WAYS AND MEANS—FINANCIAL STATEMENT.—COMMITTEE.

HC Deb 26 March 1888 vol 324 cc268-365

WAYS AND MEANS—considered in Committee.

(In the Committee)

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

Mr. Courtney, in rising to make the usual Financial Statement of the year, I feel that I have need of the special indulgence of the House, because, as Chancellor of the Exchequer, I stand in a somewhat exceptional position this year through the introduction of the Local Government Bill. Generally it falls to the lot of the Chancellor of the Exchequer simply to have to consider the claims of the taxpayers where there is an opportunity for remission of taxation; but upon this occasion the claims of the ratepayers have also to be considered; and I find that I have—if I may use the phrase—a double set of clients—namely, the taxpayers and the ratepayers. I do not believe there is any antagonism of interest between the two. Most of the taxpayers are ratepayers, and most of the ratepayers are taxpayers, so I hope that there will be no jealousy with regard to the relief which may be extended to either the one or the other of those two classes who contribute equally to public purposes, although the one class contribute to the Imperial and the other to the local purse. The ground over which I shall have to travel is wider, therefore, than it usually is; and I trust that on that account the Committee will permit me to pass, perhaps with more rapidity than in an ordinary year, over some of the details which it is customary for the Chancellor of the Exchequer to submit on those occasions.

I commence, as usual, with making a statement in regard to the Expenditure of the past year, or rather the present year. And here I must certainly say that we are placed at some disadvantage, because the Financial Statement has to be made a week before the conclusion of the financial year. I shall give the best estimate I can with regard both to the Revenue and the Expenditure of the year, and the Civil servants who deal with these matters are so experienced that I doubt whether there will be much difference between the figures which I shall lay before the Committee and the final figures which will be submitted to Parliament. But it must be remembered that the figures, which I now give, are, as regards the last week of the financial year, an estimate only.

I take first the Exchequer issues for Expenditure, and hon. Members will be able to compare them with the Estimates, if they will look to page 2 of the Papers issued on this occasion. The total Exchequer issues will be £27,972,000 under the head of Consolidated Fund Charges, or an excess of about £44,000 over the Estimate. This excess is due to an issue somewhat beyond what we put down for the year for the Localization of the Forces Fund. It is not an extra expenditure, but rather an anticipation of what, in the ordinary course, would have been spent in 1888–9, and it is a not unsatisfactory item, because it brings our outlay for this purpose practically to an end.

I will now go through the various items of Supply. The Army expenditure will be £18,167,000, as compared with the total Estimate of £18,394,000, showing a saving of £227,000. The Navy issues will be £12,326,000, showing a saving of £151,000. The Civil Service Miscellaneous issues will be £18,210,000, showing a saving of £52,000 as compared with the Budget Estimate, and of £241,000 as compared with the total estimated Expenditure, including the Supplementary Estimates. The expenditure of the Post Office will be £5,403,000, showing a saving of £18,000. The expenditure of the Telegraph Service will be £1,940,000, showing a saving of £10,000. The Packet Service issues will be £698,000, showing a saving of £1,000. For the Customs and Inland Revenue the amount will be £2,708,000, showing a saving of £8,000. For the total Supply Services the amount is £59,452,000, showing a saving of £467,000 as compared with the Budget Estimate, and of £656,000 as compared with the total estimated Expenditure. The total Expenditure is £87,424,000, showing a saving, as compared with the Budget Estimate, of £423,000.

I trust that these figures will not be unsatisfactory to the Committee. I have several remarks to make with regard to them. I do not propose to go into detail with respect to the savings which we have secured. I may state, with regard to the Consolidated Fund Services, that there has been a saving of about £100,000 in the interest of the Unfunded Debt, which saving, of course, has gone to diminish the Funded Debt, being employed as so much more money to pay off that Debt. This has been partly due to the low rate of interest on Treasury and Exchequer Bills, the average of which has been £2 5s. 11d.; but there has also been a saving of £15,000 to which I should like to allude. It is a saving which I have secured by watching more closely the balances at the Bank of England than has hitherto been done. I have not thought it necessary always to renew Treasury Bills on the day when they expired; but I have looked at the needs of the Treasury for the next week or month, and in that way I have kept down the balance at the Bank of England, and the result has been that I have been able to save £15,000, an amount which again goes to the credit of the Sinking Fund. In the next place, I wish to call attention to the fact that there have been no Supplemental Esti- mates this year for the Army and Navy; and in no year since 1870 have there not been Supplemental Estimates or Votes of Credit for the Navy or the Army, or generally for both. I trust that in view of the constant charges, which are levelled at the great spending Departments, of extravagance, and sometimes of maladministration, I may point to the fact that my two right hon. Friends at the head of those two Departments have this year, for the first time for many years, been able to keep down the expenditure to that which Parliament intended should be spent, and to exercise such a control that there have been none of those Supplementary Estimates which destroy the confidence of Parliament in the preparation of Estimates, and which also destroy the chances of the Chancellor of the Exchequer submitting a successful Budget. Again, I have to say there have been no Supplemental Estimates for the Revenue Departments. This has not happened for the last 20 years. And, again, the Supplemental Estimates for the Civil Services have been lower than in any other year for 20 years, except last year. They have been only £208,000; last year they were £165,000. Of course, I do not include in Supplemental Estimates the grant in aid of roads. I am speaking of Supplemental Estimates in the ordinary sense, which are in excess of the sums voted by Parliament. To sum up, we have spent £423,000 less than the original Estimates, and £612,000 less than our original and Supplementary Estimates taken together.

I now pass to the consideration of the Revenue, and again I am able to submit a fairly satisfactory account to the Committee. I presume that the Committee will wish to have each separate head of Revenue. The revenue from Customs—and hero again I may remind the Committee that the revenue for one week is only an estimate—the revenue from Customs is £19,630,000, or £30,000 more than the Estimate; but it is considerably less than the receipts of last year, owing to the reduction of the Tobacco Duty. The receipts from Excise are £25,597,000, or an excess of £305,000 over the Estimate. The Stamps amount to £12,940,000, showing an increase, on which I shall presently dilate, of £1,182,000. The Land Tax amounts to £1,050,000, showing a deficiency of £15,000. The House Duty amounts to £1,890,000, showing a deficiency of £30,000; and the Income Tax is £14,340,000, or exactly the sum which it was estimated to produce. That amount may be varied slightly in the coming week; but if there is any change it will be that it will realize somewhat more than the Estimate. The total produce of taxes is thus £75,447,000, showing an excess over our Estimates of £1,472,000. Post Office receipts are £8,650,000, showing an increase of £50,000; Telegraph Service, £1,950,000, which is the exact estimate; Crown Lands are £390,000, or an excess of £20,000; Interest on advances for local works and purchase money of Suez Canal is £242,000, an excess of £2,000; Miscellaneous revenue is £2,910,000, showing a decrease, as compared with the Estimate, of £90,000. The total Non-Tax Revenue is £14,142,000, and is £18,000 less than the Estimate. The total Revenue is £89,589,000, being £1,454,000 more than the estimated Budget receipts.

The Committee will wish to have some little information with regard to some of the items of increase. The total Estimate of Customs was £19,600,000, and the receipts I put down at £19,630,000. This is a remarkably close estimate, looking at the enormous sum involved. And, pointing to that, I must allude to the great loss which the State has sustained in the death of Mr. Seldon, who was a most accomplished statistician, an authority on Customs, and most conversant with these matters, and who has guided, and well guided, many Chancellors of the Exchequer in succession. I am glad to recognize, and I think it right that Parliament and the country should recognize, the services of our Civil servants in the great Departments who are performing their work in comparative obscurity. It is a subject on which I always feel strongly, and it is for that reason that I call attention to the matter, and wish to pay a tribute to the memory of one who served us well. It is right that the little-noticed work of the Civil Service should not be forgotten or undervalued. Four men of equal ability leave the University at one time. One man becomes a Bishop, another a Judge, another a Member of Parliament, and perhaps a Minister, and the fourth becomes, in the capacity of a permanent Civil servant, the mainstay, perhaps the head, of a Department of the State. He enjoys less fame and less remuneration than any of the others. That is all the more reason why, where there is merit and ability on the part of a Civil servant similar to that which is displayed in other careers in life, that merit and ability should be gratefully recognized by his countrymen.

Now, I will say a very few words with regard to the smaller differences in the Customs revenue. Coffee and its two satellites, chicory and cocoa, never show any remarkable eccentricities. They seldom increase the Revenue beyond the Estimate. They are dull items, and there is no elasticity in them whatever. Tea is fairly, though not remarkably, progressive. In 1886–7 the receipts from tea were £4,515,000, and in 1887–8 they were £4,618,000, or an increase of £103,000. This is somewhat more than in proportion to the increase in the population; but I cannot say that it is a revenue which shows much elasticity. With regard to tobacco, where a reduction in the duty took place last year, the estimated reduction of receipts was £515,000; but it has actually been £595,000, an excess over our estimated loss of £80,000. That loss has not been due so much to any miscalculation of the Customs or Inland Revenue, as to the fact that very considerable delay took place in the voting of the Budget last year; and, consequently, the Watering Clauses, which prevent an excess of water being put into tobacco, did not come into operation till a later period of the year than we reckoned for. When they did come into operation, they considerably increased the consumption of tobacco—that is to say, the individual smoker smoked more tobacco and less water in every pipe he consumed. Since the 1st of August there is a gratifying increase in the amount of unmanufactured tobacco cleared of 26,900,000 lbs. weight as against 25,900,000 lbs. in the corresponding period of the previous year, being an increase of 1,000,000 lbs. Our calculations, therefore, are beginning to be justified. The House will remember that I defended the reduction of the Tobacco Duty on the ground that extra duty had checked consumption. Just before the duty was raised in 1877 the consumption was 1.49 lbs. per head per annum. In 1882 it had fallen to 1.42 lbs. per head, and it continued at about that point till last year. But in the last five months of last year, when the Watering Clauses and the reduction of duty came together into operation, the consumption went back to where it stood before the duty was raised, and it stands now at 1.49 lbs. per head per annum.

The last heads of Customs and Revenue to which I need refer are spirits and wine. I must take these in connection with home-made spirits and beer, and treat them under the general head of drink revenue. The right hon. Gentleman the Member for Derby (Sir William Harcourt) called special attention to the falling off in the revenue under this head some time ago. In 1876–7 the revenue was £30,909,000; in the year 1887–8, which we have just concluded, it was £27,043,000, showing a fall of no loss than £3,866,000. I do not know whether it will be satisfactory to the Committee—it depends whether they look at the question as moralists or as financiers—to know that that decline in the revenue from drink has been arrested during the last year. For the first time for many years, there has not been a decline in the revenue from drink—["The Jubilee!"] There has been an increase—a very considerable increase—in the amount derived from beer; and I am credibly informed, and I think that an hon. Member behind me has anticipated the explanation, that the great loyal demonstration of last year, and the festivities connected with it, did lead to an increased consumption of boor. In the summer months of last year the revenue from beer showed a very great elasticity, and it amounted for the whole year to £8,710,000, the largest sum ever realized under this head. Throughout the year foreign spirits were stationary. In home spirits the consumption increased, as compared with the Estimate, by £170,000. Wine only fell off £28,000, whereas we had calculated upon a less of £100,000. On the whole, there is an increase of £300,000 over the Estimate on account of the revenue from drink.

This is, perhaps, a proper point, in my Statement to remind the Committee that consumable articles generally no longer yield to the Revenue what they did. In 1876–7 taxes on consumable articles yielded £1 6s 1d. per head; whereas in 1887–8 they yielded only £1 2s. 3d. per head. Thus that por- tion of the Revenue to which the great consuming classes chiefly contribute is a halting and an inelastic Revenue. But in contrast to the consumable articles stands the next great item of Revenue—namely, Stamps. I call the special attention of the Committee to this subject. Stamps have produced in the present year under their two great heads of Death Duties and general stamps—£8,160,000 from Death Duties, and £4,780,000 under the head of general stamps; being a total of £12,940,000, or £1,160,000 more than last year. Now, this large item of Revenue is contributed mainly by the well-to-do classes; and I must say that the whole of the area which is covered by the Stamp Duties constitutes a very promising field for the fiscal reaper. We have bad a very good crop from it this last year; and I am not sure that the crop has reached its maximum, and that further revenue may not be derived from that source.

I cannot pass away from this subject without saying one word about the yield of the Probate Duty, which has shown such extraordinary results this year. I may mention that it began to produce those extraordinary results just at the date when, in a premature speech, I declared that the Death Duties yielded a most steady and average revenue. Since then the Probate Duty has heaped coals of fire on my head by pouring unwontedly large sums into the Exchequer. There have fallen in two of the largest estates that have ever had to submit to the tax, both of them amounting to upwards of £3,000,000; and £3,000,000 means a cheque for £90,000. But that will not exhaust the revenue from these estates, because there are Legacy Duties to follow, and which will be paid in the ensuing year. There was also a third estate of £1,800,000. While there have been these three windfalls—and I wish the Committee to consider them as windfalls—while we have had these three windfalls in the present year, there have been only three estates of £3,000,000 before during the last 20 years. Then, again, we have had a larger number of estates than usual which pay Legacy Duty at the rate of 10 per cent. To sum up, the Probate and Legacy Duties give £7,300,000; the Succession Duty gives only £820,000, and of that £150,000 is contributed by settled personalty. This shows how small a part is played by Succession Duty in the finances of the country. Taking Stamps as a whole, while, of course, it cannot be inferred that this great increase in the revenue is necessarily a proof of growing prosperity, as it includes that which is raised from the Death Duties, yet there has been also a great increase in the revenue from business stamps, properly speaking. There is an increase of £440,000 in general stamps, and that, I think, may be fairly taken as a confirmation of the revival of the trade of which the first symptoms have begun to appear. There has been a distinct increase in business, which is revealed to us in part by the increase in this portion of the Stamp Duties.

Of the Income Tax I cannot speak with any degree of satisfaction. The yield of the tax per penny was £2,000,000 in 1884–5; £1,980,000 in the year following; £1,960,000 in 1886–7; and it is £1,955,000 in 1887–8. Thus, since 1884–5, there has been a small decrease from year to year in the yield of the penny, instead of an increase, as might have been hoped. Hon. Members will remember that the Income Tax is affected not only by the business of the year, but by that of preceding years, because the average of three years is taken in calculating business profits, and we have been passing through a cycle of unsatisfactory years. With reviving trade we may look for some little improvement; but when I come to estimate the Revenue for next year it will be impossible to hope for any large increase of revenue from this source.

I will now sum up the results for the present year. The actual Revenue is £89,589,000; the Estimate was £88,135,000; so that the excess over the Estimate is £1,454,000. The saving on Expenditure was £422,000; the surplus for which I estimated was £289,000; and I am, therefore, able to lay before the Committee a realized surplus for the year 1887–8 of £2,165,000, the largest since 1873–4.

May I pause for a moment to examine the effect of these satisfactory results upon our balances? I began the year with a balance of £5,950,000, and I leave off with a balance of £7,438,000—an increase of £1,488,000. It is always necessary, at this time of the year, to have a large balance in hand, looking to the dividends payable in April; and I have a special reason, which the Committee can readily understand, for desiring to have a very handsome balance on March the 31st this year, in order that I may be comfortably prepared to hand over their sovereigns to any holders of the New Threes who may prefer to ask for £100 in money rather than to take new Stock, which now stands at £100¾. It is well to have a strong balance to be able to meet such demands as may be made upon us.

I will now show the effect of the year's finance upon the Debt; but before doing so I must pause for a moment here to revert to a somewhat technical and dry subject—namely, the Local Loans Debt and the Local Loans Fund which I established last year. According to the system which I then ventured to inaugurate, a special account was to be kept of what may be called the Reproductive Debt of the country. It is money lent out to Local Authorities, against which the country receives as income the interest which is paid by the Local Authorities. There will now be presented to Parliament, for the first time, a clear account showing how much is loaned, what is outstanding, what each loan costs us, what we shall receive in return, and what additional sums we have lent in the course of the year. There will be a capital account and a revenue account. The capital account will show that the National Debt Commissioners have lent during this year £3,206,000, and that they have received in repayment £1,906,000, so that there is a balance of £1,300,000 of new advances. According to the system which we inaugurated, there will be issued new Local Loan Stock against this sum. Hon. Members will see that they will now be able to watch from year to year how much we lend to Local Authorities and how much we receive from them. We have not yet been able to make up our final statement, because we have felt it our duty to see what bad debts have been incurred in the course of the present year. This is a contingency we ought always to remember; and which ought always to be brought home to Parliament. I cannot help thinking that we have in the past too much encouraged the idea that if there is a margin between the rate of interest at which we lend and the rate of interest we receive, the trans actions are necessarily profitable. I now come to the Revenue account. We have received as interest on loans £1,258,000; we have paid as interest on Local Loans Stock and on Short Loans £1,033,000; and that shows a surplus of £225,000, which is to be charged with that restitution annuity of £130,000 which was established by the Local Loans Bill—an annuity which is to restore the arrears which were lost before these transactions began. In former years, the Committee will remember, £4,000,000 had been lost by bad debts, and before we can say that this banking business, as we may call it, is remunerative, we must restore, even if it be by degrees, the £4,000,000 we have lost. The figures leave a surplus of £95,000, but from that the expense of the lending departments ought to be deducted; and that leaves a balance of about £50,000, for what may be practically regarded as a Sinking Fund, against which we have to set off some bad debts incurred in the year. I am not aware of any large amounts, but there are one or two small amounts, and a Vote will have to be taken to wipe them out. In that way it will be brought home to the House where the money is lost, how it is lost, and through what means it is lost.

At present it will be more interesting to show what we have been doing with the National Debt. Including the increase in our balances of £1,488,000, which is equivalent to a reduction of Debt, we have diminished our liabilities during the year by no less a sum than £7,601,000. But it is more to the point, perhaps, in judging of a particular year, to know how much money belonging to the year 1887–8, the current year, has been, or will be, appropriated to the reduction of the Debt. Hon. Members will remember the complaints that were made against me last year, when I introduced my Budget, that I had been content with a smaller sum than I ought to have taken for reducing the National Debt, and it was said that the result in paying off the Debt would consequently be unsatisfactory. At all events, I either have paid off or shall pay off, with moneys actually belonging to this year, £7,293,000—the largest sum that has ever been paid off out of the moneys of a single year since 1872–3.

What, then, are the main features of the past year? For the first time since 1870, there have been no Supplementary Estimates or Votes of Credit either for Army or Navy. For the first time since 1869 there have been no Supplementary Estimates for the Revenue Departments. There have been smaller Supplementary Estimates for Civil Services than for 20 years past, excepting last year. We have a larger surplus, a larger balance at the end of the year, and we have paid off more Debt than in any year since 1872–3. I trust the Committee will consider that this is not an unsatisfactory balance sheet to submit to the country. I know how small a portion of the savings effected is duo to the Chancellor of the Exchequer himself. The greater portion of the credit must be given to the Departments that have so well used the money entrusted to them by Parliament. I am also thankful—and as Chancellor of the Exchequer I say this—not as a Member of the Cabinet—I am especially grateful to the Foreign Minister that we have been able to keep out of those petty wars which break in so unexpectedly sometimes upon the assets of the Chancellor of the Exchequer, and which upset his best calculations and destroy his most sanguine hopes.

I now pass to the coming year, and I have to deal, in the first place, with the Estimates of Expenditure. These are mostly known to the Committee; but perhaps it may be for the convenience of hon. Members that I should read them out in order to bring them within one focus.

Upon the Consolidated Fund Charges we estimate the expenditure at £27,861,000. The Army, £16,700,000; Ordnance Factories, £30,000; the Navy, £13,083,000; Civil Services, £18,145,000; Customs and Inland Revenue, £2,746,000; Post Office, £5,667,000; Telegraph Service, £2,037,000; Packet Service, £641,000—total, £59,049,000. The total Expenditure, therefore, is estimated—if you add these figures together—at £86,910,000, or a diminution of £514,000 as compared with the actual Expenditure of the present year. I do not think I need comment on any of the increases or decreases in the Services, as those will be discussed in connection with the various Estimates when they are proposed to the House, and I have so much work before me that I do not think it is worth while to venture into the subject. I will only point out that the increase in the Revenue Departments, £38,000, is due entirely to the fact that the triennial valuation that has to be made increases the cost of the Inland Revenue Department. For Post Office and Telegraphs there is an increase of £361,000, which is largely due to sites for new buildings necessitated by the extension of the Parcel Post system. I regret to say that in our Estimates of Revenue we have not been able to increase the Post Office revenue by the same amount as the expenditure. That is not satisfactory to the Chancellor of the Exchequer, and I commend it to the attention of those hon. Members who think that the Post Office is a Department which is always giving a growing surplus, and on which constant now demands, therefore, may safely be made.

