carried out it would be found that they would place their Australian Colonies under a very great disadvantage with regard to their wines. Under those circumstances, he felt bound to enter an emphatic protest.

MR. CAUSTON

wished to know whether the extra 1s. per barrel added to the Beer Duty was to be regarded merely as a temporary war tax or as a permanent increase of the duty?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, he did not propose to make any limitation. The Resolution would simply raise the Beer Tax from 6s. 3d. to 7s. 3d. per barrel.

MR. BIGGAR

wished to offer a few remarks upon the Budget generally, and especially upon that part of it which dealt with those unfortunate liquor taxes. At present they had nothing to do with the question as to whether the money was really to be spent or not; or whether, if spent, it was to be spent in the Soudan or in Afghanistan. All that they had to deal with that night was the fact that a certain amount of money had to be raised, and the question was whether the way in which it was proposed to raise it was the right way. There was one part of the Budget of which he very much approved—that part which related to what were called the Death Duties. He did not know whether it was likely to be carried out in its details in a judicious way with which no fault could be found, especially in the provision which related to corporate property; but he confessed that it seemed to him that this business of the Death Duties was likely to be a pretty smart tax upon the owners of landed property. He had not much sympathy with hon. Members who represented the landowning interest; but he thought they were now going to bear quite as large a proportion of the taxation as they were entitled to bear. The Death Duties had been threatened for a very long time; but now it seemed as though, in what was probably a temporary Budget, put on for a special object under exceptional circumstances, a change was to be made in the Death Duties which was almost certain to be permanent, and a tax would be put on the owners of real property which they would never get rid of. There was no great harm in laying it upon the landowners pretty heavily. The hon. Member for Mid Somerset (Mr. R. H. Paget) had raised a very important question with regard to the incidence of the Income Tax—namely, the question whether it should not be charged upon gross value instead of upon net value. He (Mr. Biggar) had always thought that the Income Tax should be raised upon the net value, because the difference between the net income and the gross income never went into the pocket of the person who paid the tax upon it. At the same time, secured property, such as land was supposed to be, ought to pay a higher rate than uncertain incomes made out of personal exertions. Still, on the whole, under the present Budget he thought the owners of property would have to pay quite up to the limit of their fair share. As to the indirect taxation proposed under the Budget, he was glad to see some portion of the proposals; but he was very much dissatisfied with other parts. He was glad to find that no increase of taxation had been put on tea and coffee, and that sort of thing; and as to the increased taxation upon alcoholic drinks, he thought the Chancellor of the Exchequer should have imposed something upon non-alcoholic drinks. Tea and coffee already paid duty to a certain extent, and there were a good many other so-called non-alcoholic drinks which had a proportion of alcohol in them. He remembered a story told of an old lady named Mrs. Brown, of Armagh, who used to sell a teetotal cordial, and when the summer came round, and it grew very hot, she used to put a very considerable amount of whisky into it, for otherwise it would not keep in the warm weather. She used to say that in summer time it sold remarkably well. There was a great number of those things made, and he believed that most of those so-called non-alcoholic drinks contained spirits of wine, or alcohol of some sort. Spirits of wine paid less duty than brandy or whisky, and therefore the sellers of those drinks did doubly well. As to the Beer and Wine Duties, it was a perfect scandal that wine should be charged at a lower rate in proportion to its value and alcoholic strength than whisky or brandy. The Chancellor of the Exchequer had told them that about 1s. 9d. duty was charged on wine, the total value of which was 7s., while whisky, which was worth untaxed about 4s. a-gallon, had to pay 12s. per gallon duty. On wine, therefore, there was only a 25 per cent duty upon the full value, while on whisky there was a 75 per cent duty upon the full value. As to beer, it was proposed to raise the duty by another 1s. for every 36 gallons, while on whisky the duty was to be raised by 1s. upon every gallon. According to the estimate of the hon. Member for Limerick (Mr. O'Sullivan), the alcoholic strength in 36 gallons of beer was equal to 500 proof, or the same alcoholic strength as was to be found in five gallons of proof whisky Yet the 36 gallons of beer were only to pay 7s. 3d. duty, while the five gallons of whisky were to pay £3 duty. In other words, the alcoholic strength of five gallons of proof spirit was to pay, in the case of beer, only 1s. of increased duty, while in the case of whisky it was to pay 10s. of increase. No defence could be offered for such inequality of treatment, and he had not the least doubt that when the Scotch Members came to discuss the question, an endless amount of time would be occupied over those Whisky Duties, with the probable result that the scheme of the Chancellor of the Exchequer would have to be amended. The argument of the Chancellor of the Exchequer with regard to wine was perfectly unreasonable and preposterous, for it practically amounted to giving a bounty to foreign producers, and levying a special tax upon home manufacturers. Free Trade was all very well; but Free Trade to their opponents, and a heavy tax on home productions, was contrary to all their ideas of what Free Trade ought to be. That part of the Budget ought to be amended, and if it were not amended pretty soon, a great deal of time would have to be spent in discussing it, and the result would not be at all satisfactory to the Government. The explanation of the Chancellor of the Exchequer was not by any means satisfactory. The right hon. Gentleman had told them that it had never been the custom to charge duty on whisky, beer, and wine in proportion to their alcoholic strength or value. But that was no reason why it should not be done. The House ought to take advantage of the present Budget to try to put the relative taxation of those different articles on a more reasonable, satisfactory, and honest foundation. He (Mr. Biggar) certainly must protest against the manner in which the duty was laid upon Irish spirits.

