HC Deb 22 June 1903 vol 124 cc150-91

Considered in Committee.

(In the Committee.)

Mr. J. W. LOWTHER (Cumberland, Penrith)

in the Chair.

Clause 2:—

Amendment proposed— In page 2, line 28, to leave out the words 'continue to,' and insert the words 'cease and the duty of 4d. the pound on tea shall.'"—(Mr. Channing.)

Question proposed, "That the words 'continue to' stand part of the clause."


, continuing his speech, said he had endeavoured to show the right hon. Gentleman that he had not dealt equally with the direct and indirect taxpayer. This tea duty, like the corn tax, was justified by hon. Members opposite, who said that the wage earner of this country having approved of the war, it was only fair that they should contribute to the cost of it. He had never accepted the theory that the wage earners had approved of the war, but if they had they could have only done so by the introduction of facts which were not strictly accurate having been placed before them, and it was therefore somewhat unfair to penalise them for an error of judgment arrived at on the facts presented to them. Even if they did approve of the war, still they should be the first to receive relief now that it had terminated. They were the least able to bear the burden of taxation. While the income taxpayers had an income out of which to pay, the consumers had little or no capital, and week by week hardly knew how to eke out an existence, very often having to buy their tea in pennyworths and ha'porths. That being the case the Chancellor of the Exchequer having been bold enough to differ from those members of the Cabinet who desire to impose fresh taxation upon the food of the people, and who had repealed the corn tax, would surely be bold enough to go a step further and remit this extra 2d. on tea, imposed for purposes of funds for the war. This year the income taxpayers would, by the remission of 4d. on the income tax, save something like £8,500,000. The indirect taxpayers, by the remission of the corn duty, would save nearly £2,500,000, but it must be remembered that if the Sugar Convention was ratified, as it probably would be against the wishes of the people, the indirect taxpayers would pay £6,000,000 or £7,000,000 a year more for their sugar. That burden would fall mostly on the working classes of this country, and that being so, there could be no justification for saying that the direct and indirect taxpayers were receiving equal benefits. The Chancellor of the Exchequer, in addition, anticipated receiving an increased sum of over £2,000,000 from the Customs, and although that sum might be spread over a larger population than hitherto, the people of this country on their food would be paying no less a sum than £10,000,000 in excess of what they paid last year. The stamina of the country depended upon the quality and quantity of the food consumed by the people; many had to look, not to quality but quantity, and by reason of these taxes upon tea and upon sugar the quantity of food which some would consume must be seriously diminished. He therefore appealed to the right hon. Gentleman to remit the extra 2d. which was put upon tea for the purposes of the war; by so doing he would confer a great benefit upon a great mass of the community.

MR. COHEN (Islington, E.)

said he was obliged to traverse a good many of the reasons of the hon. Gentleman opposite for the remission of this duty for the sufficient reason, among others, that no Chancellor of the Exchequer could remit taxation, when he had not the money to do so. It was perfectly impossible to raise the income tax to such an amount as would enable 2d. to be taken off the tea duty. So far as he personally was concerned he would make an appeal of a different character to the right hon. Gentleman. He would appeal to him not to remit any of the existing tea duty. He was sorry that even the corn tax had been remitted. The reason he so strongly opposed the argument of the hon. Gentleman opposite was because it was based on a fallacy. He was in favour of treating, with every possible consideration, those who were most needy and those upon whom the burden of taxation pressed most heavily, but hon. Members opposite must not forget that the direct payers also paid a large amount of indirect taxation. No fewer than 112,397 income taxpayers possessed incomes of less than £160 per annum; 138,467 an income exceeding £160 and not exceeding £200, and 94,298 an income of over £200 and not exceeding £300. That made a total of 355,662 of what they must suppose to beheads of families, which multiplied by the usual computation of five, as being the number of the family, gives a total of 17,750,000 who paid income tax on an assessment of under £300 a year. In those persons expenditure, tea, sugar, and tobacco formed a large ingredient, and, therefore, in addition to the oppressive burden of the Income Tax they had to pay a large amount of indirect taxation, yet by a system of equity and logic, which he was unable to follow, hon. Members opposite found their consideration was aroused on behalf of those persons who only paid through indirect taxation and had not a word to say in favour of those who paid in addition the oppressive burden of direct taxation. There was another argument which had not received from hon. Gentlemen opposite that consideration it should have received. He never had any sympathy with those who cried out because the income tax was raised in times of stress or war, but it was the duty of every Government to reduce the income tax to such a level that they could resort to it again in times of stress. The capacity of the income tax as a source of revenue could not possibly be so great when the tax stood at 11d. or 1s., as it would be when it stood at 6d. or 7d. The direct taxpayers contributed more than their share to the expenditure of the country and pro tanto they had a greater claim on the Chancellor of the Exchequer for remission than those persons who, whatever they pay in indirect taxation, pay nothing in direct taxation. The right hon. Gentleman had to be very careful how he in any way still further reduced the resources of the country, which, at any rate, at present only existed on paper. He should be the last person in the world to question the Estimates of the right hon. Gentleman, which were founded on expert advice, but Supplementary Estimates threatened them. In the last three or four weeks they had large possible and probable additions to those Estimates, and they must bear in mind the claims of the Debt and the absolute disappearance of the Sinking Fund. He certainly hoped the right hon. Gentleman would rigidly stand to the not too lavish provision he had made for the expenditure of the country.


said he strongly desired that the tea duty should be reduced. In fact, he had an Amendment on the Paper that it should be reduced by 3d. It was not an answer to say that the Chancellor of the Exchequer had not got the money. He had thrown away £2,500,000, and he talked about next year. That did not satisfy him. With regard to next year he was not without hope that the right hon. Gentleman would not be there as Chancellor of the Exchequer, and that he would have some other and better occupation. Whether that was so or not he wished emphatically to express his dislike to the whole of the first five clauses of this Budget, and especially his dislike to the tea duty. He disliked the tea duty because tea was largely produced in our own dominions. The corn duty represented only 4 per cent. of the value, whilst the incidence in regard to tea was very difficult. Let them take an average price of 1s. a pound. The duty on that was 6d.—half the value. Therefore, it was perfectly clear that a reduction of 3d. would be so large that no tea dealer could possibly do other than take 3d. a pound off the cost. He did not suppose that there was anybody in the House who would argue that the tea duty did not fall absolutely on the consumer. The duty at present was far too heavy, and, so far as he was concerned, he should lose no opportunity, both in that House and elsewhere, of urging that it should be reduced. He had a very strong objection to any tax which increased the cost of the food of the people, and if he had thought that the corn duty would have had that effect he would not have supported it. Tea had now become almost as much a necessity of life as bread itself, and the tax upon tea had become a very serious thing indeed to working people. He should always urge that the duty on tea should be reduced. He had a very strong objection to everything which increased the cost of the food of the people, and he should support the Amendment of the hon. Member opposite.


said that if his hon. friend succeeded with the view he had put forward, it would necessitate an increase in direct taxation. He doubted whether there were many Members on the Ministerial side of the House taking a large view of national questions who would consider that the alternative to the remission of indirect taxation should be an increase of direct taxation. He thought the views upon this point put forward by recent Chancellors of the Exchequer were very sound. During national emergencies, if they wanted a fund to draw from, they had the income tax, but if that tax was raised to the war point in times of peace, then they would not have that fund to fall back upon. When the income tax was raised beyond a certain point it pressed severely and unequally on the industries of the country. No doubt there was something to be said in favour of a duty on tea, and they should take into account what the real burden of the tax amounted to. When they had a commodity, the cost of producing which had been reduced beyond all expectation, as was the case with tea, then it could bear taxation without any hardship upon the consumer. Under these circumstances he could not support a reduction of the tea duty.


said he had already stated to the House the reasons why he was unable to accept the Amendment, but some observations had been made which seemed to call for a few words more from him. He did not desire to minimise the harden of indirect taxation on the working classes and the very poor, but he reminded the Committee that the relative burden of indirect as compared with direct taxation was not now so great as it was before the war. Before the war indirect taxation contributed in the proportion of 52.1 and direct taxation 47.9 to the revenue, but, after this Budget was passed the proportions would be 50.9 indirect taxation and 49.1 direct taxation. Considerably more revenue had been raised by direct taxation for the war than by indirect taxation, and the proposals in the Budget to a large extent rectified the balance once more. It had been assumed by hon. Members that the result of adding 2d. to the duty on tea had been to increase the price paid by the working classes to that extent. That certainly had not been the case, because through overproduction or some other causes the wholesale price of tea had decreased to the extent of 1½d. out of that 2d. He did not deny that if 2d. were taken off the tea duty the consumer would obtain the benefit; but his argument was that as far as the burden of that tax on the people was concerned, as compared with the period before the war, it was nothing like the 2d. which had been added to the tea duty. He had already explained that he was unable to do anything more in the way of a reduction of taxation this year, and he hoped that he had explained satisfactorily to the Committee that although this year they had taken off direct taxation a much larger sum than off indirect taxation, the balance was still in favour of the indirect taxpayer.

