HC Deb 15 April 1889 vol 335 cc498-586

Considered in Committee. (In the Committee.)


Mr. Courtney, there are two occasions on which the annual statement to be made by the Chancellor of the Exchequer is looked forward to with emotional interest. The one is, when there is a great prospective surplus, and the Chancellor of the Exchequer finds himself surrounded by a crowd of eager expectants, each wondering to whose share the largest proportion of relief may be given. The other occasion is when there is a prospect of a deficit, and expectation turns not on the relief to be afforded, but on the question who are to be the victims of the fresh taxation that must be imposed. I have not had the good fortune to find myself in the former situation. I have not experienced the pleasurable emotion which must fill the breast of the Chancellor of the Exchequer on such occasions. Twice it has fallen to my lot to have a prospective surplus within my grasp; twice it has eluded me. Last year a bill was presented to me which had been accepted by Parliament and endorsed by public opinion for the relief of local taxation. This year I have had to meet new demands for the purpose of national defence; and the worst of it is that I have not yet entirely met the former demand before I am called upon to deal with the latter. A large slice of public revenue goes in further relief of local taxation this year; and while the cormorants of local taxation reform are still dipping their hands into one of my pockets, the organizers of national defence are now putting their hands into the other. Let me put before the Committee, in the roundest of figures, the effect of these combined attacks. There is nearly a million and a-half additional to be found for local taxation; there is nearly another million and a-half for Naval defence. There is, besides, an increase of about a million and a-quarter on the ordinary Estimates for the Army and Navy; making, roughly speaking, four millions and a-quarter of new demands as compared with last year.

Before I apply myself to the task of seeing how that large sum may be met, the Committee will wish, as usual, to be initiated into the history of the Expenditure and the revenue of the past year. I deal, in the first instance, with the expenditure, and I will read, according to custom, the Exchequer issues for the year 1888–9. The Consolidated Fund charges amounted to £27,854,580, which is £6,420 less than the anticipated expenditure. The issues on account of the Army were £15,920,000, or £780,000 less than the total estimated expenditure; and on account of the Ordnance Factories £38,000, or £8,000 more than the original estimate. The Navy total issues were £13,000,000, or less by £128,000 than the total estimated expenditure, including the Supplementary Estimate of £45,000. The Civil Service issues were £17,873,000, being £23,000 more than the original Estimate, but £333,000 less than the total estimated expenditure, including the Supplementary Estimates. The expenditure of the Customs was £927,000, or less than the Estimate by £11,000. The expenditure of the Inland Revenue was £1,791,000, or less by £16,000 than the estimate. The Post Office expenditure was £5,668,000, or £1,000 more than the estimate. The Telegraph Service was £1,965,000, or £72,000 less than the estimate. The Packet Service was £638,000, or £4,000 less than the estimate. The total expenditure was £85,674,000, which is £941,000 less than the original Budget Estimate, and £1,350,000 less than the total estimated expenditure, including the Supplementary Estimates.

I am glad to be able to point out to the Committee how often in this list the words "less than the estimate" have occurred. I am grateful to my colleagues for the assistance which they have rendered me in arriving at this result. There is little to be said on the different items. The total for the Consolidated Fund Service is, as the Committee will see, hardly altered, but there are changes within that total which are of some importance. There was a saving on the interest of the Unfunded Debt. The rates of interest on the Unfunded Debt were lower than was anticipated. The average rate for Exchequer bills was £2 7s. 2d. For Treasury bills the average rates were:—For three months' bills, £2 5s. 7d.; for six months' bills, £2 11s. 11d.; and for 12 months' bills, £2 18s. 5d. Thus there was a saving on Exchequer bills of £33,000, and on Treasury bills of £25,000, making a total of £58,000. This saving, which is also affected by the fact that Treasury Bills were dropped when balances were high during a portion of the year, goes to augment the new Sinking Fund.

I shall now say a word or two with regard to the savings on the Supply Services. In speaking of the Supply Services, it is always necessary, unfortunately, to distinguish between the Exchequer issues and the amounts actually spent. Nothing is more complicated and dull; but I must ask the Committee to give this subject their attention for a moment, as otherwise they will not be able to understand the apparent saving which was not a real saving on account of the Army. The amount issued to the War Office was less than the estimated expenditure by £780,000. Now, the greater portion of that sum, was due to the fact that in the year 1887–88 there was issued to the War Office £680,000 more than it actually spent during that year. When the expenditure of any Department in a particular year falls short of the sum granted to it, two things are possible. Either the Department has foreseen that it will not be able to spend the whole of its grants, in which case the Treasury issues so much less, and the Exchequer issues of the year in question falls short of the Estimate by the amount thus unissued. Or the Department has not foreseen that it will not be able to spend its grants, in which ease the Treasury issues the full amount, but that full amount not being spent, the balance is carried over to meet, as far as it will meet, the grants of the following year, and the Exchequer issues of that year are correspondingly reduced. Now in the present case both these things have happened; £100,000 was not issued to the Army. The Committee will naturally ask, if the contractors do not present their bills for payment within a given year, and the money issued to pay those bills is appropriated to meeting the grants of the following year, how are these bills ultimately paid? In reply, I have to inform the Committee that on this occasion the liability was mainly in respect of ordnance and ordnance stores for the Navy. Under the new system adopted last year the Navy now pays for its own ordnance and ordnance stores, and the liability in question has, therefore, been transferred from the Army to the Navy and goes to swell the general mass of naval liabilities for which we are making provision. If I have said so much on this point it is because it has a bearing on the financial arrangements of the Naval Defence Bill, and we trust that, under those arrangements the risk of a disturbance in our finances owing to contractors being behindhand may be reduced. The Committee will, therefore, understand that there is no saving on the Army for which we can take credit, but that the saving is due to the postponement of liabilities, for which, of course, the War Department is not in any way responsible, but which is owing to the bills of the contractors not having been presented in time.

With regard to the Navy, the difference between grants and issues is explained much in the same way. It is due to an over-issue in 1887–8. The Civil Services show a reduction of £333,000 in issues as compared with the Estimates, and of this £200,000 is an actual saving on the year, for which we are entitled to take credit, while the balance is the result of an over-issue in the preceding year. I wish to call attention to several items of this saving of £200,000, which I hope the Committee will regard as not unsatisfactory. We have spent £5,000 less than the estimate on the Supreme Court of Judicature, owing to a reduction of the staff; we have spent £12,500 less on the special police; and £33,500 less on prisons. There is a steady decrease of the expenditure on Prisons, which is due, firstly, to a reduced number of prisoners, and, secondly, to a consolidation of the prisons. The Committee and the public will, I trust, regard these as very gratifying facts. There is another reduction of which the Committee will be glad to learn—the decrease of £6,000 in the cost of examinations held by the Civil Service Commissioners, due to the policy which the Government are pursuing to the best of their ability—the policy of making as few entries as possible into the already overcrowded Civil Service. We have embarked with energy upon that policy, which we know to be approved not only by this side of the House but by the other and by the country generally.

I have spoken of the over-issues of one year as reducing the issues of the next, and the right hon. Gentleman opposite knows that such over-issues occur to some extent every year; but that frequently their effect is obscured by Supplementary Estimates. In that case the saving does not appear, and it is unnecessary to call so much attention to it. But I must now call the notice of the Committee—and I do so with great satisfaction—to the fact that in the past year, as in that which preceded it, we have been spared to a very great extent, almost to an unprecedented extent, the presentation of Supplementary Estimates. For the Army there were none; for the Revenue Departments, none; and for the Navy only £45,000. That one Item was due to an extraordinary incident—to the compensation which had to be paid to the owners of the Ville de Victoria, which was run down by the Sultan. For Civil Services we had some Supplementary Estimates; but the number and the total amount were again below the average. Taking all the Services together, the Supplementary Estimates were the smallest in amount for any yeas since 1868–69. Last year we had the smallest in amount up to that date since 1868–9. But the amount this year is yet smaller, and I hope, at a period when so much is said with regard to mismanagement in the Departments, that the public will learn with satisfaction that, so far from exceeding the limits of the liberal grants made by Parliament, those who administer the Departments have kept well within those limits.

I turn now to the Revenue of the past year, and first I will state the Exchequer receipts. Customs realized £20,067,000, or £142,000 more than the Estimate; Excise brought in £25,600,000, or £95,000 more than the Estimate; Stamps realized £12,270,000, or £490,000 more than the Estimate; the Land Tax realized £1,020,000, or £26,000 less than the Estimate; the House Duty produced £1,940,000, or £50,000 more than the Estimate. The Property and Income Tax brought in £12,700,000, or £450,000 more than the Estimate; the total produce of taxes was £73,597,000, or £1,201,000 more than the Estimate. The Post Office gave £9,100,000, or £300,000 more than the Estimate; the Telegraph Services gave £2,080,000, or £80,000 more than the Estimate; Crown Lands gave £430,000, or £40,000 more than the Estimate; interest on advances gave £241,000, which is what it was expected to give; miscellaneous receipts came to £3,025,000, or £25,000 more than the estimate. The total produce of non tax Revenue was £14,876,000, or £445,000 more than the estimate. The total Revenue was £88,473,000, or £1,646,000 above the Estimate. While, therefore, I was able to congratulate the Committee in the former list I read that I constantly used the expression "less than the Estimate," I am glad that now, when I am dealing with Revenue, I have in all but one case been able to say "more than the estimate."

But the Committee will wish to know some few details about the various items of Revenue. In giving these, I must refer to the figures of the actual net receipts so far as they are yet known. They differ slightly from the Exchequer receipts, but they supply a truer index to the real value of the taxes and a sounder foundation on which to build expectations for the future. My catalogue of the different heads of Revenue begins with the un-exciting but satisfactory item of dried fruits. Raisins, figs, plums &c., are up to the Estimate, while currants have exceeded it by £34,000, or more than 10 per cent. This is a case in which the saying is very true that "It is an ill wind that blows no one any good." France, the experts tell me, has been excluding Greek currants, and the consequence is that they come in increasing quantities to the English market. By that they increase the consumption and add greatly to the Revenue. Also there has been a large crop, which of course, has helped in the same direction. Tobacco shows an increase over the receipts of 1887–88 of £145,000, but it falls short of the Estimate by £41,000. The increase is 1½ per cent, but we anticipated 2 per cent. This is an item which illustrates the unreliable character of some of these taxes. We thought that with an increase in trade, we might safely estimate for an increasing Revenue. But we have not obtained it, and that chiefly because one particular kind of tobacco is being increasingly used which smokes more slowly than others. Therefore, with the same amount of tobacco, the smoker is able to enjoy himself for a longer time, and to derive a greater amount of satisfaction. Thus the Revenue suffers, although there is no diminution in the enjoyment which is afforded to the consumer.

I now come to an interesting head—the great item of drinks, and I will give the place of honour to the sober beverages. The coffee group maintains its character of dull uniformity. Cocoa has yielded £6,000 more, but coffee £2,000 less than in 1887–88. Coffee will not move. Some of the experts here, again, give an extraordinary and not uninteresting explanation. They say that cocoa has actually been puffed into its more satisfactory position by the energy of ambitious advertisers. The "grateful and comforting" beverage has not been eulogized for nothing. The praises of cocoa are everywhere. Tea, too, has its place, but coffee has not been stimulated by the ambitious system of ubiquitous advertisement. Yet, despite the comparatively flourishing condition of cocoa, the coffee group as a whole is insignificant, when compared with tea. Its total yield is only £328,000, which is as nothing compared with the £4,628,000 which we get from tea. But large as is this Revenue from tea, it has been very disappointing in the present year. There is an increase of only £15,000 over the year before. This is only one-third per cent, while the population increases about 1 per cent per annum. Consequently there has actually been a decrease per head in the consumption of tea, while we had expected an increase of £80,000. The experts account for this by two circumstances. They suggest, though they do not rest strongly on the point, that a certain amount of tea has been kept back owing to the expectation that the duty might possibly be reduced; there is also a consideration connected with tea analogous to that which I have quoted as regards tobacco. I explained last year that Indian tea is to a great extent superseding China tea, at all events, it is competing with it to a constantly greater extent, and Indian tea is so much stronger than China tea that one pound of it goes further, and a larger number of cups of tea may be drunk, notwithstanding a falling off in the consumption per head. This is the explanation on which those who advise me insist as absolutely correct; and while great benefit has been derived by India from the export of tea, there is little doubt that it has injuriously affected our Revenue.

I have done now with the sober beverages. Although these yield £5,000,000 they fall short, as contributors to Revenue, of spirituous drinks, which yield £27,000,000. But this year again I have good news for the friends of the temperance cause, though it is news of no favourable augury to the Exchequer. This great Revenue does not grow in proportion to the growth of the population. I propose to place some very interesting diagrams before the House which will show how during the last 25 years the consumption of alcoholic drink has varied as compared with the population and as compared with all the other great articles of consumption. While some of the latter keep pace with the growth of population and some of them gain upon it, there is a great, a material, and a striking fall, as has often been pointed out to the Committee before, in the consumption of alcoholic liquors. It might be thought that the revival of trade would again lead to an increase in the Revenue from drink. But it has not done so. There are other interesting facts which hon. Members will perceive from the diagrams to which I refer. For example, there seems to be a curious relation between the consumption of wine and the consumption of other spirituous beverages. The years which showed the high-water mark of the consumption of spirits were 1875 and 1876; and, curiously enough, that was the time when the wine Revenue reached its highest point. It has continually fallen since. A rush to the spirit bottle on the part of the mass of the population seems always to be accompanied by a keener application to the wine decanter on the part of the more prosperous classes and vice versa. Since 1875–6 the decrease in the consumption of mine has been followed by a decrease, though not a proportionate decrease in that of spirits.

Wine yielded last year £1,210,000, as against £1,085,000 in the preceding year. The increase is entirely due to the extra tax on sparkling wine, which produced £163,000. But for this there would have been a decrease on wine of £38,000. Since 1876 the total consumption of wine has sunk from 17,000,000 gallons to 13,000,000 gallons; while the total consumption of the lighter kind of wines has risen from 6,000,000 gallons to 8,000,000 gallons. The whole decrease, it will be seen, has been in the heavier wines. There is some slight confusion in the statistics relating to the lighter kinds of wines, owing to the change of limit of their admission at the lower duty from 26° to 30°, but even making ample allowance for this, more than half the wine now consumed belongs to the lighter kinds, while formerly the lighter kinds were only one-third of the whole. Whether this is due to temperance or to the use of the cigarette immediately after dinner, which arrests the circulation of the bottle, the fact remains that there is an enormous decline in the heavier kinds of wine. The Committee will, however, wish to know how the tax on sparkling wine has answered. I have already stated that it has yielded £163,000, or £38,000 more than the estimate. But then we collected it for three months at 5s. per dozen on all bottled wines. We have had only nine months' experience of the present rate of duty. In several respects this sparkling wine duty has falsified the predictions of its opponents. When we estimated that two-thirds of the sparkling wine imported would be of the dearer and one-third of the cheaper kind, we were met by the assertion that though these might be the true amounts, the importers would so falsify values that in the collection of the duty the proportions would be exactly reversed. As a matter of fact, the dearer kind of wine has greatly predominated. In the nine months since the differential tax was imposed there have been imported at 2s. 6d. per gallon, 680,000 gallons; at 1s. per gallon, 375,000 gallons. It was said that the traders would be extremely tricky. I am glad to say that the traders have not been so tricky as our critics anticipated, and besides the Customs have been fully up to their work. Owing to these two causes, therefore, we find that the statistics come out remarkably near our expectations. I cannot for a moment admit that this tax has encouraged immorality on the part of the traders. On the contrary, it has had in some ways a beneficial effect. I think it might be argued that it has led to a diminution of the distance which separates the invoice price of the cheaper sorts of sparkling wine from the prices quoted in the circulars of merchants. Again, it was said that the tax would check consumption. Sparkling wine has not been checked in its consumption; it has held its own thoroughly well, and it has held its own while its less exhilarating rivals have been declining. I desire to state distinctly that nothing has occurred to lead me to modify the system which, with the assent of the Committee, I proposed last year; and I hope that nothing will occur to make a modification necessary. The trade has accepted it now, though with some protests; and I trust the Government will not be forced to withdraw that favour which has been extended to the cheaper kind of wines, and which would have to be withdrawn if the present system were rendered unworkable.

And now as to spirits. Foreign spirits have somewhat increased, though the increase is entirely upon "Geneva and other sorts"—that is, principally on German plain spirit. Both rum and brandy have fallen off. Rum is £60,000 below last year's receipt, and £25,000 below the estimate; brandy is £51,000 below the receipt of the previous year, and £43,000 below the estimate. "Geneva and other sorts," on the other hand, are £178,000 above receipt and above estimate, so that taking the three together we are £67,000 above last year's receipt, and £111,000 above our estimate. But this is a little more than balanced by the decline on British spirits. They have yielded £12,877,000, being £151,000 less than the receipts of the previous year, and £113,000 less than the estimate. The last great item of the drink Revenue is beer, which has yielded £8,771,000, being £60,000 more than last year, and £61,000 more than the estimate. The total spirituous drink Revenue, excluding the duty on sparkling wine, has been £26,985,000. In the preceding year it was £27,048,000. There has therefore been a decline of £63,000. Now, let me sum up the Revenue from all articles of general consumption, again excluding the new duty on sparkling wine. It has been £41,455,000; while in the preceding year it was £41,314,000. The whole increase is only £141,000 on a total of £41,000,000, or 0.3 per cent. I would call the attention of the Committee to this fact, to this remarkable elasticity, in a year of improving trade, of much more general and regular employment and, I am happy to think, in many cases also of rising wages.

MR. H. H. FOWLER (Wolverhampton)

Does that include beer?




You did not say so.


