CLAUSE 10.

HC Deb 13 June 1898 vol 59 cc114-56

MR. J. H. JOHNSTONE (Sussex, Horsham)

I rise to move the following Amendment standing in my name— Page 4, line 32, leave out 'together with the annual value of any other land belonging to the same owner in the land tax parish.' I think that the relief which this clause professes to give is entirely fallacious, and that is why I wish to see these words struck out. Now, let us take the logical consequences of the Amendment as it now stands. Suppose I possess a small field which is my only property in the parish, although it may not be a very large estate. Now, I am exempt under this Act if the value of the assessment is less than £5. But my neighbour, Who owns a cottage worth 2s. a week, is not exempt because his property is over £5 in value. That is the logical outcome of this proposal, and when you consider how many of the poor industrial class, such as the small tradesmen, invest their small savings in house property—

* THE CHANCELLOR OF THE EXCHEQUER

I think it is very desirable, if the honourable Member will allow me to interrupt him, to extend the operation of this clause. The Committee will remember that I introduced this clause in order to provide for a difficulty arising under new assessments to the land tax in consequence of the Act of 1896, by which small property was affected. I thought it was a hardship which could be remedied by an extension of the old clause in the original Land Tax Act, but I see that there appears to be a general desire to extend the operation of this clause. Now, it is extremely difficult to deal with the matter in the sense which my honourable Friend desires, and not at the same time bring within the scope of exemption cases of property to Which I am sure the Committee would not desire that exemption should apply, and with regard to which the honourable Member would not think of proposing exemption. I would, therefore, suggest to the Committee that this matter dealt with in this clause to some extent, and also the question dealt with in the Amendment of the honourable Member for the Ashford Division of Kent, would be better dealt with by the withdrawal of this clause and the substitution of a new clause, which I propose to bring up. The gist of the new clause will be that where owners of property liable to land tax are now exempt from the payment of income tax they should in future, on the production of a certificate of exemption, also be for that year exempt from land tax. It would be general in its application, and would meet what the honourable Member desires.

MR. JOHNSTONE

After the right honourable Gentleman's promise, I do not think that I should be justified in taking up the time of the Committee any further upon a clause which I have not yet seen. I therefore beg leave to withdraw my Amendment.

MR. STEVENSON (Suffolk, Eye)

I should like to know from the right honourable Gentleman whether it is intended that the new clause will be retrospective beyond March, 1896, or does it only apply to cases which have occurred since March, 1896?

* THE CHANCELLOR OF THE EXCHEQUER

It will include all land tax payable in the future.

* MR. J. G. TALBOT (Oxford University)

Before the right honourable Gentleman withdraws the clause I would urge upon him carefully to consider whether these exemptions from land tax could not follow all the exemptions in the income tax. Surely it is reasonable that as you have wholly relieved incomes under £160, so you should partially relieve the higher incomes which are partially relieved from income tax.

* THE CHANCELLOR OF THE EXCHEQUER

I think that that is hardly practicable, because my honourable Friend will remember that the land tax varies to an extraordinary degree. In some parishes the land tax might be considerable, and in other cases it might be infinitesimal, and, therefore, it cannot be graduated in the way the income tax is graduated.

MR. HARDY (Kent, Ashford)

I should like to ask the Chancellor of the Exchequer if he will give his attention in bringing up this new clause to the matters raised in the Amendment which stands in my name, which is practically a repetition of an instruction which the right honourable Gentleman himself sent out to the Land Tax Commissioners. The reason I have put it on the Paper is that I find that in a great number of cases throughout the country, when an occasion has been taken by an appellant to appeal against the land tax, and at the same time to bring forward this instruction as proof—and the authorities desire that some such scheme should be adopted short of actual proof —of redemption, they have been met by the answer from the clerk, and also on appeal from the Board of inland Revenue, that they are bound by the Land Tax Act, and those instructions give out merely directions to take great care in considering any appeal, and they have no further effect. The right honourable Gentleman should go further than that, and provide that in cases where there practically had been no payment of land tax during this century there was to be very great care exercised in putting on the land tax, and, if possible, it should be taken off rather than put on. I have a number of cases in my hand in which, this instruction was sent out by the clerk. The authorities make no exemption, and, practically, this question has been treated as a dead letter in many parts of this country. I think there is some reason why this instruction should take the more definite form of being included in some Act which deals with the land tax. In other cases it is very evident that the clerk to the commissioners has endeavoured to assess properties in order to fill up the deficiency occasioned by the reduction of the land tax from 4s. in the£ to 1s. There was a case of a parish where the tithe rent-charge had never been charged in this century, and suddenly it found itself charged with the full value. When the rector objected he was told that under the Finance Act of 1896 the revenue on the land tax had been reduced to 1s. Now, I do not think that that was the intention of the Legislature, and in taking off the land tax they did not want the deficiency to be made up by the people who had never paid it before. It is upon these grounds that I would venture to ask the right honourable Gentleman to give his very careful consideration to this question, and see whether he could not in this new clause put in some words which should to some extent protect these properties, of whatever value, which have been practically, at all events, in transcription from time immemorial relieved from payment of the land tax.

MR. STEVENSON

It is obvious that this difficulty will be removed by the new clause. I should like to ask whether the total amount of the land tax remitted upon individuals in a parish will also be remitted from the total quota payable by that parish, because unless this is done it will be a great injustice.

* THE CHANCELLOR OF THE EXCHEQUER

I have no intention whatever of placing the burden on the other land taxpayers.

MR. CARVELL WILLIAMS

I notice that there is an Amendment on the Paper in the name of the honourable Member for Essex; therefore I desire to ask the Chancellor of the Exchequer whether I am right in assuming that whatever relief is granted under this clause it is not granted to the clergy as a class, but they will have the benefit in common with other classes. If that is the intention I shall be happy to agree with him.

* THE CHANCELLOR OF THE EXCHEQUER

Yes, I entirely agree with that.

MR. JOHNSTONE

If I understand this question rightly, now that I have withdrawn my Amendment, it cannot be discussed. I do not wish to raise the question now, but I think it does not prevent me raising it again if the new clause promised does not happen to satisfy my wishes.

MR. LEWIS

There is another question. If the clause is to be brought up in Committee, it is quite evident that certain changes are in contemplation, and the right honourable Gentleman is about to accept, as I understand him, the principle of certain Amendments, but to what extent we are not aware at present, and it is desirable that the Committee should have an opportunity of seeing the clause and considering it carefully before they give assent to it.

* THE CHANCELLOR OF THE EXCHEQUER

I think I had better read it to the Committee. Here it is— Where the owner in possession of any land on which land tax is assessed before the amount so assessed, in any financial year, is paid, produces to the collector of land tax a certificate from the surveyor of taxes that such owner has been allowed in that year a total exemption from income tax by reason of his income not exceeding a hundred and sixty pounds, the said amount of land tax shall not be collected, and shall be remitted from the unredeemed quota of the land tax for that year.

MAJOR RASCH (Essex, S.E.)

I think that, under the circumstances, I shall not move my Amendment, and I beg to thank the right honourable Gentleman for the concession he has made. It is not very much, it is true, but still one has to take what one can get. I am sure the right honourable Gentleman will not get much credit from the clergy. I have been asked if, by moving this Amendment, the Church would be accepting a bribe from the thieves who had robbed her of every rag and garment, but that is not my view, and on behalf of the rural clergy of the eastern parts of England I beg to thank the Chancellor of the Exchequer for the concession he has made.

Amendment, by leave, withdrawn, and clause 10 withdrawn.

* THE CHANCELLOR OF THE EXCHEQUER

I beg to move the Second Reading of the new clause in substitution of clause 10.

Clause read a second time, and added to the Bill without a Division.

Clauses 11, 12, and 13 were added to the Bill without discussion.

* MR. PRETYMAN (Suffolk, Woodbridge)

I beg leave to move that section 5, sub-section 2, of the Finance Act, 1894, be read and have effect as if the following proviso had been inserted at the end thereof— Provided that for the purpose of this subsection a person shall not be deemed to have been competent to dispose of property during such time as he shall not have been sui juris." This, I think, will remedy an admitted defect in the Act of 1894, for a legal interpretation has been given to the Act which was clearly not the intention of the framers of the Act, and which was certainly not the intention which this House had in passing this Act. I think it can be shown that (owing to the wording of the Act) in the actual working of the Act of 1894 duties are claimed from the subject which it was never intended should be claimed. Now, I do not dispute the ruling of the courts in any degree, but if it can be absolutely shown that when the Finance Bill of 1894 was introduced into this House it was the intention of the Bill and the clear intention of this House, that duties in certain cases should not be payable, and that under the present wording of the Act they are now being claimed, I think we have made out a clear case to ask the Committee to amend the Act, and to insert a clause which will bring its legal interpretation into absolute accordance with the intention of the House. I therefore move the first Amendment. As bearing upon this question, I should like to ask the authors of that Act—perhaps the late Solicitor General will answer me— whether it was, or was not, the express intention of the authors of the Act of 1894, and of the House, in passing that Act, that estate duty should only be payable once during the duration of a settlement?