SIR FREDERICK BANBURY (Camberwell, Peckham)

said his right hon. friend the Chancellor of the Exchequer had stated that the contributions of the indirect taxpayer and the direct taxpayer now showed a balance in favour of the indirect taxpayer. He wished to point out that the duties on spirits, wine, and beer were included in indirect taxation. These things could not be looked upon as the necessaries of life, and when they were eliminated from the reckoning indirect taxation paid very little to the revenue. Tea and sugar produced about £11,000,000 out of a total revenue from taxation of £125,000,000; and if people did not choose to drink or smoke their burdens from indirect taxation were extremely small. As his hon.

friend the Member for Preston had stated, if they took 2d. off tea they had to put it on something else, and unless they revived the corn duty he did not know upon what other article they could put it, and they would have to put it on the income tax. There was no doubt that of all classes those who paid income tax were a class upon whom the burden of taxation in the last few years had fallen very heavily. The working classes had not suffered by reason of want of employment during the war, while wages had continued good, and, therefore, they could not complain if the duty on tea was kept to the figure at which it now stood. He did not believe the tea dealers and grocers would confer the whole benefit of any reduction in the tax upon their customers; if so, it would be the first time in the history of the world in which that had been done. Any number of cases could be produced where a reduction of duty had not led to a reduction in price. The abolition of the corn duty had not led to a reduction in the price of bread, and a reduction of the tea duty would not necessarily lead to a reduction in the price of tea. When the coal dues were abolished in the City of London that did not lead to a reduction in price, and there was scarcely any instance where a reduction in the tax upon an article had been followed by a reduction in the price. He did not know whether the mover of the Amendment gave any indication of what article he would put the tax on in place of this 2d. on tea. He urged the Committee to hesitate before they took this 2d. off tea, which he did not believe was felt by any one. He was not aware of any other tax that could be put on in its place which would not be a greater burden.

Question put.

The Committee divided:—Ayes, 154; Noes, 92. (Division List No. 126.)

Allhusen, Aug. Henry Eden Arnold-Forster, Hugh O. Bain, Colonel James Robert
Anson, Sir William Reynell Arrol, Sir William Balfour, Rt. Hn. A. J. (Man'r
Arkwright, John Stanhope Atkinson, Right Hon. John Banbury, Sir Frederick George
Barry, E. (Cork, S.) Gilhooly, James O'Shee, James John
Bartley, Sir George C. T. Gordon, Hn. J. E. (Elgin & Nairn Palmer, Walter (Salisbury)
Bignold, Arthur Gore, Hn. S. F. Ormsby- (Linc Peel, Hn. Wm. Robt. Wellesley
Bigwood, James Gorst, Rt. Hon. Sir John Eldon Percy, Earl
Bill, Charles Goulding, Edward Alfred Platt-Higgins, Frederick
Blundell, Colonel Henry Grenfell, William Henry Plummer, Walter R.
Brassey, Albert Hall, Edward Marshall Powell, Sir Francis Sharp
Brodrick, Rt. Hon. St. John Hamilton, Rt. Hn. Ld. G. (Midx Pretyman, Ernest George
Burke, E. Haviland Harris, Frederick Leverton Pryce-Jones, Lt.-Col. Edward
Butcher, John George Haslett, Sir James Horner Purvis, Robert
Campbell, J. H. M. (Dublin Univ Heath, Arthur H. (Hanley) Pym, C. Guy
Campbell, John (Armagh, S.) Heath, James (Stafford, N. W. Rasch, Major Frederic Carne
Carson, Rt. Hon. Sir Edw. H. Hermon-Hodge, Sir Robert T. Reid, James (Greenock)
Cecil, Lord Hugh (Greenwich) Hobhouse, Rt. Hon. H. (Som'rs't, E. Renshaw, Sir Charles Bine
Chamberlain, Rt. Hn. J. A. (Worc Hogg, Lindsay Ritchie, Rt. Hon. Chas. Thomson
Chapman, Edward Hope, J. F. (Sheff., B'tside) Roberts, Samuel (Sheffield)
Charrington, Spencer Hornby, Sir William Henry Robertson, Herbert (Hackney)
Churchill, Winston Spencer Houston, Robert Paterson Royds, Clement Molyneux
Clancy, John Joseph Hudson, George Bickerstetn Rutherford, John (Lancashire
Clare, Octavius Leigh Jameson, Major J. Eustace Samuel, Harry S. (Limehouse)
Cochrane, Hon. T. H. A. E. Jeffreys, Rt. Hn. Arthur Fred Skewes-Cox, Thomas
Coghill, Douglas Harry Johnstone, Heywood Smith, James Parker (Lanarks.
Cohen, Benjamin Louis Kennedy, Patrick James Spear, John Ward
Collings, Right Hon. Jesse Kenyon-Slaney, Col. W. (Salop Stanley, Lord (Lancs.)
Colomb, Sir John Charles Ready Keswick, William Stroyan, John
Colston, Chas. Edw H. Athole Lambton, Hon. Fredk. Wm. Talbot, Lord E. (Chichester)
Cook, Sir Frederick Lucas Law, Andrew Bonar (Glasgow Taylor, Austin (East Toxteth)
Craig, Charles Curtis (Antrim, S. Lawson, Jn. Grant (Yorks. N. R.) Thorburn, Sir Walter
Cranborne, Viscount Legge, Col. Hon. Heneage Tomlinson, Sir Wm. Edw. M.
Crean, Eugene Llewellyn, Evan Henry Tuke, Sir John Batty
Cross, Alexander (Glasgow) Lockwood, Lieut.-Col. A. R. Valentia, Viscount
Cross, H. Shepherd (Bolton) Long, Rt. Hn. Walter (Bristol, S. Walrond, Rt. Hon. Sir W. H.
Crossley, Sir Savile Lonsdale, John Brownlee Wanklyn, James Leslie
Cubitt, Hon. Henry Loyd, Archie Kirkman Welby, Lt.-Col. A. C. E. (Taunt'n
Denny, Colonel Lucas, Reginald J. (Portsmouth) Welby, Sir Chas. G. E. (Notts).
Dickson, Charles Scott Macdona, John Cumming Williams, Colonel R. (Dorset)
Digby, John K. D. Wingfield- M'Arthur, Charles (Liverpool) Willoughby de Eresby, Lord
Dixon-Hartland, Sir F. Dixon Maxwell, W. J. H. (Dumfriesshire, Wilson, A. Stanley (York, E. R.)
Douglas, Rt. Hon. A. Akers Milvain, Thomas Wilson, John (Glasgow)
Doxford, Sir Wm. Theodore Mitchell, Edw. (Fermanagh, N.) Wodehouse, Rt. Hn. E. R. (Bath
Durning-Lawrence, Sir Edwin Mitchell, William (Burnley) Wolff, Gustav Wilhelm
Dyke, Rt. Hn. Sir William Hart More, Robt. Jasper (Shropshire Wylie, Alexander
Fellowes, Hon. Ailwyn Edward Morrell, George Herbert Wyndham, Rt. Hon. George
Finch, Rt. Hon. George H. Morrison, James Archibald Wyndham-Quin, Major W. H.
Finlay, Sir Robert Bannatyne Mount, William Arthur Young, Samuel
Fisher, William Hayes Murray, Charles J. (Coventry)
FitzGerald, Sir Robt. Penrose Myers, William Henry TELLERS FOR THE AYES—
Forster, Henry William Nolan, Joseph (Louth, S.) Sir Alexander Acland-
Foster, P. S. (Warwick, S. W. O'Brien, Patrick (Kilkenny) Hood and Mr. Anstruther.
Gardner, Ernest O'Connor, Jas. (Wicklow, W.)
Abraham, William (Rhondda) Edwards, Frank Joyce, Michael
Allan, Sir William (Gateshead Fenwick, Charles Lambert, George
Allen, Chas. P. (Glos., Stroud) Ffrench, Peter Layland-Barratt, Francis
Ashton, Thomas Gair Fitzmaurice, Lord Edmond Leese, Sir Jos. F. (Accrington)
Bayley, Thomas (Derbyshire) Flavin, Michael Joseph Leng, Sir John
Bell, Richard Flynn, James Christopher Lewis, John Herbert
Brigg, John Foster, Sir Walter (Derby Co. Lundon, W.
Burns, John Fuller, J. M. F. MacIver, David (Liverpool)
Burt, Thomas Gladstone, Rt. Hn. Herbert J. M'Crae, George
Buxton, Sydney Charles Goddard, Daniel Ford Mansfield, Horace Rendall
Caldwell, James Grant, Corrie Markham, Arthur Basil
Campbell-Bannerman, Sir H. Harmsworth, R. Leicester Morgan, J. Lloyd (Carmarthen
Cawley, Frederick Hayden, John Patrick Murphy, John
Cremer, William Randal Hayne, Rt. Hon. Chas. Seale- O'Donnell, John (Mayo, S.)
Crombie, John William Helme, Norval Watson O'Kelly, J. (Roscommon, N.)
Crooks, William Hemphill, Rt. Hon. Chas. H. O'Shaughnessy, P. J.
Delany, William Hobhouse, C. E. H. (Bristl, E. Pease, J. A. (Saffron Walden)
Devlin, Chas. Ramsay (Galway Hope, John Deans (Fife, West Philipps, John Wynford
Dilke, Rt. Hon. Sir Charles Hutchinson Dr. Charles Fredk. Power, Patrick Joseph
Dillon, John Joicey, Sir James Redmond, William (Clare)
Donelan, Captain A. Jones, Wm. (Carnarvonshire) Rickett, J. Compton
Duncan, J. Hastings Jordan, Jeremiah Roberts, John Bryn (Eifion)
Robertson, Edmund (Dundee) Taylor, Theo. C. (Radcliffe) Whitley, J. H. (Halifax)
Roe, Sir Thomas Thomas, Sir A. (Glamorgan, E. Whittaker, Thomas Palmer
Runciman, Walter Thomas, David A. (Merthyr) Williams, O. (Merioneth)
Samuel, Herbt. L. (Cleveland) Thomson, F. W. (York, W. R.) Wilson, H. J. (York, W. R.)
Samuel, S. M. (Whitechapel) Tomkinson, James Wilson, John (Durham, Mid)
Shaw, Thomas (Hawick, B.) Toulmin, George Younger, William
Sheehan, Daniel Daniel Trevelyan, Charles Philips
Shipman, Dr. John G. Wason, Eugene (Clackmannan TELLERS FOR THE NOES—
Sinclair, John (Forfarshire) Wason, John Cathcart (Orkney) Mr. Broadhurst and Mr.
Sullivan, Donal White, Luke (York, E. R.) Levy.

