INCOME TAX.

HC Deb 27 April 1893 vol 11 cc1310-71

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for the year which commenced on the sixth day of April, one thousand eight hundred and ninety-three, in respect of all Property, Profits, and Gains mentioned or described as chargeable in 'The Income Tax, 1853,' the following Duties of Income Tax (that is to say):— For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) of the said Act, the Duty of Seven Pence; And for every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act—

• In England, the Duty of Three Pence Halfpenny;
• In Scotland and Ireland respectively, the Duty of Two Pence Halfpenny;

Subject to the provisions contained in section one hundred and sixty-three of 'The Income Tax Act, 1842,' for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of 'The Customs and Inland Revenue Act, 1876,' for the relief of persons whose income is less than Four Hundred Pounds."—(The Chancellor of the Exchequer.)

*MR. GOSCHEN (St. George's, Hanover Square)

Before my right hon. Friend the Member for the University of London moves the Amendment which stands in his name, I will ask permission to offer to the House some general observations on the financial scheme of the Government. One feeling of intense satisfaction must, I think, have animated the minds of hon. Members opposite while the Chancellor of the Exchequer was explaining his Budget scheme and the proposed increase of the Income Tax, and that is that the Home Rule Bill had not yet passed. It is obvious that if we were discussing this measure in what Lord Salisbury called the smaller House of Commons, unadorned by the presence of hon. Gentlemen from Ireland, unassisted by their counsels, and uncontrolled by their votes, the doom of the Government might be scaled to-night. [Laughter and cheers.] At all events, they would be at the mercy of the British majority in the House of Commons; and I would ask hon. Members from Ireland to consider during the progress of this discussion when they would be able to take part in the proceedings and when they would be compelled to absent themselves. We have passed the Resolution relating to Tea. On that subject we should have invited their co-operation. We are now asked to pass a Resolution relating to the Income Tax. On that question they would have no votes. We should then discuss some measures relating to Stamps, and the Irish Members would still have no votes; but if we discussed the proposals of the Chancellor of the Exchequer with reference to the Treasury Chest, the Irish Members would again be summoned to this House. On previous occasions, when it was my duty to submit the financial proposals of the late Government, after the customary exchange of compliments and courtesies on the first night of the discussion, the present Chancellor of the Exchequer used to rise with some wrath and indignation and denounce me to the House of Commons, airing the austere sanctity of his own financial orthodoxy. I will not follow the right hon. Gentleman in a similar manner. On the contrary, I am bound to say that I feel for him much friendly pity in his great misfortune. There must be a great disappointment in store not only for the right hon. Gentleman himself, but for hon. Gentlemen who sit behind him. We know the expectations during the Election. There was to be much financial reform in every direction, reduced Military and Naval Expenditure: democratic finance was to be tackled, and a new era was to set in. And now what a bathos! This expected Budget ends in a proposal of an additional 1d. on the Income Tax and in a Licence Duty on dealers in foreign game. I condole, in all sincerity, with my successor on his baffled ambition and on his blighted financial hopes. I am only glad that, at all events, the arrangements made with regard to the Estimates for Expenditure and the Revenue of last year have not contributed, in any way, to the somewhat difficult and painful task of the right hon. Gentleman. He was good enough to express himself in kindly terms with regard to the exactitude of the Estimates both as regards Expenditure and Income. As regards the Estimates of Revenue he gave some interesting statistics, and showed how extraordinarily the averages had come out. I might add this further remark as to how the averages came out. Not only were these averages correctly calculated, but in those items where it is possible to make a forecast, the forecast, even in detail, was extremely correct. The main divergence from the Estimates in detail was on the Death Duties, in which case it was more than usually difficult to make any estimate, not only as regards the number of persons who may die within the year, but also as to the manner in which they may dispose of their property, so as to make it liable to varying rates of duty from 1 to 10 per cent. With regard to the great articles of consumption, I gather that the proved experience of the past has again been corroborated—namely, that when a depression of trade sets in the first falling-off is in spirits; the next, at a long interval, is on tea, while tobacco is seldom touched at all. It seems that tobacco, which is the luxury of the working man in his time of prosperity, becomes his comfort in time of depression, and in that item we may be glad to see, even in bad times, there is no falling-off. I do not think there is any other item on the Revenue side which I need discuss just now, and I come to the observations of the right hon. Gentleman on the Expenditure of last year. The right hon. Gentleman showed that the result of the whole year was that there was a small surplus of £20,000, which he was good enough to say would have been larger but for the unexpected Supplemental Estimate at the very last moment—I think in the month of February or March. But the right hon. Gentleman, through his past utterances, was compelled to shy, if I may use the expression, at the word "surplus." I do not wish to revive this controversy beyond the point to which it has been forced upon me by the remarks of the right hon. Gentleman. He was compelled by his past to say he did not regard this as a surplus, because he said we had borrowed during the year. But the right hon. Gentleman is going to borrow during the coming year, and accordingly, if we are to adopt his own phraseology, he is working up to a deficit in this coming year. He accepts that view. A more extraordinary doctrine to hold— that it is legitimate to work up to a deficiency in the financial year—was never placed before a Committee of the House of Commons. We deny entirely that borrowing for Capital Expenditure docs involve the question of a surplus or no surplus. In past borrowings for Capital Expenditure, for the Military Forces Localization Bill, for the purchase of the telegraphs, and similar purposes, we have over and over again treated them as Capital Expenditure; and it does not, as I have said, affect the question of surplus or no surplus. If we had held the doctrine of the right hon. Gentleman, we should have been wrong not to have made other provision for such outlay. The right hon. Gentleman says these are remanets, and that he is going to borrow for purposes which have been previously undertaken, and for which money had been borrowed. But if he considers it wrong to borrow, it is perfectly open to him, under the very Acts to which he has made allusion, to pay the amounts out of Revenue if he considers it to be false and unsound finance to meet them out of capital. The right hon. Gentleman spoke of a balance of a certain amount which was borrowed for telephones. Well, but surely telephones stand upon the same footing as the purchase of telegraphs, and this balance on the same footing as would any balance in respect of the Military Localization Acts? If he does not hold that view, but stands by the view he preached in Opposition, that it was wrong and misleading to provide for extraordinary efforts and for this Capital Expenditure in the manner of his Predecessors, it was open to him to take some other course and, difficult as the situation was, to face it. The right hon. Gentleman said when he came to meet the deficit—"We do not intend to meet it by continuing to borrow." The words "continuing to borrow" must have given the Committee the idea that if he had borrowed he would have continued the system which we had inaugurated. How can he borrow for such normal and regular expenditure as education or the Post Office salaries, or the various items which constitute the excess of this year? He is perfectly right not to borrow, and no Government would dream of borrowing under the circumstances. I do not think it was quite fair of the right hon. Gentleman in his speech, which was otherwise very candid on his part, to say—"We do not intend to continue to borrow." I pass from the consideration of the Expenditure and the Revenue of last year to what the Committee always think a far more interesting portion of the Budget Statement— namely, the Expenditure and the Revenue for the coming year. As regards the Revenue of the coming year, it seems to me that it is based on sound principles, and I sincerely hope that the Estimate will be realised. There are some questions of detail which I should like to ask with regard to the Revenue; but I would prefer, on the present occasion, to treat the matter more broadly and not go into detail. I come to the Expenditure of the present year. The Committee will remember that the deficit which the right hon. Gentleman is unfortunately called upon to meet is due to the increase in the Expenditure of about £1,100,000 and a falling-off in Revenue of about £500,000. The right hon. Gentleman dwelt at some length and with considerable eloquence on the increased Expenditure. He pointed out that it is due in the main to an increase in the Post Office of upwards of £600,000 and an increase in the Education Vote of £300,000. I have seen it stated that the right hon. Gentleman had got a deficit because he had got to pay some debt which I had incurred. The right hon. Gentleman himself knows that this is absolutely incorrect, and he stated with accuracy the main reason of the deficit which he has incurred. But he omitted one item of increase, and a very interesting item it was—an item of £ 170,000 increase in the Military Expenditure. I am sure hon. Gentlemen on this side of the House will have seen with great satisfaction that so soon as right hon. Gentlemen opposite came into a responsible position, all the vague talk about our bloated Expenditure and all the electioneering advantage which was gained by saying we were spending millions too much on the Army —that all that talk was absolutely baseless and fictitious, so far as responsible Ministers are concerned. I wish particularly to call the attention of hon. Members opposite to this point, because it is really one which concerns very vitally the interests of the State. The Ministers opposite have had the opportunity of examining carefully the Estimates. They have been for eight months in Office, and as regards the Navy they have loyally carried out the programme of their Predecessors, and they have done more. They have put before the Committee a programme of additional ships, though they have not yet been good enough to state the details on which they base the vast expenditure which they intend to incur upon it. But I wish to call the attention of hon. Members opposite to the mistakes into which they have been led at the last Election through the unfounded belief that we were establishing the Army and Navy on a scale which was unnecessary. They have, I think, reason to complain that their responsible Leaders did not earlier warn them of the difficulties into which they would get and how certain it was they would be beguiled and deluded in their expectation of being able to see millions cut off the Military Expenditure so soon as their friends came into Office. Be that as it may, we have to face the fact that in the financial arrangements for the present year there is an expenditure for the Army and Navy upon the same scale—or rather upon a slightly increased scale—as that of the late Government. I think the right hon. Gentleman the Chancellor of the Exchequer is probably not specially responsible for the maintenance of these large Estimates at their present point; and it emphasises the necessity for the Expenditure that he, with all his influence in the Cabinet, and with a falling Revenue, was, nevertheless, compelled to consent to these Estimates. A clearer or stronger proof could not be afforded of the fact that we have endeavoured so to administer the armed Services as neither to incur waste nor encourage expenditure beyond what was the necessary point. Had it not been so, and if half a million could have been saved, would not the right hon. Gentleman have succeeded in persuading his colleagues to enable him thus to meet his deficit? I pass to the Civil Expenditure, where the right hon. Gentleman held language with part of which I cordially concur. He said both Parties were responsible for the increase in the Civil Service Expenditure, and that if the House of Commons and the country demanded extravagant expenditure in many respects in the Civil Service, then those who called the tune must pay the piper. But those who call the tune are not precisely the persons who are called upon to pay the piper. When I come to discuss the particular plans of the right hon. Gentleman I shall show there is a class very hard hit indeed—the lower and poorer middle class, who suffer deeply from the imposition of 1d. in the Income Tax, and who cannot be held responsible for any of those movements which have resulted in such a vast expenditure. I agree with the Chancellor of the Exchequer as to the House of Commons being responsible for a great deal of the increased Expenditure. The Committee know that when free education was proposed the House of Commons were not satisfied with the plans put before them, and they adopted plans which led to an increased Expenditure. Of course, as the right hon. Gentleman pointed out, the House of Commons and the country must not be surprised with having increased Estimates if such movements continue. Then let me take the question of the Post Office, where the right hon. Gentleman put down his foot very strongly. But I wish, as late Chancellor of the Exchequer, he had put some restraint upon his Colleague, the present Chief Commissioner of Works. While the only economists, the Chancellor of the Exchequer and the Prime Minister, were frequently not in the House on such occasions, the present Chief Commissioner of Works (Mr. Shaw Lefevre) came down to the House and insisted on continual improvements in the Post Office, which have brought the right hon. Gentleman into the position in which he now finds himself. In reference to the expenditure on telegrams, of which the right hon. Gentleman spoke, it was his own Colleague who reduced the rate from 1s. to 6d., to the great advantage of trade, but with an increased loss to the Exchequer. Without desiring to treat the matter in any controversial spirit, I do not think the late Government received much support from right hon. Gentlemen opposite in resisting such expenditure even when they themselves desired to resist these Motions in the House of Commons. Unless Members of the Opposition assist it is impossible to resist these Motions. May I touch on another point—an unpopular point—I mean that relating to the Civil Service? Organisations—I might almost say Trades Unions—have been formed in nearly every department of the Civil Service, to the loss of discipline and the encouragement of extravagance. The consequence is seen in a vast increase of wages, and those wages the country has to pay. If the House of Commons is generous in the treatment of its servants—and it ought to be generous without being extravagant—it ought carefully to see that its generosity does not penalise any class which is already suffering acutely from its particular share of taxation. Then the House of Commons wishes now to buy in the dearest market and to pay the highest possible wages; and all this must be written in the Estimates of this and other years. I hope the Chancellor of the Exchequer will admit that, as far as this point is concerned, I am meeting frankly the challenge which he threw down. I do not wish to escape any share of responsibility in endeavouring to show that the Estimates should not be unduly augmented where it is not required by justice. Here I might ask the Chancellor of the Exchequer whether he has taken into account in his Estimates the increase there may be in the Naval Dockyards through the new classification which I understand has been passed by the Admiralty; and whether further account has been taken of the increase in wages generally which may follow upon the adoption of the Resolution passed not many weeks ago, and which was one of the first symptoms of the probable action of this Parliament with regard to the economy which the right hon. Gentleman desires? The result of the Estimates to which I have alluded is that there is a deficit in the coming year of £1,500,000 or £1,600,000, and the right hon. Gentleman asked—How am I to meet it? In the first place, he said that it would not be met by borrowing. Of course not. On that we are all agreed. Then he said it would not be met by a suspension of the Sinking Fund. I entirely agree with him. It was the right hon. Gentleman's sad lot, in a former Budget which also fell at an unfortunate time for the right hon. Gentleman, to find no other means of meeting a deficit than by suspending two or three small Sinking Funds for the year 1885.

