INCIDENCE OF TAXATION (IMPERIAL AND LOCAL). (Hansard, 15 March 1892)

(9.30.) MR. PROVAND, &c.) (Glasgow, Blackfriars

I rise for the purpose of moving the Motion which stands in my name. Any person who for the first time approaches this subject will probably think there ought to be no difficulty whatever in ascertaining the incidence of any given tax, but no sooner does he address himself to the task of finding this out, than he finds great difficulties standing in the way of acquiring accurate information. He must not merely find out the amount of each tax, which is the simplest part of the matter; he has to ascertain, if he can, how much of the tax is paid by each different class, and on what kind of property it falls, and here he finds his difficulties arise. Further, in an examination of this kind, he must include local and Imperial taxation; and in this there 948 are still more difficulties. I should not care about troubling the House with my opinion on the point, but I may mention that a very well-known critic of our Parliamentary accounts stated in the Economist, some 18 months ago, that not even by careful analysis was it possible to ascertain from Parliamentary accounts what portion of the total receipts constitutes Imperial Revenue, and how much belongs to the Local Authorities. The same critic, a little further on in his article, goes on to say that not one in a hundred Members of the House of Commons could give any clear statement of our National finances. We have the same thing confirmed from the Front Benches on both sides. Some two years ago, a former Chancellor of the Exchequer, the right hon. Gentleman the Member for Derby (Sir W. Harcourt) said he defied any Member of the House to ascertain from the accounts furnished with the Budget how much the revenue was, or, for the matter of that, how much our expenditure was. The present Chancellor of the Exchequer has shown his opinion by refusing to make a Return of land taxation, because he said many of the sums would have to be more or less conjectural. Therefore, it will be admitted that such comments as these are not re-assuring to any man who attempts to ascertain how much of the total taxation falls on different classes of the community. Nevertheless, we must use as best we can the materials at our disposal, and these very difficulties afford evidence of the necessity for adopting a more simplified and more complete method of accounts, so that it may not be said that not one man out of a hundred in the House can explain them, but that also every intelligent man outside the House can understand them. Another and a sub-variety in the incidence of taxation is when one part of the country is taxed more than some other parts of the country, or that one portion of the country is taxed for the benefit of other portions of the country. The Chancellor of the Exchequer gave us a very good example 949 of that a year ago in the surtax of 3d. a barrel on beer and 6d. a gallon on spirits, imposed for local purposes. The result was most unfavourable to Scotland, and we were taxed in that part of the Kingdom for the benefit of other parts of the Kingdom. Now, this is more or less inevitable with some of our taxation, but it is absolutely indefensible when a tax of that kind is created, which is, I might say, inequitable in its very inception. But this sub-variety of the incidence of taxation is not one, upon which I intend to say anything more. My Resolution speaks of taxation which falls on different classes, and that is the point at which I desire to arrive. Now, this question has been very much disputed at different times, and some few years ago the right hon. Gentleman the Member for West Birmingham (Mr. J. Chamberlain) made some interesting calculations on the subject, which I must candidly say were not generally accepted at that time, and others also have done so. But the calculations have nearly always been made with reference to taxation upon some small area or small portion of the population, and have not, I think, furnished any correct estimate of the incidence of taxation by the method adopted. We must start by assuming equality of sacrifice, and that everybody pays in proportion to what he receives and can afford. That would be a fair basis for taxation, and, assuming this to be the case, I have put a few figures together, which, I think, will present a very fair estimate of what amount of taxation is paid by the wage-earning class, and how much by the class above them. For this purpose I shall first deal with the £82,000,000 of Imperial taxation raised by taxes, omitting the sums raised in other ways. Now, in the Budget statement for the year you will not find a sum of £82,000,000 raised by taxation, but only £75,000,000, the other £7,000,000 being collected by the Imperial Government, and handed over to Local Authorities. In 1885, Mr. Giffen made an estimate of the total amount of the earnings of the wage-earning classes, and he then placed it at 950 about £550,000,000 per annum. Since then there has been an increase of 5 per cent. in the population, and we may take it there has been 5 per cent. increase in wages, bringing the total