HC Deb 16 May 1889 vol 336 cc224-337

Considered in Committee. (In the Committee.)

Clauses 1 and 2 agreed to.

Clause 3.

* MR. BONSOR (Surrey, Wimbledon)

I rise on this occasion to move an Amendment, and to take this the first opportunity I have had to renew the protest which I made when the Budget was introduced as to the alteration in the standard on which beer is taxed. That standard was fixed at 1057 in 1880, and it is now proposed in the present Bill to alter it to 1055. I feel, Sir, that this is a disturbance of trade, which is not justifiable, and I hope that if this Bill is carried in its present form, we shall have some assurance from the right hon. Gentleman the Chancellor of the Exchequer that the standard will be a permanent one, and that we need not anticipate another disturbance in this direction. I should also like to say one or two words on the question of the beer tax, if I may be allowed to do so, in moving this Amendment. There is a general idea abroad that the brewing trade are absolutely objecting to this increase of duty. Sir, that statement is unfounded; the brewing trade have taken exception to the form in which the tax is proposed, and they have also taken exception to the permanent character of the tax, but they have not objected to a tax of a national character for purposes of national defence. Mr. Courtney, I think I need not go into the technical question as to what a quarter of barley produces in the form of beer. That is a question which has once for all been set at rest by the recent deputation of the brewing trade to the Chancellor of the Exchequer. The question before us is simply the question of obtaining Revenue. We have no objection to assisting the Chancellor of the Exchequer to build up a Revenue, and to make his balance even, but the brewing trade do feel that they ought not to have imposed on their profits, as a permanent tax, an additional income tax of 6d., for the general purposes of reducing the burdens of other traders, when the Chancellor of the Exchequer admits that this tax is an additional tax for a special purpose. That, Sir, is the complaint of the brewing trade, which I wish to put before the public, and that, Sir, is the contention which I am here to support. I hope the right hon. Gentleman will be able to give us an assurance that it is not his absolute intention to impose a permanent tax. The brewing trade feel that they are practically the collectors of the revenue, and they hope that should a surplus, or any large amount of money, come into the Exchequer, that this tax will be considered in future Budget arrangements as an additional, and not as a permanent, tax. In short, I ask that the standard to be fixed should be permanent, and this additional tax temporary. I beg to move the omission of words from the Clause so as to leave the existing standard of specific gravity in beer unchanged.


I cannot complain of the observations which have fallen from the hon. Member behind me, and I am glad to perceive from his remarks that there is no objection on the part of the great brewers to pay this tax for a special purpose, and that what they object to is the idea that it is to be a permanent tax imposed upon them. Now, let me recall to the recollection of the Committee the arguments which have been advanced against the proposed duty in its present form. A few evenings since I alluded to a controversy between the brewers and the right hon. Gentleman the Member for Mid Lothian in 1880 and the following years with reference to the standard of gravity, and I pointed out that it was held by the Inland Revenue that owing to the standard having been paid at 1057 instead of 1055, the increased amount which was expected to be derived from the tax had not been realized. On the other hand, the brewers contended that whether that increased amount had been received or not, they had practically paid more per barrel produced than they paid in the days of the Malt Duty. Now, it is almost impossible to arrive at a conclusion as to whether the brewers are right in that argument or not, on account of the difficulty of finding the necessary statistics. I am afraid that this controversy cannot be settled by any appeal to statistics, and I therefore fall back upon the paramount consideration which I used in introducing the Budget, that whether the brewers were right or wrong in their contention as regards 1881, I desired to derive an additional revenue of £300,000 from beer to meet the necessities of this year's Budget. Well, Mr. Courtney, I then believed, and still believe, notwithstanding the contention of my hon. Friend, that 36 gallons of beer at a gravity of 1055 is a more correct equivalent of two bushels of malt than is the same amount at a gravity of 1057. The brewers may be right or they may be wrong in thinking that 6s. 3d. on two bushels of malt is too high a tax, compared with what they used to pay before 1880, but I believe it can be proved to demonstration that, whatever may be the proper duty on two bushels of malt, that duty ought to be charged on 36 gallons at 1055. But I understand my hon. Friend does not wish to raise this point now, but wishes to ascertain whether the addition to the Beer Duty is to be permanent or only temporary. Now it might have been contended that, as the need for this revenue was created by an expenditure which will be completed in seven years, therefore it would have been right to impose the extra duty for seven years only. But I believe the brewing interest prefer to have it as it stands at present rather than to have it imposed for seven years, and I am bound to say I think they are right in their contention. If it were put on for seven years it is clear that they would not have the slightest chance of its being taken off before the end of that time, whereas if it is put on without any stipulated limit of time, the matter may be brought up again whenever it appears to be possible to make a remission of duty. The Government do not at all consider that by the change now made they are stereotyping the rate of duty at its present amount I believe we ought to regard the standard of 1055 as permanent, but there is, of course, nothing essentially permanent about the rate of 6s. 3d. I believe that hon. Members on both sides of the House who are interested in the brewing trade are afraid that the additional taxation now imposed upon them for a special purpose may be subsequently utilized in order to secure a reduction in the income tax upon other traders who have not been called upon to make a special contribution to the necessities of the nation in the present Budget. I think there would be force in the argument that it ought not to be used for such a purpose. I am most anxious not to fetter in any way the complete fiscal liberty of the Government, but at the same time, I think beer will have a fair claim for consideration side by side with other great articles of consumption, if there is a satisfactory surplus all round, and if the revenue from beer itself is satisfactory after this duty has been imposed. At the same time, I must not be understood to pledge myself with regard to any remission of taxation in the future, for it would be folly for the Government to tie its hands in regard to any great item of the revenue. I trust hon. Members will understand,however, that as I have said the Government do not look upon the Beer Duty as necessarily fixed at its present rate. Let me add that I am aware of the great interest taken in this matter by the growers of barley; indeed, I think they are, perhaps, more alarmed at the suggested increase of the duty than the brewers themselves. I am persuaded that their alarms are unfounded. I have explained to the Committee on a previous occasion the reasons why the barley growers will, I believe, be entirely unaffected, and I will not repeat them now. At the same time, it is certainly a matter which requires to be watched, because if it were found that barley growing in this country was grievously affected by any increase of the Beer Duty, the matter would be one for the serious consideration of any Chancellor of the Exchequer to whatever Party he might belong.


I quite agree with the Chancellor of the Exchequer that, except within very narrow limits, it is not as a general rule in the power of the Minister of Finance to bind his successors with regard to the expectations he holds out as to the reform or remission of taxation. I do not speak at all with respect to any present circumstances, but say that I take that to be the case as a general rule. In regard to what has transpired, I feel it necessary to say one thing—namely, that there ought to be no relation whatever between the question of standard and the question of the rate of duty. The rate of duty may vary with varying considerations of public policy, but the question of the standard depends upon the relation between beer and malt. It is simply a matter for chemical and scientific knowledge to determine how much beer is represented by a certain quantity of malt, and how much malt is represented by a certain quantity of beer. The relations of beer and malt to one another depend in the smallest degree upon questions of policy, and therefore I may say I cannot regard the alteration of the standard as a proper means of obtaining additional taxation. If it is a true rectification of the standard, if the Chancellor of the Exchequer is in a condition to show, which he may be—I do not say he is not—that I made an error in the concession which I acceded to in 1881 in the alteration of the standard between 1855 and 1857, then by all means let that be set right But I object to treating the matter as if it were equivalent to so much additional revenue; the change ought to be made, if at all, upon its own merits. There was an analogous case in the days when we had a system of sugar refinery carried on in bond. The refiner was required to produce so many pounds of refined sugar from a certain quantity of raw sugar. The figures are immaterial; but let us suppose that a refiner produced 90 lbs. of sugar, he was allowed duty upon 100 lbs of raw sugar. That was a system very good in itself, and was quite right; but it would have been absurd for the Chancellor of the Exchequer to say, "I want more revenue, and therefore I will require the refiner to produce no longer 90 lbs. but 95 lbs. from the same quantity of raw sugar." The relations between raw and refined sugar depend upon the qualities of the article and not upon considerations of policy. I wish it to be understood, however, that what I have said is only a verbal criticism, and that, perhaps, my right hon. Friend is able to prove that my original proposal was better than the final one. In that case I have no objection to make.