I hope I am not giving too many details to the Committee. They seem to me to have so important a bearing upon what I may call the general principles of finance upon which we go that I trust the Committee will excuse me for having dwelt upon them. I now turn from indirect to direct taxation; and here we shall soon find a brighter picture. Under direct taxation I include not only taxes on property and income, but also general stamps, which I may call duties on transactions. These are certainly more akin to direct taxes, and they fall not upon the great body of consumers but, almost entirely, on the wealthier and the business classes. One item under this head I pass over with a very few words—I will not linger on it for a moment. It is the item of licences. They are now passing almost entirely from the grasp of the Chancellor of the Exchequer. There are only some few licences, and those of the least profitable sort, which remain to him. The rest have been entirely swept away, and have gone to my right hon. Friend the President of the Local Government Board and his clients, the County Councils. The House duty and Land tax show little or no variation, though there is an increase of £30,000 over estimate in the house duty. This is due to the quinquennial valuation. I now come to the gloomy but fiscally attractive subject of the Death duties. They show no very striking feature this year, except that they arouse my astonishment, as they must arouse the astonishment of everybody else by the extraordinary evenness of their yield from year to year. Notwithstanding the precariousness of life and the different way in which men leave their fortunes, the Death duties remain at an extraordinarily equal level. Under the head of Probate duties I estimated that I should obtain in the past year £4,260,000. The receipts were £4,225,000, or less than the estimate by £35,000. The amount is £372,000 less than we received in the year before, but in that year some abnormally large estates fell in and I discounted these in making my estimate. In this sum of £4,225,000 a desperate gap has been made by my having to part with one-third of the probate duty to local authorities. This gap will be made half as wide again this year, when I have to part with one-half instead of one-third. The actual receipt into the Exchequer for these duties has been £2,816,000. I cannot help saying that I sincerely trust the ratepayers will benefit by these large grants to the fullest extent. When I consider what remissions of taxation might have been proposed if these grants had remained in the Imperial Exchequer, I confess I can only hope that in their capacity of ratepayers the taxpayers will have occasion to realize that they have had this great relief, and that the new authorities will so administer local affairs that it may not be lost in increased extravagance. The legacy and succession duties yielded the year before last £3,645,000. For last year they were estimated to yield £3,590,000, or less by £55,000. They have actually yielded £3,737,000, or £92,000 more than in the previous year, and £147,000 more than the estimate. So far I have gone over item after item of Revenue without finding any very encouraging results. But now I come to a point where the first foundation of the large surplus of the past year begins to be seen. I mean the item of general stamps. The Committee may remember that last year I proposed certain clauses in the Budget Bill, by which greater stringency was to be applied to the collection of some of these stamps. My hopes have been entirely realized, and these clauses have helped to swell the Revenue to an appreciable extent. The Committee will wish to know the result of the several duties on transactions which we imposed last year. I put the effect of the stringency clauses, to which I have just referred, though it is very hard to make anything like an estimate, at £50,000. The 6d. stamp on brokers' contracts has realized within £1,000 the exact amount which it was estimated to produce—viz., £50,000. It was thought by the Stock Exchange that it would yield a very much larger sum; but we put it at the sum which it has actually produced. The tax on joint stock companies' capital was expected to bring in £110,000; but I am happy to say, happy, that is, from a fiscal point of view, that the rush for these new companies has been so great that my estimate has been largely exceeded and the proceeds have been £160,000, although the tax only came into force on the 17th of May. The Committee will learn with interest that since that date to the end of the financial year no fewer than 1,743 companies were registered in London alone with a nominal capital of £132,000,000. I confess that I have experienced a momentary feeling of regret that I did not impose a somewhat larger tax. But let me here anticipate a small matter as to which a Resolution will be laid on the Table. There are some joint stock companies which escape this duty, or it is feared will do so, because they obtain limited liability through letters patent or through a special Act of Parliament. It is, therefore, necessary to insert clauses in the Budget Bill to meet the case of these companies and to put them in the same position as those which come into existence in the ordinary way. This is a small matter, but I call attention to it now so that the Committee may understand the Resolution which will be moved. To pass to another point, the taxation on foreign and colonial share certificates has not realized the amount it was expected to yield. The estimate was £200,000. It has only produced £84,000. It was extremely difficult to estimate the volume of these transactions. There were no data for doing so. I do not think there have been any evasions; but the operations have not been so large as was expected. If hon. Members think that this is but a small result to obtain from the new duty, I must remind them that it was not imposed merely for fiscal reasons, but for reasons of equity. I argued last year, with the assent of the public at large, that it was only fair, as there was a heavy transfer duty placed upon British securities of every kind, that these foreign share certificates should be similarly taxed where it was possible to reach them in any form.

But the Committee will consider it satisfactory that the Stamp revenue has been swollen, not only by new taxes. The total receipt from general stamps is £888,000 above that of the previous year, and £350,000 above estimate. If we deduct £344,000 as the product of the new stamp duties from the £888,000 total increase, there remain £544,000 as the increase of the revenue from the duties on transactions, due to the extending business of the country. Here, at last, we reach real and satisfactory proof of growing business and improving prosperity. Trade is on the increase, and I trust I shall he able to show when I come to the Income tax that extending business has not been without leaving some enhanced profits to those who have been engaged in it. This is the most satisfactory feature in the receipts of the year. We have an increase of 12 per cent over the receipts of the previous year, 1887–8, excluding the new duties.

I now approach another satisfactory item of Revenue—namely, the Income tax. It produced £12,450,000, exceeding the Estimate of £12,250,000 by £200,000. In this case it is fallacious to compare the receipts of the late with the receipts of the previous year, because in the former year they were upon the 7d. instead of the 6d. basis. It has been asserted that efforts were being made and instructions given that by putting on a stronger screw the Inland Revenue Authorities should make up for the loss of the penny. Well, the loss of a penny means about £2,000,000 per annum, and I leave the Committee to judge whether any increased stringency could make up that sum. No such instructions have emanated from the Treasury, and, as right hon. Gentlemen opposite know, no such instructions are ever given by the Treasury. Great latitude is allowed to the Inland Revenue. They improve their collection, I admit, every year. Efforts are made to evade payment of duties, and the Inland Revenue discovers new methods of resisting those efforts. But, apart from this normal improvement in the method of collection no effort has been made to apply greater stringency. The Committee will be glad to learn that each penny of income tax in the year 1888–89, after making all the necessary allowances, yielded £2,020,000, the largest amount ever yet realized per penny. The actual payments into the Exchequer on account of the tax were £12,700,000, or £450,000 over the estimate. I have now gone over all the great items of Revenue.

But before I pass to the question of the general balance, I should wish to be allowed to call the attention of the Committee to what I may call the moral of the figures I have just given. Let me illustrate the contrast between the results of direct and indirect taxation in the past year by comparing these two great sources of Revenue for some little time back. For five years the productiveness of indirect taxation has not increased at all. It is extremely important that this fact should be grasped. Indeed, the proceeds of indirect taxes have actually fallen off during the course of this period of five years by about I per cent. During the same period of five years the yield of direct taxation—that is to say, Income tax, Death Duties, and general Stamps has increased by a little over 5 per cent. But Stamps and Death Duties, irrespective of Income tax, have increased 10 per cent. Of course in these calculations all the necessary adjustments have been made, and the produce of new taxes has been omitted, as it would vitiate the comparison. Well, then, how remarkable is the contrast between these different sources of Revenue. It seems to me to show that the old policy of relying upon a very small number of articles of general consumption is one which it is questionable whether we can trust to in the present state of things. It was all very well when those taxes on articles of consumption were increasing in productiveness year by year, by leaps and bounds. Those were the times when, to use a phrase that has often been used before, the country drank itself out of the Alabama Indemnity in one year. We have now learnt that there is more precariousness in those sources of revenue than we once believed. They are affected, not only by changes of fashion and of morals, but by physical accidents, such as those to which I alluded in speaking of tea and tobacco, and so, from a variety of causes, we find they are not the same all-sufficient stand-by which we used to consider them in times past. Those were the days of great simplicity of taxation. To trust to a few great articles of consumption was our fiscal ideal. Yet even in these days of expanding consumption and of simplicity of taxation, I do not criticize the policy; it may have been wise in its day. There was something more that was necessary to make both ends meet. At that time, whenever there came an emergency, recourse was had to the income tax. This was the general policy that was followed. But I think I have explained in the last two years that I firmly believe that we are not justified in making such a constant reckless use of the income tax. I think we ought to keep it as a great reserve. Besides, I do not think it just to persons in the position of small and struggling tradesmen and clerks who feel the income tax with such peculiar weight, as compared with the sacrifices calling on others, to continue the system of regarding the income tax as a ready engine for getting the Chancellor of the Exchequer easily out of any and every difficulty in which he may find himself. I admit that the income taxpayers are a quiet people. They do not agitate or demonstrate, they do not parade the streets, they do not choose the hero of the anti-wheel tax agitation to stir the House of Commons. There may be perhaps a few imprecations at the breakfast table when the income tax payer learns that his burden has been increased, and a few more imprecations when the bill has to be paid, but that is all. No cries arise from him to attempt to move the bowels of compassion of this House. He has few champions, and thus it has happened that on every occasion it is the income tax payer who has had to meet whatever exceptional demands may have arisen. Well, I confess that I differ from that policy. I do not think that it is safe, I do not think that it is just. I do not think that it is expedient in the great interests of the State. I say I do not criticize the past, because the financial situation was different. But under present circumstances, I say, and I say it with some trepidation and knowing the enormous difficulty which the discovery of new taxation involves, that it is better service to the State to increase the number of sources of Revenue than to attempt to find simplicity. ["Oh, oh!"] I hear an expression of dissent, but I say that if some of your great sources of Revenue are breaking down under you, if you see a decline in them, and if on the other hand it is true that the income tax ought not to be used for every emergency, then you must he looking about you for new means of meeting the new demands that are constantly being made. Perhaps hon. Gentlemen opposite will look one way for such means and hon. Members on this side will look another. I I will not now lay down any doctrine as to where taxation ought to be imposed, but I say you have pushed simplicity of taxation up to a point beyond which you cannot carry it without danger. I trust the Committee will excuse the general digression which I have made. I feel so strongly on this point as a question of general policy, that I have ventured, I hope with all respect to the Committee and in all humility, to place my view before them with all the emphasis I could command.

Now, let us sum up the Account of last year. The Revenue was in excess of the Estimate by £1,645,000; the Expenditure fell below the Estimate by £941,000. I allowed for a margin of Revenue over Expenditure of £212,000. Thus we get a surplus of £2,798,000, the largest realized surplus since 1873–74. In 1887–8 we had a surplus of £2,378,000, which was then the largest since 1873–74. In the past year we have attained the yet larger figure I have stated. I have been much found fault with for reducing two years ago the amount regularly set apart for the payment of debt. At that time, it will be remembered, I diminished the Sinking Fund by the sum of £2,000,000. I considered, and I still consider, that course to have been perfectly legitimate. But it will he seen that if I have diminished what may be called the normal payment of debt, I have been enabled by the good administration of my colleagues, who have evaded Supplementary Estimates, as well as by prudence in forecasting Revenue, to obtain surpluses available for the reduction of debt which exceed the £2,000,000 a year that was taken off the fixed charge. The amount available out of surpluses for the reduction of debt has been £2,500,000 a year on the average of two years. The total sum provided out of taxation for the reduction of debt in the last two years has been, in round numbers: £5,000,000 a year within the fixed charge, making £10,000,000, and an average of £2,500,000 a year, out of surplus making £5,000,000—total, £15,000,000, or an average of £7,500,000 a year. Whatever crime I have committed in reducing the Fixed Charge, it will thus be seen that the taxpayer has contributed £15,000,000 in two years to the reduction of National burdens, a larger sum than has ever before, except on two occasions, been devoted to this object in an equal period of time. Of the £15,000,000 which represents the sacrifices of the taxpayer during the last two years, the exact amount which falls to the share of the year just concluded is as follows:—Debt paid off within the fixed charge, £4,993,000; Russo-Dutch loan, £21,000; surplus of the year forming the old sinking fund, £2,798,000—total, £7,812,000. So far I have been looking to the amount provided out of the taxation of the year for reducing debt. Now, I come to the amount of debt actually paid off. The amount paid off within the year is as follows:—The funded debt has been reduced by £2,762,000; the capital value of terminable annuities has been reduced by £3,096,000; the unfunded debt has been reduced by £1,292,000--total £7,150,000. The capital amount of debt of all kinds stood on the 31st of March, 1888, at £705,575,000, and on the 31st of March last at £698,425,000. We have thus turned the corner of another £100,000,000. It is now 80 years since the debt stood below £700,000,000. To the reduction of debt of £7,150,000 which I have mentioned must be added the diminution of the Russo-Dutch loan by £21,000, and the wiping out of the friendly societies deficiency of £464,000, making a total sum of £7,635,000.

I have submitted the figures to the Committee in two ways. First, I have given the sums applicable to the discharge of debt out of the Revenue of the year, and then the amount actually paid off within the year. But hon. Members will ask, "How about your balances?" They have declined from £7,647,000 to £5,592,000, or by the sum of £2,055,000. But the explanation is simple. On the 31st of March, 1888, the balances included the whole of my surplus of the preceding year. But in the past year £2,000,000 of the surplus has been expended before the close of the financial year. It has been expended on payments connected with the conversion of the debt. Technically, no doubt, it might be said that this is not a diminution of debt; but they are payments made in the reduction of our liabilities and our burdens, and which, considering their object, are far more effective in diminishing those burdens than would have been an ordinary cancellation of two millions of debt. It must be remembered that the conversion involved extra payments of a three-fold character. Speaking in round figures, we had to pay on account of the bonus of 5s. on old Consols and Reduced, £1,000,000; for the commission of 1s. 6d. and remuneration to the Banks of England and Ireland, £300,000; for extra quarter's dividend on so much of New Consols as represented New Three Per Cents and Reduced, £1,700,000; making a total of £3,000,000. The extra quarter's dividend arises in this way. Formerly the dividends were paid half-yearly on the Reduced and Old Consols. Consequently, on the 1st of April, 1888, there was a half-year's dividend, or two quarters, due. Then the dividends were turned into quarterly payments, and a quarter became due in July, another in October, and another in January, so that we had to pay five quarters instead of four in the year 1888–9. Of course, that was anticipating payments which would otherwise have had to be made on the 5th of April this year, and was not a new expense. It was rather a diminution of our liabilities, though it involved an extra charge on the particular year. The Committee will remember that last year I took power to borrow for the payments connected with the conversion. But when I saw that there was likely to be a large surplus, I thought it better to borrow only £1,000,000, and to take the rest out of the surplus. Had the full extent of the surplus been foreseen, we might have paid up nearly the whole £3,000,000 within the year. As it is, what remains of the surplus will be sufficient to pay off all but £200,000. I think the Committee will be content with the result—namely, that one year gives us a surplus sufficient to discharge the whole payments of a gigantic operation, such as the conversion of some £500,000,000 of debt, which has saved the country £1,450,000 a year at once, and will, in 14 years, save it £2,800,000 a year.

I have explained the reduction of £2,000,000 in balances. There are other small items which swell or reduce the balances, but which, in their joint effect, merely counteract one another. My surplus last year was greater than in 1887–8 by £420,000. There should, therefore, be a corresponding increase of balances. Besides this, we have received £150,000 from the Mint in respect of advances for bullion, and £51,000 in respect of the Sardinian Loan. These items taken together swell the balance by £620,000. On the other hand, it is reduced by £660,000 for advances to the Army and Navy for carrying out the Imperial Defence Act. This sum might have been borrowed. But for the time being it seemed more convenient to take the money out of balances. The net reduction of the balances is thus £2,055,000.

I have now finished with the past year, and shown the results as compared with our Estimates both as regards Expenditure and Revenue, as well as the surplus we have secured, and the manner in which we have applied it. It remains for me to deal with what must be the most interesting topic to the Committee—namely, prospective finance, and first I will take the estimated Expenditure for 1889–90, as compared with the estimates of 1888–9. The Committee are familiar with the We take the charge for Consolidated Fund Services at £29,274,000, an increase of' £1,413,000 over last year. The Committee will at once recognize that this is due to the extra provision for Naval defence. Otherwise the Consolidated Fund charges would remain almost precisely as they were. The Army stands at £17,336,000, an increase of £606,000 over the last year. The Navy will cost £13,685,000, or an increase of £602,000, and the Civil Services £15,739,000, a nominal decrease of £2,111,000, which is due, of course, to the cessation of grants to local authorities, and is an apparent gain only as it will be more than balanced by a loss on the other side of the account in respect of licences surrendered to those authorities in order to pay for these grants. The Customs Expenditure will be £923,000, a decrease of £15,000; the Inland Revenue, £1,757,000, or a diminution of £51,000. The Post Office will require £5,453,000, a decrease of £214,000; the Telegraph Service, £2,136,000, or an increase of £98,000; the Packet Service, £664,000, or an increase of £23,000. These sums make a total of £57,692,000 for the supply services, or an apparent diminution of £1,062,000. Taking the Supply services and the Consolidated Fund services together, the total is £86,967,000, an increase of £352,000.

The Committee is familiar with most of these items of expenditure, and it is not necessary that I should say much about them. The total Consolidated Fund services are increased by £1,413,000. This is more than accounted for by the Navy annuity of £1,430,000. The increase on the Army and Navy (ordinary Estimates) has also already been discussed, and requires no comment from me. Then the reduction in Post Office expenditure is apparent and not real. It is due to a change in an item, which before appeared in the miscellaneous receipts, and which is now to he appropriated in aid of the Vote for the Post Office. It is somewhat unfortunate for purposes of comparison that this change has been made; but it was a change recommended by the Public Accounts Committee. Now, I wish the Committee to look at all these figures for a moment, not in detail, but upon broad lines. They are acquainted with the reasons for the increase on the Army and Navy Votes, but I hope they will observe how, in other branches of the public service where no exceptional effort was demanded of us, economy has been most successfully observed. And here I must pay a well-merited tribute to my hon. Friend the Financial Secretary to the Treasury for the manner in which he has been able to keep down the Civil Service estimates. Hon. Members frequently speak of the extraordinary growth of estimates. But as regards the Civil Service this is an entire mistake. What are the facts in connection with the Civil Service estimates? I beg the attention of the Committee to this matter, and I should he glad if what I am about to say should also be thoroughly understood by the public, as I think it is calculated, to remove a good deal of misconception. In 1886–7 the estimate for the Civil Services was £18,008,000. If we deduct one item—the growth of which is automatic, and an increase of which is always welcomed by the Committee—I refer to the Education charges—and if we deduct further local grants and receipts taken in aid of civil expenditure—the net cost of civil administration in 1886–7 was £8,449,000. Making the same deductions from the Civil Service estimates of 1889–90, which are £15,739,000, we find the net cost to be £8,131,000, or a reduction in three years of £318,000. The totals for the two years compared are—£18,008,000 in 1886–7; £15,739,000 in 1889–90; and the net is £8,449,000 in 1886–7 and £8,131,000 in 1889–90, making this reduction of £318,000. Let me add also that during the same period the cost of collecting Customs and Inland Revenue has declined by £72,000. I trust the Committee will see the full bearing of these figures. In these days when the Civil Service is constantly attacked by Gentlemen who dilate on the vast growth of expenditure, I think it is well to bring the mind of the Committee to bear upon the point and to see that, while much remains to be done and while we trust that we shall have the assistance of those who desire to diminish the numbers of the Civil Service and to reduce the amounts payable in pensions and superannuations by every legitimate means, nevertheless we have made some progress, supported as we have been by the House and by the public, in reducing the cost of the civil administration of the country, although new and large duties are constantly being imposed upon it. The Committee will admit that if I am in the position of having to find additional expenditure, it is not due to any extravagance on the part of the Administrative Departments of the Civil Service.