SIR W. HARCOURT

For one year.

*MR. GOSCHEX

Yes, only for one year. That is to say, they were to be revived by his successor, after the right hon. Gentleman had had the advantage of their suspension. I happened to be that successor. If the right hon. Gentleman thinks the Sinking Funds are not sufficient, the time will come when it will be thought right to readjust the matter; but it does not lie in the mouth of the right hon. Gentleman, though it does in the mouths of other gentlemen, to tax me with having suspended the Sinking Fund. Then the right hon. Gentleman went on to say that practically the only way of meeting the deficiency was by putting an additional 1d. on the Income Tax. He felt that other reforms were looked for from him, and he mentioned the Death Duties. He gave two reasons for not dealing with the Death Duties. One was the question of time, and the other was that this reform would not give him enough to meet the deficit. The right hon. Gentleman said that the second was the more important reason. I cannot see that, because if he had dealt with the Death Duties, which was expected of him quite apart from the question of the deficit, he would, nevertheless, have had a considerable contribution towards the deficit. The right hon. Gentleman was also expected by his followers to deal with a great many other questions. Take the question of the contribution to rates. The right hon. Gentleman does not like the amount of £7,000,000 to go to rates, nor does he like the system under which it is given. He and the Prime Minister attacked me because they said I had established a duplicate system of finance; and the Prime Minister quoted this system as a precedent for his Customs arrangement with regard to the Home Rule Bill. That Bill fixes the Customs Duties for 15 years. The arrangement which I made can be changed to-day if the right hon. Gentleman chooses to do it. That shows that there is no analogy whatever between the two cases. Parliament is left absolutely free in the matter, and if the right hon. Gentleman has a plan by which the local finance can be better met, it is merely a question of time. Lot him produce it, and put local taxation on a better footing. I frankly say I am not so enamoured of the appropriation of the particular taxes which now went to the Local Authorities, as to be unwilling to consider any counter proposals which may come from the right hon. Gentleman. Other proposals have been made. Sir Thomas Farrer, the great financial guide of right hon. Gentlemen opposite, whose book supplied them with the main arguments against my finance, has got a plan, and a very bad plan indeed it is, in my judgment. But the right hon. Gentleman did not dream of touching it, and I think I know why. Other I questions have been urged upon him—I do not know whether since he has been in Office, but they were in the air during the last Election. I should be much obliged if the right hon. Gentleman would give us his view as to the possibility of some financial reforms that were urged upon the electors during that Election. The right hon. Gentleman, no doubt, knows of the famous electioneering card. The Star said, with regard to it—"This is the little bombshell which has exploded in the Tory camp." I want to know why this "little bombshell" should not now explode among Ministers themselves, if they leave untouched the state of things which was described in the card as being disgraceful to the Tory Party? This was the statement on the card— The poor man's tea pays 3d. in the shilling to taxation; the rich man's tea pays 1d. in the shilling to taxation. What is the opinion of the Chancellor of the Exchequer on this statement? What is the opinion of the Prime Minister, who is a great financial authority? The poor man's tobacco pays 10½d. in the shilling to taxation; the rich man's cigar pays ½d. in the shilling to taxation. Yet all this is to be left as it is. These thoughts have not troubled the right hon. Gentleman after the seats were won. I shall be much surprised if he rises in his place now and says he agrees with the statement I have quoted. But if he does he will be corrected by the President of the Board of Trade (Mr. Mundella), who is so impregnated with hostility to anything like an ad valorem duty that he attacked the very small tendency to an ad valorem duty that I introduced into the Wine Duties. I do not think there is anyone on the opposite Bench who will rise and say anything except that, whether this is just or unjust, they would only deal with the matter by the total remission of any of these taxes, and that they will not introduce an ad valorem system either with regard to tea or tobacco. The Prime Minister, if he had seen his way to what may be called a more equitable distribution in this respect informer times, would, of course, have carried it out. It is only by remission that you can deal with this question at all. Hon. Members below the Gangway, in that future democratic finance for which time may, perhaps, be found when they have ceased to take the Constitution to pieces, may be able to do what has baffled the ablest men in the Customs and Inland Revenue, and baffled the right hon. Gentleman and all other financiers who have dealt with these questions.

*MR. LOGAN (Leicester, Harborough)

Might I be allowed to ask the right hon. Gentleman whether he disputes the truth of those assertions?

MR. GOSCHEN

I am much obliged to the hon. Gentleman for his interruption. The sting of this is not in the truth of the statement. For what says The Star newspaper? I must explain this to the right hon. Gentleman the Prime Minister. Elections were won by this card. We always call it the card-trick, and a very successful card-trick it was. It was defended in local newspapers. I attempted to answer the statement, but the only answer that could be made was the difficulty of remedying the grievance.

SIR W. HARCOURT

What is the card?

MR. GOSCHEN

The Star is, I believe, friendly to the present Government, and its existence should not be inquired about by the Chancellor of the Exchequer.

SIR W. HARCOURT

I asked about the card.

MR. GOSCHEN

The card was put in The Star. Of course, the right hon. Gentleman may think that this card may not have had much effect.

SIR W. HARCOURT

I never heard of it.

*MR. GOSCHEN

The right hon. Gentleman has done me the honour of reading my speeches sometimes when he wanted to refute me, and I have alluded to the card once or twice, if not three times. We had better have this matter out because as we lost some seats by it at the last Election we had better not, at all events, lose them in the next. What says the influential organ?— The Tories hare been hard hit by a little card issued during the Harborough Election. Mr. Goschen has attacked the card, and Mr. Balfour dealt with it last night as a sample of 'Liberal invention.' The reason why the card has thus received the attention of the two Leaders of the Tory Party is that it condensed the truth about unequal taxation in a pithy and telling way which is not without effect among working men.… Every statement here is absolutely correct. Mr. Charles Coppack, Mr. Logan's agent, and the author of the card, defended it point by point, and from indisputable statistics, in his answer to Mr. Goschen, which we published the other day. The sting of the card is in its tail, which asks the pertinent question—'Does any working man suppose he will help to right these wrongs by voting Tory? [Ministerial cheers.] Gentlemen opposite cheer; but I want to ask them do they think the working man has gained anything in this respect by voting for the Government? Now see how straightforward and generous I am. I am giving the right hon. Gentleman an opportunity of answering this question. If I had not touched upon this, it might have been thought that the right hon. Gentleman had passed it over. Now it will be seen how it will be treated by the Government. My point is that something more is expected from a Chancellor of the Exchequer than simply to meet a deficit. He is expected to redress the inequalities of taxation, and he is expected to redeem pledges. The right hon. Gentleman was pledged to deal with the Death Duties. Why has he not done so? The right hon. Gentleman says because he has not had time. But I will suggest another reason. I am very doubtful whether the right hon. Gentleman the Prime Minister has any sympathy with these new developments of democratic finance. I have never heard him approve any such hopes in the past as have been hold out; and, as regards finance, I do not think any great revolution has taken place in the opinions of the right hon. Gentleman. As regards other matters, we know that the right hon. Gentleman stands in no terror of his past speeches. They are impalpable; they are spectres which do not affright him because we cannot lay hold of them, and, what is more, they cannot lay hold of him. But, as regards finance, I believe the right hon. Gentleman still holds fast to those principles which have given him so glorious a name in the financial annals of his country. Hon. Gentlemen opposite may say that they will redeem the pledges they gave for the seats they won by the card-trick; but that while it is extremely difficult to adopt ad valorem duties, they will get the Government to diminish the present inequalities. Too late! Ministers have tied their hands, because under the Home Rule Bill these duties are pledged to hon. Members below the Gangway. The one task was too difficult to perform, and the other cannot well be discharged without diminishing the contribution which Ireland ought to pay to the Imperial Exchequer. I commend the consideration of the present state of things not only to hon. Members below the Gangway, but to The Financial Reform Almanack, which expected so much but obtains nothing but this miserable Budget. The right hon. Gentleman says, "I have no time"——

MR. MAC NEILL

Your friends!

An hon. MEMBER

Obstruction.

*MR. GOSCHEN

I will tell hon. Members why the Chancellor of the Exchequer has no time. The Government have no time, because they prefer the destruction of the Constitution to financial reform. Perhaps some little hope may be held out with regard to the great question of ad valorem duties, but let working men understand that a reform of finance is being postponed to Home Rule. That is perfectly clear. The right hon. Gentleman says he has no time, and I acquit him entirely of blame. I know from my own experience that Chancellors of the Exchequer are deeply disappointed if scope is not allowed them by their Colleagues, and the right hon. Gentleman has my profound sympathy. But, apart from the Home Rule Question, the Government have preferred to bring in a number of Bills which it is doubtful if they ever intend to pass. Financial reform is part of the Newcastle Pro gramme. Registration, the Local Veto, and other Bills are put before it—not only is it put in the last place, but it is relegated altogether to another year. Bills can be dropped at any time, but Budgets are extremely difficult to drop; therefore the Government prefer great exhibition Bills to practical attempts at financial reform. How does the right hon. Gentleman meet his deficit of £1,500,000? He borrows the latest modern automatic invention: he puts a penny in the slot, and the thing is done. It is so very simple, but possibly it is also unjust. The right hon. Gentleman says he has no other alternative, and he quotes the precedents of past Budgets, including those of Mr. Childers, in which the Income Tax was raised alone. But he stopped short at 1885. I ventured to interpose, and said that I had never raised the Income Tax alone or at all during my term of Office. I acknowledge this with the greatest frankness—that it is extremely difficult to find new taxes. My finance has been called "flabby and shabby" by the right hon. Gentleman and his friends; but, at all events, I have not shrunk from the most unpopular and most difficult task of endeavouring to broaden our financial system by the introduction of certain new taxes. I proposed the Estate Duty, and was nearly devoured by the elder sons in this House. I increased the Succession Duty. I put an additional tax on beer and spirits, and was almost devoured by the brewers and the publicans. But, at all events, I did what I believed to be my duty, because I thought the principle ought to be established that the Chancellor of the Exchequer should not rush at the first moment to the Income Tax, regardless of anything else. The right hon. Gentleman simply gets his millions by this proposal. I look on the Income Tax from two points of view. I look on it as a great reserve, and I look upon it as a tax to which recourse must only be had in any great or sudden emergency. I am unwilling to have recourse to it at other times. I know that it is simple, as the right hon. Gentleman the Chancellor of the Exchequer said, and I agree with him when he said it is better to get the money in this simple way than to adopt new expedients. I agree with him, so far, that it is easier for himself and the House of Commons, to impose this tax. It is less likely that there will be an agitation out-of- doors than it would be if a fresh tax were adopted. Income Tax payers are not organised as the brewers and other interests are; they have not the same direct means of bringing pressure to bear upon the House; and, therefore, it behaves the House to become specially the guardians of the Income Tax payers, and to see that recourse is not had to them on every small occasion—to meet an ordinary deficit, and not on an emergency. The right hon. Gentleman put before us a very interesting argument as to the increase of the wealth of the country. Having made wealth, as it were, the substratum of his argument for the purpose of obtaining this 1d. on the Income Tax, he imposes a tax which falls with peculiar hardship upon people with incomes of about £400 a year— the struggling class of bank clerks, small tradesmen, and embarrassed farmers. This appeal to the increase of general wealth will bring small comfort to this class when the Income Tax collector calls on them for an extra penny next Christmas. Do not let the Committee run away with the idea that a few pounds, or a few shillings even, are not of importance to these men. This is a class which deserves special consideration, and it is to this class that I extended special consideration when I dealt with the House Duty. They would have felt the benefit of that reduction but for the extravagant ambition of the County Council, which presses most on the poorest class of ratepayers. Is it fair to rush to the Income Tax at once, and leave out of sight who are the men who have to pay? Their means are often so adjusted to their expenditure that a few pounds make a difference of some little pleasures or some little luxuries which brighten their very dreary lives. They are men and women who particularly deserve our consideration, and I protest against the idea that either from want of time or from want of financial resource you should, as I think, commit the error of seizing on a great engine of national reserve, and at the same time of taxing a class of the community already as heavily taxed, perhaps more heavily taxed, than any other class. But what does the right hon. Gentleman say? It is only, he hopes, for a year. I truly hope that it may be so. Next year, as I understand, the right hon. Gentleman proposes to deal with the Death Duties, and to find other financial resources. But where will the right hon. Gentleman be this time next year? This is the year when he has had the chance. Next year he may be addressing his constituents. [Cries of "Oh!"] Yes; I think it is highly probable we may be engaged this time next year upon a third edition of the Home Rule Bill. There may have been a Dissolution, and the right hon. Gentleman may, as I say, at this time next year be engaged in thinking, not how to meet the ad valorem views of the labouring classes, or of adjusting the difficulties of the Death Duties, but he may be engaged in the difficult task of endeavouring to persuade the electors with regard to the third Home Rule Bill. Sir, the case is clear. Financial reform is to be sacrificed to tinkering with the Constitution as regards registration, and as regards Home Rule and other matters. The right hon. Gentleman the Chancellor of the Exchequer has been sacrificed to the Chief Secretary for Ireland, and the British Income Tax payers have been sacrificed to the Nationalist Irishmen. I can only say, in conclusion, as I said at the beginning, that under the circumstances I offer to my successor my most profound expression of commiseration.

