FINANCE BILL.

HC Deb 16 May 1906 vol 157 cc504-52

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

MR. VICTOR CAVENDISH (Derbyshire, W.)

said that before the debate upon the Amendment upon the Paper was proceeded with it might be advisable that the more general aspects of the Budget should be considered by the House. There were two classes of difficulties to which a Chancellor of the Exchequer in introducing a Budget was frequently exposed. The first and greater difficulty was when he had to find new sources of taxation, and the second, which was probably not so great a difficulty, was when he had to make up his mind as to what relief from taxation he should afford and how he should spend and get rid of any surplus that he might have. The Chancellor of the Exchequer, with possibly the echoes of the general election ringing in his ears, was perhaps somewhat overwhelmed with the wealth he now possessed, and as a result had endeavoured to please a greater number of people than he was justified in doing. The complaint he had to bring against the right hon. Gentleman was that he had almost frittered away his surplus. The question which had frequently occupied much attention in this House and in the country in recent years was mainly the question of the Debt. And when right hon. and hon. Gentlemen who were now sitting on the Treasury Bench sat upon the Opposition side of the House a good deal was heard of the subject of Debt. The proposal of his right hon. friend the late Chancellor of the Exchequer last year to add another £1,000,000 to the Sinking Fund was, it was true, received with approval, though some criticisms were directed against him for not having done enough in that direction. They could not therefore regard without some feeling of surprise the fact that the Chancellor of the Exchequer, when he found himself in the possession of a considerable surplus, had not devoted more of that surplus to the purposes he advocated so keenly from the Opposition side of the House. The right hon. Gentleman had claimed both in this House and outside that a greater sum had been devoted to the reduction of Debt this year than had ever been devoted before, but the question of the amount was not the scale by which they could measure the extent of the right hon. Gentleman's virtue. That must be measured by Clause 7 of the Finance Bill now under discussion. He noticed that the second section of that clause dealt with the indemnity to be recovered from China. He was not a lawyer and therefore did not know whether he could judge the legal effect of that section, but he hoped and believed that that section went a considerable way towards, not only fixing the sum that might be received from the Chinese indemnity this year, but in future years, and in fixing that such sums should be devoted to the reduction of debt. He believed that so far as an Act of Parliament could bind future Parliaments this section would bind them, and that the onus would be thrown upon some future occupant of the Treasury Bench to repeal this clause. They had to measure the extent of the right hon. Gentleman's virtue in the reduction of Debt by the proposals contained in the first part of Clause 7. It was quite obvious that the right hon. Gentleman could not have made any reduction in the figure at which the provision of the Budget for the reduction of Debt stood last year, £28,000,000. The question which many were anticipating with great interest was what further provision the right hon. Gentleman would propose to make, and it was with a certain amount of surprise that they heard that the right hon. Gentleman limited it to the smallest figure that he possibly could. It was not possible to give less than £500,000, and many hon. Members hoped that it would be considerably increased. So far as it went they had every reason to be satisfied, but they could not but regret that the right hon. Gentleman had not seen his way, when he was in the possession of such a surplus, to make a still further reduction. On this question of debt he would like to ask the Government what their intentions were with reference to the loans that were obtained through the Public Works Loans Commissioners. The nature of those loans, he was aware, was not under the control of the Treasury, but the Treasury had considerable influence and power in dealing with such loans by the rates of interest which they were authorised by Parliament from time to time to fix. He gathered from the Prime Minister's Albert Hall speech that efforts were to be made by the Government to encourage municipal enterprise, and he thought he detected a hint to the same effect in the Budget speech of the Chancellor of the Exchequer. He thought they were entitled to know if any change had been made in the rates I of interest which could be fixed from time to time by the act of the Treasury, and whether they were going to depart from the policy pursued by the late Government of endeavouring to limit as far as possible the borrowings from the Public Works Loans Commissioners. He confessed that he read with surprise the statement that the Treasury were considering the advisability of making a departure in the direction he had mentioned. When they considered the weight of the public debt of this country they could not view without the greatest apprehension the very rapidly increasing local indebtedness, and any action of this House in that direction was greatly to be regretted. Turning to the tea duty, it was almost an axiom that any remission of that duty was useless unless the benefit of such a reduction went into the pocket of the consumer. The Chancellor of the Exchequer had informed the House that the consumer would benefit by the reduction of one penny, and he hoped the right hon. Gentleman was right in that assumption. He had seen it stated, however, that it was impossible to reduce the price although the quality might be improved. Personally he was a little sceptical about that improvement in the quality, and he would much prefer a reduction in the price. He sincerely hoped that eventually the reduction of the tea duty would find its way into the pockets of the consumers. The Chancellor of the Exchequer had also removed the export tax on coal, although owing to various causes the coal trade—and especially the export trade—was at present in a satisfactory condition. He hardly thought the repeal of that tax was worth the effort which had been made. It was impossible for anyone who was not an expert in the coal trade and thoroughly conversant with all the conditions of that industry to judge as to where that remission of duty would ultimately find its way. He knew that a great deal of electoral pressure had been put upon the Chancellor of the Exchequer, but he doubted whether it was quite wise, at a moment when he was necessarily marking time and when he did not know what would be the effect of his proposals, to deprive himself of so large a source of revenue from a tax which was in no degree pressing upon the industries of the country. It was unnecessary to remind Members that they were awaiting with considerable interests the financial proposals which would be brought before the House during the tenure of office of the present Government. A large sum of money was already ear-marked for next year for the purpose of carrying out the Education Bill which had recently passed its Second Reading. He did not know whether the Chancellor of the Exchequer would consider that it was due to Ireland and Scotland that he should continue the principle of the equivalent grants. If the Government proceeded upon that line they would be obliged to make a still further inroad upon the finances of the country. The right hon. Gentleman was fully justified in asking his Irish supporters to withhold their hand until he was in a position to judge of their demands. They did not know at the present moment what tire nature of those demands would be or what reply the Government would make to them, but whether the Chancellor of the Exchequer agreed wholly or partially to them they would certainly not lead to any diminution of expenditure, and he would probably find himself in future having to face still further demands, not only in regard to education, but also in respect of other questions. Another reduction the Chancellor of the Exchequer had given was in connection with the vexed question of stripped tobacco and stems. Before dealing with this point he wished to take the opportunity of congratulating his right hon. friend the late Chancellor of the Exchequer upon the very interesting announcement which was made a few days ago. He did not know whether his right hon. friend would be able to find time to go into this vexed question at any length, but it might be advisable to postpone the details of it until the Committee stage was reached. All he wished to say now was that he regretted that the Chancellor of the Exchequer had deemed it advisable at such an early date to make any alteration in the tobacco duties, because the change proposed must have a considerable effect upon the trade. Unquestionably the consumer would not benefit by a reduction of the duty upon strips, and he did not think the small manufacturers would be any better off, although he was inclined to think that some slight benefit would accrue to the big manufacturers in the tobacco trade. He had also good reason for believing that the alteration proposed in this duty would have a very considerable effect upon a large number of people employed in the stripping industry. He thought he was justified in asking the Chancellor of the Exchequer to make good his statement that in this Budget the Government were not going to depart from the strictest principles of free trade. He wished to know whether the right hon. Gentleman had had time to institute a thorough and minute inquiry into the incidence of taxes on tobacco, and whether he had found that those taxes were in accordance with the strictest interpretation of free trade. He hoped that at a later stage they would have an opportunity of examining this question with fuller minuteness, and that those who were so much interested and affected would be able to lay their views before the Chancellor of the Exchequer and the country. He hoped that in the course of the observations he had made he had justified the proposition that the right hon. Gentleman had not used his surplus to the best possible advantage. It might be an easy retort; to say to the Opposition, "If you had not been turned out of office what would you have done?" It was, of course, impossible for him to say what the late Government would have done, but speaking for himself he thought that the claims of the income-tax payer ought to have received more favourable consideration. There was some justification for complaint on the part of the income-tax payer, and a great effort ought to have been made by the Government to endeavour to make a reduction of that heavy burden. Naturally a great deal of interest was being taken in the, heavy expenditure which had to be provided for in the Annual Estimates. In this matter he hoped he might be considered as coming to the assistance of the Government in the few remarks he would make upon the proposal to establish an Estimates Committee. There was a re-commendation that certain classes of Estimates should be submitted every year to a Select Committee in order that they might be discussed in that detail which, under the present Parliamentary practice, it was difficult to secure. This recommendation was carried by a small majority, and he earnestly hoped that before hon. Members urged upon the House the advisability of appointing an Estimates Committee they would read most carefully the evidence given before that Committee. The proposal to appoint a Committee to inquire into the Estimates sounded admirable in theory, but in practice it would be found both impracticable and unworkable. In the first place, it would not be possible for any Committee to do that work. If anything like a complete class of Estimates were referred to such a Committee, it would be physically impossible to give that minute attention to all the details which was absolutely necessary before they could express a reliable opinion. Upon the Committee which was now dealing with Official Publications, which was only a small part of one Vote, they had already had five sittings, and from that illustration it would be seen that it would be impossible for a. Committee to deal with all the Votes in any class in one year. Then there was another strong objection to such a Committee from the point, of view of the House itself. Many of the questions largely affecting the administration of the Votes were dependent upon wages and salaries, and no more vexed question could be brought up in the House than the wages paid in the Customs and Inland Revenue Departments. No doubt every hon. Member was made aware during the election of the pressure which could be brought to bear by the employees in those two Government Departments. If the duty of dealing with wages was thrown upon a Committee, it would be a very invidious task to have to refuse to hear evidence on behalf of those employees; and anything like an unfavourable consideration of their claims would at once mark out that Committee, and very considerable pressure would be brought to bear upon them. The object of the House ought to be to make the Treasury Bench responsible for the Estimates. Each department must be responsible for the framing of its own Estimates; the Treasury must be responsible for control over them and for their presentation to the House He thought the intervention of a Committee might have a very damaging effect upon that control if it was exercised in the way he had pointed out. He might ask those interested in this matter: "Are the Estimates to go before this Committee before or after they have been to the Treasury? The matter was one of some importance. If the Estimates were to be approved first by the Chancellor of the Exchequer that would throw upon the Treasury the duty of defending them before the Select Committee. That was a duty which ought to be exercised by the Treasury, and any attempt to throw the responsibility on the Committee would, he thought, tend to a diminution of that strong financial control which should remain with the Treasury. In previous sessions when the Government of the day refused to provide sums of money which any section of the House considered reasonable and desirable the retort to the Government at once was that they were entirely under the thumb of a Treasury official. A Treasury official was generally regarded as a person with no feeling. It was thought by some hon. Members that matters might be better if only they could get away from the Treasury. He hoped there would be no intervention from the point of view of the Chancellor of the Exchequer between him and the officials. If the Committee were appointed he believed the Departments would frequently bring forward the argument that the expenditure proposed was justifiable and necessary, and they would be able to say to the Treasury, "At any rate, let us go before the Committee and see if we cannot impress them." The First Commissioner of Works frequently was unable to carry out objects brought before him in this House and could not get the money from the Chancellor of the Exchequer. He believed the right hon. Gentleman the First Commissioner of Works could twiddle any Select Committee round his thumb, and prove the absolute necessity of all and everything he asked. He hoped they never would be able to treat the Treasury officials with the same case as they treated a Select Committee of this House. Hon. Members interested in this subject might, at first blush, consider it an admirable idea to have an Estimates Committee, but he would ask them to endeavour to trace out for themselves the course which must inevitably be pursued, and the full effects of it. He believed it would not be wise and that it would be contrary to the best interests of the public service to appoint such a Committee. Speaking as Chairman of the Public Accounts Committee he considered it necessary to tell the House that, strongly as he disapproved of the proposed Estimates Committee, it would have no effect on any judgment he had to form or any advice he had to give to the Public Accounts Committee, who, he was sure, would be actuated by the desire to do what they considered to be for the best interests of the House as a whole. The Public Accounts Committee in any selection of Estimates they might make for consideration would act in deference to what they believed to be the best interests of the House. He hoped this question would not be unduly pressed on the Government during the present session when the House was largely composed of new Members who, before anything was done, should have full opportuntiy of making themselves acquainted with the rather complicated and difficult processes of our financial affairs. He thought it would be unfair and unwise to press the proposal on the Government.

