FINANCE BILL.—(No. 190.)

HC Deb 07 June 1894 vol 25 cc595-666

[COMMITTEE. Progress, 6th June.]

[EIGHTH NIGHT.]

Bill considered in Committee.

(In the Committee.)

Clause 2.

Amendment again proposed, in page 2, line 27, after the word "passes," to insert the words Estate Duty shall not be payable on any property passing from a wife to a husband, or a husband to a wife."—(Mr. H. Hobhouse.)

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

Amendment again proposed to the proposed Amendment, to leave out the words "Estate Duty shall not be payable on any."—{Mr. Bousfield.)

Question again proposed, "That the words proposed to be left out stand part of the proposed Amendment."

*SIR J. LUBBOCK (London University)

said, that whatever difference of opinion might exist on other points, all would agree that the Amendment of the hon. Member for Somerset was of great importance and raised questions which profoundly affected the social life of the country. And yet how had it been met by the Government? The learned Solicitor General objected on purely technical grounds, but if the principle was right it was for the able draftsman of the Bill to deal with the point. The Chancellor of the Exchequer brushed aside all the equities of the case, and the social considerations urged by his hon. Friend, and resisted the Amendment on purely pecuniary grounds. He told them that if the Amendment were carried "there would be a loss of millions to the Exchequer." But the whole additional amount which the Chancellor of the Exchequer expected to realise from the Death Duties was £3,500,000, and the sum affected by the Amendment could be but a small part of the whole, and he altogether failed to understand how the loss would be so large. In his Budget speech the Chancellor of the Exchequer said— On the best calculations we can get, I estimate we shall not in the long run fall short of an annual increase of £3.500,000. But only a small part will accrue to the benefit of the Exchequer in the present financial year. …We shall only have, say, seven months of the present year under the new system. During the first five months we shall be taking the existing duties. But even during those seven months we shall only be receiving the new duty on personalty. Realty being allowed to pay by instalments, the full increase under that head will take several years to realise. Taking all this into consideration, I cannot count for 1894–95 upon more than a net gain of £1,000,000, from the substitution of the new Estate Duty for the duties which it replaces. The yield may be somewhat greater, but it would not be safe to reckon on it. Surely, then, when it was looked into, there was no force in the second objection of his right hon. Friend. However, on this question the considerations of primary importance were not those of money, but were those of equity, and of the effect on our social life. In other cases the Estate Duty would be payable on any given property once in a generation; he did not say in all, because there were the cases of brother succeeding brother, but as a general rule. And if, from one man living to a great age, two successions should follow quickly, the chances were that they would be followed by a long interval. Of course, there would be many exceptions, and cases of great hardship. But, as between husband and wife, there would always be two deaths in each generation. Such property, therefore, would pay a double duty; it would pay twice over. Was not that very unjust? How was such a proposal to be defended? Again, was it not contrary to all our feelings, to the universal practice and policy of the civilised world, in so heavy a duty as this, to treat husbands and wives not only as other relations, but even as if they were no relations at all? The policy of a wise Government should be to legislate so as to strengthen as far as possible the ties which bind husband and wife together. But the proposal in the Bill would tend to weaken them, to discourage joint property, and to encourage separate estates. If a husband and wife chose to keep their property entirely apart, there would only be a payment on the death of the husband or wife respectively on his or her property. But if they united their property it would not only pay twice over, but as the two would be aggregated together it would pay on a higher scale. The tendency, then, would be to create separate interests, which would certainly have an unfortunate influence on our social condition and on home life. He submitted, therefore, that the financial arguments used by the Government would not stand the test of examination, and that the loss to the Revenue would not be so large as supposed by the Chancellor of the Exchequer; but they based their support of the Amendment on higher considerations, and maintained that Great Britain was not so poor, that our financial position was not so unsatisfactory, that we need consider ourselves compelled to insist on a tax financially so unjust, and on a policy the tendency of which on family life would be so unfortunate.

*THE CHANCELLOR OF THE EXCHEQUER (Sir W. HARCOURT,), Derby

who was very imperfectly heard, was understood to say that he quite admitted, with the right hon. Baronet, that this was a very important subject, and that the Committee should understand very clearly its bearing. They had before them the Amendment of the hon. Member for Somerset and the Amendment moved upon that Amendment by the hon. Gentleman below the Gangway opposite (Mr. Bousfield). It was important to distinguish between the two questions raised by the two Amendments. The Amendment of the hon. Member for Somerset proposed that property passing between husband and wife should be exempted from the new Estate Duty proposed in the Bill, but the Amendment upon that Amendment would extend that exemption to the existing Probate Duty. These two questions were very important and pregnant with financial result. He must clearly discriminate between the two, and point out the result of each separate proposal. His right hon. Friend had said that it was surely wrong to treat as other inheritances property passing between husband and wife'; but this had been always done. It was done now. All property which passed under will or under administration in intestacy was subject to Probate Duty, to whomsoever it passed. The authorities of the Inland Revenue estimated that from the present yield of £6,000,000 of Probate and Estate Duty one-sixth might be deducted as the amount that was levied upon property passing between husband and wife. The Amendment of the hon. Member for Somerset was confined solely to the new Estate Duty. It would leave Probate and the existing Estate Duty unchanged. Thus it was fatal to graduation, for personalty worth £1,000,000, if left to a widow, would pay at exactly the same rate as personalty worth £11,000. The proposal was equally fatal to the principle of equalisation, because personalty passing from husband to wife would be chargeable with Probate Duty, but settled or real property would pay nothing. None of this difficulty was ever raised until there was a question of taxing real and settled property. The moment there was a proposal for the levying of a tax upon settled property, this objection was raised for the first time.

MR. COHEN (Islington, E.)

We cannot hear a single word of the right hon. Gentleman's speech. He has been speaking some time, but we have not heard a word.

SIR W. HARCOURT

said, he had found great difficulty in dividing his voice so that it could he heard on all sides of the House, but he would try his best to make himself heard. He contended that in dealing with these duties the relation of husband and wife had been considered, and there were certain exemptions. The Estate Duty would be the analogue of the Probate Duty, which did not regard the question of the person to whom the property passed, but the property itself, irrespective of its destination. If the Committee departed from that principle they could not have either graduation or equalisation; there must be a duty which corresponded to the principle of the Probate Duty, which taxed the corpus and on which alone graduation could be founded. But the Amendment would not merely affect graduation and abolish equalisation; it would destroy even the simplification of the duty, because if the Committee were going to exempt this particular class of persons from the Estate Duty, then they would leave extant the Probate, the Account, and the old Estate Duty. In this way the Amendment would strike at every cardinal principle of the proposals of the Government—namely, graduation, equalisation, and simplification of duties. Those were reasons why the Government could not accept the Amendment. Suppose a man possessed £100,000, of which £50,000 was personalty and £50,000 realty. Suppose he left the realty to his eldest son and the personalty to his wife. The realty to his son would pay Estate Duty, and the personalty to the wife would pay under the Probate Duty; the son would pay 4½ per cent, and the wife 4 per cent, under the Probate and Estate Duty. But if the realty was left to the wife it would escape the Estate Duty, and if the personalty was left to the son it would pay 4½ per cent., the State losing nearly half of what it would otherwise receive. That would be a most convenient arrangement, because when the probate was proved all that the beneficiaries would have to do would be to "swop" and carry out the arrangements originally intended, the son getting, the realty and the wife the personalty. The Revenue in such a case would be defrauded; and the suggested exemption would simply be an instrument of evasion, which would be absolutely irresistible. He had put that one case, but he might put many others. It was quite obvious if they had one class of property which would be exempt and another class which would not be, they could shuffle the cards in such a way that they would always be able to defraud the Revenue to a very great extent. That would be the result if the Amendment of the hon. Member for Somerset were carried as it was, leaving, as he had said, extant the existing Probate and Estate Duty. Take the other hypothesis, and suppose the Amendment of the hon. and learned Member were grafted upon it, and they intended hereafter to exempt all property which came under the existing duty—passing from husband to wife. He had already stated what in the opinion of the Inland Revenue would be the effect of an exemption of that character. It would have the effect of considerably lowering the amount they received, even at present, in respect of Death Duties. At a time when they were obliged to obtain more revenue from the country it would be a strange thing if they should carry an Amendment the effect of which would be to make the Death Duties less than they were at present. He would like to give one other example. Suppose that a man died leaving £1,000,000, and that he left the whole of the money to his wife, trusting to her to distribute it. He had intended, but for this exception, to have given her £10,000 a year for life. The widow would buy an annuity and that would be free from taxation; or, if she invested £250,000 for herself, then what would be the consequence? This property of £1,000,000, under the present rate of taxation, would yield to the Revenue £40,000; under the Bill of the Government, on the principle of graduation, it would yield £80,000. But now the wife, having got the whole of it, would take £250,000. There would then be £750,000 to be divided among the children, which would pay no duty; and the result worked out was that instead of getting £80,000 on the £1,000,000 as was proposed by this Bill, they would not even get the £40,000 they got under the law as it stood at present. The sum they would get would be £16,250, as against the £40,000 which they now obtained, and that not before the death of the widow. There would be no possible graduation, and they would have an actual loss, even upon the existing duty, amounting to more than one-half. That would be the result of the Amendment as amended by the Amendment of the hon. and learned Member. He could only describe the Amendment as one which would not only be fatal to the principle on which the Government based their entire Bill, but it would, if adopted, cause a serious loss to the Revenue, as well as import confusion and difficulties into the administration of the various duties. This was not a question of small sums passing, but a question of great sums as well as small sums. There was no proposal to restrict this in any way to small fortunes. With reference to the statement that the proposals of the Government increased the burden of the Death Duties, he would say that the burden was not increased more than one-half per cent, until they got up to £50,000. If hon. Members were going to accept the Amendment, they must not forget that they would thereby destroy the benefit that had long been derived by Local Authorities from the grants made them out of the funds raised under probate, of which they received one-half. If, therefore, they were going to lose £1,000,000 a year of Probate Duty, local taxation would lose £500,000, which were now given as contributions, arising from that duty, to the Local Authorities. Whatever was reserved to them was what would be got under the Probate Duty. Under these circumstances, the Government could neither accept the Amendment to the Amendment nor the Amendment itself.

MR. GERALD BALFOUR (Leeds, Central)

said, that it had practically been admitted by various hon. Members on the Government side that there was a case to be met, and yet they were told by the Chancellor of the Exchequer that the adoption of the Amendment would be fatal to the scheme of the Bill. If the Chancellor of the Exchequer was right, that only implied that there was something wrong in the scheme; in other words, it must be obvious that, if there was to be injustice or oppression owing to the Amendment not being adopted, the proposals of the Bill must be at fault, and graduation, equalisation, and simplification were being sought in a wrong way. The right hon. Gentleman, in defence of his proposals, had again and again told them that they must regard this Estate Duty, not as a duty on successors, not as a burden on successors, but simply as a tax on the corpus of the estate. It appeared to him that this was one of those subtle distinctions to which nothing in reality corresponded. How were they to test on whom a tax fell? He only knew one way—to ask who would have gained if the tax had not been put on, or who would gain if it was taken off. Clearly the successors would gain; therefore, it was idle for the right hon. Gentleman to say that the proposed duty would not fall on the successors but on the corpus of the estate. The longer they proceeded with the discussion the more numerous did the difficulties of these proposals appear to be. He could only assume that if this Budget were passed it would have to fall to the lot of some future Chancellor of the Exchequer to deal with the whole question, and to do so on a more rational basis.

MR. COURTNEY (Cornwall, Bodmin)

ventured to protest against the method pursued by the Chancellor of the Exchequer. The right hon. Gentleman had argued in great detail against the proposition of the hon. Member for East Somerset, and had attributed to it a meaning which, no doubt, might be drawn from the words, but which was not the meaning his hon. Friend himself expressed to the Committee, and which he had since-explained he desired to be understood by them. Four or five things which the Chancellor of the Exchequer attributed to the Amendment were due to his misinterpretation of it.

SIR W. HARCOURT

said, he argued it from the Amendment as it appeared on the Paper.

MR. COURTNEY

said, one-half of the right hon. Gentleman's argument was addressed to an Amendment which, in fact, was never moved, and that half scarcely edified the Committee, for he doubted if many hon. Members were able to follow it. The true question before the Committee was the Amendment as amended by the Amendment of the hon. and learned Gentleman opposite, and it amounted to this: Should they exempt from duty, leviable upon death, property which passed from husband to wife? The right hon. Gentleman objected to it, and said they could not do it, because it would throw the Exchequer into such a want of equilibrium that no Minister could accept and no Committee approve of the proposal, and that it would leave them in a condition of insolvency. But that was provided for by the Amendment of the hon. and learned Member, who wished to defer for 12 months the practical operation of this Amendment. Would it involve insolvency if an Amendment, being adopted in principle, was thus deferred in operation for 12 mouths? The Chancellor of the Exchequer said certainly. The right hon. Gentleman's additional taxation would bring in £3,500,000, of which £1,000,000 was realisable this year. He had, therefore, only got £2,500,000 to look forward to next year, and he had not proved insolvency. Even taking his own figures, the right hon. Gentleman would only lose £1,000,000, and he had £2,500,000 to look forward to. This loss of £1,000,000 was something very different from what must be argued when the right hon. Gentleman vaguely spoke of millions being as lost to the Exchequer. The loss they now understand was £1,000,000, and the right hon. Gentleman was quite right in taking that full loss, because whatever was deducted from the Local Authorities would have to be made good, and therefore they had to face the possible loss of £1,000,000 in the produce of the Death Duties. His right hon. Friend used another argument against which he must also enter a respectful protest. The right hon. Gentleman said that this objection to the levying of the duty upon property passing from husband and wife was now heard for the first time, because the principle was now going to be extended to the case of real property and settled property, and that the objection was never heard of when the duty was confined to the poorer classes who only suffered under the Probate Duty. Yes, but they were now dealing for the first time with property in this manner. He could speak frankly upon this subject, because he had approved throughout and had supported the extension of the tax to realty as well as personalty. He had approved of the inclusion of settled as well as unsettled property, and had absolutely refused to consent to discriminate between the two. Why, then, were they objecting for the first time? Because they were making a great departure in their financial system. They were introducing a new principle of very great value, and opportunity was taken at that moment to call attention to something that had been overlooked. What was the principle? He accepted entirely the notion that Death Duty was payable as a debt to the State. It was a deferred payment. The question here was, whether the lives of husband and wife were to be considered as one life or as two? The right hon. Gentleman himself considered them, for many purposes, as one life. Let him call attention to a peculiarity of administration which showed how the Chancellor of the Exchequer regarded them as one life when he wanted to gain, and how he wanted to regard them as two lives when he desired to gain in another direction. Take the case of a schoolmaster in the country with £120 a year—not a large income—and which just escaped the Income Tax. His wife got £60 or £70 a year as schoolmistress, which was also not liable to Income Tax. But the joint incomes were taken and thus came under the Income Tax. The husband and wife were one; the Chancellor of the Exchequer proceeded in regard to it as if it were a joint and indivisible life. All that they were asking for was that the same sound principles should be regarded in the case of the Death Duties, and that they should not levy duty upon property that passed from husband and wife until the wife died. Such were the complications into which they were led by attempting to base their tax upon technical details. Was it not possible to consider this as a substantial question, and to take the lives of husband and wife as one life? There was a temptation that the husband might pass over his wife entirely if under the operation of this tax she had to pay as well as himself. This matter, therefore, was a very important one, and he claimed that the Chancellor of the Exchequer should give it his close attention. All that was urged was that that sound principle should be upheld in regard to the Death Duties. He believed that the proposal of the Government would have an evil social effect, and he pressed most earnestly for some further argument which would rise above the details in which the Chancellor of the Exchequer indulged to the mystification of the Committee.

