HC Deb 19 July 1904 vol 138 cc430-81

Considered in Committee.

(In the Committee.)

[MR. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]

Clause 4.

Motion made, and Question proposed, "That the clause stand part of the Bill."

* MR. J. F. HOPE (Sheffield, Brightside)

asked for an explanation of the reason why 1st August was the date fixed upon. [The hon. Member's observations were inaudible in the Press Gallery.]


said the same question was discussed on Clause 1, when he accepted an Amendment substituting 1st July for 1st August and he should have been ready to accept a similar Amendment to this clause if it had been moved. He did not think it desirable to accept an earlier date, as it would tend to destroy the revenue of the current year if it were known that the duty was likely to expire as soon as the financial year came to an end. Where there was reason to expect a reduction of duty, clearances were held back and stocks duty paid were reduced to a minimum. It was necessary that the taxes should be carried over to a date late enough in the succeeding year to prevent the withholding of duty in the expectation of a reduction.


said that as the Member who moved the alteration of the date to the 1st July, he must express his pleasure that the right hon Gentleman was prepared to accept a similar date in the present clause. Could he move it now?


No, I have now put the Question that the clause be read a second time.


thought it very regrettable that the right hon. Gentleman should thus express his willingness to accept an Amendment which had not even been moved. Only the previous day the right hon. Gentleman removed, quite unnecessarily as he thought, a tax upon goods on the high seas. He had always thought that these duties were fixed with a considerable amount of care. He took it that the 1st August was originally decided upon for some definite reason, and the action of the right hon.

Gentleman in altering the date seemed rather to throw doubt upon it.


submitted that ever since 1863 it had been the custom to allow a proper interval of something like four months to elapse between the end of the financial year and the date when the duties ceased to operate, in order that traders might accumulate stocks, and thus obviate violent fluctuation of market rates. For this reason and also because the shortening of the interval would make forestalling of the market common and further interfere with the market, he ventured with great respect to direr from the Chancellor of the Exchequer and to think this interval of four months should be preserved.

MR. SCOTT-MONTAGU (Hampshire, New Forest)

asked if the Chancellor of the Exchequer could see his way to make some concession in regard to spirits used for motive power, lighting, and heating purposes.


Order, order! That must be raised on the new clause standing in the name of the hon. and gallant Member for Middlesborough.

The Committee divided:—Ayes, 188; Noes, 129. (Division List No. 248.)

Agg-Gardner, James Tynte Bull, William James Elliot, Hon. A. Ralph Douglas
Agnew, Sir Andrew Noel Campbell, Rt.Hn.J.A.(Glasgow Fardell, Sir T. George
Anson, Sir William Reynell Campbell, J.H.M.(DublinUniv. Fergusson,Rt.Hn.Sir J.(Manc'r
Arkwright, John Stanhope Carson, Rt. Hon. Sir Edw. H. Finch, Rt. Hon. George H.
Arnold-Forster, RtHn.HughO Cavendish, V.C.W. (Derbyshire Finlay, Sir Robert Bannatyne
Arrol, Sir William Cecil, Evelyn (Aston Manor) Fison, Frederick William
Atkinson, Rt. Hon. John Cecil, Lord Hugh (Greenwich) FitzGerald, Sir Robert Penrose
Bigot, Capt. Josceline FitzRoy Chamberlain Rt Hn.J.A(Worc. Fitzroy, Hn. Edward Algernon
Bain, Colonel James Robert Chapman, Edward Flannery, Sir Fortescue
Baird, John George Alexander Cochrane, Hon. Thos. H. A. E. Flower, Sir Ernest
Balcarres, Lord Colston, Chas. Edw. H. Athole Forster, Henry William
Baldwin, Alfred Craig,Charles Curtis(Antrim,S.) Foster, P. S. (Warwick, S.W.)
Balfour, Rt.Hon. A.J.(Manch'r Cross, Herb. Shepherd (Bolton) Galloway, William Johnson
Balfour, Rt. Hon. G. W. (Leeds Crossley, Rt. Hon. Sir Savile Gardner, Ernest
Balfour, Kenneth R. (Christch. Dalkeith, Earl of Garfit, William
Bartley, Sir George C. T. Dalrymple, Sir Charles Gordon, Hn.J.E.(Elgin&Nairn)
Bignold, Sir Arthur Davenport, William Bromley Gore, Hon. S. F. Ormsby
Bigwood, James Dickson, Charles Scott Goulding, Edward Alfred
Bill, Charles Dickson-Poynder, Sir John P. Graham, Henry Robert
Bingham, Lord Dorington, Rt.Hn.Sir John E. Gray, Ernest (West Ham)
Blundell, Colonel Henry Doughty, Sir George Greene,Sir EW(B'ry S Edmnds
Bond, Edward Douglas, Rt. Hon. A. Akers Gunter, Sir Robert
Boulnois, Edmund Doxford, Sir William Theodore Halsey, Rt. Hon. Thomas F.
Bowles,T. Gibson (King's Lynn During-Lawrence, Sir Edwin Hare, Thomas Leigh
Brassey, Albert Dyke, Rt.Hn.Sir William Hart Harris, F. Leverton(Tynem'th)
Brodrick, Rt. Hon. St. John Egerton, Hon. A. de Tatton Haslam, Sir Alfred S.
Haslett, Sir James Horner Massey-Mainwaring, Hn. W. F. Sackville, Col. S. G. Stopford
Heaton, John Henniker Maxwell, W.J.H. (Dumfriessh.) Sharpe, William Edward T
Hermon-Hodge, Sir Robert T. Melville, Beresford Valentine Simeon, Sir Barrington
Hobhouse,RtHn H(Somers't,E Meysey-Thompson, Sir H. M. Skewes-Cox, Thomas
Hope, J.F.(Sheffield,Brightside Mildmay, Francis Bingham Sloan, Thomas Henry
Horner, Frederick William Milvain, Thomas Smith,HC (North'mb.Tyneside
Houston, Robert Paterson Mitchell, Edw.(Fermanagh,N.) Smith RtHn J.Parker(Lanarks
Howard, Jn.(Kent, Faversham Mitchell, William (Burnley) Smith, Hon. W. F. D. (Strand)
Howard, J. (Midd., Tottenham Montagu, Hn. J. Scott(Hants.) Spear, John Ward
Hozier, Hn. James Henry Cecil Moon, Edward Robert Pacy Stanley, Edward Jas.(Somerset
Hunt, Rowland Morpeth, Viscount Stirling-Maxwell, Sir John M.
Jameson, Major J. Eustace Morrison, James Archibald Taylor, Austin (East Toxteth)
Jebb, Sir Richard Claverhouse Morton, Arthur H. Aylmer Thomas,J A(Glamorgan,Gower
Jeffreys, Rt. Hon. Arthur Fred. Mount, William Arthur Thorburn, Sir Walter
Johnstone, Heywood (Sussex) Mowbray, Sir Robert Gray C. Tollemache, Henry James
Kerr, John Murray, Rt. Hon. A. G. (Bute) Tomlinson, Sir Wm. Edw. M.
Kimber, Sir Henry Murray, Col. Wyndham (Bath) Tuff, Charles
Laurie, Lieut.-General Myers, William Henry Tufnaell, Lieut.-Col. Edward
Law, Andrew Bonar (Glasgow) Newdegate, Francis A. N. Tuke, Sir John Batty
Lawrence, Sir Jos. (Monmouth) O'Neill, Hon. Robert Torrens Valentia, Viscount
Lawson, J. Grant (Yorks., N.R. Parker, Sir Gilbert Vincent,Col.Sir C.E.H(Sheffield
Lee, A. H. (Hants., Fareham) Pease, HerbertPike(Darlington Vincent, Sir Edgar (Exeter)
Legge, Col. Hon. Heneage Pemberton, John S. G. Warde, Colonel C. E.
Llewellyn, Evan Henry Percy, Earl Webb, Colonel William George
Loder, Gerald Walter Erskine Pierpoint, Robert Welby, Lt.-Col.A.C.E(Taunton
Long,Col.Charles W.(Evesham) Platt-Higgins, Frederick Whitmore, Charles Algernon
Long, Rt.Hn.Walter(Bristol,S.) Plummer, Sir Walter R. Willoughby de Eresby, Lord
Lowe, Francis William Pretyman, Ernest George Wilson, A. Stanley(York, E.R.)
Loyd, Archie Kirkman Pryce-Jones, Lt.-Col. Edward Wilson, John (Glasgow)
Lucas, Col. Francis (Lowestoft) Purvis, Robert Wilson-Todd, Sir W.H.(Yorks.)
Lucas, Reginald J.(Portsmouth Reid, James (Greenock) Wolff, Gustav Wilhelm
Lyttelton, Rt. Hon. Alfred Ridley, Hon. M. W.(Stalybridge Wylie, Alexander
Macdona, John Cumming Ridley, S.Forde(Bethnal Green Wyndham, Rt. Hon. George
MacIver, David (Liverpool) Roberts, Samuel (Sheffield) Younger, William
Maconochie, A. W. Robertson, Herbert (Hackney)
M'Iver,Sir Lewis(Eadinburgh,W Robinson, Brooke TELLERS FOR THE AYES—Sir
M'Killop, James (Stirlingshire) Rolleston, Sir John F. L. Alexander Acland-Hood and
Majendie, James A. H. Royds, Clement Molyneux Mr. Ailwyn Fellowes.
Abraham, William (Rhondda) Donelan, Captain A. Lawson, Sir Wilfrid (Cornwall)
Ainsworth, John Stirling Daoogan, P. C. Leaese, Sir Jos. F. (Accrington)
Allen, Charles P. Edwards, Frank Levy, Maurice
Atherley-Jones, L. Ellice,Capt E.C(SAndrw'sBghs Lewis, John Herbert
Bayley, Thomas (Derbyshire) Esmonde, Sir Thomas Lloyd-George, David
Bell, Richard Farquharson, Dr. Robert Lough, Thomas
Boland, John Fenwick, Charles Lundon W.
Brigg, John Flynn, James Christopher Lyell, Charles Henry
Broadhurst, Henry Foster, Sir Walter (Derby Co.) MacNeill, John Gordon Swift
Bryce, Rt. Hon. James Freeman-Thomas, Captain F. Mac Veagh, Jeremiah
Buchanan, Thomas Ryburn Fuller, J. M. F. M'Arthur, William (Cornwall)
Burt, Thomas Gladstone,Rt.Hon.Herbert Jn. M'Crae, George
Buxton, Sydney Charles Goddard, Daniel Ford M'Hugh, Patrick A.
Caldwell, James Gordon, Sir W. Brampton M'Kenna, Reginald
Cameron, Robert Harcourt, Lewis V.(Rossendale M'Killop, W. (Sligo North)
Campbell, John (Armagh, S.) Hayden, John Patrick Mansfield, Horace Rendall
Campbell-Bannerman, Sir H. Healy, Timothy Michael Mappin, Sir Frederick Thorpe
Causton, Richard Knight Hemphill, Rt. Hon. Charles H. Markham, Arthur Basil
Cawley, Frederick Higham, John Sharpe Mooney, John J.
Channing, Francis Allston Hobhouse, C. E. H. (Bristol,E.) Murphy, John
Churchill, Winston Spencer Holland, Sir William Henry Nannetti. Joseph P.
Clancy, John Joseph Hope, John Deans (Fife, West) Nolan, Col.John P.(Galway N.)
Condon, Thomas Joseph Hutchinson, Dr. Charles Fredk. Nolan, Joseph (Louth, South)
Crombie, John William Jacoby, James Alfred Norton, Capt. Cecil William
Cullinan, J. Johnson, John (Gateshead) Nussey, Thomas Willans
Davies, Alfred (Carmarthen) Joicey, Sir James O'Brien, Patrick (Kilkenny)
Davies, M. Vaughan (Cardigan) Jones,William (Carnarvonshire O'Dowd, John
Delany, William Joyce, Michael O'Kelly, Jas. (Roscommon, N.)
Devlin, Chas. Ramsay (Galway Kennedy,Vincent P (Cavan,W. O'Malley, William
Devlin, Joseph (Kilkenny, N.) Lambert, George O'Shaughnessy, P. J.
Dilke, Rt. Hon. Sir Charles Langley, Batty Parrott, William
Partington Oswald Shaw, Thomas (Hawick B.) Toulmin, George
Paulton, James Mellor Sheehy, David Tully, Jasper
Pirie, Duncan V. Shipman, Dr. John G. Warner, Thomas Courtenay T.
Power, Patrick Joseph Smith, Samuel (Flint) Wason, Eugene (Clackmannan)
Price, Robert John Soames, Arthur Wellesley White, Luke (York, E. R.)
Rea, Russell Spencer, Rt.Hn.C.R(Northants Whittaker, Thomas Palmer
Redmond, John E. (Waterford) Strachey, Sir Edward Wilson, Henry J. (York, W.R.)
Roberts, John H.(Denbighs.) Sullivan, Donal Wilson, John (Falkirk)
Robertson, Edmund (Dundee) Tennant, Harold John Woodhouse,Sir J.T(Huddersf'd
Runciman, Walter Thomas, Sir A.(Glamorgan,E.) Young, Samuel
Russell, T. W. Thomas, D. Alfred (Merthyr)
Samuel, Herbert L. (Cleveland) Thomson, F. W. (York, W. R.) TELLERS FOR THE NOES—Mr.
Shackleton, David James Tomkinson, James Trevelyan and Mr. Soares.