Now, Mr. Courtney, having dealt with the Expenditure, and before I pass to the Revenue of the coming year, I wish to refer to two other matters which more or less touch Expenditure. The one is the Imperial Defence Bill—the proposals made by my right hon. Friends the First Lord of the Admiralty and the Secretary of State for War in connection with the defences of the Kingdom and the Colonies. They have already stated the main outlines of their scheme, and they have informed the House that the money required for it would be raised, as the money for the localization of the Forces was raised, by temporary loans. They did not, however, state any details. In the case of the Navy, the money will be borrowed and repaid by an annuity running for 10 years, charged against the Navy Estimates every year. There will be no material charge until the year 1889. The Committee may remember that the ships are to be at the absolute disposal of the Admiralty at the end of the 10 years. By the end of the 10 years this annuity will cease, and the whole amount will be paid off. There will thus be an annuity on the Navy Estimates for 10 years; but against that there will be received £35,000 from the Colonies in respect of the ships, and the sum of £91,000 annually to equip and maintain these ships. Thus there will be a set-off to the Navy Estimates in respect of these ships. The clause will be as follows:— The Treasury shall from time to time issue out of the Consolidated Fund of the United Kingdom of Great Britain and Ireland, or the growing produce thereof, such sums, not ex- ceeding in the whole the sum of eight hundred and fifty thousand pounds, as may be required by the Admiralty for the purpose of building, arming, and completing for sea the vessels mentioned in articles six and seven of the Australasian Agreement. The sums so issued shall be treated as an advance, and shall be repaid to the Consolidated Fund out of the moneys annually provided by Parliament for naval services by an annuity of such amount as will repay the same, with interest at three per cent per annum, within twelve years from the end of the financial year in which the first of the said sums was issued. All sums received from the Governments of the Australasian Colonies in pursuance of the Australasian Agreement in respect of the annual sum either of thirty-five thousand pounds or of ninety-one thousand pounds mentioned in article seven of the agreement, shall be applied, under the directions of the Treasury, as an appropriation in aid of naval expenditure. Thus it will be seen that no permanent addition, but only a slight temporary addition, will be made to our expenditure by these proposals, and that even this slight addition will have something to counterbalance it. I may here say that it is extremely important to everybody to embody this arrangement in an Act, because the Colonial Parliaments have passed Acts to carry out their part of the arrangement; and it seems right that the Imperial Parliament should not leave this money to be voted year by year, but that once for all the expenditure should be sanctioned for carrying out our part of the bargain, which we believe is satisfactory from a pecuniary point of view, and also very decidedly from the Imperial point of view, as establishing the principle that the Colonies should assist very materially in the general naval defence of the Empire. In the case of the Army requirements, the interest on the money borrowed will be provided for in the Army Estimates; but means have to be provided for paying off the capital. Now, I lay down this doctrine, which will be, I am sure, endorsed by hon. and right hon. Gentlemen opposite and by the House generally, that this money should be borrowed for a term which is shorter than the probable duration of the works which are to be executed by means of this expenditure. It ought to be borrowed and paid off within a reasonably short time.

Now, I will submit to the House how I propose to do it. There is one national asset which has never yet been brought into account at its real value, and I do not believe there are 20 Gentlemen in this House, apart from those who had something to do with the transaction at the time, who are aware of the real value of that asset. I am referring to the asset which we possess in the 176,000 shares we hold in the Suez Canal. Now, the position as to those shares, at present, is as follows:—£4,000,000 was raised to pay for these shares; at, inasmuch as we were to draw no dividends in respect of them till 1894, we receive an annual payment up to 1894 from Egypt of £200,000, or 5 per cent, on the £4,000,000, 3½ per cent of which goes to pay the interest, while 1½ is treated as a Sinking Fund. The £4,000,000 has by this time been reduced to £3,200,000. The shares, on the other hand, which are £20 shares, and which, when they were bought, were worth about £27, yielding a dividend of 5 per cent on their par value, are now worth £84 each, and yield about 15 per cent on their par value. We shall come into a revenue of £570,000 per annum on these shares from 1894, useless there should be any fall in the revenue of the Canal, a contingency which we do not anticipate. At all events, we anticipate that instead of receiving £200,000 a-year, as at present, we shall, after 1894, be in receipt of a revenue of £570,000 a-year. I do not think I stated just now that the actuarial value of the shares at the present moment is £10,500,000—a comfortable nest-egg, I think I may say, and some set-off against the expenditure which has been incurred in connection with Egypt. Now, let the Committee realize how we stand at the present moment. We have this debt, £3,200,000, and we are receiving towards the liquidation of it £200,000 a-year. What I wish to submit to the Committee is this—that we should destroy and put an end to the present artificial system, to this debt on which we are paying 3½ per cent—that we should pay that off, except as much as will be paid off before 1894 by the £200,000 a-year, so that we shall have, when 1894 arrives, this whole asset of the Suez Canal shares clear of all liability whatever, and giving us a revenue of £570,000 a-year. I propose to utilize that revenue for the purpose of discharging the new debt of £2,300,000 which is required for the fortification of the ports and coaling stations. Its amount will be £2,300,000, and it will be seen that in four years or four and a-half years after 1894 the Exche- quer Bills or Bonds raised to provide that sum will be paid off out of this revenue, which is at present totally unpledged, and we shall be able to raise this loan, and wipe it out entirely, without placing any burden whatever upon the taxpayers, We shall simply make use of the dividends of the Suez Canal shares for four and a-half years after we begin to receive them to pay off a loan incurred for the defence of the Empire. I trust these proposals will, when examined—and, of course, they must be carefully examined—commend themselves to the Committee; but I think, at all events, I carry out in these proposals my promise that the loan should be paid off very quickly and on very short terms, for the first moneys issued would begin to be paid off in 1894–5, six years hence, and all would be paid off within 10 years, and possibly within even a shorter time.

There is another expense which hon. Members may think might encumber the Revenue of the coming year—namely, the expense connected with the Conversion Scheme which I have submitted to the House. Now, I distinguish for a moment between the expenses proper—I mean the agency commission, bank charges, and matters of that kind—and the 5s. bonus which is to be given to holders of Consols and Reduced who accept our terms. I propose to charge these first-mentioned expenses against the first economies on interest which we shall receive, and which will begin on the 1st of April in the year after this. With regard to the bonus, had the bonus been larger, it would, of course, have been treated as an addition to the capital of the Funded Debt; but being so small in amount, at the outside £980,000, it will be paid in cash, and therefore any addition to the Funded Debt will be avoided. From whatever source, however, the money may be taken, and whatever liability the bonus may involve, very nearly an equal sum has already been secured as a set-off by a further operation preparatory to and connected with the Conversion Scheme—that is to say, there is what again I will call a nest-egg which has not been taken into account, and which may amount to nearly £1,000,000; that is the premium or additional value on the Local Loan Stock, whether realized or not realized, at this moment. There has already been netted in respect of the issue of Local Loan Stock the sum of £150,000. There is still £18,000,000 of the Stock in the hands of the National Debt Commissioners, on which, if you put the premium at 4 per cent, which is a very moderate estimate as compared with the price of Consols, you get £720,000, or, in all, £870,000. However that profit may be treated, I wish to show that by the issue of this Local Loans Stock, which stands at a premium, you have got an asset of about equal value as a set-off against the 5s. bonus which may be granted to the holders of Consols and Reduced. No addition to our liabilities will have been made. If the whole profit arising from the issue of Local Loans Stock were left in the hands of the Saving Banks Trustees, their position would be so strengthened that it might no longer be necessary to retain the annuity of £83,000 to make up the deficiency on the Savings Banks. Accordingly, we should have so much more for the reduction of our general expenditure. I will not elaborate the point; but I wish to show the Committee that, through the operation of the issue of Stock at a premium, you will have an asset of about equal amount to set against the liability in respect of the 5s. per cent bonus. [Mr. CHILDERS: Hear, hear!] If my right hon. Friend does not follow me, I am sure there is no one in the House who will be able to do so. I am afraid I am wearying the patience of the Committee by the slow rate at which I am getting on with my story; but I trust that I shall be able now to travel somewhat faster over the ground.

Now, having shown the total Expenditure to the Committee, I come to the interesting point of the estimated Revenue of the coming year. I will give the totals first, without going into details. I estimate the Customs at £19,800,000, or £170,000 more than the receipts of the current year; Excise at £25,560,000, less by £37,000 than the receipts of the present year; Stamps at £12,740,000, or £200,000 less; Land Tax, £1,046,000, less by £4,000; House Duty, £1,890,000, the same as the present year; Income Tax, £13,820,000, or £520,000 less, owing, of course, to the fact that the arrears will be taken at 7d. instead of 8d. That gives a total produce of taxes of £74,856,000, showing a decrease of £591,000 as compared with the current year. The Post Office revenue I place at £8,800,000, or £150,000 more than this year; Telegraph Service, £2,000,000, or an increase of £50,000; Crown Lands, £390,000, the same as this year; Interest on the purchase of the Suez Canal shares, £241,000, which is about £1,000 less than this year; Miscellaneous, £3,000,000, an increase of £90,000; the total produce of the Non-Tax Revenue thus being £14,431,000, or an increase of £289,000. The total Revenue is, therefore, £89,287,000, or £302,000 less than in the current year. I do not think that the Committee will be surprised that the total estimated Revenue is placed at a lower figure than in the actual year, because, though there is some improvement in trade, it has certainly not yet developed to such an extent that a prudent Chancellor of the Exchequer would wish to swell his Estimates on the faith of it. The only items of substantial increase in the produce of taxes are under the head of Customs—namely, in respect of tobacco and of tea. I estimate £130,000 more for tobacco and £82,000 more for tee. I rely on it that the consumption of tobacco will be stimulated by the fact that the Watering Clauses will come into full effect in the ensuing year; and in tea I allow for the ordinary increase which has been justified by previous years. On the other items, except spirits, of which I have not yet spoken, there is no increase or decrease. With respect to the drink revenue, though there has been no decrease in the year just about to end, I am not prepared to say that the downward movement has been permanently arrested. I estimate £30,000 less for home-made spirits, and £30,000 less for foreign spirits. Beer I put at the same figure as last year. The past year was Leap Year, which gave an additional day in which to consume beer, and it was also, as I have said, the Jubilee year. Against that we have the ordinary increase of population, and I think it is a safe estimate to take beer at the same figure as before; but I do not think I should be justified in increasing the estimate. With regard to Stamps, I take off £320,000 from the Death Duties, in view of the abnormal produce of the Probate Duty in the present year. But, on the other hand, I allow for an increase of £120,000 in general stamps, which, it seems to me, is a fair and moderato increase to take—less, I think, than the normal increase; and the general effect is that under the head of stamps generally I allow for a not decrease of £200,000. Licences, Land Tax, and House Duty are practically unchanged. I need not say more in regard to the Income Tax than I have already explained to the Committee. The diminution will be £520,000; but that is due to the fact that the arrears last year were taken at 8d., while this year they will be taken at 7d. The new valuation on Schedule A, which is going to take place this year, will somewhat increase the revenue from Income Tax as regards house property; but I must set that off against the probability that there will be a reduction with regard to landed property, and so I allow for a total diminution of £520,000.

To sum up the Revenue for the coming year, there is an estimated improvement on Customs of £170,000, against a loss on receipts from other taxes of £761,000; therefore the tax estimate is worse by £591,000. On the other side, there is an expected improvement in non-tax receipts of £289,000. The total receipts in 1887–8 were £89,589,000; I estimate for 1888–9, £89,287,000, showing a decrease of £302,000. On the other hand, if hon. Members will carry their minds back, there is also a decrease in Expenditure of £514,000. I am now able, therefore, to come to my estimated balance for the coming year on the existing basis of taxation. I do not think I need read the figures over again. The total taxes are £74,856,000; the total Non-Tax Revenue is £14,431,000, making together £89,287,000. The total Expenditure is £86,910,000, showing a surplus on the existing basis of taxation of £2,377,000.

And now, Mr. Courtney, I come to a part of my Statement which may be of more interest to hon. Members than the accounts of last year, or even of the coming year on the existing basis of taxation, for they will be more interested to know what the result of the National Balance Sheet will be on the future basis of taxation in connection with the changes which we propose to introduce. And here, Mr. Courtney, I am placed in a somewhat unpleasant position— namely, that, having a satisfactory balance of £2,377,000 to dispose of, I see havoc and devastation wrought upon that balance by my right hon. Friend the President of the Local Government Board (Mr. Ritchie). There are many schemes of relief from taxation which I would most gladly have undertaken; but the claims of my right hon. Friend's clients, the ratepayers, endorsed as they have been by successive Parliaments for many years past, it has been impossible to ignore; and, consequently, I have now for a short time to abandon my position as Chancellor of the Exchequer, and to place before the Committee some information with regard to the Local Budget, or rather—I say it to my own distress, and I fear to the distress of those who have to listen to me—to two Local Budgets, because we have to make both a provisional arrangement for the coming financial year, and a permanent arrangement which will take effect when the Local Authorities have come into power after their election on the 1st of April, 1889. I may have to travel over some ground which has already been travelled over by my right hon. Friend; but, perhaps, it will be agreeable to the Committee to hear how we shall stand as regards local finances in somewhat more detail.

Now, first as to the permanent plan, which is to come into operation on the 1st of April, 1889, after the new authorities are in power. Under it we begin our re-adjustment of Imperial and Local Taxation by taking away from the localities grants in aid amounting to £2,600,000. We shall remove this charge entirely from the Imperial Budget. I am sure most of the Committee and most of my right hon. Friends opposite will agree that it is bad finance to have the same expenditure appearing in two accounts. This £2,600,000–I am speaking, of course, in round numbers—appears in the first instance as Imperial expenditure; and, secondly, it appears again in its proper place as local expenditure, and by adding up both you get a higher figure than the real expenditure, because of this double entry. We propose in future to separate the two entirely. As I was saying, we withdraw from Local Authorities grants amounting to £2,600,000. But, on the other hand, we give up to the County Authorities existing licences bringing in £3,000,000, and there will be some new licences amounting, in round numbers, to £800,000; or, in all, £3,800,000. The existing licences which we propose to give up are of two kinds. One portion, amounting to £1,400,000, of which publicans' licences form the bulk, will be collected by the County Authorities, and may be increased to a certain limited extent at the discretion of those authorities. The other portion, amounting to about £1,600,000, of which the main items are the dog, gun, and game licences, and the Carriage Tax, will still be collected by the Inland Revenue, and the County Authorities will have no power to increase them, because they are licences which must continue the same over the whole of the United Kingdom. It would not do, for instance, to have one licence tax raised in Norfolk, and another at a different rate raised in Kent, considering, how people move to and fro in this country. It would not be fair or practicable to have these licences raised by the counties, and varying in different counties. Consequently, these taxes, although local in their character, will be raised by Imperial agency; but in both cases the counties will receive the proceeds of the licence duties. But with regard to this point I may say there is a clause in the Bill, which hon. Members will see to-morrow, which will clear up any doubts in regard to the manner in which these licences will be localized.

I now come to what may be a more interesting point, and that is the promise of my right hon. Friend the President of the Local Government Board that a substantial sum should be contributed from personal property to the relief of local taxation. It has been the dream of reformers of local taxation to make personalty contribute to local expenditure. I understand that many Chancellors of the Exchequer have tried to see whether they could carry out a system of local Income Tax; but I understand that all have broken down. I ought, perhaps, to ask a preliminary question—lout I cannot dwell upon the point—to what extent the ratepayers are entitled to the relief which is to be given them? My right hon. Friend did not discuss that subject, and it is so large a one that I think the Committee will excuse me if I do not now go into it. But I must enter a protest against the suggestion which has been put forward in some quarters that this relief of local taxation is simply to be a gift to the squirearchy. On the contrary, a very large portion of this relief will go to the poorest ratepayers in some of the poorest towns of the Kingdom. During the whole of the conflict which has raged round this question it has always been maintained that the towns have a ratepayer's grievance as well as the country. There is also this distinction—and it is one for which I have myself strenuously contended—that while a large portion of rates are hereditary burdens, subject to which property has been bought and sold, and which, therefore, should come distinctly from the pockets of the landlord, on the other hand, there has of late years been an enormous increase in the rates which was not foreseen by Parliament, and which, as it results not from the legislation of the past, but of the present, is distinctly not a hereditary burden. It has been imposed by recent Parliaments, and imposed on land and houses alone, to the advantage of personalty, not on any ground of principle, but simply because Parliament has not been able to devise means of making the latter kind of property contribute in any substantial degree, except by the obnoxious system of grants in aid, to local taxation. The situation has thus greatly changed of recent years. Hon. Members will remember that between 1868 and this year rates have risen from between £16,000,000 and £17,000,000 to £26,000,000 or more; and I do not believe that any relief which Parliament would be ready to give, and certainly no relief we shall propose, would be equal to those additional charges which have been placed during the last 25 years upon rateable property. I make this protest against the suggestion that our proposal is one for the relief of hereditary burdens which ought to be borne by the landowner, and here I must make another remark as to that portion of rateable property which consists of land. Land has depreciated enormously in value since former comparisons were made with regard to the contributions of real and personal property. Those comparisons were made when rates were lower and land more valuable, and therefore are not applicable to the situation which exists now. I trust that the relief which we are giving, and which will go in part to the towns and in part to the counties, will not be represented as given merely to one interest and one class of property. What we believe we have done in the proposal we have submitted to Parliament is to offer relief to all ratepayers, bearing in mind that Parliament has declared that the time has come when other property should be brought in to assist in bearing the burden that now rests exclusively on land and houses.

Well, then, how is this to be done? How is this contribution from personal property, of which my right hon. Friend spoke, to be effected? I have said that a local Income Tax seemed to be an impossible idea. The next idea, and one which has been a very favourite one, is that you might raise 1d., any other sum, by the Imperial Income Tax, and then allocate it for local purposes. But I will state what I consider to be a fatal objection to that plan. Income Tax is largely paid in respect of land and houses, the very property upon which those rates chiefly fall which we are anxious to relieve, so that by means of an Income Tax you would be simply taking away with one hand what you were granting with the ether. Again, there is another objection to the arrangement by means of Income Tax, and that is that it is largely charged upon earnings, and that it weighs very heavily upon the struggling middle class, upon whom the rates also fall very heavily. I have a strong opinion that Income Tax falls very severely upon professional men and upon the lower middle class. They, perhaps, feel the burden of taxation as severely as any class of the community; hence the Government are not prepared to propose that relief should be provided out of the Income Tax. What we have rather to look to is to get at realized personalty—personal property which is yielding income, and not personal earnings. Now, there is one tax which falls exclusively on realized personalty, and that is the Probate Duty, and we propose to give up permanently to the Local Authorities one-half of the Probate Duty. That is the manner in which we propose to assist local taxation—through the means of a tax which is distinctly seen to be derived from realized property. I hope that the Committee will understand that if we give half of the Probate Duty to the Local Authorities, we do not intend to take the whole of that half for England alone. Scotland and Ireland must be considered too. We take the share of England, for reasons I will presently explain, at 80 per cent, or four-fifths, of the Probate Duty. The total for the year 1888–9 is estimated at £4,260,000. Half of that is £2,130,000, and the share of England, or 80 per cent, is £1,704,000. And here I want to point out that an additional advantage of giving a portion of the Probate Duty in relief of local taxation is that this duty is not a stationary but a rising and improving duty. It is but a very few years ago that the duty only amounted to £3,700,000, while last year it was about £4,500,000. Therefore, if local finance shares with Imperial finance in the Probate Duty, there will be this constant hope for the ratepayer—that as personal property increases, the contribution which he will receive will increase in proportion, and he will have a growing participation in the realized wealth of the country.

I can now sum up to the Committee the permanent arrangement which will come into force in April, 1889. It will be this, The licences, both transferred and new, which will be at the disposal of the Local Authorities, will bring in £3,800,000; half of the Probate Duty, £1,700,000—total, £5,500,000; but from this we must take the present grants, amounting to £2,600,000, which will leave a net gain in relief of local taxation of £2,900,000 for England and Wales. My right hon. Friend the President of the Local Government Board (Mr. Ritchie) said £3,000,000. If there is any increase whatever in the course of the two years in the Probate Duty the relief will amount to £3,000,000, and the total at the disposal of the Local Authorities will be £5,600,000, for, as I have shown, mine is a minimum estimate.

At this point I must ask the Committee to follow me in a matter which takes me again away for a moment from the Local to the Imperial Budget. The Committee is aware that there has always been a double controversy going on—two parallel and simultaneous grievances with regard to the burdens borne by realty and personalty respectively. The friends of the ratepayer have always complained that personal property did not contribute anything towards local taxation. But, on the other hand, there has been a grievance on the part of the friends of the Imperial taxpayer. They have said that landed property did not contribute its fair share to Imperial taxation. Now, what is perfectly obvious is that the two questions must be treated together. Both complaints quite possibly may have been true. It may be true, and I believe it was true, that personal property did not contribute its fair share to local taxation—that it contributed scarcely anything. On the other hand, it is equally true that the Death Duties upon land are considerably smaller than those imposed upon personal property. Now, the Committee will see how the situation is varied by the proposal which I make. In future, the Probate Duty on personal property for Imperial purposes will be only 1½per cent, instead of 3 per cent—but, of course, there will still be the Legacy Duty. The Succession Duty at the present moment for lineals is 1 per cent. Lineals are exempt from the Legacy Duty.

