HC Deb 02 May 1889 vol 335 cc996-1031

Where such value is above £10,000.

At the rate of One Pound for every full sum of £100, and for any fractional part of £100 over any multiple of £100.

The said Duty is to be a Stamp Duty in addition to any Duties chargeable under "The Succession Duty Act, 1853," and Section twenty-one of "The Customs and Inland Revenue Act, 1888," provided that the said Duty shall not be payable upon the interest of a Successor in leaseholds passing to him by will or devolution by law or on property included in an account delived according to section thirty-eight of "The Customs and Inland Revenue Act, 1881."

The value upon which the said Duty is to be charged and assessed shall be ascertained in accordance with "The Succession Duty Act, 1853," subject to the following provisions;—

  1. (a.) In the case of a Successor who is entitled to the real property comprised in his Succession for an estate in fee simple, or in fee according to the custom of any manor, or for lives renewable under any custom, or under any leases for lives, or for any estate in tail, or to possession of such real property under an entail, whether strict entail or otherwise or is entitled to any such property for life, and competent to dispose as he shall think fit of a continuing interest therein, the value shall be the principal value of such property after making such allowances (if any) as ought to be made under section thirty-four of the said Act:
  2. (b.) In the case of an increase of benefit accruing to a Successor, and chargeable to Succession Duty by reference to sections five, twenty, and twenty-five of "The Succession Duty Act, 1853," where the value of the Succession, apart from the increase of benefit, shall exceed ten thousand pounds, such increase of benefit shall be chargeable with Duty in conformity with this Resolution, whatever may be the value thereof; and where the value of the Succession, apart from the increase of benefit, shall not exceed ten thousand pounds, the value of such increase of benefit, as well as of every preceding increase of benefit, shall be added to the value of the Succession for the purpose of the said Duty.

*MR. CHILDERS (Edinburgh, South)

This Resolution is of course the Resolution which raises the whole question of the new duty. I do not, however, at the present moment rise to discuss the question, but for the purpose of obtaining information. When my right hon. Friend the Chancellor of the Exchequer brought in his Budget I listened with great attention to his speech, and I think I said it would be impossible to understand this new duty until we had the Resolution before us, and that probably it would be impossible to do so until we had the Bill itself before us. Perhaps the right hon. Gentleman will now be good enough to answer this question: Is it proposed that in the case of real estate which is the actual property of the person inheriting the duty of 1 per cent shall be paid upon the capital value of the estate, or according to the life-interest of the successor? Before going into a discussion, which must be a very long one, it is desirable that this point should be made clear.


I confess I thought this was clear. I will not put the matter in legal language or form, but I may say the intention of the Government is that where there is an absolute power of disposal it is not the life-interest but the capital value of the succession on which the duty will be taken.

*MR. HALDANE (Haddington)

Is the Committee to understand that this duty is of a wholly different character from the Succession Duty, which varies according to consanguinity. Are we to understand that this is altogether a new duty analogous, if anything, to the Probate Duty levied in a lump sum in the case of personalty, and a duty which is to be levied in a lump sum in the case of realty?


What is the meaning of "the principal value of such property" in the Resolution? Is the principal value of freehold ground rents to be estimated according to the real value, or, as is now the case under the existing Acts, without reference to the real value, which may be four or five times the amount of the nominal value?


I would ask the right hon. Gentleman to be good enough to wait to see the Bill. I may say generally that the principal value would be ascertained in the manner in which it is now ascertained in taxing the property of Corporations. There are already provisions for taxing the capital value of real property, and these provisions will be applied to the present case. That is my general answer to the question. With respect to the question of the hon. Gentleman (Mr. Haldane), this is essentially a new duty, resembling the Succession Duty in some respects and the Probate Duty in others. The hon. and learned Gentleman is right in saying it is an additional tax which falls equally on any one who may obtain the succession, whatever his relationship to his predecessor, and so far it may be said to be like the Probate Duty. But I think to describe it simply as a sort of Probate Duty on Land would give a false impression. It is an increase of scale of the Succession Duty by 1 per cent on all successions above £10,000.


But it is not affected by the degree of consanguinity.


No. Those who pay one and a-half per cent now will pay two and a-half; those who pay four and a-half now will pay five and a-half, and so on. It is irrespective of the relationship of the successor.

MR. RATHBONE (Carnarvonshire,) Arfon

Is the new duty of 1 per cent to be charged on the whole capital value of personal property, but only on the life interest of realty?


I think I have made it plain that it is not so. Personalty and realty will be treated alike. As regards instalments, the payments in the case of realty will follow the Succession Duty, rather than the Probate Duty.

*MR. H. H. FOWLER (Wolverhampton)

Then for the purposes of this new duty is the scale of consanguinity abolished?


I do not think that is the proper way of putting it. This duty is an increase of the scale of the duty paid before. It is an equal addition of 1 per cent all round, the addition being calculated on a somewhat new system.

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

The question is one of some perplexity. There is some difficulty in finding a proper appellation for the duty. It is hardly proper to call this a mere addition to the Succession Duty, because in certain essential particulars it departs from the principle of the Succession Duty. The principle of the Succession Duty as applied to land, is that it is taken upon the limited ownership, rather than upon the capital value. It is an entire change of the principle of the Succession Duty, when you impose the duty that is to be taken on the capital value without respect to the question whether the ownership is limited or absolute. So far, I think, we clearly understand the Chancellor of the Exchequer, and there can be no doubt about the matter whatever. In point of fact this additional charge in the case of the Succession Duty is to be levied as the property tax on the subject to which it applies. The Succession Duty, it will be remembered, affects real property with two most important limitations, one being the distinction drawn between limited ownership and absolute ownership. That point has been completely cleared up. But the Succession Duty likewise affects, in a most important manner, the amount of the tax which is to be paid. As I understood the Chancellor of the Exchequer, the consanguinity scale will still remain in force with reference to this tax—the tax will be levied according to the degree of relationship. ["No."] I do not mean that the tax will be levied—it will be an absolute tax of 1 per cent, not upon the capital value simply without any deduction, but upon the capital value estimated according to the consanguinity scale. Is that so? If not, let us understand how it is.


I have been asked whether it is the abolition of the consanguinity scale, and I have said that I do not look upon it in that way. I look upon the consanguinity scale as not having absolutely anything to do with the new duty. The Estate Duty is levied equally upon the value of the succession, whatever the degree of consanguinity.


I am glad to hear that, but it is out of place to call it an Estate Duty.


; I call it an Estate Duty so as not to mix it up either with the Probate or the Succession Duty. This Estate Duty is a separate duty. It resembles the Probate Duty in some particulars, and it resembles the Succession Duty in others.