Question "That the word 'July' be there inserted," put, and agreed to.

Clause 5—


moved to leave out "August" in order to insert "July."

Amendment proposed—

"In page 2, line 30, to leave out the word 'August' and insert the word 'July.'"—(Mr. Gibson Bowles.)

Question proposed, "That the word August' stand part of the clause."

MR. MCKENNA (Monmouthshire, N.)

hoped the Committee would have an opportunity of discussing the Amendment of the hon. Member for North Cork in favour of substituting April or the end of the financial year for August. The point he wished to impress upon the Chancellor of the Exchequer was that these duties were intended originally to be only temporary, and he would ask the right hon. Gentleman if he did not think the time had now come when they should be permanently incorporated with the duties which already existed.


That is hardly relevant to the Amendment.


agreed that it was not relevant to the July Amendment, but it was to the April one. He strongly objected to the false pretence of continuing these duties from year to year as temporary duties when from long experience they knew that they were permanent duties. Did not the right hon. Gentleman now regard them as permanently part of our fiscal system. The right hon. Gentleman the Member for West Bristol, in introducing the duties, said he would remove them at the earliest possible moment. There had since been opportunities of removing them but they still remained.


objected to making the duties permanent. He preferred that they should be brought under the review of the House year after year.

MR. BUCHANAN (Perthshire, E.)

asked if, providing this Amendment were carried, it would not also be necessary to make a corresponding alteration in the date of the expiring of the drawbacks.

MR. FLYNN (Cork County, N.)

pointed out that in imposing these duties the right hon. Gentleman the Member for West Bristol explicitly promised that they would only be put on temporarily, but four years had since elapsed and they were still imposed. Personally he held that these duties should expire at the end of the financial year, and he should vote against their continuance one day longer than was necessary.


said it was true that when the right hon. Gentleman the Member for West Bristol imposed the duties he expressed the hope that they would be temporary, but a year later he warned the House of Commons that he feared he would not be able, when the war terminated, to remit the additional taxation he had imposed. For himself, having to find a larger revenue, he was obliged to continue the existing taxation. The additional duties were continued as an annual tax simply in order that they might be brought under the review of the House every session, and he thought the House would prefer that. He hoped hon. Members would treat with reasonable brevity the renewal of these taxes, which were necessary for the finances of the year. Some margin must be left, or else merchants and traders would not replenish the stocks, but would keep them as low as possible. The consequence would be that there would practically be no duty paid during the last quarter. He thought the period of three months which had been suggested was sufficient to safeguard the revenue, and he accepted that suggestion in order to meet the wishes of hon. Gentlemen on both sides of the House. The hon. Member for East Perthshire put a Question to him in regard to the date of the expiration of the drawback. His attention had not been called to that point before and it certainly deserved consideration. He hoped the hon. Member would allow him to defer any definite answer upon that point until the Report stage, because he should not like to deal with it until he had had an opportunity of consulting the Treasury officials.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said he understood that the right lion. Gentleman had practically accepted the Amendment moved by the hon. Member for King's Lynn. A very important point had been raised by the hon. Member for Perthshire in regard to the drawback, but the right hon. Gentleman had promised to look into that matter.


said he would inquire whether such an alteration was necessary, and, if it was, he would make it upon the Report stage.


said he thought the House ought to have a larger annual control over these taxes, and he should like to see them made annual taxes and put into the Finance Act. It was ridiculous to continue these little remnants of taxes year by year when there was no probability of repealing them. Perhaps next year the right hon. Gentleman, if they still had the advantage of his services, would bring some of these taxes into the annual taxation, and restore to the House the control which it used to have over these taxes.


said it seemed to him very unfortunate that this change had been made. Changing the dates during the passage of the Bill through the House was confusing, and now he understood that there was some doubt in regard to the drawback. These things ought to be settled from the first, and it would save a good deal of friction if they were settled at the outset and stuck to.


said he objected to this alteration, because pro tanto the Chancellor of the Exchequer was making these additional duties permanent. They were imposed in 1900 for temporary purposes, and he viewed with great jealousy any step in the direction of making these taxes part of the ordinary annual permanent taxation. He should certainly divide the Committee upon this question.

* MR. HERBERT SAMUEL (Yorkshire, Cleveland)

said he objected to the attitude taken up by the hon. Member for East Perthshire in regard to making these taxes permanent. It should be the policy of those who sat on that side of the House to impose upon intoxicants as much taxation as they could fairly bear. These taxes were imposed temporarily to pay for the war, but they should attempt to make them permanent for the purposes of peace, and therefore he entered his protest against the argument of the hon. Member and he should support this proposal.


said that although the right hon. Gentleman had promised to consider this point, he felt confident that after he had done so he would find that there was absolutely nothing in it.

MR. RUNCIMAN (Dewsbury)

said he did not think a case had been made out for this proposal. To alter these dates would, as the hon. Member for North Islington had pointed out, cause confusion. Surely it was premature to make a concession, as the Chancellor of the Exchequer had, in order to artificially facilitate business, by accepting a date like 1st July, instead of 1st August. The case of annual control over the tax could be covered as it had up to the present. Anticipating the taxes was an evil they ought to avoid as far as possible, and they had a greater safeguard by adopting August 1 as the date than they had by adopting 1st July. He would like to know how far the dates were harmonious, He understood that they were working on the principle of separate dates, and the case which had been made out for the alteration from August to July might equally apply to other matters. It was bound to lead to confusion, and it would have an effect upon the Exchequer [MINISTERIAL cries of "Divide."] of which hon. Gentlemen opposite had no conception. It was a little indecent now for hon. Members to cry "Divide" when a short time ago they were endeavouring by every means to avoid a division.

Question put, and negatived.

Motion made, and Question proposed, "That the clause, as amended, stand part of the Bill."


said the clause referred to the additional duties of Excise on beers and spirits imposed by the Finance Act, 1900. The hon. Member for King's Lynn had stated that a clause of this kind gave the Committee certain power over the Treasury. That was a very fragmentary power indeed; the real power of the Committee consisted in the power it had over the tax as such. The additional duty put on beer was comparatively small—6d. on 36 gallons—and he would not be inclined to quarrel with it. But the additional impost on spirits by which the duty was raised to 11s. per proof gallon was one which penalised a most important Scotch and Irish industry. He made bold to say that much of the drunkenness and insanity, end many of the evil consequences which they unfortunately had to deplore at the present time as the result of the consumption of spirits, were due to the enormous tax put on spirits. If spirits were to be consumed at all, whether in the form of whisky, gin, or other commodity, it was desirable that they should be taken as a pure and wholesome fluid; but by imposing a duty of this kind they encouraged the production of the impure and vile kinds of spirit which unfortunately were to be found in whisky. That was entirely in consequence of the tax of 11s. per proof gallon on spirits. He did not know whether the House realised that

this tax was equal to between two-thirds and three-fourths of the cost of production of a good Highland or Irish whisky. There were some classes of whisky which took a long time to mature, and he was informed that in the higher class the tax of 11s. represented no less than five-sixths of the cost after allowing for storage charges, loss of bulk, and interest on capital. That was surely out of all reason. At one time the tax was 2s. 3d., and then it was 3s. 6d. There was an old saying in regard to the good whisky on whichthat amount of duty was paid that "There is not a headache in a hogshead." It was impossible that distillers could produce a healthy spirit, and put it on the market at a price that would pay, if the State persisted in imposing this crushing tax. It put a premium on dishonesty. He opposed the clause.


said the hon. Member for King's Lynn had entirely misunderstood what he said. He should have supported the tax as heartily as the hon. Member, if it had not been expressly declared when it was imposed that it was to be temporary, and that it was intended to be withdrawn. It was because it was a war tax, and a war tax only, that he wished to have it set aside now for good and all. He agreed with the hon. Member for Poplar that this tax, if it was to be continued, ought to be incorporated in the general Excise duties on beer and spirits. The Excise duties on beer and spirits ought to be made annual duties, in order that the Committee might have the opportunity of reviewing the whole range of the imposts on these articles of consumption. What they got now was a half-hearted debate on a mere fragment of these duties, while the whole scope of policy of the duties was withdrawn from their discussion. That, he thought, was a mistake. Either the duties should be made permanent, or else they should in their entirety be made annual. It was on that ground that he wished to support his hon. friend who had spoken against the clause.

Question put.

The Committee divided:—Ayes, 217; Noes, 141. (Division List No. 249.)

