§ CONSIDERED IN COMMITTEE.
§ [Mr. EMMOTT in the chain]
§ (IN THE COMMITTEE.)
§ INCOME TAX.
§ Question again proposed,
§ "That income tax shall be charged for the year beginning the sixth day of April, nineteen hundred and nine, at the rate of one shilling and twopence in the pound, and that an additional duty of Income Tax at the rate of sixpence in the pound be charged in respect of incomes which exceed five thousand pounds on every pound of the amount by which the income exceeds 36 three thousand pounds."—[Mr. Lloyd-George.]
§ Mr. EVELYN CECILWe listened on Wednesday night to a very strange speech in defence of this Resolution from the Chancellor of the Exchequer, and it is one which we ought to lose no time in answering. I somewhat question whether he would have made use of some of the defences which he made that evening had certain events happened then which have happened since. But however that may be, I should like somewhat critically to-examine his remarks, which gave me a great deal of astonishment at the time. In the first place he objected that the Opposition desired some three weeks at least to discuss the first reading of this Bill, and he told us that this was his view with a certain amount of theatrical sur- 37 prise, not altogether unconnected, I suspect, with a readiness to use the closure. But is it surprising that we should wish to have three weeks to discuss the first reading? This is not one Bill. It is about half-a-dozen Bills, and anyone of them would deserve to have a considerable portion of any Session allotted to them. Why then should we not be allowed to have full time to discuss these entirely unprecedented proposals and to consider the far-reaching bearings which they have? Besides, I am rather surprised that the Chancellor of the Exchequer is so very anxious to hurry on these Resolutions. I should have thought from his own point of view that the longer they took the more time there was for Cabinet alterations in the Bill.
It appears to ore that this Bill is not unlike a jelly not quite set, and whether it ever will be properly set still remains to be seen, but if rumour is to be trusted I gather that the 60 or more clauses of the Bill are still in a very jelly-like condition, and that the right hon. Gentleman is prepared to make material alterations on them during the time the Debates on the Resolutions go on. I should like just to look at the defences which the right hon. Gentleman brings forward for these remarkable resolutions. This income tax resolution is defended, so far as income tax strictly is concerned, by him on two grounds. I would note the fact at the outset that this is a fundamental change as regards the income tax, that we have never had such proposals in peace time to deal with before, and that it is starting altogether a new precedent. What are the right hon. Gentleman's defences? He told us in the first place that preparation for war was equally important with war itself. That was one of the reasons why it was necessary to have a high income tax in time of peace—at least that is how I interpret the remarks of the right hon. Gentleman—but from the financial point of view, surely this is entirely absurd. Does anybody suppose that the amount of money spent in preparation for war is ever the same as the amount spent when war is actually going on? Why the normal condition of every nation should be to spend an adequate amount for defence in peace time, and in preparation for war, and for that purpose a certain amount of taxation should be raised and cheerfully paid, but it is quite another thing to say that we should have to pay in peace time what we should have to pay in war time. There is no analogy between the two. I 38 do not understand why the Chancellor of the Exchequer should bring forward such a defence of this particular proposal. But his second defence was even more extraordinary. The Leader of the Opposition had said that after all you ought to leave the income tax as a kind of reserve for great emergency, and the Chancellor of the Exchequer replying to that said:—
Why should the income tax be treated as a reserve, as something Which is of a temporary character, while other taxes are regarded as permanent? Why should not the other taxes have their turn as temporary taxes, the taxes on the food of people, fur instance? Why should taxes on the necessaries of life be regarded as permanent, and the taxes on high incomes as purely temporary.I should think there was the best of reasons. I do not know whether the Chancellor of the Exchequer intends to suggest that taxes on the food of the people are suitable taxes to raise in time of national emergency. I should have thought it was never his desire to raise the taxes on the food of the people, and certainly, above all others, that we should not pile an enormous sum upon them when a national emergency occurred. If that is not the meaning of the right hon. Gentleman, I suppose he means that very often certain classes of the community ought not to be paying taxes at all, while other and more limited classes of the community ought to be paying them very considerably. But is that a just doctrine? Is it to be seriously alleged that a large proportion of the nation ought to be left out of taxation altogether? That savours to me very much more of the clap-trap of the demagogue than of the responsibility of the statesman. If that is a serious defence for proposing this increase of the income tax in the time of peace, I should like to answer the right hon. Gentleman out of the mouth of the Prime Minister himself. What did the Prime Minister say when he introduced the Budget in 1906? He said:—In regard to the income tax, I do not hesitate to associate myself with the declarations of more than one of my predecessors, that an income tax of a uniform rate of Is. in the £ at a time of peace is impossible to justify. It is a burden on the trade of the country, which in the long run affects not only profits but wages. It presses with excessive and peculiar severity on that large class of the community with incomes from £700 to £2,000 a year, who pay in addition their full share of the taxation on articles of consumption. It tends to destroy. or at any rate to contract, a. most readily available reserve on which the State can draw n a sudden and unforeseen emergency.I agree with every word used by the Prime Minister, and it is perfectly astounding that the right hon. Gentleman now the head of the Government, after having given utterance to these wise opinions, should be raising the income tax to Is. 2d. in time of peace.
§ The PRIME MINISTERI adhere to them all.
§ Mr. EVELYN CECILI am glad to hear that the right hon. Gentleman adheres to them all. I only wish he would carry them out in practice.
§ Mr. W. P. BYLESDid the right hon. Gentleman not reduce the income tax to 9d.?
§ Mr. EVELYN CECILNot in all cases. I do not quite see the relevancy of the hon. Gentleman's interruption. There is another subject in regard to the income tax on which I want to make a few remarks, and that is the question of differentiation. We hear a great deal about differentiation between earned and unearned incomes, permanent or precarious incomes, or whatever you like to call them. I think, in the first place, that differentiation in this country is already a great deal too high, as appears from the evidence of the Inland Revenue Commissioners themselves. It is higher than in any other country in Europe, and if you attempt to define it you get yourself into a number of intricacies and injustices. I personally think it is very foolish to try to carry out differentiation of this kind at all. You have the obvious case of incomes derived from savings. Why should they be considered as unearned incomes? The pensions paid to civil servants have been allowed to be treated as earned incomes. That was a concession which was made two years ago, but what is the difference between pensions paid to civil servants and incomes derived from savings of worthy citizens? Both have done much for the country. No doubt the civil servants have served the country well, and deserve their pensions, but there are many people who are not civil servants who have served the country well in many commercial or other callings who deserve also to have the incomes from their savings treated as earned incomes if the pensions of civil servants are to be so treated. That kind of difficulty arises because you attempt to differentiate, and because you try to make some distinction with respect to subjects between which it is impossible to draw the line. These hardships are likely to take place, and I would earnestly advise the Chancellor of the Exchequer to reconsider some portions of his Budget from that point of view.
Let me refer to the super-tax which is referred to in the latter portion of this Resolution. The Chancellor of the Ex- 40 chequer had three defences for that in his speech on Wednesday night. He told us that the City does not complain; he told us that he had no correspondence objecting to it; and he told us that he considered the super-tax perfectly fair. Let me take these three remarks seriatim. As regards the City not complaining I think the right hon. Gentleman will admit that he has spoken too soon. He no doubt by this time has digested the weighty letter from bankers, merchants, and business men two or three days ago which was addressed to the Prime Minister. Perhaps I may read one sentence, which contains the pith of the letter:—
The great, increase and graduation of the Death Duties —already materially raised hut two years ago—and of the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industries of the country.The commerce and industries of the country do get some solicitude from the Chancellor of the Exchequer, and if that is likely to be the effect, as assuredly it will, of his Budget proposals, I should have thought that he might have given some consideration to this letter. I thought that as a rule in financial matters it was the practice to seek for the advice of the City and not to flout it. The right hon. Gentleman now we learn evidently did not seek the advice of the leading members of the City and of persons there engaged in business, and he has decided to flout the advice which he now receives. Even Sir Felix Schuster, one of the gentlemen who stood for the representation of the City in the Liberal interest, has joined in this letter. It is quite a non-party letter. It is purely a practical letter from business men. [Indications of dissent.] Apparently hon. Gentlemen below the Gangway consider it of no consequence at all. I do not know whether their experience is equivalent to that of the signatories of the letter. I understand their attitude is that if any further money is required in time of emergency you should clap on more super-tax. You want old age pensions, which in many respects are being scattered about like doles to the unthrifty. It was only a day or two ago that I spoke to a working man who objected to pay 1½d. a week more for his tobacco in order to give doles to the unthrifty. Hon. Gentlemen below the Gangway consider the super-tax an engine for taking out money from an unlimited mine of gold. I can assure them that it is not the case. 'They are killing the goose that lays the golden eggs, and if they find hereafter that trade and commerce 41 do diminish, and that workmen are discharged, they cannot say, at any rate, that we have not warned them.Let me go on to the Chancellor of the Exchequer's second defence for this super-tax. He said he had no correspondence. This letter is quite sufficient to count for a great deal of influential correspondence, but I strongly suspect that the 10,000 or 12,000 people in the kingdom who are alleged to have more than £5,000 a year are not very likely to communicate with the Chancellor of the Exchequer when they remember that he holds office in a Government which intends that minorities should suffer. As to the third defence of the super-tax, that he considers it perfectly fair, I should like to make some comments also. It should be remembered that the super-tax does not stand alone. It is a tax which must be taken together with the death duties which were raised two years ago and the succession duties. If it was standing alone it might be considered to be a fair tax. But as it taxes the same people merely in a different way from the other taxes—death duties, legacy and succession duties, and so on—it is in its incidence and its amount I consider a very unfair tax, and it is not only we on the Opposition who consider it so. I suppose anyone who speaks from these benches will be considered merely a special pleader, but I should like to read to the House the remarks of Lord Milner on that subject, who at any rate is not a special pleader as we could be considered to be, and whose eminent services and great financial experience ought to have some weight with the Chancellor of the Exchequer. He said at Bristol on 4th May:—
I am absolutely convinced that these crude, repeated, direct attacks on the wealthy will defeat their own object. I am not one of the wealthy myself. I have no personal interest in the matter, but I have I hope sonic sense of justice, and I have had more than 20 years' experience of public finance in different parts of the world, and I say that the present raid is going to defeat itself.Those are very strong words, coming from Lord Milner, and I do not believe that they are a bit too strong.But who, again, is to judge of the fairness of this super-tax, so far as its practical administration is concerned? It is not the Chancellor of the Exchequer; it is not the Treasury; it is the people upon whom the taxes will fall; and you may be quite certain that if people consider that the tax is unfair they will take it upon themselves to evade it legally—lawful avoidance is the term used by the Committee in its Report—lawfully avoid it in every possible way. 42 And small blame to them from their point of view, because, after all, a tax which is considered grossly unfair and grossly unjust naturally tempts people to evasion, and they do not consider themselves, and I really do not know why they should consider themselves dishonest, if they attempt to do so in a legal way. But is that all? The tax itself is economically unsound. No political economist of repute and standing, I venture to think, would really seriously consider it otherwise. Sir Henry Primrose, who has a great knowledge of this subject, said in his evidence before the Income Tax Committee: "I am convinced that it would be beyond our powers effectively to levy a super-tax, even on persons with incomes in excess of £5,000 a year." That is a very strong argument from a Treasury official. If the super-tax does not work effectively it is simply a fraud penalising the scrupulous, and acting in its operation irregularly and with great uncertainty. If, on the other hand, it is going to work effectively, as the Chancellor of the Exchequer argues, what justification is there for incurring the expensive machinery of two income taxes, because it is practically a second tax? The Chancellor of the Exchequer, I suppose, intends to have one staff to collect the present income tax, and to have another staff, a different staff necessarily, for the collection of the new super-tax.
Apart again from that, the Chancellor of the Exchequer is giving up the principle of collecting at the source so far as the super-taxes go, and I should have thought that anyone who read the evidence in the Blue Book would have come to the conclusion that the less you collect at the source the greater leakage there is in the amount of taxes which flows into the Treasury. I do not know whether there is any disposition to dispute that, but I saw in the main portion of the Committee's Report a very interesting piece of evidence which bears that out. The Report says: "It is interesting to recall the fact that 100 years ago we abandoned direct personal assessment, and collection at the source was substituted, with the result that the yield of the tax was almost doubled immediately. In 1803 an income tax of 5 per cent. collected at the source yielded within a very small amount as much as a tax of 10 per cent. did in 1801, when it was assessed and collected direct from each taxpayer." Nothing is more conclusive to my mind. Yet in the face of the evidence, and in face 43 of that statement in the report, the Chancellor of the Exchequer proposes to introduce all his machinery for the ineffective working of the super-tax. There is another remark to be made about the super-tax. It is very inquisitorial. Hitherto British statesmen have strongly objected to anything so inquisitorial into private affairs as the proposed machinery. Apparently this view is no longer going to be maintained, and it is not an answer to tell me that inquisition is already made into certain incomes. That is quite a different kind of thing. Inquisition there is made for the benefit of the person who pays the tax. An hon. Gentleman laughs. Of course it is made for his benefit; otherwise he would not get any abatement, and it is further a thing that is voluntary. The person who pays the tax need not make the Return stating exactly—?
§ Mr. CHIOZZA MONEYIs not the hon. Member aware that we actually go behind the back of the employee and compel the employer to divulge the employé income to the Government?
§ Mr. EVELYN CECILSuppose I had an income of £630 a year and I did not choose to return it, though I could get an abatement as it was under £700, I am not compelled to do so. It is quite voluntary. The hon. Gentleman seems to forget that there are innumerable instances of that kind throughout the country, but I do consider that there is a very great difference between an inquisition which is to a great extent for the benefit of the taxpayer and an inquisition which is necessarily going to be to his prejudice. The two inquisitions are on a wholly different basis. The one, to my mind, is utterly hateful, while the other is voluntary, and is only made to secure an abatement for a lesser income. I am afraid the Chancellor of the Exchequer in all his proposals is an apt pupil of the hon. Member for Blackburn, that he is departing from the advice of Mr. Gladstone and Sir William Harcourt, and that now he is listening very attentively to the suggestions which come from hon. Members below the Gangway. I can only say that I fear his conversion forebodes national commercial disaster, and that the consequences of it will be that capital will go abroad, that wages will be reduced, that workmen will be discharged, and that unemployment will be rampant.
§ Mr. CHIOZZA MONEYI should be very happy if I can do anything to calm 44 the somewhat exaggerated fears of the hon. Gentleman who has just sat down. Regarding in the first place the financial stability of the United Kingdom, it seems to me, that he has forgotten the ratio between the amount of the new taxation which my right hon. Friend proposes to impose upon certain classes of this country and the income of those classes. For example, the whole income which my right hon. Friend stands to get both out of the increased income tax and the super-tax in addition to that increase is three and a half million pounds. Let us suppose for a moment that three and a half million pounds is a conservative estimate, as I suppose it ought to be under the present circumstances. Let us suppose that the yield will prove to be, as I think it will prove to be, at least £5,000,000. What is the ratio of that £5,000,000 to the income of the class taxed by his scheme? Is the hon. Gentleman aware that the total income of the taxpayers whose income exceeds £700 a year is certainly not less than £600,000,000 per annum? Can it truly be said, in view of that fact—and it is a figure which can easily be verified—that if you take £5,000,000 out of the pockets of the possessors of that extraordinary income you either impose an intolerable burden upon them or weaken the resources of this country, or in any way trench upon the war reserve of this country? Even if you believe the income tax to be a war reserve, which to my mind is not the proper light in which to regard it, what is the war reserve? What is the financial reserve of this country whether in time of peace or war'? Surely it consists in the entire taxable income of the country? The means by which we get at that income merely represents the tapping of the reservoir, the means by which you draw upon the reservoir. It matters not whether you call it income tax, super-tax or petrol tax, the effect is that you take a sum out of private pockets and transfer it into the public purse. What is the economic effect of the transfer? Does it necessarily weaken the country financially at all? Consider the effect of taking £5,000,000 from the pockets of persons who possess £600,000,000 a year and spending it on the building of war ships and the provision of old age pensions. What is the exact economic effect upon the nation? It is this: You reduce the spending power of a limited number of rich persons by £5,000,000, and they have £5,000,000 less to spend. Upon what? Investments? Does the hon. Gentleman suggest that to take 45 £5,000,000 out of that vast amount of income is really to reduce substantially the means of investment of these persons? Of course it is not. The proof of that is to be found in what happened during the South African War, when we were not only imposing a war income tax up to 1s. 4d. in the pound, but in addition we were floating big loans in the public market to meet a great part of the expense of the war. Was there at that time any decrease in luxurious expenditure of the upper classes of this country? On the contrary every indication was in the opposite direction. For example, hon. and right hon. Gentlemen opposite have referred to the imports of motor cars into this country. The imports of motor cars into this country during that period went up by leaps and bounds. The import of motor cars, at about £400 each, is a typical example of luxurious expenditure, and it went up by leaps and bounds during that period. Every other test during that period shows that so far from trenching upon capital investment we did not even touch the fringe of luxurious expenditure in the United Kingdom. The hon. Gentleman referred to the speech made in my own hearing by my right hon. Friend the Prime Minister about two years ago, in which a uniform rate of Is. in the pound was referred to by him. I really cannot see that the hon. Gentleman who has just sat down has strengthened his argument by referring to the tax of 1s. It was a distinctly uniform rate of taxation which my right hon. Friend referred to. What did my right hon. Friend do shortly afterwards? He reduced it in the case of persons who earned incomes between £700 and £2,000 a year from Is. to 9d. in the £—a reduction in the case of earned incomes of 25 per cent. The hon. Gentleman says that does not cover the whole of the cases of income between £700 and £2,000 a year. It is true that there are unearned incomes between those limits, and in their case the rate is not reduced; on the other hand, it is increased by the present Budget. Has the hon. Gentleman reflected, if we are to increase the taxes to meet the national expenditure, from whom we are to take that increased taxation? I ask the hon. Gentleman whether those with between £700 and £2,000 a year in this country, who do not follow trades or professions, are not the favoured few? They consist almost of the top layer, very nearly the top layer, of the rich of this country. If we are not to tax them, I should very much like to know whom we are to tax. I should like to 46 know the proposal of right hon. Gentlemen opposite with regard to the classes who should be taxed to meet this increased expenditure. Do they really suggest that they can get the money that is required for the 13 or 16 millions out of the taxation of foreign manufactured articles?
The CHAIRMANI do not think the hon. Member can embark on that line of argument without opening up a general Debate on the Budget. We are now dealing with this one solitary Resolution.
§ Mr. CHIOZZA MONEYI bow at once to your ruling in the matter, but I do think that hon. Members opposite, who tell us that we ought not to tax those who possess wealth to raise the money required at this particular moment, ought to inform us, on the other hand, by what means they propose to raise the money. Otherwise we shall need a new definition of the word patriot: "Patriot: a person who won't pay." I think myself that the Debate we have had on the land tax has cleared the way for a discussion of this particular Resolution. May I remind the Committee what occurred when we discussed the land tax of my right hon. Friend? We were then told by hon. and right hon. Gentlemen opposite that there were many other forms of unearned increment besides the unearned increment which attaches to the land. I fully agreed with them. I did my best to cheer my hon. Friend the Member for Preston, the Leader of the Opposition, and the Noble Lord who spoke subsequently in the Debate, I cheered those hon. Members when they showed most conclusively that unearned increment, or social values as they are sometimes called, attach not only the land but to other forms of property. I am most thoroughly in agreement with the views given by hon. Members opposite on that subject. May I remind them what was said One hon. Member said:—
If thirty year ago £100,000 had been invested in land and 0100,000 in gas; lad water shares, made concurrently that the increase in the value of the shares which has taken place was quite independently of any effort or skill on the part of the owner, and, therefore, it may lie argued that this unearned increment—.
§ Another hon. Gentleman said:—
The CHAIRMANI must confess that I fail to see the relevance of the hon. Member's line of argument to the Resolution with which we have to deal. I was listening to the hon. Member to see whether his observations would really apply to it. So far I cannot see the relevance.
§ Mr. CHIOZZA MONEYI beg most respectfully to submit that I am in order in referring to unearned increment in order to develop the point that graduation differentiates the tax. Really the subject we are discussing in this particular Resolution, inherently involves the question of unearned incomes and unearned increment, and I say the discussion on the land values Resolution really cleared the way for this Resolution, and made very clear, out of the mouths of hon. Gentlemen opposite, the justice of the proposals of my right hon. Friend with regard to the graduation of income tax. I do not at all complain of the interruption. I was pointing out that another hon. Gentleman said:—
There is unearned increment, but asked would anyone deny that a big trader doing business is profiting enormously with the general advance of the community. In the matter of communications, for instance, he gets tremendous improvement owing to the fact of there being a cable or telegraph service. That is unearned increment to him, and that applies to almost every form of industry.The Leader of the Opposition also referred to cases of unearned increment in regard to railway companies and other enterprises. What does this lead to? It leads to this: I think the more we examine the sources of incomes the more we see that as incomes rise in the scale the more social values, if I may use the expression, attach to those incomes. In other words, the amount of an income, the degree of an income, is also a rough measure, not an exact measure, of the unearned increment which attaches to it by the growth and the activities of the community. It is upon that proposition, which I beg with all respect to submit, that I found my support of the Resolution which is now before the Committee. And I would say to hon. Gentlemen opposite who hold that land ought not to be taxed more heavily than any other form of property that in this Resolution they can find a corrective of the land tax which has already met with approval of the Committee. I do not disguise my own opinion from the Committee that I do not think property and land ought to be taxed more heavily than other forms of property. I find myself in agreement with hon. Gentlemen opposite on that point, but I am astonished to find that they adopt what I may call the academic Socialist view. When they come to discuss the question of graduated and differentiated income tax they find themselves rejecting the principle that other social values than land should be taxed. They reject altogether the principle that income should be 48 taxed progressively according to their degree. At any rate the right hon. Gentleman the Leader of the Opposition did not subscribe to that idea; he distinctly expressed disagreement with John Mills' idea. I really think when the right hon. Gentlemen opposite come to consider the matter a little more thoroughly they will accept this Resolution. I would point out that it is perfectly clear from the facts so far as social values attach to income—and I do not think anybody can deny that they do—those social values are certainly expressed to a greater degree in regard to interest than they are expressed in economic rent. I think that can be most easily proved from the statistics that are available. The facts show that the landowners' share, even when you have added an estimate of hypothetical income from un built sites, is only a, very small fraction of the income of the country. In other words, the unearned increment which attaches to property, to salaries, professional fees, and other forms of property is chiefly expressed not in economic rent, but in interest.From these considerations I repeat that as incomes rise in the scale they should be progressively taxed. The graduation of income really means a differentiation of the income tax, and when that is once seen, the way of the Finance Minister is largely cleared. He need no longer worry himself about differentiating between earned and unearned income. If he applies a practical scheme of graduation of Income tax he may be satisfied that he has also done his duty very largely to the principle of differentiation. I am in general agreement with the object of this Resolution. I wish I could say that I am as fully in agreement with the method expressed by this Resolution. I have so many times pleaded in this House for a plain scale of income tax that I feel almost reluctant to do it once more to-day. But the facts when they are examined bring to light so many anomalies, they show so many cases of injustice between one income and another, that I do think it is worth the while of the Committee just to look at the chief points for a moment. I will not go into detai1s. We have got the abatement system; we have got differentiation between earned and unearned income, and now we have got the super-tax. I do not suppose there is one man in ten thousand in this country who could take pen and paper and give a clear idea 49 of what the present system means. I say the tax ought not to be levied in that way. It ought to be levied in a way clear and understandable to the average man. I have suggested in this House on several occasions the plan of a graduated income tax. I suggest that there should be a plain scale, that you should collect at the source, say, one shilling in the £, that you should have, whether it is earned or unearned income, a personal declaration from the taxpayer, and that in cases where the amount payable is greater than the amount collected at the source, you should collect the balance from that person. I do submit to the Committee that in what my right hon. Friend is now doing he is carrying that system into effect, but only roughly. He does tax at the source; he does get a personal declaration; he does collect the balance which is called the super-tax after collecting the first income tax; but the effect of the theory, when it is worked out, is to create a very large number of cases of hardship. For example, the scale rises too rapidly in the early part. The graduation up to £700 is very rapid indeed, whether we take earned or unearned income. Suppose we take earned incomes; a man pays l¾d. on £100 a year, and 5½d. on £400. Take unearned incomes, and take the widow—we had better call her a widow—with £200 a year. She pays 2¾d. in the pound, while the widow with £400 pays 8½d. in the pound. Of course, the rise in the graduation there is much too rapid. Then after this rapid rise in values we come to a, sudden stop. If we take the case of unearned incomes the injustice is very apparent. £701 per year pays fourteen pence in the pound, and so does £5,000. The scale goes up for certain incomes, and then remains at a standstill. If you attempt the principle of graduation, why cannot we carry it out better than that, and if we give a lip-service to the principle, why not carry it out in practice? Then, of course, there are a large number of steps in the scale where the temptation to evasion must be very great indeed. It is scarcely equitable that while a man with £2,000 per year pays £75 per annum, a man with an income of £2,001 per year should pay £105, or £30 more. Exactly the same case arises when we come to the man with an income of £3,000. Thus, £3,000 pays £150 and £3,001 pays £180. Take the £5,000 income, where the super-tax comes in: the man with £5,000 income pays £291 and the man with £5,001 pays £350. I will not weary the Committee 50 with any more examples of the class of anomalies I refer to, and which my right hon. Friend could easily sweep away if he would construct a plain scale of income tax and carry out the same system on which he proposes to embark now, but basing it on a plainly graduated scale.
I feel that my right hon. Friend in the Estimates of his Budget given to Parliament on such an occasion as this, when we. must have elastic revenue, should be more than usually conservative, but I think there is scarcely any excuse for putting as low as £500,000 the yield of this super-tax. I think it will be a very conservative estimate to anticipate a million and a half or two millions. I think, before the year is past, we shall see very clearly that, so far from the super-tax yielding only £500,000, it will yield several millions, and if not in this year then certainly next year. But even in the present year, unless the officers are more than usually inefficient, we shall get a much larger sum than is put down in the Budget. Something has been said by the hon. Gentleman with regard to inquisitorial methods. We have heard that before in the House, and I really think it has been disposed of. I do not think the hon. Gentleman attaches sufficient weight to the principle upon which we work in this matter. The abatement is not a gift to the middle class man. The abatement is simply to graduate the tax of the middle class man, and the middle class man's taxation is not the amount which he would pay if he did not declare, but it is the amount which is exacted from him after the declaration is made. That is the amount he is supposed to pay. He is not supposed to pay the other amount.
The difference is not a gift to him; it is simply a recognition on the part of the State that he should not pay more than the lower of those two amounts. When, therefore, you go to him and make him declare his income before you tax him, you really impose a pecuniary penalty on him if he does not declare. It is a heavy penalty for not declaring. May I explain by a concrete case what I mean? If you imagine the case of a clerk or a manager with £400 per year—if he does not declare he has to pay £15 income tax. If he declares, he pays £9. The difference is £6, which is a. virtual fine. It is not a gift to him because he does declare, but it is a fine if he does not declare. What you do, in fact—whatever you like to call it in an Act of Parliament—is to fine him £6 if he does not declare. What we are doing now is to apply exactly the same principle to larger 51 incomes. I presume the right hon. Gentleman will exact a heavy penalty from a man of high income if he does not declare his income. If he does declare, he will only be doing what is done in the case of all the moderate incomes of the country.
§ Mr. EVELYN CECILOne is fined if he does not declare, the other if he does.
§ Mr. CHIOZZA MONEYIt is fining him if he does not declare in both cases. I now pass to a more important point, and it is this: Need there be any apprehension at all that the amount of taxation raised by the increased income tax plus super-tax will diminish capital savings. I should be the first to agree that in our society, as now constituted, with an industrial system as it is now, you ought not to do anything to decrease or risk the decreasing of the amount devoted to capital savings. Whatever fine ideas any hon. Member may entertain as to collective enterprise, collective enterprise does not exist now. We have the individualistic system; employment of the masses depends upon the investment of capital by the few. As that is the case, you must not, of course, do anything to diminish the capital savings or capital investment. It remains to ask: Is there any probability that the amount which these taxes will raise will in any way seriously impair or even trench upon those capital savings? Professor Marshall said, I think it is worth repeating, that probably a hundred millions is wasted by the lower classes of this country every year, and that, probably, three hundred millions by the upper classes upon forms of expenditure, which are not or, at any rate, do not make for national advancement. If there is any truth in this statement, and I believe myself there is a good deal of truth in it, I do not think it is uttered lightly, then what is the ration between this amount of expenditure, this extra amount of expenditure, which we propose to raise and the amount which, according to such an authority as that, is wasted upon things which do not make for national advancement? The ratio obviously is as five to three hundred.
If Professor Marshall's figure is not credited, may I refer the hon. Gentleman and those others, there appear to be many, who believe we are trenching on capital savings, may I repeat to them once more the extraordinary growth of assessed incomes in the last 10 years. Make what 52 allowance you will for increased stringency of collection, and I believe that has been quite exaggerated, especially in the ten years, but make an allowance for it, and what are the figures? During the period when our expenditure went up by leaps and bounds on account of the war, during the period when it rose from 118 millions to 162 millions, that is between 1899 and 1909, you find that the gross income reviewed by the Inland Revenue Officials rose from 763 millions to 1,040 millions, that is to say, that while national expenditure rose by 44 millions, the income of the classes, not of the masses, rose by 277 millions. The proportion of increase in the ten years is almost precisely the same in national expenditure on the one hand and in assessed income on the other. National expenditure rose by 37.2 per cent., and incomes rose by 36.3 per cent.
As I pointed out previously the national expenditure of this country is exaggerated by the inclusion of the entire outgo of the Post Office. That is not true national expenditure, because it is balanced, and more than balanced, by the income of the Post Office with five millions profit over in relief of taxation. That exaggerates these figures of expenditure, and with the growth of the Post Office increasingly exaggerates them year by year. If allowance were made for that it would be found that the increase in assessed income has gone on at a greater rate than the increase in national expenditure. I venture to say in conclusion that that shows most clearly that in imposing an income tax plus super-tax, bringing in additional taxation of three and a half millions, possibly rising next year to five or six, we need not be under any apprehension whatever that we are trenching even upon the margin of the capital savings of the country.
