FINANCE BILL.

HC Deb 04 May 1896 vol 40 cc453-510

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."

MR. T. LOUGH (Islington, W.)

proposed an Amendment, to leave out from the word "That," to the end of the Question, in order to add instead thereof the words— this House is not prepared to accept a Bill which makes no adequate provision for the divergent economic conditions existing in Ireland as contrasted with Great Britain, and fails to establish a just fiscal system for Ireland in accordance with the avowed principles upon which the Act of Union was declared to be founded. The hon. Member said that, notwithstanding the praise that was justly bestowed upon them, the financial statements of the Chancellor of the Exchequer had one great defect. His figures, though accurate in themselves, gave an entirely false view of the progress and condition of the nation, when they remembered that he was speaking, not of a single country, but of two islands joined into one United Kingdom. Let him give one or two illustrations of this grave defect in the right hon. Gentleman's figures. Speaking of the last 50 years, he said that the population had increased about one per cent. This was not true of either island. What he meant to say was that, in the larger island, where seven-eighths of the people reside, there had been an increase of 1 l–10th per cent, per annum, or some such proportion, while in the smaller island there had been not only no increase, but a steady decrease of one per cent, per annum during the same period of 50 years. Take another example. The right hon. Gentleman stated that indirect taxation was 52 per cent, and direct taxation 48 per cent, of the total sum collected last year. This was not accurate anywhere; the proper statements were that, in the larger island the proportion was somewhat under 50 per cent., while in the smaller island the proportion of indirect taxation was 75 per cent, of the whole sum collected. These examples led them at once to the fatal defect of the Bill now before the House. It not only did not exhibit, but it concealed, almost every important fact connected with the progress which the two communities were making. Sufficient justice was not done to the wealth and resources of the one, and the poverty and suffering of the other was entirely obscured. Therefore he rose to move the Amendment of which he had given notice, which declared that they could not accept the Bill now before the House, because it "made no adequate provision for the divergent economic conditions" of the two islands, which all the figures, as well as those he had just quoted, illustrated. Practically the Amendment asserted that if equal financial burdens were laid on two countries in which every vital condition was so different, as in England and Ireland, the effect must be that by the extension of the burden—which the strong, progressive and wealthy commercial people could bear—to the weak and declining agricultural community, terrible suffering must be caused. But the question here raised of placing different burdens, proportionate to their wealth, on each of these two islands, raised such a large issue and would be received by so many in the House with surprise, that he must first ask permission to explain how it was that what seemed to him the astounding proposition that the same rate of taxes could possibly be fair to communities so different came to be embodied in the Bill which they were discussing. Hon. Members who saw nothing questionable in the equal taxation of two such communities, would think that there was an easy answer to the question he had put to the House. They would not unnaturally suppose that the reason they were discussing a Finance Bill based on such principles, was because an Act of Union was agreed to between the two islands, and that we were only following out the system which was then mutually adopted. His Amendment, therefore, recalled to the recollection of the House that no such system was embodied in the Act of Union, and asked what they should substitute for the principles of the present Budget, the financial proposals on which that Act "was declared to be founded." Perhaps the best key to the financial principles which were embodied in the Act of Union was found in a sentence spoken in this House by Mr. Pitt, when the proposals were under discussion:— To avoid suspicion of unduly loading our sister kingdom with more than her share of the expenses of the State, to obviate all imputation of partiality, the Parliaments of both countries have fixed proportions to be paid by each for a limited time. What were the arrangements to which this description was applied by Mr. Pitt? First, that equal taxation should not be applied to the two countries. Second, that Parliament should fix, from time to time, how much Ireland could fairly pay; and third, that her contribution should be reconsidered in a spirit of justice and kindliness whenever it was necessary to do so. For seventeen years after the Union an arrangement of a separate character was maintained. In 1818 the new principle that equal taxation might be laid on both kingdoms was adopted, but for 35 years afterwards it was not carried fully into effect. Not until 1853, as was to be found by Clause 31 of the Finance Bill now before them, did the principles of equality, on which the present proposals were based, become an integral part of the practice of the House. The two dates since the Union, which he had named, showed that the progress to their present position had been gradual, and they divided the 95 years into three unequal parts which, perhaps, the House would allow him to glance at in a little more detail as illustrating the genesis of the present Bill. He had suggested that during the first period of 17 years, from 1801–17, a juster principle was adopted. But it was necessary to somewhat qualify this statement. A fair principle was indeed adopted, but practical effect was not given to it; in other words, although different taxes were demanded from Ireland as compared with Great Britain, yet, owing to a reason which he would explain to the House, the proportion that Ireland should pay was fixed too high. In estimating the figures Mr. Pitt and Lord Castlereagh only took into account the amount that Ireland had paid during the two years 1799 and 1800, at which time the taxation of Ireland had, owing to special causes, reached an abnormal amount. The statesmen of the Union assumed that what Ireland was then paying she could continue to pay. The result was that too high an amount was fixed. This was proved by the fact that, to realise the sum required, taxes on spirits, tea, sugar, tobacco, and other articles had to be doubled, and when they were doubled they produced less than previously. So that every effort to obtain the money that was required failed, and huge additions were made every year to debt. The principle of equalisation adopted for the second period of 33 years, from 1818 to 1853, was also not carried completely into effect; the most striking examples of the differentiation in favour of Ireland being that the tax on spirits was not equalised with that of Great Britain, and in 1841 the Income Tax was established in Great Britain without being imposed in the smaller island. The duties on tobacco, however, were equalised with those of Great Britain, and this was now, and was then, the second heaviest imposition laid on the country. A few examples might be given of how the principle had been carried out, and how injuriously it affected Ireland. First in regard to tobacco, the assertion of the principle of equalisation in this matter caused the amount levied by it on Ireland to be quadrupled. Exact figures had never been available since the change took place, but it was now estimated, on the highest authority, that a million and a quarter per annum was paid on it in Ireland—surely a most serious burden. In beer the equalisation took the form of reducing the rates in England. In 1830 the duty on beer was 5d. the gallon in Great Britain, in Ireland 2d. The duty was now the same in both, or 2¼d. the gallon, so that in this case a great relief was carried to Great Britain which Ireland did not share. Stamps were equalised in 1841 at a cost of £120,000 a year to Ireland, an amount which had been greatly exceeded since. Spirits were equalised between 1853 and 1860. As in the case of tobacco, the amount paid by Ireland was quadrupled, and some two and a half millions a year were now collected by this tax. Finally, however, it must be remembered that the principle of equalisation had never, up to this moment, been fully asserted. The Inhabited House Duty, the tax on carriages, armorial bearings and servants were not collected in Ireland, and one or two other duties were collected at a lower amount. Therefore, the principle of differential taxation was still recognised, but in a manner that gave no practical relief to Ireland. The full amount that she gained by the exemptions he had mentioned were lost in the allocation of the Licence Duty, under which nearly £200,000 was collected in Ireland, out of which only £40,000 was paid back to the local authorities, instead of the whole amount being handed over as in Great Britain. The variations which were still maintained were important, as showing that there was no principle except the exaction of too much from Ireland in the system which had been gradually developed. Perhaps the general effect of the three periods might be most easily understood if he stated in a few words what was the spirit which dominated each. During the first period the just principle of differentiation was adopted, but not fairly carried out. During the second period the most unjust principle of equalisation, was declared but not fully carried into effect. During the third period, experience having been gained of the oppressive effect that equalisation of financial burdens might produce, that harsh provision was carried out in the most unscrupulous manner, and so it was found to be the broad principle of the Bill which they were now discussing. There were two reasons why it seemed to be indispensable that this question of Ireland's capacity to bear equal burdens with Great Britain should now occupy the attention of Parliament. The first reason was that there was no national representation of the country in this House when the arrangement of the union was broken away from, and the present oppressive system was adopted, therefore this system had no constitutional sanction so far as Ireland was concerned. In 1817 Catholic emancipation had not been granted, so that the vast bulk of the Irish people had no voice in Parliament. When thinking, however, of the change which Catholic emancipation made, Englishmen too often forgot that it was accompanied by the disfranchisement of the forty shilling freeholders, so that Parliament took away with one hand what she gave with the other, and no effective franchise was extended to the country till the year 1884. The second reason why this principle ought now to be discussed was that the experience of the period during which equal taxation had been in force proved that Ireland was unable to bear the fiscal burdens which had been imposed upon her. The Chancellor of the Exchequer, in making his statement, said that last year was "a wonderful year." He was only speaking, however, of one island. In the other island the experience was gloomy in the extreme. The year had opened there with a famine, which this House had to make exceptional efforts to relieve. The process of depopulation, which had gone on steadily for half-a-century, was doubled as compared with 1894. The growth of pauperism and just discontent were quickened, and the action of Her Majesty's Government itself, in many ways, proved that it was conscious that a grave economic crisis existed in Ireland. It was necessary, therefore, as there had been no discussion of the point that he was raising for half a century, that the House should consider for this suffering island, as indeed the Chancellor did for the other island, what had been the general tendency during the half-century, without, however, going into any detail. During these 50 years the population had steadily diminished, until now it had been cut down to half. Other statistics, which enabled them to judge of the progress of the nation, did not cover the whole half-century. Still, the progress had been the same all through, so that reliance might be placed on the few figures which he would lay before the House. During the last 40 years the average value of the crops had decreased by 35 millions per annum. The average annual value of cattle had decreased since 1869 by five millions. During the last 30 years the ratio of pauperism to the population had doubled. Statistics relating to the diseased sections of the population presented the most ominous contrast with similar statistics in Great Britain. In this country there were 340 lunatics to each hundred thousand of population; in Ireland there were 450. In England there were 50 deaf and dumb, against 71 in Ireland; 78 blind, against 113. It was sometimes assumed that agricultural depression accounted for the suffering. But, unhappily, the tendency of the nation in other departments showed even greater decay than in agriculture. In 1841 there were 690,000 people engaged in the textile manufactures in Ireland; by 1891 this number had sunk to 130,000. Other industries and manufactures had sunk in the same proportion. The cities along the southern and western coasts, and the inland towns in almost every part of the island, exhibited features of more complete ruin and decay than the purely agricultural districts. No class had escaped. By whatever tests they could measure the strength and dignity of a nation they were driven to recognise that Ireland was declining. It was not a case of agricultural depression, but of national oppression. They must, therefore, look for the cause of this ruin, not to the natural difficulties which Ireland had had to contend with so far as her agriculture went, but to some other cause. It seemed to him that this cause was sufficiently explained in the financial burdens which had been thrown upon the country. Let them contrast the taxation in Ireland now with the taxation under her own Parliament. In 1795 the population of the country was four-and-a-half millions. The total local and Imperial taxation was two millions, or 9s. per head. This was under her own Parliament. In 1895, under this Parliament, her population was the same, but the total taxation was 11½ millions, or 49s. per head. If the figures he had quoted of steady decay during the last 50 years could be carried back farther still, it would be recognised that, in the day when those small taxes were paid, agriculture—which was the great industry—was prosperous everywhere. No competition with foreign lands existed. Practically all the manufactured goods which were used were made in the country, so that many sources of wealth existed which could not be found to-day. It might be said that it did not help much to contrast these times with a hundred years ago. This was a sentiment much more true of Great Britain than of Ireland. In Ireland, during the hundred years, there had been little change except the ruin of the country. Let them, however, take the last 50 years. In 1845 the total taxation collected in Ireland was under seven millions; the population was eight-and-a-half millions, so the payments were about 17s. 4d. per head. The result, therefore of the first half-century of the Union was to double the taxation, and that was one of the main causes of the frightful national catastrophe of the famine with which the period ended. The result of the second half-century had been to treble the amount collected in 1845, and by that means Ireland had been brought to its present condition. It was easy to make allowance for the cost of education, the poor, and other reasonable requirements of government which had arisen during the century, and when such allowance was made it would be found that an effective government might be maintained for at least four millions a year less than would be exacted from Ireland under the Finance Bill which they were considering, and a saving of a million more might be made in local taxation, for which that House was just as directly responsible. Therefore it seemed to him that the second reason which he had quoted held good, and that, if they took a broad view of the progress of Ireland during the 50 years, they must come to the conclusion that this fiscal oppression, which the Bill continued, was the true cause of all her suffering. The gloomy history which he had summarised recalled the eloquent prophecy of Mr. Grattan on the subject— That Ireland would stagger under a weight which was a feather on the shoulders of a wealthier people. The summary by the right hon. Gentleman of the progress during 50 years in Great Britain showed that, as population and wealth increased, taxes increased in a somewhat similar proportion. This would appear to be the natural progress in civilised communities, but