SIR JOSEPH M'KENNA

said, he did not wish the opportunity to pass without entering his protest against the increased duty which was to be put on whisky. It was a tremendous increase, considering the way in which that article had been surcharged with duty since 1853 to the extent of 200 per cent. Formerly the duty was levied, in the case of beer, upon dry malt; and it was not so obvious then as now what was the amount of duty according to alcoholic strength. But now it was found that the duty on beer, according to the alcoholic standard, was 1s. 10d. per gallon of proof spirit, or for as much alcohol as would be found in a gallon of proof spirit. But there was a duty of 10s. per gallon upon Irish whisky, or upon the same amount of alcohol as went free, in the case of beer, for 1s. 10d. Beer was the national beverage of England; but whisky, in one form or other, was the national beverage of Scotland and Ireland. The Chancellor of the Exchequer had said it was not the rule to apply the same scale of taxation to those articles. It certainly was not the rule, because before 1853 the duty on malt raised the tax on beer to about 12s. 6d. per gallon of alcoholic strength, and since then the duty had been reduced from 12s. 6d. to 1.s 10d. per gallon on the proof spirit contained in beer, while the duty on whisky had been raised in Scotland from 3s. 6d. to 10s. per gallon, and in Ireland from 2s. 8d. to 10s. per gallon. That was a measure of injustice such as had not been equalled in the Budgets of any other country in Europe. The ordinary consumption of whisky in Ireland was 6,000,000 gallons for 5,000,000 people—not a large consumption, certainly, for it showed that less alcohol was consumed in Ireland than either in Scotland or England. England consumed the largest quantity, and yet Ireland was to be the most heavily taxed, and was to be made to pay for this war, which she had had no hand in bringing about. The taxation on this one article alone in Ireland, without the addition which it was now proposed to place upon it, cast upon the country a burden of no less than £300,000 a-year. But what was the addition to be made to the duty upon beer in England? It was only 1s. on every barrel of 36 gallons, which was exactly one-third of 1d. on each gallon. Was not that oppressive in the last degree? Did it not betray an absolute cowardice on the part of the Government, when they ought to do justice between the people of the Three Kingdoms? Was there any reason why alcohol, in whatever vehicle it might be contained, ought not to pay the sum which it paid before the year 1853? What was the object in changing the old arrangement? The right hon. Gentleman the present Prime Minister was Chancellor of the Exchequer when the change was made, and that right hon. Gentleman then explained that the change was to establish equality of taxation. But there never was a greater or a grosser fallacy palmed off upon the House than was put forward on that occasion. The duty on spirits was raised by degrees from 2s. 8d. per gallon in 1853 to the 10s. per gallon at which it stood now. The English papers had leading articles about the poverty of the Irish, and attributed it to their improvidence; but the fact was that the people of Ireland were poor because they were taxed most outrageously. Any people in the world would be impoverished if they were treated in the same manner. The true way to measure the income of a country was to consider the amount of its Income Tax. The taxation of Great Britain, which included Scotland as well as England, would be measured by an Income Tax of 2s. 6½d. in the pound, while the taxation of Ireland could be measured by this— that it would take no less than 5s. 3d. in the pound to discharge Ireland from Imperial taxation, whereas before 1853, 3s. in the pound would have discharged her from Imperial liabilities. He entered a solemn protest against this species of legislation for raising the taxes of the country. Ireland was miserable and poverty-stricken, and that fact was due solely and entirely to the unfair rate of taxation cast upon her in proportion to her means when compared with England.