*SIR A. ROLLIT (Islington, S.)

said, the Chancellor of the Exchequer had recognised the importance of this subject, and he thought it was much to be regretted that he did not attempt to do something more than to meet it by a non possumus. He was sure that some way could be found by which it could be dealt with. This case was raised by the imposition of the new duties, and inasmuch as in dealing with other duties they made exceptions and exemptions, there was no reason why that should not be done in this case. What struck him was that the whole question underlying this matter was that of coincident lives, and where there were coincident lives they ought not to institute the duties on the same scale. With regard to the statement of the Chancellor of the Exchequer that there would be evasions, he should like to say that for his part he had very little belief in evasion. In this country he believed that amongst all classes of persons there was a very strong indisposition to entrust the administration of property to other persons during their own lives. The ordinary practice of husbands, of giving their wives property and with it the power of exercising discretion as to the portions and education of the children, and so on, was a most beneficial one, and one that was followed in the best interests of the children. This was a very great social question, of the highest family importance, and it was because he thought the proposal of the Government would injuriously affect those relations that he should oppose it.

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

I do not wish to dwell upon the large social question which is raised by this proposal. I wish to address myself to the Amendment which is before the Committee. Important as this question is, if it is to be dwelt with at all and fairly—and there is a considerable opinion that something ought to he done, whatever view the Government should take up—I must say that I should deprecate the adoption of the position of the hon. Member for North Hackney that we can arrange matters for this year, and that next year the burden of taxation will be relieved by the increased Death Duties. That would mean a loss of Revenue next year, and, as the Chancellor of the Exchequer has said, would lead to insolvency. It certainly must not be understood that the amount which will come to the credit of the Government next year will be so much greater that there will be no deficit. If I am not mistaken it has been pointed out to us that large as the Estimates are this year, we must look forward to the presentation of very much larger ones next year. We cannot look forward to having any surplus next year, nor will there be available that asset which has done so much this year to help the Chancellor of the Exchequer out of his financial difficulties. Therefore, it may be taken that next year we shall have to provide for the largely increased burdens of State, which burdens will nullify the increased Death Duties. The hon. Member for North Hackney suggests that we should start next year.

MR. BOUSFIELD

Take the year after next.

SIR W. HARCOURT

It will be greater in that year than in next year.

MR. GOSCHEN

That shows the inconvenience which is caused by the Government not putting before the House the naval expenditure of the year.

SIR W. HARCOURT

Oh, I do not refer to increased expenditure on the Navy. I refer to general expenditure. This year it is greater than last year, and the year after next will, no doubt, be larger than next year.

MR. GOSCHEN

To those of my friends on this side of the House who may be disposed to accept the Amendment of the hon. Member for North Hackney, I would say that I think that to take a step of this kind would be unsound finance. I do not think there would be any more difficulty in raising the sum this year than next year. In any case, I do not think we ought speculatively to indulge in a course which would produce such a gap in the Revenue as that which, is suggested by my hon. Friend the Member for North Hackney.

MR. COHEN (Islington, E.)

said, he thought the Committee had some reason to complain of the manner in which the Chancellor of the Exchequer and the Solicitor General had met the arguments of those who were opposed to the proposals of the Government. The Chancellor of the Exchequer had not been able to say that the principle embodied in the proposal was an unjustifiable one. The only answer which he made on the previous afternoon was that the Government could not accept this Amendment, because it would absolutely upset their Budget. That was no answer to the Amendment, which he might point out was not applied to the corpus of the property, but to the specific property which passed from the husband to the wife. He submitted that any Amendment proposed, no matter from whence it came, ought to be judged on its merits, and that it was no part of the duty of that House to place the Chancellor of the Exchequer in possession of the funds that he required, irrespective of the justice or injustice of the methods he proposed for raising them. The avowed object of the Chancellor of the Exchequer in re-modelling the Death Duties was incidentally to increase the amount which he would receive from these duties, but at the same time to readjust the many anomalies which had existed. While the Chancellor of the Exchequer was trying to extract more money out of the Death Duties as connected with large estates, he ought also to readjust them for the relief of small estates, the value of which had very much depreciated in recent years. He made no appeal to the Chancellor of the Exchequer for mercy; but when the right hon. Gentleman had said he was going to redress the anomalies of the Death Duties, he might fairly consider whether, without prejudicing his receipts, and with the object of rendering the incidence and collection of the duties more effectual, he could not readjust the burdens on the small estates. There were many ways which he could indicate to the Chancellor of the Exchequer of raising large sums of money which had nothing to do with the Death Duties, but which would at all events have remedied glaring anomalies and injustices which the Chancellor of the Exchequer's own proposals did not do. If the Amendment were pressed, he should certainly go into the Lobby in its favour.

MR. AMBROSE (Middlesex, Harrow)

said, the Chancellor of the Exchequer was proposing to redress the anomalies of the situation with respect to the incidence of the Death Duties. He ventured to say that this was the first time that the House had ever been asked to sanction the principle that duty should be paid on property passing between husband and wife, the fact being that directly the attention of the Legislature was called to the matter the distinction was recognised and the exception made. The payment of these duties began with the Probate Duty, and this duty itself began with the fees on probate charged by ecclesiastics; and when the Courts by-and-by began to find it difficult to enforce claims, in the reign of George III., the Probate Duty which had gone to the ecclesiastics was appropriated by the State, and the present system became established. In considering the question as to whether Probate Duty was payable in the case of property situated out of the United Kingdom, the test had always been, ay or no, is it necessary to have recourse to the English Courts? If that was necessary, although that property was situated outside the United Kingdom, in such cases Probate Duty had been payable. The Legislature had never affirmed the principle of payment of duty in cases where property passed from husband to wife. The first time it came before the Legislature was in respect of the Probate and Succession Duty.

SIR W. HARCOURT

How about the Estate Duty?

MR. AMBROSE

said, that was a duty which followed, and was allied to the Probate Duty. He asked the Committee not to take it as a matter of course that the duty ought to be payable under the Estate Duty because it had been payable under the Probate Duty. In his opinion, it was a matter that ought to be considered de novo. What was the ground upon which the Chancellor of the Exchequer based this duty? He told them when they were dealing with Clause 1 that the State had a better right to the property of a deceased man than anybody else. That was a proposition which startled a good many of them. He supposed it would be out of Order to attempt to controvert that proposition now. In the case of strangers, indeed, it seemed to have been accepted by the House. What he wanted to ask was whether the Committee was prepared to confirm that doctrine in the case of pro- perty passing between husband and wife. Could it be said that where a man had devoted his life to secure a small competency as provision for his wife and children, that when he was taken away his wife and children should be left to the tender mercies of the world? Would the Chancellor of the Exchequer say that in such a case the State had a better right than the relatives, or that it had any right to intervene at all? If the Government could not manage to raise the Revenue without despoiling the widow and the fatherless the sooner they put into power a Chancellor of the Exchequer more competent to equitably adjust the modes of taxation the better. It was quite true, as the Chancellor of the Exchequer was constantly telling them, that the Revenue must be forthcoming; but that was not all that they had to consider. In order to be just it was possible that they might have to interfere with the principle of graduation. Graduation might be a very good thing. He was not prepared to discuss that now. What he declared was that if graduation meant that in order to maintain that principle they were to do violence to the principle of right, he, for one, said lot graduation go altogether. They were very cute, no doubt, and very suspicious of anyone who had anything to do with the rendering of accounts to the Department, but he objected to the House being governed by the suspicions and fears of the Department. It might be depended upon that if this taxation were made unfair it would be evaded. If the Government wanted to prevent evasion they must make their taxation fair and honourable.

SIR W. HARCOURT

I hope that we may now be permitted to go to a Division upon the Amendment to the Amendment, and we shall then clear away part of the discussion.

MR. A. J. BALFOUR (Manchester, E.)

I confess I feel myself in some embarrassment over the question now before us, because I think I was the person who first raised what I may call the social aspect of the problem on an earlier Amendment, and I still feel that the arguments I then advanced have all been strengthened by the course of the Debate which has subsequently taken place. All that has fallen from my hon. and learned Friend the Member for Harrow (Mr. Ambrose), from my right hon. Friend the Member for Bodmin (Mr. Courtney), and from other speakers equally confirms the view which I believe the whole Committee was ready to entertain yesterday morning—namely, that we cannot regard the wife who inherits from the husband, or the husband who inherits from the wife, as really being equitably in the same position as any other heir. That is a broad principle for which I am prepared to vote. I have, however, to admit that two or three arguments to a certain extent modify that general abstract proposition. In the first place, I cannot quite see my way to support the Amendment to the Amendment, as it appears to only defer the difficulty from this Chancellor of the Exchequer to the next Chancellor of the Exchequer, and it is possible that I may have an even keener interest in the prosperity of the next Chancellor of the Exchequer than in that of the present holder of the office. I would, therefore, suggest that whatever decision we come to to-night, it should be a decision that would apply to this year as well as to subsequent years. We are then left face to face with the Amendment in its unamended form. As I understand, it is now admitted on both sides of the House that the original Amendment cannot stand as it is, as it would have an effect which my hon. Friend who moved it does not himself intend, and that if we are to embody it in the Bill we shall have to alter the words. There is the further substantial difficulty raised by the Chancellor of the Exchequer with reference to the financial necessities of the year. The Chancellor of the Exchequer says that if we accept the principle, which I believe to be a just principle, at least £1,000,000 will be lost to the Exchequer. No doubt a loss of £1,000,000 will be a very severe loss. I attach no importance whatever to the fact that certain provisions in our existing system of taxation appear to make the property which a wife gets from her husband pay toll to the State. My hon. and learned Friend the Member for Harrow (Mr. Ambrose) pointed out just now that the Legislature has never explicitly and of set purpose given its assent to the principle.

SIR W. HARCOURT

Yes, in the Estate Duty.

MR. A. J. BALFOUR

No; that point never was really raised before; it never has been brought home to the conscience of the House of Commons that it was committing this wrong. We really might have allowed the amount of the wrong as it at present exists to pass unnoticed and undealt with if the question had not been raised. It is only when the Chancellor of the Exchequer has rather gratuitously taken in hand the task of entirely re-casting the Death Duties, of greatly augmenting them, and of dragging into the net of the Death Duties a large amount of money that never was touched previously, that it is brought home to us that this injustice is being perpetrated, and we have the burden thrown upon our reluctant shoulders of seeing whether we cannot remedy it. I admit that, after what the Chancellor of the Exchequer has told us, the burden is a very heavy one, and I do not quite see my way through the problem at the present moment. I would, however, throw this suggestion out to the Chancellor of the Exchequer. In the laws of all countries the wife of a husband who dies intestate obtains a third of his property. In the law of Scotland, and in the laws of most Continental countries who derive their system of jurisprudence from the Romans, whether the husband dies intestate or not, and whether he likes it or not, a third of the property goes to the wife. Why should we not endeavour to put this Amendment into such a shape that a third of the husband's property on going to the wife shall not pay the Estate Duty, but that anything in excess of that third shall pay the duty? I do not know whether that proposal can be embodied in the Bill, but it appears to me to be based upon principles of social equity. Let us if we can take hold of this embodiment of the counsels of civilised society and say that a third of the husband's property going to the wife, and, if you like, a third of the wife's property going to the husband, shall be exempt from the duty. One great advantage of this plan would be that it would prevent all the evasions of which the Chancellor of the Exchequer has drawn so lurid a picture. He says that if the Amendment be carried a man would leave the whole of his property to his wife, and would give her written directions that she should write cheques for two-thirds of it, and hand these cheques to the children, and thus the children would obtain the bulk of the property without having paid a sixpence to the State. That would no doubt be an evasion, and no doubt such evasions would occur if the Amendment were carried in its present form. If, however, my suggestion were adopted and we exempted one-third of the property from the Estate Duty, of course no temptation of the kind would exist, and the wife would feel that she was not paying duty upon that part of the estate which was properly her due. I do not press my hon. Friend (Mr. Bous-field) not to divide upon his Amendment, but I do say that I shall find some difficulty in supporting him in the Lobby if he does.

MR. BOUSFIELD

said, he desired to facilitate the proceedings of the Committee, and would therefore withdraw his Amendment if such a course were regarded as desirable. He would point out, however, that his Amendment did not involve any question of postponing the difficulty till next year, and he thought it would- be far easier for those in favour of the principle of the original Amendment to divide on the words he (Mr. Bousfield) had proposed than upon those proposed by the hon. Member for Somerset (Mr. H. Hobhouse).

MR. H. HOBHOUSE (Somerset, E.)

thought it would be better for his hon. Friend (Mr. Bousfield) to withdraw his Amendment. There were various objections to be taken to the Amendment which did not apply to the general principle. If the Amendment to the Amendment were withdrawn he (Mr. Hobhouse) should certainly go to a Division on the original Amendment, if merely as a protest against what he believed to be an unjust principle of taxation. On the other hand, if the Government would promise that at a later stage there should be an abatement made with regard to property passing to a husband or a wife as suggested by the right hon. Gentleman opposite (Mr. A. J. Balfour), he was sure that the supporters of the Amendment would prefer not to divide.

Amendment to the proposed Amendment, by leave, withdrawn.

Question again proposed, "That those words be there inserted."