Question put, "That Clause 3 stand part of the Bill," and agreed to.

Clause 2 agreed to.

Clause 3.


moved to leave out the clause. He said the argument that this year the Chancellor of the Exchequer had not got sufficient money to carry out what he now proposed did not meet the case, because the life of the nation was not a matter of one year only. It was a matter of grave doubt how far they were wise in raising so large a proportion of their revenue from alcoholic drinks, and other things, the reasonable use of which was right and proper. No question of temperance, or what was best for the people, entered into the Exchequer's consideration in that matter, but simply how the greatest possible revenue could be raised. The excessive taxation of the articles concerned was very bad for everybody. The State made itself a partner with the brewer, distiller, and publican, and a partner which took as much as possible out of the interest concerned, and did as much as it could to stimulate the consumption of alcohol in this country. From a social and national point of view, not less than that of the traders affected, and of those who abused the good things of this life, the present system was undesirable, and for those reasons he moved the omission of the clause.

Amendment proposed— In page 2, to leave out Clause 3.

Clause 4 agreed to.

Clause 5.


moved an Amendment with the object of confining the income tax to profits derived from investments beyond the limits of the British Empire. His objection to income tax was probably greater than to any other part of the Budget. The income tax was not only a tax upon those who directly paid it, but upon the trade and industries of the country. He had nothing whatever to say so far as it meant taxing the investments of those wealthy people who put their money into foreign concerns which competed with the industries of this country, and many of whom escaped the tax. He would like to see income tax abolished so far as the industries of this country were concerned. He was very far indeed from sharing the views of the Chancellor of the Exchequer and others as to the right proportion between direct and indirect taxation, because he could not help remembering that a greater authority than any of them wished to abolish income tax altogether. However little he might agree with Mr. Gladstone in most matters he agreed with him in that. He was aware that the Chancellor of the Exchequer had not got the money and that it could not be done, but he raised the question with a view to the future. There was no more abominable tax than the income tax, which was very unfair so far as it related to those who earned their daily bread as shopkeepers, clerks, or professional men. Minorities were not always wrong, and he was perfectly certain there were many who thought with him who would not vote in favour of the Amendment.

Amendment proposed— In page 3, line 11, after the word 'shall,' to insert the words 'as regards all profits derived from investments other than in the United Kingdom of Great Britain and Ireland or in any other part of His Majesty's Dominions.'"—(Mr. David MacIver.)

Question proposed, "That those words be there inserted."


My hon. friend has supplied the practical answer to his own Amendment. He says it is quite impossible for me to do it. Indeed, we should be in a state of hopeless bankruptcy if we attempted it.


asked whether anything had been done with regard to the Committee on the income tax which the Chancellor of the Exchequer had promised.


The arrangements are not finally settled, but I hope to announce them at an early date.


asked whether the inquiry would be by a Select Committee or otherwise.


said the Committee would be a Committee of the House appointed in the usual way.

Question put and negatived.

*MR. J. H. LEWIS (Flint Boroughs)

had an Amendment on the Paper in the following terms— In Clause 5, page 3, lines 11 and 12, leave out 'rate of eleven pence,' and insert 'following rate, namely: In respect of incomes exceeding one hundred thousand pounds a year, two shillings; In respect of incomes exceeding fifty thousand pounds and not exceeding one hundred thousand pounds a year, one shilling and ten pence; In respect of incomes exceeding twenty thousand pounds and not exceeding fifty thousand pounds a year, one shilling and eight pence; In respect of incomes exceeding ten thousand pounds and not exceeding twenty thousand pounds a year, one shilling and six pence; In respect of incomes exceeding five thousand pounds and not exceeding ten thousand pounds a year, one shilling and three pence; In respect of incomes exceeding two thousand pounds and not exceeding five thousand pounds a year, one shilling and two pence; in respect of incomes exceeding one thousand pounds and not exceeding two thousand pounds a year, one shilling; In respect of incomes exceeding seven hundred pounds and not exceeding one thousand pounds a year, eleven pence; In respect of incomes exceeding six hundred pounds and not exceeding seven hundred pounds a year, ten pence; In respect of incomes exceeding five hundred pounds and not exceeding six hundred pounds a year, nine pence; In respect of incomes exceeding four hundred pounds and not exceeding five hundred pounds a year, seven pence halfpenny; In respect of incomes exceeding three hundred pounds and not exceeding four hundred pounds a year, six pence; In respect of incomes exceeding two hundred pounds and not exceeding three hundred pounds a year, four pence; In respect of incomes exceeding one hundred and sixty pounds and not exceeding two hundred pounds a year, three pence.


said the hon. Member could not propose a higher income tax than that named in the Bill, and, therefore, only the latter half of the Amendment, beginning with the proposed payment of 11d. for incomes over £700 a year, would be in order.


said he would restrict his proposals accordingly. He was under the impression that, as the scheme be proposed would not increase the total revenue from income tax provided for in the Bill, it would not be out of order, but under the circumstances he was bound to move the second part of the Amendment only. He appealed to the Chancellor of the Exchequer to discuss the question, without taking advantage of the technical difficulty. The point he wished to raise was whether the income tax should be graduated or not. It was one which had been raised on several occasions in the House, and he believed it was one which was growing in public favour. He need not argue the principle of graduated taxation. The history of English fiscal legislation contained many instances of that principle culminating in the Finance Act of 1894. The right hon. Gentleman the Member for West Monmouthshire, when Chancellor of the Exchequer in that year, proposed a scheme of graduated death duties, the object being to impose a differential estate duty, and to equalise taxation between the property owner and the man who earned his income. In 1897–8 the estate duty yielded £11,000,000, and the income tax £17,000,000, the proportion of the former to the latter being therefore 65 per cent. Last year the amounts were £14,000,000 and £36,000,000, and the proportion 39 per cent. It was therefore clear that there ought to some readjustment in this respect. When he proposed a Motion of this kind in 1901, the late Chancellor of the Exchequer opposed it on the ground of the extension he had made in the system of abatements, and also because it was a year in which it was necessary for him to ask Parliament to increase the income tax. This year a reduction was being made in the income tax. The late Chancellor of the Exchequer stated then that if they had to reconsider the question, the principle adopted in 1894 should be adopted—that of imposing some compulsory taxation to equalise the taxation of the richer with that of the poorer class of income taxpayers. If ever such a case had arisen it had arisen now. Then the right hon. Gentleman said he would not bind himself to any policy or plan in the matter, but he very clearly indicated that some policy or plan would have to be adopted in order to reduce the inequalities which undoubtedly did exist at the present time. So far no step had been taken in that direction. He hoped the Chancellor of the Exchequer would make some promise to reduce the inequality that, in spite of the exemptions, still prevailed between the larger and smaller income taxpayer.