I perfectly understand it. It appears to me that those points in which the new duty resembles tho Succession Duty are of a peculiar character. But the two essential points which limit it as a tax are, first, whether the ownership is absolute or limited, and, secondly, whether it is limited under the consanguinity scale. I am not in the least blaming the Chancellor of the Exchequer; but I have observed that an idea has obtained considerable currency which is misleading as to the character of this new duty; and I gladly accept the appellation which has been given by the Government to this duty—that it is an Estate Duty. Although in its form it resembles the Succession Duty, especially in the most important matters of being levied on the entire value of the property and taking no cognizance of the consanguinity scale, yet its analogy really is to the Probate Duty, and not to the Succession Duty; but it is an Estate Duty quite distinct, as I understand, from both. It is to me very satisfactory on more grounds than one, inasmuch as it is founded on the principle of equal taxation as between personalty and realty. It is also of very great importance, because it now introduces for the first time into succession the principle of taxing capital value. I do not myself entertain any doubt as to the main principle of taxing capital value in contradistinction to other inferior interests, especially interests which might be earned out of the capital value; but, of course, the question will arise, if the principle of valuation of property is applicable on the occasion of death, may it not be made applicable on other occasions? This is a very large question indeed, and one of the utmost importance; but it is a question to which the present financial proposals of the Government obviously open the door. Although I intend to support the proposal of the Chancellor of the Exchequer, I would remark that the limitation of it to estates above £10,000, is the introduction of a great novelty into our taxing system; and I should like to know whether the Chancellor of the Exchequer believes that the proposal he has made can possibly remain permanently limited within the bounds he has fixed. I can understand that there is no injustice in the principle of what is called graduated taxation. In itself it is not unjust that richer members of the community, who have a greater abundance of this world's comforts, should make a larger proportional contribution to the Exchequer than poorer members; but, on the other hand, there is this difficulty. I have never been able to observe any absolute rule by means of which that graduation is to be kept within bounds. It is quite clear that it is capable of being carried to a point at which graduation would become confiscation; and I should be glad if we could be told whether there is any fixed rule which, in the judgment of the Government, would apply to the custodians of property and to proprietary interests, for the purpose of distinguish- in g what is moderate and just from what is immoderate and unjust. I do not see how it is possible if it is held that estates of £10,000 ought to pay more than estates of £9,000 or £8,000, to say that estates of £10,000 ought to pay at the same rate as estates of £50,000, £100,000, £500,000, or £1,000,000. I am quite prepared to rest satisfied with what is now conceded; but I believe that no long period will elapse before others will improve upon the precedent now set, and will attempt to apply, within the bounds of moderation and justice, something like an ascending scale to the larger estates, now that the principle is, as I understand, unanimously endorsed by both parties, and is not objected to by the supporters of the present Government. Because we must observe that we have just passed unanimously the Resolution dealing with the limit of £10,000 to personal property. This unanimity is a fact of great importance, and it will probably be prolific of consequences in the future. It will rest with the judgment and discretion of the House to keep those consequences within safe bounds, and I have no doubt it can be done; and if it is done the Chancellor of the Exchequer will have been the prime cause of the achievement of a result which will be favourable on the whole to the interests of justice. I gladly accept, on the responsibility of the right hon. Gentleman, a proposal with regard to which it has always been felt that there is great difficulty in guaranteeing its limitation within due bounds. It is quite impossible for the Opposition, even if they were disposed to attack exemptions, to look with a jealous eye upon a proposal of this character, proceeding from such a source; and undoubtedly I shall record it on my financial memory as an important and material fact that the proposal embodied in the first Resolution should have received the unanimous, and even the silent acquiescence of the House.


I think the right hon. Gentleman has failed to remember the basis upon which, in my opening statement, I fixed the limit of £10,000. The right hon. Gentleman seems to think that this is the introduction of a new system of graduation; but in the Budget speech I stated that £10,000 was adopted as a limit which was analogous to the limits existing already in the case of the income tax. £10,000 may be held to represent an income of about £400 a-year, and that is the basis upon which, as the mouthpiece of the Government, I rest the proposal. Any step which goes beyond £10,000 in the direction of graduation would run as much counter to the proposals of the Government as would the graduation of the income tax on incomes above £400. I acknowledge there is always a danger in admitting these exemptions; but exemptions from income tax already exist, and it has not been argued that these exemptions are the beginning of graduated taxation. I must protest against its being suggested that because we have followed the analogy of the income tax therefore we are taking the first steps towards a system of graduation. I do not quite understand whether the right hon. Gentleman is or is not in favour of graduated death duties, for he spoke with some reserve; but for myself I do not wish to exercise a similar reserve; and I repeat that the Government have adopted this line of limit thinking it is analogous to income tax exemptions, and by no means as indicating any approval of a general scheme of graduated taxation. Then, as to the suggestion that the levying of taxes on capital value will not stop with the Estate Duty. That revives a point which arose in a controversy which I had with the right hon. Gentleman last year as regards the existing taxation of landed property. While land is less heavily taxed than personalty in respect of Death Duties, it is more heavily taxed in respect of income tax; and in my judgment it would be extremely unfair to rectify the disadvantage which personalty may be under as regards death duties without at the same time rectifying the disadvantage under which realty stands to so great an extent as regards income tax. The Government have maintained the status quo; they have not extended any advantage which realty enjoys as regards Succession Duty to the new tax; but they distinctly affirm that you cannot extend the principle of capital value to Succession Duty without at the same time recasting the income tax.


I cannot accept the statement that the limit of £10,000 s only equivalent to the exemptions from income tax which stop at £400, for in this commercial country a capital of £10,000 will yield more than £400—not if put into the New Consols, but if employed in business, as a vast amount of the wealth of this country is. But that is not the point. That is not the question. I think incomes of £400 a year are entitled to a deduction—I rather believe of £120. Therefore, the consequence is, that under £400 is taxable, and that the favour received is a very light one. But I should say that there is no analogy between this sum of £10,000 and the distinction of the limit of exemption under the income tax. But what I wish to point out to the House is the likelihood, nay, the moral certainty, that proposals of this character will produce in future times other proposals in the same direction, and going beyond the scope of the present proposal. As far as I am concerned, I have always taken a severe view of these matters. When I was Chancellor of the Exchequer I proposed that limit of exemption from the income tax, which Sir Robert Peel had put at £150, should be reduced to £100, and the House accepted that proposal. That was a rather stringent measure, perhaps, and that was the only Act I ever proposed touching this matter, as Chancellor of the Exchequer. But when Lord Iddesleigh proposed to raise the limit of exemption or partial exemption to £400, we pointed out to him that he must not suppose that the proposal would remain a dry and barren fact, but that other new proposals would be certain to be founded upon it. And so now the proposal of the Government has been founded upon the proposal of Lord Iddesleigh — beyond which it goes—and I confidently predict that before a very long time either the present or some other Government will submit proposals which will go beyond this proposal, and that a considerably larger application of the principle will be devised, proposed, and adopted. All I say is, Sir, that I trust that these applications will be kept within the bounds of reason and justice. And, in my opinion, there is no ground of reason or justice on which you can propose that estates of £10,000 shall be subject to a specially stated tax of 1 per cent—which is not to apply to estates of smaller value—and at the same time contend that it would be otherwise than just to apply a higher charge to estates of much greater value.