* MR. S. SMITH (Flintshire)

I am very glad that the Chancellor of the Exchequer refuses to give any pledge as to a future reduction of the Beer Duty. All the temperance bodies in the country are very grateful to him for this addition to the Beer Duty. We think beer can very justly bear this additional duty; indeed, we think it might bear a much higher duty. Only the other day we had a debate respecting the Tea Duty, and in that debate it was clearly shown that the incidence of duty upon tea is much greater than that upon beer. I am told that the Beer Duty is only equivalent to ¼d. a pint. I, and many of those with whom I am associated, think that it might very reasonably and properly be doubled. We wish to reduce the consumption of alcoholic liquors as much as possible, and think that the best way to do that is to lay a heavy tax upon them.

COLONEL DAWNAY (Yorkshire, N.R., Thirsk)

It seems to me that the difference between Liberal and Conservative finance is that the Liberals always place increased taxation upon their political opponents and the Conservatives upon their political friends. The result invariably is, that whatever Government is in office, the unfortunate Conservative Party goes to the wall. We were told last Session that one of the results of the Local Government Bill would be a great revision of taxation. We have had certain revisions, but one of the most substantial revisions which was promised was, at the last moment, dashed away from us. We were explicitly told by the First Lord of the Treasury and the Prime Minister that an equivalent would be found for the tax early in the present Session; but, instead of the equivalent being found, it seems that fresh burdens of taxation have been placed upon us. I suppose that other Conservative Members besides myself during the last Autumn Session praised the Chancellor of the Exchequer up to the skies at every horse show and every agricultural dinner for the boons and blessings he was about to shower upon the agriculturists; but all these boons and blessings seem to have disappeared in the dim distance. I do not exactly see how we shall hold up our heads when we are asked in the coming autumn what we are going to get in the place of the van and wheel tax.

SIR G. CAMPBELL (Kirkcaldy)

Conservative Governments are always exceedingly civil to the brewers—it is their nature to be—and the Chancellor of the Exchequer has not been wanting in that civility. But I must add my expression of satisfaction that the Chancellor of the Exchequer has not substantially yielded in this matter. I agree with the hon. Member for Flintshire (Mr. S. Smith) that the duty on beer is not half heavy enough. Apart from the temperance point of view, the taxation of alcohol in beer is inadequate in proportion to that in spirits and other alcoholic stimulants. Alcohol in beer is only taxed to the extent of one-sixth part of the alcohol in whiskey. It seems to me especially unwise and unreasonable that this matter should be treated as a brewers' question. I can understand that something should be said on behalf of the poor man's beer; but this is not a poor man's question—it is a brewers question. Brewers make an enormous profit, and, therefore, I rejoice at this tax upon an enormous monopoly which holds the country in drink and keeps the Conservative Government in power, but which is not founded on reason or right.


I was not able to gather from the statement of the Chancellor of the Exchequer that it was not his intention to re-impose the Beer Duty next year, but I cannot help thinking he must be very well aware of the great embarrassment caused the agricultural interest by the idea that the tax will be permanent. Between this and the time for the introduction of the next Budget I hope the Chancellor of the Exchequer will seriously consider whether there are not some other sources from which the money required cannot be more easily and properly obtained.


I certainly intend to give myself the luxury of supporting the Government on this occasion, and I quite agree with my hon. Friends that beer can stand a very much larger charge than it has ever done as yet. Beer imposes very great burdens upon us in the shape of pauperism and crime, and therefore it ought to bear a large share of the taxation. Besides, the supporters of the Government have voted an increase of naval expenditure, and therefore it is right they should pay for it.

BARON DIMSDALE (Herts, Hitchin)

I trust that when the immediate necessity for the beer tax ceases some measure of relief will be afforded, as it was by the right hon. Member for Mid Lothian in respect of the malt tax at the close of the Crimean War. I can certainly assure the Chancellor of the Exchequer that in the barley-growing districts this tax has caused an immense amount of irritation, which it will take a good deal to allay.


asked leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

SIR E. BIRKBECK (Norfolk, E.)

who had given notice of the following Amendment:—Clause 3, page 2, line 7, after "eighty-nine," insert "until the sixteenth day of April, one thousand eight hundred and ninety," said: I desire to explain the course I intend to take with reference to the Amendment which stands in my name. In the first place, let me say I adhere to every word I have said on two previous occasions lately on behalf of the barley growers of the Eastern counties. I protested against the proposal of the Chancellor of the Exchequer to tax one of the most important products of the land to a greater extent than it is already taxed, and I have had most unmistakeble evidence, since my Amendment appeared on the Paper, of how strong a feeling there is in the country against the proposal. The agricultural interest contend that the barley crop is already most severely taxed in respect to the 6s. 3d. per barrel Beer Duty, and that not the repeal of the malt tax, but the transfer to the Beer Duty was an evil thing for the tenant farmers. It has undoubtedly led to a diminished use of English barley. If the repeal of the malt tax was so vital a question in the days of agricultural prosperity, how much more so must it be at the present time, when the agricultural interest is suffering so much? The statement the Chancellor of the Exchequer has made is, however, satisfactory to a certain extent. I gather he is prepared another year, providing he has a satisfactory surplus, to re-consider the whole question of the Beer Duty. On my own behalf, and as a representative of a barley-growing district, I may say we are ready to accept the statement; we are ready to place implicit confidence in the Chancellor of the Exchequer that he will do his very utmost in the future for a suffering industry, and help us to the best of his ability, that instead of increasing taxation on the produce of the land, he will act in a contrary direction, and relieve taxation as much as he can. On these grounds I do not move the Amendment that stands in my name.


I only just wish to say, in reply, that I appreciate the action of my hon. Friend, and I stand entirely by what I have said. I am always extremely anxious to avoid giving vague pledges, and I do not wish Members to go one whit in their expectations beyond what I am able to promise, but the hon. Gentleman may rely on my doing all that my words imply. In reference to what has been said by the hon. Member as to the irritation caused by this proposal, I am quite aware of it; but I adhere to the opinion I have frequently expressed that this irritation and alarm are not justified by the slight increase of duty proposed. I can assure the hon. Member that every Member of the Government is profoundly desirous of promoting the interests of agriculture, but I doubt myself if it can be shown that the interest of beer and those of agriculture are identical; and I can fancy that there may be circumstances in which agitations such as this, with regard to the Beer Duty, may make it more difficult to promote the interests of agriculture. With this I hope hon. Members will be satisfied to leave the matter as it now stands, and I trust that much of the irritation will vanish when it is seen that the duty does not affect the Eastern Counties, or any other barley-growing district in the way apprehended.

Clause agreed to.

Clause 4 agreed to.

Clause 5.

* MR. SYDNEY GEDGE (Stockport)

I am very sorry that when so important a subject as that raised by my Amendments on this clause is being discussed there is such a very small House. I see there are only six or seven Members present to hear what I am saying.

Attention having thus been drawn to the fact that there were not 40 Members present, the House was counted and 40 Members were found to be present.