Now, I would ask the Committee to put the figures together. The total estimated expenditure for 1889–90 is, as has been stated, £86,967,000, which is £352,000 more than the expenditure for the previous year. But if the comparison were made with the previous year, after deducting the local grants in 1888–9, as they are deducted this year, we should have an excess, speaking in round figures, not of £352,000, but of £2,650,000. And this is as nearly as possible the actual increase due to the Army and Navy. There is the Navy annuity of £1,430,000, and there is the increase on ordinary Army and Navy estimates of £1,210,000, making a total of £2,640,000, which is within a few thousands of the total increase of estimates compared with those of last year.

I now come to the Revenue for the coming year. What is the Revenue to meet this estimated Expenditure of £86,967,000? Customs I put at £20,050,000, being £17,000 less than the Exchequer Receipts of last year; Excise, £22,570,000, being £3,030,000 less, due to the loss of licences; Stamps, £11,780,060, being £490,000 less, due to the loss of another one-sixth of the Probate Duty; Land Tax, £1,035,000, being £15,000 less; House Duty, £1,925,000, being £15,000 less; Property and Income Tax £12,550,000, being £150,000 less, with regard to which I will say a word presently; total produce of Taxes, £69,910,000, being £3,687,000 less than the Exchequer Receipts of last year. Post Office, £9,350,000, being £250,000 more; Telegraph service, £2,230,000, being £150,000 more; Crown Lands, £430,000, being the same as last year's receipts; Interest on Advances, £280,000; Miscellaneous, £2,850,000; total of Non-Tax Revenue, £15,110,000, being £264,000 more than last year. Total Revenue of all sorts, £85,050,000, being £3,423,000 less than last year, again I say in consequence of the transfer of licences, and of a further share of Probate Duty. The sum of £2,950,000 in licences is surrendered to local authorities, and the sum of £730,000 additional of probate duty is also surrendered to them, making a total of £3,680,000. If these sums still came in to the Exchequer we should have not a diminution of Revenue of £3,420,000, but an increase of £260,000.

The Committee will, perhaps, be astonished, looking to the soundness of trade at present and to the increase of employment, which, I am glad to think, is becoming general, that I only estimate for a real increase of £260,000 in the Revenue. I hear from all sides that profits are increasing, that men are in more regular work, and that trade is reported better even to the Tax Collector. Still, notwithstanding all this, I should not be justified, in the face of what I have stated to the Committee about the inelasticity of those great items, the dutiable articles of consumption, which form almost half of the total revenue of the country in making a more sanguine estimate. It is just in a period when you are passing from a time of depression to a time of prosperity, or when you are passing from a time of prosperity into a time of depression, that the Chancellor of the Exchequer has the greatest difficulty in correctly forecasting the yield of taxes. I ask myself, how far am I justified in speculating on that increase of business and prosperity of which we see signs, but which, if there were a reaction or a cessation for only a few months, might disappoint my calculations? A prudent Chancellor of the Exchequer, in these circumstances, must frame his estimates with caution, hoping that they may be exceeded, but not speculating upon an increase of revenue which a little reaction or even a little repose from our present great activity might frustrate and, by frustrating, lead to that which I trust I may never have to submit to the Committee—a deficit instead of a surplus. Therefore I hope I may be excused from any reproach, and relieved from any pressure to take a more risky view, if I do not attempt to screw up the estimates to the very highest point of reasonable anticipation. The Committee will see that there is a wide gap between the close upon £87,000,000 of Expenditure and the £85,000,000 of Revenue; but that must be filled up by other means than by yielding to the temptation of impaling Estimates beyond what, on a fair consideration of all the contingencies affecting them, they will reasonably bear. I have a few words to say on the principal items. In Customs I anticipate an increase of £79,000 on the actual receipts of last year, there being an increase of £81,000 in tea, and of £51,000 in tobacco, but a decrease of £29,000 in wine, and a decrease of £33,000 in spirits. In Excise, excluding the loss of £2,950,000 by the surrender of licences to Local Authorities, I anticipate an increase of £35,000. The principal items are an increase of £69,000 in beer and a decrease of £27,000 in spirits. Probate duty I have taken at the same figure as it was estimated at last year, being £35,000 more than the actual receipts of that year. The figure is £4,260,000. The legacy duty is taken at £2,885,000, and the succession duty at £925,000, making a total of £3,810,000, as against £3,737,000, the total of the two duties last year. General stamps are taken at £5,800,000, or £140,000 more than the receipts of last year. This figure is £1,000,000 above the receipts of the year before last, and is the most hopeful item in the whole list. The only other point upon which I need touch, but it is a very important point, is the income tax. I have put it at £12,550,000, or £100,000 more than the net receipts of 1888–9. But these receipts included arrears at 7d., and the difference between the average amount of arrears at 7d. and at 6d. is at least £300,000. Therefore I really estimate for an increase of £450,000 on the rd. of this year as compared with the 6d. of last year. Practically, I put up the yield of a penny from £2,020,000 to very nearly £2,100,000, which is a very considerable increase—an increase which I hope will be realized, but which I do not think I should be entitled to augment. With regard to non-tax Revenue. I take the receipts of the Post-Office at £250,000 more than last year, and those of the Telegraph Service at £150,000 more. So much for the several items. To return to the general result, my total Estimate, after all deductions are made—is, as I have said, £85,050,000, which, if the loss of Excise Licences and Probate duty be allowed for, is a real increase of £260,000, though it is an apparent decrease of £3,420,000, upon the receipts of last year. My total expenditure I have stated at £86,967,000, leaving a deficiency which I have to meet of £1,917,000, besides the margin which, of course, it is my duty to provide. But before I turn to consider what course we are to take to obtain this sum of £1,917,000, or practically £2,000,000. I am anxious to recall to the mind of the Committee exactly how the deficit has arisen. It arises entirely from the Navy annuity, and from the increases in the Army and Navy Estimates. This is how the account really stands, as compared with last year's Budget. I have more to pay for the Army by £606,000; I have more to pay for the Navy by £602,000; I have to meet increased charges on other Services amounting to £342,000; and there is the naval annuity to provide for of £1,430,000, making a total of £2,980,000. Besides this I have to hand over to the local authorities extra Probate duty to the amount of £730,000, and I lose by the surrender to the local authorities of the excise licences in exchange for the grants in aid which I take back—£645,000. Therefore I am in a worse position by £4,355,000. And after taking credit for the margin of revenue over expenditure which I left last year—£212,000—I am still apparently worse off by £4,143,000. On the other hand, the revenue last year came in better than I expected by £1,646,000, and over and above that I hope this year to get a further sum of £580,000, making in all £2,226,000. Deducting this total, by which I am better off, from the total I have just stated, by which I am worse off, I get the deficit already stated of £1,917,000.

It will thus be seen that I have to find resources to meet the sum of £1,917,000 besides the necessary margin. Under these circumstances, one thing is apparent, and that is that no interest can fairly look for any remission of taxation. I will frankly admit that there are several directions in which I should hay liked to give relief, and some quarter where, for other reasons than relieving the taxpayer, an abolition of duty might have been desirable. I should have wished to adopt a recommendation of the Royal Commission, and to abolish the silver plate duties; but the Committee will remember that this not only involves the loss of the tax, but possibly the payment of a heavy drawback. I have not the means at my command for such an operation, and I am not prepared to impose fresh taxation to carry out the abolition of this tax. I must not indicate the relief I should like to give in some other quarters lest I should excite hopes which I may not be able to fulfil. But I sincerely trust that, having had two years' running to deal with abnormal expenditure—in one year my surplus was destroyed by the proposals of my right hon. Friend the President of the Local Government Board, and this year by the proposals for national defence—I may, in the coming financial year, have the gratification of proceeding to some readjustment of taxation which will give relief where it is due. At present I cannot aggravate my difficulties by increasing the sum which I have to find to make both ends meet.

It will be observed that the sum which I have to meet is in round figures £2,000,000, and by a remarkable coincidence it precisely corresponds to the additional burden imposed upon us by the Naval Defence Bill. The increase in the Revenue would have been sufficient to meet the loss from the relief of local taxation of about £1,400,000, which was carried over to this year, as well as the increase in the Army and other Services, exclusive of the Navy. Now when I spoke last year I stated that I did not consider myself entitled to take into account the probable increase of the revenue, nor the revival of trade which I hoped to see established. I had to contemplate the possibility that the additional sum to be surrendered to local authorities would have to be raised by extra taxation; but the revival in trade and the increased revenue have enabled me to discharge these liabilities without any additional taxation whatever. It is the Naval Defence Bill which has put me in the position of having to arrange to meet a deficit of £2,000,000.

At this point I would remind the Committee that last year I expressly reserved the application of the £1,000,000 to be saved in the present year—viz., the Conversion Scheme, and said that I did not wish to pledge myself or the Government 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 public debt. "But there," I said, "it stands—a sum of £1,000,000, which will be added to the National resources in the year 1889–90, and it will be followed by a yet larger sum in the following year." As it has turned out, while the saving in the first year is £1,000,000, it will in subsequent years be £1,500,000. What I propose, therefore, is this. I propose that £1,000,000 of that saving should be annually applied to meet a portion of the deficit due to the Naval Defence Bill, while the £500,000 should be allowed to go to increase the fund available for the diminution of the Debt. If I were to act according to precedent, I should be entitled to take the whole of the saving for the benefit of the taxpayers. In no Conversion Scheme has the saving effected on the interest been applied to increase the sinking fund. In the Conversion Scheme of 1884, my right hon. Friend the Member for South Edinburgh gave the whole net advantage of his Conversion, such as it was, to the taxpayer. By my Conversion operation, on the other hand, if my present proposal is accepted, there will be an amount of something like £500,000 a year added to the sum available for the reduction of the Debt. The only argument which I can imagine may be pressed against this proposal is that I ought to give the whole of the saving to the reduction of the Debt, because two years ago I diminished the amount available for that purpose by £1,500,000.

MR. CHILDERS (Edinburgh)

Two millions.


Yes, £2,000,000; I am obliged to my right hon. Friend. But I have explained before that I consider myself perfectly justified in the course then taken, and if, as I held, and hold, £5,000,000 besides the old sinking fund is a sufficient and ample annual provision for the reduction of debt, then I feel that if, out of the £1,500,000 which is saved by my Conversion, I add £500,000 to that provision I am doing as much as the most rigid financial purist could expect. I believe that a great majority, both in this House and out of it, will think that I have taken a reasonable, fair, and businesslike course in applying this £1,000,000 as I propose to apply it—to meet a portion of the increased charge due to our naval defence plan. The effect will be to diminish the total fixed charge for debt from £26,000,000 to £25,000,000, but out of that £25,000,000 there will be as much devoted to the reduction of debt as is devoted now out of the £26,000,000, and after the present year there will be £500,000 more so devoted. Of the £25,000,000, £19,500,000 in round figures will go in payment of interest and £5,500,000 in reduction of Debt.

The deficit now has reached the more manageable sum of £917,000. How is it to be met? There are not wanting people who will suggest a very easy expedient. One halfpenny on the income tax would cover the whole amount, and such a course would produce no friction, no remonstrances, no agitation, no resistance. The income taxpayers are so accustomed to be made the victims of emergencies and of financial timidity on the part of Chancellors of Exchequers, that they would only be grateful because it was not a penny that had been imposed, and they were only mulcted in a halfpenny. Inventive electioneers have already announced that the shipbuilding proposals would involve a large increase in the income tax, but those who have listened to and followed the exposition of my views as regards the income tax will have felt that I consider myself absolutely precluded from taking this easy and tempting course. I am not prepared to propose additional taxation which will weigh to any extent upon the struggling professional or trading class, the men with incomes from £300 to £600 and £700 a year, whose situation requires them to spend all or nearly all that they earn—the men who have no margin, or only a very small margin, which they can lay by. I would look to the surplus which can be put by rather than to the resources which cannot be diminished without imposing a sacrifice out of proportion to the sacrifices made by other classes of the community. The Death Duties afford me the means of reaching accumulations such as I have described, and accordingly it is to the Death Duties that I turn, and I look to see whether on this field I can find some constitutional way of meeting the requirements of the national exchequer. I will not impose an additional tax on those whose accumulations only just suffice to produce an income which, under the Income Tax Act, is considered so small as to deserve the application of reductions and exemptions. For on the whole, I think it will be generally recognized that it is the men whose fortunes are considerable who pay least in proportion to their aggregate income and property. I propose, therefore, to look to the estates which amount to £10,000 and upwards, £10,000 representing an income of about £300 or £400 a year, and not more. What I propose is to levy an additional tax of 1 per cent on all estates of more than £10,000, whether they consist of realty or personalty, and to do this by means of a separate duty, partly because I do not wish to mix it up with the Probate Duty, and partly because it is not desirable that the inequalities which attach to the existing Death Duties, and which can be justified in them, should extend to the new tax. In the existing Death Duties real property, even when it passes absolutely, is always charged on the life interest. The new duty will be charged similarly on both realty and personalty—that is to say, on the capital value when the property passes absolutely, and in the case of settled realty or settled personalty on the interest actually taken by a successor. I estimate that the yield of this new duty will be on a full year £1,000,000, but that in the present year it will produce £800,000.

The proposal just stated is, I know, open to many objections. One serious objection which may be urged is this. It may be said, "If you have recourse to the Death Duties at all, why not deal with them as a whole?" I think I can give some excellent reasons why that is impossible. Any Chancellor of the Exchequer who can simplify the Death Duties, and reduce them to a more equitable and simple form will have a great feather in his cap. But I may recall to the Committee that, some years ago, the right hon. Gentleman the Member for Mid Lothian (Mr. Gladstone) said that to re-arrange the Death Duties would take an entire Session, and this Session, as hon. Members know, is mortgaged for other work. The right hon. Gentleman said it would take an entire Session, and I entirely agree with him. I hope the Committee will allow me, although I have detained them so long already, to say a few words more on the subject of Death Duties, because it is a subject to which the public attention has been constantly drawn, and it is a subject on which great misconception prevails. I know that it will be said that it would be wiser to deal with the whole Death Duties, as a whole, instead of increasing a particular duty, but it is impossible to proceed in that manner. The reconstruction of the Death Duties does not mean simply putting realty and personalty on the same footing. The deeper we go into the question the more insoluble are the problems presented. It is administratively impossible to put realty on the same footing as personalty, if you maintain the present system of duties or the present legal machinery affecting the devolution of land. But that is not the only difficulty. In any complete reconstruction of the Death Duties the relation of Probate and Legacy Duty would have to be revised. The question of dealing with the various interests involved in settlements would have to be considered, and the difficulties of detail would be almost exceeded by the difficulties of coming to a conclusion on two great questions of principle which lie at the very foundation of the system. One is this, "Are you, or are you not, to abolish the scale of consanguinity?" If you do not abolish this scale you will be unable to deal in a simple manner with the Death Duties, but if you do abolish it I believe you will run counter to the general feeling of the country. The next great point which would have to be settled arises in connection with settlements. If you are to tax settled property equally with property passing by will you will have to decide whether you will put the tax on the corpus of estates or upon the separate interests arising under the settlement or will. If you put it upon the corpus you will in fact be taxing more heavily those who are near than those who are more remote. On the other hand, if you put it upon the interests, you will find that the loss to the revenue in the first year will be enormous, because it practically amounts to giving up the Probate duty which is paid immediately on death. It must, therefore, be seen what large questions spring up in dealing with the Death Duties, and how right the right hon. Member for Mid Lothian was when he said that it was a matter which would occupy an entire Session. But from the point of view from which I regard it, the problem assumes even greater difficulties than those which the right hon. Gentleman pointed out. The Committee will remember how I left the matter last year, when I raised the Succession Duty until it stood on a par with that portion of the Probate Duty which still comes into the Imperial Exchequer together with the Legacy Duty. They will remember that personalty now pays 1½ per cent to the Exchequer, and that a corresponding addition has been made to the Succession Duty, so that whether for lineals, collaterals or strangers the rates of duty are now equal to Probate and Legacy Duty combined. But, although the amount of the tax on realty and personalty is, therefore, now the same, yet there is one important difference in the incidence of taxation on the two classes of property, namely that realty always pays on the value of the life interest while unsettled personalty pays on the capital value. But it must be borne in mind that, if realty still derives benefit from the system of Death Duties, realty pays towards income tax on its gross income, while personalty only pays on the net income. The landowner, therefore, pays income tax on a much larger sum than he actually receives, the excess amounting, I believe, to as much as 20 per cent; in fact, the right hon. Member for Mid Lothian once said that the land paid 9d. income tax, when personalty paid only 7d. As against the benefit that land and houses may obtain from the Death Duties, there is, therefore, the punishment they receive from the Income Tax. Any revision of the system by which the benefit land now receives from the system of Death Duties was taken away must be accompanied by an alteration of the incidence of the income tax upon it. In point of fact, we are in this position—that the alteration of Death Duties would have to be considered pari passu with a revision of the income tax, the Inhabited House Duty, and the system of valuation all over the country. I trust it will not be felt that I am shirking my duty by not undertaking this gigantic task in the present year, already so heavily mortgaged for other work.

I do not think it necessary to apologize for having gone into topics which, though not absolutely necessary for the purpose of explaining this Budget to the Committee, are supremely important for the consideration of questions connected with it. But if in the present year I am unable to deal with the Death Duties as a whole, there is no reason why I should not ask hon. Members to permit of such Amendments as will tend to prevent several evasions of the duties as they now stand. I trust I shall have the concurrence and sympathy of hon. Members in several proposals which I have to submit for preventing ingenious evasions of the duties imposed when property changes hands at death. The Committee is probably aware that death-bed gifts are caught and taxed by what is called the account duty, and not only death-bed gifts, but gifts or voluntary dispositions made within three months of death. I am sorry to say that the experience of Somerset House has proved that the three months fixed in the Act is insufficient to protect the Revenue, and I propose to extend the period to 12. If the State expects that accumulations are to pay tribute to the State when transferred in the natural course of events from one person to another, I think there will be no sympathy with devices by which the State loses what the Legislature intended it to gain. But there is another and a more fruitful form of evasion. A father makes over his property to his son during the latter portion of his life, reserving to himself an annuity, or making a condition that the son should pay him an annuity during his (the father's) lifetime. By this means a large amount of property is sometimes passed over, and the effect is that the bulk of the property does not pay succession duty at all. No doubt such a step involves considerable confidence on the part of the father, but that confidence appears to be stimulated by the large saving which is thereby secured to the family at the expense of the State, which suffers accordingly. We propose that such transfers shall be taxable when discovered; whenever the transfer has not been an absolute free gift, but when the donor has reserved some benefit to himself. If the gift is bona fide then it would not be taxed, but if there is consideration for the transfer, direct or indirect, then the ordinary Death Duties should be paid.