MR. MCCRAE (Edinburgh, E.)

said the hon. Member the late Secretary of the Treasury was always an exceedingly fair critic, and in the speech just delivered he had shown his usual moderation, He did not think the hon. Member was quite just in his criticism of the Chancellor of the Exchequer when he said that the right hon. Gentleman had frittered away his surplus. He agreed that the right hon. Gentleman might have gone further without faring any worse with regard to the tea duty. The hon. Member had forgotten that the Chancellor of the Exchequer had endeavoured to achieve two objects with his remission of taxation. The first, and perhaps not the less important, was to free trade from certain restrictions placed upon it, notably in the cases of the coal-tax and the tobacco duty. He reminded the hon. Member that Mr. Gladstone said that more could be done for the taxpayer by freeing trade from hampering duties than even by the direct reduction of taxation. The coal-tax was exceedingly unequal in its incidence. Scotland and the North of England especially suffered more because they produced the cheaper class of coal. The Chancellor of the Exchequer had remitted a portion of the tea duty. The right hon. Gentleman was bound to deal with the indirect taxes which had been put on under the guise of war taxes, but the House must not lose sight of the fact that many of those taxes, put on presumably as war taxes, were really to meet the increase in the ordinary expenditure. The hon. Member for West Derbyshire had also criticised the Chancellor of the Exchequer for not laying aside a larger amount for the reduction of debt, and had made some observations with regard to what took place in this House last year. There was no adverse criticism of the proposal of the Chancellor of the Exchequer last year with regard to the sum laid aside for this purpose. The criticism then was rather as to the method he adopted in paying off the £1,000,000 a year by a lottery process which experience had shown was altogether reprehensible. The hon. Member had altogether lost sight of the fact, which, after all, was the governing factor in considering the sinking fund, namely, that—even with the additional £1,000,000, which the late Chancellor of the Exchequer applied towards the sinking fund last year, and although he had laid aside the large sum of £10,000,000 for the reduction of debt to go to the sinking fund—the estimated expenditure under naval and military works loans amounted to £9,000,000, and had this been expended—happily it had not been—the effective sinking fund would have amounted to only about £1,000,000. What was the proposal of the Chancellor of the Exchequer? After providing for expenditure under naval and military works loans there would be a net reduction of £9,000,000 in our indebtedness in the coming year. The total sum laid aside was £13,500,000. The late Secretary of the Treasury had also referred to the loans from the Public Works Loans Commissioners. They all admitted that local expenditure should be watched with care, but at the same time they must never forget that great a part of it was remunerative expenditure, and that, in many cases local authorities were getting a revenue not only to provide for the interest on the loans but also for the redemption of the debt incurred. He hoped the Chancellor of the Exchequer, when dealing with the equivalent grants, would propose some form of local taxation which would enable them to get rid of the wasteful form of grants which tended so much to local extravagance. The House must be indebted to the hon. Member for his thoughtful remarks with regard to the proposed Estimates Committee. Personally, he could not say that he agreed altogether with the proposition laid down by the hon. Member, but he entirely agreed that the Government of the day must not devolve any of its responsibility with regard to expenditure. Anyone who had sat on the Public Accounts Committee must have been impressed by the fact that the Committee were doing useful work in criticising expenditure even twelve months after it had been incurred. He had always maintained that something of the kind was necessary with regard to the Estimates before the expenditure began. It also seemed to him that it would be an improvement if they had some form whereby the Estimates from the different Departments could be laid before the House in order that they might have an opportunity of considering the expenditure of the year as a whole before being finally committed to it, instead of being left, as under present conditions, to criticise it when the Budget pro- posals were before the House. If his right hon. friend wished further argument in favour of dealing with the tea duty he would find it in the fact that when the Budget was submitted for 1895–6 the then Liberal Chancellor of the Exchequer budgeted Customs duties amounting to £20,756,000. The estimate for the present year, after allowing £1,000,000 for the remission of tea duty, amounted to £33,230,000, so that there was an increase in Customs alone in a comparatively short space of time of £12,474,000. In Excise there had been an increase of £3,400,000. The hon. Gentleman had pleaded the claims of the income-tax payer. They all realised that the poorer class of income-tax payers were heavily rated. The yield of the income tax was now £31,500,000, as against £16,100,000 in 1895–6. He would recommend to the Chancellor of the Exchequer a reform which he might carry out in his present Budget in connection with the income-tax, and that was regarding the iniquitous system—he could call it nothing else— of exemptions under the provisions of the Income Tax Act of 1842, which were adopted for quite a different purpose— now being put into force in connection with the renewal of ground leases. He hoped his right hon. friend the Chancellor of the Exchequer would give some attention to that matter, because he was sure that it would bring in a much larger sum to the Imperial Revenue than most hon. Members supposed, a sum which would be most equitable. He would like to make a few remarks as to the Debt Redemption proposals set out in the Finance Bill. He had already said that he would have liked to have seen his right hon. friend setting up new terminable annuities in place of those which were falling in. With the position of Consols at present, standing as they did at 90, the Chancellor of the Exchequer might be able to cancel £51,000,000 of Consols with those terminable annuities. In addition to that he would have the Chinese war indemnity, and be able to cancel other £5,000,000. The application of the Chinese War Indemnity to repayment of debt would be carrying out the policy of Sir Michael Hicks-Beach and Lord Ritchie, who estimated that the sum of £6,000,000 from this source should be applied to the reduction of the War Debt. If the Chancellor of the Exchequer saw no temptation to buy Consols at £90 for every £100, he might, by a scheme of terminable annuities, fund the floating debt and provide for its extinction in twenty years. He would be, therefore, enabled to redeem the floating debt which amounted at March 31st last to £55,770,000—almost exactly what these annuities would redeem in twenty years. He thought that such a transaction would be for the benefit of the State. Another advantage of the proposal he had submitted was that it would stereotype the amount that was to be provided for the reduction of the National Debt; and would put it out of the power of any Chancellor of the Exchequer to tamper with the Sinking Fund. His hon. friend the Member for West Derbyshire belonged to the Party whose Chancellor of the Exchequer had cut down the contribution to the Sinking Fund by £2,000,000 a year on two occasions and £1,000,000 in another year. In 1899 the then Chancellor of the Exchequer said the year before the South African War that the revenue was not able to meet the ordinary expenditure. He found that certain annuities were expiring and he anticipated the falling in of the Savings Bank Annuities, and reduced the Sinking Fund by £2,000,000, and as a justification Sir Michael Hicks Beach said— If I do not this, I must increase direct as well as indirect taxation. He thought that if his right hon. friend the Chancellor of the Exchequer looked into this matter he would be able to devise something in the way suggested. The right hon. Member for West Birmingham had characterised this as a humdrum Budget. He would rather say it was an interim Budget, and he admired the courage with which the Chancellor of the Exchequer had given effect in his Budget to the principles of sound finance which had been so long departed from in this House.

MR. LAMBTON (Durham, S.E.)

said that his breath was taken away by the statement that the present heavy expenditure was due to the late Government. Hon. Gentlemen opposite had forgotten their own schemes. For in- stance, he remembered a most remarkable document which was signed by 119 Members of the House of Commons and sent to the King of Greece. He remembered also the despatch of a fleet in connection with the Armenian atrocities and also the interference of hon. Gentlemen opposite in Macedonia and the Congo. He would remind hon. Gentlemen that all these, schemes had not much effect with foreign nations. One battleship and one regiment of soldiers had more effect than all the speeches made in the House. He wished, however, to draw attention more particularly to the abolition of the coal-tax and the reduction of the tea and tobacco duties. It was not difficult for him as an amateur to decide between two so great fiscal authorities as the Chancellor of the Exchequer and the right, hon. Gentleman the Member for West Birmingham when they differed and when they agreed he had a shrewd suspicion that they were both wrong. He was sorry to say that the Chancellor of the Exchequer had fallen into the same mistake as the right hon. Gentleman the Member for West Birmingham and said that tea was a necessary of life.