I must say in the first place that so far as regards the analogy between the £10,000 value and the limit of exemption which exists in the case of the income tax, there is no analogy at all. The House observes that in the case of these estates of £0,000, you tax them by probate, succession and legacy duties, and in the case of the income tax, you except certain incomes from taxation altogether. Therefore, it is a case of graduated duty. You are imposing a new and additional duty on estates of the value of £10,000. We have reasons to congratulate ourselves on this side of the House, and also those opposite, in a somewhat wider sense than we usually do, because those of us who remember the controversies of 1885 between the right hon. Gentleman (Mr. Goschen), and the right hon. Gentleman (Mr. Chamberlain), have not forgotten that perhaps the bitterest of those controversies was waged about the subject of graduated taxation. It is perfectly true that this is only the first step, but it reminds me a little of Madame Recamiers' famous answer to the gentleman who said he had seen St. Denis walk first a mile and then at least one step with his head under his arm, that it was only the first that counted. This is the first step in graduated taxation, and you are committed to the principle. I am not at all opposed to graduated taxation within limits. It is a difficult subject, and requires careful consideration. I believe the majority of Members on this side of the House are practically prepared to consider it an open question, and to discuss it on that basis. But we should certainly like to approach it in a little more workable fashion than it seems to have been approached by the Chancellor of the Exchequer. I do not know whether the House realises that the Chancellor of the Exchequer proposes to add a fifth Death Duty. From the four already existing, complications arise, and I should rather have thought it desirable to consolidate these taxes than to propose a new duty. In the first place there is the Probate Duty, which has existed, I think, from the middle of the 17th century; then there is the Legacy Duty, which is levied exclusively upon successions, and which the landowners succeeded in confining to movable property. Then, in 1853, came the new and intricate Succession Duty, which I understood from the right hon. Gentleman the Member for Mid Lothian was something in the nature of a compromise. The Government at that time took what they could get, and it was impossible for them to get any more, because their own supporters consisted of gentlemen connected with the landed interest, with which they were dealing for the first time. In 1881 a duty was imposed by which it was sought to attack voluntary gifts made by the people during lifetime for the sole purpose of evading the Death Duty. That duty I am glad to see is to be made more, binding and stringent by one of the resolutions. But surely, when you have four duties already, the time has come when you should try something in the way of simplification instead of imposing a new duty. The Lord Chancellor in the other House has a Bill affording facilities for the constitution of a real representative of the landed estates of deceased persons, and all you have to do is to allow that Probate Duty to attach to real as well as to personal estate. Instead of that you propose to create a duty which is a departure from the position which you took up last year. I find in Hansard that the Chancellor of the Exchequer at the conclusion of a long and powerful speech, said—"We have endeavoured to remedy certain inequalities so far as we think they ought to be remedied; but so far as the Government is concerned, we show our whole hand, and say that we have no further proposals to make."


That had reference to the rectification of existing duties; it was not a general declaration that we would not deal with the Death Duties. We showed our whole hand, and the Government have made no further changes as between realty and personalty.


Our point last year was that the whole system of the Death Duties should be put on a more even footing, but I accept the explanation which the Chancellor of the Exchequer has given, that the Government objected to take up the question of the Death Duties unless in an entirely new and thorough-going fashion. We have got a new departure, but it is one which we on this side of the House have no reason to regret; on the contrary, we are entitled to congratulate ourselves, though, at the same time, we are entitled to complain that no attempt has been made to deal with the subject as a whole.

*MR. CHAPLIN (Sleaford Division of Lincolnshire)

I will not detain the Committee more than a few moments. But I think it necessary to say one word of protest, more especially after the closing observations of the right hon. Gentleman the Member for Mid Lothian, and his adhesion to the proposal. The proposals of the Budget are before us, but I confess I am not very much enamoured of them. They were made just before the Easter Holidays, and for my own part I frankly own that I have been more pleasantly occupied than in a discussion of the Death Duties; and, without the figures and details I should not be in a position to enter upon any considerable discussion. When I first heard the statement of the Chancellor of the Exchequer, I listened to it with a good deal of suspicion, and that suspicion has certainly not been in the slightest degree allayed by the way in which the proposals have been received on the other side of the House. I remember that the hon. Member for Northampton patted the Chancellor of the Exchequer on the back and congratulated him on his proposals, observing that they were far more satisfactory than he could have anticipated. Then to-night the right hon. Gentleman the Member for Mid Lothian rightly and properly called attention to the future, and significantly remarked that although the House may be satisfied upon the present occasion, it must necessarily be the first step towards a much larger proposition in the future. Sir, I frankly confess that the more I consider the propositions of the right hon. Gentleman the less I am disposed to accept them. It seems to me that they open up questions of the largest character, which we on this side of the House would certainly do well to consider much more carefully than they have been considered up to the present time. There is no doubt about this. He is going to propose an additional burden, and a very serious burden, upon the land, and that at a time when probably it is less able to bear it than ever it has been before. Under these circumstances, although I take no further part in the proceedings at this time, I rise to say that I reserve to myself the fullest right to take whatever course I please with regard to the question on a future occasion.


I wish to ask the Chancellor of the Exchequer one question. On the Succession Duty, the time for payment is protracted, in order to enable the heir, without inconvenience, to find the money. The Chancellor of the Exchequer stated that with regard to the duty under discussion, equal time would be guaranteed for payment. One result of that would be that if the heir dies before full payment has been made, the country loses. I wish to ask the Chancellor of the Exchequer whether, in providing for the extension of the time, he will enhance the amount of the duty by so much as will cover so much of the prospective loss, owing to the expectation of life in some cases being less than in others?

MR. RATHBONE (Carnarvonshire,) Arfon

I understand the Chancellor of the Exchequer to say that the charge will lie equally on personal and real estate, while the right hon. Gentleman the Member for Mid Lothian said it would be charged on the capital value of the succession. I think the Chancellor of the Exchequer is a great deal too modest. His proposal is n my opinion a very bold, but at the same time, a very just one; and if our Conservative friends will consider the matter they will, I think, agree that it is a very Conservative proposal. Now that the Democracy are in power, they ought to insist on this matter being put on a fair footing, either on the ability of a person to pay or on the benefits he receives from the Government. Probably on both those grounds it is right that those who leave large fortunes behind them should be liable to pay a larger proportion than they have done of the value of the estate.


I may perhaps be allowed to say a few words with the view of removing any doubt that may exist in the mind of my hon. Friend in regard to the wording of the resolution. The tax to be levied is, as I understand the matter, to be leviable on personalty and realty alike. If a man should succeed for life to £12,000 personalty, then the capital value of his life interest in that personalty is taken. If he succeeds for life to real property of the value of £12,000, the capital value of his life interest is to be taken. If his interest is absolute, then the case contemplated by the hon. Member for Wolverhampton would apply, and he would pay on that capital value. It makes no difference whether it is a succession to personalty or a succession to realty. With regard to the remarks of the hon. Member for Haddington (Mr. Haldane), I would point point out out that there are not four different kinds of duties, but practically only two, although they have different incidence.

*SIR H. DAVEY (Stockton)

I am glad to understand that the fee-simple owner on succeeding will pay the duty on the fee simple value, and not merely on the life interest. Death Duties should be levied on the same principle as personalty and realty. It is a Succession Duty to all intents and purposes. If that be so, why should a difference be made in the mode in which this Succession Duty is to be levied and the way in which the Succession Duty is levied in the Act of 1853. A much more simple way would be to alter the Succession Duty Act of 1853, and make all Succession Duties under that Act liable on the fee-simple value of the property. With regard to the limit of £10,000, I think explanation given will hardly be satisfactory to hon. Gentlemen opposite. Let them take the case of a man who under one appointment succeeds to £4,000 personalty and £6,000 realty. Is it clear that he would pay on the whole value of the estate—viz., £10,000? Is the payment assessed on the total value of the Succession, whatever the quality of the property might be? In my opinion, the Estate Duty should be paid on the whole value of the estate, whatever may be its character. Is the payment assessed on the total value of the succession, whatever the quality of the property may be? Is it paid on the whole value, whether it is real or personal estate? Would a man who succeeded to £10,000 half in personalty and half in land pay the Estate Duty? In my opinion, the Estate Duty should be paid on the whole value of the estate, whatever may be its character.