in Ireland an opposite rule prevailed, and the fewer the people became the larger their burden grew, and the more they were sunk in poverty the more they had to pay. He would now turn to consider whether there were any serious difficulties in the way of the Chancellor of the Exchequer in making some fiscal proposals to the House; which would be just to Ireland. The first standpoint from which the suggestion would be examined was that of the principles of Unionism which the Government were supposed to represent. Without going into any detail on this subject, surely no one who desired the continuance of the present Union, would be found to maintain that a necessary part of it was the maintenance of a system which had wrought so much havoc in Ireland. His Amendment only asked that other arrangements should be made within the House, and that they should return to the juster principles on which the Union itself was founded. Precedents of the last 50 years and the authority of Chancellors during that period might be quoted against the proposal which he was making, but, on the other hand, he was supported by the authority of Mr. Pitt and Sir Robert Peel, the greater Chancellors of a better time. A better time, at least, so far as Ireland was concerned, for, although there was financial depression then, her population continued to increase, her manufactures were not destroyed, and her agricultural interests were fairly protected. Therefore, so far as the principles of Unionism were concerned, there could be no difficulty in the adoption of a just financial system. A greater difficulty, however, was found in persuading this Parliament, which contained six representatives of the large commercial island for every one of the poor agricultural community, that there could be any real grievance in the system of levying the same duties on the same articles; six felt no oppression for one that did. "If the Irish did not wish to pay the duty, let them not use the article," was the response which was heard on all sides. If the Irish did not use tea, tobacco, beer or spirits, there would be no financial oppression! But this matter was not so simple as it looked. In one country these articles might be more necessary than in the other. The Chancellor of the Exchequer made a very luminous remark in his Budget speech on this subject with regard to tobacco. He said that "everything spent on tobacco by those who had enough to eat is waste." There was much to be said for this proposition, and he hoped the right hon. Gentleman would go the full length to which it would carry him. It meant that, if tobacco was found to be largely used by a poor, ill-fed community, with them it was a necessity; whereas, when it was largely used by a rich and well-fed community, it was a luxury or waste. Therefore, equal taxation of tobacco among two such communities was highly oppressive. The same principle might apply to each of the other articles. Perhaps hon. Members would see the difficulties of this point best if they imagined the case, not of the two islands they were considering, but of two such communities as the English and the French, who lived nearer one another, and who were much more alike in many respects than the British and the Irish. Let them suppose, then, that England and France were placed under a common fiscal system, and it was resolved to levy a large amount of revenue on tea. Then it would be seen that France would escape, because they used no tea. Or, if coffee were chosen, the English would escape. If light wines were chosen, a great French industry would be ruined and the English would suffer little. But, besides the difficulty of finding articles which were used in the same proportion by each of the two communities, there was the difficulty that the same duty was not just unless the purchasing power of the two communities was the same. Thus the Irish and the English might drink, on the average, about the same quantity of tea. Yet there might be infinite oppression in asking each to pay the same duty on tea. Let them inquire, then, what was the purchasing power of each. He would not repeat here what he had quoted to the House on a former occasion as to the total wealth of Great Britain and Ireland respectively. There were small figures, which now rested on high authority, which put the point more simply. It was found that, on the average, the gross annual income of every person in Great Britain was £42; the corresponding figure for Ireland was £15. If hon. Members reflected for a moment, few would be found to question that these two figures of 15 and 42 would probably represent, not unfairly, the available resources of the average of the population in each of the islands. From this it might be assumed that the taxable capacity of an individual in each of the two communities was as 15 was to 42. This, however, must not be assumed; an allowance of £12 must be made in each case for the necessary cost of subsistence. This meant that the capacity to bear taxation of the average person who lived in Great Britain stood to the average person who lived in Ireland as 30 was to 3, or as 10 to 1; so that, if absolute justice, according to this standard, were done, an equal system between the two islands would mean that on each commodity the tax paid by the Irish would be one-tenth of the tax paid on the same commodity in Great Britain. It might be admitted that it would be impossible to reach such an ideal as that, and, indeed, our difficulties would not be solved by such a rough arrangement; but the arguments were good to the extent of showing that the system of equal duties between two such communities might be most oppressive. It was not right to turn from this question before pointing out that, without any intention to oppress, the opinion of the majority was likely to find expression in the light taxation of articles important to them, and that, in the case that the House was considering, they would find that this was true to no small extent if they contrasted the duties levied on the national drinks of the two countries. Roughly, the duty levied on beer was 2d. per gallon, and on whisky 10s. 6d. If the two articles were taxed strictly according to their alcoholic strength, the duty on beer would be raised to a shilling per gallon. Every person in England drank, on the average, 37 gallons of beer per annum. In Ireland the average consumption was 16 gallons. Both drank, on the average, the same quantity of spirits and wine. The Englishman only paid 6s. 2d. duty on his 37 gallons of beer, and the abstemious Irishman only saved 3s. 6d. by refraining from taking the extra 21 gallons that would bring him up to the Englishman. But, if beer were taxed according to the alcohol it contained, the English would pay, on the average, 37s. instead of 6s. 2d., and a corresponding relief would be carried to the Irish, and, in a smaller degree, to the Scotch. Other examples also tended to show that there was a disposition, unconsciously no doubt, to deal leniently with the predominant partner. There was a vague feeling that the principles of Free Trade required equal duties to be levied. A moment's reflection, however, would show that it was in the protective times of 1818 that the principle of equalisation was first asserted. It was because Germany and America were protective Powers that equal duties existed among the different states into which those countries were divided. Under a system of Protection it was felt to be impossible to allow exceptions to be made in one country against the others. The principle of Free Trade required duties to be imposed only for purposes of revenue; therefore, to lay a duty on a country simply because such a duty existed in another country, so different as Great Britain was from Ireland, was not in accordance with the principles of Free Trade, and was only too likely to result in the evils of Protection. It might also be pointed out to the House that they had got, within the United Kingdom, examples of communities which enjoyed the advantages which might also be claimed for Ireland. In the Isle of Man different duties were levied on beer and spirits from those that existed in Great Britain. Yet all were collected under the same Customs authority. In the Channel Islands such articles were free from duty, and the prosperity of these little communities was due, in no small degree, to this exemption. There was one difficulty which loomed largely in the public mind, which was real, but the importance of which might easily be much exaggerated. That was the interruption to communication between the two countries which would be caused by restoring the Customs cordon. This, however, would be a slight difficulty. It did not interfere materially with the comfort of passengers going to or from the Channel Islands. There would be no examination going into Ireland, because few, if any, duties would exist there, and such as did exist would be less than in Great Britain, so that there would be no inducements to smuggle. On the whole, whatever discomforts passengers might suffer between the two countries, no one would seriously urge that this could be weighed against the advantage to the whole nation. He hoped that he had not delayed the House too long with these considerations, but they were really the basis of his argument, and surely they might now agree to the two conclusions—(1) that equal duties between two such communities might be very oppressive to one; and (2) that there was no difficulty under a Free Trade system in allowing each country to levy whatever duty was best for it. It would be necessary for him to suggest, however, briefly, the principle on which he thought the finance of Ireland should be managed if they were to put it on a different basis from that of Great Britain. It appeared to him, then, that it should be based on the following three principles:—1st. No help should be given by Great Britain to Ireland in meeting her financial difficulties, whatever they might be, and the country should pay its own way; 2nd. Whatever was judged to be fair as an Imperial contribution should be paid by Ireland; and 3rd. After providing for the necessities of her own Government, any surplus that might appear in the finances of Ireland should accrue for the benefit of that country. The House would not be likely to entertain this suggestion for separate financial treatment if it would involve disturbing the fabric of British finance which had been slowly built up during the last 50 years. It must, therefore, be remembered that this was no necessary part of his suggestions. The financial arrangements of Great Britain, which, speaking broadly, appeared to him to be fairly well suited to the needs of the country, need not be interfered with in the slightest. The Irish receipts and payments were a small matter, quite apart from the vast bulk of what flowed into the British Treasury. Altogether some 7¾ millions would be received from Ireland this year. The payments for Irish purposes, when the Army was included, would probably amount to eight millions; certainly they would not be less than the receipts. Therefore, as much went out as came in, and there would be no loss to the British taxpayer, and no disturbance of British finance, if the suggested separation of accounts were carried into effect. The question would be asked whether, if this separation took place, there was reasonable ground for supposing that substantial economies might be effected in Ireland? Without going in detail into this matter, the merest glance at the way the money was spent there should satisfy any reasonable person that large economies were practicable. The cost of the military and police in Ireland alone was three and three-quarter millions. Of this, three-and-a-quarter could be saved. Apart from the increased cost of education and police, the cost of the civil establishments in Ireland had increased by a million and a half since 1860. A million could be saved in these central establishments if they were conducted in proportion to the cost of such establishments in England. A wise administration of the country could effect the economy of another million in the local expenditure, so that over five millions might soon be made available in relief of taxation, if the country were looked at according to the necessities of its own wants, which were constantly decreasing as its population diminished. Perhaps it would be asked what form relief to the Irish people might best take. Suggestions had recently been made in favour of still continuing the collection of the large taxes that were now levied, and allocating a share for local purposes. He was not in favour of allocations or subventions of any kind. The whole principle of collecting more than was necessary and then giving back something seemed to him ineffective and wasteful. He would, therefore, give the relief directly by taking off taxes. He would suggest to hon. Members for Ireland a high authority for this course. In that historic document, the address of Mr. O'Connell to the electors of Clare in 1828, this greatest champion of Irish liberties promised, when he got to Parliament, as one of the greatest benefits he could confer on the nation, "to vote for every Measure of retrenchment and reduction of the national expenditure, so as to relieve the people from the burden of taxation." The country required the same help now as it did then, and the burden of taxation was three times as onerous. The reductions that would give the greatest relief would be to abolish the duties on tobacco, and what were called the "breakfast table" duties, and to fix the duty on spirits at 5s. per gallon, and beer at 1s. 6d. per barrel. This would at once reduce the Imperial taxation by three and three-quarter millions. In conclusion, it was desirable to explain that he had only broached many of these subjects for the sake of proving the practicability of adopting the principle which underlay the Amendment. He did not ask the Chancellor of the Exchequer to plunge this year into the whole question. He made only one request, which was embodied in a question asked on the night of the Budget. In this question, the right hon. Gentleman's attention was directed to the fact that, notwithstanding the great industry which the Royal Commission on the financial relations between the two countries had exhibited, it was impossible for them to discover even the accurate amount of the Irish taxation. Since the Customs cordon was abolished in 1818, this essential information was not at the disposal of the country. He therefore asked the right hon. Gentleman whether he would undertake, with a view to adopting a fair system to Ireland, to discover, during the next 12 months, what it was that Ireland actually paid. If the right hon. Gentleman would thus accept the principle of his Amendment and undertake to provide this information, which the Royal Commission had declared itself unable to ascertain exactly, he would be satisfied, for the moment, in the hope that next year still further progress might be made. The case that he had presented might be summed up in the following manner. He had suggested that this Kingdom was composed of two islands, in which there was so much economic divergence, that it was impossible to lay the same fiscal burdens on each with justice. He asked that each island should be taxed according to its nature and capacity to bear taxation. There seemed to him to be no other means of avoiding oppression of the most cruel kind. He suggested to hon. Members for Ireland that this was a matter to which their energies should be turned from many of the occupations which had hitherto engaged them in and out of Parliament. Their appeals for relief and help in this House were constantly directed to the Irish Secretary, but he, after all, was only the instrument of the Government. He did not direct its policy, he was not even a Member of the Cabinet, and beyond displaying patience and good will, he could do little to promote the radical reforms which the country needed. He suggested that the Chancellor of the Exchequer was the real oppressor of the country. Let hon. Members appeal to him. The Finance Bill which the House was now discussing destroyed every provision for the just treatment of Ireland which the Act of Union contained. By its nature the Bill was re-enacted every year, so that the facility for reform lay to their hand and was periodically presented to the House. If he had persuaded anybody that the imposition of these burdens had been oppressive to Ireland, this oppression had been entirely carried out by the House of Commons. The House of Lords had no jurisdiction in the matter. No one had interfered with the discretion of this House, and if a merciful Measure of relief were undertaken, there would be no need to appeal to any other authority before it was carried into effect. His Amendment only went the length of asking that, while this House reserved to itself the right of fixing the financial burdens of the people of Ireland, the obligation remained of discharging that duty in a spirit of moderation and justice.