THE CHANCELLOR OF THE EXCHEQUER (Mr. ASQULTH, Fife, E.)

Of course it is.

MR. LAMBTON

said he should like to know when tea became a necessary of life to any Englishman or a ay English woman. Shakespeare, Queen Elizabeth and Oliver Cromwell never drank tea. No doubt there were modern Shakespeares, but whether they were, better than the old he could not tell. They also had their Cromwells of modern date, and he should have liked to ask the President of the Board of Trade whether their superiority to the old was due to tea drinking. Tea might be soothing to politicians who suffered from acerbity of temper, but he never found it had been beneficial to women or children. He was glad that the Chancellor of the Exchequer had taken off the coal duty. When that tax was introduced he was under the painful necessity of separating himself from his party, and the still more painful duty of making a speech on the subject. If he remembered rightly, that speech was couched in language of great moderation, considering the iniquity of the tax. He remembered also that he warned the Government of the danger of departing from free trade. The Member for West Birmingham made a speech the other day to the Tariff Reform Section of the Unionist Party, in which he said the repeal of the coal-tax benefited only the mighty men of the north and the foreign consumer. The only people who would be benefited, the right hon. Gentleman said, were the coal owners, of whose unselfishness they had had an illustration by their attitude upon the Workmen's Compensation Bill, and the foreign consumers. He was glad the men of the north were so mighty. He had some respect for the men of the Midlands, but he did not think they in the north wished to be dictated to by the mighty city of the Midlands, or by any other part of the country. The right hon. Gentleman said that the unselfishness of the coalowners was illustrated by their attitude to the Compensation Bill. Did he mean the present Bill or the old one?

MR. J. CHAMBERLAIN

The old one.

MR. LAMBTON

thought it rather unnecessary to brand the coalowners of the north for opposition to a Bill which the right hon. Gentleman brought in no less than nine years ago. He remembered, when the coal-tax was first imposed in 1901, the right hon. Gentleman, addressing his constituents in the Midlands, said that either the coalowner who produced the coal, or the foreigner who bought it, must pay the tax, and he did not care which. The right hon. Gentleman had since stumped the country for two-and-a-half years on behalf of the English producer against the foreign competitor. He did not know if there was any Member who would still maintain that the tax on coal was paid by the foreigner.

MR. J. CHAMBERLAIN

I do.

ME. LAMBTON

said it might be so in the case of coal which was a monopoly; but that coal did not come from the north, and it was impossible to argue that the foreigner paid the tax on coal from the north. Suppose he wanted to buy a good stout hat to wear at a tariff reform meeting, and he had a sovereign to offer a Unionist Member for his. The owner was willing to sell but the right hon. Member for West Birmingham said, "Before you sell your hat you must give me a shilling." Either he should have to pay 21s. for the hat, which he could not afford, or the owner of the hat would have to accept 19s. and give the right hon. Gentleman 1s. The result would be that he would have to go over to the other side I of the House and buy a hat which would probably not be so good a one. He hoped the right hon. Gentleman would give some indication of his attitude towards the Finance Bill in the future. They had been told since February 14th that there had been a complete concordat in the Unionist Party. When the right hon. Gentleman first started on his missionary attempt there was some doubt whet her the late Prime Minister was in accord with him or not. He certainly wished the missionary God-speed, but perhaps that was less from a desire to spread the gospel than the secret hope that the missionary would be devoured by the heathen. With regard to alternative taxes to the coal tax, he hoped hon. Members opposite would not receive too much support from his side of the House in advocating taxation of mining royalties. The owner of the coal was already taxed like any other person on his property, which was, moreover, a diminishing property. The Royal Commission of 1893 reported— We are of opinion that the system of royalties has not interfered with the general development of mineral resources of the United Kingdom or with the export trade in coal with foreign countries. The Royal Commission of 1893, therefore, had no fault to find with royalties but the Report of the Royal Commission published last year, had some fault to find with the coal tax. Why should one form of property be taxed more than another? It must be remembered, as he had pointed out that the coal owners' property was a vanishing one, and he should like on this point to call attention to the evidence of an American witness, Dr. Raymond. He was asked about coal royalties, which in the United States were very much in the same position as in this country. He said that for the State to assert a right over the minerals would mean with them confiscation and anarchy. If there had been anything the State had done in America it had been to recognise the right of property in the coal as well as in the land, and they might as well go the whole figure with Mr. George and assert ownership in the land and wipe out all private property as to begin in that way. He would detain the House no longer. He only desired to make these few remarks on coal royalties, but he would warn hon. Members on the Opposition side of the House, who sometimes had curious ideas as to what they should and should not support, that this was a question they ought seriously to consider. With regard to the present Budget, he would only say that having regard to the difficulties which the Government had inherited and the difficulties that they had made for themselves it was not a bad Budget.

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

said he thought that there was very little disposition to complain of the character of this year's Budget, because the Chancellor of the Exchequer was, so to speak, getting his eye in, and was playing cautiously at first before beginning to hit out. It seemed to many Members all to the good that this year the Chancellor should establish his reputation in the country for circumspection so that he might be more powerful in the future for taking strong action. They eared a good deal more this year about the Chancellor's mind than for his Budget. It was the modest prologue, they hoped, to a very considerable drama. Members on the Ministerialist side of the House felt that the Budget was the pivot round which the success or failure of this Parliament would turn, and the attitude and action of the Chancellor of the Exchequer was a matter of supreme importance to all reforms. In one direction, this year promised to fulfil their highest hope. The text and burden of the Budget speech was economy. Ministerialists hoped next year for a great reduction in Army and Naval expenditure. He thought, however, that it would be a mistake to suppose that this Parliament was bound by any shibboleth of economy. Their main duty, he believed, was to make the position of free trade impregnable and to accomplish great social reform, and for both of these "economy" was not the last word. Should an emergency arise in future it would perhaps give the protectionist his opportunity unless new sources of taxation were opened during this Parliament. There were several social reforms necessary and they would cost money. A million or so would be required for education, a scheme of old-age pensions was hoped for, and many other things such as payment of Members. We wanted not only a doctrine of economy capable of enforcement but a new system of taxation capable of indefinite expansion. He was glad to hear that the Chancellor of the Exchequer was thinking about tapping another great source of possible revenue by increasing the licence duty. He considered that the well-being of the nation depended as much upon having light and just taxation locally as nationally. It was impossible to dissociate national from local taxation. The contribution of £10,000,000 in aid of local rates was much the most alarming part of the national expenditure at present. The Chancellor of the Exchequer would find it increasingly difficult to make a reduction of taxation owing to this enormous pressure to relieve local rates. £50,000,000 was at present raised by way of rates, and if this was allowed to go on the increasing demands for subventions would sweep away the benefit that might be derived from reduced taxation. The taxation of land values was a means by which the Chancellor of the Exchequer could place the system of taxation in a position impregnable against the assaults of protection. The right hon. Gentleman had a great majority behind him to enable him to do strong things, and he had the good fortune to be the head of the one Department whose actions could not be injured in the House of Lords. By placing local taxation no longer on the industries but on the land value of the country they might remove a burden from the people even more vicious than the old bread tax.