But I have not yet exhausted the forms of evasion. Another method is practised sometimes by partners in a firm and sometimes by members of a family. This is done by partners agreeing that they will put their separate properties together into a kind of pool, under which, according to the present law, the survivors would not pay on the benefit which they derive from the death of their partners in such pool. Here is an illustration of the same thing in a family:—There are three sisters, Mary, Jane, and Rebecca, each owning £3,000. In the natural course, if one dies and leaves her £3,000 to the second and third they will pay upon the £3,000 which she leaves to them; but if all three make an arrangement under which they agree to put their property together so that whoever survives receives the benefit from the death of the other, then the property is held by some not to be liable to Death Duty. I have stated the matter in a popular form which lawyers may not recognize as absolutely correct, but this is in substance the mode of evasion. Legal opinions have differed as to the precise effect of existing Statutes, but I am advised that a clear declaration of the law is very necessary for the defence of the Revenue. This may not be so important in the case of relatives, but in the case of partners I believe that, owing to the doubtful state of the law, very large sums escape the payment of Death Duty. There is still another mode of evasion which I think we are bound to meet. If a man insures his life and bequeaths his policy with the rest of his property, of course the proceeds of that policy pay duty like everything else. But when a man during his life assigns his policy to his son, though he himself continues to pay the premiums upon it, in this case the proceeds of the policy pay no duty, though obviously such an assignment of the policy while the burden of paying the premiums is retained is simply made with the object of escaping from paying toll to the State.

There is one further change which I propose, not to check evasion, but to do away with an exemption at present recognized by law. The point arises in connection with settlements. The whole theory of the Death Duties is that the State claims a share in all property passing on death. If I may use phrase of legitimate exaggeration, a portion of the Death Duty is practically evaded by settlements. From my point of view, every settlement, if not a fraud upon the Death Duty, at all events makes a serious inroad upon what I may term the rights of the Chancellor of the Exchequer. If there is a man with a property of £100,000 and five children, I should look upon him as a man who, at his death, will transfer £100,000, and who will consequently pay Probate Duty to the extent of £3,000. If he settles during his lifetime £10,000 upon each child, he diminishes the property which will pass at death to £50,000, and it will only pay £1,500 Probate Duty. Settlements, it is true, pay a small duty, but nothing as compared with the toll to the State which the property comprised in them escapes. I do not feel sure that equity and analogy do not require that a higher duty should be put upon settlements to compensate for the heavy loss to Death Duties which they bring about. But I am not prepared to submit a proposal in that direction to the House except in the following case, where, I think, there is a distinct infraction of the principle of the duties even in their present form:—As the law stands, if a man settles £10,000 on his daughter after his death and promises at the same time to pay her £200 a year for her life, she is allowed to deduct the value of that which she received during the lifetime of the settlor on receiving the £10,000 at his death. I think that that is an inequitable arrangement. We have to look, not so much to the amount of benefit which may be received at a given moment, as to the share of the State in property transferred by death. If the property passes away from the donor during lifetime, well and good, but if he purposely makes arrangements by which he retains the property in his hands till his death, and the property only passes at his death, analogy and equity seem to me to require that the whole property should be subject to Death duties. I propose, therefore, that such a deduction should no longer be allowed.

The result of the abolition of these exemptions and restraints on evasion will ultimately, I have no doubt, have a considerable influence on the Revenue. But their operation will be gradual, and I am not justified in adding largely to my Estimate of the Revenue of the year on their account. I took them into consideration in fixing the Death duties at the amount which I have already stated to the House. What I gain from the Death duties this year, over and above my original estimate, I consider to be limited to the £800,000 derived from the new estate duty.

Now I look with pleasure at the fact that I am approaching the end of my task. But I have still to find £300,000. This I propose to effect by doing an act of justice and reparation to the right hon. Gentleman the Member for Mid Lothian (Mr. Gladstone). I must ask the Committee to carry its mind back to the year 1880, when the right hon. Gentleman substituted a beer duty for the duty on malt and certain other duties connected with the manufacture of beer which had previously existed. The problem he had to solve was to place such a tax upon beer as would be a full equivalent for the Duties which were abolished, and give a slight advantage to the Revenue. He did this by assuming that two bushels of malt would yield 36 gallons of beer of a specific gravity of 1,055, and by imposing a tax of 6s. 3d. either on the two bushels of malt or on the 36 gallons of beer of a specific gravity of 1,055, which were supposed to correspond to them. A great resistance was offered by the representatives of the brewers' interests, who asserted that the imposition of 6s. 3d. on 36 gallons of beer of the specific gravity of 1,055 would yield a great deal more than the right hon. Gentleman estimated would give, in fact, a duty £800,000 in excess of his Estimate. In the long run it has been proved that my right hon. Friend was entirely right. There was no such increase of £800,000; but the right hon. Gentleman yielded to the brewers' contention, and raised the standard of specific gravity from 1,055 to 1,057. What I propose to do is to revert to the original proposal of the right hon. Gentleman to take the duty of 6s. 3d. on 36 gallons of beer of the specific gravity of 1,055, instead of, as now on 36 gallons of the specific gravity of 1,057. In doing so, I shall obtain the £300,000 which I want, while adding something perfectly imperceptible to the cost of a barrel of beer. The duty on beer is at present 2d. per gallon, and the addition proposed, if it could be thrown on the consumer, would only increase the cost of beer, on the average, by about 1–14th part of a penny per gallon. The fact is, the addition is so extremely small it will be felt in no quarter whatever.

I beg the Committee to observe that, while obtaining my Revenue by an addition to the tax which cannot be felt by the consumer, I am also doing an act of justice as between different classes of brewers. I have stated that the Beer duty can either be levied upon the amount of material used—i.e., 6s. 3d. upon every two bushels of malt, or a corresponding quantity of other material, or it can be levied upon the amount of unfinished beer, commonly known as worts, which is produced from that material—i.e., 6s. 3d. on 36 gallons of worts at a specific gravity of 1,057. Now the duty is levied either upon the malt or upon the specific gravity of the worts, according as the one or the other method of levying it is more advantageous to the Exchequer. Where the brewer gets less than 36 gallons of beer of the given specific gravity out of his two bushels of malt, the duty is levied on the malt—i.e., on the material; where he gets more, it is levied on the worts—i.e., on the produce. Now, out of the 13,000 brewers at present existing in this country, 11,000, being small and unskilled men, fail to produce 36 gallons of worts of a specific gravity of 1,057 from two bushels of malt. They produce, on an average, only 34 gallons, yet they pay as if they produced 36 gallons, with a deduction of only 4 per cent. The larger and skilled brewers, with their great capital and highly-developed methods, obtain 36, or a larger number of gallons of worts of the specific gravity named from their two bushels of malt. But they never pay on more than they actually produce. They pay on the worts themselves, after their specific gravity has been measured by the saccharometer. The skilled brewers on a great scale are entitled to the advantage which their capital and skill give them, but they are not entitled to have that advantage heightened by the action of the Revenue laws. This inequality will by our proposal be remedied. There were two courses open to me. I might either level down and reduce the payment made by the smaller brewers, or I might level up and put a slightly higher duty upon the skilled brewers. As I am still short of the necessary revenue, I propose to level up, and in this manner to obtain the £300,000 required to balance the account. The expenditure, as previously given, is £86,967,000, or, deducting the saving on debt charge, £1,000,000, it is £85,967,000. The revenue, as previously given, is £85,050,000. Add the £300,000 obtained by the readjustment of the beer duty and £800,000 obtained by the new estate duty, and we get a total of £86,150,000, leaving a margin of revenue of £183,000.

I have now finished my long story as regards both the past and the present year. There is one other topic with regard to which I am aware that there is much public expectation, which the Committee will notice I have not thus far touched upon in my speech—I mean the question of the rehabilitation of the gold coinage—a matter, I admit, of extreme and urgent importance. It must not be inferred from the fact that my Budget proposals do not embody a plan for dealing with light gold that I in any degree recede from the position which I have taken up with regard to it, or from the announcement in the Queen's Speech that we should deal with it. But to my mind any scheme dealing with light gold involves matters of such complexity that it must be embodied in a separate measure. It would be a simple matter to provide for the restoration of the gold coinage to its full weight if it were legitimate to treat that subject by itself, and if it were right to throw the whole burden of such a restoration on the taxpayer. But I am not prepared to throw this burden on the taxpayer without some compensation. If it be the duty of the State to take upon itself the cost of maintaining the metallic currency—and I am inclined to admit it—then I say that the State is entitled to inquire whether it is in receipt of its fair share of profits from the paper currency. The two questions are bound up together, and I am reluctant to deal with that branch of the business which involves expense to the State without touching that other branch where we may hope to some extent to reimburse ourselves. But if I am right in regarding the question of the currency as involving both these considerations, then it is no longer a simple matter to deal with. Merely to restore the gold coinage is simple, though expensive; but to propose, side by side with the restoration of the gold coinage, important changes as regards some of the conditions and forms of fiduciary issues, is a delicate and intricate task. I hope shortly to lay proposals before the House; but I am not prepared to complicate my Budget with these proposals, which are sufficiently important to form the subject of a separate measure, and here it is right that I should add one word of caution. I see it is expected that I may cheapen money and set free a considerable amount of gold by the proposals which I am expected to make. I wish to state in the most emphatic manner that whatever scheme I may bring forward I should be most reluctant to weaken the reserve of gold which exists in this country to any appreciable extent. I do not say that the lines drawn by Sir Robert Peel are absolutely immutable; I do not say that their may not be a certain economy of gold; but, anxious as I naturally should be to increase the profit of the State by the utmost economy of gold which prudence permits, prudence in such a measure seems to me bound to play a primary part, and to forbid the temptation to add largely to our available resources by the issue of paper unrepresented by gold.

And now, I have come to the end of my long story; but before I sit down, I would wish to be permitted to present to the Committee in the fewest possible words the broad results of the several Budgets which I have had the honour to introduce. I have been charged with proposing "finicking" measures, with a want of breadth in my finance, with harassing various interests by the imposition of some small new taxes. But let me recapitu- late the main features of the last three Budgets. Allow me to present a balance-sheet of my deeds and misdeeds, assuming that the House is pleased to assent to the measures which I have proposed to-night. I will take my misdeeds first. I have diminished the Sinking Fund by a million and a-half—originally by two millions, but I replace half a million. I have increased the Death duties on fortunes above ten thousand pounds by 1 per cent. I have added to the succession duty the equivalent of what remains of the Probate duty as an Imperial tax. I have imposed a duty of some £150,000 on sparkling wines. I have put £300,000 on beer. I have increased the Stamp duties by about £500,000. I have caught in the net of Transfer duties some foreign securities which before were exempt. These are my misdeeds. On the other hand I have reduced the Tobacco duty by £600,000. I have reduced the income tax by £4,000,000. I have given £2,500,000 in relief of local taxation. I have provided £2,000,000 extra for national defence. I have converted upwards of £500,000,000 of Consols, securing an annual saving in interest of £1,400,000 at once, and £2,800,000 by-and-bye; and I have been able to pay off more Debt during my two financial years than has ever been paid off before in the same time, save on one occasion. Surely, the scale of these operations is no petty scale. I have been favoured by fortune in some respects. I claim no exclusive merit for what I have been able to perform, but whatever may be said of my stewardship, I do not think the charge can fairly be brought against me that I have not dealt in a broad spirit with the national finances, or that, in the two years during which it has been my fortune to preside at the Exchequer, I have not carried out some measures which will redound to the lasting benefit of the country.

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 1st day of August, 1889, until the 1st day of August, 1890, on the importation thereof into Great Britain or Ireland (that is to say): on tea six-pence per pound.

*MR. CHILDERS (Edinburgh, S.)

The Committee will gladly recognize the clearness which has distinguished my right hon. Friend's statement. Following the course usually adopted on these occasions by those who sit on this Bench, I will abstain from further criticism than is involved in putting come questions as to details. I could have wished my right hon. Friend had said a little more about the light gold question; but I am rejoiced to hear the taxpayer is not to be called upon to make good the large prospective charge which has now accumulated if our gold currency is to be permanently rehabilitated. What the right hon. Gentleman has said as to the source from whence this change is to be met is probably satisfactory far as it goes. But when he speaks of dealing with fiduciary issues, by which I presume he really means paper money, what he is to propose may be something very small or something very considerable; and it will be for the right hon. Gentleman to consider whether he cannot a little further take the House into his confidence. In the early part of his speech my right hon. Friend said that he received last year an additional sum from currants, because the French Government had taken steps for restraining the import of Greek currants into France. May we not, I would ask, expect precisely the converse of that result to follow from the proposal of Her Majesty's Government to restrain the import of French and other sugar into this country, and will not this country suffer disadvantage from that proposal? Then as to the Death duties. I need not go back to the debates of 1885 on that subject, or discuss to what extent the fortunes of the two political parties were affected by what took place on that matter. But my right hon. Friend is now proposing a new duty, to which may be given the name of an Estate duty. This fresh Death duty is to be levied equally on all estates, real or personal, which are worth more than £10,000. The introduction of such a proposal sounds the knell of Differential Death duties; because, if we add to the Death duties a tax which for the first time absolutely falls equally on real and personal property, it will be impossible in future to maintain the Differential duties in other respects on those two classes of property. Without expressing any opinion on the details of the plan—of which we cannot judge without seeing the Bill—I am bound to say that the admission which my right hon. Friend has made is worth five or six years of debate on this subject; and, so far, we have gained what we fought so hard for in the time of the late Government. Of course, there are some omissions from the Budget which we all deplore. I am under the impression—although it may be wrong—that my right hon. Friend distinctly promised that he would this year remit the Silver duty. [The Chancel or of the Exchequer indicated dissent.] At all events, I am sorry that when there is an opportunity, as there is now, of settling the question of the drawback without any excessive charge on the present year, my right hon. Friend could not find it in his heart to put an end to that most objectionable duty which produces a very small sum, and is not only disadvantageous to this country, but also to India, where great disappointment will be caused by its retention. With regard to the Beer duty, I hope that the Chancellor of the Exchequer has convinced the brewers that they are wrong as to their objections, both to the original plan of my right hon. Friend the Member for Mid Lothian (Mr. Gladstone), and even to the concession which my right hon. Friend made before his Bill passed through Parliament. That part of the Budget will, I hope, receive unanimous support from this side of the House. I am sorry to find that my right hon. Friend adheres to his plan relating to the Sparkling Wine duty. Of course, in a year of deficit there may be a difficulty in dealing with the matter; but I am afraid my right hon. Friend will find that there is, on the part of the trade, an undiminished objection to the present arrangement. In conclusion, I desire to know how soon the necessary Bill will be put down for a Second Reading. I presume that tonight the Tea duty and the Income tax resolutions will be proposed; and that beyond that we shall not go on this occasion. When the country has had full notice of the proposals of my right hon. Friend, which, although complicated, have been very fairly and clearly stated, the House will be able to enter upon their due discussion.

*SIR W. BARTTELOT (Sussex, North West)

I must most sincerely congratulate my right hon. Friend the Chancellor of the Exchequer on the clear and able statement he has made; and I believe the Committee and the country will admit that the right hon. Gentleman has not dealt with finance in a niggardly spirit, and that he has done some great things, which will redound to his credit as a financier. With regard to his proposals as to the Death duties, I do not think that they will be particularly popular in the country, because my right hon. Friend who has just spoken hit the right nail on the head when he said they might lead to an equality of taxation in respect to Death duties without reference to the degree of relationship which individuals might bear towards the testator. That I do not think would be a wise course, nor do I think it would commend itself to the public generally, who would consider that affinity ought to be regarded, and that the tax ought to bear a proportion to the relationship in which those to whom he leaves his money stand to the testator. I wish to obtain some information in regard to local taxation. Last year my right hon. Friend (Mr. Goschen) said he had arrived at the conclusion that personal property ought to pay a fair share of local taxation as against real property, and he gave us half the Probate duty. I have never been able to see the great difference between a subvention and a definite tax, excepting that from the latter a benefit or a loss may result, while by the former a clear and definite sum may be reckoned upon. The Chancellor of the Exchequer stated as clearly as possible that there was to be £5,500,000 in relief of local taxation, as against the £2,500,000 previously provided. Has the right hon. Gentleman, in his Budget, made up that £840,000 which he failed to provide last year, owing to the withdrawal of the horse, van, and wheel tax? He has pledged himself that the withdrawal of these proposals should not make any difference to the additional £3,000,000 promised in aid of local taxation. The Local Government Bill brought in by my right hon. Friend the President of the Local Government Board (Mr. Ritchie) was not a very popular proposal, but as an Act it has been accepted, and all have endeavoured to make it work successfully; but now it is expected that the promised relief will be given. The proposed van and wheel tax was a reasonable tax, and if the Chancellor of the Exchequer had had the courage to persist with it, without making any exemptions, he would have been successful; for he would have received the support not only of all those who do not own carts and horses, but who have to contribute to the maintenance of the roads, but of, as I believe, a majority of those who do not own carts. Nothing more than the subvention due up to September of last year has been received, though there was another half-year's subvention due up to April 1. It was understood that the subvention was to continue till the 1st of April, and that the new taxation was to take effect from that date. Will my right hon. Friend the Chancellor of the Exchequer say whether any loss, and if so what loss, will be sustained by this arrangement? There is one other question I should like to touch upon. The payment for the compulsory slaughtering of diseased cattle falls entirely upon the districts into which the cattle are introduced, although the local authorities may have done all they can to obviate the introduction of diseased cattle. I think that in such cases some compensation should be afforded from the Consolidated Fund. I will not go any further into my right hon. Friend's Budget, which, on the whole, is a fair and reasonable one.

*MR. S. BUXTON (Tower Hamlets, Poplar)

I desire to follow the example of my right hon. Friend (Mr. Childers), and not do more on the present occasion than ask a few questions. One of the most remarkable features of the Budget is that the right hon. Gentleman the Chancellor of the Exchequer proposes to reduce the annual payment devoted to the National Debt to the lowest point reached during this century—namely, to 25 millions. I understand that the right hon. Gentleman proposes to use £1,000,000 of interest which has been saved on the concession of the Debt, and which, under the arrangement of 1876, ought to remain within the Sinking Fund to meet the present deficit. The right hon. Gentleman also proposes to devote the further saving of £500,000 (which, by the way, will not be available till next year), towards the Sinking Fund. How does the right hon. Gentleman propose to give effect to and guarantee this plan, because this was the second time in three years that he has robbed the Sinking Fund?