MR. JOSEPH A. PEASE

seconded the Amendment. Dealing with the Irish contribution to Imperial charges, he showed that, from a return issued recently by the Treasury, it would be seen that in 1860 the net Irish contribution to Imperial charges amounted to £5,400,000; in 1870 it had decreased to £4,500,000; in 1880 to £3,200,000; in 1890 to £2,684,000; and in 1894 to £1,966,000. Under the Home Rule Bill it was proposed that the normal contribution from Ireland should be £2,276,000. In the initial year the contribution was to have been £1,790,000. It would be found that in 1894–5 and in 1895–6 we received for Imperial purposes from Ireland a less sum than was proposed to be given under the much-abused Home Rule Bill. Financially, therefore, this country would have gained if Home Rule had passed. Great Britain would never get better terms. Our Government of Ireland was unduly costly, and money could be saved in many ways under a better system of administration. He congratulated the Chancellor of the Exchequer on his not having adopted the views expressed by Lord Salisbury in the summer of 1894. On June 8 in that year, alluding to the Budget of the right hon. Member for West Monmouthshire, the noble Lord said:— I condemn most heartily this Budget. It is nothing but an expression of the passions of the Chancellor of the Exchequer. Budgets come and Budgets go. They do not matter very much, and your blunder, if detected, can he set right in the Budget that follows. Those words seemed to imply that the Conservative Party, should they come into power, would reverse the financial policy of the late Chancellor of the Exchequer; but the present Budget did not do that, and thus a tribute was paid by the present Government to the fiscal arrangements of their predecessors. He wished to draw the attention of the Committee to the Treasury's estimate of the future revenue of the country. He would take the tax revenue and the non-tax revenue and contrast the proposals of the Government for the present year with those of the past year. The estimated increase of tax revenue in 1895–96, as compared with 1894–95, was £1,335,000; the actual increase was £6,461,000. Therefore there was an under estimate of £5,126,000. The Chancellor of the Exchequer estimated that the total tax revenue for 1896–97 would be £2,046,000 less than it was in the past year, and when allowance was made for the £1,275,000 in respect of the Estate Duty and the Land Tax, there would be a deficiency of £771,000. The estimated increase in the non-tax revenue in 1895–96 was £143,000; the actual increase was £829,000, and therefore there was an under-estimate of £686,000. The proposed estimated increase for 1896–97 was £552,000, but he calculated that after allowance for alterations there would not be this increase, but an actual deficiency of £219,000. Taking the total revenue of the year, he found that the estimated increase in 1895–96 was expected to be £1,478,000, and that the actual increase was £7,290,000, so that there was an error in the Estimate of £5,812,000, and with regard to the proposed increase in 1897 the fact was that there would not be an increase at all, but a deficiency of £219,000. He did not understand why the Chancellor of the Exchequer should anticipate that there would not be a growth in the revenue during the coming year. For the last three years the growth in the tax revenue had been £627,000 in 1894; £3,228,000 in 1895; and £6,461,000 in 1896; but for 1897 the estimate was a decrease of £2,046,000. In 1894–95 there was an increase of £2,512,000 in the total revenue of the country; in 1895–96 that rose to £5,817,000, and he did not understand why the Chancellor of the Exchequer anticipated that there was not going to be a further increase in the revenue of the country during the current year. To illustrate his point, he would take the increase of the Income Tax returns since that tax had stood at 8d. In 1894–95 the increase was £400,000; and in 1895–96 £500,000, but now the Chancellor of the Exchequer put the estimated increase at £100,000 only. It appeared to him that there was no sufficient reason for believing that the increase from the Income Tax would not be maintained during the coming year. In time of peace the wealth of the country increased with the population, and therefore additional revenue might be anticipated. There was no sufficient reason to doubt the expansion of the revenue, even if it should not expand at the same rate as it had recently. The Chancellor of the Exchequer had said that the revenue increased in the past year in consequence of the gambling spirit that prevailed on the Stock Exchange and elsewhere. He believed that that spirit was as rife to-day as at any time in the last 12 months. The right hon. Gentleman also referred to the fact that he had received certain large windfalls, in the shape of Death Duties, and he had made an enormous reduction in his estimate respecting the Death Duties for the current year. But there were as many millionaires to-day as in previous years, and he agreed with the right hon. Member for West Monmouthshire that the item from the Death Duties was more likely to increase than to diminish. It seemed to him that the advisers of the right hon. Gentlemen at the Treasury had not taken advantage of their experience. The estimates of revenue should, no doubt, be kept within the mark, but they ought to be fairly accurate. The object of the Government in framing their Estimates seemed to him to be to endeavour to secure another large surplus in order that they might thereby gain credit in the country and make capital with their supporters. If there was a large surplus next year the nation at large would no doubt attribute it to the ability of the Chancellor of the Exchequer. He held that the right hon. Gentleman and the Treasury ought to deal fairly with the House by placing before it as accurate an Estimate as possible of the probable revenue of the coming year. He did not think that the right hon. Gentleman had dealt as he ought to have done with the anticipated surplus, and that was one of the reasons why he opposed the Second Reading of the Bill. If the growth of the revenue went on increasing at the same rate as it increased last year, there would be an increase of something like £7,000,000. Even if the increase were only half that amount it would be sufficient to justify the abolition of the Tea Duty. He objected to that duty, because he held that all such indirect taxation was detrimental to the interests of the community as a whole. It failed to tax men according to the protection afforded them by the State. It was often argued that the farmers needed relief as compared with town residents because they were not interested in local expenditure. That argument applied equally to the practice of indirect taxation. Men who had wealth and property needed the protection of the State more than poor men, and therefore they ought to pay more in direct taxation. The cost of the collection of indirect taxation was greater than the cost of collecting direct taxation, and it pressed most heavily on the industrial and poorer classes of the community. It also tended to reduce the volume of trade. A tax placed upon the necessaries of life increased the prices of articles by more than the amount of the tax. The reasons were that the cost of collection had to be paid for and that the trades required interest on capital required to pay the tax. Indirect taxation restrained trade, and thus promoted monopolies. Even assuming that the Chancellor of the Exchequer was correct in his estimate of the revenue of the coming year, something might have been done in the direction of reducing this indirect taxation. Substitutes for it could have been found in the taxation of ground rents and mining royalties, and a tax could and ought to have been levied upon all property conveyed by a man during his lifetime to his son or heir with the object of evading the Death Duties.

* THE CHANCELLOR OF THE EXCHEQUER

I understand the Amendment having been moved the discussion must be confined to the subject with which the Amendment deals, and, therefore, I am about to address to the House a few observations with regard to the speech of the hon. Member who moved it, rather than in regard to the speech of the hon. Member who seconded it, who used the opportunity to discuss every other subject under the sun, and said nothing with regard to the Amendment itself, except that the state of Ireland as regards taxation, when compared with Great Britain, would be worse under a Home Rule system than it is now. [Laughter and "Hear, hear!"]

MR. J. A. PEASE

On a point of order, may I ask is it not the fact that the whole Bill as well as the Amendment is before the House at the present time?

* MR. SPEAKER

No; I think not. It would be so usually upon a reasoned negative, but the Amendment here is of so specific a kind that it is convenient to confine the Debate to its terms. But the hon. Member was strictly and technically in order in speaking on the main question, because in seconding the Amendment he was speaking on the question before the Amendment was put.

* THE CHANCELLOR OF THE EXCHEQUER

At any rate I am unfortunately confined to the Amendment now before the House, and when I have another opportunity I shall be glad to notice the accusations the hon. Member has made against me of mala fides in dealing with the House in the matter of the Estimates, though I cannot do so now. ["Hear, hear!"] The hon. Member who moved the Amendment has no doubt raised a question of very great importance and one to which he has given, as I am aware, very considerable attention. But I confess I am utterly at a loss to understand what is his reason for raising this particular question at this particular moment. I do not think that in adopting this course he is doing justice to the views of those who agree with him with regard to the proportion of taxation between England and Ireland. I ventured the other day, when the hon. Member alluded to this subject in the Debate on the Budget Resolutions, to deprecate discussion upon it on the simple ground that it was now being considered by a Royal Commission, which we expect will report in the course of a few months, and that it was not ripe for discussion in this House until we had had time to consider not merely the evidence given before the Commission, but also the conclusions which the Commission might come to upon that evidence. If I deprecated the action of the hon. Member then, I deprecate it still more to-night, when he has thought fit to raise this subject in the shape of an Amendment to the Budget Bill of the year, and to the financial proposals of the Government of the day—an Amendment which, if successful, would obviously not only put an end to our financial proposals, but to our existence as a Government. ["Hear, hear!"] I will not follow the hon. Member into his review of the past history of this question. Whether at the time of the Union the provisions of the Act of Union were fair financially to Ireland, or whether they were not; whether later on the cost of the great war, was fairly apportioned between Great Britain and Ireland, by way of the creation of debt or by way of the sums levied in taxation; or whether that union of the two Exchequers, and the unification, so to speak, of the fiscal system of the two countries, which Mr. Pitt certainly contemplated as the result of the Union, was carried out at the proper time and in the proper way, are matters, which, no doubt, are interesting by way of historical retrospect, but which have only an indirect bearing on the present financial situation. ["Hear, hear!"] The hon. Member seems to consider that the comparative poverty of Ireland, and the diminution of her population are due to the existing fiscal system of the two countries. If I thought it necessary to go into the subject I could find other and far more important causes. To my mind the most important cause for the poverty of Ireland is this—that Ireland is, unfortunately for herself, not possessed of the mineral wealth which we have in such an abundance in Great Britain. ["Hear, hear!"] But I do not wish at all to dwell upon that part of the question this evening. The hon. Member omitted to mention two very material points in his review of the situation. He omitted to remind the House that, although our annual Imperial expenditure has grown between the years 1864 and 1894 from £64,000,000 to £100,000,000, yet Ireland contributes to the common purse very little more now than she did 30 years ago. ["Hear, hear!"] He omitted also to mention that even if you take half the cost of the Irish Constabulary as an item of Imperial expenditure, Ireland now only contributes l–23rd part of the total Imperial charges as against 1–11th part of them in the year 1869. Of course I admit, as I did the other night, that Ireland is a poor country as compared with Great Britain. The hon. Member is aware, I think he then stated it, that the Imperial taxation per head in Great Britain is now £2 5s. per annum, while the Imperial taxation in Ireland is only £1 8s. 10d. per head. That is a considerable difference. From his point of view it is not nearly sufficient. From his point of view every inhabitant of Great Britain should be taxed 10 times as much as every inhabitant of Ireland.

MR. LOUGH

According to his wealth.

* THE CHANCELLOR OF THE EXCHEQUER

That is the proportion the hon. Member suggested to the House.

MR. LOUGH

I said if taxed according to wealth.