MR. W. E. GLADSTONE (Edinburgh, Mid Lothian)

On the life interest.

MR. GOSCHEN

Lineals pay no Legacy Duty. The matter is extremely complicated; but I think I can satisfy my right hon. Friend. The lineals, in the case of the Succession Duty, pay 1 per cent.

MR. W. E. GLADSTONE

On the life interest only.

MR. GOSCHEN

Yes; there is that difference, I admit. But I am not proposing to deal with all the anomalies of the Death Duties. I cannot attempt that task, as a whole, in the present Session. What I was pointing out is this. Perhaps I can best explain it by going back to the proposal of my right hon. Friend the Member for Edinburgh (Mr. Childers) in 1885. He suggested that the Succession Duty should be raised from 1 per cent to 3 per cent in the case of lineals, in order to put it on a level with the Probate Duty, which was 3 per cent, and which was all (lineals paying no Legacy Duty) that personal property paid when it passed to lineals. Hereafter the Probate Duty will stand at 1½ per cent. The amount of the duty remaining for Imperial purposes, when I transfer 1½ per cent to the Local Authorities, will be 1½ per cent. As far as Imperial finance is concerned, I cut away 1½ per cent from the Probate Duty. Therefore, the difference—of which so much is constantly made—between the Succession Duty and the Pro- bate Duty (apart from the question of life interest) will be reduced from 3 per cent, as against 1 per cent, to l½ per cent, as against 1 per cent; and in order that the grievance may be met, I propose that the Succession Duty shall be raised ½ per cent, after which the Succession Duty—that is to say, the Death Duty paid by land—will, in the case of lineals, be 1½ per cent, just as the Probate Duty, which is the only Death Duty paid by lineals in respect of personalty, will be 1½per cent. I spoke of parallel grievances. What I propose is to remove one grievance, that of the local ratepayer, by handing him over a portion of the Imperial Death Duties. Half the Probate Duty is to be paid to the relief of local burdens. It disappears from Imperial taxation, and then, by a slight increase in the Succession Duty, you will have equal rates on the two kinds of property for Imperial purposes. I effect this, in the case of lineals, who pay no Legacy Duty, by adding ½ per cent to the Succession Duty, and in the case of collaterals, who do pay Legacy Duty, by adding 1½ per cent to the Succession Duty.

But while I take this step to equalize the amount of the contributions of real and personal property, it would not, I think, be fair to insist on a similar method of payment in both cases. My right hon. Friend (Mr. Gladstone) called attention to one point in which those who pay Succession Duty are at a considerable advantage; but there are others in which they stand at an immense disadvantage. We cannot compare the weight of the duty raised on land with the weight of the duty resting on personal property which can be sold. If that difference ever existed, it exists in tenfold force at the present moment, when it is so difficult to sell land, and when the value of land is so depreciated. I cannot fancy any heavier burden than that now resting, for instance, on the Irish landlord, who cannot sell his estate, who cannot collect his rents, and who, nevertheless, is liable to Succession Duty. While, therefore, I suggest a slight alteration in the amount of the Succession Duty, I also propose to give a somewhat longer time—namely eight, instead of four years—for the payment of the duty. [An hon. MEMBER: He may sell a portion.] I think those who are acquainted with land will know that it is extremely difficult to sell a portion or corner of an estate in order to realize a certain sum. You cannot separate farm buildings from a farm; you may not be able to got a proper rotation of crops; and there are a hundred circumstances besides, which prevent a man from selling a portion of land in order to meet a special charge. To impose on an heir the necessity of selling part of his land in a hurry is to throw on him a heavy burden; and if, without sinning against any financial canon, we can prevent that, while slightly raising the duty, I think that is a proposal to which no strong objection can be made. The financial effect of the raising of the Succession Duty by ½ per cent on lineals, and by 1½ per cent on collaterals, in order to put it on the same footing as the Probate and Legacy Duty, when half the Probate Duty has been handed over, will not be considerable in the coming year. I put it at £50,000; but this, of course, is a source of income which will increase in subsequent years.

Now I must return to the Local Budget. The contributions at present coming to the Imperial Exchequer, and which are hereafter to go to the counties, amount to £5,500,000. The Committee will remember of what this sum consists. I now have to explain to the Committee the distribution both of the licences and of the contribution from the Probate Duty, which will go to the localities. The principle we adopt in the distribution of the portion which comes from the Probate Duty is that it shall be paid to each county according to the proportion which the indoor pauperism of that county bears to the indoor pauperism of the country as a whole. This distribution has been criticized as being unequal. It has been said that it would very much favour London, where the proportion of indoor pauperism is much greater than in any other part of the country. But I particularly ask hon. Members to bear in mind that this distribution must not be taken by itself, but in connection with the surrender of licences and the withdrawal of the Imperial grants. It will probably turn out that the withdrawal from London of the grant for police will more than neutralize any advantage London may got from the distribution of a particular portion of the funds to be given up for local purposes according to indoor pauperism. Every county, every Quar- ter Sessions borough, every rateable area will got some advantage under my right hon. Friend's (Mr. Ritchie's) Bill; but the distribution must be looked at as a whole, and cannot be judged simply by the allocation of one particular part of the resources to be surrendered. We may look upon the distribution of this half of the Probate Duty as a corrective of the inequality which may arise from the exchange of licences for grants in aid.

There is a proposal that you should give the new money in proportion as counties and boroughs have been in receipt of the old grants. It seems to me that nothing could be more unjust. If there were a great lunatic asylum, in a particular county, receiving a considerable Imperial grant, and if you were to say, "This county has been receiving so much, and practically, as there is more money to be distributed, you must pay in proportion to what it has received hitherto," you would be offending against every principle of justice. You must rather look to see whore the shoe pinches most. Now, all grants, as I have explained, will disappear from the National Exchequer. The county will pay them instead of the Exchequer, and these grants will be a first charge on the Revenue given up to the county by the Exchequer. The Revenue so given up will, in the next place, meet the whole cost of the disturnpiked roads, and will pay the 4d. per head for every indoor pauper, and what remains over will go to general county purposes. For instance, where there are Quarter Sessions boroughs with their own police, and where the rest of the county has its own police, a certain portion of the new grant will go to the Quarter Sessions, and the remainder will go to the county. It will be distributed first to the widest areas, and will then descend to the narrower areas; so I believe that in the end the county will benefit, the Quarter Sessions boroughs will benefit, and the District Councils will benefit, and the ratepayer, wherever he is paying rates, will find that he has some relief. He will find that be has relief in his poor rate, county rates, general borough rate, and highway rate. I must beg hon. Members to bear all this relief in mind, because, if there are additional licence taxes to be raised, their defence will be in the great amount of the relief to be given in almost every quarter, and which will far outweigh, to the vast majority of ratepayers, the burden of these now licences.

I pass now from the permanent to the transitional arrangement which is rendered necessary by the circumstances of the present year. The County Authorities, to whom the licences are to be handed over, do not yet exist, and we think that to take steps in order to leave them in possession of a balance when they come into office would be a direct incentive to them to begin with extravagance. We propose, therefore, to give only so much this year as can be fairly distributed and spent by existing authorities. What we propose to pay this year, as explained by my right hon. Friend (Mr. Ritchie), is the 4d. per head for every indoor pauper, and a contribution towards the disturnpiked main roads, together with some corresponding relief to the Metropolis and the Quarter Sessions boroughs. For this we propose to give up at once one-third—that is, 1 per cent—of the Probate Duty, and to impose at once for local purposes only, so that they will in no way affect the Budget, the new licences which I have yet to explain. Roughly speaking, 1 per cent of the Probate Duty will almost pay for the indoor paupers, and the new licences will be the contribution in respect of the roads.

Now, the justice of this arrangement will become apparent when I come to the task which my right hon. Friend the President of the Local Government Board (Mr. Ritchie) has left to me—namely, to describe the new licence duties which are to be levied. Before I mention them I must again entreat the Committee to remember that this is not a question of Imperial taxation or of Imperial relief, or of Imperial contribution, but simply a question between one class of ratepayers and another. What is raised by these taxes will go to the relief of the ratepayers, and to the ratepayers alone. The cardinal point of our idea is to look at the fact that the roads are used gratis now, and that those who use a road contribute nothing to its support except by the highway rate, which falls equally on the whole body of the community. But is it not fair that those who use a road should contribute more than those who do not to the general maintenance of the road? If there are 50 ratepayers, and 40 of them use a road on foot, while 10 of them use it on horseback or on wheels, is it not fair that the 10 should pay something more as a contribution than the 40? Well, the Carriage Tax is one of those taxes which will be handed over to the Local Authorities, and I will speak of that in a moment. But quite apart from the Carriage Tax, which is a tax mainly on the more luxurious carriages—carriages—used for pleasure—there is at present no tax on any other vehicles, however much they may destroy the roads, except omnibuses and a certain number of vehicles which ply for hire. But the heaviest description of vehicles—such as railway vans, coal contractors' carts, and vehicles of that character—[An hon. MEMBER: Brewers?] Yes; brewers' drays are a good instance. These vehicles use up the roads without paying one shilling more than anyone else for their maintenance. Well, we propose to put a duty of £1 a-year upon every vehicle exceeding 10 cwt. in weight, a very moderate limit to take. We propose that duty of £1, but with an exemption, which has always been made in favour of agricultural carts, carts used by farmers for the purposes of husbandry and not for haulage. Those vehicles which are propelled on roads by any other means than by horses will also be included. That is one of the now licences we propose, and I think hon. Members will acknowledge that the principle that all those who use the roads should pay for them, and should pay in some proportion to the wear and tear that they cause, is just. But I have not yet exhausted the subject. We propose, also, to put a very small Wheel Tax upon every vehicle.

COLONEL NOLAN (Galway, N.)

Not on carts?

MR. GOSCHEN

Yes. We propose a duty of 2s. 6d. per wheel upon all carts over 2 cwt. [Colonel NOLAN: Oh!] A two-wheeled cart under this proposal will pay 5s. a-year towards the roads. I must say that I do not think, looking to the advantage of the other ratepayers, who have no carts, that that is an unfair charge. We have put it extremely low-5s. upon a two-wheeled and 10s. upon a four-wheeled cart. Gentlemen's carts and pleasure carriages will continue to pay higher duties—namely, the present Carriage Tax, with such modifications as I will presently indicate; but we do think it is fair that those who use the roads should in this slight degree contribute towards their repair. We expect to derive £300,000 from this tax.

MR. CHILDERS (Edinburgh, S.)

Will the Wheel Tax have to be paid for heavy carts in addition to the £1 duty?

MR. GOSCHEN

I am obliged to my right hon. Friend for the interruption. We think that those heavy carts use the roads to such an extent that they may fairly bear the Wheel Tax of 2s. 6d. a wheel, as well as the duty of £1.

MR. HENNIKER HEATON (Canterbury)

Will farm waggons have to pay?

MR. GOSCHEN

Those employed in agriculture on farms will be excluded. I hope that hon. Members will see that this tax of £1 10s. on the heaviest carts is not excessive, for they will still be paying less than a brougham with two horses, although causing much more wear and tear to the roads. I have had many suggestions that bicycles and tricycles should be taxed; but I have not come to any conclusion to impose such a tax. I do not say that there is in principle any objection to such a tax, and that a tax on bicycles and tricycles would not form a proper source of revenue; but I do not like to multiply little taxes of this description, and I recognize the great service that has been conferred on a vast number of young men, who, by means of bicycles and tricycles, are enabled to explore the country, so I do not propose to impose such a tax as part of the scheme. At the same time, however, as I have said, I do not think there would be any great objection to such a tax.

MR. ARTHUR O'CONNOR. (Donegal, E.)

Does the right hon. Gentleman propose to extend the Carriage Tax to Ireland?

MR. GOSCHEN

No, Sir; I do not propose to extend the Carriage Tax to Ireland; but I will deal with that in a moment. I am obliged to the hon. Member for reminding me that I must deal with Ireland. Having got through this first licence tax somewhat better than I expected, I now approach with some trepidation—

MR. W. E. GLADSTONE

How much will this tax produce?

MR. GOSCHEN

£150,000.

MR. W. E. GLADSTONE

The two—the Cart Tax and the Wheel Tax?

MR. GOSCHEN

No; the two will produce £300,000. The tax on the heavy carts, with which there is absolutely no sympathy, as far as I can see, will produce £150,000, and the light vehicles, which are very lightly taxed, and with which there is a great deal of sympathy, will also contribute £150,000, making, in all, £300,000.

I now approach with some trepidation the next licence duty. Many fantastic guesses and reports have been hazarded as to the taxes about to be imposed, and one hon. Member has hoard it reported, I believe, that it would be proposed to put a tax on bakers' licences. I should like to see the hon. Member who would venture to get up and propose to put a licence tax on bakers. No; I look to an older friend—to a tax which existed for very many years, and which was then taken off—the duty which used to be imposed upon horses of every kind, and which was repealed in 1874. The old duty was imposed on all horses, whether they were engaged in trade or otherwise, and it was a duty of 10s. 6d. I do not propose to tax what I may call trade horses, or horses used in agriculture; but I do propose, not in order to fill what for the moment I may call my own Exchequer, but, for the purposes of local finance, to impose a tax of £1 on pleasure horses—[Cries of "Oh!"] [An hon. MEMBER: Hobby horses!] I am afraid there is not the same satisfaction in regard to this £1 duty as in regard to the licence tax on heavy vehicles. Hon. Members will see that I put the cart before the horse. But let me remind hon. Members on whom this tax will fall. It will fall a good deal on what I may term the well-to-do classes. Hon. Members must bear in mind, too, that this tax will go in aid of local rates and towards relieving their constituents from burdens of which they now continually complain, and that it will be a contribution from those who are better able to pay it than the ordinary ratepayers. Then, again, it is an old tax which formerly was put on all horses, but which I now propose only to impose on horses of a certain class. Brood mares and young horses not yet in use will be exempted from the tax entirely; but, on the other hand, racehorses will have to pay a licence tax of £5. Horse dealers will pay a composition duty of £15. This Horse Tax is estimated to produce £540,000. The Committee will feel that it is impossible for me, in dealing with the multiplicity of subjects to which I have to refer, to justify all my proposals with as much argument as possibly they might require; I must content myself with rapidly and feebly sketching the main arguments in their favour. But I will say this—that it is only right that those who use the roads should pay contributions towards them, and I also think it is right that, in endeavouring to relieve the ratepayers, we should be careful in our re-arrangement to see that the new burdens fall on the shoulders of those who are best able to bear them.

Now, let us see how localities will be benefited in the coming year by the proposed arrangement in England and Wales. The allowance in respect of Probate Duty will amount to £1,136,000, the now Wheel Tax to £300,000, and the Horse Tax to £540,000, making up a total of £1,976,000, or, it may be said in round numbers, £2,000,000. This will be distributed temporarily as follows—this will be the effect this year:—there will be a relief given to the Local Authorities of 4d. for every indoor pauper, which will amount to £1,200,000; then there will be the sum of £520,000 given to County Authorities for main roads; and, lastly, there will be the grant to the Metropolis and boroughs of about £250,000 for their roads and streets. I ought to add that I propose to introduce the Horse Tax and the Wheel Tax in a separate Bill, because they do not really affect the Imperial Budget at all. It would be un-Constitutional, I think, to have introduced these taxes in the Bill of my right hon. Friend (Mr. Ritchie), otherwise I would have had the greatest pleasure in allowing him to deal with them in that measure. When the time comes and we proceed to business, and this Bill is before the House, it will be for the ratepayers and the ratepayers' friends to fight it out with those who may not be so enamoured of these new licence taxes. They will not affect the Imperial Revenue, but I believe them to be just taxes, and that the ratepayers will find them to afford an equitable arrangement.

And now I must state how Scotland and Ireland will be affected. The Committee will observe that we surrender from the Imperial Exchequer one-third of the Probate Duty—and by Probate Duty Scotch Members will understand me as including inventory duty. Now the question arises on what principle this ought to be distributed between the three countries—whether this surrender in respect of Probate Duty ought to be based or not on the locality where the duty is paid? [Colonel NOLAN: No, no!] An hon. Member from Ireland interrupts me with what I was going to say. I recognize that it would be unjust to Ireland to deal with it in that manner; and as I am always anxious, apart from political differences which separate us here from many of the Irish Members, to do full justice to Ireland from a fiscal point of view, I have examined this matter with peculiar care. I find that of the Probate Duty 85 per cent is paid in England, 10 per cent in Scotland, and 5 per cent in Ireland; and, therefore, if we proceeded on the principle of handing back to the countries the proportion of the Probate Duty which they pay, Ireland would come off very badly indeed. I do not, however, propose to adopt that principle. I propose to adopt the following system, which I hope will commend itself to the sense of justice of the Committee—namely, to withdraw this amount from the Imperial Exchequer, and to give each country a share of it in proportion to the general contributions of that country to the Exchequer. On this principle, England will be entitled to 80 per cent, Scotland to 11 per cent, and Ireland to 9 per cent. This division is, if anything, a little too favourable to Ireland, as its contributions are in reality only 8.7 per cent; but I have felt obliged to give the benefit of the doubt to the poorer country. I must further state that we propose to extend the Wheel Tax and the Horse Tax to Scotland, though this, again, is a question for the Scotch ratepayer. If so extended, they would go in relief of the Scotch ratepayer, precisely in the same way as the same taxes levied in England will go to the relief of the English ratepayer. This calculation will give to Scotland for the year 1888–9 on account of Probate Duty £156,000, which, with £84,000 in respect of the new Wheel Tax and Horse Tax, which are to be extended to Scotland, will give £240,000 in aid of local taxation. Those sums I propose to have paid over to a fund standing in the name of the Secretary for Scotland, the first charge upon which will be a sum of £70,000 for main roads, which is double the grant put down in the Estimates of this year, a grant, which, as in the case of England, will be withdrawn. The balance will be distributed in a manner to be hereafter settled by the Secretary for Scotland and his advisors, according to the general views of Scotch ratepayers. From April, 1889, the relief to Scotland will be increased by about £80,000 more, as she will then begin to get her share of half the Probate Duty and not only of one-third. Ireland will receive for the year 1888–9 from the Probate Duty £127,000 on the basis of the calculation just explained—that is to say, 9 per cent. Irish Members will, however, of course, bear in mind that they will get one-half as much again next year, for they will then receive their share of one-half of the Probate Duty, instead of one-third. This sum will be paid to a special fund, as in the case of Scotland, and the distribution of it will fall on the Chief Secretary for Ireland. Proposals will be made to Parliament on the subject. My own leaning, I may frankly say, is in favour of relieving the county cess in some form or other. That is the course I should be disposed to suggest; but hon. Members, both from Scotland and Ireland, will forgive me if, owing to the vast number of topics I have had to deal with in my Budget and Conversion Scheme, I have been unable to give this matter of Budgets for Ireland and Scotland that narrow and careful consideration which it deserves. I have done my best, however, to see that—however the money may be allocated—as respects the amount of the money handed over to them, these two countries shall be dealt with in strict conformity with every principle of justice. Of course, also, adjustment will be made to compensate Scotland and Ireland for any loss which might arise from the surrender of licences in England; but the sum required, when the time comes, will not be considerable, and it is unnecessary to enter into that question new.

I have concluded that portion of my task which deals with local finance and with the Local Budget; and hon. Members, I am sure, will excuse the length at which I have spoken, remem- bering that I have not had to deal with one Local Budget only, but with two Local Budgets, or rather with four, if I include Scotland and Ireland. Now, I will ask the Committee to go back with me, after this long digression, to that surplus, steadily diminishing, of which I have spoken. The original sum was £2,377,000. From that I must give up one-third of the Probate Duty, amounting to £1,420,000. This reduces the surplus to £957,000. On the other hand, I take back the grants to main roads in England and Scotland provided in the Estimates, and amounting to £295,000. This brings the surplus up to £1,252,000, and, adding £50,000 in respect of Succession Duty, I get a total of £1,302,000.

Before I consider what can be done with the bulk of that surplus, there are two or three remissions of taxation which I wish to propose. Hon. Members will have seen that there has been a great deal of discussion lately in the Press with reference to the Carriage Tax. I have been asked by those who are chiefly interested not to hand over the Carriage Tax to the Local Authorities, because they—the persons who are interested—have more confidence in the Imperial Parliament and in the officers of the Inland Revenue than in the new Local Authorities, by whom they themselves will be represented. They are anxious that we should deal with the tax, and accordingly we have determined, in view of this fact, to put the tax on a more satisfactory footing, and to remove some of the grievances which exist in connection with it. The principal grievance in connection with the Carriage Tax has hitherto been the limit of weight. Up to 4 cwt. four-wheel carriages pay 15s., and over 4 cwt. they pay two guineas. This is a heavy tax on the cheaper kind of carriages over 4 cut., such as the ordinary fly; and it has been urged on me—I do not know to what extent with justice—that this limit of weight discourages the production of well-made carriages. I, therefore, propose a new scale of duties—namely, for all two-wheel carriages, 15s.; for four-wheel carriages, of whatever weight, drawn by one horse, £1 1s.; for four-wheel carriages drawn by two or more horses, or having pair-horse fittings, £2 2s.; for hackney carriages, and all carriages kept by hotel-keepers, 15s.; and for carriages let on hire for less than three months by coach makers and others, also 15s.—for it has been urged on me as a considerable grievance that in the case of carriages which are only intermittently used, and for short periods, the full duty should be charged. For carriages used for the first time after October the 1st in any year, half the above rates of duty will be payable. This plan, I think, will give substantial relief to the job masters, and meet the complaints of those concerned in the manufacture of carriages. The operation will involve a loss to the Revenue of £30,000.