§ Sir FREDERICK BANBURYI would like to draw the attention of the hon. Gentleman to two or three remarks which I understood him to make. I understood him to say that an income tax and a tax on tea, sugar, and suchlike are practically the same, that they all take money out of the people and give it to the nation. That is precisely what we have been saying, that if you impose taxation on high incomes and a super-tax that you were, taking it from the poor. We have always held that those taxes, wherever you take them from, recoil eventually on the poor. I am glad the hon. Gentleman is a disciple of that opinion. The hon. Gentleman also 53 said that he was going to support the Budget, and believed in the proposals of the Chancellor of the Exchequer with regard to the income tax. Then I gathered that we should hear a eulogy of the proposals with regard to the income tax of the right hon. Gentleman the Chancellor of the Exchequer. What was my astonishment when the hon. Gentleman said that in his opinion a simple method of collecting the income tax was right. He then read out, I think he said, three different forms of collection. I think I can give him five or six, and he read out a number of cases of hardship, during which all the right hon. Gentlemen on the Front Bench shut their eyes, every single one of them. I noticed that particularly. Having read out those instances of hardship, and having said it was not the way he would arrange the graduation, then he wound up by saying he is going to support that which he strongly disapproves.
I do not congratulate either the Chancellor of the Exchequer or the Prime Minister on their supporters in this Debate. Over and over again hon. Gentlemen opposite have risen and said they are going to support the particular Resolution before the House, and over and over again, though they say in their speeches they are going to support, they disagree with it as heartily as we do on this side of the House. The hon. Gentleman told us that we ought not to do anything to deplete capital in this country. With that we agree, and we are glad he falls in with our views on that matter. He weft on to say that he did not think this tax would tend to operate in that direction, because during the war, when high income tax was imposed, the luxuriousness of the rich did not decrease, and a larger number of motor cars were imported. May I point out first of all that motor cars were new, and naturally people would buy them, because they had not got them before, therefore the motor cars increased. I would also point out, by his own confession, the result was not to encourage savings but to allow luxury to go on. Does the hon. Gentleman think that by these taxes luxury will be stopped and that people, instead of spending any money, will save it'? The exact opposite is likely to occur. People will say, Why should we save when, for all we know, a great portion of our capital may be taken away from us? The tendency is to spend, not to save. I have an apt quotation on this point from Mr. Lecky, which I will read later on, to show that all these taxes, and especially the super-tax, tend to dis- 54 courage thrift and industry, and penalise especially the thrifty and industrious for the benefit of the unthrifty and the lazy. The hon. Gentleman said also that while motor cars were bought, and the luxuriousness of the rich did not decrease, neither did investments decrease. May I ask where he thought the money came from? Apparently it comes froth nowhere. If you do not decrease either your luxuries or your savings, where on earth does the money come from? It must come from somewhere, either out of curtailing luxuries (which, after all, employ people) or out of savings. If it comes out of neither it can come from nowhere, and I suggest that the hon. Gentleman should study that problem a little more carefully.
The Chancellor of the Exchequer stated on Wednesday that he had had no protests about the super-tax. The super-tax, by his own showing, will be paid by about 10,000 people, and those 10,000 people, who are in receipt of incomes of over £5,000 year, are not the class of people who go in for writing letters to Ministers, unless they happen to have the pleasure of their acquaintance. Therefore the fact that he has not received letters from this particular class of persons does not at all prove that-they do not regard the super-tax with dislike. On the contrary, every single person I have met, both in the City and elsewhere, has regarded the super-tax as a step in the wrong direction. The letter from the City which appeared in the papers on Saturday tends to show that the super-tax is regarded unfavourably by some of the greatest living financial authorities in the City, including the hon. Baronet who stood for the City of London at the last election as a Liberal, and who, when it suited them, was held up by hon. and right hon. Gentlemen opposite as one of the ablest financial authorities in the City. What attention are they going to pay to his opinion now? I should like to point out to the hon. Member for Paddington one serious objection to the super-tax. I do not know if it is a doctrine which will meet with commendation on the other side of the House, but it has always been held that a tax should be imposed for purposes of revenue. Possibly in a Protectionist country it might be imposed for the protection of the industries of the country, but that is abhorrent to hon. Gentlemen opposite. I have never heard any statesman who has said that a tax ought to be imposed as a punishment for any particular class. The danger to my mind of imposing the super-tax quite regardless of 55 whether or not it is just is this. Why 6d. 7 Why not Is.? [Cheers.] I am glad that hon. Gentlemen below the Gangway cheer that. May I suggest that they should not wear their hearts so much on their sleeves. They give their own case away. Why not 1s.? Hon. Members cheer. That is the next thing, because there is no reason why Is. should not be imposed just as well as 6d., if the object is to get money out of the pockets of a few rich people for your own advantage. As the hon. Member for Preston said the other day, Members below the Gangway desire to keep their cake and eat somebody else's. If they want to eat the cake of the rich, why stop at a little bit? Gradually they will go on and take the whole.
It may be said that my argument applies to any income tax: Why not 1s. 1d. or 1s. 2d? But the great protection is that there are a large class of people who pay income tax, and if they find that they are unjustly treated they will turn against the Government and take steps to protect themselves. But with the super-tax is it possible for that to be done? I have here the statement of the Chancellor of the Exchequer that incomes of over £5,000 a year are enjoyed by 10,000 people, and it will be within the recollection of the House that the right hon. Gentleman said that he did not impose the super-tax upon incomes over £3,000 a year, because they were enjoyed by 20,000 people—a very naive confession I thought, and one which bears out the truth of my argument. The income of these 10,000 people, according to Sir Henry Primrose, is £121,000,000, and the income tax and death duties on that amount come to over £20,000,000, or one-sixth. But the total income of the country is between £1,600,000,000 and 21,700,000,000, and only contributes £25,000,000. Therefore, the danger is that this small number of people with a large amount of money may have such a tax put upon them which they will be unable to resist, because they have not much voting power, that their money will be taken from them, and the tendency to thrift, investment, and enterprise will be destroyed. The following is the quotation which I promised to read from Mr. Lecky's book on "Democracy and Liberty ":—
It is obvious that a graduated tax is a direct penalty imposed upon saving and industry, a direct premium offered to idleness and extravagance. It discourages the very habits and qualities which it is most in the interest of the State to foster. It is at the same time perfectly arbitrary. Highly graduated taxation realises most completely the supreme danger of 56 democracy, creating a state of things in which one class imposes on another burdens which it is not asked to share, and compels the State into vast schemes of extravagance—I should like to draw particular attention to that—compels the State into vast schemes of extravagance under the belief that the whole cost w ill be thrown upon others. Yet no truth of political economy is more certain than that heavy taxation of capital w ill fall most severely upon the poorI do not know that I could have brought forward better arguments than those to justify my position.Let me say one word upon the question of income tax as a reserve. The Chancellor of the Exchequer told us on Wednesday that he did not approve of the income tax being treated as a reserve for time of war, and he asked why should not other taxes, such as those on tea and sugar, be treated as a reserve. That seemed to me to be a very peculiar statement to come from a Chancellor of the Exchequer, because the reason why the income tax has always been held to be a reserve in war, ever since 1798, when it was first imposed by Mr. Pitt, is that it is easily collected and requires no new machinery. Up to the present time it has always been collected at the source. If a war breaks out, it is easily collected without additional expenditure upon fresh machinery, and without pressing very heavily upon the people who have to pay it. In answer to the statement of the hon. Gentleman opposite about capitalists, I venture to say that the tax has been paid willingly whenever the necessity has arisen. But if you are going too impose taxes upon articles imported from abroad, such as tea, sugar, etc., they will press upon the poorer classes, as well as the richer classes, just at the wrong time—in time of war, when one does not want to put additional burdens upon the poor. Moreover, this sort of tax in war time would be extremely difficult to collect. It is obvious that if our shores were invaded, taxes upon imports would be difficult to collect. I was astonished that the Chancellor of the Exchequer should advance the doctrine that he should use what has hitherto been regarded as the only real reserve in time of war, and consoled himself with the fact that when war comes he may be able to put duties upon imported articles which in all probability the foreign fleet would see did not come to our shores. The right hon. Gentleman said that until 20 or 30 years ago no Chancellor of the Exchequer had used the income tax as a reserve in time of war. What is the history of the income tax? It was imposed in 1798, 57 when we were at war, taken off in 1801, reimposed in 1803, when we were again at war, and taken off again in 1816, when peace came. It is true, as the right hon. Gentleman told us, that between 1803 and 1816 it once touched 2s.—
§ The PRIME MINISTERThe whole time.
§ Sir F. BANBURYIt is very presumptuous for me to contradict the right hon. Gentleman, but—
§ The PRIME MINISTERIt was 2s. when Lord Henry Petty was Chancellor of the Exchequer in 1806. From that time it remained at 2s. until the end of the war.
§ Sir F. BANBURYI think perhaps the right hon. Gentleman did not hear me. I said that it was imposed again in 1803, and it rose to 2s. in 1906, but it was not 2s. for the whole time. It is a very curious thing —I do not know whether the right hon. Gentleman can tell me why it was—that Scotland and Ireland paid less. In 1816 the tax was taken off. It was imposed during those years on all incomes above £60, without any graduation.
§ The PRIME MINISTERdissented.
§ Sir F. BANBURYExcept in the case of Scotland and Ireland, where there was a different scale.
§ The PRIME MINISTERThe hon. Baronet is quite inaccurate. It is quite true that all incomes under £60 were exempt, but, speaking from memory, there were abatements up to £200, and there was differentiation between earned and unearned incomes.
§ Sir F. BANBURYI have looked the matter up, but "Whitaker" does not state those facts. From 1816 to 1842 there was no income tax at all. It was reimposed in 1842, when the corn duties were about to be abolished. ["No."] That is where the question of the corn duties arose. It was then levied upon incomes above £150. In 1863 the limit was reduced to £100, and it remained on all incomes of £100 and upwards until 1876, when the amount was raised. My point is that if the right hon. Gentleman had imposed an income tax of 2d. upon all incomes he would have received £6,000,000—I think the exact sum is £5,800,000—whereas he now proposes, with all his different graduations, to take only £5,500,000. Well, ultimately, and he said in his Budget speech, 5½ millions.
§ Sir F. BANBURYThis year. Well, but he could get £5,800,000 now if he had made it 2d., and saved a great deal of trouble, and very much unnecessary opposition.
The right hon. Gentleman the Chancellor of the Exchequer also went on to tell us that there was income tax in foreign countries. I think the right hon. Gentleman the Member for the City alluded to the investment of capital abroad. The right hon. Gentleman the Chancellor of the Exchequer said: "Take Japan. There is an income tax of 5s. in Japan." There may be in certain instances, but as a matter of fact there is no income tax on the Japanese people or in any other country, with two exceptions, which I will tell the House later. There is no single country that I know of —I have looked it up here to-day—no single country in the world, with the exception of Italy and England, in which there is a tax of any sort upon their National Debt. Therefore, it is absurd for the right hon. Gentleman the Chancellor of the Exchequer to come down and say that there is an income tax of 5s. in Japan. There may be some sort of an income tax, but he does not tell the whole story. In order to make it clear you have to tell the whole story. There are two exceptions, Austria and Russia. Austria, in some of her earlier loans, does make a deduction as a tax, but it is only in her earlier loans—her silver loans of 1894. Russia in one or two of her loans does the same. But all Russian later loans have been on the prospectus described as being absolutely free from income tax that may be now or hereafter imposed in Russia. That is not limited to foreigners. There is no condition that the stock must be held by foreigners. Anyone can hold it, and in that case they get their interest free from income tax. Therefore, the statement of the right hon. Gentleman that it is income tax that is imposed is incorrect. The right hon. Gentleman is inaccurate in his belief.
There are two or three other questions which I should like to mention. I am glad the Prime Minister is in his place. Perhaps he would give his attention for a moment or two. The Prime Minister will perhaps remember that some two years or so ago I asked him some questions in the Debate on the income tax about decaying businesses. Some two years ago, I think in 1907, the Prime Minister abolished the right of the income tax payer, if he found 59 that he had returned his income at a larger figure than it was, to go to the Commissioners and claim the difference between the sum actually earned and the sum which he had paid upon. The Prime Minister, when he was Chancellor of the Exchequer, abolished that. In answer to my request that he should reconsider that abolition, that he said that the three years' system of averages was in force, and that the people who might consider themselves aggrieved by the abolition of this right to claim back money paid in excess would find themselves righted later on. If they had a good year one year they would get it hack a little bit later; and the system of averages adjusted all these inequalities. That, no doubt, is quite correct. I agree with that statement. Then I put this question to the right hon. Gentleman: "What about a decaying business, a business which has been earning £20,000 a year, and is gradually on the downward line—it does not have an up-and-down scale; it is gradually going down and never gets better? "The right hon. Gentleman replied that there was some truth in my statement; he thought it was hard in that case, and he hoped that there were not very many instances of that sort; but that, of course, lie could not legislate for every hard case. I venture, however, that now, when you are going to increase the income tax to the extent which you are proposing, and when you are going to put on a super-tax on the top, the case of the decaying business, which may be a large one, though decaying, and liable to the super-tax, that the point I have made, or that I made two years ago, is one for consideration. Because it is evident that if it was a hardship then it is a greater hardship now, when the amount claimed is so very much larger.
With regard to earned and unearned incomes, I have had a large number of people complaining about the hardships and anomalies which arise. It is extremely hard where a man has been working for 20 or 30 years, and has been earning, we will say, £700 or £800 a year, and has not spent that money, but has put away £300 or £400 per annum in order to provide for himself practically a pension when he is old, that he should be subjected to this extra impost. He has invested, say, safely and well, and he finds that after 30 years or more he is able to retire. What is his reward? He has to pay income tax on a higher scale because he has an unearned income. Take, on the other hand, the man 60 who has been earning £500 or £600 per year, and has spent everything upon himself. He has saved nothing. What is the reward of the State to him? Five shillings per week at the expense of the gentleman who has saved and has got a small capital set aside. I think that alone shows the hardship of this differentiation between unearned and earned incomes. Of course, the mere fact is that it sounded very well to say earned income ought not to be put in the same category as unearned; but when you come to look into the matter you find that it is extremely difficult to differentiate as to what is earned and what is unearned income. Take the case of a Civil servant who receives a pension. The Civil servant has to pay his income tax upon his pension if it is under two thousand pounds—9d.—and the man who has saved it has got it to pay too. There cannot be any possibility of justice in the matter. Any man who has saved has to pay. The Civil servant, whose income has always been assured to him so long as he did his duty, is different to the professional man or the tradesman, who is not sure whether he will be able to keep his business together, and who has to make his savings out of an uncertain income. The tradesman and professional man has to pay if he has been thrifty and industrious. That cannot be justified. The differentiation becomes doubly hard when the tax is increased in the manner in which it has been increased.
Let me in conclusion draw the attention of the Committee to a small quotation of only a few lines which was brought to my notice the other day, and which I think very opposite to the present situation. It is from Indian prophecy concerning the last days of the Kali Yug, or present age, and is out of the Ruranas, a portion of Hindu Scripture, and dates from 1000 B.C. This is what it says:—
The man who owns most gold mid lavishly distributes it will gain dominion over Religion will consist in wasting alms at large, and self-willed women will seek for power. They who rule the State will rob the people and abstract the wealth of merchants on the plea of raising taxes. And in the world's last age the rights of man will be confused, no property be safe.
§ The PRIME MINISTERI do not know that I fairly apprehend the relevance of the hon. Baronet's peroration, or, indeed, a large part of his speech to the Resolution which is now before the Committee. I say that, as he will understand, with no sort of disrespect. We have-often crossed swords over the matter of the income tax. But when I venture humbly to 61 question the appositiveness of a considerable part, at any rate, of the remarks which he has just addressed to the Committee, it is simply upon this ground—though they were perfectly relevant to the general question—as to whether an income tax is or is not a desirable impost, and whether our system of levying and collecting in this country is or is not ideally just. His remarks do not appear to me to bear upon the particular subject before us, namely, whether the tax should be increased in the case of normal incomes from 1s. to 1s. 2d., and whether there should be added to it a super-tax on incomes of a larger amount. That is the point, I apprehend, and the only point. I am not going to intrude upon the Committee for more than a very few minutes, because the general consideration bearing upon the subject seemed to me to be exhaustively stated by the right hon. Gentleman the Chancellor of the Exchequer at our last sitting. Yet I should like, if I may, to make one or two criticisms upon some matters which have since emerged, and particularly I think it only respectful to take the first opportunity of referring to a document which has been already cited more than once in the course of this afternoon's discussion, but which I only received late on Friday night or early on Saturday morning, and which I found in the Press on the same day, and before I had the opportunity of replying to it. I mean the memorial signed by certain very eminent firms and individuals in the City of London. It is addressed personally to myself. I make no complaint either of the spirit or the terms of that memorial. It is couched in very moderate language. It purposely and advisedly refrains from passing any criticisms on the larger part of the proposals in the right hon. Gentleman's Budget. It confines itself—I am not saying that by way of reproach or even of criticism—confines itself, as the signatories to the memorial naturally regard themselves as in a special sense the custodians of the capital—to the two proposals of the Budget which in their view have special reference to the interests of capital, and in particular the capital of the City of London. One of them is the proposed rise in the scale of death duties, which would, of course, not be in order upon this Resolution to make any reference to, but in regard to the other—the language which is used is this:—
The great increase and graduation of the death duties and of the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industries of the country.62 That, I am glad to see, is prefaced by a statement of the eminent persons that:—We realise that the increased and increasing expenditure of the country necessitates additional taxation.And of this they are prepared to bear their full share. Well, if that be so, if you are to take it for granted, as you must for the purpose of this argument, that the 16 millions or the 13 millions, whichever you like to call it now, has to be provided for, the sums which we have allocated to indirect taxation—to liquor duties, to tobacco, and also sums allocated to land—are to be taken for granted, I want to ask in what other way can the capital which these Gentlemen rightly claim to represent be called upon to contribute its share to the necessities of the country than by such proposals as are now before the Committee. I am not going to travel outside the range of the Resolution now before us. I will not, therefore, ask whether you are going to supply the gap by some readjustment of your tariff. I will not ask whether it is to be filled up by duties not protective duties, but duties upon the necessaries of life, like tea and sugar. I will assume that capital recognises that it has a duty in this matter which it may rightly be called to discharge —a duty which it cannot shift on to the shoulders of the consumers of the country and the payers of indirect taxation, and if that be so I do not think anyone will allege that the share of the total which we are proposing to allocate to capital is excessive in proportion, having regard to the share which other classes of the community are required to pay. I leave out the death duties for the moment, and I repeat the question: Is there any other way than that proposed by my right hon. Friend which will be more equitable and less injurious to the trade and commerce of the country?The hon. Baronet who has just sat down has spoken in reply to some observations of the Chancellor of the Exchequer of the burdens imposed in the shape of income tax by the Legislatures of other countries. I will not go as far afield as Japan, because I do not profess to be intimately acquainted with the provisions of the Japanese law in that matter. I may say incidentally that I fail altogether to perceive any relevance in what the hon. Baronet said in regard to the taxation of the National Debt. Income tax has always been imposed on Consols in this country. Every buyer and seller of Consols, every person who has invested in our National Debt has done so upon the under- 63 standing that he will be called upon to pay income tax. I cannot conceive the hon. Baronet with his commercial and City experience even to suggest—
§ Sir FREDERICK BANBURYThe reason I made that remark was this: The Chancellor said where will capital go? In Japan there is an income tax of 5s., and so on.
§ The PRIME MINISTERI do not think that that is very relevant to the subject now under discussion, but let me pursue the matter a little further with the hon. Baronet, not with regard to the incidence of the income tax on the National Debt, but with regard to its incidence on the general wealth of the country. The hon Baronet speaks as if the demand which my right hon. Friend is now about to ask Parliament to sanction was something abnormal and excessively burdensome, even unprecedented in amount such as, to use the language of the eminent signatories of this memorial, would tend to discourage the accumulation of capital in this country and promote its emigration into other quarters of the world. I think I am correctly construing the hon. Baronet's argument. I will not go through all the cases cited the other day. I will take two crucial cases. I will take two great European countries with which we are in the most acute commercial and industrial rivalry—France and Germany. How does this matter stand? In regard to France the eminent Finance Minister in that country, M. Caillaux, has passed his Bill through the Chamber of Deputies. I do not think it has yet passed the gauntlet of the Senate, but Senates as we know are difficult people to deal with. But. M. Caillaux has passed through the Chamber, with the assent of a large majority, his income tax law. What is the effect of that income tax law? Take an income of £4,000 a year—this is one of the class of incomes that most appeal to the hon. Baronet opposite; they appeal to him with a degree, I will not say of intimacy, but with a degree of sympathy—
§ Sir F. BANBURYI have not got so much.
§ The PRIME MINISTERThen, I must say the hon. Baronet is a most disinterested champion of the campaign against the super-tax. I am not speaking of him personally, but of those whom he represents and those whom it is only 64 natural, sitting here as the Member for the City of London, he feels called upon to protect. How is an income of £4,000 treated in France under the new income tax as compared with the predatory and oppressive proposals of my right hon. Friend the Chancellor of the Exchequer? An income of £4,000 in France will have to pay income tax of 1s. 5d. in the pound. An income of £4,000 here, under my right hon. Friend's proposal, will have to pay income tax of 1s. 2d., and if you go a step lower down in the scale and take an earned income of £3,000, it will only pay one shilling. When you come to the higher incomes, if you take an income of £20,000, in France it would pay 1s. 7d. income tax under the new law, which is practically the same sum as it would pay under my right hon. Friend's proposa1s. [An HON. MEMBER: "There is no death duty."] I am talking about the income tax. I am quite prepared, when we come to the death duties, to compare the scales of death duties. For the moment I am dealing with income tax, and I think I have conclusively shown, as regards France, at all events, that the larger class of incomes will be at least equally taxed under the proposals of the French Parliament as those of my right hon. Friend.
Now let us come to Germany. Take Prussia, which is, after all, the premier State in Germany. In Prussia, on an income of £5,000, income tax is already payable at this moment to the State and the municipality amounting to 10 per cent., or 2s. in the pound, on an average in 30 of the most important cities. [An HON. MEMBER: "That is rates and taxes."] My right hon. Friend the Chancellor of the Exchequer has disposed of that matter about rates in his speech the other night. The income tax to which I have referred is 10 per cent., or 2s. in the pound, and further additions to this will be due under the finance law of the present year, and, in all probability, further additions will be made under the finance law of the Empire which is now under discussion. I do not think those well-to-do people with incomes of three, four, five, six, and up to twenty thousand, will find themselves better circumstanced if they emigrate to France or Germany, but will find themselves in much less advantageous circumstances than under the proposals of my right hon. Friend.
§ Sir F. BANBURYThere is no duty on German stocks. I hold myself, and I know.
§ The PRIME MINISTERI am rather astonished to hear that—
§ Sir F. BANBURYI need not say I sold them after the right hon. Gentleman the Chancellor of the Exchequer had introduced this Budget.
§ The PRIME MINISTERI am bewildered to hear that. These German stocks, according to the hon. Baronet, do not pay income tax. What the hon. Baronet received from them here I assume he always returned.
§ Sir F. BANBURYThat is English income tax.
§ The PRIME MINISTERYes; the income tax here, I agree, is going to be raised twopence.
§ Sir F. BANBURYIf I lived in Germany I should not pay it.
§ The PRIME MINISTERI hesitate to contemplate such a bereavement as the public life of this country would sustain; it would be with great reluctance I could even in imagination contemplate such a prospect. If the hon. Baronet migrated to Germany in order to escape an extra twopence he would find himself liable to a 2s. in Germany on every pound of income he enjoyed in that country. My impression is he would soon make tracks, and we should all be prepared to welcome him back, though I am afraid he would return with an impoverished pocket. Seriously, what is the argument, assuming the money has got to be found and assuming that capital has to bear its fair share and make its just contribution? What is the objection from the point of justice or equity to this particular proposal? The hon. Baronet gave us—he said we could glean it from the pages of "Whitaker's Almanack "—a singularly superficial and in many respects inaccurate account—an account of the income tax. The income tax was imposed by Mr. Pitt, it is perfectly true, in the first instance as a war tax, and it was imposed upon incomes which exceeded £60 a year. It was dropped at the peace of Amiens; and it was reimposed by Mr. Addington when the war broke out again, and it was placed, two or three years later, by Lord Henry Petty, Chancellor of the Exchequer, upon a footing on which it remained for the whole of the next ten years of the war. It was a tax of 2s. in the pound; the only persons exempt from it were persons whose incomes were less than £60; there was a small abatement up to £200, and differentiation in this sense, there was an abatement up to £200 with respect to earned 66 incomes. Everybody with unearned incomes exceeding £60 had to pay, and to pay for the whole of these ten years at a rate of 2s. in the pound. That was a war tax. There was an abatement for children, but I am not quite sure whether that was continued. That was a war tax imposed with great stringency upon everybody with incomes over £60. It remained in abeyance from 1816 to 1842, and it was then revived by Sir Robert Peel, not for the purposes of the repeal of the Corn Laws—Sir Robert Peel was a strong supporter of the Corn Laws at the time—it was revived by Sir Robert Peel, not for war purposes, but for the purpose of reconstructing the tariff. That is what in those days went by the name of Tariff Reform. At that time it meant taking away, but what passes by the name of Tariff Reform now means to put on. The fact remains that the income tax was revived by Sir Robert Peel not as a war tax at all. It was revived at, the rate of 7d. in the pound, which was a very high rate in those days, for the purpose of reconstructing the tariff, and it remained, and was retained by successive Chancellors of the Exchequer—some with honest and more or less cheerful acquiescence, some, like Mr. Gladstone, who was always an opponent of the income tax, and some with very great reluctance—from the time of Sir Robert Peel down to the present day. That is the explanation of the quotation from my speech which was made by the hon. Member for Aston earlier in the Debate. The effect of the income tax in those days having always been professedly and ostensibly regarded as a mere temporary instrument is that it can never be brought to anything like a position of absolute justice. I claim for myself that when I was Chancellor of the Exchequer, in defiance of the opinion of every great authority who preceded me, including the right hon. Gentleman the Member for East Worcestershire and almost every previous Chancellor of the Exchequer and the Commission presided over by the right hon. Baronet the Member for the Forest of Dean—I do not say we brought the income tax into anything like an ideal position, but at any rate we removed the most glaring of its inequalities and anomalies by establishing a distinction between earned and unearned income.
I confess that I now look upon the income tax as a permanent part of the fiscal machinery of the country with an untroubled conscience. I quite agree, if I may say so incidentally, with what the hon. 67 Baronet said about the hardship inflicted. It might well be so, but it does not specially arise in regard to this particular income tax. There are a number of other matters which the Chancellor of the Exchequer has admitted with regard to the incidence of the income tax under schedule A, which undoubtedly call for readjustment and reconsideration. All these things are capable of being put right. I think we have removed by far the greatest injustice of the income tax, and I believe that by a proper system of legislative improvement and wise administration it can be made a tax which everybody wild regard as being on the whole the fairest of all taxes, and one which is capable still of very wide expansion in times of public emergency.
There is another point with which I should like to deal. The hon. Member for Aston quoted some words of mine to the effect that the income tax is one which we ought to regard as our principal reserve for times of national emergency. I thought there was great force in what my hon. Friend said the other night when he stated that you must give a large definition to national emergency, and include not only the actual outbreak of war but also preparation for war. The latter is much cheaper, and I do not think it would be a wholly illegitimate expansion of the term "national emergency" to include in it the present requirements of social reform. But let us assume that the income tax is one which ought not to be raised even under such circumstances as now exist beyond the point which will admit of its further expansion in case of emergency. I want to ask the attention of the Committee to what are the actual facts. The income tax has been described as it stands at the present time as a tax upon incomes of 1s. in the £, but it is nothing of the kind. What is the average per pound for the year of income tax in the year that has just closed? It is 9.6d., or just over 91d. That is the actual tax which the 1,100,000 who are the only people who contribute to this tax, that is the average rate upon which they have been paying during the past 12 months.
§ Mr. LEVERTON HARRISIs that calculated on the actual income of last year?
§ The PRIME MINISTERIt is calculated upon the average. There are, of course, always ups and downs; but I am taking it on the average, and last year it 68 amounted to 9½d. in the pound. The question I am going to put is, How much will it be if the proposals of the Chancellor of the Exchequer are acceded to, and if it is raised as it is going to be raised from Is. to 1s. 2d., remembering at the same time the additional abatements which my right hon. Friend proposes in the case of incomes of £500 and under for children, and further that this extra tax is not to apply to incomes unless they exceed £3,000? I am only giving an estimate, but this is the best we can frame. The average, taking all these things into consideration at 1s. 2d., will be 10.8d., or rather more than 10d. That is my second figure. My third figure is taking into account the super-tax above the 1s. 2d. which is going to be imposed upon incomes over £5,000 a year to the extent to which they exceed £3,000 a year. If you take that into account, also the average rate of the tax-that is, of the 1s. 2d. plus the super-tax-in a full year is estimated to be 11d. in the £. I venture to say that that is an extremely moderate sum.
§ The PRIME MINISTERNo, Sir; but I can supply them to the hon. Member. The Committee, however, may assume that my figures are correct, because the estimate has been very carefully prepared, and the average is a little more than 1d. in the £.
§ Mr. CHIOZZA MONEYThat is based upon revealed income?
§ The PRIME MINISTERYes. One of the results of differentiation was to show that the previous disclosures by no means corresponded with the income which could be and actually was brought in. It is said, "You have got a 2s. income tax at present, and here under these iniquitous proposals you are going to drive capital away from the City of London." The total average of the income tax under the present Budget does not amount to 11½d., and I venture to hope that that fact when brought home to the eminent gentlemen who have signed this memorial may afford them some consolation. I do not know that I need say anything more, but there is one point to which I ought perhaps to refer, and it is what is called inquisition. I do not see myself that there is anything more inquisitorial in a super-tax than in the income tax levied in its present form. I notice the attention of the right hon. Gentleman 69 opposite is being drawn to a quotation, and I think that what the right hon. Gentleman is going to read refers to my Budget speech two years ago. Am I not right?