*SIR J. LUBBOCK (London University)

said, he concurred in congratulating the right hon. Gentleman the Chancellor of the Exchequer on the fact that he had not proposed to cover the deficit by borrowing or suspending the Sinking Fund, but he regretted that the right hon. Gentleman had not dealt with the situation in a different manner. The right hon. Gentleman had told them that there were only two economists left in the House—the right hon. Gentleman the Prime Minister and himself; and he had stated that he was doing his utmost in the House to resist all attempts to increase Expenditure. He hoped the right ton. Gentleman would not confine his efforts to this House, but would also do what he could in Downing Street, for it was sometimes more difficult for a Chancellor of the Exchequer to resist the claims of his own Colleagues than to resist proposals in the House. The Prime Minister in 1884 told them that he could— Never belong to a Government which did not on every occasion seek to enlarge its resources by wise economy. He very much wished the right hon. Gentleman had carried out that admirable sentiment on this occasion; but instead of doing so, in his first year of Office he proposed a large addition to the Expenditure of the country. He admitted that the main items of increase were unavoidable in themselves, but at the same time he wished they had been met by economies in other directions. They found themselves at the present moment in an abnormal position, for some of the taxes were being collected without Parliamentary sanction. He made no complaint, because he knew that it was impossible to do without a certain interregnum, but he trusted that the Government would endeavour to make that interval as short as possible. While approving of the course the Government had taken in proposing additional taxation, he could not agree in the method they had proposed. No doubt, as the late Chancellor of the Exchequer had said, there were strong arguments in favour of the Government making additions to the Income Tax. It was an easy and a simple matter, and saved trouble both to the Government and the House, but they would all agree that to increase the Income Tax in time of peace was a very serious matter. He represented a constituency which was pressed almost more than any other by an increase in the Income Tax. The Income Tax was really to a great extent a tax upon brains, and fell upon the medical profession, schoolmasters, lawyers, &c., more heavily than on those whose income was derived from Consols or other investments. He admitted that the arguments against any change in the assessment of the tax were so strong as to be almost insuperable, but that fact was a grave reason against any increase of the tax except in a case of real necessity. The Prime Minister in 1874 appealed to the country to enable him to abolish the tax. He said— According to the older financial tradition the Income Tax was a war tax. For such a purpose it is invaluable. Men are willing to sacrifice much, not only of their means, but of their privacy, time, and comfort at the call of patriotism. But the right hon. Gentleman pointed out that these circumstances did not then exist, nor do they now. He stated that he contemplated the total repeal of the tax, and he added— I do not hesitate to affirm that an effort should now be made to attain this advantage. Why did the right hon. Gentleman advocate the total abolition of the tax at that time? The right hon. Gentleman thought at that time that the tax was one of the very worst, and yet he now, for a comparatively small sum, was taking steps to increase it. He (Sir John Lubbock) would not enlarge on that argument, for it had already been so ably and so clearly stated by the late Chancellor of the Exchequer. But he wished to press on the Committee an argument of a somewhat different character, which made it inadvisable that they should meet the increased Expenditure by an increase of the Income Tax. He was not one of those who thought the Home Rule Bill would become law, but hon. Gentlemen above the Gangway were of a different opinion. They thought that the Bill would be carried to a successful termination, and, therefore, he submitted they were bound to act upon the hypothesis that it would be passed. They found themselves face to face with an increased Expenditure of something over £1,000,000 a year; and they could not flatter themselves with the slightest hope that that increase was likely to be only temporary. In fact, nobody could have listened to the interesting speech of the right hon. Gentleman the Chancellor of the Exchequer without feeling that, so far from there being a diminution next year, they were only too likely to find themselves face to face with a still further increase. In these circumstances, he proposed to move as an Amendment to the proposal before the Committee— That, having regard to the provision of the Government of Ireland Bill, under which the produce of the Income Tax collected in Ireland is devoted to Irish local purposes, it is inexpedient to provide for increased Imperial charges by taxation to which, if the Government of Ireland Bill should become law, Ireland will contribute no part, and the whole burden of which would fall on England and Scotland.

*THE CHAIRMAN

I must call the right hon. Baronet's attention to the fact that he is proposing to move an Abstract Resolution, which would be out of Order in Committee of Ways and Means; but, as has already been explained to him, it is competent to him to move to reduce the sum in the Income Tax Resolution.

SIR J. LUBBOCK

said, he would amend his proposal to meet the view expressed by the Chairman, and would move to omit the 7d. for the Income Tax and substitute 6d., which would really come to the same thing as the Motion he had put on the Paper. The Committee would remember that the Income Tax was one of the items allocated under the Government of Ireland Bill to Irish local expenditure. It followed, therefore, that if that Bill became law Ireland's share of the tax would be no longer available for Imperial Expenditure, and it would be necessary to impose further taxation in order to make up the amount. The Chancellor of the Exchequer might ask, if objection was taken to the proposal he had put before the Committee, what alternative was suggested. But if he did he would not probably expect an answer, for it was not for a private Member to suggest an alternative in a ease of that kind; but he would say, in the first place, that out of an Expenditure of over £90,000,000 in a time of profound peace probably some economies might be effected which would render it unnecessary to have recourse to the Income Tax. But if he admitted that there were difficulties in the way he could not but ask himself whose fault was it? The Government had created the difficulty for themselves. What are the principal sources of revenue? They were Customs, Excise, Stamps, Laud Tax, House Duty, Income Tax, Post Office and Telegraph Service, Crown Lauds, and Miscellaneous Receipts. The Miscellaneous Receipts, Crown Lands, Post Office and Telegraph Services were more or less automatic, and any increase by alteration of rates or charges was out of the question. In the present depressed state of agriculture no one would suggest any addition to the Land Tax. Then he came to the Death Duties. An alteration in the Death Duties had been promised over and over again to the House, but a re-arrangement of those duties had been postponed year after year. The subject was surrounded by peculiar and exceptional circumstances; but if his right hon. Friend next year did really re-arrange with the Death Duties, the additional taxation would be open to the same objection, because the Death Duties would go to the Irish Local Exchequer. Of course, the same objection applied also to the large revenue derived from Stamps. Then he came to the question of Excise. The Prime Minister had said that if we required any great sum for any national emergency, such as a sum of £20,000,000, it could be obtained by an addition of 2s. 6d. per gallon to the Spirit Duty. He did not know whether the right hon. Gentleman adhered to that statement; but an addition of 10s. per gallon to the duty did not produce more than,£20,000,000, and, therefore, an addition of 2s. 6d. would not produce more than a fourth of the amount stated by the right hon. Gentleman. But the Chancellor of the Exchequer did not agree with the Prime Minister in that respect. The Chancellor of the Exchequer said that the Spirit Revenue was a falling revenue, and, so far from being able to raise £20,000,000 upon spirits, they could not even raise the £1,500,000 which was required. At the close of his speech the right hon. Gentleman went on to say that the knell of indirect taxation had been rung, and that, therefore, it could not be increased. Now, he would like to ask who was it who had rendered any increase of indirect taxation impossible? However it might have come about, it was rather remarkable that they should in this country be asked to rely for their contribution from Ireland entirely on the source of revenue—Customs—which the Chancellor of the Exchequer said was practically dead. The position in which they found themselves was a very difficult one, but whose fault was it? He maintained, and he asked the Committee to say, that they were bound to meet Imperial Expenditure by taxation which would fall fairly upon the Three Kingdoms. He had seen it stated that there was no necessity or justification for his Amendment, because they were dealing only with the question of a year, but the Expenditure they were considering was not a temporary Expenditure, not an Expenditure which would cease with the year; on the contrary, it was an Expenditure which was growing, and, so far from being less, it would probably be larger when they came to another year. If, then, the Expenditure was to be permanent, it ought to be provided for in a permanent manner. The Chancellor of the Exchequer would not, he felt sure, say that he intended to provide for that Expenditure next year by an increase in the Customs Duties, and there was no reason for supposing that the reasons he had given against taking such a course now would be any less cogent then. He therefore submitted to the Committee that if they agreed to this taxation now they imposed permanently the whole burden of the increased Expenditure on the people of Great Britain. The fact was, that the Home Rule Bill, which insidiously professed to be only a Bill for the better government of Ireland, as they saw at the present moment by the present Budget, really did fundamentally affect the finances of the year and deprived the House of freedom in dealing with its own finances. At any rate, the proposal of the right hon. Gentleman was most | unjust to the people of England and Scotland. If the House adopted it Ireland would, under the Home Rule Bill, contribute absolutely nothing to this increased Expenditure. It was no question of 1–15th or 1–17th or l–25th. If they passed the Resolution as it stood, then the increased taxation of the year with which they found themselves face to face would fall entirely upon England, and Ireland would contribute absolutely nothing at all. This was obviously most unjust and most improvident to the people of this country, and he therefore recorded his solemn protest against it. As the Chairman had held that he could not move the Amendment in the exact form in which he had placed it on the Paper, he would move—for the reason that this increase of taxation after next year would fall entirely on the people of England and Scotland, and that there was no reason to believe that it would be otherwise than permanent— to substitute 6d. for 7d. in the Budget Resolution.

Amendment proposed, in line 10, to leave out the word "seven," in order to insert the word "six."—[Sir John Lubbock.)

Question proposed, "That the word 'seven' stand part of the Question."

SIR W. HARCOURT

I desire to interpose here to reply to my right hon. Friend who has raised a special point as to Ireland, and, if possible, to dispose of that point apart from the general discussion of the question. I understand that my right hon. Friend desires to introduce Home Rule finance into the Budget of the year. I suppose we shall have Home Rule introduced into everything. I do not complain of that; but I wish to show that upon this occasion there is no foundation for the introduction of the Home Rule Bill. I will not take the point, which in itself is conclusive, that nothing which can take place under the Home Rule Bill can possibly affect the financial arrangements of this year. That is a pretty obvious and conclusive point, but I will meet my right hon. Friend on the substance of his allegation. He says, "You have an additional expenditure of £1,100,000, and you are raising a tax to which Ireland will contribute nothing." If he will only address his attention to the facts of the case, he will find that there is no foundation for his statement at all. Let me see what the additional expenditure consists of—Education, about £350,000; Postal Charges, £450,000; Inland Revenue Charges, £70,000; leaving for Imperial Charges, apart from those which are local charges, a sum which appears to be £230,000, but which would probably be £157,000, but that is not material to my argument. So that out of that sum of £1,100,000 nearly £900,000 are local and not Imperial Charges. What would happen in that case? So far as those local charges belong to Ireland, Ireland would be the creditor; so far as there is additional charge for education in Ireland, Ireland will defray it, and nothing will fall upon England; Be far as postal charges are increased, Ireland will defray them, and nothing will fall upon England; and so far as the Inland Revenue Charges are concerned, the same conditions arise. What you have really got to deal with is £150,000, Ireland's share in that matter. Ireland's share of that at 4 per cent. would be £5,000, and that is the whole question on which my right hot). Friend is proposing to attack the provisions of the Budget. That is the utmost, out of this £1,100,000, to which, under any circumstances, the contribution of Ireland to the Imperial Exchequer is involved. There is an old maxim, "De minimis non curat lex." No one who has observed the course which has been taken in regard to Ireland will think that the loss of £6,000 upon that account, as compared with the increased Expenditure, from year to year, is any great matter. That is the whole of the argument of my right hon. Friend. The right hon. Gentleman opposite said, "The Home Rule Bill will so tie you up that you could not possibly reduce the Customs Duty." "Why not?" he said; "because it would diminish the contribution of Ireland to the Imperial Exchequer." So it would now if you reduce the Customs. If you reduced the Tea Duty 1d., of course England would contribute less to the Exchequer from the Tea Duty than Ireland. That fallacy which has been doing duty all over the country as to our being tied up by the Home Rule Bill is really the shallowest fallacy I have heard. What is the contribution of Ireland to England now? It is the difference between what you receive from Ireland and what you spend upon Ireland. Supposing you reduce the Customs Duties, the contribution from Ireland is less. It does not make the smallest difference, if you reduce the Customs Duties as regards the Irish contribution, from what would happen if you reduced them under present circumstances, and that is the extent of the grievance the right hon. Gentleman has raised upon this question of the £1,100,000. My right hon. Friend said I might ask him if he did not increase the Income Tax, what tax he would propose, and he very discreetly declined to answer that question. I observed also that the right hon. Gentleman opposite carefully abstained from any suggestion of the kind. He made a very eloquent denunciation of the Income Tax. Well, Sir, it is very easy to make an eloquent denunciation of any tax. The right hon. Gentleman opposite took great credit for his courage in the proposal of various taxes. Some of those proposals were not fortunate, and some did not succeed. Our ancestors, with much smaller resources and smaller population, devoted £28,000,000 to the reduction of the Debt, while we, with our increased resources and population, devote only £25,000,000 to that purpose. I do not, however, want to go back on that controversy. The right hon. Gentleman made a very ingenious and able Party attack on the Budget. I do not complain of that at all. It is his business to do so. It was the part he had to play, and he played it very well. He had a certain card up his sleeve, which I heard of for the first time. ["Oh!"] That may astonish hon. Gentlemen, but they seem to be better acquainted with that card than I am. The right hon. Gentleman said very properly that I was a student of his speeches, but unfortunately those portions of his speeches which dealt with the card have passed from my memory. Well, I will try to speak by the card, though I can only imperfectly gather what this portentous card said. It appears from the representation of the right hon. Gentleman to have demanded the redress of certain inequalities in taxation, and I understand that the right hon. Gentleman admits that those inequalities exist. If so, it proves to have been a true card—I might say a correct card—and, it seems to me, a card which reads a very important lesson and deserves attention, in order that those inequalities may be examined and redressed in future. After the attention which the right hon. Gentleman has bestowed on the card, I will also study it carefully and do what I can to give redress to the inequalities which it sets forth.