MR. WILLIAM REDMOND

said, he did not know whether it was intended to take a division; but if so, he should certainly vote against the Government, not because he had any particular objection to whisky being taxed, for the people who were taxed would get something from the taxation. The people of Ireland were to be taxed more heavily upon whisky, and they would feel it more heavily; but that was because they consumed more of it. But why was that increase to be made at all? The Government were going to tax alcohol in Ireland because of their taste for blood; and he, as an Irish Catholic, thought it his duty, and the duty of every person who had the interest of humanity at heart, to object to taxation which was merely for the purpose of enabling the Government to carry on a war. Much as the people of Ireland were opposed to wars and to the unnecessary shedding' of blood, he believed they would consent to have their bread heavily taxed, provided that would bring about what a good many people in Ireland devoutly wished—the end of English rule, by plunging Great Britain into a war with some first-rate Power which would bring it to a sense of its duty to Ireland. But to tax the people for such a war as the Government had been waging in the Soudan and in the Transvaal, and for paying the expenses of such Expeditions as that of Sir Charles Warren, who had been sent out to try and get up another war with the Boers, in obedience to the Jingo spirit of the country—to do that, in his opinion, was nothing short of an infamous swindle. He hoped a division would be taken, not only as a protest against the proposed increase of taxation, but to show that Ireland did not derive any benefit whatever from, and was entirely opposed to, any extra taxation merely to enable the Government to carry on bloody and unnecessary wars.

Question put, and agreed to.

(1.) Resolved, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and eighty-five, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of Eight Pence; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act,— In England, the Duty of Four Pence; In Scotland and Ireland respectively, the Duty of Three Pence; Subject to the provisions contained in section one hundred and sixty-three of the Act of the fifth and sixth years of Her Majesty's reign, chapter thirty-five, for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of "The Customs and Inland Revenue Act, 1876," for the relief of persons whose income is less than Four Hundred Pounds.

(2.) Resolved, That Stamp Duties, at the like rates as are charged on Affidavits and Inventories by "The Customs and Inland Revenue Act, 1881," shall be charged and paid on accounts delivered of property to be included therein according to the value thereof:

The Property to be included in the account shall be property of the following description, viz.:—

1. (a.) Personal estate and effects of any person dying on or after the first day of May one thousand eight hundred and eighty-five, which by reason of the local situation thereof are not included in any Affidavit or Inventory under the provisions of "The Customs and Inland Revenue Act, 1881;"
2. (b.) Money which, by virtue of the will of any person dying on or after the first day of May one thousand eight hundred and eighty-five, or upon the death of any person so dying, either immediately or after any interval, is or becomes charged upon or made payable out of any real estate otherwise than by way of annuity;
3. (c.) Real estate directed to be sold by the will of any person dying on or after the first day of May one thousand eight hundred and eight-five, or held on trust for sale upon the death of any person so dying:

Provided, That, in respect of any legacy payable out of, or a succession to, any property according to the value whereof Duty shall have been paid on an account in conformity with this Resolution, the Duty at the rate of one pound per centum imposed by the Act of the fifty-fifth year of King George the Third, chapter one hundred and eighty-four, or "The Succession Duty Act, 1853,"shall not be payable.