* THE CHANCELLOR OF THE EXCHEQUER

The hon. Member's contention was that that was the relative capacity of the inhabitants of the two countries to bear taxation. It appears with all deference, to be an extravagant contention. But let me point out to the House what the real question is. It is not a question as between the countries. The countries do not bear the taxation; it is a question as between the inhabitants of the two countries, who have to bear the taxation. Does the hon. Member say that direct taxation weighs more heavily on the inhabitants of Ireland than it does on the inhabitants of Great Britain? I noticed he carefully avoided that point. ["Hear, hear!"] He did not attempt to show that any single Irishman whose income or property brings him within the scope of direct taxation pays one penny more in direct taxation than an Englishman or Scotchman of similar means. I can say something to the contrary. I would venture to say, and the hon. Member himself knows it, that direct taxation in Ireland is lighter than direct taxation in Great Britain, and for this reason, unless things have much changed since my connection with Ireland some years ago, that the valuation for the purpose of Income Tax in Ireland is based upon what was called Griffith's valuation, which certainly bore, and I believe still bears, a much less proportion to the real value of property subject to the Income Tax than the similar assessment does in Great Britain.

MR. LOUGH

No, no! The evidence was all against that before the Commission.

* THE CHANCELLOR OF THE EXCHEQUER

The hon. Member, I think, has forgotten that no one in Ireland pays Land Tax, house duty, or railway passenger duty. These are direct taxes which are levied in Great Britain but not in Ireland. The hon. Member omits to notice this question of direct taxation and goes to indirect taxation, saying that indirect taxation presses more heavily upon the individual inhabitants of Ireland than it does upon the individual inhabitants of Great Britain. I should just like to observe that since 1860 the annual amount per head of indirect taxation levied in Ireland has only increased by 1s. 6d. That is not a very large increase. The hon. Member says that out of the total Imperial taxation raised in Ireland 76 per cent, is indirect taxation. That might be, but it was 87 per cent, in 1849. ["Hear, hear!"] The proportions of direct to indirect taxation have been distinctly altered in favour of Irishmen by the increase in the Income Tax and Death Duties in recent years. But then the hon. Member puts forward a most remarkable argument. He says:— Where does your indirect taxation in Ireland come from? It mainly arises from tobacco and spirits. That, no doubt, is true. But he says that tobacco and spirits are necessaries in Ireland, whilst they are luxuries in Great Britain, and therefore they ought to be taxed here, but should be free from duty in Ireland, or, at any rate, taxed at a much lower rate. [Laughter.]

MR. LOUGH

It was tobacco I used the argument about, and I was quoting from the speech of the right hon. Gentleman himself. His words were that in a country where there was not enough to eat tobacco is a necessary.

* THE CHANCELLOR OF THE EXCHEQUER

The remark I made—which I am afraid was a very dangerous remark—["hear, hear!"]—and which I know the right hon. Gentleman the Member for West Monmouthshire does not approve of—was this; that where persons were sufficiently fed all expenditure in tobacco was waste. But are there no insufficiently fed persons in England and Scotland as well as Ireland? ["Hear, hear!"] The hon. Member forgets that the consuming classes include the richest as well as the poorest. Of course there are, no doubt, many poor persons in Ireland, and so there are in our great cities, in our agricultural districts, in the Highlands and Islands of Scotland, and I cannot understand why in the world the hon. Member thinks that tobacco and spirits are necessaries of life to the Irishmen and not to persons in similar circumstances in England and Scotland. ["Hear, hear!"] That I call a very extravagant contention. Let me go from the speech of the hon. Member to the proposition he laid before the House. He wants what he is pleased to call a just fiscal system in accordance with the principles of the Act of Union. And what is his proposal? He proposes what I will venture to say would be the most intolerable nuisance that could be conceived to both countries. He proposes the institution of a separate customs tariff in Ireland and in Great Britain. When right hon. Gentlemen opposite brought forward their scheme for Home Rule they distinctly refused to adopt such an absurd and retrogade policy as that. They proposed that the Customs of Ireland as well of Great Britain should remain under one system of legislation, under one management, under one Imperial control, and for the hon. Member, towards the end of the 19th century, to suggest that we should go back to the antediluvian system of a separate customs tariff for Ireland is a proposition which again I characterise as one of the most extravagant that could be submitted to this House. ["Hear, hear!"] No doubt there may be something in the suggestion that in our Customs and Excise Duties on beer, and on spirits, the subject that, we tax is the alcohol in the liquid rather than the liquid itself, and it has been frequently argued by those who have expressed reasonable opinions upon this subject that the taxation of beer, looked at from that point of view, is too low as compared with the taxation of spirits. But it was only last year that the right hon. Gentleman opposite took a step in the very direction which this view suggests. He abolished the extra duty of 6d. on spirits, and he continued the extra duty of 6d. on beer. Well, I have not increased the duty on spirits, and I propose to continue the extra and on beer. ["Hear, hear!"] So far I have been acting in accordance with the views of the hon. Member. I do not think that as years pass by this argument, whatever weight may now properly attach to it, will be as strong as it was, in connection with the relative taxation of the inhabitants of Great Britain and Ireland, because during recent years there has been an increased consumption of spirits in England and a very large increased consumption of beer and porter in Ireland and Scotland. But I have no doubt that it is a matter that may fairly demand investigation, and that it will be investigated by the Royal Commission, and I shall very carefully consider any suggestions they may make with regard to it. But what does the hon. Member propose to do with his new fiscal system when he has introduced it? He proposes to abolish the duty on tobacco in his Irish Custom House—[laughter]—and he proposes to reduce the duty on whiskey to 5s. a gallon. He is aware that he will make a very large sacrifice of revenue by these two propositions. What economies will he effect in order to make up the deficiency? He proposes to get rid of half of the Constabulary. [Opposition cheers.] I daresay that may receive some popular support in Ireland, though I think by no means as much as perhaps the hon. Member may suppose. Then he proposes to get rid of one-third of the cost of the civil government. That is a beautiful thing in theory—["hear, hear!"]—but I can never believe that it would be found practically possible when you came to work it out in Ireland, [Cheers.] And he proposes, finally, to take the whole of the troops from Ireland, and to cease practically all I the military expenditure for what he calls the "army of occupation" in Ireland. I do not believe the hon. Member could make a more unpopular proposal. [Cheers.] The troops must be somewhere. They are not maintained, as the hon. Member seems to suppose, for the coercion of Ireland. They are maintained for the defence of the British Empire and the United Kingdom, of which Ireland forms a part. [Cheers.] When he has got rid of them from Ireland and when he has devoted all the revenue he is going to raise in Ireland from Customs, Excise, and other sources to purely Irish purposes, what is Ireland, under his scheme, to concontribute to the defence of the United Kingdom and of the Empire and to Imperial administration?

MR. LOUGH

I said what was fair. [Ministerial laughter.]

* THE CHANCELLOR OF THE EXCHEQUER

But the hon. Member has written a book—[laughter]—and he has done me the favour of sending me a copy, appropriately bound in green with a beautiful shamrock border. [Laughter.] In that book he calmly proposes, instead of the £2,370,000 a year which Mr. Gladstone proposed to take from the Irish Customs Revenue for Imperial purposes, that Ireland should make to Imperial purposes the generous contribution of £20,000 a year. [Laughter.] That is the fiscal system which the hon. Member considers not an extravagant proposition to make to the House. [Laughter.] I turn from these wonderful notions to the general question which is raised by the Amendment. I admit its importance. It is now under the consideration of a Royal Commission appointed on the recommendation of our predecessors. I am aware after what happened last week, that the recommendations of Royal Commissions appointed at their suggestion and composed of Gentlemen they had selected do not always commend themselves to their mature judgment. ["Hear, hear!"] I do not complain of this; for neither the Government nor the House of Commons is ever bound to accept the recommendations of any Royal Commission—[Opposition cheers]—but this Royal Commission has been considering this subject for some time. It has published some evidence upon it, and it is now considering its conclusions. Could there be a less appropriate time to ask this House to express an opinion upon what, I will venture to say, is one of the most difficult problems with which we can possibly have to deal? I am anxious when the time comes, to approach this question with an open mind. I have been forced by the hon. Member to express to the House, to some extent, the views which I hold upon it, but I am anxious to consider fairly both the evidence and the conclusion of the Royal Commission and to do justice, if it be shown that in any way justice requires to be done. I ask the hon. Member, in his own interest, not to press the House to come to a vote which must necessarily be unfavourable to his own view, which may prejudice in the eyes of the country the opinions which he and those who agree with him hold, and which certainly cannot possibly further any relief which he desires should be given to Ireland in the matter of Imperial taxation. [Cheers.]

MR. VESEY KNOX (Londonderry)

said it was only by protesting time after time and raising this question time after time that they could hope to get any result. The right hon. Gentleman said there was a Royal Commission sitting on this Question. That Royal Commission had already published its evidence. The evidence was completely before the right hon. Gentleman, but he ventured to doubt whether he had read a single line of it. The evidence they had published by itself was sufficient to show that there was an enormous injustice to Ireland. There had been no attempt to show that the present system was, as the right hon. Gentleman suggested, fair. Even the English officials had practically admitted that the present system was a grave injustice to Ireland, and consequently he thought the House would be somewhat surprised to hear that, nevertheless, no relief, no provisional relief, was to be given until the whole question had been decided by the Royal Commission. Why did they not have that theory applied to the Agricultural Rating Bill? The Royal Commission had to inquire into all the details of urban and rural rating in the United Kingdom, but because the right hon. Gentleman believed there was a great and frequent injustice to the agricultural interest of England, he asked the House immediately to devote a large sum of money to the relief of a particular class of ratepayers. If that policy had been adopted in the case of the English agricultural interest, if they were being provisionally relieved while the question was being further inquired into, why should not the taxpayers of Ireland be provisionally relieved while this question was being further inquired into. He could not expect the right hon. Gentleman on that occasion, while the Commission was still considering its Report, to give a final answer and to bring into his Bill a scheme dealing with the whole question, but he did say that the mass of evidence which had been given before the Commission, even by the English witnesses, had been so great that there was a pressing and immediate problem that ought to have presented itself to his mind to give, pending the report of the Commission, some sort of provisional relief to the Irish people. He would refer the right hon. Gentleman to the evidence of Sir Robert Giffen before the Commission. That evidence entirely overthrew the position which the right hon. Gentleman took up. In the first place the right hon. Gentleman said that Ireland was insufficiently valued for the purposes of Income Tax as compared with England. Sir Robert Giffen was not an Irishman or a Home Ruler. He was, he believed, an Englishman or a Scotchman, and he was a Unionist. He was the head of the Statistical Department of the Board of Trade; he was a skilled man, and the evidence he gave before the Commission was the result of his mature consideration. Sir Robert Giffen absolutely contradicted the Chancellor of the Exchequer, and if the right hon. Gentleman had read his evidence and had known that one of the permanent officials of the country had absolutely denied his proposition, he thought he would hardly have put it before the House in such a confident way. Sir Robert Giffen said that he had considered the question of the Income Tax assessment of Ireland some years ago and the conclusion to which he then came was, that, on the whole, Ireland was more strictly valued than Great Britain, and he went into elaborate figures to show the total annual income of the people of Ireland and the people of Great Britain. Sir Robert Giffen said:— Before you arrive at the fair taxable capacity of the two countries, you must deduct the minimum necessary for subsistence. There is a certain sum which cannot be taken in taxation, and that ought to be regarded. And then he went on to show that the gross income of Ireland was one-twenty-second of that of Great Britain. The Chancellor of the Exchequer, by his Budget of this year, asked the House to levy on Ireland one-eleventh of the taxation of Great Britain, so that even if the gross income was taken and no allowance was made for the minimum for subsistence, still he would be levying on Ireland exactly double her fair proportion. But that did not state the whole case. Sir Robert Giffen, taking the fair minimum for subsistence at £12 a head of the population, deducted that sum in each case and worked out the figures in this way. He said:— When you deduct that £12 a head from the, total gross income of Ireland you have only £22,000,000 a year left. Of that £22,000,000 one-third went In the Exchequer of Great Britain in the form of taxes. Sir Robert Giffen then showed that the gross income of Great Britain, after deducting the same sum, was £900,000,000, and from that he argued that the proportion of taxation that Ireland ought to bear to Great Britain was 22 to 900. Was it right then that this Budget should be allowed to pass without giving at least some provisional relief to the crying needs of Ireland? The Budget rather intensified the Irish injustice. Some little relief was given in connection with the Land Tax and the Death Duties, but on those Irishmen paid very little. The right hon. Gentleman had picked out those taxes to which Irishmen did not contribute much, and had left untouched those to which they did contribute largely, and therefore Ireland's proportion would be increased. It was the deliberate policy of the Treasury to choose for reduction those taxes to which Irishmen did not contribute. Although the right hon. Gentleman had a vast mass of evidence before him, and had the opportunity of giving Irishmen some relief, he sought rather to increase the proportion which had to be paid by the unfortunate Irish taxpayer. A large sum of money was to be applied to the relief of local rates in England, but in Ireland a different principle was to be applied.

