§ I now come to the changes which I am in fact going to propose. First of all, I will deal with a matter which, though it does not immediately affect, for good or evil, the revenue of this particular year, is, in my judgment, of the greatest importance with regard to the future. I refer to the relations between the Imperial Exchequer and local taxation. I propose, as from the end of the present financial year—I cannot break up the year for this purpose—but, as from the 1st of April next, to sweep away, root and branch, the whole system by which assigned revenue, the proceeds of Imperial taxes, is intercepted from the Exchequer and handed over to local authorities. The arrangements which I ask Parliament to terminate were initiated nearly twenty years ago, in 1888, by the late Lord Goschen, whom we have lost since I last presented a Budget to this House. He was a great financier, a great administrator, a man who brought a rare combination of clear insight, cultured intelligence, subtle reasoning power, wide expert knowledge, and indomitable and inflexible courage, to the service of the State. Lord Goschen introduced this system, and his scheme, as conceived by him and as presented to this House in 1888, had, no doubt, a good deal to recomend it. He had a twofold object in view—first, to provide a contribution from personalty towards local expenditure, and next, to effect a permanent settlement between local and Imperial taxation by handing over to local authorities certain duties or taxes. Amongst these were the licensing duties, which it was intended should be collected locally, a power at the same time being given to the local authorities to vary them by raising or lowering them, a moiety of the probate duty on personal property, and certain proposed new taxes—the van and wheel tax, which never saw the light of day, together with the surtaxes on beer and spirits, which were assigned with the special object of providing funds for compensation for the extinction of licences. That was the scheme, but as all of us who were here at 1196 the time, and as all know as a matter of history, in the course of its passage through this House it was mutilated beyond all recognition. The van and wheel tax was abandoned. The local authorities got the licensing duties, it is true, but without the power of raising them, and without the power of collecting them. They were really Imperial taxes, collected by Imperial officers, which, by a thoroughly illogical and indefensible process, never came to the Imperial Exchequer, but were intercepted on the way, and reached the hands of the local authorities, who had nothing to do with them but to spend them. As regards the death duties, with the revision of those duties in 1894 by Sir William Harcourt even the semblance of a special contribution from personalty to local taxation disappeared; and the Agricultural Rates Act and various other Acts which have since been passed have rendered the system even more intolerable than it was before.
§ The Committee may not find it interesting, but I think it is necessary to show what the present condition of things is. First of all, there is the estate duty. Part of it, representing the old probate duty, goes, under the Act of 1894, to the Local Taxation Account, and is divided between the three kingdoms in certain fixed proportions, though it is a variable amount. And it is further complicated by this, that, owing to the passing of the Tithe Rent-Charge Act, from the English portion of that varying amount another varying amount is every year deducted for the purpose of the tithe rent-charge grant. Then a further part of the estate duty goes to agricultural rates. In England, that contribution is made entirely out of the estate duty. In Scotland it is made mainly out of the estate duty, with, also, a grant from the Consolidated Fund; and in Ireland it is wholly made out of the Consolidated Fund. Take the case of licences. In England and Scotland the proceeds of the local taxation licences are given to the various authorities according to the amount collected in their several areas. Ireland gets three so-called equivalents. I am not sure, though I do not want to raise any question of controversy with hon. Gentlemen whom I see sitting opposite to me, that they are not a good deal more than 1197 equivalents. But, at all events, they receive three so-called equivalents for these licence duties out of the Consolidated Fund. And, finally, you have the beer and spirits duty, which is divided between the three kingdoms in the fixed proportion. Could a more head-splitting condition of chaos and confusion possibly be presented to the House of Commons? I think that everybody concerned either with local or Imperial taxation will agree that it is time that the system was put an end to. It will stop an enormous amount of complication and difficulty in our national accounts; and, from the point of view of the Chancellor of the Exchequer, which is the point of view from which mainly regard it at the moment, it will set his hands free, as they are not free at present, to deal with some of the most important sources of taxation. I have been pressed very much to alter and raise the duty on motor-cars. I should be very much disposed to do so. I think a tax on motorcars is almost an ideal tax, because it is a tax on a luxury which is apt to degenerate into a nuisance. But it is no good, so long as this system prevails, for me or for anyone else to put an additional duty on motor cars; for where does the duty go to? It goes to the local authority by whom these duties are collected, that is to say, as a rule, the local authority within whose area the person resides to whom the motor-car belongs. Suppose I pay, under a new addition to the motor duty, as I should pay, here in London, an extra duty on my motor-car, the benefit goes entirely to the London County Council. But it is not the streets and roads of London to which my motor-car does injury, it is to the rural districts of England and Scotland. Nothing can be more illogical or unjust than that distribution of the matter. Let me take another case, much more important—take the duty on the licences of public-houses. I wish to have my hands set free in that matter also. At present the proceeds of those duties go to the Local Taxation Account, and there, again, they go to the local authorities in proportion to the number of licences which are taken out in their respective areas. You could not possibly have a system better calculated to put a premium on a lethargic and non-public-spirited licensing authority. To set free the hands of the Chancellor of the Exchequer for these and 1198 other purposes it is eminently desirable that he should recover complete control over the whole of this class of duties. I do not want the local authorities to suffer; as far as my plan is concerned, they will not suffer and will not be one halfpenny out of pocket. I propose that in future, after the close of the present financial year, they should no longer have any concern with probate duty, local taxation licences, or beer and spirits, but that they should receive from the Consolidated Fund a sum equivalent to the proceeds of these respective sources of revenue that at present go to the Local Taxation Account, and at the present rates of charge. I mean, of course, that, if in the future you raise the duties of any of this class of licences, that is not to be taken into account in the sum which the local authorities are to receive.
§ MR. AUSTEN CHAMBERLAINThey would share in any natural growth?
§ *MR. ASQUITHThey would share in any natural growth—that is to say, they would receive precisely the same sum in any year as they would receive now if the present state of things was continued; a natural growth or a natural diminution, as the case may be. The object is, as I say, first of all to get rid of an enormous, most unsightly and inconvenient complication in our national accounts; secondly, to set free the hands of the Chancellor of the Exchequer with regard to a large area of taxation; and thirdly, to clear the ground—for this is only a provisional arrangement—for a future re-settlement, I hope on equitable terms, of the whole relations between the central authority and the local authorities. That is the first of the proposals that I make to the House, and I hope it may be received as of almost a non-controversial character.