SIR R. REID (Dumfries Burghs)

Yes, that was the intention.

* MR. PRETYMAN

Then that will save me from quoting further. The right honourable Gentleman allows that it was clearly the expressed intention that the estate duty should only be paid once in a settlement. Now, how was that intention carried out? It was carried out in this way. Estate duty was to be paid by the man who made the settlement, and was not again to be payable until the death of another person taking under the settlement, who had the power of making a new disposition, and, on his death the duty would be payable again. Now that has been to some extent carried out, but certain cases appear to have been unforeseen. I have studied the cases in question, and the debates which took place in Committee on the Bill, and it does appear to have been actually unforeseen that in cases where the tenant in tail is non sui juris, this exemption is not carried out at all. I will take a plain, concrete case by way of illustration: A is the tenant for life; B, C, D are sons, minors, and successively tenants in tail. A dies, and duty is paid, or is not paid, as the case may be. B succeeds at 10 years of age to the property, biddies a year later, and is succeeded by C, the second son, who is eight years old, and dies four years later. D follows him, and survives to attain majority, and, obviously, duty must be payable on his death, and also on the deaths of both B and C, although their successors take, under the existing settlement, which neither B nor C has the power to alter. This Amendment provides that no new duty would be payable until the death of a person who really can bring the settlement to an end—that is, either B, C, or D on the attainment of their majority. That duty should be claimed on all these deaths cannot possibly be in accordance with the principle laid down by the right honourable Gentleman that duty should be only payable once upon a settlement, and that is the 'hardship with which my Amendment proposes to deal. It proposes to enact that in cases of that description the duty should only be payable on the death of the person who actually is competent to dispose of it. That is to say, if B, one of the persons referred to, survived and became of age and actually competent to dispose, the duty would then be payable whether he actually dealt with it or not. But if B dies a minor, and is accordingly not capable of disposing of the property, then no duty will be payable, because C comes in under the settlement. I think it is clearly proved that in this particular case a duty has not been imposed by this House—that is to say, has not been knowingly imposed, but yet, under the wording of this clause, duty is being actually and is legally claimed by the Crown. The Amendment does not infringe upon, but only carries out, the existing principle of the clause to which it refers. The injustice is a self-evident one, and I trust the Chancellor of the Exchequer, whom I believe to be desirous of remedying real hardship, will sec his way to accept it.

THE ATTORNEY GENERAL

The Chancellor of the Exchequer has asked me to deal with this matter. We think that the honourable and gallant Member for Woodbridge has pointed out a flaw which may have to be dealt with, namely, the possibility of there being paid, under one settlement, a number of estate duties, although the person has never, in fact, been competent to dispose. We accepted the principle, which is, I believe, the principle of the Act of 1894, that duty should be paid once under a settlement, and we can, therefore, accept the Amendment of my honourable and gallant Friend. There is, however, one matter which we shall be obliged to consider. As the Amendment stands it is possible it may apply to the last person in the claim altogether, and I do not suppose my honourable and gallant Friend contemplates that in the case of the last person, even though he were a lunatic or an infant, his heirs should not bear the estate duty.

* MR. PRETYMAN

That is not contemplated.

THE ATTORNEY GENERAL

We shall consider between now and the Report stage what words will be necessary to avoid that possibility, but, subject to that reservation, we accept the Amendment.

SIR R. REID

I do not quite know what is proposed in this matter. It seems to me that this is unquestionably giving a greater advantage to settled property as against unsettled property. In my opinion settled property has already a greater advantage than unsettled property under the Act as it stands. If what the honourable and gallant Member opposite is now doing is trying to extend, in certain cases, the duration of the settlement according to the terms of the Act itself— in other words, he is trying to extend the advantage, which I think is already excessive, which is enjoyed by settled property as compared with free property under the Act—I do not know what use there is in making any objection, seeing that the Attorney General has intimated his acceptance of the principle of the Amendment: but for my part, if a Division is taken, I shall certainly vote against the Amendment of the honourable and gallant Member; because I do not think it is a legitimate or wise thing to whittle down the effect of this Act piece by piece, as I am afraid some honourable Gentlemen opposite are disposed to do, and one of the most ready ways of doing that is to alter the nature and duration of what I may call the statutory settlement which is provided by the Act.

THE ATTORNEY GENERAL

I think my honourable and learned Friend opposite has for once allowed the feeling he has in regard to this Act to slightly outrun his judgment. I can assure him that, whatever view we may ultimately take with regard to the Amendment, there is nothing in it, so far as I can understand, in the nature of whittling away the Act; nor is there even the slightest intention of adding to any favour which is supposed to be given to settled property. I must say myself that I do not see any undue advantage to settled property. The case which we desire to meet is a simple one. It is the case of where, while precisely the same settlement is running, owing to the fact that one of the persons who otherwise would be competent to dispose, being an infant, died in that condition, two duties are under the terms of this Act claimed. I am sure that upon consideration my honourable and learned Friend will see that that is not what is intended.

* SIR WILLIAM HARCOURT

I do not desire to prolong the discussion now. I only desire to say that, as far as I understand the purport of the Amendment, I entirely agree with my honourable and learned Friend that it is a proposal for giving an advantage to settled property which is not held by free property under the Act.

MR. GIBSON BOWLES (Lynn Regis)

I confess that, while I approve of the Amendment of my honourable and gallant Friend, it appears to me that the matter he has complained of is absolutely prohibited by the Act. As I understand the intention, it is that, as soon as the property comes into the possession of a person competent to dispose of it, the benefit of the settlement as regards duty ends. I shall support the Amendment, because any limitation of the duty should be supported; but I must entirely corroborate what' the right honourable Gentleman has said as to this being an alleviation of one part of property, and not also of another. There I think it is unfortunate. I should have thought the proper means of amendment would have been found in the interpretation clause. Unless you have an interpretation clause, what will happen will be this: an infant, we will say, comes into possession of two estates of £10,000. One is under a settlement, of which he is competent to dispose, and the other under a will. Duty will be paid on the one, but not on the other. I think that is an unfortunate case. But, Sir, the readiness of the right honourable Gentleman to accept the Amendment makes me suppose that there has been some understanding arrived at previously to this; so, thankful for small mercies, I will support the Amendment, though I am naturally sorry it has not been made more extensive.

SIR R. REID

Parallel cases of hardship can be given in relation to free property, and I do not see why such cases of hardship should not be relieved equally with cases of settled property.

* THE CHANCELLOR OF THE EXCHEQUER

was understood to say that that point had been fully examined by the Inland Revenue and the law officers. His honourable Friend had suggested a case where duty would become payable twice, but the Finance Act of 1894 laid down that duty should be paid only once on the settlement, and the Amendment was to meet exceptional cases where the demand might arise twice.

MR. HALDANE (Haddington)

I have listened attentively to this discussion, and I must say I do not share the apprehensions of my right honourable Friend. The Amendment, as I understand it, is to give effect to the arrangement regarding settlements embodied in the Bill. I am a great admirer of the Act of my right honourable Friend, and I want to see it maintained. But you cannot maintain it if you allow little injustices to creep in. To my mind, there is such an injustice in this case. Take the ordinary case of a man leaving £2,000 to his wife, and at her death to his children and in a case of that sort it is unfair to charge two duties, because only the yearly interest passes. Take this case: a man leaves his estate to his son for life, and on his son's death it is to go to his son's eldest son, and in the event of his eldest son dying without issue, it goes to his second son's son—really, it is a case of the second grandson taking it. It was not the intention of those who framed the clause that that should be so. Just make your Act of Parliament clear, and make the Act what you intended it to be. My honourable Friend opposite, the Member for King's Lynn said that ought to be done by a definition clause; it would have been better to have done it in that way, but I do not know that it could. The honourable Member was understood to conclude by saying that it seemed to him that they should be just, if not generous, in dealing with the point.

THE CHAIRMAN

put the Motion that the clause be read a second time, which was agreed to.

The clause was then added to the Bill.

The Committee adjourned.