I beg my hon. Friend's pardon. I do not rob the Sinking Fund. The diminution of interest leaves it precisely at the same amount as before.


The right hon. Gentleman will admit that in 1887 he robbed—using the word without offence—the Sinking Fund of two millions of year; and now instead of allowing this £1,000,000 to remain within the Sinking Fund, he proposes to take it out and apply it to certain other purposes. This to my mind is again to rob it. When the Sinking Fund was instituted by Sir S. Northcote in 1876 its object was that instead of applying varying annual sums to the interest and redemption of the Debt, a fixed sum should be taken every year for the purpose, and that any saving effected within that amount should go to the further redemption of the Debt. The right hon. Gentleman must surely allow that his proposition is an invasion of the principle on which the Sinking Fund was instituted; and I should like some guarantee that the £500,000 which the right hon. Gentleman proposes to restore to the Fund next year will actually be so restored. Passing from the question of the treatment of the Debt; the greater part of the Budget will probably meet with approval from the Opposition side of the House, because to a large extent it is the Budget of 1885, on which the Liberal Government were defeated—for it increases the Death duties and the duty on beer. The increase of the Beer duties is advantageous; and all sides agree that if the Death duties can be further raised it would be well to take that course. In this process the right hon. Gentleman is about to institute a system of graduated taxation in regard to the Death duties, for he taxes additionally only estates of £10,000 and over. He is thus, in another direction extending the system of graduated taxation carried far by Sir S. Northcote in regard to the income tax. I, for one, wish him all success in the attempt. We congratulate the right hon. Gentleman on the very interesting financial statement he has laid before the House and on the very satisfactory progress which he has been able to point to in respect of the general, financial, and trade prospects of the country. I think, however, that the right hon. Gentleman was hardly sanguine enough in taking the Revenue at such a low figure, though that was a fault on the right side.

*MR. BARTLEY (Islington, N.)

There are two points which I wish to place before the Committee for their consideration—the question of the Debt and the question of how the Budget will affect the different classes of the community. It is gratifying to know that we have during the last two years been enabled to pay off so large a sum of our Debt. While this has been accomplished, however, we have on the other hand, been very largely increasing the local debt of the country. During the last 15 years we have paid off something like £67,000,000 of our Imperial Debt, and if that stood alone it would be a satisfactory condition of affairs; but we have increased our local debt during the same period by £100,000,000. We are now paying, in spite of our increased wealth, larger population and national income, a proportionately very much smaller sum towards the extinction of the National Debt than we were paying 15 or 20 years ago. I think it is a pity that we did not get rid more rapidly of this incubus, especially when it is borne in mind that we are about the lowest taxed nation in Europe. Considering the great increase in our wealth of late years, I think it is desirable, looking to the future, with its emergencies and contingencies, to emulate in some degree the speed of the Americans in getting rid of such a burden. But there is another matter I wish to refer to, and that is how this Budget is going to influence the great mass of the people. It seems to me this question has hardly been considered enough in connection with the Budget, whether everybody pays the proportionate share that may be fairly claimed, or whether we have a system of taxation which falls harder upon one class than upon another. The taxation of the country seems to me, under the Budget we have just heard explained, to amount to something like £73,000,000—that is to say, the Customs, Excise, land tax, income tax, Stamp Duty, and Probate duty, amount to something like that, leaving out, of course, such matters as Post Office revenue and such matters as may not properly be considered taxes, but are the result of certain businesses carried on by the country. Now, the indirect taxes are, of course, paid by all classes of the community, while other taxes, such as the Stamp duty and the income tax are paid by the richer classes. What I want to inquire is, how does the burden of Imperial taxation really affect the poorer classes, and especially the poorest of the poor? Do they contribute fairly towards the amount, and does the present Budget really relieve or aggravate the hardships of the poor? There is some idea that the poorest of the working classes do not contribute their fair share to the Imperial Exchequer and if that is so I think we should know it; we should understand whether it is so, and what seems to me a very reasonable way of inquiring into the matter is to ascertain distinctly what the national income is, and what the National Revenue is, and then what the income tax would be if everyone paid in proportion to his earnings. Those who have studied the history of the national income vary in the amounts they arrive at, but all put it down at something like 1,200 or 1,300 millions sterling. Mr. Giffen and the late Professor Leoni Levi, with others, came to the conclusion that 1,250 millions sterling is about the National Income. Now, if we take the gross income of the country, and the gross amount the Chancellor of the Exchequer requires for his Revenue we should find that if everybody paid exactly according to his earnings, so much in the pound, all would have to pay 1s. 2d. in the pound all round. Now, the question I want answered is whether, under the Budget, the poorer people pay more or less than this. There is no question of Party politics involved, but it is a matter of enormous importance, and those who have worked among the poorer classes and know their difficulties and trials have a right to know whether their payments to Imperial taxation are more or less than this proportion. It has always been held that those who earn very small wages should not pay quite as much in the £ as richer men. I think that is a system of finance that has been established over and over again, and it has been established again in the Budget of to-day in regard to the Death duties, and in regard to the income tax it is acknowledged, smaller incomes being allowed a rebate up to £400 a year. Now, as a matter of fact, taking the outside earnings of the poorer classes, do they contribute more or less than this normal amount of taxation I have mentioned? It is a question of very great importance that we have to face fairly. I have gone into the question, and I cannot help thinking from the statistical investigation I have made that the classes who pay most taxation in proportion to their incomes are the poorer of the working classes, and the poorest of the richer classes who just come within the income tax. If that is so, then our fiscal system is not quite as it should be. Of course it is obvious that those who earn very small wages from £20 to £40 a year would, if they paid in equal proportion to richer classes, have a heavier burden, because the necessities of life are the same on both sides. It is true that the very poor who drink no alcoholic liquor and smoke no tobacco and consume no tea or dried fruits, &c., pay very little to the Exchequer; but what I want to find out is not what a small number of people might pay, but what they do, with their known habits, pay on the various items of consumption. I am sorry the Chancellor of the Exchequer has run away for the moment, for I am sure, though my inquiries may seem microscopic, they are very important as bearing on the proportion of taxation borne by the working classes. For instance, take the case of a family earning 15s. a week, or £39 a year, that family, under the present Budget, would contribute £2 19s. 5d. in taxation, and this amount, we may suppose, made up in the following manner: say 8oz. of dried fruits (figs, raisins, &c.) each week, that would be equal to a duty of 1s. 9d. in the year; 8oz. tea per week equals 13s.; 1osz. tobacco, 10s. 6d.; a moderate amount of beer each day, say half-pint at dinner and again at supper, duty 20s.; a glass of spirits each week, for medical or other purposes, duty 10s. 4d.; and, say, the proportion of rent that goes to pay the land tax, 1d. per week, or 4s. 4d. a year. I think I am right in saying that there are hundreds of thousands of families who pay, at least, this amount in consuming taxable articles. The relief that brewing licences may be said to afford may be left out of view, for the number is very small—only 7,000 for the whole country. What I want to press home is this, that this abstemious yet typical family pays £2 19s. 5d. to the Revenue Returns. If it paid what I may call the normal rate of income tax above described—the rate of 14d. in the £—the amount contributed to taxation would be £2 7s. Thus these families pay 12s. 5d. more than if income tax were the basis of the whole taxation, and everybody paid an equal proportion, by 25 per cent. Take another illustration: Suppose a widow and children earning £20 a year; their contribution to the normal income tax would be £1 3s. 4d., but, taking the fair estimate that they pay in indirect taxation on dried fruits, 1s. 9d. in the course of the year; on tea, 14s.; on beer, 9s.; and in land tax in the form of rent, 2s. 1d.; or in all, £1 6s. 10d. So I might go on through various small incomes, and although it may be said that the amounts might be considerably reduced by the non-consumption of beer and tobacco, yet we know it is the habit of Englishmen to drink beer. Further, in the proportion I have estimated it cannot be called a vicious habit, and as a matter of fact if my figures are right, and I do not see how they can be shown to be wrong, the poorer class does pay a much larger amount than they would pay pro rata if everyone paid according to earnings. It follows, if this is so, that the richer classes pay proportionately less. If this be so then a case is made out for the re-adjustment of Imperial taxation. It is true that the better-to-do classes, those with incomes of from £2 to £4 a week, and with abstemious habits, living chiefly in the way I have described, do not pay so large an amount as if an equal income tax were enforced. I am quite aware that Chancellors of the Exchequers have done something to amend this state of things, and looking back over 15 years we find a spirit to amend these anomalies has been abroad. When we compare the proportion of Customs and Excise duties to population then and now I find that not only have Customs and Excise duties been reduced some two millions since 1876, but stamps and property taxes have been increased from 14 to 27 millions, that while on Customs and Excise there has been a reduction from £1 10s. 2d. to £1 5s. 8d., the increase on stamps and property has been from £1 15s. 5d. to £2 18s. 6d. per head, while at the same time there have been reductions on sugar and other transfers in the form of taxation. At the same time I think it is clear that an unfair pressure is placed upon the poorest and upon those at the bottom of the richer classes who just come within the imposition of the income tax and who pay an equal amount to the Customs duties with those just below them. It must be borne in mind, too, that the poorer classes have to pay the Customs duties to the uttermost farthing, for there is no smuggling now, and no possible means of evading the impost, whereas it is notorious—and the Chancellor of the Exchequer has told us as much to-night—that the richer classes do manage to evade a good many of the taxes imposed upon property. There is another branch of the subject closely allied to the consideration of the whole, in this fact, that of the 1,250 millions of which the national income consists, 400 millions are due to the revenue from past savings, and this constitutes an important part of the wealth of the country. It is obvious that to tax at the same rate incomes from past savings and absolute earnings is an anomaly. If accumulated wealth paid its full quota in proportion to that paid by the artizan class, there would be a relief to the taxation on earnings, and I cannot see myself that there would be any extreme hardship. The Chancellor of the Exchequer congratulates himself every year that the revenue from income tax is increasing, but he must bear in mind there is another phase to this, because it indicates that more and more is drawn from the class at the bottom of those who pay the tax. It is obvious that the increase does not come from the richer classes, because during the last few years the extremely rich classes have diminished, and larger incomes have certainly not been made. A great deal of it certainly comes from those just brought within the tax. That is to say, the Chancellor of the Exchequer and his officials—very properly, no doubt, but, still, very hardly—do manage to get into their net a larger number of those upon whom the pinch of taxation is felt most acutely. But I do not wish to dwell on this at any length, and perhaps this is hardly the proper occasion to do so. Our opportunities, however, are rare, and the incidences of Imperial taxation are so important that we are bound to consider it, having in view the fact that it is extremely probable that the burdens of local taxation are likely to increase. I think I have made out my case that smaller incomes of 10s. or 20s. a week pay a larger amount per £earned to Imperial taxation than larger incomes, and I think I have indicated anomalies-that seem to require a revision of our whole fiscal system.

*MR. SHAW LEFEVRE (Bradford, Central)

I will not follow the hon.. Member into a discussion which, however interesting, is scarcely, I think, appropriate to the ordinary Budget for the year. I desire to say a few words on the proposals of the Chancellor of the Exchequer. Assuming that it is necessary to raise taxation by the amount he has mentioned, I have no objection to his two main proposals to raise £800,000 from a revision of the Death Duties and an additional sum—£250,000—from modifications in the Beer duty. With regard to the Death duties, however, I am sorry the right hon. Gentleman has not gone somewhat further, and has not taken the opportunity of doing something to rectify the very great, the serious, the most unjust anomaly that exists in the treatment of leasehold as compared with freehold property. The more it is looked into the more unjust does it appear to owners of leasehold property. I made a comparison some little time ago as to the taxation imposed on leasehold property as compared with ground rents, and assuming that two men have interests in either property to the same amount, and both die, the successor to the leasehold property would have to pay Probate duty and Succession duty, but in then other case Succession duty only would be paid. Even after the changes made last year leasehold property has to pay 14 or 15 times more in the shape of Death duties than the owner of freehold house property does. I say in any-alteration of the Death duties this anomaly should be rectified. But what I want particularly to call attention to is the real increase of military expenditure included in the Budget. This is practically the only opportunity we have for reviewing that expenditure as a whole. I do not propose to occupy much time, but briefly I will state the figures showing the increase and how far it is included in the Budget. If I understand the Chancellor of the Exchequer rightly, the Army and Navy Estimates are increased together by £1,200,000, and there is a further item of £1,450,000 taken from the Consolidated Fund for the Naval Defence proposal, a total of £2,650,000 provided for in the Budget. But there is a further increase not provided for in the Budget. Under the Naval Defence Bill of the 10 millions to be expended in building something like 50 vessels other than for which provision is made in the Estimates, the amount to be expended in the year being £2,800,000.


Not extra?


Including the £1,400,000. That is to say under the Naval Defence proposals out of £10,000,000, the sum over and above the Normal Estimates and spread over a period of seven years, the actual amount to be expended in the year is £2,800,000.


Will the right hon. Gentleman explain how he arrives at that result.


From the details laid before the House.


There is no such figure as £2,800,000. That is the ordinary Estimates, but no one can say what the amount will be; it will depend on how soon the contracts are put out.


There is a Return before the House showing how much of this amount of £10,000,000 is to be expended in each year over and above the ordinary Estimates of the year, and as I understand it, £2,800,000 will be spent in the coming year, £4,100,000 in the next year, £2,200,000 in the next, £750,000 in the next, and the remainder in the fifth year.


Will the right hon. Gentleman give me figures; it is rather difficult to follow him?


I am certain I am right, but my right hon. Friend near me will get the Return from which I am quoting. Assuming that my figures are right, that £1,450,000 is taken from the Consolidated Fund in the year, there is a further sum of £1,350,000 which will be spread over 10 years under the National Defence Act. Then there is a further sum which will be expended under the Act of last year for the provision of ships of the Australian Squadron, no less than £600,000 having to be expended in the year, the proportion of the payment to be spread over 12 years. But I have not yet got to the end of the actual Military expenditure of the year, because, under the Act of last year, provision must be made for the fortification of ports and coaling stations, to the extent of £3,500,000; and I believe I am right in saying that something like £1,000,000 will be spent within the year, although the money will be raised by loan, and spread over a considerable time. Adding these various sums, I find the actual expenditure on Naval and Military affairs will amount ta£35,466,000, of which £32,400,000 is provided for in the Budget, and £3,000,000 is postponed. We have a prospect of yet further expenditure, for the Secretary for War has alluded to the probability of his having to make a demand upon the House for barracks, and evidently contemplates that a considerable sum of money will be expended in the year, although not provided out of the revenue of the, year, but raised by way of loan. I have now got the Return to which I referred, and I find that the sum of £10,000,000 which is to he raised is to be repaid by equal annual instalments spread over seven years; but the actual expenditure within the present year is £2,845,000; in the following year,. £4,415,000; in the third year, £1,900,000; in the fourth year, £740,000; and in the fifth, £100,000. I was, therefore, perfectly accurate in saying that out of the £10,000,000, the repayment of which will be spread over seven years, the actual expenditure within the present year will be £2,845,000. I ask the Chancellor of the Exchequer if I am not right in that?


It is right according to the Paper.


I must assume that the printed statement is cor- rect. It is signed, I see, by the Secretary to the Admiralty. I am therefore right in saying that the actual expenditure is £35,466,000 for this year, or £5,000,000 more than this country has ever expended in any one year before in time of peace. Comparing it with the expenditure of the great Powers of Europe, I undertake to say that the expenditure of this country during the last 20 years has risen in a greater proportion than -that of three, at least, of the four great military Powers — namely, France, Russia and Austria. I have not been able to compare it with the expenditure of Germany 20 years ago, because the German Empire was not then constituted, and it is almost impossible to make out what the expenditure of the various component parts was. As I understand it, the additional expenditure is provided for in part by an increase of taxation to the amount of £1,000,000, and in part by sacrificing the benefit we derive from the conversion of debt. The remaining £750,000 comes from the ordinary increase of Revenue. The Chancellor of the Exchequer not very long ago, speaking on some platform in the country, told us he had sacrificed his Budget to his sense of patriotism, it being necessary to increase the Military Expenditure of the country; but he has sacrificed a great deal more than his Budget, for he has destroyed his power of reducing the taxation of the country. Irrespective of the items to which I have alluded, and but for this enormous expenditure, we might have done away altogether with school fees in this country, or reduced the tax upon tea by more than one half, or done many other things for the benefit of the people. All these opportunities the Chancellor of the Exchequer has sacrificed; he has also sacrificed the Budgets of six possible Chancellors of the Exchequer who may come after him, and three of them will be sacrificed without any benefit to them, simply because he is going to spread the payment of this £10,000,000 over 7 years, while the expenditure will be incurred in 4 years. I can only say upon this point that it seems to me a most serious matter that in time of peace and prosperity, when the country had every reason to hope that there might be a reduction of taxation, we are practically increasing our Military Expenditure by £5,000,000 with the possible additional expenditure for barracks suggested by the right hon. Gentleman the Secretary for War (Mr. E. Stanhope). There is another point I would allude to, and that is the increased amount it is proposed to draw from the Revenue of the Post Office. I would point out how largely increased is this surplus to be drawn from the Post Office as compared with what it was a few years ago. Taking the ordinary Post Office receipts and expenditure, I find that in the year 1883–4, the surplus was £2,885,000; in 1884–5, it was £2,802,000; in 1885–6, £2,920,000; in 1886–7, £2,809,000; in 1887–8, £2,965,000; in 1888–9, £3,434,000, and in the coming year it will be £3,577,000, or nearly £700,000 in excess of net revenue in the earlier years I have referred to. I do not include telegraphs in the amount. I confess I think the increased surplus revenue delivered from the Post Office must be looked at with great care and consideration. My own belief is that it is not wise to be continually drawing an increased surplus revenue from the Post Office and treating the Post Office as an always increasing source of revenue. I know that there are a great number of ways of expending the surplus, and I know also from experience how rigidly the Treasury endeavours to get as large a surplus from the Post Office as it possibly can lay hold of. I cannot but think that that policy may possibly be carried too far, and it may be wiser for the Post Office to expend a larger amount in improving the service; of course, always subject to the control of the Treasury. I will have another opportunity of raising the question at a greater length. I cannot but repeat my regret that in a time of peace and great prosperity it is found necessary to impose greater taxation, and also to forego to a very large extent the benefit which we had every right to expect we might obtain from the conversion of the debt.