I beg to move on Clause 5, page 2, line 27, after "Ireland," to insert "in respect of any person dying." I am satisfied that if hon. Members who have just come in would only stop and hear what is said, they would see the justice of the Amendments. Although I can only formally move the first on the Paper that Amendment is repeated seven times, and applies to other Sub-sections of the clause. The apparently harmless enactment of the clause is that in certain circumstances an executor or trustee shall deliver a statement of value, but the next clause says that this statement must be impressed with a stamp of 1 per cent ad valorem duty. The question is, what shall be the point of time which shall determine whose property shall be subject to the new tax? The object of my Amendments is to provide that it shall be chargeable on the property of those who shall die on or after the day named in the Bill. I find that in the 6th Clause my right hon. Friend the Chancellor of the Exchequer has admitted the principle that the death of the person is the proper time at which to ascertain whether or not the Estate Duty is to be paid. In this 5th Clause the Chancellor of the Exchequer must have exercised his ingenuity in discovering varieties of tests. The point of time differs in each of the Sub-sections. In former days it used to be very easy to obtain probate of the will or letters of administration within a few days after death. But since 1881, the reverse has been the case. It used to be possible to deliver the account some time after probate or administration had been granted. The account has now to be carried on before probate. In the first instance, the executor is bound to ascertain exactly the value of the estate at the time he makes his affidavit, and very often it is exceedingly difficult for him to do so. An unconscientious man will make a guess and swear to anything, and if the Bill passes in its present form, there will be a large inducement to such men to swear loosely and thereby escape payment of the Estate Duty. I think it very much better that the general Revenue should suffer than we should do anything unfair or unjust, and it is manifestly unfair to say that 1 per cent shall be paid, say, if the executor happens to be abroad or for some other reason the application for probate is deferred over the 1st of June. When we turn to the next Sub-section, we find it deals not with the application for probate as does the first Sub-section, but with the case of probate having been granted. We are told that when the personal property does not exceed £10,000, but the deceased has been possessed of real property, and has exercised the power of disposing of it, and the value of the two together exceeds £10,000, although probate has been applied for before the 1st June, in the event of delay occurring at the Probate Office through redtapeism, the estate is to be mulcted in the new duty. If my Amendment is not adopted, there will be a distinct inducement to the clerks at Somerset House to cause delays, in order to obtain kudos by increasing the revenue derivable from the tax. Then, I submit, it is the date of the death of the man that should be the criterion, and not when the estate comes in. If this Sub-section is adopted, it will be a strong temptation to concealment. The 4th Sub-section follows on the same lines. Either some mistake has been discovered or the value of the property has turned out to be greater than has been expected. A conscientious administrator thinks it right to set the matter straight, and delay will be occasioned. In all these cases in fairness these ingenious varieties of time and tests which it is proposed to apply should not be accepted by the Committee. The test should be the same as in Section 6, dealing with the Succession Duty, and the time of death ought to be the period taken.

Amendment proposed, Clause 5, page 2, line 27, after "Ireland," to insert "in respect of any person dying."—(Mr. Sydney Gedge.)

Question proposed, "That those words be there added."


I will not follow the criticisms that have just been addressed to the Committee on the subsections, because they will have to be dealt with if there is any inaccuracy in the language at a later period. But it is not right to say that there has been any deviation from principle in dealing with these matters. When an additional duty is imposed it should be imposed with reference to some date or other, and the principle observed in this Measure is that where a duty is paid on the passing of an instrument the date of that instrument shall be looked at. Where, however, as in Clause C, the value of the succession is that which passes on the death of a person, then the date of the death of that person is the date to be taken. It has been suggested that between this and the 1st of June there will be an inducement to the clerks at the Probate Office to be careless or negligent, in order to put the matter off until the 1st of June, so as to secure the payment of the tax, but I do not think that is an argument which will weigh with the Committee. The same principle has been adopted in the five sub-sections, and the Amendment of the hon. Member would be altogether inconsistent with that principle.

MR. CALDWELL (Glasgow, St. Rollox)

This is a practical matter that falls mostly within the province of law agents, and I can understand the reason which prompted the hon. Member opposite to move the Amendment. The date of death is not a matter that can be disputed, but there is frequently a difficulty, after death, of making out the inventory. In the cases where the deceased has been in business you have to appraise the value of the property, and you have to state its mercantile value in the letters of administration. From no fault on the part of an executor there may often be delay in applying for probate, from causes such as disputed claims. You might have a case of a man dying and leaving an estate worth £20,000, which, because the executor is in a position to lodge the account at once, will escape duty altogether, and you may have another case of an estate of £10,000, which, through delay in making out the account, owing to no fault of the executor, will have to pay the duty. In deciding what is fair in allocating the duty, regard should be had to the equities of the matter, and we should not lay down such rules as would enable one man to escape and would bring another in. The date of death is a very reasonable period to fix. Cases frequently occur in practice where the value of an estate is enhanced by discoveries made after the presentation of the original letters. I know that the irritation in the country is strong on the subject, and I think the Chancellor of the Exchequer ought to take into consideration whether he cannot obviate the present arrangement, under which, by making little alterations in the dates and so forth, he apparently hopes to catch a few trifling sums, which, while creating a good deal of feeling, do not contribute much to the revenue. The system is one which cannot be defended on principle, and it is one by which advantage is to be taken of the exigencies of particular estates, where the man who is unable to take out his letters of administration before a certain date will be placed in a worse position than the man who has been enabled to do so.

SIR H. DAVEY (Stockton)

I think the hon. Gentleman the Member for Stockport (Mr. Gedge) has pointed out some difficulties in Clause 5 which are well deserving the attentive consideration of the Government, and I do not think the Solicitor General accurately dealt with the point. The hon. Member for Stockport has pointed to one or two instances in which it is perfectly obvious that the draftsman of this Clause had no consistent scheme in his mind. In Subsection 1 of Clause 5 the date from which the duty attaches is the date of application for letters of probate, while in Subsection 2 the date is the date of the granting of letters of administration, which may be months after the application, and I say that if the duty dates from the application for probate in the first sub-section, the same date ought to be fixed in the second sub-section. But that is not all, and the hon. Member for Stockport did not do justice to his own case; because sub-section 1 says:#x2014; Where in the case of any person applying for probate or letters of administration granted in England or Ireland on or after the first day of June 1889, or in the case of any person exhibiting an inventory in Scotland on or after that day. Yet it will be seen that the exhibition of an inventory in Scotland coincides with the application for probate in England. The more I consider these duties, the more impressed am I with the intricate confusion that is being introduced into the whole system. I think attention ought to be directed to subsection a, which says:#x2014; If the value of the estate and effects in respect whereof duty was charged on the former affidavit or inventory under Section 27 of the Customs and Inland Revenue Act, 1881, exceeded #x00A3;10,000, the person delivering the further affidavit or exhibiting the additional inventory shall deliver together therewith a statement of the value of the estate and effects included therein, or of the increased value of the estate and effects in the former affidavit or inventory as the case may be. But the next Sub-section says that, if the value is less than #x2014;10,000, the duty shall not be payable at all. I think the contention of the hon. Member for Stockport well worthy of the attention of the Government.


I would point out to my hon. and learned Friends that under Sub-section A, if in respect of an estate a person dies after the 1st June, and the duty has been paid up to #x2014;10,000, or more, and afterwards it is found that the amount has to be increased, a further statement may be delivered showing the value of the estate and the effects not included in the former affidavit or inventory, while Subsection B provides that, if the Estate is supposed to have been less than #x00A3;10,000, but the value exceeds that sum, the total value is to be included. The difference in the language arises from the payment in one case of the increased amount and in the other of the total amount.


Let me point out that in the case of real property you charge the duty on the estate of any man dying on or after the 1st June, 1889, while in the case of personalty you are taking power to charge the estates of persons who may have died six months before, but as to whom no one has applied for letters of administration before the 1st June, 1889. It is clear that letters of administration cannot be applied for till after a man is dead.


If hon. Members will look at Sub-Section 8 they will see that it says:#x2014; Where a further affidavit or additional inventory is delivered or exhibited of any estate or effects of a deceased person after a former affidavit or inventory of the estate and effects of the same person has been delivered or exhibited and recorded prior to the first day of June one thousand eight hundred and eighty-nine, it shall not be necessary to deliver any statement of the value of the estate and effects of such person under such section. That I think carries out the object in view, while the words of Sub-Section 4 are also necessary because they keep the entire provisions of the clause in harmony.

Amendment put and negatived.


I wish now to move an Amendment, the object of which is to extend the tax to all cases in which a person leaves upwards of #x2014;10,000 in personalty and realty whether the realty is left by will or by appointment under a deed. This Bill, as it stands, restricts the tax to cases in which over #x2014;10,000 in personalty and realty is left "by will." I do not think the tax ought to be imposed even as proposed by the Bill, but if it is to imposed I do not see why it should be restricted to cases of property left by will. A man who has #x00A3;9,000 personalty and #x00A3;5,000 realty to leave would be advised by his solicitors to leave the realty by deed and then when he died the whole #x00A3;14,000 would escape this tax. The deed would not require an ad valorem stamp, but merely a 10s. stamp, and thus a considerable sum would be saved. I do not see why this loophole should be left unstopped if the tax is to be imposed at all.


A question of procedure arises here, and I hold that this Amendment cannot be moved. The effect of such a proposal would be to effect an alteration in substance of the Bill by increasing the scope of the tax; therefore it cannot be taken.


I propose to amend Clause 5, page 3, line 11, by inserting after the word "will," the words "or other testamentary instrument."