(3.) Resolved, That, in addition to the Successions chargeable with Duty under section ten of "The Succession Duty Act, 1853," there shall be levied and paid to Her Majesty in respect of every Succession as defined and mentioned in that Act, upon the death of any person dying on or after the first day of May, one thousand eight hundred and eighty-five, where the Successor shall be the husband or wife of the predecessor, a Duty at the rate of Three Pounds per centum upon the value of the interest of the Successor:

And, in addition to the Duties chargeable under such section, there shall be levied and paid to Her Majesty in respect of every Succession therein referred to, upon the death of any person dying on or after the first day of May, one thousand eight hundred and eighty-five, according to the value thereof, the following Duties (that is to say):— Where the Successor shall be the lineal issue or lineal ancestor of the predecessor, a Duty at the rate of Two Pounds per centum upon the value of the interest of the Successor; In all other cases mentioned in such section, a Duty at the rate of Three Pounds per centum upon the value of the interest of the Successor:

Provided, That no Duty in conformity with this Resolution shall be payable upon the interest of a Successor in Leaseholds passing to him by will or devolution by Law, or in pro- perty included in an Account according to the value whereof Duty is payable under "The Customs and Inland Revenue Act, 1881," or in conformity with the foregoing Resolution, nor shall such Duty be payable by a person in whom any reversionary property expectant on death shall be vested by alienation for value in money or money's worth prior to the first day of May, one thousand eight hundred and eighty-five.

Provided also, That where by means of any disposition, personal property is so settled that it, or the income thereof, is to be enjoyed upon the death of any person dying on or after the first day of May, one thousand eight hundred and eighty-five by the husband or wife of the predecessor during his or her life, or for any other limited interest, and subject thereto by any lineal issue or lineal ancestor of the predecessor for an absolute interest, the Duty of Three Founds per centum upon the value of the property shall be immediately charged upon and paid out of such property; and, by the payment of such Duty, any claim to Duty under "The Succession Duty Act, 1853," and in conformity with this Resolution, upon the Succession of the said lineal issue or ancestor, shall be deemed to have been fully satisfied and discharged.

(4.) Resolved, That, in addition to the Legacies chargeable with Duty under the Act of the fifty-fifth year of King George the Third, chapter one hundred and eighty-four, there shall be levied and paid to Her Majesty in respect of every Legacy by the will of any person dying on or after the first day of May one thousand eight hundred and eighty-five, charged upon or made payable out of any real estate, and, given by way of annuity to or for the benefit of the husband or wife of the deceased, a Duty at the rate of three pounds per centum on the value thereof:

And, in addition to the Duties chargeable under the said Act and specified in the Schedule thereto, there shall be levied and paid to Her Majesty in respect of every Legacy charged upon or made payable out of any real estate and given by way of annuity by the will of any person dying on or after the first day of May one thousand eight hundred and eighty-five, or upon the death of any person so dying, either immediately or after any interval, the following Duties (that is to say):— Where the same is given to or for the benefit of any lineal issue or lineal ancestor of the testator, a Duty at the rate of two pounds per centum on the value thereof; In all other cases specified in the said Schedule, a Duty at the rate of three pounds per centum on the value thereof.