* THE CHANCELLOR OF THE EXCHEQUER

The proposal in the Budget is simply this: A certain annual sum is to be devoted in England from the Imperial revenue to local purposes, and a corresponding sum will be devoted in Ireland and Scotland from the Imperial revenue to local purposes.

MR. KNOX

contended that what was being done was really very different. A large sum was to be given, in the case of England, to a distinct local purpose, namely, the relief of agricultural rates. The agricultural industry in Ireland was suffering equally with that in England. The principle on which the Government professed to act was that the people of England and Ireland should be treated as the same people, and dealt with equally. Why, then, should they not give as much to the Kerry farmer as to the Kent farmer? He ventured to think that there had never been a more grievously unfair Budget presented to the House. The principle his hon. Friend sought to establish was that Ireland, as the poorer country, ought not to be overtaxed; but the right hon. Gentleman was increasing the proportion Ireland would have to pay in the year of his great prosperity, when something could easily be spared. It might be suggested that Ireland paid less than was spent on her in the various services. But English ministers had put those services there. It was the work of Englishmen, not Irishmen, and therefore, having indulged in such luxuries, Englishmen ought to pay. France treated Brittany as a part of that country, and if the English people really believed that Ireland formed a part of the United Kingdom in any real sense of the term they would treat her fairly in this matter of taxation; but the truth was that they regarded Irishmen as an alien race and as a conquered people, out of whom as much tribute as possible was to be squeezed. As far as civil expenditure was concerned, any one looking at the Irish Estimates would say that in the course of years the expenditure might be considerably reduced. If Ireland were really a part of the United Kingdom, it was only fair that she should be made to bear a just proportion only of the general taxation and not an excessive part of it. But if the Irish were really regarded as a conquered people, the dignity of that House required that the fact should be stated openly. Why did not Englishmen boldly state that Ireland was a conquered province and that they intended to bleed her to her last drop of blood, because Irishmen were too few to resist. Such a declaration as that would, at all events, be one that could be understood. But it was impossible to understand all this talk about union and equality between Ireland and England, and then to require the former to pay more than her fair share of taxation. It was absurd to talk about equality when we were bleeding the very life-blood out of Ireland by over-taxation and were forcing her people to emigrate, and were thus diminishing her population year by year. He could not understand how any Irish Unionist Member could get up in that House and support an unjust Budget of this kind, which maintained an unequal taxation between the two countries. He should support the Amendment.

MR. B. L. COHEN (Islington, E.)

said, that he should not follow the hon. Gentleman the Member for West Islington in his elaborate figures on the financial relations between England and Ireland, because any hon. Member who had studied the evidence that had been given before the Royal Commission now sitting to consider the financial relations between the two countries would recognise most of them as having been given by that hon. Gentleman in his evidence before the Commission. It would be obviously useless and not a little misleading to pursue the investigation into those figures until the Commission had reported, when the House would learn what were the recommendations of the Commissioners who were able to balance and to compare the hon. Gentleman's evidence with that of other witnesses—an advantage which that House did not at present possess. He, on the other hand, should like to give the House a very few, but at the same time some very significant figures which he had taken from a Return presented to Parliament last August, which referred to the financial relations that existed between England and Ireland. Those figures showed that the expenditure on local services in Great Britain in 1819–20 had amounted to 6s. 3½d. per head of the population, while in Ireland they had amounted to 4s. 7d. per head. Therefore, the expenditure in Ireland in those days amounted to 73 per cent. of the amount per head that was spent in England. In the year 1889–90 the expenditure per head in England was 14s. l0½d., while it had risen to £1 2s. in Ireland, or a little more than double the percentage of 1819–20. The fact was that at the beginning of the period to which he had referred the administration of Ireland cost the Central Government appreciably less per head of the population than that of Great Britain, while in recent years the average expenditure of the Central Government for local purposes in Ireland far exceeded that in Great Britain, and tended still further to increase. But let hon. Members look at the matter in another way. In 1819–20 out of every £1,000 raised from Imperial imposts from the inhabitants of Ireland £298 was spent on the local services in Ireland and £702 on Imperial services. In 1889–90 the expenditure for local purposes in Ireland had risen to £658, nearly double the percentage of 1829, while the expenditure for Imperial charges had fallen to £342, or less than half of what Ireland paid in 1829. But it must not be supposed that the State got for this generous treatment of Ireland—which he should be the last to deplore—a larger percentage of income than formerly. In 1819–20 the revenue collected in Ireland was 9.18 per cent, of the total revenue of the United Kingdom, while in 1889–90 it was only 9.68 per cent., a difference of only a half per cent. He thought it was significant to quote these figures to the House, as hon. Members had tried to convey the impression that Ireland was being financially oppressed during a period in which it had been most generously treated.

MR. J. C. FLYNN (Cork, N.)

said, that both the Chancellor of the Exchequer and the hon. Member who had just sat down ignored to a great extent the main point of the discussion. That point was not exactly the net amount that Ireland contributed; the main question which the Commission had been inquiring into was the taxable capacity of Ireland as compared with that of Great Britain, and not whether the respective amounts which they contributed were larger or smaller than they were a certain number of years ago. In ignoring that hon. Members ignored the central point of the controversy. They were informed by the Chancellor of the Exchequer that the amendment of his hon. Friend would, if carried, lead to the displacement of the Government; in view of the fact that the late Government were displaced on such a subject as cordite, he did not think it would be an unmitigated evil if the present Government were displaced on the much larger question of financial injustice to Ireland. The hon. Member who had last spoken had quoted some figures, but he did not think he had made them very clear. At the beginning of the century Ireland's population, as far as the figures could be ascertained, was much about what it was now, perhaps somewhat larger. After 20 years' experience of the Union, the figures, taken from official sources, were as follows:—In 1819 the indirect taxes per head were in Great Britain £2 8s. 7d., while in Ireland they were only 11s. In 1893 the indirect taxes had fallen in Great Britain to £1 4s. 1d. per head, but in Ireland they had risen to £1 2s., which was double what they were 74 years ago. The total taxes in 1819 were in Great Britain £3 10s. 3d. per head, and only 14s. 5d. in Ireland; but in 1893 they had fallen in Great Britain to £2 4s. 10d., and had risen in Ireland to £1 8s. 10s. He thought these figures proved to demonstration that, as Ireland's population diminished, and as her poverty increased, the financial burden was laid more heavily upon her in the form of indirect taxes, and the total tax revenue increased year by year, and became more intolerable to the people. The hon. Member opposite had spoken as if there was no difference as to whether a man lived in Islington or in the county of Kerry; but they maintained that, in regard to these taxes Ireland had a distinct claim founded on the promises contained in the Act of Union, and that these, promises had been violated. Sir Robert Giffen had said that the taxable income of Ireland must bear a smaller proportion to the taxable income of Great Britain than did the gross incomes or capitals. Sir Robert Giffen defined the taxable income as the income remaining after allowing for the minimum necessary to maintain a population in a given standard of living, and in this sense he showed that Great Britain had a taxable income of 800 millions, and Ireland of only 15 millions. A considerable sum was to be set aside for agricultural land this year. They had proved that the taxation per head in regard to indirect taxes had fallen in Great Britain 50 per cent., but had been doubled in Ireland during the same time. They were told that in regard to taxation Ireland must not be treated as a separate country, but when a sum was voted from the Imperial Exchequer for the relief of agricultural land that principle was abandoned. If they applied totally different principles in this manner, they were perpetuating the injustice to Ireland.

MR. JOHN MORLEY (Montrose Burghs)

said, it had been his business on two occasions to consider, in connection with Bills for the better Government of Ireland, the various problems that arose in regard to Irish finance and the proportions between the contributions made by Ireland and by Great Britain. He was, therefore, well aware, as was the Chancellor of the Exchequer, of the enormous difficulties and intricacies in which all these problems of Irish finance were involved. He only rose for the purpose of putting to his hon. Friends whether it was worth while, after what the Chancellor of the Exchequer had promised, to press this Motion to a Division. A Royal Commission had been appointed, and great pains were taken in constituting that Commission to make it thoroughly representative, and he had never heard from either side of the House that every attempt was not made that could be made to get gentlemen of all persuasions to serve upon it. The Commission had taken a great deal of evidence, and were now almost on the eve of producing their Report. A Draft Report, as the newspapers informed them, was submitted by the late Chairman to the Commission. How that Report would be dealt with under the circumstances he did not know, but it was perfectly cer- tain that the Commission would report long before the end of that Session. Of course the Chancellor of the Exchequer had promised that he would consider that Report with what he called an open mind; and, when the Report was drawn up and presented, he would undoubtedly consider it. Whether it would be dealt with before the end of the Session he could not say, but, in view of the presentation of the Report of a carefully-constituted Commission, he did not think his hon. Friend would gain anything by pressing his Motion to a Division.

MR. LOUGH

withdrew his Amendment.

* MR. J. E. JOHNSON-FERGUSON (Leicester, Loughborough)