*SIR W. HARCOURT

I want to point out, Sir, that the Amendment on which the Committee is now going to vote is an Amendment that would have the effect of exempting from duty property passing between husband and wife only in the case of real property and settled personalty and would draw the most invidious distinctions between realty and settled property on the one hand and personalty on the other.

MR. MATTHEWS (Birmingham, E.)

said, he wished to move an Amendment which, if adopted, would make the original Amendment run as follows:— Neither the Estate Duty nor the duties mentioned in the first Schedule of this Act shall be payable on any property passing from a wife to a husband or a husband to a wife.

Amendment proposed to the proposed Amendment, before the first word "Estate," to insert the word "neither."—(Mr. Matthews.)

Question proposed, "That the word 'neither' be there inserted in the proposed Amendment."

SIR W. HARCOURT

I must now point out to the Committee the effect of this Amendment. It will, if adopted, make our finance insolvent, because it proposes not only to abolish the proposed increase under this Bill, but to put an end to the receipt of all the money which is now received on personalty passing from husband and wife. It is not disputed that this amounts to £1,000,000 under the present duty. This is an Amendment, therefore, which I understand the Leader of the Opposition must be distinctly opposed to. It proposes to exempt from the tax not merely property to the extent of one-third, but all property passing from a husband to a wife or a wife to a husband. I cannot believe that the Committee, having to make provision for the Expenditure of the year, is going to give a vote practically to make the Revenue of this country insolvent.

MR. A. J. BALFOUR

The right hon. Gentleman must remember that this Amendment will be followed by one limiting it to all property exceeding one-third of the total amount.

SIR W. HARCOURT

That is not consistent with the Amendment, which is that neither the Estate Duty nor the duties mentioned in the first Schedule shall be payable on any property, &c.

MR. A. J. BALFOUR

Cannot you add some such words as "where such property exceeds one-third"?

SIR W. HARCOURT

Might I suggest that we are dealing with very great interests, and that we ought not to deal with them in an inconsiderate way. The right hon. Gentleman has said that the matter is of great importance. We are dealing with a large amount of Revenue not only for this year, but for future years, and we ought to take very great care how we proceed. We have had an Amendment from the hon. Member for Somerset, and that has not been satisfactory, and we have had another from the hon. and learned Gentleman below the Gangway, and that has not been satisfactory. There will be future stages of the Bill, and I would suggest that Amendments dealing with the point under consideration should be postponed until these stages are reached.

MR. A. J. BALFOUR

said, that everybody would feel that the appeal of the right hon. Gentleman was animated by a very proper desire that the Committee should deal with the complicated questions in the Bill in a serious spirit, and in a way not to embarrass the present or future Governments or the officers who would have to administer the legislation. What were they to do? The discussion showed that the Amendment did not carry out the intention either of the Committee or its framer. Nevertheless, the Committee generally felt that at all events a point had been raised in dealing with this great social question which they were bound to meet. If they let this opportunity slip the psychological moment would be lost and would not be regained until the Report stage. The alternative was that they should on the spur of the moment frame an Amendment which would meet the views of all parties. The object they had in view was a simple one. The Committee were anxious that property not exceeding in amount one-third of the property of a deceased husband or wife should pass to the survivor without paying Estate Duty, and it ought not to be beyond their powers to frame an Amendment giving effect to that view.

SIR W. HARCOURT

said, he hoped the Committee would vote against the Amendment, seeing that the right hon. Gentleman opposite had admitted that he did not know what the practical consequences might be. He (Sir W. Harcourt) did not know what they would be. He had had no opportunity of ascertaining what would be the effect upon the Revenue of the proposal to exempt one-third, and he trusted the Committee would not assent to it.

MR. BYRNE

said, he had an Amendment on the Paper to Clause 4 dealing with the Estate Duty and marriage settlements by way of exemption.

SIR W. HARCOURT

said, he would ask the Committee in the interests of time and on grounds of common sense to dispose now of the Amendments before them. He could not accept any responsibility for Amendments which apparently did not even carry out the objects of the hon. Gentlemen who moved them. The duty of the Committee with respect to Amendments of this kind was to vote upon them.

MR. A. J. BALFOUR

said, they were all anxious to meet the views of the right hon. Gentleman the Chancellor of the Exchequer. No one was anxious to delay the proceedings. He admitted the difficulty of drafting without further consideration an Amendment which would give expression to their views in a complete and satisfactory way. In the circumstances, he thought the best plan would be to take a vote now upon the speeches that had been made, if he might put it that way—[Cries of "Oh!"]—or rather upon the intentions expressed by the supporters of the Amendment, If they were not allowed to vote for the intentions of those who had spoken, but were compelled to vote for the actual proposal, they might get into a hopeless mess. Let them vote upon the policy adumbrated by his hon. Friend, and reserve for the Report stage the very difficult task of embodying it in specific words.

SIR W. HARCOURT

said, he did not understand what it was to vote upon the speeches of hon. Members. The Judges who would have to administer the law established by this Bill would not administer it according to hon. Members' speeches, but according to the words put in the measure. Let it be quite understood, before they proceeded to a vote, that this Amendment was one for exempting real and settled property from Estate Duty. It would not relieve personalty.

MR. A. J. BALFOUR

said, that the right hon. Gentleman was one of the greatest obstructives in the House. He (Mr. Balfour) had done his very best to-bring this discussion to a peaceful end, but the right hon. Gentleman could never resist the temptation of introducing into Debate mere electioneering considerations calculated to embitter their discussions. What they were going to vote on were the expressed intentions of the persons who proposed the Amendment. If that were not done, it would be necessary to devote whatever time was needful to amending the Amendment, and the Government would be responsible for the delay that might take place.

SIR W. HARCOURT

Let us vote on the Amendment. Members can put what construction they like on it.

Amendment to the proposed Amendment, by leave, withdrawn.

Question again proposed "That those words be there inserted."

*SIR J. LUBBOCK

said, he would suggest to the right hon. Gentleman opposite whether he would not effect his object, and at the same time carry out the view of the hon. Member for Somerset, if he were to add to the Amendment— Provided that the amount of property so passing shall not exceed one-third of the whole estate.

MR. A. J. BALFOUR

That would be an improvement.

SIR W. HARCOURT

It is open to the same objection. It is an endeavour to put into the Bill a proviso that neither the House nor the Government have had an opportunity of examining. We do not know what effect it would produce. If such a proviso is to be moved, I have again to ask the Committee not to entertain it.

*SIR J. LUBBOCK

I prefer the Amendment as it stood, but in hopes of securing some concession I move the Amendment.

Amendment proposed to the proposed Amendment, at the end thereof, to add the words— Provided that the amount of the property so passing shall not exceed one-third of the whole estate."—(Sir J. Lubbock.")

Question put, "That those words be added to the proposed Amendment."

The Committee divided:—Ayes 201; Noes 241.—(Division List, No. 79.)

Question, That the words 'Estate Duty shall not be payable on any property passing from a wife to a husband, or a husband to a wife 'be there inserted, put, and negatived.

*SIR M. HICKS-BEACH (Bristol, W.)

reminded the Chancellor of the Exchequer that yesterday, in the course of the discussion on the Amendment of the right hon. Member for Bodmin, he had practically admitted that some relief was justifiable in the case of small annuities not exceeding £100, and especially in cases of survivorship between husband and wife. When the matter was further discussed on the Motion of the hon. Member for North Islington, the Chancellor of the Exchequer said, in his opinion, the question of survivorship was one more properly to be raised on the Amendment of the hon. Member for Somerset, of which the Committee had just disposed; and it had been intimated that some statement of the intention of the Government in the matter would be made when that Amendment came to be considered. But no such statement had been made, and he had, therefore, placed an Amendment on the Paper before the rising of the House in the hope of eliciting some definite intimation from Her Majesty's Government of what they proposed. A general feeling of sympathy had been manifested in the Committee with the object of the Amendments. On such annuities, as far as the survivor was concerned, Estate Duty should not be payable. The Amendment of the hon. Member for Islington would have relieved the survivor from payment of Estate Duty, not merely on the portion to which he or she had themselves contributed, but on the whole value of the annuity. With that proposition the Chancellor of the Exchequer had expressed sympathy, and he should be glad now to hear a statement from the Solicitor General on the subject, as to whether the Government was prepared to make any concession on the point.

Amendment, in page 2, line 27, at end, to insert, Estate Duty shall not be payable upon the survivorship to any annuity for the joint lives of husband and wife."—(Sir M. Hicks-Beach.)

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

THE SOLICITOR GENERAL (Mr. R. T. REID,&c.) Dumfries,

was not aware that the Chancellor of the Exchequer had come to any resolution on the subject; but he might state that the matter was not at all precluded by not being dealt with under this clause. Where an annuity was enjoyed by husband and wife jointly, and each of them had contributed a portion of the capital, under the proposal the survivor would not be called upon to pay upon more than he or she had contributed. But the Amendment of his hon. Friend would relate to annuities of all values, and if that were the case a husband and wife might expend a capital sum of £20,000 in the purchase of a joint annuity for the purpose of evading payment of duty on the passing of the property from husband to wife. Probably his right hon. Friend's Amendment was not intended to extend to large annuities of that kind, but only to small annuities, and he would therefore, no doubt, hardly feel inclined to press it.

*SIR M. HICKS-BEACH

explained that he really moved the Amendment on the Chancellor of the Exchequer's suggestion that the point would be better discussed on the previous Amendment. It was for that reason he had asked his hon. Friend behind (Mr. Bartley) to postpone his Amendment. It might, perhaps, be too soon to ask for any definite statement from the Government, but he hoped it would be clearly understood that the point raised would be met by some definite proposal. That was certainly the understanding yesterday.

MR. BRODRICK (Surrey, Guildford)

said, cases often occurred where husbands settled small annuities upon their wives in the shape of "pin money," from£100 to perhaps£500 a year; and he was advised that in such cases the husband, if his wife died, would have to pay on receiving back his own money—or, in other words, he would have to pay for ceasing to pay his wife an annuity for her own purposes.

MR. R. T. REID

said, that where a man granted something out of his property for a time, reserving to himself the reversion, he was only, in fact, depriving himself for a time of his own property.

MR. BRODRICK

pointed out that the words were— any annuity or other interest purchased either by himself alone or in concert or by arrangement with any other person. An annuity might be payable under a marriage settlement made between a husband, wife, and her father, and the view taken by lawyers was that in that case payment would have to be made. The right hon. Gentleman could not deny that if the husband failed to pay on receiving back his money when his wife died, his estate would remain liable to the extent of an annuity which had been paid out of it for 30 or 40 years. Surely an estate should not be called upon to pay under such circumstances. That was a point which the Solicitor General ought to take into consideration. Undoubtedly the question of evasion—"getting round" the enactment—would have also to be considered, and the Solicitor General had remarked that the Amendment would apply to large annuities. But if the husband died the wife should not in any case be asked to pay upon her own money where the parties had agreed to put their funds together. If the one who had contributed least died, the other would have to pay on the larger amount which he had himself contributed.

MR. BARTLEY (Islington, N.)

reminded the Chancellor of the Exchequer that on a previous occasion he had brought forward cases of a joint annuity to two persons, referring specially to husband and wife, and the Chancellor of the Exchequer stated that he had much sympathy with cases of that kind, but that the point had better be discussed on the Amendment of the hon. Member for Somerset with regard to property passing by death. Had the Chancellor of the Exchequer yet made up his mind or not whether he was going to take this matter into consideration? He had stated yesterday that he was pressed by his own followers just as much as by Members on that side to make an exception in the small joint annuities. The question was, what was a small annuity? Could it be said that an investment of £1,000 had been made in that way in order to evade the Death Duties? It had been suggested that where two people purchased an annuity for their joint lives, with reversion to the survivor, one-half of the duty should be payable on the death of each. That, he asserted, was a most unfair arrangement, because it could not be said that it fell in until the death of both, and, therefore, it could not in any sense be said to be a final passing at the death of one. It might technically, in a legal sense, be so, but in common sense it could not be regarded as a final passing when it was a joint annuity possessed by husband and wife in order to secure that both of them should have a competency while either of them lived. He quite agreed that if it was thought desirable it should be limited in amount. To those who had had to do with these things it was well known that these annuities were not common in sums over £30, £40, or £50 a year, and he should be prepared to limit it to annuities of not more than £52, which would be £1 a week. He did not know whether the right hon. Gentleman would be prepared to accept an alternative, of that kind, but he thought this was a, case in which the Chancellor of the Exchequer might announce that he would give way. If the right hon. Gentleman would agree, either now or on some-other stage, to accept the principle of this Amendment on a limited amount, he thought he would relieve a great many persons of considerable anxiety and would do something that would not affect the stability of the Budget.

SIR W. HARCOURT

said, he entirely adhered to what he said yesterday upon, this subject. He stated yesterday why he thought it might lead to a great deal of evasion, but he also thought that in regard to small annuities there was a question well worthy of consideration if limited in some such way as suggested in the speech of the hon. Member, and with respect to those he should be prepared to give further consideration to the proposal. The matter had already been referred to the officers of the Department to consider what could be done in the matter.

MR. WARNER (Somerset, N.)

thought the Chancellor of the Exchequer might extend it to brothers and sisters.

*SIR A. ROLLIT

said, the constant argument of the Chancellor of the Exchequer was the risk of evasion from probate. He (Sir A. Rollit) did not think it would have so much influence as was attributed to it, but he objected that those who did not evade should be more stringently dealt with because there were those who might. The best and proper course was to strike at the evasion itself. With regard to the question raised by the hon. Member for Surrey (Mr. Brodrick), he hoped that it would be carefully considered, because he was satisfied that if the Bill remained as it was that very great injustice would be done to such annuitants.

SIR M. HICKS-BEACH

said, that after the statement of the Chancellor of the Exchequer, he would ask leave to withdraw the Amendment.

MR. COURTNEY (Cornwall, Bodmin)

only wished to say one word before the Amendment was withdrawn, and it was that the question regarding brothers and sisters should receive some attention when the right hon. Gentleman considered the question of small annuities.

Amendment, by leave, withdrawn.

MR. BUTCHER (York)

said, his Amendment was to substitute for "Estate Duty shall not be payable in respect of" the words "property passing on the death of the deceased shall include."

Amendment proposed, in page 2, line 28, to leave out the words "Estate Duty shall not be payable in respect of," and insert the words "property passing on the death of the deceased shall not include."—{Mr. Butcher.)

MR. R. T. REID

said, he was inclined to accept that Amendment.

Amendment agreed to.