MR. GOSCHEN

The right hon. Gentleman does not suggest that I said that there were inequalities? The card itself suggested an injustice.

SIR W. HARCOURT

I hope the right hon. Gentleman will let me have a copy of the card, and I will form my own opinion on it. I certainly gathered from him that he did not dispute the accuracy of the card, and, therefore, if the card is a true card, we ought to correct the evils it sets forth. The right hon. Gentleman also said, with reference to the Income Tax, what was perfectly true—namely, that it falls with considerable weight upon persons to whom it is a serious burden. But, unfortunately, that is true of all taxes. In the controversies which have taken place between the right hon. Gentleman and myself, I have made the statement, which I believe to be absolutely correct, that the tendency of the right hon. Gentleman's finance was to relieve direct taxation at the expense of indirect taxation. I have had the figures worked out as regards the proportion of direct to indirect taxes in various years. In 1886–7, before the right hon. Gentleman's advent to the Treasury, the proportion of indirect taxes was 54.4 per cent., against 45.5 per cent. of direct taxes. But in 1890–1 the figures were:— Indirect taxes, 55.9 per cent., against 44 per cent. of direct taxes. The House will, therefore, see that, in a sensible degree, the right hon. Gentleman had reduced direct taxation in almost exactly the same proportion as he had increased the amount of indirect taxation; and if the proposals which the Government now make with reference to the Income Tax are approved, it is remarkable that we shall have exactly returned to the proportions between direct and indirect taxation which existed before the right hon. Gentleman started, because the figures will be 54.7 per cent. of indirect taxes, against 45.2 per cent. of direct taxes. I referred in my Budget speech on Monday to the fact that the knell of indirect taxation was rung in 1885 by the proposal which the right hon. Member for Bristol (Sir M. Hicks-Beach) then carried for increasing the Income Tax to 8d. The reason then stated—for that change was that the weight of direct taxation was out of all proportion when compared with the great weight of indirect taxation, and if that were true at that time it is still more true in the present position of taxation. That is the reason—the important reason—which has led us to make no proposal for increasing the indirect taxation of the country. We believe that the proportion of indirect taxation to direct taxation is greater when it ought to be loss, and that is a very important consideration in dealing with the relative taxation as it falls on different classes of the community. I do not exactly understand what the right hon. Gentleman meant when he said that the sting of the card was in its tail. Did he mean that he, as well as the right hon. Member for the London University (Sir John Lubbock), would refuse to make provision for the Debt, and is he prepared to take the responsibility for such a refusal? I should imagine that the right hon. Member for the London University is not a man to leave the Debt uncovered, and I should like to know what his ideas on the subject really are. Do those two right hon. Gentlemen refuse to put 1d. of this charge on direct taxation, and, having increased the proportion of indirect taxation compared with direct taxation during the last Parliament, do they desire to continue the same practice and to place the additional burden of the additional expenditure, in the present case, not on direct, but on indirect taxation? That is a question which we are entitled to ask; and if we are to have a Division on the subject, we desire to know whether the increased Expenditure which has led to the deficit is, or is not, to be met by increasing the Income Tax? If it is not, the only conclusion we can come to is that they are prepared to throw the whole weight of this burden on indirect taxation. I think we are entitled to some statement upon this point, and we shall then know where we are and how to proceed.

SIR J. GORST (Cambridge University)

The Chancellor of the Exchequer is a perfect master of financial assertion, but I confess I was rather astonished to hear even him state that my right hon. Friend the late Chancellor of the Exchequer disturbed the proportion of indirect and direct taxation in favour of direct taxation by increasing the amount of indirect taxes and decreasing the amount of direct taxes. So far as my right hon. Friend disturbed the proportion of those two taxes, the effect was exactly the opposite. He imposed Estate Duties, and increased the Succession Duties, which tended to, and had the effect of, increasing direct taxation, and he took 2d. off the Tea Duty, which tended to and had the effect of decreasing indirect taxation. Therefore, as far as the action of my right hon. Friend went, it tended in a directly opposite direction to that which the Chancellor of the Exchequer has just asserted. What did, in fact, take place during the late Parliament was that the produce of indirect taxation grew, while that from direct taxation declined; and to the increase in the one, notwithstanding the reduction in the Tea Duty, and the decrease in the other, notwithstanding the increase in the Succession Duties, is attributable the alteration in the proportions between the two taxes. I am also very surprised at so extremely acute a debater as the Chancellor of the Exchequer misunderstanding the point about the card. Successive Liberal Administrations, as well as successive Conservative Administrations, have continued to levy a uniform tax upon tea and tobacco, which has had the effect of making the poor man pay more than the rich man for tea and tobacco; but these Administrations imposed that uni- form tax on tea and tobacco because it passes the wit of the financial advisers of the Government and of the Inland Revenue Authorities to devise any workable scheme by which an ad valorem duty could with advantage to the State be imposed.

MR. W. E. GLADSTONE

It was tried in vain.

SIR JOHN GORST

As the right hon. Gentleman says, it was tried and tried in vain. It cannot be done. But what happened at the last Election? Certain financial authorities who followed the right hon. Gentleman took upon themselves to tell the electors that the placing of a higher duty on the poor man's tea and tobacco than on the rich man's tea and tobacco was one of the monstrous iniquities of the late Government, and that if they would only displace the late Government and put the right hon. Gentleman opposite and his friends in Office this monstrous iniquity would be forthwith redressed. The point of the case, therefore, is that having displaced the late Government, and having put the present Government in Office, this monstrous injustice, on which hon. Gentlemen opposite enlarged so eloquently to the electorate during the General Election, remains unredressed, and the Prime Minister, the greatest financial authority in the country, tells us its redress has been vainly tried and cannot be carried out. I hope the Committee and people out-of-doors will note the moral of the present discussion, and, next time an attempt is made to impose upon people by these monstrous and unfounded assertions, will remember that the promises and assurances made to them at the last General Election cannot be carried out, and, consequently, will resolve not to be so easily led away the next time such promises are made to them.

*MR. COURTNEY (Cornwall, Bodmin)

said, that his right hon. Friend the Chancellor of the Exchequer complained that the subject of Home Rule had been imported into the Debate. He was afraid that spectre would turn up very often. It was impossible for any person, as it had been impossible for the Chancellor of the Exchequer himself, to keep out of his mind, in the consideration of the present Budget, the proposed financial arrangements for Ireland which were contemplated to come into force next year under Home Rule, and which would dislocate altogether our present financial system. He did not propose to continue the discussion on the card trick. How much use had been made of it at the General Election he did not know. Some hon. Members on the Ministerial side, in whoso favour it was used, seemed disposed now to disavow the card trick. But, however that might be, The Star newspaper, which had a keen eye for electioneering action and facts, said this particular card had done a great deal for the Party now in power. The point on which he wished to insist was that it was a vulgar appeal to the mind of vulgar and ignorant people to take the incidence of one tax by itself and say whether that was or was not unjust. It was perfectly true that the poor man's tea and tobacco were taxed to a greater degree than the rich man's tea and tobacco; but to say, therefore, that the poor man was more heavily taxed than the rich man, passing over a hundred considerations that ought to be taken into account, was simply an appeal to ignorance, and was a most corrupt and improper method of seeking the suffrages of the electors. The man who made the appeal must be equally ignorant himself, or something worse. He rose, however, for the purpose of offering some sympathetic criticism to the Chancellor of the Exchequer, who found himself in a position of considerable difficulty. He rejoiced that his right hon. Friend was able to claim that he was one of the economists. He could remember a time when the economic ardour of his right hon. Friend was not so manifest. He remembered a time when the Treasury was the object of his right hon. Friend's special abhorrence, and when he viewed the economic action of that Department as the fatal machinery which brought to confusion every Government. He had remembrance of a time when his right hon. Friend was scarcely on speaking terms with the representatives of the Treasury, when he was for judicious expenditure and not for judicious retrenchment. It did not happen in his own time. He was not recalling an old personal sorrow. A little experience of the Treasury had had a curious effect upon the present Chancellor of the Exchequer and also upon the noble Lord the Member for South Paddington. Those distinguished Members of the House, each in his turn, were in favour of a generous system of finance. Each seemed to be of opinion that not petty economy, but generous expenditure, would gain the support of the people. Each of them went to the Treasury. The noble Lord sacrificed his Office and almost his career in the strenuous resistance to increased expenditure, and the Chancellor of the Exchequer was another example of conversion brought about by that powerful Office. The irony of the situation was indeed complete. His right hon. Friend now found himself not only a disciple of economy, but also found him proposing an additional 1d. on Income Tax. He remembered his right hon. Friend taking the chair at a public meeting for the abolition of the Income Tax. It happened a good many years ago, he admitted; but he still remembered the strong language in which his right hon. Friend denounced the iniquity of that impost, its interference with trade, its injustice, and many other accusations. All this, he ventured to submit, suggested one lesson in the way of good economy for his right hon. Friend at the head of the Government. It was said that they ought to put into the Exchequer a man of an economical turn of mind. The lesson the experiences of his right hon. Friend taught was that they must do nothing of the kind. On the contrary, if they found a Member of the Government inclined to favour generous expenditure let them put him in the Exchequer and he would soon grow out of that opinion, and would exercise a strong influence over his Colleagues. That was the true way to secure economy and efficiency in the Administration. There was another lesson which might be derived from the Budget speech of the Chancellor of the Exchequer. If they wanted to be really economical and to pervade with a spirit of economy the whole Administration of the country, they had better not indulge in too optimistic a view of the financial condition of the country. There was, he thought, in the speech of his right hon. Friend too optimistic a view of the actual situation. They were face to face with a declining Revenue. They were on the downward grade. Now, a country could go on in prosperity long after the springs of prosperity had themselves become weakened, because it had had in former years a large surplus of savings over expenditure, and the surplus might remain though the prosperity itself was declining. The surplus of income would not go all at once, and it was a delusion to appeal to the circumstance that we were still saving something as a proof of prosperity. The facts to which his right hon. Friend referred as showing that they were still in a good situation were quite consistent with a real apprehension that they were not in a good financial condition. His right hon. Friend at the head of the Government would remember perfectly well how he took occasion in making a Financial Statement, now some 25 years ago, to draw attention to the analysis of our commercial and industrial position as dependent upon the relative ease of working of the coalfields of this country, made about that time by Professor Jevons. There were those who thought that the forecast of Professor Jevons had been discredited by experience [Sir W. HARCOURT: Hear, hear!] His right hon. Friend seemed to be of that opinion, but he had, perhaps, better consult his chief; for he believed the Prime Minister did not share the view that the anticipations of Professor Jevons could be discredited. So far from having been discredited, Professor Jevons' anticipations had been entirely fulfilled. The competition we were meeting with from the rest of the world had had the effect of bringing about the arrest of prosperity which Professor Jevons had predicted, and a falling-off in the increase of our activity in almost mathematical correspondence with his prophecy. That was the situation now. If they looked at the Returns of the Income Tax Assessments, to which the Chancellor of the Exchequer had paid the greatest attention, it would be seen that they did not exhibit a growth in industrial, prosperity, but rather a decline. That was admitted so far as Schedule A was concerned. It was admitted to be still more manifest with respect to the assessments under Schedule B. "But," said the Chancellor of the Exchequer, "Schedule D shows an increase"; but over one-half of its assessment dealt with incomes from property rather than from incomes resulting from industry and from professional employment. It included receipts from mines, canals, railways, and Colonial investments, and other sources which, in fact, arose from accumulated savings. If they looked to the portion of Schedule D which was strictly confined to the assessment of trading and professional incomes, they would not find an increase there, or, if they found any increase at all, it would be an extremely small one, oven where it was found it was a declining increase. The situation was a serious one, inasmuch as they were face to face with increasing expenditure, with the springs of industry, which, if they were not so far weakened as to deprive the country of surpluses, were so far weakened as to give declining surpluses. Therefore, it had become necessary that the strictest attention should be paid to economy in Expenditure. The apparent increase in our Expenditure which had been going on in recent years did not represent the actual increase. Whatever they might find to be the cause of the phenomenon—and as to that a great deal could be said on both sides—everyone admitted that during the last 20 years prices had fallen from 20 to 30 per cent., so that, so far as the expenditure of the country upon raw material and purchase of stores for the different Services was concerned, it implied a larger expenditure. His right hon. Friend had been casting about to meet a still greater deficiency next year, and he intimated that if it had not been for considerations of time he would have preferred an augmentation of the Death Duties to an augmentation of the Income Tax. He could not altogether agree with that proposition, and would put in a little demurrer or caveat to the assumption that that augmentation was to be preferred. Some financiers had said that the great charm of indirect taxation was that it was imposed without being recognised—that a good deal of money could be obtained without the taxpayer knowing that he was paying. But he did not suppose anyone on the Front Ministerial Bench agreed with that cynical maxim. They would consider it a drawback in the case of indirect taxation if the taxpayer did not appreciate the fact that he was making a contribution towards the Expenditure of the country. The same argument applied—and applied with greater force—in the case of the Death Duty. Who did pay the Death Duty? Some people said the man who was dead. If that were so, he, at least, did not appreciate the fact that it was being paid. A man could have no motive for economy in knowing that at his death such and such a sum would be taken from his estate. Nor did those who received money subject to the Succession Duties appreciate the fact that they were suffering or being mulcted or contributing to the Expenditure of the country. The tax was not viewed with that acute personal apprehension with which other forms of direct taxation were regarded. It was, in fact, an abstraction from the capital of the country, and the survivor did not feel under any obligation to make it up out of his income by diminishing his expenditure. On the ground that the Death Duties were taken out of the capital of the country for current Expenditure, there was much to be said against a. great enlargement of the Revenue from those duties as compared with the Income Tax. If the appreciation of what he was called upon to pay led the taxpayer to exercise an influence over the Expenditure of the country, then let that expenditure be brought home to him as directly as possible. If they wished to evade the knowledge and the consequent influence of the taxpayer, then they might resort to indirect taxation. They received a not altogether ridiculous sum at present from the Death Duties. They levied from them £8,000,000, a fair proportion of the Revenue of the country. He had risen for the purpose of pointing out that the present situation was one which required very grave and serious attention, and that they ought not to indulge in any optimistic expectations. It was pleasant for hon. Members of the House who did not wish to see a heavy increase of taxation to hear the optimistic views of the Chancellor of the Exchequer; and he (Mr. Courtney) made these observations by way of demurrer against the view that the policy of increasing the Death Duties was one which should receive unreserved approval. He would add one word in favour of keeping up a due proportion of indirect taxation. He could not accept the policy of a free breakfast table, unless they had some system of direct taxation, which would be brought home to the less wealthy taxpayers. The Prime Minister had on one occasion spoken of his polygamous attachment to the two handmaids — direct and indirect taxation.