up to about £600,000,000. I am taking what I think is a very full estimate. I know that others have made lower estimates, but Mr. Giffen's figures are larger than others, and so I take them. Now, it is also estimated that the total earnings and profits of the United Kingdom are every year about £1,200,000,000 or £1,300,000,000 sterling, so, I take it, the wage-earners receive during the year a sum very nearly half the total earnings of the nation. In dealing with Imperial taxes, I shall assume that the wage-earning classes pay only on Customs and Excise, and I take Customs at the amount collected last year, say £20,000,000—I assume that the wage-earning classes pay half the duty on coffee, cocoa, and chocolate. I only take half, because, for some reason, the upper classes consume a much larger proportionate share of these three articles than do the working classes; but the latter I do not calculate pay any of the duty on brandy, Geneva, and similar liquors or that they ever smoke a cigar or drink a glass of wine. I know they do all these things, but to such a small extent that I leave them out. On the other hand, I shall assume that they pay the whole of the duty on rum, on dried fruits, on tea, and on tobacco, because the amount of these duties paid by the upper classes is comparatively trifling, as compared with that paid by the wage-earners. This estimate shows that £15,500,000 out of the £20,000,000 are paid by the working classes. Then I turn to Excise and the duties levied by that Department on beer, British spirits, and licences—£27,000,000 sterling, of which sum the workers pay five-sixths, or £22,500,000, and this amount added to the Customs amount gives a total of £38,000,000 provided by the working classes out of £82,000,000 of Imperial taxes collected. The proportion is very nearly the same in figures as the proportion to the entire income of the country—nearly one-half. Therefore, I think it is perfectly 951 clear that the working classes contribute at least their full share to the Imperial taxation of the country. Now, in taking these figures, I have avoided all details; I have not included any of those taxes of which they pay a small amount, and, on the other hand, I have not deducted anything from those of which the richer classes pay very little. Besides this, I do not take any credit for what the working classes pay on stamps, although they contribute by receipt stamps, and in a large degree to the stamps for patent medicines. That item comes to about £225,000, and I must think that nearly all is contributed by the workers, as I never heard of the upper classes patronising "Beecham" or "Holloway." Nor have I taken any credit for their contributions to the Post Office revenue, although penny stamps give the Post Office a profit of £3,500,000 every year. Of course, other figures might be extracted from the accounts in various ways; but I care very little how they are stated by anyone—they must be more or less conjectural, and, instead of trying to establish the precise share each class pays of each tax, it is better to take the figures en bloc. Whichever method is adopted, I do not think my statement can be seriously assailed—that the working classes contribute at least their full share to Imperial taxation. And now let us consider how the working classes stand in reference to local taxation, and this is a much simpler question; and, as I have shown that they pay their share of Imperial taxation, I can show that there is no doubt that they contribute far more than their share of local taxation, because the working classes pay about 20 per cent. of their wages in rent, and as 20 per cent. of that goes in rates, these rates take 4 or 5 per cent. from the workman's income, which is a far larger percentage than is paid by any other class. Shopkeepers pay more in rates, but that is for trade and not for residential purposes. Considered in the capacity of resident occupiers, the rates paid by the working classes are higher than those paid by any other class. This is proved by the Return of the rates charged in different parts of 952 London. For example, in the Division represented by the Chancellor of the Exchequer, St. George's, Hanover Square, the rates are 4s. in the £1, whereas in St. Luke's the rates are 60 per cent. higher, and in all the East End and other working-class Divisions the rates are much higher than in the highly-rented residential parts of the Metropolis. Now, I think I have established that the working classes pay too large a share of the total taxation, and that they are entitled to some relief; and, of course, that relief may come in two or three ways. Taxes may be repealed or they may be re-adjusted. One of these methods must be adopted, and probably both, until the working classes are put upon a taxpaying level with the richer members of society. Here I must admit at once that what the working classes contribute to Imperial taxation is, to a large extent, voluntary. If they did not drink and were non-smokers, they would contribute very little to Imperial taxation. On the other hand, the rich man's contributions are largely compulsory. But, nevertheless, this is no