*SIR E. BIRKBECK (Norfolk, E.)

I wish, on behalf of the tenant-farmers of the Eastern Counties, to enter my protest against one of the most important products of the land in the Eastern Counties, viz., our barley crop being further taxed. I refer to the further imposts it is proposed to place upon beer, and, therefore, upon barley. I can assure my right hon. Friend the Chancellor of the Exchequer that his announcement will be received with dismay, especially coming this year, which has been the worst year for the tenant-farmers with regard to the barley crop since 1860. I only hope the Chancellor of the Exchequer, as a set off against this most objectionable proposal, will consider favourably the suggestion to give compensation out of the National Exchequer in respect of cattle slaughtered for pleuro-pneumonia and other cattle diseases. I am sorry no allusion was made by my right hon. Friend to the loss local taxation has suffered of nearly £800,000 promised last year in respect of the Van and Wheel Tax by the Chancellor of the Exchequer. We have not heard the slightest explanation from my right hon. Friend this evening with regard to that matter, and we certainly shall expect this amount to be made good to us from some source.

MR. H. COSSHAM (Bristol, E.)

I desire to emphasize the remarks made by the right hon. Gentleman near me (Mr. Shaw Lefevre) as to the extravagance of the Budget. It seems to me as though our taxation was growing much more rapidly than the prosperity of the country, and, I believe, the burdens we are called upon to bear are pressing so hardly upon the industry and commerce of the country that they are becoming really a source of danger. I will also point out to what an extent the Budget favours real property. I believe it to be a dangerous experiment to make these grants from the taxation of the country towards the removal of local burdens. The national taxes are raised to a large extent from trade and industry, the £47,000,000 arising from Customs and Excise mainly coming out of the commerce and industry of the country. To devote that money to the lightening of county burdens is, I believe, very unwise, and may result in extravagance on the part of the Local Government bodies. If we are to adequately meet the burdens of the country I think we shall have to increase the taxation upon real property. The £5,000,000 now raised upon articles connected with our breakfast table presses with very great hardship upon the poor, and the poor pay a much larger proportion of the taxation of the country than the rich. I hope the Chancellor of the Exchequer will yet review his position and will impose greater burdens upon real property rather than look in the direction he has announced to-night. The land tax is a most anomalous thing. I hope when the proper occasion comes to show the Committee that if the land tax were now paid on the scale on which it was intended to be paid we should at this moment be realizing by it, not £1,000,000, but £3,000,000. I am rather surprised at the selfishness shown by some of the landed proprietors with regard to the grants made to the counties. The county expenditure goes very largely in maintaining roads, and we all know that such expenditure gives value to the property in the neighbourhood of the roads. The voting of money from the National Exchequer towards the expenses of County Government is therefore certainly the voting of money to increase the value of real property. The chief point in connection with this Budget is that we have to provide a naval expenditure, which I cannot but regard as unnecessary. It is an expenditure which has never been justified, and the justification of which has never been attempted. I trust that at a further stage of the Bill we shall he able to strike such a blow at the Government proposals as will induce them to modify them considerably.

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

When the Chancellor of the Exchequer introduced his Budget last year I had the satisfaction of congratulating him on showing that he was anxious, if possible, to extend a helping hand to the agricultural interest. I was exceedingly sorry that one of the most important proposals in that Budget fell through, but I had hoped that this year we might have heard from the right hon. Gentleman some proposal by way of compensating for the loss which the agricultural interest sustained by the failure to carry the Van and Wheel Tax. I fancy the House can hardly realize how important a measure that was and how much benefit it would have given to the agricultural interest, as well as to the ratepayers generally. The hon. Member for West Southwark, who did all he could to prevent that measure fructifying, knew perfectly well the position in which agriculturists stood as connected with the provision of the necessary funds for maintaining the roads in the country. When that hon. Member was President of an Agricultural Association in the county of Essex he heard over and over again of the grievances of agriculturists in connection with this matter. I am afraid this is a subject which will be laid on that shelf on which so many measures are laid, and from which so few are brought back again to daylight. But I wish to take this opportunity of confirming what was said by the hon. Baronet the Member for East Norfolk, when he begged the Chancellor of the Exchequer at any rate to keep in his mind the importance of the question, and if possible to see what can be done in the way of giving some compensation to the agricultural interest for the loss which it sustained by the failure to pass the Van and Wheel Tax. There was another point touched upon by the hon. Member in connection with the Cattle Disease Regulations, and the source from which the compensation money for animals slaughtered is to be obtained. I wish briefly, but very earnestly, to impress upon the Chancellor of the Exchequer and upon the Government that as the slaughtering of diseased animals is really in the interests of the whole community, it is only fair that the whole community should pay the expenses. If we were to be overrun with disease the English consumers of meat would certainly find to their cost that a saving of a few pence would cost them many pounds. In these times, when we depend so very largely upon the foreigner for the people's food, I think we have a right to ask—even if we may not under our breath allude to Protection, in the way of imposing duties on imports—I say I think we have a right to ask for protection against the importation of disease from abroad. My hon. Friend alluded to the proposal of the Chancellor of the Exchequer in relation to the Beer duties. I think, however, he was under a slight misconception as to the effect of the right hon. Gentleman's proposal. He seemed to fear that the slight increase proposed would fall on English agricultural productions. But I do not think that that would be the result. If the additional duty had touched, say the agricultural labourer, I should certainly have strenuously opposed it, for I think we should do all we can to encourage brewing by agricultural labourers. I even go farther. I think the farmer ought to be allowed to brew the pro- duce of his fields with as little restriction as possible. Now, Sir, if I understand aright the proposal of the Chancellor of the Exchequer, it will' rather catch the scientific brewers who, brew—I am sorry to say too frequently, from materials which have never grown in an English field. I am not, therefore, anxious to say very much against a proposal which would affect these scientific brewers, because, in the first place, I am sure they are quite able to take care of themselves, and, secondly, they use a great deal of material which has no connection with English barley. I may just point out to the House before I sit down that there are two ways in which the beer duty is levied—one is on the basis that two bushels of malt will make a barrel of beer, which is subjected to a duty of 6s. 3d., and on the other hand the brewer, if he prefers it, can have the wort gauged in the mash tun and pay on its specific gravity. The proposal of the Chancellor of the Exchequer only affects the latter. That being the case, I think my hon. Friend the Member for East Norfolk rather misrepresented the right hon. Gentleman's proposal when he stated that the increased duty would fall on, English agricultural productions. I believe, on the contrary, that it will fall to a very great extent on saccharine and various other foreign commodities which compete in the larger brewers' mash tub with English barley malt. The grievance, if any, is one for the large brewers themselves to deal with. In conclusion, I can only appeal to every Member of this House to support—whenever the opportunity arises—measures that will benefit the agricultural industry.

MR. PICTON (Leicester)

It appears to me, Sir, that hitherto the statement of the right hon. Gentleman the Chancellor of the Exchequer has met with. more appreciation on this side of the House than on the other. I am happy to say that his Budget has proved more attractive to me than the one he brought forward last year. The hon. Member for the Maldon Division of Essex has supported some of the complaints made by previous speakers, but I think that those complaints arise from a confused opinion of national progress. Hon. Members seem anxious to delude the ratepayers and taxpayers into the opinion that it makes a great deal of difference to them whether they take money out of the one pocket or out of the other. If the funds are advanced from the national finances to which they have to contribute themselves as taxpayers in order to relieve them as ratepayers, they are led to believe that a great advantage is conferred on them. Of course, in some special districts there may be such advantages, but as a general rule. I believe it has been found that whether the money comes from the rates or from the taxes it amounts to pretty much the same thing. But, Sir, it occurred to me, while listening to the statement of the right hon. Gentleman, that if it had not been for the needless, extravagant, and reckless proposals made to increase our expenses for armaments in a period of profound peace, the Chancellor of the Exchequer, instead of having a deficit to make up, would have had a surplus to distribute among various suffering interests. I hope that the brewers and publicans, who have to pay an increased duty on their beer will take note of this fact, and I also hope that those who have to pay 1 per cent more on the Succession and Legacy duty will likewise bear it in mind. Now, Sir, with regard to this increase of 1 per cent on the Succession and Legacy duty, I do heartily rejoice that the Chancellor of the Exchequer has seen his way to lay the additional burdens, since they must be imposed, upon accumulations. I noted with pleasure the expression he used: he emphasized the word accumulations, and I repeat that I heartily rejoice he has decided to lay the additional burden upon accumulated wealth rather than to impose it on incomes earned by industry. I believe that this will lead to a sounder system of finance than we have reached at present. I rejoice, likewise, that the Chancellor of the Exchequer has seen his way to introduce a system of differential duties, that is, the imposing of heavier burdens upon larger accumulations than are imposed on smaller accumulations of property. He has stated that the extra duty will only be charged on properties of the value of more than £10,000. I should like to know how this amount of £10,000 is to be arrived at. Does he mean that a property of £10,000, however it may be divided, will pay the additional I per cent, or only that those who receive more than £10,000 shall pay it? This makes a great deal of difference, for a man owning £9,000 may leave it to his child free of this extra duty, while a man leaving £45,000 may equally divide that between five children, each of whom may have to pay the additional 1 per cent. Surely that would be an injustice. But, Sir, as the right hon. Gentleman has seen his way to levying these additional duties on larger properties, why should he not have levied a differential income tax? He said, with very great truth, that the income tax presses heavily on small tradesmen, clerks, and others who are just above the level of the income tax payments. Why should he not have charged an additional tax on incomes, say of over £1,000, £2,000, and even £10,000 a year? I know it has been said that this is an idea like the "Will o' the Wisp," and that people may be led away by bogus speculations; but surely the right hon. Gentleman could devise a scheme by which a differential income tax might be charged. There is another matter as to which I feel it my duty to raise a protest, and I shall continue to raise my protest at the various stages of this financial measure. I regret that the right hon. Gentleman had not a single word to say with regard to what I may call the iniquitous Tea duty. I am sorry that he has not seen his way to remove it. Remember that you have to pay 6d. per pound on all tea, whatever may be its value—whether it fetches 4d. a pound in bond, or 1s., 1s. 6d., or 2s. Surely, Sir, there is no justice in an imposition of this kind, and when we remember how entirely tea has become a necessity of life, and how much its use has contributed to promote the sobriety of this country, I do regret most profoundly that we have not had any relief given to us in this matter. I feel it my duty to give notice that I shall at the proper stage of the financial measures oppose the continuance of this duty as it is at present levied. I feel very much sympathy, Sir, with the remarks which were made by the hon. Member for Islington, concerning the burdens that press upon the poorer classes of the community. I understood him to say that they contributed more than their fair share to the expenses of the nation. With that view I entirely sympathize, but I would go further than that, and I contend that the poorer classes should not, below a certain limit, be called upon to contribute towards the expenses of the nation. I think they should be entirely free for taxation on articles which constitute the necessaries of life—that any man who earns, say, an income of under £100 a year should not be required to pay taxes, either directly or indirectly except upon say, alcoholic drinks, or tobacco, which are indulgencies that he can dispense with. Remember that, although these classes may not contribute directly towards the Imperial Exchequer, they do so indirectly, and] if there occurs a war in which say, 10 or 20 millions is expended, the result is that that amount of money is taken out of trade channels, and they are prevented from reaping the benefits of the expenditure of this money. I hope that the poorer classes will, in the future, become more and more alive to this fact, and that it will assist to stop any tendency on the part of Parliament to sanction extravagant expenditure of this kind.

*BARON DIMSDALE (Herts, Hitchin)

I always think that the occasion of the introduction of a Budget affords a very fair opportunity of criticizing in a fair and candid spirit the details of the Chancellor of the Exchequer's proposals. Personally, I am one of those who entertain a very strong opinion that the agriculturists have not received fair and just treatment at the hands of the Finance Minister. Last year the Chancellor of the Exchequer proposed to impose the Horse Tax, and the Van and Wheel Tax, and when he was questioned at the close of last Session as to whether he would persist in imposing these taxes he replied that, in consequence of the pressure of business, it had become perfectly impossible for him to entertain the hope that he would be able to proceed with those measures, and that they would therefore be withdrawn; but that the best course to be pursued by the County Councils which were to be established, would be to give expression to their opinion as to these measures, and that the Government would take those expressions of opinion into their consideration. Well, Sir, in obedience to the suggestion of the Chancellor of the Exchequer, not a few County Councils have passed resolutions bearing out the views expressed by the right hon. Gentleman last year. Remember that we lost £540,000 a-year by the Horse Tax, and a probable £300,000 by the Van and Wheel Tax. We have been disappointed in this respect and we think it is not unreasonable that there should be an expression of opinion on our part with a view of inducing the Chancellor of the Exchequer to provide some means to recompense us for the loss. I do not believe that it is the fault of the right hon. Gentleman that these Bills were not passed. I believe no one was more anxious than he was to pass the measures, but I think we are bound to enter into these considerations—that, the measures not having been passed, we are entitled, and not unreasonably, to ask the Government how they mean to compensate us for the loss to be sustained. Remember, further, that £250,000 subvention to the roads has been taken away from us; it has been taken away from us in accordance with the general principle of the Local Government Bill, and I ask is it fair, is it right, or is it just, that we should have no amount allotted to us out of the Exchequer to supply the loss which we incurred when we gave our cordial support to the Local Government Act of last year on the faith that we were to be recompensed? It may be suggested that the Chancellor of the Exchequer intends still to do something for the agricultural interest; but what is he doing? He is increasing the beer tax; and I do not think that that is an increase upon which the agricultural interest is likely to look with favour. I remember when the beer tax was originally brought forward in the Liberal Budget of 1885, we, on this side of the House, did our best to defeat that particular scheme, because we thought it imposed an unfair burden on the agricultural industry, and dealt unfairly with the differential rates on Succession duty. On that occasion we defeated, by a narrow majority, the Liberal Administration of that day, and yet we have the unreasonable and absurd proposition included in the Liberal Budget of 1885—to wit, the dealing in a peacemeal and in an inequitable spirit with the Death duties, and the imposition of additional burdens on the consumers of beer and the growers of barley are brought for- ward by a Conservative Government in contradiction to all the financial principles by the assertion of which, in opposition, they obtained Office and power four years ago. We shall be certainly in great difficulty when we go down to our constituencies if we are asked to explain the measures of relief the Government propose.