(5.) Resolved, That, towards raising the Supply granted to Her Majesty, and making a permanent addition to the Public Revenue, there shall be levied and paid to Her Majesty in respect of all Real and Personal Property which shall have belonged to or been vested in any body corporate or unincorporate during the yearly period ending on the fifth day of April, one thousand eight hundred and eighty-five, or during any subsequent yearly period ending on the same day in any year, a Duty at the rate of Five Pounds per centum, upon the annual income or profits of such property accrued to such body corporate or unincorporate in the same yearly period, after deducting therefrom all necessary outgoings:

Subject to exemption from such Duty in favour of property of the description following (that is to say):—

1. (1.) Property vested in or under the control or management of "The Commissioners of Her Majesty's Works or Public Buildings," or "The Commissioners of Her Majesty's Woods, Forests, and Land Revenues;"
2. (2.) Property which, or the income or profits whereof, shall be legally appropriated and applied exclusively for the benefit of the public at large, or of any county, shire, borough, or place, or the ratepayers or inhabitants thereof, or in any manner expressly prescribed by Act of Parliament:
3. (3.) Property which, or the income or profits whereof, shall be legally appropriated and applied exclusively for any purpose connected with any religious persuasion, or for any charitable purpose, or for the promotion of education, literature, science, or the fine arts;
4. (4.) Property of any Friendly Society or Savings Bank established according to Act of Parliament;
5. (5.) Property belonging to, or constituting the capital of, a body corporate or unincorporate established for any trade or business, or being the property of a body whose capital stock is so divided and held as to be liable to be charged to Legacy Duty or Succession Duty;
6. (6.) Property realised or acquired with funds voluntarily contributed to any body corporate or unincorporate within a period of thirty years immediately preceding;
7. (7.) Property acquired by any body corporate or unincorporate within a period of thirty years immediately preceding where Legacy Duty or Succession Duty shall have been paid upon the acquisition thereof:

The term "body unincorporate" in this Resolution shall include every unincorporated Company, Fellowship, Society, Association, and Trustee or number of Trustees to or in whom respectively any real, or personal property shall belong, in such manner or be vested upon such permanent trusts that the same shall not be liable to Legacy Duty or Succession Duty.

(6.) Resolved, That, in lieu of the Stamp Duties payable upon any security for money given to a subscriber in respect of a loan raised by any Company or Corporation and transferable to bearer, and upon a Foreign Security transferable to bearer, there shall be charged a Duty at the rate of one shilling for every ten pounds, and also for any fractional part of ten pounds of the money thereby secured:

And, in lieu of any other Stamp Duties, there shall be charged upon a Security given in substitution for a Security duly stamped a Duty at the rate of six pence for every twenty pounds, and also for any fractional part of twenty pounds of the money thereby secured:

The term "Foreign Security" shall have the meaning assigned to it by the Act of the thirty-fourth and thirty-fifth years of Her Majesty's Reign, chapter four, and shall also include a Security which, though originally issued to the holder out of the United Kingdom, is offered by him for subscription, and given or delivered to a subscriber in the United Kingdom.

Motion made, and Question put, That, in lieu of the Duty of Excise now payable on British Spirits under the Act of the twenty-third and twenty-fourth years of Her Majesty's Reign, chapter one hundred and twenty-nine, there shall be charged and paid the Duty of Excise following, that is to say:— For and upon every gallon, computed at hydrometer proof, of spirits distilled in the United Kingdom, the Duty of twelve shillings; and so in proportion for any less quantity."—(Mr. Chancellor of the Exchequer.)

The Committee divided: —Ayes 109; Noes 27: Majority 82. —(Div. List, No. 143.)

(7.) Resolved, That, in lieu of the Duty of Excise now payable on British Spirits under the Act of the twenty-third and twenty-fourth years of Her Majesty's Reign, chapter one hundredand twenty-nine, there shall be charged and paid the Duty of Excise following, that is to say:— For and upon every gallon, computed at hydrometer proof, of spirits distilled in the United Kingdom, the Duty of twelve shillings; and so in proportion for any less quantity.

(8.) Resolved, That, in lieu of the Duties of Customs now payable on Spirits, there shall be charged and paid the Duties following (that is to say):

	£	s.	d.
For every gallon computed at hydrometer proof of spirits of any description (except Perfumed Spirits) including Naphtha or Methylic Alcohol, purified so as to be potable, and mixtures and preparations containing Spirits.	0	12	4
For every gallon of Perfumed Spirits	0	19	9
And so on in proportion for any less quantity.

