§ Order read for resuming Adjourned Debate on Amendment [14th July] proposed on Consideration of Bill, as amended:—
§ And which Amendment was to leave out Clause 31.—(Mr. William Jones.)
§ Question again proposed, "That Clause 31 stand part of the Bill."
§ Debate resumed:—
§ MR. J. H. DALZIEL (Kirkcaldy Burghs)said the clause practically amounted to a present of £100,000 a year to the landed interest of the country. It was not pretended that the tenants would benefit to the extent of a single shilling by this remission. It was a present that would go directly into the pockets of the landlords. Though the remission was nominally limited by the Bill to five years, it was certain that the tax would never be brought up again to its original standard, so that, capitalised, the gift to the landlords amounted to the enormous sum of £3,500,000. This proposal in regard to the Land Tax was part of the general policy of the Government—as all this recent legislation indicated—to subsidise the landed interest of the country. Surely they could await the result of the investigations of the Commission on Local Rating which they had promised to appoint before taking this step, which was practically a prejudging of the decision of the Commission as to whether or not this relief ought to be given. No less a financial authority than the Leader of the Opposition had expressed himself in favour of the reduction of the tax, and as that opinion was deserving of the greatest weight, it naturally increased the difficulties of the opponents of the Government's proposal. But the Government argument in support of the reduction was, forsooth, that personalty used to be taxed, and that realty had escaped the burden. But why was the tax on personalty abolished? 1555 It was abolished for these reasons—first, because in the end the amount was practically insignificant; secondly, because of the difficulty of collection; and, thirdly, because personalty had to bear burdens in other ways in order to compensate for the relief it sustained in regard to this tax. The Land Tax was admitted by the Royal Commission on Agriculture to be a rent-charge, and here the Government was actually proposing that a rent-charge should be relieved. Of course, when an estate was sold, the taxes upon it were taken into consideration in fixing the price. Therefore, by this proposal, the Government were increasing the value of the land by reducing the taxation upon it. He was bound to admit that there was a certain amount of injustice in the Land Tax. It seemed hard that in one county it should be 2s. 6d. in the pound, in another county 4s. in the pound, and in other counties only 3d. or 4d. in the pound. But then it must be remembered that the tax was associated with the land; that it had existed for years, and that in any dealing with the land, the exact amount of the tax had been taken into consideration. The injustice he had referred to was a good subject for inquiry by the proposed Commission; but the Government had made no case whatever for their proposal to reduce the tax at that stage.
§ SIR W. HARCOURTagreed that the question, of the Land Tax was very important, and was quite deserving of discussion again at that stage of the Bill, but he need hardly say that he found himself at variance with his hon. Friend the Member for Kirkcaldy on the subject. There was a great deal of misconception as to the origin of the tax and the character of the tax, and those misconceptions had led to conclusions which could not well be supported. The name of the tax was very inappropriate. It never was a Land Tax in the real sense of the word. During the Commonwealth, subsidies were raised on salaries 1556 and lands, which were done away with at the Restoration. Then came the Land Tax of William III. That tax was really on the lines of the old subsidies of the Commonwealth. It was clear from the early receipts of the tax that the first charge was upon personalty, and that the residue only fell upon the land. It varied every year, both in the amount and in the rate per pound, according to the necessities of the time. Then came the proposals of Mr. Pitt, by which it was intended that the tax should be devoted to pay off the National Debt. But the great error in connection with the tax was the fixing of the quota. In the time of the Restoration, Devonshire was assessed at £5,000; Suffolk, Norfolk and Lincoln at £4,800 each; Lancashire at £1,600; Northumberland at £700; and Durham at £700. Those figures, no doubt, represented the wealth of the different counties at that time. But the fatal error was in the fixing of the quota, so that as one part of the country increased in wealth it paid no more, and as another part diminished in wealth it contributed just the same. ["Hear, hear!"] The tax had also been called a rent-charge. The quality of a rent-charge was that it was a regular fixed sum every year. But the Land Tax did not pay the same amount each year. If the value of the land fell a man had to pay at a higher rate in order to produce the same total. In the interim Report of the Commission would be found cases such as that of the parish in Essex where, during the last 15 years the tax had risen, presumably from agricultural depression, from 1s. 4½d. to 4s. in the pound. People had a mistaken notion that the Land Tax was invariably 4s. in the pound. He had taken pains to inquire of the Inland Revenue, and he found that