Another contemplated small remission is in connection with Schedule A of the Income Tax. In 1881 the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) gave relief, under Schedule A, to persons having land thrown on their hands and making no profit out of it; but, as the exemption then given was interpreted, it did not apply to lands habitually held in hand. Let me explain. My right hon. Friend only exempted those who tried to let their land and failed to do so. There is, however, a large class of yeoman farmers who never tried to let their land; and these, although they may make no profit, are still exposed to the tax, being excluded from the benefit of my right hon. Friend's exemption. Now, I propose to extend that exemption to lands which are bonâ fide worked for husbandry by their owners, whether they have tried to let them or not. I have had many representations that men farming their own land have for years been paying taxes on profits which they have not made. I propose to extend the exemption so that it shall apply to all lands occupied by their owners, provided they cultivate with a view to deriving profit, but as a matter of fact derive no profit. Hon. Members will understand that the exemption which I propose will not be given to those who have model farms and incur great expenditure for other than the ordinary purposes of husbandry. The exemption will only be extended to laud occupied by the owner farming for purposes of husbandry and with a view to profit. Of course, it is not meant to relieve those who farm land near their mansions simply for the sake of certain amenities derived from such farming. This exemption will involve a loss of about £20,000. Let me here mention another circumstance. Hon. Members may remember that last year I stated that farmers under Schedule B could claim to be assessed as traders under Schedule D if they should so elect; but the difficulty caused by the insufficiency of the accounts kept by farmers has stood in the way of their availing themselves of this privilege. Some of the best friends of the farmers have told me that, even where the idea found favour with the farmers, it was, nevertheless, difficult to put it into practice on account of the state of their accounts. I do not think, therefore, that my suggestion has been widely adopted, but where it has been adopted I think it has had a great effect. About 160 farmers did return themselves as traders, having been assessed before under Schedule B at £22,000. On that sum they would have had to pay or go through all the forms of appeal; but they accepted the new system, exhibited their accounts before the Income Tax Commissioners, and paid, not upon £22,000, but upon £2,500. I do not think that it is very prudent to make this revelation showing the relief which farmers may get by going under Schedule D. But while I am most anxious to secure for the Revenue every legitimate contribution, I have no desire, through any breakdown of machinery or through the difficulties of appeal, to compel men to pay on profits which they do not make, especially at a time when they are in a position of great difficulty in consequence of the depression of agriculture. Therefore, I have mentioned these circumstances at the risk of encouraging agriculturists to come under Schedule D in large numbers. While upon this subject I may mention as, perhaps, a significant fact, that half the farmers who availed themselves of this new method of paying the tax were Scotchmen.

The last of the small exemptions which I propose affects the licence duty upon hawkers. I dare say that many hon. Members are not aware that there is a licence duty on hawkers. The duty amounts to £4. It is collected all at one time, and it is very difficult indeed for poor men to pay it. It is difficult to collect, and weighs heavily upon a particular class, and I propose, therefore, to repeal it. The origin of this imposition was that hawkers paid no rates. It was thought that they competed unfairly with traders and shopkeepers who did pay rates. But now, at a time when we are doing our best to relieve ratepayers, it cannot be an improper moment to select to relieve also this small class from a charge which seems to be a hard burden when their scanty earnings are considered. The loss to the Revenue involved in this exemption will be £25,000. This figure shows that there is a considerable number of persons who pay the tax at the present time.

These three reductions in respect of the Carriage Tax, Schedule A, and the hawkers, amount together to £75,000, and reduce my balance from £1,302,000 to £1,227,000. I now arrive at the interesting question of what is to be done with this balance, from which I must take sufficient to provide a surplus of at least £200,000 to carry over to next year. That leaves me a balance of about £1,000,000. I wish to recall to the Committee the view I presented at an earlier stage of my Statement—namely, that the Income Tax falls with special weight upon the poorer middle class; and both from great political and Imperial considerations, and from the point of view of the weight of the Income Tax upon the professional classes, and the less prosperous section of the trading and farming class, I should like to see my way to take off another 1d. I spoke of Imperial considerations. The Income Tax is one of those taxes to which we have recourse upon every emergency, and whenever we can we ought to be able to rely upon this great instrument for prompt financial assistance. Twopence on the Income Tax means an ultimate increase of £4,000,000 and an immediate increase of £3,000,000. It is an enormous and powerful engine, and the question is whether, in a time of profound peace, it is right to keep the Income Tax above 6d., or whether every effort ought not to be made to reduce it to that figure. The Income Tax payers are certain victims of every extraordinary emergency; and although they may not be able to escape a high tax even in a time of profound peace, they ought, nevertheless, to be able to have immunity from an amount above 6d. The rich can afford to pay it, and, as I understand, are ready at every moment to pay it; but the peculiarity of the tax is that it falls so heavily upon the struggling professional and business man. The right hon. Member for Mid Lothian, said, in his great speech in 1853—"The operation of the Income Tax taken alone is severe upon intelligence and skill as compared with property."

Well, then, I would wish to be able to take off this 1d. But it will be seen that to take off the 1d. I should require £1,550,000, while I have only £1,000,000 at my disposal. How is that to be effected? Well, Mr. Courtney, I looked round to see upon what resources I might possibly lay my hands. Many suggestions have been made to me as regards new taxes. I will only deal with one—not, strictly speaking, a new tax, but one to which a great deal of public attention has been attracted. I receive innumerable suggestions that revolvers ought to be taxed. The extraordinary thing is that revolvers, if used, are taxed at this moment; but many people are unaware that they ought to pay the tax, and that they are evading the law of the laud if they use their revolvers and do not pay duty upon them. I have been asked if the duty on revolvers is to remain as it is now; and my reply is that the Government intend to introduce a Bill dealing with that question. But we propose to deal with that question as I think it ought to be dealt with—that is to say, rather as a matter of police than of finance. I prefer, therefore, not to encumber my Budget with a tax upon revolvers. So I have still to look and see where £550,000 can be found to enable me to reduce the Income Tax. And in the first place, let us inquire, are there not any exemptions which ought to be removed? Are there exemptions by neglect or evasion, or are there exemptions by force of law? There is one exemption by evasion, a neglect of which those Members who are familiar with the Law Courts may have heard. That occurs when persons who are bound to stamp certain instruments do not stamp them until they are produced in Court, and then pay the stamp to make the instruments valid. In a large number of other cases it is notorious that Stamp Duty is evaded. I shall propose certain clauses to make the application of the existing law somewhat more stringent, and in that attempt I know I shall have the support of the whole Committee, because there can be no wish that existing stamp laws should be enacted, and that by evasion people should not contribute to the Revenue that which is expected from them, and which it is a legal and bounden duty to pay. We propose to introduce a clause insuring greater stringency in the enforcement of existing obligations, which we believe will raise the revenue from stamps by at least £50,000.

What I have just referred to is an exemption by neglect. But there are some exemptions by law, and in inviting the Committee to consider these I am borne up by the feeling that I am approaching the end of my task, and that hon. Members who have followed me through the somewhat intricate proposals I have had to submit to them will soon be able to cease to listen to my almost apparently interminable Statement. There are a large number of securities—I will use popular rather than technical and legal language—which have throughout, either partially or entirely, been exempt from Stamp Duties, while competing securities are paying very high duties. I find a total practical exemption upon some portion of these securities which is not justified by any principle, but has existed so long on account of the practical difficulty of dealing with them. Let me impress on the Committee the anomaly that now exists. On the one hand, as regards registered securities, comprising some of the most solid investments, passing by registered transfer, these highly-respectable securities pay on every transfer, on every journey, so to speak, which they take, 10s. per cent on the consideration. The Revenue levies its toll on them, and if they are sold four or five times in the year, £2 or £3 per cent may find its way into the Exchequer. But in the case of the transfer of securities to bearer it is impossible to collect the Stamp Duty in the same way. Before 1862 there were no stamps upon securities to bearer. Between 1862 and 1885 there was something imposed which, to distinguish it from other forms of taxation, I may call a "Birth Tax" of 2s. 6d. upon every issue. In 1885, it being felt that these bearer bonds, with the soli- tary payment of 2s. 6d. on their first issue, were too advantageously placed as compared with their rivals, a circulation tax was put upon them of 7s. 6d., making in all 10s. The state of things, therefore, is this. There are a great many high-class and solid securities which pay ½ per cent every time they are transferred. English securities to bearer, which you can get hold of because they are issued in England, now pay 10s. on issue, which is to clear them for ever from all payments on transfer. There are, however, others in this class which have only paid 2s. 6d. per cent, because they were issued before 1885, and they are now travelling from hand to hand without paying 1s. to the Revenue. Moreover, there is a considerable class of securities which are transferred from hand to hand without paying anything on transfer, and without having paid anything on their issue or introduction to this country. I believe an enormous number of transactions go on in American Shares on which no duty whatever is paid on issue or transfer, but which, in principle, ought to pay for their right to travel from hand to hand in the same way as others. The more solid the security the more it pays; the more fugitive the security the more it escapes duty. What we have to do is to see how we can hit these fugitive securities. The principle will be admitted on the Stock Exchange by the holders of these Stocks. We cannot manage to make them all pay a duty on their issue, because so many of the Companies which issue them are established abroad. Therefore, there are only two courses open to us—either to tax them in the hands of the first holders, after their arrival in this country, or to make them pay an annual tax, which shall be essential to a good delivery, as the phrase is, during a certain period.

The simplest plan would be to tax these securities in the hands of the first holder, because then you can make it a composition tax. But this has two great defects. In the first place, it would be considered very hard upon the first holder that he should have to pay the whole cost of freeing these securities from transfer duty; and, in the next place, I am not prepared to say that the Revenue ought to be satisfied with the composition duty of 10s. per cent to enable them to circulate from hand to hand for ever, while other securities pay 10s. per cent every time they are transferred. I want, if possible, to devise machinery by which an adequate Stamp Duty may be imposed, which may be distributed over a longer time, and over a larger number of people. I propose to do this by placing an adhesive stamp of 1s. per cent per annum on the nominal value of all securities to bearer which are now circulated without having paid the stamp of 10s. per cent. The effect would be that such Stocks would not pass as a good delivery unless they bore the ad valorem stamp which I have mentioned for the year in which the transfer took place. If the securities do not change hands during any one year they will pay no duty for that year. There will be a stamp of 6d. under £50, and 1s.between £50 to £100. This, I believe, will bring in a Revenue of £200,000 to the Exchequer. Every effort will be made by the Inland Revenue to secure the advice of persons who are experts in such matters, in order that the inconvenience, which can be the only objection to the tax, shall not be large. Some inconvenience there must be, and there will be, I admit. On the other hand, I think the Committee will come to the conclusion that whatever difficulties exist must be met, and that on no ground should these securities be allowed to retain their absolute immunity from a Stamp Duty which is paid by every other class of property. The duty, 1 believe, is so small that it cannot be argued that it will in any way impede business. But, however that may be, I venture to think this step must positively be taken. It has been difficult for me to consult with all those who are concerned in this matter, but I shall be glad of any practical suggestions, and the Inland Revenue will do all in their power to avail themselves of such suggestions; I can, however, hold out no hope that the tax, in some form or other, will not be imposed. I would say to those who are acquainted with the matter that if they can suggest a better method of raising the duty every consideration shall be given to it. I only lay down two principles—namely, that the existing immunity of these securities cannot be allowed to continue, and that whatever method of taxing them is adopted must promise at least about £200,000 a-year, which is the minimum that they ought, on any reasonable calculation, to pay. I have only to add, on this point, that there is another small change which I propose in the Stamp Duty with regard to a certain class of registered bonds which pay now 6d. on transfer. That amount will be raised to 10s., as in the case of other securities of a similar character.

But after a Stamp Duty has been imposed on these securities it is nevertheless certain that it will be impossible to reach all the transactions, because so large a number take place where there is no delivery of Stock at all, and where Stocks are simply bought and sold, and contract notes pass from one person to another. I propose to make a slight but notable change in this respect. A contract note at present bears a stamp of 1d. I propose to raise that 1d. to 6d. I have no doubt that the brokers will be able to charge the 6d. to their clients in addition to their brokerage, and so the amount will be distributed over a very wide area. This change will give me another £50,000.

So far every point I have touched upon has related to the abolition of an exemption which ought to be abolished, and I have been engaged in equalizing, rather than in adding to, taxation. There is one more item of a somewhat similar character with which I have to deal. It is a slight adjustment of the tax upon the issue of Companies under the Limited Liability Acts, which will fall upon new Companies and upon the new issues of old Companies. And here I have high authority. The Royal Commission on the Depression of Trade in their last Report state that— The creation of Companies might be to some extent restrained if the fee for registration, which is now very low in proportion to the nominal capital, were increased; and the attention of the Legislature might, in our opinion, be advantageously directed to this point, both in the interest of Revenue and in the interest of legitimate trade. We propose, without touching the fee stamp on the memorandum of association, to impose an ad valorem duty of £1 per £1,000 on registration, whatever the amount of the nominal capital may be. It is not a largo tax. A nominal capital of £500,000 will pay a tax of £500; and if it acts as a check on these Limited Liability Companies putting a very much larger nominal capital in their prospectuses or memorandums of association than they ever intend to employ, that, I think, will be a salutary provision which will in no way tend to check legitimate business. From that source of Revenue I gain £110,000, and I have now towards the £500,000 or £550,000 which I require a total of £410,000.

But I have not yet enough. I must still cast my eyes around me in order to secure some further slight addition to the Revenue. Hon. Members will see that in seeking to make up this amount, which is to enable me to take 1d. off the Income Tax, I have not had recourse to any taxation levied on the great articles of consumption; I have not had recourse in any way to the earnings of professional or business men, but to what I believe the Committee will consider to be more legitimate sources of Revenue for my present purpose. I do not know what hon. Members will say to the tax which I am now about to propose. I turn to a source of Revenue which, perhaps, will give a not very pleasant surprise to some Members of this House. There is one taxable commodity which is not at the disposal of the great consuming classes, but which is essentially a luxury of the well-to-do. I cast my eyes upon wine—not on the cheap wines, for the introduction of which the public is so deeply indebted to my right hon. Friend the Member for Mid Lothian, but those finer wines which, if an ad valorem duty were imposed upon thorn, would pay more than they now pay when the test of the amount of duty is alcoholic strength. The alcoholic test is the best which the authorities have been able to devise for taxing a commodity of which alcohol may be a pleasing and a necessary part, but is certainly not that element which is most attractive in the opinion of epicures in the matter of wine. The fact that the duty is levied on the amount of the spirit which wine contains puts the same tax, and in some cases a higher tax, on cheap wines than on wines of the highest quality. Some of the most expensive wines are of low alcoholic strength, and yet they are taxed no more than the cheaper wines. Quality and value cannot be measured by mechanical or analytical processes. There is only one way to get at the high class and costly wines, and that is to roach them in an indirect manner, and I propose to effect that by recurring to a tax which was imposed in 1861, and which lasted till 1866, when it was taken off, not on account of any inherent defects, but in consequence of the representations of Powers, with whom we were then engaged in some very delicate commercial negotiations. From 1861 to 1865 there was a tax on bottled wines. These wines are, for the most part, synonymous with high class and costly wines, and they are, especially in the present day, champagnes. It is very possible that an extra tax imposed upon these high-class wines may lead to some remonstrances from Foreign Powers; but I am bound to say that remonstrances of ours to Foreign Powers with regard to impositions of duties on British goods have not been so entirely successful as to make it necessary for us, more than is absolutely compatible with our own interests, to look beyond the fiscal merits of the question. The system of ad valorem taxation, which in some cases is so admirable in practice, is almost impossible in that of wine. But you may arrive roughly at the same result by putting an extra tax on bottled wines, which will in most cases not affect the cheaper class of wines, because they are, or can be, imported in the wood, but will fall upon the more costly sort of wine—an article not of necessity, but of pleasure, yet which is becoming one of almost daily use. I propose a tax of 5s. per dozen on bottled wines, which is equivalent to 2s. 6d. a-gallon. Originally, the idea was to impose a duty of 6s. a-dozen, but in that case the merchant would argue that he must have something to recoup him for the additional capital advanced to meet the new impost, and he would put on an extra charge of 1s. a-bottle, because he had had to pay 6d. a-bottle more duty. But this duty of 5s. a-dozen will enable the wine merchant to recoup himself, even if he charges only 6d. extra per bottle. I estimate this tax to bring in an additional revenue of £125,000. I take note, in making this estimate, of the probable, nay certain, diminution of the amount of wine which may at present be imported in bottle, and which will in future be imported in casks. It is possible that the bottling trade in England may receive a certain impetus, but I cannot conceive that that is an objection to the plan. What we have to look to is to fine wines such as Margaux, Lafitte, La Rose, and the more expensive class of champagnes, which must continue to be imported in bottle as before. I trust hon. Members will not grudge the imposition of this tax; but I admit that the greater portion of this additional tax will have to be borne by sparkling wines. If any hon. Members regret that I have taxed wine, as I have, to a certain extent, put taxes on the more speculative class of transactions, let them remember what I hope will be the outcome of all these details—namely, that we make a great step in the direction of securing that the Income Tax shall be reduced to 6d. I have calculated that if a man with £2,000 a-year should receive a remission of 1d. in the Income Tax, he would be able to afford to drink a bottle of champagne at the increased price—that is to say 6d. extra, every day in the year. The recipient of £1,000 a-year would be able to indulge in this luxury every other day in the year, or to have one pint, paying 3d. extra for it, every day. If by this means we secure to the Revenue a slightly larger contribution from the club man, who lives in chambers and pays few rates or taxes, I do not think he will complain when he reflects that he, too, is a citizen, and ought to share the burdens of his fellows. And now I have come to the end of my list, and I am rejoiced to think that I have put together a surplus amounting to £1,762,000, and am able to deduct my 1d. from the Income Tax. That deduction will involve a loss of £1,550,000, leaving me a balance of £212,000.

I have now reached the goal at which I wished to arrive—of being able in this year, without placing any new taxes upon persons who cannot well boar them—of being able to relieve to a great extent—to a notable extent—the ratepayers of the country, and at the same time to make what I hope will be considered a substantial relief in the direction of Imperial taxation.

The final figures are as follows:—Customs, which stood at £19,800,000, with the addition of the tax on bottled wines, will reach £19,925,000; Excise, which was £25,560,000, deducting £55,000 for remission of Hawkers' and Carriage Taxes, will stand at £25,505,000; Stamps, which were £12,740,000, but from which we have taken off Probate Duty to the amount of £1,420,000, are again raised by the addition of the now Stamp Duties and the extra Succession Duty to £11,780,000; Land Tax, £1,046,000; House Duty, £1,890,000; Income Tax, which was £13,820,000, less £20,000 for Schedule A, and one penny off the tax, amounting to £1,550,000, leaves £12,250,000—a total Tax Revenue of £72,396,000; while the Non-Tax Revenue is £14,431,000, or a grand total of £86,827,000. On the other hand, the total Expenditure is £86,615,000, leaving a surplus of £212,000. The effect of the Budget in general is to distribute the surplus between the ratepayer and the taxpayer. The ratepayer of the United Kingdom will get, in round figures, £2,050,000, of which about £920,000 is due to the new licences in England and Scotland, and the taxpayer will get £1,625,000, of which £585,000 is raised by new taxation.

And now I have only one paragraph more in the Statement which I have to lay before the Committee. The circumstances of the time have imposed the necessity upon us of not only looking to the next year, but to the year after next. We shall then have to surrender an additional sixth part of the Probate Duty, and also to make good the difference between the grants in aid which are taken back and the licences handed over, and the two operations will, taken together, cost us £1,400,000. The circumstances of the case are such that we have been obliged to settle once for all the contributions to local expenditure, so as to place them upon a firmer basis. I do not consider myself entitled to take into account the probable increase of the Revenue in the course of two years, nor the revival of trade which we hope to see thoroughly established. I must contemplate, and the Committee must contemplate, the possibility that this sum may have to be raised; but, on the other hand, it is impossible to enact taxes before the Bill is passed, before we know what the contingent payments will be. But I would wish to lay down certain propositions with regard to the mode by which this sum ought to be met. I will state it in the strongest way negatively. It must not be met by any increase of duties which rest upon the industrial class. It must not be met by any duties resting upon the earnings of the mass of the people. It must not be derived from duties contributed by professional men, by industry, and by skill. But it must be met by duties on property or the result of property, or from that promising item of stamps, from which I have already reaped a certain advantage, but which is by no moans an exhausted field. I will not point to the fact that in the year after next there will be available for the disposal of my Successor, if I should have one by then, a sum which may amount to £1,000,000, if the Conversion Scheme is successful. I will not take that into account, because I wish to reserve the application of that amount; and I do not wish to pledge Parliament, or the Government, or myself, as to whether the whole, or a portion, or none of it, should be employed in the remission of taxation, or, on the other hand, in the diminution of the Public Debt. My right hon. Friend admitted that it was fair to reserve such determination until we could see what would be the resources at our disposal when the conversion had reached a certain stage. But there, at all events, it stands, a sum, I hope, of about £1,000,000, which will be added to the national resources in the year 1889–90, and will be followed by a yet larger sum in the following year. This is a contingency which I have a right to indicate, but which I have not taken into account. I have stated the sources from which I believe this gap ought to be met, by duties on property and the results of property, from stamps, or from some re-arrangement of the Death Duties, or from taxes of that class.