Amendment agreed to.


I beg to move as an amendment to Clause 5, page 3, line 26, the insertion after the word "person," of the words "in respect of the estate and effects of any person dying on or after the first day of June 1889."


I have stated that it was necessary to insert words to prevent Sub-sections a and b applying to estates where the owners die before the 1st June, 1889, and if the hon. Gentleman looks at the Bill he will see that the draftsman has dealt with the matter in Sub-section 8.


I think when we come to Sub-section 8 the hon. and learned Gentleman will see that it is not entirely as he supposes, as I do not think that that Sub-section will meet the point. I hope my Amendment will be accepted.


We cannot accept the Amendment of the hon. Gentleman, as we think that the Clause as it stands entirely disposes of the question.

Amendment, by leave, withdrawn.


In moving the Amendment of which I have given notice I will endeavour to avoid anything which is not at all necessary for the purpose. It is necessary to remind the Committee of the condition in which, according to our contention, the question of the Death Duties was left last year, when enormous advantages had been given in the first instance in respect of the rates, the whole ultimate incidence of which would be in relief of real property. At the very time of the readjustment of the rates, when this enormous advantage had been given to real property, the readjustment of the Death Duty was made between realty and personalty. And the effect of that readjustment, according to our estimate, according to our demonstration, was that personal property passing upon death was left liable to pay three times the duty charged on real property. We thought that a ease which it was necessary for us as a body to take up and to do our best to bring to the minds and proper action of the country, thereby establishing the case of this grievance, this extreme and enormous inequality to the disadvantage of the holder of personal property as compared with real. That, Sir, is retrospective. Now comes the present year, when we come to the way in which Her Majesty's Government produce this plan for imposing a distinct duty upon realty and personalty alike. In many respects it will be upon realty and personalty alike. Wherever an individual, becoming a successor to realty, takes an interest equal to #x00A3;10,000, he will be in precisely the same position as if he had taken up the amount under a will, established by probate, or by taking out letters of administration. In that case there will be absolute equality. There will also be an equality at the other end. That is to say that where the entire estate in respect of which Probate Duty is paid, does not amount to #x00A3;10,000, the party or parties interested in that estate will be in the same position as an individual taking an estate in realty which is equal to #x00A3;10,000. Therefore, let it be understood that up to this point equality will subsist. There is another and most important point under which a new and I must say gross inequality#x2014;amounting, I confess in my opinion, to a gross injustice#x2014;will occur. A great inequality will be introduced and established by the plan of the Government if it is carried. That is in the case where the entire estate, in respect to which probate is taken out, amounts to a sum exceeding #x00A3;10,000, but where either a portion of the interest or of the interests are severed under #x2014;10,000 each. In that case every one of these interests will be subject to this Death Duty. I observe in the first instance that such inequality entirely destroys and sweeps out of view the contention of the Chancellor of the Exchequer, when proposing the reduction to #x00A3;10,000, which was#x2014;it is an argument which I will not stop to dispute, because it is not one with which I am at all concerned—that he was working out a distinction analogous to that established under the income tax, where £400 is the line at which exemption from the tax absolutely ceases. If we are to be told that we are to impose a tax of 1 per cent upon the capital value accruing to persons taking property by will, however small and insignificant their personal interests may be, it is quite obvious that instead of establishing an analogy, we are entirely differing from the analogy by going in the opposite direction. Because, whereas where the income tax recommends exemption up to a certain point, and beyond that certain point a partial exemption, we should be establishing by the plan of the Government, as regards this enormously extended class of case, a principle with no degree of minuteness in the interests taken, and exempting the individual from the payment of this extra duty. It seems to me a proposal of that kind is an astonishing proposal. From a Party point of view, nothing in the world could suit our Party better. There is no constituency in the country in which it will not form a favourite topic for every Liberal candidate. I do not know what sort of handling it will receive from hon. Gentlemen opposite, especially those who represent constituencies in which personal property is predominant. That I hope they will consider before they determine upon the course they are to take with respect to this proposal. But I must frankly confess, as between Party men and Party men, I do not recollect any financial proposal that was more convenient and more advantageous to us in a Party spirit. We will work it heartily; I think we may say that we will work it with effect, and work it with effect because we are standing upon the principle of equality and justice. Now, Sir, let me consider the cases that will happen. Let me take the case—I will not say extreme case, because extreme cases will happen, that is to say, very strong and vivid illustrations of the nature of this proposal and the operation of this proposal will undoubtedly come up. But I will take a case which is perfectly natural. I will take the case of a farm of the value of £16,000. Well, upon the farm, in all likelihood, I may take the value of the farm stock at about £3,000, or between £3,000 and £4,000. Now, taking an average of lives, and speaking generally, the successor to that farm, under the Succession Duty Act, could well afford to pay this duty. That will not be contested. As a rule, the value of an estate which he takes for his life will be under £10,000. I doubt very much whether such a case will occur anywhere as an interest of over £10,000 taken by a successor. As a general rule, there will be no such case as the case of a life interest in a farm where the sum will reach £10,000. Now, what is the kind of legislation which this popularly elected assembly is invited to consider? It is this. When a farmer dies, the next holder under he entail comes in, and he does not pay this severe estate tax. The farmer does; and his heirs, whose interest, the farm being of £16,000 value, is not of £10,000 or £8,000, but £3,000, will have to pay the estate tax.


Why does he?


He will have to pay the estate tax wherever it happens, after it comes to him under the probate, the total of which exceeds £10,000.


Well, are there many such cases?


There are many of such cases; there are hundreds and thousands of such cases. It seems hardly necessary that the Chancellor of the Exchequer should have put to me the question, because I have already stated that I was arguing exclusively with reference to such cases, and that no inequality whatever will subsist where the total interest under the will was less than £10,000. Well that is one case. Now I will give another case. The principle of exemption has always, I believe—always within my recollection—been recognised under the Death Duties, although to a very low amount. I think, if I remember aright, until the year 1881, everybody was liable to the payment of Probate and Legacy Duty except where the interest taken over was of a value of £200. At that time some important changes, or what I may call reforms, were introduced into the Death Duties. Under the necessity of exacting a great deal of revenue by taxation, I know of no more proper subject of taxation than estates passing at death. But the grievance, especially of the small people, was that they were all liable to what is usually a much heavier burden than the burden of the duty itself, namely, the burden of the charges entailed. They were obliged to go through the formalities attached to a much larger property, and then the person taking less than £200 at death was subject to that tax. We made a change at that time—I am not quite certain whether I recollect with accuracy, but if I do not it is not material to my point—by raising the limit of exemption, not so high as it ought to have been raised, and as, I think, it could have been raised, but we raised it to £1,000, if I remember aright. And we effected a greater and more important change by an arrangement of this kind, that whereever the estate was under that limit the Revenue officer should be charged with the whole transaction of the business, and that the accounts, and the whole operations connected with the property should be settled by and through him upon a charge of, I think, 30s., in respect both of Legacy Duty, and likewise the trouble he might be at, and which would stand in lieu of all those charges. Now let me take the case of two persons under a will receiving money in respect of property in which probate is taken out. It seems to me intolerable that if we have reduced the total charge upon these people to £10s. for their Death Duties and other law charges, so as to include the whole transaction of the business, we are now to come down upon them and to subject them to a charge of £3 extra. Why, it seems to me so extravagant and so outrageous a proposition that—although, as I have said, nothing could be more convenient to us who sit on this side of the House—I cannot help hoping that the mention of such a case as that may have some weight with the Government. I have a great deal of hope of them. The aim of my Amendment is to establish equality without increasing the tax payable by any one. There may be another mode by which equality might be established, namely, by providing the mode of succession under the Act of 1853; but the effect of that would be to increase the duty; and we do not desire to increase the duty—what we desire is to remove the inequality. I may here refer to a change which I think would give more complete effect to the intention of my Amendment. In the fourth line of the Amendment instead of reading, "any legacy upon which Legacy Duty is chargeable," it might read, "Any legacy within the meaning of the Legacy Duty Acts," and I will with the sanction of the Committee propose so to alter the Amendment. Our idea is that if 1 per cent is chargeable it is clear that those whose estates are of less than £10,000 value ought not to be liable to the present rates. Our proposition is that as the Chancellor of the Exchequer has thought fit to charge only the amount of interest taken by each individual successor in the case of realty, so he ought to charge only the amount of interest taken by each individual successor in the case of personalty. It has nothing to do with the aggregate. It does not signify one whit to the man who receives one or two thousand pounds whether the probate is taken out for £10,000, £20,000, or £100,000. However large the probate is, and however small his interest, his share is to be diminished by this serious tax of 1 percent on his capital, while the more fortunate person taking possession under the Succession Duty is placed in a totally different position and has not to pay anything. In this country, where there are multitudes of cases in which the probate is taken out for very moderate sums, it would be very hard in those cases to come down on the man who takes the interest under a will, and, however small that interest, to charge him this serious tax, from which other persons, substantially in the same position, are to be altogether exempt. Upon these grounds I now beg to move the Amendment which stands on the Paper in my name.