After the return of the CHAIRMAN,

* MR. PRETYMAN

moved his second Amendment as follows— Where property in respect of which estate duty is payable is liable to become settled on the happening of some contingency, settlement estate duty shall not become payable in respect thereof unless and until the event happens upon which such property becomes settled, and if when, the contingency has been determined the property shall not be settled and settlement estate duty shall have been previously paid to the commissioners in respect thereof, such duty shall be repaid."—(Mr. Pretyman.) He said: In regard to the second Amendment standing in my name, the same general considerations apply as were referred to in the case of the former Amendment.

DR. TANNER (Cork Co., Mid)

I beg to call attention to the fact that there are not 40 Members in the House.

The House was counted, and 40 Members being present,

* MR. PRETYMAN

resumed: Having regard to the particular bargain already referred to, that property which went into settlement should only pay one duty during the continuance of that settlement. My first Amendment which the Chancellor of the Exchequer has accepted dealt with part of the bargain and required the duty only to be paid once during the settlement. The second part of the bargain—namely, that the settlement estate duty was accepted as an equivalent for the escape of the payment of estate duty more than once in the settlement—is also not adhered to by the present wording of the Act. Instead of submitting an A B C case I think it would be convenient that I should read an extract from a letter written by a firm of solicitors describing an actual case. They say— A testator left property worth £74,000, and after giving certain legacies and directing his widow should have the use of his house and certain lands and furniture and an annuity, he gave all his estate (subject as aforesaid) amongst his children, sons who shall attain 21 years or leave lawful issue,, daughters who shall attain 21 or marry, the daughters' shares, however, being settled. Of course it is possible all the sons may die under age without leaving issue, and in that case all the estate would go to the daughters and would be settled estate. Having regard to 'Re Fairley,' which was a case nearly on all fours with ours, settlement estate duty is claimed on the whole of the estate of the testator. The operation of the decision in all cases where there are sons must be felt to be a hardship. In our case there are four sons and three daughters, the sons taking double shares, so that if all survive the sons will take roughly £54,000 and the daughters £20,000. As a matter of fact, the sons, with one exception, are the older children, and one is almost of age. Nevertheless the £54,000 must pay £1 per cent, extra duty, that is £540, because there is a possibility that all the sons may die before attaining 21 years of age, and the daughters, or one of them, survive. No doubt there is the contingent possibility that all the sons may die, and that all their property may go to the daughters, and go into settlements; but in a case such as I have referred to there is only a contingent escape of duty, and it is for such a case that I wish to provide. The late Chancellor of the Exchequer, in his Budget speech of 1894, said— In the case of settlement when property is now settled by will probate is charged once on the corpus of the property, and this payment covers all the limitations of the settlement. We now therefore propose to assimilate the treatment of property under all kinds of settlements to that now in force respecting settlements made by will. But as the single payment in respect of the whole settlement may result in a total diminished produce of the tax, we propose to levy an additional 1 per cent, on all property under settlement to recoup this loss. And that, Sir, is all that I require.

THE ATTORNEY GENERAL (Sir R. WEBSTER,) Isle of Wight

I think the honourable and gallant Member has called attention to a defect in the working of the Act which will require same remedy. While, therefore, we are prepared to accept the principle of his Amendment, yet we cannot quite accept it in the form he has proposed. It is Absolutely necessary, as I think my honourable and gallant Friend will admit, that the duty should be paid in the first instance, because otherwise we might not have the means of knowing what the total amount would be. What my honourable and gallant Friend desires is that if the whole of the property does not come into settlement there should be repayment, and I will suggest as an alternative to his proposal these words— Where in the case of the death occurring after the commencement of this Act settlement estate duty is paid in respect of any property contingently settled, and it is thereafter shown that the contingency has not arisen and cannot arise, the duty paid in respect of such property shall be repaid. I believe those words will carry out the object of the honourable and gallant Member, and if he will withdraw hi words I will venture to move these words as an Amendment.

SIR ROBERT T. REID (Dumfries Burghs)

thought that in the circumstances contemplated by the Attorney General, the Crown would not have been entitled, under the existing law, to settlement estate duty. If, however, the Revenue Department had any doubt on the matter, it would be better to make the matter clear.

Captain Pretyman's clause was, by leave, withdrawn, and the new clause of the Attorney General was read a second time and added to the Bill.

LORD EDMOND FITZMAURICE (Wiltshire, Cricklade)

moved to insert the following clause— Section fifty-seven, sub-section nine, of the Taxes Management Act, 1880, is hereby repealed, and it shall be lawful for the General Commissioners to permit any barrister or solicitor to plead before them on any appeal for the appellant or officers either viva voce or by writing. He said he hoped to be able to persuade the Committee to add the new clause in some shape to the Bill, as it was a clause which sought to remedy an injustice which arose owing to the Taxes Management Act of 1880 prohibiting solicitors and barristers from practising before the General Commissioners. The Committee would be entitled to ask what was the reason, or rather what was alleged to be the reason of this prohibition. So far as the pages of "Hansard" were their guide he could not find that, when the Act of 1880 was passed through Parliament, there was any discussion of the question at all, but perhaps that was not remarkable, because the Act of 1880 was a consolidation Act, and it was difficult to trace the record of the earlier Debates on this question. What he understood to be the reason of the prohibition was that it was thought that proceedings would be simplified and shortened, and perhaps made cheaper, by the absolute prohibition of the appearance of solicitors and barristers before the General Commissioners of Income Tax. As a matter of fact, experience did not confirm that view, and there was a great deal of discontent in the country, not merely amongst members of the legal profession, who not unnaturally resented being barred in this way, but amongst the general public, many members of whom found themselves engaged in cases where they required legal assistance, and where this strange and unusual prohibition debarred them from the benefit of legal representation. This prohibition ought to be removed, because it has not been shown to work in the direction which, so tar as can be ascertained, was the direction in which it was imagined and desired it would work, namely, that of simplicity and the shortening and cheapening of proceedings. As a result, in many parts of England the practice had grown up of allowing solicitors and barristers to appear before the General Commissioners unless objection were taken. The Committee would see that this state of things was very objectionable. Barristers and solicitors should be permitted to appear. As he understood he would not be met with any opposition, he did not wish to take up time by quoting numerous instances from different parts of the country of the great hardships that have arisen, especially in the case of women, who, even more than men, were sufferers by this arrangement. He begged to move his Amendment.

Amendment agreed to, and clause added to the Bill.

LORD ALWYNE COMPTON (Beds., Biggleswade)

moved the following clause— Where estate duty shall have become payable on any death by or on behalf of any person in respect of property to which he shall have become entitled on such death, and such person shall die within the space of eight and a-half years from the date of the death on which the duty shall have become payable, such duty (in this section referred to as 'the first charge of duty') shall for the purposes of this section be taken to have become payable by such instalments as are mentioned in section six, sub-section eight, of The Finance Act, 1894, and if the estate duty payable in respect of any property passing on the death of such person (in this section referred to as 'the second charge of duty') shall be a sum equal to or less than the total amount of the instalments then to become due or which by virtue of this section are to be taken as then to become due of the first charge of duty (thereinafter referred to as 'the future instalments'), the second charge of duty shall be wholly remitted; but if the amount of such second charge of duty shall exceed the amount of the future instalments, then the amount which but for this section would have become payable in respect of such second charge of duty shall be reduced by the amount of the future instalments. That the proviso at the end of section four of the Finance Act, 1894, shall be read and construed as if there were omitted therefrom the following words, that is to say, the word 'immediately,' the words 'to some person other than the wife or husband or a lineal ancestor or lineal descendant of the deceased,' and also the words at the end of the proviso commencing' but if any benefit under a disposition not made by the deceased,' down to the end of the section. The noble Lord said he hoped the Chancellor of the Exchequer would accept this proposal, which would be a reasonable relief, without loss to the Exchequer.

* THE CHANCELLOR OF THE EXCHEQUER

The proposal raises a very complicated matter, and I aim sure my noble Friend has dealt with it in a very fair way. The whole theory of death duties—and I refer to the death duties existing long before the passing of the Act of the right honourable Gentleman opposite—is based upon averages, but I am afraid that the doctrine of averages does not commend itself to anyone who suffers. I have looked into this matter already myself, as some of my honourable Friends are aware, and I do not yet despair of finding some proposals which may obviate the hardship where it particularly occurs, if there are such cases, without undue loss to the revenue. But I am afraid the proposal which my noble Friend has placed before the Committee would not be workable. I will endeavour to deal with a concrete case. Suppose a person called A dies, leaving £5,000 by will to a person called B. The death duty is, of course, paid on the £5,000. B takes the £5,000 and gives it away to somebody, or spends it in some way or other, or loses it in speculation; at all events, it disappears. But B is a man possessing other property besides. Suppose he dies within eight years of paying the duty, under my noble Friend's proposal it would be permissible to deduct from the death duties on B's own property, with which it has nothing to do, the duty which has been paid upon A's estate. Well, I think that cannot be the intention of my noble Friend. I think the Committee will see that it would be obviously unfair. I am sorry for that reason that I cannot accept my noble Friend's Amendment, but I will undertake to consider the matter further.