And now I rejoice to think I have come to the end of my long and I fear almost interminable story. The subjects have been so vast, so complicated, that it has really been impossible for me to attempt to do justice to most of them. I should have been glad to have built up step by step as I passed on a rampart of solid masonry, so to speak, in the shape of argument, around every proposal I have made. I feel that during the comparatively short time I have had to devote to each several point, I may have left positions undefended which will be bombarded by heavy guns in the course of the discussion which will ensue. On the other hand, the amount of work arising out of the great Conversion Scheme, concerning which, I am happy to say, there is every indication of its being successful, has put it out of my power to devote as much time to the preparations of my statement as might possibly have resulted in my being able to condense my remarks. Hence I have omitted many great subjects. Perhaps my hon. Friend the Member for Sheffield (Mr. Howard Vincent) will think that I ought to have dealt with that fiscal change he advocates in the shape of some form of Fair Trade; but I have had to enter into too many discussions arising out of the proposals I have made to enter into the discussion of proposals I cannot accept. There is an omission of a different kind which I regret even more. I should have liked to refer to the important subjects of light gold and of the circulation, which I touched upon last year in my Budget Speech, and upon which I have been engaged, and measures for dealing with which are in an advanced stage. I hope still, looking to the facilities which the House of Commons now kindly gives for the discussion of Business, that I may be able to submit proposals on these subjects for the consideration of the House even in the present year. But, at any rate, I have placed before the House the main financial proposals of the Government. We have tried to consider the interest of the ratepayer as well as of the taxpayer; we have endeavoured, as far as we can, to be just to both. I have felt, and I feel, the extreme difficulty of the adjustments between the two vast fields of Imperial and Local Taxation. But, at least, we have endeavoured to lay before the House proposals conceived in a just and liberal spirit, and we submit them with some confidence to the favourable consideration of the Committee and the country.

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

MR. CHILDERS (Edinburgh, S.)

I think there is one point on which every hon. Member of the House will agree. I ask the cordial assent of the Committee when I say that my right hon. Friend the Chancellor of the Exchequer, throughout the three hours and a quarter during which he has addressed us, has held the attention of the Committee thoroughly, and has made himself perfectly clear to all those who take an interest in finance, with regard to the proposals he has placed before us. We desire, whatever may be our opinions, either on the spur of the moment, or when we have had time to consider them, to thank him for placing those proposals before us in so explicit and clear a manner. I have very little to add to these words, for the present is not the occasion for criticizing the details of the Budget; and, therefore, I postpone any criticisms I may have to make upon the principles of the right hon. Gentleman's Budget, or their application, until the more appropriate opportunity which will present itself on the adoption of the Resolutions in Committee or Second Reading of the Customs and Inland Revenue Bill. But before I sit down I should like to ask the right hon. Gentleman one or two questions. I wish to ask him, in the first place, whether he has any objection to circulate at once, not to-morrow, but as soon as he possibly can, a Paper showing in detail the proposals he has made to the Committee? I followed the right hon. Gentleman through his whole speech, and I think he will not blame me if I say that the number of figures and calculations which he has placed before us is so large that it is not possible for anyone to carry them away in his mind so as to understand them thoroughly, even though we may supplement our recollection by reading the report of his speech in the newspapers. I therefore ask the right hon. Gentleman whether he will, in the first place, give us a Paper showing the details of his proposals? Probably, if it is laid pro formâ on the Table of the House to-morrow, a Paper could be circulated in a day or two, showing not only the details of his proposals, but also more minute figures relating to the Revenue and Expenditure of the last and coming year, which, considering how lengthy his statement necessarily was, he has very wisely, I think, curtailed. For instance, I think my right hon. Friend gave us no details whatever as to the charges on the Consolidated Fund beyond the Debt totals. It has, I think, been always usual to give these details; but my right hon. Friend has not mentioned them at all. I see that my right hon. Friend admits that I am asking nothing unusual, and I think we may also ask him to give us some more details of Revenue. If my right hon. Friend will do that, I think he will greatly assist the discussion which will take place in a few days. I was glad that, with reference to future years, my right hon. Friend exercised some caution by warning the Committee on one subject particularly—namely, as to what will be the prospective effect of the Budget which, although it leaves for 1888–9 a certain surplus, contemplates that unless a marked improvement in trade or economy in expenditure takes place the deficit of 1889–90 will be serious. The right hon. Gentleman will forgive me for saying that, in speaking of the prospective deficit, he omitted to refer to one very important item—that is, the loss of Income Tax as between 1889 and 1890.

MR. GOSCHEN

I may, perhaps, meet that point at once. The loss upon the Income Tax will probably be made up by the natural increase in the average incomes of the country. In calculating the probable Revenue, we must not forget that we have passed through some bad years, and are now approaching a year in which we hope to receive more from the Income Tax.

MR. CHILDERS

I am glad to hear that from the right hon. Gentleman. I did not at all refer to the subject as a matter for blame, and the information which my right hon. Friend will give us in print will, no doubt, make this matter perfectly plain. Again, my right hon. Friend promised last year that the subject of light gold coinage was one which he would bring this year before Parliament. I presume that the conversion of the light gold coinage will involve a heavy charge this year.

MR. GOSCHEN

No increased charge will be involved in the conversion.

MR. CHILDERS

I am glad to hear that statement; but I must remind my right hon. Friend that he has two alternatives—either to make a proposal which will create a charge upon the year, or to make a proposal which will make no such charge; he must do one of two things if he brings forward a proposal with regard to the light gold coinage during the present year; and if the plan involves a charge it will diminish his surplus. [Mr. GOSCHEN: No.] My right hon. Friend is very ingenious, and I will give him credit for finding out some third plan; but let me impress upon him that the state of the gold coinage is so extremely bad, and has got so much worse since I was unfortunately unable, through the early Prorogation, to carry out the proposal I made to the House four years ago, that whereas, for instance, one-half of the half-sovereigns were light then, there are, I believe, three-quarters of them light at the present time.

MR. GOSCHEN

A schema of the character indicated by the right hon. Gentleman is in an advanced stage of preparation.

MR. CHILDERS

I rejoice at the statement of the right hon. Gentleman, as I know that it is most important that there should be no delay in dealing with this subject. As there is no pressing necessity for the Resolutions which have been placed in the hands of the Chairman, I would put it to the Committee that they should not be debated this evening, but that we should adjourn the present debate.

MR. GOSCHEN

I hope that right hon. Gentlemen opposite will not object to pass the Resolutions relating to the Wine Duties and Income Tax, because if the former is not passed to-night large quantities of wine will be taken out of bond to-morrow and sold during the rest of the year free of the increased duty. My right hon. Friend will understand also, with regard to the Income Tax, that the dividends are payable on the 5th of April; and if the Committee will assent to the remission of the one penny of Income Tax it will, of course, enormously facilitate the collection of the Revenue for the year, and avoid the great labour that would otherwise be incurred. Of course, I have no right to press this, if right hon. Gentlemen opposite do not see their way; but I am sure they will appreciate the difficulty now that the dividends are so shortly payable, and perceive that it would be a very great assistance if the Committee will deal rapidly with these two Resolutions.

SIR WILLIAM HARCOURT (Derby)

I think that the appeal of the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) on the subject of the Wine Duties ought to be assented to without objection; but as to the Income Tax, it seems to me impossible that we should proceed with the Resolution now. I believe with my right hon. Friend the Member for South Edinburgh (Mr. Childers) that no Resolution on that subject has ever been taken on the first night of the Budget when there has been a change of duty. Everyone who has listened to the very able statement of the right hon. Gentleman the Chancellor of the Exchequer will see that in consequence of the proposed change many other taxes are to be imposed; and I do not think we should give any opinion on this matter now. There are one or two points on which I should like some further details. I do not in the least complain of the right hon. Gentleman for not having given us full details of the items of Revenue; but if he will let us have them in a printed form it would be interesting to the House. The right hon. Gentleman stated that in the Customs of last year there was a falling off of £80,000; and I cannot make out what are the items in which an increase of duty has taken place that would so countervail that as to result ultimately in an increase of £30,000 on Customs. Then the right hon. Gentleman alluded to the great increase in the Probate Duty. I think he will find that last year either my right hon. Friend (Mr. Childers), or I, told him we thought he was taking his stand too low. The real truth is, that there has been of late years a disposition—I do not know why—to undervalue the Stamp Duties. The Stamp Duties have almost invariably exceeded the estimates made of them. This year they have, no doubt, exceptionally increased. I would say for the consolation of my hon. Friend the Member for Central Sheffield (Mr. Howard Vincent) and others, who think that we have for the last 40 years or more been pursuing a ruinous commercial policy, that, if we had been pursuing a policy injurious to our trade and to our interests, we should not have found the realized wealth of the country constantly increasing beyond our expectations. Two years ago, when people were in despair about the prosperity of the country, I was criticized severely because I would not believe that all the interests of the country were ruined. One of the points I especially insisted upon was the increase in the Probate Duty. In 1886 I mentioned that then the Probate Duty had reached the highest point it had ever obtained, and now I am glad to hear from the right hon. Gentleman the Chancellor of the Exchequer that the Probate Duty has reached a still higher point. I think we may judge from that that the apprehension which existed some years ago as to the general distress of the country was ill founded, and that, also, we may believe that the system we are pursuing is one which is not really injurious to the interests of the country. Now, the right hon. Gentleman the Chancellor of the Exchequer has prided himself upon the large reduction he has effected in the Debt. I may be allowed, in all good humour, to tell him he has been a reducer of the Debt malgré lui, because he reduced the provision made for the reduction of the Debt by £2,000,000. What has really reduced the Debt is the existing law of the old Sinking Fund, which has appropriated his surplus—his surplus of £2,000,000—to the reduction of the Debt. The fact is, that the surplus he has derived from the large yield of the Probate Duty has been by the operation of the law appropriated—I think I am right in so saying—to the reduction of the Debt. Owing to the prosperity of the country and the wisdom of previous legislation, though my right hon. Friend the Chancellor of the Exchequer took £2,000,000 off the new Sinking Fund, the £2,000,000 has reappeared under the old Sinking Fund. The reduction of the Debt is made, in spite of the Chancellor of the Exchequer, by the operation of the law, through his surplus being applied to that. I should not have alluded to that but for the references to the savings the right hon. Gentleman has effected in the future upon the conversion of the Debt. If I am not wrong, the existing law would apply that money to the reduction of Debt; and I do hope that in future the House of Commons will not be a party to breaking down the law by which savings effected upon the interest will go in reduction of the Debt. I may point out to the House the enormous value of the old Sinking Fund under which I imagine the interest saved upon the Debt will go to the reduction of the capital of the Debt. See how it has operated. It operated in my time, to a certain extent, in reducing the Debt. It has operated to the amount of £2,000,000 in reducing the Debt in spite of the provision made by the Chancellor of the Exchequer for the reduction of the new Sinking Fund. It is a provision of enormous value, and I hope the House of Commons will not be disposed to depart from it. The right hon. Gentleman spoke of his increased balances, and also of the balances as being a reduction of Debt. Now, I confess I think that is rather a loose doctrine. The Chancellor of the Exchequer knows very well that I have objected to the returns of the condition of the Debt in which the balances are shown as an asset. I know there are arguments both one way and the other. Certainly the whole of the balances cannot be spoken of as an asset. You might just as well, before you pay your Christmas Bills, talk of the balance at your bankers on the 24th of December as an asset, when you know perfectly well that the great part is going immediately in the discharge of debt. Of course, there is the nest egg of the Suez Canal. The Suez Canal, I will admit, has been a very fortunate speculation; but there is nothing so ruinous to a nation as to an individual to find its first speculation a successful one, because if a nation is to go into more speculations of this character, I think the results are likely to be very disastrous. I do hope that the Chancellor of the Exchequer is not meditating putting any of these balances into the Panama Canal in consequence of the successes which have been achieved in the Suez Canal. I only hope we may be satisfied with the success of the Suez Canal, and that we may never repeat the experiment, because I am convinced if the nation speculates in transactions of this kind it will experience the fate which befalls individuals. The right hon. Gentleman the Chancellor of the Exchequer made a very interesting reference to the farmers' schedule, or schedule B. The remarkable part of it, however, was that the right hon. Gentleman the Member for South Edinburgh made the same offer to the farmers some three years ago; but for some reason or other they did not at that time accept it. I only make these very incidental remarks because in the case of important proposals of the character the Chancellor of the Exchequer has made, one must take time to consider and to reserve his criticism for a future occasion. My right hon. Friend the Member for South Edinburgh has alluded to what is the most serious feature of this Budget. The Chancellor of the Exchequer in his Budget and in the Local Government Bill is going to enact charges for which he makes no future provision, or, at all events, but very imperfect provision. He has made charges which he will meet partially in the present year under the temporary arrangement, but the charges in the Local Government Bill and in the Budget will, I understand, be permanent charges which cannot be altered. For these he has made no provision. He has said very frankly that he has only made the provision which is necessary in the present year; for the year which is to come after that, charges will subsist, but there is no provision for them. That is a very serious financial omission, which has certainly not been usual in Imperial Budgets. That is a subject which will have hereafter to be very carefully considered, because, although the Chancellor of the Exchequer did not make provision in money, he made provision in a series of what I may call "financial moral sentiments." He concluded his speech by admitting that there would be a charge of £1,550,000 which would have to be met in the year after next; but he said that "It must not be met by this, it must not be met by that, and I will not tell you how it is to be met." That seems to me to be somewhat doubtful finance; but of course we shall have more opportunity of considering the point later on.

MR. STANLEY LEIGHTON (Shropshire, Oswestry)

The right hon. Gentleman the Chancellor of the Exchequer has made a statement which I hope he will explain a little more fully. The right hon. Gentleman told us over and over again that he is giving great advantages to the local ratepayers—that this is a Local Budget. I understand he intends to hand over to the local ratepayers £5,500,000, but that at the same time he takes away £2,600,000, which is now given in the form of grants in aid. That will leave a paltry £300,000. [Cries of "£3,000,000."]We get now £2,600,000, and we are to have £5,500,000. What remains to us is £2,900,000, and this is to be made up by additional taxation.

MR. GOSCHEN

The hon. Gentleman stated the figures correctly in the first instance, but did not do the sum. The total advance will be £5,500,000. From that you have to deduct £2,600,000, leaving not the paltry sum of £300,000, but £2,900,000, nearly £3,000,000. It is £3,000,000 fresh money.

MR. KELLY (Camberwell, N.)

May I ask the right hon. Gentleman the Chancellor of the Exchequer if I am right in supposing he told us that the whole of the Hawkers' Tax is to be repealed? I should also like him to tell us whether hawkers' carts will be taxed, and whether, if hawkers' licences are to be abolished, similar relief ought not to be given to the poorer class of vendors—the pedlars?

SIR JOSEPH PEASE (Durham, Barnard Castle)

I do not desire to go into what I may call the controversial points of this Budget, because I know that the House of Commons has now a very difficult task before it. It has the difficulty of dealing with the very able statement made by the right hon. Gentleman the President of the Local Government Board (Mr. Ritchie) in introducing the Local Government Bill as well as of dealing with the Budget, and there is the difficulty of considering the two combined. It seems to me that there are several points in this Budget which will require very great consideration. For instance, the proposal that a large amount of personalty should go in relief of the rates is one which we shall do well to consider very carefully. But I congratulate the right hon. Gentleman the Chancellor of the Exchequer upon the very able statement he has made. I think he was perfectly right in the beginning of his statement to pay a great tribute to the public servants. I am sure he must have taxed the abilities and the time of the public servants in the collection of the enormous array of facts and figures he has laid before the Committee. There are one or two points which I am sure the whole country will receive with satisfaction. Whatever may be the result of remitting a 1d. of the Income Tax, I am convinced that the right hon. Gentleman's endeavour to make the transactions on the Stock Ex- change, which have hitherto paid nothing, bear their fair share towards the National Revenue, will be received with great satisfaction in the country. I only hope that the efforts of the right hon. Gentleman to lay hold of this portion of the revenue will not be frustrated by the difficulties which are sure to be thrown in his way. In my constituency there has been for years great complaint that the heavy vehicles were entirely free from toll, and that the farmers had to maintain the roads. I think the proposal to tax the class of large vehicles the right hon. Gentleman has alluded to £1 is a most righteous proposition. It is but proper that these vehicles should pay towards the wear and tear of the roads, of which they have been so largo a user, and to which they do so much damage. With regard to the tax on wheels, I should have been glad if the right hon. Gentleman could have seen his way to leave the farmers' carts untaxed.

MR. GOSCHEN

I thought I made it clear that carts employed in husbandry are not to be taxed.

SIR JOSEPH PEASE

I am much obliged to the right hon. Gentleman for correcting me. Sitting below the Gangway I was not able to hear that he made any exception to the tax. The tax on horses of luxury is a most legitimate tax; but of all the alterations the Chancellor of the Exchequer proposes to make, I think the one which will give the greatest satisfaction is that he proposes to make in the Carriage Tax. I, for one, would have been glad if he had repealed the carriage tax, because I regard it very much in the light of a tax upon labour; but if we are to have a carriage tax, certainly the way the right hon. Gentleman proposes to deal with it is one which will remove a great deal of grievance. I must congratulate the Government upon the comparative absence of Supplementary Estimates. The amount of Supplementary Estimates they have brought in is very small, and I hope the example they have set will be followed in future. With regard to the more important points of the Budget, I desire to reserve any opinion I may have of them until I see further what are actually the right hon. Gentleman's propositions.

MAJOR RASCH (Essex, S.E.)

Representing, as I do, an agricultural division which has been very hardly hit, and which has more land out of cultivation than almost any other county in the Kingdom, I congratulate the right hon. Gentleman the Chancellor of the Exchequer on the very large measure of relief he has promised us, and also upon the fact that he has fulfilled the hope which he raised in the minds of the deputation of agricultural Members who waited upon him about this day last year. I also wish to protest as strongly as I can against the statement that the relief the right hon. Gentleman is giving us is only a grant in aid of the squirearchy. This grant in aid is a grant in aid of agricultural labourers and farmers, and I do not think any hon. Gentleman on either side of the House will deny that we want the assistance which the right hon. Gentleman is going to give us. As I have said, we in South-East Essex have more land out of cultivation than any other county in the Kingdom; in fact, our farmers are divided practically into two categories—those who are ruined, and those who are going to be ruined. I do not want to pursue such an unpleasant subject; but I wish to assure the right hon. Gentleman that the farmers and labourers in the division I represent will remember very gratefully the Chancellor of the Exchequer, who has been the first to bring the equalization of taxation of real and personal property into the area of practical politics, and who has done all he can to take undue burdens off the land.

MR. QUILTER (Suffolk, Sudbury)

After the long and exhaustive statement the right hon. Gentleman the Chancellor of the Exchequer has addressed to us, I shall only ask him one question. I wish to know whether my impression is correct—that in addition to the present one-half per cent on the issue of Foreign Bonds, there is to be an annual tax of 1s. per cent on all Foreign Bonds and Stock Exchange transactions not now liable to duty? I also desire to say that the chosen representatives of the experts, to whom the right hon. Gentleman alluded, will certainly afford him every assistance in his power, without which assistance I am persuaded some of the proposals he has shadowed forth cannot be carried into effect.

MR. AUSTIN (Yorkshire, W.R., Osgoldcross)

It will be in the recollection of the right hon. Gentleman the Chancellor of the Exchequer that some time ago an appeal was made to him concerning the great hardship suffered by some tenant farmers in having been called upon to pay Income Tax twice over. I trust that the right hon. Gentleman will provide some remedy for such an unjust state of things.