§ Mr. AUSTEN CHAMBERLAINYes.
§ The PRIME MINISTERI was then arguing in favour of differentiation, and I said that for a man to make a declaration-when he had the hope and expectation of obtaining an abatement was quite a different thing from making a declaration which might have the effect of increasing the charge upon him. That is absolutely true, but it does not really affect what I was going to say. It is not directed at the probable accuracy of the return, but the inquisitorial nature of the methods applied. Take, as my right hon. Friend pointed out, the case of an ordinary tradesman with £1,000 a year. He has got to be assessed. He makes a return in which he says he is earning £1,000, and he returns £1,000. He sends that return into the surveyor of taxes, who, observing that he is. a man living in apparently comfortable circumstances and of very good repute, suspects that he is making more than £1,000 a year. Now what is the procedure that is followed? Anything more inquisitorial could not be imagined. He is brought up before the commissioners of taxes, probably his own neighbours. He is required to give evidence, his books can be examined, and the whole machinery of his business can be overhauled and investigated in order to determine whether he has made an. accurate return or not. I agree that this is a great deterrent to those who would not be inclined to make honest returns, but at the same time it is an inquisitorial proceeding, and nothing more inquisitorial is provided in our proposals in regard to the super-tax. In fact, something much less offensive is provided than under the present system. What is it? Suppose he makes his declaration and the authorities at Somerset House believe that he has understated his income over £5,000, or suppose he says he has not got £5,000 a year when he has? The same process is gone through, with this difference: that instead of being haled before his own competitors and rivals in business, who probably are local men in the City of London or elsewhere, with whom he is every day brought into contact, the investigation is to be conducted by a special body of Commissioners without any chance of there being any revelation at all. 70 I claim both in regard to the principle of the tax itself and the method in which it is levied that there is no ground for saying that there is anything in the least degree oppressive to any class in the community. I am most anxious that the public outside should realise that we are proceeding in this matter in no spirit of levity, still less in any spirit of vindictiveness, but that we are acting with most equitable and considerate regard for all interests concerned.
§ Mr. AUSTEN CHAMBERLAINI suppose that the speech of the Chancellor of the Exchequer is a. reply to the address of the bankers and financiers which has been presented to the Chancellor of the Exchequer. I must say that the remarks which he has made can hardly be accepted as an adequate reply to those representations. The Chancellor of the Exchequer sought to show, in the first place, that even if the proposed taxations were unfair the persons taxed would be no better off by going elsewhere. That is a matter on which those who presented the communication to the Chancellor of the Exchequer can express an opinion quite as valuable as that of the Prime Minister or that of the Chancellor of the Exchequer. The Chancellor of the Exchequer has shown by some argument that the proposals of the Government were not unfair. I will come to his argument later on, but I wish to make some reference to a speech which was made by the Chancellor of the Exchequer about 12 o'clock at night when the subject was under discussion. He has made a number of statements very light-heartedly, but he has made them on insufficient information, and on insufficient inquiries as to the real facts of the case. The right hon. Gentleman complained of the length of time which the Committee was occupying in the discussion of these Resolutions. He repeatedly said that these Resolutions are only a formal stage of our procedure and are intended as the basis of a Bill, and he seemed to expect us to do what our predecessors in opposition 'nave never done—still less what the right hon. Gentleman and his colleagues did when they were in opposition. He wants us to defer the discussion of these Resolutions until we get to the Bill. At this stage we have been discussing large principles, and our complaint has been that we cannot get information from the Chancellor of the Exchequer. Does he propose that our financial procedure is in many respects obsolete, and that it would be worth while to consider the procedure de novo? Does he 71 propose that the whole procedure should be confined to obtaining information from the Notice Paper? If he and the Government are prepared to move in the direction of the reform of our financial procedure they will not find me an irreconcilable foe to such a change. I have on more than one occasion pressed upon them to take the whole subject into consideration and bring forward a well-considered system of reform. As long as we have the present procedure we must do what our predecessors did, and we must discuss the Resolutions at this stage. We must attempt to elucidate points which the Chancellor of the Exchequer has left obscured in his statement. The right hon. Gentleman seems to think that he has done an unprecedented thing by putting the terms of the Resolution on the Paper. That procedure is not unprecedented. It has been customary to do it. It began in 1869, and it existed in 1896, and yet he says there is no precedent for it. A little later in his speech the right hon. Gentleman said that the Opposition was unreasonable in discussing these Resolutions at length, because the coal tax passed in a single night. That is a half truth. The whisky tax and the petrol tax were passed in one night because they were new duties, and their speedy passing was intended to prevent fraud, and they came into force at once. There were five Resolutions, and on the report stage they were discussed for three days. As regards my first Budget the right hon. Gentleman said that I kept the Committee sitting continuously from the meeting of the House until half-past four o'clock of the next day in order to get the Budget through, including the position of the coal tax. May I remind the right hon. Gentleman that the coal tax was not imposed by my Budget. It was already in force. [Here Mr. LLOYD-GEORGF shook his head.] It was not imposed by my Budget; I say that it was already in force. Surely my memory is as likely to be as good as anybody else's on the subject. It is perfectly true that we discussed the coal tax at nine o'clock in the morning, but what we were discussing was not a new tax but the repeal of an old tax. He also says that in any case I moved the closure six times during the evening. It is quite possible that we did so at that stage. After we had passed the Resolutions in Committee there came the introduction of the Bill, its second reading, and then the Committee Stage, and the Committee Stage lasted 72 two days. That was on a Budget which contained no new taxes of any kind, and with reference to which the real Opposition was concentrated on a single tax between stemmed and unstemmed tobacco. The Chancellor of the Exchequer says that the Opposition at that time gave me a great deal more latitude than we are giving to him. I wish to recall the attention of the Prime Minister to the tobacco duty. The Prime Minister speaks of a prolonged and bitter controversy, and he also refers not merely to days but to weeks. That was one Budget, but here we have half a dozen Budgets. It foreshadows not one Bill but a dozen Bills, some of which we have not seen, and some of which I am afraid we are not likely to see. On the very day that the Chancellor of the Exchequer closured the Debate he referred to our intentions. Yet at that time not a soul in the House or out of it had any conception of what the tax really was. He kept the elementary knowledge which we were entitled to have up his sleeve until the last moment. He really must not expect that we shall meet him in a more conciliatory way under these circumstances than we should a Chancellor of the Exchequer who might be more courteous to his opponents than he has been. Every previous Chancellor of the Exchequer proposing a new tax has sought to defend it, and to assure as many people as possible that they need not worry over it. But the right hon. Gentleman has pursued a policy which is exactly opposite. He seems to seek to keep as many people in suspense as possible. I do not think that is a good policy.
§ Mr. CHIOZZA MONEYI rise, Mr. Chairman, on a point of order. I wish to ask you, Sir, if the remarks of the right hon. Gentleman have anything to do with the Resolution under discussion
The CHAIRMANThe hon. Gentleman has put me the question whether the right hon. Gentleman is in order in the remarks which he has been making. I must say clearly he is absolutely out of order. The reason I allowed him latitude was because he is replying to remarks made the other night. Those remarks, made by the Leader of the Opposition and the Chancellor of the Exchequer, were out of order also, but I allowed them because I thought it was convenient to the Committee that I should do so. As I am now asked whether this is in order or not, I certainly think that it is out of order, and I hope that the right hon. Gentleman will not pursue the remarks which he is making.
§ Mr. AUSTEN CHAMBERLAINI thought myself I was travelling perilously near the limits of order, but I had assumed that what was sauce for the goose was sauce for the gander.
§ Mr. LLOYD-GEORGEI was replying to the Leader of the Opposition.
§ Mr. AUSTEN CHAMBERLAINYes, and I was replying to the right hon. Gentleman. However, I will not finish what would have been my last sentence, and I will now deal with the merits of the particular proposals of the Government, and not with the merits of the methods by which they are conducting the Budget as a whole. What was the allegation made in the letter from the City of London to which the Prime Minister undertook to reply I It was:—
That the great increase and the graduation of the death duties, already materially, raised two years ago, and the income tax, coupled with the super-tax, will, we are confident, prove seriously injurious to the commerce and industry of the country.I want the Committee to consider how far the Prime Minister's reply was, or was not, an answer to that. The right hon. Gentleman said that there were higher taxes in force elsewhere. That may be so, but it is still no answer to the contention embodied in this letter. The fact that a higher tax exists elsewhere does not show that it is not injurious to industry or commerce there, and it does not show that it will not be injurious to industry and commerce here. To that point I will return in a moment. But let me first take a point raised by the right hon. Gentleman himself, that there is no objection to a high income tax of this kind, and that it leaves us with an unimpaired reserve for any great emergency. In the first place, the right hon. Gentleman should define "emergency." I think he has done so in a new way, for he has included in a national emergency for this purpose the need for social reform. I venture to say that that is to destroy the basis of his argument. It is, if I may use the word, to denature the argument which previous Chancellors of Exchequer have upheld on this subject. What they have contended was that the income tax was the most serviceable of all taxes for a sudden emergency. That is where it differs from other taxes. It is a tax which, for a temporary purpose and on a sadden emergency, you can most easily raise with least disturbance to trade or commerce. The President of the Board of Trade argues in exactly an opposite 74 sense to the Prime Minister and the Chancellor of the Exchequer, and perhaps I may be anticipating the speech which that right hon. Gentleman intends to deliver on some future occasion in regard to Tariff Reform, when he announced that Customs duties drag in your hands in times of great emergency, and that a direct tax like the income tax is the only tax on which a Chancellor of the Exchequer can count in a time of emergency. I think that is a good deal exaggerated, but it has some truth in it. It is true, whether for a small emergency or for a big one, if it be a temporary emergency, there is no tax so convenient or which causes so little disturbance to raise as the income tax. That is the great reason why every Chancellor of the Exchequer and every great master of finance in the past has held that we ought to keep the income tax low in time of peace, because it was the quickest, least disturbing, and most effective instrument we could have in reserve in times of war. Is the income tax high or not I My hon. Friend the Member for Aston Manor quoted from a speech by the Prime Minister when he was Chancellor of the Exchequer three years ago, and when he spoke of the inconvenience of a tax at the uniform rate of 1s. in the £, the Prime Minister, in reply to that, said he adhered to his former statement, but that the tax was no longer uniform at 1s. in the £. He laid a good deal of stress on the word "uniform," and he appeared to think that any other words in his argument had no important bearing at the present time. Let me ask him whether the same argument does not apply to a high tax, whether uniform or not. I hope he will not think I am quoting unfairly, because I propose to read what I consider is the only part necessary for my argument.
§ The PRIME MINISTERWill the right hon. Gentleman read the first sentence?
§ Mr. AUSTEN CHAMBERLAINYes: "In regard to income tax I do not hesitate to associate myself with the declaration of more than one predecessor that an income tax at a uniform rate of 1s. in the £ at a time of peace is impossible to justify and difficult to defend." The right hon. Gentleman attaches an enormous importance to the word "uniform." Was that observation intended to be limited to a tax which was uniform at 1s., or would subsequent alterations remove all force from that argument Then he goes on: "It is a burden upon the trade of the country, 75 which in the long run affects not only wages but profits." Is not that true also of a high income tax 2 Will anyone contend that the relief of earned incomes below £2,000 a year causes a tax no longer to press as a burden on profits and wages? Why should these words be applicable to a tax at a high figure, whether uniform or not? No one will contend that the major portion of the wages of the country are paid by people whose incomes come under the exemption of £2,000. Then he goes on to say: "That it is open to the same objections as the continuance at an abnormal figure of the floating debt, namely, that it tends to destroy, or at any rate to contract, the reserve on which tire State can draw on a sudden and unforeseen emergency." Is not that as true to-day as when the tax was at a uniform rate of 1s. in the £? Your tax may now be Is. Can you raise it without inflicting hardship or without doing injury to industry, because you have given some relief to earned incomes below £2,000 and less relief to earned incomes between £2,000 and £3,000? The very hardest cases get no benefit from the earned-increment relief There are plenty of small incomes above £750 not subject to abatement—incomes of a moderate amount and this is especially so in the cases of widows and daughters and of men who have retired from business either through ill-health or by reason of old age. There are plenty of small incomes which will be struck by the tax of 1s. 2d. in the and I am confident from the correspondence T have received that while the Prime Minister flatters himself he has removed a. sense of injustice from many minds, the great mass of income-tax payers will not have reason to think so. I am quite confident he has raised the bitterest sense of injustice among people who are certainly worse off and who get no relief whatever. I frankly say I think that the path on which the right hon. Gentleman has entered will lead him and his successors into interminable difficulties and that there is no solution on the lines he has laid down which will do even-handed justice all round. I say in the case of these small incomes, the income tax of I s. 2d. will press very hardly, and that by putting the tax at that point in time of peace he is destroying the elasticity of the tax, while he will also aggravate the sense of injustice which the distinction made by the right hon. Gentleman has already produced in the minds of the people. Above all, he is going to 76 charge a super-tax. I agree with the right hon. Gentleman the Leader of the Opposition that there is no inherent injustice in the idea of a super-tax, but such a surtax is of necessity an arbitrary tax. There is no ground why it should be fixed at 4d. or 6d., or even 8d.; it is a purely arbitrary figure which the Chancellor of the Exchequer of the day fixes in view of his present needs. The second objection is that it is extremely difficult to assess, that it requires costly and complicated machinery in order to collect it. It is quite certain you will have a great deal more trouble in the future, and you will produce an added sense of injury and injustice not alone in those taxpayers from whom you succeed in extracting it, but in a great number of other taxpayers from whom it is not due, but whom you will harry and worry in order to make them prove that it is not due. The Prime Minister says, as I understand, he does not anticipate that any difficulty will arise from evasion. I gather he does not think that capital will be taken away from the purview of the tax, and that that is a fantastic danger conjured up by the imagination of thoughtless people in the City, which will soon entirely disappear. I think a great deal of nonsense has been talked in this Debate about evasion, and for this reason, that hon. Members who use the word use it to cover entirely different things. May I split it up and discuss it under two different phases which will be familiar to gentlemen who sit on income tax committees. Let us take evasion to mean the illegitimate avoidance of the tax—a. breach of the obligation imposed by the law, an evasion of the tax where the tax is due. That is exactly on a par with smuggling. It defeats the moral obligation which rests upon every citizen to obey the law because it is the law. Many citizens have been largely encouraged by hon. and right.. hon. Gentlemen now in office to disobey the law because they choose to think it acts unjustly towards them. The Chancellor of the Exchequer may find that there are passive resisters in regard to income tax as well as in regard to education, and, indeed, passive resistance was a financial weapon, which is as applicable to taxes quite as much as it is to rates. But as soon as you have evasion, which is what I have defined, namely, the refusal of the citizen to discharge his obligations under the law as to a payment, then I say —though there is not one of us who defends it—you have got to take account of 77 what human nature is and of what income-tax-paying human nature is, and it is the opinion of everyone who has studied the income tax that there has been great evasion in the past, and you must expect to have evasion in the future, and you cannot expect that as you make the burden heavier the evasion will grow less. But I do not defend it and no-one defends it, and if you catch people who are guilty of evasion, let them suffer the penalty of the law. But that is a different thing from' what we are discussing here in the name of evasion, which is simply the avoidance of the tax; that is to say, the so handling your fortune that the tax never becomes due. There is no legal obligation on any taxpayer to pay more than the Statute says he shall, and there is no moral obligation on any man to pay more than the Statute says he shall, and, if the Statute allows him, provided he uses his income in one way more than another to escape, he is entitled to do so, just as we arc entitled to escape the whisky tax. You put a half-penny tax on whisky. Supposing I were a whisky drinker, and rather than pay that tax I give up whisky and take to French wines. Would you say I evaded that tax and was an unpatriotic and immoral person, or would you come down and rejoice that the consumption of whisky was declining and that temperance was making vast strides, and that if you did not get so much tax you bad promoted a reform in my domestic economy. If there is no obligation on the man to pay a whisky tax, there is no obligation on a man to pay the income tax if he can avoid it. I am now dealing with avoidance as distinguished from illegal evasion — legal avoidance — avoidance within the rights of any citizen. It is that kind of avoidance which I dread from the new tax which the right hon. Gentleman is putting on.
He thinks there will be no sense of injustice, but I differ from him; I should differ with great hesitation, if I stood alone, but every witness connected with the revenue, who came before the Income Tax Committee, laid stress on that fact, and no one more so than the late chairman of the Board of Inland Revenue, Sir Henry Primrose, who had not only his long experience at the Board of Inland Revenue to guide him, but who had been Mr. Gladstone's private secretary while he was in office. Sir Henry Primrose said that you will find there will be great avoidance. The poor man who has only enough to cover his expenses and who lays by little, he cannot do 78 it, but the man who has a free income beyond his necessities, he can do it, and all these witnesses, one and all, said you will find great avoidance. You will lose not only the super-tax but the original shilling, which he might have paid, if he had paid the tax at all. In the hope of getting the shadow, you drop the bone, and I believe you will have a very great decrease of revenue in consequence; and how can the Government pretend that they take any other view? The Chancellor of the Exchequer says he has based his estimates on those of Sir Henry Primrose, but Sir Henry Primrose argued that there would be this avoidance. Has the Chancellor of the Exchequer reduced his estimates in consequence?
§ Mr. LLOYD-GEORGEWhat I said was that I based my estimates on what Sir Henry Primrose said about the £5,000 incomes.
§ Mr. AUSTEN CHAMBERLAINHas the right lion. Gentleman allowed for any transfer of capital or not? Has he allowed for any transfer outside the purview of this tax or not?
§ Mr. LLOYD-GEORGEThe Committee did not accept Sir Henry Primrose's view.
§ Mr. AUSTEN CHAMBERLAINThen the right hon. Gentleman does not either? I am not pretending to pit my opinion against the right hon. Gentleman's; but it is he who pits his and the Government who pit theirs, not only against Sir Henry Primrose, but against that of the Senior Commissioner and I think every other witness connected with the collection of the revenue who came before that Committee.
§ The PRIME MINISTERAll equally opposed to differentiation?
§ Mr. AUSTEN CHAMBERLAINThere were some, but for the reasons I have given I think they were more right than the right hon. Gentleman. The right hon. Gentleman based his assumption, he said, on the number of gentlemen with incomes over £5,000 a year given by Sir Henry Primrose. What figures did he get in regard to the particular tax which he is imposing, which is not a super-tax only on the portion of income above £5,000, but an income tax on the incomes of people between £3,000 and £5,000? Those will be of a very different character from the figures which Sir Henry Primrose has presented. I think he gives an estimate of all the people with incomes over £3,000 and an 79 estimate of all the people with incomes of over £5,000. What the Chancellor of the Exchequer has done is to bring in a tax which goes neither to one principle nor the other, but which is a combination of the two. What I want to know is, Whose estimate has he taken of what will be the result of that combination? I do not think that he will find that Sir Henry Primrose's affords him a figure for the estimate he has given to the Committee.
§ Mr. LLOYD-GEORGEYes.
§ Mr. AUSTEN CHAMBERLAINIn that case perhaps the right hon. Gentleman will explain before the Debate concludes; we shall be very much obliged to him if he will. The question to what extent there will be avoidance is a very difficult one to determine at all, because it depends entirely upon the state of mind of the individual taxpayer who is affected by this tax and on his own financial position. "Why should they feel any injustice?" said the right hon. Gentleman. "We had an income tax of Is. 3d. in the pound in the late war and the income tax has been higher." I think we can rely upon the income-tax payer to respond well to meet any great and temporary emergency, but it is a very different thing if you are taxing not merely for a great emergency when the future of the country is at stake, or even for a temporary emergency. You are not taxing for that. You are permanently putting on differential rates and differential provisions to those affecting other citizens of the country, for all the ordinary expenditure of the country, with no hope or prospect of relief at any time, but with the certainty that in spite of this added burden, whenever the Government gets into an emergency again, further demands will be made. I therefore do not think the good response made to the 1s. 3d. is any guide to what will happen here, and let me say in this case that I think a more curious argument in support of this proposition than that adduced by the right hon. Gentleman at the head of the Government I have never heard in my life. The Prime Minister says, "We ask you to make a normal rate of 1s. 2d., we ask you in certain circumstances to put on a super-tax of 6d. on that, but how can anybody think that unfair when the average payment throughout the country is taken? "He says the average payment last year was 9½d., this year, without the super-tax 10¾d. and with the super-tax 11½d. What possible consolation 80 is that to the poor taxpayer with £800 who is charged at 1s. 2d., or to the man with just over £5,000 who is charged at Is. 8d., or something like that. It is exactly on a parallel with the contention of the Chancellor of the Exchequer the other day, which I think really emanates from the hon. Member for Paddington; he says: "How absurd of these income taxpayers to cry out! Why the total amount of income assessed to the income tax in the last five years—
§ Mr. CHIOZZA MONEYI said in the last 20 years.
§ Mr. AUSTEN CHAMBERLAINThe total amount of income, assessed to the income tax in the last 20 years, exceeds the addition which will have been placed upon the tax. What on earth has that to do with it? The tax increased by the increased number of taxpayers, but putting that aside, if every taxpayer increased his proportion, and if we could all share in the increase of double income, that would be an argument, but as we do not all have our share and some people's incomes remain stationary and others increase out of all proportion, you cannot draw an analogy in this way, or, if you do, that can have no possible bearing upon the justice or injustice of the tax. And with regard to these taxes, is there no ground for a sense of injustice, which undoubtedly is spreading amongst many of the people, who are subject to income-tax payment at the full rate, and I think he will find also amongst the owners of small incomes taxed at Is. 2d., because they are nominally not earned, although they may be the result of the savings of a lifetime, or a pension which a man has earned and worked for himself. What did the right hon. Gentleman say about another tax, the increment tax? He said that there were rich men with incomes of £5,000 a year, and did they really object to pay a halfpenny in the pound on the capital value of land in order that they might have "Dreadnoughts" and the poor people might have old age pensions? Is it a halfpenny in the pound that they are paying? I complain that neither the Chancellor of the Exchequer nor the Prime Minister will keep their taxes all present in their mind at the same time. The rules of the House are sometimes very convenient, even to Members of the Government. It is quite convenient for the Prime Minister to come down to-day and say, "I discuss income tax only; look at the income tax of Prussia and of France," and when my right hon. 81 Friend says, "The income tax in Prussia includes payment in lieu of rates," to say "that is totally outside our discussion; I am only discussing the income tax."
§ The PRIME MINISTERWhat I said was about the death duties.
§ Mr. A. CHAMBERLAINExactly. My right hon. Friend said the death duties, and the right hon. Gentleman said that is outside the scope of the income tax. Nothing is more relevant to the income tax than the death duties. Sir William Harcourt graduated the death duties because he would not graduate the income tax. He and others before him, Mr. Gladstone notably, used the death duties in order to correct the injustice of the income tax, and if you deal with these taxes in separate watertight compartments you do not get justice over the whole, but gross and growing injustice. I notice that these great city authorities say it is their experience that death duties are not treated as income tax, and that they are paid as a chunk out of the property. That was not the intention of Sir William Harcourt. He said the proper way to provide for them was by insurance, and providing for them by insurance is in fact charging yourself with an additional income tax every year of your life in order that the corpus of your property may not be diminished at your death. May I ask the Committee to consider, not in the interests of the individual taxpayer, but of the country at large, whether that is not a process which we ought to encourage rather than discourage. Is it our interest to have the corpus of the capital diminished at every death or to have it maintained and to induce the taxpayer to make sacrifices during his lifetime which will enable it to be maintained at his death and which will prevent the estate being broken up? My argument would not apply if you used the death duties to wipe out the National Debt. You might then fairly say at the death of every man "we take a chunk out of his estate, we by so much diminish the capital of the country, but we use this money to pay off debt, and therefore by so much we diminish the liabilities of the country. There is an entry on each side of the ledger, and the account is balanced."
But we are not doing that. We take the death duties for the ordinary annual expenditure of the country and apply them to meet the annual outgoings. Unless the capital is replaced during the lifetime of the successor you are gradually diminishing the accumulated capital of the country 82 and destroying the resources to which future Parliaments have to look. I therefore submit that it is of the greatest importance that we should regard death duties in connection with income tax, that we should treat them as being in fact an additional income tax, and when we are considering what income tax is fair we should look at the effect of the two combined. I have not been able to make the calculations—I hope we may have them before we get much further—as to what will be the effect of the changes which the Chancellor of the Exchequer is proposing in the death duties in the present Budget. But I take from Stir Henry Primrose's evidence before the Income Tax Committee, a statement which will give the House some idea of what the weight of the total duties is when measured in this way.
The CHAIRMANI really think this argument about the death duties should be left to the death duties Resolution. It only affects the question of the income tax in regard to the whole question of total taxation, or the total taxation on this class of individuals, and that is an argument more relative to the general discussion of the Budget. We cannot possibly discuss the death duties in this way.
§ Mr. AUSTEN CHAMBERLAINI do not wish to discuss them. I have given you a wrong impression if I led you to think I wanted to discuss the death duties for a moment. I feel bound to raise the point if I may. My whole object is to discuss whether it is reasonable to have a is. 2d. income tax with a super-tax of 6d. I say you cannot consider that alone, and especially the 6d. super-tax, unless you consider what other obligations lie upon the payer of this super-tax, and that it is not fair to say as the Government do look at his income tax alone. Here is a man with an income of over £5,000 a year. All we ask him to pay is something over 1s. 8d. in the £ on income tax. I say what they are asking him to pay is not is. 8d., but far beyond that sum. I will put my point in a single sentence which I do not think you will think is out of order. Before any of the changes were made in the death duties—and the figure will have to be altered to include the Prime Minister's changes as well as the Chancellor of the Exchequer's—in income tax and estate duty alone without any other death duties, even an estate of £100,000 a year a man was paying income tax of 2s. 6d. in the £. What is it going to be now? The 2s. of Prussia will be as nothing compared with 83 the charges which the Prime Minister is making. I will not go further than that, but it will be disastrous for this Committee, and for the finances of the nation if each tax is to be treated so absolutely distinctly one from the other that we are never to see the accumulative effect of taxes which fall cumulatively upon the shoulders of the same man. The failure of the Government to correlate their different proposals is apparent throughout. The Chancellor of the Exchequer for the purpose of income tax, like all his predecessors, treats the income of husband and wife as one. I do not say he could do otherwise. I think it would give rise to a great deal of evasion, possibly illegitimate evasion, if he did. But is it not very hard to correlate two separate incomes for the purpose of income tax as long as a person is alive and the moment he dies to separate them and to raise the duty on the widow as the right hon. Gentleman proposes to do? In my opinion, in considering these Budget Resolutions, we have to take the Budget as a whole. It is not sufficient for the Chancellor of the Exchequer to present us with each Resolution in turn and to demand that we shall concentrate our whole attention upon that particular Resolution and think of nothing else. We must look at the Budget as a whole, as the City looks at it and as the taxpayers will look at it. In my opinion, taken as a whole, it is not a fair distribution of the burden. It is placing an undue proportion on the shoulders of certain portions of the taxpayers, and it will encourage that sense of injury and injustice which it should be the study of every Chancellor of the Exchequer to avoid.
§ Sir CHARLES W. DILKEThe right hon. Gentleman who has just sat down made one tremendous point against us—not only a strong point, but one to which the greatest attention ought to be given, and it is only right that that point should be frankly met by all who have changed their minds on this question. As the Prime Minister put it, all the expert evidence, all the authority of the most distinguished statesmen in the past, may quite justly be claimed against this proposition of a super-tax as against the proposition of differentiation. There was a Member of this House who was highly respected, but whose weight in the House was not equal to that of Mr. Gladstone, Mr. Lowe, Sir Stafford Northcote, and all the great men 84 who sat there in his time—Mr. Hubbard, I mean—who year by year brought forward a Motion on the income tax which was generally supported only by himself. The most overwhelming authority was against him, and I for one, in common with almost every Member of the House accepted and followed that authority. It was very difficult to do anything else. I am still, to some extent, under the influence of it. But the authority in the case of differentiation pure and simple was greater than at any time has ever been the authority against graduation. Sir William Harcourt, for instance, was fiercely opposed, like Mr. Gladstone and Mr. Lowe and all his predecessors, to differentiation, which is now happily accomplished with universal assent. [An HON. MEMBER: "No."] Well, I think pretty universal. I am quite certain no one is ever going to propose in this House, even in a private Member's Resolution, to get rid of it, and if he did he would have the same amount of support that Mr. Hubbard used to have on the other side in days gone by. The weight of evidence against that change was overwhelming. The real fact is that on these, matters, as in a good many others in an old country we are taught from the same book, we are all taught by people who have been taught from the same book, and we get into the habit of reading masses of figures to support a preconceived opinion which, when we set to work and examine it for ourselves, as on both sides the country has recently examined certain questions which interest hon. Members opposite, breaks down, and the figures will not bear the test. That was the case notably upon the income tax.
The effect produced on the minds of-those who read the evidence to which the right hon. Gentleman just now made so much reference will, T think, be discounted at all events next year. Sir Henry Primrose expressed the old view, and simply repeated views that Lord Milner had put before Sir William Harcourt. Sir William Harcourt ardently desired to graduate the income tax, and Lord Milner made such a report against it that he was unable to do it, and preferred to increase the death duties. Sir Henry Primrose repeated Lord Milner's well-known views, and all those who appeared as official witnesses before the Committee, backed by the whole strength of the official element on the Committee all expressed themselves in the same sense, but suspiciously using exactly the same arguments and adducing exactly 85 the same facts, which would not bear examination.