MR. GIBSON BOWLES

Undoubtedly, in some cases, the hardship is extremely great, inasmuch as you have a number of successions—four, five, and, perhaps, six—during the time that one property has only one succession. I think that is a conclusive reason why death duties should be moderate, in their amount. Now, Sir, with regard to the objection of the right honourable Gentleman the Chancellor of the Exchequer to this particular clause. He has put a hard case, and I admit the arguments of the right honourable Gentleman if the estate duties are moderate, but as they have been so enormous under the Act of 1894 it is perfectly allowable to take certain cases, as my noble Friend has done, and to endeavour to relieve them of excessive charges. Therefore, Sir, I remain entirely unconvinced by the arguments of the Chancellor of the Exchequer, and shall certainly vote for the Amendment.

SIR M. STEWART (Kirkcudbright)

I desire to make one remark with reference to the great hardship which the Chancellor of the Exchequer has promised to consider. It has been before the House on many different occasions. It has been traversed in the country many thousands of times and during many contests, and after the electioneering speeches which honourable Members have had to make, not only on this side of the House, but also on the other side, it is really time now that some definite action were taken to relieve those great hardships. I hope that before another Session is passed the present state of things will pe remedied. It can be remedied—many honourable Members are pledged up to the hilt to try and effect a remedy—and I am satisfied that, if my right honourable Friend will really put his shoulder to the wheel, the matter is not too difficult to be properly settled. He will certainly be well supported in the House in his attempt.

SIR J. FERGUSSON (Manchester. N.E.)

In order to show the possibility of hardship in the present law I desire to put a concrete case to the right honourable Gentleman. I know an ancient estate—not a very large estate—in which the owner left five brothers, only the youngest of whom has children. The third brother has now succeeded, and, in the course of nature, the others will suc- ceed in turn, and it is possible there may be five successions in 10 years.

* SIR W. HARCOURT

Is it settled property?

SIR J. FERGUSSON

I do not know whether it is or not.

* SIR W. HARCOURT

Settled property only pays once.

SIR J. FERGUSSON

But supposing, it is not settled property, is it desirable that any estate should be fined thus heavily five times in about 10 years. That is a possibility of the law. Surely it amounts to confiscation, and not to taxation.

* THE CHANCELLOR OF THE EXCHEQUER

I am almost certain I know the case to which my right honourable Friend has referred, and if I do I also know that it was met by an alteration in the law in 1896.

* MR. BUTCHER (York)

The real hardship under quick succession only arises when the same property is taxed several times in the course of a few years. As the clause is drawn it does not exactly provide for such a case, although the hardship is admitted by the Chancellor of the Exchequer. The difficulty in the way of granting relief is to identify a particular property, and to be able to say that the property on which A paid duty one year is the same to which B succeeds a few years later. I would suggest that the difficulty might be met in this way. Leave it to the commissioners to decide whether the property on which a second duty is claimed is the same or substantially the same as the one which paid duty a few years previously. I think that might fairly be left to the opinion of the commissioners; and if, in the opinion of the commissioners, it is the same property on which duty is demanded a second time, then there should be an amending clause enabling the commissioners to give relief in such cases. In other words, when the commissioners have decided that the same property is to be taxed twice, let the law provide it shall be exempted. As the Chancellor of the Exchequer has admitted the hardship, I venture to suggest that, if not this year in some year not far distant, he may see his way to remove a serious hardship in such a way as I have suggested.

LORD ALWYNE COMPTON

In view of the sympathetic attitude of the Chancellor of the Exchequer, I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

LORD ALWYNE COMPTON

The second new clause which stands in my name is a different question altogether. It is, proposed, with a view to extending to a lineal descendant, or wife, or husband, the same favour that is given under the Finance Act of 1894 to a collateral successor. The provision referred to was inserted by the late Government, but, practically, it seems to me a matter of the grossest injustice that the same favour should not be extended to a lineal descendant as is given in some cases even to a stranger. Take this case: a settlement is made by a father on his daughter for life, with remainder to her issue, and, in default of issue, to the next of kin. If the daughter dies and leaves issue, the duty is paid in full, but if there is no issue, and a stranger, perhaps, succeeds, the property is not charged in the same way. May I take another case? A father has two sons, and on his death the property passes, by special settlement, to them. In that case it has to pay the full rate, whatever it may be. I have a case in my mind, of which I have personal knowledge, in which the second and third sons of a millionaire had to pay duty at the rate of eight per cent, on the property. Possibly, that may not have the sympathy of right honourable Gentlemen opposite. I am fully aware that there is not much sympathy for millionaires, or for their sons, who take any property at all, but my point is that if the second and third sons in the case I mention had died, and if that same property had passed to a collateral issue, or even to an absolute stranger, it would not be aggregated to pay eight per cent. That seems to me contrary to the principle of the legacy and succession duty that special favour should be extended to collaterals and strangers, and not to younger sons. I do not know whether the Chancellor of the Exchequer can see his way to accept my Amendment, but I should like to ask on what principle of justice, or right, or of common sense, the present law, by which property which passes to a collateral issue or to a stranger is not aggregated to pay as much as when it passes to a lineal descendant, can be defended? I beg to move— That the proviso at the end of section four of the Finance Act, 1894, shall be read and construed as if there were omitted therefrom the following words, that is to say, the word 'immediately,' the words 'to some person other than the wife or husband or a lineal ancestor or lineal descendant of the deceased,' and also the words at the end of the proviso commencing 'but if any benefit under a disposition not made by the deceased,' down to the end of the section.

* THE CHANCELLOR OF THE EXQUER

This clause will prevent that. I certainly could not accept the noble Lord's proposal, because it would disturb the whole system of aggregation, and would affect the revenue very considerably. The exemption for which section 4 of the Finance Act provided was only intended to operate in cases where there was no connection between the deceased and the person to whom the property passed.

SIR R. REID

I think the honourable Gentleman has not considered the genesis of this clause. The principle of the Act is that whatever passes or changes at death will all form one property, and shall be allocated to ascertain the total amount of property, and thereby fix the higher or lower scale of taxation. Suppose that on the death of person there are two estates of £100,000 each. In the ordinary course these two estates would go together, and taxation would be paid upon the £200,000. But this case may possibly occur. A man, by no settlement of his own, but by the settlement of his ancestors, might be enjoying two estates, each £100,000, and those two estates nay go, one of them by the settlement to his son, and the other to a distant relative. Now, it would be very hard for his son that he should have to pay a larger amount of duty on the one estate he got by reason of someone else who is not a member of his own family at all, who derives also a benefit by reason of the death of his father. It might seem to be a hard thing, but if these two estates go to the lineal descendants of the man, and not to a stranger, this hardship does not exist. The principle is that an exception is made which operates in favour of the family of the deceased. By this Amendment it is provided that they shall not be taxed more heavily by reason of some other property which is not the family estate. Now, that is the purpose and the working of the Act, and that is the intention of the clause. That is just what I would venture to remind the Committee is the danger of an Act like this. You make an exception which is in the nature of a concession—I do not say an unreasonable concession—and then that is inverted and turned upside down, and is made the basis of a demand for further concessions, and the result of this is that if each supposed hardship, or any apparent ostensible anomaly, not a real anomaly, is made the foundation for indulgences here and exemptions there, you will very soon have very little left of the Act. But that good time will not last for ever; and I am quite certain you will find, if I may say so, a great deal more unpopularity in proposing other Acts to supplement the revenue than in maintaining this Act as it is.

* MR. VICARY GIBBS (Herts, St. Albans)

If the Committee will allow me two or three minutes, I should like to describe a case which occurred in my own family in 1895, which I consider discloses a very great hardship, which would be removed by the adoption of this clause. I am afraid the argument may be a little wide of the clause, but I should like to state this case. A man died, leaving £20,000 to his wife for her life, with the remainder over to her brothers. The woman married again, and married a very rich man; that man died and left her all his property, real and personal. The woman died intestate in respect of that property, and it went to her heirs-at-law. Now, the £20,000 left by her first husband for life followed the settlement and went to the brothers. The Treasury successfully contended, however, that the property which she inherited from, her second husband must be aggregated, although the moneys thus aggregated came from different sources and passed into different channels, and although the inheritors of the £20,000 had no benefit from or connection with the second husband's property. Now I would ask the Chancellor of the Exchequer to consider this point. Does he not regard this as most inequitable? I believe that it was not the intention of the framers of the Finance Act that this result should be produced, and such injustice ought to arouse the tender sympathy of the Chancellor of the Exchequer. This is not an imaginary mischief, such as the honourable and learned Member referred to, but it is an actual case arising out of the Act. Let me put it in another way which will bring it home to the Committee. Supposing that A leaves to B £1,000 with the remainder over to C. Then supposing that D, another man, leaves £1,000,000 to B. Is it not monstrous that the sum coming to C from A should be heavily charged because somebody else, who never knew of their existence, had given somebody else some money? That is the position as the Act stands, and I ask anybody whether that is not a preposterous condition of things. But whether the Chancellor of the Exchequer accepts the clause of my noble Friend or not, he ought to introduce some clause which will prevent such a gross injustice as this, whether it affects the Treasury or not. I think it should not exist, and I appeal to him to consider its removal.