MR. W. E. GLADSTONE

Bigamous union.

MR. COURTNEY

said, however immoral might be the suggestion involved in this description, he was glad to know that the right hon. Gentleman had an abiding respect for these two handmaids.

MR. W. E. GLADSTONE

Hear, hear!

*MR. COURTNEY

said, that indirect taxation must not be neglected, though direct taxation might probably be, to a large extent, our mainstay in the future. He protested against the deduction drawn from the action of the right hon. Baronet the Member for Bristol (Sir M. Hicks-Beach), that any chance of modifying our system of indirect taxation in the future was altogether lost. The scheme of the Budget of 1885 was a fair and honest attempt to secure a due contribution to the Expenditure of the country from both streams of taxation, and it was defeated by a combination which could not be looked back upon with pleasure, and the remembrance of which was, perhaps, not agreeable to either Party. But he demurred to the view of the Chancellor of the Exchequer that the dictum laid down by his predecessor was something that should guide his conduct in the future. It was one of the greatest tasks which a Chancellor of the Exchequer could undertake that he should be able to devise some automatic method of levying direct and indirect taxation together, so that there should be the least disturbance of trade.

SIR W. HARCOURT

said, he had not expressed any opinion against indirect taxation; but he had quoted the right hon. Gentleman to show that it did not lie in the mouth of the Party opposite to complain of direct taxation.

MR. COURTNEY

was glad to have elicited that explanation, and to learn that the right hon. Gentleman considered he had both streams of taxation in reserve.

SIR W. HARCOURT

Especially with regard to liquor.

*MR. COURTNEY

said, he did not overlook the liquor revenue, but the Chancellor of the Exchequer had said that was declining. The economic future of this country was a matter of the gravest character, especially as with a declining trade and Revenue they had to meet increased Expenditure. English literature had recently been enriched by a volume, the offering of an intellect nurtured at Oxford, but ripened amid Southern Seas. It depicted the superior races confined in the future to the Temperate Zones if the Mongolians did not oust them from possession; with growing hindrances to the international migration of labour; with an ever enlarging State organisation of industry. Poetic inspiration, personal ambition, individual distinction would dwindle and disappear. The picture was not exhilarating, but it was qualified by the promise of material comfort and material prosperity. But that qualification might be offered at the Antipodes with their large reserves of unoccupied and undeveloped resources. What was the prospect here, with a teeming population ever pressing on the margin of existence? The difficulties of the future at home were such that our present experiences must seem trivial. It was looking forward to the future, and seeing how the prophecies to which he referred at the commencement of his observations had practically been reaching their fulfilment, and seeing also how, with our crowded population, we should have tremendous problems to grapple with hereafter, that he strenuously urged on all those who had anything to do with the finances of the country the necessity of economy, and of bringing home to every taxpayer the effects of that Expenditure by making the organisation in respect to taxation such as to check further drains on our resources, which at present were threatened with very serious and growing demands.

MR. KNATCHBULL-HUGESSEN (Kent, Faversham)

said, that, as he represented a constituency in the main agricultural, he should like to be allowed to say a few words on this financial question. They would be few words, because he felt he should not be justified in taking up the time of the House with the expression of views which, though he believed they were entertained more widely than was generally supposed, did not very often find open expression. However that might be, he conceived it to be the duty of every agricultural Member sitting on the Opposition side of the House to take this opportunity—and, indeed, every opportunity that might offer itself—of bringing before the notice of the agriculturists of the country, and more especially of the agricultural labourers, the way in which for the second time they had been outwitted, juggled, and deceived by the promises of the Party opposite. He could not help a feeling something akin to pity for hon. Members opposite when he saw the humiliation they were exposed to day by day. He would commend to them the study of their own extra-Parliamentary speeches and election addresses—he meant, of course, those of them who had addressed almost exclusively agricultural constituencies. He had no hesitation in saying that at the last General Election dozens of seats were won by Gladstonian Liberals because they were able to make the labourers believe in numberless unscrupulous misrepresentations directed against the Conservative Party, and in abundant promises as to what the Gladstonian Liberals would do if only they were returned to power. Of these misrepresentations, although he suffered through them as much—perhaps more— than any other hon. Member of the House, he wished to say nothing now. He preferred to let bygones be bygones. But as to the promises made, how had they been redeemed? How had the Government dealt with the interests of agriculture? Let the Budget answer that question. They had, in time of peace, imposed a tax, or increased a tax, which they knew would prove a special hardship on the agricultural class, which, unless the Government's own utterances were dishonest, they professed to believe more deserving of relief than any other. It was said that there was to be an inquiry—an inquiry into what? Into something which was thoroughly well known. Surely the Government did not think that this device would succeed—and that they would he able to cajole the constituencies a second time. He should be out of Order in saying more on this matter than that he could not think that the inquiry was seriously intended. Had they no means of meeting this deficit of £1,500,000 than by the imposition of 1d. on the Income Tax? Yes; they had a remedy at their hand. They had a remedy at their doors which would not only meet the deficit, but provide them with a surplus, and not only revive trade and agriculture, but provide employment for thousands of working men. He believed that a complete revision of our fiscal system in the direction of imposing duties upon foreign imports was the only way in which our trade and agriculture could be rescued from the ruin that was impending. The opinions of the civilised world, as evidenced by their action, were, with the exception of England, on the side of those who believed that the protection of their own industries and their own labour was the first duty of those who loved their country. Protection would come in this country, and he believed that the statesman who took up the question would find an amount of support and sympathy from the country which would astonish both sides of the House. As one of the last of the old Tories, he had made his protest against our fiscal system, and pointed out a remedy to meet the deficit which would be in every way efficacious, and the most effectual that could be devised. He should like to give the right hon. Gentleman the Chancellor of the Exchequer an opportunity of making a "petty economy" which he might do by making the Income Tax year run from May 6th to May 6th, instead of from April 6th to April 6th. It was clear that the month now current—that was from 6th April last—the collection of the extra 1d. would yield nearly £200,000. The normal monthly value of the 1d. was £150,000, and, May 1st being a specially heavy pay day, the amount would be very little short of that amount. All the payments for dividends, &c. falling due the 1st May wore already made out, and ready to be posted on Saturday, and it would be physically impossible to alter the amount. As an instance, he might say that the Bank of England had about 31,000 distinct warrants ready for issue, and that was only one instance out of many. All that could be done by the issuing houses or those persons charged with the collection of the tax was to refer the Government to the parties owning the dividends, and it would be the duty of the Government to apply to each of these persons, in many cases for a few pence only. There could be no doubt but that the amount thus collected would be very short of that collected through the ordinary channels; and, by making the alteration of date he proposed, a saving probably of £20,000 or £30,000 to the Revenue would be effected. He recommended this to the consideration of the right hon. Gentleman as a "petty economy "worthy of his consideration.

*MR. BARTLEY (Islington, N.)

did not wish to revive any point raised about the elections, although he himself was a strong sufferer in some of the cards that were issued. He thought the discussion had been useful as showing that really greater care ought to be taken in the use of language, so as to guard against reckless statements, possibly on both sides. With regard to what the Chancellor of the Exchequer had said respecting the revision of direct and indirect taxation, he would ask the right hon. Gentleman if he would be willing to lay on the Table of the House the document he had read from? He agreed there should be a decided tendency to increase direct rather than indirect taxation, and, at the same time, to keep those two substantial forms of income. What he desired to say a word or two about was the Income Tax. The Budget was the old story, directly a Liberal Government got into power, of increasing the Income Tax. He had on six or seven occasions, in different Sessions, directed attention to the system of taxation by the Income Tax, and the effect it had upon the smaller payers. He ventured to think that if Radical Members realised that the great bulk of the payers of the Income Tax were small people, they would be really more concerned about them than they were at present. He believed the time would come when the case of the small payers of the Income Tax would be regarded with the greatest solicitation by the Radical Party, because they were rapidly becoming one of the largest elements of the Constitution. In Schedule D, which embraced all the industries of this country except agriculture, and a, great proportion of the real workers of this country, he found that of those who paid Income Tax exactly half, or 225,000 persons, paid on incomes of under £200 a year. In addition to that, l–4th more, or 106,000 persons, paid Income Tax upon incomes of from £200 to £300 a year. Therefore, in Schedule D they got the startling fact that half the payers of Income Tax paid upon less than £200, and a quarter of the whole paid upon sums of from £200 to £300 a year. Under the present system a great many even of the working classes wore forced to pay Income Tax, and be had received many letters from members of the working classes on this point. The lower stratum of the Income Tax payers had increased of late years to an enormous extent. The Chancellor of the Exche- quer would doubtless say this was an indication of the growing prosperity of the country. No doubt this increase was an indication of the growing prosperity of the country; but it was important, at the same time, to see not only how this class was growing, but how the Income Tax affected them. In 1874 there were 39,000 persons paying Income Tax under Schedule D on incomes from £200 to £300 a year. In 1889 the number had risen to 106,000. That showed the enormous increase in the number of the small persons who were now brought within the meshes of the Income Tax, and who were going to be specially taxed by this Budget. This Budget affected persons who were not the drones of society, but those who were promoting the industry and the wealth of the country. The number of persons earning from £500 to £1,000 a year was almost stationary; and the number of persons who paid Income Tax on £1,000 and upwards had absolutely decreased during the last few years. This was a healthy symptom in every respect, because the fact showed that the distribution of profits had widely extended. But an enormous portion of the Budget deficiency was now being placed on the shoulders of the struggling classes, many of whom were the best citizens of the State, deriving nothing from the increased expenditure. A difference should be made in the tax as it affected those who were earning their livelihood and those who derived their incomes from spontaneous sources or from capital. In increasing the tax, therefore, the Chancellor of the Exchequer ought to have taken advantage of the opportunity to make some difference between the taxation of those who had to work for their living, especially in the lower grades, and those who had not. A persons who possessed £200 a year in Consols paid the same amount of Income Tax as the man who had to earn that amount of money by the sweat of his brow. The amount of the rebate was the same, but the two individuals were in a totally different position. The man with his income in Consols could, if he wished, spend every 1d. of it on reasonable expenditure; but the man who had to labour for the same amount must devote a considerable portion of his income to life insurance, allowance for sickness, for being accidentally thrown out of work, and for other contingencies. These things imposed an absolute tax of at least 3s. in the £1, which the prudent man was bound to provide for, but which the man who had an income spontaneously from sources of capital need not do. It seemed to him that the Chancellor of the Exchequer, in increasing the amount of the Income Tax, was inflicting a great hardship upon this large class of the community; and he (Mr. Bartley) entered his protest against the action of the right hon. Gentleman in not taking into consideration the effect on the industrial incomes by this increase. Instead of this class of people receiving consideration in a period when they needed it, an additional hardship had been put upon them. He thought they ought to do away with the anomaly arising from two classes of income; and those persons who enjoyed a spontaneous income from capital should not be allowed to pay exactly the same amount as those whose incomes were dependent on their labours, and which in most cases ceased on their death.