The right hon. Gentleman to-night has repeated every single argument put by every single official witness before that Committee, and backed with the weight of every great name without exception. The first gleam of doubt, I think, in the minds of many was when we found that some statements, which were universally assumed as sound by everybody would not bear examination at all. For instance, the fact that everything is right, because everything is collected at the source. Of course it is not collected at the source. You only collect at the source what you cannot miss, and of all the people who opened our eyes by their evidence the hanker, who has been quoted so much tonight, and who was one of the signers of that City manifesto, and the most weighty I suppose, Sir Felix Schuster, was the witness who gave the case away. He went dead against the official view. The City attitude at this moment, should be criticised with some care. The City held a tremendous meeting a short time ago, and almost in the words which were adopted in this House on a former occasion declared their willingness to make every sacrifice that possibly could he asked of them to meet the particular expenditure which they desired to see incurred this year, and which is pointed to by the Government when they speak of a large increase in the Navy next year—a large portion of the expenditure which we are contemplating in the great surplus which we are piling up for next year's Budget. In passing that resolution it was a little id of course to attack this or any particular tax, but still the opposition which the City has always shown to all taxes of this description at every time, the opposition which they showed a great many years ago to a certain speech on ransom, and which included this proposal—that opposition of the City is an opposition to this tax, and one other especially, because they are supposed to be of this cumulative nature. I have looked through the leaflets which have been issued attacking this Budget, and I do not find a word in them about the imposition of cumulative taxes. Therefore it is just as well to examine the evidence which was given against it before the Committee by the experts, and also the evidence which was given in support of it.
Take the evidence of Sir Felix Schuster. He made a most remarkable, and, I think, 86 perfectly sound criticism of our old income tax, which is supposed to be the peculiar glory of this country. Referring to the collection of income tax at its source, he pointed out that under the present system you cannot get a great deal of the tax which you are supposed to get by collection at the source. That was brought out to some extent by the earlier Committee, who sat in 1904, who, in their Report, stated that there are many kinds of income to which that method cannot be applied at all. The Committee gave specimens of that class of incomes, and among them were incomes derived from property abroad. The Committee said that there was abundant evidence to show that in that sphere there was a substantial amount of fraud and evasion. Sir Felix Schuster was a witness before both Committees, and it is important to quote what he actually said, as his authority has been claimed on the side of those who are against what is now proposed. I think if his evidence was not examined it would be thought that he shared the ordinary British official view on this point. I will take his evidence as it appeared after he had revised it. He desired, on reflection, to make certain alterations, and not to put certain statements so sharply as he did in the first instance. I will quote from his corrected evidence, as printed and in the hands of Members. I take question: 3,013. He goes out of his way to state that the, collection of the tax at the source may be carried to an extreme, and that he did not think it desirable to carry it to an extreme. He suggests that you lose an enormous amount of money by the very system which will be kept up by these proposals of collection at the source. That is not the principle on which income tax will have to rest in future. By the more general declarations you will get such a knowledge that you will be able to get a more scientific system, and to reform it in the way the Prime Minister has suggested this afternoon.
Sir Felix Schuster has been referred to as a City man who objects to this tax. When before the Committee he was asked in regard to these declarations. Those of us who desire to see this experiment tried, and who have gradually come to believe that it will be a successful one which will bring in more money, attach above all importance to the declarations. All the experts were very much astonished when he said in cross-examination that he saw no difficulty in making a man give a return of his income, whether taxable or 87 not. When the witness was pressed again on the subject he was asked whether in saying that the difficulties involved had not escaped his attention, when he said there was no difficulty in asking a man to make such a return as he was thinking of. Sir Felix Schuster replied:—
I have tried to think out dl those difficulties. I confess that they have not struck me as insuperable.That is the opinion of the great banker who is appealed to as being against the inquisitorial nature of this declaration. He believes that now you are almost cruelly inquisitorial with small merchants who have to bring their books before the local Commissioners, but does not believe that the Somerset House appeal is inquisitorial torture to which the rich people of this country ought not to be subjected. Sir Felix Schuster went further and said that there is a good deal of evasion. He was told that there would be fraud under the declaration, and he replied that there would be a great deal less fraud under declarations than there is now. You will see from Question 3,030 that Sir Felix Schuster indicated the opinion that the right to inquire into questions of income was not enforced now to the degree it should be enforced. When he was told that a man living far beyond the amount at which he had returned his income might say that he was living on capital, and that you could not discover the truth of the reply, Sir Felix Schuster said: —That might be, but it would very soon come to an end.The Committee also examined the official experts, who were against us to a man. Sir Felix Schuster was pressed in another portion of his evidence by several members of the Committee, and in answer to Question 2,976—and the income tax was high at that moment—he stated that London had capital coming from all portions of the world.An hon. Member said in the course of the last Debate that France has no income tax. That is not the case at the present moment. Sir Felix Schuster said that French capital comes in large quantities. That was at a time when the income tax was high, when the death duties were high, and when we are told that France has no income tax, I say these facts break down all that argument. Where is capital to go if it leave this country? Are not cases of evasion, possible under a super-tax, existent now? The combination of general declarations with the knowledge we are now getting from the death duties 88 being more accurately known is likely to bring in year by year more and more money which is escaping taxation at the present moment. We examined the experts on these points. Sir Felix Schuster, having described these foreign investments, we examined the gentlemen who remained after Sir Henry Primrose had gone, and who will have the enforcement of this super-tax—I mean the Special Commissioners. Does the late Chancellor of the Exchequer suggest for a moment that these gentlemen are unable to get through those administrative difficulties he has described to us? Does he think that the gentlemen who pointed out these difficulties in the past are not perfectly able to overcome them? Take the Senior Commissioner, who is the man, as I understand from the statement of the Chancellor of the Exchequer, who will have this work to do. As I understood the Chancellor of the Exchequer, Mr. Gyles, the Senior Commissioner at Somerset House, will be the man to carry out the work. Both he and his colleagues showed their leaning towards the declaration. They did not want the super-tax and they do not want a high income tax, but when you put it on they will have to get it, and they will get it. Naturally they want to get along easily and without friction, but they all want more power than they now possess, and especially in the case of large incomes. There was something-said by the hon. Member for Aston as to the present powers of the Commissioners to ascertain the amount of people's incomes. The Commissioners get at the incomes in a very disagreeable way. You can raise the financial status of a man arbitrarily, and then you have an inquisitorial proceeding—a sort of trial—directed against him for the purpose of ascertaining his actual income. That is a very different thing from what will occur in nine-tenths of the cases of those who will pay under the proposals of my, right hon. Friend. The Commissioners have all stated that their powers are insufficient. Mr. Gyles very distinctly asked for far greater powers than he has now, and he was examined very closely on the question of evasion and fraud which will come under the super-tax. He said that an enormous amount of evasion, or avoidance, to use the word of the late Chancellor of the Exchequer, and a large amount of fraud, exist now. There is an enormous amount of concealment of income and consequent loss of taxes under the present system which the Revenue 89 ought to get. That raises the taxation of those who honestly pay their share.
Mr. Gyles was examined on that point, and stated that the majority of the cases of evasion and fraud are among individuals rather than among firms. He gave cases of firms, and he gave cases of individuals, and showed exactly how they occurred. We have been told by speakers here today that if you overtax people that they will "do" you, although they would be willing to pay honestly under a lower tax. He said:—
I have frequently heard that allegation made. and when investigated have found that the persons making that allegation were defrauding the Revenue.As regards evasion, as regards fraud, as regards avoidance of tax, there are cases well known to all who have gone into the matter, where it transpires now, and where it will continue, where under no system can you get tax which the country ought to get. We had well-known cases very closely before the Committee when the doors were shut. But as regards the overwhelming majority of cases I believe with a very gentle spurring by those who are skilled officials you will obtain, not a very large amount of tax the first year—it is rightly put low by my hon. Friend—but gradually a great deal of money behind this tax, more than my right hon. Friend has dared to put it at its highest point. I am not an expert, but that very comfortable belief is based on knowledge that owe have of the classes of property which do not pay income tax at the present time. The evidence before the Committee in 1905 gave five great classes of property which avoid tax. Those people who avoid it are all people living in this country, most of them living in this town, and most of them very rich people indeed. In all those cases, I believe in all classes except one, which are mentioned in those five classes in the 1905 evidence, you will get by the knowledge of declarations and of death duties a tax which honestly ought to be paid and is not paid, and the getting of which is a complete answer to the statement of the right hon. Gentleman that you will both fail to get your super-tax and fail to get your tax on money which I do not get now.The main point of the right hon. Member was that of the use of income tax for a sudden emergency which has been so ably dealt with by the Prime Minister, that it is not necesary to say another word with regard to it, for though the Prime Minister spoke before the right hon. Gentleman, I think he may be said to have 90 answered him in advance. But the right hon. Gentleman needs something of an answer, because hon. Members opposite evidently do not quite credit the facts as stated by the Prime Minister in reference to the amount of capital going, and going where? I saw a certain doubt pass over the minds of highly competent members on the other side when the Prime Minister, in dealing with France, spoke of taxes which are not now and which are to be in France. There are five taxes in France, sometimes called four and sometimes called live, which are of a complicated nature, which used to exist in. Belgium, and which used to exist in the Rhine provinces of Prussia, and the replacing of which in Holland has been a matter of extraordinary difficulty at last accomplished. These taxes are in the nature of income tax. They are patchy and uncertain; but the taxes which the Prime Minister rightly describes as being higher than ours, and which are proposed by the present Government in France, like the tax which was proposed by the previous Minister of Finance, are calculated only to yield the same amount as is yielded now by the other taxes that are to be abolished, the certain taxes in the natures of income tax. And when you remember that these large taxes, an average of 8½d. per cent. all round upon small incomes, as well as big ones, are required to replace the existing more direct taxes in France you can see how incorrect is the statement that there is now no income tax in France.
Someone mentioned death duties, but it is out of order to deal with them just now. However, I may point out that the death duties in France, as I can show on another occasion, are higher than here, and the total amount relatively in France for the income-tax paying classes is far higher than here. It is much larger than is usually supposed in proportion to the general trading conditions of the country. Then it has been said that the money is to go, elsewhere. But the fact which is reflected in all these arguments is the fact which is essential, and known to all these gentlemen in the City, the fact that capital does not take these trifles into account. They are all trifles as compared with security, greater interest and other conditions; and every sort of instance can be chosen from all parts of the world to show that that is so. The question of the increase in investments of foreign capital is supposed to be, of course, all a matter of guesswork, but all those who guess at it, coming to it from all quite different modes 91 of making their guess, all come to certain general conclusions pretty much alike. The largest increase in the last 10 years is admitted to have been in Australia. We probably have four hundred million pounds of invested British capital in Australia. If taxation were to keep capital from investment, it is not to Australia that that capital would have gone. Direct taxation in Australia is very large; it is increasing very much, especially taxation against all the classes of property which are hit by this Budget, but on a much larger scale. There are accumulated taxes and greater taxes of every kind, and especially taxes-directed against Englishmen—absentees. Yet, in spite of all this, the investments of British capital in Australia are enormous, and rapidly increasing. In the Argentine, on the other hand, there is hardly any direct taxation, and there the investments are increasing too; but, of the two, they are increasing more rapidly in Australia; and you can draw no positive conclusion from the facts, so far as they are known, except that capital does not care about taxation, which is, to some extent, a relative measure of the security which different countries enjoy. If investments were governed by taxation, all the capital in this country ought to fly to Monaco for investment, because I know of no other State where there is no direct taxation. There used to be none in Jersey; I am afraid they have some now. But in Monaco there is none. Does anybody ever consider in discussing the question whether he should invest in Monaco or go and live there? Does he ever consider the question of direct taxation or the incidence of direct taxation? The conjuring up of this question of private capital going abroad because of what is done in every country now is, in fact, a bogey, and conceals a somewhat belated objection to the taxation of great fortunes, which, I believe, is regarded by a majority of the people of the country as fair and likely to be well regulated.
§ Mr. SAMUEL ROBERTSI listened with great interest to the speech of the hon. Baronet. We all know what great interest he took in the proceedings of the Committee as chairman, and although his Report was not accepted by the Committee, yet I am quite sure that what he stated had very great influence with the Committee. It is a sad commentary on the financial procedure of the Government that three years after their first Budget 92 they should have to come down to this Committee and ask for an increase of six millions more money from the income tax payers than they asked three years ago. At that time the present Prime Minister was Chancellor, and he commented in severe terms upon the extravagance of the late Government, and he added that a return to more economic methods was the first and paramount duty of the Government. Here is a return to more economic methods by asking the income tax payers of the country to pay six million pounds more in the coming year than they did three years ago. I deprecate this extravagance with regard to income tax for two reasons. First, the income tax payers were promised time after time by succeeding Chancellors that they should be the first to receive relief. My right hon. Friend, who is not here now, the Member for Worcestershire, who was Chancellor of the Exchequer when we had to increase the income tax to 1s., in the year 1904, said this: "In my opinion it is the income tax payers who will have the first claim to relief, and I hope the sacrifice I am now asking of them will not endure for long."
The right hon. Gentleman who succeeded him was also of the same opinion, and I may allude once more to that statement, which has been quoted more than once this afternoon, when the right hon. Gentleman said that he did not approve of a uniform tax of 1s. because it was a burden on trade and affected profits and wages, and also because it entrenched upon the national reserve. The right hon. Gentleman has given us his explanation of that speech, and he said it only applied to a tax of is., which was not differentiated, and in the year 1907, that is the year after he made the speech, he did differentiate, and he calculated the result of differentiating the income tax on earned incomes would be that he would lose £1,250,000. The result of that was that he did lose £7,240,000; but what was the net result? The income tax brought in actually £780,000 more than it did before he differentiated. Can the right hon. Gentleman argue that an income tax which brings in more money, namely, £33,380,000, as against £32,600,000, was not a tax upon the trade and the industry of the country? It was a sum of money which entrenched upon the national reserve. It entrenched upon the national reserve because if there was a larger return from the income tax there would be less money to come in time of emergency. Take the Chancellor of the Exchequer's estimate for the coming year. 93 His estimate is £37,400,000, or an increase of £6,050,000 on what it was three years back. That burden upon the trade of the country, and that tax upon profits and wages, I maintain does entrench upon the important reserve of income tax. In 1873 Mr. Gladstone proposed to abolish the income tax altogether, and it was brought down from 3d. to 2d. in the £. Mr. Gladstone in his great speech in 1853 said:—
Much as may be said about the importance of an Army Reserve or a Navy Reserve, and of haying your armouries and your arsenals well stored, I say this fiscal reserve is no less important, for if it be used right, it is of engine to which yon may resort, and with which, judiciously employed, it unhappily necessity arise (which may God in his mercy avert), you may again if need he defy the world.I want to say a few words on the subject of the super-tax. It is an innovation in our financial system. It is a doubtful and dangerous policy to tax a few rich persons more in proportion than the rest of the community. The estimate has been given to the House that there are 10,000 people in this country with £5,000 a year and upwards. But take the higher figure of £10,000 and upwards, and you find the number is 4,000 persons. A little higher, and you come to incomes of £25,000, and the number falls to 1,250 persons. These figures were given before the Income Tax Committee. It has been said this afternoon by the right hon. Baronet opposite that he did not fear that the imposition of this s super-tax would have any effect upon capital going abroad. I doubt that very much. Does the right hon. Baronet know that last year, out of a total capital application raised in this country of £192,000,000, more than half, £118,000,000, went abroad, either to foreign countries or to our Colonies. That is the largest amount of money that has ever been sent abroad from this country. Mention has been made of legal evasion. I know that can be easily done. I can tell the Chancellor of the Exchequer several ways in which he could do it. It is known quite well that most foreign securities are to bearer, and that the coupons are transferable on delivery. None of the interest comes into this country. The rich man can instruct his banker or his broker to invest this interest abroad. The next year he may say to himself, "I want that interest." He sends to his banker or his broker to sell out. It becomes capital by means of this investment abroad, and the money can be returned to this country without any liability upon it in England. Sir Henry Primrose in his evidence before the Income Tax 94 Committee said he estimated that out of a total of £700,000,000 of income under review, as much as £100,000,000 came from abroad; and he indicated how the owners of that money could if they wished so divide their houses, partly in London and partly abroad, that this income would not be received in London; it would be received abroad, and unless it came into this country it would not be liable to taxation. Sir Henry also gave other instances. I am going, however, to allude to the evidence given before the Committee which the right hon. Baronet did not mention, namely, that of Sir Felix Schuster.
§ Sir C. W. DILKEI did not quote Sir Felix Schuster on the super-tax, because it was not so much on that that I was speaking, but on two specific matters mentioned by the right hon. Gentleman opposite. The principal one was the declaration.
§ Mr. ROBERTSSir Felix pointed out to the Committee that any addition to the existing income tax would lead to a considerable diversion of capital from the country. Sir H. Primrose did the same, and what he thought were the disabilities and disadvantages with regard to administration, and he divided his objections under several heads. One was this, to discover the persons who were thought to be liable, and to do that he considered it would be necessary to send out 100,000 notices to those who might have incomes of over £5,000. In order to get that information it will involve a very great deal of trouble to a number of people who have to make out their income tax, but who may not be liable for this super-tax. It will also be a source of great difficulty, in my opinion, to those people whose income comes from various sources. Such people will have to be very careful to indicate the sources from which the money conies, because it will have to be the gross income, and, therefore, the income derived from various sources will have to be added together by the person making the return in order to make it a true statement. Sir Henry ended by saying that he thought it would cost perhaps £100,000 a year for additional staff. It has been said during this Debate more than once that a return could be easily sent in. I doubt it very much, because when people now make a return it is in order that they may get off taxation. Here, when a return is made, it will be in order that taxation may be put on. In fact, a man making a return will be practically, 95 as far as his income goes, signing his own death warrant as to the amount of tax which will be taken from him.
With regard to people with small incomes, there are, as the Committee is aware, a great many of them who would be classed under earned income. It may have been earned in the past—probably it has been earned in the past by professional men and others, and that money has been invested. But it will not be entitled to any relief. Take a man with £500 a year. The deduction in his case will be £150, so that he would pay on £350. On unearned income it works out, I make it, 9.8d. in the pound on £500, and if it is earned income it works out at 6.3d. in the pound. I consider that even with the abatement it is a very heavy tax upon people with small incomes of this character, for it means nearly 10d. in the case of unearned income and 6,½d. in the case of earned income which has to be paid. The Chancellor of the Exchequer is not in the House at the present moment, but I do not wish to sit down without making a suggestion. The money has to be found; we admit that; but some of us think that the present occasion is an exceptional one. The Chancellor of the Exchequer is called upon suddenly to find an increased amount for naval construction. I do not think he has provided sufficient in this Budget. What I should like to suggest is that this exceptional occasion would justify the Government in borrowing the extra money that is required for naval construction. I believe if the Government would make up their mind to do this they would largely meet the necessities of the case.
The CHAIRMANOrder, order. The hon. Gentleman's observations are not relevant to the Resolution, and are more in the nature of general observations on the Budget.
§ Mr. ROBERTSI was going to suggest to the Chancellor of the Exchequer that he should withdraw this extra income tax, and in lieu of it create a loan for naval purposes. That was what I was going to suggest, but, of course, I will not pursue the point, as it is ruled out of order. But I do hope that the Chancellor of the Exchequer will consider the injustices and the hardships that I have put before him, and that he will also consider the very important question that to raise the income tax in time of peace to the amount of 1s. 2d. in the £ all round is a dangerous proceed- 96 ing from the point of view of national fiscal safety. Supposing in a few years' time we are called upon—I hope we shall not be—to defend our country, the Chancellor would have, on the top of the 1s. 2d. to put on such taxation that it would be a real grievance to the taxpayers, and you would have very great difficulty in getting in the whole of the money which he required. I trust the right hon. Gentleman will see his way to making the reduction which we suggest, and to meeting the objections which we have brought forward.
§ Mr. P. F. CURRANIn rising to occupy a few moments on this Resolution I think it is my duty in the first place to inform the Committee that the income tax as suggested in the Budget does not in any way affect me. No doubt some Members of the Committee will say that that is a great misfortune so far as I am concerned, and I feel disposed to share that opinion. I am somewhat amazed at the length of time taken up by hon. and right hon. Gentlemen above the Gangway in discussing the woes of the middle and upper classes in regard to this income tax. I took part in a bye-election not very long ago, since the Budget was introduced, and there were quite a number of gentlemen down from this House supporting the official Conservative candidate. I had the pleasure of listening to some of their speeches, and not one of them ever referred to the burden which was about to be imposed on the middle and upper classes. They all referred to and all unanimously deplored the poor man's tobacco and whisky being touched, but there was nothing said whatever about the unfortunate members of the middle and upper classes.
The right hon. Gentleman the Member for Worcester repeated this afternoon what has been said both in this House, on public platforms, in the country, and through the Press, that the Labour party has converted the Chancellor of the Exchequer to their way of thinking. I am sorry to say that neither my colleagues nor myself can detect that revolutionary change in the political principle of the Chancellor of the Exchequer. It is something to be hoped for, but not yet realised. As far as we are concerned, and as far as I am personally concerned, I support the principle of this Budget and the Resolution before the Committee at present. The basis of the Resolution is, in my judgment, the allocation of the tax so that the people in the community who are best able to 97 bear will pay their proportionate share of that tag. I am about to make what may be termed a bold proposition in this House. I am bound to say, so far as I am aware, the working classes and the essentially distributing classes are the two classes in the community that both directly and indirectly pay all the taxation. What do I mean by that? I mean in the words of Adam Smith, who laid down this law in the wealth of nations labour applied to land is the source of all wealth, land being the gift of Nature to all her children, labour bringing the commodities out of it is the only method whereby wealth can be derived. Then may I point out that the proposal of a tax, the increasing of the income tax upon land values, the imposition of a super-tax upon high incomes is, in my judgment, a more just, a more logical, more moral and consistent method than endeavouring to tax the food of the poor.
I want to make a reference to a statement made by the hon. Member for Paddington in his very able address. In the production of figures, at which he is an expert, he made one statement that economic rent was a mere fraction of the social value of the country. I cannot follow him in that statement. I do not want to misquote or misinterpret what he said, but possibly he did not imply that economic rents meant the entire ground rent of the United Kingdom. The entire ground rent of the United Kingdom is over 200 millions, and that cannot be called a mere fraction in the social value of the country. The people who receive that, and who will be taxed by the principles of the present Budget, those people in my judgment are much better able to bear the tax than any other class of the community. I want also to make a reference to one or two statements made by the hon. Baronet the Member for the City of London. He is evidently representing in this House the impoverished City merchant and the hard-up stock and share broker. They have not yet got to find their sleeping accommodation on the Thames Embankment as far as I am aware. He quoted the hon. Member for Preston, who said the other day that the Labour party wanted to eat other people's cake and keep their own. That is rather a risky statement for the hon. Member for the City of London to make. If labour is the source of all wealth, then the logical outcome of that position is that people who live upon rent and interest are eating other people's 'cakes and keeping their own.
98 Another point was referred to by the hon. Baronet and also by the hon. Member for Paddington, that in an individualist state of society it was or would be injurious to do anything by way of taxation which would cripple the investment of capital, inasmuch as it would tend towards limiting employment. Some of us, those of us on these benches at least, are hoping for the time when the wage worker, the wealth producer, will not be entirely dependent on the investor for his employment. There is a principle laid down in the Budget at least the elements of a principle that a certain amount of the taxes raised will be utilised for the purpose of finding employment. As far as we are concerned we are hoping that the time will come when a great deal more of the national revenue of the country will be put into operation to find useful employment upon the natural inheritance of the people of the country, namely, the land of the country. Of course, those of us who speak from these benches are not seriously affected from a pecuniary point of view by the imposition of the new taxes, or especially by the imposition of a super-tax, but at the same time it is the duty of the work people to uphold a good principle when it is laid before this House and the country. The non-producing element up to this moment. and even after the Finance Bill becomes an accomplished fact, the leisured classes and the non-producing classes will have shirked, and will be shirking, a great deal of responsibility to pay their quota towards this debt. I submit, therefore, that it is the duty of the worker to take a very keen interest in the various forms of taxation, especially that which is suggested by the Resolution before the Committee. I might say to the hon. and right hon. Gentlemen above the Gangway that prior to the introduction of the Budget those of them who spoke with weight and authority were clamouring for the expenditure of a tremendous sum of public money. Clamouring—why they were not satisfied with four "Dreadnoughts," they wanted eight. [An HON MEMBER: "And could not wait."] And could not afford to wait, the country was in danger. I read something of a mysterious aeroplane that was flying round somewhere about the south-east coast just now—
The CHAIRMANThe hon. Member is really very wide in almost the whole of his observations. I do hope he will confine himself to the Resolution.
§ Mr. CURRANThe interruptions, I am afraid, rather drove me on. At any rate, the money has to be found, and the question that presented that to me is this, is the money to be found by the propertied classes, by the upper and middle classes, and especially by the landed proprietors class, or is it to be found once more by placing taxes upon the breakfast table of the poor? It must be found either way, and, in my judgment, the general principles laid down in the Budget are the most fair, human, logical, and consistent principles for the purpose of finding the money.
§ Sir WILLIAM BULLI will not follow the last speaker in some of the ramifications of his speech, but I should like once again to point out to him that all wealth does not come from land. I should like in the first place to thank the Chancellor of the Exchequer very sincerely for the remission he has made in regard to children. That is a principle I have advocated for very many years past, and I am very glad to see that now a first step has been made to bring it into force. I had hoped that for children an allowance of £40 might have been made. He has started at £10, and I am grateful. I must press what I usually do in this Debate year after year, and that is the question with regard to married couples. I do feel very strongly indeed that the income tax presses very hardly upon married couples. In the first place the abatement was at the rate of £150 per year, but it was raised to £160 some years ago. It was stated by the then Chancellor of the Exchequer that that was a reasonable sum for one person to live upon. Nothing was said about keeping two persons. Since those days the price of every kind of commodity has gone up—rent, rates, taxes, food of all description have all gone up in price, and therefore on that account alone I would appeal to the Chancellor of the Exchequer that some consideration ought to be given to this matter. I would not pretend that the cost of living of two persons is double that of one. I do think it is one and a half times as much, and I would appeal for a reduction to be made of a sum of £240 upon every married couple, rather than £160 as at present. It might be asked whether this would cost much money. In my opinion it would not mean a very large sum. The hardship of the present arrangement falls very severely upon the possessors of small incomes; and it might easily lead to immorality, because a man and woman living 100 together both get reductions, whilst if they are married no reduction is made. It is estimated that there are about 1,000,000 married couples at present called upon to pay this tax, of whom one-half would be exempt, because of their incomes being under £160, one-fourth would not have to pay on £240, and the remaining one-fourth, say 25,000, would fairly represent the question we have now to deal with. I am informed, and I thoroughly believe, that the cost of this reform would not exceed £200,000, and I press very earnestly indeed that the Chancellor of the Exchequer should see if he cannot make this great and necessary reform.
Then there are one or two questions I should like to ask as regards the Budget itself. There is one paragraph in the Chancellor of the Exchequer's statement which I cannot quite understand. He said:—
The yield of the super-tax in a full year is estimated at it £2,300,000, but as new machinery has to be set up, and as returns have to be obtained from taxpayers, examined, and assessments made upon them, I should be sanguine if I anticipated that more than a small proportion of the first year's income will reach the Exchequer before 31st March next. In these circumstances I have not felt justified in including more than £500,000 in my estimate for the current year.If the super-tax is going to realise £2,300,000, what is the Chancellor of the Exchequer going to do with the other £1,800,000? Is it all going in machinery, or what is to become of it? Further, what is it expected to yield in the second year? I know the right hon. Gentleman is not budgeting for the second year, but the House would be interested to learn what sum he expects then to realise from the super-tax and what the cost of machinery will be. It has been denied over and over again that there has been any more inquisition with regard to the income tax. All I can say is that, according to my experience, which is a fairly wide one, there has been a great deal more inquisition and more pressure all the way round. No one who has received income tax demand notes can deny that they have been delivered far earlier than usual, and that they have been of a far more pressing character. The usual polite notice has been altered for one still quite polite, but of a more urgent character, and many more questions have been raised. Persons have been suspected of having larger incomes than they have stated, and many inquiries have been going on. If we were able to get the information from the Treasury, I think it would be found that a very large sum has been recovered by these inquisitions. With regard to the super-tax, how is it to be collected? Is it still 101 to be under Somerset House? Are the special Commissioners at Somerset House to superintend the collection? Why is the collection of the super-tax different from the collection of the ordinary tax? We have been given no reason at all why the two taxes should be divided and put under different authorities. There is no doubt that the super-tax will lead to a good deal of evasion, and the result will inevitably be that when once people begin to learn how to evade the income tax, like dram-drinking, the practice will grow. The people will get more and more used to it, and the revenue will lose increasingly. Two or three days ago I was discussing this question of income tax with an hon. Member of great experience, and he agreed with me that there is more money at the present moment collected wrongfully by the revenue than there is taxation evaded. By that I mean that the forms are so complicated, and the difficulty of getting money back is so great, that many people—spinsters, widows, small tradesmen and others—rather than go through the trouble and mental difficulty of understanding the forms, allow themselves to be taxed when there is no reason why they should be. The super-tax is a great leap in the dark, and that the Chancellor of the Exchequer evidently feels this to be so is shown by the fact that out of an expected yield of £2,300,000 he only estimates to get in the first year £500,000. Again I ask: What does he expect is to become of the other £1,800,000?
§ Mr. WALTER GUINNESSThe right hon. Baronet the Member for the Forest of Dean read out some of the evidence given by Sir Felix Schuster before the Select Committee on Income Tax, which pointed to the opinion that collection at a source was a failure. It is possible that some of his hearers may have judged from that quotation that Sir Felix Schuster was in favour of a super-tax.
§ Sir CHARLES W. DILKEThat was not my point. I claimed him as a very powerful witness on two other points which have been raised in Debate.