*MR. T. H. BOLTON (St. Pancras, N.)

said, that Sub-section 2, page 2, ran— Estate Duty shall not be payable in respect of property held by the deceased as trustee for another person under a disposition not made by the deceased. The Amendment he proposed was that the words "under a disposition not made by the deceased" be left out, and that the words— Nor upon any property which would have been free from Succession Duty under the 12th section of 'the Succession Duty Act, 1853 be inserted. The Amendment achieved a double object, as he thought—it improved the clause in the first instance, and it dealt with a matter that he thought ought to be dealt with by the Bill. Dealing first with the omission of the words, he contended that the omission would be an improvement in the language and meaning and, in fact, ought to be made, "Estate Duty shall not be payable in respect of property held by deceased as trustee for another person under a disposition not made by the deceased." What did it matter whether the trust was held under a disposition made or not made by the deceased if it was a bonâ fide trust? The property was equally passed by it, and it was quite immaterial whether there was a legal estate left on passing the property. If the person exercising that power reserved to himself no beneficial interest in the property, it was just the same as though he actually assigned the property; the result was the same if bonâ fide a declaration of trust was made for valuable consideration—it might be in the case of marriage, which was valuable consideration, or for money consideration. A trust, he admitted, was an awkward mode of conveying property, and would not be good conveyancing from a lawyer's point of view, but the effect was just the same as if the property were assigned. If he declared for value that he held a house for another person, it was just the same as if he assigned that house to the other person, if the declaration of trust was a bonâ fide declaration. If it was a fraudulent trust for the purpose of evading payment of duty, then he apprehended it was hit under the other clauses of this Bill, and particularly under Sub-section (c). These were the points he made with reference to the omission of these words. Perhaps the Solicitor-General would allow him to move the omission of the words first, as that was really quite a distinct Amendment from the other.

Amendment proposed, in page 2, line 29, to leave out from the word "person," to end of Clause.—(Mr. T. H. Bolton.)

Question proposed, "That the words proposed to be left out stand part of the Clause."

MR. R. T. REID

agreed with the hon. Gentleman in dividing his Amendment into two, because really they were two distinct Amendments rolled into one. The intention of the hon. Member was limited to the words "under a disposition not made by the deceased," and the case mentioned by the hon. Member was that a man might become trustee for another person where valuable consideration had passed. As he had stated before to this Committee, they had always held that such transactions would not come under the Bill, but they had put down an Amendment in his name at the end of the clause—though whether it was better to put it in the clause or in a separate clause he would not now say, but it was certain that an Amendment of this character was a debt due from the Government to the Committee. They intended to insert words to meet all cases in which valuable consideration had been given, and he thought that was an answer to the objections.

*MR. T. H. BOLTON

asked if the hon. and learned Gentleman would amend the clause he had put down by omitting the words "for good consideration in money or money's worth," and inserting in their place "valuable consideration in Good consideration in money or money's worth" was different from "valuable consideration," as it would not cover the case of marriage.

MR. R. T. REID

said, he knew there was an immense distinction, and he would deal with that when the matter arose, but in the meantime he said they in- tended to protect all commercial transactions of the character the hon. Member referred to. But the hon. Member went further and asked, "Why restrict it to 'dispositions not made by the deceased'"? If a man by deed of trust made himself trustee of his own property, the property would escape the Death Duties. In that case they might as well throw out the Bill, because all that a man need do was to execute a trust, leave it in his drawer, and on his death nothing would be payable, for the reason that according to the Amendment of the hon. Gentleman Estate Duty shall not be payable in respect of property held by the deceased as trustee for another person. But as the first and main part of the Amendment of the hon. Member was met by another Amendment, he trusted he would not press it.

*MR. T. H. BOLTON

said, he deferred to the legal authority of the hon. and learned Gentleman, but he would suggest that a man who was trustee for himself alone was the owner of the property; if he, however, created a trust in favour of another person another class of considerations came in, and that of itself might create a dealing with the estate which would subject it to duty. However, as the point he had been contending for had been conceded in the Amendment put down by the Solicitor General, and he had the assurance that the case of valuable consideration should be treated as distinct from the consideration of money or money's worth, he was prepared to withdraw the Amendment.

MR. R. T. REID

No, no. We all know that valuable consideration includes marriage; but all I have said is that I am dealing with commercial transactions.

MR. GRANT LAWSON (York, N. R., Thirsk)

thought it was the intention of the Committee that property that passed from a trustee without any beneficial interest in it should not be charged on his death and used for purposes of aggregation to increase the rest of the duty payable on his estate. The condition was this: that a bare trustee, with no interest whatever, was trustee under a deed of trust or settlement made by himself. When he died the whole property had not only to pay duty on his death, but be aggregated with his other property. He would give a simple illustration. Suppose a father settled money on his daughter on her marriage, and made himself and A trustees, when A died no duty was payable under the words as they stood, because A was trustee under a disposition not made by himself. Then the father died, and the property was aggregated with the whole of the property of the father, and duty would be paid upon the whole of it. Surely that was not the intention of the Committee.

MR. R. T. REID

said, the answer to that was that what passed on the death of A was worthless beyond the obligation of his duty. Property meant holding a beneficial interest, whether legal or equitable.

COMMANDER BETHELL (York, E. R., Holderness)

Give us a concrete case.

MR. R. T. REID

said, he would do so. Suppose he were trustee for an estate of £10,000 a year, and he died, in law the entire legal estate of £10,000 a, year passed, but in equity nothing whatever passed; therefore, on the death of the trustee all that passed in point of fact was the legal ownership, clothed with an equity that made it absolutely valueless.

MR. GRANT LAWSON

said, the answer to the hon. and learned Gentleman was that there must be some meaning in the words. If they took the converse, that Estate Duty should be payable in respect of property held by the deceased as trustee for another person under a disposition made by the deceased, the Estate Duty would fall on the bare trustee.

MR. BYRNE (Essex, Walthamstow)

said, he had put down an Amendment in the same sense and precisely because the same difficulty occurred to him. Though he accepted the reference of the learned Solicitor General he would urge him so far to yield to their views as to omit the words, as lie did not think it could possibly do any harm.

MR. W. AMBROSE (Middlesex, Harrow)

agreed with the view expressed by the learned Solicitor General. The point was that they were not taxing the individual but the corpus of the estates.

MR. R. T. REID

said, it was of course a question of drafting, but the matter had been very carefully considered by very eminent authorities. He thought it was quite impossible to leave out the words "under a disposition made by the deceased," otherwise a man might make a declaration of trust of £10,000 in favour of some other person, keep it in a drawer until he died, and then it might operate. He did not suppose hon. Gentlemen wished to occupy the time of the Committee by a mere drafting Amendment. If hon. Gentlemen and those who were apprehensive on the point would consider the section, and, after the same mature consideration that had been given to it by the Government they thought their apprehensions were well grounded, then the Government would meet them.

MR. COURTNEY

agreed that it was a purely drafting Amendment. What they meant was, that where there was a bonâ fide trustee, in that case there should be no question arising. These technical words were not sufficient to meet the case they proposed to meet, and he therefore suggested the learned Solicitor General should consider whether his object would not be better met by the Amendment suggested.

*SIR A. ROLLIT

thought that in the case of a bad disposition it did not matter who made it; the real question was whether it was a good disposition or not. He regarded the difficulty as met in the manner suggested by the right hon. Gentleman the Member for Bodmin (Mr. Courtney), and the insertion of words making any good disposition necessarily a bonâ fide one was the way to meet it. To create a wholesale disability because occasionally an evasion occurred, was a violation of the first principles of legislation.

MR. HALDANE (Haddington)

thought there was no doubt the matter would be considered between this and Report, and, under those circumstances, he hoped the question would now be disposed of.

MR. DARLING (Deptford)

wished to come to the assistance of his colleague on the same circuit, the Solicitor General, by saying that there really was not this difficulty alleged by the Chancery lawyers against the drafting of the section as it stood. All that a person creating a trust had to do if he did not want to get into a difficulty with the Revenue was to put another person in as trustee. What had been pointed out as likely to occur could only occur where a man was so perverse as not only to create a trust, but to create himself a trustee.

*MR. GIBSON BOWLES

said, that suppose A created a trust and made himself and B trustee, and B died. A would then be left alone as trustee, he having created the trust, and under this clause the property would be liable to the duty. He distinctly understood the Solicitor General did not defend the clause on the ground of principle, but on the ground that it was necessary to prevent evasion. First of all, he submitted that under (c) the hon. and learned Gentleman had already ample means of preventing evasion of this kind, inasmuch as it included property settled by the deceased in which any right was reserved to himself. Surely that was sufficient protection against any trust created not bonâ fide, and he submitted that to put in a defining and charging clause provisions to prevent evasion was not the way to proceed, and it seemed to him that if a man held under a bonâ fide trust it did not matter one farthing who created that trust—whether it was himself or Julius Csesar. The Solicitor General could not defend the words, and on the point of principle if he wanted words to prevent evasion let him leave out these words and put in other words, so that the subsection should read that Estate Duty should not be payable in respect of property held bonâ fide by the deceased as trustee for another person. The whole question was whether a trust was made in good faith or evasively in order to defeat the statute, and he thought the insertion of the words "bonâ fide" would meet the case.

*MR. T. H. BOLTON

said, that if the suggestion of the right hon. Member for Bodmin were accepted he should be willing to withdraw his Amendment.

MR. BUTCHER (York)

said, the hon. Member for Deptford had gallantly come to the rescue of the Solicitor General, but he thought the hon. and learned Gentleman had suggested the wrong remedy. The hon. Member said that all the deceased had got to do was not to be the sole surviving trustee. But the true fact was this: What the trustee had got to do was not to die. That was really the only way out of the difficulty, and as that remedy was not always available, might he suggest that this was really a serious objection in point of substance, because it would come to this: Where a person was left sole surviving trustee under terms of a will, the property which passed in which he had no interest would come under the definition of property passing on his decease. If the words were left out, as proposed by the Amendment, he saw no case in which any evasion or evil could arise. He must protest against the continual answer which was given to them when they pointed out the absurd results that would follow from the adoption of the words in the Bill. They were told, time after time, when they pointed out these absurdities, that the object was to prevent evasion. He really thought that was not the proper way, with great respect, in which to avoid evasion. If there were evasions which could be brought about let them be met in direct ways, and in ways that would not produce other and perhaps greater injustices.

SIR W. HARCOURT

thought this matter had now been sufficiently discussed. The whole point was a question of drafting, so far as he understood it. The Government had taken the very best advice they could, and they thought that was the best way of dealing with the subject. They had had the advice of the Attorney General, than whom they could have no more competent authority, the clause had been the subject of a great deal of consideration and discussion, and finally drawn in the form in which it appeared in the Bill, and the Government must adhere to it.

SIR R. WEBSTER

said, that no one would dispute the great experience of the learned Attorney General in these matters, but he would like to point out that this was a little more than a mere question of drafting. The right hon. Member for Bodmin had pointed out a serious difficulty that might arise, and other gentlemen had also pointed out that under the words of the clause as it stood cases might occur where property which had been held by the deceased bonâ fide as a trustee might become chargeable. It was most important to exempt bona fide trustees, but under the ambiguous wording of the clause, property held by bonâ fide trustees would form property which would have to pay duty, and that was certainly contrary to the object of the Government and the Committee.

SIR W. HARCOURT

was understood to say that between this and the Report the Government would consider the matter, and if it appeared necessary would endeavour to frame words to meet the objections of hon. Members.

*MR. T. H. BOLTON

I could not hear what the right hon. Gentleman said, but I gather it was to the effect that between this and the Report the matter would be carefully considered.

SIR W. HARCOURT

Certainly.

*MR. T. H. BOLTON

said, under these circumstances, he would withdraw the Amendment.

Amendment, by leave, withdrawn.

*MR. T. H. BOLTON moved, in page 2, line 29, at the end of Clause, to insert, nor upon any property which would have been free from Succession Duty under the 12th section of 'The Succession Duty Act, 1853.' The hon. Member said, that Section 12 of the Succession Duty Act of 1853 provided that no Succession Duty should be payable where the predecessor and successor were the same person. There was an express provision in the section that a successor should not in any case be chargeable with duty in succession taken under a disposition made by himself, and no person should be chargeable to duty upon an extinction or determination of any charge, estate, or interest created by himself. That was at present the law, and he ventured to suggest there were good reasons for maintaining it. Take the case of a man who, to provide for his son, granted to the son an annuity for life, and the son died in the father's lifetime. Under the present Bill there would be a duty payable, but that could hardly be the intention of the Chancellor of the Exchequer. This was really a matter for careful consideration. It had been under the consideration of the Council of the Incorporated Law Society. That body had called attention to it, and had recommended that there ought to be a provision extending the protection of Clause 12 of the Succession Duty Act to the Estate Duty. He could give several other cases, but it was unnecessary to trouble the Committee with them. The object of the Estate Duty was to tax a family estate passing on death, and it was not to inflict duty when really no estate practically passed, and in the case he had mentioned to charge, perhaps, a considerable duty would be to inflict a real injustice. This was a matter which had perhaps escaped the attention of the Government, but it was one which required attention, and involved an alteration in the clause which ought to be made. He begged to move the Amendment.

Amendment proposed, in page 2, line 29, to leave out from the word "person," to end of Clause, and insert the words— nor upon any property which would have been free from Succession Duty under the 12th section of 'The Succession Duty Act, 1853.'"— (Mr, T. H. Bolton.)

Question proposed, "That the words proposed to be left out stand part of the Clause."

SIR R. WEBSTER

ventured to think this was a point which had been overlooked. This was not really Death Duty. Take the case of a father in his lifetime making a settlement upon a son for life of so much money; the son died, and the property came back to the father. There had been no instance there of Death Duty ordinarily leviable, and it had never been treated as succession. It was a matter of principle, and not any question of drafting. It was no evasion or escaping from that which it was desired to charge. There were cases in which a man provided temporarily for the disposition of his property in his own lifetime. It was in no sense or purpose a dealing with a case where there could be either evadence or avoidance, and some words should be introduced to prevent the tax including a succession which was not in reality a succession.

SIR W. HARCOURT,

whose remarks were almost inaudible in the Gallery, was understood to say that Lord Stowell, with the object of avoiding Death Duties, made a settlement on his son. The son died intestate and the father was his heir. The same property thus paid Death Duty on the death of the son and again on the death of the father. The Amendment could not be accepted at once; but, if the matter were allowed to stand over, it should be carefully considered.

*MR. T. H. BOLTON

said, on this assurance he was willing to withdraw the Amendment, reserving to himself the right to again bring forward the question on the Report stage if the right hon. Gentleman took an adverse view of it.