* SIR W. HARCOURT

I have endeavoured to follow the honourable Member, but certainly this Amendment has no application in the case cited. Certainly the intention and the spirit of the Act was to meet any case such as this of money not belonging to the family. The intention of the Act was to prevent an injustice arising where the property passed away altogether from, the family.

MR. BANBURY (Peckham)

I am the owner of property, say £500,000. I also have an interest in other property worth, say, £50,000. I have two sons and at my death £500,000 goes to the eldest son. The £50,000, in which I have a life interest, goes to the second son. The second son, who only receives £50,000, in which I have a life interest, has that aggregated to the £500,000, and he has to pay duty on the whole. Now, if the £50,000 went to a stranger, that stranger would not have to pay. I must say that it seems to me very hard that a son should be put in a worse position than a stranger, and I hope the right honourable Gentleman the Chancellor of the Exchequer will consider the case and endeavour to alleviate this evil.

MR. GIBSON BOWLES (Lynn Regis)

I do not know whether honourable Gentlemen are aware that this is only a proposal to aggregate certain kinds of property by themselves, and charge it with the proper rate of duty. It is not a proposal to exempt them from estate duty. Now, what is the proposal? It is substantially the same as that to which I have put down an Amendment. Sir, in a few words the noble Lord's proposal is this, that you shall only aggregate with the main estate property which the deceased had been competent to dispose of. I do not know whether all the members of this Committee realise that that also is charged by this nefarious Act. This Amendment practically provides that the only property that shall be aggregated into the main lump of this property, if I may use the term, shall be property which he had power to dispose of, and which he had in fact disposed of. I make out that you may have 18 or 19 different properties, subject to a different set of duties and conditions. This Amendment, I do think, is one of the most reasonable and necessary character that can possibly be proposed into this Act. It does not touch the principle of the Act in any way. The principle of the Act we must not, of course, touch, but it could never have been contemplated to impose duty on such property—that is, property which has been settled by some body whom they never heard of. I do think, Sir, that if the Chancellor of the Exchequer has any bowels of compassion at all—and I confess I sometimes doubt it, for he is always going to do something, and he has had the last Amendment before him for three years, and he is still considering it—the moment has arrived to make up his mind about this particular Amendment moved by my noble Friend. I am bound to say that in the whole list of Amendments, including those I have moved myself, there is not one more desirable than this. I hope my noble Friend will not be put off, but will go to a Division, and then the country will know the names of those who resist this Amendment, and will remember it at the next election.

* THE CHANCELLOR OF THE EXCHEQUER

I wish to observe that what I said just now on the last Amendment was said in perfect good faith, and I confess that I have not been able to deal with this matter to my own satisfaction. What I mean with regard to this Amendment is this—that it goes very much further than, as I endeavoured to explain to the Committee, I think my honourable Friend desires. I will take the case of a man settling certain property on his son, with the remainder to his grandson. The son dies, having inherited, the property, and on the son's death the property goes to the grandson. Of course, the death duty has to be paid on the property settled, and on any free property which goes to the grandson under the son's will. Now, that is property which goes to the same person, only that it is settled by the grandfather instead of going directly from the son. Surely it ought to be aggregated for the purpose of the death duty in that case. But, if the Amendment is passed, that property settled by the grandfather would not be aggregated at all. That is quite a different thing from property settled by some complete stranger, passing away from the lineal descendants. It may be that the provision of the Finance Act of 1894, far exemption from aggregation, in these circumstances, does not go far enough, but that is no reason why we should accept the clause which carries the exemption in that direction much too far. I do not know whether, after what the honourable Member for King's Lynn has said, the promise to consider anything will be acceptable to the honourable Member; but I will endeavour to go into this subject also. Exemption must, however, clearly have reference to property passing to somebody else, rather than to the question of the person from, whom the property is derived, and I think we must maintain the principle that where there is a real interest in property inherited the property ought to be aggregated.

* CAPTAIN PRETYMAN

I fully endorse the statement that this clause was introduced into the Bill with the intention of reducing the hardships which that Bill imposes. I quite recognise that, but it appears to me, from what has been said here now, that the real meaning of the clause is hardly appreciated. As I understand honourable Gentlemen on both sides of the House, I think they agree that the object of this clause is, as it stands, that where property both came in from different directions and went in different directions it should not be aggregated. I maintain that the clause does not do that at all. What it says is this— if property passes under two different dispositions on the same death to strangers, Or even if it all goes to the same stranger, the two properties would not be aggregated, but would be treated as two separate estates. But if the two properties, either together or separate, go to two different lineal descendants of the deceased, then they are aggregated together. The words of the Act are plain, viz., that if the property passes to any other person but a lineal it shall not be aggregated, but if it passes to a lineal it is aggregated. All may go together to a non-lineal and escape aggregation, but this privilege is in all cases denied to lineals. Take a very ordinary case, that of a man who inherits two properties, one from his mother and the other from his father. The one he inherits from his father passes to his eldest son, the one from his mother passes to his second son, and, if he has none, to his brother. That is a case which might commonly occur. Under this clause as it stands the eldest son takes the grandfather's property in any case, but the grandmother's property, if it goes to the second son, is aggregated, and if it goes to the brother it is not aggregated. That is the actual position, and as a layman I should be very sorry to argue the point for one moment as to whether these words do actually carry out the intention of this Amendment. But I do know what the intention of the Amendment is, and it is this: that the same exemption, and no more than is actually extended by the clause to non-lineals in the Act, should be extended to lineals. By the Amendment we ask for no fresh exemption whatever, beyond that which is already included in the Act, and if this proviso which is now asked for is carried it will only give to lineals the same privilege as non-lineals already enjoy. There are certain words in that clause in the Act which convey a particular exemption to non-lineals, and all that this Amendment proposes to do is to leave out those particular words. By this Amendment we ask for no exemption or fresh concession, but merely that the existing position in the right honourable Gentleman's Act should be given to lineals. It is an established principle that for payment of death duties lineals should receive more favourable treatment than strangers. I think that in this particular case exactly the opposite principle has been followed, for the exemption has been withheld from lineals. I wish to dissociate myself from the remarks of the honourable Member for King's Lynn as to the Chancellor of the Exchequer. I think we have to thank him for very great concessions with regard to Amendments moved by myself and by others, and for a promise which I, for one, most thoroughly rely upon, and I feel sure that he will consider carefully the Amendment moved by my noble Friend the Member for Bedfordshire.

SIR ROBERT REID

It is really a very difficult thing for anybody who has studied the Act, or tried to take part in the discussion, to satisfy a Committee, consisting mostly of laymen, as to the real meaning and effect of this clause, I believe there is no court in the kingdom which would venture lightly to express an opinion without grave misgivings as to the meaning of this Act. Necessarily, only those who have tried know what an extraordinary and difficult thing it is to deal with this question. Having said that, I may take the case of the honourable and gallant Gentleman opposite. It is a case, perhaps, in which I myself think that he has fallen into a grave error. The honourable and gallant Gentleman does not appreciate that the benefit which is conferred by this section is conferred upon lineals. He does not seem to appreciate that when one estate goes to a stranger it is withdrawn from aggregation, and the benefit conferred is quite as much on lineals as it is upon those who are not lineals. The honourable Gentleman seems to imagine that the benefit of this clause is confined to those who are not lineals, and is not extended to those who are lineals. Well, I do not agree with him, and I think everybody will see that the benefit is shared by both. The honourable and gallant Gentleman says if two properties go from different sources to the same person that they are aggregated if that person is a lineal, but they are not aggregated if that person is not a lineal. Now, it will take considerable argument to deal with that, and I do not agree with it. But if that be the case, permit me to point out that it is not in the least degree raised by the Amendment which is before the consideration of the House. The honourable Member for King's Lynn said that what was wanted was that there should be no aggregation in cases in which the deceased had no interest in the property which was passed. He forgot that in the very first words of the clause it was provided that any property so passing in which the deceased never had an interest should be aggregated with other property. Therefore, the honourable Gentleman, though usually so accurate, I may say almost learned, must in his own candour confess that he did not look at the very first words of the clause.