In practice only a small fraction of the benefit to which people with small incomes were entitled from abatements was realised by them. An enormous number of people were unaware of the exemptions to which they were entitled, and were deterred by difficulties from claiming the exemptions. The proportion of the amount recovered by the taxpayer to the amount due to him he should say was one-eighth or one-tenth; and when he thought what this system pretended to be, and what it really was, he was prompted to use very strong language indeed. If the right hon. Gentleman would look at the first column of the table he would find that there were 308,000 entitled to exemption of £160 a year; and in the last two columns he would find that there were 380,000 employees also entitled to exemption of £160. If they took a fairly low average of these exemptions it would be found that when the income tax was at the rate of 8d. in the £1 these exemptions amounted to £2,500,000 at least. Some time ago he had asked the previous Chancellor of the Exchequer how much was received during a year when the income tax was 8d.; and the reply was that the amount actually paid to persons entitled to exemption was £313,000. There were an enormous number of people who were not aware that they were entitled to these exemptions, and there were a large number who were aware but who were deterred by the difficulties which existed from recover- ing the sums due to them from the State. There were 300,000 income taxpayers with incomes of less than £200 per year, and 50,000 of those whose incomes were between £300 and £400, and 25,000 of those whose incomes were between £400 and £500, none of whom had received the abatements to which they were entitled. He thought it was the duty of the State, if this system of abatement could not afford relief to the poor taxpayers, to find some other system of taxation by which the small taxpayers should pay only the amount of the tax which the State wished to levy on them. He was well aware that there was one practical difficulty constantly urged by Ministers who had to meet a Motion of this character. It was the difficulty of inducing individuals to aggregate their incomes when derived from many sources; and of checking evasion of the tax. After all, however, he should like to ask the right hon. Gentleman whether the difficulties were so great. Individuals were obliged to make a statement as to their incomes; these statements were examined, and certain checks applied. If a man had many sources of income, in nearly every case the source would be investments in limited liability companies. Now lists of the shareholders in these companies were public property. It would be quite possible to compile an alphabetical index of these shareholders by means of unskilled clerical labour. As a matter of fact he was told that there were private firms in the City which compiled lists of that character. At all events it was possible for Somerset House, which had these lists under its control, to make such a list, and the cost of that work would be justified when £2,500,000 of the poorer taxpayers' money was concerned. There could be no doubt that the present system, or want of system, did not work, and that the classes who were entitled to relief from income tax did not receive it. We must adopt some different system of graduating the income tax. The public believed that those small income taxpayers got the exemptions to which they were entitled; but, as a matter of fact, it was a mere make-believe, and he hoped the Chancellor of the Exchequer would seriously consider the case of these widows, spinsters, and other people with small incomes of £200 or £300, who did not get the relief to which they were entitled; if the right hon. Gentleman was able, to introduce that reform these classes would be deeply grateful to him.

Amendment proposed— In page 3, lines 11 and 12, to leave out the words 'rate of eleven pence,' and to insert 'following rate, namely:—In respect of incomes exceeding seven hundred pounds and not exceeding one thousand pounds a year, eleven pence. In respect of incomes exceeding six hundred pounds and not exceeding seven hundred pounds a year, ten pence. In respect of incomes exceeding five hundred pounds and not exceeding six hundred pounds a year, nine pence.'"—(Mr. J. H. Lewis.)

Question proposed, "That the words 'rate of eleven pence' stand part of the clause."


said he quite understood that the hon. Gentleman had moved his Amendment not at all with the idea that it could be carried, but only to enable him to make the speech which he had just delivered in regard to graduation and abatements. He admitted that so far as the question of abatements was concerned, the whole of the existing system was one which required to be examined. He hoped that it would be one of the subjects to which the proposed Committee would direct its attention, with a view to seeing whether or not some more equitable arrangement than the present could be devised. But when they came to the hon. Gentleman's proposal in regard to graduation they were landed in absolutely inextricable difficulties. Graduation was discussed by Mr. Gladstone, who had pointed out the enormous difficulty and the impracticability of coming to any settlement of the question which would be equitable all round. It was true that on the face of it it seemed to be just that incomes over £5,000 or £10,000 a year should be called upon to pay more than the smaller incomes. But there were practical difficulties to consider, and it was impossible to contemplate any alphabetical arrangement of names in company lists like that adumbrated by the hon. Member. The intricacy and the difficulty of such a subject as that would be over- whelming. It should be remembered that two-thirds of the money obtained from the income tax was received at the source—that was to say, deducted from the payment of dividends and the like. How was the Committee going to make the various companies at home and abroad responsible for ascertaining what was the income of an individual who received a dividend? The difficulty was absolutely insuperable. The suggestion, moreover, that the larger incomes should pay a higher duty than the smaller incomes had been to a large extent met in the remodelling of the death duties, which were, of course, something like income tax. As it stood, the income tax was considered by many persons as being of an inquisitorial character, and they resented as improper many of the inquiries made of them. He was constantly receiving complaints from income taxpayers as to the cross-examination and inquiry to which they were subjected, and which they did not consider reasonable or right. But, if the Treasury had to summon persons to the bar of the Department, and to cross-examine them as to whether they had £5,000 or £10,000a year, and require them to show cause why they should not be so assessed, it was possible a good many persons might be brought into the net who tried to escape, but only at the expense of friction and annoyance to hundreds of other taxpayers. He had looked carefully into the question, and he was convinced that the difficulties were overwhelming, while the cost of the investigation would eat up a large proportion of any additional sum they could possibly receive. Though in favour of some inquiry on the subject of abatements to remedy any injustice that might exist at present, he could not hold out any hope to the hon. Member that he could deal with graduation.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said he was glad to hear the statement of the Chancellor of the Exchequer that the Committee, which they understood the other day was to deal with the question of evasions of income tax, would deal with the question of abatements. In his view it was quite clear that, apart from the question of a graduated income tax, the abatements made under existing circumstances might very well be extended to incomes of from £700 up to £1,000 a year. At the same time he was bound to agree with the Chancellor of the Exchequer in opposing the general principle of the graduation of the income tax. He himself should like to feel that the graduation of the income tax could be extended from top to bottom, but he feared that that was out of the question. He hoped, however, that the right hon. Gentleman would allow the question of the death duties from this point of view to be referred to the Committee. The right hon. Gentleman, the Member for West Bristol, last year admitted that, if the income tax was to remain permanently at a higher level, it would be a fair question to consider whether the death duties should not be proportionately increased.

SIR M. HICKS BEACH (Bristol, W.)

said he did not remember ever making such a statement.


said he had not brought the quotation with him, but the impression on his mind was that the right hon. Gentleman in the course of the debate last year, or the year before, had stated that if the income tax came to be at a higher permanent level than at present, the death duties should be proportionately increased also. However, he did not wish for a moment to give any expression of opinion which would leave a wrong impression of what the right hon. Gentleman had said. He would be sorry to see any stumbling block put in the way of the collection of the income tax.


said that last year when he held the office of Chancellor of the Exchequer, they had a debate of some importance on this matter, and, in response to the hon. and learned Member for Dumfries, he expressed his sympathy with the suggestion which he made that a Committee should be appointed to inquire into the possibility of either extending the present abatement upon the income tax or of graduating the income tax upon the higher incomes. He did not accept the principle of graduation, but he admitted that his main objection to the proposal was the question of its practicability. He doubted its practicability; but he thought it a fair subject for inquiry. The Committee he had in contemplation was not a Committee of the House of Commons, but a Departmental Committee of experts, who would deal with the question solely from the point of view of practicability. The Chancellor of the Exchequer had gone beyond that. He had seen certain matters connected with the income tax which in his opinion demanded inquiry, and he had undertaken that the inquiry should be conducted by a Committee of the House of Commons, and that this point should be included in it. He had been good enough to suggest that he should undertake an important position with regard to that Committee. He did not think that anything he could do—or that anyone in his position could do—could detract from the responsibility of the Chancellor of the Exchequer of the day in a matter of such vast importance to the country as the proper collection of income tax. But anything he could do to assist the House or his right hon. friend in the matter, of course, would be cheerfully done. He thought this was a matter of considerable difficulty, and it was not settled, as the hon. Member for Poplar seemed to imagine, by anything that Mr. Gladstone might have said or done in the matter. In Mr. Gladstone's days, fortunately for the income taxpayer, the tax continued at a low point. They had now got to a time when the income tax in time of peace stood at 11d. in the pound. Well, that was a very serious matter, because how many of them could really believe that it was possible in the years before them that that poundage could be materially reduced? What was the result? It was this: Anyone who had devoted five minutes to the consideration of this point knew very well that the income tax, whatever rate it might be in the pound, pressed far more severely, as a matter of fact, upon the owners of small incomes as compared with the owners of large incomes. To a man of £50,000 a year what did the income tax matter? The man, again, of £20,000 or £10,000 a year felt the income tax but to a trifling extent compared with the man of £2,000 or £1,000 or £700 or £800. That was a fact that, surely, must come home to all of them if they wished to be fair to the taxpayers of this country. Of course he need not say that the unfairness, if it was an unfairness, was largely increased when the income tax stood at a high level.