MR. J. CHAMBERLAIN

I regret that the Chancellor of the Exchequer should have left the House while his hon. friend behind him was giving him his instructions, rather than suggestions, as to what he should do in the future, in the next Budget he brings before us. I was wondering very much when I listened to the hon. Gentleman whether the Chancellor of the Exchequer would be grateful to his supporter for the manner in which he treated the subject. The hon. Gentleman in the first instance has explained that although he considers the Budget in its present form humdrum, or moderate I think was the term he used, it has to be regarded in connexion with the altogether different, immoderate, and sensational Budget which is to be brought in next year. He approves of the action of the Chancellor of the Exchequer on the present occasion because, he suggests, he is earning a character for moderation as a preliminary to a course of revolutionary practices. While lesser people may possibly misunderstand the right hon. Gentleman's endeavours, he at any rate thoroughly appreciates the policy of appearing at the present moment as a wolf in sheep's clothing; having won esteem in the more amiable character of the sheep, next year we shall see the right hon. Gentleman as a raging, rampant, and daring wolf. The hon. Gentleman went on to tell the Chancellor of the Exchequer that his business was not what was generally understood as the particular work of a gentleman occupying his position and also to present him with a mandate. That mandate was to make free trade impregnable. The hon. Gentleman has perceived, as some of us perceived a long while ago, that the Chancellor of the Exchequer will always want a great deal of money if he is to carry out the many mandates of his Party, and, knowing that the money cannot be obtained without an extension of the basis of taxation, he offers as an alternative a policy of confiscation, for it is nothing else. I confess I was not able to follow the hon. Gentleman clearly as he proceeded to unfold his argument; but he seemed to base his demand for this policy of confiscation not so much on the need of the social reforms that are to be accomplished as upon the increasing expenditure of local authorities. Does the hon. Gentleman agree with those outside the House who have been preaching that having given self-government to local authorities we should now proceed to control their expenditure? All I can say is that, for my part, I entirely disapprove of this definition of self-government. I say that this interference with local authorities, to whom you have given full control of local affairs, is a mistake, and cannot be made consistent with any theory of local government. Therefore, I cannot under stand how the hon. Gentleman connects his suggestion to the Chancellor of the Exchequer with the question of the control of local authorities. He seems to think, however, that unless local authorities are controlled their expenditure will be so large that they will be obliged to come to the Chancellor of the Exchequer for assistance, and to that extent encroach upon the money that would otherwise be available for social reforms; and he urges, therefore, that some form of direct taxation, such as land values, should be immediately undertaken. Land values may possibly be a proper subject for taxation. I say "may be." That is a point that I am not arguing at the present moment. But one thing I do say—they are not a subject for confiscation. When Mr. George wrote his interesting book, which made so great a sensation some years ago, he advocated that the taxation of land values was to go on until the value was taxed out of existence. That is confiscation. If it could be carried out, though it would bring many evils in its train, it is just possible that it would raise a sufficient amount of money to carry out the objects which the hon. Gentleman opposite has in view. But, on the other hand, if it is only to be brought in as another item of direct taxation, and if the taxation is to be moderate in amount, it will prove a barren source of revenue indeed. At any rate it will not give anything like the amount of money talked of as necessary to carry out the schemes of social reform. After the speech of the hon. Gentleman I might see an objection to it which I have never seen before. It reminds me of an experience of my own at the time when we were discussing in 1885 the old unauthorised programme, every item of which has since been carried out. One of the questions was graduated taxation, since carried out in the Bill of the late Sir William Harcourt. But at that time I had a conversation on the subject with Mr. Gladstone. He said to me— I see you are advocating graduated taxation. In principle, I am not opposed to it, but I am opposed altogether to the graduation to the income-tax. When I asked him why, he said— Because I think the graduation of the income-tax might easily lead to confiscation. That is interesting, not only in con nexion with this matter, hut as showing the drift of Mr. Gladstone's mind. In like manner, I would say to the hon. Gentleman that while I am willing to consider any new basis of taxation I am not disposed to favour his proposal, as it would lead to confiscation. The hon. Gentleman wants to get a great deal of money. I think I should not be wrong in supposing that he would like to get it from the very rich. "The capitalist is the enemy," as I saw it expressed in a speech made recently to this House. But there are capitalists and capitalists. There are capitalists who are more hardly pressed than people who, nominally, have less property, hut the persons whom some of our friends, socialists and others, want to get at are the very rich men. The worst of all these quixotic attempts at mulcting the very rich is that they are ineffective. It is precisely the biggest capitalists who most easily escape. I am certain that if you try these extravagant proposals you will fail to get what you want. At all events, however much you may press the small capitalist, because he I cannot escape you, you will never succeed in catching the big capitalist by measures of this sort. My suggestion is that the hon. Gentleman should go back to the greatest financier of English history—in this respect, at any rate— and that is King John. King John picked out a capitalist—a mighty man of the north, perhaps—and put him down in a well or a cellar, and pulled out his teeth, day by day, until the unhappy victim presented the requisite sum. There is finance which, for efficiency, has never been exceeded. It is quite as drastic as, and even more practicable than, the procedure suggested by the hon. Gentleman opposite, and it certainly would be much more effective.

On the last occasion that the Budget was discussed I said a few words on the subject without having had time for much reflection; and I come back to it now, again under the disadvantage— in which I am sure I have the sympathy of the House—of the absence of my right hon. friend the late Chancellor of the Exchequer, without whose aid we have not that access to a great deal of expert opinion which would make our comments more valuable. But I am confirmed by further reflection that this Budget is a composite Budget. There have been many hands in its making. It is a Budget that would not have been introduced if the Chancellor of the Exchequer had had his own way. At any rate I can see evidence that, when the right hon. Gentleman sat down to consider what he should do with the surplus which he owes to the moderate Estimates of his predecessor, he determined not to make a sensational Budget, but to take up one thing and to do it thoroughly. What I gather he intended to do was to make a really large contribution towards the reduction of the Debt. It would have been very wise on the part of the right hon. Gentleman had he carried out that idea, because by a large reduction of the Debt he would have given confidence to trade and steadied the money market, and thus benefited all classes of the community, but none more so than the industrial classes. But evidently the right hon. Gentleman was pressed with suggestions from various interests; and he proceeded to divide his surplus into a series of small contributions—or doles, as I may call them—to the most clamant of his critics, aid it would seem that of them all the mighty men of the north made the most noise. So the coal-tax had to go. I have said that I thought the late Chancellor of the Exchequer proposed to deal with this tax in any reduction of taxation. But what I do not know is whether my right hon. friend would have proposed to put it in the first rank, or whether he would have proposed to abolish it altogether. What I said about the tax the other day— which my hon. friend behind me has failed to understand—was clear enough. I said that the coal consumer in this country would not be benefited in the slightest degree by the abolition of the tax. No one will contradict that. Then who is to benefit? I believe the miners' representatives have an idea that the workmen in the trade would gain. It has not always happened that a rise in the price of coal to the consumer has been followed by a corresponding rise in the rate of wages. I think the coal miners will be very lucky indeed if they get that corresponding rise on the present occasion. But, putting that aside, the people who will most benefit will be either the coalowner, who will put the shilling in his pocket, subject to any concession he may be willing to make to the miners, or the foreign consumer. When I speak of the foreign consumer I am ready to recognise that the position may differ in regard to certain classes of coal. There may be coal which comes into sharp competition with foreign coal, and in regard to which, therefore, you will benefit the trade generally by reducing or abolishing the duty. Up to the present time in the Returns I have seen there is no proof that there is serious competition in British coal; but there will be, I venture to predict, serious competition with German and other coal. The expansion of production in Germany And France has been very remarkable. But that is not likely in the least to touch either the Welsh hard steam coal or certain classes of gas coal which are practically a monopoly. I have evidence from foreign sources to prove that the tax did not make the slightest difference in their purchases of these particular qualities of coal. Probably, therefore, it might have been worth while for the right hon. Gentleman to have postponed this change till he could have dealt with it in a scientific way, for he might have found that the tax of what is practically a monopoly might have been continued, and in that case it would have been very wise to earmark it for the further reduction of the Debt. The House will remember the sensation which was created by Professor Jevon's book on coal production, and although our stores of coal are now known to be much greater than he supposed, nevertheless it is true, after all, that the stores of coal are limited. And what Professor Jevons said is true, that long before you have exhausted the coal it will have become scarce, and therefore dear; and you have to take into account, at all events in periods which are not to be neglected in dealing with national interests, that we are drawing upon our capital, and that we ought to make provision for it. Mr. Gladstone, who took an immense interest in the subject, declared that while we lessened our capital in the shape of the export of coal we ought to lessen our Debt, for which it was a security. As regards the tax on tea, I agree that the Chancellor of the Exchequer was quite right to reduce it. And for this reason: that tea is a thing which we do not produce in this country; there is no competition, and accordingly every penny of the tax, in theory at any rate, is paid by the consumer. I should like, therefore, to reduce the tax on tea as much as I possibly could, but by giving a little to one and a little to another the advantage of the reduction has been in my opinion lost. My prediction on that point has to a certain extent been confirmed by the declaration of the tea trade that they are unable to make a reduction in the small packets which affect the consumption of the working classes. I shall get the penny off because I buy tea in quantities of perhaps 14 lb. or 28 lb. at a time, but the working man who buys in 2-oz. packets cannot get any advantage, except that absolutely illusory reduction which is supposed to be represented by an improvement in the quality. The working classes have, on the whole, the quality which they like. The working man does not want an improvement in blends, which very likely he does not appreciate. What he wants is a tea to which he is accustomed, and of the quality of which he does not complain, a penny a pound less than before. Under this Budget he will not get it; and therefore I think it is a pity that, as in coal, so in tea, the changes which the right hon. Gentleman is making in this Budget will not advantage the people whom we most desire to help, but will advantage, as far as I can see, in an extraordinary way certain limited classes of very rich people.

I asked the right hon. Gentleman the other day, why did you deal with a single branch of the question of the taxation of tobacco? Was it as a free-trade question you dealt with it? If so, why did you not deal with it efficiently and completely? If you assume that the present system gives an advantage to the manufacturer of strips in this country, you will be justified, no doubt, in making an alteration; but if that is your case, why do you not deal with the much older and much more important duty which in the manufacture of cigars and raw tobacco gives a very considerable preference to the home manufacturer? It is not I who would attempt the change, but I do know that the very small amount of protection or preference which has been given to manufactured tobacco in this country has had the result of establishing some of the most successful industrial concerns, employing thousands and even tens of thousands of industrious people. If that is good, why not go a little further? Why strain at a gnat and swallow a camel? I ask the Chancellor of the Exchequer if he will kindly lay on the Table the calculations on which he has based his proposal in regard to tobacco. I asked the right hon. Gentleman the cither day why did he make the change? He gave me an answer which I did not quite understand. He said that one reason was that the duty brought nothing to the Exchequer. That is quite true, because of the large stocks in existence; but I suppose it would have brought something in time. But even if it did not, I would say that that is not the object with which it was put on. It was put on with the object of meeting an unfair preference in favour of the foreigner, with the deliberate intention of establishing in this country a business of which we had been wrongfully, as we thought, deprived, and it has led immediately to this remarkable change—that while factories for stripping tobacco have been closed in Holland, and factories have been closed elsewhere, factories have been opened here, machinery bought, and workmen employed. I will give some evidence which I think goes to show that at least 6,000, and probably more, people have been so employed. I am told that one stripper does 5,000 lb. in a year. Now the increase of leaf introduced into this country in consequence of the tax, leaf, therefore, which has to be stripped here instead of being stripped abroad, is an increase of 42,000,000 lb. Now if a stripper can do 5,000 lb. a year. 8,400 people will be required in order to strip that quantity of leaf. Surely the onus lies on the Chancellor of the Exchequer to give us some very good reasons why these 8,400 people should be taken out of employment? It is not, in my opinion, in the least a question of free trade or protection. It is a question of keeping in this country trade which reasonably belongs to us, and which has only been taken from us by an unreasonable differentiation in favour of the foreigner. Put the foreigner and ourselves on an equal footing.

MR. ASQUITH

The differentiation remains, but only at a proper figure.

