Motion made and Question proposed,
That where, in the case of any Probate or Letters of Administration granted in England or Ireland on or after the first day of June one thousand eight hundred and eighty-nine, of the estate and effects of any person deceased, or in the case of any Inventory of the estate and effects of any person deceased exhibited and recorded in Scotland on and after that day, the value of the estate and effects in respect whereof Duty is charged on the Affidavit or Inventory by Section twenty-seven of "The Customs and Inland Revenue Act, 1881," shall not exceed £10,000, but the deceased shall have been at the time of his death entitled to an absolute interest in any real property, or shall have had a general power to dispose of any real property, and shall have exercised such power by his Will, and the combined value of the said estate and affects and of the said real property exceeds £10,000, there shall be levied and paid to Her Majesty in respec
of the value of the said estate and effects a Duty of one pound for every full sum of £100, and for any fraction of £100 over any multiple of £100 of such value.
And, where the value of the succession of any person to any real property under the Will or Intestacy of a person dying on or after the first day of June one thousand eight hundred and eighty-nine, together with the value of any other benefit passing to him under such Will or Intestacy, exceeds £10,000, there shall be levied and paid to Her Majesty in respect of the value of such succession a Duty of One pound for every full sum of £100, and for any fraction of £100 over any multiple of £100 of such value.
The said Duties respectively are to be Stamp Duties, and the Duty in respect of the estate and effects is to be in addition to the Stamp Duties charged on the affidavit required from persons applying for Probate or Letters of Administration in England or Ireland, and on the Inventory exhibited and recorded in Scotland, but is not to be deemed to fall within the expression "Probate Duties," according to the meaning assigned to that expression by Section twenty-one of "The Local Government Act, 1888;" and the Duty in respect of a succession to real property is to be in addition to any Duty chargeable under "The Succession Duty Act, 1853," provided that Duty shall not be payable, in conformity with this Resolution, upon the interest of a successor in leaseholds in respect of the value whereof Duty has been charged on the affidavit or upon any succession upon the value whereof, by reason of the same exceeding £10,000, Duty is chargeable in conformity with the Resolution in relation to successions of a value exceeding that amount.
§ *Mr. SHAW LEFEVRE
Although I recognize the desire which the Chancellor of the Exchequer has shown to meet the objection which I ventured to point out on a previous occasion, yet I cannot think he has met the difficulty in a satisfactory way. In doing this, however, the right hon. Gentleman seems to have introduced further anomalies in the scheme. Supposing a man were to leave personalty and realty worth £9,000 each. Under the original scheme of the right hon. Gentleman I understood that neither of those amounts would pay the duty. The object of the right hon. Gentleman in the present Resolution is to provide that mixed estate should pay the full duty; so that if £9,000 worth of personalty and £9,000 worth of realty are left to the same individual he will have to pay 1 per cent on both items of property. But suppose the case of property so distributed being left, not to the same individual, but to two sons, the effect in this case would be that the son receiving the personalty would pay 1 per 1576 cent and the son receiving the realty would pay nothing. That seems to me to be introducing a fresh anomaly. At present a son receiving £9,000 worth of personalty has to pay £270, while the son receiving £9,000 worth of realty would only pay £61. But under the new proposal of the right hon. Gentleman the son receiving £9,000 worth of personalty would have to pay £360, while the son receiving the same amount of realty would have to pay the original sum of £61.
§ *MR. SHAW LEFEVRE
I cannot draw a distinction between what is paid to the state and what to local taxation. My figures are based on what is paid in the aggregate; although the Chancellor of the Exchequer gives 1½ per cent to the local authorities, yet it pays substantially 3 per cent. Now under the new proposal the son who receives £9,000 personalty would pay £360 instead of £270, while the son receiving the realty would only have to pay £61. I venture to say that that is not a fair and equal distribution of these taxes. I could give many other illustrations to show what extraordinary anomalies will result from this different treatment of personalty and realty. Take the case of a man with an income of £1,000 a year from land, and a personalty of £9,000. Suppose he leaves the personalty to one son, and the real estate to his widow for life and after her death to his eldest son for life; what will be the result? The realty which is practically worth £30,000 will pay nothing, while the personalty will have to pay 1 per cent. I believe that these figures cannot be disputed, and it only shows that the Chancellor of the Exchequer in his attempt to meet the difficulty of mixed estates has so drafted his Resolution that a large number of cases will arise in which an increased burden will fall on 1577 personalty and not on realty; and when you come to consider that the personalty will probably be divided between several eons, while the realty goes to the eldest son in the entail then, I think, the inequality is still greater.