*MR. POWELL WILLIAMS (Birmingham, S.)

said, he would give the Chancellor of the Exchequer an instance within his own knowledge which would show the necessity of making some alteration. A father settled upon a son £1,000 a year until the son succeeded, on the death of a relative, to £5,000 a year. As the Bill was drawn it seemed as if the £1,000 would be liable to duty when it fell in, and it was clearly necessary to provide against cases of that kind.

MR. BARTLEY

said, there was another case he should like to mention occurring in the insurance world. A parent paid an annual sum in order to buy a largish sum, varying in amount, at a certain age for his children. If one of such children died he took it that under this Bill this money, which would pass to the father, would be liable to duty. The money did pass at death, but surely this was not a case which should come within the purview of the Bill.

*SIR A. ROLLIT

asked the Chancellor of the Exchequer also to take this case into consideration—namely, a settlement on a daughter on marriage. Supposing the father settled upon his daughter a life estate with remainder to the issue, and an ultimate reversion to himself in the event of failure of issue. The daughter died, there was no issue, and the ultimate trust in the father's own favour took effect. Then there was accession, but not succession, because it was his own property. Surely that ought not to come within the purview of the Bill.

Amendment, by leave, withdrawn.

MR. BYRNE

said, he desired to ask the Chancellor a question on a point of Order. He had placed the following Amendment down to Clause 4:— Page 3, line 11, at end, insert,— If upon the death of the deceased an estate in dower or by courtesy or any other like estate in any property passes to the wife or husband of the deceased, the provisions of this section shall apply in like manner as if the property had been settled by the will of the deceased in the manner in which the property actually devolves upon his death. Neither Estate Duty nor further Estate Duty shall be payable in respect of property comprised in a marriage settlement and not in the aggregate exceeding at the date of the settlement in value or amount the sum of £10,000, so long as such property is enjoyed under or by virtue of the settlement by the wife, husband, or issue of the settlor. He put the Amendment to Clause 4, which dealt with settled property, because he thought that was the proper place. What he desired to know was should he be entitled to bring it on there, or must he move it before they reached the end of Clause 3.

THE CHAIRMAN

I think the hon. and learned Gentleman will be entitled to bring it on on Clause 4.

The following Amendment stood in the name of the Solicitor General:— Clause 2,page 2,line 30, after 'deceased,' insert nor include property passing under a disposition made bonâ fide for good consideration in money or money's worth given or reserved for the use or benefit of the person making the disposition to the extent of such consideration.'

MR. BYRNE

suggested that this Amendment should be postponed until a later stage, or brought up as a new clause. It raised a question of great importance, and there were one or two points as to which he should like to communicate with the Solicitor General before the hon. and learned Gentleman moved the Amendment.

MR. R. T. REID

considered the request reasonable, and assented to the postponing of the Amendment as suggested, and which it was agreed should be brought up as a new clause, the Government having collected the views of hon. Members acquainted with the subject.

MR. GRANT LAWSON

said, that if lands were held under lease for the lives of A, B, and C, on the death of the last of those the estate went back to the man who left it. That was really a passing of property from one hand to another at death. Clause 1 declared that on the passage of property Death Duty became payable, and payable, too, not on the amount received by each individual successor, but on the full value of the property that passed. He did not think that such a case as that was covered by the Amendment the Government had put down, and he therefore begged to move the second of the Amendments he had placed on the Paper.

Amendment proposed, in page 2, after line 30, to insert the words— Estate Duty shall not be payable on any property leased for the life of another, or for the longest of two or more lives, upon the expiration of such lease."—(Mr Grant Lawson.)

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

SIR W. HARCOURT

said, that one of the subjects which the Solicitor General intended to include in his promised clause was the subject of leases for lives, and therefore he did not see what object the hon. Member had to gain by moving the Amendment.

SIR R. WEBSTER

said, he would advise his hon. Friend to withdraw the Amendment; but, at the same time, he would like to bring to the notice of the Government that this was not a question of consideration, or of money, or of money's worth, but a simple question of machinery by which a term of years was arrived at by a landlord and tenant in an arrangement for the letting of lands, and was not met at all by the language of the clause of the Solicitor General.

MR. GRANT LAWSON

said, that if they were agreed as to the principle, the form of the words was immaterial, and as he understood that duty was not to be payahle under the circumstances he had mentioned, he would withdraw the Amendment.

SIR W. HARCOURT

said, there should be no misunderstanding in the matter. The Government had not agreed to anything; they simply kept the matter entirely open, and if the hon. Gentleman desired a Division on his Amendment he could take it.

*MR. POWELL WILLIAMS

thought that the proposal of the Chancellor of the Exchequer should be accepted. He respectfully asked the right hon. Gentleman to consider the case of a lease for three lives, all the lives of which had dropped out and the property had reverted to the original grantor. In many cases, under such circumstances, the grantor would give a new lease, with fresh lives inserted, on a fine being paid, and the unfortunate person to whom the new lease was made would have the fine increased by the amount of the new duties. That was a hardship that should be removed.

Amendment, by leave, withdrawn.

COLONEL KENYON-SLANEY (Shropshire, Newport)

rose to move, in page 2, line 30, after "deceased," to insert— (3) Where Estate Duty has become payable in respect of any property but has not been fully paid, and by reason of another Death Estate Duty becomes again payable in respect of the same property, so much of the former Estate Duty as has not been paid before the occurrence of such death shall cease to be payable. The object of the Amendment was to secure that if a man died before he had cleared off the duty payable by him on his succession, the successor should not be liable for the remainder of the instalments in addition to his own Succession Duty. He thought that a very just proposal. It might be fairly argued that a person who was paying in instalments his Succession Duty, and who died before he had completed the instalments, had at least completed his succession, and ought not be charged for that which he had not enjoyed; and that in any event it would be unfair to saddle the successor not only with what he himself owed to the State, but what his predecessor owed to the State for a possession he had not altogether enjoyed. If such a thing were unjust, it was most certainly inexpedient. It was not expedient that encumbrances arising under the Death Duties should accumulate on a property; and it was not expedient that the State should be, in that way, the cause of an owner being forced to sell his estate to another to clear off the Death Duties. In order to illustrate what he meant he would take a case, which, it would be admitted, was possible. He would take the ease of an, agricultural property valued at £50,000,. but bringing in only a net annual income of £1,000. Supposing the elder brother, a soldier, succeeded to that property in 1884. Under the provisions of the Bill he would have to pay £2,500 duty on the estate, and had eight years to pay it. Supposing he was killed in action in 1885; and was succeeded by another brother, soldier or sailor, who would have to pay another £2,500 in eight years, and who was killed in 1887, and was succeeded by a third brother, who would have to pay another £2,500. The result would be that in a few years there would be three charges amounting to £7,500 on an estate the net annual income from which was only £1,000, and that, of course, would mean ruin and bankruptcy for the unfortunate owner, and for the artizans and labourers who depended for a livelihood on the maintenance of the property. He therefore urged the favourable consideration of the Amendment on the Government.

Amendment proposed, in page 2, line 30, after the word "deceased," to insert the words— (3) Where Estate Duty has become payable in respect of any property but has not been fully paid, and by reason of another death Estate Duty becomes again payable in respect of the same property, so much of the former Estate Duty as has not been paid before the occurrence of such death shall cease to be payable."—(Colonel Kenyon-Slaney.)

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

SIR W. HARCOURT

said, that Clause 5 dealt with the question of instalments, and the Amendment of the hon. and gallant Gentleman would be more in Order on that clause. He wished, however, to state shortly the views of the Government in the matter. They started with the proposition that real property and personal property must for the purposes of this duty be put on the same footing. Therefore, the death was due instantly on the death of the owner, and the payment of it in instalments was an indulgence. But they could not found on the instalments the argument that the death of the successor released him from the obligations to pay the charge. With regard to the argument of the hon. and gallant Member as to several charges being placed on the property because of the death of several brothers in succession, he would point out that if it were personal property there would be no doubt that the sum would be paid; and the question was whether real property, because it was real property, was to he placed in a different position from personal property. The Government said "no "; they thought that realty and personalty should in this matter be treated in the same terms. He would also point out that some of the largest properties in the country had resorted to insurance, as one of the best and most economical means for providing against the contingencies to which the hon. and gallant Member had called attention. In any event, if the hon. Member was not satisfied with that explanation, the proper place to raise the question was on Clause 5.

*SIR M. HICKS-BEACH

said, he thought the Committee were indebted to his hon. and gallant Friend for the clearness and fairness with which he had put before them a case that would, in the circumstance suggested, be a great hardship to owners of real property. It was a necessary consequence of the attempt of the Government to assimilate the duty on two things which were not like each other. He entertained some little hope that the hardship to which his hon. and gallant Friend referred might be to some extent met by a reasonable consideration of the position of real property when they came to consider the question how the value of real property was to be ascertained. Under the circumstances, he would advise his hon. Friend to raise the question on a later clause.

Amendment, by leave, withdrawn.

Clause, as amended, agreed to.

Clause 3.

MR. HANBURY (Preston) moved, in page 2, line 32, after "property," to insert "liable to such duty." The object of the Amendment was to remove an ambiguity. The words of the clause were sufficiently strong and wide. They laid it down that all property passing at death should be aggregated, and what he by his Amendment tried to prevent was that property, not distinctly liable to the Estate Duty, should be brought into the aggregation and taxed. Take the case of a man not domiciled in this country, who had £ 1,000 abroad and £ 1,000 in this country. Undoubtedly, they would not be able to touch the £1,000 of personalty abroad; hut as he read the clause the £1,000 abroad would be aggregated with the £1,000 in this country and the successor would have to pay duty on the £2,000. Again, no realty abroad would be liable to this Estate Duty; but he was afraid that in the case of persons domiciled in this country, and foreigners and colonists, the clause would bring in realty abroad. If his words were accepted, it would make it quite clear that in aggregations of property no property would be introduced that was not in itself liable to duty.

Amendment proposed, in page 2, line 32, after the word "property," to insert the words "liable to such duty."—{Mr. Hanbury.)

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

MR. R. T. REID

We accept the Amendment. I think the addition of the words will improve the clause.

Question put, and agreed to.

*SIR M. HICKS-BEACH moved to amend the clause by leaving out the words "so passing," and inserting the following words:— Of which the deceased was competent to dispose beneficially by will, or has disposed of by donatio mortis causâ or gift made within 12 months of death. He said, they had now arrived at what to his mind was the most delicate and difficult portion of this very delicate and difficult measure, and he thought that as a layman he owed some apology for trespassing on grounds almost sacred to Members of the legal profession. But he had waited for some time before taking action to see whether someone more competent than himself would point out the extreme difficulty of aggregating all the property of a deceased person for the purposes of the Estate Duty. The Committee had decided on the first clause of the Bill that the Estate Duty should be a charge not upon the interest of the successor but on the estate left by the deceased; and that it should be levied in a graduated scale according to the aggregated amount of the value of the property. He was not assuming too much when he assumed that in the opinion of those responsible for the measure aggregation, at least to some extent, was necessary for the purposes of graduation. The right hon. Gentleman the Chancellor of the Exchequer, in introducing his Budget, had pointed out the difficulties, the inconvenience, and the unpopularity that would result from an attempt to graduate the Income Tax, owing to the impossibility of obtaining the aggregate amount of the income of the person to be taxed without an inquisitorial investigation, which would render the tax most obnoxious, and therefore the right hon. Gentleman turned to the Death Duties as forming the proper field for graduation by the method embodied in this Bill. In his opinion the difficulties in the way of graduation, though not the same as in the case of the Income Tax, would be very great in the case of the Death Duties. There was, in the first place, the objection on principle, which had been placed before the Committee by his hon. and learned Friend the Member for the Isle of Wight when he proposed that the Estate Duty should be levied upon the succession rather than upon the estate, and when he showed, with the sympathy of a very considerable portion of the House, how unfair it would be that the individual succeeding to a very small portion of an estate should pay Death Duties upon that portion, not according to the value of the portion to which he had succeeded, but according to the value of the whole estate, the greater portion of which had passed away to other persons. He would not, however, further touch on the question of principle, as it had already been fully argued; but would confine himself to what he believed to be the practical difficulties of the course proposed by the Government. It was clear that under this clause as it stood all manner of different properties passing under different titles and administered as parts of different estates and trusts would have to be aggregated together for the purposes of graduation. Those properties might, on the death of the deceased, be vested in almost an infinite number of different persons. How would it be possible for the various persons interested in the different properties included in the deceased's estate to communicate together with the object of ascertaining the total aggregate value of the estate? Every one of them was interested in the aggregate amount of the estate, for it was to determine the amount of Death Duties which was to be paid by that portion of the estate in which each was personally interested; and the proposal of the Government to aggregate all the different estates belonging to or vested in completely different persons appeared to him to be a prolific source of disputes and quarrels as between those persons, both as to the amount which each separate portion of the estate might properly be valued at, and also as to the amount which the whole might properly be valued at. It was obvious that no one could tell what the aggregate amount of the estate was, and therefore what the graduated amount of the Death Duty upon that estate might be, except by adding together all the items of which the estate was composed and thus obtaining the aggregate amount of the whole. There was not only the danger of dispute as to value, but there was also the risk that each of those persons might suffer from some fraudulent representation on the part of another about a matter of which he was necessarily ignorant; there was the risk of mistake by someone who returned his portion of the estate at an insufficient amount, and thereby secured that the aggregate amount would be furnished at less than it ought to be; and at some future time, when perhaps the estate of the person who had made the mistake had been disposed of by him, others interested in the same estate might be pounced upon by the Inland Revenue for additional Estate Duties. One might multiply ad infinitum the number of persons who would be separately accountable for the Estate Duty under this Bill. None of them need necessarily be relations or even connected with one another; they might be absolutely unknown to each other. The first result of this would be very great delay. An estate of large amount might be composed of many different kinds of property. The deceased might, as the saying goes, have his eggs in a good many baskets; and the fact that all these different kinds of property might be vested in so many different persons would add indefinitely to the great delay in the valuation. It might be said that these persons had an interest in concealing their existence from one another, because in so far as any portion of the property was not accounted for and did not come into the aggregate of the whole estate for the purpose of Estate Duty, to that extent the aggregate value was lowered for Estate Duty. Instead of disclosing their interest to one another and helping one another to ascertain the aggregate amount of the whole property, their advantage lay in precisely the opposite direction. Meanwhile the position of the executor, which was never enviable, was made a hundred times worse by this Bill. The executor was primarily responsible not merely for the payment of the duty on that portion of the estate which was vested in himself, but also for disclosing as far as he could and, if he chose, for paying the duty on other portions which were not so vested. He could never be quite certain that he had a complete account of all the different portions of the estate, and therefore he could never be sure that he had correctly ascertained' the aggregate amount of the whole estate. Until he had ascertained the aggregate amount correctly, he could not with safety pay one single legacy, because he could not say what rate of duty would be payable and what funds he ought to reserve for the purpose. Not only so, but the beneficiaries of an estate under settlement could never be certain how much their beneficial interest amounted to until they knew what was the graduated scale of duty payable on their interest. Therefore, they would have for an indefinite time very great difficulty in dealing with their reversion, if they should desire to do so. He knew the Bill provided that after two years the estate should be closed and the graduated duty fixed, but even then, if the Commissioners chose, they might decline for an indefinite time to determine what the graduated amount of the duty should be. So that for two years, at any rate, as he contended, it would be impossible for the executor to pay legacies or wind up the estate or discharge himself from his duties. He should like to know, under such circumstances, whether, when the Bill passed, if it ever did, the Budget of the Chancellor of the Exchequer would be quite as popular as he now supposed it to be. The legatees very often would be persons to whom early receipt of their legacy was a matter of supreme importance, who might be looking to the legacy to pay their debts, to start themselves or their children in some career in which an early start might make all the difference to their success in life. In future, every legatee, the payment of whose legacy was delayed through the opera- tion of this Bill, would be an enemy to the Chancellor of the Exchequer, who had made such a proposition in this would-be popular Budget. He might be told that the difficulties he had pointed out were due to the law of inheritance and succession; and that they would be remedied if on the death of a person holding personalty and realty, personalty and realty alike passed to his executor. The faults of the Bill could not be excused on that account, because they had to consider the law as it was at present, for it was on the existing state of the law that the proposals of the Chancellor of the Exchequer were based. And he ventured to say, from the information laid before him by men experienced in those matters, that the practical difficulties of working the proposed scheme of aggregation were so great as to be almost insuperable. He had ventured to suggest au alternative. The first part of the clause, as amended by the Amendment he now proposed, and by a further Amendment which stood on the Paper in his name, would read as follows:— For determining the rate of Estate Duty to be paid on any property passing on the death of the deceased, all property 'of which the deceased was competent to dispose beneficially by will, or has disposed of by donatio mort is causâ or gift made within 12 months of his death,' shall be aggregated so as to form one estate, and the dut3r shall be levied at the proper graduated rate on the principal value thereof; 'and all property comprised in a settlement a beneficial interest wherein accrues on the death of the deceased to any person other than the settlor or the deceased shall be similarly aggregated and the duty shall be levied at the proper graduated rate on the principal value thereof, and all property a beneficial interest wherein accrues on the death of the deceased to any person by the severance of a joint tenancy shall be separately charged, and the duty shall be levied at the proper graduated rate on the principal value thereof.' The effect of this, as he had been advised, was that property passing by will, whoever might be the beneficiaries, to the executor; property passing under settlement, whoever might be the beneficiaries; and property passing by severance of a joint tenancy, would each be aggregated separately. He hoped his suggestion would not be met by technical objections, for, though it might not be the best way possible of dealing with the matter, he was convinced that it would meet, to a large extent, the practical difficulties he had pointed out. The Chancellor of the Exchequer would no doubt contend that the result of separately aggregating the properties would reduce the aggregated amount on which duty had to be paid, but it would not do so to a very large extent. By this Amendment, also, the suggestion of the hon. and learned Gentleman the Member for the Isle of Wight that the Death Duty should be levied on succession instead of on the death of the deceased would be partly met. Supposing a man left his landed estate in settlement to his eldest son, that son would pay duty on the whole estate. If he left £10,000 by will to a younger son, that would be aggregated separately, so that the younger son would only pay according to the value of what he received.