Amendment proposed, in page 4, line 40, at the end, to add the following Subsection:— (9) Provided always, that whenever the value of any succession in personal or moveable property under "The Succession Duty Act, 1853," or any legacy within the meaning of the Legacy Duty Acts, shall have been diminished by reason of any duty having been charged and paid under the Act in respect of the principal fund or estate out of which the subject of the succession of the legacy is payable, or of which it forms part, and the value of such succession or such legacy together with the amount by which it has been diminished shall be less than ten thousand pounds,then,and in every such case so much of the duty paid under the Act as is equal to the amount by which the value of the succession or the legacy has been diminished shall be repaid to the person entitled to the succession or legacy."—(Mr. Gladstone.)

Question proposed, "That those words be then added."


The right hon. Gentleman has stated that one of the objects of his Amendment is to serve electioneering purposes.


What I said was, the result, not the object.


The result of what?


Of my Amendment.


The right hon. Gentleman said it was with a direct view to electioneering tactics that his Amendment was proposed.

Several hon. MEMBERS

No, no.


Hon. Members who say "no" were not in the House at the time. The right hon. Gentleman has explained how the matter should be put before the constituencies. Hon. Members opposite need not be shocked, because the right hon. Gentleman said, Here is a case we are not sorry for."


I am very sorry for it.


The right hon. Gentlemen said he was not sorry.

Several Hon. MEMBERS

He never said so.


I wonder on what terms we are to conduct these debates. The right hon. Gentleman was allowed to speak without any interruption, but the moment a reply is attempted—I hope I may say so with the greatest good humour—the speaker is interrupted immediately. That conduct I am sure will not commend itself to the right hon. Gentleman. The right hon. Gentleman stated distinctly that use was to be made of this motion in the country in order to represent the gross inequality existing in the treatment of personalty and realty.


I said I believed that this proposal would, from a Party point of view, prove a great gain to us, and be very detrimental to hon. Gentlemen opposite. I thought it only honest to state as plainly as I could how it would be made use of in the country.


I am extremely grateful to the right hon. Gentleman for the candour with which he has stated his case, and I am sorry so much irritation should have been shown. The question is one that is to be raised in the country. As to that there is no mistake. But how is it going to be raised? The right hon. Gentleman said he was going to state that "here again is an instance of the gross difference with which personalty and realty are treated "; but the right hon. Gentleman forgets that settled personalty is treated in precisely the same manner as settled realty. This the right hon. Gentleman did not state.


Not under will.


I did not say under will. Remember I used the words "settled personalty;" and said that that and settled realty were to be treated in precisely the same manner in this Bill, and therefore when it is said that here is a gross case of inequality, I hope it will be remembered that in the case of settlements we have put these two classes of property on the same footing. I think hon. Gentlemen opposite will at least admit that equality is our object. We have not attempted to make any difference between personalty and realty, but we are obliged to make a difference between property passing under settlement and property passing by will, and that applies to personalty as well as to realty. The right hon. Gentleman gave an instance of a farm of the value of —16,000. He said the owner of the estate would probably not pay anything on succeeding to that farm because the value of the succession would be only his life interest, and that would be less than £10,000. In order to strengthen his position he selects the case where the successor takes only a life interest. The right hon. Gentleman says that the life interest would escape if less than £10,000, though practically worth £16,000, but that the poor farmer whose stock was worth only £3,000 or £4,000 would have to pay. A contrast is thus drawn between the owner of an estate of £16,000 and the farmer with £3,000 or £4,000 worth of stock. But if the farmer had only £3,000 or £4,000 he would not pay.


My meaning was this, that if a farmer takes an interest of £3,000 or £4,000 which forms part of an estate amounting to upwards of £10,000, he has to pay while the rest of the estate goes free.


I wish that the right hon. Gentleman would make these distinctions at the proper time. What the right hon. Gentleman stated was that the farmer would have to pay and the owner would not pay. I call attention to this mode of putting the case in order to show how extremely easy it is to create false impressions in the mind of the public. With regard to the £3,000, I understand the right hon. Gentleman to refer to a legacy, and to be thinking of a legatee who receives the money out of an estate of a larger amount than £10,000. In that case the residuary legatee would have to pay the additional duty. By all means let the case be argued from the point of view of the residuary legatee. But let it not go before the country as a case of robbery of orphans. Now I will take the Amendment of the right hon. Gentleman. Suppose a case of an estate of £100,000. The right hon. Gentleman will agree that an estate like that ought to pay the 1 per cent. Suppose it were left equally among 12 children. In that case, under the proposal of the right hon. Gentleman no part of that £100,000 would pay a shilling of this 1 per cent. That, therefore, is not a suggestion which we can accept in the interest of the revenue. There are many cases where personalty of a large amount is divided among five, six, seven, or eight recipients. I ask, as a practical question, whether landed property is often treated in that way. I have made inquiries and find it is very rarely the case that real estate is divided in this manner. As a practical matter therefore, this supposed injustice will very rarely arise. Where there are exemptions there will always be anomalies; but the question is whether these anomalies are sufficient to cause us to give up the exemptions. There are strong grounds of justice and expediency for such exemptions, and by the proposals of the Government small and poor estates will be let off. The proposal of the right hon. Gentleman may have the effect of letting off estates of £80,000 or £100,000 which are not to contribute to the revenue,in so far as they are divided among persons who receive less than £10,000. The Government have no desire or intention to favour one class of property more than another. I think I may be said to have treated realty and personalty with greater equality than any other Chancellor of the Exchequer. But I admit that there is some inequality arising from the practical impossibility of dealing with real estate as you deal with personal estate. In the case of personalty something can be taken at once from the corpus, but in real estate it is a great practical difficulty to dispose at once of part of the estate. Our whole legislation recognizes the distinction between the two classes of property. I disclaim any intention of giving any unfair advantage to one kind of property, but I cannot accept a proposal which may destroy two-thirds of the Revenue which the Government wish to obtain from the new duty.