§ *MR. GOSCHEN
I must say I think that the right hon. Gentleman has not shown much gratitude after all that has been done. I told the right hon. Gentleman frankly that I was of opinion it was almost impossible to make a satisfactory proposal to meet the diffiiculty specified. You may attempt to equalize the duty, and you may charge land in order to bring it up to personal property, but even then you will defeat your own object, as you say I have defeated mine. This new proposal, however, will no doubt bring in a certain number of estates which otherwise would be exempt, and so far the right hon. Gentleman will admit that it will conduce to good by removing the inequality which at present exists. No scheme will be found to work quite satisfactorily where you attempt to add together two things of a totally different character. Whatever right hon. and hon. Gentlemen may say, personal property and land cannot be treated alike. I dispute the correctness of the right hon. Gentleman's figures. If it is insisted that the contribution of Probate Duty to local taxation shall be taken into account in this matter, then you are entitled to take into account on the other side the heavy burden which realty bears in the shape of rates You must either take local and Imperial taxation together, or leave out local taxation on both sides when considering the burdens on property. I object to one particular tax being taken out of the account of local taxation and added to the burdens which are to rest on personalty for Imperial purposes.
§ SIR G. CAMPBELL
It seems to me that the effect of the first Resolution was to provide that no person should be charged if the combined estate of realty and personalty did not exceed £10,000. I regard the alleged impossibility of including in one valuation both the realty and the personalty as altogether a red-tape objection. In the United States all the property is lumped together, and I do not think that in reality there is such great difficulty in the matter.
§ *MR. GOSCHEN
The hon. Member will recollect that the whole corpus of an estate of £10,000 is charged already in the Resolution passed. This is a Supplementary Resolution to meet the difficulty which was pointed out at an earlier stage. I think that if the hon. Member had half an hour or an hour's conversation with any lawyer he would find that, whether red tape or not, the difficulties surrounding the treatment of realty on the same footing with personalty are extremely great.
§ *THE ATTORNEY GENERAL (Sir R. WEBSTER,) Isle of Wight
Suppose there is £9,000 of personalty and £5,000 of realty, the total estate being £14,000. That would have passed free from taxation and, as I understand it, under the Resolution already agreed to there would be paid 1 per cent on the £9,000 on the ground that the total estate was worth more than £10,000, and therefore, not one of the estates in respect of which the Chancellor of the Exchequer thinks there ought to be an exemption. In addition there would be such an amount of realty left that there would be 1 per cent paid on the succession.
§ MR. CALDWELL (Glasgow, St. Rollox)
I must dispute the contention of the Chancellor of the Exchequer. You can no more say that, because a landlord receives the rent and pays the taxes out of the produce of the rent he pays the taxes, than you can say that if there be a lien on the property a landlord pays the duty. Suppose a man has £10,000 worth of property in a borough, and £10,000 of personalty. The heritable property probably yields him 4 per cent, and his personalty may not yield him 3 per cent. Now, upon what principle can it be said that the realty should be looked upon and treated differently in the case of Succession Duty to the personalty?
§ SIR G. CAMPBELL
I hardly understand the explanation the Attorney General has given; it seems to raise a most extraordinary anomaly. As I understand it if a man leaves £9,000 personalty, and £5,000 realty, total £14,000, he has to pay on the £9,000, but not upon the £14,000. I cannot conceive any possible reason why.
§ *SIR R. WEBSTER
The hon. Gentleman will remember that this difficulty arises from the limit of £10,000, and if the limit were swept away there would be no difficulty. I am afraid it will be always possible to point out anomalies, but that ought not to prevent us taking any step in the direction of removing an anomaly.
§ *MR. GOSCHEN
If hon. Members can suggest any method by which mixed estates shall pay in the same way as others, I shall be glad to consider it.
§ SIR G. CAMPBELL
As the right hon. Gentleman invites an Amendment which will remove this anomaly, I propose to omit the words "The said estate and effects," in order to insert the words "The whole property."
§ *MR. GOSCHEN
The hon. Gentleman will see that such an Amendment cannot possibly be accepted without seeing the full affect of it. Perhaps the hon. Gentleman will defer his proposal until Committee. Let me now point out, however, that the words, "The whole property" would have to be defined, which would be somewhat difficult.
§ *MR. H. FOWLER (Wolverhampton)
The real point to be kept in view by the Chancellor of the Exchequer is that raised by the hon. Member for Leicester. I would suggest that when the Bill gets into Committee, the Government should assent to an Amendment which will provide that where any person under any will or settlement does not take combinedly—that is to say, out of both realty and personalty—an interest amounting to £10,000 he should be entitled to claim a drawback or abatement from the estate.
§ *MR. GOSCHEN
I would point out again, so that false hopes may not be raised, why this suggestion cannot be adopted, and how, if it were, extremely wealthy people might claim exemption. A man may leave £60,000. He may have four children amply provided for, and if he leaves them legacies of £9,000 apiece probably a third of the duty will be lost. Then it would be necessary to impose fresh taxation, which might be as open to objection as the proposal now made.
§ MR. SHAW LEFEVRE
I am disposed to agree with the Chancellor of the Exchequer that the Amendment 1580 suggested by my right hon. Friend would very seriously reduce the amount of the tax. But there is another way of meeting the difficulty, and that is by altering the system by which the duties are levied on realty.
Resolution agreed to; to be reported to-morrow at Two of the clock; Committee to sit again to-morrow.