* MR. GEDGE (Walsall)

I agree with the honourable Member in one thing—that no court of justice would easily come to a decision on any part of this Bill. No doubt it is an old sound constitutional maxim that when the pockets of the taxpayers are concerned the Act ought to be so clearly worded that he who runs may read. The existing Act is so obscurely worded from beginning to end that it is almost impossible to give a legal decision on it; and if a court would hesitate, how much more would individuals! I was not in the House when this Act came into force, but I studied the Debates at the time with the keenest interest. I observed that many of its provisions were strongly and ably opposed by my right honourable Friend the Chancellor of the Exchequer, and the Gentlemen who sit around him, and there were many Amendments from the Conservative and Unionist side which were lost by small majorities. I hoped that when we had a large majority he would introduce into the Measure—without touching the main principle which I admit we cannot go back from—that which would alter it and do away with its inequalities and hardships. I hope the Chancellor of the Exchequer will look at the matter with a more liberal view, and that before this Bill becomes law some of the hardships will be alleviated.

* MR. BUTCHER (York)

I am free to admit that the Amendment in its present form goes a little bit too far. For my own part I think that aggregation is the deepest blot upon an Act which has upon it a good many blots. I think this Amendment goes further than is necessary for removing the particular grievance of which my honourable Friend complained. The Amendment, as it stands, would really abolish aggregation in every case where property is not settled by the deceased. I think that principle would be a right one; but the Amendment goes beyond the grievance which the Chancellor of the Exchequer admits.

LORD COMPTON

I shall be perfectly frank with the Committee. I have full reliance on any assurance the Chancellor of the Exchequer gives us. I have had personal experience of his courtesy and kindness in these matters of form, and if he has said that he will give attention to the matter, I will not be dissatisfied.

Amendment, by leave, withdrawn. Section two, sub-section one (b) of the Finance Act, 1894, shall be read and have effect as if after the words property in which the deceased' the words at the time of his death' were inserted, and as if after the words 'any other person' the words 'at the time of such death' were inserted.

MR. GIBSON BOWLES (Lynn Regis)

This clause is identical with that which, was moved in 1896, and which I moved last year. I propose this in order to make an appeal to the Chancellor of the Exchequer to give a further explanation. This clause was withdrawn in 1896, on the undertaking of the Chancellor of the Exchequer to have a concrete case decided by the courts. A case was decided the other day by the Court of Appeal, and it is impossible to read the judgment of Mr. Justice Smith, Mr. Justice Chitty, and Mr. Justice Collins without feeling that that judgment was unanswerable. I think there never was a case so clearly put and so clearly decided. I therefore say, without opening the question of what the right honourable Gentleman the Chancellor of the Exchequer undertakes as the course, that I wish to make an appeal to him to-night not to carry the case any further. It does seem to me that if he does so he is simply wasting, not only time, but public money, which will be expended, in the shape of costs. That is the first reason why I have put down this Amendment, in order to make to him that appeal, that he will not prosecute an appeal to the House of Lords. Of course, I am aware that the decision of the Court of Appeal, if maintained, will be said to have another effect; or, rather, that it has been the cause of another discovery upon the part of the Attorney General. Section 2, sub-section 1 (c) does not altogether apply to cases of this kind; in other words, a man may make away with his life interest upon his death-bed. It is not necessary for him to live a year and a few days to make his bequest effective; and I quite admit that that does leave the Chancellor of the Exchequer in rather an awkward predicament. But I cannot refuse the result, if it be the result of the judgment of the Court of Appeal, that section 2, sub-section 1 (c), is a section which, by inference, presumes to lay down that a man shall be considered, for the purposes of revenue, dead 12 months previous to his decease. I protested against this clause upon a former occasion, and I appealed in vain to the Government to put in plain language what they really meant to convey, but without success. Now it turns out that the section is inoperative, and I cannot say I am sorry for it; in fact, I am extremely glad. But I do realise that it leaves the revenue and the Chancellor of the Exchequer in an extremely awkward position. Now, Sir, I have made an appeal, and that was the first object I had in moving this Amendment, that the case of the Attorney General versus Beach should not be taken to the House of Lords. I would now only further ask the right honourable Gentleman the Chancellor of the Exchequer for some explanations. It has been rumoured that the right honourable Gentleman proposes to shut the door which the right honourable Gentleman the Member for Mon-mouth left open, and that he intends to ask the House of Commons to render illegal and unlawful, and chargeable with, duty, that which at present is legal, lawful, and not chargeable with duty. That is a thing we should not extend, and I move the Amendment formally, partly in order to give the right honourable Gentleman an opportunity of explaining the intentions which rumour has attributed, to him. Whether the right honourable Gentleman the Member for Monmouth intended to open this door I am not now concerned to inquire, but I believe he did intend that when a man parted with his life interest it should not become chargeable for revenue. But, whether he intended to leave it open or not, it was left open, according to the recent decision in the Court of Appeal. I therefore move this, pro formâ, as I have said, first, for the purpose of making the appeal that he will not carry this case any further; and, secondly, in the hope that he may explain, as I hope he will, that it is not his intention to propose a new clause which will shut this door which was left open by the right honourable Gentleman who framed, the Act.

* THE CHANCELLOR OF THE EXCHEQUER

I do not now propose to discuss the intentions of my predecessor, but, in answer to the question of the honourable Gentleman, I may say this: that, as two courts have differed upon the subject of the definition of the law in this matter, I shall certainly sanction the proposals of the Inland Revenue to appeal to the House of Lords. It is an action which, I think, it is necessary and right to take. So far as any rumour which the honourable Gentleman may have heard is concerned, I can only say I have formed no intentions upon the subject.

MR. GIBSON BOWLES

I quite recognise, while I regret, that the right honourable Gentleman finds himself bound to carry this case to the House of Lords. So far as the intentions are concerned which rumour attributed to him, I am glad that he has formed none, and I now beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn. To move the following clause— "'In lieu of the duty of Customs now payable under the Customs and Inland Revenue Act, 1881, on rum of and from any foreign country being the country of its production, there shall be charged and paid the duty of Customs following (that is to say) for every gallon of rum of and from any foreign country being the country of its production, 10s."' —(Mr. Price.)

MR. PRICE (Norfolk, E.)

The subject I wish to bring before the notice of the Committee is a distinctly cheerful subject, following the rather gloomy subject which we have been discussing this evening. I feel as if I am going to take part in the wake which follows the funeral. I propose to move a new clause— The duties of Customs payable upon rum imported from the British Crown Colonies shall be reduced from 10s. 10d. to 10s. 6d. per gallon. It will be seen that I have restricted in a great measure the clause which stands in my name, as, chiefly, I wish to narrow the subject in dispute. The Crown Colonies occupy a very different position from foreign and our great self-governing Colonies in connection with this surtax. When it was first imposed it was imposed because there were said to be taxes connected with the taxation of this country which would not apply in the case of Crown Colonies. But, whatever the facts of the case may have been then, the facts as regards the case of the Crown Colonies are not so now. At the present time there are in the Crown Colonies distinct Excise regulations which, I am informed, and believe have increased considerably the expenses of the rum trade and distillery, quite as much as is experienced over here by the distillers by the Excise regulations en- forced in this country. It is true the new Excise regulations come into existence and increase the expenditure over here; but it is equally true that over there new ordinances come into force which also increase the expenditure; and, in addition to that, the argument is used by the distillers over here that there are trade circumstances which also affect the business, in addition to the Excise regulations. But there are trade circumstances, certainly, which also affect the trade of rum in the West Indies, and they consist of a freight which they have to pay, and the very large evaporation which takes place in the spirit while on its way here. I believe, however, in point of fact, the inequality which is supposed to exist, and which is supposed to remedy, by this extra surtax, this extra 4d. on the gallon, is no longer in existence; and it does seem an extraordinary thing that when we are giving money to the West Indian Government, in order to relieve their poverty, during the present Session, we should be charging a surtax on the main element of produce which they possess, and which must certainly takeaway a large portion of the dole which we give to them. And the right honourable Gentleman the Chancellor of the Exchequer takes the view that any relief which can be given should be done by way of drawback. But the West Indian Government is not sufficiently well off to make any drawback, or make any arrangement for taxation, and I feel that the time has come when this surtax of the Crown Colonies, at all events, should be considered by the right honourable Gentleman. I do not extend the clause of the surcharge to the self-governing Colonies of this Empire, and to foreign countries, because we are not to know what the Excise regulations are which prevail in those parts, or how they affect them; but we are in a position to know what Excise regulations are in the Crown Colonies, because there are ordinances which emanate from here, and it may be that, as we have placed countervailing disadvantages on the Colonies from time, to time, and although we have done that, we have not reduced the surtax of 4d. on the gallon, which is felt to be such a grievance over there. Fourpence does not at the first sight seem to be a very heavy matter, but the right honourable Gentleman is not, perhaps, aware of the cost price of rum before it has paid duty. I am informed that the price of rum, before it has paid duty, is from 9d. to 1s. a gallon; if that is the case, if 9d. is the ordinary price for rum, the surtax of 4d. is an extremely high rate of duty to pay for that article, so much so that I am informed, under the present conditions, it cannot be used for the purposes of methylation. This tax is felt to be a very hard tax by the Crown Colonies, and they firmly believe that the removal of it will only mean a very small sum; and I think the right honourable Gentleman the Chancellor of the Exchequer, if he accepts my clause, will confer a very great benefit upon the Crown Colonies, and one which will be greatly appreciated.