Sir, the right hon. Gentleman the Chancellor of the Exchequer stated that the Government have no desire or intention of creating any inequality of taxation between real and personal estate. But, Sir, I must say that if that is the intention of the Government—if they have no desire or intention in that direction—they have been singularly unsuccessful in carrying their desire into effect. I venture to say my right hon. Friend the Member for Mid Lothian was absolutely correct when he said that not only does this tax not redress any existing inequalities of taxation between real and personal estate, but that it actually introduces fresh anomalies and fresh inequalities, and aggravates confusion which already exists in the levying of the Death Duties. Now, Sir, the Chancellor of the Exchequer has taken the right hon. Gentleman the Member for Mid Lothian to task for not having called the attention of the House to the fact that settled personalty only pays the new duty on the value of the succession in the same way as real estate. It was not necessary for him to refer to that, for if the right hon. Gentleman the Chancellor of the Exchequer had done my right hon. Friend the courtesy to study his Amendment, he would have seen that that Amendment has nothing whatever to do either with settled realty or with settled personalty, but merely with personalty which passes in account by probate or letters of administration. The contrast which my right hon. Friend desired to draw in the observations which he addressed to the House was between the Estate Duty, as it was levied upon personalty passing by probate or intestacy, and the Estate Duty as it was levied on real estate, devised, it may be, by the same will, or passing by the same intestacy. Now, Sir, in his speech the Chancellor of the Exchequer admitted that there were great anomalies, and he also admitted that he had been unable, notwithstanding his burning desire to do so, to assimilate taxation between real and personal estate. My right hon. Friend the Member for Mid Lothian has suggested a mode in which that may be done so far as regards personalty and realty passing by the same will; but what is the inequality between them—an inequality which is aggavated by this new Death Duty? I will point out once more, and I do not think that any hon. or right hon. Gentleman on the other side of the House will dispute the correctness of what I am going to say, the, whole vice and the whole difficulty arises from this, that the Chancellor of the Exchequer has endeavoured, as regards the personal estate, to increase the Probate Duty under the name of the Estate Duty; but as regards real estate he only increases the Succession Duty. It is perfectly clear that the difficulty in this case is that the Probate Duty is levied on the whole estate before distribution, while in the case of the Succession Duty it is only levied on the value of the share which the devisee of the real estate takes for his own enjoyment. The result is that every estate, the value of which exceeds £10,000, pays this Estate Duty, and although it may be divided between half-a-dozen people, the persons who are beneficially interested in the estate upon which this Estate Duty is claimed, although they take only £2,000, have to pay; and on the other hand, in the case of real estate which may be worth £50,000, if it has to be divided between six children, not one of those six children will pay a single penny. I do not think that can be contradicted by anyone. Again, we will take the case of a man with a personal estate valued at £12,000 and a landed estate worth £9,000 only. He leaves the landed estate to his eldest son, who may go and sell the next day and put the £9,000 into his pocket while he pays no Estate Duty; but if the man divides the £12,000 amongst his four younger children, who only get £3,000 apiece, then every one of these four is subject to the tax. Sir, these things cannot be gainsaid. I quite agree with the Chancellor of the Exchequer that many of the difficulties and anomalies arise from the mode in which the Death Duties are levied, but we complain, Sir, that the Chancellor of the Exchequer has introduced a new Death Duty. He has introduced fresh complications and a Death Duty which is to be levied on a new principle and on a different principle as regards personalty and real estate. And, Sir, it does not atop there, and I beg to ask the attention of gentlemen who are interested in commercial pursuits in the country to this point. Members of the Committee are aware that landed property which is held for partnership purposes is in the eyes of the Chancellor of the Ex- chequer personal estate, and landed estate which is employed in partnership for the purposes of commerce in this country will be brought in under the new Estate Duty, and will have to pay the tax leviable on personal property; whereas real estate, not owned in partnership for commercial purposes, will pay the duty only on the interest of the successor. The Chancellor of the Exchequer was very severe in some remarks he made as to the illustrations employed by the right hon. Gentleman the Member for Mid Lothian. I can only say that I understood the right hon. Gentleman distinctly to say that he was referring to a case where a farmer on administration took £3,000, the total of the estate exceeding £10,000, and I cannot but think that the Chancellor of the Exchequer must have lost, or have omitted to hear,something that my right hon. Friend said. The right hon. Member for Mid Lothian, I venture to say, was perfectly accurate in the illustration he gave. Under this Act it would be possible that a farmer who succeeded, it may be his father and received £3,000 in the shape of farming stock out of his father's estate, would have to pay the duty of 1 per cent, whereas the real estate, although it might be of a value exceeding £10,000, would altogether escape payment of the duty. And now, Sir, one word as to this Amendment,which I cannot help thinking the right hon. Gentleman the Chancellor of the Exchequer has misunderstood. The right hon. Gentleman is, of course, aware that the word legacy, under the Legacy Duty Acts, includes the residue and also the share of an estate passing under intestacy, and no doubt the word legacy was used advisedly in this Amendment. To make it more clear, the right hon. Gentleman the Member for Mid Lothian has informed the Committee of the alteration he has made. Now, the object of the Amendment undoubtedly is this, that where the share which people take under the estate has been diminished by reason of the exaction of this duty out of the personal estate, there should be a drawback or return upon those shares where they are under £10,000, and the object of that is to assimilate it to real estate in the same way in order to make beneficial interests under a will exceeding £10,000 liable to the tax. No person taking beneficial interest in real estate under a will would be liable to it unless the interest he takes exceeds £10,000. Sir, I am sure the right hon. Gentleman the Member for Mid Lothian would be far from saying that some better way may not be devised for meeting these anomalies and difficulties. We have endeavoured to meet them in the best way we can, and dislocating as little as possible the scheme brought forward in the Act. No doubt a better scheme would be one which reformed the Death Duties altogether, but we cannot do that, so we have done the best we can by indicating in the form of this Amendment the anomalies that exist, the way in which they are aggravated, and the way in which we think they ought to be dealt with.

* MR. R. B. HALDANE (Haddington)

It is with considerable diffidence that I rise to say something on the speech which was addressed to the Committee by the Chancellor of the Exchequer, because it appears that nobody can say anything from this side of the House without his motives being misunderstood. My right hon. Friend the Member for Mid Lothian made a speech which was received by the Chancellor of the Exchequer with loud complaints, and when the right hon. Gentleman ventured to explain that his statement had been misunderstood, the interruption was received with still louder complaints. Then when the hon. and learned Gentleman the Member for Stockton ventured to make an explanation, he was received with jeers at his supposed superior legal learning. Well, Sir, if there be no just man on this side of the House, even on the Front Opposition Bench in the eyes of the Chancellor of the Exchequer, what chance have those who sit behind? We shall be told when we venture to make any criticism on the proposals of the Government that we do so for the purposes of misleading the Electorate. As an earnest of what some of us hope to do all over the country when the proper time comes, I shall endeavour now to state the effects of the Government proposal. Now, the Chancellor of the Exchequer has told us a number of things. He has told us that in this Bill, settled personalty is treated on precisely the same footing as settled realty. I shall presently take an opportunity to controvert this. He told us beforehand that our Amendment was one which was bound to fail in its purpose, because its purpose was not one which could be properly carried out. Let us test these things by concrete cases. Take the case of a man who has got land worth £50,000 and six children. He leaves the land among the six children equally, and there is not a share of it which will be called upon to pay a penny of this new duty; but suppose he happens to have in addition to this a sum of £3,000, and supposing he leaves the whole of the land to his eldest son, whilst the sum of £3,000 is divided amongst the younger children. Under the clause introduced into this Bill, for I believe it was not shadowed out in the original Bill, but was the result of an afterthought of the Chancellor of the Exchequer, I mean Sub-section 2, Clause 5, this miserable £3,000 will be charged with duty, while the £50,000 of realty will escape scot free. And that is what the Chancellor of the Exchequer called carrying out the intention which he announced in his great speech last year of treating realty and personalty as on precisely the same footing. But he goes further: he says after all this is not a serious matter because it is only the residuary legatee who suffers, and he seems to think the residuary legatee is entitled to little or no consideration. Why, Sir, in nine cases out of ten where only a small sum passes under a will, the children of the testator are residuary legatees. The common form of the will is to give legacies to those whom they may concern and to divide the residue among the children, and the very purpose of this Amendment is to reach the people who, in nine cases out of ten, will thus be constituted residuary legatees. The Chancellor of the Exchequer said that, at all events, settled reality and settled personalty were treated in precisely the same way, and he challenged us to go to the country and have the honesty to tell the electors that such was the case. Well, Sir, we shall go to the electors and tell them that settled realty and settled personalty were treated by the Chancellor of the Exchequer's Bill, but not on the same footing, because we shall point out to them in the first place that, whereas settled personality is charged upon what is equivalent to the fee simple value, settled land is not charged on the feesimple value at all, but is dealt with by a separate clause which I should have thought the Chancellor of the Exchequer had not read the Bill when he spoke, By Sub-section 5 of Section 6 settled land is charged upon an artificial annual value in a way which is so astounding that I cannot but believe there will be considerable discussion upon it. It is said to be chargeable upon the principal value, but then there comes in an extraordinary proviso that the principal value shall not exceed the amount which would be chargeable on an annuity. Now, Sir, would it be believed that the highest capital value to be taken is 24.4 years?


Perhaps the hon. Gentleman will be obliged to me for informing him that that part of our proposals were taken verbatim from the Bill of the right hon. Gentleman the Member for South Edinburgh (Mr. Childers).