the average charge throughout England was not more than 9d. in the pound; and if that rate were levied uniformly all over the country the return would be greater than it was now with a maximum of 4s. in the pound. That maximum 1557 obtained hardly anywhere. In the appendix to the Commissioners' Report most extraordinary instances were given where, in the same collecting area, there was a Land Tax of three-twelfths of a penny and also one of 4s. in the pound. That was a state of things which, in his opinion, it was impossible to maintain. When he was Chancellor of the Exchequer and was asked what could be done for agricultural depression, he at once pointed to the Land Tax as a tax which operated in a most unfair manner. It so happened that the counties where the highest rate obtained were the counties which were the most depressed, and the charge had risen in consequence of the depression. That could not be regarded as fair. If anyone wished to understand the question let him read the elaborate Judgment delivered by Lord Campbell in 1853, in which the real character of the impost was fully explained. He had always desired to make taxation bear with greatest weight where it could be best borne, and with least weight where it could be least easily borne. Where the pressure of public burdens increased as the power of bearing it diminished some relief ought to be given. It was said that this proposed relief amounted to £100,000. Let the Committee mark the following facts, which would show how little the 4s. rate obtained:—The tax was to be reduced by three-fourths, but that reduction only reduced the produce of the tax by one-tenth. Devonshire now had to levy £82,000; Essex, £89,000; Lincolnshire, £71,000; Norfolk, £84,000; Suffolk £75,000. As against these figures, which related to the distressed counties, the tax in Lancashire yielded £20,000, and in Durham £10,000. It was quite impossible to maintain such a state of things. The great fault in this tax from the beginning was fixing the quota. There ought to have been periodic revisions, adjusting the charge to the capacity to bear it. In 1836 there was a Commission upon Agricultural Distress, 1558 and evidence was given by the then head of the Inland Revenue Department on the subject of the equalisation of the Land Tax. That Gentleman suggested that the assessment might be made annual according to the valuation for the Poor Rate, or it might be made subject to revision at stated periods, as there was no substantial reason why the Land Tax should not be subject to the same alterations, according to the fluctuations of the value of property, as those to which the House Tax and the Property Tax were liable. It was said that the Government's proposal involved the surrender of about £100,000. But in recent times much more had been given up in respect to personalty. In 1832 the Land Tax on personalty was surrendered, and in 1876 the Land Tax on official salaries was surrendered. The plan proposed by the Government was not on the lines which he should have desired to follow; but he could not maintain the propriety of raising upon some districts—and those the most distressed—a Land Tax of 4s., or even 2s., while such counties as Lancashire paid no more pence than the former counties paid shillings. He agreed with the Government proposal as far as it went in making the maximum charge 1s. instead of 4s.; but then those rates which were below 1s. ought to be raised to that maximum. It was a remarkable fact that it was pointed out so long ago as 1849 that an equalised rate of 9d. in the pound, even after deducting the amount redeemed, which was about one-third of the whole, would produce an increase to the revenue of a million and a half sterling a year, besides securing to the country the benefit of an annually increasing rent charge which would necessarily accrue from periodical revisions. To his mind, that was the principle on which the Land Tax ought to be dealt with, and if nearly half a century ago it was calculated that an equalised rate of 9d. would produce an additional revenue of l½, million, he was quite sure an additional rate of 1s. 1559 in the pound would now produce a half or a quarter more than the present tax. That seemed the fair method of dealing with the Land Tax, but the proposal of the Government only opened the door instead of closing it. It was to be observed, too, that the minority Report of the Commission agreed with that of the majority upon this question, because they said they thought the maximum Land Tax, now fixed at 4s. in the pound, ought to be reduced to a reasonable limit, about the level at which it stood in the west and north of England. In certain parts of the country the Land Tax was unfair, and he believed it was not unjust to relieve those districts from the extreme pressure with which the impost now bore upon them. No doubt to equalise the Land Tax was a matter of considerable difficulty, but it was a subject which a responsible Government was bound to undertake. With regard, finally, to the question of the terms of redemption, he pointed out that when Pitt inaugurated that policy the redemption was fixed at 18½ years' purchase, and the terms had been altered at various times since then. Since then land had been falling in value and Consols rising, and therefore the whole plan of redemption as established by Pitt had entirely failed as applicable to existing circumstances.