*SIR R. PAGET (Somerset, Wells)

I wish to take this opportunity of saying a few words on this important matter, and I agree very much with what fell from the right hon. Gentleman the Member for Lincolnshire (Mr. Chaplin). I think it is our duty to examine carefully the propositions which have been put before us by the Chancellor of the Exchequer, but having gone so far with the right hon. Gentleman, I am unable to go further with him. I confess that I do not share the fear with which he regards the proposals of the Chancellor of the Exchequer. On the contrary, it appears to me that in many respects they are worthy of support. I detect in them the principle of absolute equality of taxation in regard to personalty as well as realty, and in that principle I entirely concur. I go with the Chancellor of the Exchequer and say that it would not do alone to effect an equality in regard to Death Duties, but that that equality of taxation must be carried further. At present there are far more serious and heavy burdens imposed upon realty than upon personalty, and I should be glad, if possible, to remove every one of those inequalities and render the burden equal. That is the reply to the hon. and learned Gentleman opposite, who with great emphasis asked, "Why introduce this new Estate Duty—why not get rid of the unjust action of the Act of 1853?" The answer is plain. You cannot get rid of that injustice unless you deal with the matter of taxation as a whole. If you can possibly do this, then I admit that the inequality must go. The matter has been one of great difficulty. Most of us dislike taxation in any shape, and special objection is taken to a new tax. The Chancellor of the Exchequer has displayed much ingenuity in designing new taxes which are to be borne by the community at large. New tax after new tax have been introduced with little or no irritation, and have been borne with equanimity. [Cries of "The Wheel Tax."] Yes; but that did not pass. I am only speaking of those which are the law of the laud, and I must congratulate the right hon. Gentleman on having introduced new taxes which have excited so little objection. If the elements of a graduated taxation are objectionable, we have had them on our Statute Book for years. From the moment the system of exemptions from income tax was introduced, there were, to a certain extent, instances of graduated taxation. As far as I can see, the present proposal is on all fours with the graduated taxation imposed in the income tax. It might possibly be made still further on all fours with it if the Chancellor of the Exchequer had followed with greater nicety the precedent of the income tax, and instead of fixing one point of £10,000 capital, below which the new Estate Duty should not apply, had introduced an automatic sliding scale, following the graduated exemptions now given to incomes below £400. There is no novelty in a system of graduated taxation to the extent I have mentioned; on the contrary, its application has already been recognized by Chancellors of the Exchequer on both sides of the House. This is only a re-application of the principle in dealing with the Succession Duty. I do not see any reason why we should fear that this is to form the groundwork of a new system of taxation, seeing that it has long since been enforced. I certainly approve heartily of a plan the leading features of which are identity and equality of taxation upon all property whatever.

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

I am sorry that the Attorney General has left the House, because I wanted to call attention to one remark he has made; but perhaps the Chancellor of the Exchequer will be able to clear it up. The Attorney-General, speaking of this new tax—this estate duty, said that it was to be in every sense of the word levied on the value of the succession. That is not so. In Subsection A of the Resolution, in a certain description of property where the successor succeeds to an estate in fee simple, the duty is to be levied on the principal value of the property, and not on the value of the succession. Let me take the case of a man who dies possessed of a real estate of the value of £12,000, and leaves that estate to his son liable to the present Succession Duty. The income of the estate has to be ascertained, certain deductions have to be allowed, and the net value of the income has to be capitalized according to the scale of the Succession Duty Act. Possibly the son is of such an age that the value of the succession is £5,000. A Succession Duty of 1½ per cent is levied upon it, but if this Estate Duty is passed, that calculation will not be made in respect of it, but the authorities will ascertain what is the capital value of the whole property, and assuming that it is worth £12,000, the new Estate Duty would be 1 per cent upon £12,000, in addition to the duty upon the value of the succession as defined by the Succession Duty Act as the value of the son's life interest in the property. But although this proposal does introduce a most valuable alteration—one almost of priceless value—it is, nevertheless, limited to the case of absolute bequests. Where a father leaves an estate to a son for his life, and then to his grandchildren, the new duty will not he levied on the capital value of the property, but on the life interest of the son and on the ultimate interest of the grandchildren. Therefore, what we have is this—that where the succession is created by settlement or by will, as far as real property is concerned, this new duty will be levied on precisely the same principle as the old Succession Duty, but where real property passes absolutely, then the new duty is levied on the corpus on the same basis as it is levied on personal property.

*SIR G. O. TREVELYAN (Glasgow, Bridgeton)

I hope I may be allowed to supplement by one word what my right hon. Friend has said. I do not think the House is quite aware what a serious proposition, from one point of view, has been laid before it. Take au estate of the value of £20,000. At the present moment a heir succeeding under the ordinary conditions would pay £135, taking the income at £600. Fifteen times 600 is 9,000, and 1½ per cent on £9,000 is £135. That is what the heir would pay at present. Under the Estate Duty, if the property if settled by will the heir will pay in addition £90. If on the other hand it is left absolutely he will pay £200. And so in the case of landed property, which is left absolutely, as in my opinion, all landed property ought to be left. The tax of the right hon. Gentleman opposite will increase the Death Duty paid by the heir from £135 to £335, an addition so enormous that I really doubt whether the right hon. Gentleman below the Gangway (Mr. Chaplin) during the agreeable Easter holidays he recently passed fully mastered it. It is the most serious proposal in regard to the taxation of a class which has ever been made, but it is an addition which I was delighted to hear proposed, and which I shall be delighted to see passed by Parliament. Under this new tax if the estate is left absolutely, the heir will have to pay £335, but if it is left through an entail he will only have to pay £225. Multiply that by ten, so that it may apply to the size of important estates in this country, and it will be seen that an entailed estate, every time it passes from one proprietor to another, will have an advantage as against an estate which passes absolutely of more than £1,000; and we know very well that the heirs of those entailed estates generally find themselves in a position, owing to the many family claims upon the estates, in which the additional £1,000 will be a serious burden indeed. And therefore I would ask the Committee to consider what an enormous premium the Chancellor of the Exchequer is putting on the deleterious practice of tying up land. There can be no doubt that an additional inducement will be offered by this proposal in favour of tying up land greater than has been given by any proposal which has been made for many years past. The advantage given to entailed property should as soon as possible be abolished, and therefore I trust that all of us will do our best to hasten the day when these duties will be placed upon a thoroughly comprehensive footing.


I do not know whether the right hon. Gentleman who has just spoken is aware of the proposal which was made in 1885 by the right hon. Member for Edinburgh (Mr. Childers).


Oh, yes.