I am sorry to hear it. I would remind the right hon. Gentleman what was said by a distinguished Leader of his own Party—namely, that many things have happened since then, and I would remind him furthur that we are not dealing with the ordinary Succession Duties, but with a new Death Duty, the fifth or sixth which will have been called into existence, and which, instead of simplifying the subject, will add a new complication to it. But the fact remains that, instead of charging land on its fee simple, or even on an assessment of its annual value you are charging it on 24.4 years' purchase of its annual value. Why, Sir, even in the case of perpetual pensions, which we heard about to-night, the Government proposes to take 27 years, and yet in the case of laud—for some mysterious and unexplained reason which, of course, has nothing to do with the Tory Party opposite, and which is wholly unconnected with the speeches we have recently heard from Gentlemen opposite—land is to be treated on this special footing. We shall support this Amendment not because it is the best that could be devised, but because it would be out of order to move an Amendment which would increase the duty on land. We welcome the principle of the graduated Death Duty, and should like to see it applied to land and to personalty alike, but we must content ourselves with the lesser, but still just, endeavour of getting, as far as possible, equal treatment for land and personalty.

Clause 6.

The Committee divided:—Ayes 181; Noes 257.—(Div. List, No. 116.)

* MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

I beg to move in Clause 6, page 5, line 40, after "property," to insert "and in estimating such principal value regard may be had to the annual value after making such allowances (if any) as ought to be made under the said Act." This Amendment is framed in reference to the point alluded to by my hon. Friend the Member for Haddingtonshire (Mr. Haldane) respecting the inequalities created by this Bill as between personalty and realty. Under the Bill, the capitalized value of realty is to be assessed to the Succession Duty, and is to be estimated simply and solely on the net annual value of the estate. In a very large number of cases the result of taking the net annual value alone as the basis of capitalized value will be that estates having a very large market value will practically altogether escape the duty. On many estates the annual rental is very small indeed. Such estates as are commonly called luxurious estates and estates which, in some future time, will be probably very valuable for building purposes, will under this Bill practically escape the proposed duty. I move the Amendment to give the right hon. Gentleman the Chancellor of the Exchequer an opportunity of carrying out the principles he announced in his Budget Speech of equality and similarity between realty and personalty. My proposal, practically,is that in estimating the capital value, attention may be paid to other factors, as well as the net annual value, so that the real market value may be ascertained.

Amendment proposed, In page 5, line 40, to leave out from the word "property," to the word "The," in line 42, in order to insert the words "and in estimating such principal value regard may be had to the annual value after making such allowances (if any) as ought to be made under the said Act."—(Mr. Sydney Buxton.) Question proposed, "That the words proposed to be left out stand part of clause."


The Government is unable to accept this Amendment, because by doing we should follow a false analogy and create a real injustice.


I have an Amendment on the Paper, but of course I cannot move it because it relates to the question raised by my hon. Friend. The Chancellor of the Exchequer told us when the Resolution was before the Committee of Ways and Means that the intention of the Government was to assimilate real and personal estates. It is perfectly clear that if the values are assessed in the way indicated by the Chancellor of the Exchequer, really on the existing annual value, you will not by any means get anything like the real feasible value of the property. I believe I am right in saying that for the purpose of Succession Duty a property of £5,000 cannot be assessed at more than £2,800, or something of that kind. That may be right or not, but do not let us hear again that real and personal estates are to be assimilated.

MR. RATHBONE (Carnarvonshire, Arfon)

I can confirm what has fallen from the hon. and learned Gentleman from my own personal experience. I have a property worth, I suppose, £25,000, from which the rental is £140 a year. Now, just think what the proportion is to what I should have to pay if the value were invested in Consols.

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

This clause creates another inequality, and not an inequality between realty and personalty, but an inequality between two classes of realty, and the one class of realty which the Chancellor of the Exchequer is benefiting is the one best able to bear the burden and the one as to which there is the least difficulty of realizing it. Suppose a man inherits property in green fields which represent a succession of £10,000, his successor will have to pay duty on the fee simple value. The Chancellor of the Exchequer points out the difficulty there would be in selling a small portion of that to pay the duty, but the building speculator who has bought land in the neigbourhood of large towns, such as London, Liverpool, Manchester, or Birmingham, which is not lying idle, but year by year is adding from 1s. to 3s. per yard to its value, and represents his profit when he comes to sell, that is to be exempt altogether. This is an inequality, not as between realty and personalty, but as between a heavily burdened class of realty and the class of realty that bears no share in local taxation. Owners of building land escape the payment of their share of local taxation, and now the Chancellor of the Exchequer proposes to exempt them from Imperial taxation.


I am not surprised at the vigour with which the right hon. Gentleman speaks in relation to this point. No doubt there are cases where it would seem property escapes its fair share of taxation, and if a means can be devised by which I can secure more from my hon. Friend opposite out of that valuable property of which the rental is only £140 I shall be glad. But I wish the Committee to realize that the Government is establishing no new principle. We are following the principle of valuation laid down in the Bill of 1885. Hon. Gentlemen may find fault with my proposal, but it cannot be so very wicked in principle, based as it is on that upon which the right hon. Gentleman the Member for Mid Lothian proceeded. Admitting much that has been urged, still I maintain my position that it would be unfair to adopt the proposal of the hon. Member.


The Chancellor of the Exchequer has admitted that there are certain inequalities, but then he is aggravating those inequalities. There are ground rents increasing in value that pay no rates or taxes. Again, I may point to America as an example, and if the Chancellor of the Exchequer accepts the principle that realty and personalty should be equally rated and taxed, there is no difficulty. In one of my visits to America I thought I would buy a bit of land in Iowa, but before I completed the purchase I found that I should have to pay taxes on the property every year, and so I was deterred from my nefarious speculation. The Chancellor of the Exchequer, if he made a trip across the Atlantic, might pick up some very useful ideas that, put into practice, might save him from the Radical wrath to come.

MR. SHAW LEFEVRE (Bradford, Central)

I need hardly point out that as a general rule ground rents are worth more in point of annual value than Consols. In the case of a rental arising out of ground rents under leases with still 40 or 50 years to run—say of £1,000 a year—the annual value would be calculated at 24 years' purchase, and the duty would only be £240; while if a man had £1,000 a year out of Consols that would be calculated as worth £35,000, and the duty would be £350. Of the inequalities attending the present Succession and Probate Duty by which great ground landlords escape taxation there can be no doubt, and certainly amendment is required.

The Committee divided:—Ayes, 203; Noes, 129.—(Div. List, No. 117.)

Original question again proposed.


As the next Amendment I have to propose is likely to give rise to some debate, perhaps the Government would agree now to report progress and allow us a short time tomorrow afternoon for the purpose?

* THE FIRST LORD OF THE TREASURY (Mr. W. H. Smith, Strand, Westminster)

I hope the hon. Member will proceed now. It is the last Amendment, and I think the Committee have entered upon the discussion with a desire to conclude it to-night.


My proposal is to omit from the clause the words providing that the duty payable in respect of the principal value should not in any case exceed the amount which would be chargeable upon an annuity equal to such annual value according to the highest value in table III. in the Schedule of the Succession Duty Act. The point of this is that, as in the case of the last amendment, I wish to bring the Bill into conformity with the speech of the Chancellor of the Exchequer when in opening his Budget he said his desire was as far as possible to bring about an equality between realty and personalty. I would strike out the limitation of the number of years' purchase to 24½ in capitalizing the value of realty. I trust the Government will see their way to amend this and allow further discretion for the estimation of the value of land upon a fair basis. Again, I suppose, the Chancellor of the Exchequer will go back upon the pre- cedent of 1885. But let me say no one now cares two straws about what was done in 1885; what people really care to know is how far the Chancellor of the Exchequer is going to carry out his definite promise to bring about similarity and equality between realty and personalty. The Bill bristles with inequalities, but I trust it may be made a little fairer than it is.


I have very grave doubts whether it is in the power of the hon. Member to move his Amendment. It proposes to increase the limitation of the tax, and would therefore make the taxation larger than is proposed in the Bill, and that, I think, is outside the power of the Committee to do.


I am afraid the Amendment has that tendency, for the Bill as it stands limits the tax on realty so much that any Amendment proposed must necessarily increase the tax. I do not know whether the Chancellor of the Exchequer can suggest any means by which we should be in order in endeavouring to bring about something nearer equality ["No, No."] Then we shall divide against the clause.