Agg-Gardner, James Tynte Anson, Sir William Reynell Arnold-Forster,Rt.Hn.Hugh O.
Agnew, Sir Andrew Noel Arkwright, John Stanhope Arrol, Sir William
Atkinson, Rt. Hon. John Graham, Henry Robert Murray, Rt. Hon. A. G. (Bute)
Bagot, Capt. Josceline FitzRoy Gray, Ernest (West Ham) Murray, Col. Wyndham (Bath)
Bailey, James (Walworth) Greene,Sir E.W(B'rySEdm'nds Myers, William Henry
Bain, Colonel James Robert Grenfell, William Henry Newdegate, Francis A. N.
Baird, John George Alexander Greville, Hon. Ronald Parker, Sir Gilbert
Balcarres, Lord Gunter, Sir Robert Pease, HerbertPike(Darlington
Baldwin, Alfred Halsey, Rt. Hon. Thomas F. Pemberton, John S. G.
Balfour, Rt.Hon. A.J.(Manch'r Hardy, L. (Kent, Ashford) Percy, Earl
Balfour, Rt. Hon. G. W. (Leeds Hare, Thomas Leigh Pierpoint, Robert
Banbury, Sir Frederick George Harris, F. Leverton(Tynem'th) Pilkington, Colonel Richard
Bartley, Sir George C. T. Haslam, Sir Alfred S. Platt-Higgins, Frederick
Bathurst, Hon. Allen Benjamin Haslett, Sir James Horner Plummer, Sir Walter R.
Beach, Rt.Hn.Sir MichaelHicks Heath, James (Staffords., N.W. Pretyman, Ernest George
Bhownaggree, Sir M. M. Heaton, John Henniker Pryce- Jones, Lt.-Col. Edward
Bignold, Sir Arthur Hermon-Hodge, Sir Robert T. Purvis, Robert
Bigwood, James Hickman, Sir Alfred Reid, James (Greenock)
Bingham, Lord Hoare, Sir Samuel Ridley, Hon. M.W.(Stalybridge
Blundell, Colonel Henry Hobhouse,Rt Hn.H(Somers't,E Roberts, Samuel (Sheffield)
Bond, Edward Hope, J.F.(Sheffield,Brightside Robertson, Herbert (Hackney)
Boulnois, Edmund Houston, Robert Paterson Rolleston, Sir John F. L.
Bowles, T.Gibson(King'sLynn) Howard, Jn.(Kent, Faversham Rollit, Sir Albert Kaye
Brassey, Albert Howard, J. (Midd.,Tottenham) Round, Rt. Hon. James
Bull, William James Hozier, Hn. James Henry Cecil Royds, Clement Molyneux
Burdett-Coutts, W. Hudson, George Bickersteth Sackville, Col. S. G. Stopford
Campbell, Rt.Hn.J.A.(Glasgow Hunt, Rowland Samuel,Sir HarryS.(Limehouse
Campbell, J.H.M.(DublinUniv. Jameson, Major J. Eustace Sassoon, Sir Edward Albert
Carson, Rt. Hon. Sir Edw. H. Jebb, Sir Richard Claverhouse Scott, Sir S. (Marylebone, W.)
Cavendish, V.C.W. (Derbyshire Jeffreys, Rt. Hon. Arthur Fred. Sharpe, William Edward T.
Cayzer, Sir Charles William Jessel, Captain Herbert Merton Sloan, Thomas Henry
Cecil, Evelyn (Aston Manor) Johnstone, Heywood (Sussex) Smith,H C(North'mb.Tyneside
Cecil, Lord Hugh (Greenwich) Kenyon-Slaney, Rt.Hn. Col.W. Smith,Rt Hn.J.Parker(Ianark
Chamberlain,Rt Hon. J.A(Woro. Kerr, John Smith, Hon. W. F. D. (Strand)
Chaplin, Rt. Hon. Henry Kimber, Sir Henry Spear, John Ward
Chapman, Edward Laurie, Lieut.-General Stanley, Edward Jas.(Somerset
Churchill, Winston Spencer Law, Andrew Bonar (Glasgow) Stone, Sir Benjamin
Clive, Captain Percy A. Lawrence, Sir Jos. (Monm'th) Stroyan, John
Cochrane, Hon. Thos. H. A. E. Lawson, J. Grant (Yorks., N.R. Talbot, Lord E. (Chichester)
Colomb, Rt. Hon.Sir John C.R. Lee, A. H. (Hants, Fareham) Taylor, Austin (East Toxteth)
Colston, Chas. Edw. H. Athole Lees, Sir Elliott (Birkenhead Thompson,Dr.E.C (Mon'gh'n,N
Cox, Irwin Edward Bainbridge Legge, Col. Hon. Heneage Thorburn, Sir Walter
Craig,Charles Curtis(Antrim,S.) Llewellyn, Evan Henry Thornton, Percy M.
Cross, Herb. Shepherd (Bolton) Loder, Gerald Walter Erskine Tomlinson, Sir Wm. Edw. M.
Crossley, Rt. Hon. Sir Savile Long, Col.Charles W.(Evesham Tritton, Charles Ernest
Dalrymple, Sir Charles Long, Rt. Hn.Walter(Bristol,S. Tuff, Charles
Davenport, William Bromley Lowe, Francis William Tufnell, Lieut.-Col. Edward
Dickinson, Robert Edmond Lowther, C. (Cumb., Eskdale) Tuke, Sir John Batty
Dickson, Charles Scott Loyd, Archie Kirkman Valentia, Viscount
Dickson-Poynder, Sir John P. Lucas, Col. Francis (Lowestoft) Wanklyn, James Leslie
Dorington, Rt.Hn. Sir John E. Lucas, Reginald J.(Portsmouth Warde, Colonel C. E.
Doughty, Sir George Lyttelton, Rt. Hon. Alfred Webb, Colonel William George
Douglas, Rt. Hon. A. Akers Macdona, John Cumming Welby, Lt.-Col.A.C.E(Taunton
Doxford, Sir William Theodore MacIver, David (Liverpool) Welby, Sir Charles G. E.(Notts.
Dyke, Rt.Hn.Sir William Hart Maconochie, A. W. Wharton, Rt. Hon. John Lloyd
Egerton, Hon. A. de Tatton M'Iver,Sir Lewis(Edinburgh,W Whitmore, Charles Algernon
Fardell, Sir T. George. M'Killop, James (Stirlingshire) Williams, Colonel R. (Dorset)
Fergusson,Rt.Hn.Sir J.(Manc'r Majendie, James A. H. Willoughby de Eresby, Lord
Finch, Rt. Hon. George H. Martin, Richard Biddulph Wilson, A. Stanley (York, E.R.
Finlay, Sir Robert Bannatyne Massey-Mainwaring, Hn. W. F. Wilson, John (Glasgow)
Firbank, Sir Joseph Thomas Maxwell, W.J. H. (Dumfriessh.) Wilson-Todd, Sir W.H.(Yorks.)
Fison, Frederick William Melville, Beresford Valentine Wolff, Gustav Wilhelm
FitzGerald, Sir Robert Penrose Meysey-Thompson, Sir H. M. Wortley, Rt. Hon. C. B. Stuart
Fitzroy, Hn. Edward Algernon Mildmay, Francis Bingham Wrightson, Sir Thomas
Flannery, Sir Fortescue Milvain, Thomas Wylie, Alexander
Flower, Sir Ernest Mitchell, Edw. (Fermanagh,N.) Wyndham, Rt. Hon. George
Forster, Henry William Mitchell, William (Burnley) Wyndham-Quin, Col. W. H.
Foster, P. S. (Warwick, S.W.) Moon, Edward Robert Pacy Yerburgh, Robert Armstrong
Galloway, William Johnson Morpeth, Viscount Younger, William
Gardner, Ernest Morrell, George Herbert
Garfit, William Morrison, James Archibald TELLERS FOR THE AYES—Sir
Gordon, Hn.J.E.(Elgin&Nairn) Morton, Arthur H. Aylmer Alexander Acland-Hood an
Gorst, Rt. Hon. Sir John Eldon Mount, William Arthur Mr. Ailwyn Fellowes.
Goulding, Edward Alfred Mowbray, Sir Robert Gray C.
Abraham, William (Rhondda) Harwood, George O'Shaughnessy, P. J.
Ainsworth, John Stirling Hayden, John Patrick Parrott, William
Allen, Charles P. Hayter, Rt. Hon. Sir Arthur D. Partington, Oswald
Asher, Alexander Healy, Timothy Michael Paulton, James Mellor
Atherley-Jones, L. Hemphill, Rt. Hon. Charles H. Pease, J. A. (Saffron Walden)
Bayley, Thomas (Derbyshire) Higham, John Sharpe Pirie, Duncan V.
Beaumont, Wentworth C. B. Hobhouse, C. E. H (Bristol,E.) Power, Patrick Joseph
Bell, Richard Hope, John Deans (Fife, West) Price, Robert John
Boland, John Hutchinson, Dr. Charles Fredk. Rea, Russell
Brigg, John Jacoby, James Alfred Redmond, John E. (Waterford)
Broadhurst, Henry Johnson, John (Gateshead) Rickett, J. Compton
Bryce, Rt. Hon. James Joicey, Sir James Roberts, John H. (Denbighs.)
Buchanan, Thomas Ryburn Jones, William(Carnarvonshire Robertson, Edmund (Dundee)
Burt, Thomas Joyce, Michael Runciman, Walter
Buxton, Sydney Charles Labouchere, Henry Russell, T. W.
Caldwell, James Lambert, George Schwann, Charles E.
Cameron, Robert Langley, Batty Shackleton, David James
Campbell, John (Armagh, S.) Law, Hugh Alex. (Donegal,W.) Shaw, Thomas.(Hawick B.
Campbell-Bannerman, Sir H. Lawson, Sir Wilfrid (Cornwall) Sheehan, Daniel Daniel
Causton, Richard Knight Layland-Barratt, Francis Sheehy, David
Cawley, Frederick Leese, Sir JosephF.(Accrington Shipman, Dr. John G.
Clancy, John Joseph Lewis, John Herbert Smith, Samuel (Flint)
Condon, Thomas Joseph Lough, Thomas Soames, Arthur Wellesley
Craig, Robert Hunter (Lanark) London, W. Soares, Ernest J.
Crombie, John William Lyell, Charles Henry Spencer, Rt.Hn.C.R(Northants
Davies, Alfred (Carmarthen) MacNeill, John Gordon Swift Stanhope, Hon. Philip James
Davies, M. Vaughan (Cardigan) MacVeagh, Jeremiah Strachey, Sir Edward
Devlin, Chas. Ramsay (Galway M'Arthur, William (Cornwall Sullivan, Donal
Devlin, Joseph (Kilkenny, N.) M'Crae, George Thomas, Sir A.(Glamorgan,E)
Dilke, Rt. Hon. Sir Charles M'Hugh, Patrick A Thomas, D Alfred (Merthyr)
Donelan, Captain A. M'Killop, W (Sligo, North) Thomson, F. W. (York, W.R.)
Doogan, P. C. Mansfield, Horace Rendall Tomkinson, James
Edwards, Frank Mappin, Sir Frederick Thorpe Toulmin, George
Elibank, Master of Markham, Arthur Basil Wallace, Robert
Ellice,Capt E.C(SAndrw'sBghs Mooney, John J Walton, Joseph (Barnsley)
Esmonde, Sir Thomas Morgan, J. Lloyd (Carmarthen) Warner, Thomas Courtenay T.
Evans,SirFrancisH.(Maidst'ne) Morley, Rt.Hn.John (Montrose Wason, Eugene (Clackmannan)
Farquharson, Dr. Robert Nannetti, Joseph P. White, Luke (York, E. R.)
Fenwick, Charles Nolan, Joseph (Louth, South) Whiteley, George (York, W.R.)
Flavin, Michael Joseph Norton, Capt. Cecil William Whittaker, Thomas Palmer
Foster, Sir Walter (Derby Co.) Nussey, Thomas Willans Wilson, Henry J. (York, W.R.)
Fowler, Rt. Hon. Sir Henry O'Brien, James F. X. (Cork) Wilson, John (Durham, Mid.)
Freeman-Thomas, Captain F. O'Brien, K. (Tipperary, Mid.) Wilson, John (Falkirk)
Gladstone, Rt.Hn.HerbertJohn O'Brien, Patrick (Kilkenny) Woodhouse,Sir J.T(Huddersf'd
Goddard, Daniel Ford O'Connor, James (Wicklow, W. Young, Samuel
Grant, Corrie O'Dowd, John
Grey, Rt.Hn. Sir E. (Berwick) O'Kelly, Jas. (Roscommon, N.) TELLERS FOR THE NOES—Mr.
Harcourt, Lewis V.(Rossendale O'Malley, William Flynn and Mr. M'Kenna.

Clause 6:—


said that the next Amendment which was in order was that standing in the name of the hon. Member for Barnstaple, relating to incomes arising from colonial investments.

MR. J. H. LEWIS (Flint Boroughs)

said that he quite understood that in reference to the Amendment which stood in his name at the top of page 16, a considerable portion of it would come under a previous ruling of the Chairman, on the ground that it would involve an additional charge. He, however, wished to move his first Amendment in conjunction with the Amendment which stood in the name of the hon. Member for Elland lower down on the Paper, which, he understood, had been discussed on former occasions and ruled in order. This was by no means the first occasion on which the question of a graduated income-tax had been raised in the House.


Does the hon. Member seriously mean to move only half of his proposed Amendment.


said he wished to move his first Amendment so as to graft on it that of the hon. Member for Elland "to leave out 'one shilling,' and insert 'ten pence, and every person whose total income from all sources, upon which income-tax is now paid, exceeds £5,000 shall pay an additional tax upon the following scale, etc.'" That was an Amendment which had been under discussion formerly and had been ruled in order.


Has the hon. Member received the sanction of the hon. Member for Elland?




The hon. Member put his scheme down only yesterday.


said that the scheme had been put down for some weeks, and it had only been starred because of a slight alteration he had made in it the previous day. However, he did not propose to lay that scheme before the Committee, but to move his first Amendment in connection with that of the hon. Member for Elland. In fact, the object of the hon. Member for Elland and his own were substantially identical. They wished to have a discussion on the general principle of a graduated income-tax. Opinion in favour of such a tax was growing in favour in the House and certainly in the country. He himself had received a considerable number of letters from Unionists on this subject, and there was a very large class of persons outside the House who were very deeply interested in the question. The princple of graduation had practically been settled by the imposition of estate duties, and in various other ways in which it already existed. Considerable abatements were allowed in respect of smaller incomes, and they submitted that it was desirable to extend the system. Owing to the great increase in indirect taxation within recent years, it had become necessary to revise the scale upon which income-tax was charged. At the present time the burden of taxation fell much more heavily upon persons of small means than upon rich men. A rich man had only to deny himself luxuries, but a poor man had to deny himself comforts and even necessaries in order to pay rates and taxes. The Government had refused over and over again to graduate the Customs and Excise duties. The most expensive tea was charged at the same rate as the cheapest tea that entered into the British market, aid the same rule obtained in the case of wines and cigars. As the right hon. Gentleman was not able to graduate duties in that way he should proceed in some other direction, and could best do so in connection with the income-tax. It was essential that the tax should be adjusted to the capacity of the individual bearing it. They had been told that the estate duty did what was necessary in the way of graduated taxes on property. He denied that entirely. When the estate duty was proposed it produced £15,000,000, whereas now it yielded £30,000,000 a year, so that it was obvious that the time would come for heavier incomes to contribute more largely than they did at the present time. It was monstrous that a man with an income of £800 should pay just exactly the same rate of income-tax as a man with £8,000 or £80,000, as obtained under the present system. He ventured to think that the time would come for the extension of a principle which, was admitted to ho both sound and equitable. The right hon. Gentleman the Member for West Mon-mouthshire had said that the object was a good one, and every sound argument was in its favour.