§ MR. EDWARD STRACHEY (Somerset, S.)could not help thinking, in listening to the speech of the Leader of the Opposition, that his arguments might equally be applied in favour of the reductions to be given to tenants under the Rating Bill to which his right hon. Friend was so much opposed. It was hardly right to relieve agricultural distress in the way in which his right hon. Friend gave assent to, not by assisting the tenants themselves, but by giving Crown property to the landlords. The Land Tax was a rent and first charge on land, and the proposal in this clause was to make a gift of Crown property to the landlords. He could not see how, because the Land Tax might have increased 1560 in prosperous districts that, this was an argument for reducing this rent to the Crown, because they must look at the question all over the country at large. His right hon. friend said that, while he approved the reduction to 1s. in the pound, he would raise the whole of the Land Tax over the country to 1s. in the pound. He could not reconcile these two statements, because, if it was right to throw an additional burden on the landlords by increasing the head rent, it was equally right to say that they would demand the full amount of 4s. land tax. It seemed to him more likely that, instead of either the Land Tax being increased to 4s. or being made 1s. all round, the direct effect of interference with this State rent would be to reduce it all over the country. Those who believed that it was a fatal mistake to allow any tampering with the Land Tax would agree with him that the Land Tax would be levelled down instead of up, and that there would be a direct loss to the revenue. Besides, this was a direct invitation to the landlord to redeem the Land Tax in order to make it impossible to level the tax up. On those grounds he opposed the clause.
§ MR. EDMUND ROBERTSON (Dundee)put to the Chancellor of the Exchequer a question of some technical difficulty not yet mentioned in the course of the discussion. It had been shown that what was called Land Tax was a payment directly payable by the landowner to the State, at all events from the time of the legislation of Pitt. But since then the Land Tax had been capable of being redeemed, though, that was not the case universally. The law used to be this. There were two ways of dealing with the Land Tax. An absolute owner might redeem it out and out; the tax might then be abolished, and the land would be exonerated. But that was not the only way of dealing with it. The tax could be redeemed so far as it was payable to the State, but on terms that the land should not be exonerated, 1561 but should still remain subject to the position of being charged.
§ THE CHANCELLOR OF THE EXCHEQUERThat has been abolished.
§ MR. E. ROBERTSONsaid that the text-books of 1894 showed that the law was as he had stated.
§ THE CHANCELLOR OF THE EXCHEQUERThat system existed for a certain number of years, but I think there were not more than 330 cases in which it operated in the whole country. After the law had been in existence for a number of years it was found convenient to abolish it.