defence against an unfair state of things; we must look at facts as we find them, and consider the question on this basis. Now, I come to look at the several ways in which poorer citizens might obtain some relief from the inequitable position which they occupy in respect to taxation. On this point I am not going to say anything new. The facts I shall mention have been before the House and the country for many years, and have been considered. The first relief to which I think the working classes are entitled is the repeal of the taxes upon food. These duties return about £3,700,000, of which about £3,400,000 is on account of tea. I do not intend to say anything upon that, as my hon. Friend the Member for Leicester (Mr. Picton) may possibly have something to say, but I do desire to draw attention to the inequitable character of the duties on dried fruits. We allow all green fruit to come in free, and then we tax raisins, currants, figs, and plums, dried apricots if in bags or barrels, but we charge nothing on almonds, dates, dried apples or dried 953 nectarines, and if dried apricots are mixed with sugar they come in free. It is idle to suppose there is any possible defence for these taxes. They were put on at a time when those who had to pay them had no voice in the taxation of the country. All they could do was to pay and complain. It was impossible for them to do more. But hon. Gentlemen who sit opposite must admit that that time has passed for ever, and the voices of those who are to be taxed must be heard in reference to the imposition of taxation. But the staring folly of these duties is still more indefensible when we look at them more closely. Valencia raisins used by the lower classes are taxed to the extent of 50 per cent. of their value. Every workman's wife who buys raisins pays more by half than she would pay but for these duties. On the other hand the raisins used by the wealthier classes pay on an average 10 per cent. in duty. Of course differences of this kind are inevitable unless differential duties were put on, and in the case of raisins no doubt differential duties would be very difficult to impose even if they were desirable. But does not this inequality furnish a strong reason why there should be no duty at all? I have not mentioned a worse case. There are quantities of figs, plums, and prunes taxed to the extent of 80 per cent. of their purchase price—that is to say the purchaser would pay little more than half of the price he now pays in the shop but for these duties. Of course very small quantities of these fruits come to this country; the tax is prohibitive; they are not worth the price this enormous tax imposes. Abolish the duty, and no doubt these fruits would be imported, and our citizens would have the advantage of the use of these fruits, and our commerce would benefit in freights and in other ways. On account of these duties these fruits cannot be discharged over the ship's side, and the expenses of landing and of transshipment are such that our ports do not become depots for the trade. The whole duties raised on dried fruits amount to little more than £300,000, and a large portion of this must be ex- 954 pended in the cost of collection, and for this comparatively petty sum, we keep up these duties to the damage of trade and to the hindrance of our commerce, while we are depriving our people of the enjoyment of some of the best descriptions of food at a price such as the poorest could afford to pay. America has been importing large quantities of raisins from Europe, but the California raisin crop is now becoming so large that it is thought America will shortly cease the importation from Europe, and that we shall have an increased supply from Spain of about 18,000 tons a year, all of which can be consumed in this country if the duty were repealed. We have an illustration of the effect the abolition of duty would have on the consumption. Two years ago the duty on currants was reduced from 7s. to 2s. per cwt., and what has been the result? For many years there had been no increase in the consumption of currants, but immediately the duty was reduced the consumption of currants increased by 23 per cent. over any year for a series of years. Transhipments of currants also increased to the extent of 35 per cent., showing how our ports may become depots for the supply of foreign fruits. I have no doubt that if the duty were taken off raisins a similar result would follow. Canned fruits from California and Australia compete with these dried fruits, they are admitted free, and the trade has largely and rapidly developed. There are many reasons why these duties should be abolished, but I think I have amply demonstrated that there is no possible reason for maintaining them, or possible defence for them. But although the repeal of the dried fruit duties would be a great benefit to the working classes of this country, they are entitled to much more relief than this £300,000. It is but a small sum, and there are two other sources of relief which naturally suggest themselves as suitable for alteration and the re-adjustment of the incidence of taxation, and one of these sources is the