That where a person importing Liqueurs, Cordials, or other preparations containing Spirits in bottle, may have entered the same in such manner as to indicate that the strength is not to be tested, Duty shall be charged and paid at the rate following (that is to say):

	£	s.	d.
For every gallon thereof	0	16	0
And so in proportion for any less quantity.

And, in lieu of the Duties of Customs now payable on the articles hereinafter mentioned, being articles in which Spirits are a part or ingredient thereof, or in the manufacture of which Spirits are used, there shall be charged and paid the Duties following (that is to say):

		£	s.	d.
Chloroform	the pound	0	3	7
Chloral hydrate	the pound	0	1	7
Collodion	the gallon	1	8	9
Ether, Sulphuric	the gallon	1	10	0
Ethyl, Iodide of	the gallon	0	15	7

(9.) Resolved, That, in lieu of the Duty of Excise now payable under the Inland Revenue Act 1880, in respect of Beer brewed in the United Kingdom, there shall be charged and paid the Duty of Excise following (that is to say) — Upon every thirty-six gallons of worts of Beer of a specific gravity of one thousand and fifty-seven degrees, the Duty of Seven Shillings and Threepence; and so in proportion for any difference in quantity or gravity:

And, in lieu of the Drawback of Excise now payable under the Inland Revenue Act 1880, in respect of Beer exported from the United Kingdom to Foreign Parts as merchandise, or shipped for use as ships' stores, there shall be allowed and paid in respect of Beer brewed in the United Kingdom on or after the first day of May, one thousand eight hundred and eighty-five, a Drawback calculated according to the original gravity thereof (that is to say):— Upon every thirty-six gallons of an original gravity of one thousand and fifty-seven degrees the Drawback of Seven Shillings and Three Pence; and so in proportion for any difference in quantity or gravity.

(10.) Resolved, That, in lieu of the Duties of Customs now payable on Beer, there shall be charged and paid the Duties following (that is to say):—

For every thirty-six gallons of Beer of the description called Mum, Spruce, or Black Beer—

Where the Worts thereof were before fermentation of a specific gravity,	£	s.	d.
Not exceeding one thousand two hundred and fifteen degrees.	1	10	0
Exceeding one thousand two hundred and fifteen degrees	1	15	0
For every thirty-six gallons of Beer of any other description—
Where the Worts thereof were before fermentation of a specific gravity of one thousand and fifty-seven degrees	0	7	6

And so in proportion for any difference in gravity.

(11.) Resolved, That there shall be charged and paid on licences taken out for a half-year by Brewers of Beer, not being Brewers of Beer for sale, the Duties following, that is to say:— On a licence, when taken out on or after the first day of April in any year to expire on the thirtieth day of September following, and on a licence, when taken out on or after the first day of October in any year to expire on the thirty-first day of March following—

	Duty.
	£	s.	d.
By any such Brewer who is the occupier of a house of an annual value exceeding ten pounds, and not exceeding fifteen pounds.	0	6	0
By any other of such Brewers	0	4	0

Motion made, and Question proposed, That the Duties of Customs now chargeable upon Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and eighty-five, until the first day of August, one thousand eight hundred and eighty-six, on the importation thereof into Great Britain or Ireland (that is to say): Tea the pound. Sixpence.