* THE CHANCELLOR OF THE EXCHEQUER

When the honourable Member placed his clause upon this subject upon the Paper I was very much surprised at it. The clause proposes, as it stands upon the Paper, that the duty upon rum, which is now 10s. 10d., should be reduced to 10s. a gallon upon rum exported by foreign countries, and I concluded that he must be interested in some way or other in the manufacture of that spirit. The honourable Member, however, has found out his mistake, and in place of that proposal he now proposes to upset all the fixed rules by which we have for years past regulated our customs, and institute a preferential duty in favour, not of all our Colonies, but of the Grown Colonies alone. It would be a remarkable change for the sake of a surtax upon rum. I confess I cannot attach the importance the honourable Gentleman does to this matter, from the point of view of the West Indian Colonies. This matter was alluded to in the Report of the Commission which inquired into the state of the West Indies. They adduced some arguments in favour of it which appeared to me to be utterly baseless, and they recommended that this surtax should be remitted, but in making the recommendation they attach no importance to the matter, and they did not believe it would make any appreci- able difference to the sugar industry. Upon the recommendation being made public the distillers of the United Kingdom took alarm, and waited on me in deputation, and they established the fact that this surtax of 4d. which had been in existence was a reasonable difference between the Customs and Excise duties in this country, and that to get rid of it would inflict upon them considerable harm. That is one side of the matter. It is treated as a small matter by the West Indian Commission upon the other. And the fact also remains that at least one of the Colonies asking for the reduction of this surtax imposes an export duty upon rum. I cannot agree that this surtax can be regarded as excessive, and I think we should be treating the case of the West Indies better if we adopted some other way. Any injury to our own distillers ought to be discouraged, and the proposal of the honourable Member, raising as it does the whole question of differential duties in favour of the Colonies, is not one which the Government can accept.

* MR. W. F. LAWRENCE (Liverpool, Abercromby)

said the right honourable Gentleman who had just spoken had followed very much the same line of argument as that which he adopted when the distillers came before him a short time ago. He pointed out in his speech that the arguments of the West Indian Commission were obviously bad, but he [Mr. Lawrence] thought it would have been far better had the right honourable Gentleman shown in what way they were faulty. It was much regretted by those interested in the West Indian Colonies that more attention was not paid to the arguments adduced by the Commission in support of the proposition then before the House. Long before it had been mentioned by the Commissioners in their Report it was a matter very much complained of by those who were interested in the West Indian Colonies. He assured the House that the Colonies would view with great disappointment the way this proposition was disposed of The right honourable Gentleman had made a statement to the effect that the West Indian Colonies already paid export duties upon rum. There was, as a matter of fact, only one instance which supported that statement, and that was the island of Trinidad. That export duty was specially levied to meet the expense of coolie immigration. That is the only incident upon which the right honourable Gentleman could rely. He further said this was a small matter and not of consequence in the cultivation of sugar. He had had some experience of Jamaica, and he knew something of the working of the estates in that country. He could instance two estates where the 4d. surcharge represented in the one case 10 per cent, and in the other 7 per cent, of the gross profits. He submitted that no farmer in England would consider the reduction by excise to the extent of 7 per cent, or 10 per cent, of his profits a matter of no consideration, and he thought if he appealed to the right honourable Gentleman that he would appreciate such an undertaking if it were brought before him in that way. The land was worked under difficulties, and the right honourable Gentleman would admit that a farmer had a right to complain. The surcharge, as a matter of fact, was based upon a condition of things which existed no longer, and he considered there was a strong primâ facie. case for the consideration of this matter.

The clause was negatived.

Amendment proposed— Add the following clause— Section nineteen of the Finance Act, 1894, shall be read and have effect as if the words 'derived from personal property such sum as the commissioners, in accordance with regulations made by the Treasury under those Acts, may determine to be an amount equal to one and a half per cent, on the net value of such of the property in respect of which estate duty is leviable, as would, if this Act had not been passed, have been chargeable with the duty imposed by section twenty-seven of the Customs and Inland Revenue Act, 1881 (44 and 45 Vic, c. 12), on Inland Revenue affidavits, were omitted, and the words 'the sum of three million pounds' were inserted in lieu thereof, and as if the words 'sum so determined' were omitted, and the words 'the said sum' inserted in lieu thereof."—(Mr. Gibson Bowles.)

MR. GIBSON BOWLES

I wish to move the clause which stands in my name which proposes to establish a fixed annual grant in place of the grant that is now given. The Committee will see that this clause makes payable to the local taxation account by the Commissioners of Inland Revenue a sum not named, but a sum which the Treasury has determined to be equal to 1½per cent.—not a known sum, but a constructional sum which in their opinion shall represent the old probate duty. That is a very complicated method of arriving at the charge upon the revenue. It is a charge, or rather an interception of revenue, and if it were not an interception I doubt whether I should have been in order in moving this clause. But its being an interception, I can do so. My objection to this clause is, first of all, that some of the charges to be paid to the local taxation account are entirely constructional. It has to be arrived at by the Commissioners of Inland Revenue, and I am not quite sure whether if they were asked to explain they could thoroughly answer the question as to how it was arrived at. I imagine there must be a certain amount of guesswork in arriving at the estimate that would probably have been paid in probate duty if the Finance Act of 1894 had not been passed. Now this is, as I have said, an instance of interception, and up to the present time something like four figures have been paid over to the local taxation account. I hope the Chancellor of the Exchequer will see his way to accepting the principle that the charge shall be a fixed one instead of an entirely uncertain and varying one, Under the Act of 1894 local authorities are never quite certain what amounts they are going to receive, and this, of course, introduces great uncertainty into their budget, I think the clause I now move would be fraught with a great many advantages. It would enable the local authorities to know exactly what they are going to get, and the Inland Authorities to know exactly what they are going to pay: and, above all, it would enable the Inland Revenue authorities to get rid of an enormous amount of difficulty in connection with their accounts. I do not know whether the Chancellor of the Exchequer has inquired how, in practice, the amount payable under section 19 of the Act of 1894 is arrived at, but I am certain that it must involve a very large amount of calculation, and I think the substitution of a fixed amount would indirectly effect a very considerable saving, or, at any rate, avoid a considerable leakage.

Question proposed— That the new clause stand part of the Bill.

* THE CHANCELLOR OF THE EXCHEQUER

Under the Act of 1888 it was arranged that a certain proportion of the probate duty should be given every year as a contribution to the expenses of local administration, varying in amount with the yield of the probate duty. That was simply confirmed by the Act of 1894, and, of course, it follows, as the honourable Gentleman says, that the amount appropriated has been varying from year to year. It varied from £2,264,000 in 1889, the first year after it was enacted, to about £2,600,000 in the year just concluded. It may be a subject for consideration whether this system or the system of a fixed grant is better. I am inclined to think that, if you are to have a contribution, from personal property to the rates, the amount should be fixed according to the yield of each particular year. But, however that may be, as the whole question of contributions to local taxation is now under the consideration of a Royal Commission, I think the matter should be left over for the present. If we had been making any alteration at all, there are some reasons in favour of the proposal of the honourable Member; but I think the present Bill does not afford a convenient opportunity of dealing with the matter.

MR. GIBSON BOWLES

The explanation of the right honourable Gentleman that the whole subject of local taxation is now under the consideration of a Royal Commission, is sufficient ground for my not pressing this clause, but I trust the Royal Commission will not overlook the matter to which I have called attention.

Motion, by leave, withdrawn.