MR. J. CHAMBERLAIN

The effect of the previous tax on tobacco was to give a distinct advantage to the foreigner. We made changes which I believe removed that differentiation and which we thought represented the differentiation. The right hon. Gentleman says, "I recognise the principle; I do not quarrel with it; but your differentiation was too great; it did not put the Englishman and the foreigner on exactly the same footing; therefore I have altered this differentiation to a halfpenny." From the sources of information at my command I am assured that the effect of this change will be that as the leaf which is now in bond is gradually cleared out, no more leaf will be imported, and that these 8,400 persons will be thrown out of employment. If that is to be the effect, it is no use telling me in these circumstances that a halfpenny is a sufficient differentiation. I say it is not, and that it is proved not to be. I hope, therefore, before we get into Committee the right hon. Gentleman will give us information so that we may judge for ourselves whether this constitutes a fair and reasonable differentiation. If he can prove that, our argument against that part of his Budget will probably fall to the ground. I remember on the occasion of the last Budget that my right hon. friend in making the change desired that we should have more experience and that it was a fair subject of inquiry whether the rate chosen was the right rate or not; but suddenly to make so great an alteration seems to me rather risky. May I ask also what is the intention of the right hon. Gentleman with regard to the rebate on stalk and offal? I understand that no change has been made in that respect. I am afraid that I have necessarily entered into some detail, but the Budget is always a matter of detail. We are certainly not going to oppose the right hon. Gentleman at the Second Reading stage of the Bill, but there are questions of some importance which will arise in Committee, and before hen I hope we shall have full information.

MR. ASQUITH

I have no objection to offer to the tone and the substance of the criticism which the right hon. Gentleman has made, and I will endeavour to reply briefly to his questions. First of all I will deal with the changes in the tobacco duties. The right hon. Gentleman asks, "Why have you singled out this particular item for a change? Have the tobacco duties as a whole not always contained a protective element?" I think that they have. I think that the tobacco duties do contain a protective element. They were established substantially on their present basis by Mr. Gladstone very nearly fifty years ago, and it must be remembered that the changes made and which prevailed then involved a higher degree of protection than anything that can be alleged against the new duty. The trade has gone on under the system, and whatever; may be said against it as a violation of the free-trade principle, it produces a very large revenue. What is the case with this duty that I am altering? My predecessor two years ago made a change which had never been dreamt of. Strip tobacco had always come in at the same rate, because the process of handling which goes on before the leaf becomes a strip is so slight that no previous Chancellor of the Exchequer thought that it ought to be treated in a different category. The late Chancellor of the Exchequer took a different view, and he established a difference of threepence between the two. It was at once found that the change would not work, and the right hon. Gentleman made a concession as regards all strips then in bond, reducing the duty from threepence to a penny halfpenny. As a matter of fact, I am satisfied, from inquiries I have made, that the duty of threepence has never been an effective revenue at all. Strips could not have come into this country if they had continued to pay the duty of threepence. I agree that there ought to be a differentiation. Under my plan leaf will come in at 3s. and strips at 3s. 0½d.; and I intend to make a considerable revenue from that duty. I shall get a halfpenny more on every pound of strip that comes in, and if it is not a prohibitive duty and the strips can come in, then I am adding to the revenue of the country by the change I am making. That is why I am making the change. It will, in the first place, increase the revenue, and, in the second place, I am satisfied that the change is desirable. I have not had a single representation of any sort or kind from the trade in favour of retaining the difference between the two duties. The trade as a whole is well satisfied with the differentiation of a halfpenny. In answer to the plea of the right hon. Gentleman, I cannot lay my calculations on the Table, because they were made in my own head, and I cannot extract them. But I will tell him the materials out of which I have been induced to make the alteration. They will be found in the evidence and the Report of the Departmental Committee which sat two years ago, at the time when my predecessor made his Budget. Our estimate of a halfpenny as being the true duty difference between the strip and the raw leaf as well as our scale of drawbacks is based entirely on the evidence given before and the conclusions arrived at by that Departmental Committee. This is a case where you establish, under the shadow of a protective duty, an artificial trade. When you put on an artificial protective duty and encourage the growth in this country under unnatural conditions of a trade which is not a very desirable trade, judging by the sanitary conditions under which it is carried on, and the wages received are not the wages that any of us would care to adopt as a standard —the moment a Chancellor of the Exchequer comes along and says, "I am going to abolish protection," then you say that he is going to throw out of employment all these poor people. We have taken the greatest possible care in the matter. The stock of raw leaf now is so great and the stock of strips relatively so small that for a considerable time to come, by adapting themselves to the new conditions, these people will receive employment in the industry in which they are engaged. I am sure that this readjustment of the duty, which recognises the difference between the casual raw material, is acceptable to the trade in freeing it from hampering restrictions, and that in the long run it will redound to the benefit of the industry.

I come now to the more serious subject of the coal tax. What is the right hon. Gentleman's attitude with regard to it? Does he or does he not approve of its abolition? I really do not know. If he does, what is the object of the speech he has made? If he does not, then why not oppose the abolition openly and frankly, and move the omission of the change from the Bill? It is interesting to trace briefly the history of the right hon. Gentleman's opinions on the subject. He has told us to-day, repeating an argument used elsewhere, that the coal tax is one which falls on two classes only—first on the coalowner of this country, and secondly on the foreign consumer in the markets to which the exported coal is sent. It is an odd thing if that is so that there is not a miners' representative in this House who is not ardently in favour of the repeal of the coal tax; and I should be very much surprised if we find in the course of this debate, or in Committee, that any representative of the miners' interest will get up and endorse the right hon. Gentleman's contention that this change is for the relief and benefit of the coal-owner alone. Anybody who has investigated the history of the export coal trade since this tax was imposed will agree that the miner has suffered in his wages quite as much as the coal-owner in his profits. If it is the case that this is a tax that falls only on the coalowner, how is it the right hon. Gentleman said the other day that the coalowners and the foreign consumers would share between them the benefit of the abolition of the tax? Anybody who has investigated the history of the export coal trade since this tax was imposed, will agree that the miner has suffered in his wages quite as much as the coalowner in his profits. In the stress of the general election the right hon. Gentleman informed a correspondent that he was personally in favour of the repeal of the tax, which was imposed during the War, which had not answered the expectations formed of it, and which, he believed, the late Chancellor of the Exchequer had intended to repeal at the first opportunity.

MR. J. CHAMBERLAIN

I said the same thing in the House the other day.

MR. ASQUITH

I know; that is the more remarkable. Having held the opinion, the right hon. Gentleman retained it after hearing the Budget speech, and it is only in the coarse of the last fortnight that he has discovered, what previously was hidden from him, that this tax, of the repeal of which he was in favour, which had not answered expectations, and which the late Chancellor of the Exchequer intended to repeal, was really an ideal tax from his point of view, because it fell only on the rich, and the great bulk of it was paid by the foreign consumer. If that is so, why touch it? Of all taxes in our tariff, it was the one most deserving of the right hon. Gentleman's commendation. My error is that I held the same opinion about the tax that the right hon. Gentleman held in January and seems to have held as late as April, and only changed in the first fortnight in May. As to the suggestion he made, that we should differentiate between the different classes of coal, and, while abolishing the export tax in regard to the bulk of the coal, retain it on that portion in respect of which we have a monopoly—that is to say, the first-class steam coal and some gas coal—my answer is that it would be impracticable. What proportion does the right hon. Gentleman think these classes of coal bear to the whole of our export? I am well within the mark when I say that they are not a quarter; and to keep the tax on that quarter would only disturb the trade without bringing any corresponding advantage to the revenue.

The right hon. Gentleman apparently does not object to the remission of the tea duty, but he thinks that the actual remission proposed will be entirely lost to the consumer. I observe that the right hon. Gentleman did not repeat to-day the language which he used on this subject in an address to a body called the Liberal Union Club, consisting, I should think, of credulous and not very well-informed people; because they loudly cheered the following statement— This is the Government that comes in to redress taxation in favour of the working classes. On the contrary, what do they do? They give instead £2,000,000 to the wholesale dealers in tea. Let me pause there. The cost of the sacrifice involved in the remission of a penny in the tea duty is £925,000; the acceleration of the change from July 1st to May 4th is estimated to bring the cost up to £1,000,000. The right hon. Gentleman said £2,000,000. It would really seem as if the right hon. Gentleman had become so demoralised in the protracted orgies of fiscal controversy that two and one were, exactly the same thing to him. But when we have brought the amount down from £2,000,000 to £1,000,000, is it going, as the right hon. Gentleman suggests, to the wholesale dealers in tea? It is not a pleasant suggestion in such a contest, because throughout it is suggested that the Government are showing something like a corrupt partiality to persons supposed to have supported them in the country and in this House. I have obtained the best information as to what will take place. The wholesale dealers have already allowed the reduction, and as to the great bulk of the retailers, while it is true that they are not going, possibly in the majority of cases, to give a reduction of 1d. in the shape of a reduction of money price, they are giving it in the shape of an improvement in the quality of the tea they supply. The right hon. Gentleman sneers at that. If he had investigated the subject closely he would have found that one of the worst results of the heavy duty imposed on tea during these late years has been that the poorer consumer has been put off with stuff that he ought not to drink, as being bad for his health. I can see that one of the best results of this reduction of taxation is to be found, not merely and not so much in the lower price charged to the consumer, as in an improvement in the quality of something that has become a prime necessity of life. All the evidence before me corroborates the opinion I expressed that the full effect of this remission, either in the form of lower price or better quality, will reach the consumer. An hon. friend has just given me an interesting piece of information. He is a member of a board of guardians, and he tells me that on Saturday last the local grocer wrote to say that he would supply the workhouse tea at 1d. per lb. less than the previous tender. The right hon. Member for Derbyshire said, "You make great, professions of reducing debt, and you only contribute another half-million out of revenue." I should have been very glad to apply a larger sum than half a million; and there were times, while I was framing my Budget, when I hoped to be able to apply a larger sum. But when I found that, partly by means of the old Sinking Fund of last year and partly by this windfall of the Chinese indemnity, I should be able to apply £13,500,000 to the reduction of the National Debt and reduce the gross debt of the country by £9,000,000, I realised that the taxpayer had a claim which could not be ignored to such benefits as he has received from this Budget. I entirely agree with my hon. friend that, in a sense, this is a provisional Budget. But such as it is, and having regard to the conditions which control production and to the general circumstances of the country at the time, I submit that no better use could have been made of the funds at our disposal, and that the criticisms of the right hon. Member for West Birmingham fall absolutely to the ground. I ask the House to give unanimously a Second Reading to the Bill.

