HC Deb 29 July 1896 vol 43 cc980-6

Motion made, "That this Bill be read the Third time."

* MR. GIBSON BOWLES (Lynn Regis)

said that he wished to give the Bill a few parting words of benediction. The part of the Measure dealing with the Death Duties might effect some improvement. There were 10 operative clauses in that part of the Bill, and in seven out of those 10 clauses he seemed to recognise his own features, although they had undergone alteration at the hands of the wicked draftsman. These clauses would undoubtedly assist most materially the administration of the Act of 1894, and they got rid of some of the more oppressive and tyrannical provisions of the Act. But there was still much to be done, and he trusted that the Chancellor of the Exchequer would bear in mind that, whilst they were grateful to him for what he had done, they had a lively sense of future favours to come next year. He had, however, to make two remarks upon the Bill. In Section 24 an impossibility was enacted. It was now July 29th, and that section enacted that part of the Act should come into operation on the 1st day of July. That was, of course, a slip. A similar slip occurred in the Finance Act of 1894, but it was put right by an Amendment under which the operation of the Act was postponed to August 2nd. That, however, was done in Committee. In this case the efflux of time had taken place after Committee. He believed, however, that it would be possible to make the Amendment; but if the Chancellor of the Exchequer chose to leave that blot in the Act, he should not complain. A far more important point arose in Section 38. It was a principle of legislation that in a Money Bill of Supply for the service of the year—which Bill could not be amended and could only be accepted or rejected by the House of Lords—no matter other than such as related to the Supply of the year should be introduced. That principle was very clearly laid down in Sir Erskine May's work on Parliamentary practice. This Clause 38 was obnoxious to that principle, for it contained matter foreign to the supply of the year. It provided that any person admitted as a solicitor, who was employed by the Solicitor for the Inland Revenue, might appear in the County Court. That was the only clause in the Bill which did not immediately relate to the Supply of the year. It dealt with a purely domestic concern of the Inland Revenue, and empowered the Solicitor to the Inland Revenue to authorise another person to appear in his place in the County Court. That might be necessary, but it ought not to find a place in a Supply Bill, and its insertion in this Bill afforded a shocking instance of "tacking." It was an Amendment of the Inland Revenue Regulation Act of 1890. In 1890 there was also a Supply Bill, but it dealt with nothing else, and when this question was dealt with in that year it was put into a separate Bill. He trusted that it might not be thought that he was nice or hypercritical in criticising these, matters. He did not propose to make any Motion. He only made this statement for the purpose of drawing attention to what he thought was a very unfortunate perpetuation by the Government of a bad practice. He was extremely anxious that nothing in any way irregular should be done by the House without a protest from those who, like him, believed in the essential importance of preserving the safeguards with which both Houses had surrounded questions of finance.

MR. HERBERT LEWIS (Flint Boroughs)

said he proposed to offer a few words of criticism on the Third Reading of the Bill. The first subject to which he wished to allude was the Tea Duty. He regretted that the Chancellor of the Exchequer had found himself unable, owing to practical difficulties, to differentiate between high-priced and low-priced teas, and to place a heavier duty upon the former than upon the latter. He did not know whether those difficulties could be overcome or not, but it was most unfortunate that the consumers of the low-priced teas, who belonged to the poorest classes of the community, had to pay the same duty on the low-priced tea as those who could afford a higher-priced article. He also regretted that an Amendment to reduce the duty on tea had not been carried. The reason that the Chancellors of the Exchequer had given in previous years for declining to reduce or abolish the duty on tea, was that the state of the revenue did not permit it. But never had there been such an opportunity of abolishing a duty on a necessary article of diet as had occurred this year. It was a long time since there had been such a surplus in the Treasury, and it would be long before a similar opportunity would occur. The abolition of the duty on tea had been proposed year after year by Members of both Parties, and he did not bring the matter forward as a Party question. The abolition or reduction of the duty would be an encouragement to trade between Ceylon and India and this country, because 88 per cent. of the tea used in this country was imported from those dependencies, and such a Measure would be some set-off against the rather shabby way in which India had been dealt with in some respects during the present Session. With regard to the Income Tax, he thanked the Chancellor of the Exchequer for the spirit in which he approached the question of graduation. The principle of graduating the taxes a man had to pay out of his property to the State, whether those taxes were paid by his estate on his death or out of his income during his life, was a sound and equitable principle. It had already been carried into law in regard to the Estate Duty, and the principle had also been adopted to some extent in the assessment of Income Tax, an abatement of £150 now being allowed in regard to all incomes under £500 a year. No attempt had been made to upset the principle of graduation of the Estate Duty, which was now accepted by both Parties in the State, and was now permanently established as a part of our fiscal system. All he asked for was the extension of that principle in its fullness to the Income Tax. The pressure of Income Tax was most severe on persons of small and moderate incomes, and as they were unable to levy duty on luxuries ad valorem, it was all the more necessary that they should deal leniently with people of small means. The objections which had been raised as to the graduations of Income Tax could, he thought, be overcome by a Chancellor of the Exchequer who really desired to carry out this reform. If the tax were charged in full on all incomes as at present, the payer of Income Tax being allowed to claim abatement on a scale graduated in proportion to his income, there would be no difficulty to overcome which was not successfully dealt with at the present time. The reform he proposed was sound in principle, that principle had already been accepted by them in regard to the Estate Duty and Income Tax, and it would be carried out without causing any deficit to the Revenue. His proposal was that incomes under £500 a year should pay fourpence in the pound, those under £750 sixpence and those under £1,000 eightpence, the deficiency being made up by additional taxation on incomes over £1,000. The third and last question on the Finance Bill to which he desired to draw attention was the proposal it contained with reference to the Land Tax. The effect of the remission of Land Tax over 1s. in the £1 would be to hand over the difference between that amount, and the additional amount now paid in some parts of the country to individual landowners. No question could arise in this case as had arisen in the case of the Rating Bill as to whether the benefit of the remission was received by the landlord or the tenant. In this case the land-owner and the land-owner only would reap the advantage. Whether his estate had been acquired by inheritance or by purchase it was unfair for the State to make a gift of this kind to the individual at the expense of the general taxpayer. If the estate had been acquired by inheritance the land had always been held subject to the same tax, every arrangement made in connection with the estate had been made on that basis and the individual owner therefore suffered no real injustice. But if the payer of Land Tax was a recent purchaser it was still more inequitable to make him a present at the expense of the State, because the price he had paid for the land was less by the capitalised value of the Land Tax, and the remission of a part of the Land Tax simply put the capitalised value of the tax remitted straight into his pocket. Take the concrete case of an estate in a Southern county with a rental of £1,000 a year, purchased a year ago, subject to a Land Tax of 4s. in the £1. The owner who has paid less for the estate because it was subject to the payment of Land Tax at 4s. would obtain a remission of 3s. in the £1, which would be equivalent to a sum of £150 per annum or a capital sum of £4,500. This was equivalent to a direct gift of that amount to a wealthy person by a State which raised the larger part of its income from the taxation of articles which were largely consumed by the working classes. But it was contended that the incidence of the Land Tax as between county and county was unfair. Then why should a remission be given to the individual land-owner and to the county? If instead of paying the amount to the individual, it were given to the general county rate, the injustice to the county would be removed. Although the Land Tax had been dealt with, as he contended most unjustly, the fact that it had been so dealt with would bring to the front the important question of the taxation of land values, and the Chancellor of the Exchequer would find that this would be one of the most burning financial questions of the future. ["Hear, hear!"]