SIR W. HARCOURT

Would you aggregate all the settlements?

SIR M. HICKS-BEACH

No, each settlement separately. This measure must be considered not on financial grounds only, but also in regard to its practical working. He contended that in practical working it would create enormous difficulties owing to the delays that would be caused and the impossibility of the different persons who were accountable for the payment of the duties on the different portions of the estate communicating with one another. The mere delay in the payment of legacies would of itself be a great public evil. Those were matters the Committee ought to seriously examine into before adopting the Government scheme of aggregation, which had been submitted, he believed, without the extreme difficulty of carrying it out having been adequately considered. The question was not to be treated as one of a Party character. It was as much his desire as it could be that of the Chancellor of the Exchequer that the Revenue should receive all the money to which it had a fair claim, and that the proposals of the Budget might be so administered as not to work any injustice or create any public grievance. He, therefore, hoped that in the interests of the Chancellor of the Exchequer himself the Government would be able to accept the Amendment.

Amendment proposed, in page 2, lines 32 and 33, to leave out the words "so passing," in order to insert the words— Of which the deceased was competent to dispose beneficially by will, or has disposed of by donatio mortis causâ of gift made within twelve months of death."—(Sir M. Hicks-Beack.)

Question proposed, "That the words 'so passing' stand part of the Clause."

SIR W. HARCOURT

I have no reason to complain—quite the opposite—of the tone and object of the right hon. Gentleman in proposing the Amendment. It is only natural he should desire that proposals such as those made in the Finance Bill, involving, I admit, heavy burdens, should be made to work with as little oppression as possible. I myself share in that desire, and I may repeat what I said in introducing the Budget, that so long as the principles on which it is founded were accepted, the Government had an open mind entirely as to the methods and machinery for carrying it out. First of all, in regard to a proposal of this kind, I have considered whether it is consistent, or reconcilable, with the principles on which the Budget is founded. Of course, in order to make graduation of any value, there must be aggregation. One could not graduate except upon the amount which passed at death. If the total amount was split up into a number of small fragments graduation disappears. The whole ratio of graduation depends upon aggregation. If the wealth of a rich man was to be split up into any number of fragments, either by settlements or in any other way, that would strike at the very root of the principle of the Budget. It is a case of the large stream receiving small rills. If you proceed, not upon the stream, but upon the rills, the whole virtue of our proposals disappear. I am told that we are to graduate upon separate settlements. Thus a man with £100,000 has only to make 10 settlements in order to reduce himself to the appearance of having only £10,000. It is obvious that in a case of that kind there would be evasion of the duty. The right hon. Gentleman has said that I desire to have more money. I cannot say that I desire it, but I certainly require it. It is by the adoption of the principle of graduation that I propose to obtain it, and I do not think it is unreasonable that I should decline to accept an Amendment which practically destroys graduations. So much for the principle. The right hon. Gentleman has also referred to the question of administration. I can only say that this point has been long and carefully discussed by the most competent authorities of the Inland Revenue, and that I have taken great pains to ascertain what the practice was and whether the difficulties which have been suggested were insuperable. If necessary, the Government will make further provision in order that no delay shall occur in administering these estates. These are matters of machinery. The provisions have been day after day under the consideration of those who will have to administer them, and as such the Government recommend them to the House. If we are wrong we shall have to take the consequences. The proposal to split up property in this way is fatal to the Government's doctrine of graduation, and therefore the Government cannot accept it.

MR. GOSCHEN

The right hon. Gentleman in his opening remarks said that of course the Government could not accept any Amendment inconsistent with the principles which he laid down and to which he gave expression in his Budget speech. It strikes me that the right hon. Gentleman has laid down certain abstract principles and then endeavoured to carry them out. He says that administrative difficulties must give way in order that his principles may be maintained. I am afraid I cannot follow that argument. If we are asked to follow that, I must inquire what would have happened to all our present taxation if previous generations had proceeded on the Chancellor of the Exchequer's plan? It is one of the first propositions in taxation that taxes should be as easy to collect as possible, and taxes have been condemned, not only on account of injustice, but also if they caused so much friction and oppression in realising the amount expected from them as to cause a real grievance to the taxpayer. What I think the Chancellor of the Exchequer ought to do is to propose a workable scheme land not to lay down propositions with which he meets us at every turn, and which involve the rejection of every Amendment which, in the right hon. Gentleman's opinion, is not in accordance with them. But I will leave these administrative difficulties to gentlemen more capable of dealing with them than I am. I should like to say a few words as to the financial part of the Chancellor of the Exchequer's speech. The right hon. Gentleman seems to me to exaggerate the possibilities of evasion in saying that the millionaire might split up his fortune into so many tenth parts. The right hon. Gentleman has forgotten one of the main points which is generally in his mind—the nature of real property. It is the large landowners whom the Government wish to tax. Does the right hon. Gentleman suppose that one of the large estates would be broken up in order to avoid aggregation?

SIR W. HARCOURT

There might be a dozen settlements.

MR. GOSCHEN

That is merely a technical objection. If that is the chief difficulty that the right hon. Gentleman feels I am sure that it can be met by the exercise of his own discretion and the ability of the officers of the Inland Revenue. They will be able to stop more difficult holes than that. Under this Amendment the Chancellor of the Exchequer will not indeed get the whole of the aggregation, and I am glad that is so, because the aggregation proposed by the Government involves considerable injustice as well as administrative difficulties. This proposition sins against one of the right hon. Gentleman's own cardinal doctrines—that taxation should be levied according to ability to pay. The proposals of my right hon. Friend's Amendment are a compromise. They would permit large aggregations; but they would treat settlements separately. Apart from the administrative difficulties, I am prepared to argue that graduation is unjust with regard to settlement where the interest of those who derive the benefit is totally distinct from the interest of those who inherit by will. I admit that the proposals would involve some loss to the Exchequer, but nothing like what the Chancellor of the Exchequer has anticipated. His example was one which is most unlikely to occur. The right hon. Gentleman takes the case of the millionaire. An ordinary man, however, who has not an immense for- tune would settle it according as the interests of his wife and children required. He would divide it into fractions on this account, and not to avoid aggregation. The right hon. Gentleman did not attempt to grapple with the most powerful arguments of my right hon. Friend (Sir M. Hicks-Beach) as to the difficulties that would ensue upon the adoption of this scheme. The right hon. Gentleman had said that reliance may be placed upon the ingenuity of the Inland Revenue officers to find a method by which they can collect this duty in the case of an aggregated estate. I quite endorse all the commendations he used concerning the Inland Revenue Authorities. They are almost as ingenious in stopping leaks as solicitors are in finding how to evade a tax. But not all the ingenuity nor all the activity of the officers of the Inland Revenue will enable them to overcome difficulties which are inherent in the principles which the Chancellor of the Exchequer has attempted to carry out in this Bill. The right hon. Gentleman said that he had been advised in regard to this matter by the Inland Revenue officers. If the right hon. Gentleman first lays down a principle and then asks the officers of the Inland Revenue to find some method of carrying that principle into effect, it is of course the duty of those officers to do their best to carry out the views of the right hon. Gentleman however, impossible it may be to do so. The right hon. Gentleman may tell us that he has endeavoured to do the best he can compatibly with his first object, which is to obtain additional revenue, but if the right hon. Gentleman's first object is met by insuperable difficulties his original plan ought to be modified. One of the chief difficulties which are inherent in the right hon. Gentleman's plan is the enormous delay that it must necessarily involve. The gathering in of all the rills of an estates as the right hon. Gentleman calls them in that picturesque language which I am glad to say he often employs to lighten up what must otherwise be a very dull subject—must necessarily occasion very great delay in the administration of an estate. The right hon. Gentleman has spread his net so wide in his endeavour to bring everything into it, including property outside the United Kingdom, that it is almost impossible to say how long the administration of an estate will last. The very perfection of his dream makes it the more difficult to carry it out in reality. It has been pointed out that the delay and inconvenience may all be shifted from the general body of legatees to the residuary legatee, but the difficulty of ascertaining what the residuary legatee is to have will now be more difficult than ever. The whole principle of graduation involves the difficulty that it is not till the last moment that it will be known what the whole estate has to bear. My right hon. Friend proposes a compromise, and we venture to put it to the Government that for the purpose of securing the smoother working of this measure, and in the interest of the public and of the taxpayer, the right hon. Gentleman should agree to the compromise which my right hon. Friend offers. The Amendment, if adopted, may to a certain extent affect the revenue to be obtained from the duty, but, on the other hand, it would greatly facilitate the working of the Bill, and would prevent the friction and enormous expense which might otherwise be incurred. My right hon. Friend pointed to many difficulties besides delay. I do not feel competent to argue the question of those difficulties any further. While we acknowledge that if the Amendment be adopted some revenue may be lost, we are anxious to assist the Chancellor of the Exchequer to remove some difficulties which we believe to be inherent in the proposal as it stands, and which all the ability of draftsmen and Inland Revenue Authorities will, I think, be unable to overcome.

*MR. GIBSON BOWLES (Lynn Regis)

said, the Committee would have been very much struck with the entire absence of enthusiasm on the part of the Chancellor of the Exchequer in defending the principle of aggregation, which was the central principle—he was going to say the central absurdity—of the Bill. [Ministerial cries of "Oh!" and "Divide!"] The Chancellor of the Exchequer had gone so far as to say that he had an open mind on this subject. ["Divide!"] This was the first time in the course of these discussionsߞ["Divide!"]

MR. HANBURY (Preston)

I rise to a point of Order. I beg to call atten- tion to the fact that the hon. Member opposite (Mr. Brunner) is constantly interrupting.

MR. BRUNNER (Cheshire, Northwich)

I wish to ask, Sir, whether it is in Order for an hon. Member to describe the principle of a Bill of which the House has agreed to the Second Reading as an absurdity?

THE CHAIRMAN (Mr. J. W. LOWTHER)

I do not think there is anything out of Order in that.

*MR. GIBSON BOWLES

It is a pity that the hon. Member has been so long a Member of this House as to have forgotten all its Rules, and even the common courtesies of debate. The hon. Gentleman went on to say that the Chancellor of the Exchequer had absolutely declined to discuss the principle of aggregation; he had only said that without it he could not apply his graduation scheme. The right hon. Gentleman had had nothing to say in principle against the Amendment except that it would be fatal to this eternal principle of graduation. The objection of the Opposition was not to graduation in principle, but to this graduation. They said that if the Chancellor of the Exchequer wanted to apply the principle of graduation it should be applied not to the amount left by the dead man, but to the amount received by the survivors. The right hon. Gentleman said he had no objection to the whole of the duties being paid out of the residue, but he seemed to have forgotten that the whole basis of the doctrine of taxation was that if a man wanted apples he must go to the orchard, and that if he wanted Death Duties he must get them not from the dead man but from where the money was, or the persons to whom the property had passed. The right hon. Gentleman said that the executor would know everything, Very often the executor knew very little indeed about an estate. It was a very common thing for an estate to consist very largely of realty, with which the executor had nothing to do, or of separate trusts, with which also the executor would not concern himself. It was a common thing for a patron of the arts in his youthful days to admire an actress and to make a settlement upon her, with remainder to her child. Subsequently the art patron got married, and made another settlement, appointing, perhaps, his brother-in-law executor of his will. He did not tell his brother-in-law about the other settlement. He could assure the Chancellor of the Exchequer that this was no uncommon thing.