Perhaps I may be allowed to answer the observations made up to this point, lest I should seem to be guilty of discourtesy in forgetting some of them. Though I appreciate the tone of the remarks of the last speaker, I think he has hardly done justice to the Government or to himself. If I did not introduce into my Budget speech anything relating to local finance it must not be thought that the subject has been overlooked. I had intended to point out that the severance of local from Imperial finance prevented my dealing with local finance, but I omitted doing so because my statement was so long. But I can assure hon. Gentlemen behind me that the question of local finance will continue to occupy the attention of the Government, though they must understand that the Chancellor of the Exchequer is no longer responsible for local finance. And here I may answer the observations of the hon. Member for Bristol. In lieu of the grants formerly made to local authorities, they now have Licence duties and half the Probate duties. From this time local finance is separated from Imperial finance: and it is rather to the President of the Local Government Board that hon. Members must look for the development of the resources of local authorities. Some hon. Members have put strong pressure upon me to stand by the Horse tax and the Wheel tax, but I am bound to say they have not been so active in the country as they are in this House. One would not have thought, from the apathy the ratepayers of the country generally manifested in the defence of them, that these taxes were regarded with that satisfaction with which, I am glad to think, some people present regard them. I thought at the time when these taxes were proposed that there were so many people who had not horses or carts and who did pay rates, that the feeling of the ratepayers would have overborne the interest of the carmen and horse owners; but it was not so, and the activity of the opponents of these taxes made it extremely difficult to carry my proposals without sacrificing too much time in discussing them. My hon. Friend (Baron Dimsdale) says that the proposal ought to be revived, but let me point out that now it is for the Municipal and County Councils to say whether they wish for the revival of these taxes. A certain number of County Councils have signified their adhesion to these taxes, but the expression of opinion is by no means universal, and I do not know whether it extends to a majority of those Councils. Then there is a further question: Are these taxes to be treated separately? Would the landed and agricultural interest be content to see the Horse Tax enforced, and not the Wheel Tax. [An hon. MEMBER: No.] That is my own impression. I believe that to revive the Horse Tax without the Wheel Tax would not be satisfactory to those who are anxious that both should be revived at the same time. Still I believe there is a difference of opinion, and that there are many quarters in which it is desired that the Horse Tax should be revived. The Government will continue to give their serious attention to the matter; and I stand by the declaration I have made that when the County Councils and local authorities express a desire sufficiently pronounced to give promise of adequate support, it will be the duty of the Government to see that this resource for local taxation should be realized and secured to the great interests which are concerned. But it will be for the local bodies to take the initiative. If their resources are insufficient through their not having these taxes, I do not think I should be justified in the present state of our finance, in making good the deficiency from Imperial resources. We must devise local means for assisting the rates. There is not a Member in the House who has a stronger opinion on the subject than I have. I think it is monstrous that no other means of raising revenue locally should have been discovered than that of rating; but it requires considerable support to make it possible to introduce a fresh tax. A new tax is like a new shoe—it pinches at the moment it is put on, and people will rather pay a pound in an old way than a shilling in the form of a new tax. That is a tendency which must be got over if we are to put local finance on a sound basis. The matter will be considered by the President of the Local Government Board and the Government, and if local finance no longer finds a place in the Imperial Budget hon. Members must not think that it is in any way neglected by the Government. Then there is another point which has been urged with considerable energy, namely, the question of putting the compensation for the slaughter of cattle upon the Imperial Exchequer. That is a matter which does not really come within the limits of a Budget statement. A Budget statement is a statement which shows how to find the Ways and Means to meet the expenditure which is upon the Estimates, and therefore this is not an occasion upon which I can enter upon the question of the expediency or otherwise, or the justice, or otherwise, of dealing with this most important question. I may say, however, that the Government are engaged in considering to what extent, if any, the views of our Friends in this respect may be met. In the next place, let me say a word as to the criticisms made upon the proposed increase of the duty on beer. It is not proposed to increase the duty on the quantity of malt employed, but to alter the standard of specific gravity, on which the tax is calculated. I was very glad to hear the reply which my hon. Friend the Member for the Maldon Division of Essex (Mr. Gray) made in answer to some suggestions put forth by the hon. Baronet the Member for the Horsham Division (Sir W. Barttelot. The hon. Baronet suggested that the growers of barley would hear with dismay that this tax had been increased. But that increase is so small, and it is imposed in such a form that I cannot conceive it will have any effect whatever upon the growers of barley, and in that I am confirmed by the observation of my hon. Friend (Mr. Gray) that it is not only from barley that beer is brewed. Even if it were, the margin of brewers' profit, if one may judge from published statistics as regards breweries and the value of their goodwill, is sufficiently large to justify the hope that this increase, which only comes to 1–14th part of a penny per gallon of beer, will not in its operation injure agricultural interests. It is entirely against our wish and contrary to our expectations that the tax should fall in the slightest degree on the growers of barley. I will not answer at any length the observations of the hon. Member for Leicester (Mr. Picton) and the hon. Member for Islington (Mr. Bartley) who have opened up questions of such vast importance that I cannot follow them into the broad issues Which they have raised. The hon. Member for Leicester complained that I did not allude to the Tea duty, or hold out any hope of its reduction or abolition. If there is one duty that is imposed absolutely on a Chancellor of the Exchequer it is that, if he cannot reduce or abolish a tax at a particular time, he should be absolutely silent as to whether that tax should be reduced or abolished at a future period. By holding out hopes of that kind he may diminish the Revenue of the year, and may raise expectations that cannot be realized in his attempt to secure popularity by an abstract expression of opinion. I must therefore observe absolute neutrality on the views which the hon. Member for Leicester has put forward on the subject of the Tea duty. Certainly I am not prepared, in a year in which I am compelled by the exigencies of the case to impose taxation—it would be wrong if I attempted it—to remit the duty as the hon. Gentleman desires. The hon. Member has enunciated a very broad doctrine, that persons who form a large proportion of the community should pay nothing whatever towards the taxation of the country; that they should be absolutely free from any contribution to the State; and that their only interest in the country should be the indirect interest they might have if its trade were severely smitten by taxation. I have always thought, and we have been brought up in the belief—which I should be very reluctant to abandon—that taxation and representation went together, and that it was desirable that all those who took part in the government of the country, as the great body of the people now do more largely than ever before, should in some small measure, according to their ability—and I do not wish them to do it beyond their ability—contribute towards the expenses of the State. Beer, tobacco, and spirits have been spoken of as luxuries—["Oh!"]—at all events, they are optional expenditure. The Tea duty, I admit, is a poll tax on a very low scale. If we abolish the Tea duty we shall have this result, which, I think, is unconstitutional—that a large proportion of the population will pay nothing whatever to the public revenue. [An hon. MEMBER: "Except on alcohol."] The hon. Member says, "Except on alcohol." Is it to be only those who take alcohol who are to be regarded as having a stake in the State? I do not want to put the consumers of alcohol so much higher than the consumers of tea as to enable them to say that they are contributing something towards the support of the State, while the tea-drinkers pay nothing. I admit that, as the hon. Member for Islington has suggested, we should examine with the greatest anxiety the proportion in which different classes contribute to the public expenditure. The hon. Member has spoken of the struggling middle-class and the poorer section of the community not actually belonging to the working class. I should have thought that the hon. Gentleman would have recognized in his statements, made both this evening and on other occasions, that if there is one class to which I have particularly directed my attention, so that they might be free from the continual oppression of the income tax, it is precisely the class to which the hon. Gentleman refers. I sympathize with the hon. Member on this point, and it is for that reason that I have rejected, and am anxious that the Government should continue to reject, the plan of constantly having recourse to the income tax, in order to save trouble to any Chancellor of the Exchequer who may be too timid to resort, when necessary, to any other source of taxation. It has also been suggested that we should apply the income tax only to the richer classes, and adopt a graduated scale. There are the greatest administrative difficulties in the way, difficulties which have baffled every man who has ever attempted to frame a plan in that direction. There is not only the principle to be settled, but also the problem to be solved how, with the greatest care and the greatest stringing, and without giving rise to the development of fraud, we can raise the required revenue. There are other methods than ours in force in the United States, but, judging from what I have read, the amount of perjury and fraud which attends the collection of the revenue in the United States, and the valuation of the property and income of individuals, is stupendous and enough to make one stand aghast. I have endeavoured in my proposals as to the new Estate duty to exempt the class that excites the interest of the hon. Member for Islington, those with incomes of £300 or £400 a year. £10,000 represents an income of about that amount; and that is the income we should spare in life, and also at death. In aiming at this end I have proceeded on lines which have been previously accepted by both sides of the House. As regards the new Estate duty, it will be collected as regards personalty like the Probate duty, it will be collected as regards realty like the Succession Duty, but with this important difference—that in the case of realty the duty will not be charged, as Succession duty is charged, on the life interest only, but on the capital value of the whole estate wherever the successor takes an absolute interest. In the case of settled property, both personal and real, it will be paid upon the interest accruing. The right hon. Gentleman the Member for Edinburgh (Mr. Childers) has raised the question of light gold. What I said, or meant to say, on this subject was that the question of light gold and the question of paper money generally, of the profit derived from it, and the maintenance or curtailment of certain monopolies in respect of paper issues, would have to be considered side by side. These issues are sufficiently large to give the question some importance. I cannot say how large the measure will be, as the perspective of the matter depends very much on the mind of the person who proposes the question. I believe it will be a considerable measure, and to carry it out I may have to invoke the cordial support of both sides of the House, because interests are touched in such matters which make themselves felt. The main point of the right hon. Gentleman the Member for Bradford (Mr. Shaw Lefevre) lay rather outside the scope of this discussion. The right hon. Gentle- man dwelt upon the aggregate amount that is provided for naval and military defence. The hon. Member for Bristol has emphasized the point, but has expressed some sympathy with a Chancellor of the Exchequer who, instead of being able to remit taxation, has to provide for a largely increased expenditure for naval and military purposes. These Gentlemen, however, will not see that if there is one person more interested than another in the security of the country, in the credit of the country, in the maintenance of trade, and in the absence of scares, it is the Chancellor of the Exchequer himself. The scares, and the reactions, and the depressions which follow scares, may vitally affect the Revenue. But there are not only scares and foolish fears to be provided against. I have before alluded to what I consider to be the really grave state of European politics; and, looking at the question from the merely fiscal point of view, and with an exclusive eye to the preservation of the sources of the country's revenue, the insurance provided by this expenditure appears to me indispensable. It would, indeed, be taking a narrow view of our duties if the Government were to shrink from that expenditure which they think to be imperatively demanded. The right hon. Gentleman the Member for Bradford was perfectly right from his point of view. The right hon. Gentleman believes that there is no danger, and that Great Britain never excited the envy of other Powers; and he looks upon all money spent upon the Army and Navy as practically thrown away.


I never said anything of the kind.


Of course, the right hon. Gentleman has never said anything of the kind. He would not like to commit himself to such a view; but that was his argument. It would be criminal upon our part to increase the expenditure unless we thought it absolutely necessary. Do hon. Members not think that the Government would be anxious, if they could, to take up the position of remitting taxation? We should like to remit taxation, we should like to spend our surplus in relieving the burdens of the people, and earn popularity in that way if we could. But we point to the situation in Europe and say it absolutely demands this expenditure. We know our responsibility and feel that we cannot escape it. Then the right hon. Gentleman the Member-for Bradford (Mr. Shaw-Lefevre) having dealt with the Colonial Defence Bill and other matters, alluded to barrack accommodation, and treated that as if it were a wanton expenditure; but is that a wanton expenditure which provides for the health and well-being of the British soldier? Well, having denounced this expenditure, the right hon. Gentleman then appeared in a different capacity and addressed the Committee as an ex-Postmaster General. He dealt with the Post Office Revenue, stated how it was increasing, and how he desired to appropriate the surplus to Post Office purposes irrespective of the demands of the Exchequer.


In improving the Service.


In improving the Post Office Service. On that point I will make a declaration which may not be entirely palatable to all hon. Members, but which is straightforward and frank—I intend to hang on to the surplus of the Post Office to the best of my ability. The surplus has increased and is increasing, and no doubt there is a tendency or the part of the Department, perfectly natural and legitimate as a critical ex-Postmaster General will be aware, to make demands upon the Treasury. But we have here an annual source of Revenue of some £3,000,000, and I would ask those who have listened to me whether we can afford to part with this surplus? By what other tax is it to be replaced? Where are we to find, with less friction, less injustice to all classes, the three millions which a light-headed ex-Postmaster General would wish us to part with.


I never suggested that the Government should part with it, or anything like it; what I pointed out was the growing increase in the surplus Revenue, and what I suggested was that we should revert to the arrangement of some eight or ten years ago, when the surplus was £2,500,000, and was well spent in improving the Service and giving the public greater facilities.


I am sorry to have excited the remonstrance of the right hon. Gentleman; and perhaps in replying to him I should also have said that I have in mind what has been said by hon. Gentlemen below the Gangway, who attempt to make inroads on the Post Office surplus, showing how it could be appropriated to the improvement of the Service. I do not think that the percentage of the increase of the Revenue of the Post Office over the increase of the expenditure is so large as to allow the Chancellor of the Exchequer to sacrifice such Revenue, and I will go further and say that even if this indirect revenue from the Post Office means that one-third of a penny is pocketed by the State for every postage stamp sold, that constitutes a form of taxation which is as good and sound and provocative of as little friction and injustice as any tax which could possibly be imposed. I have burnt my boats. I have made my reactionary declaration. So far as I can exercise any influence over the Post Office, I will encourage every attempt to improve the Service. Assuredly, I should be sorry to take a churlish view of the great efforts of one of the best Departments that ever existed, a Department full of go and energy, an ambitious Department that would carry on the whole business of the country if it could. The thanks of the country are due for the magnificent way in which a most complicated service is conducted. I am sorry whenever there is a controversy between the Post Office and the Treasury, but I say again, looking at the want of elasticity in many branches of revenue, we should be blind to the interests of the country if we did not cling to the Post Office surplus with tenacity, though not in any miserly spirit. I think I have answered most of the points raised. Some remarks were made by the hon. Member for Poplar (Mr. Sydney Buxton) and others in regard to what were called inroads on the Sinking Fund. Well, of course, the whole of these criticisms were founded on a fallacy. The Sinking Fund is not a fixed charge; but the balance which remains over after the interest on the debt has been paid. The hon. Member for Poplar (Mr. Buxton) thinks it is a very improper thing that, after having largely reduced the interest, the country should not continue to pay precisely the same sum as when the debt and the interest were larger, but I do not see the matter in that light. I have made no inroads whatever on the Sinking Fund, but on the contrary, the Sinking Fund will be strengthened by the addition of the £500,000 which will fall to it after the current year. The Bill which we shall introduce will reduce the amount of the fixed charge from £26,000,000 to £25,000,000; but when that has been done an the additional £500,000 arising from the reduction of interest will go to the Sinking Fund by an automatic process and no further action will be necessary. There will be so much less interest paid, and that will swell the Sinking Fund by the corresponding amount. We have been accused of crushing the trade of the country by the taxation imposed, but I do not think as a fact that the trade of the country is crushed, but that it is expanding. I might set off against such remarks the complaint of my hon. Friend the Member for Islington that we are not paying so many taxes as are paid by other countries on the Continent.


Excuse me, I made no complaint. I was discussing the rate of the repayments of our National Debt, and I said our taxation, local and Imperial, was, as compared with income, less than in other countries. That is rather matter for congratulation than complaint.


It was simply a rhetorical exaggeration to say that my hon. Friend complained of our reduced taxation towards the repayment of Debt. I accept his correction. But what he meant was that we, being less taxed, ought to pay largely for the reduction of Debt. I trust, therefore, he will not object to becoming a witness on my side, as opposed to those who complain that the country is crushed by taxation. I cordially hope, as I said before, that the time may come when I shall not have to stand here to advocate increased duties, and explain how they will fall on this interest or on that, but that it may be my happier task in future to give relief in some definite form, a task which must be infinitely more satisfactory to the Chancellor of the Exchequer than that which I have had the honour to perform to-night.

MR. LABOUCHERE (Northampton)

The course of this debate leads me to think that this Budget is a good one. I have been delighted to hear the groanings and the moanings of hon. Gentlemen opposite, who claim to represent the landed interest—whether they really do so I do not know. The hon. Member for Hertfordshire anticipates great difficulty with his constituents owing to this Budget; but I have not the slightest objection to that—indeed, I hope the difficulties may become insuperable. The hon. Gentleman complained of his Chancellor of the Exchequer; but he had better be thankful for what he has got, for if he fell into our hands, we can assure him that we should treat him and those he represents infinitely worse than the present Chancellor of the Exchequer has. But it is always the case whatever Budget is proposed, whether from this side or that, we have gentlemen who represent the so-called landed interest complaining that they do not get what they are pleased to call relief. The hon. baronet the Member for Sussex, and the hon. Member for Hertfordshire sitting together up there, raise their voices like the two daughters of the horse leech and cry "Give!" "Give!" "Give!" What does the hon. Member for Hertfordshire want? He says that because the landed interest did not get the Wheel tax last year, therefore they are entitled to some sort of quid pro quo this year. I can assure him that most of us think that when a considerable portion of public Revenue was handed over to localities as against grants in aid, those localities gained largely by the change, and there is not the slightest chance that the House of Commons will vote any more. Another subject of complaint has been that the Exchequer does not pay for all the cattle destroyed to put down disease. But why should the whole public be called upon to pay? We know that these cattle are destroyed in the interests of owners of cattle. The only fair and reasonable thing, if you want to distribute the burden, is to have a tax on every animal, and pay for those that must be destroyed. That would be equal to insuring yourselves, but I see no claim to asking the country to share your losses with you. One hon. Gentleman actually raised a complaint on behalf of the poor brewers, but it is really a little too absurd, in view of recent transactions by which shares in brewing companies have risen to 200 premium, that brewers should complain because a trifle of taxation is put upon them. The fact is no class is more unfair to the public than brewers. I have always thought drinkers of beer are the most foolish people in the United Kingdom, not because they drink beer, but because they pay too much for it. The brewers charge the same amount to the publicans, what aver the price of malt and hops may be. We know perfectly well that if the price of malt goes down the difference finds its way into the pockets of the brewers. Gentlemen who grow barley should fight out the dispute with the brewers, not come here for relief. I certainly think that brewers have no claim upon our sympathy, for I have always understood their profits are excessive, considering the amount of capital they put into their business. It is my misfortune to disagree with the right hon. Gentleman (Mr. Shaw-Lefevre) in reference to the Post Office revenue. I was delighted to hear the Chancellor of the Exchequer's statement that he means to hold fast to the Post Office and Telegraph surplus. I hope he will stick to it, for no tax falls so lightly. We often hear a great deal of praise of Rowland Hill, and I suppose we do owe to his memory a debt of gratitude, but I am sure many hon. Members must have felt the feeling of antagonism I often feel when we find the huge increase in our letters since the reduction of the postage. I hope to goodness the postage will never be reduced below its present rate, increasing our burden of daily letters. I cannot say I agree with my hon. Friend the Member for Leicester in his extraordinary theory that nobody with an income under £100 a-year should pay taxes. I can understand how many men with large families and scarcely able to find the necessaries of life cannot pay taxes, but to abolish taxation on incomes under £100 would mean that the majority of electors would not pay a farthing. My hon. Friend says that these people would still thoroughly realize the evils of war, because of the effects on trade and industry. But I should like it to be brought home to every one by means of taxation what an evil war is. I would have a proportion of the burden fall on everyone who is above the position of wanting the necessaries of life. But I can agree with my hon. Friend in what he says about the Tea duty. The objection to indirect taxation is, of course, that it presses unequally, the poor man paying much more in proportion to his income than the rich man. With a sixpenny Tea duty the rich man who gives 2s. a pound for his tea, pays 25 per cent in taxation, and the poor man who buys tea at 1s. pays 50 per cent. Rich or poor, I imagine a man's consumption of tea will be about the same. The Chancellor of the Exchequer asks us to sympathize with him, because he has had to meet so many heavy demands on account of naval and military expenditure, but I cannot allow that he deserves any sympathy. He should have realized what it was to take his place as Chancellor of the Exchequer among the Tories. The right hon. Gentleman says it is preposterous to suppose that he is not actuated by a sense of patriotism, because this expenditure from an electioneering point of view is not popular. I am not so sure that it is not a good election dodge. We remember how this promise of expenditure was used as a bribe to influence an election. The Jingo policy has always a certain amount of popularity, and it draws off attention from the home policy of the Government, which hon. Members must acknowledge has not been very successful. If I were a Tory I do not know that I could recommend a better policy than to beat the Jingo drum, call for large expenditure on the Navy, and denounce everybody who did not agree with me as utterly unpatriotic. That has been done many times before; but as the Chancellor of the Exchequer is not responsible for the expenditure, I think we have nothing to complain of. It has been suggested that we ought to increase the Sinking Fund with the profit which accrues from the Conversion scheme; I, for my part, shall be always sorry to hear of one single penny being paid off the National Debt. I know that there are Members on this side of the House who do not agree with me. But, Sir, our grandparents incurred a very large amount of expenditure which they ought to have paid off, and surely all that our grandchildren can ask is that we should pay our own way. I have not the slightest notion of being taxed a single farthing for the benefit of our grandchildren. I can only say we must leave our grandchildren to settle with our grandparents. Now, I must congratulate the right hon. Gentleman on having introduced a graduated scale into the system of Death duties. As far as I can gather from the explanations which the right hon. Gentleman has given, the additional duty will be imposed on the amount the legatee leaves, however the money may be distributed. I should have thought it would have been infinitely better not to impose the additional duty in cases where the legacy was under £10,000, because the effect would be that men would divide their property among numerous people. Amongst the Romans it was the custom for men to leave their money to their children and to their acquaintances, and it seems to me most desirable to put an end to a system which is one of the greatest curses of this country, and which enables great fortunes to accumulate from generation to generation. I want to see a large number of persons of moderate means, and fewer who are exceedingly poor or exceedingly rich. I, therefore, hope that in times to come we shall be able to drive home the wedge, the thin edge of which the Chancellor of the Exchequer has introduced. This is not a really Democratic Budget, and I suppose we must wait until a Liberal Ministry is in power to get what we want. We have had, of course, Liberal Ministries, and, although they have not done all we wanted, they have done a good deal; but now we believe the Radical element has become sufficiently strong to enable us to have our own way in these matters in the future. I observe that the right hon. Gentleman rather under-estimated the revenue for next year; and that leads me to suppose he expects to remain in power for another twelve months. I am perfectly certain that if he thought a Liberal Chancellor of the Exchequer would have been in power he would not have given him the advantage. I do not complain of that—indeed, I hope that the revenue may greatly exceed his estimates. On the whole, I am bound to say, I think we have very little to find fault with in the present Budget. There is one point on which I should like a little explanation. The right hon. Gentleman pointed to a large saving in the Civil Service Estimates. I am sorry he did not explain to us more definitely how that saving had been brought about, but I think that his remarks were intended as an encouragement to those who sit on this side of the House to look after the Estimates. It appears that although during the last three years we ourselves have not been able to carry any reductions, yet the effect of our protests has been that the Chancellor of the Exchequer and the Treasury have been strengthened to hold their hands against the different Public Departments, and a considerable reduction has been effected. That, Sir, will encourage us to persevere in our efforts. We shall know in the future that we have the sympathy of of the right hon. Gentleman. I know that he is not generally in the House when the Estimates come on, but I can assure him that those who sit on this side of the House will bear in mind the observations he has made, and will do their best to receive his continued approval in the future.