Then surely he ought to have raised the same objection to it which he has raised now. It was open to precisely the same objection as bat which he has taken to the present proposal. Under the proposal of the right hon. Member for Edinburgh there would have been on property that was entailed only the charge for the life interest, whereas upon property that was not entailed there would have bnee a charge on the capital value. The late Government, in 1885, proposed, without any compensation such as is claimed by my hon. Friend behind (Sir R. Paget), to raise the Succession Duty to 3 per cent not on estates of £10,000 only, but on all successions. Right hon. Gentlemen opposite were going to put realty and personalty on the same footing as regards the death duties, but to leave realty under other burdens and disadvantages as compared with personalty. My belief is that when we remove some of the existing inequalities of these duties, but deal at the same time with the burdens which unjustly lay upon land, it will be found that the landed interest is in a more favourable, because more just, position than it is now. I have been asked several questions. The hon. and learned Member for Stockton (Sir H. Davey), after endorsing what I have done in charging the Estate Duty in certain cases upon capital value, asked why I did not apply this principle to the whole of the existing Succession Duties? My reply is that the Government would not consent to so apply it until at the same time they were able to relieve realty from the injustice to which it is subject in other respects. The hon. and learned Gentleman asks whether, if a man left £10,000, half in land and half in personalty, it would he liable to the Estate Duty. My reply is that that would not he. It would require further changes in the general administration of the Death Duties to be able to effect that object. I accept the statements of the right hon. Member for Wolverhampton as being a correct general description of my proposals. When my hon. and learned Friend the Attorney-General spoke of the value of the succession, I think he used these words not in any legal and technical sense, but he meant that the property is taxed at what it is worth to the successor. The right hon. Gentleman says he expects that in the Bill the whole method of valuation will be set forth. I cannot promise that. In the Succession Duty Act, there are Clauses which point out the mode of valuation; and it is by reference to them that I think the matter is dealt with by the present Bill. The right hon. Member for Bridgton (Sir G. Trevelyan) has selected a case of 15 years. Of course, that is entirely an arbitrary selection.


It is the average as given by the right hon. Gentleman himself.


It may be perfectly true, as regards the new duty, that it does fall more heavily on the landed interest than the existing Succession Duty; but if we compare the position of land with that of personalty it will be seen that the increase on personalty is also severe. The right hon. Gentleman may try to alarm some of our friends as to the character of our proposals; but it rests with the Government to show, as we are able to do, that we have not forgotten the true interests of realty any more than we have neglected the true interests of personalty. We do not profess to favour either the one class of property or the other, but to observe a just measure between them when we are in the disagreeable position of having to impose any fresh taxation at all. One hon. Gentleman has said that we ought to have dealt with the Death Duties as a whole. For reasons which I have explained at considerable length it was impossible to do so in the present year.

MR. SHAW LEFEVRE (Bradford, Central)

I understand that the right hon. Gentleman has answered the important question put by the hon. and learned Member for Stockton in the negative. My hon. and learned Friend asked whether £10,000 left by a testator, evenly divided between realty and personalty, would pay duty under the present proposal, and the Chancellor of the Exchequer has answered that in the negative. That will lead to very extraordinary results. Supposing a testator leaves £20,000 evenly divided between realty and personalty, under -the present proposal that aggregate property would pay £200 to the Exchequer. But supposing the testator leaves £18,000 also evenly divided between realty and personalty, that would pay nothing. If, on the other hand, the aggregate property was £18,000, £10,000 in realty and £8,000 in personalty, the realty would pay £100, and the personalty would pay nothing. That seems to me to be a very strange state of things, and I cannot but think that the Government would do well to reconsider their proposal with reference to the anomalies I have pointed out. The Chancellor of the Exchequer made a very effective tu quoque reply to the right hon. Gentleman the Member for the Bridgeton Division of Glasgow (Sir G. Trevelyan) but he did not touch the merits of the case. The point of my right hon. Friend's remarks was that under the proposal of the Government we add a fresh premium to entailed property inasmuch as entailed property will be less heavily burdened than property left absolutely to the heir. I have endeavoured to make a comparison as to what the results will be in the two cases—in the first place, of personal property of the value of £10,000, and in the other case of realty of the same value. I find that under the present law the personal property would pay £300 in the shape of Probate Duty, but in the case of real property, assuming the heir to be forty-five, payment would be made on a capitalized sum of £5,500–1½ per cent—namely, £82; and this would be reduced by the money being spread over eight instalments, on which discount would be allowed, to £75. Therefore, in one case there would be a payment of £300, and in the other a payment of only £75. Under the proposal of the Bill, £100 would be added to the amount payable in respect of the personalty, making £400. I assume that the property is left absolutely to the heir, and in the case of the realty £100 would be added, making, in that case, £175. That, also, is subject to discount. My right Friend was, therefore, quite correct when he said that the effect of the present proposal will be to increase the inducements to entail property. This, we feel, is a matter worthy of the serious consideration of the Chancellor of the Exchequer.


I desire to say a word on behalf of the small owners of land. The Chancellor of the Exchequer is, perhaps, unaware that in the Eastern Counties small owners of land are divisible into two categories—those who are ruined, and those who are going to be. This proposal will only precipitate the latter catastrophe. It does not effect the big men, the persons who own 200,000 acres, or the 800 persons who own 3,700 acres of land and upwards, but it comes down uncommonly heavily on the 180,000 people, who own 350 acres and a smaller quantity, and I do hope that, as the agricultural lamb has been sufficiently shorn already, the Chancellor of the Exchequer will temper the wind which blows from the Exchequer with reference to the small owners.

*SIR J. SWINBURNE (Staffordshire, Lichfield)

I should like to know when the first instalment in the case of landed property will be due. An heir may succeed to an entailed estate, and yet have to wait eighteen months before receiving a farthing of rent, as on many estates the tenants hold their farms with "a running half-year's rent" allowed. Consequently, if the first instalment of the Death Duty is to be paid immediately, the heir may have to go to prison for non-payment of the Queen's Taxes, while he may not have received a shilling from the property he has inherited.

SIR G. CAMPBELL (Kirkcaldy)

I always welcome any steps towards a graduated taxation of property, and with that view I very much welcome the proposal of Her Majesty's Government. I was also pleased to hear the observations of the right hon. Gentleman the Member for Mid Lothian. It is perfectly clear, as the right hon. Gentleman so forcibly showed, that you cannot stop at £10,000. Something has been said about confiscation, but it seems to me there is a great distance between 1 per cent and confiscation of property. I think that if you put 1 per cent on the amount of £10,000, you might reasonably put 4, 5, 6, or even 10 per cent upon the property of the millionaires. I hope the same system of graduated taxation will be applied to the income tax. The only doubt I want to suggest with regard to the proposal of the Government is whether it is prudent to put the whole of the taxation on the Death Duties; whether it would not be better to revise the income tax. I fear that if you put it all on the Death Duties, the consequence will be that Members will be apt to spend their incomes.

*SIR W. BARTTLELOT (Sussex, North West)