advocated the payment of the Duties in one payment. As to the redemption of the Land Tax, difficulty had been put in the way by the Clerks to the Land Tax Commissioners. This should be as easy as the redemption of tithes. It was the difficulty of redemption which prevented the Land Tax being redeemed. The Bill, in Section 21, provides for the occupier of agricultural land assessed under Schedule B to get relief without going under Schedule D. He recognised that as a very great boon. The Bill provided that the owner of land, buildings, etc., should have right of appeal, although not directly assessed. He recognised that as a great boon also. He drew the attention of the Chancellor of the Exchequer to the unequal and, in many cases, unjust manner in which Schedule A operated, and to the heavy expense involved by its separate maintenance. Let them take the case of a commercial concern with mills and machinery. Persons assumed that profits shown in balance-sheets were the same on which Income Tax was paid, but that was an entire mistake. Take the case of a concern with works the annual value of which is assessed at £3,600, and whose gross profits, as shown in balance-sheet, averaged for three years £8,000 per annum. That firm paid under Schedule A on £3,000, and under Schedule D on £5,000, making up the total profit of £8,000. But suppose a succession of bad years comes, or an exceptionally bad year results in heavy loss, the average gross profits of three years may be reduced to £2,000, £1,000, or a vanishing quantity. Yet the Income Tax, Schedule A, is still charged on £3,000. There was no use appealing, they were told that their works were worth that amount, and that if they had not made £3,000 they ought to have done. That was no imaginary case, it was constantly going on; and, the larger the amount of fixed plant, the greater the risk of such overpayment under Schedule A. Take again the case, brought within his notice within the last few days of a small occupying owner of a farm. The annual value of the farm was £180 a year, the house being assessed separately. The annual amount at which the farm was assessed, therefore to Schedule A was £180 less one-eighth—£158. The occupying owner would be assessed to Schedule B at fine-third of the £180—that is, £60 a year, or, together, £218. But this particular man went under a clause of a former Act, and claimed to be assessed under Schedule D, and showed that his total profit of the preceding year was £208. Now, one of the most popular provisions of the Act brought in by his right hon. Friend was the extension of the total exemption to £160, and the reduction of the assessment of an occupying tenant to one-third of his rent. That being so, a tenant paying a rent of £624 would have been assessed under Schedule B at £208 from which he would have been entitled to a deduction of £160, and would have paid Income-tax under Schedule B at £48. Had this man been a small tradesman, with an income of £208, he would have had a deduction of £160 and paid on £48. Had he been a tenant farmer, paying £624 rent, he would have been assessed under Schedule B at £208, and only have paid on £48. But in this particular case, the man held a letter from the Inland Revenue Department, maintaining that because he was assessed under Schedule A at £158, and showed a total profit of £208, he was not entitled to any deduction whatsoever, and the whole Income-tax under the one schedule at £158, and under the other schedule at £50 a year, had to be paid. The House might remember that at the time the Finance Bill of 1894 was being discussed, the question of the amount of deduction which ought to be made as between the gross and net revenues of agricultural land was raised on both sides of the House. Since then they had had the reports of the Sub-Commissioners appointed by the Commission on the Depression in Agriculture, and if the right hon. Gentleman had read these reports he would see some extraordinary statements as to what the real difference between gross and net revenue of agricultural land really is. Mr. John Speir in his report on the counties of Ayr, Wigton, Kirkcudbright, and Dumfries, says (p. 5):— The most absurd ideas appear to possess the minds of the public regarding the incomes which landlords draw from their estates. It is often considered by those whose knowledge of estate management is rather limited, that because a landlord has a rent-roll of £10,000 a year, he has an income of that amount, whereas the facts of the case show this is very far from the truth. The estates of which I have had returns are nearly all considered to be very well managed, and the average net income to the proprietor from these at the present time is 56.7 per cent, of the gross income. Many estates are yielding their proprietors very much more, but others are very much less, the highest I have received being 85˙3, while the lowest is 23.3, both being calculated for an average of three years. Mr. Wilson-Fox, reporting on the county of Cumberland (p. 27 and 28) says:— On the Netherby estate the total sum spent on all out-goings between 1879 and 1894 represent 27½ per cent, on the gross rents received in that period. On the Underley estate, in Westmorland, the total outgoing in 1894, excluding Income-tax, represented 36.2 per cent, of the rent received, whereas in 1880 they represented 33 per cent. Mr. Hunter Pringle, in his Report on South Durham, and the North and East Riding, stated that the outgoings on estates in those districts ranged from 40 to 63 per cent, of the gross income. These, and other reports of the Sub-Commissioners, showed that while in some cases one-eighth amply covered, and might even more than cover the necessary expenditure for the maintenance of the land in a cultivable condition, there were many other cases where it was very far indeed from representing the expenditure necessary to be made. Take, again, the case of buildings in towns. It was becoming usual for buildings, let as offices to many tenants to be rated as a whole, the rate being collected from the owner, who recovers it along with the rent. So long as the building was entirely occupied no hardship could arise. Take as an illustration a building, let in offices, the total rent of which was £1,200 a year. The rateable value of that building would be £1,000, and assuming the rates were 6s. in the pound, the total rates would be £300, less 10 per cent, allowed to the proprietor, which would make £270 a year. But now assume the offices were half empty, the rent then received would be £600. Income-tax, under Schedule A would be paid on £600, it being assumed that the rates were recovered from the tenants, but of the rate in that instance only one-half was being received. The other half was being paid out of the pocket of the proprietor. Also, to show the anomaly of the present system, take the case of a house. Whether the owner lets or occupies a house, it was assessed under Schedule A, on what was called the gross annual value. The contents, however valuable, of the house, were not assessed to the revenue at all unless they were let with the house, in which case the difference between the gross rent and the annual value was assessed separately under Schedule D. It was stated by Sir Alfred Milner, in his evidence before the Commission on Agricultural Depression, that it was estimated that the value of that class of property which was not called upon to contribute to the Imperial taxation was £1,000,000,000. Sir Alfred considered that an excessive figure, and was inclined to put the value at £600,000,000. Take another case, that of a man who spent large sums of money in forming a collection of pictures, that collection would not be assessed in any way whatever to the Imperial taxation. If the same man, however, instead of spending say £100,000 upon pictures, were to spend any part of the money in building labourers' cottages, or anything of that sort, he would be very highly assessed indeed. The injustice of the present incidence of taxation under Schedule A, as compared with that under Schedule D, was undoubted. When he raised this matter on a previous occasion, the late Chancellor of the Exchequer argued, and he believed the present Chancellor of the Exchequer to some extent agreed with his right hon. Friend, that the great difficulty in dealing with Schedule A arose from the fact of the enormous number of assessments under that Schedule. He believed it was stated that in the opinion of the advisers of the Government, the Inland Revenue Depart- ment would almost break down were a system of assessment different to that which existed at the present time adopted. He did not altogether share that view. The back of the Inland Revenue Department was a good deal stronger than it was sometimes credited with being, but if injustice was shown to exist, the convenience of the Department had no right to stand in the way of its removal. He could give one or two instances to show what he called the extravagance of the present system of assessment. The figures in the first case were those relating to a well-known concern in the north of England, and they were taken out specially for him. That concern paid Income-tax under Schedule A on 3,285 assessments to 24 collectors, in 27 townships, while under Schedule D, it paid on one assessment to one collector. The amount that concern paid in January last, under Schedule A, was £1,642, or an average of 10s. per assessment, and £324 per collector, whereas under Schedule D it paid £7,776 in one assessment, and to one collector, and that figure was arrived at by taking the profit shown in the published balance sheet, and deducting the £1,642 which had been paid on the 3,285 assessments under Schedule A. Then in the case of a house let with furniture in it, Income Tax was paid under Schedule A on the gross annual value of the house when empty, but the tax under Schedule D was paid to a totally different collector, possibly miles away from the collector under Schedule A, on the difference between the gross rent and the annual value. If a factory was let empty, and the occupier put machinery in it, when paying his Income Tax under Schedule D, he was entitled to deduct depreciation at the rate of 5 per cent, from the amount of his return. If, on the other hand, the owner put machinery in and let the place with the machinery, the owner was entitled to depreciation at the rate of 5 per cent., but was not allowed to deduct it when the payment was made. He had to go to all the inconvenience and cost of making a claim for the deduction to the Inland Revenue Department, and some six or nine months afterwards, he might get the sum repaid to him. He would be told, he knew, that the number of assessments made under Schedule A was between 7,000,000 and 8,000,000, and that the work involved in merging Schedule A in Schedule D would almost break down the Department. He had had inquiry made in two counties in Scotland as to what the effect would really be. In Scotland the whole of the rates and taxes were levied on what was known as the Valuation Roll. In Dumfriesshire there were 10,502 separate assessments under Schedule A. If grouped, as they would be under Schedule D, they would be reduced to 2,357. In the upper ward of Lanarkshire, there were 15,658 assessments, and they would be reduced to 3,064, or, taking two counties together, the number of assessments would be reduced to one-fifth. He was perfectly aware that such a change as he suggested could not be introduced in a hurry, but only after very careful inquiry and a great deal of consideration, but he thought the Chancellor of the Exchequer might introduce into his Bill the principle of Clause 21, and give to the owners of land, tenements, and hereditaments used for the purposes of trade or agriculture, the right to apply to the general Commissioners in any case where it could clearly be shown that the income arising in the course of the year has not amounted to the amount of the annual value charged under Schedule A. By doing that the right hon. Gentleman would go a long way to meet the cases of injustice arising under Schedule A.

* SIR ALBERT ROLLIT

said he voted in favour of the principles of the equalisation and graduation of the Death Duties, and the proposals had been more than justified by experience, but he approved of the effort to remedy any cases of particular injustice which might have taken, place in the administration of the Act. He certainly thought this Bill dealt with one or two points which called for remedy, and which, un-remedied, would be productive of very considerable hardship and injustice He was struck by the interpretation given by his hon. Friend opposite with the possibilities of Clause 14. Generally speaking, he was no great believer in attempts to evade the duties, and he had never believed that landowners would part absolutely with their property in order to ultimately evade the payment of the Death Duties. But the case was different if the owner was able to preserve a life interest, and then escape the duty, as under the words of this clause he would be able to do. With regard to scientific collections, he knew the view prevailed that such collections had better be in the hands of the public, rather than in the hands of private individuals. He did not altogether share that view. Such collections, made with great personal skill and knowledge, had generally been very accessible to the public, and if the State obtained benefit from the maintenance of the unity of the collections, as compared with their dispersion, he did not think the burden ought to fall on the collectors, especially where the collections had not only a family, but also a national interest, and ought to be kept intact. The value of a collection often consisted in its integrity, and this clause in the Bill might result in benefit to the State. The provision giving facilities for the payment of Succession Duty by enabling the payer to take a charge on the estate was a good provision; but he doubted whether it was quite fair to a prior mortgagee, who would thus become a second mortgagee. He regretted much that the Bill did not deal with the Income Tax, but still maintained it at an abnormal peace rate. He hoped the time would soon come when the Chancellor of the Exchequer would be able to deal with this question more favourably, especially for industrial incomes under Schedule D. He believed the depression in agriculture to be great and acute; but there were other interests in which the depression had been equally felt—in shipping, for instance. It had been said in the Debates on the Rating Bill that ships bore no proportion of local taxation; but that was a mistake. The docks were rated, and ships paid through the dock dues, and by the tax on incomes derived from freights. Except as a temporary measure, he should object to the differential treatment of real and personal property. He was sorry that the promised inquiry was not to extend to the whole question of the incidence of rating. The inquiry, as he understod, was only to deal with the possibility of rating personal property; and with that limitation, the class who might suffer would be the same class who were differentially treated, to their disadvantage under the Rating Bill, and also under this Bill. They would have nothing to gain and something to lose by such an inquiry. The wider inquiry had been remitted since 1840, and during the interval there had been continual subventions disadvantageous to personal property. In considering the whole question, to redress the many anomalies of local taxation, the tradesmen in the large towns had perhaps the greatest claim to attention. The burden of the rates on that class, who had to face the stress of competition, was more oppressive than on the agricultural classes. A rate of 7s. or 8s. in the pound was not unusual in the boroughs. He thought the provisions of the Bill in regard to the Land Tax were good, though here again the landed interest were treated preferentially. It was to the public interest that the tax should be redeemed; but the Bill would still leave grave inequalities. In connection with the Light Railways Bill, he had appealed to the Chancellor of the Exchequer to fix the interest payable for local loans, at 3 per cent.; but the right hon. Gentleman would not assent. Yet, in respect of the instalments of the Land Tax remaining in arrear, the interest was now to be fixed at 3 per cent. The lowest rate charged by the State in connection with loans for local improvements was 3⅛ per cent, under the Housing of the Working Classes Acts, yet by landowners for land tax instalments it was only to be 3. On the whole, however, the Bill had dealt with taxation in a way which should meet with the approval of the House, subject to the qualifications he had made.

* MR. T. P. WHITTAKER (Yorkshire, W. R., Spen Valley)

pointed out that according to Sir A. Milner' s Report, there were no grounds from the allegations of the farmers that they were heavily taxed. It was the owners of the land and not the occupiers who were heavily taxed; and if the relief given by the Government's proposals was really to go to the farmer and not to the landlord, it would go to the man who did not need it. Why should the farmers be almost exempt from Income Tax? Sir A. Milner stated that the whole of the farmers of this country only paid £190,000 a year in Income Tax, on a total value of more than £15,000,000. They were assessed on a third of the rent; so that a farmer who paid a rent of £480 would be exempt from the tax altogether; while another rented at £900 would pay on £300, less £160 abatement, or £140. The manufacturer or trader earning £900 a year would pay on the whole. Sir A. Milne showed that the land was overtaxed; but, curiously enough, he classed the farmers among those who were under-taxed; and yet the farmers were to be still further relieved. According to the same authority, the Imperial taxation on the capital value of property was on land .95d. in the pound; on other rate able property .81d. in the pound; on non-rateable property, .54d. in the pound. So that the Imperial taxation on non-rateable property was about half that on land; and the farmers non-rateable property was only taxed to the extent of .10d. in the pound; or one-fifth of other non-rateable property. Sir A. Milner said that Schedule B of the Income Tax was rapidly becoming a farce; and that certainly was the case, when a total rent of £45,000,000 only paid £190,000 a year. There was no class in the country so easily let off in respect of Imperial taxation as were the farmers. If they made profits, they ought to pay Income Tax like other people. The farmers were taxed far more lightly than any other portion of the community, and, if they were to be relieved in regard to local rates, he contended that it was only fair that the exceptional treatment they received in regard to the income tax should be reconsidered. Under the circumstances, the farmer ought to pay on the Income Tax in the same proportion as other traders.