§ Mr. WALTER GUINNESSI do not mean to suggest that the right hon. Baronet in any way misused the evidence, but I think it will be well to mention the evidence which Sir Felix Schuster afterwards gave very strongly against the super-tax. In the modification of his evidence he states that:—
…although there is a good deal to be said in favour of a return of a person's total income, the 102 practical objections are great, and it might defeat its own object. This would especially be so in the case of a super-tax being imposed, based on such returns … the existing tax is already considered very heavy, and any addition thereto would, in my opinion, lead to a considerable diversion of capital from the country, while an additional tax on larger incomes would also lead to a further tendency towards the division of estates in the lifetime of the owners, and to consequent loss to the revenue of that additional tax and of considerable amounts in death duties, a point which is of great importance in looking at the result as regards the revenue.It is quite obvious, therefore, that Sir Felix Schuster, who is rightly considered a weighty authority on this subject, is strongly against the particular proposals put forward by the Government.I do not think that at this period of the Debate it is worth going into small objections to the machinery of the super-tax. I will devote my observations to considering the proposal on general grounds. The right hon. Baronet the Member for the Forest of Dean pointed out that in many foreign countries there is very heavy taxation now, and that evasion of the super-tax would not at present be worth while, because people would avoid a tax in this country far smaller than the tax to which they would make themselves liable by putting their money abroad. I think the right hon. Baronet was right and that at the present figure evasion is hardly worth while. But I do not think that that is the only case we have to consider. We must look at the matter riot only from the point of view of revenue, but also from the point of view of its effect on the industries of the country. It is not only whether you are going to destroy revenue or investment, or decrease the yield of the income tax, but also whether you are going to divert into foreign channels the income which is now re-invested in British securities. At present the revenue is not losing to any considerable extent by evasion of the income tax. That is amply clear from the large growth in the figure of the incomes brought under review every year. At the same time it is probable, if one considers the figures contained in the Annual Report of the Commissioners for Inland Revenue, that British industries are losing very extensively by the turning away from home investment of those savings which otherwise would find their way into that very necessary form of national saving. In their last report the Commissioners draw attention to the very large increase of investments in foreign securities, and they give a very interesting table, from which it emerges that in the last two years-the absolute increase in income from foreign investments is greater than in the 103 previous 10 years. That is a very disquieting fact. It shows that the investor in this country is getting very nervous about British investments. If one looks into the figures and divides them under various heads they become even more disquieting. One finds that Indian Loans and Guaranteed Railways are stationary; the investor is not forsaking British Government and municipal securities. In the same way, the increase in the holdings of Colonial and foreign Government securities is also very slow. But in the case of Colonial and Foreign securities and coupons other than Government the increase in the years ending 1906 and 1907 was twice as great as in the previous ten years put together.
§ The DEPUTY-CHAIRMAN (Mr. Caldwell)This has no hearing on the present resolution.
§ Mr. WALTER GUINNESSI immediately bow to your ruling. I was about to bring my remarks in order by saying that this great increase in investments abroad had taken place since the present Government came into office. I will not say another word on the point, except that this increase took place after the Government had appointed a Committee to inquire into the graduation of the income tax, and the increase has been going on steadily since. Well, I do not see that the revenue is losing directly from income tax at its present rate. The capital which is exported still supplies income to this country, but surely if the rate of investment abroad is to be very considerably increased our industry in this country must suffer. Labour will suffer even more, because capital after all is fluid, and can find investment abroad if this super-tax is so heavy as to frighten people from British investments. But labour is by no means so mobile, and the unemployment, which has lately become so disquieting a feature in our social position, is certain to increase very much if the income tax proposals of the Government cause greater alarm among investors, and increase the present noticeable tendency to forsake British industrial investments for investments of the same class abroad. We realise that at the present time the graduation proposals of the Government are comparatively reasonable. They are light. I do not think that comparison of our system with those of the majority of foreign countries which impose an income tax would induce anybody 104 in this country to attempt to evade the income tax which the Government are proposing. But the investor has to remember this of the super-tax: that it may not remain at the present figure. It will be a tremendous temptation to the Chancellor of the Exchequer in the future to raise this tax. It will have a great advantage over every other tax, because once he has got the information of the number of taxpayers of every given category, of those whose income is £10,000, £15,000, or £20,000, he will be able to calculate to a nicety the exact yield to be received from the graduation, and from another 6d. or 1s. As has been made perfectly clear in this Debate by hon. Members who sit below the Gangway, it is recognised that the chief object and advantage of this tax is that in future times, when the Chancellor of the Exchequer does want more money he will be able to put another turn of the screw on to the super-tax. We know, of course, that this Budget has been inspired by a very interesting little book which was recently published by the hon. Member for Blackburn, and which is entitled "The Socialist Budget." In that book it is proposed that the super-tax should not stop at 6d. in the £, but should go up to I think 6s. in the £. In addition to that there would be the income tax of say 1s., which would make the total 7s. in the £. Again, that is not the only tax, because if we accept the views of many Liberal statesmen that the death duties are only a form of deferred income tax, and if we may accept the probability that the right hon. Gentleman the Chancellor of the Exchequer will not forsake his present mentor, and will follow him to the extent of his proposed death duties to 50 per cent., or 10s. in the £, it is quite certain that the super-tax, and the direct taxes on saving will be enormously increased.
Of course, one would imagine that any Chancellor of the Exchequer will realise the great danger of passing the point of diminishing returns; that he will realise that there is a limit to the amount of taxation which can profitably be imposed on any area of national income.
§ The DEPUTY-CHAIRMANOrder, order. The proposal before the Committee is the present and not the possible future increase of the super-tax.
§ Mr. W. GUINNESSI shall only point out that the proposed super-tax is in a form which lends itself easily to increase.
§ The DEPUTY-CHAIRMANAll taxes lend themselves to increase, but we are now discussing the probable effect of the present proposal, and not the effect of possible future increase of super-tax.
§ Mr. W. GUINNESSOf course I will not refer to that subject again, but I hope I have made myself clear that this particular tax will certainly present greater temptations to future Chancellors of the Exchequer than any form of indirect taxation, because once they get their machine they will be able to tell to a very exact figure what a rise in the tax will bring in. I think if we look at the figures of foreign investments, people have gauged this danger of a Radical finance, and are clearly preparing to remove securities if direct taxation is made too heavy for them in this country. The tendency now is to buy bearer bonds and other foreign securities, not that holders evade the income tax at the present time, but, because they believe they will be easily able to withdraw them in future.
Let me quote the evidence on this point of Sir Henry Primrose before the Select Committee. He states that the super-tax such as proposed by the hon. Member for Blackburn would mean:—
The dissipation of a very large proportion of that lent of annual income Mild) at present can most easily be saved, and wind.' tine: seriously retard the accumulation of capital.' It would mean, too, that to the present risks attending the use of capital there would lie added not the risk. but the certainty, that the most successful employment of it would bring to the owner a greatly diminished reward. As a result the tax would render capital in this country scarce and dear, a situation not disagreeable to those who might hold such capital as existed, but eminently disadvantageous Lo the majority of the community who do not hold capital, and especially labour. For in the division of total product between capital: mil labour an increase in the share of capital must mean a diminution in the share of labour. unless the value of the product can be increased at the will of the producers.I think it is perfectly clear that with a heavy super-tax people will not be satisfied with an income of 3 or 4 per cent. from British investments. If they have to pay this proportionate amount to the State they will expect British industries to give them a far larger yield, and industries, to counterbalance this great disqualification, will have to tempt capital by paying far higher rates of interest than at present is possible. There is no doubt whatever that the, present income-tax proposals have done much to, keep down the price of money at the present time. What does it mean to-day? Money is unlendable in the City from 1 per cent. from day to day. It simply means—
§ The DEPUTY-CHAIRMANOrder, order. The hon. Member is travelling wide of the Resolution.
§ Mr. JOYNSON-HICKSOn a point of order, Mr. Caldwell, may I call your attention to the fact that we are not merely discussing the question of super-tax, but the whole income tax Resolution, and I venture to submit to you that any point arising out of the income tax, past, present, or future, is perfectly admissible.
§ The DEPUTY-CHAIRMANThe Resolution contains both Resolutions, but the remarks are getting rather wide of the subject.
§ Mr. W. GUINNESSI think my remarks are applicable to the whole question of the income tax. I think there is no doubt that the cheapness of money is very largely due to the fact that people who are not bound to put their property into British investments will not do so while this heavy burden is hanging over their heads.
They prefer to submit to a very low rate of interest; they have submitted to lend money on 1 per cent. or to leave it on deposit at the banks because they did not know what would happen to them if they put it into British industrial enterprise, from which probably they would not be able to get it out. As the Chancellor of the Exchequer is looking out for unearned increments, I should suggest he should turn his attention to those foreign issues which have enormously increased in value, entirely owing to the action of the Government, because the large prominence recently given by the City to issues of foreign Governments and foreign industrial enterprise is evidently due to the fact that the Budget proposals of the Government, and especially their income tax proposals, means so heavy a burden upon the savings of the people of this country that they do not like to invest their money in home industries, and an undeserved and unearned increment has therefore accrued to recent foreign issues.
§ Mr. RIDSDALEThey will have to pay income tax upon these.
§ Mr. WALTER GUINNESSI quite agree. That is my point. At present they do not pay, but they know after they have invested in this class of security if the worst comes to pass they can quite easily take their savings to a foreign country; they can easily come to an arrangement with the register 107 of a company abroad so that their income earned by previous holdings in this country should be paid by a foreign bank; and because this class of investment can so easily be taken advantage of people prefer that class of investment, even though for the moment they are paying income tax upon it, to tying up their capital in this country in a way where probably they would not be able to realise it. We know the Chancellor of the Exchequer must now be beginning to realise that this super-tax and this increased income tax will undoubtedly lead to increased investments abroad, and a resulting stagnation in British security, and it will lead to this end not with a view to dishonest evasion, but simply so that people may place themselves in a position where, if this principle is carried further, they may be in a position to save whatever is left.
§ Mr. SUMMERBELLOne almost feels sad sitting listening to the Debate in this House with regard to the present Budget. I am sure the hon. Member who has just sat down would lead one to believe that if the Budget is carried into effect England is going to be ruined, and that all the capital is going out of the country and into foreign investments, and that no investments whatever will be left at home. Now I ask lion. Members to try and take a more generous view in regard to the nation's welfare, so far as this country is concerned, because at the present we are face to face with a very big deficit, and we are asked how are we going to raise the necessary money to settle, as they should be settled, the nation's affairs. So far as the working classes are concerned, they have too much taxation to bear already; it is quite impossible to get anything further from the working classes. The Government and the country are faced with two alternatives: either to further tax the people's food or to place additional taxes upon the rich. I am glad the Chancellor has taken the latter course. I think it ought to have been taken long ago. We have been accustomed to tax tea and sugar and the food of the people. Now we are getting into the habit of taxing incomes, and the Gentlemen that have paid the least are saying the most about it. I said the working classes are paving too much, if anything, at the present moment, and you cannot look for anything additional from that source. In the year 1906 the working classes were paying 63½ millions. At all events, that sum was raised 108 from taxation on food. That is 30s. per head of the population, or £T 10s. per family of five. When heavy taxes of that kind are in force you cannot look to the working classes for any additional taxation.
To tell us that labour will suffer if the Budget is carried through, because capital will go out of the country, is bad patriotism. Capital will certainly not go to Germany. I read in to-day's papers that Germany was so perplexed with her Budget that it was suggested her Parliament should adjourn fur a month to think over the matter and to try to arrive at some satisfactory conclusion. We have in that country suggested new taxes same as you have in this country. Hon. Members talk about death duties, and we find in Germany complaints against that form of tax just the same as there are here. There are claims for increasing the death duty, claims for an increased income tax, and claims for a super-tax. Then will our capital go to France? Taxation in France is heavier than in this country. Instead of complaining, hon. Gentlemen on the Opposition side of the House ought to feel pleased, and ought to be quite ready to come forward at a moment like this and show that they arc prepared to bear a little additional burden in order to help the nation out of the difficulties in which it is. Hon. Gentlemen want millions to spend upon the upkeep and on the security of this country, and, if so, they ought to come forward to help to raise the necessary money. The hon. Member who last spoke said that we on the Labour benches look forward to the time when the Chancellor of the Exchequer would have to put on another turn of the screw to get more revenue out of capital. Why not? I do not see that it can be hard for the man with £5,000 a year to have to pay an additional tax on the part of his income which is over £3,000. In fact, I think it is the proper way to raise the necessary revenue. An hon. Friend reminds that £3,000 a year is just about the poverty line.
I hope to see the time when the Chancellor of the Exchequer will practically raise all revenue from incomes. It is the natural and proper source from which to raise the necessary revenue for this country. When you raise it from income you make all men pay their fair share according to their ability. To raise it from indirect taxation is to make the food of the people pay more and in greater proportion than that which is paid by the rich. I say, 109 then, by all means tax incomes. I hope hon. Gentlemen on the Opposition benches will not say because they are going to be called upon to pay a little extra on incomes of £5,000 that this nation is going to arrive at a point of stagnation, with all the capital flown out of the country. I would say to them, "Be manful, and come forward and say, 'We can bear our burden willingly in order that the necessary revenue may be raised for the country.'" So far as we on these benches are concerned, we hope the Government will adhere to this Budget, and particularly to that portion of it which we are discussing here tonight, viz., the increase of the income tax and the new super-tax. I hope all this sorrowful talk we hear in regard to what is going to take place will have no effect upon the Government, and that they will stick manfully to their Budget, and if they do in my view they are doing right to make the rich people of this country pay more in the future than they have paid in the past.
§ Mr. JOYNSON-HICKSWith regard to the speech of the hon. Member who has just sat down, I would suggest that he should approach this question from its effect upon the country as a whole rather than upon any individual class. He said he hoped the Government would stick to their Budget, or at least that portion which did not affect him. The hon. Member suggested that all the taxation of the country should be put upon the income tax. I do not know whether his proposal is that everybody should pay income tax down to the smallest incomes. The people who decide questions of peace or not, and who have been crying out for "Dreadnoughts" are not the middle or the upper-classes, but that cry has come from those who have the votes, and every bye-election shows it. As one who represents a middle and upper-class constituency I associate myself with the speech of the hon. Baronet the Member for the City of London, and I approach this question from the point of view that an income tax of is. '2d. in the £, with a super-tax of 6d., is likely to have upon the prosperity of the country. I do not object to pay my share of taxation for additional "Dreadnoughts" and old age pensions, because we are just as responsible on these Benches for the passing of the Old Age Pensions Act as Ministers sitting opposite, and we are prepared to pay our share like men of the taxes that are necessary both for old age pensions and for the navy.
110 I want to consider whether the income tax at is 2d. in the £, with a super-tax of 6d., is one which will be for the benefit of all classes of the community. I am inclined to agree with the hon. Member for Sunderland that the working classes ultimately pay all taxation. I have held that doctrine for many years. Whatever tax you put on its effect is bound to come upon the wage-earning classes of the community. Those I represent in Manchester are just as much wage-earners as the hon. Member who made that statement. Upon these city merchants, the stockbrokers, the cotton lords, and the heads of our manufacturing firms depend, and must depend the very existence of an enormous number of the working class community, and if the income tax is put at such an amount that it affects the security of capital and the stability of finance it will act and react upon the merchant, and the cotton manufacturer, and every man who carries on a large business. It is bound to act and react upon the employment which those classes are able to provide for the working classes. Before I deal with the basis of the Budget, so far as it affects the income tax, I should like to mention two Amendments which are down in my name dealing with the super-tax which, I think, should have been charged on separate-in-conies in the first place, and in the second place on unearned incomes.
I know the existing system of taxation is that husband and wife should be considered to have one income, and there is something to be said for it. I am bound to suggest, however, that a wife who has property of her own, unearned income if you like, is a separate entity, and under the provisions of the Married Women's Property Act women have the entire control of their own property, and it would be hard upon a wage earner getting £2,000,. £3,000, or £4,000 a year, merely because his wife has a certain amount of income, that he should be charged this super-tax upon the full amount of his own earnings. I hope the Chancellor of the Exchequer during the Committee stage, will consider the Amendment which I put down to separate the income of the husband and wife, at all events for super-tax purposes, and I suggest that the super-tax should apply to unearned incomes. The system that the professional man and brain worker should be differentiated from the receiver of unearned income has already been embodied in the financial system of the country. If a man earns £2,000 a year, he has a lower 111 rate of tax, but if he happens to be a surgeon flying up and down the country and a good part of the night to carry out an additional number of operations, that man's income should not be visited with this super-tax. This tax has been put on somewhat as a Socialist measure, but after all Socialism should not be applied to eminent surgeons, or to the present occupants of the Ministerial Bench and other law officers who earn by the power of their brain more than £5,000 a year.
I should like to dwell for a few moments upon the basis on which the income tax is now being raised, in addition to which there is to be a super-tax. There are two canons upon which the Budget can be brought in. One of them is the rule laid down by all the great financiers of the past, and laid down by Mr. Gladstone and Sir Robert Peel that taxes should be levied without regard entirely to penalising any section of the community. Taxes should be put upon the community as a whole, and, in settling this form of taxation, the Chancellor of the Exchequer should have regard solely to the financial exigencies of the country, and should not attempt in any way to use the Budget to penalise any section of society. I am perfectly sure that you may read the whole of Mr. Glad-stone's speeches, and those delivered by Sir Robert Peel, or any of our great financiers, and you will not find even a suggestion that you are entitled to use the Budget as a means of correcting mistakes in legislation, which has undoubtedly been suggested by hon. Gentlemen opposite in regard to the late Licensing Bill, or as a means of carrying some kind of Socialistic legislation. The Government are now proposing to increase the income tax beyond the point at which all our great financiers have said it should not go in times of peace. I represent a middle-class Constituency, but it contains also a large number of wage earners, and I suggest that the income tax is really in their opinion a reserve tax. That is a point which has been referred to this afternoon. Mr. Gladstone often referred to it from that point of view, but I am afraid that Mr. Gladstone's name is no longer one to conjure with, for the Liberal party has changed its ideas on finance since the days of Mr. Gladstone. Mr. Gladstone was distinctly in favour of either abolishing the income tax or of not increasing it beyond 4d. or 5d., for he thought that beyond that rate it would bear unfairly on particular sections of the 112 communities; besides, he was of opinion that it would be financially wrong on the whole community to extend it in times of peace, for that extension would be required in times of war and emergency. I do not know where we are to get our extra taxes in times of war or emergencies.
During the Boer war the right hon. Baronet the member for the Forest of Dean suggested that we could fly to our indirect taxes, but the right hon. Gentleman was answered by the Chancellor of the Exchequer in anticipation, and by so great an authority as the President of the Board of Trade, who said that in times of war and. emergency indirect taxes would dwindle away. It is beyond doubt that in the case of war, and particularly in the case of a naval war, they would dwindle away. If we had any difficulty in getting sugar or tea or corn we have the authority of the President of the Board of Trade for believing that in a time of war or in the case of emergency indirect taxation would dwindle away. It was once the opinion of the Chancellor of the Exchequer that the income tax should be held in reserve for times of war or emergency. That was also the view of the present Prime Minister until a short time ago. The Prime Minister has given us no answer to a speech that he made on the subject in 1906. The income tax to-day is 1s. in the £, and to-morrow it will be 1s. 2d. It is true that there are special concessions to a certain number of people, but the tax itself is 1s. in the £1, and to-morrow it will be 1s. 2d. It is idle for the Prime Minister to say that the income tax is only 9½d,d. in the £. It is 1s., with certain deductions, and when he made his speech in 1906 he said the tax was a burden on the country and was a burden not only on profit, but on wages. The present income tax abolishes the reserve fund of the country and affects both profits and wages. I have great respect for the clearness of the Prime Minister's statement, but I do not quite understand his position on the subject of graduation. He told us in 1907 that he foresaw difficulties in the way of a graduated income tax, and I am surprised that he has been converted so rapidly by the Chancellor of the Exchequer. Everyone conversant with the income tax must see enormous difficulties in the application of that principle. Both the Prime Minister and the Chancellor of the Exchequer in this Debate have relied upon the view of foreign countries with regard to income tax and super-tax.
113 We have heard of the income tax in Japan, and of the income tax in another country, and of the income tax in different foreign countries, and the experiences of these countries are used for the purpose of showing that we should adopt the super-tax. We have heard of a super-tax of 5s. in the £ in Japan, and the Prime Minister deals with a super-tax altogether apart from out investments abroad. In 1907 the Prime Minister said that the experience of foreign countries or even Colonial countries was not really relevant to our taxation. Foreign Government taxation in regard to the super-tax should not be binding on us, and it should not be an example which we should follow. Our old system of taxation is entirely different from that of foreign countries. I do not want to weary the House with quotations, but this question of income tax is of very great importance to my Constituency. I must therefore refer to a speech delivered four years ago by the President of the Board of Trade when, in 1904, he was on the borderland between this side of the House and that side of the House. In 1904 he said: "The income tax has always been looked upon as a great reserve for war, and when it stands at a shilling in the £ in times of peace it is inevitable that the whole elasticity of our finance is destroyed." Yes, the elasticity of the financial system of this country was to be destroyed in 1904 because of an income tax of a I s. What are we to think to-day of an income tax and a super-tax with reference to our financial system? There was an even greater authority than the President of the Board of Trade in 1904. I wonder nobody has found this speech which the present Chancellor of the Exchequer made on the proposal of the Conservative Government to institute an income tax of is in the £.
I wish I could sneak as eloquently as the right hon. Gentleman, or even that I had been able to learn that speech off by heart and deliver it to-night as one of my own. It is extraordinary how it fits the present situation. "The strongest reason," said the hon. Gentleman, as he then was, "for this Amendment "—it was an Amendment which he was supporting against the Conservative party—" was the extravagantly high income tax proposed by the Government. The income-tax payer was very heavily pressed at the present moment, and wherever one went he heard complaints of the amount of the income tax." The 114 right hon. Gentleman told us the other night that he has had no complaints with regard to the super-tax. Well, it is hardly likely that a man who is going to suffer from the super-tax would write to the Chancellor of the Exchequer. A man who fears robbery does not write to the burglar he writes to the policeman. Shoals of people have written to me. My Constituency is one in which there are a large number of those who will be affected by the super-tax, and they naturally have written to me rather than to the right hon. Gentleman. [Mr. Lloyd-George here took his seat on the Ministerial Bench.] I am delighted to see my right hon. Friend come in. He is just in time to hear this useful quotation from the speech which he delivered in the year 1904 on the proposal of the Conservative Government to-impose the extravagantly high income tax of 1s, in the £. There was a Motion to reduce it, and Mr. Lloyd-George on that occasion, in supporting the Motion, gave some excellent advice to the then Chancellor of the Exchequer. He said that after all he ought to have some sense of responsibility with regard to checking extravagant expenditure. I hope that the right hon. Gentleman now appreciates that sense of responsibility. Yet the fact remains that in a time of profound peace he has brought forward the biggest Budget yet known in the history of Parliament.
No wonder the Chancellor of the Exchequer got excited in the middle of his speech. He said that anyone who examined the expenditure of the last few years could characterise in no other way a 1s. income tax in time of peace as a war tax in time of peace. But in addition to that he is proposing a 1s. 2d. income tax with a 6d. super-tax. Is riot that a good deal more than a war tax in time of peace? The right hon. Gentleman went on to say they were reaching a point which it would be difficult for the public to tolerate. Then he dealt with the question of reserving the income tax for further taxation in time of war and emergency. He asked, as I have been asking to-night, "Supposing there was a great European complication. One never knew what might happen, especially if the present Government remained in power "—I entirely agree with the right hon. Gentleman, one never does know what may happen if the present Government remains in power—but he asked where could they plant another tax. He said they might put another penny or two pence on 115 the income tax, but all the financial authoties in the country realised the position; they saw there was no reserve. That is the very point which I have been making during the last few moments. Again, I say we see, and the country sees, there is no reserve. The right hon. Gentleman did not say they were on the road to bankruptcy, but he said their credit was badly damaged. o Again I concur. He concluded by saying there had been a fall in public credit outside. A fall there had been no doubt, but it was nothing to the fall of Government credit inside the House and nothing to the fall of Government credit on these Benches. Consols had gone down in the market and no one would touch them, and we were going to trade without credit and the public would have to pay the balance. I am going to suggest that that speech of the right hon. Gentleman—and again I say I wish I had been able to learn it off by heart and repeat it here as one of my own—puts clearly the position which I have been trying to lay down, a position where the credit must suffer.
But why has the right hon. Gentleman changed his views so much between the years 1904 and 1909? I have here a small Red Book which, I think, is the source of the inspiration of the right hon. Gentleman. It has already been referred to tonight by the hon. Member for Bury St. Edmunds. It, entirely sets out the views on which the right hon. Gentleman has framed his Budget, the views not of taxing the country fairly for taxation, but of using the Budget as a means of dealing with other people's property.
The hon. Member for Blackburn, at the beginning of his book, states that Socialism looks to the Budget as a means of not only raising revenue to meet unavoidable expense (which was the method of Mr. Gladstone and all other great financiers), but also as an instrument for redressing inequalities in the distribution of wealth. That I think is the basis upon which the right hon. Gentleman has based his Budget. There are two ways, said the hon. Member for Blackburn, of carrying out this object—one is pure unadulterated municipalisation and socialisation. I need not stay to deal with that. The second is by the method of taxation adopted by the Chancellor of the Exchequer. The hon. Member for Blackburn goes on to support exactly the taxes which are proposed in this Budget, namely, a higher income tax and a super-tax amounting up to as high 116 as 6s. in the pound, and he gives for that the reasons given by the right hon. Gentleman opposite in support of the super-tax. The hon. Member for Blackburn suggested the raising of the tax on incomes over £5,000, because it would be immeasurably popular except, of course, with the possessors of these incomes. Exactly; it is popular to tax other people apart altogether from the fairness of the taxation. It is popular to put on a tax which can only be felt by a very limited number.
The hon. Member for Blackburn goes on to say that these limitations would be restricted to a very small number of individua1s. Is that the reason why the Chancellor of the Exchequer has put on this super-tax, which it is said will only affect some 10,000 persons? Apart from fairness apparently he has done so because there can be no widespread opposition to it, because there will be no Hyde Park meetings, because there will be no demonstrations. These 10,000 people who are to pay are more or less inarticulate, and whether they are or not the right hon. Gentleman will pay no attention to their views. I propose to conclude by referring to the speech of the hon. Member for Jarrow, who said that all taxation was bound to fall sooner or later on the shoulders of the working classes. If you compel any man to pay an extra £50 or £100 income tax it has to be found, and sooner or later it conies down to the shoulders of the working classes. May I read a final quotation?
Sooner rather than later it will come on shoulders of tile working classes, it will cripple, industry, and commerce.That I have from a very high authority. Many people imagine that taxes are paid by the rich alone. That is not so. As far as the question of employment is concerned the effect of taxation is the same whether it is paid by the rich or the poor. I am dealing only with the question of the ultimate effect upon the country— what will be the effect upon most of the middle-class men who have to pay the tax and the effect, through them, upon the country? The ultimate effect is the same whether it is paid by a rich or a poor man. If a man has to pay £50 for income tax, he has £50 less to spend in the multifarious industries which we carry on in this country, and the people who supply him with the things which he would otherwise buy are thrown out of work. That is stated in a book written by one who was until recently very orthodox in his views in regard to finance—the present Member for Preston. It was published not by him, but by 117 the Liberal Publication Department; it has the im primateur and the blessing of the late Sir H. Campbell-Bannerman, and, therefore, we may treat it as the orthodox expression of Liberal principles, three years ago, on the effect of a high income tax. It is the Liberal principles of three years ago, but I do not attempt to define them now. Those are the principles of three years ago, but those set out in the Budget speeches are those which are taken from the book of the hon. Member for Blackburn, the principles of Socialism pure and simple, and I can only thank the right hon. Gentleman for his moderation in not going to the whole extent of the hon. Member for Blackburn. I suppose it is, because he does not want more money to-day, but when the time comes he will become a pure and active Socialist, and use the Budget in a way in which it has never been used before, to cripple those classes who differ from him in politics.
§ Mr. E. A. RIDSDALEThere was one remark which fell from an hon. Member which caused me considerable surprise. It was to the effect that my right hon. Friend the Chancellor of the Exchequer was insensible to City opinion. Now if there is one thing to which my right hon. Friend is not insensible it is to every shade of opinion that can be expressed. He is always willing to hear all sides of a question, and form his own opinion thereon, and to act accordingly. Indeed, it is only to-day that I happened to be in the City, and I heard the rumour current that a near relative of the right hon. Gentleman, the President of the Board of Trade, had been making investigations as to whether representations which had been made by the governors of a certain institution, really represented the main feelings of the members of that institution. It was I daresay without the right hon. Gentleman's cognisance or assent, but at any rate it only shows that opinion in the City is at any rate alive to the fact, that the right hon. Gentleman is anxious to ascertain what the true opinion of the City is.
§ Mr. LLOYD-GEORGEI should like to make it perfectly clear that, as far as I am concerned, I have no doubt that a very influential deputation which came to me represented the real opinion of that body.
§ Mr. E. A. RIDSDALEI never doubted that, I only explained that to show how entirely unfounded was the insinuation which was made by the hon. Member. Of course this Resolution divides itself 118 into two portions. One deals with the income tax, and the other with the extension of the income tax, on an entirely new principle—the super-tax. With regard to the income tax, for myself I do not intend to take up the time of the Committee. I am afraid I am in the position of thinking that an income tax of is. in a time of peace is indefensible. I am quite sure the money can be obtained in another way, but as the Government do not intend to raise it in another way I will not deal with the matter further. I come to the super-tax, and I congratulate the right hon. Gentleman on having had the courage to adopt this principle. I believe it is a sound principle, a good principle for the country, and an eminently fair one. It lays the burden of taxation upon those shoulders which are best able to bear it, and I contend that those difficulties of collection, grave though they may be, will prove not to be nearly so grave as was anticipated by those experts who gave evidence before the Royal Commission presided over by the right hon. Baronet the Member for the Forest of Dean. The hon. Baronet who sits for the City of London, who is no mean financial expert himself, if I may say so, gave the Committee the result of his investigations among financial experts, ranging from the Hindu Scriptures and from the late Mr. Lecky to Sir Felix Schuster, and as the result of those investigations he showed, as he thought conclusively, that the super-tax could do nothing but evil. My right hon. Friend the Member for the Forest of Dean dealt, and, I think, dealt very effectively, with his criticism, and as regards the Hindu Scriptures, I have no doubt that had the hon. Member had a knowledge of Sanscrit there might be found even in that great authority some moral precept which might be quoted in favour of taxing the rich rather than taxing the poor.