MR. F. S. POWELL (Wigan)

There are only one or two matters of minor importance which I wish to mention. When I had the honour, some years ago, of representing a division of Yorkshire, there was a great hardship felt by many of the small farmers in consequence of the tax on horses. The tax at that time was paid by them if by some chance they happened to use their horses for pleasure. I am sure it will be a great source of satisfaction to the small farmers in that district if, before the debate closes, my right hon. Friend the Chancellor of the Exchequer will assure us that horses used mainly for agricultural purposes will not be brought under taxation, because by some accident horses may be used from time to time by a farmer for his own pleasure and for the amusement of his family. The second point—I am ashamed to mention these small matters, but they are matters of practical interest—is the tax on carts. I have had for some time the honour of being a member of the Highway Committee in the West Riding of the county of Yorkshire, where there have been heavy rates in consequence of the enormously weighty burdens carried on the roads by traction engines. We have the power—and we exercise it—to levy toll on the locomotive itself in the shape of a licence; but we have no power to tax the carts. These carts, as we all know, form a long train, and their effect on the roads is most destructive. The roads are not constructed to bear heavy burdens. The mechanism of the roads is utterly annihilated, and passage along them by ordinary vehicles becomes almost impossible, I am delighted to hear the proposal of the right hon. Gentleman, because that injustice will no longer be allowed. I have no doubt that when these carts are brought under taxation they will be used with greater moderation, and that improper use of roads will not continue. I congratulate the Government on their proposals. They are wide and far-reaching proposals; they do not relieve one class to the injury of another; but I believe they will prove a relief to many classes. I am sure the proposals will be received by the country with great thankfulness. There is one very humble class which has been for years groaning under taxation, and which will be relieved by the Government proposals, and that is the class of hawkers. I have sufficient knowledge of the feelings of magistrates to be able to say that no duty imposed on magistrates which is discharged by them with greater regret than the duty of fining hawkers without licences. Many of them are poor but industrious people, and the taxation levied upon them is a severe pressure upon their honest trade. The licence was intended as a prohibition upon what was regarded as a nuisance in the country; but it has acted most mischievously and has produced a great hardship upon these simple but deserving persons. I am glad that I have been permitted to make these observations. They are few, indeed, but perhaps they are not unworthy of some consideration amongst the larger questions which occupy our attention.

COLONEL NOLAN (Galway, N.)

said, he only intended to touch upon the Budget from one point of view, and that was so far as it related to Irish interests. He looked upon this Budget as the third step in the very complete change which the English Treasury Bench had been effecting during the past three or four years in the financial relations of England and Ireland, and he was not at all sorry to have to discuss that change whilst the right hon. Gentleman the present Chancellor of the Exchequer (Mr. Goschen) was in Office, because he rather liked the tone of that right hon. Gentleman in dealing with money matters. The right hon. Gentleman was the only person on the Treasury Bench who did not pretend to be generous to Ireland in money matters, and whilst not claiming to be generous he was the only one who tried to be just. The right hon. Gentleman discussed the matter from that point of view. Those who pretended to be generous were committing the grossest injustice to Ireland, from a pecuniary point of view. Ireland suffered this great disadvantage, that she had not had a single Member on the Treasury Bench during the past 30 or 40 years. The result was that the Irish Members were untrained in these subjects, and had many difficulties to contend with in considering and discussing them. There were three steps which had taken place in the monetary relations between England and Ireland, and the right hon. Gentleman would recognize the fact. The first change occurred when the roads were disturnpiked. A modest sum of money was given to England and Scotland in regard to the operation then brought about; but as Ireland was not affected no equivalent was given to her. The old custom had been to put duties on England and not to put them on Ireland, and this was the first change in the direction of a subvention or a covert subvention. Nominally, Ireland was always better treated than England or Scotland; but in the case to which he (Colonel Nolan) referred, money was given to England and Scotland and not to Ireland, the reason advanced by the right hon. Gentleman the Chancellor of the Exchequer then in Office being that no carriage duty was charged in Ireland. The amount given in the case of England and Scotland was an offset on the Carriage Tax. That was the first step. The second step came last year. He did not blame the Chancellor of the Exchequer, but the fact was that additional moneys were given to England and Scotland—either £180,000 or £280,000, he forgot which. The Chancellor of the Exchequer at the time said he considered a gift of £50,000 to Ireland would be equivalent to the amount given to England and Scotland, and if the Chancellor of the Exchequer had followed out his opinions—because he spoke pretty much then as he had spoken to-night—the Irish Members would all of them have agreed with him. But that £50,000 had been frittered away; there were so many interests at stake, and the clerks and Government officials in Ireland got round the Government to such good purpose, inducing them to go in for fancy schemes of arterial drainage, and so on, that the money was actually wasted—at any rate, three-fifths of it had been spent. The great danger in dealing with Irish matters was that there were always two or three Members who understood the agricultural parts of Ireland sitting on the same side of the House as the right hon. Gentleman, who undertook to advise him; and it was solely by these two or three Gentlemen that the Government were guided. They were cut off from the great bulk of the Irish Members in the House. The result of this state of things, in the case to which he was referring, was that this £50,000 given last year to Ireland had either been wasted or not expended, The second step, therefore, was giving a certain sum to England and Scotland, and pretending to give the same to Ireland, but in reality doing nothing of the kind. What had been given had been frittered away in Dublin. The third step was far more important, and had come in in that portion of the Budget of the Chancellor of the Exchequer which dealt with the Local Government Bill. That question became of great importance in the pecuniary relations of the two countries. They had, up to this point, dealt with sums of moderato amount. Under the disturnpiked roads arrangement it would only have come to £40,000; last year the amount given to Ireland came to £50,000; but now they found the amount given to Ireland should be about £500,000. The right hon. Gentleman the Chancellor of the Exchequer said the gross sum for England would be £5,800,000, and that he considered Ireland to be entitled to 1–11th of the amount that England was entitled to, from a taxable point of view, so that the amount given to Ireland would be considerably over £500,000. As to what the proportion should be between Ireland and the United Kingdom, he (Colonel Nolan) did not agree with the right hon. Gentleman. The proportion between the two could only be settled by one of two sets of statistics—one he himself had moved for at a time when there was no political question before the House, and which was granted by the Treasury. That Return showed that Ireland paid 1–9th or 1–10th of the whole taxation of the United Kingdom, leaving out—exactly as the Chancellor of the Exchequer had left out to-night—the Post Office receipts from the ordinary taxation. Since that time the right hon. Gentleman the Member for East Wolverhampton (Mr. Henry Fowler) had brought a re-edited edition of the statistics; but that edition was brought out at a peculiar time—namely, at a time when political questions between England and Ireland were to the fore and Party feeling ran high, and though they cut out down the proportion of the United Kingdom, he did not think it was as likely to be correct as the statement given by the Treasury on his (Colonel Nolan's) Motion on the first occasion, when there was no political question touched by the figures. He thought that, under the circumstances, the right hon. Gentleman the Chancellor of the Exchequer ought to prove to the House on what he grounded his assertion that Ireland was only 1–11th part of the United Kingdom for taxable purposes. He must have been guided either by independent Returns of his own, or by the Returns obtained by the right hon. Gentleman the Member for East Wolverhampton, or the Returns granted upon his (Colonel Nolan's) Motion, which he thought were the truest of the three. Putting that point aside for the present, he should like to know from the right hon. Gentleman exactly what he intended to adopt as the share of Ireland in this Local Government arrangement? The right hon. Gentleman said £127,000.

MR. GOSCHEN

This coming year.

COLONEL NOLAN

said, he hoped the right hon. Gentleman would follow up the opinion he had expressed with regard to the application of this sum better than he had done last year. Last year he had expressed very much the same opinion as that they had heard from him to-night; but he had not followed it out. The right hon. Gentleman had said he hoped the money would go to the county cess. He (Colonel Nolan) trusted the right hon. Gentleman would now put his foot down, and say that the money must go to the county cess. He would much sooner trust the right hon. Gentleman than he would the great majority of the Gentlemen on the Treasury Bench on this question, and he would urge the Chancellor of the Exchequer to see that the money was spent in Ireland as it was in England. There would not be the slightest chance of getting justice if the Treasury Bench listened to everybody in Dublin who made representations to them, men who wanted new salaries, and things of that kind, and who got round the Chief Secretary, getting him to adopt fancy schemes. If the money were given in Ireland as it was in England, the Irish people would throw in their lot with the English people, and would take the same chance that the English ratepayers took. Was he to understand that 4d. per head for the indoor paupers was to be given besides the £127,000?

MR. GOSCHEN

said, that the contribution from the Probate Duty paid that 4d. per head, and that that contribution amounted in the case of Ireland to £127,000.

COLONEL NOLAN

said, the right hon. Gentleman would own that, though he had spent over three hours in explaining the matter, and although, no doubt, he had done it far better than anyone else would have been able to do it, he had not been able to devote more than eight or 10 minutes to this part of the subject, and therefore it was not to be wondered at that the Irish Members had not grasped the whole meaning of the arrangement, so far as Ireland was concerned. The £127,000, it seemed, was to be the gross amount given to Ireland, and that would be increased at the end of next year by one-third.

MR. GOSCHEN

By one-half.

COLONEL NOLAN

said, he maintained that Ireland ought to get about £500,000, seeing that the United Kingdom was to receive £5,800,000. The only way the Chancellor of the Exchequer could get out of that was by a special system of allotting all those taxes which were paid in England, and which were not paid in Ireland, to local rates. That was a clover plan, no doubt, but they must remember that for the past 10 or 20 years Ireland had been very badly treated in this House. The Government had said—" There are certain taxes which are paid in England, but which you do not pay in Ireland;" but all that sort of thing, it must be remembered, now came to an end under this Budget, and Ireland, instead of being treated better, was treated worse than ever. He (Colonel Nolan) recognized the justice of the Chancellor of the Exchequer—the right hon. Gentleman did not claim generosity—in not considering the difference between the yield of Probate Duty in England and Ireland. But why should the right hon. Gentleman take the Probate Duty? It was a matter of selection—he must either take that duty or some other duty to assist the paupers. No doubt, the right hon. Gentleman had acted very wisely; and he had seen, very properly, that he could not affect the relations between England and Ireland. He (Colonel Nolan) had argued this question with the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) in this House; and, therefore, he might claim that he argued it altogether apart from political feeling. The yield of the Probate Duty in Ireland was very small compared with its yield in this country; but, relatively speaking, the poorer classes in Ireland were much more heavily taxed than they were in England. He quite acknowledged that the Chancellor of the Exchequer had behaved fairly in not applying the Probate Duty equally, which would have been the most unfair and fallacious test between the two countries which could be devised. On the whole, he recognized the fairness of the right hon. Gentleman's proposals in regard to the Probate Duty; but otherwise he was of opinion that the Budget, in connection with the Local Government Bill, would bear with extreme hardship on Ireland, unless it were reconsidered. The right hon. Gentleman might say—"I have left no inequality of taxation between the two countries—all those taxes which were unequal I have swept away, and I have put them on the local rates in England." That was the utmost the right hon. Gentleman could say for his Budget. He (Colonel Nolan) did not think there was a tax left in England which was not paid in Ireland, except, perhaps, that for armorial bearings, which the people of Ireland were perfectly ready to pay. As to the Cart Tax, he was ready to assent to it, so far as Ireland was concerned, if agricultural carts were omitted—not only the carts used in farm work, but those light carts in which the farmer and his family went to market once a-week. If such carts as those were to be included, the tax would be a most iniquitous one, and would bring about a little revolution in Ireland. Most families in the country districts had small carts, which were used for this purpose; and, whether or not the imposition was right and just, it would prove the most unpopular tax the Government could invent. And the same in regard to horses. If it were merely to be on pleasure horses, or on horses used for professional purposes—driving the solicitor about, and so on—he should not object. As to the additional tax it was proposed to put on champagne and foreign securities, the people of Ireland would not care much about that, as they had very little to do with such things.

MR. GOSCHEN

I desire to answer several questions which have been put to me; and, in the first place, I will refer to what has fallen from the hon. and gallant Member for North Galway (Colonel Nolan). The hon. and gallant Gentleman seems to think I have fallen short of the ideal standard he would wish to see applied to the two countries; but when he complains that there is only £127,000 applied to Ireland, and that next year it would be only £190,000, I would remind him that I used a phrase which I very carefully selected—namely, that if any further adjustment were necessary between the two countries in consequence of the transfer of licences in England to the Local Authorities, as against the withdrawal of the grants, and if that proceeding left a hole in the Revenue, which would be to the disadvantage of other portions of the United Kingdom, that would be made a matter for adjustment between the two countries. If the effect of the transfer should be to leave Ireland at a disadvantage as compared with England, I should consider it my duty, in the case of Ireland as in the case of Scotland, to make a corresponding adjustment. The hon. and gallant Member speaks of the total sum which is to be given to England as £5,500,000. He must deduct from that the grants she now gets, but will hereafter lose, and only treat the aggregate relief, which is £3,000,000, and not £5,500,000.

COLONEL NOLAN

said, he had been treating of the subventions which Ireland did not get.

MR. GOSCHEN

Ireland gets other subventions which England does not get. At any rate, I would invite the hon. and gallant Gentleman to discuss with me the question of the sum paid by England and Ireland. Although, in the case of some special grants, Ireland may not have the same proportion that England and Scotland enjoy, in other directions Ireland is enjoying much larger grants. I think the hon. and gallant Member has done me justice in this matter as regards my intentions; and I will only say that I am anxious to bring about an equitable adjustment between the two countries. When a pro- per time comes, I shall be perfectly prepared to confer with my hon. and gallant Friend on the subject, because, as I have repeatedly asserted, that I look upon it as extremely important that Ireland should feel that, whatever differences of political opinion may exist, she is treated by this country—her richer sister, with whom I hope she will always remain indissolubly united—with all the consideration which her poorer circumstances deserve. The proportion I have estimated as due to Ireland I have arrived at after careful consideration.

COLONEL NOLAN

On what statistics are the proportions made out?

MR. GOSCHEN

From a Return presented to the House not along ago. I have consulted all the Returns prepared by the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), when he wished to adjust the taxation between the countries in connection with his Home Rule scheme, and I have arrived at the best results it was in my power to arrive at. As I say, it is my earnest desire to satisfy hon. Gentlemen opposite and their constituents that they are fairly treated in this matter. I will give them every opportunity of examining and criticizing our calculations, and, if necessary, I should be perfectly ready to reconsider them if they wish me to do so. The hon. and gallant Gentleman made some reference to the £50,000 which in my proposal in the Budget of last year was handed over to Ireland. He complained that the money has not been spent in a manner which recommended itself to the Representatives of Ireland. A considerable amount of that was given for arterial drainage, and the pressure put upon the Government for the expenditure from the districts where the money has been spent was both very considerable and very persistent. I do not know whether the hon. and gallant Member remembers that in making my first statement I distinctly intimated that the Government would be prepared to listen to any representations that might come from Ireland on the subject; but the offer was treated with some disdain, and we received no assistance whatever from Ireland as to the expenditure of this money. I trust that in the expenditure of the sum of money which will now be placed at the disposal of Ireland we shall receive such assistance as may enable us to apply these grants, which are given, not in a spirit of generosity but in a spirit of justice, in such a manner as to give the best relief we can to the ratepayers of Ireland. My own personal desire would be that as in England and Scotland we hope every individual ratepayer may feel the advantage of the relief which is given, so in Ireland every ratepayer, whatever district he may be in or whatever class he may belong to, may at the same time feel that some relief has been given to him in the burdens to which as a ratepayer he is liable. I have been asked a great many questions in the course of the discussion, and I must say I regret that I did not give sufficient information to right hon. Gentlemen opposite, and the Committee generally, with regard to the falling off or the increase on particular heads of the Revenue. I have certainly no reason to complain of the tone in which right hon. Gentlemen opposite criticized my statement. They recognized that I felt I had a very long statement to make, and that, therefore, I omitted to dwell to the extent which is usually the case on some of the details of Expenditure. It would, however, be easy to remedy any omission, which, considering the already intolerable length of my statement, was hardly avoidable, and I cheerfully accept the suggestions of the right hon. Gentleman the Member for South Edinburgh (Mr. Childers) and the right hon. Gentleman the Member for Derby (Sir William Harcourt) that I should supplement the statement I have made by putting the House into possession of further information at the earliest possible date with regard to particular heads of Expenditure and particular heads of increase or falling off of Revenue. It will be my duty to do that, and I shall carry out their wish at the earliest possible date. Several questions have been asked me with regard to the Wheel Tax and the Carriage Tax, and it may be as well that I should make a few further observations on that part of the question. Those carriages now liable to licence duty will not be liable to the new Wheel Tax. Those which pay the £2 2s. or the 15s., which I have described, will not be liable to the further tax of 2s. 6d. per wheel. In the second place, I am asked with regard to cars or waggons which are dragged by locomotives or traction engines, and which in many cases, as has been explained, do very great damage to the roads. They will be treated as waggons, and will have to pay £1 if they should be above the weight of half-a-ton, and they will also be charged the Wheel Tax according to the number of wheels they have. There is a special clause in the Resolution which will be submitted, which says that when drawn by electricity or other means, cars and waggons will be liable to the Wheel Tax. There is one omission I made which is of some consequence, and that is that carts of less weight than 2 cwt. will not be taxed at all. Hon. Members will probably think of costermongers and other poor persons who use small carts of a very light character. We do not wish to impose a tax upon them, especially after having dealt with the hawkers, and therefore we have taken a limit of 2cwt., below which barrows and light carts will not be taxed.

MR. HENRY H. FOWLER

How about traction engines?

MR. GOSCHEN

Traction engines are now liable to a licence.

MR. HENRY H. FOWLER

Do you add to that?

MR. GOSCHEN

No, I do not propose to add to that tax; but it will be a legitimate thing, if the Local Authorities think that the tax ought to be added to, to consider the question. At the same time we must recognize that these locomotives do a useful service, and that it would be very unwise to tax them beyond the amount they could fairly bear. There must be fair adjustment between the service they render and the damage they do to the roads. I have been asked a question by the hon. Member for the Osgoldcross Division of Yorkshire (Mr. Austin) as to the collection of Income Tax. The hon. Member alluded to a grievance which some of his constituents felt in having to pay this tax twice over, on account of the default of collectors. Well, I do not wish to overload my Budget Bill with a greater mass of controversial matter than that which it must necessarily contain, but I certainly, in the course of the present Session, hope to introduce again clauses relating to the collection of Income Tax by paid officers of the Inland Revenue, instead of a percentage being allowed as commission to local collectors. That proposal was frustrated last year, partly by want of time and partly by the opposition which was offered to it; but I hope to be able to introduce it again, and to be able to gain the general assent of the House of Commons to my proposal, and against the opposition which will certainly be raised on behalf of the vested interests of a great many people. This is a kind of proposal which brings a great number of Town Clerks up to the Metropolis, who bring influence to bear upon their Members, and sometimes, what I think, a fictitious opposition is, in this way, raised to legitimate proposals which really commend themselves to the general sense of the House. It will be a considerable reform to place the collection of the Income Tax in the hands of officers of the Inland Revenue; but, as the right hon. Gentleman the Member for East Wolverhampton knows, the proposition is one which will evoke a great deal of opposition. I am reminded by my hon. Friend the Secretary to the Treasury that it is now in the power of Local Authorities to adopt the system, but it is better that some compulsory method should be adopted by Parliament once for all than that Local Authorities should be left to struggle with it from time to time. Then with regard to the imposition of an anuual tax upon foreign securities, an hon. Member asks me whether securities which have paid the duty of 10s. will be liable to this tax? No, Sir; such securities will not be liable. Once they have paid the 10s. tax, they are supposed to have compounded for the transfer duty for ever. I think that is a very cheap composition. The issue tax is 2s. 6d., and for the additional 7s. 6d. it has been considered that the bonds of any Corporation or State should be free from the toll on passing from hand to hand, and we will not disturb that arrangement. There is only one other question I have left unanswered. We are asked if we will not exempt from licence duty pedlars as well as hawkers? No, Sir; I have not yet come to the conclusion that that tax should be repealed. The case of the hawkers has been specially brought to my notice, and it seems that, having dealt with that, a claim is set up on behalf of another class of persons who consider themselves almost similarly situated. I cannot admit that their claim can be established, but it will be for the House of Commons to consider the matter on a future occasion. I must once more, in conclusion, apologize to the right hon. Gentleman opposite for not having dilated on certain figures; but if I had gone more fully into detail on some points I should have been obliged to trouble the Committee at a length which, notwithstanding their extremely kind indulgence, would have been trespassing too much on their patience.