*MR. GOSCHEN

The Chancellor of the Exchequer has appealed to us to say whether we should vote against the Resolution. I know that it is rarely that an Opposition takes the responsibility of framing a counter Budget. That is a demand sometimes put to an Opposition, but which, I think, is never complied with, and I do not propose that we should comply with it on the present occasion. Clearly we could not vote for a deficit, and, therefore, I should recommend my right hon. Friend the Member for the London University not to press his Motion to a Division. Perhaps the right hon. Gentleman will allow me to mention a point with regard to direct and indirect taxation. The right hon. Gentleman includes in his figures relating to direct taxation the 2d. which was put on specially for war purposes in the year 1885. I looked upon that 2d. as an item which ought certainly to be taken off, and it was taken off at the earliest opportunity. Otherwise my movement was in the direction of reducing indirect taxation and increasing direct taxation. I reduced the Tea Duties, portion of the Tobacco Duty, and at the same time I put on the Estate Duty and increased the Succession Duty. Therefore, so far as my personal action is concerned, I certainly did nothing to relieve direct taxation. All my movements were the other way. The country, if I may use the phrase, drank so merrily during one or two of these years that, notwithstanding my reductions, they forced an increased receipt from indirect taxation upon the Chancellor of the Exchequer. I cannot be held responsible for that increase in the proportion of the indirect taxation which came from such a source. I think it also to be borne in mind, though the right hon. Gentleman cannot technically be bound to do so, that the large sum paid towards free education went exactly to the same class as are most benefited by the reduction of indirect taxation. The working classes gained more through free education than they would have gained if the money had been spent on the abolition of the Tea Duties. The right hon. Gentleman said that we had used the argument that the Government would be hampered as regards the Customs Duties by the Irish proposals, and he said that he thought they would not be hampered any more than they are now. I can put two cases which would show you where you would be hampered. Suppose we were to propose to abolish the whole of the Tea Duties. That would be a loss of £3,000,000; and the Irish share would be £353,000. But now we could recoup ourselves for a great portion of that loss, and probably it would be necessary to do so by a reorganisation of taxation in different directions. Supposing, for the sake of argument, that the whole of this amount was put on various forms of stamp transactions and Death Duties, the proportion of Ireland to that would be l–18th. We could recoup by that £166,000, and our loss then would be £187,000, whereas now we should have to bear the whole loss of £353,000. In round figures there would be a loss of £200,000 out of the small contribution which Ireland would pay. Again, suppose you wore to propose to abolish the Tea Duty and recoup yourselves by an increase in the Excise, theoretically you could get back a portion of that from Ireland as Ireland's share; but you would be taxing a particular commodity to which the Irish would be most specially opposed. You would have to get your extra money through the goodwill of the Irish Executive, and I think you would find that such an operation, though comparatively easy now, would, when the relations of the two countries as regards taxation are entirely different, become a more difficult operation.

*SIR JOHN LUBBOCK

said, that the Chancellor of the Exchequer, in his reply, did not meet the substance of his argument, but picked out certain items, which he said were particularly British; but they must consider, not particular sums, but the Expenditure as a whole. The right hon. Gentleman wont on to argue that if they reduced the Customs they should relieve Great Britain and Ireland in proportion even under the Homo Rule Bill. But under that Bill, if the Customs were abolished, Great Britain would still contribute many millions to, in fact, the whole of the Imperial Expenditure, while Ireland would then contribute nothing. However, he was obliged to the Committee for allowing him to bring the matter before them. In response to the appeal of the right hon. Gentleman the late Chancellor of the Exchequer he would withdraw his Amendment, and not put the Committee to the trouble of a Division.

Amendment, by leave, withdrawn.

*SIR J. DORINGTON (Gloucester, Tewkesbury)

moved the following Amendment, to be added at the end of the Chancellor of the Exchequer's Resolution:— Provided that in the case of Lands, Tenements, and Hereditaments chargeable with Income Tax under Schedules A and B of the said Act. the annual value on which such Income Tax is assessed shall be the net and not the gross value thereof. He said, in connection with the proposed increase of 1d. to the Income Tax, he wished to call special attention to the grievances under which the agricultural interest laboured at the present time. The great depression in agriculture was shown by the fact that 1,165,000 acres had passed out of cultivation since the year 1882. They had also the statement of the Chancellor of the Exchequer that the yield of 1d. in the Income Tax under Schedule A had fallen from £217,000 down to £191,000. These two facts alone showed the extent of the agricultural suffering, and yet this was the occasion taken to impose an extra 1d. In- come Tax upon that interest. He should like the Chancellor of the Exchequer to follow a precedent he created on Monday night, when he proposed to remit a single tax upon certain stamps on the ground that it was a falling and unproductive tax. The agricultural industry was a falling industry, and he should, therefore, ask the right hon. Gentleman to apply the same argument to that interest. He pointed out that the Income Tax under Schedules A and 15 was levied upon the gross value of the incomes; but in the ease of the agriculturists they never received that figure from the land. In one of his remarkable speeches as far back as 1853 the present Prime Minister argued this question very thoroughly and made great admissions. The right hon. Gentleman, who at that time was the Chancellor of the Exchequer, said in the first place that— Land pays not on an income assessed by the possessors, but by a standard independent of them, without the smallest deduction in respect of the difference between gross and net income. The right hon. Gentleman in that speech went on to say— It is obvious that in order to estimate how much land and houses really pay we must deduct the whole difference between gross and net income. What are the deductions which ought to be allowed for this difference? If we had to construct a new scheme, what should we be called on, and I must say what should we in justice be compelled, to allow on this score?', Then the right hon. Gentleman proceeded to lay down the deductions which ought to be allowed for, such as repairs, insurance, law charges, agency, and management, estimating that 16 per cent. should be allowed in respect of these matters. At the present period the agriculturists of this country were labouring under great difficulties. At the period to which he referred, the right hon. Gentleman the present Premier apparently satisfied his own mind that the claim of the agricultural interest was just equitable; but he refused redress on the ground that incomes derived from land were stable, while other incomes were precarious. At the present time could anyone pretend that incomes derived from land were other than precarious? The agricultural interest could certainly say that it was by no means lightly taxed in other respects, and that the burdens on land were exces- sive. It was a national question, for the nation itself had a vast interest in making this great industry prosperous, and seeing that it was not. unduly oppressed by taxation. The subventions in aid of local rates seemed to be thought specially favourable to land; but from the Return which had been presented to that House by the President of the Local Government Board (Mr. H. H. Fowler) it would be seen that no special advantage was given to country districts. In order to find what the real charge was the rateable value per head must be taken, and the amount paid in rates on that basis must be calculated; and while in country districts this was 14s. 7d., in urban districts it was 15s. 8d., in boroughs 18s., and in London 37s. 6d. He gave up the case with regard to London; but why should rural districts be charged 14s. 7d. as compared with 15s. 8d. for urban districts? When they considered for what purposes rates were required they would see that the people in rural districts paid very much in excess of what they required, and that the rates were really taxes upon production, and not for services received. He thought, therefore, that the rural districts were entitled to some remission, and that the Income Tax should be charged on the rateable value instead of on the gross. If the Chancellor of the Exchequer would allow the tax to be levied in that way he would confer a great boon upon the agricultural interest. He begged to move the Amendment which stood in his name.

Amendment proposed, At the end of the Question, to add the words "Provided that in the case of Lands, Tenements, and Hereditaments chargeable with Income Tax under Schedules A and B of the said Act, the annual value on which such Income Tax is assessed shall be the net and not. the gross value thereof."—(Sir John Dorington.)

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

SIR W. HARCOURT

I can assure the hon. Baronet that it is not from any want of sympathy with the agricultural interest that I am obliged to say that I am not able to assent to the Amendment. There can be no doubt that there is a great distinction as to the principle on which the tax is levied under Schedule A and the other Schedules of the Bill, But there is an equal anomaly on the other side with regard to the Death Duties. I am against the anomaly in both cases, and should like to see it in both cases redressed. It is impossible, however, to leave the anomaly with regard to the Death Duties remaining, and to get rid of that which relates to the Income Tax. The hon. Baronet refers to the Debates in 1853 and to the great speech of my right hon. Friend (Mr. W. E. Gladstone) with respect to differential rates according to the character of the income. The answer to the hon. Baronet is that all these questions were raised in 1852, when Mr. Disraeli proposed to establish differential rates between landed income and industrial income. These proposals were answered by the speech of the present Prime Minister; and the remarkable circumstance is that, since then, no responsible Government and no responsible Opposition has endeavoured to establish that distinction, so completely was the matter settled by the speech of my right hon. Friend in 1853 and by the Committee which sat in 1852. What I would point out to the hon. Baronet is that his claim arises from the distress of the agricultural interest; but, if his Amendment were carried, it would apply to the whole of Schedule A, part of which relates to house property. The proposal of the hon. Baronet is, therefore, not a reasonable one. The hon. Baronet also proposes to include Schedule B. But no tenant farmer under Schedule need pay at all upon the system of levying the tax of which the hon. Baronet complains—he need not pay except upon the actual profits he has made. The hon. Baronet's Amendment is erroneous in two respects. Schedule A covers much more than his argument applies to, and under Schedule B it has no application at all. The Department of Agriculture has issued to the farmers a Circular instructing them as to their position under Schedule B, and how to relieve themselves from oppressive treatment by transferring themselves to Schedule D. If they do that, and if their profits have really dwindled to the vanishing point, they will pay nothing at all in Income Tax. I am very anxious, I can assure the hon. Baronet, to deal with the anomalies existing now in favour of real property under the Death Duties; but that cannot be treated separately from the anomaly under Schedule A of the Income Tax. If this Motion were carried the proposals to cover the deficit would be practically non-effective. I perfectly admit all the arguments in regard to the anomalies; but I hope the hon. Baronet will consider the impossibility of dealing with them now and in the manner he would be disposed to suggest.

*COLONEL E. HUGHES (Woolwich)

said, he only rose to express a hope that the present or some other Government would remedy the anomaly by which one kind of income paid 9d. in the £1 and another kind of income only 7d., for 7d. on £20 gross rating of a house was equal to 9d. on £15 the net rating, which latter was the real income. Many Prime Ministers had promised redress, but nothing had been done. He had expected redress in this matter from the late Government, but it did not come; and he felt that any Government, even a Radical one, would confer a boon by applying a remedy for the anomaly alluded to.

MR. H. R. FARQUHARSON (Dorset, W.)

said, he was astonished at the coolness with which the Chancellor of the Exchequer had made his statement opposing the suggestion contained in the Amendment. The right hon. Gentleman knew how severely agriculture was suffering, and yet, as an answer to a suggestion for practical relief, he referred hon. Members to the Death Duties. Agriculturists wanted immediate relief. There were mistakes in the wording of the Amendment, but they could easily be remedied. Under the Income Tax Act it was laid down that in Schedule A taxes should be levied on the annual value, and that in Schedule D taxes should be levied on actual profits. If the Act were amended so as to substitute "profits" for "value" under Schedule A the remedy which was desired would be given. It might also be necessary to alter the Exemption Clauses to make sure that payment was made only on net gains. If under Schedule D it was permissible to deduct the cost of carrying on business, why was it not so under Schedule A also? The expenses of managing any estate were very great, and they were increasing rather than diminishing. Landowners had to spend large sums in repairs and improvements, and it was a great hard- ship that they had to pay Income Tax on all this expenditure. It was not to he expected that in these circumstances they would he disposed to lay out more money on their estates than could possibly be helped; and it should be considered that for heavy taxation and pinching the expenditure bad dwelling-houses for the labourers would result, and that would be another cause of the labourers flocking to the towns. Should the Chancellor of the Exchequer still hold Office next year, he hoped he would make up his mind do something for the agricultural interest, if nothing could be done at once. He had endeavoured to point out to him the necessities of the situation, and to show him that great injustice was being done, and he looked to him to bear the agricultural interest in mind when he next had to deal with financial proposals.