SIR CARNE RASCH (Essex, Chelmsford)

said he wished to express the views of the agricultural interest on this Finance Bill. He listened for two hours and twenty-five minutes to the Budget speech of the Chancellor of the Exchequer, but although he did his best to make himself acquainted with what was said, he confessed that, being the epitome and incarnation of agricultural distress in the eastern counties, he had been profoundly disappointed with the Budget. This Parliament was elected to pay every one out of every one else's pocket; but where did the agricultural interest come in? He should like to know how the duty on wheat hurt the Chancellor of the Exchequer, his constituents, or anybody else. They knew that when it was put on, the price of wheat went down, and when it was taken off the price of wheat went up. The Chancellor of the Exchequer might have imposed as much registration duty as he liked upon wheat and the agriculturists would not have objected to it.

MR. ASQUITH

Why did your Government repeal it?

SIR CAKNE RASCH

Heaven knows; they would not have repealed it if I had been on the Front Bench. The hon. Member proceeded to ask why the Chancellor of the Exchequer did not take his courage in both hands and do something for them. He had a considerable surplus, and it would have been possible for him to have given a bounty upon every quarter of corn grown. Right hon. and hon. Gentlemen were always talking about people coming from the country to the town and the necessity of getting them back again; about the physical deterioration of the people; about the large number of spindle-shanked people walking about the streets, and so on, but here was a chance of making agriculture pay at all events to some small extent. He always regretted that the Chancellor of the Exchequer did not consult the agricultural interest before he framed his Budget. Charles V. of Spain used to say that if he had been consulted by Providence before the world was created he could have given a good many useful hints, and if the right hon. Gentleman had consulted the agricultural interest they could have given him a good many useful hints. Rates in the agricultural districts were piling up, and he should like to know, if men were to be driven from the land as they had been in the past, how the Government were going to secure a virile population upon the soil or keep up a population which would produce sons capable of defending the frontiers of the Empire.

MR. RICHARDSON (Nottingham, S.)

desired to offer a few sympathetic remarks in regard to the reduction of the tea duty. The right hon. Gentleman the Member for West Birmingham had said that the consumer would not get the benefit of it, but he was of opinion that those purchasers who bought penny and two-penny packets of tea would get the full benefit of it. He did not speak as an expert but as a practical man. We had some 12,500,000 people in this country who lived on the border line of poverty and who bought these penny and two-penny packets of tea and he said from experience that they would get the benefit of this relaxation of taxation. He offered his thanks to the Chancellor of the Exchequer for the remission. He had filled the hungry with good things and the rich he had sent empty away. He was sure that the right hon. Gentleman the Member for West Birmingham would agree with him that competition did not range fiercest around the highest price but that it was keenest in regard to the lowest price. He was confident that the process of competition would place this benefit in the pockets of the very poor.

MR. HICKS BEACH (Gloucestershire Tewkesbury)

regretted that the Chancellor of the Exchequer had not seen his way to reduce the income-tax. The-right hon. Gentleman had himself admitted that it was impossible to justify a tax of Is. in the pound in peace time. It was a burden upon trade, which affected not only profits, but wages, and tended to destroy the most valuable and readily available reserve upon which the State could draw in time of emergency. The right hon. Gentleman said that he had reduced the gross capital liabilities-of the State by £9,000,000; but in making that calculation he had included a net increase of £4,600,000 in capital liabilities which ought not to have been taken into consideration, seeing that these charges were all provided with their own Sinking Funds which allowed for a yearly redemption of capital as well as payment of interest. The right hon. Gentleman had in fact reduced the Deadweight Debt by £13,500,000, and he therefore suggested that more good would have been done to the country if £11,000,000 had been devoted to the reduction of debt, and £2,500,000 to the reduction of the income-tax. The coal tax, along with the corn and sugar duties, was proposed by the right hon. Gentleman's predecessor for the purpose of broadening the basis of taxation, and should have been maintained at any rate as long as the income-tax remained at so high a figure. The corn duty, unfortunately, had two disadvantages; it gave rise to much misrepresentation, and it gave an excuse to certain bakers to increase the price of the loaf. In the case of the coal duty, however, there were no such disadvantages, and the revenue derived from it had been an increasing one ever since its imposition; for in 1902–3 it produced £l,991,767,and since that it had gradually increased until in 1905–6, it amounted to £2.183,973. When this tax was first imposed it was said that the mine owners would be ruined, the mines shut down, the export trade destroyed, and that the miners would suffer great hardship. The results derived from this tax had, on the contrary, justified its existence. It had provided a handsome revenue, and had caused the smallest amount of harm to the trade of the country. The total export of coal in 1900, the record rear, was 58,405,000 tons, in 1905 it had increased to 67,160,000 tons. The total amount produced in 1900 was 225,181,000 tons, and in 1905 236,128,000 tons. The percentage of exports to the total output, had increased from 25.93 in 1900 to 28. in 1905. The House had been told that this duty inflicted a great loss on the export trade, particularly with Russia, Germany, Prance, Holland, and Belgium. In 1902, the total exports to those countries except France amounted to 15,800,000 tons. In 1905 they had increased to 19,745,000 tons. It was quite true the exports to France had decreased to a slight extent but, as had been pointed out in the Report of the Royal Commission which considered this question, that was due to other causes, particularly to the competition of Germany which had made the full use of her natural advantages and had come into serious competition with this country in the markets contiguous to her frontiers. One reason for the slight diminution in our exports to France was that our coal exporters did not try to meet the requirements of foreign markets. The methods of Germany were more scientific, and they insisted on cleaning, sizing, and sorting their coal in a way that was not done in this country. Of course no one would contend that a tax could be imposed without to some small extent interfering with the natural flow of the commodity taxed. But the figures he had given proved that the coal trade had suffered to a very small degree, and no tax could have been imposed which would have brought so large a sum to the Exchequer and at the same time caused so little harm. Who would benefit if this tax was taken off? The right hon. Gentleman the Chancellor of the Exchequer had said he was unable to take this tax off immediately because if he did the only persons to benefit would be the foreigners, owing to a clause contained in the contrasts. He himself believed that only the foreigner would benefit. The miner certainly would not, because if he came to the owner for better wages the owner would refer him to that statement of the right hon. Gentleman. The right hon. Gentleman had reduced the duty on tea by 1d. and upon that he supposed the body which ought to be congratulated was the Anti Tea Duty League. But though the right hon. Gentleman had used the arguments of that body for this reduction he had not fulfilled their expectations; and they at any rate along with other tea producers were assured that this reduction would not be sufficient to benefit those who bought their tea in very small quantities. He very much doubted whether the poorest of the poor would benefit. But what of the future? What likelihood was there that in the near future the income-tax would be reduced? What the House had to realise was that next year the Chancellor of the Exchequer would have to find an additional sum of £1,000,000 to replace the loss of revenue caused by the remission of the coal duty for the whole year; another £1,000,000 to provide for a further reduction of 1d. off the duty on tea, so as to give a real benefit to the poorest of the consumers, and if the Education Bill passed a further £1,000,000 for the purposes of education. What possibility was there, with this probability of increased expenditure in the future and only a faint hope of a slight reduction in the expenditure of the naval and military forces, of a reduction of the income-tax? He must also remind the House that the right hon. Gentleman this year had granted a sum of £135,000 for the relief of certain districts in respect of the education charges, and that the tendency of opinion, especially in the country districts, was that education ought to be more of a national charge; which meant that further grants from the Imperial Exchequer would be asked for. He did not hold with those who wanted the whole charge put upon the Exchequer, but he thought that this being a really national question the right hon. Gentleman ought to give further relief to local taxation on this account. What programme had the Party opposite for the reduction of taxation in the future? The House had heard that when the social programme of the Ministerialists was entered upon there would be large demands upon the Exchequer for old age pensions, the feeding of children, and perhaps the clothing of them, the payment of Members, the payment of election expenses, and the payment of the light dues at present borne by the shipping industry. The social programme of the Government was bound to bring further demands for expenditure on the Exchequer, and he thought in a few years to come the right hon. Gentleman would rue the day when in a hasty moment he abolished the export duty on coal—a duty which brought him in a handsome revenue and the abolition of which prevented him from making any reduction in the income-tax.