MR. PICTON (Leicester)

said, he could quite sympathize with the natural desire of the right hon. Gentleman the Chancellor of the Exchequer, after his wonderful exertion this evening, to bring this informal discussion to a conclusion; but he (Mr. Picton) might be pardoned if he could not allow the discussion to end without uttering a word of dissent. He could join with hon. Members who preceded him in admiration of the lucidity with which the right hon. Gentleman the Chancellor of the Exchequer had put before them the most complicated proposals—a lucidity which, to his mind, was perfectly wonderful, because it enabled even him, who was puzzled by such things generally, to follow the statement almost throughout with the greatest case. But however he might admire the faculties which enabled the right hon. Gentleman to set such a statement before the House, he could not but regret their use for such a purpose. He thought that the right hon. Gentleman's proposals looked like a retrograde movement. He set interest against interest, instead of taking a broad view of the welfare of the whole Commonwealth. They had to consider the case of pedlars as against hawkers, of two-wheeled vehicles against four-wheeled vehicles, and the case of various little licences one against the other. He could not help thinking that all these little irritating taxes must necessarily be annoying to the community. They require expenditure on their collection, and they interposed many hindrances in the way of trade. The right hon. Gentleman the Chancellor of the Exchequer was only a short time ago regarded as a rising prophet of the great school of financiers, of which the chief luminary for generations past had been the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone). Now, they could not help contrasting the Budget—able as it was—to which they had listened to-night with the Budgets which were produced in 1853, 1860, 1861, up to at any rate 1865. Those Budgets aimed at freeing industry and labour from their burdens, at reducing a number of little irritating imposts on various forms of enterprize, and at throwing the burden of taxation as far as was possible and just upon the accumulated wealth of the country. They did their best to reach that goal, and probably it would have been reached by this time had not the progress of the country been interrupted by disastrous wars, and by various changes owing to Government by Party. The right hon. Gentleman was much mistaken if he supposed that those Budgets were forgotten, or that there were not millions of people in this country who looked forward to the resumption of that line of fiscal policy which was marked out by the financial statements of the right hon. Gentleman the Member for Mid Lothian. Amongst other things, he could not but regret that the right hon. Gentleman the present Chancellor of the Exchequer had found no opportunity of reducing or abolishing taxation on what he (Mr. Piston) must insist had now become the necessaries of life—that was to say, such drinks as tea and coffee and cocoa. Hon. Gentlemen belonging to the Party opposite years ago had maintained that these things had become necessaries of life. He (Mr. Picton) certainly thought that taxation on the necessaries of life was in the highest degree injudicious. However, he was aware that it was scarcely right to endeavour to discuss at any length the principles involved in the Budget which had been just proposed. He had merely wished to say in a very few words that he most emphatically dissented from the general tendency of the proposals which had been made, and that he hoped to have another opportunity of raising the principles to which he referred, when he trusted that the House would allow them to be discussed.

MR. C. W. GRAY (Essex, Maldon)

said, he was glad to have heard the speech to which they had just listened. The hon. Member seemed to be jealous of any taxation which did not press as much as possible on the rich, and which did not keep as far as possible from trade and the working classes. To his (Mr. C. W. Gray's) mind the Budget which had been produced this afternoon was certainly a more favourable Budget to that great branch of trade, agriculture, than any Budget which had been heard of in this House for many years past. He was sure that many an agricultural labourer and many a little village tradesman and shopkeeper when he heard of this Budget would say—"Well, though we will not admit that this is a remedy for agricultural depression, we do give the right hon. Gentleman the Chancellor of the Exchequer credit for having done what he could under the circumstances." Not very long ago he (Mr. C. W. Gray) had had the pleasure of being at a public meeting in the town which the hon. Member had the honour of representing with his hon. Friend the Member for Sheffield (Mr. Howard Vincent), who held out to the people of Leicester that it would be a good thing to reduce the tax upon tea; but at the same time it was pointed out that taxes must come from somewhere or other, and that when the tax on tea was reduced, it would be well to make up the loss to the revenue by taxing certain foreign articles of luxury. They heard to-night that champagne was to be taxed. Not only champagne, but silks, satins and laces, which were articles of luxury used by the rich, would bear taxation, and he hoped in time would become a source of revenue, whilst tea and such necessaries would be taxed less and less. To leave these parts of the subject, before he sat down he begged to thank the right hon. Gentleman the Chancellor of the Exchequer for having done what he could under the circumstances. He hoped that some day a great deal more would be effected, but he was sure that the agriculturists would be glad to hear that brewers' drays, millers' waggons, and such like heavy vehicles, which cut up the roads and added so much to the cost of keeping them in repair, were now going to bear some share of that cost. Those of them who were yeomen farmers would be glad to know that they were in future to be treated under Schedule A of the Income Tax in a straightforward way, and that if they were farming, and the farms they were farming did not pay, they would not be called upon to pay Income Tax upon that part of their business.

MR. ARTHUR O'CONNOR (Donegal, E.)

You are not a tenant farmer.

MR. C. W. GRAY

said, the hon. Member for East Donegal, who was, no doubt, renowned for his knowledge of nearly every subject touched on in this House—though in this case the exception proved the rule—had told him (Mr. C. W. Gray) that he was not a tenant farmer. That was not the fact. He was a tenant farmer, and he rented just about as many acres as those which he owned.

MR. ARTHUR O'CONNOR

said, the point of his remark was that, if the hon. Member came under Schedule A as an owner, he would be exonerated, but not as a tenant farmer.

MR. C. W. GRAY

said, he must explain that hitherto when these persons who were farming their own land—persons who were known in England as yeomen farmers—under the disastrous circumstances which to-day surrounded agriculture, were not able to make any profit from the land, they had not received any relief under Schedule A, but now the Chancellor of the Exchequer said to them—" Provided yours is a bonâ fide business, and that you cultivate not merely a model farm or a pleasure farm, you should have relief." He thanked the right hon. Gentleman very much for what he proposed to do.

MR. MORE (Shropshire, Ludlow)

congratulated the Government and the right hon. Gentleman the Chancellor of the Exchequer upon the great satisfaction which he believed would be given to the agricultural classes, and to the farmers especially, who were the most suffering class in the country. He believed it would give them satisfaction to see heavy vans taxed, and it would also give them especial satisfaction to see a tax put upon champagne, which was a beverage which in their bad times they had themselves little chance of indulging in. He wished, however, to call the right hon. Gentleman's attention to one omission in his speech. Many farmers had been looking forward with great interest to some further statement from Government with regard to the promised subsidy to agricultural and dairy schools. Many farmers were looking forward to the establishment of those schools, but the right hon. Gentleman had said nothing about them. He (Mr. More) wished to get some assurance from the Government that they were still regarding this question with the interest with which the farmers looked upon it. He should like to know whether the fact that the subject had not been mentioned was due to the fact that the Government thought it could be more fittingly dealt with on some future occasion. The right hon. Gentleman the First Lord of the Treasury (Mr. W. H. Smith) had promised them the other night an instalment of £5,000 for the purpose of agricultural dairy schools. The opinion of the agricultural classes was that that amount would not go very far. The proposal as to this grant had been attacked by some writers in the public Press, because it was thought that the establishment of large Government schools would interfere with the undertakings of some professors who had established private schools, but the object those who advocated the grant had in view was to cheapen the education for our small farmers' sons, and not to affect the colleges at all. He (Mr. More) had no wish to trespass on the time of the House, and he only asked for an assurance from the Government that this matter was one to which they intended to devote some attention.

MR. JEFFREYS (Hants, Basingstoke)

said, he wished to make an appeal to the right hon. Gentleman the Chancellor of the Exchequer on behalf of those people living in the country who kept horses. He agreed that people in towns who kept horses and carriages kept them for the purpose of luxury, and no doubt they ought to be taxed; but agriculturists were obliged to keep horses, it was a necessary for them. He understood that agricultural horses were to be exempted from the tax, but the right hon. Gentleman should remember that the farmer was obliged to keep other horses—for instance, the nag which took him to market, and on which he rode about the farm. He should like to know whether such horses as those were to be exempted from the tax, for oven if the tax were only £1 1s. it would be an amount which it would be very hard for a struggling agriculturist to pay in these days. The farmer was the very man who paid the rates in the country—who was already overcharged—for the maintenance of the roads, and he was the very man who ought to be exempted I from the horse tax. An hon. Gentleman opposite had referred to the taxing of tenants under Schedule A, and he (Mr. Jeffreys) thought the hon. Gentleman did not quite understand that Schedule A was the landlord's tax and Schedule B the tenant's tax. Men who farmed their own land, as he (Mr. Jeffreys) and as his hon. Friend the Member for the Malden Division of Essex (Mr. C. W. Gray) did, had to pay two taxes. They first of all had to pay the landlord's tax under Schedule A, and then they had to pay the tenant's tax under Schedule B. That had been found a great hardship, and it was only right that it should be cut off. A man had often been obliged to pay upon a supposed income, when in these times he may not have earned anything. He thanked the right hon. Gentleman the Chancellor of the Exchequer for the relief he had given to the agriculturists, and trusted he would extend this relief by exempting all bonâ fide agriculturists from the payment of this horse tax.

MR. HENRY H. FOWLER (Wolverhampton, E.)

said, he heartily joined in the feeling which had been expressed in all parts of the House of admiration of the lucid manner in which the right hon. Gentleman the Chancellor of the Exchequer had made his statement this evening. He did not propose for a moment to criticize the right hon. Gentleman's statement, which required very careful consideration; but there were two points on which he wished for some further information. In the earlier part of his speech the right hon. Gentleman alluded to the great increase which had taken place in local taxation during the last 10 years, and he justified on that ground the very great change which he proposed to make in taxation. No doubt the right hon. Gentleman was well aware that the increase had not occurred altogether in purely rural districts, and he (Mr. Henry H. Fowler) was afraid in saying this that his remarks would not perhaps altogether meet with the approbation of hon. Members opposite. A great deal of the increase had arisen in the Metropolis and the urban districts. In the Report signed by the right hon. Gentlemen the President of the Local Government Board (Mr. Ritchie) it was set forth that 67 per cent of the increase had occurred in the Metropolis, while 59 per cent had occurred in urban districts, and only 12 per cent in the rural districts. He did not raise any question as to whether or not tins increase of 12 per cent in the rural districts was not an important increase, but he wanted to know from the right hon. Gentleman the Chancellor of the Exchequer whether the Metropolis and urban districts whose taxation had been so enormously increased were to get their full and fair share of the proposed relief. The other point he wished to call attention to was with reference to the adjustment which the Chancellor of the Exchequer proposed to make between the two great classes of property in bearing the burden of Imperial taxation—real and personal property. If he understood the right hon. Gentleman aright, he said that the time had arrived when the two questions ought to be dealt with together. The owners of real property were not confined to the squirearchy—there were the owners of houses in boroughs to be considered. There was house property in towns, and the burden upon owners of real property so situated was quite as great as in the rural districts. He understood the right hon. Gentleman to say that while he was adjusting the inequalities on the one side he was ready to adjust them on the other. He did not understand how the Chancellor of the Exchequer proposed to deal with Succession Duty. If he (Mr. Henry H. Fowler) was correct, personal property paid, with one exception, two taxes upon death, the Probate Duty and the Legacy Duty. When a property was bequeathed from a father to a child there was no Legacy Duty payable. The right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) when he altered the Probate Duty from 2½ to 3 per cent, raised the half per cent for covering that case, so that in a case where personal property was bequeathed to a child it paid one duty, the 3 per cent duty, and that was all. But where the property was bequeathed to a collateral, such as a brother or a sister, or other collateral relative, or a stranger, there were two duties to be paid, first the Probate Duty and then the Legacy Duty. He remembered when the case was stated by the right hon. Gentleman the Member for Mid Lothian the right hon. Gentleman gave them as the Report of the Inland Revenue officials that in 7–12ths of the cases the property descended from father to child, and in 5–12ths to others—to collaterals or strangers. The right hon. Gentleman the Chancellor of the Exchequer, as he (Mr. Henry H. Fowler) understood, proposed simply to deal with the Succession Duty, which was equivalent to the Legacy Duty and not to Probate Duty. The right hon. Gentleman the Member for Derby (Sir William Harcourt) raised the point and said that the whole question would have to be considered with regard to the incidence of these two forms of taxation, one being on the corpus and the other on the life interest. The right hon. Gentleman will, therefore, probably throw some further light on the subject.

MR. S. HOARE (Norwich)

I trust it will be in the power of my right hon. Friend the Chancellor of the Exchequer to hold out some hope that in the case of horses engaged on farms perhaps not entirely in agricultural work, there will be no licence. But I go further, and express the hope that since the Government have been offering inducements for the breeding of horses, that in the case of horses used for breeding throughout the country there will be some relief to those engaged in breeding horses, and that, at any rate, duty will not be placed upon the horses until they arrive at a certain age. I think this is a tax which will tell hardly on some agricultural districts, and I shall be glad if the Chancellor of the Exchequer can consider the case. The hon. Member for Leicester (Mr. Picton) has spoken of this as a retrograde Budget; but I should think it is one of the most progressive Budgets ever brought into this House. For the first time it is proposed that personal and real property shall be amalgamated to reduce the burden of the country, and I cannot but consider that this is a great step, and one which will make a great difference to the poorer portion of the community. It may be that they wish to see the duty on tobacco reduced, as was done last year, but I cannot understand how the hon. Member can suppose that the Budget is one which affects poor people unfairly. It seems to me that all the various duties which have been increased will fall almost entirely upon another class; even if we enter on that part of it which is connected with the Local Government question, we shall find that it falls principally upon the keepers of horses and the users of wheels, and we find that the methods by which the Chancellor of the Exchequer gets the means of reducing the Income Tax is distinctly connected with the wealthier classes of the country. I am very glad that the duty on contract notes is to be 6d. instead of 1d., and I believe this will also be the feeling of the London Stock Exchange, because there are many people who will be affected that under assumed names get people to engage in doubtful operations; and I believe if the stamp were made heavier the proposal would not meet with much opposition. I am afraid that the tax on American Railway Securities will be found to present some difficulties with regard to its collection, but, at the same time, I think it is a fair and right tax; at any rate it does not affect the poor people of the country, none of whom probably hold foreign securities. I was glad to hear that the Chancellor of the Exchequer realized that in many cases it was found that the Stamp Duties were evaded, and I am certain there are other cases than he has dealt with where the Government ought to receive more money than they do from stamps. At the same time I should be sorry that the temporary transactions of men of business should be in any way interfered with by a straining of the law. Then it cannot be said that the tax on bottled wines affects the working classes, and so far, therefore, from this being a retrograde Budget it is—and I believe the people of the country will so consider it—very much the contrary. At any rate, if they are not satisfied with what is in the future, they will be entirely satisfied with the past, when they see the grand surplus which the right hon. Gentleman has been able to put before the House. I think they will take courage when they see that there are no supplemental charges for the Army and Navy, and have confidence in the financial administration of the country at the present time.

SIR GEORGE CAMPBELL (Kirkcaldy, &c.)

I think we may fairly congratulate Her Majesty's Government on the fact that we have got free from those little wars which have prevented our having a surplus for many years past; and I also wish to congratulate the right hon. Gentleman the Chancellor of the Exchequer on his looking to the taxation of realized property rather than to the earnings of the people. I am bound to say that I do not wholly agree with the hon. Member for Leicester (Mr. Picton) in saying that the Budget of the right hon. Gentleman is open to objection from the point of view of the poorer classes of the people. As regards the taxation on horses and carts, I am inclined to agree with the Chancellor of the Exchequer. But I rise principally to say that I looked with great interest on the long-promised cessation of the Imperial subventions in aid of local taxation. It dons not, however, seem to me that there is any real cessation of subventions for local purposes; the change appears to be only nominal; when we are told that certain taxes are to be made over to the Local Authorities, the change seems to be only one of account, though there might be a change in the manner of distribution. Again, it seems to me that the old hereditary burdens on land have been to a great degree shuffled off while new burdens have been imposed. There is one point on which I desire some information. I understand the right hon. Gentleman to say that he proposes to buy up and put an end to the capital value of the Suez Canal shares in order that the profits may be unencumbered. I do not understand how it is proposed to raise the money with which to buy up these shares, and the right hon. Gentleman will, perhaps, give the Committee some further information on this point.

MR. CHAPLIN (Lincolnshire, Sleaford)

The right hon. Gentleman the Chancellor of the Exchequer has said that he is prepared for a bombardment on many subjects dealt with in his speech. I shall address myself to one point alone, and can assure the right hon. Gentleman that this is only a preliminary bombardment. The right hon. Gentleman said he proposed to reimpose or rather increase the duty formerly paid on race horses. If my right hon. Friend thinks it right or necessary to reimpose the duty which the greatest of Conservative leaders repealed since I have been a Member of this House, I have nothing to say further than that the tax of £5 per head will be paid without a murmur. But allow me to say that this tax will not produce a very large amount of revenue, because my own recollections remind me that in former days there were probably not more than 1,500 or 2,000 horses engaged in racing, and, therefore, I think the revenue which the right hon. Gentleman expects to derive from this source must be regarded as a doubtful factor in this calculation. The right hon. Gentleman told us in a marked manner that brood mares and foals would be exempted from this taxation, and I wish to ask him whether stallions are to be included in this exemption, because, if not, I can conceive nothing more inconsistent than my right hon. Friend's proposal. It is only two months ago that the right hon. Gentleman—with a generosity and liberality that I hardly anticipated from him—came forward with a proposal to appoint a Royal Commission, and consented to the expenditure of £5,000 a-year for the encouragement of horse-breeding in this country. That Commission was appointed, and I have had the honour of being a member of it; we have devoted some attention to the subject—I hope not altogether with bad results—and we have submitted proposals, some of which have been carried out. If my right hon. Friend is not going to exempt stallions, I ask what is the definition he is going to place on "pleasure horses?" Are they riding and driving horses? I imagine that he means that all horses used for the purpose of riding or driving and which are not used in trade are those which he describes as pleasure horses. But what does that involve? Is a horse on which a farmer rides round his farm to be considered a pleasure horse, and as such to be liable to the tax? I would point out that the horse which a farmer uses to ride round his farm is frequently a clever four or five year old, which he either proposes to sell or use for hunting. Is it the horse he drives to market? Because, if so, it is often a horse that he proposes to sell at a high price, for harness, especially if he is bred in Norfolk, and got by a Norfolk trotter. I want to put this in all earnestness before my right hon. Friend. All the pleasure horses in this country are bred by the agriculturists and farmers of Great Britain and Ireland—and of Ireland, perhaps, more than England. [An hon. MEMBER: No.] Certainly the best horses I ever rode came from Ireland. An hon. Member says "No," but I can assure him that Ireland is celebrated, perhaps, for its horses more than anything else. If the right hon. Gentleman is going to impose £1 a-head on all pleasure horses in the country, he will be inflicting an injury on the farmers and breeders of Great Britain and Ireland, and interfering with the breeding of horses in the future, and he will, moreover, counteract the good effect which we expect to derive from his liberality of two months ago. I was amazed at hearing a Member of Her Majesty's Government making this proposal, and I was surprised at what seemed to me to be the lack of knowledge on the subject. But, when I looked along the Treasury Bench from the Chancellor of the Exchequer to the First Lord of the Treasury and the row of Ministers who are sitting there tonight, I came to the conclusion that there was not a single man amongst them who knew a horse from a cow. I hope, therefore, I shall be excused for calling attention to this subject on the present occasion; but I give the right hon. Gentleman the most friendly warning and intimation that if this proposal is persevered in, it will meet with certain opposition from this Bench.

MR. GOSCHEN

I think I may now proceed to deal with some of the questions which have been addressed to me by hon. Members, and I will commence with the question of my right hon. Friend the Member for Lincolnshire (Mr. Chaplin). It will be, I think, an interesting sight, when my right hon. Friend commences to bombard, not me, for the Exchequer is not concerned in this, but to bombard the Representatives of the ratepayers with regard to the tax on horses. I have pointed out that this tax will not affect the Imperial Revenue, but the mass of the ratepayers of the country and their Representatives will have to fight out the question, whether stallions are to be included in the exemption, with my right hon. Friend. I shall watch, with interest not un-tinged with a certain amount of amusement, the battle that will be waged over the question whether it is better to pay higher rates or place a duty on horses. The right hon. Gentleman has pointed out the difficulty in deciding exactly what is and what is not a pleasure horse. There is one way in which the difficulty can be avoided and that is by making the tax one of 10s. on every horse as it used to be, instead of £1 on each pleasure horse as is now proposed. Does my right hon. Friend prefer that every horse should be taxed? [Mr. CHAPLIN: No.] Where then is the anxiety for the reduction of rates of which we have so often heard? We wish to relieve the burdens of those who have no horses and make those who have contribute to the general relief; but if the hon. Gentleman prefers to continue to pay a higher highway rate and have no tax on horses, the difficulty will be not between my right hon Friend and myself, but between him and the advocates of the reduction of rates. I can assure him, although he says there is no one on this Bench who understands the difference between a horse and a cow, that there is the Under Secretary to the Local Government Board (Mr. Long) who is, perhaps, competent to speak on these matters, I will not say as the representative of the Jockey Club, but as representing the genial common sense of the country squire. We have had the opportunity of consulting with him and a certain number of gentlemen representing country interests who have taken a view of this matter different from that of my right hon. Friend. With regard to the tax of £5 on racehorses, I think that horses like Hermit can very well bear the tax, and as to the tax on stallions which has so greatly excited my right hon. Friend, I cannot conceive, looking to the great value of those interesting animals, that a duty of £1 a-year is likely to diminish to the smallest extent either their usefulness or their patriotic endeavours, or in the slightest degree to conflict with the desire to promote an improved breed of horses in the country. The tax is, no doubt, heavy on those who, like many country doctors and clergymen, keep a single horse, and I regret this more in their case than in the case of those who keep a larger number of horses. I believe what you may call the breeding horse will be able to boar the tax. At the same time it is for my right hon. Friend (Mr. Chaplin), as I have said, to fight the matter out with the ratepayers and convince them it is better not to impose this tax, and to leave the rates so much higher in consequence of its non-imposition. I have been asked several questions with regard to other matters connected with horses. I presume there will be exemption in favour of the horses which are connected with the Military Services; including the Volunteer Service; that no horses which are legitimately and avowedly kept for the purpose of the Public Service will fall under the tax. Bat it is a matter which will require examination. All these matters will have to be most carefully considered, and I shall with pleasure hand over the discussion of this subject to my right hon. Friend the President of the Local Government Board (Mr. Ritchie), who is far more interested in the maintenance of this tax than the Chancellor of the Exchequer, who has had the misfortune to propose the tax and to incur the displeasure of the right hon. Gentleman (Mr. Chaplin), while he is not to derive a single penny's advantage from the taxation of racehorses or any other horses. [An hon. MEMBER: There are the farmers' horses.] The horses engaged in trade and husbandry will be exempt from the tax. The interesting animal of which we have heard so much tonight—namely, the farmer's cob, which does a certain amount of work, but which is sometimes used for purposes of amusement, offers some difficulties, and the case is undoubtedly one for consideration. But I trust that the Committee may find it possible to retain the duty of £1 upon all horses which, speaking broadly and from a common-sense point of view, may be described as the horses belonging to well-to-do people. I trust the Committee will rather retain the duty of £1 upon such horses than force us to the alternative, the old alternative of imposing a tax of 10s. 6d. upon every horse. The Committee will with its wisdom and the assistance of the representatives of all the horse breeding, horse racing and other horse interests, be able to arrive at a competent conclusion in the matter. Of course, cab horses and 'bus horses will come within the category of trade horses. My hon. Friend the Member for Kirkcaldy (Sir George Campbell) dwelt upon a far drier subject than that of the breeding of horses, namely —the question of the allocation of the licence duties. I agree with him that it is expedient that the Local Authorities should have as much power as possible in the collecting and in the administering of the licences. My hon. Friend omitted to notice that, in the first instance, we hand over as a trial to these new authorities the administration of public house licences, and, I think, the new authorities will find their hands pretty well full during their first year of office with the innumerable difficulties that arise with regard to this class of licences.