MR. JEFFREYS (Hants, Basingstoke)

said, it was most unfair that landowners should have to pay Income Tax on the gross amount of the rental, when they ought to pay, as other commercial people did, on the net amount. It was particularly hard on the landowners, because the charges which they had to pay before any of the rental went into their own pockets were not taken into account. If those were properly considered they would work out at something like 25 or 30 per cent. off the gross, because it must be remembered there was the collection of the rent, and repairs which were necessary. If these remissions from the gross amount were allowed, it would be to the great benefit of the collection of the taxes throughout the country, because there was no doubt that in the country they considered the Income Tax was collected in a very arbitrary way. It was not taken upon the profits at all. The Chancellor of the Exchequer had reminded the Committee that farmers, if they chose, might be assesed under Schedule D. That was technically true, but practically very very few farmers could take advantage of the right, as the large majority of them did not keep accounts and had no books to produce, and, in order to be assessed under Schedule D, they must be prepared with documentary evidence of that kind. A statement had been issued to show that the rates had fallen very considerably in the country in recent times. The fall, as everybody knew, was due to the better administration of the Poor Law. But the ratepayers in the country were hardly treated as compared with the ratepayers in the towns. In a town, a shopkeeper paid rates in respect of the house, perhaps a small one, in which he conducted his business; a jeweller, for example, with a capital of £10,000 or £20,000, paid in that way. The cultivator of land in the country, on the other hand, was assessed in respect of all the acres under his control, so that he, who possessed probably a very much smaller capital than the jeweller, had to pay rates in respect of a very much larger area. The rates paid by the small farmers were, in fact, a great deal higher than the rates paid by the shopkeepers in towns. Another matter affecting landowners was the amount which they had now to pay for stamps on leases. When a farm lease was made, the rent, of course, was mentioned in it; but the rent now included the tithe as well as the amount to be given for the farm itself, and the unfortunate landlord had to pay Stamp Duty on the whole amount; in other words, he paid Stamp Duty in respect of the tithe in addition to Stamp Duty in respect of the rent. The land was undoubtedly unfairly taxed. In former days the land could bear the taxation levied upon it; but it could not do so now, as was proved by the fact that in many counties the land was rapidly going out of cultivation, and even the small remissions they now asked for would be a great relief to agriculturists.

MR. MUNTZ (Warwickshire, Tamworth)

said, he agreed with the remarks which had been made with regard to the hardship of landlords being called upon to pay Income Tax on gross rental. He had been convinced in his own mind for some years—and he had stated it in public—that the Exchequer received many hundreds of thousands per annum which they might fairly say they were not entitled to. Under the present system farmers and landlords felt it to he a gross injustice; but the class which felt the injustice the most was that of the yeoman farmer, who farmed his own land and paid upon a presumed rental and upon a presumed income. That man had, perhaps, for many years earned no income what- ever; yet his income was taxed as though he was earning the same income as he was 15 or 20 years ago. They naturally all looked upon this as a great hardship. No class in the country would appreciate the importance of altering the system of collecting the income from land more than the owners and occupiers and cultivators of their own land. He accordingly appealed earnestly to the Chancellor of the Exchequer to do what he could 1o relieve the land, which, at the present moment, was suffering under the greatest difficulties. The agricultural interest was undoubtedly in a state of complete ruin. If something were done by the Government to relieve that interest they would be conferring a benefit upon the country generally.

*MR. FREEMAN-MITFORD (Warwick, Stratford)

said, the Income Tax was, perhaps, the fairest tax that could possibly be raised by way of increasing the Revenue of the country; but if they were to have an Income Tax, let it be raised upon what was really income. An agricultural income might be defined as something which did not come in. On the other hand, the outgoings were like the poor—they were always with them. He ventured to think that at the present moment landowners were doing everything in their power to relieve the distress which prevailed amongst farmers. Some consideration, therefore, should be shown to them. It appeared to him that the present system was a monstrous injustice. They had a right to appeal to the Government to do something for them. The present condition of farmers was such that they could not afford to pay Income Tax. In fact, they were not making an income. On the contrary, many of them were actually working their farms at a loss. To call upon these men to pay Income Tax at the present moment was asking them to do that which they positively could not do. If they attempted to claim exemption from the Income Tax by appealing to be put on Schedule D, it was really trying to do that which was impossible, because, although a man might be an excellent farmer, he was not for that reason an accountant. As a matter of fact, farmers did not keep accounts. He personally had a very large experience of the agricultural industry in his own part of the country, and he could safely say it would be altogether an exceptional thing to find the farmer keep such accounts as would satisfy the Income Tax Commissioners, when appealed to, to relieve a farmer from Schedule B and put him on Schedule D. It was impossible for the farmer to keep such accounts. His trade was not like the ordinary trade of the country. It was altogether peculiar. He ventured to think it would be a very difficult matter indeed for the farmer to keep such books as wore kept by ordinary tradesmen in the country. It was on that account that he hoped the Government would, in their mercy, think a little of the agricultural interest. They never stood more in need of consideration than at the present moment, and the Government might rely upon it that they would earn the gratitude of all classes interested in agriculture if they would give the matter their serious consideration. From no class would they earn greater gratitude than from the agricultural labourers, whose well-being was dependent upon the well-being not only of farmers, but also of the landlords, who did their best to find labour for them when labour was scarce in the winter time and when they were sorely in need of work. Alas, however, now the efforts of the landlords were paralysed and the efforts of the farmers were paralysed, and the agricultural labourer was driven into the towns to swell the distress which already prevailed there.

*MR. J. G. LAWSON (York, N.R., Thirsk)

said, he desired to say a few words in corroboration of what the hon. Member for Warwickshire had said. He had watched this question for some years, and he thought he could show that although the sum received under Schedule 15 was a small sum and a decreasing sum, yet it was a sum which included a large amount, which ought never to find its way into the Exchequer at all. The total sum collected under Schedule B in the year 1891–2 was only £230,000; but he doubted if the Government would be able to collect so much under that Schedule during the present year. Under the Act of 1887 farmers had the option of being assessed under Schedule D as traders. In the year 1887 160 farmers availed themselves of the option, and, instead of paying on £22,000, they paid on only £2,500; and in a more recent case, last year, 116 farmers were assessed as traders, and paid on £6,826 instead of on £55,900 These were picked men among the farming class who had books to show, and that showed that they were only realising one-eighth of the assessed profit of the land they cultivated. Therefore, the receipts under Schedule B should not he £230,000, but £30,000. The first moral of this was that the farmers of the land were overtaxed, and it was the duty of the Chancellor of the Exchequer to relieve them. But he knew that landowners were treated with indifference by the Government. They were an oppressed and a proscribed race. They belonged to the educated class, and consequently they could expect little sympathy at the hands of hon. Members on the Ministerial side. They had to pay a larger share of Income Tax—a War Tax—than was just, and at a time, too, when we were not at war with any Power, nor likely to be. The increased Expenditure, they were told, was in respect of Education and further expenditure upon the Postal Service. The farmers appreciated the advantages of education, but they certainly did not call for it, because it deprived them of cheap labour. As to increased expenditure on the Post Office the farmers did not ask for that, because postal facilities in the way of the Parcel Post enabled fresh supplies to be brought into a rising market, and they had to pay for advantages to other classes of the community. The Chancellor of the Exchequer admitted that Schedule B had decreased in value from £48,000 to £36,000 per penny, and it was also the fact that in Schedule A (which included houses and lands) the agricultural land had fallen from £217,000 to £191,000 to each penny of the tax. It was no satisfaction to the farmers to find that they were becoming poorer while the other classes wore growing richer every year. He admitted that the man who farmed his own laud had an advantage; he could claim an abatement if he could show a loss on rent and on profits. The farmer could also get an abatement, but not so the landlord, whose rent, through abatement to the tenants, rent charges, and repairs, was considerably reduced from its assessed value. Those were matters which the Chancellor of the Exchequer should take into his consideration with a view to finding a remedy.

MR. CHAPLIN (Lincolnshire, Sleaford)

I am very glad that my hon. Friend has raised this question, and I am delighted also to find that the landed interest has so admirable a champion as my hon. Friend who has just sat down has proved himself to be. I am afraid this is likely to be one of the very few opportunities, if not the only one, we shall have during the present Session of discussing the agricultural situation. That situation, which certainly was bad enough at the commencement of the Session, has undoubtedly not in any way improved since. The Chancellor of the Exchequer assumed—and I think rightly—that this question was raised on the ground of agricultural depression. I am informed that there is a very general and widespread feeling on the part of the agricultural community of something like bitter resentment at the way in with they consider their interests have been neglected. No class of people in the country know as well as they do how urgent is the ease, which is not allowed to receive any portion, or which is allowed to receive hardly any portion, of the time at the disposal of the Government. It is no answer to the speech of my hon. Friend (Sir J. Dorington) to point to anomalies of the Death Duties, and to the anomalies of assessing the Income Tax on the gross instead of upon the net, and to say that these anomalies would be dealt with when there is time. The Government do not, I think, adequately realise that what we really want is something in the nature, if possible, of some relief. Nor is it sufficient for the Chancellor of the Exchequer to point to the fact that in Schedule A are included houses as well as land. The right hon. Gentleman acknowledged that it was perfectly true, as was pointed out in 1853, that there was a serious inequality between the cases of land and trade. I think it has been pointed out that the inequality amounts to as much as this— that a 7d. Income Tax is really equal to a 9d. Income Tax as far as laud is concerned. If that was the case in 1853, the burden is infinitely heavier now. My hon. Friend the Member for Tewkesbury (Sir J. Dorington) pointed out that on examining the deductions it was found necessary to make in order to arrive at the difference between the gross and the not, the first item taken into consideration was the necessary outgoings, such as those for repairs. In 1853 16 per cent. was allowed for these outgoings, and I am confident that a much larger sum ought to be made to-day; for, while it is undoubtedly the case that rentals throughout England in almost all cases have diminished, the outgoings remain the same, and in a great number of cases they have been considerably increased. That being so, it was that the real burden of the Income Tax on land at the present is greatly heavier than the estimate made by the right hon. Gentleman many years ago. The Chancellor of the Exchequer laid it down in his speech only the other night that it was financially unsound to raise the rate of duties on articles the revenue of which has notoriously increased.

SIR W. HARCOURT

That was a question.

MR. CHAPLIN

Well, it was a question which I understood the right hon. Gentleman to adopt; but, whether he adopted it or not, I do not think he could dispute the proposition. In the same speech he said that the tax under Schedule A on agricultural land has fallen from £217,000 per annum to £190,000, although it has risen on houses, whilst Schedule B has also fallen heavily—namely, from £48,000 per annum to £36,000. In spite of these facts we are now subject to an increase of duty, and an increase which will fall upon those who pay under these Schedules with great hardship. On his own showing, the right hon. Gentleman, had it been possible for him to do so, might have considered that in these cases he might have remitted the duty altogether. In any event, I think we are fully entitled to ask him to take the earliest opportunity of mitigating the hardship and injustice of the present state of things by taking care that in future the Income Tax on land shall be assessed on the net instead of the gross. I am afraid that the most bitter disappointment will be experienced by farmers and others who are interested in laud throughout the country at the Financial Statement of the right hon. Gentleman. They have been looking forward, I believe, to the Budget, and hoping against hope that possibly something might be done for them. There is, as I have said, a bitter feeling of resentment against the Government because of the way in which, during practically the whole of this Session, their interests have been ignored. A Motion was placed on the Paper by the Government for the appointment of a Select Committee to inquire into the causes of the agricultural depression and into the remedies that might be adopted. If the appointment of that Committee was really regarded by the Government as a very serious and important matter, why is it that they have never gone on with it? I know the right hon. Gentleman made a speech somewhere in the country in which he referred to well-known proceedings in the House of Commons which had prevented the appointment of the Committee. I assume that he was referring to the effect that I had felt it my duty—and that other Members, including one gentleman on the other side of the House—had felt it their duty, to give Notice of Amendments to the Motion. Seeing that the Government have the whole time of the House of Commons at their disposal, surely, if they thought the matter a serious and important one, they might have devoted some few hours to its discussion. I admit that, as far as I am individually concerned, I do not altogether share the views of the Government as to the great importance of appointing that Committee, at all events, with the proposed Reference. It appears to me, I own, that the terms of the Reference are more calculated to lead to considerable waste of time and to produce a long inquiry into matters which are perfectly well known already than to secure any practical measure of relief within any reasonable period of time. Under these circumstances, I felt it my duty to indicate by an Amendment the direction which I thought the inquiry ought to take. My misgivings as to the advantages to be derived from the proposed inquiry were confirmed by the speech which the right hon. Gentleman made on this question very early in the Session. I do not wish to impute to the right hon. Gentleman that be is wanting in sympathy with the agricultural interest, because I do not believe he is; but, at the same time, I cannot help telling him that I regarded the speech he made in that Session as a positively heartbreaking speech to every member of the agricultural community. The right hon. Gentleman practically acknowledged that the agricultural depression was owing to the great fall in the price of agricultural produce, and that if that fall continued the depression must become worse. At the same time he rejected every proposal for a remedy. Protection was, in his view, an intolerable heresy. He could not do anything for the reform of the currency, and he said that if we wanted any relief we must point out, in the first place, how the deficit was to be made good. That is a new doctrine to me. I always thought it was the duty of the Chancellor of the Exchequer, and not of the Opposition, to propose new methods of taxation. However, I do not wish to detain the Committee at any unnecessary length. I have stated as moderately as I can what I believe to be the genuine feeling of the agricultural community at the present time. I still believe that some Members of the Government do not altogether realise how very serious the position is, or understand that it is becoming worse from day to day. On the top of all the calamities we have suffered, an unusual drought is now doing great injury in many districts. Taking all the circumstances into consideration, I do hope the Government will bear in mind the gravity of the position, and that if it be not possible to accept this Amendment they will make up their minds to apply some practical remedy at the earliest possible date to the present state of things.