He hoped that the Chancellor of the Exchequer would not raise any technical objection because they were trying to raise a discussion on a great question of principle, and desired to brush aside all technical difficulties. If the Chancellor of the Exchequer was prepared to make a concession on this subject, they on their side were willing to wait for another year. There were objections on practical grounds, such as the difficulty of aggregating a man's income, but with the aid of Somerset House there ought not to be much difficulty in ascertaining any particular income, or testing whether a man's aggregate of income was correct. The only labour required for testing income front companies and investments in public stocks and securities could be performed by a clerical staff of the lowest grade. There were firms in the City at the present time able, for a consideration, to give a list of anyone's investments, and surely the Inland Revenue authorities would have no difficulty in testing the accuracy of returns of incomes derived from stocks and shares. One of the objections raised by the Chancellor of the Exchequer on the Second Reading of the Bill was that graduation could not begin at a lower point than an income of £5,000 a year, because he would otherwise have to inquire into the income of a great number of persons. He (Mr. Lewis), failed to see how the difficulty would arise. The present system of taxing profits at the source was the most convenient that could be devised, according to the arguments advanced by the right hon. Gentleman, and he recognised a certain amount of force in that line of reasoning, but he thought it was desirable that the people should know they were being taxed. A great deal of extravagance prevalent in this country was due to the ease with which the taxes were raised, but with a graduated system of income-tax the people would realise the fact that they were being mulcted in a considerable portion of their income, and he hoped that the Chancellor of the Exchequer would consider that part of the question, seeing that it was the duty of the right hon. Gentleman to encourage economy. If, as it might be contended, a graduated tax would be inconvenient to the authorities of Somerset House, it surely followed that the present system caused an infinitely greater inconvenience to payers of income-tax. In advocating a graduated income-tax he did not wish to impose on any class, however wealthy, an unfair share of the national burdens. All he asked was that taxation should be apportioned to taxable capacity. He was sorry the Government would not grant an inquiry into the subject in order that the country might know on official authority what the difficulties were, and whether they were insuperable. In moving the insertion after "tax" of the words "at the graduated rates hereinafter mentioned," he proposed to adopt the scale placed on the Paper by the hon. Member for the Eland Division. That scale provided that "tenpence" should be substituted for "one shilling," and that "every person whose total income from all sources, upon which income-tax is now paid, exceeds £5,000, shall pay an additional tax upon the following scale:—Incomes over £5,000, up to £10,000, at the rate of Id.; incomes over £10,000, at the rate of 2d." He begged to move.

Amendment proposed—

"In page 2, line 37, after thewords 'income tax to insert the words `at the graduated rate s hereinafter mentioned.'" (Mr. J. H. Lewis.)

Question proposed "That those words be there inserted."


said he understood that the hon. Member had adopted the scale of the hon. Member for Elland, not because he thought that on its merits it was an improvement on his own, but because it brought him within the scope of the rules of the House. The hon. Member would be the first to admit that if the principle for which he had argued was adopted, the proposal of the hen. Member for Elland would be inadequate to apply it in practice. The hon. Member based his argument on the fact that they ought to tax the superfluity of this world's goods, which a man might possess, more highly than the necessaries of life. Within moderate limits that principle was already embodied in the income-tax, but the hon. Gentleman proposed to give it an extension hitherto unknown. The hon. Gentleman would find it extremely difficulty to define what was superflous and what was necessary with regard to the income of any class or any invidual. Surely, if it was on that basis that the tax was to be collected, they must distinguish not merely between the incomes of different, men, but between the claims upon them. Two men might each have £1,000 a year, but one might have a large family, while the other might have no one dependent upon him. Could they say that the same amount was necessary in each case for subsistence, and that the same balance remained in each case for luxuries? It was difficult to estimate how much revenue the Exchequer would lose through the adoption of any of these schemes. Under the scheme which stood in the hon. Member's own name, in which he proposed to raise the maximum of the income-tax to double its present amount, the loss would be from £7,000,000 to £10,000,000; and under the proposal of the hon. Member for Elland the loss, would be probably between £3,000,000 and £4,000,00.

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

said his Amendment really meant that the existing tax should remain untouched, and that another tax should be levied over and above it. Lower figures had been introduced because the rules would not allow him to submit a proposal which imposed a higher tax upon a single individual. He invited the Chancellor of the Exchequer to discuss his Amendment on the basis of a tax over and above the existing income-tax.


said it was difficult to discuss a proposal which was not before the Committee.


It was discussed on that basis two years ago, as a question of policy.


said he did not, know what the hon. Member's scheme was. All he knew was that it was out of order. It was not reasonable to ask that he should give figures showing the effect of a scheme which had not been described. It would be very difficult to recover from the higher incomes the amount which would be subtracted from the lower incomes. The hon. Member for Elland's proposal was that the present rate of income-tax should be limited to incomes over £10,000. But he supposed the idea was that there should be an additional tax on incomes which exceeded, say, £15,000.


said his proposal, as it stood on the Paper, was that the existing tax should be levied as at present only at a rate 2d. lower. What he desired was that rich men having £5,000 a year and upwards should declare their incomes, that an extra tax should be placed upon them, and that the income-tax should be graduated after that amount. That was a proposition which the right hon. Gentleman himself discussed and gave figures bearing upon a few days ago.


said he did not complain of the hon. Member's raising the question in the only way in which it was open to him to raise it; but surely the hon. Gentleman could not ex- pect him to give figures about a plan which could not be discussed.


You gave the figures on the proposal the other day.


said that being so he hoped the hon. Gentleman would accept the figures he gave the other day, which would be found in the report of his speech. Those figures tended to show the very serious effect which any proposal of this kind in reference to the income-tax would have upon tho revenue. The hon. Gentleman seemed to think that under a system requiring every man to declare his income the Exchequer would be likely to obtain a larger return from the income-tax than under the present system of collecting the tax at the source of income. Experience was wholly against that theory. The additional yield from the income-tax in recent years was largely due to so many undertakings becoming public companies and publishing balance-sheets, and to the tax being paid at the source where the income was made instead of it being dependent upon a return furnished by each individual. When the income-tax was first proposed by Mr. Pitt it was based on individual assessment. In 1803 it was put upon what was practically the present basis of calculating it at the source of income, and, immediately, a shilling tax under the new system gave almost exactly the same yield as a two-shilling tax under the old system. The fact of the matter was that it was exceedingly difficult to ascertain the income of individuals. Every Member of the Committee must have known men whose great incomes no one suspected until after their death. How was the Inland Revenue to trace the incomes of men of that kind? He ventured to say that to alter the present basis of the income-tax would be to strike a serious blow at the yield, and would be a most retrograde step in our financial system. Complaints had been made that abatements and exemptions were not always enjoyed by the persons they were supposed to benefit. That was the point which would be considered by the Committee at present sitting under the presidency of the right hon. Gentleman the Member for Croydon. The more exemptions and abatements there were, the greater was the burden thrown upon the authorities. The work at certain periods of the year was exceedingly severe, and, though errors might occasionally creep in, they did not spare themselves in their efforts to give satisfaction to the claimants of abatements. Certainly the heads of the Department, as well as the men, would be most glad if they could make the system more efficient.


said he made no attack whatever upon the officials of the Department. He knew they were doing their very best in the matter. What he meant to convey was, that the evils of which he spoke were inherent to the system, and that in consequence a large number of people, particularly those unaccustomed to business ways such as widows and spinsters, did not receive the abatements to which they were entitled.


said that in times past there had probably been many cases of the kind referred to, but he thought that with the greater publicity now given they were a diminishing number. All the schemes which had been suggested depended for their efficiency upon self-assessment, but hon. Members were altogether mistaken if they thought that by closely scrutinising registers at Somerset House, or by other inquiries, the Government could ascertain the individual incomes of all the wealthy men in the country. Any inquisitorial attempt to get at men's incomes would endanger the existence of the tax altogether, because it would render it intolerable to the public. Under the circumstance he could give no countenance to the Amendment. He admitted that a high income-tax pressed more heavily upon certain sections of the community than upon others. That was true of any tax. But the remedy was not to be found in any attempt to graduate the tax. It was rather in compensatory taxes of other kinds, such as the death duties, and in reducing the income-tax to a lower figure whenever their resources allowed them to do so.

MR. LAMBERT (Devonshire, South Molton)

When will that be?


said that was a Question he was unable to answer, but he hoped it would not be so long postponed as the hon. Gentleman would wish.


I should like to see it done at once.


said he was glad to have from the other side of the House an assurance of support when he should propose a reduction of the income-tax. In his opinion it was by keeping the income-tax at a moderate figure that the evils inherent in the system could best be met, and not by altering the basis on which it had been collected with such efficacy for so many years.


said he was very sensible of the awkwardness of the form in which a Motion for the graduation of income-tax always had to be moved. The advocates of the system would much prefer to propose higher taxation upon the very rich, leaving the present tax approximately as now for separate discussion. The Amendment standing in his name did not in any way affect the tax now levied. There was no interference with the present tax whatever under the proposal they were discussing. All that was proposed by the Amendment was to have an additional tax upon those who had an income of over £5,000, graduated from that point upwards. He had for over three years taken part in pressing for some method of graduating the income-tax, but, like his hon. friend, he had never dogmatised about the practicability of it. What they had been doing was to press for a practical inquiry by practical people who had the matter at their fingers' ends; and he thought they had been sour oily treated in the matter. In 1902 the right hon. Gentleman the Member for West Bristol held out hopes that in the Committee he was then appointing to inquire into the income-tax he would leave room for this to be considered. On this he (Mr. Trevelyan) withdrew his Amendment to the Budget Bill. In the next year, 1903, the right hon. Gentleman the Member for Croydon again took the official Treasury view against graduation, but the right hon. Gentleman the Member for West Bristol, whom he was going to appoint chairman of the Committee, told them that he would see that the discussion of this question was not prevented. Upon that they again withdrew this Amendment. Now, this year, from the present Chancellor, who, in his turn had become Chairman of the Committee, they could get no promise, and they were left in the position that they found this question of graduation was omitted from the reference to the Committee. He did not say that the right hon. Gentleman was bound by previous statements of other Chancellors, but he did think they had had a reasonable expectation, which, had they been licensed holders, would certainly have entitled them to some equitable compensation. In spite of this, the question had made some progress, for the right hon. Gentleman the Member for West Bristol at an earlier stage in the Budget discussions warned the Members opposite that, if the income-tax were going to remain as high as it was in peace time, they would find this question come very much to the front; and he actually went so far as to say— I have never seen any objection in principle to a movement of this kind. We have graduation in the death and house duties, I confess the difficulties and doubt its practicability. But he went on to press that "this question of the practicability of abatements and graduations should be examined by a practical, skilled Committee. He could not but think that this was the moment they might fairly make the claim." Then the present Chancellor, in spite of what he had said, had begun to take the matter more seriously. In the speech he made at an earlier stage of the Budget Bill he discussed in a more thorough way than to-day the proposition of extra taxation being levied on large incomes, and he went so far as to go into figures. The first objection he raised was that it would offend powerful interests and would be unpopular; of course, it would be unpopular with the very rich; every tax was unpopular with the people taxed.


The point of my observation was that the successful working of the system would depend upon the co-operation of the people taxed.


proceeding, said that, in the calculation the right hon. Gentleman made as to the result of additional taxation upon incomes of over £5,000, he cited the Inland Revenue to the effect that only one-fifth of the whole income-tax would come under the head of "Incomes of over £5,000." This, of course, was a large sum of the whole money; and if the large incomes upon which this additional taxation would be levied were held by a few individuals, it was perfectly obvious that, regarding the income-tax as a whole, the effect of making the tax unpopular would be very small. It would be a tax upon the luxury and superfluity of a few individuals and, as far as it went, might be a relief to the ordinary income-tax payer and make the tax as a whole more popular; in fact, this was the argument of the Member for West Bristol, who urged that the question of the graduation of the income-tax necessarily forces itself to the front when you are making the income-tax more unpopular by levying it at a higher rate in times of peace. It was alleged that this tax would be very unpopular among the people paying it and that it would be very difficult to discover the incomes which would have to be taxed under this proposal. He admitted that he saw no way in which they could be assessed except originally by the declaration of those who possessed them. Publication was a very important part of it, because there would be a fair number of people whose human nature would lead them to declare in order to have the credit of having big incomes. His hon. friend said they could to an extent test what rich men's incomes were by' public records. If a man was living in this country and was in a high and important position, he would be chary of doing anything which would hold him up to public opprobrium by avoiding the tax, and the fact that they would be able to check the returns that were made would make it very unlikely that any large number of rich men would seriously try to avoid the tax. He did not, therefore, think there was any insuperable objection to raising the tax in this way. The last time the right hon. Gentleman spoke about this tax he said that the Commissioners of Inland Revenue put the amount of incomes subject to graduation at one-fifth of the total incomes subject to taxation, and he calculated, taking the average graduated tax at 6d. on incomes of over £5,000, that the tax would yield £3,000,000 additional. They then advised him that they would have to deduct £750,000 for evasions. He could not understand the rest of his speech, because later on he said that, making these deductions, the possible gain would be reduced to £1,500,000.