§ MR. E. ROBERTSONWas the charge abolished? Under Pitt's legislation a limited and even an absolute owner could say to the Crown: "I propose to buy up this tax; the tax thereupon becomes my property." Therefore what was called a Land Tax might not only be the property, and was in most cases the property of the State, but in virtue of the Act which created it, it might become the property of private persons, although it was still a burden on the land. He wished to know whether this reduction of the tax was to take place in places where the tax was in the hands of private owners. The Government were proposing to give away in perpetuity out of the national resources £100,000 a year to a specific and limited class. That sum had been capitalised at £3,500,000. He trusted that hon. Members who intended to vote for this remission would take warning by what had been said by his right hon. Friend the Member for West Monmouthshire. His right hon. Friend had said that the Land Tax should be levelled down to 1s. when it stood above that amount, and should be levelled up to 1s. when it was below it. That was a startling proposition. The root of this matter was the Act of 1798, which imposed a perpetual burden upon permanent property. If the Chancellor of the Exchequer were to bring in a Bill for the purpose of levelling up the Land Tax to 1s. in the pound he should oppose it just as he did the remission now proposed. In that case the Government would be remitting £3,500,000 belonging to the State with the intention that owners who did not get the benefit of the remission should 1562 not only make that loss good, but should provide the State with a great deal more than the whole amount remitted. Under this Bill the Government were not granting a remission for one or for five years only—they were remitting in perpetuity a burden which was no tax at all, but a rent-charge.
§ MR. R. WALLACE (Edinburgh, E.)thanked the hon. and learned Member for his courageous speech. The Leader of the Opposition had missed a splendid opportunity and made a colossal mistake. He could not understand how a man who had taken up the position which the right hon. Gentleman took up in connection with the English Rating Bill could have sunk to the position which he now occupied in connection with the Land Tax proposals of the Government. The man who was an agrarian Nimrod, a mighty landlord hunter before the country—[laughter]—had sunk to the position of a mere landlords' jackal. He would have said this if the right hon. Gentleman had been present. The accident of the right hon. Gentleman's absence was an accident of his own providing. After what the hon. and learned Member for Dundee had said there could be no doubt that what was proposed to be done with the authority of the Leader of the Opposition was to give away for no return a large amount of National property to people who had no claim to the gift. The robbery that was being committed ought to be made clearly known to the county. ["Hear, hear!" and laughter.] He regretted that the Leaders of the Opposition—self-appointed Leaders, no doubt—[laughter]—were absent from their places. The state of that Bench at the present moment in connection with this question was a disgrace and a scandal to the Liberal Party. [Laughter.] There ought to have been men there to proclaim with far greater power than he, a humble, obscure, and opaque individual, could do, the claims of the public and of the nation as against private spoliation. No doubt the Leader of the Opposition was a man of admirable abilities, but that day he had devoted those abilities, not to the protection of national interests, but to their destruction. He alleged that that was a most tragic situation. [Loud laughter.] It was a most melancholy condition of things, and he 1563 thought he could appeal to hon. Gentlemen opposite who, though they did not agree with him in opinion, were men of sufficient intellectual discernment to see the sad and sorrowful position in which what might be called the private Members of the Liberal Party were plunged that day. [Ministerial laughter and cheers.] He said this, not because he delighted in adverse criticism of men who were far his superiors in position, and character, and ability, but simply because he was saddened and struck down by the fact that a great revolution with regard to taxation was being carried on at this moment, and that the men who ought to be there to protest against it and to resist it to the very utmost extent were not there, and, if represented at all, were represented, by one who exerted his abilities for the very purpose of doing the opposite of what he and they ought to do. [Laughter.] He did not know that he could do very much more in the way of expanding the conception and developing the idea that he rose for the purpose of lending a helping hand to. He did not profess to enter minutely into the history of the Land Tax. It was not necessary to do so in this emergency. He was perfectly willing to accept the history and the figures of the Chancellor of the Exchequer and ex-Chancellors of the Exchequer with regard to this matter. That was exactly what they kept people of that kind for. But they reserved to themselves the right to draw their own conclusions from the particular facts which were so industriously produced to them, and, though no man had a greater respect for the grasp of financial facts than the Chancellor of the Exchequer had, he would never convince him, and he did not think the right hon. Gentleman would ever be able to convince the people of this country, that there was any righteousness in the proposal he had embodied in the 31st Clause. He did hope that some attention would be drawn in the country to the extensive change that was being made—to the fact that, whatever the Chancellor of the Exchequer might say with regard to inequality, to accidental differentiation, and to grievances here and there and up and down in different places, a national property, a national estate in land, was being surreptitiously taken away from the nation. There 1564 were a great many people in this country who had, and who still had, an idea that the Land Tax afforded a great opportunity in the way of revision and reform—for introducing progressive movements in connection with the contributions to the public revenue by landed estate, and here an attempt was being made quietly, and, he was sorry to say, with the obvious consent of the leadership of the Opposition, to put the matter aside sub silentio. He regretted that, and he desired to expostulate and to protest against it with any strength of voice, or with any power of idea, that happened to belong to him. He regarded it as a blindfolding of the people, a reduction of opportunity for the people, done in a way of quietness and in a sort of conspiracy of silence between the two Front Benches, that was alarming for the interests of the nation, and certainly derogatory to the reputation of both sides of the Chamber. He would not give more than one vote against this clause, but he should give it with an intensity of feeling and a sincerity of purpose that he had not always experienced in the votes he had given in that House.