*MR. JAMES LOWTHER (Kent, Thanet)

I trust my right hon. Friend the Chancellor of the Exchequer will duly note the quarter of the Committee from whence comes the most cordial eulogy on his Budget. The hon. Member for Northampton has, it is true, twitted the right hon. Gentleman with not having vied with some of his Predecessors in regard to the amount of the expenditure, and I think we must remember that the Government which the hon. Gentleman supports once brought in a Budget of 100 millions, and the present Chancellor of the Exchequer has fallen short of that sum by several millions.


I may be allowed to say that the right hon. Gentleman is entirely mistaken. The statement that the Budget was for 100 millions was due to the fact that certain figures had been added up twice over.


Of course I am not responsible for the accuracy of the calculating machine which compared the Budget, but I think I am not alone in sharing the opinion which, however, I have now afforded the right hon. Gentleman an opportunity of correcting. The hon. Member for Leicester has spoken in favour of a system of taxation under which no taxes whatever are to be paid by persons having an income of less than £100 a year, but who are to have the entire control of the national expenditnre? The hon. Member for Northampton cannot bring himself to endorse such a doctrine as that, and says that he is anxious to bring home to all classes in the country the horrors of war, which no doubt accounts for the persistence with which the hon. Gentleman opposes all defensive measures for the protection of our shores. But there is one point in the Budget against which I wish to enter my humble protest, and that is against the dealing with what are popularly known as the Death duties. The principle of those duties has always been opposed by Members sitting on this side of the House. They have been especially denounced from the point of view of the landed interest, for it has been pointed out that land is heavily enough taxed without recourse being had to these special and exceptional imposts which press so heavily upon those who are called into the possession of the land. Again, the impost has been objected to because it is levied at a time and in a manner which is, perhaps, the most inconvenient and unfair towards those who have to contribute towards it. Now, if I understand my right hon. Friend aright, he proposes to introduce an entirely novel feature into this most objectionable impost. Hitherto, so far as landed estates are concerned, it has been levied upon the actual life interest which the inheritor takes. I under-stand the right hon. Gentleman now proposes to levy it on the actual cost of the estate.


The tax will be levied like the Succession duty, and will not be exacted in a lump sum.


I quite understand that my right hon. Friend only proposes to levy it in the half-yearly instalments with which we are too painfully familiar, but I question whether he is levying it in a fair and judicious manner. The right hon. Gentleman the Member for Edinburgh in one of his Budgets proposed to levy an additional sum on the holders of corporate estate as an equivalent for the Death duties, from which they were, of course, exempt, and that surely would be a more fair and equitable manner of raising money than that which the Chancellor of the Exchequer now proposes. The Chancellor of the Exchequer proposes, in the shape of the Death duties, to raise additional sums from the owners of real estates, and to this subject I will for a moment address myself. I say that if he is desirous of raising further sums from owners of real estate, it would be more equitable to make the charges payable year by year in a regular manner, rather than to do it in the haphazard method which is now proposed. I have said this because there has been a disposition to assume that the Conservative Party has run away from its former opinions with regard to the injustice and iniquity of this tax. My right hon. Friend knows that I make these remarks in no unfriendly disposition towards him or towards the Treasury Bench. The hon. Gentleman the Member for Leicester mentioned just now that he would have been glad to see the abolition of the duty upon tea. Well, now Sir, at the risk of following the example of the Chancellor of the Exchequer and endeavouring to gain plaudits from hon. Gentlemen opposite, I will say at once that I am strongly in favour of abolishing the duty on tea, and, in fact, of abolishing the duties on all articles which do not come into competition with the native products of this country. I think if my right hon. Friend had saved his friends a little more and had got something further from those outside the limits of Her Majesty's dominions, he would have produced a much better Budget than that which he has brought forward on this occasion Something was said just now by the hon. Gentleman the Member for Northampton, and also by the hon. Gentleman the Member for Leicester, about the Tea Duty being in the nature of a Poll Tax levied upon all taxpayers at large throughout the country. I believe that a bonâ fide Poll Tax in the shape of a tax on imported foreign labour in lieu of it would have been intensely popular, and I hold that some such tax is necessary to miit- gate the evils of the sweating system, which is grinding down the working classes of this country. Now Sir, I shall not any longer detain the House, beyond saying this, that I fear I cannot associate myself with some of the remarks which have been made from this side of the House, and notably by my hon. Friend the Member for Islington. Nothing more unconstitutional and less Conservative in all senses of the word can be imagined than a graduated income tax. I fear that my right hon. Friend has not held himself entirely from these pernicious principles. He has, I am afraid, shown an example, which is already too prevalent, of laying down the principle, that "he who pays the piper is to have no share practically in calling the tune." The right hon. Gentleman talks of the Constitutional doctrine of taxation and representation being co-extensive; but what becomes of that doctrine when the right hon. Gentleman proposes that a large mass of the taxpayers should contribute nothing practically towards these additional imposts? These are most dangerous doctrines which he is adopting, and I trust that the Committee will withhold its sanction. I hope my right hon. Friend will reconsider his decision to charge the Death Duties on the corpus of the estate, and that he will relieve an already over-burdened interest of the additional impost which he proposes to put on.

Mr. R. K. CAUSTON (Southwark, West)

If, Sir, I had been fortunate enough to catch your eye before the right hon. Gentleman the Chancellor of the Exchequer replied, I should have congratulated the right hon. Gentleman on the fact that he had not yielded to the persuasive eloquence of agricultural Members who desired him to renew his efforts in regard to the imposition of a Van and Wheel Tax, but after the remarks of the right hon. Gentleman I must rejoice that in future he will have nothing to do with local finance, and that the duties in connection with this branch will have to be discharged by my right hon. Friend the President of the Local Government Board. This change having taken place, I think we are entitled to make an appeal to the President of the Local Government Board to-night for some informa- tion with regard to his future intentions. The hon. Member for the Malden Division of Essex has reminded me that when I was the president of the Essex Chamber of Agriculture I knew how enlightened the agriculturists of Essex were, and I rejoice to know that they still show great common sense. I have noticed that the Essex County Council has not joined in those resolutions which have been passed by other County Councils in reference to this matter, but have rejected by a large majority a proposal urging the Chancellor of the Exchequer to re-introduce his Van and Wheel tax. I do not desire to do any any injustice to agriculturists, but I feel it would be a great hardship to impose on the towns taxes which would only benefit agricultural districts. I understand, from the Chancellor of the Exchequer, that in future the taxes derived from the money which has been handed over to the County Councils are not to be interfered with in any shape or way, unless the County Councils agitate on the subject. I was sorry to notice, Sir, that the Chancellor of the Exchequer said nothing about one tax upon an industry which was referred to last year—I mean the Carriage tax. This is a tax upon labour, and I had hoped that the agitation which had taken place in regard to it might have had some effect upon the mind of the right hon. Gentleman, and as he did not renew his proposals with regard to the Van and Wheel Tax, he would, at any rate, show some sympathy for a similar branch of trade. This tax is undoubtedly injurious to the carriage industry. It is proved that the warehouses are crowded with second-hand carriages, which ought to be in the possession of innkeepers in the country and of jobmasters. But these men cannot afford to keep surplus carriages because of the impost. The right hon. Gentleman has spread his net wide in order to secure a surplus next year, and we can look with almost certainty that this expectation will be realized.

*MR. BONSOR (Surrey, Wimbledon)

Sir, the statement that the Beer duty was originally based on the supposition that two bushels of malt were equivalent to thirty-six gallons of beer, and that the specific gravity of the beer was altered from 1,057 to 1,055 for duty purposes, in consequence of representations made by the brewers, is absolutely correct. But the right hon. Gentleman when he said that the figures of the brewers were proved in the long run to be incorrect, was, I think, inaccurate. I stand by the figures which were brought out in 1880. In 1882 I was a member of a deputation of brewers, which waited on the right hon. Gentleman the Member for Mid Lothian, when he admitted that the figures we had placed before him in the preceding year were absolutely correct, although he could not at that time give us the relief we asked for. I have only risen to ask the right hon. Gentleman to give us an opportunity of meeting him in any public place so as to prove that the figures we produced in 1880 were correct. If the right hon. Gentleman wishes to increase the duty on beer, let him not do so on the supposition that there was an error in the original figures, but let him base his proposal upon a national issue.

*MR. N. P. SINCLAIR (Falkirk)

I may be allowed to say that, in my opinion, the Budget presented by the Chancellor of the Exchequer is one that, as a whole; will give great satisfaction to the nation at large, and in nothing more than in the fact that it will prevent those who, in the past, have been claiming exemptions in matters relating to the Death duties from being able to retain those exemptions in the future. Those persons will, in future, have to bear their fair and reasonable share in the taxation of the country. The matter is a small one, but I have no doubt it will receive due attention.

*SIR R. FOWLER (London)

It seems to me that the future Chancellor of the Exchequer, whoever he may be, will be puzzled to accommodate his friends in the different views they express. In reference to what has been said by the right hon. Gentleman the Member for Bradford with regard to the increase of the Navy, I desire to state that my constituents heartily approve of the scheme of the Government—especially in respect to that part of their proposals, and that being the case they will cordially support the right hon. Gentleman the Chancellor of the Exchequer in the course he is pursuing. I do not propose to go into the question opened up by my hon. Friend near me, but I would say that if an increase of taxation be found necessary it is quite right that the taxation should, as far as possible, be drawn from the class best able to bear it. So far I agree with the hon. Gentleman the Member for Northampton (Mr. Labouchere), with whom I am not very often in agreement; and I can only offer my congratulations to my right hon. Friend the Chancellor of the Exchequer on his very successful Budget and on the statesmanlike manner in which he has met the difficulties by which he has been surrounded.

MR. BIGGAR (Cavan)

Seeing that the right hon. Gentleman requires an increase of the taxation of the country, I would ask why is it that we are asked for a large increase on the expenditure of the Army and Navy? Of course the right hon Gentleman has not a free hand with regard to the provision he is called on to make; but for my part I cannot agree with the conclusions arrived at by hon. and right hon. Gentlemen opposite with regard to the Budget which has just been presented by the Chancellor of the Exchequer. The hon. Gentleman the Member for Wimbledon (Mr. Bonsor) complains of the small increase of taxation proposed to be put upon beer. I think the hon. Gentleman very indiscreet in raising a discussion on this question, because he ought to be aware that the taxation on that commodity is, in proportion to its alcoholic strength, much less than that which is put upon whisky. Therefore, the less said on that subject the more discreet will the advocates of the beer interest be. So far, I think the right hon. Gentleman the Chancellor of the Exchequer is entitled to credit, and I think the only mistake the right hon. Gentleman has made is that he has not laid a heavier tax on that beverage. The right hon. Gentleman the Member for Thanet (Mr. Lowther) complains very much that extra taxation is to be placed on the class which is best able to bear it; but in my opinion those who are most able to pay increased taxation are those from whom it ought to be exacted. The people who are hardly able to live on the income they earn ought to be taxed as lightly as possible, and one of the disadvantages of the system of indirect taxation is, that under it the poorer classes are called on to contribute more than their fair share of the taxation of the country. This being so, I think that those who are the owners of large properties should be slow to place difficulties in the way of the Chancellor of the Exchequer. The only objection I have to the scheme of the right hon. Gentleman is that it does not go far enough with regard to the main items on which he proposes to lay extra taxation; but, under the circumstances, so far as the taxation is concerned, I think there is very little cause to complain.


I believe the proposals of the right hon. Gentleman the Chancellor of the Exchequer will receive the approval of the commercial classes; but I am very sorry that he has not introduced the question of light gold into his Budget. As it is, he has given us either too much or too little. He stated—and it was also repeated by the right hon. Gentleman the ex-Chancellor of the Exchequer—that it was quite right that the taxpayer should not be called upon to bear the loss of light gold. I do not see any reason why the general taxpayer should not bear that loss. The general taxpayers use the light gold, and the whole of them should contribute to the loss. I do not think it is fair that those who happen to have the light gold last should pay for the whole of the loss in weight. Whenever the question is brought forward, I think it should be regarded as affecting the whole of the taxpayers. Now, the Chancellor of the Exchequer held out a sort of threat that the tax to provide for the loss is to be paid partly at the expense of the paper issues at present used in this country; and I think we cannot regard that in any other way than that it is an attempt to do away with the private issues of various banks.


The hon. Gentleman is now transgressing beyond the limits of debate.


I was only following the remarks of the Chancellor of the Exchequer with view of asking him certain questions. Of course, after what he has said, the banking community will feel a great interest in the subject he has brought forward, with reference to light gold, and I want to know whether he can give us any more information as to the plans he proposes. He has already said so much that there will be a great feeling of uneasiness and discomfort in banking circles, and I do think the question of where the loss for light gold will fall, to which the right hon. Gentleman alluded, will have to be discussed in the country before it comes up again.


I will reply in a very few words to one or two of my hon. Friends. In answer to my hon. Friend the Member for Wimbledon I can assure him that nothing is further from my intention than to throw any doubt upon the bona fides of the representations made by the brewers to the right hon. Gentleman the Member for Mid Lothian in 1881. I have stated to the House the history of the subject. The brewers maintained that an extra revenue of £800,000 would be obtained from his scheme, while the right hon. Gentleman the Member for Mid Lothian estimated it at £300,000. At all events I will give my hon. Friend, and any of those associated with him, a full opportunity of sketching their views to me, and of correcting any false impressions that may have been derived from the history I have heard and repeated. But the point, of course, to which he and his Friends will have to direct attention is whether the 1055 or the 1057 limit is the correct limit to take. I cannot complain in the slightest degree of the observations of my hon. Friend, who is perfectly entitled to call the attention of the Committee to the point; but I trust that, whatever course the controversy may take, he and his friends will be assured that I intended to put no slight whatever upon the representations of the great interest with which he is associated to the right hon. Gentleman the Member for Mid Lothian, in 1881.


The whole question was, what was the equivalent of the quartern of malt in 1881? And the right hon. Gentleman the Member for Mid Lothian in 1881 actually admitted that the figures of the brewers were absolutely correct.


Very well; I will give my hon. Friends every opportunity to represent their case, but, at all events, my hon. Friend will feel that I can fairly make the brewing interest pay £300,000. Nor do I understand that my hon. Friend so much objects to the taxation of that splendid industry, of which he is an ornament, as to the expressions I have used in submitting my proposal. Well, then, by way of compromise, I would wish to withdraw every single argument I have used, provided I can get his assent to the payment of the £300,000. My hon. Friend the Member for Uxbridge spoke of the question of light gold, and wished me to say something more upon the matter. But, in saying anything further I feel that I am treading upon very delicate ground, because our proposals are not yet fully matured. But as he has asked me to say something, I am bound to remind him that many years ago proposals were made to the private bankers by the Member for Mid Lothian which gave the monopoly they enjoyed an additional life of 15 years. The matter fell through, however, and the right hon. Gentleman was defeated. I must say that I do not think that the private bankers can claim that the monopoly which they hold should be a permanent monopoly. At the same time, I do not wish the words that I used to be pushed too far, because I adjusted them carefully to cover other matters in my mind. There are a great many questions floating in the air, among them those relating to silver, on which there are recommendations by the Royal Commission—questions on which there may be a difference of opinion, and questions which have been under my consideration, but in regard to which I should hope to be excused from making any premature statement. I was sorry to hear the observations of my right hon. Friend, who stated that perhaps in my position I had not been able sufficiently to understand that the Conservative Party were opposed to the Death duties altogether. I had understood that the Conservatives were only opposed to the Death duties on realty being put on the same footing as the Death duties on personalty, as long as no allowance was made for the additional burdens which are borne by the land. That is a contention I have always supported, and I think that in any increase of the Death Duties, a great deal is to be said on the side of those who argue that the land is under certain disadvantages as regards the income tax, and that it is unfair to treat it equally with personalty as regards the Death Duties, without giving it some relief in respect of income tax. I consider, however, that I have dealt by no means unfairly, either with lands or houses, in the proposals I have made. It is very difficult to adjust taxation equally on the various interests, but I have done my best.

MR. CRAIG (Newcastle)

I should like to call the attention of the Chancellor of the Exchequer to the fact that, in his proposals about the Death Duties, he has entirely forgotten those who live. He has fallen very much into the same error he fell into last year in connection with his proposals as to the duties on bottled wines—he has taxed the poor as much as the rich. I ask the right hon. Gentleman to consider this between now and the time when he frames his Bill, and brings it into the House. Let me give an illustration. Take the case of ten children, inheriting £10,000—£1,000 each, and then take the case of two children, inheriting £5,000 each. How would the right hon. Gentleman work that out so as to make the burden approximate to the capacity to bear it?

Question put, and agreed to.


I do not know whether the right hon. Gentleman opposite (Mr. Childers) would object to the other Resolutions being moved now. It would be a convenience to pass them as I would then put them into the Bill. If we do not pass the Resolutions it will be impossible for me to introduce the Bill between now and the Easter Holidays, and clearly it would be an advantage to hon. Members to have the Measure in a complete form in their hands by the holidays.


I should be glad to do anything I can to expedite business, but there is a definite rule in these matters which has been observed for a long time. When it is a question of dealing with an existing duty, such as the renewal of the tea duty, or the income tax, or the increase of a Customs or Excise duty, no doubt it is wise to pass the Resolution on the first night, but it is not so in regard to other new duties. When a new duty in connection with stamps, for instance, is proposed, it is not customary to pass the Resolution relating to that duty the first night. It is taken afterwards. The right hon. Gentleman knows that the Resolutions can be reported to-morrow, and the Bill brought in, and that he can bring in the other Resolutions afterwards, and incorporate them in the Bill.


I cannot, of course, force the matter, but I thought it would have been convenient to pass the Resolutions dealing with the Death Duties and the other matters to night.


It is our duty in these matters to have some regard to precedent, and as the plan I propose will not really lead to delay, I think we should not depart from the usual custom.

Forward to