I said in the first place that you would have to allow £750,000 for legitimate avoidance and that then you would have to allow for evasions, illegitimate avoidance of the tax. The yield of the tax would then be reduced to £1,500,000.


said this meant that actually half of the tax would not be declared, if the sum left would be an additional tax of £1,500,000. Of course, without further technical evidence he did not in the least accept this statement. But the Chancellor further argued that there would only be an addition to the total returns of £1,500,000, and added "That is a trifle not worth having." He (Mr. Trevelyan) objected to that attitude altogether. Surely £1,500,000 was worth having in the present financial straits. What he desired to insist upon was that they ought not to be prepared to take as final, in so important a case, calculations which had been put forward and which the Chancellor of the Exchequer refused to justify by investigating. Why did he burke inquiry if he was so certain of his position? The truth of the matter was that the right hon. Gentleman knew it would be a very serious thing for himself and the Party opposite, because it would upset the financial coach. He avoided the question because it was opposed to the policy to which he was friendly. The right hon. Gentleman urged that they must go on under this excessively high standard of indirect taxation because he wished it to go forth that the Government could not get anything more from higher direct taxation. The one point upon which their financial policy turned was the availability of sources of direct revenue. They were bound on the Opposition side of the House to seek new sources of direct revenue, and every source of revenue ought to be probed before they resolved to go in for permanent taxation upon the food of the people. They ought to be certain that they had tapped every source of revenue from vested interests and monopolies before adopting a policy which the Government had secretly befriended.


said he regretted that the hon. Member for Elland had brought into the subject a question of Party.


said he had only brought it in with regard to the refusal of the right hon. Gentleman to hold an inquiry.


said he had raised the question of this system of taxation on many occasions, and he had always felt that the poorer classes paid more in proportion to their incomes than the rich. This was unavoidable so long as they taxed alcohol, and so long as people drank alcoholic liquors excessively. With regard to the income-tax in recent years there had been many changes,and although he used to think that the rich ought to pay a larger share a great difference had been brought about by the introduction of the death duties. Incomes might be divided as being derived from two great sources. The first class was the industrial incomes representing the amounts earned from day to day. He did not think it was desirable to put an excessive tax upon any income that a man earned by his own industry. The great thing they all wanted to do was to promote industry. It was desirable to encourage persons by their industry to earn large incomes, because in that way they would be promoting the prosperity of the community. The second great source of income was what he called spontaneous incomes derived from investments which were distributed in a variety of ways over the community. Many years ago he urged that there should be a different tax upon spontaneous and industrial incomes. The man who obtained his income as a doctor, a barrister, or a lawyer, had to pay he same tax as the man who derived his income from investments, and that was unfair. He had frequently urged that there should be a different tax for those two great classes of incomes, but he had never been able to get any Chancellor of the Exchequer to agree with him. If a man inherited £1,000,000 he paid, calculated at 8 per cent., the sum of £80,000, and if he enjoyed his inheritance for twenty years the tax at 4 per cent. worked out as if he paid £5,888 a year for his life, and that worked out exactly at 3s. 2d. in the £ income-tax upon the balance of the income derived from that £1,000,000. Roughly speaking the man was paying 3s. 2d. of income-tax in addition to the income-tax of 1s. claimed under this Budget. He thought that was the best and wisest form of graduating the income-tax. It did not burden the man who was engaged in the promotion of enterprise, but when he left his fortune it was taxed in this way, practically amounting to a large income-tax. He would take the other extreme. If a man succeeded to £10,000 there would be £300 paid to the State in death duties. In the course of twenty years, instead of paying 3s. 2d. income-tax he would pay, of course, a very much smaller amount. It would work out at 1s. 2d. in the £ in addition to the ordinary income-tax. This indicated that the present system worked very fairly, and had adjusted to a great extent many anomalies which were certainly prominent before the passing of the Act.

He did not wish to enter into the great difficulties connected with a graduated income-tax. He agreed that theoretically there was a great deal to be said for it, but he was satisfied that there were practical difficulties in the way of carrying it out. Substantial justice had, he thought, been done by the death duties. He did not for a moment say that the necessity might not some day arise for revising the scale formed by the right hon. Gentleman the Member for West Mon-mouthshire. Millionaires were becoming so common that they should be looked after more carefully. Still he thought the principle was fair, and it would be a mistake to introduce any system of graduating the income-tax which would lead to great evasion, to harassing inquiries, and to the tax becoming objectionable and disliked by different classes of the community, because they would have to investigate everybody's means, and by so doing they would do harm by making the tax more unpopular than it was under the present system. He was anxious to see the burden of taxation more fairly adjusted on the shoulders of different classes and individuals, but he thought this scheme would not be so beneficial as perhaps a more careful system of death duties would be.

SIR EDWARD GREY (Northumberland, Berwick)

said that those of them who were in the House in 1894 might all feel that it was worth while living ten years more if only to listen to the speech of the hon. Member for North Islington. It was the best example he had ever heard of the proverb that it was never too late to mend. The hon. Member in his interesting and non-partisan speech had examined the relation of the existing death duties to the question of the graduation of the income-tax. The graduation as between earned and unearned incomes was, however, only one part of the question, and he thought there was a further case still for examination. The speech of the hon. Member had indeed rather strengthened the feeling that was in his mind before, that the time had really come for some public inquiry into this subject. Of course the Chancellor of the Exchequer and any Government started from the principle that graduation was not desirable. From their point of view the case against any inquiry was complete, but he thought that a very large number of people started from the point of view that graduation was desirable if practical means of carrying it into effect could be found. A number of methods of graduating the income-tax could be suggested. They had heard four that afternoon, including that mentioned by the Chancellor of the Exchequer of greatly extending the system of exemptions and abatements. The right hon. Gentleman said that it would involve more hard work upon an already hardworked department, but, though that was true, it would be possible to increase the staff. The extension of exemptions and abatements was clearly practicable without altering the present system of collection at the source, and the plan proposed by his hon. friend the Member for Elland was also practicable. He admitted that he was impressed, as every one must have seen impressed, by the fact that all who went to the Treasury came out strongly impressed by the practical difficulties in the way of graduating the income-tax, but he did not see why these objections should not be brought into the open. He did not see what objection there was to having a Committee of inquiry which would really go into the whole question. It was true that some anomalies might be created if they distinguished between earned and unearned incomes; but they had all these anomalies at present, and what weighed with him was the question, not whether they would get rid of all anomalies, but whether they could not lessen the existing anomalies. The present system admittedly created tremendous anomalies and in many cases very great hardship, and, at any rate, by an extension of the system of exemptions and abatements, or by some such system as the hon. Member for Elland advocated, they might lessen those anomalies. The sooner the Government of the day agreed to some Committee of inquiry the better it would be for the future of the income-tax. If the Committee reported adversely they would know that it was only after a more complete investigation of the subject than had ever been held; but his opinion was that such an inquiry would result in a Report which would show that more than one scheme of graduating the income-tax was feasible and might be desirable.


said that the hon. Member for Islington and the Chancellor of the Exchequer had quoted the death duties as being an answer to the contention of hon. Members on that side of the House. The death duties were on the whole exceedingly well calculated to make the necessary differentiation between earned and unearned income. But the question of graduation was a very different thing. On both sides of the House they were agreed that differentiation was necessary and desirable. A man who had an earned income, more or less precarious, dependent on his health and capacity, was in a different position from a man whose income was derived from land or from capital and was a continuous income. And the former had to lay by money for future eventualities and for his children, while the latter had his land or his capital behind him and was not obliged to save. It was necessary that the income of the first should be taxed less than the income of the second. That was done by the death duties. A man who inherited an estate which had paid duty to the extent of 8 per cent., had lost 8 per cent. of his capital, and. therefore 8 per cent. of his income. This was equivalent to an income-tax of 1s. 7d. in the £, so that practically he paid 2s. 7d. in the £ on his income while the recipient of an earned income of an equal amount paid only 1s. The death duties, no doubt, applied the principle of graduation. But the principle of graduation ought to apply to earned incomes just as much as to unearned incomes. The Chancellor of the Exchequer had used an argument which did not carry conviction. The right hon. Gentleman said that if they wished to carry this principle to its logical conclusion they must have one tax on the man with a large family and another tax on a man with a small family. Of course, any proposal could be met by a reductio ad absurdum; but because they could never secure exact justice in the incidence of taxation that was no reason why they should tolerate a gross injustice. The Chancellor of the Exchequer also agreed that the proposals of his hon. friend would result in a loss of revenue rather than in an increase. But this, of course, was due to the fact that the rules of the House forbade a Private Member proposing an increase in the total of taxation. But the right hon. Gentleman would not dream of asserting that it was impossible to devise any graduated scale which would increase the revenue. This Amendment was put down merely in order to raise discussion, and to take the opinion of the Committee on the principle of graduation of the income-tax. They were not tied to details. The Chancellor of the Exchequer, at any rate, carried conviction when he said it was impossible to give up the collection of income at the source. If that system were abandoned it would cause a considerable loss of revenue, but it would be quite possible to adopt the system of graduation without abandoning that of collection at the source. At the present time, through the system of abatements, they had a carefully graduated system of income-tax. A man with an income of £150 paid nothing whatever; the tax on £250 was 1.8 per cent.; on £350 it was 2.7 per cent.; on £450 it was 3.3 per cent.; on £550 it was 3.9 per cent.; on £650 it was 4.5 per cent. and on £700 and over it was 5 per cent. There they had a graduated scale of income-tax, ranging from nothing to 5 per cent. Why should it be impossible to extend that scale still further.

When the income-tax was first proposed in England it was violently opposed, because it was said that it would led to inquisitorial inquiry, to fraud, and to great expense in collection. They now found the disadvantages so small in comparison with the importance of the revenue raised that these objections no longer carried weight. Similarly in the future they might find the hon. Member for North Islington as loud in praise of this graduation as he now was in the case of the death duties, which he formerly opposed so strenuously. Graduation of income-tax existed in many other countries. It was successful in Prussia and many other German States, also in Austria, Sweden, Denmark, Switzerland, Victoria, South Australia, and New Zealand, and if in all those countries it was found practicable to levy a graduated income-tax, why should they believe, on the ipse dixit of the Chancellor of the Exchequer and of the Treasury, that such a scheme could not possibly be enforced. It was highly important that an effort should be made, if possible, to overcome the difficulties which might attach to this, as they necessarily attached to all forms of new taxation. If there was any desire to do justice in matters of taxation on the part of that Committee and the House of Commons, it must be recognised that the present system fell far short of what was desired. The impositions which Parliament laid upon the nation ought to be adjusted as closely as possible to the principle of financial equity, and the only principle that could guide them was that of equal sacrifice of ability to pay. An arithmetical equality in the rate of tax did not secure an equality of burden. Surely it was obvious that if they were to tax at the same rate in the £ incomes of £50, £500, £5,000, and £50,000 they would have no equality of burden. The man with £50 would be taxed upon his necessities, the man with £500 upon his comforts, the man with £5,000, would pay upon his luxuries, and the possessor of an income of £50,000 would be taxed nothing at all, except perhaps upon the pleasure of accumulating fresh stores of unused wealth. On a previous occasion during these discussions he had shown on official and other sound authority that the average amount paid by the working class in indirect taxation was at the rate of 1s. 7d. in the £ on their incomes, whilst on the higher incomes the rate was only 1s. in the £. We now had graduation, but it was graduation in the wrong way, and if hon. Members approached this question with an unbiassed mind and examined the problem of the comparative incidence of taxation they would see there was an overwhelming primâ facie case for an expert inquiry both as to the incidence of taxation on the various classes of the nation and also as to the practicability of a graduated income-tax.