But while saying this, and defending the super-tax in principle, and expressing my pleasure that the right hon. Gentleman has adopted it, I feel that he has not, perhaps, adopted the best method of applying it, or, at any rate, has not applied it in the manner in which I should wish. The super-tax is to be applied by having the whole 6d. put on at once. When this new tax is going to he applied it is going to comprehend in the area of its operation a class of people, among the ablest in the country, who are said by their spokesmen to be willing to evade the tax. It is therefore best not to make it too easy for them to evade, and not to make it too obvious that 119 it would give an advantage to them if they evaded it. If you place 6d., all at once, upon incomes over £5,000 and counting down to £3,000, it is obvious that the lowest tax that you would extract from any one pocket which becomes liable to super-tax at all is a round sum of £50 sterling. I suspect that anyone called upon to pay £50 suddenly in respect of a new tax is driven to look at it, and to say, "Is it necessary that I should pay this sum of £50 in respect of this one tax?" If the right hon. Gentleman had been able to graduate this tax, by small increments, so that first one person and then another person, and then a few more, were brought within the scale of its operation in a growing degree, I think there would not have been the same inclination to evade it that there might be if a man is brought up against a brick wall of a 6d. tax. I hope that when this measure goes into the Committee stage that my right hon. Friend may be able to reconsider the amount which he is going to impose all at once. It is quite clear, that; f this amount is going to be collected, it cannot be collected at the source. This amount has to be collected by declaration, and how is anybody going to make that declaration? The declaration will not usually be made by anybody who is earning the income, because the amount of money which anybody can earn in the space of a year is more or less limited. The greater number of these incomes which will be liable to the super-tax will be unearned incomes, interest on money placed out for use in various directions. That money, when it comes into the recipient's pocket, comes in the shape of dividends which have had their income tax deducted at its source, and the amounts which these gentlemen find on looking through their pass-books will not represent their real income but only 18s. 10d. in the pound of their income. My right hon. Friend, in the form of his Resolution, is really going to take the super-tax as an increase of the income tax, in other words, he is going to make it incumbent upon a person to find out what his gross income is before he returns it, and it is going to be a position of very great difficulty to ascertain what it is. We are not all mathematicians. Some people who will be called upon to pay in respect of these incomes of over £5,000 must be ladies, and anyone who wishes to make a true return of his income in order to ascertain whether it is accessible for the pr r-pose of the tax or not will have to enter- 120 into the most intricate calculations. They will have to take their bank-book page by page, and will have to think for themselves, "this represents 18s. 10d. on every sovereign I have, and, therefore, I have to add 1s. 2d. I have not to take 1s. 2d. out of every sovereign. I have to take is. 2d. out of every 18s. 10d. I have to take 7–113ths of the total and add it to the result of my pass book." That is a very complicated operation for anyone, and it is almost impossible for any lady or anyone without expert advice to undertake for themselves, and I think, as we no doubt shall have in the future law cases as to people having evaded income tax deliberately, it is very essential that we should make it absolutely clear and plain what the amount of income is which has to be declared, because if you are going to leave it to such an intricate calculation as that it will be quite open to anyone who is had up before the Law Courts to show cause why they have made an untrue declaration to say, "I am not the Astronomer Royal, and it did not occur to me that this kind of intricate calculation had to be gone into before the sum was arrived at."
If these two points that I have adduced are not really met., I am afraid there will be an extraordinary percentage of incomes ranging between £4,800 and £4,995, and the right hon. Gentleman will find that extraordinarily few people will declare an income of anything between £5,000 and £5,100, more especially from the fact that if they have to pay the 6d. super-tax on the excess of their income over £3,000 a year. they may even have to pay more income tax than the amount of the excess over £5,000. In other words, supposing a man has £5,030 a year and he is super-taxed 6d. on the difference between £3,000 and £5,030, it is quite obvious that he will have to pay more than £50 in super-tax, and, therefore, it will pay him better not to return his income as £5,030 but as £4,995, so you will get cases in which a man who would really be liable to super-tax voluntarily says: "I forego that much of my income. I will not have it. You can take it back and keep your dividends," and he would actually save money by not receiving it. That is not a position which will add to the income of the Chancellor of the Exchequer, and it will not make this scheme appear in the best light. I hope he may see his way eventually to graduate the tax.
There is another point which was just referred to by the hon. Member for North-West Manchester. In answer to a 121 question which I put on the paper I was informed that the incomes of husband and wife would, for the purpose of super-tax, count as one. What does that amount to? Let us take a concrete case in which husband and wife both have an income—the husband of £4,500 and the wife of £1,000 a year. Taken together they amount to £5,500, and, according to the scheme, £2,500 of that will be liable to super-tax. [n other words, £62 10s. would be paid into the Exchequer. Who is to pay that? Is the whole of it to come from the husband or is part to come from the wife? They may not even be living together. There is an abatement of £3,000 a year to be allowed to someone. Is the whole of it to be taken off the husband's income or is part to be taken from the wife? These are two very important questions, and if they are not thought out on the Committee stage they may really lead to a deadlock on the Bill.
Let us take another case. Supposing the husband who has £4,500 a year is separated from his wife and has also to allow her £500 a year alimony, so reducing his income to £4,000 and making his wife's £1,500. In what proportion are you going to assess the super-tax? Are you going to make the husband pay the tax on the amount which he only holds for the time being? That £500 a year has been ordered by the Court to be paid to his wife. It is no part of his income. He only receives it in order to distribute it. The same sort of point will arise with regard to large incomes in which a man may have a jointure or charges on property. He will only receive the income, though it may be more than £5,000 a year, for the purpose of handing on certain parts to other people. I do not wish to elaborate the point unduly, but the hon. Member for Blackburn welcomed the Budget frankly as a Socialist Budget. I do not look upon it as a Socialist Budget and I do not look upon this super-tax particularly as a Socialist scheme, but unless my right hon. Friend is prepared to consider this point of the husband and wife's income ranking separately, I am really very much afraid that some pious people in the country may think he has gone over bag and baggage to the Socialists. As long as they are married and living together they pay £62 l0s. per annum for the privilege of enjoying the respectability of the marriage contract. That is a very large' increase in the cost of a marriage licence, and I am quite aware that it is not a new point. You have that same point in the matter of 122 abatements. if you had under the old scheme a man and his wife with a joint income under £700 a year they were both entitled to an abatement. But that is only a matter of a few shillings. You then had it developed in the Budget of last year when earned and unearned increments were differentiated and there was a possibility of a man and his wife being assessed as one and having to pay a few sovereigns for the privilege of being married, but it comes beyond a joke if the cost of a marriage licence is to become £62 10s. And really if any married couple ever possessed of property living together have an income the total of which exceeds £5,000, the minimum which they may be called upon to pay is £50 and the maximum is no less than £175. If you capitalise that money and see what can be obtained in the way of life assurance for a sum of that amount paid annually you will see that the amount may be from a minimum of £2,500 to a maximum of £8,000. I hope if my right hon. Friend is going to place this duty upon married couples he will at any rate consider the advisability of placing a corresponding Excise duty on divorce, otherwise he may find that people will go in deliberately for breaking the marriage contract in order to avoid paying the tax. I hope my right hon. Friend will give consideration to the points I have raised.
§ Mr. HARMOOD-BANNERI think there is very great advantage in having these discussions on the Resolutions before the Bill is brought forward, because it is a good thing to mention some of the grievances which arise in connection with the taxes, so that there may be something done to remedy them when the Bill is brought in. The other day I asked a question in regard to a matter which was raised by my right hon. Friend the Member for East Worcestershire, and the Chancellor of the Exchequer was good enough to say that the additional taxes on unearned increment from land would not apply to any municipal property. I want to ask—and I wish particular attention to this—a question as to whether this increased income tax is to apply to municipal property. The increased tax under schedules A and D of 2d. in the £ will weigh very heavily on the municipalities in respect of all those trading services which they carry on. For instance, there is gas, water, tramway profits, electric light profits, and all the numerous profits which come into consideration in the 123 receipts of municipalities. These are now taxed at 1s. in the £ under schedules A and D, and they will have this further burden placed upon them of 2d. in the £, that is to say, an addition of one-sixth of the present payment. [An HON. MEMBER: "And the super-tax?"] Well, I do not know how far that will apply to municipalities. I am now dealing with the addition of one-sixth of the present tax paid by municipalities under schedules A and D. Thus the rates will be put up in every county and town in England, Wales, Scotland, and Ireland. The Chancellor of the Exchequer expressed his gratitude to the municipalities for the improvements they have made which enable him now to exact this extra tax on undeveloped land and on leasehold and other property. But what is the reason; having been grateful to them for having made these improvements and got some benefits from municipalities, that he is going improperly, to my mind, to take the money received from that tax and to put it in the Imperial Exchequer instead of the municipal taxes? But that is not all. We in the municipalities—I have the honour to represent a municipal association—know that throughout the life of this present Government, and I think I might say throughout the life of the past Government, all sorts of duties and expenses have been added to the rates. The rates have gone up 1s. in the £ for education.
§ Mr. HARMOOD-BANNERI bow to your ruling, but I would venture to say that the fact that the municipalities are now going to have an added tax to their burdens of increased rates is bound to aggravate the already heavy burdens which they have already had placed upon them. I shall only emphasise the fact that we are now to have on the municipalities increased rates in consequence of this Budget, unless the Chancellor of the Exchequer does something to remove this burden as regards the income tax. Now I come to the tax itself. Whilst I do not join with hon. Members below the Gangway in agreeing to their principles as regards the equity of these taxes, I do wish to join issue with them that it is a most important thing that here should be a capital sum for labour, and that with the taxation raised by this 124 increased income tax and the super-tax a labour reserve fund should be saved every year. The notion is as injurious to manufacturers and the Labour party as any course that could possibly be pursued. An hon. Member stated that he longed for the day when the wage earner should not be dependent on the investor for employment. I do not know whether that is the view of the Chancellor of the Exchequer, because if that is so, that would be a direct destruction of the income tax at once. If labour was to be paid by that means I do not know what would become of the promissory notes or cheques, or whatever he may call them. There would be nothing cut of which the Chancellor of the Exchequer would be able to collect his income tax. However far the Chancellor of the Exchequer may go in the direction of Socialism, I hope he will not go so far as to make the wage earner independent of the investor for employment. It is a matter of the greatest importance to keep a fund out of which labour can be paid. I really feel at some loss to know what is meant by "labour." Is it only the mechanic and the man who works with a spade who are to be regarded as contributing "labour?" Is the barrister, surveyor, solicitor, director, or anyone else who has nothing to do with manual labour to be excluded? That fund ought to be kept in such a way as to be available for improvements which ought to be carried on.
We have heard a great many of these taunts that we on our side are not prepared to meet the expenditure which has been suggested in reference to the Navy. I reply to that that it is perfectly certain that if the income tax had been increased with the sole purpose of meeting that expenditure there would be no demur on this side of the House; but when it is now brought forward to be a permanent tax on the nation, not to be utilised solely for Imperial purposes, and then removed when that purpose is at an end, and to be used again when these purposes come forward once more, then I say that the tax is being misused by the increase, and the misuse of the increase is because it is to be created into a permanent tax always on the back of the man who places his money in any British security. But that tax is to be preserved for good and all, and with all due deference to the surveyor of taxes and the Exchequer authority, if the tax is to be permanent one would plead on behalf of the commercial community that it should be an honest tax. It is not an 125 honest tax at the present time. It is not honestly collected. The instructions to surveyors are so wide and general that one surveyor does one thing and one another in reference to the collection of the tax. One surveyor takes up the position of saying, "Depreciation is rife on your property. I will allow you provided you will give me "—what he has no legal right to obtain—"your accounts file to be put on one side and used for any purposes of reference that the Exchequer may require." Another surveyor takes this stand, and whenever there is an underwriting letter going out, says: "I want a list of the underwriters." He gets it. He assesses the man for his profit on underwriting, which is a capital profit, which is in no way an income profit, with the result that the man who underwrites—there must be many hon. Members who know the forms of business—may underwrite very often a mine which is absolutely worthless. The Chancellor of the Exchequer says: "Pay on your profits. You are underwriting a mining company." The reply is: "But I have lost; the shares have gone down from £1 to 10s.," and he is told, "Oh, that is a capital loss. I will take your profit in the way of underwriting. I will not allow you the loss in the case of a loss of your share."
That has been the course of business which has perhaps added to that great increase of income tax on which the right hon. Gentleman congratulates himself. Another cause is that the income tax has to be collected with great avidity. A great number of poor men, men who are paid by wages, were brought in who were never brought in before, and a great many causes that promoted the prosperity of the country have added to the increase of income tax on which he so much congratulates himself. This tax, being permanent, ought to be fair and honest. I think the right hon. Gentleman will agree with me that a man's profits and his earnings are two very distinct things. A man makes a profit, but he has to provide depreciation. Depreciation is not allowed on many things now in trading because of judges' decisions, and therefore the income tax is assessed on profit, as to which a judge would say to directors, if they paid dividends on them, "You directors must he responsible for this dividend, which was not paid out of profit," and, on the other hand, the same judge says, "Those are profits, on which you must pay income tax." That is a question which has arisen with collieries and nitrate companies, mines, and all companies outside the King- 126 dom who have wasting assets. If they do not provide for the wasting assets, and pay dividends without providing proper depreciation they are fined, and the judges hold that they are liable, but when the income tax takes it the judges say it is profit when there is no real profit.
Therefore, I distinctly say that now the tax is to be permanent let the tax be an honest tax, placed upon what a man really and truly has for his income out of the profits which he may make, and I think I might appeal to the Labour Members to support me in that, and not to ask for profits which are in excess of a man's real earnings. Commission or no commission, with all due deference to Sir Henry Primrose and all those who dealt with it, they seemed to think that a judge's decision overruled all common-sense and profit and loss account in estimating what a man ought to pay upon. I am not dealing with reserve funds or anything. I am dealing with the true and honest account in which a man makes up an account of his profit and loss, and on which he is perfectly prepared to pay his income tax. There were certain statements about capital going abroad. We must all admit that capital is going abroad. You have only got to look at the list and refer to the underwriters of whom I have already spoken as suffering from unjust taxation, and you will find that you may take Columbia, Venezuela, and any of those places, and people will send their money there. But has there been anything raised for money which will provide labour for the hon. Gentlemen below the Gangway'? Nothing of the sort. The result of his transaction is to send money abroad. It is quite true an hon. Member opposite stated that the Government, so long as the company is registered here, does get the income tax out of a limited company in reference to profits abroad, but it is also the fact that many companies are going elsewhere. Take Australia. If you take a company which paid in Australia and you chose to alter Australian investments you have to pay 1s. in the £ in Australia, and you have 1s. 2d. here. That is you pay 2s. 2d. If you send your money out to build a railway or a, tramway in Australia and give it to a limited company here in Victoria the income tax is 7d. with is. 2d.—that is 1s. 9d will be the tax. How can you expect Australians to send their money here for investment? How can you expect companies not to make arrangements as soon as possible to transfer their 127 business to the other side? If the tax becomes unreasonable they will transfer the capital to other countries. I have some experience of this matter. I know of companies in regard to which questions were asked in this House as to whether any relief could be obtained. It was found that no relief could be obtained, and some of those companies closed their offices in London and transferred their businesses to foreign places. They are now carrying on their business abroad, and that is undoubtedly an example of what will follow if this oppressive taxation is carried out to any great extent. There are many other questions in regard to income tax which require most careful scrutiny. An honest tax honestly conducted will be willingly and honestly paid, but a tax which is imposed in the oppressive form suggested, and unjustly collected, will undoubtedly be recognised as an injustice, and will not be paid. You may say that it is wrong that it should be so, but the injustice of the Chancellor of the Exchequer will filter down throughout the whole nation so as to cause injustice or wrong on the part of the taxpayers. As regards the super-tax, I think we will have to deal with a good many inequalitites which will exist under it. The right hon. Gentleman said this tax would be collected by special Commissioners, and I think he added that interest and commission and all expenses would be allowed out of it. That is not made very clear, however, and there are one or two questions which, I think, we ought to have answered with reference to the matter. In the first place the super-tax will operate very unjustly as between the individual who owns his own manufacturing premises — ironworks, collieries, breweries, and so forth—and the individual who owns shares and receives dividends. In the one case, that of the man who pays dividends, you will have the amount on which tax is to be paid. On the other hand, the colliery proprietor will come under schedule D for ordinary profits, and he will be assessed for the super-tax on the basis of profits which nobody can call profits, and, unless you make this clause very wide, he will have to pay the depreciation which he has to provide in order to make the super-tax a proper tax. It is quite possible, therefore, that we may have a man who receives dividends paying on a fixed sum, while a man who receives income as a shipowner has to provide for the depreciation of his ship and other things, 128 and the only amount he has available for himself is £7,000, though his profit and loss account would show he had made £15,000. The man who pays the dividend is protected; the man who receives income from his enterprises has to pay on the big and the wrong scale. If this super-tax applies to profits there are many shipowners, colliery owners, and owners of other works who will be placed in a very disadvantageous position. One year the owner of a factory may make a big profit; next year he may make an absolute loss. Are you going to impose the super-tax on the year in which a profit is made and allow nothing in respect of the year in which a loss is sustained? If a man loses £10,000 one year and makes £15,000 the next year, are you going to charge him on the £15,000 or is he to be allowed to bring forward the £10,000 which he has lost? As it stands he is not permitted to bring it forward. He may sustain a loss for three years and make a profit in the fourth year. He will be charged the super-tax on the profit which he has made in the fourth year, though on the whole four years together he may have sustained a loss. The scheme of the right hon. Gentleman bristles with injustice, and it is because it bristles with injustice that you may be quite certain there will be evasion.
Undoubtedly we know that the Chancellor of the Exchequer has under-estimated —honestly under-estimated. He says there are 10,000 people with incomes of £5,000 a year, but there are far more in the country than 10,000 with £5,000 a year, and, therefore, the yield from the tax had been enormously under-estimated. But whether under-estimated or over-estimated, what we want is that the tax should be honestly imposed. If you borrow money from your banker you get your income back on the money borrowed, but if you borrow money from your stockbroker or any other outside individual you do not get it back. The right hon. Gentleman, in his Budget speech, said he intended to allow interest on mortgages alone, but I think if he consults the income tax authorities he will find that they do not allow it. The Commission which is to deal with this super-tax is most inefficient for the purpose of making the income tax an honest one, honestly conducted. You must lay down laws and rules for the surveyor, and they must be equally applied throughout the country. When you have done that your next step must be to take steps to get rid of this extra tax as quickly as you can. 129 You will want it in times to come. "Dreadnoughts" are not our only need; there are other wants which may come in the future for the preservation of this country, and therefore by imposing this super-tax you are depriving yourself of funds which should be solely available in case of difficulty arising with other nations. I do hope that the Chancellor of the Exchequer will give us an assurance that it is not only merely a temporary tax,
§ but that it will be a tax honestly conducted and honestly collected from the taxpayers.
§ Mr. LLOYD-GEORGE rose in his place, and claimed to move: "That the Question be now put."
§ Question put: "That the Question be now put."
§ The Committee divided: Ayes, 260; Noes, 96.
131| Division No. 107.] | AYES. | [9.55 p.m. |
| Abraham, William (Rhondda) | Duncan, J. Hastings (York, Otley) | Lloyd-George, Rt. Hon. David |
| Acland, Francis Dyke | Dunne, Major E. Martin (Walsall) | Lupton, Arnold |
| Adkins, W. Ryland D. | Ellis, Rt. Hon. John Edward | Luttrell, Hugh Fownes |
| Agnew, George William | Erskine, David C. | Macdonald J. R. (Leicester) |
| Armstrong, W. C. Heaton | Essex, R. W. | Macdonald, J. M. (Falkirk Burghs) |
| Astbury, John Meir | Evans, Sir S. T. | M'Laren, Sir C. B. (Leicester) |
| Atherley-Jones, L. | Everett, R. Lacey | M'Laren, H. D. (Stafford, W.) |
| Balfour, Robert (Lanark) | Falconer, J. | M'Micking, Major G. |
| Baring, Godfrey (Isle of Wight) | Fenwick, Charles | Maddison, Frederick |
| Barker, Sir John | Findlay, Alexander | Mallet, Charles E. |
| Barlow, Sir John E. (Somerset) | Foster, Rt. Hon. Sir Walter | Manfield, Harry (Northants) |
| Barlow, Percy (Bedford) | Fuller, John Michael F. | Marks, G. Croydon (Launceston) |
| Barnard, E. B. | Fullerton, Hagh | Marnham, F. J. |
| Barnes, G. N. | Gibbs, James (Harrow) | Massie, J. |
| Barry, Redmond J. (Tyrone, N.) | Glendinning, R. G. | Menzies, Walter |
| Beale, W. P | Glover, Thomas | Mlcklem, Nathaniel |
| Beauchamp, E. | Goddard, Sir Daniel Ford | Mond, A. |
| Beaumont, Hon. Hubert | Gooch, George Peabody (Bath) | Montagu, Hon. E. S. |
| Bell, Richard | Greenwood, G. (Peterborough) | Morgan, G. Hay (Cornwall) |
| Bellairs, Canyon | Greenwood, Hamar (York) | Morse, L. L. |
| Bennett, E. N. | Griffith, Ellis J. | Morton, Alpheus Cleophas |
| Bethel!, T. R. (Essex, Maldon) | Gulland, John W. | Murray, Capt. Hon. A. C. (Kincard.) |
| Birrell, Rt. Hon. Augustine | Harcourt, Rt. Hon. L. (Rossendale) | Myer, Horatio |
| Black, Arthur W. | Harcourt, Robert V. (Montrose) | Nicholls, George |
| Boulton, A. C. F. | Hart-Davies, T. | Norman, Sir Henry |
| Bramsdon, T A. | Harvey, A. G. C. (Rochdale) | Norton, Captain Cecil William |
| Brigg, John | Harvey, W. E. (Derbyshire, N.E.) | Nussey, Thomas Wilians |
| Brocklehurst, W. B. | Harwood, George | Nuttall, Harry |
| Brodie, H. C. | Hasiam, James (Derbyshire) | O'Donnell, C. J. (Walworth) |
| Brooke, Stopford | Haworth, Arthur A. | O'Grady, J. |
| Brunner, Rt. Hon. Sir J. T. (Cheshire) | Hedges, A. Paget | Parker, James (Halifax) |
| Bryce, J. Annan | Helme, Norval Watson | Pearce, Robert (Staffs, Leek) |
| Buckmaster, Stanley O. | Hemmerde, Edward George | Pearce, William (Limehouse) |
| Burt, Rt. Hon. Thomas | Henderson, J. McD. (Aberdeen, W.) | Philipps, Col. Ivor (Southampton) |
| Byles, William Pollard | Henry, Charles S | Philipps, Owen C. (Pembroke) |
| Cameron, Robert | Herbert, T. Arnold (Wycomhe) | Pickersgill, Edward Hare |
| Carr-Gomm, H. W. | Higham, John Sharp | Pirie, Duncan V. |
| Causton, Rt. Hon. Richard Knight | Hobart, Sir Robert | Pointer, J. |
| Cawley, Sir Frederick | Hobhouse, Charles E. H. | Pollard, Dr. G. H. |
| Channing, Sir Frederick Allston | Holland, Sir William Henry | Pensonby, Arthur A. W. H. |
| Cheetham, John Frederick | Holt, Richard Durning | Price, C. E. (Edinburgh, Central) |
| Cherry, Rt. Non. R. R. | Hooper, A. G. | Priestley, Arthur (Grantham) |
| Cleland, J. W. | Hope, W. H. B. (Somerset, N.) | Radford, G. H. |
| Clynes, J. R. | Horniman, Emslie John | Rainy, A. Rolland |
| Cobbold, Felix Thornley | Horridge, Thomas Gardner | Raphael, Herbert H. |
| Collins, Stephen (Lambeth) | Hutton, Alfred Eddison | Rea, Walter Russell (Scarborough) |
| Collins, Sir Wm. J. (St. Pancras, W.) | Hyde, Clarendon G. | Rees, J. D. |
| Corrpton-Rickett, Sir J. | Illingworth, Percy H. | Rendall, Athelstan |
| Corbett, C. H. (Sussex, E. Grinstead) | Isaacs, Rufus Daniel | Richards, Thomas W. (Monmouth) |
| Cornwall, Sir Edwin A. | Jackson, R. S. | Richards, T. F. (Wolverhampton, W.) |
| Cotton, Sir H. J. S. | Jardine, Sir J. | Richardson, A. |
| Craig, Herbert J. (Tynemouth) | Jenkins, J. | Roberts, Charles H. (Lincoln) |
| Crooks, William | Johnson, W. (Nuneaton) | Roberts, G. H. (Norwich) |
| Crosfield, A. H | Jowett, F. W. | Roberts, Sir J. H. (Denbighs) |
| Crossley, William J. | Kavanagh, Walter M. | Robertson, Sir G. Scott (Bradford) |
| Curran, Peter Francis | Kearley, Sir Hudson E. | Robertson, J. M. (Tyneside) |
| Davies, David (Montgomery Co.) | Laldlaw, Robert | Robinson, S. |
| Davies, Ellis William (Eifion) | Lamb, Ernest H. (Rochester) | Robson, Sir William Snowdon |
| Davies, Timothy (Fulham) | Lamont, Norman | Roch, Waiter F. (Pembroke) |
| Dewar, Sir J. A. (Inverness-sh.) | Laylando-Barrett, Sir Francis | Roe, Sir Thomas |
| Dickinson, W. H. (St. Pancras, N.) | Lehmann, R. C. | Rose, Charles Day |
| Dlike, Rt. Hon Sir Charles | Lever, A. Levy (Essex, Harwich) | Rowlands, J. |
| Dobson, Thomas W. | Lever, W. H. (Cheshire, Wirral) | Russell, Rt. Hon. T. W. |
| Duckworth, Sir James | Levy, Sir Maurice | Samuel, Rt. Hon. H. L. (Cleveland) |
| Duncan, C. (Barrow-In-Furness) | Lewis, John Herbert | Samuel, S. M. (Whitechapel) |
| Schwann, C. Duncan (Hyde) | Thomas, Abel (Carmarthen, E.) | White, J. Dundas (Dumbartonshire) |
| Schwann, Sir C. E. (Manchester) | Thomas, Sir A. (Glamorgan, E.) | White, Sir Luke (York, E.R) |
| Scott, A. H. (Ashton-under-Lyne) | Thomasson, Franklin | Whitehead, Rowland |
| Sears, J. E. | Thompson, J. W. H. (Somerset, E.) | Whitley, John Henry (Halifax) |
| Seaverns, J. H. | Thorne, G. R. (Wolverhampton) | Whittaker, Rt. Hon. Sir Thomas P. |
| Seddon, J. | Tomkinson, James | Wiles, Thomas |
| Seely, Colonel | Ure, Rt. Hon. Alexander | Wilkie, Alexander |
| Sherwell, Arthur James | Verney, F. W. | Williams, J. (Glamorgan) |
| Silcock, Thomas Ball | Vivian, Henry | Williams, A. Osmond (Merioneth) |
| Smeaton, Donald Mackenzie | Walsh, Stephen | Williamson, A. |
| Soames, Arthur Wellesley | Walters, John Tudor | Wilson, Hon. G. G. (Hull, W.) |
| Soares, Ernest J | Walton, Joseph | Wilson, J. H. (Middlesbrough) |
| Spicer, Sir Albert | Ward, John (Stoke-upon-Trent) | Wilson, J. W. (Worcestershire, N.) |
| Stanley, Albert (Staffs, N.W.) | Ward, W. Dudley (Southampton) | Wilson, W. T. (Westhoughton) |
| Steadman, W. C. | Wardle, George J. | Winfrey, R. |
| Stewart-Smith, D. (Kendal) | Waring, Walter | Wood, T. M'Kinnon |
| Strachey, Sir Edward | Warner, Thomas Courtenay T. | Young, Samuel |
| Straus, B. S. (Mile End) | Wgson, Rt. Hon. E. (Clackmannan) | Yoxall, James Henry |
| Summerbell, T. | Wason, John Cathcart (Orkney) | |
| Sutherland, J. E. | Waterlow, D. S. | TELLERS FOR THE AYES.—Mr. |
| Taylor, John W. (Durham) | Watt, Henry A. | Joseph Pease and the Master of Elibank. |
| Tennant, Sir Edward (Salisbury) | Weir, James Galloway | |
| Tennant, H. J. (Berwickshire) | White, Sir George (Norfolk) | |
| NOES. | ||
| Anson, Sir William Reynell | Fletcher, J. S. | Magnus, Sir Philip |
| Arkwright, John Stanhope | Forster, Henry William | Morpeth, Viscount |
| Ashley, W. W. | Foster, P. S. | Morrison-Bell, Captain |
| Baldwin, Stanley | Gardner, Ernest | Nicholson, Wm G. (Petersfield) |
| Banbury, Sir Frederick George | Gibbs, G. A. (Bristol, West) | Oddy, John James |
| Banner, John S. Harmood- | Gordon, J. | Pease, Herbert Pike (Darlington) |
| Barrie, H. T. (Londonderry, L.) | Goulding, Edward Alfred | Peel, Hon. W. Robert Wellesley |
| Bigrold, Sir Arthur | Guinness, Hon. R. (Haggerston) | Percy, Earl |
| Bull, Sir William James | Guinness, W. E. (Bury St. Edmunds) | Pretyman, E. G. |
| Burdett-Coutts, W. | Haddock, George B. | Bandies, Sir John Scurrah |
| Butcher, Samuel Henry | Hamilton, Marquess of | Rawlinson, John Frederick Peel |
| Campbell, Rt. Hon. J. H. M. | Harris, Frederick Leverton | Renton, Leslie |
| Carlile, E. Hildred | Harrison-Broadley, H. B. | Renwick, George |
| Cave, George | Heaton, John Henniker | Roberts, S. (Sheffield, Ecclesall) |
| Cecil, Evelyn (Aston Manor) | Hermon-Lodge, Sir Robert | Ronaldshay, Earl of |
| Cecil, Lord R. (Marylebone, E.) | Hope James Fitzalan (Sheffield) | Rutherford, W. W. (Liverpool) |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Houston, Robert Paterson | Salter, Arthur Clavell |
| Chaplin, Rt. Hon. Henry | Joynson-Hicks, William | Scott, Sir S. (Marylebone, W.) |
| Clive, Percy Archer | Kennedy, Vincent Paul | Sheffield, Sir Berkeley George D. |
| Coates, Major E. F. (Lewisham) | Kerry, Earl of | Stanier, Beville |
| Cochrane, Hon. Thomas H. A. E. | Keswick, William | Starkey, John R. |
| Craig, Captain James (Down, E.) | Kimber, Sir Henry | Staveley-Hill Henry(Staffordshire) |
| Craik Sir Henry | King, Sir Henry Seymour (Hull) | Talbot Lord E. (Chichester) |
| Dalrymple, Viscount | Lane-Fox, G. R. | Talbot. Rt. Hell. J. G. (Oxford Univ.) |
| Doughty, Sir George | Lardner, Jaynes Carrige Rushe | Tuke, Sir John Batty |
| Douglas, Rt. Hon. A. Akers- | Law, Andrew Bonar (Dulwich) | Valentia, Viscount |
| Du Cros, Arthur | Lockwood, Rt. Hon. Lt.-Col. A. R. | Walker, Col. W. H. (Lancashire) |
| Duffy, William J. | Long, Col. Charles W. (Evesham) | Walrond, Hon. Lionel |
| Duncan, Robert (Lanark, Govan) | Lonsdale, John Brownlee | Wcrde, Col. C. E. (Kent, Mid) |
| Faber, George Denison (York) | Lowe, Sir Francis William | Williams, Col. R. (Dorset, W.) |
| Faber, Capt. W. V. (Hants, W.) | MacCaw, Wm. J. McGeagh | |
| Fell, Arthur | M'Arthur, Charles | TELLERS FOR THE NOES.—Sir |
| Fetherstonhaugh, Godfrey | M'Calmont, Colonel James | A. Acland-Hood and Lord Balcarres. |
§ Question put accordingly, The Committee divided: Ayes, 299; Noes, 96.