Death Duties. Of course I know the stereotyped reply to this demand is that the land is at present assessed for Income Tax at a much higher rate 955 than other kinds of property. The obvious reply is, let us have the land fairly assessed, and do notlet us continue with one system for England, another for Scotland, and another for Ireland. The Chancellor of the Exchequer should re-adjust the incidence of the assessment of land to the Income Tax on a fair and intelligible basis, making it in principle the same in all three countries. The unfairness of the Death Duties is so notorious as to have become common knowledge. When the Chancellor of the Exchequer, about three years ago, introduced the Estate Duty Bill he said it was to meet the constitutional requirements of the National Exchequer, and that it would be free from the inequalities of the existing Death Duties. In the last, Report of the Commissioners of Income Tax I find that in the first completed year the tax has been imposed £1,125,619 has been derived from personalty, and £69,000 derived from realty; that is to say, personalty has contributed 15–16ths of the tax and land only 1–16th; and yet we were told that that was to be a tax which was to meet the constitutional requirements of the National Exchequer, and to be free from all the inequalities of the existing Death Duties. Besides the re-adjustment of the Death Duties there is no doubt that the larger incomes should be assessed to Income Tax at a higher rate than the smaller. When an income passes a certain amount, when it becomes enormous—when, in fact, it is ascertained to be beyond what I may call the power of personal effort of any man to obtain by any labour of his own, incomes of that kind—I am not going to define what sum it should commence at—should pay a higher rate of Income Tax than the smaller incomes. I will mention another source from which taxation ought to be derived, and that is the mining royalties. Although royalties are rated, they should likewise form the subject of special taxation. Then I come to the last point that I am going to mention, and that is the relief of the ratepayer. Now, there are two ratepayers—the urban ratepayer and the rural ratepayer; and, with respect to the 956 rural ratepayer, his case is not anything like as hard as that of the urban ratepayer. And no one has stated the case of the urban ratepayer better than the present Chancellor of the Exchequer, who more than once in this House, and several times in other places, pointed out how necessary it was that the urban ratepayer should be relieved from the pressure of the excessive rates which he has to pay in our cities at the present time. Another reason why I shall not say anything about the rural ratepayer is that because it raises the question of the taxation of agricultural land, and any person who considers this will find it far and away the most intricate and difficult taxation question to deal with. Some other method of rating must be adopted from that which we employ at the present time, because, while some agricultural land is rated too high, there is a great deal rated too low. The present system is inequitable, and must be altered. But to return to the urban ratepayer. I think the source to which he must look for relief is the taxation of the land under our cities; and while the agricultural question is full of difficulties, the town question, I may say, is simplicity itself. The land is set apart for a particular purpose—for the benefit of all, not for the benefit of him who owns it, and cannot be made more or less valuable by the person who receives the rent. The only way in which it can become valuable is by the aggregation of inhabitants in its neighbourhood, and it can only become less valuable by the inhabitants going away. I wish to call the attention of the House to what the result of the last County Council of London election pointed, and to the question on which it was fought. No doubt there were the questions of the monopoly of gas, and tramways, and water, and other matters of that kind; but the real question which settled the election was the taxation of land values in order to relieve the occupying ratepayer. That is the reason why the Moderates were so badly beaten, and why the Progressives succeeded in being returned by such a large majority. It may be that this question is too large for Parliament to deal with in 957 the last year of its existence; but there is nothing whatever to hinder or interfere with the Chancellor of the Exchequer rectifying the Death Duties, or putting a special tax on mining royalties, or repealing the duties on dried fruits. I therefore hope he will take an early opportunity of remedying the condition in which the poorer taxpayers of this country stand at present, because there can be no doubt that the incidence of taxation falls heavier on the working than on the richer classes. I beg to move the Resolution that stands in my name:— That, in the opinion of this House, the incidence of Taxation in the United Kingdom for both Imperial and Local purposes is inequitable, and ought to be readjusted as to fall with greater fairness on all classes.