I think we must all agree that a great deal of information has been afforded in the debate of to-day, and I hope the Chancellor of the Exchequer will give us plenty of time to carefully consider the very serious proposals he has made. The right hon. Gentleman the Member for Mid Lothian laid down, as he always does with regard to finance, the case as clearly as it could possibly be laid down. I wish to endorse one thing he said, and certainly adhered to, in the early part of his career as a financier, and that is that taxation should begin as low as it possibly can, and be kept upon a uniform scale, and that we should not have a graduation of taxation according to the property which a man may hold. But the right hon. Gentleman said a great deal to-day. The right hon. Gentleman has said that this tax might be converted into a tax upon estates totally irrespective of the Death Duties, and that the tax might be made use of for other purposes at another time. I gathered from the right hon. Gentleman's speech, not that he is anxious to see this done, but that these proposals will open a door to those who may wish to impose taxation upon property in a different way from that which has been adopted up to the present moment. This is a serious proposition, and I wish to call the special attention of my right hon. Friend to it. Such warnings of what may occur in the future deserve the serious consideration not only of the right hon. Gentleman, but of hon. Members who sit on the Ministerial side of the House. The right hon. Gentleman the Member for Mid Lothian also warned us that an ascending scale may be made use of on large properties in regard to the income tax, the Death and Estate Duties, and that the consanguinity scale in the Death Duties might be abolished. That is another important point to be seriously noted by the Chancellor of the Exchequer, for though it is urged that the proposals are safeguarded, I would point out that the same argument was urged with respect to the Reform Bill of of 1867, but before the Bill left the House all the safeguards on which we on this side had depended were eliminated. May not the same fate overtake the proposals of my right hon. Friend? He proposes certain things which he thinks are safeguards, and I should like to know how the safeguards are to be maintained. As an illustration there is the case of two men who recently died, their property falling to their sons, neither of whom is going to reside (on account of their pecuniary inability to do so), on their properties, but both intend to sell them. It is difficult for hon. Members opposite to realize the position of men who inherit landed property, small or large, and who have not other means whereby to live. It becomes a severe hardship to such to be taxed more heavily than at present, especially when we consider the present condition of agriculture. Hon. Members opposite will give us credit for trying to deal leniently with our tenants and therefore we ought to receive consideration at the hands of the House.


I am not very much surprised at the remarks of the hon. and gallant Gentleman. I think that what he has said is true, but it is the truth of what he says that commends these proposals to hon. Gentlemen who sit on this side of the House. It is a fact that nobody can deny that the proposals of the Budget open up in the future a great number of very important questions, such as graduated taxation, applicable equally to the income tax, and to the Succession and Probate and other Duties. The great question at the bottom of graduated taxation is, whether or not people with enormous means shall contribute in a greater ratio to the necessities of the State than people with humbler means. This was established to a certain extent some years ago in reference to the income tax; it was afterwards extended, and now it has been established in reference to the Death Duties by the Chancellor of the Exchequer. It is a characteristic of stones of this kind that when set rolling, they acquire the peculiar property of rolling faster and faster. These proposals also open up the question why property should only pay on the accident of death, and why it should not, as in other countries, contribute annually to the necessities of the State. It is quite true as the hon. and gallant Gentleman has said that all these questions are brought forward with great. weight and authority coming as they do from the Conservative Party in this country, and I hope they will receive increased force from the political situation. What I want now to ask the Chancellor of the Exchequer is whether I fully understand the position of the right hon. Gentleman in dealing with the point raised by the right hon. Member for Mid Lothian. The right hon. Gentleman cannot mean that a property worth £18,000, equally divided between land and personalty, should pay nothing, because each of the properties would be £9,000, and therefore below the limit. He cannot possibly mean that when a man inherits £10,000 in realty, or £10,000 in personalty, he shall pay the tax, but not if he inherits less. The proposition is so absurd that the right hon. Gentleman cannot possibly mean it, and I hope he is prepared to tell us that the Bill will be amended in this respect. If the £18,000 is divided in this way, £10,000 in realty and £8,000 in personalty, is it to pay on realty and not on personalty? But surely the principle is that if a man inherits anything above £10,000 he should pay the Duty, without regard to the way in which the property is divided.

MR. PICTON (Leicester)

I wish to put a simple question to the Chancellor of the Exchequer, which I asked when the right hon. Gentleman made his Budget speech; he did not think it necessary to answer it then, but I hope he will not refuse to answer it now. The question is whether the 1 per cent extra is to be levied on the whole property, or is it to be levied on the portions which the successors may receive? I understand that an estate of £9,000, received by one child, would not pay the 1 per cent duty, but if a man leaves £12,000 to be divided among 12 children, then I understand on the other hand, that the extra 1 per cent is to be paid by each. ("No, no.") Well, there is evidently a difference of opinion on the subject, and I therefore hope the Chancellor of the Exchequer will explain what is the real position of the matter. I do not pretend to be learned enough to understand the legal language of these resolutions. I am glad, however, to find I am not so simple but that there are others who agree with me. If the case is as I have put it there will undoubtedly be a considerable inequality, and an inequality by which some persons will be painfully affected. Where a large property, consisting mainly of personalty, is divided among a number of persons, those who happen to receive small sums from the estate and have to pay 1 per cent however small their portion may be will certainly have their feelings painfully excited. Perhaps it is felt that those who are fortunate enough to receive any legacy at all would probably be in a generous humour, and would willingly pay anything that might be demanded from them. At the same time I think it is of importance that the matter should be clearly understood, or otherwise mistakes may be made.

SIR R. FOWLER (London)

There was a point put by the right hon. Member for Derby (Sir W. Harcourt), which I should like to see made clear. The right hon. Gentleman put the case of a testator leaving £18, 000—£9,000 in realty and £9,000 in personalty, and he asked whether in that case, so far as the duty is concerned, the estate is to escape scot free. But suppose a testator leaves £20,000 and it consists of £10,000 realty and £10,000 personalty, is the tax to be levied separately as between the one and the other?

SIR W. LAWSON (Cumberland, Cockermouth)

I merely rise for the purpose of congratulating the Chancellor of the Exchequer upon the Budget. It is very not often that the right hon. Gentleman receives compliments from this side of the House, and I therefore think it is incumbent on me to say what I feel on this occasion. I consider that the right hon. Gentleman has had the honour of inaugurating in this country a fiscal revolution; and those who heard the speech of the right hon. Member for Mid Lothian will agree that I am not overstating the case. I look with the greatest pleasure on this scheme of graduated taxation, and I hope the Chancellor of the Exchequer will carry it to a triumphant issue. It all illustrates the saying that "Everything comes to him who waits." We have not had long to wait in this matter, because the right hon. Member for Mid Lothian was defeated on this very question. The right hon. Gentleman wanted to increase the Death Duties, and the Beer Duties, placing an additional tax upon death and another upon beer which is the means of death. A great defeat of the Liberal Government occurred in consequence, and yet in less than four years, we are coming here to support a Tory Government in carrying out the very same proposition which turned out the right hon. Member for Mid Lothian. It is a very encouraging incident, and I feel sure that after this Budget we shall now go on increasing the taxation of that most mischievous creature, the rich man, and make him far more useful to the State than ever he has been before. I congratulate the Government heartily all the more that their own supporters appear to be a little lukewarm in regard to the present proposal.

*SIR R. LETHBRIDGE (Kensington, N.)

The difficulty stated by the right hon. Member for Bradford (Mr. Shaw Lefevre), and emphasized by the right hon. Member for Derby (Sir. W. Harcourt), might be very well met by my right hon. Friend the Chancellor of the Exchequer, if he were to reckon his limit of exemption from the new Estate Duty by reference to the amount of the income which passes rather than to the capitalised amount. I think a plan of that kind would do something to abate the apprehensions of those who fear that this new duty will press unfairly upon the landed proprietors. The right hon. Gentleman the Member for Mid Lothian has endeavoured very skilfully to arouse the apprehensions of hon. Members on the Ministerial side by dwelling upon the fact that this is the thin end of the wedge for the introduction of a general system of graduated taxation. I must say that for my own part I regret very much that the right hon. Member for Sleaford (Mr. Chaplin) allowed himself to be drawn like a trout that rises to the fly skilfully thrown over his head. It is perfectly obvious to common sense that we have been accustomed in the exemption of the smaller incomes from income tax, to such an exemption as that which the Chancellor of the Exchequer proposes, and it has never been dreamt of that the exemption of the smaller incomes really was to lead to anything like a graduated income tax. Therefore, I do not see why this proposal should be regarded as leading to graduated taxation of any kind, and I shall support the Chancellor of the Exchequer's proposals most unhesitatingly. I believe that he will be supported by the country at large, and that his proposals will have the approval not only of hon. Gentlemen opposite, but of the majority of Members on this side of the House.