Hon. Members opposite had proposed to meet this by graduation. He had no objection to the principle of graduation with regard to the income tax. He had no objection to it with regard to the death duties or the house duty. With regard to the house duty, it had, of course, been long in operation in this country, and with regard to the death duties, during the seven years that he had been Chancellor of the Exchequer he had found the principle of graduation work extremely well. But he was afraid that they would find it absolutely impracticable to extend the principle of graduation to the income tax for the reasons which had been given by his right hon. friend the Chancellor of the Exchequer, and which he gave to the House himself last year—namely, that the great fortress of the income tax, so to speak, in this country was the fact of its collection at the source, and if they resort to the only means at their disposal—namely, that of an inquisitorial investigation by officials specially appointed for that purpose into the circumstances of persons who were supposed to have more than a certain amount of income, which would bring them into a higher grade for taxation—they would be certain to have all kinds of evasions, qualifications, and mental reservations, which would really prevent any successful issue to the inquiry. It was possible, also, that the cost of such an inquiry might be entirely out of proportion to the results obtained. For the Committee could not too clearly remember that the bulk of the income tax was collected from small incomes—he meant comparatively small incomes—and that the fortunate persons who owned an income of £10,000 or £15,000 a year, or above that sum, were a very limited number indeed. He merely mentioned those matters from his own experience in order to show his appreciation of the great difficulties in the way, not at all as suggesting that they ought not to go very carefully into the subject, with the best expert evidence at their disposal, to endeavour to see whether anything practical could be done so as to lighten the burden upon the income taxpayers with smaller incomes, and increase the burden upon the persons who at present felt it very little at all. He sympathised with that idea himself, but he would venture to say that he hoped that in the inquiry which was contemplated there would be no idea whatever of placing the whole system of the income tax into the crucible of a Select Committee of this House.

Of course, there were many anomalies and difficulties in the income tax system. He wished every hon. Member of this House and anyone who thought he could remove them would first of all read that speech of Mr. Gladstone's in 1853, in order to appreciate to some extent the present position of the income tax and the difficulties in the way of making any alteration in it. If a Committee of this House was to be appointed to deal with this subject, the reference to it ought to be narrow, ought to be carefully confined to certain points, and ought to be definite. Otherwise he would venture to say that they would have no adequate results from any investigations of the Committee, and they might possibly have as useless a result as that of the Committee of 1860, which did not report at all after examining a great deal of evidence. Certainly they would run a great risk of dangerously interfering with one of the most important sources of revenue of the United Kingdom. He trusted that his right hon. friend, while carefully limiting the reference to this Committee, would include in that reference the principle which had been brought before the Committee in that debate. He trusted that if the Committee were appointed it might be their duty to inquire not merely into the working of the existing system of abatement—which he believed, on the whole, worked fairly well, although it was perfectly possible that some persons entitled to abatements did not receive them—but also that they might be enabled to enquire whether that system could be extended or in any way altered so as to make the income tax at its present high level fairer to all persons in the country who paid it.

MR. TREVELYAN (Yorkshire, W.R., Elland)

expressed his opinion that it was more imperative this year to continue to urge upon the financial authorities the necessity of inquiring into the question of the graduation of the income tax than it had been in preceding years. At a time when a declaration had been made in important quarters in favour of taxing the food of the people, we must consider whether there were no alternatives to such taxation. The plan of graduation was based on the fact that there existed in the country stores of wealth which we could tax without touching the resources of the poor. He did not lay it down that the proposal was necessarily practicable, but some system of the kind was in operation in one of our colonies and in Prussia, and there was obviously ground for inquiry into the subject. It would not be necessary to touch the present way of raising the existing income tax, but the country might inquire whether it would not be possible to require from the rich a declaration of their whole income in order that we might put upon them an extra tax.

MR. MOULTON (Cornwall, Launceston)

said he agreed with the right hon. Gentleman the Member for West Bristol as to the importance of an inquiry into this matter of a graduated income tax. He had never been able to scheme out a system of graduated income tax which was not, in his opinion, thoroughly inequitable. Income was a very poor criterion of a man's wealth or his power to bear taxation. He wished to explain the proposal he was going to make in regard to the inquiry, which was essential in order that it might be useful to the nation. No doubt the whole theory of direct taxation was that wealth and the capacity for bearing burthens were taken regardless of how the income was derived; and the burthen was put on the shoulders of the taxpayer proportionate to that. To take the power of bearing burthens was, however, absolutely delusive. He had given an instance more than once of a man who had £10,000 in Consols, and a man who in the best three or four years of his life earned an income of £250 per annum. Both men were taxed equally, although one was almost incomparably richer than the other. Parliament had endeavoured to remedy that by the rough-and-tumble method of death duties, which fell entirely on the owners of realised wealth. In that way, they had to a certain extent balanced the income tax, and the owner paid about double the tax on his income that the earner paid when the income tax was at 8d. in the £. He thought that even, then the owner was let off very lightly. But if it was proposed to increase the burthen of the income tax and to add to the existing income tax a second income tax graduated according to the amount of the income, justice would not be done unless there was an inquiry made as to the nature of that income. An income might be partly earned and partly derived from realised property, but any attempt to divide income into those two classes would utterly fail. He could imagine a business income which was little more than 4 per cent. or 5 per cent. on the money invested, and which in part might be derived from realised property; and he could imagine a business income which depended entirely on the skill of the person who carried on the business; and between those two extreme classes there would be found such a graduation that it would be impossible to decide in what proportion the two elements of incomes, earned and incomes derived from realised property existed. He was, therefore, satisfied that any attempt to put a heavier burthen on a man in proportion to his income would cause a quite intolerable injustice. One man might have an income of £1,000 from Consols, another man might have an income of £1,000 derived from his earnings; but although the latter would be capable of bearing taxation, he would be crushed if he were to be taxed to the same extent as the former.

Income tax had worked well because it was balanced by the death duties, and because a man's wealth was estimated partly by what he could earn and partly by what he owned; and if the income tax was not pushed too far that would be a good, reasonable, and practical approximation to justice. But it should not be imagined for a moment that it would be just if it were not balanced to a certain extent by the death duties. He should like to see an inquiry as to whether income tax could be graduated and yet justice done; but he was certain that a heavier income; tax would mean a heavier tax on the earners. He should also wish to see an inquiry as to whether the death duties should not be dependent on the scale of the income tax. If the income tax were doubled, it was borne equally by those who earned aud those who owned—a most unfair division of an extra burthen such as the war expenditure. The only way in which that could be remedied was to get a tax on capital, and the only tax on capital they had was the system of death duties. He should like to see the scale of the death duties doubled when the income tax was doubled, and when the income tax was lowered he should also like to see the death duties lowered. They should satisfy themselves as to the fair proportion of both taxes to be borne by owners and earners; and then the two taxes should go up and down together. It might also be useful to enquire whether the capital tax which was the justification for the income tax should not vary in proportion to the amount of income.

MR. BROADHURST (Leicester)

said he did not know what the terms of reference to the Committee which the Chancellor of the Exchequer was about to appoint were to be. The Committee were given very little information about the range of the inquiry in the speech of the right hon. Gentleman. He would make an appeal to the Chancellor of the Exchequer in the interests of a large and increasing number of poor persons who had incomes varying from 50s. to £100 per year derived from investments in limited liability companies and corporation stock. An income tax of 11d. in the £ was deducted from those incomes, and seldom, if ever, did those persons get a rebate. In the first place, many of them did not know that they were entitled to a rebate; and, in the second place, even if they did know, they were not aware as to the means to be taken to secure it. What he wished was that part of the reference to the Committee should be to devise some simple, certain, ready means of recovering money paid as income tax by persons entitled to it. He did not know whether the Chancellor of the Exchequer ever had occasion to apply for a rebate himself. The right hon. Gentleman smiled; and he, therefore, gathered that he never had occasion to apply, as his income was always sufficiently above the water-mark to afford him no hope of recovering money paid as income tax. He wished the Treasury officials would inform the right hon. Gentleman as to the enormous difficulties which attach to any attempt to recover money from the Treasury. Small tradesmen with an income of about £200 a year, part of which was derived from investments, very rarely indeed secured the rebates to which they were entitled. That was a real, genuine, substantial grievance. In his own personal experience he knew many cases where income tax was paid, although the persons paying it were not liable. The process of recovery was so difficult that it was easier to pay it than employ a lawyer to make out a claim. The Chancellor of the Exchequer, as well as his predecessor, spoke in a condemnatory way of the inquisitorial nature of levying the income tax. He did not see where that arose. If a man were an honest man, he made a statement of income more or less correct, more generally under the mark than above it. He sat for many years in a court of appeal to hear appeals against income tax; and he knew of his own knowledge that many people paid income tax who were not liable at law to pay it. What he wished was that some protection should be given to this class of income tax payer, from the cruel injustice from which they now suffered. If the right hon. Gentleman saw that this grievance was rectified, he would be conferring an act of justice on hundreds of thousands of people.