New clause proposed— Section two, sub-section three, of the Finance Act, 1894, is hereby amended as fol- lows: the description of property in subsection three shall be construed as if the words more than twelve months before his death' were omitted therefrom."—(Mr. Gibson Bowles.)

Question proposed— That the new clause stand part of the Bill.

MR. GIBSON BOWLES

This clause, and the two following clauses standing on the Paper in my name, deal with the same subject; and to avoid making a speech on each, I will at once explain the object of all three. The two other clauses are as follows:— Section two, sub-section one, clause (c), of the Finance Act, 1894, is hereby amended as follows: the description of property marked (c) shall be construed as if the words in section eleven, sub-section one, of the Customs and Inland Revenue Act, 1889, be read as if the word 'twelve' were substituted for the word 'three' therein, and 'the said description of property shall' were omitted therefrom. Section thirty-eight, sub-section two, clause (a), of the Customs and Inland Revenue Act, 1881, is hereby amended as follows: the description of property marked (a) shall be construed as if all the words in clause (a) after the words 'one thousand eight hundred and eighty-one' were omitted therefrom. This is not the first time that I have moved the abolition of the time limit within which property passing in various ways shall be subject to a charge to the revenue. The whole principle of such a limitation is to my mind obnoxious, and based on a false assumption. It seems to me that the true principle to apply is analogous to that on which questions of domicile are determined. When a man dies you do not assume that his domicile was English; it is a matter of evidence; and if the revenue claim that the domicile of the deceased was English, and his executors claim that it was foreign, the matter has to be determined in the courts. That principle applied all round until, I am sorry to say, Mr. Gladstone, and after him the present First Lord of the Admiralty, introduced this assumption in favour of the revenue. There is no assumption in favour of the revenue in the matter of domicile, and there should be none on the question whether a man determined to evade the revenue in contemplation of his death, or in the belief that he would live. I will not labour the point. It is a question of the policy of assuming on behalf of the revenue, as is now assumed by these clauses in the Finance Act, that every gift a man makes within twelve months of his death is made in contemplation of his death, and fraudulently with the desire to evade the revenue. I protest against the principle of such an assumption.

* THE CHANCELLOR OF THE EXCHEQUER

I am sorry to say that I am unable to give the honourable Member any satisfaction in regard to this matter. I can only repeat what I have said in reply to him on former occasions; I cannot agree to these three new clauses. It appears to me that they are merely proposals which would result in the evasion of the Act, and I cannot accept them.

MR. GIBSON BOWLES

I feel that the right honourable Gentleman is the master of more votes than I am, and that being the distressing state of the case, I do not purpose to take a division on these clauses.

Motion, by leave, withdrawn.

New clause proposed— Section nine, sub-section two, of the Finance Act, 1894, shall be read and have effect as if the words 'grant a certificate' were omitted, and the words 'from time to time deliver to any person interested in any property affected by such duty on applying for the same for any reasonable purpose approved by the commissioners, a certificate in such form as they may think fit' were inserted in lieu thereof."—(Mr. Gibson Bowles.)

MR. GIBSON BOWLES

Under the Act as it at present stands, a certificate of payment of duties is only given to the person who accounts for or pays the duties; but in many instances, especially with regard to real property, there are persons other than those who pay the duties who may be interested. Persons may become interested in the property by purchase and in various other ways. I have never been able to understand why precedent was not followed in this matter, and why the commissioners should not be directed to give a certificate to any person interested in the property. That is the principle I lay down in the clause I now move, and I cannot see any possible objection to it.

THE ATTORNEY GENERAL

I quite agree with the honourable Member that if the framers of the Finance Act had adopted the scheme of former Acts, it would have been much simpler, but this Amendment I cannot accept, because I am confident that it would be found to be impracticable. The applications already made to the Department are very numerous indeed, and it would not be practicable to make it obligatory on them to meet every demand made by persons claiming to have some interest in the property. At any rate, it would require a considerable re-casting of the Bill, and that is a matter that we cannot enter upon at this late stage.

Motion, by leave, withdrawn.

New clause proposed— Section 6, sub-section 2, of the Finance Act, 1894, shall be read and have effect as if at the end of the sub-section, after the words 'such payment' there were inserted the words 'and an amount equal to the proper rateable part of any estate duty paid by an executor may be recovered by such executor from each legatee or beneficiary, according to the proportionate share of the whole property passing to such legatee or beneficiary by the death in respect of or with reference to which such duty has become payable.'"—(Mr. Gibson Bowles.)

Question proposed— That this clause stand part of the Bill.

MR. GIBSON BOWLES

At present the whole of the estate duty in ordinary cases falls upon the estate as a deduction, so that, in effect and in practice, it is paid by the residuary legatee. But there are certain instances in which the estate duty is not paid by the residuary legatee. It is paid, as I submit it should be, by the beneficiary. For instance: in the case of a donation, the duty is paid, not out of the estate, but by the donee himself. Therefore, the Act does, in certain cases, recognise that the beneficiary should pay, as I think he should in all cases, the duty on the benefit he receives. In the case of real estate, the duty is a charge on the property itself, so that there also it affects the beneficiary. It does seem to me that in the case of ordinary personal property the beneficiary also should pay. The greatest hardships arise from the present system. In one case within my knowledge, a man had left what he thought reasonable legacies, and the residue to his widow or child. In consequence of the depreciation of the property, the legacies which he thought, and which were, of proper value at the time he made his will, had at his death become so swollen in proportion to the rest of the estate that, after payment the legacies as directed, only enough was left to pay the duties, and the residuary gift to the widow was, in effect, nil. I am perfectly well aware that hard cases seldom make bad law, but I contend that here the principle is altogether indefensible. The clause I now propose would in no way interfere with the yield of the duties, or with the principle of any par of the Act. It merely gives the executor a power, which he may exercise or no as he pleases, to recover a rateable proportion, of the duty from, each beneficiary under a will or an intestacy. First of all, he would pay the whole duty out of the estate, so that the revenue could not possibly suffer, and then he would be able to recover it pro rata from, the beneficiaries. That seems to me a perfectly reasonable proposition. It was part of the original scheme of the Act, and I could never understand exactly why it was withdrawn. No doubt, in certain cases, it would have rendered it necessary for the revenue authorities to have levied the proportion of duty in each particular case; but the difficulty there principally arises in the case of annuitants; and the Chancellor of the Exchequer himself provided last year, or the year before, that in the case of annuities there should be a proportionate collection of the duties, because he provided that the annuities should be paid by instalments; so that this proposal of mine would impose no additional burden on the authorities. I hold that the true principle is that the beneficiaries themselves should bear the burden of the duties. For these reasons I beg to move the clause.

THE ATTORNEY GENERAL

It fell to me last year to reply to the proposer of this clause, and I need not now take up much time in explaining why it is not possible for us to accept it. First of all, as a private individual, and not for the moment representing the Chancellor of the Exchequer, I may express sympathy with what I may call the main argument of the honourable Member for King's Lynn. I agree that, from many points of view, it might have been much better if the Finance Act had provided that the tax should be levied on the devisee—the beneficiary himself. But it is quite impossible for us now to adopt that fundamental alteration without an amending Bill, and anything in that direction must be very carefully scrutinised. I am sure my honourable Friend will agree that if we were now, after three or four years' work, under the system at present existing, to alter the practical incidence; of taxation—I do not mean the theoretical incidence, but the practical incidence, of taxation—by a clause of this kind, it would undoubtedly involve the absolute redrafting of the Bill. It would be applying a new state of things to wills which have been drawn in reference to the old state of things. I think the honourable Member has under-rated the difficulties of dealing with the matter in the way he proposes. Personally, I admit at once that any difficulty of that kind could have been avoided if a different scheme had been adopted; but, taking the Act as it stands, a provision; of this kind, merely giving an executor a right to recover rateable proportions of the duty, would be an unworkable system; and it would not be possible for us, without due consideration, and practically a Second Reading discussion, to assent to such a complete departure from the principles of the Act of 1894.

MR. CRILLY (Mayo, N.)

I have no intention of taking part in a discussion, of the merits of this clause. The Attorney General may, or may not, be right; I am not a lawyer, and I should not care to discuss what seems to be a legal technical matter. I rise simply to protest against the endeavour which is evidently being made to rush this Bill through just on the stroke of 12 o'clock. I do not think any important Measure should be rushed through in this way. I will not detain the Committee longer, but you will notice, Mr. Lowther, that it is now midnight.

THE CHAIRMAN

The honourable Member is under a misapprehension. The progress of this Bill is not interfered with by the 12 o'clock Rule.

Question put, and negatived.

Bill ordered to be reported, with the Amendments, to the House.

House adjourned at 12.10.