* MR. GIBSON BOWLES (Lynn Regis)

said he desired to refer in a few words to the question of the Death Duties only. He was not surprised that it had been found necessary to amend the Finance Act of 1894, for he had always anticipated that amendments would be necessary. He had always believed that too high an estimate of the ultimate and permanent return from the duties had been made, that this year would be found to be the high-water mark, and that the return from these duties would go on decreasing. During the past financial year the Death Duties had returned £14,000,000, which was £1,500,000 more than the Inland Revenue had estimated—a very serious and quite unprecedented mistake. For the current financial year it might well be found that a similar mistake had been made, but in the opposite direction, and he thought it quite likely that the Chancellor of the Exchequer might find that the return from them was £1,000,000 less than he counted upon. He still held that the principles of that Act were mischievous and false fiscally, but he held that they should not be attacked, or amendments destructive of them proposed at this stage or until their full effect was seen, which could not be for several years. He believed, however, that it was absolutely necessary now to remove some of the more crying injustices and complications of the Act, and the Government had certainly taken some steps in that direction. But the Chancellor of the Exchequer had not gone far enough in his proposals of amendment. The net results of the finances of the year were that the right hon. Gentleman had finally in his hands to dispose of a sum of £1,708,000. He contended that the first claimants on that surplus were the contributories to the Death Duties, so far as those duties involved injustice—he was about to say iniquities and extortions. But the Chancellor of the Exchequer did not recognise those claims. He gave to relieve rates on agricultural land £950,000; he gave to education £400,000, and to the Land Tax £100,000, leaving only £200,000 for the unfortunate victims of the Death Duties. He gave all to land and learning and left nothing for the widow and the orphan who had been despoiled by the right hon. Gentleman the Member for West Monmouth. The right hon. Gentleman should have limited Death Duty taxation to property which was actually in possession of the deceased, and which actually passed on death; he should have limited the aggregation to such property as the deceased had been competent to dispose of, and had disposed of, since the passing of the Act. The right hon. Gentleman should also have abolished the provision which made duty payable on any gift made within 12 months of death, which ousted all consideration of the facts and made an assumption false in most cases, in favour of the tax collector. The true test was the test of facts. In a case of a true donatio mortis causa duty should be paid, but in all other cases gifts should be freed from taxation. He also thought the right hon. Gentleman should have abolished the retroactive effect of the Act. Still, he had done something to amend the Act of 1894, though it was very little. He had proposed to abolish the duty which at present had to be paid when a man's own property reverted to himself in the same way as if it passed by death; to provide for the return of duties which had been merged in the Estate Duty when these former had been paid in advance; and to exempt property of the nature of heirlooms, yielding no income and enjoyed in kind only, though as to this he suggested that the Treasury should be made the deciding authority, which would have to be reconsidered. This was little, but still it was something, and he (Mr. Bowles) proposed to move some further small amendments, whose modesty would, he hoped, procure for him support from all sides. He was not satisfied, but he supposed he must take what he could get. He trusted that, having thus generously acknowledged what little the Chancellor of the Exchequer had done for them, he should be able to get from the right hon. Gentleman an amicable consideration for the few Amendments to the Bill which he had placed upon the Paper. One Amendment dealt with the difficulty, trouble and hardship which was often caused by a very small amount of property leading to a very large amount of duty. If by a few shillings an estate was brought over the maximum of a given category at a given rate, an extra rate and extra duty of £250 might now be levied. He proposed to increase the margin to £100. He would also make a small exemption in small classes of estates, to which he was sure no one would object. There were two rates of duty in the Bill. Some were called upon to pay three per cent, and others to pay four per cent., but as the revenue never paid more than three per cent, interest, clearly the rate of interest should be that of 3 per cent, and the same in all cases. He was glad that some attempt was being made to make some amendment in the Finance Act of 1894. He was sorry that those Amendments did not go further; but he was glad that, at any rate, a beginning had been made in the right direction. More amendments would have to be made next year, but he trusted that about the year 1900 a Chancellor of the Exchequer would be in office, who, finding himself in the presence of a vastly diminished revenue and enormously increased grievances, would practically repeal the Act altogether.

SIR WILLIAM HARCOURT (Monmouthshire, W.)

I hope the Chancellor of the Exchequer will not be too much alarmed at the sinister prognostications of the hon. Member for King's Lynn as to the yield of the Death Duties in the future. The hon. Member has always been the reverse of sanguine on this subject. [Opposition laughter.] When the Measure imposing the Duties passed its Third Reading in 1894, he stated first that the yield might be £700,000, and afterwards said he felt sure that that figure was too high. He said the Act would be defeated by evasion and avoidance, and that the main result of that ill-considered and foolish scheme of taxation would be that in future years the Chancellor of the Exchequer would get less instead of additional Duties. I hope that after the experience we have had of the result of the Act the hon. Member for King's Lynn will pluck up courage and have more confidence in this source of revenue. [Opposition laughter.] Let me say, in the first place, that if there are in the working of this Measure of taxation things which prove unnecessarily oppressive. I would be the first to desire that they should be remedied. But I will reserve my opinion of these particular Amendments until we get into Committee, and the Chancellor of the Exchequer states the reasons by which he has been led to propose the alterations. The hon. Member for King's Lynn urged that property which reverted to the original possessor ought not to be taxed. But a case arose before the Act of 1894 in which such property was taxed—the well known case of Lord Stowell, who made over his property to his son; but the son died first, and Lord Stowell of course became liable for the duty on that property, which came to him by process of law from his son. As to the proposal in regard to landowners, I would ask whether it is not tantamount to a gift to millionaires? Take the case of a man of immense fortune who has acquired a collection of this kind of great interest and value. You may be making that man of enormous wealth a present of £80,000. ["Hear, hear!"] Turning to the general aspect of the Budget—which I do not at all view in any hostile spirit—I would say, first of all, that it is to be regretted that in the financial arrangements of the year you are creating liabilities in the future for which you make no provision. [Opposition cheers.] When in our Budgets we proposed undertakings which required in the future a larger expenditure than arose in that particular year, I had the satisfaction to feel that the growing produce of the Death Duties would supply the additional sum to meet the increased expenditure as the years went on. But here you have proposed an expenditure in future years for which you make no provision. There are two millions of uncovered expenditure in future years for the relief of agricultural rating and for increased demands for primary education. What are those two millions to come out of? [Opposition cheers.] But that is not all. The Chancellor of the Exchequer is a man of unlimited faith. He said the naval expenditure next year is to be less than this year. Great indeed is his faith. [Laughter.] I did not observe that that particular assumption was received with any enthusiasm on his own side of the House. [Laughter.] He is also perfectly confident that only a trifling expenditure will come upon the Exchequer in regard to South Africa; I suppose one must not say the conquest of the Soudan, but the advance on the Nile—[Opposition laughter]—but that, also, in the belief of the Chancellor of the Exchequer, is not going to bring increased charge on the Estimates. Here, in my opinion, are matters of certain expenditure of indefinite extent, without any provision having been made for them, and I say that that, with our constantly growing expenditure and our very limited expectations of increased revenue, is a rather formidable condition of finance. [Opposition cheers.] With regard to the question of local taxation, complaint has been, made before that subventions do not appear in the public accounts in connection with the Budget. I take some blame for that myself. I always intended to remedy it but did not. It is, I think, a misfortune that, considering the great growth which has taken place in that particular charge upon the public revenue, it does not appear in the annual Financial Statement. We have, apparently, a revenue of nearly £112,000,000 and an expenditure of nearly £110,000,000; but that does not appear on the face of the account. In former days, when the grants in aid were something like, £3,000,000, we credited ourselves with revenue and debited ourselves with grants in aid; and that is the proper way. Formerly you used to deduct all expenditure in collecting the revenue, and only show the net revenue; now the fundamental principle is to show the gross revenue and to show the charges against it. The First Lord of the Admiralty first adopted the plan of assigning taxes, which was really taking them out of Imperial revenue. One does not know exactly what phrase to apply to it; but call it a fallacy, and a mischievous financial fallacy it was. In the account which is presented at the close of the year, you have it added to the account of the revenue of the United Kingdom which includes the local finance. The contribution to local finance last year was £7,366,000; but it is Imperial revenue which is handed over to local taxation. It is not local finance; it is Imperial finance; and I submit that the public accounts ought to show it. In the weekly accounts of the receipts of the Inland Revenue and the Customs to the Exchequer, it is always shown at the foot how much has been paid over to Local Taxation Account, thus showing that it is Imperial revenue handed over under Parliamentary authority to local taxation. This is really a matter of great importance in dealing with local taxation and Imperial taxation. I foresee that the claims and charges upon Imperial taxation in respect of these local charges are going to become a verey serious matter in the finance of this country—["hear, hear!"]—and there is great danger of ruining your Imperial finance altogether. In the Statistical Abstract you see that the contribution by 1892 to local taxation was nearly £11,000,000. To that you are going under this Bill to add £2,000,000; you will, therefore, be giving £13,000,000 out of Imperial taxation to local account. I venture to say the inevitable consequence of this will be that you will have to give another £13,000,000, because it is impossible you can refuse to the towns what you are giving to the country—["hear, hear!"]—and that is a consequence which we must face. The £13,000,000 you are giving already is equivalent to 6d. on the Income Tax; that is what you are giving at present to local taxation. Do you believe you get your money's worth in the relief of local taxation? Could not the Chancellor of the Exchequer distribute the money in a manner which would be more advantageous to all classes of the community? Why, the local authorities hardly thank you for giving it to them. The reduction in the rates has been comparatively insignificant. Why, the contribution you are making to local rates is more than the whole Poor Rate of this country. What might you not do with that £13,000,000? You might have a free breakfast table, and take 4d. off the Income Tax, if not 5d. You might take off the Tea Duties and have £2,000,000 or £3,000,000 to spare for other purposes. I must profess my profound conviction that there never was a greater waste of money than these subsidies are. I am not looking at the advantages anybody derives from them; it is impossible to speak of them until you deal with the money in a different manner and distribute it so as not to squander it; but you might have given infinitely more relief with it. Landowners would have appreciated 2d. or 4d. off the Income Tax, as compared with 1s. reduction of rates. It is obvious the relief to the same classes would have been greater by removing the Tea Duties or one-half of them. I believe experience has shown that these subsidies have given very little relief or satisfaction. You will have, in due course, to nearly double these subsidies if you are to do justice to the urban communities. What a prospect that is for Imperial finance! Instead of taking 6d. off the Income Tax you may have to put another on. Under this aggravated system of subsidies I look forward to the future of Imperial finance with the gravest apprehension. It is said now it is a matter of urgency to afford relief to the agricultural community. Two years ago I was treated as the sworn foe of the farmers and of the agricultural interest, because, finding myself with a temporary deficit, I proposed a temporary duty of 6d. upon beer. The representatives of the agricultural interests were up in arms. The hon. Member for the Epping Division said that 6d. was equivalent to 1s. 2d. on the Income Tax, and that it would cripple an industry already taxed beyond endurance. The hon. Members for South Essex and for the Woodbridge Division made similar assertions. Yet a Chancellor of the Exchequer, with a surplus of millions, supported by these friends of the agricultural interest, makes the temporary duty a permanent one, although it was said that 6d. a barrel was equal to 2s. a quarter on malt. The First Lord of the Admiralty then said the value of a concession made by a Chancellor of the Exchequer depended upon the Government that might be in power. [Laughter.] It depends upon the Government whether the Chancellor of the Exchequer makes this temporary duty permanent. ["Hear, hear!"] The First Lord of the Admiralty also said:— I believe we shall be able to supply the deficit caused by diminishing this tax by one-half by some other method. Well, what is the method which he said they would resort to when they came into Office? The secret has not yet come out. Then he said:— There is a great hardship in the proposal to put this particular tax on brewers. I think it hard and unjust that that particular tax should again be selected to supply the needs of the Exchequer. When the extra 6d. a barrel was put on beer, hon. Gentlemen opposite said it was equivalent to a duty of 2s. on barley. Now, the most urgent desire of the Government is to relieve agriculture, and yet they proposed as part of their Budget to renew what they all, with one accord declared was a tax of 2s. a quarter on barley. If you work it out you find that these friends of agriculture are striking a heavier blow at the agricultural interest than the boon they are conferring upon it. They must do one of two things—either admit that the language they held and the policy they pursued in 1894 was a most factious proceeding based on statements that had no foundation, or admit that they are going to impose a heavy and most unjust duty on the agricultural interest. For my own part I think the duty is perfectly fair. I think it is a duty which the Chancellor of the Exchequer, in the earlier part of the discussion, referred to as one which might be considered with reference to the taxation of Ireland and the rest of the United Kingdom. The real truth is, this duty on beer—I do not care to ask whether it falls on the brewer or consumer or on the farmer—gentlemen opposite pledge themselves to the opinion that it falls on the farmer—as regards the brewer there is no doubt that it is not a burden upon him beyond that which he is able to bear. With reference generally to the arrangements of the Budget, I do not object to the duty on beer. I do not at all object to consider reasonable Amendments which may be proposed in regard to the Death Duties. With regard to disposing of the surplus of the Budget entirely in the interest of one class and relieving agriculture alone, upon that I said what I had to say on the other part of the Bill. I must say I look forward, as I have already mentioned, with serious apprehension as to the consequences likely to flow from the commencement of the policy contained in the proposals of the Budget, and I regret that in the flourishing state of the finances of the country at the present time it should have been found necessary to enter on liabilities which there is no certainty you will be able to meet in the future. Of course, the revenue may largely increase so that you may cover those charges. That is not certain, and the charges are there, and you have made no provision for them in the revenue. That, to my mind, is not a satisfactory condition of things. The next may be worse than the present. For the present, at all events, there is no doubt the resources of the country are marvellous. I think there is one moral at least to be drawn from the present state of the finances of the country. It shows that our principles of finance are sound, that the condition of the people is sound, and that you ought not to overload a willing horse in the matter. The great principle of the finance of this country is its simplicity. The former Chancellor of the Exchequer, the right hon. Member for St. George's, holds that it is well to have a great many sources of taxation. I do not think so at all. The whole of the reforms of Mr. Gladstone and Sir Robert Peel were in the direction of simplifying our finances. When I proposed the Budget of 1894, I ventured to say that if you wanted readily to increase your revenue, your object should be to deal with the great fabric and skeleton of your finance. Certainly, the resources of the country answered to that appeal, and I hope that under all circumstances you will adhere to the general leading principles of taxation in this country, and that you will not be led away by ideas of raising revenue on a great number of commodities which will certainly destroy the springs of your industry—and, above all, I feel entire confidence in the Chancellor of the Exchequer that he will not be induced to tamper with the fundamental principles of the finances of the country or with the currency on which your prosperity depends. [Cheers.]