He was bound to say he was not quite able to follow the remarks of his hon. friend the Member for Launceston. He usually understood what his hon. friend said; but he was unable to follow him in his argument condemnatory of the principle of this Amendment. He believed that the great majority of the people of this country regarded the present system as unjust His hon. friend referred to the death duties; but it was not the man who owned the property who paid the death duties, but the fortunate person who succeeded to it. If he had an experience of that kind, he certainly would not grumble at the payment of the death duties. He believed that the country was tired of the present system; and with all due respect to the late Chancellor of the Exchequer, for whom he always had a great regard, he hoped the present Chancellor of the Exchequer would mark a new era in his Chancellorship by making this inquiry as wide as possible. If the Treasury came out victors in argument from the inquiry, so much the better for their own reputation, but he hoped the Chancellor of the Exchequer would provide ample opportunity for arguing the question at a public inquiry. In any case, he hoped the right hon. Gentleman would see that poor people were no longer robbed in the manner he described. Although he had had some little experience of public affairs, he found it was no easy matter to satisfy Somerset House that he was entitled to money which had been illegally deducted from his income.


said he agreed that great trouble was experienced in securing rebates of income tax. There seemed to be a system at Somerset House of obstruction and delay designed to prevent people from getting the return of money to which they were entitled. That seemed very unreasonable; and there ought to be some simple process by which people would be able to show that they were entitled to a rebate, and when that was shown payment should be made without further trouble. At present there seemed to be an idea that getting money from Somerset House was like getting butter out of a dog's mouth, He would ask the Chancellor of the Exchequer to take some steps to secure that those cases should be more readily attended to without all the annoyance and irritation which now existed. With regard to the inquiry, he had advocated an inquiry for fifteen years. He did not think that the late Chancellor of the Exchequer quite liked the idea; and he himself had no doubt that it would lead to some loss of revenue; but there were at present many cases in which hardship existed, and they should be inquired into. To tax the two classes of income equally was neither logical nor fair; but he ageeed with the hon. Gentleman that the death duties very largely put that right. The imposition of the death duties generation after generation led to a large proportion of the value of property being transferred to the Exchequer. He thought that system was fairly just; but there were certain anomalies which he hoped would be considered by the Committee. Another matter which should also be considered was the mode of assessing, and the question of appeal. He thought the present system of appeal was most unfair, and that it led to great hardship. A system under which a man was not allowed to be represented, although his opponent was represented, wanted inquiring into. The income tax was a permanent tax; and unfortunately it did not look as if it could be reduced for many years. Therefore some system should be devised whereby it could be collected as fairly as possible.


asked the Chancellor of the Exchequer whether he was right in supposing that the inquiry would include the system of granting and obtaining abatements; whether it would also include the desirability of extending the system to higher incomes, and, if so, how that could be done; also whether the inquiry would extend to the comparative incidence of the estate duty and the income tax respectively; and the practicability of adopting a system of graduated income tax.


said the form of reference had not yet been settled. It was proposed to inquire into the question of evasion, collection, abatements, and many other points in connection with the income tax. The Committee would agree, he thought, that it was very desirable that the inquiry should not range over so varied a field as to prolong the proceedings. They wanted to have an inquiry which would lead to some reform of these pressing matters in a short space of time. He could not undertake to say that the inquiry would include the question of graduation. He had been inquiring into that matter himself, and he was persuaded that the difficulties were immense, and he did not really see his way out of the difficulties which presented themselves to him. But the reference had not been finally decided yet, and until it had been decided he was not prepared to say exactly what the scope would be.


asked whether the right hon. Gentleman would go so far as to inquire into the system of graduation which was at present in vogue in at least one British colony, as well as elsewhere.


said he could not add anything to what he had said. Of course he would consider all the proposals that had been made that night before the reference was finally settled. With regard to the question of the hon. Gentleman opposite, he presumed the Committee would naturally inquire into that particular point when they inquired into the whole question of the equity of abatements. He agreed that they ought to see whether they could not make it more easy to obtain the return of money that had been paid. With regard to what his hon. friend the Member for North Islington had said, he was convinced that there was a good deal to be said in favour of some alteration in the present mode of appeal, so that the appellant might have power to appoint some one to put his case before the Commissioners, either counsel or a solicitor. He was quite sure something of that kind ought to be done, and he hoped he might be able to do it without inquiry at all. There were several small matters in connection with taxation with which he hoped to deal in what he might call an Omnibus Bill, and, as they were none of them of a contentious character, he imagined there would be no prolonged discussion when they were dealt with.


What about the death duties?


said he did not think they could extend the inquiry.


hoped the hon. Member would not put the Committee to the trouble of a division. He was anxious, as he had said, that the inquiry of this Committee should extend not only to the question of abatements, but also to the practicability of graduation. He had endeavoured to impress his views on his right hon. friend, and, though he did not himself believe it was practicable, he felt quite sure that, if it was impracticable, it would be a good thing for everybody if it could be shown to be so. If the hon. Member took a division on his Motion now, on the ground that he was dissatisfied with his right hon. friend's answer, he thought he would injure the cause he had at heart. He quite understood the position of his right hon. friend, who was not yet authorised to state precisely what the inquiry would be, and he was sure his right hon. friend would bear in mind what had been said in the course of the debate.


said, in view of the fact that the Chancellor of the Exchequer had by no means given anything in the nature of an absolute negative to his question, and in view of the remarks just made by the right hon. Gentleman the Member for West Bristol, he would ask leave to withdraw his Amendment.

Amendment, by leave, withdrawn.

*MR. MCCRAE (Edinburgh, E.)

complained of a lack of uniformity as between England and Scotland in the collection of income tax. While 93 per cent. was collected in Scotland at 28th February only 53 per cent. was collected in England, representing a loss to the revenue of £30,000 a year in interest. He thought they were entitled to an assurance from the Chancellor of the Exchequer that, until the collection of income tax in England was brought up to a higher standard, they in Scotland should have extended to them the same time for payment as was given in England. He asked that until a rearrangement had been made the two countries should be put in a position of perfect equality. He had made representations to the Chancellor of the Exchequer, and although he had been told there was no difference in actual law, the collection was a month or six weeks earlier in Scotland than in England.


said that as far as he was aware there was no inequality. In Scotland, however, they were rather more eager to pay quickly than in England, as he should expect from his fellow-countrymen, who always liked to discharge their debts as quickly as they could.


said it was not a question of eagerness, but of compulsion.


said that as far as the law was concerned there was no difference between the two countries. He had made inquiry, and could find no reason why the collection should be earlier in Scotland, unless it was that the collectors were more prompt.


said it was really a serious matter, and was exciting much dissatisfaction in Scotland.


pointed out that to bring England up to the level of Scotland would not benefit Scotland. He thought it would not be desirable to push the matter or to adopt more stringent measures; the tax was a very heavy one, and he was unwilling to give another turn to the screw.

SIR MARK STEWART (Kirkcudbrightshire)

stated that the feeling expressed by the hon. Member was common to all Scotland on both sides of politics, and he hoped the right hon. Gentleman would give the matter his attention.

Clause 5 agreed to.

Clause 6:—


asked whether the Chancellor of the Exchequer would consent to report Progress at this point. There was on the Paper a proposed new clause relating to the coal duty, and that would involve a good deal of discussion. But before that was reached he desired to raise a point with reference to the Sinking Fund, in connection with which he believed some of his hon. friends had points they wished to bring forward. He thought, therefore, this would be a convenient stage to report Progress.


said that while he did not intend to take the coal tax to-night, he thought the Committee ought to finish the clauses in the Bill and then start the new subject of the coal duty tomorrow. The question of Sinking Fund was no doubt very important, but it was not a matter that lent itself to prolonged discussion.