SIR W. HARCOURT

In what class of society are these settlements generally made?

MR. GIBSON BOWLES

In the class of society to which the Chancellor of the Exchequer himself belonged. The unfortunate principle of aggregation never could work, and if the officers of the Inland Revenue had told the Chancellor of the Exchequer that they thought it would, he was of opinion that they were extremely mistaken. It was a matter for regret that in framing the Bill the Chancellor of the Exchequer had departed from all the principles of taxation hitherto known to the tax collector. The right hon. Gentleman levied his tax not on the property taken by the beneficiary, but on the property left by the deceased. He taxed a man who no longer existed—nay, a property which no longer existed, inasmuch as it was already broken up into various properties. He followed the ghost of the dead man and sought to levy the tax upon the property that existed while that man was alive. When a man died his estate was not necessarily capable of being at once wound up. The experienced officers of the Inland Revenue Department would tell the right hon. Gentleman that estates had constantly to be reopened, added to or diminished, in consequence of accretions or diminutions which had taken place since the death. Under the Chancellor of the Exchequer's scheme, whenever there was an aggregation or a diminution of an estate, there would be an alteration in the rate of duty payable, and an entire reopening of the question of duty from top to bottom. In the case of an estate of £500 distributed in five legacies of £100 each the duty payable would be 2 per cent., and each legatee would pay his £2 and go away with his £98. A short time afterwards it might happen that the value of the estate was found to have increased to the value of—to take an extreme case—£1,000,000. He could assure hon. Gentlemen that stranger things than that had happened in the history of legacies. This property being aggregated the duty on the £100 would become not £2 but £8. There was £6 more to get from each legatee, and how was it to be got? The legatees had, perhaps, gone away. Was the executor to pay it? Or, instead of the estate becoming greater, it became reduced in value. Money would then have to be returned to the executor, and how would he be able to return the amounts to the legatees, who might have removed to some other country, or who might have died. The beauty of this system of taxation was that until you had I aggregated you could not graduate, and until you had graduated you could not levy your tax. He submitted that they never could aggregate finally as the estate would have to be kept open for ever, the Bill saying "if at any time." He hoped the Committee had gained some idea of the enormous complexity that this aggregation would cause. The Inland Revenue Department was full of books containing records of deceased persons and their properties. These books had been open well nigh 100 years, but under the system proposed they would have to be open 1,000 years. Whatever other result the Bill would have it would enormously increase the complexity of this taxation. These considerations alone ought to make the Committee hesitate before they adopted this ridiculous device of aggregation.

*THE SECRETARY OF STATE FOR INDIA (Mr. H. H. FOWLER, Wolverhampton, E.)

said, he would recall the attention of the Committee from the speech just delivered to the Amendment before the House, which was not directed against graduation or aggregation. Taken in connection with subsequent Amendments, it contemplated two or three classes of aggregation, and made graduation depend on the description of the property. Seven-twelfths of the property in this country passed from father to child; another large portion passed from father to child by way of settlement; and in a third class of cases men on their marriage settled their property upon their wives and children. The right hon. Baronet proposed that I they should take a man's property and divide it into two sections. In an ordinary case of a man dying worth £100,000, leaving a certain interest to the wife and the rest in equal proportions to the children, the property would be taxed according to the gross amount on the scale, of graduation that Parliament in its wisdom had seen fit to adopt, and no objection could be raised on the ground of injustice—except in so far as objection could be taken to the principle of graduation altogether. But suppose the father settled £25,000 each on two daughters on their marriage, and left £25,000 each to two other children by will, under the Amendment they would find themselves in this position: the estate would be taken as only worth £50,000, and so far as aggregation was concerned the other two £25,000 would be dealt with separately. The Chancellor of the Exchequer was quite right when he said that the Amendment struck at the whole root of the Bill. It mattered very little whether the property was disposed of by will or by settlement. The result of the case which had been put would be that a man would I die worth £100,000 and would bequeath £100,000, and yet part of his estate would pay duty as if he had died worth £50,000, and the other portions as if he were worth £25,000. If the Committee did not mean to produce that result they would not accept the Amendment. The amount of property which would pass on the death was £100,000, and, whether it passed by deed or will, the Revenue wished to get at it as a whole and to tax; it as a whole. That was the principle of the Bill. The Chancellor of the Exchequer was right in saying that the Amendment proposed would produce a wholesale system of evasion. It would encourage men to begin giving life interests and making separate settlements; and by such au alteration this scheme, whether right or wrong, would be completely nentralised as regarded aggregation and graduation. The right hon. Gentleman had drawn a depressing picture of the absolute impossibility of the officials at Somerset House being able to ascertain the facts with regard to settlements, but the administrative difficulties which had been suggested were largely imaginary, because there was not a settlement in existence on which Succession Duty had been paid of which there was not a note at Somerset House. There might be some illegitimate transactions carried out, as had been suggested, by the aid of the mysterious relatives to whom allusion had been made; but the affairs of most people in the great bulk of these matters were known to professional advisers, family trustees, and executors. An executor never allowed a residuary legatee to touch the residue until all accounts at Somerset House were passed and the whole matter closed; and that practice would prevail in the future as in the past. He knew of no other administrative difficulty entailed by the proposed aggregation. He did not think that real property would be divided in the manner suggested. The object aimed at was to treat a man's fortune as a whole; and the machinery existing and to be provided was adequate to deal with any difficulties that might arise. He respectfully urged upon the Committee that the right hon. Baronet's Amendment would practically neutralise the whole Bill.

MR. BANBURY (Camberwell, Peckham)

wished to mention a difficulty which had arisen in his own experience in the case of a family in which the father died four years ago leaving £100,000 settled on the widow, to be divided at her death among his children. According to Clause 17, this amount of £100,000, having paid Probate Duty before the passing of this Bill, would escape the Estate Duty; but if this clause were to apply and the widow died next year leaving £3.000, her executor would have to aggregate that with the life interest on £100,000, and he would have to pay Estate Duty on £103,000, for which the entire bequest of £3,000 would not suffice, and therefore the unfortunate person to whom the widow had left £3,000 would find himself liable to au amount of duty which would leave him considerably minus.

MR. R. T. REID

said, no doubt the case mentioned by the hon. Member raised a difficult question, and he was not certain that he had grasped all the facts stated so fully as to be able to deal with the case on the spur of the moment, but if they were reduced to writing he would answer any question based upon them.

MR. BANBURY

said, it was a case that had actually occurred, and he was the unfortunate executor. He hoped the hon. and learned Gentleman would consider that point.

SIR R. WEBSTER

said, the hon. Member had only put in a complicated shape an illustration of cases that must occur, and which ought therefore to receive attention from the Government through the Solicitor General or those who drew this clause. The case put was one of a class which brought out in strong relief what would happen under the subsection on the passing of property if any benefit was reserved when the entire property would be aggregated. With regard to the observations of the Secretary of State for India and the Chancellor of the Exchequer, he contended that it was no answer to the case in support of the Amendment to say it was contrary to the principle of the Bill, and that therefore the Amendment could not be accepted. He denied that Somerset House knew all about settlements. The only class of settlements that Somerset House knew of, so far as he was aware, were those on which Succession Duty had been paid. No machinery, or Regulations, or Rules existed, as far as he knew, whereby Somerset House knew anything about settlements except in a very small number of cases. Quite apart from that, what right had an executor to call upon a trustee to give him the necessary information for the purposes of aggregation? It might be said a clause would be inserted to give him power to obtain the information by litigation, or that there might be an originating summons taken out in the Courts in order to get a power of discovery; but the Committee stood face to face with this difficulty, that the Government were seeking to aggregate properties of a different kind, with different incidents, and the control of which rested in different hands. The only practical and sensible method of dealing with the case was to require that property passing by will and property passing by settlement should be aggregated separately. He did not deny, with regard to settlements, that it was possible to imagine persons setting to work to break up their property into small amounts and appointing beneficiaries to whom separate interests might be given, and that in that way they might be able to reduce the duty payable; but the suggestion that a millionaire might make himself into 10 men with £100,000 each, or 100 men with £10,000 each, was, he should say, rather an absurd illustration. Then it had been said that a man would break up his property into various lots and settle each lot separately, but in favour of one and the same person. Of course, if he did that, no objection would be raised to the whole being classed together again and made to pay duty on the full aggregate scale. The simple remedy for such evasions would be to equalise more the rate of graduation at the lower end of the scale, and make up for the deficiency that would accrue by a readjustment of the rates levied on the larger estate. It was difficult to accept the statements made by the Government that they were unable to adopt this or that reasonable Amendment because its terms would have involved a great reduction in the return to the Revenue. That was not true, and if the Members of the Government opposite would afford an opportunity of working out the figures with paper and pencil he would undertake to convince them of it in a few minutes. Of course it was impossible at that moment to enter into calculations of that kind. Why did the Government refuse to make any improvements whatever in their scheme? His right hon. Friend had not exaggerated I he case at all when he said that there wore a number of persons whose property would be subjected to an uncertain amount of taxation, and that until the principal value of the property could be ascertained nothing could be done. The winding up of estates, therefore, would be delayed simply on the chance of the Government being thereby able to squeeze one more drop of blood out of them. It had been always assumed throughout the Debate by those in charge of the Bill that there would be a residuary legatee out of whose pocket these duties could be got. That was a fallacy. There were two ways of leaving property by will. The first was by cutting up the whole of a property and willing away each individual part, in which case there would be no residue at all; and the other way was to make the residue the principal bequest after the payment out of the estate of certain specified sums. Suppose, again, that after paying away the legacies as directed there should not be sufficient residue left to pay the duty. In that case the legacies would have to be reduced pro rata; and therefore it would be necessary to ascertain exactly what the actual duty would be before any payment out of the estate could be made. Considerable delay must in many cases occur before this could be determined, especially where part of the estate was difficult to realise or was situated outside the limits of the Kingdom. It was obvious, looking at the question from a practical point of view, that they must not compromise matters. It was the duty of the Committee to see if some remedy could not be found to meet this difficulty, which at the same time would not limit the amount that the Exchequer would finally receive. From the practical point of view they should endeavour to find some way whereby, without seriously diminishing the total result to the Exchequer, a remedy would be provided against the objections which had been pointed out. One right step in that direction was that property passing under will should be aggregated by itself. He protested against the doctrine that because the Chancellor of the Exchequer had made up his mind that he wanted so many millions and so many hundred thousands, that therefore they were to impose a scheme and devise machinery unworkable in practice, which would inflict upon the people who had to pay a great amount of inconvenience and hardship, and when these inconveniences and hardships were pointed out to be told that the Government would not attempt to remedy them because the compromise proposed was contrary to what they were pleased to call the principle of their Bill.

MR. WYNDHAM (Dover)

observed that the Secretary of State for India had said the proposal now before the Committee struck at the very principle of graduation and aggregation, as embodied in the Bill. Perhaps, after the speech to which they had just listened, the right hon. Gentleman would admit that his expression was forcible, and that this compromise did not go quite so far. Undoubtedly, it would mitigate the force and diminish the effect of those two principles, and he would ask the Committee whether such mitigation and diminution might not be desirable from a point of view which English Members in that House were only too apt to overlook, though hon. Members from Ireland and Scotland, in the first place, examined every provision in a finance or Budget Bill from that point of view, and that point of view alone. The Chancellor of the Exchequer, when they moved an Amendment, asked "What class are you thinking of, and who will benefit?" Might he not, upon somewhat parallel lines, ask what nation would suffer if these principles of aggregation and graduation were applied to the full extent in which they at present stood in the Bill? In which of the three countries of this Kingdom were the large estates which had to be assessed as a whole, and graduation to be calculated upon their whole size, and which would contribute a yet larger share of revenue than was now contributed by England as contrasted with Ireland and Scotland. Last year they were plunged into calculations as to the relative contributions of the three countries, and it came out that out of every £100 contributed from England, £70 went to Imperial objects, and only £30 returned to this country. Out of every £100 contributed by Scotland and Ireland, the reverse ratio-obtained for £70 went to Ireland or Scotland, and ouly£30 were devoted to Imperial purposes. Was it true, or was it not, that in consequence of this adoption of the principle of aggregation and graduation they would derive a far larger revenue from England? Was it not true that the great estates were situated in England? And if they were to be regarded as a whole, and graduation assessed upon them as a whole, they would add to the total sum derived from England, without adding to the amount of money returned and spent in England. If that were true, the contrast, already sufficiently glaring in 1893, would be yet more scaring and unjust as regarded the predominant partner in 1894.

SIR W. HARCOURT

said, he thought the very frank observations of the hon. Member for Dover were worthy of notice. It was perfectly true that the principles of aggregation and graduation would to a greater degree affect England than Ireland or Scotland. The "predominant partner," as it was properly termed, was the richest partner, and as such must be prepared to make the largest contributions to the burdens imposed. Ireland and Scotland maintained that they were more heavily taxed in proportion than England; and now it appeared the great objection to aggregation, which was the substratum of graduation, was that the great properties of England would have to contribute in a greater ratio than Ireland and Scotland. He was perfectly prepared to join issue with the hon. Gentleman on that ground. It was the comparative immunity of great properties in a wealthy country like England that was the basis of the proposed reform. If it were proved that aggregation would produce the result indicated by the hon. Member, it would be one of the greatest reasons for the Government adhering to the proposal in the Bill and opposing the Amendment. This question had now been discussed very fully from both sides, and he hoped the Committee would come to a decision. There was an entire answer to the objections to the administrative difficulties in the fact that all these difficulties existed now with regard to the Succession Duties. But the question to be decided was whether they were to aggregate the whole property of a man for the purpose of determining what ratio he ought to pay; and he could not accept as an answer to that proposal that it would bear more heavily on the richer persons and the richer country than on the poorer persons and the less wealthy countries of Ireland and Scotland.

