DEATH DUTIES. (Hansard, 29 April 1897)

§ * THE CHANCELLOR OF THE EXCHEQUER

Ah, but it will not. [Laughter] The estimates formed by the Local Government Board of the effect in the whole year of the Agricultural Eating Act amounted to £1,560,000, and the equivalent grants to Scotland and Ireland make a total of £1,950,000. [Opposition laughter.] I think I may put the grant to Ireland out of the question, because Parliament has not yet applied it to the landed interest or to anybody else, and I do not think that Scotch Members would quite support the view that the Scotch equivalent grant has gone entirely, at any rate, to the landed interest; I take it, therefore, that the opinion of the right hon. Gentleman really refers to the agricultural Rating Act. The estimated effect of that Act was a grant of £1,560,000 to the Local Taxation Account. That has actually turned out to be only £1,331,000, and, of course, the corresponding grants are also diminished, so that the total effect is that £1,664,000 will in the current year be transferred from the 1256 Death Duties on personalty to the Local Taxation Account, instead of £1,950,000, as was originally estimated. We have, therefore, saved to the Exchequer in the year just closed half that amount, or £143,000, being half the difference between the estimate and the actual sum payable for a whole year. The second reason why the Death Duties have produced more to the Exchequer than I anticipated is that the principal remission which I carried last year—that relating to settled objects of art and scientific and other collections —has not come into effect during the year just concluded. There are two cases now before the Treasury, but, of course, any loss of revenue by them will be felt in the current year. The third reason is that my advisers were wrong in their anticipations as to the total amount of estates over £250,000 in value which were likely to come under the Death Duties in the year. The total amount in value of such estates in 1895–96 was, £29,969,000. That was considered by those who were best able to judge an exceptionally high amount, but to the surprise of all of us it has been exceeded in the past year. The total value of such large estates in the year just closed has been £31,354,000—["hear, hear!"]—with the result that £84,000 more duty has been paid upon such estates during the year just closed than was paid in 1895–96. I am bound to say that that is a result for which I am not very sorry—["hear, hear!"]—but, after making due allowance for all these causes, I have to admit that I underestimated the receipts from the Death Duties last year. I think, however, we must be cautious before we move too rapidly in the other direction, and I will give the Committee some reasons for that view. The total amount of what is called free personalty that used on the average to come annually under the probate duties before 1894–95 was, roughly speaking, about £160,000,000. That was increased to £163,500,000 in the year 1895–96; but there has been a remarkable falling-off during the past year—a falling-off of more than £10,000,000. Taking that fact with the stories one hears, and in which I think there is some truth, as to the tendency of rich men to make over their property to their heirs in order to avoid the death duties—["hear, hear!"]—and bearing in mind that nothing is so easily made over 1257 as free personalty, I think it is possible that this falling-off of more than £10,000,000 may be but the precursor of a greater falling-off in future years. ["Hear, hear!"] So far as the past year is concerned, it has been practically made up by the increased amount of realty coming under the Death Duties. That has risen from £29,971,000, in 1895–96, to £39,606,000 in the year just closed. But the reason for that increase, of course, is this. It is well known that realty has come into the net of the Finance Act of 1894 much more slowly than personalty, and my advisers assure me that, though they think there may be an increase in the amount of realty coming under the Death Duties in future years, yet the increase of the past year will not be anything like maintained. Then, further, I have to remind the Committee that the succession duty and the legacy duty are yearly diminishing. The legacy duty last year yielded net receipts of £2,550,000, a failing-off of £181,000 as compared with the previous year, due to the exemption of small estates by the Act of 1894, and also, I think, to the fact that people are beginning to substitute gifts for legacies, a very much better thing both for the giver and the receiver, but a loss to the revenue. [Laugher and "Hear, hear!"] The net receipts from Succession Duty were £824,000, a falling-off of no less than £227,000, as compared with the previous year, which I expect will continue, at any rate, to some extent. Perhaps it may be of interest to the Committee if I tell them in what shares these duties have been paid respectively by realty and personalty. The total Death Duties that were paid by personalty were £11,433,000. The total Death Duties paid by realty were £2,530,000. out of the duced £10,548,000, and of this realty paid £1,871,000 on a total value of £1,871,000 on a total value of £39,006,000, whilst personalty paid £8,677,000 on a total value of £179,803,000. Of the payments by realty to estate duty £1,708,300 were payments in full, and £162,700 were instalment, showing the fact, which I remarked upon last year, that the preference for paying in full over payment by instalments still continues. ["Hear, hear!"] I have analysed the proportion of the different kinds of realty which came under the Death Duties 1258 during the nine months previous to December 31 last. They amounted altogether to about £34,000,000. Of these £16,327,000 represented house property; £10,708,000 represented agricultural land, which was valued at an average of 16¾ years' purchase of the gross value, and 20¼ years' purchase of the net value; £2,700,000 represented ground rents, and £4,181,000 represented miscellaneous property. It is estimated that the total Death Duties paid in the year by agricultural land amounted to about £843,000.