SIR GEORGE CAMPBELL

The proposal will not pass.

MR. GOSCHEN

My hon. Friend says the proposal will not pass. I feel certain that the proposal to transfer licences to the Local Authorities will be adopted, and that both sides of the House will agree that licensing should not remain in the hands of a judicial body, such as the Quarter Sessions will be in the future, but should be transferred to the administrative body, which will be the now Councils elected by the voice of the people. We have every confidence we shall be able to carry the proposal to transfer licensing to the new authorities. But my hon. Friend will see that the Bill which he will be able to obtain to-night, and which, with his enormous industry, he will have mastered before to-morrow morning, provides that in the case of all licences the localities may ultimately undertake the collection. We have proceeded upon the principle that in the earlier stages of their existence it would be wise not to overload these new Councils. They will have their hands quite full enough during their first years of office with the duties which have been specially confided to their care; but as years roll on we trust that these County Authorities may take in hand the collection of other licences besides public-house licences. Of course, we cannot allow them to raise or reduce general licences, because otherwise you might have some poor county, some small county, setting up a system of cheap licensing, which would attract people from all parts of the country to buy their licences in that particular county to the disadvantage of other counties. We cannot, therefore, allow any variation of the rates, but we will encourage to the utmost Local Authorities to take into their hands the whole of the finances of their district. It is quite possible the result may be, that the money is not collected so cheaply as it is now by the Central Authorities. It is impossible to exaggerate the enormous number of questions which have grown up round all these licences—questions of law, questions of practice, questions of exemption, with which the Inland Revenue are now perfectly familiar, and with which the new authorities will gradually have to make themselves acquainted. But I am personally so strongly impressed with the advisability and expediency of large duties and responsibilities being imposed on the Local Authorities, that I should be glad, even if the expense should be somewhat increased, that the powers of these new County Councils should be, from year to year, more and more developed, and that these bodies should relieve the central administration of that over work which we all deplore. I am, therefore, agreed with my hon. Friend the Member for Kirkcaldy (Sir George Campbell) that we should do our utmost in every way to make the transfer of the collection of revenue a real change, enlisting the whole sympathies of the country on behalf of the revenue which will go to the counties, exemptions which are now pleaded for on insufficient grounds will then cease, evasions which are now winked at will then be punished. I trust I have satisfied my hon. Friend (Sir George Campbell) so far as intention goes, at all events. We wish to make this a real and not a nominal transfer, though, in the first instance, we may have to proceed with caution. The hon. Member for Leicester (Mr. Picton) considered this a retrograde Budget. He alluded to the great Budgets of 1853 and 1860. I entirely agree with him it is impossible to equal the great financial achievements of my right hon. Friend the Member for Mid Lothian (Mr. W. E. Gladstone) in those years. I entirely agree with him it is impossible to exaggerate the advantage which the right hon. Gentleman conferred upon the State upon those occasions; but there is another consideration which has been forced upon my mind since the time I have been responsible for the National finances, and even before that time, to which I will call the special attention of this Committee and the public. We have been proceeding in the direction of simplicity. We have removed an enormous number of taxes; we have enabled the revenue to be collected more cheaply, perhaps, than the revenue is collected in any other country, because it is concentrated upon a few and great and striking items. But, at the same time, we are resting the whole finance of the country upon a rather narrow basis. We have been looking to some five or six great sources of revenue, and if any of them should break in our hands, we are imperilling the equilibrium of our finance. Now, when I say this, I trust that I shall not be thought to be detracting in the slightest degree from the great achievements of my right hon. Friend the Member for Mid Lothian; but what is the position of this country as regards taxation? We see that £27,000,000 sterling, an amount more than sufficient to pay the charge on the National Debt, is raised from one source of revenue alone—namely, drink, which is a declining source. Is that not a warning to us that we must not simplify too much, and that we must not rest too much upon a few single items? It is from that point of view that I look upon it as so important to keep in reserve that great engine which we have at our disposal, the Income Tax. I hope I have made it clear, though I may not have convinced the hon. Member for Leicester (Mr. Picton) that the Imperial policy dictates that we should retain this important engine for emergency, that in times of comparative case we should seek somewhat to broaden the revenue, so that when the emergency comes we may have in reserve additional resources which we may turn on at any moment, thus greatly strengthening the credit of the country, and greatly strengthening our position in time of peril. I do not complain of the tone of the hon. Member (Mr. Picton), but I say we must not carry simplicity too far, and I should be averse to parting with a single important item of revenue, but we may diminish, and I trust the time may come when we shall be able to diminish, the amount of some of the taxes which rest upon some articles of consumption, without parting with the taxes themselves. The duty on tobacco is very high, indeed, compared with the value of the article. But, nevertheless, we can only deal with the few great articles of consumption which are still taxed, when we are in a position to approach the question in a broad spirit. It is not desirable to disturb them from year to year, and I, therefore, consider what I have said a good defence for not having touched any of these most important sources of revenue to which the hon. Member (Mr. Picton) alluded. It would be gratifying to be able to reduce the taxation upon these articles, but we must look to the taxation of the country as a whole, and we must not, without great thought, give up any of our great sources of revenue. I have still to deal with the remarks which were made by the right hon. Gentleman the Member for Wolverhampton (Mr. Henry H. Fowler.) He challenged me, with perfect fairness, upon two points. He challenged me with regard to the incidence of local taxation as between town and country, and he challenged me with regard to the Succession Duty. Dealing with the first point, I fully admit that the boroughs, especially where there is a largo population of indoor poor, have as strong claims upon us as the country districts have. I admit that a large portion of the relief which is given ought to be given to the boroughs, and it is given to the boroughs. The criticism I have seen made upon our plan is that the assistance given to the boroughs is larger than it ought to be in proportion to the relief we give to the counties. The right hon. Gentleman says that the rates have increased far more in boroughs than they have in the country districts. So they have, but then I ask the right lion. Gentleman, have the boroughs not got more in return for their increased rating than the country districts have got for their money? There are the sanitary rates, there are the rates which have gone to beautify the towns, which have established free libraries, which have added to the amenities and pleasures of the working classes in the great centres of industry. I am glad from many points of view that boroughs have increased their rates, because the rates are remunerative in a different sense to the rates imposed in country districts; and the boroughs may fairly claim that personal property should contribute towards all the great social reforms which we rejoice to see in so many of our cities, because why should such reforms be carried out at the expense of one class of contributors only? It is perfectly right that the possessors of realized personalty should contribute to the rates which have been imposed, and which have, I trust, conferred great benefits upon a large portion of the community. But then it must be remembered that there is no town which has heavy rates imposed upon it that will not be benefited by the relief we are affording, just as we trust that there is no corner of the agricultural districts that will not feel that, by one means or another, we have been able in this year to remove a portion of that intolerable burden which has been increasing on their shoulders for so many years. The right hon. Gentleman says that the increased burden has not been so great upon country districts as upon towns; but I appeal to him whether the increased burden must not be felt more by the depressed industry of the agricultural portion of the community than it is felt by those thriving centres of industry which have been able to do so much for their inhabitants by means of their increased rates. It is far more difficult for the agricultural community, in view of the fall in prices, in view of the depression of agriculture, which we all deplore—it is far more difficult for them to bear an increase, even if it be a smaller increase in rates, than it is for other portions of the country. So I trust the right hon. Gentleman, while I hope he will take it from me there is no borough that will not be benefited by the proposals we make, will not grudge to the suffering agricultural communities the relief which we hope will also flow to them from the proposals which we have had the honour to submit. The right hon. Gentleman has alluded to another point, on which, I admit, I did not give sufficient explanation—I mean the position of the Succession Duty and the Probate Duty. I dealt too exclusively with lineals, and I did not speak enough of the position of collaterals. I think the right hon. Gentleman entirely appreciates the first part of our proposal, which is this, that the Probate Duty for Imperial purposes is positively reduced to 1½ per cent, the other 1½ per cent going in relief of local burdens. It is admitted that personal property does not contribute enough to these local burdens; and, therefore, I put it to the Committee in this way. We remit 1½ per cent of the Probate Duty from Imperial purposes, and we add so much to the Succession Duty as will equal that amount of Probate Duty which is retained for Imperial purposes. The Imperial Probate Duty will be 1½ per cent. Succession Duty will be raised by ½ per cent. in the case of lineals, and 1½ in that of collaterals, and it will stand exactly on the same footing as the Probate Duty and the Legacy Duty after the Probate Duty has been reduced by 1½ per cent. A nephew inheriting personal property will pay 3 per cent Legacy Duty and 1½ per cent Probate Duty—4½ per cent, and a nephew inheriting Real Property will pay 4½ per cent Sucession Duty. We have levelled down in this sense that personal property is to contribute less to Imperial taxation and more to local taxation; and, on the other hand, we have levelled up, because we say that real property is to contribute somewhat more to Imperial taxation while receiving relief in respect to local taxation. And now I think I have dealt with all the questions that have been addressed to me. I am deeply grateful to the Committee for the manner in which they have generally received the Budget, and to my political opponents for the extremely courteous manner in which they have expressed themselves towards me. I acknowledge that our proposals will have to be examined with the greatest care. I acknowledge that right hon. Gentlemen opposite are entitled to consider not only the coming year, but the year after next, and to press us, as they have, as to the means by which the deficit is to be met. On the other hand, I ask that we may be judged with indulgence. We have difficulties imposed upon us by reason of having to deal with the relief of local taxation, not in this year only, but for future years. That we shall be able to meet right hon. Gentlemen opposite I trust. We will endeavour to meet them in the same spirit in which they have treated us this evening; in a spirit, not of violent political controversy, but of anxiety to secure that the great changes we are making in the relations between local and Imperial taxation may be carried out equitably to all the interests involved. I trust that these changes may be effected without evoking any violent political differences. Both sides of the House are equally pledged and equally interested in endeavouring to do justice between the two great classes who contribute to Imperial and local burdens—the ratepayers on the one hand, and the taxpayers on the other hand.

MR. ARTHUR O'CONNOR (Donegal, E.)

I need not say how thoroughly I am inclined to join in the expression of congratulation to the right hon. Gentleman the Chancellor of the Exchequer for the lucidity and the interesting character of the Statement he has laid before the Committee. That which interested me most in his Statement was the account the right hon. Gentleman was able to give of his stewardship during the year which has passed. He was able to show not only a larger sum in the shape of Revenue than he had looked forward to, but he was able to show that the Votes passed by Parliament for the Army and Navy Services had not been exceeded. I attribute that entirely to the watchfulness and the good husbandry of the Chancellor of the Exchequer himself, fortified, as he was beforehand, by the efforts in favour of economy made by the noble Lord the Member for South Paddington (Lord Randolph Churchill). But I think the credit which he attempted to give to the First Lord of the Admiralty (Lord George Hamilton) and to the Secretary of State for War (Mr. E. Stanhope) was scarcely merited. The House will remember that no less a sum than something over £30,000,000 sterling is, in time of profound peace, voted for the Army and Navy Services, and that within a very short period of time when a Vote of Credit of many millions was granted by this House for those two Services. One thing disappointed me very much in the Statement, and that was, that when aid was given to local taxation for local purposes, that aid was drawn entirely from personalty and not from realty. The right hon. Gentleman has appropriated one-half of the Probate Duty in aid of local resources; but there are many forms of property throughout the country which at present bring in immense incomes to the owners, but which contribute nothing to the local resources There are such things as ground rents. They would have been a much better source from which the right hon. Gentleman the Chancellor of the Exchequer might draw his aid for local resources than the Probate Duty. As in manufacturing centres, and in large centres of population, so in the country districts where mining is carried on, you have immense incomes drawn from the mines of the country in the shape of royalties and way-leave rents which now contribute not one single penny to the local resources. Let me take the case of the Ecclesiastical Commissioners in the single county of Durham. They draw £130,000 a-year in the shape of royalties from the coal mines in Durham, and they are able also to charge some £37,000 a-year on account of way-leave rents. How much did these Ecclesiastical Commissioners contribute to the local expenditure in Durham? Nothing, or next to nothing. Now I say, that ground rents and royalties and way-leave rents and charges of that kind may be fairly taxed for local purposes. The right hon. Gentleman deplored the narrow basis upon which the present financial system rests. Why does not the right hon. Gentleman broaden the basis of his financial system until the natural foundation—that is, the land of the country—is that upon which it rests? He, of all Chancellors of the Exchequer, should do so. There was a lawgiver of some 4,000 years ago who provided a financial system of the simplest kind. He did not trouble himself about taxes on coffee or dry goods, or this or that article; he initiated a simple system of taxation of the land, drawing contributions from every portion of the soil, from occupier and owner. If the right hon. Gentleman had endeavoured to adjust his Budget to the exemplar of his countryman and predecessor, he then might claim that he was broadening the basis of the taxation of the country. But the right hon. Gentleman appears to be suffering under that restraint that affects all Finance Ministers of his Party. Throughout the Budget it could be seen plainly enough how difficult it was for a Chancellor of the Exchequer of the Conservative Party to throw any- thing in the shape of additional burden on owners of land. Occupiers of land they themselves owned, when they adopt farming operations and are unable to make them pay, are discharged from liability under which they now rest under Schedule A. But, then, take the case of farmers under Schedule B—not the owner but the tenant. If his farming is unsuccessful, the Chancellor of the Exchequer does not propose to discharge him from his liability as he proposes to discharge the owner under Schedule A. The right hon. Gentleman said it was open to a farmer to go under the Schedule and present his statement of account—

MR. GOSCHEN

It is practically the same with the owner; he would have to prove that he has made no profit.

MR. ARTHUR O'CONNOR

Then, why not use the same language? It seemed to me that it was an extraordinary thing to make the difference between owner and occupier, and not a single word was said until that moment as to the necessity of owners furnishing accounts of their transactions. Then, again, when we come to Ireland, the right hon. Gentleman says he does not propose to extend the Carriage Tax to Ireland; but we have not the least objection to that extension. Those who in Ireland drive in carriages belong to a very small and favoured class. Some days ago the right hon. Gentleman said it did not pay the Exchequer to collect the Carriage Tax in Ireland; so now the Carriage Tax is not to be imposed on Ireland, though it is utilized in England, but the wheels of the farmers' carts are to pay a tax of 2s. 6d. apiece. Thus, you find the industrial classes are charged—

MR. GOSCHEN

The hon. Member is under some misapprehension. I do not propose to extend the Wheel Tax or the Horse Tax to Ireland. I have not communicated with my right hon. Friend the Chief Secretary for Ireland on this subject, and am not informed; but if there is a general wish that the Carriage Tax, the Horse Tax, and Wheel Tax should be introduced in Ireland, I should consider it a most fair measure.

MR. ARTHUR O'CONNOR

I am glad to have elicited that fact, for we gathered from the right hon. Gentleman's speech that the Carriage Tax was not to be extended to Ireland, but the Horse and Wheel Taxes were. Well, what we now hear is satisfactory, Then as regards the Succession Duties, the right hon. Gentleman within the last few minutes emphasized his observations in regard to these duties, and shows that in the case of collaterals a further rate will be levied to that levied in the past, so that there will be an approximation to equalization between real property and personalty; but he did not meet the point that was raised from the Front Opposition Bench, that Succession Duty is not paid on the corpus but on the life interest, and so tender is he towards realty on this occasion, that he enacts that the duty shall be paid not in four years, but in eight years. He did not give us to understand that any longer term would be allowed for the Probate Duty than exists already, and I fail to see why this exceptional tenderness is shown in the Succession Duty. Then with regard to the distribution locally of the relief to be given from the Imperial Exchequer, I failed to gather the reason why the amount of local resources spent on indoor relief should be the standard of distribution. See how unequally it will work. In parishes like Kensington and Chelsea, a much larger sum is spent on indoor than on outdoor relief, because the workhouse test is mercilessly applied in those places, and they will, by the very harshness of their administration of the Poor Law, secure a very large haul in the amount of aid to be given from the Imperial Exchequer. But let us go Westward, to Merionethshire, to Devon, to Gloucester, and you may find few cases of indoor relief, a proportion of one to every six, seven, or, in some cases, 10, to every case of outdoor relief. It is in these places that the Poor Law is really most depended upon by the agricultural and industrial working population for relief in their old age, or in times of distress, and these are the places where the smallest share of relief will be enjoyed from this Imperial contribution. On another point, I think, the Chancellor of the Exchequer has missed a great opportunity. He has a surplus of over £2,000,000 of money, and he has a number of small taxes raised upon coffee, raisins, figs, and dried fruits, generally articles which, by reason of these taxes, have shown a wonderful want of development, and no increase at all in consumption. If the right hon. Gentleman will take the trouble to look through the Trade Returns he will find that of some 15 or 18 articles that were taxed in 1853, every single one has increased in consumption to a surprising extent, except those half-dozen or so upon which the tax is still retained, such as coffee, chicory, and dried fruits. The amount of revenue realized upon these is comparatively insignificant, but the relief from the abolition of the duty would be very sensible, The right hon. Gentleman might have been able to boast that he had established a free breakfast table at last; he had the opportunity, and I am sorry, both on the merits of the case and for his own reputation, that he allowed the opportunity to slip. It is now reserved, I suppose, for some Liberal statesman to deal with. From observations already made, the right hon. Gentleman will gather it is scarcely a satisfactory proposal that the amount of assistance to be derived from the Imperial Exchequer for local taxation in Ireland should be vested in the hands of the Chief Secretary.

MR. GOSCHEN

In the absence of data to go upon, I have not marked out the proposals as regards Ireland.

MR. ARTHUR O'CONNOR

We have no inkling of the principle of distribution. Evidently, that of indoor relief will not do as a proper standard; and one thing I have been unable to gather, and that is if there is any assurance that the amount of local taxation to be bestowed will equal the amount we lose by the withholding of the grants. If he will work out the figures he has failed to give us, it will be a satisfaction; but it does seem to me very seriously open to doubt whether the grants to be withheld will be equalled by the amount of local assistance we shall get.

MR. GOSCHEN

No grants will be withheld from Ireland. Ireland will continue to receive the grants she has received hitherto, and she will, in addition, be entitled to the relief I have stated. But, as I have said more than once, I have not sufficient information in regard to Ireland and Scotland. I will make it my business to work out these points, and I will make a future statement to the House with regard to these two countries. I now wish the Committee to allow me to withdraw the Resolution with regard to the Tea Duty, so that hon. Gentlemen may discuss the general Resolutions on a future occasion. I hope, however, the Committee will allow me to take the Resolution in reference to the duty on wines, which it is urgent to take, for otherwise large transactions will take place without the increased duty.

Motion, by leave, withdrawn. 2. Resolved, That in addition to the Duties of Customs now payable on Wine, there shall, where the Wine is imported in bottles, be charged and paid the Duties following (that is to say):—

Upon every dozen bottles of Wine—

	s.	d.
If in imperial pint bottles or bottles of less capacity	2	6
If in bottles of capacity exceeding imperial pint bottles and not exceeding imperial quart bottles	5	0
If in bottles of capacity exceeding imperial quart bottles a proportionate increase of Duty according to capacity.

Resolution to be reported To-morrow, at Two of the clock.

Committee to sit again upon Thursday 5th April.