§ *MR. CHARLES HARRISON (Plymouth)pointed out that in the Act which fixed the amount of the Land Tax, not only was it regarded exclusively as a tax upon land, but there was a provision inserted by which the tenant occupier who paid the tax was entitled to deduct the amount from the landlord. It being admitted that it was a landlord's tax, and it being admitted that, in whatever proposals had been made for the relief of agricultural distress, the relief should not be to the landlord, but that it ought to inure to those who carried on the industry, to the occupier, then the relief of the Land Tax could not in any form be said to be a relief to the agricultural industry which was carried on by the occupier. That was emphasised very much in the Scotch Rating Bill. In that Bill the Government were anxious and had been extremely careful not to give any relief or rebate to the owners' schedule, but entirely to give it to the occupier, because it should inure to that particular industry. But the motive on which the Bill was framed for the relief of the agricultural industry had now been entirely changed. It was now put forward as an immediate 1565 relief of the alleged existing unjust system of rating of realty as compared with personalty. It was quite true, historically, that in 1698 the tax was imposed not only on realty, but was a tax which involved the rating of personalty, though not a direct tax on personalty. The Act originally started with the assumption of taxing every £100 of personalty at six per cent. interest, or 4s. in the £ on £6, the then legal rate of interest, and it fixed the tax at 24s. for every £100 of capital, stock on the land and household property being exempted. But by 1798 it had been found that the rating of personalty was inconvenient. Personalty had no locality; it followed the person, and gradually the system of rating of personalty fell out as a mode of levying taxation, not only as regarded land taxation, but as regarded other taxes. As regarded the Land Tax Act, so far as it affected personalty, it was abolished in 1832, and as regarded taxation on offices, in 1870. But other taxation of personalty and that on the capital and not on the income, arose and took the place of the rating of personalty on its capital, whilst land remained rated only on its income. Thus, for the exemption of the rating of personalty there was substituted legacy duty on the capital, and it was not until 1853 that by the Succession Duty Act, a duty on the life interests of realty was levied, and not till 1894 that the capital value of realty was taxed, although that had always been the case in respect of personalty. It was mere technicality to speak of Land Tax extending to personalty, when, in point of fact, it taxed personalty only by rating, for which, on account of its inconvenience, other forms of taxation were found. However, the Land Tax still remained a tax or charge on the land, and to such an extent that under a special Act the owner might deduct the proportionate part of the Land Tax from any charge on the property, whether belonging to the widow or not. Could it be said that the relief of the Land Tax in respect of a deduction made from the widows' rent-charge was a relief of agricultural distress? Could that assist or in any way advance the question? Sir Alfred Milner, in his memorandum which was published in the Appendix to the Agricultural Commission, stated that there was no means of 1566 ascertaining what ratio of taxation realty bore to personalty, on account of the terms and accounts having been kept upon the basis of personalty being defined in its legal sense, and not in its economic sense, and to its being used in different terms in different ways, according to whether it applied to property in England or applied to property in Scotland. The only other indication was that which the Chancellor of the Exchequer had stated, namely, that whilst direct taxation paid 48 per cent., indirect taxation paid 51 per cent. It was obvious that there were no materials at present at hand to settle this question, that realty bore an unjust proportion of taxation. The answer to that question had to be ascertained by the promised Government Inquiry. The real objection to the clause was that pointed out by the Mover of the Amendment, namely, that it anticipated the Inquiry; it was a leap in the dark, it anticipated the whole question and the whole theory as to whether realty paid a greater proportion of taxation than personalty. He strongly supported the Amendment in the hope of eliminating this legislation until after, at all events, an Inquiry had been held and the true position of realty and personalty and its taxation had been ascertained.