MR. ARTHUR O'CONNOR

said, he should like to hear what answer the right hon. Gentleman the Chancellor of the Exchequer had to make to the observations which he (Mr. A. O'Connor) addressed to the Committee a short time ago. In the year 1869, when the importation of tea amounted to 139,000,000 lbs., the value of the article was only a little over £10,000,000. In 1883, when the importation had risen to 222,000,000 lbs., the value was only £11,500,000. That was to say, the amount of capital invested only increased by about 8 per cent; but the amount of tea on which the tax was raised had increased from 139,000,000 to 222,000,000 lbs. There was an increase of 70 per cent in the amount levied, because there was a similar increase in the amount imported as measured by weight. The amount in value had only increased very slightly. Having regard, therefore, to the amount of capital invested and the commerce done there was a virtual increase of the tax equal to about 50 per cent. It was as if the tax was 4d. per lb. in 1869 and 6d. in 1883, though all the time the tax nominally remained the same. To maintain the tax at the present figure was to burden the capital invested in the tea trade with a tax 50 per cent greater than that tax levied in 1869. In reality, the incidence of the tax was very much more grievous on the trade now than it was formerly. He should like to ask the Chancellor of the Exchequer if he contemplated a reduction of the Tea Duty next year?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, he was not quite sure whether he followed correctly the whole of the hon. Gentleman's arguments; but he understood the hon. Member to ask whether next year the Tea Duty would be reduced. He certainly could say nothing about what might be done next year with regard to the Tea Duty.

MR. ARTHUR O'CONNOR

said, the point was exceedingly simple. The tax was levied, not according to the value of the tea, but according to its weight. 139,000,000 lbs. were imported 14 or 15 years ago, and 6d. in every 1 lb. weight was charged. The weight had risen to 222,000,000 lbs., and 222,000,000 sixpences were accordingly levied. But there had not been a corresponding increase in the value of the tea; there had not been a corresponding increase in the amount of capital invested; and therefore the comparatively smaller amount of capital was now weighted by the nominally equal, but in reality the greater, amount of taxation. In order to maintain the incidence of taxation equal upon the equal amount of capital, he proposed that for the word "Sixpence" in the Resolution put from the Chair there should be substituted the words "Pour Pence."

Amendment proposed, to leave out the word "Sixpence," in order to insert the words "FourPence,"—(Mr. Arthur O'Connor,)—instead thereof.

Question, "That the word 'Sixpence' stand part of the Question," put, and agreed to.

Main Question put, and agreed to.

(12.) Resolved, That the Duties of Customs now chargeable upon Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and eighty-five, until the first day of August, one thousand eight hundred and eighty-six, on the importation thereof into Great Britain or Ireland (that is to say): Tea …the pound Sixpence.

Motion made, and Question proposed, That on a day to be fixed by the Commissioners of the Treasury the Duties of Customs now chargeable on Wine shall cease and deter mine, and that on and after such day there shall be charged the Duties following (that is to say):—

	£	s.	d.
Wine containing less than 30.1 degrees of proof spirit, and less of such Wine, the gallon	0	1	0
Wine containing less than 42 degrees of proof spirit, and less of such Wine, the gallon	0	2	6

And for every degree of strength beyond the highest above specified an additional Duty of 3d. the gallon."— (Mr. Chancellor of the Exchequer.)

MR. O'SULLIVAN

said, this was a Resolution against which the Committee ought to protest. Wine was the only exciseable article on which a reduction was proposed. The right hon. Gentleman the Chancellor of the Exchequer proposed to increase the duty on spirits and beer, which were chiefly consumed by the working classes, while he proposed to reduce the tax on the drink of the wealthy people.

Question put.

The Committee divided: —Ayes 98; Noes 26: Majority 72.—(Div. List, No. 144.)

(13.) Resolved, That on a day to be fixed by the Commissioners of the Treasury the Duties of Customs now chargeable on Wine shall cease and determine, and that on and after such day there shall be charged the Duties following, that is to say:

	£	s.	d.
Wine containing less than 30.1 degrees of proof Spirit, and less of such Wine, the gallon	0	1	0
Wine containing less than 42 degrees of proof spirit, and less of such Wine, the gallon.	0	2	6

And for every degree of strength beyond the highest above specified an additional Duty of 3d. the gallon.

(14.) Resolved, That it is expedient to amend the Law relating to the Inland Revenue and the Customs.

Resolutions to be reported To-morrow.

Committee to sit again To-morrow.