135| Division No. 108.] | AYES. | [10. p.m. |
| Abraham, W. (Cork, N.E.) | Barry, Redmond J. (Tyrone, N.) | Brunner, Rt. Hon. Sir J. T. (Cheshire) |
| Abraham, William (Rhondda) | Beale, W. P. | Bryce, J. Annan |
| Acland, Francis Dyke | Beauchamp, E. | Buckmaster, Stanley O. |
| Adkins, W. Ryland D. | Beaumont, Hon. Hubert | Burns, Rt. Hon. John |
| Agnew, George William | Bell, Richard | Burt, Rt. Hon. Thomas |
| Allen, A. Acland (Christchurch) | Bellairs, Carlyon | Byles, William Pollard |
| Armstrong, W. C. Heaton | Bennett, E. N. | Cameron, Robert |
| Astbury, John Meir | Bethell, T. R. (Essex, Malden) | Carr-Gomm, H. W. |
| Atherley-Jones, L. | Birrell, Rt. Hon. Augustine | Causton, Rt. Hon. Richard Knight |
| Balfour, Robert (Lanark) | Black, Arthur W. | Cawley, Sir Frederick |
| Baring, Godfrey (Isle of Wight) | Boland, John | Channing, Sir Francis Allston |
| Barker, Sir John | Boulton, A. C. F. | Cheetham, John Frederick |
| Barlow, Sir John E. (Somerset) | Bramsdon, T. A. | Cherry, Rt. Hon. R. R. |
| Barlow, Percy (Bedford) | Brigg, John | Cleland, J. W. |
| Barnard, E. B. | Brocklehurst, W. B. | Clough, William |
| Barnes, G. N. | Brodie, H. C. | Clynes, J. R. |
| Barry, E. (Cork, S.) | Brooke, Stopford | Cobbold, Felix Thornley |
| Collins, Stephen (Lambeth) | Jowett, F. W. | Roberts, Sir J. H. (Denbighs) |
| Collins, Sir Wm. J. (St. Pancras, W.) | Joyce, Michael | Robertson, Sir G. Scott (Bradford) |
| Compton-Rickett, Sir J. | Kavanagh, Walter M. | Robertson, J. M. (Tyneside) |
| Corbett, C. H. (Sussex, E. Grinstead) | Kearley, Sir Hudson E. | Robinson, S. |
| Cornwall, Sir Edwin A. | Kennedy, Vincent Paul | Robson, Sir William Snowdon |
| Cotton, Sir H J. S. | Laidlaw, Robert | Roch, Walter F. (Pembroke) |
| Craig, Herbert J. (Tynemouth) | Lamb, Ernest H. (Rochester) | Roche, John (Galway, East) |
| Crean, Eugene | Lemont, Norman | Roe, Sir Thomas |
| Crooks, William | Lardner, James Carrige Rushe | Rose, Charles Day |
| Crosfield, A. H. | Law, Hugh A. (Donegal, W.) | Rowlands, J. |
| Crossley, William J. | Layland-Barrett, Sir Francis | Russell, Rt. Hon. T. W. |
| Curran, Peter Francis | Lehmann, R. C. | Samuel, Rt Hon. H. L. (Cleveland) |
| Davies, David (Montgomery Co.) | Lever, A. Levy (Essex, Harwich) | Samuel, S. M. (Whitechapel) |
| Davies, Ellis William (Eifion) | Lever, W. H. (Cheshire, Wirral) | Schwann, C. Duncan (Hyde) |
| Davies, Timothy (Fulham) | Levy, Sir Maurice | Schwann, Sir C. E. (Manchester) |
| Delany, William | Lewis, John Herbert | Scott, A. N. (Ashton-under-Lyne) |
| Dewar, Sir J. A. (Inverness-sh.) | Lloyd-George, Rt. Hon. David | Sears, J. E. |
| Dickinson, W. H. (St. Pancras, N.) | Lupton, Arnold | Seaverns, J. H. |
| Dilke, Rt. Hon. Sir Charles | Luttrell, Hugh Fownes | Seddon, J. |
| Dillon, John | Macdonald, J. R. (Leicester) | Seely, Colonel |
| Dobson, Thomas W. | Macdonald, J. M. (Falkirk Burghs) | Sheehan, Daniel Daniel |
| Donelan, Captain A. | MacNeill, John Gordon Swift | Sherwell, Arthur James |
| Duckworth, Sir James | MacVeagh, Jeremiah (Down, S.) | Silcock, Thomas Ball |
| Duffy, William J. | MacVeigh, Charles (Donegal, E.) | Smeaton, Donald Mackenzie |
| Duncan, C. (Barrow-in-Furness) | M'Laren, Sir C. B. (Leicester) | Smyth, Thomas F. (Leitrim, S.) |
| Duncan, J. Hastings (York, Otley) | M'Laren, H. D. (Stafford, W.) | Soames, Arthur Wellesley |
| Dunne, Major E. Martin (Walsall) | M'Micking, Major G. | Soares, Ernest J. |
| Ellis, Rt. Hon. John Edward | Maddisan, Frederick | Spicer, Sir Albert |
| Erskine, David C. | Mallet, Charles E. | Stanley, Albert (Staffs, N.W.) |
| Essex, R. W. | Manfield, Harry (Northants) | Steadman, W. C. |
| Esslemont, George Birnie | Marks, G. Croydon (Launceston) | Stewart-Smith, D. (Kendal) |
| Evans, Sir S. T. | Marnham, F. J. | Strachey, Sir Edward |
| Everett, R. Lacey | Massie, J. | Straus, B. S. (Mile End) |
| Falconer, J. | Meagher, Michael | Summerbell, T. |
| Fenwick, Charles | Menzies, Walter | Sutherland, J. E. |
| Findlay, Alexander | Micklem, Nathaniel | Taylor, John W. (Durham) |
| Flynn, James Christopher | Molteno, Percy Alport | Tennant, Sir Edward (Salisbury) |
| Foster, Rt. Hon. Sir Walter | Mond, A. | Tennant, H. J. (Berwickshire) |
| Fuller, John Michael F. | Montagu, Hon. E. S. | Thomas, Abel (Carmarthen, E.) |
| Fullerton, Hugh | Morgan, G. Hay (Cornwall) | Thomas, Sir A. (Glamorgan, E.) |
| Gibb, James (Harrow) | Morse, L. L. | Thomasson, Franklin |
| Glendinning, R. G. | Morton, Alpheus Cleophas | Thompson, J. W. H. (Somerset, E.) |
| Glover, Thomas | Muldoon, John | Thorne, G. R. (Wolverhampton) |
| Goddard, Sir Daniel Ford | Murray, Capt. Hon. A. C. (Kincard.) | Tomkinson, James |
| Gooch, George Peabody (Bath) | Myer, Horatio | Ure, Rt. Hon. Alexander |
| Greenwood. G (Peterborough) | Nicholls, George | Verney, F. W. |
| Greenwood, Hamar (York) | Nicholson, Charles N. (Doncaster) | Vivian, Henry |
| Griffith, Ellis J. | Nolan, Joseph | Walsh, Stephen |
| Gulland, John W. | Norman, Sir Henry | Walters, John Tudor |
| Gwynn, Stephen Lucius | Norton. Capt. Cecil William | Walton, Joseph |
| Harcourt, Rt. Hon. L. (Rossendale) | Nussey, Thomas Willans | Ward. John (Stoke-upon-Trent) |
| Harcourt, Robert V. (Montrose) | Nuttall, Harry | Ward, W. Dudley (Southampton) |
| Hart-Davies, T. | O'Connor, John (Kildare, N.) | Wardle, George J. |
| Harvey, A. G. C. (Rochdale) | O'Deherty, Philip | Waring, Walter |
| Harvey, W. E. (Derbyshire, N.E.) | O'Donnell, C. J. (Walworth) | Warner, Thomas Courtenay T. |
| Harwood, George | O'Grady, J. | Wason, Rt. Hon. E. (Clackmannan) |
| Haslam, James (Derbyshire) | O'Kelly, James (Roscommon, N.) | Wason, John Cathcart (Orkney) |
| Haworth, Arthur A. | O'Shaughnessy, P. J. | Waterlow, D. S. |
| Hayden, John Patrick | Parker, James (Halifax) | Watt, Henry A. |
| Healy, Maurice (Cork) | Pearce, Robert (Staffs, Leek) | White, Sir George (Norfolk) |
| Hedges, A. Paget | Pearce, William (Limehouse) | White, J. Dundas (Dumbartonshire) |
| Helme, Norval Watson | Pearson, W. H. M. (Suffolk, Eye) | White, Sir Luke (York, E.R.) |
| Hemmerde, Edward George | Philipps, Col. Ivor (Southampton) | White, Patrick (Meath, North) |
| Henderson, J. McD. (Aberdeen, W.) | Philipps, Owen C. (Pembroke) | Whitehead, Rowland |
| Henry, Charles S. | Pickersgill, Edward Hart | Whitley, John Henry (Halifax) |
| Herbert, T. Arnold (Wycombe) | Pixie, Duncan V. | Whittaker, Rt. Hon. Sir Thomas P. |
| Higham, John Sharp | Pointer, J. | Wiles, Thomas |
| Hobart, Sir Robert | Pollard, Dr. G. H. | Wilkie, Alexander |
| Hobhouse, Charles E. H. | Ponsonby, Arthur A. W. H. | Williams, J. (Glamorgan) |
| Hogan, Michael | Price, C. E. (Edinburgh, Central) | Williams, A. Osmond (Merioneth) |
| Holland, Sir William Henry | Priestley, Arthur (Grantham) | Williamson, A. |
| Holt, Richard Doming | Radford, G. H. | Wilson, Hon. G. G. (Hull, W.) |
| Hooper, A. G. | Rainy, A. Rolland | Wilson, J. H. (Middlesbrough) |
| Hope, W. H. B. (Somerset, N.) | Raphael, Herbert H. | Wilson, J. W. (Worcestershire, N.) |
| Horniman, Emslie John | Rea, Walter Russell (Scarborough) | Wilson, W. T. (Westhoughton) |
| Horridge, Thomas Gardner | Redmond, William (Clare) | Winfrey, R. |
| Hutton, Alfred Eddison | Rees, J. D. | Wood, T. M'Kinnon |
| Hyde, Clarendon G. | Randall, Athelstan | Young, Samuel |
| Illingworth, Percy H. | Richards, Thomas (W. Monmouth) | Yoxall, James Henry |
| Isaacs, Rufus Daniel | Richards, T. F. (Wolverhampton, W.) | |
| Jackson, R. S. | Richardson, A. | TELLERS FOR THE AYES.—Mr. |
| Jardine, Sir J. | Ridsdale, E. A. | Joseph Pease and the Master of |
| Jenkins, J. | Roberts, Charles H. (Lincoln) | Elibank. |
| Johnson, W. (Nuneaton) | Roberts, G. H. (Norwich) |
| NOES. | ||
| Arkwright, John Stanhope | Foster, P. S. | Nicholson, Wm. G. (Petersfield) |
| Ashley, W. W. | Gardner, Ernest | Oddy, John James |
| Balcarres, Lord | Gibbs, G. A. (Bristol, West) | Pease, Herbert Pike (Darlington) |
| Baldwin, Stanley | Gordon, J. | Peel, Hon. W. R. W. |
| Banbury, Sir Frederick George | Goulding, Edward Alfred | Percy, Earl |
| Banner, John S. Harmood- | Guinness, Hon. R. (Haggerston) | Pretyman, E. G. |
| Barrie, H. T (Londonderry, N.) | Guinness, W. E. (Bury St. Edmunds) | Randles, Sir John Scurrah |
| Bignold, Sir Arthur | Haddock, George B. | Rawlinson, John Frederick Peel |
| Bull, Sir William James | Hamilton, Marquess of | Renton, Leslie |
| Burdett-Coutts, W. | Harris, Frederick Leverton | Renwick, George |
| Butcher, Samuel Henry | Harrison-Broadley, H. B. | Roberts, S. (Sheffield, Ecclesall) |
| Campbell, Rt. Hon. J H. M. | Hermon-Hodge, Sir Robert | Ronaldshay, Earl of |
| Carlile, E. Hildred | Hope, James Fitzalan (Sheffield) | Rutherford, W. W. (Liverpool) |
| Cave, George | Houston, Robert Paterson | Salter, Arthur Clavell |
| Cecil, Evelyn (Aston Manor) | Hunt, Rowland | Scott, Sir S. (Marylebone, W.) |
| Cecil, | Joynson-Hicks, William | Sheffield, Sir Berkeley George D. |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Kerry, Earl of | Stanier, Beville |
| Chaplin, Rt. Hon. Henry | Keswick, William | Starkey, John R. |
| Clive, Percy Archer | Kimber, Sir Henry | Staveley-Hill, Henry (Staffordshire) |
| Coates, Major E. F. (Lewisham) | King, Sir Henry Seymour (Hull) | Talbot, Lord E. (Chichester) |
| Cochrane, Hon. Thomas H. A. E. | Lambton, Hon. Frederick Wm. | Talbot, Rt. Hon J. G. (Oxford univ.) |
| Craig, Captain James (Down, E.) | Lane-Fox, G. R. | Thornton, Percy M. |
| Craik, Sir Henry | Law, Andrew Bonar (Dulwich) | |
| Dalrymple, Viscount | Lockwood, Rt. Hon. Lt.-Col. A. R. | Tuke, Sir John Batty |
| Doughty, Sir George | Long, Col. Charles W. (Evesham) | Walker, Col. W. H. (Lancashire) |
| Douglas, Rt. Hon. A. Akers- | Lonsdale, John Brownlee | Walrond, Hon. Lionel |
| Du Cros, Arthur | Lowe, Sir Francis William | Warde, Col. C. E. (Kent, Mid) |
| Duncan, Robert (Lanark, Govan) | MacCaw, Wm. J. MacGeagh | Williams, Col. R. (Dorset, W.) |
| Faber, George Denison (York) | M'Arthur, Charles | Younger, George |
| Faber, Capt. W. V. (Hants, W.) | M'Calmont, Colonel James | |
| Fell, Arthur | Magnus, Sir Philip | TELLERS FOR THE NOES.—Sir |
| Fetherstoohaugh, Godfrey | Markey H. H. (Kent) | A. Acland-Hood and Viscount |
| Fletcher, J. S. | Morpeth, Viscount | Valentia. |
| Forster Henry William | Morrison-Bell, Captain |
§ Motion made and Question proposed: "That no exemption, abatement, or relief under the Income Tax Acts shall be given to any person who is not ordinarily resident in the United Kingdom."—[Mr. Lloyd-George.]
§ Mr. LEVERTON HARRISI would like to ask the Chancellor of the Exchequer one question by way of explanation. This Resolution seems to me to be an extraordinarily involved one. I think before we begin this discussion it will be just as well if we have it clearly defined as to what is to be meant by "Not ordinarily resident in the United Kingdom." What is the nature of "ordinarily resident?" Is it a person who lives three months in this country and nine months abroad, or is it one who lives nine mor Luis country and three months abroad? That is really a very important point, because there are many British subjects who enjoy small in, comes derivable from British securities who happen to be resident either in our Colonies or in the great dependencies of India or Canada. Are these people to be excluded from the benefits which they would have enjoyed if they had happened to live in this country?
Then, again, reading this Resolution in connection with the last Resolution, this Resolution says that, "no exemption, abatement, or relief under the Income Tax Acts shall be given to any person who is 136 not ordinarily resident in the United Kingdom." But the last Resolution imposes an extra super-tax of 6d. in the £ in respect of incomes which exceed £5,000 on every £ of the amount by which the income exceeds £3,000. Are we to understand that a foreigner resident abroad is not to be chargeable on his income which he receives in this country if that income happens to exceed £5,000? The Chancellor of the Exchequer, in a reply which he gave this afternoon in answer to a question by me, said there would be no charge against a foreigner. The foreigner would not have to pay income tax even if his income, derivable from securities in this country, exceeded £5,000. That surely is in contradiction to this particular Resolution which is before us at the present time, and which states that no exemption, abatement or relief shall be given. It would be very useful before we enter into a discussion of this particular Resolution if the Chancellor of the Exchequer would clear away some of these obscurities which at present are: connected with these words.
§ Mr. LLOYD-GEORGEI think the hon. Member might have taken the trouble to realise what this Resolution is. It has nothing to do with super-tax. It purely relates to the ordinary abatement under the income tax, and it carries out the recommendations of a Committee appointed by the late Government that 137 foreigners should not be entitled to claim the ordinary abatements or exemptions which are given to residents in this country. The position is this: The foreigner, even if he is a millionaire, so long as his income in this country does not exceed, say, £160 per year, would claim exemption. Under £700 he would claim the usual abatement. I am simply proposing an Amendment which I should have thought would have been accepted without a word by hon. Members opposite. [An HON. MEMBER: "Why?"] I can give the reason, but really I would appeal to the Committee to allow us to get this Resolution without much discussion. [Cries of "Oh, oh."] I can give a good reason for that request. We have had a very long discussion upon the income tax generally. It was not really confined to the super-tax—it ranged over the whole question of the income tax. We had a very able speech from the Member for Liverpool, which covered the whole length of the income-tax proposals and its anomalies, and I trust, therefore, the House will allow us to get this Resolution without much Debate, seeing it is accepted in principle by all parties.
§ Mr. AUSTEN CHAMBERLAINI will not enter into an examination of the discussion which has just concluded. I only venture to observe in that connection that although it is quite true that the anomalies and injustices inherent in the income tax have occupied a portion of that Debate, and it is only reasonable and fair, having regard to the fact that it is to increase the effect of the anomalies, and that they will become more unendurable, in the main that discussion, or the major portion of it, did turn upon the points in which the Chancellor of the Exchequer is making changes, namely, the addition of 2d. over a lar-.2,-ci portion of the tax, and the addition of 6d. over another portion of the tax. I will not go back upon that. I only think it fair to myself and to my Friends that we inst mention it. Now I come to the Resolution before the House. We have not had a word of discussion upon this Resolution. It was mentioned, and no more than mentioned. by the Chancellor of the Exchequer himself in introducing his Budget. I think he will find that in a single sentence, not a paragraph, but in a single sentence, he passed it by, and the House, or the Committee, I believe, up to this time have not in any quarter expressed any opinion whatever upon the subject. It is a much bigger matter, and a much more important 138 matter, than the Chancellor of the Exchequer himself appears to observe. He says it arises from the recommendation of the Committee appointed by the late Government—I think actually appointed by myself—and he then described that recommendation, which I have not got in my mind—and if I am inaccurate in my account of it, I must say I take that inaccuracy from him—but I have no doubt he is accurate, and he says that the recommendation was that this exemption should not be allowed to foreigners who could not claim to be British citizens resident in this country.
§ Mr. LLOYD-GEORGEIt was made in 1905.
§ Mr. AUSTEN CHAMBERLAINI was not sure whether it was my Committee or not, but it does not matter. That is the single sentence with which he dealt with this matter in his Budget speech. That was the view he gave to the House of Commons that there were foreigners resident abroad who derived a small income from this country, but who had large incomes on the whole, who derived the benefit of this exemption and abatement, because their incomes in this country were small, but who would not have been entitled to this exemption and abatement if they were British subjects, because their total incomes were large. I have great sympathy with the Chancellor of the Exchequer when he says, "I do not want to give the foreigner who cannot plead poverty or small means a privilege which is not granted to any British citizen," but that is a totally different thing to that which is now proposed. The Resolution is not confined to foreigners, but it applies also to every British citizen who has not ordinary residence in the United Kingdom. I do not know what the definition of "ordinary residence" may be, and probably the Solicitor-General will enlighten us upon that point. I presume that it is governed by decisions which have already been given in the Law Courts, and which he will no doubt be quite ready to explain to us. This Resolution proposes to withdraw the relief given by these exemptions and abatements from every citizen, whether British or foreign, who has not an habitual residence in this country. If the Chancellor of the Exchequer will transform his proposal from what it appears on the Paper to what he describes it in his speech I will raise no further objection to it, and I will agree to pass the Resolution at once as far as I am concerned.
139 I object to the Resolution as it stands upon the Paper, in the first place, because it applies not merely to the rich, but also to the poor; and, in the second place, because it makes an unfortunate discrimination between British subjects resident in the United Kingdom and elsewhere. Who are the British subjects resident elsewhere? Let me take for example those who are resident on the Continent. I am not speaking of the rich who, by reason of their total income, would not be entitled to exemption, but of those who would be entitled to this exemption if they were resident in this country. Some of them are serving His Majesty's Government abroad. I think it is very hard to tax them higher because their public duties force them to live out of the United Kingdom. Others live abroad not discharging any public duty, but in a semi-voluntary exile. It is not true to say that it is wholly involuntary, neither is it wholly voluntary, but they go abroad because, being very poor people, they can economise by so doing. Take the case of a widow who thinks the expense of the liberal education she wishes to give to her children is too great here, and therefore she goes to live in some Continental town where she finds that she can get the kind of education she requires more cheaply and where she can live at a less rate of expense. Is it not very hard to take such people as those, who are practically exiles because of their poverty, and tax them additionally because they are exiles? I have had such letters from ladies and gentlemen as well who live abroad, to their great regret, on account of ill-health because they cannot stand the climate of this country. Some of them are men who can afford to pay the tax who do not get these exemptions and abatements now, whose income is probably taxed in England. There are people who go away by reason of ill-health. They leave their business when other people are in the prime of their activity. They go away on the advice of their doctors to places where the conditions of climate prevent them from an early sentence of death. Is it not very hard that these voluntary exiles should not be entitled to relief because from ill-health they are driven out of this country?
There is one other class to whom I wish to call attention. I received the other day from an agent who collected money for a large number of people resident in dominions over the sea. I have not his letter with me, but I was astonished at the 140 figures which he mentioned. I think it is regrettable that any proposal should be made likely to create an additional barrier between those abroad and those at home, and which creates distinction between different parts of a united Empire. I do not desire to criticise, or Oven to appear to criticise, the financial policies of the self-governing dominions. Their object, I take it, is to attract capital rather than to repel it. We propose to tax people because they are resident in the Colonies, and I venture to deprecate the proposals with reference to them. I think we have not adopted such a policy hitherto. I do not think that we have hitherto taxed residents in other dominions more than if they were residents here, and this is a very unfortunate precedent. I am speaking on behalf of those who have gone out from the mother country into new lands. The sons of such men remain in those new countries to carry on their fathers' businesses or to develop their fathers' farms. They are helping to build up the King's dominions. When the fathers die they are perhaps able to leave a little money, and the sons may be able to carry on their fathers' businesses, and accordingly they settle in the Colonies. Those people are to be refused the abatement to which they would be entitled if they were in this country. Is that wise or generous I do not think it is either the one or the other, and I earnestly hope that the Chancellor of the Exchequer will consent to remodel these proposa1s. He should confine his refusal of abatement, if not to the case of-foreigners, who have no right to abatement, at any rate to such people whether foreigners or British subjects, who are in receipt of incomes which do not entitle. them to abatement.
§ Mr. LLOYD-GEORGEI will make one or two observations in reply to the very important speech delivered by the right hon. Gentleman. I have simply to make one comment here—one which I have made on other Resolutions: that, of course, it is. the Bill the House must look to. Here you have simply two lines which authorise me to introduce the Bill. [A laugh.] Well, the hon. Member laughs. I do not know how soon he will be in this position, but when he is he will realise that is all that can be done. I may at once say that the exceptions which are claimed by the right hon. Gentleman are exceptions which have to be introduced in a Bill. Nobody would dream of putting them into a Resolution. It is not intended that these exemptions or 141 abatements shall be withdrawn from those who are serving abroad. I have made that perfectly clear in answers which I have given to questions in this House. We do not propose to withdraw exemptions in these cases, but that could not be put in a Resolution; it will be provided for in the Bill. There are two or three suggestions made by the right hon. Gentleman which I am quite willing to consider, but I would rather like to carefully consider them in view of the difficulty which may be experienced if you make exceptions in these circumstances. The right hon. Gentleman says if you merely withdraw the exemption from the foreigner who has property the income from which exceeds £700 a year you must withdraw from the poor foreigner as well. That is true, and it is the recommendation of the right hon. Gentleman's own Committee.
§ Mr. AUSTEN CHAMBERLAINI am not bound by that.
§ Mr. LLOYD-GEORGEThe matter was investigated very closely by the Committee of my right hon. Friend, and it came to the conclusion it was practically impossible to make this exemption. Suppose you have a foreigner in China, or Spain, or Italy, or any foreign country who claims exemption on the ground that his total income does not exceed £700. How are you to examine him? If such a claim is made in this country it can be examined into by the Revenue officials, who can inquire into all the circumstances, but you cannot do that in the case of a foreigner in Italy, Germany, Russia, or the Far East. It is practically impossible; these investigations are utterly impossible. You could not do it either in the case of claims from the Colonies. There is no reason why exemptions should not be extended to people who contribute to our revenue outside, and the right hon. Gentleman's own Committee states that relief can only be given to persons in receipt of small incomes where such persons contribute to the public revenue by means of indirect taxation in fair proportion to their taxable capacity. But you are not to discriminate in favour of the foreigner. So long as a person is resident in the United Kingdom you grant exemption to his income under £160, because he contributes by other means—tea, whisky, sugar, and tobacco. [An HON. MEMBER "What about the teetotalers? "] Well, I never heard of a teetotaler who neither smokes nor takes sugar nor drinks tea. [An HON. MEMBER: "What 142 about the Chief Secretary for Ireland? "] I think that right hon. Gentleman indulges in tobacco at any rate. I really do not think he would claim exemption in regard to his income tax. Those are really the reasons. It is not a question of giving preference to foreigners. It is a question of putting them on the same footing as the British subject. The British subject does not pay if his income is only £160, because it is generally regarded that his contributions to indirect taxation is quite as much as you could expect from him unless his income is over £160. But if you grant art extension to gentlemen outside who derive advantage from the United Kingdom they contribute nothing, and I trust the right hon. Gentleman will not raise the point of prejudice against the Colonial. That is not the point at all. I simply take the argument used by his own Committee, and put it purely on the ground that this was the only contribution they made to the taxation of the country. The right hon. Gentleman knows perfectly well that as a matter of fact it is very rarely that the Colonial or foreigner ever thinks of claiming abatement, and it has been started within the last few years by agents, who have made a business of it, and who make a very considerable percentage out of it. In one case they wrote to a British subject who went out to a Colony, and who never dreamed of making this claim for abatement, and they suggested that he should make a claim, and said that if he would leave the matter in their hands they would take care that he got 50 per cent. of abatement. It is purely a matter of business, and before these gentlemen started it was never thought of. Another point which I think it is well worth our while to consider is the case of a British subject who has been sent abroad on the ground of ill health. I am not so sure that he could not claim abatement, as he is simply sent abroad temporarily for the recovery of his health. I am very doubtful whether that would be a case where he could claim abatement, as he is not domiciled abroad in the ordinary sense of the term. I am quite ready to consider that point and I think there is a case for consideration, and that the contention deserves support in fair play and in humanity. With regard to the others, if we begin to make distinctions it will be quite impossible to examine claims which come from beyond the seas, and it is for that reason alone that I think it would be better to follow the recommendation of the Commit- 143 tee appointed by the right hon. Gentleman himself, and to lay down this general rule, simply making exceptions in favour of those who are serving the Crown abroad.
§ Mr. WILLIAM PEELI do not think the right hon. Gentleman has answered the points which have been put to him by my hon. Friend on my right, because throughout the statement that he has just been making now he has been telling us that he does not want to exempt the foreigner. I have not the slightest desire to exempt the foreigner from any sort of taxation. On the contrary, I am very glad that they should bear taxation which apparently they ought to have borne before. But the point my hon. Friend put was this. He said, after all, what is residence abroad? Is it three months, six months, or ten months in the year? How long a period of residence in a foreign country o puts that man in a position of being able to claim exemptions and abatements? I do not think he has answered that question at all.
§ Mr. LLOYD-GEORGEI thought I had answered it. I think it is purely a question in these matters of domicile of whether a man has really taken his residence with a view to remaining abroad or is going temporarily.