* COLONEL MILWARD (Warwick, Stratford-on-Avon)

said that he was afraid that hon. Members opposite did not realise the depression which agriculture suffered from at this moment. The late Chancellor of the Exchequer, when discussing the Land Tax, had said that he approved of a policy that would give relief to agriculture. Hon. Members who represented agricultural constituencies were not in the least afraid of Parliament reverting to the state of things that was brought about under the Act of 1798, which imposed a tax upon houses as well as upon land. Such an Act would raise the rents of every man in the country and especially those of the working men. He did not envy any Chancellor of the Exchequer who should propose a tax that would raise the rent of the working men. If they went hack to the Act of William and Mary of 1694, they would find that a heavy tax was placed upon personal property as well as upon land. He thanked the right hon. Gentleman the Chancellor of the Exchequer for the relief that he had given to agriculture under this Bill. He was sorry, however, that the right hon. Gentleman had been compelled to disappoint a great number of people by keeping the Income Tax at 8d. in the pound. It ought to have been reduced to 7d. with the ultimate view of reducing it to 6d., at which it should remain while peace continued.


said that the present Bill was marked by one or two defects to which he desired to advert. He hoped that any reduction of the Tea Duty would not take the form of substituting an ad valorem duty for the present form of taxation, because such a change would not have a good effect upon the trade. The right hon. Gentleman the Chancellor of the Exchequer had made a slight mistake on the last occasion that this matter was under discussion when he said that the average price of tea which came into this country was 9¾d. or 10d. a pound.


said that he did not say that. He had been misreported on the point.


said that he was very glad to hear the right hon. Gentleman make that, statement. We received small quantities of tea from India that were of the value of 3s. per pound. As to cocoa butter, it was a small matter, but there was a large principle in it. He regretted that the tax upon cocoa butter should, at the instance of the hon. Member for Sheffield and at the instance of a few traders, have been hastily introduced into the Budget. He objected to the Budget because it was very unfair to Ireland. The abolition of the Land Tax would not affect Ireland. Yet the funds to make up for this were collected from Ireland as well as from Great Britain; and so Great Britain was relieved at the expense of Ireland. If agricultural rates in Ireland were to be relieved on the same scale as in England and Scotland, £750,000 would be required. But they had only £180,000 for the purpose, yet the funds from which assistance was given elsewhere were collected equally from Ireland. The readjustment of the beer duty in favour of the brewers was nothing short of a scandal.


appealed to the Chancellor of the Exchequer, in the interests of the legal profession, to do something to codify the law relating to Income Tax. Scattered over 50 Acts of Parliament, it was absolutely unintelligible and incomprehensible, and a lawyer, if his advice was sought on a point, had to spend days studying these Acts to find out what the law was. At present the law was only understood by Income Tax officials.


said that during the Recess he would give his attention to the points that had been raised and the suggestion made in the discussion. He now appealed to the House to pass the Third Reading of the Bill.

Bill read the Third time, and passed.

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