DR. CLARK (Caithness)

urged that in Part 6 of the Bill, under Clause 25, there would be a loss of one-tenth in the amount of Land Tax, owing to a fall in the valuation. It should be remembered that the valuation on which the Land Tax was based was made two centuries ago, and something should be done in the direction aimed at in Clause 25 to make the tax more fair than at present. At present it was very high in some districts and low in others; and he contended that it should be made fair all round. He further called attention to Clause 26 for the redemption of the Land Tax and the reduction of the term to 30 years' purchase, instead of 37 years as formerly.

* THE CHANCELLOR OF THE EXCHEQUER

With regard to the last point raised by the hon. Member, I have to say that so long as Consols remain at their present price the reduction of the term to 30 years' purchase will cause a loss to the State in the matter of redemption; but the money will be devoted precisely as in the past to the reduction of the National Debt. We do not anticipate that redemption will be very rapid, even at the price of 30 years' purchase, but the probable loss is one reason why we have not been able in lowering the price of redemption, to put it below 30 years' purchase. I will undertake to consider the points which have been raised with regard to the Income Tax, but the matter is more for Committee than for Second Reading. The hon. Member for King's Lynn is not absolutely satisfied with the proposed alterations in the Death Duties. I explained, in introducing my Budget, that I did not feel justified in attacking the main principles of the Finance Act of the right hon. Gentleman opposite; and certainly, if I felt myself in that position, I should not be inclined to endeavour to destroy that Act by affording opportunities for evasion. I think that the particular suggestion so dear to my hon. Friend for amending the Act of 1889 with regard to the limit of 12 months is one which I could not reconsider. It appears to me that there could be no greater encouragement to evasion than an alteration of the law in that respect. He mentioned some points with regard to the amount of interest charged, the margin in settling the different scales of duty, and one or two other points—which may fairly be considered, and might, no doubt, improve the working of the law. I will not deal with the particular clauses which I have embodied in the Bill with reference to the Death Duties, because it seems to me that all of them raise technical points of detail which it will be much better to discuss in Committee. The point raised by the hon. Member for Leicestershire as to the chance of evasion under one clause will have my careful attention. The right hon. Gentleman opposite repeated the criticism of his right hon. colleague the Member for Wolverhampton that I have not made any provision for future expenditure, because I have consented to certain Bills for dealing with the surplus of the present year which will involve further expenditure in future years, without having made provision for that expenditure. I can only say that it passes my understanding to see how I could have made any such provision. I can only provide in these matters for the finance of the year. I have provided for all the expenditure which, either under legislation or in any other way I am able at present to anticipate, will come within the financial year. The finance of next year will be a matter to be considered in the next year.

SIR W. HARCOURT

My point was that you have committed yourselves to the expenditure of next year, for which you have not provided.

* THE CHANCELLOR OF THE EXCHEQUER

I could not. Supposing I put on an additional tax this year for the expenditure of next year, the right hon. Gentleman would have said that the proposition was absurd. It is possible that the good fortune which attended me last year may attend me again; but if it does not and I have to provide for a greater expenditure next year than I have to provide for this year, my only resource is an increase of taxation, and that is the only answer which I can give to the criticism of the right hon. Gentleman. Then the right hon. Gentleman went on to deal with three points in which he subjected me to more severe criticism. The first was as to the mode in which the account of Imperial Revenue and expenditure is presented, together with the Budget Statement, to Parliament; the second was my action in continuing the Beer Duty, and the third was my action in increasing the subsidies to local taxation. I listened with some astonishment to that criticism, because in every one of these cases I have followed the example of the right hon. Gentleman. Take the first. The form in which the Estimates of the Imperial expenditure of the year is presented to Parliament has been inherited by me from him, and by him from previous Chancellors of the Exchequer. It does not show, on doubt, that part of the total produce of Imperial taxation which goes to the relief of local taxation. It never has done so, and it could not do so, because this is a balance sheet of revenue and expenditure for Imperial purposes only. It would be possible, no doubt, by a note or separate heading to show that there is a sum of several millions levied for the purpose of aiding local taxation, as well as the Imperial revenue that is shown in that statement. But I believe that in all Budget speeches it has always been the custom to state the amount of revenue raised for that purpose, and certainly I stated it in my speech. There was no attempt at concealment; only it was not shown in a paper, to which I suggest that it does not properly belong. The right hon. Gentleman recalled with great unction, speeches that had been made when we were in Opposition on the effect of the increased Beer Duty on the prospects of agriculture. He spoke of the continuance of the additional Beer Duty in a more hostile spirit than the brewers themselves; and yet he admitted that in his belief we were acting rightly in continuing it, only we were acting, as he considered, inconsistently with our past principles. When my hon. Friends commented on the right hon. Gentleman's increase of the Beer Duty as an act injurious to the agricultural interest, they knew that the right hon. Gentleman was also proposing to increase the burdens on that interest by his Finance Act. He was not proposing to give any relief to that interest as we are proposing to do this year. ["Hear, hear!"] We propose, no doubt, to continue the additional Beer Duty, but we propose at the same time to give some very substantial relief to agriculture. For that reason, the comments and the criticisms which were passed on the right hon. Gentleman's finance have not been brought to bear upon us either by the brewers, who are glad to promote the interests of agriculture, or by hon. Members behind me who represent agricultural constituencies, and believe that their interests will be served more practically and directly by the proposals that we have made, than by a change in the amount of the Beer Duty. Then the right hon. Gentleman dwelt at considerable length on the question of Imperial subsidies to local taxation. He calculated that next year £13,000,000 levied by Imperial taxation would be devoted to subsidies towards local taxation. I do not know on what figures this calculation is based, but, assuming it to be correct, the right hon. Gentleman is himself responsible for £11,000,000 of that expenditure. He did not begin it, but he continued it, and he was three years in office as Chancellor of the Exchequer. He dealt with this matter to some extent in a section of the Finance Act of 1894, yet he felt himself bound to continue those very subsidies which he denounces this evening as being in, his judgment "a greater waste of money than it is possible in any other way to conceive." I do not wish to use this as a mere tu quoque argument. Why did the right hon. Gentleman continue these subsidies? [Sir W. HARCOURT: "I protest against extending them."] But why did the right hon. Gentleman continue them? He could not help it, because they afford that relief to the particular kind of property which alone is subject to local taxation which, in the judgment of Parliament and the country, personal wealth ought to give. I sympathise to some extent with what has been said by the right hon. Gentleman as to these subsidies. I do not think that the granting of subsidies is the best form that such relief could take, but the matter has been considered by the right hon. Gentleman himself, by my right hon. Friend the First Lord of the Admiralty, by myself, and by many abler and more experienced Chancellors of the Exchequer, and no one has yet been able to find any way to give relief from the personal wealth of this country to the property which is subject to rates except by means of these subsidies. I do not, however, despair that some means may be found which may be simpler, more economical, and better; and I look forward to the Inquiry which it is our intention to institute, with some hope that it may have such a result. Meanwhile, we can only give this relief in the form already adopted, and, where we believe that additional relief is required, in that way, for the present, at any rate, it must be given.

* MR. B. L. COHEN

said, he regretted the suspension of the Sinking Fund, and recognised the force of the observation of the Leader of the Opposition, that possibly there might be no surplus next year to apply to the purposes of the Fund. He did not think that the right hon. Member for Wolverhampton was justified when he described the rise in Consols as being due to artificial means. The rise of Consols from 105 to 110 was a gradual, continuous movement. It was due to the absorption of Consols by the process of investment in connection with the Post Office Savings Banks. It was likely that the rise from 110 to 114 in a few weeks was due to speculation, but he did not believe that the speculative purchases due to the temporary operations of the Money Market justified the use of the phrase "artificial means." He hoped the Chancellor of the Exchequer would consider the possibility of preventing the Unfunded Debt from being entirely in the hands of the public. His right hon. Friend was entitled to great credit for having reduced the Unfunded as distinguished from the Funded Debt of the nation, and he would suggest that the Unfunded Debt offered a very suitable reserve for the investment of the funds of the Post Office and Trustee Savings Banks Commissioners of the National Debt to resort to. If the Savings Bank Commissioners were compelled to purchase the Unfunded Debt of the country, a reserve fund would be formed against depreciation in the price of Consols, and probable loss from the purchase of stock at present prices would be guarded against. He trusted that the Chancellor of the Exchequer would not listen to any suggestion that the funds of the Post Office Savings Banks should be placed in securities not having the direct guarantee of the Consolidated Fund. He was only sorry to have intruded with some observations that did not appear to be entirely approved by his right hon. Friend; still, he trusted that the points he had raised would receive a little attention before the Bill got into Committee.

Main Question put, and agreed to:—

Bill read a Second time, and committed for To-morrow.