MR. ANNAN BRYCE (Inverness Burghs)

said although he did not agree with the hon. Member for Tewkesbury in his criticism upon the taxes selected by the Chancellor of the Exchequer for reduction, he was disposed to agree with him that the right hon. Gentleman would have done better to devote the whole of his surplus to the reduction of debt. The Chancellor of the Exchequer had told the House that at one time he had meant to take that course, and the best financial authorities, while pleased with what he had done, would have rejoiced still more if he had given effect to his original Mr. Hides Beach. intention. The right hon. Gentleman in his Budget speech painted in strong colours the evils of a large floating debt. He showed how it not only destroyed the reserve forces of this country against emergencies, but by maintaining a constant drain on the money market hampered commerce and industry. This crippling effect, inherent in all forms of floating debt, was most marked in case of Treasury bills. The new ten-year Exchequer bonds, which might be regarded as semi-funded debt, were taken as quasi-permanent by insurance companies. But Treasury bills, favourites as they were with bill discounters, absorbed funds which would otherwise be available for current loans and discounts, and therefore formed a great factor in raising the rate of interest. It might surprise those who were not familiar with the figures to know the serious effect of even a comparatively small rise in the rates of interest. For the five years before the South African War, the average Bank of England rate was £2 10s. per cent., while- for the five years from the beginning of that war the average rate was £3 14s., or £1 4s. per cent. more. Everybody knew that roughly the rate of interest charged on loans and discounts was determined by the Bank of England rate. The total amount of loans and discounts in the United Kingdom at any one moment, irrespective of loans made by insurance companies and private moneylenders, was estimated at £550,000,000. It would therefore be seen that an additional burden of £6,600,000 per annum, or in the five years £33,000,000, was laid upon the enterprise of the country, during the five years after the beginning of the South African War, as compared with the five years preceding it. The enhancement of the rate of interest was without doubt largely caused by the existence of the floating debt, and especially by the large amount of Treasury bills. If it were too late to make provision this year for the further extinction of Treasury bills, in which only a trifling reduction was being made, he would urge on the Chancellor of the Exchequer, so far as the future was concerned, that he should devote as large an amount as possible to the extinction of this form of floating debt. In addition to its other advantages he believed the right hon. Gentleman would by this course help to re-establish the credit of the country, and raise the price of Consols, even more rapidly than by the redemption of Consols themselves. Apart from all other considerations, it was an object of the first importance to get Consols to par, in view not only of the block in Irish land purchase, but of the other projects of social reform which might require the issue of stock. He might remark in passing that a rise in the price of Consols meant a general recovery in the price of other securities. It was often forgotten that the loss caused by the South African war was not represented alone by the £300,000,000 which that war cost. It entailed a fall in the value of securities of at least £1,000,000,000, and the re-establishment of the public credit would help to repair that loss, though unhappily not to the many who had been forced to sell since the fall began. While it was tempting to extinguish debt by redeeming Consols themselves at their present price, against this must be set the higher interest paid on the floating debt, and the general advantages of freeing the money market from the incubus of that debt. A subject which he proposed to bring up when the Bill was in Committee was the hardship entailed by the present method of assessing industrial and mining companies for income-tax. Under the present system no allowance was made for depreciation of land, buildings, or leases, nor of development work, while only a limited and often totally inadequate allowance was permitted for depreciation of plant and machinery. The result of the present system of assessment was that many companies had to pay income-tax on an illusory profit and in the extreme case might be bled to death by that tax. He knew a company which in seven years had paid only one dividend amounting to £15,000, and that was in its first year, whilst almost all through it had been paying income-tax, which had amounted in all to about £4,000. The income-tax, therefore, had in fact amounted to about 27 per cent., or 5s. 5d. in the £, on the dividend. He knew another com- pany which had never paid any dividend, but which had paid income-tax, and he had no doubt many hon. Members could give other instances of the hardship of the present system. The simplest and fairest plan would be to levy the tax on the sums actually distributed in dividend, which was the course pursued in Belgium and in New Zealand, where, moreover, all allowance was made with the view of preserving the capital intact. Under this method the Revenue would not suffer in the long run, because all companies existed for the purpose of paying dividends, and, to provide against the case of a liquidation for the purpose of dividing reserves, the Revenue might be empowered to charge income-tax on the amount distributed in excess of capital subscribed in cash. The method he proposed would tend to preserve the life of the goose that laid the golden egg, instead of tending, as the present method did, to kill it.

MR. HILLS (Durham)

said he wished to associate himself with all that had been said as to the absolute importance of the reduction of debt. If in prosperous years in the past debt had been reduced instead of taxes remitted we should be in a far better position to-day. But dealing with things as they were, the country was confronted with a very large expenditure and a margin of income over expenditure which was very small. The only way by which the State could repay debt was by the income exceeding the expenditure. There was no royal road to wealth. Was there any prospect of the national income exceeding the expenditure to any great extent? He was very sceptical on that point. All the departments of the State wanted more money. It was said that this Parliament was pledged to economy; but for every mandate in favour of reduction they could quote an equally imperative mandate for increasing expenditure. All that was saved on the Navy would be swallowed up by the payment of Members or feeding of school children. All they could save on the Army would; he wanted for old age pensions or something else. Besides those two great spending departments it was clear the Civil Service would cost far more in the future, because the standard of living had been raised all round. He saw no chance of reduction anywhere, but rather the potentiality of an increased expenditure beyond the dreams of the most reckless Chancellor of the Exchequer. If they turned to income he did not think the outlook was any more rosy. All the great items of income were stationary or showed no great elasticity. Customs were a falling market so far as the Chancellor of the Exchequer was concerned. A stage had been reached when present taxes ceased to show a natural increase and increased taxes produced a smaller revenue. Excise was levied entirely on food drink, and tobacco. As a convinced tariff reformer he was opposed to food taxes. It must be remembered that it was a part of the scheme before the country that, although certain additional taxation was proposed on some articles, the whole plan contemplated a reduction of food taxation. In fact, all parties, whatever their fiscal creed was, agreed that food taxation should go. No doubt it would be possible to get more from income-tax, and he was in favour of the graduation of the income-tax, but even with a graduation he did not think the gross return from the income-tax would be more than £30,000,000, unless the tax stood at a figure far too high for a time of peace. On these three great sources of income he did not see the prospect of any great increase unless they increased the burdens to such an extent as to press unduly upon industry and to cause the country to suffer. The death duties stood at a very high rate. Eight per cent, was a very heavy tax on capital, and if those duties were increased he did not think they would get very much more from that source, as the number of big estates was small. Supposing, then, they went outside their present held to see what were the new sources of taxation that were suggested. There, again, he confessed he did not see a new field for the Chancellor of the Exchequer. Of course they could tax land values, but he did not think that land was the Golconda that some land-tax reformers seemed to think. It was a very poor investment, and he did not think the Chancellor of the Exchequer would get very much out of it. And so they were met with a large increasing expenditure and an almost stationary revenue, and on every side demands were made for spending more money. It was perfectly clear that all these schemes of social reform would not stand still for want of money. The Government might say that they agreed with those schemes in principle, but they could not find the money. That attitude could not be maintained for long. The demand would become so overwhelming that all thought of economy would be swept away and the reforms would have to be carried out. Where were they to find the additional revenue? He would not go into the intricate question of the incidence of taxation; but it was a mistake to hold that case of collection was the same thing as case of incidence. A tea tax was very easy to collect and a tax on manufactures very hard to collect, but still it might be that the tax on tea would press more hardly than the tax on imports. Again, a tax on sugar was paid by every person in the community. If one man was 100 times richer than another he did not eat 100 times as much sugar as the poor man. The power of bearing the burden was also not equal, although our system seemed to take it for granted that, equality of contribution was the same thing as equality of burden. But anyhow he did plead for a reconsideration of the whole scheme and basis of our taxation. He was not satisfied with things as they were, and he was not to be put off with any stock phrase like "taxation for revenue only." No doubt taxation was a dangerous weapon, but it was one that he desired to see used for the benefit of the whole community and not for one part of it only. The last word had not been said when they were told that no taxes should be imposed except for revenue.

MR. SCOTT (Ashton-under-Lyne)

said he would confine his remarks to the reduction of the tea duty. Upon this point he was not altogether in accord with the observations that had fallen from his hon. friends on the Ministerial side, because he did not believe under present circumstances that a penny taken off the tea duty would find its way in all cases to the consumer. He wished to place before the House the position which the merchant found himself in. The Chancellor of the Exchequer had alluded to the fact that most of the tea merchants were found supporting the Government. Rut why was that? Because they were strong free traders? They submitted each year to the nuisance which was always associated with dealings in any article that was liable to taxation. If they placed upon their posters or labels a particular price, no sooner had the Chancellor of the Exchequer spoken than they had to send the billposter round with a slip to place on their posters indicating an alteration of price, whilst their labels would have to be destroyed. The result of all this was that the tea merchant only knew for twelve months what the regular price of his packet-tea would be. What was the position that this Budget placed the merchant in? If the Chancellor of the Exchequer had a big surplus next year and again interfered with the tea trade by taking another penny off the tea duty what would be the position of those engaged in the tea trade who had given the benefit of this year's remission to the consumer when they were faced with the difficulty of taking twopence off twelve months from now? They could only do it by decreasing the quality of the tea by one penny in the pound. Consequently they would suffer great inconvenience twelve months hence or cause dissatisfaction to their customers. He hoped the Chancellor of the Exchequer would give some undertaking that they would not have to submit to these continued alterations in regard to the tea duty every year. During the last half-dozen years there had been hardly a year in which the tea duty had not been interfered with, with the result that whenever those engaged in the tea trade saw any indication of a surplus they at once reduced their stocks to the lowest possible amount, and when the expenditure of the country had been greater than the Estimates the tea merchants crowded into their warehouses as much tea as they could. There ought to be some understanding that they would not have these disturbances yearly, and when the tea tax was either increased or decreased it should be dealt with to the extent of twopence in the pound in order that the alteration might be given on a quarter pound packet which was the recognised packet in which most of the tea was sold in the North of England.