* MR. SOARES (Devonshire, Barnstaple)

regretted that the hon. Member for the Flint Boroughs had received so unsympathetic an answer from the Chancellor of the Exchequer. It was, to his mind, a matter of the greatest importance, and he sincerely hoped before the debate concluded the right hon. Gentleman would be able to see his way to alter the line he had taken up and give the inquiry which was asked for. When considering the imposition of a new tax or when reconsidering an old tax the Committee ought to be guided by two main ideas. They ought first to consider whether the tax when imposed would be regarded as a fair and just tax by those who had to pay it, and, secondly, they should consider whether the burden would fall equally on all. Unless the income-tax was graduated neither of these principles would apply to it, and they did not apply to it in its present condition. In its present form the income-tax could not be said to be fair as between an income of £1,000 a year and an income. of £10,000 a year, nor could it be said to be fair as between a struggling professional man and a millionaire. The question of differentiation would however be brought up later in the debate on a different Amendment and the only question now under discussion was a question of the graduation of income-tax—whether it was right that there should be a graduation of the income-tax as it existed at the present time, or whether a man with £800 a year should pay the same tax as a man with £80,000 a year. He would remind the Committee that during the war the income-tax amounted to no less than one-sixteenth of the income. Most of the Committee knew what a burden that was on an income of £800 a year. A man with an income of £800 a year had to pay £50 income-tax, whilst a man with £80,000 paid £5,000. They knew in the case of an income of £800 such a tax as £50 meant many sacrifices as, for instance, inferior education for one's children or the foregoing of the annual holiday at the seaside, but it was a very different thing in the case of rich men. The income-tax of 1s. 3d. in the £ at the time of the war made no difference to them; some might have taken a grouse moor instead of a deer forest as being cheaper, or curtailed their subscriptions to the Party funds, but they had not to go without necessaries; their wives and children did not suffer, nor did their own health.

The fact of the matter was that a graduated income-tax would mean a tax on luxuries. The right hon. Gentleman the Chancellor of the Exchequer had some time ago expressed the opinion that it was impossible to have a tax on luxuries under our present fiscal system, but although he was being shown that it was quite possible, the right hon. Gentleman would not even grant an inquiry into the matter. It was said that if a graduated income-tax was put in force it would mean that a declaration of income would have to be made by every man before a committee. It might not be the pleasantest thing to do, but it must be remembered that business men now had to make a declaration of income and they usually made that declaration in the town in which they carried on their business, and the disclosure of the fluctuations of the income of a business man was of infinitely more importance than the disclosure of the income of a man who lived on the produce of his investments. He did not think the Committee ought to be so very over-scrupulous in their dealings with wealthy men. It must be remembered that this Amendment, if accepted, only affected in its present form incomes of over £5,000 a year, and as the right hon. Gentleman the Member for West Bristol had said when he was Chancellor of the Exchequer that there were not more than 10,000 people with incomes of over £5,000 a year, it would not throw a great amount of work on the department. Doubts had been expressed as to the practicability of the scheme, but it had been pointed out with truth that a similar scheme was actually in force at the present time in many European countries and in Australia, and no doubts ought to be expressed, nor any condemnation passed, on a scheme as being impracticable which was, as a fact, in force and working at the present time. At any rate, a case for inquiry had been made out.

The history of this matter was that the hon. Member for the Elland Division brought in a similar proposal in 1902, and the then Chancellor of the Exchequer, the right hon. Gentleman the Member for West Bristol, expressed the opinion that there was a great deal to be said both in favour of graduation and against it. The right hon. Gentleman, however, promised to consider whether there should be an inquiry or not and upon that the hon. Member for Elland withdrew his Amendment. In 1903 the hon. Member for Flint Boroughs brought forward a similar Amendment, which, however, received very little sympathy from the right hon. Gentleman the Member for Croydon, who had then succeeded the right hon. Gentleman the Member for West Bristol as Chancellor of the Exchequer. The right hon. Gentleman the Member for Croydon thought the difficulties in the way were insuperable. In that debate, however, the right hon. Gentleman the Member for West Bristol intervened, and stated that he considered the question a fair subject for discussion, and he expressed himself as being anxious that the inquiry of the Committee to be appointed should extend not only to the question of abatements but to the question of graduation generally. The subject was pre-eminently one for inquiry. Not only was there the high financial authority of the right hon. Gentleman the Member for West Bristol in favour of inquiry, but there was a practically unanimous demand from the Opposition in the matter. If the inquiry did no good it could not possibly do any harm. Should the proposal be proved impracticable the matter would be at an end, whereas if the decision were the other way a new scheme could be introduced by which the income-tax would be placed on a fair and equitable footing.


said that he was not at present convinced that the income-tax could be graduated from top to bottom, but he would like to see it done if possible, and therefore he would welcome an inquiry in order to ascertain whether, without destroying the basis of the income-tax, the impost could be graduated to a much greater extent than at present, if not indeed from top to bottom. He did not believe that any Committee would report in favour of altering the present general system of collecting the tax at the source, but it was very possible that means might be found of some further graduation than was now made. The present income-tax had been in force about sixty years; it was introduced by Sir Robert Peel purely as a temporary measure for three years, and the wording of the Act of 1803 was adopted almost without alteration. The income-tax was thus being worked under an Act 100 years old, and practically no changes had been made. Consequently there was room for, and a probability of great advantages accruing from, an inquiry. In June, 1902, when an inquiry was suggested, the right hon. Gentleman the Member for West Bristol gave a sympathetic reply, and, at a later stage used the words— The hon. and learned Member for Dumfries referred to what he and others had said as to the practical difficulties—he might use even a stronger word—of a graduated income-tax. He asked if some inquiry might not be instituted into the matter. That seemed to him a suggestion well worthy of consideration, and he promised to give it that consideration. After this sympathetic speech the Motion of his hon. friend was withdrawn. Last year, on 22nd June, 1903, the ques- tion again arose on the Motion of his hon. friend, and the then Chancellor of the Exchequer, the Member for Croydon, gave a fairly sympathetic answer, stating that it was intended to appoint a Committee of the House and that the right hon. Gentleman the Member for West Bristol would be chairman of that Committee. In the course of the debate, the right hon. Gentleman said he was anxious that the inquiry should extend not only to the question of abatements but also to the practicability of graduation. He did not himself feel that it was practicable but, if it were, it would be a good thing for everybody. Again, on the strength of those words the Motion was withdrawn. Naturally the right hon. Gentleman the Chancellor of the Exchequer was not bound by these words, but in view of the fact that a gentleman of such pronounced financial authority as the Member for West Bristol was in favour of a Committee of inquiry by which either some practical scheme might be discovered or satisfaction given, he trusted the right hon. Gentleman would view the matter favourably.

* SIR CHARLES DILKE (Gloucestershire, Forest of Dean)

said this matter was one on which he felt strongly, and on which he should not like to give a silent vote. The right hon. Gentleman the Member for West Bristol had been directly appealed to on the strength of a former debate in which he stated his extreme desire to arrive at a juster principle of administering the income-tax and his sympathy with the principle of graduation. He said he thought it was practicable in the case of the death duties and house tax, but he did not think it was practicable in the case of the income-tax. Then followed those expressions of desire for inquiry in order to prove whether he was right or not. This was a very weighty pronouncement, but in all the allusions made that afternoon to the practicability of dealing with the income-tax by graduation, the actual difficulty had been rather suggested than faced. The reason for having it in their minds was that it affected not only graduation in the higher portions of the scale, but the same difficulty affected abatements at the present time; and if some of them were right in thinking that the practical difficulty of getting at the income at the source, so far as it affected graduation in the highest scale, was a real one, it was a real one also with regard to the abatements now being made. It was a difficulty which arose with regard to the man not very well known personally; it did not arise in the case of Peers and men of well known names, but in the case of men bearing common names—there were three or four—shopkeepers in London, who also owned farms in Wales and had investments. The difficulty, of course, was to find out whether these were the same person. It could only be proved by the man's own declaration; and the man's own declaration could not be taken unless it were accompanied by publication. But this difficulty existed with regard to abatements at the present time; and, if it were a real difficulty, they must be being defrauded on the lower portion of the scale in the case of these abatements, and they would be still worse defrauded if the suggestion of the hon. Member for the Berwick Division were adopted, and these abatements were extended. This in itself formed a case for inquiry, because it was no speculative proposal which raised the difficulty; the difficulty was already before them. The right hon. Gentleman the Member for West Bristol, with his great authority, knowledge, and consideration of his subject, saw that it was raised by the matter of abatements, and that it ought really to be a portion of the inquiry of the present Committee. It had not been, and he was afraid ought not to be, because although his right hon. friend was on that Committee, it was a small Committee to which a matter of this sort could not be referred with that satisfaction they would wish to see. Therefore, it must be a fresh and a larger Committee. They had come not only very nearly to pledges, but in the nature of the case there was ground for inquiry.

The question of graduation had lately been discussed by all those Continental countries where it was now proposed to introduce the income-tax for the first time, and they had discussed the question of the man's own declaration or collection at the source. Those who attached the highest importance to collection at the source knew the necessity of not tampering with that principle unless there were to be publication. But in the United States during and immediately after the war the principle of a graduated income-tax was pushed very far indeed; and it was accompanied by universal declaration. Unless they published the figures they could not have a graduated income-tax; but the time had come when they would have to make up their minds either to increasing the death duties or to increased taxation on large incomes. As regarded revenue, the American experiments showed that they would get a larger revenue than expected. He was convinced that the difficulty could and would be faced either by increasing the death duties or by public declaration, as in the United States; and, unless they were prepared to inquire into the matter, they would find that the same difficulty affected abatements and that they would be defrauded at the lower scale.

MR. BROADHURST (Leicester)

said that owing to his incapacity to deal with figures to the extent necessary he was unable to formulate his views in detail, but for many years he had advocated the adjustment of the income-tax according to the means of the citizen. Some years ago the hon. Member for Flint Boroughs produced a scheme which seemed to be perfectly reasonable. The late Chancellor of the Exchequer never turned a deaf ear to his appeals, and it was from the right hon. Gentleman that they got a promise that the matter should be investigated by a Committee which the present Chancellor had appointed. From that Committee he had great hopes that a considerable measure of justice would follow. There was no doubt that a great body of people at present complained of the unequal system of taxation. Every man should make a contrtribution equal to his ability to pay. In the case of the workman who earned £100 a year they could levy a direct tax of 5 per cent. upon his income. He would like to see a 5 per cent. tax levied upon all incomes, whether it be £1,000 or £10,000. Incomes from investments should be taxed at a higher rate than incomes derived from industry. He could not understand for the life of him why the Chancellor of the Exchequer would not agree to the appeal for a Committee or Commission to go exhaustively into this question of taxation in order to see whether it could not be adjusted so as to place the burden more equally than it was at present. He hoped the Chancellor of the Exchequer would agree to the appointment of this Committee, because he could obtain the services of the highest authorities in the country upon finance, and he could call experts from the Board of Trade, Inland Revenue, the Treasury, and other Government Departments, all possessing great knowledge of our system of taxation. Let them have a full, free, and impartial inquiry, which would give satisfaction to that large body of the community who complained of the injustice of the present basis of taxation. He thought that the time had arrived when an exhaustive inquiry should be held into this question.

MR. BRYN ROBERTS (Carnarvonshire, Eifion)

said that whatever scheme was adopted must be some scheme which did not alter the present method of collection. The right hon. Baronet the Member for the Forest of Dean was of opinion that it was impossible to achieve this without the publication of the names of all persons who claimed abatement, and he should regret any such publication, which would be open to the insuperable objection that the number would be so large. The opposition to publication would come quite as much from persons with small as with large incomes. Take a person with an income under £400 derived from incomes in public companies. It was perfectly obvious that it was impossible for the secretaries of companies to make proper deductions in the case of persons who were entitled to abatements, because they did not know the income of the various shareholders. One shareholder in a company might have £20,000 a year, and the income of another might amount to £390. The first was not entitled to an abatement, the second was. The abatement was obtained by making a private representation to the Treasury authorities, and only the person demanding the abatement was put to inconvenience and trouble. He failed to see that there was any substantial difficulty in this matter. If a Committee were appointed to make an investigation of the subject they could see what the practical difficulties were. The same arrangement for allowing abatements would apply in the case of a person deriving his income from land. It would, in his opinion, be a practicable and a successful method.


said the principle of a graduated income-tax seemed to him to be not only eminently false, but really to suggest to the State to enter upon a career of plunder with the avowed object of preventing people earning more than a certain amount of income. Yes, because when they had earned more than a certain amount of income the tax was to increase progressively, a shilling here and two shillings there, and the result of that would be practically to prohibit by a process of taxation on the part of the State the earning of more than a certain sum. That was entirely contrary to public policy. Their policy should be to encourage people to earn by honest means as much as they possibly could. [Cries of "Oh."] Certainly. He did not know whether that was applause or jeers. If they were jeers they were greatly misplaced, for surely it should be the object of the State to develop the energies of all its citizens. He did not know a better means of developing them than by giving the people the opportunity of earning as much as they honestly could. It was extremely presumptuous to propose in this House a system of graduated income-tax in the face of the repeated declarations of the Inland Revenue authorities, who knew what they were talking about, and of successive Chancellors of the Exchequer, that the system was impossible. [An HON. MEMBER: No.] He thought it was impossible.

The Committee was no doubt aware the two-thirds of the whole of the income-tax was levied by deductions. In 1901–3l the total yield of the income-tax was £41,000,000, and of that sum £27,500,000, as nearly as possible, was levied by deductions. How were they going to apply any graduated scale to the system of deductions? If they were going to, graduate at the source, as they collected at the source, they would require an army of clerks to ascertain, assuming that they had the means of ascertaining, what the exact income of each person was and what was the exact deduction which should be made from each dividend warrant or certificate. There were £27,500,000 levied by deductions. Assuming that the maximum was 3s., they would have to levy not £27,500,000, to which they were entitled, but £80,000,000. That was to say, they would he levying £80,000,000, knowing that they were levying £50,000,000 more than they were entitled to. Was that a conceivable state of things? And what would happen? Each person who had paid more than he ought to have paid would come to the Inland Revenue Office,where there would have to be another army of clerks, in order to make his case good for relief. This was really a fantastic proposal, only worthy of a comic opera, and which the country would not endure for a year. The system of abatements which applied to the income-tax between £160 and £700 cost the country in the year 1901 no less than £5,799,000—which was a much larger sum than most hon. Members of the Committee were aware of.

The theory of a graduated income-tax was not only impracticable but it would be unjust. Why should they alter the rate that must be applied to the income-tax? It was the amount of the income that was the test of the amount of the tax that should be paid. A consistent single percentage was the true measure of the tax. Where the unfairness was in that he had never been able to perceive. If they were to charge a man who had £10,000 a year ten times more than a man who had £1,000 a year, that he should call unfair. The right hon. Baronet the Member for Forest of Dean suggested that everybody should make a declaration. He presumed that even then the right hon. Gentleman would not countenance a scheme whereby the maximum of tax should be levied from everybody. As he understood the right hon. Baronet's proposal, if they first went to everybody for a declaration of their income, that would knock on the head the system of deductions. Did the right hon. Gentleman think that the people of this country would be willing to accept such a system? This was a commercial country. Competition was exceedingly keen, and there was a necessity for keeping secret commercial men's incomes. Any betrayal of a business man's income might be ruin to that business. The right hon. Baronet knew how strong the objection was felt in France to the publication of a man's income. Such a system had never been introduced in France and never would be. It was the very rarest thing in the world for the Inland Revenue to get a real declaration of a man's total income. He believed that the present system of the income-tax was the only true and possible one, and that any scheme of graduation would result in serious injustice to the individual and a very great injury to the Exchequer.


said he could not agree with the hon. Member that a heavier tax on larger incomes discouraged the earning of those larger incomes. Let them take an arithmetical proof. He took it that a man who had an income of £10,000 a year, and who paid 1s. income-tax, would have £9,500 a year to live upon; and a man with £20,000 a year with the graduated tax would have £16,000 left to live upon. He could not imagine for one moment that that would not be a sufficient inducement for a man to increase his income if he elected to do so. What they wanted to consider at the present moment was the view which the Chancellor of the Exchequer took of this case. The right hon. Gentleman had not made it clear whether his objection to an inquiry was based on the principle of graduation or on the method and the difficulties of applying that principle. He could not imagine for one moment that the right hon. Gentleman was of opinion that the income-tax, as it at present stood, was perfect. He understood that the hon. Member for King's Lynn thought it was perfect.


Oh, no! On the contrary, he thought it was imperfect in many respects, especially in regard to abatements.


said he was sorry he had misunderstood the hon. Member. What they wanted to know was whether the Chancellor of the Exchequer was so satisfied with the present system of levying the income-tax that he did not wish an inquiry such as had been suggested that afternoon, not for the first time in the House of Commons. The reference to the Committee that had been appointed was extremely narrow. It dealt practically only with abatements and evasions. These were of importance, but the proper method of procedure was to consider whether they should make the income-tax on the present basis produce as much as possible before they adopted another basis. Surely they might ask whether the Chancellor of the Exchequer had not a broader basis of inquiry to suggest than that suggested by the officials at the Treasury. As a matter of fact the predecessor of the right hon. Gentleman, the right hon. Gentleman the Member for West Bristol, had a more open mind on the matter. As he understood the case, the right hon. Gentleman the Member for West Bristol was prepared to make an inquiry and did not close the door to the possibility of graduation. The right hon. Gentleman the Member for West Bristol was not unsympathetic to an inquiry being held, although he himself stated that he thought it would not produce any good result. Why should there be a difference on this matter between the Chancellor of the Exchequer and the right hon. Gentleman the Member for West Bristol? The right hon. Gentleman the Member for Croydon was also prepared for an inquiry. He gathered that the Chancellor of the Exchequer had not taken into his calculation the success which this system had earned in other parts of the world. Really in the Australian Colonies he was perfectly sure there would be no change from the system of graduation so far as the broad principle of graduation was concerned. In Victoria they not only had graduation, but differentiation. In Queensland and New Zealand a distinction was also drawn between incomes derived from personal exertions and those derived from property, and finally, the best example of all of success in graduation was to be found in Prussia, where a declaration had to be made, and yet the system had been so successfully adopted that they graduated to an enormous extent, from .6 per cent. to 4.0 per cent. The machinery which was adaptable to Prussia was not altogether adaptable to the United Kingdom. But why on earth should not an inquiry be made on the merits of the subject?

The tax should be made remunerative and be relieved of its unpopularity. He would not vote for any change which would abandon the collecting of the tax at the source. An extension of the present system might be made popular, and that was what they were aiming at. The unpopularity of the tax was a great consideration, and he ventured to say that its unpopularity was one of the gravest dangers this country had to face, that being chiefly due to its inquisitorial character. The men who objected most strongly were those whose incomes were derived from their personal exertions. The people who felt the tax most were those with small incomes, and professional men who dared not admit that their incomes had fallen from say, £5,000 to £1,000, because of the fear of ruining their reputations. He had no doubt that declarations had sometimes been made on the American system of overstating incomes in order to preserve status. A man with an income in excess of £5,000 very seldom felt any personal inconvenience from the addition of one penny or twopence to the tax. The same problem as was now before the House had to be met last year, but an enormous amount of information not then available had now reached them, and they had been able to compare the methods of other countries with their own. On these grounds the Chancellor of the Exchequer would be well advised to grant the desired inquiry.

MR. CHARLES ALLEN (Gloucestershire, Stroud)

said that according to the view of the matter put forward by the hon. Member for King's Lynn, we had been unconscious blunderers for a number of years. That being so it was necessary to have an inquiry in order to show where we had been ruined. On both sides of the House there was a very strong feeling that the burden ought to be graduated for the back that had to bear it. In the country there was a similar feeling that the income-tax ought to be further graduated. A former Chancellor of the- Exchequer, the right hon. Gentleman the Member for West Bristol, had declared himself in favour of it, and from his own point of view for his own sake, and for his own popularity, the Chancellor of the Exchequer ought to grant this inquiry. If he yielded to this demand he would find that his Budgets would find more favour with the House and would pass through much more quickly.

MR. COURTENAY WARNER (Staffordshire, Lichfield)

said he was one of the Members who pressed this question in 1903, and he fully recognised the difficulties surrounding the proposal. Those difficulties had been overcome in other countries, and on his side of the House they were not asking that the Chancellor of the Exchequer should swallow the Amendment just as it stood. They only wanted a complete inquiry into the incidence of the tax, and they wanted the

rich man to hear a rather larger proportion than the poor man had thrust upon him. It was not that they wanted to penalise the rich man, but that he was better able to bear the tax than was the poor man and because the latter in an indirect way paid much more in proportion than the rich man. The question of the extent of the graduation was a matter for future inquiry, and he appealed to the Chancellor of the Exchequer to accede to their request.


said had the right hon. Gentleman assented to the request made to him by hon. Gentlemen on both sides of the House and acceded to an inquiry, he would gladly have withdrawn his Amendment, but under the present circumstances he was compelled to press it.

Question put.

The Committee divided:—Ayes, 165; Noes, 234. (Division List No.250.)

Abraham, William (Cork,N.E) Donelan, Captain A. Joyce, Michael
Arbaham, William (Rhondda) Doogan, P. C. Kearley, Hudson E.
Ainsworth, John Stirling Duncan, J. Hastings Kitson, Sir James
Allen, Charles P. Dunn, Sir William Labouchere, Henry
Asher, Alexander Edwards, Frank Lambert.George
Atherley-Jones, L. Elibank, Master of Langley, Batty
Barlow, John Emmott Ellice, CaptEC(SAndrew'sBghs Law, Hugh Alex.(Donegal,W.)
Bayley, Thomas (Derbyshire) Ellis, John Edward (Notts.) Lawson, Sir Wilfrid (Cornwall)
Beaumont, Wentworth C. B. Emmott, Alfred Leamy, Edmund
Bell, Richard Esmonde, Sir Thomas Leese,Sir Joseph F.(Accrington
Boland John Evans, SirFrancisH(Maidstone Levy, Maurice
Bolton, Thomas Dolling Eve, Harry Trelawney Lloyd-George, David
Brigg, John Farquharson, Dr. Robert Lough, Thomas
Broadhurst, Henry Fenwick, Charles Lundon, W.
Brown, George M. (Edinburgh) Ferguson, R. C. Munro (Leith) Lyell, Charles Henry
Brunner, Sir John Tomlinson Flavin, Michael Joseph Macnamara, Dr. Thomas J.
Buchanan, Thomas Ryburn Flynn, James Christopher MacNeill, John Gordon Swift
Burns, John Foster, Sir Walter (Derby Co.) MacVeagh, Jeremiah
Burt, Thomas Freeman-Thomas, Captain F. M'Arthur, William (Cornwall)
Buxton, Sydney Charles Gladstone, Rt.HnHerbertJohn M'Crae, George
Caldwell, James Goddard, Daniel Ford M'Kean, John
Cameron, Robert Goulding, Edward Alfred M'Kenna, Reginald
Campbell, John (Armagh, S.) Grant, Corrie M'Killop W. (Sligo, North)
Causton, Richard Knight Grey, Rt. Hon. Sir E. (Berwick) M'Laren, Sir Charles Benjamin
Cawley, Frederick Haldane, Rt. Hon. Richard B. Markham, Arthur Basil
Channing, Francis Allston Harcourt, Lewis V.(Rossendale Mitohell, Edw.(Ferinanagh., N.)
Condon, Thomas Joseph Harwood, George Montagu, Hon J.Scott(Hants.)
Craig, Robert Hunter (Lanark) Hayedn, John Patrick Morgan, J. Lloyd (Carmarthen)
Cremer, William Randal Healy, Timothy Michael Moulton, John Fletcher
Crombie, John William Hemphill, Rt. Hon. Charles H. Murphy, John
Crooks, William Higham, John Sharpe Nannetti, Joseph, P.
Cullinan, J. Hobhouse, C. E H. (Bristol,E.) Nolan, Joseph (Louth, South)
Davies, Alfred (Carmarthen) Holland, Sir William Henry O'Brien, James F. X. (Cork)
Davies, M. Vaughan-(Cardigan Hope, John Deans (Fife, West) O'Brien, Kendal(Tipperary Mid
Delany, William Horniman, Frederick John O'Brien, Patrick (Kilkenny)
Devlin,Chas. Ramsay (Galway) Hutchison, Dr. Charles Fredk. O'Connor, James (Wicklow,W.)
Devlin, Joseph (Kilkenny, N.) Jacoby, James Alfred O'Kelly, Sames(RoscommonN.
Dilke, Rt. Hon. Sir Charles Johnson, John (Gateshead) O'Malley, William
Dobbie, Joseph Jones, William (Carnarvonshire O'Shaughnessy. P. J.
O'Shee, James John Russell, T. W. Tomkinson, James
Parrott, William Samuel, Herbert L. (Cleveland) Toulmin, George
Partington, Oswald Schwann, Charles E. Ure Alexander
Paulton, James Mellor Shackleton, David James Wallace, Robert
Pease, J. A. (Saffron Walden) Shaw, Charles Edw. (Satfford) Walton, JohnLawson(Leeds,S.)
Pemberton, John S. G. Shaw, Thomas (Hawick B.) Walton, Joseph (Barnsley)
Philipps, John Wynford Sheehan, Daniel Daniel Warner, Thomas Courtenay T.
Pirie, Duncan V. Sheehy, David Wagon, Eugene (Clackmannan)
Power, Patrick Joseph Shipman, Dr. John G. Whiteley, George (York, W.R)
Price, Robert John Soares, Ernest J. Whittaker, Thomas Palmer
Priestly, Arthur Stanhope, Hon. Philip James Wilson, John (Durham, Mid.)
Rea, Russell Strachey, Sir Edward Woodhouse,SirJ.T.(Huddersf'd
Rickett, J. Compton Sullivan, Donal Young, Samuel
Roberts, John Bryn (Eifion) Tennant, Harold John
Roberts, John H. (Denbighs.) Thomas, Sir A.(Glamorgan,E.) TELLERS FOR THE AYES.—Mr.
Robertson, Edmund (Dundee) Thomas, DavidAlfred(Merthyr Herbert Lewis and Mr.
Rollitt, Sir Albert Kaye Thompson, DrEC(Monagh'n,N. Trevelyan.
Agg-Gardner, James Tynte Craig Charles Curtis (Antrim S. Hay, Hon. Claude George
Agnew, Sir Andrew Noel Cripps, Charles Alfred Heaton, Arthur Howard(Hanley
Anson, Sir William Reynell Cross, Herb,Shepherd(Bolton) Heath, James (Staffords. N.W.
Arkwright, John Stanhope Crossley, Rt.Hon. Sir. Savile Heaton, John Henniker
Arnold-Forster, Rt.HnHugh O. Cubitt, Hon. Henry Helder, Augustus
Arrol, Sir William Dalrymple, Sir Charles Henderson, Sir A. (Stafford, W.
Atkinson, Rt. Hon. John Davenport, William Bromley- Hermon-Hodge, Sir Robert T.
Bailey, James (Walworth) Denny, Colonel Hickman, Sir Alfred
Bain, Colonel James Robert Dickson, Charles Scott Hoare, Sir Samuel
Baird, John George Alexander Dimsdale,Rt. Hon.SirJosephC. Hobhouse,RtHnH (Somerset E
Balcarres, Lord Dixon-Hartland, SirFredDixon Hope, J.F.(Sheffield, Brightside
Baldwin, Alfred Dorington,Rt. Hon.Sir John E. Horner, Frederick William
Balfour,Rt.Hon. A. J.(Manch'r Doughly, Sir George Hoult, Joseph
Balfour,Rt.Hn.GeraldW(Leeds Douglas, Rt. Hon. A. Akers- Howard, Jn. (Kent, Faversham
Balfour, Kenneth R. (Christch. Doxford, Sir William Theodore Hozier, Hon.JamesHenryCecil
Banbury, Sir Frederick George Duke, Henry Edward Hudson, George Bickersteth
Bartley, Sir George C. T. Durning-Lawrence, Sir Edwin Hunt, Rowland
Bathurst, Hon. Allen Benjamin Dyke,Rt.Hon.Sir William Hart Jebb, Sir Richard Claverhouse
Bhownaggree, Sir M. M. Egerton, Hon. A. de Tatton Jeffreys, Rt. Hon. Arthur Fred.
Bignold, Sir Arthur Elliot, Hon. A. Ralph Douglas Jessel, Captain Herbert Merton
Bigwood, James Fardell, Sir T. George Kenyon, Hon. Geo.T.(Denbigh)
Bill, Charles Fergusson,Rt. Hn Sir J (Manc'r Kenyon-Slaney, Rt. Hon.Col. W
Bingham, Lord Finch, Rt. Hon. George H. Kimber, Sir Henry
Blundell, Colonel Henry Finlay, Sir Robert Bannatyne King, Sir Henry Seymour
Bond, Edward Fisher, William Hayes Laurie, Lieut.-General
Boulnois, Edmund Fison, Frederick William Law, Andrew Bonar (Glasgow)
Bousfield, William Robert FitzGerald, SirRobertPenrose Lawrence,Sir Joseph (Monm'th
Bowles, Lt.-Col.H.F.(Middlesex Fitzroy, Hon.EdwardAlgernon Lawson, JohnGrant(Yorks.N.R
Bowles, T. Gibson (King'sLynn Flannery, Sir Fortescue Lee, ArthurH(Hants.,Farehamn
Brassey, Albert Flower, Sir Ernest Lees, Sir Elliott (Birkenhead)
Brodrick, Rt. Hon. St. John Forster, Henry William Legge, Col. Hon. Heneage
Bull, William James Foster,Philip S.(Warwick,S.W. Llewellyn, Evan Henry
Burdett-Coutts, W. Galloway, William Johnson Lockwood, Lieut.-Col, A. R.
Butcher, John George Gardner, Ernest Loder, Gerald Walter Erskine
Campbell, Rt. Hn.J.A.(Glasgow Gibbs, Hon. A G. H. Long, Col. CharlesW(Evesham
Campbell,J. H. M.(DublinUniv.) Gordon, H.J. E. (Elgin & Nairn) Long, Rt. Hn. Walter(Bristol,S.
Carson, Rt. Hon. Sir Edw. H. Gore, Hon. S. F. Ormsby Lowe, Francis William
Cautley, Henry Strother Gorst, Rt. Hon.SirJohnEldon Loyd, Archie Kirkman
Cavendish,V.C. W. (Derbyshire Goschen, Hon. George Joachim Lucas, Co. Francis (Lowestoft)
Cayzer, Sir Charles William Graham, Henry Robert Lucas, ReginaldJ.(Portsmouth
Cecil, Evelyn (Aston Manor) Greene,Sir E W(B'ry SEdm'nds Lyttelton, Rt. Hon. Alfred
Cecil, Lord Hugh (Greenwich) Greene,Henry D. (Shrewsbury) Macdona, John Cumming
Chamberlain, Rt.Hn.J.A.(Worc Gretton, John MacIver, David (Liverpool)
Chapman, Edward Greville, Hon. Ronald Maconochie, A. W.
Charrington, Spencer Groves, James Grimble M'Arthur, Charles (Liverpool)
Clare, Octavius, Leigh Halsey, Rt. Hon. Thomas F. M'Iver, Sir Lewis(EdinburghW
Clive, Captain Percy A. Hardy, Laurence(Kent,Ashford M'Killop, James (Stirlingshire)
Cochrane, Hon. Thos. H. A. E. Hare, Thomas Leigh Majendie, James A. H.
Coghill, Douglas Harry Harris, F. Leverton(Tynem 'th) Martin, Richard Biddulph
Colomb, Rt. Hon. Sir John C.R. Haslam, Sir Alfred S. Maxwell,W.J.H.(Dumfriesshire
Colston, Chas. Edw. H. Athole Haslett, Sir James Horner Melville, Beresford Valentine
Cook, Sir Frederick Lucas Hatch, Ernest Frederick Geo. Mildmay, Francis Bingham
Milner, Rt. Hon.SirFrederickG. Ridley, S.Forde(BethnalGreen) Valentia, Viscount
Milvain, Thomas Roberts, Samuel (Sheffield) Vincent,Col.SirCEH (Sheffield)
Molesworth, Sir Lewis Robertson, Herbert (Hackney) Wanklyn, James Leslie
Moon, Edward Robert Pacy Rolleston, Sir John F. L. Warde, Colonel C. E.
Morgan,DavidJ.(Walthamstow Round, Rt. Hon. James Webb, Colonel William George
Morpeth, Viscount Royds, Clement Molyneux Welby, Lt.-Col.A.C.E.(Taunton
Morrell, George Herbert Sackville, Col. S. G. Stopford Welby,Sir Charles G.E.(Notts.)
Morrison, James Archibald Samuel,Sir Harry S(Limehouse Wharton, Rt. Hon. John Lloyd
Morton, Arthur H. Aylmer Sassoon, Sir Edward Albert Whitmore, Charles Algernon
Mount, William Arthur Scott, Sir S. (Marylebone, W.) Willoughby de Eresby, Lord
Mowbray, Sir Robert Gray C. Seely, Charles Hilton (Lincoln) Wills, Sir Frederick
Murray, Rt Hn A Graham(Bute Sloan, Thomas Henry Wilson,A.Stanley (York, E.R.)
Murray, Col. Wyndham (Bath) Smith,HC(Northumb.Tyneside Wilson, John (Glasgow)
Myers, William Henry Smith, RtHnJParker(Lanarks) Wilson-Todd, Sir W. H. (Yorks
Newdegate, Francis A. N. Stanley, EdwardJas.(Somerset) Wolff, Gustav Wilhelm
Nicholson, William Graham Stirling-Maxwell, Sir John M. Wortley,Rt. Hon. C. B. Stuart
O'Neill, Hon. Robert Torrens Stone, Sir Benjamin Wrightson, Sir Thomas
Peel, Hn.Wm.RobertWellesley Stroyan, John Wylie, Alexander
Percy, Earl Talbot, Lord E. (Chichester) Wyndham, Rt. Hon. George
Pierpoint, Robert Taylor, Austin (East Toxteth) Wyndham-Quin, Col. W. H.
Pilkington, Colonel Richard Thorburn, Sir Walter Yerburgh, Robert Armstrong
Platt-Higgins, Frederick Thornton, Percy M. Younger, William
Plummer, Sir Walter R. Tollemache, Henry James
Pretyman, Ernest George Tomlinson, Sir Wm. Edw. M. TELLERS FOR THE NOES.—Sir
Pryce-Jones, Lt.-Col. Edward Tritton, Charles Ernest Alexander Acland-Hood and
Pym, C. Guy Tuff, Charles Mr. Ailwyn Fellowes.
Ratcliffe, R. F. Tufnell, Lieut.-Col. Edward
Ridley, Hon. M.W.(Stalybridge Tuke, Sir John Batty

Bill read a second time.


on behalf of the hon. Member for Barnstable, moved to substitute 11d. for 1s. in order to leave the income-tax as it stood during the past year. He was sure that he had the sympathy of a good many hon. and right hon. Gentlemen opposite, for nobody could but believe that 1s. income-tax in time of peace was a monstrous and intolerable burden upon the taxpayers; in fact, the Chancellor of the Exchequer in his Budget speech said that in the opinion of His Majesty's Government 11d. was too high, leaving too small a margin in case of war, but he promptly put on another 1d. and made it 1s. He should have thought he would have taken the directly opposite course judging from his speech. He thought the right hon. Gentleman had really been long enough under the tuition of the Treasury officials, and that he should now take a few lessons from his relative the right hon. Gentleman the Member for West Birmingham, who only a few weeks ago said that he thought it was still possible with scientific taxation to secure ail the money the country required without anybody being the wiser or worse for it. Surely this was the opportunity for the Chancellor of the Exchequer to raise the taxes on a scientific basis with- out anybody being the worse or wiser for it! He could not but think that, if he persisted in this old-fashioned, crude income-tax, and put it up to an intolerable height, and did not take the system offered to him upon the highest possible authority, enunciated by his illustrious relative at the Institute of the Bankers of the City of London, he was guilty of something like Parliamentary cowardice. This was his (the hon. Member's) first point; but he went farther, and said that to increase the income-tax at the present time was undoubtedly to curtail the investible capital of the country and to thereby check enterprise. The income-tax had been increased from 8d. to 1s. since the last Liberal Government was in office, and he would like to ask what they had got for this enormous increase. Could anybody point to anything in our financial situation, or our political situation abroad. or in the general strength of the country. which would warrant this large increase in the income-tax? He did not think anybody could show that they were getting something like £10,000,000 worth of security more than before because of the existence of the present Government. The hon. Member for West Monmouth, who proposed the death duties, said that in his opinion they were a sort of deferred income tax, so that they had not only an increase of 4d. in the £income-tax, but they had this £6,000,000 additional deferred income-tax.

He did not think anybody ever anticipated when they entered upon the South African War that they were going to have a permanent income-tax of 1s. in the £. Only two years ago the right hon. Gentleman the Member for West Bristol stated very & early and explicitly that if they kept the income-tax at 1s. in time of peace, they would lose their reserve of financial energy for time of war. The right hon. Gentleman seemed to think they wanted to increase the income tax. He did not want to increase it at all; he did not think they were getting value for it, and he had not sufficient confidence in the Government to give them any increase of taxation. He wished to compare the right hon. Gentleman's finance with that of Sir Robert Peel, one of his predecessors. He brought in the income-tax to relieve the springs of industry. He took the tax of 750 articles of universal consumption. The right hon. Gentleman increased the income-tax and increased the tax also on one article of consumption, namely, ten It seemed to him that by piling up this expenditure in a time of peace and increasing the income-tax to such an enormous degree, they were destroying their greatest strength, and their financial reserve in time of war. In 1855 Mr. Disraeli, whose authority the right hon. Gentleman would recognise, protested, as they were now protesting, against keeping up larger military establishments than were necessary for the country; and another great Member of the House, Mr. Gladstone, agreed with him. He was perfectly certain that they were squandering their reserve at an alarming rate, and were destroying that which was their principal strength.

And, it being half-past Seven of the clock, the Chairman left the Chair to make his Report to the House.

Committee report Progress; to sit again this evening.