said in that case he would proceed with the observations he desired to make. The point he desired to raise did not cover much ground, but the Committee would see that it was a vital matter in reference to the efficiency of the Sinking Fund. There were a great many of them who made out that the Chancellor of the Exchequer's provision of £27,000,000 for the fixed debt charge was short by about £500,000 of what was necessary to bring it up to the old level. Besides that, there was no provision for the reduction of the new debt, the South African war debt. That left the fund, in a sense, inadequately provided for. The right hon. Gentleman himself had stated— In January next we are to receive £10,000,000 more out of the loan which has been underwritten by the Transvaal mine-owners, so that within twelve months we shall receive £14,000,000, and the interest on that £14,000,000 will be £400,000, which will be added to the Sinking Fund of the fixed debt charge, so that the amount of the fixed debt charge available for the extinction of the debt will be increased by nearly £500,000.… In another year we shall get another £10,000,000, and the year after that we shall get a further £10,000,000, so that we are going to put on the Sinking Fund £1,000,000 odd in three years. That will go on being added to the Sinking Fund, so that by the time this £30,000,000 Transvaal Loan is paid we shall have a Sinking Fund of close on £9,000,000 sterling. In short, the right hon. Gentleman admitted the insufficiency of the pro- vision for the Sinking Fund as it stood, but looked to the Transvaal loan of £30,000,000 to furnish in two or three years an adequate sum to make it good. But was it a certain asset on which the right hon. Gentleman was calculating? What security was there that the Transvaal loan, and especially the second and third instalments, would be paid? Was the right hon. Gentleman justified in relying upon the certainty of the receipt of that large sum of money? He noticed in the report published by a Johannesburg newspaper of the meeting at which the arrangement with regard to the loan was arrived at, that Sir Percy FitzPatrick used the following words— Never in the history of the world has a young and struggling State taken on the burden of £30,000,000 of unproductive debt. None of us here to-day know enough to express a confident opinion; we are a great deal in the dark. I believe in the future of this country, and I believe that, given reasonable time, we shall be able to bear the burden of this debt; but you must realise that it is an experiment, a great experiment. If we face this, and if we brush on one side those stipulations which would safeguard us in making this experiment, if we abandon them and leave it entirely to the wisdom of the mother country and to her—well not magnaminity, that is not the word, let us say to her wisdom in the highest sense of the word to deal gently with us, should it prove that our condition and our needs in the future require it, we may be neglecting business precautions, we may be even committing an act of what is called folly or indiscretion, but we are doing it because it is our duty and would do no less. We have confidence in the good sense and the goodwill of the British people, who having it in their power, if needs be, at a future date to lighten the burden, will most certainly not impose upon us that which we cannot bear. They have in reserve the two unguaranteed instalments amounting to £20,000,000. My conviction is that if we cannot bear it when due they will defer it until we can. That was a perfectly natural position for Sir Percy FitzPatrick and his friends to take up, but it was wholly subversive of the theory that this loan was a fixed and certain income to make up for any insufficiency there might be in the provision for the Sinking Fund? He did not know, nor was this the occasion on which to inquire, how, when, or by what authority, this loan was to be granted, guaranteed, and secured, but in order to gain information on the specific point to which he had referred he moved to leave out Sub-section 1 of the clause.

Amendment proposed— In page 3, line 27, to leave out Sub-section (1)." (Sir H. Campbell-Bannerman.)

Question proposed, "That Sub-section (1) stand part of the clause."


said it was hardly accurate to represent that no provision had been made in the £27,000,000 for a Sinking Fund for the war debt. There was an immediate addition of £750,000. It was quite true that in arguing that £27,000,000 was sufficient he confidently expected that in the next three or four years there would be a repayment of £30,000,000 from the Transvaal. The right hon. Gentleman asked what was their security. His right hon. friend the Secretary for the Colonies, in his statement on the subject of the finances of the Transvaal, fully explained to the House how that matter stood. The Transvaal was at present a Crown colony, and it was not necessary that we should take from them, in the ordinary sense of the term, security for the payment of debt which they were willing to incur. It was not necessary, because the matter was practically in our own hands. But, of course, they would not be justified in making the assumption that the Transvaal could pay that money unless they had had some assurance from those who were interested which led them to believe that they would receive the money. The Colonial Secretary had informed the House that the contribution was assented to by an assembly representing the various interests of the colonies for the purpose of considering the contribution of the colonies towards the expenses of the war. At the first meeting some of the representatives of labour dissented, but subsequently, on the proposal being explained exactly, the dissentients withdrew their objection. Another meeting representing all interests, including those of labour, came unanimously to the resolution that they would be prepared to find the £30,000,000, and the mine owners guaranteed at least the first £10,000,000. Therefore, so far as the first £10,000,000 were concerned, we were quite safe. If, therefore, we only received that £10,000,000, and also the amount of money which we should receive back in repayment of the loan from the Transvaal, which undoubtedly we should receive in the course of the present year, we had at once an appreciable sum which would represent an addition to the Sinking Fund of £400,000 or £500,000. The Government were confident that they would also get the remaining £20,000,000, and they were supported in that belief by Lord Milner's review of the prospects of the finances of the Transvaal during the next three years. Lord Milner had arrived at the conclusion that that money would be forthcoming, and the progress which had been made since he made that forecast justified the view which he had taken. Therefore, although the Government had no actual guarantee so far as the whole £30,000,000 were concerned, all the interests in the colonies had agreed to the proposals of his right hon. friend for the payment of that sum. Having regard to the fact that at the end of four years, if they obtained that £30,000,000, they would have a fixed charge containing within it some £9,000,000 towards the Sinking Fund, or 1.25 per cent. of the outstanding debt, which was a larger percentage than ever existed before, they would not have been justified in increasing the burden of the people of this country in the shape of taxation.


said it was not easy to discuss the matter at that time of night, but he had no wish to delay the progress of the Bill. He certainly should be sorry to blame His Majesty's Government or the Secretary for the Colonies for having settled with the Transvaal for the contribution of £30,000,000 towards the expenses of the war. He thought it was a good settlement, and it was as much as he ever expected to get. He thought, however, it would be a bird in the hand, and from the Budget speech of the Chancellor of the Exchequer and the speech of the Colonial Secretary it has so considered in their calculations. But he was sorry to hear from the speech of his right hon. friend that he was a little doubtful about £20,000,000 of the sum of £30,000,000.


I have no doubt at all.


said he wished he was as certain as his right hon. friend. It was a rather delicate matter to discuss in the House, and they certainly ought not to throw any doubt on the probability of recovering that sum. But what was the position? The revenues of the Transvaal depended largely on the railway receipts, that was admitted, and the railway receipts had been very large during recent months, and were estimated by Lord Milner at a very considerably increased sum for the ensuing year. With his knowledge of Lord Milner's financial powers he would not wish to throw the slightest doubt on the estimate, but it must be remembered that this was the time when railway receipts in the Transvaal must necessarily be very large, for everything was coming in for restoration work in the territory. But taking Lord Milner's calculations and assuming them to be perfectly justified, there would be, as he understood from Papers laid on the Table, a deficit of some £200,000 or something of the kind in the third year, assuming that the second and third ten millions of the thirty were to be raised, and this was to be made good by increased revenue. The calculations might be right, but there were other factors in the situation. We expected to receive £10,000,000 next January, and that might be taken as certain, and then again £10,000,000 in January, 1905, and £10,000,000 again in January, 1906. Well, 1905 was some way off, and January, 1906, a long way off, and the Transvaal was a country that above all others would pay for development, and there would necessarily be a conflict to some extent between the funds required from the revenue for providing the second and third £10,000,000 and the sum required for further development required in the Transvaal. He suggested that his right hon. friend would make the second and third millions far more secure if His Majesty's Government would insist on a provision in the ordinance that certain receipts should be ear-marked to provide the interest for the £30,000,000; in other words, that the receipts not from taxation, but from mines or property of that kind, should be ear-marked to provide the interest on the £30,000,000. Last year it occurred to the Government that it would be better that there should be no fixed sum named as the Transvaal's contribution to the war expenditure, but that certain revenue of the Transvaal should be set aside practically indefinitely in order to provide that contribution. His right hon. friend the Colonial Secretary went out to South Africa with that idea, but he found it was impracticable—and he thought he was absolutely right—because it placed a burden of an indefinite amount on the Transvaal for an indefinite time, and that might check development altogether. What he suggested was a different matter—namely, that in the ordinance certain revenues should be ear-marked for providing the interest on the £30,000,000 and no more. He ventured to hope that his right hon. friend and the Government would give the matter their attention, because he thought at present there was some slight danger of losing the later contribution towards the £30,000,000 which the Transvaal had agreed to as a fair contribution from that colony towards the war expenditure.