MR. W. LONG (Liverpool, West Derby)

said, the Chancellor of the Exchequer had adopted the practice apparently most easy and agreeable to him when presented with a fair and reason able proposition, put forward on the part of the people who, at all events, believed that they had a grievance, and that the incidence of this taxation would be un fair and unjust. The right hon. Gentle man did not attempt to grapple with the difficulties that were fairly and reason ably presentedߞߞ

SIR W. HARCOURT

I have answered them before. I was answering the Member for Dover.

MR. W. LONG

asked how did the right hon. Gentleman attempt to answer the Member for Dover? By turning his speech as referring to the incidence of taxation on large properties in England into a political speech, from the point of view of Party politics in this House con- nected with totally different subjects. He noticed when the hon. Member for Dover alluded to the incidence of this tax upon a large number of big estates in England his statement was received, as similar statements had been received before, with jeers by hon. Gentlemen opposite. Hon. Gentlemen were perfectly entitled to use their political power to the best of their ability in order to give effect to the principles they believed in, but he submitted it was not necessary or decent for them to jeer at men for presenting opinions which not only they themselves but those they represented believed to be true. They believed that this tax as proposed would operate unfairly to England. Let hon. Members opposite make use of their political power to impose these burdens if they thought they ought to be imposel, but they need not insist on accompanying their work by jeering at those who endeavoured fairly and reasonably to put the position of those whom they represented before the Committee. The Chancellor of the Exchequer had treated the argument of the hon. Member for Dover as a claim for Great Britain, as the predominant partner, for immunity from burdens she ought to bear. His hon. Friend did nothing of the kind. What he endeavoured to show was that, whether the tax was fair or unfair, at all events by far the larger burden would be thrown upon England, because there were a larger number of these large properties in this country. How did the Chancellor of the Exchequer deal with the proposition? First of all, he turned away from the real issue by re-introducing Party politics and difficulties between the different countries, and then he turned into an issue even more unjust. The Government had laid it down times out of number that their object was in graduating this taxation to cast an increased burden on the rich. The Chancellor of the Exchequer used those terms himself. That was an issue upon which they were willing to fight hon. Gentlemen opposite. The Government said their intention and object was to cast their increased graduated taxation upon those who were rich, and, therefore, able to pay it. The Chancellor of the Exchequer claimed that the State had a right to take from the deceased the State's share of the deceased's property before anything should pass to his successors. The Government were going to cast this upon property as it devolved on the successors without regard to what share the successors got in the estate of the deceased. He would put one simple case before the Committee, and ask whether if their (the Opposition's) estimate of the incidence was correct the Government were justified in saying they were going to tax people according to their ability? Let him take an estate divided into a million of personal estate, a large amount of real estate, and a certain amount of loose personalty. The original personalty had been settled; a portion of the land had been settled, and the remainder of the estate was only available for disposition. That passed under settlement—passed under will, and what -happened? The testator had no power over the settled estate; no power over the portion of the real estate, and he disposed of the rest partly to his own successors and partly out of his family altogether. If the smaller amount passed to his own legitimate successors they would have to pay, not upon the basis of what they received from the estate, but upon the basis of the whole estate being calculated for the purpose of this Succession Duty. They believed if the Amendment were carried this injustice would be rendered impossible, because if they were to introduce the words suggested they would exclude from the calculations that portion of the estate which the testator had no power as to the disposal of, and that portion of which he had only within his own power of disposition at the end would be the portion on which he would pay.

MR. H. H. FOWLER

Did he settle the £1,000,000?

MR. W. LONG

replied no. It was where he succeeded under a settlement, and had no power of settlement at all. He succeeded to it, and it passed on his death out of the direct succession.

MR. H. H. FOWLER

It will not be aggregated.

MR. W. LONG

What will prevent it? Is it quite clear that being settled it would be excluded?

MR. H. H. FOWLER

Yes, as it was going out of the family.

MR. W. LONG

Not going out of the family. The right hon. Gentleman knew that there were such things as sons and daughters and nephews and nieces, and sons and daughters sometimes considered they were entitled to prior consideration over the nephews and nieces, and if the greater part of the estate passed over to the nephews and nieces it would not pass out of the family, but out of direct succession.

MR. W. MOULTON

It would not be aggregated.

MR. W. LONG

said, most certainly there were very different opinions upon this point. He had put the case he had submitted before practical men, and he had been assured that if this succession had taken place after this Bill had become an Act of Purliament that the Estate Duty would have been payable upon the estate aggregated as a whole.

SIR W. HARCOURT

was understood to say that this was not the case.

MR. W. LONG

said, he was not a lawyer, and was not competent to express an opinion on the language of the clauses of the Bill which the Chancellor of the Exchequer had said would no doubt have hereafter to be decided by Courts of Law. They were fighting this Bill not because they wanted to evade just liability and responsibility, but they asked the Government if they were going to tax the rich that they should in reality tax the rich and not those whose ability to pay would not come under that description. The Amendment, in his opinion, would still more ensure that the duty should be payable in its increased degree by those best able to bear the burden. It was not desired in any way to relieve the rich of the payment of a burden they were able to bear, but what had been contended all through was that the Bill did not lay the burden on the right shoulders.

MR. MOULTON

said, it seemed to him that the speeches that had been delivered of late could not, even by the persons who had made them, be supposed to go to a mere amendment of this Bill. I Let them look at what the proposed Amendment was. It was to aggregate— that was, graduate according to the property—only that passed by testamentary disposition. The references beyond the testamentary disposition were really only colourable forms of that same testament and same disposition, and, therefore, included. They were not arguing here whether graduation was to he according to the amount of the legacy or the amount of the estate. Both these points had been decided, and the Committee ought to accept the decision loyally. Gould anybody in this House think that they could honestly except, as a ground for graduation, that fraction of a man's property that he might choose to pass on by testamentary disposition? Every one knew that by settlement a man could do pretty nearly the same as he could by will. How could anyone stand up and justify graduation, if it was not based on the total wealth of a man? That which passed by settlement might be nine-tenths of a man's wealth, and this Amendment proposed to exclude all that. Could it be said that such an Amendment did anything but strike at the root of the Bill? and could it be said to be a loyal acceptance of the decisions the Committee had already arrived at? He was not standing on any technical ground, but he did say that graduation by that fraction was in no way graduation according to the power of a man to bear the burdens. It must be by his total wealth; by his total wealth being taken, that which could be passed on by testamentary disposition, and so much as he had enjoyed and had passed on to him under settlement as might be considered family wealth which he could take advantage of in arranging the disposition of that which he had left himself competent to dispose of at the end of life. If that wee so, it was impossible to draw a line between testaments and settlements when they were coming to a question of graduation. What was the reason for doing it? The reason was, they were told, that the machinery would be inconvenient. Were they going to abandon a principle of taxation that they thought to be just because it required care in arranging the machinery? For remember this was not a trivial abandonment of something that would be more trouble than it was worth. It was an abandonment of what might be nine-tenths of the whole property passing, and therefore an abandonment of the whole system of the Bill so far as graduation according to wealth was concerned. And, forsooth, the reason—and, it was suggested, sufficient reason—for this was that it would be difficult for an executor to know exactly what the amount of the property passing under settlement was. But even supposing for a moment that was an adequate reason, and assume they were incapable of taking precautions that settlements should be known by the Inland Revenue officials just as much as wills. Suppose they admitted that, how much farther were they? The trustees of the one settlement would not be the same as the trustees of another. The consequence would be that the whole of this settled property would be split up into little bits, and the whole system of graduation with regard to settled property would have to be abandoned. He did not venture to say that this Amendment was out of Order; but if ever there was an Amendment which was diametrically opposed in principle to the previous decisions of the Committee—though it was not in form— surely it was this one. Those who were in favour of making the weight of this taxation fall upon all the wealth that a man practically left behind at his death could not give any countenance to a proposal like that under consideration.

MR. BUTCHER

said, he thought the hon. and learned Member had grossly exasperated the effect of the Amendment. The object of the Amendment was simply to remove one of the many impracticable and many unjust proposals of the Bill. And how did the hon. and learned Member justify his extraordinary description of the Amendment? He said, "Do you suppose we are going to tax only the fraction of property a man leaves by will? No; we shall tax his total wealth." But what was a man's total wealth? He held that the total wealth of a man was the property which he was competent to dispose of by will. "No," said the hon. and learned Member, "we have not only to consider what a man disposed of at his death, but also what he disposed of by settlement 10, 20, or 50 years ago." It was a most extraordinary statement that property which a man had placed entirely outside his power of disposition years ago by settlement was to be considered part of his wealth by will. Settled property ought to be left out of consideration. To say that property which a man had settled and parted with 10, 20, or 30 years ago still formed part of his wealth was like saying that an individual who had not backed Ladas yesterday and who had lost £50,000 out of a capital of £100,000 over the race was still worth £100,000. The Government proposed that property passing under a man's will, property passing under settlements made by himself, and property passing under settlements made by somebody else, should all be aggregated and form an artificial fund for the purposes of Estate Duty. The view of the Opposition was that the only class of property which could be dealt with justly in that manner was property passing under a will. The plan of the Government was impracticable and unjust. There had been an expression of pious hope on the part of the Chancellor of the Exchequer that the difficulties would be overcome, but the right hon. Gentleman had not shown how. With regard to the injustice of the measure, he would ask, what justification was there for aggregating property of which a man could dispose at his death with property which he could not so dispose, it being settled property in which, perhaps, he had only had a life interest? With regard to the point of evasion, it was, of course, right that the Chancellor of the Exchequer should seek to provide against it, but on the principle adopted the Government would be unjust to the honest man in order to avoid being lenient to the dishonest man. If evasion was to be prevented it should be dealt with in a properly and clearly drawn clause that would not hit the honest man but would hit the dishonest man. The Chancellor of the Exchequer had endeavoured to justify his proposals by his present need of money. There would have been more weight in that argument if the new duties were to be imposed for one year only; but the injustice the Bill perpetrated would, if it passed, be inflicted for many years, for it was not likely, after the present experience of remodelling taxation, that any Government would for a long time to come seek again to alter the Death Duties. That was another reason why the Chancellor of the Exchequer should endeavour to remove the injustice involved in the Bill as it now stood. Reference had been made to the system adopted in the colonies. He had looked into the Acts of many of the colonies dealing with the Death Duties, and he had found that, while the principle of graduation was adopted, in not one case was aggregation applied on the principle adopted by the Chancellor of the Exchequer. The Amendment would remove from the Bill that which, if it was allowed to remain, would make the measure impracticable and in many respects very unjust, and therefore he hoped it would be agreed to.

MR. A. J. BALFOUR

said, that the Chancellor of the Exchequer, instead of arguing these Amendments, generally contented himself with the suggestion, directly or indirectly, and with more or less politeness, that hon. Gentlemen opposite to him were interested in the Amendments they moved. He, at least, was not interested in any of the cases which had been raised during the discussion. The hon. Member for Dover pointed out that England would be more heavily mulcted than Ireland or Scotland. Well, he lived in Scotland and not in England. Much had been made of the case of a wife inheriting from a husband or a husband from a wife. He was a bachelor. The whole Bill might be said to concern those who were to inherit large properties. Unhappily, he had no expectations. Therefore, he hoped it would not be suggested that he was animated by personal feeling. In answering detailed objections to the measure the Chancellor of the Exchequer relied a great deal on the principle of his measure. The right hon. Gentleman admitted that difficulties might exist, but urged that the principle could not be over-ridden. That principle was that every atom of property in which a man was himself interested was, at his death, to pay duty on the aggregation of the property. But that principle was violated in the second sub-section of the very clause under discussion. His hon. Friend the Member for the West Derby Division quoted a case where an immense sum of personalty was settled on persons not in lineal succession to the possessor. There was a chorus from the Ministerial Benches that that property would not be aggregated. [Ministerial cries of "Hear, hear!"] Then what became of the principle? He did not object to the sub-section; it was a concession to equity. But it was diametrically opposed to what the Chancellor of the Exchequer called the principle of his Bill. Therefore, the principle of the Government was not one without exception; and he hoped that no more would be heard of the principle as preventing the Government from accepting this Amendment. As to whether property enjoyed by a man under settlement ought to rank with property under his absolute disposition, he agreed that, if the successors were considered, it mattered no whit whether the property came by settlement or bequest. But that was not the principle of the Government. They said that the successors were not to be considered at all, but only the dead owner, who was to be posthumously taxed. While he did not go as far as his hon. and learned Friend, he urged the more moderate contention that a man ought not to be taxed in the same way with regard to property in his own disposition and property tied up beyond his power to untie at the time of his death. It had been pointed out that the administrative difficulties of carrying out the clause would be so great that it was worth while, from an administrative point of view, to make an alteration. Such considerations had modified our whole system of taxation. The Chancellor of the Exchequer himself said that he was in theory in favour of a graduated Income Tax, but that it was administratively impossible, and therefore he did not carry it out. The Chancellor of the Exchequer, accordingly, was himself human; he was subject to the limitations of administrative convenience, and that should induce him to listen favourably to such arguments as the Opposition were able to lay before him. The right hon. Gentleman the Secretary of State for India had told them that Somerset House was acquainted with every settlement in the country, and that, therefore, when any one of them died it would be the simplest matter in the world to discover how much property he left by will and how much by settlement, and to aggregate the two. He did not know by what system of secret espionage Somerset House became acquainted with the private affairs of people.

SIR W. HARCOURT

said, Somerset House became aware of settlements when Succession Duty was paid.

MR. A. J. BALFOUR

said, he did not know how far that affected the difficulty which had been pointed out. Every single embarrassment they now; had to encounter in dealing with Succession Duty would be multiplied ten thousand fold by the fact that every settlement the deceased had made would act and react on every other settlement or sum of money which had belonged to the deceased. In asking the Committee to divide with his right hon. Friend, he admitted that this was in the nature of a compromise, and that those on his side of the House looked at the matter with somewhat different eyes from gentlemen on the other side, because they thought the equitable system was to tax the man who received and not the man who left the property. That principle he was not now arguing, as they had already divided on it, but he did think they might compromise between the opinions held on both sides of the House and adopt an Amendment which, while it did not carry out to the full the equitable view of the Opposition of dealing with the Death Duties, did relieve the officers who had got to collect the tax and legatees who would be kept out of their legacies. Let it be remembered that the compromise suggested would get rid of a great many practical inconveniences—inconveniences so great that he was sure that long before the period of 20 years named by his hon. and learned Friend it would be necessary for some successor of the Chancellor of the Exchequer to revise the system the right hon. Gentleman was endeavouing to establish.

Question put.

The Committee divided:—Ayes 169; Noes 129.—(Division List, No. 80.)

Committee report Progress; to sit again To-morrow.