No doubt the objection taken to the Amendment of my hon. Friend must prevail, but that of course does not apply to the operation of the clause. I do not wish to detain the Committee at length, but I wish to place on record—and this we may do by dividing against the clause—our objection to a new tax founded on a principle we regard as entirely unjust as between one class of property and another. The Amendment of my hon. Friend goes to the point of one of our principal objections to the clause. The clause provides that land shall be capitalized at 24½ years' purchase; why should it not be capitalized on the real value, whatever that is? What argument against that can possibly be maintained? The Chancellor of the Exchequer is extremely fond of the tu quoque argument, but I should have thought that from questions of arithmetic that favourite argument of his might have been excluded. Also, I do not see how we are to make any progress with finance if it is to be sufficient to say that in former times other people made the same error. What we really want to hear from the Chancellor of the Exchequer is his own statement of the principle involved. The right hon. Gentleman is understood not to deny that inequalities exist, and it is desired that he should make some more effectual effort to remedy those inequalities. Now, though a private Member cannot make an Amendment such as my hon. Friend desires, the Chancellor of the Exchequer of course can make any change he likes. Is it not rather striking that the Government should be now contending for the capitalization of land at 24½ years' purchase, and earlier in the evening they were fighting for the commutation of pensions on 27 years' purchase? It is utterly impossible to defend it on any principle of equity between the different classes of property. The Government have a majority, and will no doubt defeat the Amendment, but it is our duty to call attention to this extremely unfair incidence of taxation.


I have not referred to the proposals of 1885, which the right hon. Gentleman who has just sat down treats with such contempt for the sake of a tu quoque argument, but merely because I think that coming with the authority of the right hon. Gentleman the Member for Mid Lothian, assisted by the right. hon. Gentlemen the Members for Derby and Edinburgh, there must be sound arguments in support of them. The right hon. Gentleman says he does not care two straws for what was done in 1885, but I think those proposals should be at least looked into. It can hardly be unfair and preposterous to establish now a method of valuation which was fair and just in 1885. As for the comparison with the capitalization of pensions, a fixed sum of money payable yearly by the Government may well be more valuable than land yielding a similar amount, which land, perhaps, is not saleable, and the value of which is subject to fluctuations, and under present circumstances is probably falling. The principle capitalization is taken from the value of land with buildings upon it, and 24½ years' purchase is a fair market price. The characteristics of landed and personal property are so different that it would not be sound finance to place them on exactly the same footing.


The Chancellor of the Exchequer now for the fourth time has adopted the tu quoque argument in reference to what was done in 1885, in which year we were defeated in our proposal to make the Death Duties on realty and personalty equal. The right hon. Gentleman asks why did we not then propose the other change also, that is to say, to value the land, not according to the scale of the old Succession Duty, but according to its real value. Why, how foolish we should have been when making the proposal which added greatly to the Death Duties on land, if we had proposed in addition to raise the scale of valuation; thus in many cases doubling the amount of the increased duties. Of course the plan of charging upon the real value, and not according to an arbitrary scale is a sound one, but had we done this as well as put personalty and realty under the same rate we should have been making a proposition to Parliament which would have had no chance of success. We satisfied ourselves by proposing what we did without suggesting that which would have made a heavy second addition to the tax on real property. I hope that is a clear answer to the tu quoque argument of the right hon. Gentleman. Instead of taxing realty and personalty at the same rate as we proposed, he is now enacting a reform of a limited kind, under which realty will not pay so much as personalty, and we say if that is the proposal of the Government, that there is good reason for valuing realty, not in accordance with the artificial scale of the Succession Duty of 1852, but according to its real value, the chief result being that ground rents would no longer escape the proportionate tax due from them. As to the particular proposition on which we wished to take a Division, it is clear it would be out of order to take one on Sub-section "a," and I would ask my hon. Friend not to press his Amendment.


I should like to ask whether the words I propose at the end of the clause, and which I intended as a part of it, could be moved in this place?


The clause being out of order, it is unnecessary to entertain that question.

Clause, together with clauses up to Clause 9, added to the Bill.

Clause 10.


I beg to move to leave out Sub-section 1. Under the Succession Duty Act if any successor takes a succession and has to give up property which he possesses, he is allowed the value of that which he gives up, to be reckoned as against what he takes, and pays Succession Duty only upon that by which he profits. Say a father possesse an estate of £100,000, and gives a son £20,000, and when he dies devises the estate to his eldest son on condition that he passes over the smaller property to his younger brother. In that case, according to this clause, the son will be allowed to deduct the value of the smaller property against that which he inherits. But supposing the uncle or the grandfather—[laughter and interruption]—hon. Members may laugh, but this is a case very likely to happen—I am objecting to an exemption given in the Succession Duty Act being taken away. Supposing an uncle or grandfather—[continued interruption]—has devised the smaller estate to the elder son, as frequently happens, and it is to pass on to the younger son when the father dies—[renewed laughter and interruption]—then he will not get the benefit of this Return, and it seems to me that if he should get the benefit in one case and not in the other it should be in the last and not in the first—[Laughter.]—because in the last case the estate will have paid Succession Duty once. If hon. Members think this is the way to get through business I do not agree with them. [Laughter.]

Amendment moved: Clause 10, page 7, leave out Sub-section 1.—(Mr. Gedge.)

Question proposed, "That Sub-section 1 stand part of the clause."


It was rather difficult to follow the remarks of the hon. Member owing to the interruptions that took place during his speech. I did not quite catch his objection to the clause; but, no doubt, in the Succession Duty Act of 1853, there was an exemption which has been pushed too far, and my objections to the existing interpretation of which I explained as fully as I was able when I introduced the Budget the other day. If there is an allowance made—for instance, £200 a year—to an expectant heir, up to the death of the owner of an estate, and then on that death the estate comes into the posses- sion of the person enjoying that £200 a year, the £200 is deducted from the annual value of the estate, and that, we do not think, should continue. I understand that it has been by a straining of the Statute that this exemption has hitherto prevailed, and we propose to put an end to such exemption.

Question put and agreed to.


In moving the next Amendment, I merely wish to say that if an estate be worth not more than £300, only 30s. is paid by way of duty, and there is no Succession Duty payable at all, but if this clause is passed that limit of £300 will be reduced to #x00A3;100, and Succession Duty will become payable even in cases where legacies are under #x00A3;20. I think that is very hard, and I move the omission of the Subsection.

Amendment moved, Clause 10, page 7, leave out Sub-section 2.#x2014;(Mr. Gedge.)

Question proposed#x2014;"That Sub-section 2 stand part of the clause."


I do not think the clause would have the effect pointed out by the hon. Member. The exemption would be left as it exists now, but we desire to prevent these small legacies escaping payment of duty by being purposely left in land. An evasion of duty frequently happens in these cases.

Question put and agreed to.

Clause 10 added to the Bill.

Clause 11.

* MR. GEDGE [Laughter]

It is all very well for hon. Members who have not paid as much attention to the Bill as I have to laugh. I have the interests of the taxpayers at heart. Under present law if a man executes a voluntary settlement on which he has to pay a stamp of 5s. per cent and he dies within three months, the subjects of the voluntary settlement become liable to Probate Duty, and the sum of 5s. per cent is allowed. But in this clause the three months is extended to twelve months, making it more likely that the man will die, and the allowance is taken away. [Laughter and Interruption.] I beg to move the omission of Sub-section 2.

Amendment moved, Clause 11, page 8, leave out Sub-section 2. (Mr. Gedge.)

Question proposed, "That Sub-section, 2 stand part of the clause."


I cannot agree to the exclusion of this Sub-section.

Question put and agreed to.

Further Amendments agreed to:#x2014; Clause 12, page 9, line 14, after "duty," insert "in case the successor shall not have availed himself of the option given to him by Section 22 of 'The Customs and Inland Revenue Act, 1888,' or after two years from the date of the last payment by such successor of any instalment or part of the duty, if he has availed himself of such option."#x2014;(Mr. Chancellor of the Exchequer.) Clause 14, page 10, line 25, at end, add "and no trustee, executor, or administrator shall, after the expiration of such six years, be liable to such duty, if it is proved to the satisfaction of the Commissioners that the account rendered was correct to the best of his knowledge, information, and belief."—(Mr. Gedge.)

Bill as amended, reported; as amended, to be considered to-morrow at Two of the clock.