MR. BUCHANAN (Perthshire, E.)

said that very important considerations were raised by the facts which had been placed before the Committee by the Leader of the Opposition and the right hon. Gentleman the Member for West Bristol, and it would greatly conduce to the proper discussion of the matter if the Government would now consent to report Progress.


admitted that the matter was important, but it had been debated on more than one occasion, and the facts and arguments were really confined within very narrow limits. He hoped, therefore, the Committee would dispose of the matter to-night.


contended that the facts showed clearly the absence of certainty with regard to this one and only source of any repayment of the war debt.


said he had endeavoured to point out that so far as the contribution towards the war expenses was concerned they had the first £10,000,000 assured while the other two sums of £10,000,000 each would bring the amount of the Sinking Fund up to a figure it had never before reached.


pointed out that the right hon. Gentleman was mixing up two subjects—the sufficiency of the sum quoted for the Sinking Fund, and the adequacy of the means being taken for the early extinction of the war debt. The late Chancellor of the Exchequer, in bringing forward his various Bills for raising money, always made a strong point of the fact that the borrowing for the purposes of the war should be temporary, not permanent, and that the first obligation on the Chancellor of the Exchequer at the conclusion of the war would be to take effective steps for the early extinction of the war debt. The only two conditions which the right hon. Gentleman imposed upon himself or his successor were that the war should be over, and that he should be able to state the amount of the contribution to be obtained from the Transvaal. The present Chancellor of the Exchequer had stated the amount of the Transvaal's contribution, but the Committee had seen the comparatively slight security for the second and third instalments. Even though the whole £30,000,000 were paid, it was a comparatively small fraction of the total war debt, which amounted to £67,000,000 unfunded debt, and £90,000,000 funded debt. They had expected that the Chancellor of the Exchequer would be able to make some clear and definite statement of the intentions of the Government in the immediate future in regard to the debt, but the right hon. Gentleman had disappointed them: he had made no attempt to deal with the question upon which his predecessor had laid so much stress—viz., the necessity at the earliest possible date of some diminution in the amount of the unfunded debt. £10,000,000 of Exchequer bonds would mature in about six weeks, and it was

time the right hon. Gentleman gave some assurance as to what he intended to do with regard to them.


said that he thought it was not desirable to make any definite statement as to the way in which the £10,000,000 of Exchequer bonds, or indeed the unfunded debt generally, was to be dealt with. But he did not regard the amount of that debt with satisfaction, and he intended to make inroads upon it as quickly as the resources at his command would permit. With regard to the war debt generally, he anticipated it would be extinguished by March, 1915, the whole debt would then be reduced to a figure below that at which it stood in March, 1899.

Amendment, by leave, withdrawn.

Question put, "That Clause 6 stand part of the Bill."

The Committee divided:—Ayes, 154; Noes, 36. (Division List, No. 127.)

Agnew, Sir Andrew Noel Cochrane, Hon. T. H. A. E. Gordon, J. (Londonderry, S.)
Allhusen, Aug. Henry Eden Colomb, Sir John Chas. Ready Gore, Hn. G. R. C. Ormsby-(Salop
Anson, Sir William Reynell Compton, Lord Alwyne Gray, Ernest (West Ham)
Arkwright, John Stanhope Condon, Thomas Joseph Greene, Sir E. W. (Bury St. Ed.
Arnold-Forster, Hugh O. Corbett, T. L. (Down, North) Greene, Hy. D. (Shrewsbury)
Arrol, Sir William Cox, Irwin Edwd. Bainbridge Gretton, John
Atkinson, Rt. Hon. John Cranborne, Viscount Greville, Hon. Ronald
Bain, Colonel James Robert Crean, Eugene Guthrie, Walter Murray
Balcarres, Lord Crossley, Sir Savile Hamilton, Rt. Hn. Ld. G. (Midx
Balfour, Rt. Hon. A. J. (Manch'r Cubitt, Hon. Henry Hare, Thomas Leigh
Balfour, Kenneth R. (Christch. Cullinan, J. Harris, Frederick Leverton
Banbury, Sir Frederick George Dalkeith, Earl of Hay, Hon. Claude George
Barry, E. (Cork, S.) Dalrymple, Sir Charles Hayden, John Patrick
Beach, Rt. Hon. Sir M. Hicks Devlin, Chas. Ramsay (Galway) Heath, Arthur H. (Hanley)
Bill, Charles Dickson, Charles Scott Heath, James (Stafford, N. W.
Bond, Edward Digby, John K. D. Wingfield- Henderson, Sir Alexander
Brassey, Albert Dimsdale, Rt. Hon. Sir Jos. C. Hermon-Hodge, Sir Robert T.
Butcher, John George Doogan, P. C. Hobhouse, Rt. Hn. H. (Somrst E.
Campbell, J. H. M. (Dublin Univ Douglas, Rt. Hon. A. Akers Hope, J. F. (Sheff., B'tside)
Carson, Rt. Hn. Sir Edw. H. Durning-Lawrence, Sir Edwin Hoult, Joseph
Cautley, Henry Strother Dyke, Rt. Hon. Sir Wm. Hart Jameson, Major J. Eustace
Cavendish, R. F. (N. Lancs.) Fellowes, Hon. Ailwyn Ed. Jessel, Capt. Herbert Merton
Cavendish, V. C. W. (Derbysh.) Finch, Rt. Hon. George H. Joyce, Michael
Cecil, Evelyn (Aston Manor) Finlay, Sir Robert Bannatyne Kennedy, Patrick James
Chamberlain, Rt. Hn. J. A. (Worc Flavin, Michael Joseph Keswick, William
Charrington, Spencer Forster, Henry William Law, Andrew Bonar (Glasyow)
Clancy, John Joseph Foster, P. S. (Warwick, S. W. Law, H. Alex. (Donegal, W.)
Clive, Captain Percy A. Fyler, John Arthur Lawrence, Wm. F. (Liverpool
Lawson, John Grant (Yorks, N. R. Palmer, Walter (Salisbury) Stanley, Edw. Jas. (Somerset)
Lees, Sir Elliott (Birkenhead) Percy, Earl Stanley, Lord (Lancs.)
Leveson-Gower, Frederick N. S. Platt-Higgins, Frederick Stewart, Sir M. J. M'Taggart
Long, Rt. Hn. W. (Bristol, S. Powell, Sir Francis Sharp Stock, James Henry
Loyd, Archie Kirkman Pretyman, Ernest George Sullivan, Donal
Lucas, Col. Francis (Lowestoft Pryce-Jones, Lt.-Col. Edward Taylor, Austin (Last Toxteth)
Lucas, Reginald J. (Portsmouth Purvis, Robert Thornton, Percy M.
Lundon, W. Rankin, Sir James Tomlinson, Sir Wm. E. M.
Macdona, John Cumming Rasch, Major Frederic Carne Tuke, Sir John Batty
MacVeagh, Jeremiah Redmond, Jn. E. (Waterford) Valentia, Viscount
M'Calmont, Colonel James Reid, James (Greenock) Walrond, Rt. Hon. Sir W. H.
Maxwell, W. J. H. (Dumfriessh. Ridley, Hn. M. W. (Stalybridge) Warde, Colonel C. E.
Molesworth, Sir Lewis Ritchie, Rt. Hn. Chas. Thomson Webb, Col. William George
Montagu, G. (Huntingdon) Robertson, H. (Hackney) Welby, Sir Chas. G. E. (Notts)
More, Robt. Jasper (Shropshire Rothchild, Hon. Lionel Walter Whiteley, H. (Ashton-u.-Lyne)
Morgan, D. J. (Walthamstow) Royds, Clement Molyneux Williams, Colonel R. (Dorset)
Morrell, George Herbert Sackville, Col. S. G. Stopford Willox, Sir John Archibald
Morrison, James Archibald Sadler, Col. Saml. Alexander Wilson, A. Stanley (York, E. R.
Mount, William Arthur Scott, Sir S. (Marylebone, W.) Wortley, Rt. Hon. C. B. Stuart
Murray, Rt. Hn. A. Graham (Bute Seely, Chas. Hilton (Lincoln) Wylie, Alexander
Murray Charles J. (Coventry) Seely, Maj. J. E. B. (Isle of Wright
Nannetti, Joseph P. Sheehan, Daniel Daniel TELLERS FOR THE AYES—
Nolan, Joseph (Louth, S.) Smith, Abel H. (Hertford, E.) Sir Alexander Acland-
O'Brien, Patrick (Kilkenny) Smith, James Parker (Lanarks) Hood and Mr. Anstruther.
O'Donnell, John (Mayo, S.) Spear, John Ward
Allen, Charles P. (Glouc., Stroud Helme, Norval Watson Roe, Sir Thomas
Asher, Alexander Hobhouse, C. E. H. (Bristl, E. Samuel, Herbt. L. (Cleveland)
Barran, Rowland Hirst Jones, Wm. (Carnarvonshire) Shaw, Thomas (Hawick, B.)
Black, Alexander William Labouchere, Henry Sinclair, John (Forfarshire)
Brigg, John Lambert, George Thomas, David A. (Merthyr)
Brown, Geo. M. (Edinburgh) Lawson, Sir Wilfrid (Cornwall) Thomson, F. W. (York, W. R.)
Buxton, Sydney Charles Layland-Barratt, Francis Toulmin, George
Caldwell, James Levy, Maurice Walton, Joseph (Barnsley)
Causton, Richard Knight M'Arthur, William (Cornwall)
Channing, Francis Allston M'Crae, George TELLERS FOR THE NOES—
Dewar, John A. (Inverness-sh.) Markham, Arthur Basil Mr. M'Kenna and Mr.
Gladstone, Rt. Hn. Herbert J. Norman, Henry Buchanan.
Griffith, Ellis J. Rickett, J. Compton
Gurdon, Sir W. Brampton Roberts, John Bryn (Eifion)

Motion made, and Question, "That the Chairman do report Progress; and ask leave to sit again."—(Mr. Joseph Walton.)

Put and agreed to.

Committee report Progress; to sit again this day.

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