MR. HUNT (Shropshire, Ludlow)

said that during the last election hon. Members sitting on the Ministerial side told the electors that they were the Party above all others to represent the working classes, and they were also great advocates for the free breakfast table. It seemed to him that under this Budget some of the necessaries and all the luxuries of the poor were very heavily taxed. With the exception of alcohol and tobacco the whole of the real luxuries of the rich escaped taxation altogether, because no import duties were paid on those luxuries. He might mention, as an illustration, silk, of which article over £13,000,000 worth was annually imported into this country. There were also such articles as motor cars, furs, toys, gloves, ornamental feathers, turtle soup and expensive foods, and various other things which were only used by the rich, and of which many millions of pounds worth were imported every year. All those luxuries did not pay one halfpenny of taxation. This was a system which the Chancellor of the Exchequer and hon. Members opposite were pleased to call free trade, which they pretended was for the benefit of the working classes. In 1894 the Liberal Government gave India a general tariff and the power of retaliation. Under that system India had prospered exceedingly and had twice been in a position to reduce the salt tax, which was one of the great necessities of the very poor in India. He was quite aware that Lancashire manufacturers vehemently protested against it, and said that they would have to pay the tax and not the Indian consumer, which proved that in some cases at any rate the consumer did not always pay these import duties. Why did the Liberal Government in 1906 refuse to the British Empire a privilege which they gave to India in 1894? Although a penny had been taken off the tea duty he doubted whether the very poor in London and our big cities would get any benefit whatever from it. They had been told that tea was an absolute necessity for the poor of this country, and yet the present Government were taxing tea to the extent of 90 per cent, of its value. The poor people had to pay nearly the whole of this tax, because there was no competition with an untaxed supply. In regard to the two shilling duty on foreign wheat the Ministerial Party gave the electors to understand that it would certainly raise the price of bread to double its present amount. [Cries of "No, no" from the MINISTERIAL Benches.] At any rate, if the posters were to be believed, a tax of 2s. on corn would have made the price of bread four or even eight times as much as it was now judging from the relative sizes of the loaves displayed. He had seen pictorial posters in which the "big loaf" was shown four or eight times as large as the "little loaf." He thought that might fairly be called the gigan ic inexactitude of the big and he little loaf. The absurdity of that contention was shown by the fact that, even if the consumer had to pay the whole of the duty suggested by the right hon. Gentleman the Member for West Birmingham, its amount would have been only one-tenth of a farthing upon a pound of wheat; while such a preferential duty would have enabled Canada to compete on equal or nearly equal terms with the United States. Members on the Ministerial side believed in the graduation of the income-tax, so that the richer a man was the more he would have to pay. But in regard to the duty on tea—a necessity for the very poor— the Chancellor of the Exchequer had reversed that principle, and made the burden fall most heavily upon the poor. The poor man paid two or three times as much in taxation for his pound of tea as the rich man. In the case of sugar, which was not only a necessity, but the raw material for some of our great industries, the tax was 30 per cent. Cocoa, which might fairly he called a necessity, for it was used by the very poor, was taxed to the extent of Id. in the raw state and from l½d. to 2d. when manufactured He really thought that the Gentlemen opposite should not call this a system of free trade or free imports. Coffee was also heavily taxed, while nearly all the luxuries of the rich escaped taxation altogether. Some of the necessaries of the poor and practically all their luxuries were heavily taxed. This was the Budget supposed to be for the benefit of the poor, which the antiquated Cobdenite policy of the strongest Liberal Government of modern times had produced. If the luxuries of the rich were taxed home manufacturers would be helped by being relieved of that portion of taxation which the foreigner would have to bear, and home industries would be able to provide regular work at good wages for British working men. The Home Secretary received 13 per cent, on the money he had invested in jute mills abroad. The mills competed seriously with those of Dundee. The wages paid in the mills were from 1s. 8d. to 5s. a week for men, and 2½d. a day for women. Although it might suit the Home Secretary to get his thirteen per cent., it did not help the Dundee workers who had to compete with him, and who, if paid at the same rate as the workers in the mills abroad, would receive from 2s. to 3s. a week. He contended that all, or nearly all, of the small tax on wheat suggested by the right hon. Gentleman the Member for West Birmingham would be paid by the foreigner. The system of taxation put forward by the Chancellor of the Exchequer might suit bankers, because they got more pickings out of foreign securities, the rich, because they were able to get their luxuries cheap, and people who had invested their money in foreign securities; but he hoped that before next year the Chancellor would have found a way to reduce the taxes upon the luxuries of the poor.

MR. CAIRNS (Newcastle-on-Tyne)

said that, as a representative of a constituency the name of which was synonymous with coal, he wanted to take the opportunity of expressing the gratitude of the Newcastle district to the Chancellor of the Exchequer for having had the moral courage to remove the coal tax, the incidence of which was peculiar and restricted. It was comparatively easy to listen to the voices of the many when a tax had a generally detrimental effect, but when a tax was obscured by its exceptional incidence, it was very much more difficult to demonstrate clearly to the country, and even to Members of this House, the lines upon which it should be removed. The coal tax was a tax upon a section of our industries, nay, upon a section of a section, because it was only on the export part of the coal trade. Undoubtedly, other coal-producing countries had received a great advantage—practically shilling per ton export bounty—by the imposition of this tax. This was easily demonstrable in the case of France, Germany, and even Spain. It was also clear that injury had been done to our own coal trade with Canada by America. The hon. Member for the Tewkesbury Division had admitted that the tax had done some harm, and coming from him that was a strong argument. As a proof that the tax was paid by the foreigner, he instanced the contracts now in existence which stipulated that in the event of the remission of the tax the whole amount must be allowed to the foreign buyers. Such contracts proved nothing as to the incidence of the tax. He knew of contracts which, in case of the tax being taken off, stipulated sixpence to the foreigner and sixpence to the British exporter. Did that necessarily prove that the tax generally was paid half by the foreigner and half by the ox-porter? He knew further of contracts when in case of remission the whole amount came to the exporter. Did that prove that the whole of the tax fell upon the British producer? Such facts afforded no explanation as to who bore the tax. They were merely incidents in commercial transactions. He was sure he would enlist the sympathy of hon. Gentlemen opposite when he stated that the coal tax had advantaged foreign countries to the detriment of our own. In these few brief words he wished to thank the Chancellor of the Exchequer for having had the courage to defer to a sense of justice rather than to mere expediency.

SIR WILLIAM BULL (Hammersmith)

said he thought that the Chancellor of the Exchequer might have, with some manipulation, given relief to income-tax payers whose incomes were small. He understood that the hon. Member for North Paddington had propounded in the Press a scheme for taxing bachelors. Nothing was said about spinsters, and other members of the fair sex, whom he would leave severely alone. When the limit of exemption was raised some years ago from £150 to £160 it was stated by the then Chancellor of the Exchequer that for persons with £400 a year or less, a sum of £160 for maintenance was a fair amount, and the relief granted was upon that basis. Well, that amount, £100, was ample for a single person, but it was totally inadequate for the maintenance of two persons, because extra rent, extra rates, and increased cost of living had to be taken into account. It was not for a moment suggested that the cost of two persons' living and maintenance was double that of one person, but it could be safely taken as one and a half times as much. It was for that reason that he suggested that the limit of exemption should be raised by 50 per cent, for married persons. That was to the extent of £240, leaving the present limit of £160 to single persons. Where there were children there should be a further relief granted, say, £20 per annum for each child. As this worked out a trifle over a shilling a day, it certainly could not be called extravagant, if clothes, food, medical attenance, etc., were taken into consideration. Let him take a concrete case. A man was married, and had two children. He asked that such a man should receive relief of £160 for himself, of £80 for his wife, and of £40 for his two children, making in all £280 relief if the total income was less than £800 a year. For other statutory abatements, other calculations would have to be made, but he did not wish to tire the House by entering into minutiae. No doubt, the Chancellor of the Exchequer would say that this system of relief would cost a considerable amount of money. He thought that he could prove the contrary. Let him assume that no less than 50,000 families were to receive this extra relief. The cost to the revenue would be, at the very outside £200,000, or less than one-tenth part of the present yield of a penny in the £ of income tax for the relief granted was only £4 for the wife, and £1 for each of the children. But what did not these few pounds represent to a man who might have less than £300 a year! It might deprive them not only of luxuries, but of actual necessaries. He did not think the Member for Liverpool could have any idea of the struggle which such men had, to pay this heavy Income tax to the State. Dealing with, say, 100,000 married couples suffering from taxation, there had to be eliminated first at least one-half whose incomes were under £160, and who, consequently, were already entitled to exemption. Fifty thousand remained who, if they possessed £240 a year would be entitled to the full £4 relief proposed to be granted, but of these 50,000 it might safely be calculated that another half would not have the full £240, and consequently the extra relief granted to them would not, on the average, amount to more than £2. The only persons who would benefit to the full amount of the £4 relief were those owning incomes of from £240 to £600. Dealing with children, relief only came in where the parental income exceeded £240. It would therefore affect a comparatively small number of persons, although at the same time it would be an extreme boon to those to whom the relief was granted. What he proposed was not altogether new, for already there existed a modicum of relief granted to married persons who earned their own living independently one of the other. Where he feared he should meet with the greatest opposition to his scheme was amongst the permanent officials of Somerset House, for it would appear to be their policy to throw every obstacle in the way of persons who, even now, were statutorily entitled to exemption or abatement. Several questions which he had already asked the Chancellor of the Exchequer on various occasions must have prepared him for some of the statements which he was about to make. The Board of Inland Revenue were continually making new rules and regulations, even after the sixty-three years existence of income-tax. He might mention their refusal to refund tax to a claimant if the dividends were not exclusively registered in his name. This refusal went as far as not to refund income-tax to a claimant on his share of a dividend in his name if any part of such dividend belonged to another person, and to refund to joint beneficiaries under any circumstances whatever unless a deed of trust or legal documentary evidence as to ownership could be produced to satisfy the Board. Now came one of the greatest difficulties. What was the kind of legal documentary evidence which was required to satisfy the Board? The Inland Revenue, should issue such documents as, when completed and submitted, would satisfy them, but they declined to do so, and said that it was for the claimant to supply the evidence, which they would consider. They fully admitted that it was next to impossible for the claimant to produce any evidence which would satisfy them—an attitude worthy of Dickens' Circumlocution Office. Consular and notarial declarations had been produced where the claimant had sworn as to his income, but all of these had been refused. It was against these arbitrary decisions given by the Board of Inland Revenue that he would ask that there should be some appeal. It was absurd to suggest that a person with less than £160 a year who considered himself to be aggrieved should have to appeal to the High Court for a decision upon a legal point. Why not have a simple Court of Appeal where the claimant could state his case and obtain justice? As it was, the Board of Inland Revenue merely gave a decision, and if any argument was brought against them they gave the stereotyped answer that the Board adhered to their original decision, and if applied to again gave the second stereotyped answer that they had nothing to add to their previous communication, sometimes saying that they declined further correspondence.

Question put, and agreed to.

Bill read a second time.

Committed for Monday next.