There is one point to which I think the attention of the Chancellor of the Exchequer ought to be drawn. It is a somewhat technical point, but I am sure the right hon. Gentleman will follow me. Real estate only pays Succession Duty; it never pays Legacy Duty. The Succession Duty is paid on the real estate which is devised or passes by will, but where personalty is bequeathed by will it does not pay Succession Duty but Legacy Duty. As I read the resolution the new Estate Duty is only to be imposed on personal property passing by the death of any person dying on or after the 1st day of June, 1889, as a succession or successions under the Succession Duty Act 1853. What I wish to point out is that if £10,000 is bequeathed by a will to, say, a son, it would not be a succession under the Succession Duty Act 1853, but would be a legacy and liable to Legacy, not Succession, Duty, and therefore as I read the resolution as framed it would not he made to pay the new Estate Duty. I do not suggest to the Chancellor of the Exchequer that this is intended, but I think it is a matter worthy of his consideration in order to ascertain whether it is so or not. If the first resolution is intended to cover this case of course the question will not arise.


It is intended to cover it.


Then I hope the right hon. Gentleman will see his way to meet the anomaly which my right hon. Friend the Member for Derby and I have pointed out, namely the case of a man who leaves an estate of £18,000 one half in realty and the other half in personalty. In that case Succession Duty will not be paid at all. That, I am afraid, is an anomaly which cannot be altered in his Bill, but must be altered in the resolution.


This point has not escaped our attention, but it is one of a practical nature. I quite agree that if the matter were reasoned out logically some scheme ought to be devised to meet a complex case of a man leaving £7,000 of personalty and £7,000 of realty, but we had to consider the matter from a practical point of view and we found that it would delay so extremely the collection of the Probate Duty that we were obliged to proceed tentatively, in order to see whether the plan is capable of further development. The point submitted by the hon. and learned Member has, however, not been lost sight of.


I apprehend that it will be necessary to insert some provision in the Bill.


I am sorry to have to trouble the Committee so often. In the case put by the hon. Member for Leicester (Mr. Picton), I may state that the Estate Duty so far as personalty is concerned follows the Probate Duty, and would be paid out of the corpus of the estate before it came to a division. This being an extension of the Probate Duty, it would follow the lines of the Probate Duty. It may almost be said the Probate Duty is put at 4 instead of 3 per cent. My object as Chancellor of the Exchequer, has been not so much to reform the Death Duties as to get £800,000 into the Exchequer. The idea of the new duty is that it is to be an addition to the Probate Duty, and the Succession Duty. If it were to be made an increased Legacy Duty instead of an increased Probate Duty, I suppose not one-half of the duty would come into the Exchequer in the present year. With regard to complex estates, corn posed both of realty and personalty, I have urged upon the officers of the Inland Revenue to have a practical plan prepared which can he put before the Committee; but as hon. Members acquainted with legal affairs are aware, it takes a much longer time to ascertain the value of realty than of personalty, and the difficulties in the way of framing such a plan are very great, though not, I hope, insuperable. Our desire would be, if possible, to bring such estates under the tax, and I will express to the able officers of the department the view of the Committee that this ought to be done if the difficulties can be overcome. I endorse the remark that has been made by an hon. Member behind me that the criticisms of the right hon. Member for Mid Lothian and others are simply an attempt to frighten hon. Members on the Ministerial side, and to stir within them a spirit of disgust with the Chancellor of the Exchequer, on the ground that something like our present proposals has been a part of the Liberal programme for years past. In 1885 the Government of the right hon. Gentleman, the Member for Mid Lothian, proposed an increase in the Succession Duty and the Beer Duty, and the main ground on which their scheme was resisted by my right hon. Friend the President of the Board of Trade, was that it would be unfair to increase the duty on land until relief was given to Local Taxation. But since then the present Government have surrendered considerable sums out of the Imperial Exchequer for local purposes. It was not contended in 1885 that there ought to be no approach to the equalization of the Death Duties, but only that such a step ought not to be taken until the House had redeemed the promise it has made to the ratepayers that some relief should be given to Local Taxation. This, however, has since been done, and the fact that it has been done makes all the difference between our position now and that of right hon. Gentlemen opposite in 1885.

*MR. GEDGE (Stockport)

I desire to point out the inconvenience experienced by executors owing to their having to pay the Probate Duty before they can touch the property in respect of which it is due, and I wish to know whether this extra duty will be payable under similar conditions. When a man dies his executors are naturally anxious to prove his will as quickly as possible, and until 1881 they could do so, as they were allowed to estimate roughly the value of the estate for probate, and any mistake was rectified afterwards. But in that year the right hon. Member for Mid Lothian compelled them to make an account returning the estate with full particulars in the first instance, and this has greatly impeded them and delayed proving the will. If the proposals of the hon. Gentleman opposite be entertained and the value of the real property be added to that of the personalty for the calculation of the new Estate Duty, and if that is to be paid on proving the will, a delay of 8 or 9 months may take place before the value of the real property can be ascertained, and everybody concerned will be put to immense inconvenience.

MR. DE LISLE (Leicestershire, Mid)

I wish to ask the Chancellor of the Exchequer whether he has read the letter of Lord Addington which appeared in the Times a few days ago, suggesting the application of the consanguinity table to the payment of this tax, as in the majority of cases the persons coming under this tax would be widows and orphans, As the main object of the right hon. Gentleman is to find money for the Exchequer, I think he ought not to abandon the opportunity afforded him of raising a still larger sum by adopting the principle of the consanguinity table. I think it would be a mistake to throw away entirely this means of raising additional revenue.

*SIR W. PLOWDEN (Wolverhampton, W.)

Before the Chancellor of the Exchequer rises to answer the questions which have been put to him, I wish to call his attention to the point which has been raised by the hon. Member for Leicester (Mr. Picton). It certainly seems to me that to tax an estate of £12,000 passing to 12 persons, each receiving only £1,000, and to allow an estate of £9,000 passing to a single individual to escape the duty altogether, is an anomaly. I do not think that so far the right hon. Gentleman has dealt with this matter. Is it the intention that the estate of £12,000 divided among a number of persons should pay the duty, while the estate of £9,000 should not pay it?


Will there be any difference made between the Succession Duty and the Probate Duty? I presume that in the case of real estate the Succession Duty is charged not on the corpus of the estate, but on individual successors. Therefore, if real estate of, say, £12,000, be divided among several successors, persons receiving less than £9,000 would not pay the 1 per cent extra, whereas an estate consisting of personalty descending to a number of persons would pay Probate Duty on the corpus of the estate, and would also pay the one per cent extra. That is, each of twelve children, among whom £12,000 of personalty is divided, would have to pay the extra one per cent from which realty in similar circumstances would be free.