§ Mr. PEELThen may I put this further question? Does the right hon. Gentleman mean permanently going there, or does he mean that he goes there for two or three years for the purpose of educating his children or improving his health, because there is a very great difference between a situation of that kind and that of a man who is going abroad with the intention of living there for the whole of his life? There is another point on which I wish for further information. The right hon. Gentleman said he wishes to except those who are serving abroad. Here again he introduced a phrase of the greatest possible ambiguity.
§ Mr. LLOYD-GEORGEServing the Crown.
§ Mr. PEELThat makes a very great difference. There are several cases which struck me first of all as being very hard. There are people who are not in the service of the Crown, but who are temporarily engaged in foreign countries. There are people who, without being in the service of the Crown, take service with 144 some foreign country. There are several people whom I know personally who take inspectorships with the Turkish Army and other armies. Are they to be considered persons resident abroad to whom none of these exceptions and abatements are to apply? Then, again, take companies. Take the number of people who have to reside abroad, not from any desire of their own, but simply because they are sent there as the representatives of firms who have branches there. In consequence of the systems prevailing in other countries a large number of great companies in this country set up branches of manufacturing businesses abroad. They are for obvious reasons sent there as managers and in other capacities, and they are persons who are obliged to reside there. They get salaries on a fixed basis. Are these men who in the course of business are sent out to foreign countries to be put on a penal level with the foreigner? I cannot help thinking if I may turn for a moment to the right hon. Gentleman's Budget speech that it is really foreigners and not these persons he is thinking of, because I see that at Page 509 of that speech he said: —
The income of a person resident abroad only cornea within the scope of the income tax in so far as it is derived from sources within the United Kingdom. Whatever may be his total actual o income, his total income from all sources within the meaning of the Income Tax Acts comprises only such receipts as accrue to him from sources in this country. A foreign millionaire, who draws anything between £160 and £400 from English investments, can obtain £8 from the Commissioners of Inland Revenue.I cannot help thinking that when he drafted the Resolution he was thinking of the foreign millionaire, and not necessarily of the millionaire, but of others of smaller means. But surely in this case he has not made provision for the numerous people, many of whom in following their business have to go and serve in foreign countries and lose the advantage of the exemption which they otherwise would have. There is a matter in regard to which I did not quite follow the right hon. Gentleman. I think he said that foreigners were not to be liable to the super-tax whatever the amount of money they might, have invested in this country.
§ Mr. LLOYD-GEORGEWhat I said was that the Resolution had absolutely nothing to do with the super-tax.
§ Mr. PEELI think it was in answer, to a question at question time the right hon. Gentleman said the super-tax was not to apply to the incomes of foreigners from investments in this country.
§ Mr. LLOYD-GEORGEIt has nothing to do with that.
§ Mr. PEELThere are a great number of persons, in addition to the class my right hon. Friend below me mentioned, who have to go abroad for various purposes. There are those unfortunates who do not get on well with their families, and who have to go to Boulogne and other places in the north of France. I do not wish to express any unnecessary sympathy with those persons who go abroad under these conditions, but I think it is rather hard to hit a man who is down already, and because he is unfortunately obliged to go to these watering places. If he has the intention of returning, whatever his friends may wish, I think it is rather hard that he should be penalised twice. But there is another class of men, I would like to refer to. I think those who have travelled in Canada know the class of men called "remittance men." People of this kind who draw from England a rather precarious income, and who are also sent to Canada because they do not get on very well in this country, are men I deeply regret should go to Canada at all, for in many cases they have brought on the British name an evil reputation, because Canadians are apt to form their idea of Englishmen from these remittance men, who drag out a miserable, and often a drunken, existence at the places where they reside. Are these men to be doubly penalised because they are in this unfortunate condition? There are a great many classes of men quite different from the millionaire foreigner whom we could plead. There is the case where a husband has to go abroad, perhaps because of health, and leaves his family at home, and perhaps earns his living by writing for newspapers in England. Here, again, you charge full tax, without any exemption or abatement, simply because the man's business or his health compels him to live abroad, and because for the sake of the family at home he tries to work on under uncomfortable and sometimes, perhaps, insanitary conditions abroad. Then there is the case of the British resident abroad who draws more than £5,000 a year from this country. In that case he would be liable to this super-tax, and he would be obliged to pay on that, of course.
§ The SOLICITOR - GENERAL (Sir Samuel Evans)He certainly would not have the abatement.
§ Mr. PEELHe would not have the abatement, and in this case he does not enjoy those advantages of security which come from living in this country under a Liberal or any other Government. Therefore, I ask the Chancellor of the Exchequer to try to give us some explanation or definition of how he is going to exempt these unfortunate people; because he tells us all these arrangements will be explained in the Bill, and I feel as if this Bill was going to be like the Humbert safe, and that when it is opened we shall find nothing in it. I cannot think it possible that all these inquiries, all these explanations, and all these questions will be fully dealt with in this Bill. Therefore, if only to relieve the Chancellor of the Exchequer from the trouble of explaining all the details of his Bill, I hope that he will make clear to us now how he will give these exemptions to British subjects resident abroad, while at the same time he will lay the tax on the foreigner, which I am quite certain all on this side are anxious to see laid on without any exemption or abatement.
§ Mr. D. M. SMEATONI wish to say a few words in reference to Indian civil and military officers. I would like to point out that the funds from which they draw their income and live are for the most part funds saved from their salaries abroad in India. They are sent home to be invested in the best securities available in order, as a rule, to support their wives and families who are left at home. It is proposed by the Chancellor of the Exchequer to tax the income of these men which income has already paid income tax in India. The funds from which their income is derived are the savings from their income in India upon which income tax has already been paid, yet the Chancellor now proceeds to tax these funds. The reasons which the Chancellor of the Exchequer gave were four in number. One as that as a rule these abatements are realised by agencies which swallow 50 per cent. of the rebate. I am told, in the cases I am specifying, that the abatements are not those to which the right hon. Gentleman refers; they are not those in which 50 or 60 per cent. of the abatement is swallowed up by the agents. The cases to which I refer are dealt with by agents, who take 3 or 4 per cent. simply for a clerk who keeps the account and for out-of-pocket expenses. In regard to Indian servants, civil and military, the right hon. Gentleman does not meet the case at all.
147 Reference was made by the right hon. Gentleman to millionaires in India. There are not many millionaires in India, and there is very little chance of becoming a millionaire there. The Chancellor of the Exchequer then spoke of the amount being comparatively small. But let me tell him that the hardships would be exceedingly great. As a rule these officers are not highly paid men. I think the words of the Chancellor of the Exchequer were these:—
I am satisfied that the abolition of this concession will give rise to no appreciable hardship.I maintain, and there is good ground for maintaining—I think that I am supported by most men who know the circumstances —that there would be very great hardship indeed in the case of Indian servants, civil and military. Seven or eight pounds to a millionaire or a rich man is nothing, but to a man who has perhaps a small salary in India, and has to keep his family here on the merest pittance that amount possibly means a considerable part of his income. Then there is another blow inflicted by the right hon. Gentleman in the answer he gave me to-day in regard to the relief given by the Act of 1907—the relief which the late Chancellor of the Exchequer gave an earned income. On my own Motion the late Chancellor of the Exchequer inserted in the Bill of 1907 a clause providing that pensions were earned income, and he gave a relief of 3d. in the pound on those pensions as earned income. By the answer which the right hon. Gentleman gave me this morning he intends to deprive these pensioners of the abatement of 3d. in the £. The reason which he holds justifies him in this: Why should the pensioner live abroad at all? Why should he spend his money abroad? I would give him a reason. Very many of these men have suffered over 30 years' exposure in India. They come home under medical advice, and they are compelled, for reasons of health, to live abroad. Does the right hon. Gentleman tell this House that he will fine these men by depriving them of this relief because they are compelled to live abroad? I think, if that is his reason, he will not find very much support in this House, on whatever side it he. I hope the right hon. Gentleman will give favourable consideration to the plea I have put before him, and that in passing the Finance Bill, to which we have been so often referred, he will retain the relief as to the small savings of Indian officers and as to pensions being treated as earned income.
§ Mr. BONAR LAWWe shall have many opportunities of discussing the Budget on matters of principle, and with regard to this particular question. When the right hon. Gentleman in his Budget speech mentioned this special question I was in entire sympathy with him. I am bound to say it seems to me that the right hon. Gentleman would be wise to meet what is, I am sure, the general wish of all parties in the House in regard to this Question. He himself has admitted, and I have seen a letter from a lady who is living abroad and educating her family in a Catholic convent; he has admitted in a case of that kind it is a hardship which he would like to meet. What reason is there for not putting in his Resolution that this is to apply to anyone who is not a British subject? There would be no difficulty in doing that.
§ Mr. LLOYD-GEORGEThe case I promised favourable consideration of was a case of a totally different character. That is the case of a man ordered abroad for medical reasons, and that covers the case of my hon. friend the Member for Stirlingshire. I do not think the case of a British subject who lived abroad for reasons of economy is ail of the same category, and that he or she should escape taxation altogether.
§ Mr. BONAR LAWI accept what the right hon. Gentleman states that he did not express any sympathy with a case of the kind I have mentioned, but I do think that a majority of the Committee and of the people outside feel that there ought to be some privilege to every British subject. There is another reason. Even on the ground of expediency it seems to be extremely unwise to draw this distinction. We all know that unfortunately some of the best and most energetic of young men for various reasons go abroad to make a living. In the ordinary course, if there were a fair opportunity of investing their savings in this country, the natural tendency would be to send their savings here with a view eventually to coming and living in this country. To make a discrimination at the onset puts them at a disadvantage to people in this country, and will more and more make people inclined to invest their savings somewhere else rather than here. I am going to press this point a little more because of my own Colonial experience. It seems to me it is a good thing if it is possible to encourage investment, large or small, in this country wherever you have the 149 opportunity. What the right hon. Gentleman is doing is to discourage it in many small cases, which will give him very little revenue and where the amount of inconvenience or annoyance is out of all proportion to the additional revenue. In addition—I am not sure I am speaking accurately in what I now say—I understand, though, it is true—some of the Colonies make discriminations between those who reside in the Colonies and outside. I believe this is the first time in this country we have made a distinction between one British subject and another. As far as I know this is the first case. [HON MEMBERS: "No, no."] I would like to know of any other. There certainly is no other such case in the ordinary cognisance of ordinary men. I do say from every point of view, both expediency and fairness and of the general well-being of the Empire, it is a very great mistake to draw such a distinction when you are going to get very little out of it.
Captain CRAIGmoved to insert after the word "person" the words "other than a British subject."
I think that my Amendment would bring this important question to a vote, and I presume it would be in order afterwards to continue the discussion on the Resolution. The Chancellor of the Exchequer, all through these debates, and particularly on this Resolution, has asked us to wait for the Bill. Would it not be possible to introduce the words I propose, and still frame the' Bill in accordance with the spirit of the Resolution? The right hon. Gentleman lays down the rule that we should give him these Resolutions in order that he may prepare his Bill; and I ask whether he could not frame the Bill on the broad principle of exempting British subjects from this disability. The right hon. Gentleman's arguments have not shaken us on this side of the House in the slightest degree. There are two outstanding principles—first, that a foreign millionaire has a preference over a millionaire in this country, because he will not be charged the super-tax; and, secondly, that according to the Chancellor of the Exchequer, the super-tax does not come under the income Tax Acts. If that is so, this Resolution is a very harsh one, and loyal British subjects residing in one of our colonies, who give sums of money for charitable purposes in this country will be penalised. The right hon. Gentleman further says that people living abroad are not contributing to the local taxation of the 150 country. In many cases that is entirely erroneous. Men are sometimes obliged by their work to go abroad. Great engineering firms take out hundreds of British subjects every year to construct works which they have undertaken, and under this Resolution I understand that they would suffer the proposed disability, although their wives and families are being maintained at home and the houses in which they reside are taxed in the ordinary way.
The thing appears to me to be an absolute absurdity. The intention of the Chancellor of the Exchequer is to tax foreigners investing in this country, and whose income is taxed at its source in this-country before they get it; but why, in his desire to hit the foreigner, he should also. hit every poor British subject who has gone abroad owing to the nature of his. work—sent by a large firm of contractors to erect a dam at Assuan—it is difficult to say. Everyone who accepts work in a British Colony, or in Egypt, as the case may be, will be penalised. Then he says-later on that if he makes any exemptions perhaps he would miss some taxation. What would he miss? Some trifling sum, perhaps. But far better miss the whole sum than cause the men to go abroad in the service of the country—either in the Army, Navy, or in industrial expeditions —to be followed by the Chancellor of the Exchequer, who, by his ill-advised Budget and other legislation, has driven, and is driving, these very people abroad. He will follow them up after creating unemployment here. So that you cannot escape him if you go to work in the Colonies. That is how the thing appears to me. My Amendment is a reasonable one. After all, we have to look at our own kith and kin at home before we look after the-foreigner.
Another point. I would like to ask the opinion of the Committee upon this: What is the sum of money that is involved, and why is the Chancellor of the Exchequer so very much down on those who recover income tax for the poorer classes of this country? The income tax recovery agencies exist to do justice. The Chancellor of the Exchequer suggests that if it were not for these people he would be able to get a large sum of money that justly belongs to other people, simply because they cannot come home from Canada or Australia to claim £8 a year. That is the foundation on which this Budget is based. The Chancellor of the Exchequer has a very hard task before him to carry it through. He says these income tax 151 recovery agencies claim 50 per cent. Why should they not? Some people make money by stockbroking; others as lawyers. They all exact their charges. But it is not necessary to go to one man in preference to the other. I know myself that many and many an income tax recovery agency has charged 50 or 60 per cent. I assure the right hon. Gentleman that it would be better even to pay 40, 50, or 60 per cent, to such an agency to recover what, after all, is one's just due if you are living abroad, and entitled to it, than to come all the way home from one of our distant Colonies in order to get abatement. I ask any hon. Member of this Committee if he can get an abatement in any other way. No one can get his abatement unless he can get some one who is very well acquainted with the intricacies of the Inland Revenue Department to fight for him. It seems to me that the Chancellor of the Exchequer bases his defence of this Resolution on the flimliest possible pretext. I want to raise another point—and it is not the last one, for I think there are a great many points in this Budget that require thrashing out—I ask hon. Members if it is not a fact that on every point raised by right hon. Gentlemen on the front Opposition bench the Chancellor has had to get information, showing that the Chancellor of the Exchequer is not himself prepared to meet reasonable points brought forward without sending for volumes and references in previous Debates. So far as I am personally concerned, I would like to contest every point in the Budget that is made against a British subject with a view to having it remedied. This is undoubtedly an important matter. Some hon. Members opposite may not think so, but the country as a whole will want to know very fully whether in passing this Resolution we are doing our duty to the trade of this country and to the people who live in it. I ask all the members of the Committee who are interested in this country and not in the foreigner to support the Amendment I now move by going into the Division Lobby with me in support of it.
§ Mr. LLOYD-GEORGEI have not much to say about the speech of the hon. and gallant Member, except to remark that it had nothing to do with the Amendment. I think I should explain to him for the first time what the meaning of the Amendment is. He talked of the poor British subject resident abroad. If a millionaire left this 152 country—and the hon. and gallant Member is under the impression that there will be quite a regular emigration of millionaires—1 do not know any better argument in favour of my Amendment. What would happen if this great exodus of millionaires took place? If they went abroad taking their capital with them, but leaving a small investment in this country, they could claim exemption of Income Tax as if they were only poor people of £160 per year. That would be giving a preference to a British subject because he lived abroad. That is surely not the object of the hon. and gallant Member. If a Colonial millionaire had his money invested so as not to get more than £150 from investments in this country, if the Amendment of the hon. and gallant Member was carried, that millionaire would be exempt from any contribution to the revenue of this country. He could claim exemption as if he were a clerk earning only £150 a year. That is not the desire of the hon. and gallant Member, but I could only gather his desire from his speech. His speech has nothing to do with his Amendment, and I think it is a misfortune that the time he spent upon his speech was not given to considering his Amendment, because if he had given the ten minutes which he occupied in thinking out his proposal he would have produced a totally different one. This Amendment exempts altogether every British subject, whether Colonial or British, whatever the amount of his fortune and wherever resident. I know that is not what the hon. and gallant Member really wants, but that is what his Amendment amounts to.
§ Mr. AUSTEN CHAMBERLAIN'think my hon. and learned Friend has succeeded in turning the tables on the Chancellor of the Exchequer.
§ Mr. JEREMIAH MacVEAGHHe is not "learned."
§ Mr. AUSTEN CHAMBERLAINI beg my hon. and gallant Friend's pardon. The Chancellor of the Exchequer has complained of this Amendment, because it does not carry out my hon. and gallant Friend's view. Perhaps I may be allowed to say that the resolutions put forward by the Chancellor of the Exchequer have the vaguest possible reference to what he claims for them. What is the next objection raised to this Amendment? It is that it will give relief to some people who are under no circumstances entitled to it, and whom my hon. and gallant Friend does not wish to relieve. What is our position with 153 regard to the Resolution before us? It is that it will tax a great many people who ought not to be taxed, and whom the right hon. Gentleman has no desire to tax. And why does the right hon. Gentleman tax them? Not because he thinks they ought to be taxed, he does not refuse them relief because he does not think they ought to have it, but because the administrative difficulties of ascertaining whether they are entitled to relief or not are insuperable. If that be the last word on the subject, if you must choose between making some people get relief who ought not to have it, or depriving a great many of relief who should have it, if the choice be between doing some injustice to the revenue and doing a great deal of injustice to poor individuals, I think it is better that the revenue should suffer what is a mere trifle than that the poor individual should suffer what is a very heavy injustice. Under these circumstances I doubt whether the right hon. Gentleman was wise to meddle with this question.
The right hon. Gentleman defends himself by saying that this is the recommendation of what he calls my Committee. I appointed a Committee, with the late Lord Ritchie as chairman, upon which there sat the Postmaster-General and various other distinguished gentlemen from outside the House, as well as from inside, to consider various anomalies in the income tax, with a view to finding a remedy to these grievances. I appointed a Committee which no man can say was party or of a partial character, and they discharged their duties as they were meant to do—as thoroughly independent, non-partisan, and impartial persons. Under these circumstances the right hon. Gentleman should not talk about this Committee as if it were my child, guided and directed by me, and as if I ought in honour to accept every recommendation that Committee thought right to make. I was much disappointed that they did not make some recommendations which I thought were urgently required to relieve injustice under the Act. Had I remained in office, there were certain recommendations made by that Committee which I should have given careful attention to. I was not bound to accept their recommendations then, and I am not bound to accept them now, and if I am asked my candid opinion I think they were wrong. I think the right hon. Gentleman is landing himself in difficulties by the course he is pursuing, and be had far better drop the whole thing and leave us where we were before. I am in favour of 154 giving relief to very poor people, and I shall support my hon. and gallant Friend in his Amendment, which will give effect to the object.
§ Lord ROBERT CECILThe Chancellor of the Exchequer seems to me to have receded from everything that he has said in these discussions. He is dealing with the Amendment, and it appears to me from what he says that if any British subject should be entitled to exemption, then it will be left open in the Bill to say whether he is entitled to exemption or not. I cannot think that the Amendment meets the principal blot in the Resolution—namely, the words "not ordinarily resident." I should prefer the word "domiciled." Let me give the Chancellor of the Exchequer an illustration: The Chancellor of the Exchequer says, and I quite agree with him, that a British subject resident abroad and in the service of the Crown, ought to be entitled to exemption. Is he quite sure if he passes the Bill in its present form that he will be able to insert such exemptions in the Bill? If a person is ordinarily resident you cannot give him exemption. What is the effect of the Resolution? No exemption shall be granted to any person who is not ordinarily resident.
§ Mr. LLOYD-GEORGEThe rule is that you cannot include any one who is not in the four corners of the Resolution
§ Lord ROBERT CECILThe right hon. Gentleman is a greater authority on this subject than I am; but I should think that you cannot insert in the Bill anything which is inconsistent with the Resolution. It is in the highest degree unbusinesslike that no person who is not ordinarily resident should be exempted. Then a Bill may be brought in founded upon that proposal. If it is in accordance with the rules of the House it is not in accordance with the rules of common sense. I doubt very much if there is any rule of this House which is not in accordance with common sense. [A laugh.] How Members opposite may laugh, but then they generally define common sense as something with which they agree. I do ask the attention of the Government to this point. The Solicitor-General is here. Is he quite sure that a person holding a five years' appointment in India—it may be a legal appointment—can fairly be described as ordinarily resident in this country; I quite agree that he is domiciled here. I will ask the hon. and learned Member for 155 Reading—would he advise that a person holding a prolonged appointment abroad is ordinarily resident in this country? I should think it would be better to use the word "domiciled" rather than o" ordinarily resident."
May I say one word on the principal argument upon which the Chancellor of the Exchequer relies. He says the real reason for these exemptions is that the people who enjoy them already contribute to the revenue by means of indirect taxation. That is a perfectly sound Treasury view, but from the point of view of the taxpayer it is not the whole truth. The reason why a man with only £160 is exempted is because he finds it hard to pay the tax; it does not matter whether the other burdens he bears come to this country or any other country. But if you are to tax that income in spite of exemption, he appears to be just as hardly treated as the person who lives in this country, and who only has £160 a year. When you come to the case of a man living in one of the great dependencies of the Crown it appears to be an exceedingly narrow view to say that that gentleman is contributing nothing to taxation. It is true, no doubt, that he may contribute nothing to the taxation of this country, but there is the wider view that he contributes to the taxation of the Empire, although his contribution may go to the Government of India or to one of the self-governing Colonies. I think that these persons are as much entitled as anyone in this country to exemptions on incomes which do not exceed the taxable income. For my part, I should propose to move an Amendment by putting in the word "domiciled," if my hon. and gallant Friend will not do so.
§ Mr. G. N. BARNESI am not quite sure I understand the speeches which have just been delivered. I am going to vote against the Amendment because it seeks to discriminate in favour of the rich man as against the poor man. [Cries of "No. no."] The hon. and gallant Member for East Down spoke of the large number of workmen who go to Egypt and other countries, and one would think they are all liable to pay income tax. As a simple matter of fact, I do not suppose that one out of a hundred would be liable to it, nor does the privilege of English law cover them in Egypt or elsewhere. I am told that it is a general principle of. English law that it protects a man only 156 within the confines of the United Kingdom unless it specifies otherwise. Three years ago we passed a Compensation for Accidents Act, and some of us entertained the view, that we had made special provision, whereby the provisions of that Act would follow a man wherever he went. Nothing of the sort has taken place, as has been recently decided by the High Court. One of the very men mentioned by the hon. Member for East Down was injured recently in Malta—a British possession, which makes the case stronger from my point of view than if the accident had been in a foreign country—hut the High Court has decided that the man is not protected by English law. No compensation was therefore payable to the widow, and therefore the Compensation Act does not apply outside the United Kingdom at all. Having made inquiries during the last day or two I understand that that is the ordinary principle of the incidence of the English law, and therefore it seems to me that this Amendment in seeking to discriminate in favour of the rich man who goes abroad is trying to set up a discrimination in his favour as against the poor man. I venture to say, that not one man in a hundred who goes abroad under the conditions mentioned by the hon. Member for East Down, is liable to pay Income Tax, and I am in favour of reaching these people who have large incomes, who go abroad and who employ a large amount of labour in this country. I am in favour of reaching them, because it is obvious that they do not pay as the man living in this country does pay, by the consumption of goods. Therefore I am going to vote in favour of the Chancellor of the Exchequer arid against the Amendment.
§ Sir F. BANBURYThe right hon. Gentleman said the Amendment of my hon. and gallant Friend did something which he did not intend, but he is mistaken. The Amendment simply does this, it provides that where a man is a British subject if his income is under £160 a year he can obtain that abatement which he would be entitled to if he lived in England. In order to obtain that abatement you have to make a declaration at Somerset House. The right hon. Gentleman knows perfectly well, that where a man has an income of £160 a year or less the whole tax is charged upon that income before he receives it, and he makes a claim to Somerset House for the abatement. I want to ask the right hon. Gentleman 157 where a British subject resident abroad makes a claim for abatement on the ground that his income is under £160 a year, what is to prevent him when he makes that claim from making a declaration that his income from all sources, whether here or abroad is under £160 a year. I see no reason to prevent that being done. What is in the right hon. Gentleman's mind, I expect, is this: that where a foreigner has made that claim for abatement, he has not been asked to make any declaration beyond this—that his income in England is not more than £160 a year. But if the Amendment is accepted there is nothing to prevent the right hon. Gentleman from putting in his Bill a statement to the effect that a British subject in making that claim for abatement must state that from all sources, whether here or abroad, his income is under £160 a year. I would rather that the Amendment had gone further.
The right hon. Gentleman is quite correct in his statement about income tax associations advising people to claim abatements. I know of my own knowledge that that occurs. But I do not think he is right in the statement about 50 per cent. It is very rare. In my own business with foreigners I always refused to claim the abatement on the ground that the charge I should have to make would make it too great to make the abatement valuable to them. I recommended them to go to this particular association because their charge was so small. Six thousand pounds in Consols returns about £180 a year, and £5,000 in Irish Land Stock will do the same. An investment of £5,000 or £6,000 in Consols or Irish Land Stock is a largish investment. The right hon. Gentleman wants to get as many investors of that kind as he possibly can. He is face to face at present with large issues of Irish Land Stock.
§ Mr. AINSWORTHIs the hon. Baronet entitled to talk about Irish land?
The CHAIRMANIf the hon. Member had followed the hon. Baronet's argument he would not have thought it out of order.
§ Sir F. BANBURYThese people attach very great importance to these exemptions. Is the right hon. Gentleman going, by refusing to give these people the abatement they have always had, to turn their money away at a time when we want it in order to keep up our national credit? He is going to turn it away in order to get the smallest possible benefit for the 158 Exchequer. I know this is a good point, from my knowledge of investments, extending over nearly 40 years, arid I assure the right hon. Gentleman that he does not know the harm that he is going to do his own cause. He will not be able to quote the rising stocks in favour of his Budget if this sort of thing is going to be brought in. He will drive away money which he wants, and which it is the interest of everyone to get in.
§ Mr. PRETYMANI only want to appeal to the right hon. Gentleman on one ground. If there is one man who has done more to make the Empire and the country more than anyone else it is the young fellow who goes abroad, not necessarily in the service of the Crown but in a commercial company, in a tea company, in a great engineering works. Any young fellow who goes out to work as an engineer—not as a working man in the sense used by the hon. Member below the Gangway—is as much a working man in every sense of the word, and a man who has as much difficulty in keeping up his position as a man who is working with his muscles. If you look at the history of our country there is no man to whom we owe more than to those who have begun life in that fashion, and that we should penalise them when they are sending their small savings home, or when they are drawing a small allowance to eke out the small pay with which they begin in a foreign country, seems to me to pass the bounds of folly. I do appeal to the right hon. Gentleman that he should not in order to obtain some small sum for the Exchequer discourage young men from going out to do what for generations has always proved to be of the greatest advantage to themselves and to this country.
§ Mr. JOYNSON-HICKSI want to appeal to the right hon. Gentleman on behalf of the men to whom my hon. Friend has referred. Really, the kind of speech made by the hon. Member for the Black-friars Division of Glasgow makes one almost despair. When we are discussing a question of considerable importance, not in relation to rich or poor, but in regard to the remission of a small amount of income tax to those resident abroad, the hon. Member says he is going to vote with the Government because he thinks the question of favouring the foreigner is involved in the Amendment which has been proposed. He has dragged in a question in regard to compensation for accident. The hon. Member does not seem to see in 159 these matters anything beyond the interests of working men. He might join with us in discussing the question a little bit beyond the man who works with his hands. The prosperity of the country and of the Empire has been built up by men who have gone abroad, not merely to serve the country under the Crown, but to serve the commerce of the country. Young men have gone out under the test of business houses, and have founded businesses in India and in foreign countries. We should be careful to give to such men every possible assistance. Not merely are invalids who go out for the sake of their health entitled to consideration; far more consideration should be shown to the young men who in connection with industry and commerce go out to found houses abroad, and who send home a certain amount of money to be invested in English securities. I would ask the right hon. Gentleman to get up and say that he will extend this abatement to every British subject. Whether a young man goes to Hong Kong or Canada, so long as he is a British subject, he is entitled to the protection which the law of Great Britain gives him. A man is entitled to this abatement when serving for the welfare of the country in foreign quarters just as much as if he were doing that at home.
§ Mr. J. F. MASONIt seems to me that we have not yet fully considered the question of the British subject who is not ordinarily a resident in the United Kingdom in the shape of the Colonial who is resident entirely in the Colony, and who has shares in an industry carried on in the Colony. There are many Colonials who own a large amount of property in English companies working in the Colonies. These Colonials are, of course, under this proposition, subject to pay income tax in this country I rather question whether this is within constitutional rights to tax these
§ Colonials at all, but I think, at any rate, they will have a very serious grievance if they have to pay income tax in this country for purposes in which, beyond the Navy, they have no concern whatever. If the Colonials are to be taxed in this way that might raise the whole point which at one time led to the present condition of freedom in the United States of America. There are certainly very distinct instances of this. I know the case of a British Company working in New Zealand which remits to Colonial shareholders in New Zealand £100,000 a year in the shape of dividends, and I venture to think that these New Zealanders will have very just cause of complaint if they have to pay income tax on this money. Of course the obvious way of evading that difficulty would be for the company to be registered in New Zealand instead of in England. As things stand at present it is quite open to that company by a change of domicile—I do not say that the company desire to do any such thing—to escape this payment, and I do think that the Colonial shareholders have a very substantial grievance, which might very reasonably be met by exempting British citizens from paying income tax in this country, although they are not domiciled in this country. I think that these Colonia1s. should be exempted from income tax on incomes arising from industries carried on in their own countries, and that the tax should not be imposed merely because their company is registered in the United Kingdom.
§ Mr. LLOYD-GEORGErose in his place and claimed to move: "That the Question be now put."
§ Question put: "That the Question be now put."
§ The Committee divided: Ayes, 215; Noes, 108.
163| Division No. 109.] | AYES. | [11.58 p.m. |
| