§ In regard to the income-tax, I do not hesitate to associate myself with the declarations of more than one of my predecessors that an income-tax of a uniform rate of 1s. in the pound at a time of peace is impossible to justify. It is a burden on the trade of the country which in the long run affects not only profits but wages. It presses with excessive and peculiar severity on that large class of the community with incomes of from £700 to £2,000 a year, who pay in addition their full share of the taxation on articles of consumption; and from the point of view of the nation it is open to the same objection as the continuance at an abnormal figure of the floating debt, namely, that it tends to destroy, or at any rate to contract, a most readily available reserve on which; the State can draw in a sudden and unforeseen emergency. But that reduction of the income-tax by a penny means in these days a sacrifice of £2,600,000, which is more than this year I can afford. Although I am not able to give any 300 immediate relief to the income-tax payer I propose to take a step which will at any rate clear the ground for future operations. There are two familiar and, in point of justice and economic principle, valid objections to the incidence of the tax. They are, as every one knows, first, that above the limits of exemption and abatement it is levied at a uniform rate; and, secondly, that no distinction is made between precarious and permanent incomes. It appears to me that the time has come for a searching and authoritative inquiry, and at the earliest possible moment I shall ask the House to appoint as strong a Select Committee as we can get together to undertake the task. The reference to the Committee will be simply to inquire into the practicability of graduation and differentiation. It is well known, however, that many experts in these matters have grave doubts as to whether it is possible to reconcile graduation with our practice of collecting the tax at its source, and as to whether the additional yield of a graduated tax would be sufficient in amount to compensate for the worry, cost, and irritation which it might involve. On the other hand, there is the experience of foreign countries and of our self-governing Colonies, who have made experiments in that direction and apparently are contented with them. I express no opinion of my own as to the probable results of an inquiry. I am satisfied it ought to be hold, and hold without delay.