§ THE CHANCELLOR OF THE EXCHEQUERhoped the House would now, in pursuance of the arrangement made last night, come to a decision. He personally had only to say he did not wish to follow the Leader of the Opposition into his argument respecting the clause. He had nothing to add to what the right hon. Gentleman said as to the necessity of the case, but the suggestion that they ought to level up as well as lower he believed to be quite impracticable.
§ SIR ROBERT REID (Dumfries Burghs)said his hon. Friend the Member for East Edinburgh made it somewhat difficult for those who did not agree with the late Chancellor of the Exchequer to go into the Lobby against this proposal as he intended to do. He did so all the more because the right hon. Gentleman the Member for West Monmouth proposed as a sequel to what was being done now that something should be done in the way of levelling up. That appeared to be, according to 1567 the view of the Chancellor of the Exchequer, impracticable. It, therefore, practically came to this, that the Land Tax was now in the same position as though he had a mortgage on the property of another man. When the Chancellor of the Exchequer gave up any part of the Land Tax without being paid he was doing exactly the same as he would be doing if he gave up a portion of his mortgage. He had made this explanation because of his extreme attachment to the right hon. Gentleman the Member for West Monmouth, whom he was proud to acknowledge as his Leader.
§ MR. J. CALDWELL (Lanark, Mid)said the clause dealt with the remission of Imperial taxation so far as England was concerned, because there were no cases in Scotland to which it would apply. If the Government wished to introduce remission of Imperial taxation in England, they should do it at the expense of the people of England.
§ MR. J. W. LOGAN (Leicester, Harborough)said that after the appeal of the Chancellor of the Exchequer he would not prolong the discussion, but he must protest against arrangements being made by the two Front Benches without those who sat behind them being made aware of them.
§ MR. HERBERT LEWIS (Flint Boroughs)was not aware till this moment of the arrangement to which reference had been made. In Committee an arrangement was made by which the discussion was very considerably shortened. He acceded to that arrangement and postponed an Amendment he had to this clause. That Amendment was to the effect that the amount of the Land Tax remitted instead of being given to particular individuals should be given to the County Council.
§ *MR. SPEAKERsaid the manuscript Amendment which the hon. Member had handed up, proposing to insert words in the clause, could not be put, inasmuch as the question that the clause stand part of the Bill had already been put from the Chair.
§ MR. LEWIS, addressing himself to the clause as it stood, said the Leader of the Opposition had argued that some parts of the country were unduly charged with Land Tax. He met that by saying, if that was the case, allow the 1568 amount which was remitted to go into the hands of the County Council as a public body, and not into the hands of private persons. Perhaps the Chancellor of the Exchequer would say when the Third Reading would be taken; he hoped it would not be put down for to-morrow.
§ THE CHANCELLOR OF THE EXCHEQUERsaid he was anxious to pass the Bill as soon as possible, but he would put it down for Friday if the hon. Gentleman wished it.
§ THE CHANCELLOR OF THE EXCHEQUERIt would come after Supply, of course.
§ Question put:—
§ The House divided:—Ayes, 258; Noes, 103.—(Division List, No. 335.)
§ Bill to be read the Third time upon Monday next.