THE FIRST LORD OF THE TREASURY (Mr. W. E. GLADSTONE,) Edinburgh, Midlothian

If the last sentence used by the right hon. Gentleman had represented the spirit and effect of his whole speech, I should have had very little to complain of, because the recognition that has been given by my right hon. Friend of the state of the law and likewise of the general claims of the agricultural body would have left no very great difference between the right hon. Gentleman and us as to the duty of the Government to find the earliest opportunity in their power of doing what they could for its relief were it open to relief. But when I go back to other points of the speech of the right hon. Gentleman, I must express my deep regret at the course taken by him; and if it has been taken by others my regret extends to them also with regard to the Committee which the Government, following the example of other Governments friendly to agriculture, proposed to take. The right hon. Gentleman says he could not agree to a Committee appointed under the terms upon which we proposed to make the appointment. But if the objection of the right hon. Gentleman was simply to those, terms, I am very sorry he did not enter into communication with us upon them, because my belief is that we could not have failed to arrive at some rational agreement with regard to the terms of the inquiry if it were admitted on all sides that an inquiry was not an unreasonable measure in itself. But the Amendment of which the right hon. Gentleman gave Notice did not point to an alteration of the terms, but it pointed to an objection to the nomination of a Committee, and to the supposed obligation of the Government to propose immediate measures of relief instead. I must say that I regret very much that an inquiry has been stopped, with regard to which it is fair, I think, to say that, although it might not have realised all that sanguine persons might have expected from it, it is highly probable that if the appointment had been made by general consent at the commencement of the Session, some particular measures of justice or of relief— perhaps not of very great extent, but still valuable as far as they went— might have proceeded from the inquiry The right hon. Gentleman says if we thought the matter of serious importance, we ought to have found an hour or two or a few hours for discussing it. But who can guarantee to us the number of hours? My opinion is if we had entered into that question we should not have got through it in a single night; and when the right hon. Gentleman takes our not having proceeded to the consideration of that Motion as a sign that we did not consider the matter serious, we are continually, not from day to day perhaps, but from week to week, compelled in regard to other great subjects to allege, sometimes in answer to hon. Gentlemen opposite, sometimes to hon. Gentlemen on this side of the House, that we admit the gravity and urgency of the question they wish to put forward, but that it is impossible, from the still greater pressure of other matters, to give them as early a place in the discussions of the House as we should desire. Certainly the suggestions of the right hon. Gentleman did not greatly tend to facilitate the course of those who desire to administer relief to the agricultural interest. What does he point at? He points at the restoration of Protection, with evident yearning and longing for the attainment of that happy state of things. Does he think that if he were to make a proposal for the restoration of Protection, whatever effect his eloquence might produce on the House, it would be a matter of a few hours?

MR. CHAPLIN

The right hon. Gentleman is probably not aware that I very publicly and openly stated my opinion with regard to Protection in the winter, when I said it was not within the bounds of practical politics.

MR. W. E. GLADSTONE

Then why does the right hon. Gentleman introduce it in his speech now as that which we should take into consideration in reference to the great need of immediate agricultural relief? Then he passes from Protection to bimetallism.

MR. CHAPLIN

I did not mention bimetallism.

MR. W. E. GLADSTONE

But what is the case with respect to bimetallism? When the subject of bimetallism was introduced to the House, the proposer of the Motion felt his difficulty so acutely that he was obliged to disclaim having bimetallism in view; and while we were contented with the very moderate course of simply declining the Motion of that hon. Gentleman, an hon. Member on the opposite side of the House, sitting behind the right hon. Gentleman, felt his objections to be so strong that he was not satisfied without producing a virtual condemnation of bimetallism and getting us to adopt a Motion which forbade us, so far as the House was concerned, giving any further encouragement or taking any positive measures of prolonging the discussion of the question of bimetallism.

MR. CHAPLIN

I did not say bimetallism. I spoke of a reform of the currency.

MR. W. E. GLADSTONE

I thought I heard the word, but I am glad to find that the right hon. Gentleman shares the modesty and the delicacy of sentiment of the Mover of the Motion on this side of the House, and that he is not prepared to recommend the adoption of bimetallism. Therefore, that remedy disappears. Then, said the right hon. Gentleman, there was the question of the Relief of Local Rates. That means the relief of the distressed agricultural interests at the expense of the general public by direct taxation just after the enormous Grant in Aid of Local Taxation that has lately been made. And yet the right hon. Gentleman thinks that is a measure —I do not enter upon the merits of it at this moment—to which all parties should at once submit. On the contrary, I do not think there could be the smallest doubt that it would be simply entering on a new and very difficult subject of contest and controversy. The right hon. Gentleman has also, I think, weakened his own ground very much by a remarkable statement in his speech, because he said—"You may point to difficulties in dealing with the case of house property under Schedule A. We do not ask you to do anything about house property; we only ask you to relieve land." Yes; but what will the owners of house property say to that? He, in a multitude of cases, has grievances quite as great as those of the land. The late Lord Addington, who was an excellent man, was very strongly impressed with the nature of the difficulties and inequalities under Schedule A; but, if I recollect rightly, Lord Addington considered the case of houses as the greatest grievance. He thought that relief ought to be afforded in both cases, but that the case of houses was the most prominent and most glaring portion of the case. And I must frankly tell the right hon. Gentleman, if he asks us to exclude houses from the relief he proposes to give to land, he cuts from under his feet the only ground upon which it is possible for my right hon. Friend to approach the question at all—namely, the ground of the great inequalities that are affecting the owners of laud now in common with owners of houses in this respect, that they are taxed upon rents that they do not receive. Well, Sir, that is a real grievance; that is a very serious grievance. It is a grievance which has been adopted by the Legislature, and is involved in a form of law accepted in a manner by the agricul- tural interest in consideration of other exemptions they were supposed to enjoy and other forms of relief that they were entitled to claim. Do not let the right hon. Gentleman suppose for a moment that I am not sensible of the reality and breadth of that grievance. It is bad in many ways. It is bad because it introduces inequality between the man who pays Income Tax upon land and the man who pays Income Tax under Schedule D or Schedule E. It is bad because it introduces very great inequalities as between different portions of the country, as between different classes of estates. Take, for instance, one class of estates in this country whore the holdings are small, where there are a large number of extremely small farms or cottage properties. Upon these estates generally the expense of repairs is enormous. A large staff of workmen is kept for the purpose of conducting them. Take another class of estates, where there are only large farms, or take the counties of Scotland, where leases used to prevail, and where the landlord had nothing whatever to do with repairs as a general rule, unless it might happen that he had to do with them upon the expiration of the lease, but where, as an annual charge, nothing in many cases was known of them at all. But in the case of Ireland these deductions hardly exist. I am not speaking of special cases. Therefore, my right hon. Friend has no motive and no disposition to accentuate these inequalities. I assure the right hon. Gentleman that in suggesting that my right hon. Friend should extend relief to land and deny it to house property——

MR. CHAPLIN

I did not make the suggestion. I was replying to the right hon. Gentleman.

MR. W. E. GLADSTONE

The right hon. Gentleman, I understood, suggested, or intended to say so, that house property should not be relieved. He did notice house property, and said—"We are quite satisfied, if you relieve us respecting land, to let house property shift for itself." But that is just what house property would not care to do. Lot us look at the relative magnitude of the two subjects; £190,000 per penny indicates the magnitude of the subject involved in the grievances of land;,£450,000 indicates the grievance which affects houses, which is quite as real and genuine and true— both of these being real and genuine. The right hon. Gentleman is a little in error in referring to a calculation of mine made in 1853, but which he has quoted correctly. It could not be said to be authoritative, but it was the best computation I was able to make. Unhappily, the landed property is often greatly handicapped. Unhappily the land of this country is in many respects heavily handicapped, and where estates are heavily handicapped the whole of this inequality between the landlords' nominal rental and what he actually receives falls not upon the free portion of his estate, but upon so much of his estate as is encumbered; and the inequality which he has to bear applies, therefore, to that portion of his estate the revenue of which is expended in paying interest upon his mortgage. It is quite obvious that this matter cannot be dealt with, as the right hon. Gentleman was disposed very fairly to admit, in a petty and partial manner by means of pure exemptions. These would be so anomalous that it would be impossible to pass them without giving general offence, and leading us into a discussion far wider and far more complex in the future. We are most anxious that the best and simplest means should be devised of enabling the tenant farmer to pay nothing except on the profit he actually makes; but to introduce exemptions in the Income Tax which are intended to say, as between two citizens of the country, that one shall not pay the tax which another shall pay, is striking at the absolute root and foundation of the tax, which loses all its warrant and justification when it ceases to be aim at substantial equality between all the payers. In view of the complex nature of the tax, and of the interests involved in the taxation of this country, we believe that it is not possible to deal with a case of this kind, where the considerations of justice involved, I admit, are strong; but where, when we come to discuss details, it is not possible to look, at any rate, without much consideration, upon such a counter anomaly as that which prevails, and has prevailed, under the Death Duties. On the nature of that inequality it is not necessary to enter: but when the proposal is to disturb the long-established foundation of the Income Tax, based upon the equal taxation of the Schedules, we cannot proceed to execute such a task as that without considering the general position of the agricultural interest in regard to equality of treatment in taxation. The question of the Death Unties then comes immediately into view, and, we submit to the House, quite irrespective of convenience or inconvenience, or to going forward with this, that, or the other measure in the present Session, that those inequalities must be considered comprehensively; and, if justice is to be done, as it is most desirable it should be done, to the owners of laud and houses under Schedule A, the House ought to take a comprehensive view of the whole matter, and endeavour to establish substantial justice between those interested in agriculture and those interested in all other kinds of property by removing the serious anomaly which now prevails both in the one class of duties and in the other. In the circumstances, I do not think that is an unreasonable position to assume. But the right hon. Gentleman and all those interested in agriculture may be quite certain that no one is more anxious than my right hon. Friend to have an opportunity of submitting to Parliament at the earliest practicable period legislative proposals which will have the effect of doing substantial justice to adjust the balance between these different classes.

*MR. W. H. LONG (Liverpool, West Derby)

I do not want to detain the House, but I should like to make clear the position which the Opposition occupy with reference to the Committee of Inquiry, and I should also like to refer to the position of the Government on the subject of agriculture. The Prime Minister has stated as the reason why the Government do not proceed with the Motion for the Committee of which the Government gave notice earlier in the Session that the Government did not receive assurances from the Opposition that the Debate on the Motion would last only one day. I want to call the attention of the Committee, and of agriculturists generally, to the fact that the position of the Government with reference to the rest of their business is so peculiar that they cannot spare one day, still less two days, for the discussion of the interest which has always been regarded as the backbone of, and as the most important interest in, this country. The right hon. Gentleman has said that the only remedy we could propose was to relieve the taxation which fell upon land at the expense of other classes of property in the country. The President of the Local Government Board (Mr. H. H. Fowler), in his speech yesterday on the Registration Bill, referred to the position of the rural ratepayer in terms of slight exaggeration. Relying upon the figures contained in the able and interesting Return which he has produced in reference to the history of local taxation, he told the House that the rural rates amounted to only 3s. 7d. in the £1. But it is not a question of what the rural rates are compared with the urban rates; it is the ability of the person to pay the rate levied; and what agriculturists have always submitted is, that since the present basis of taxation was initiated the whole situation has undergone a complete change —that, whereas land was then, no doubt, the only ostensible property, and, therefore, able to bear its burdens, that position has been entirely changed. The Prime Minister tells us the Opposition did not make proposals. Proposals have been made, but when we listened to the speech of the Chancellor of the Exchequer, we realised that it was impossible that help could be given to the agricultural interest. We have felt, and do feel, that the present position of the agricultural interest is so serious as to demand more than a mere passing reference or a few words of sympathy, however real that sympathy may be. We are constantly told that the agricultural interest must stand or fall as best it could, and that it must accept the situation. I hope and believe, however, that it is at last appreciated on both sides of the House that the landlords of this country, at all events, have not been to blame, but that they have done their best, and are entitled to be considered just as much as any other class of the community. The Opposition have put down Amendments to the Motion for the appointment of the Committee because they consider that inquiry is not wanted into the causes or the extent of agricultural depression. The condition of agriculture speaks for itself, and such an inquiry can only unduly postpone the measures which we ask the Government to take and for which or anything approaching them they tell us they cannot even spare a day.

SIR J. DORINGTON

said, he would ask leave to withdraw his Amendment, as he was satisfied, in taking note of the statement of the Chancellor of the Exchequer that, when the Death Duties were considered, the anomaly and injustice of the present incidence of the Income Tax should also be dealt with.

Amendment, by leave, withdrawn.

Original Question put, and agreed to.