I fully realize the difficulty referred to by the hon. Member for Stockport (Mr. Gedge), and all that is possible will be done to meet it. But the Bill proposes that this tax should be paid as a Stamp Duty simultaneously with Probate Duty. There can be no doubt that the Bill proposes an increase of the Probate Duty, as far as personalty is concerned, as distinguished from Legacy Duty. I have seen the letter of my noble Friend, Lord Addington, and I am surprised to find the suggestion as to the consanguinity table being applied to this tax. It would be quite inappropriate, having regard to the principle upon which Probate Duty is assessed. My noble Friend calls it a widow and orphan's tax, but he might as well call the Probate duty a widow and orphan's tax. The principle is to obtain the duty in proportion to the bulk of the property that passes, and it amounts to an addition to the present Probate Duty above a certain line. It will apply to the widows and orphans of very rich men who at present pay no Legacy Duty, as well as to those of persons who have a moderate, but not a small, fortune. I was surprised that a wise man like Lord Addington should try to create prejudice against the proposal by calling it a Widows' and Orphans' Tax; and I am afraid that it would only complicate the matter if the new Duty were to be varied according to the table of consanguinity. In regard to the point raised by the hon. Member for Leicester as to succession to personalty, there can be no doubt that the Estate Duty, so far as it applies to realty, will follow the principle of the Succession Duty. The Succession Duty is different from the Probate Duty in the fact that there is no corpus that is taxed, but that it is the individual interest of each successor which the tax takes. That difference will necessarily exist in the Bill as it is drawn.


The Chancellor of the Exchequer has entered rather into the question of machinery than the principle of the Bill—the different modes of dealing with personalty and realty respectively. The case which has been put by the hon. Member for Leicester certainly affords a striking instance of the different manner in which personalty and realty are treated. Under this proposal, if £12,000 personalty is left to be divided among 12 children, 1 per cent would have to be paid on each £1,000, the share of each child; whereas, in the case of succession to realty of the value of £12,000 divided among 12 children, no cognizance is taken of the gross amount. The £12,000 of realty would not pay, whereas the £12,000 of personalty would pay. That is a point which requires serious consideration. That exemption goes to the man whether he has children or not. We know nothing about children in the case of income tax; we say there is no analogy at all with the case of personal estate, where probate is taken up, between children, and each child suffers. There is no argument on the ground of analogy. I am afraid here is a new and rather striking inequality introduced in the modes of dealing with personalty and realty to this extent. Suppose an estate of £12,000 personalty goes in one portion, and suppose at the same time a succession value of £12,000 passes to a single individual in the nature of realty, these cases will receive identically the same treatment; they will also be dealt with in exactly the same manner when the sums in respect to which probate is taken out does not amount to £10,000, for then, whether they go to one or several individuals they pay nothing in respect to the new duty; but if £12,000 personalty is left to be divided among 12 children, 1 per cent will have to be paid on each £1,000, the share of each child. However, I do not wish to prolong the present discussion. When the matter comes before the House in the shape a Bill, we shall be able to form a more mature opinion upon it. The novelty of introducing, for the purpose of raising revenue, a permanent inequality in the treatment of personalty and realty appears to me to be a very serious matter.

MR. ILLINGWORTH (Bradford, W.)

Suppose the succession value of a real estate is say £27,000, and it is divided among three persons, the Chancellor of the Exchequer will lose all the benefit in each case, for each portion will be under £10,000, and so also of real estate of very large amounts if they are sufficiently sub-divided. I wonder the Chancellor of the Exchequer, when his friends made these complaints of new taxation, did not reply that the money is wanted for increased Army and Navy expenditure. The hon. Baronet the Member for Sussex (Sir W. Barttelot) is one of those who had not a word to say against this increase, and he has the satisfaction of knowing that it is for the defence of the country that the Chancellor of the Exchequer makes his demand. I think this discussion will be immensely valuable, for on this side of the House there appears to be almost unanimity in corroboration of the principle that graduated taxation is the system we must look forward to and develop in the future; and the Chancellor of the Exchequer has been successful in committing the Tory Party to approve of that principle. There are two other points on which I wish to say a word or two. The Chancellor of the Exchequer has maintained that tenderness of treatment towards entailed estates which from first to last I condemn. The system of entail is of no advantage to the country, and is a most pernicious practice. So far from the Committee being called upon to show special tenderness to estates thus treated, I think we should be doing the State a special service by putting a new and special burden upon estates so entailed. I am amazed that the Chancellor of the Exchequer should lend himself to the maintenance of this system. Those who are owners of property, or claim to be the mouthpieces of that class, seem to imagine that their case during the last 12 or 15 years is one that deserves some special and exceptional treatment, but the only difference between these and those engaged in commerce and industry is that the latter have had the manliness to bear their losses and sufferings without coming continually before the House, and pleading in formâ pauperis, while it seems to be the vested right of those who own landed estates—and I know something of the one class as well as the other—to be always bringing to bear what influence they have on the Government in favour of exemption from this or that share of taxation. The Chancellor of the Exchequer has upheld the inequality and justified it on the ground that it would not do to proceed with the equalization of the Death Duties until the special charges on land referring specially to the income tax had been readjusted. As time goes on, nothing will become more manifest to the House and to the country than that the income realized from land ought to bear a higher rate of Income Tax than income derived from precarious sources, such as professions, trades, and industries. Hon. Gentlemen must bear in mind that land is a luxury—not so much as it used to be I grant, but still it is a luxury—and those who own it have privileges connected with the ownership that should bear proportionate burdens. I am glad of the progress we have made to-night towards a policy of a more just and equal taxation, but I doubt if it will take the form that hon. Gentlemen opposite desire.


With reference to the concluding remarks of the right hon. Gentleman (Mr. Gladstone) I think he and the Committee will see that anomalies must arise near the line of limitation, wherever we may draw it. Hon. Members have been pressing these anomalies that only our from the attempt to draw a line that will save smaller estates, anomalies that will arise only in exceptional cases. Nobody knows better than the right hon. Gentleman that wherever you draw a line giving exceptions, anomalies will only occur close to that line. I will consider with my colleagues all that has been urged as to these exceptions, but whatever conclusion we may come to it is certain that the anomalies cannot all be removed.


If I may presume to say so, my right hon. Friend entirely mistakes the question. These anomalies which my right hon. Friend admits do not in the slightest degree arise from the drawing of the line. That has no connection with the case. You may draw a line and avoid these anomalies, and the way to avoid these is to deal with realty and personally on the same principle—the amount of the value passing to the individual—instead of adopting two different principles for realty and personalty. Where it is realty you look to the value of the interest passing to each successor; but where it is personalty you look to the gross value. This is the source of the whole anomaly. I hope some of us on this side of the House may be able to draw some Amendment giving effect to our views and bringing them out distinctly.

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

I may point out to the Chancellor of the Exchequer that the form of the resolution deals with successions to property in two different ways, as thus: There shall be levied and paid to Her Majesty in respect of the value of the entire personal property passing upon the death of any person dying on or after the first day of June, one thousand eight hundred and eighty nine, as a succession or Successions under "The Succession Duty Act, 1853," and in respect of the value of every Succession to real property under the said Act, upon the death of any person so dying, the following duty, that is to say:—and so on, placing 1 per cent or values above £10,000. Now if £10,000 in consols is settled on marriage, and devisable among children, as in the case put by the hon. Member for Leicester, then the additional 1 per cent duty on Succession would be imposed; but if a man leaves the property among his children, then no additional duty is imposed. When we come to the sub-section A, the duty is levied upon the corpus of the personalty of a man dying worth £10,000; but if a man, having four or five farms, valued at £8,000 to £9,000 each, left a farm to each of his children, no duty would be payable.

Resolution agreed to.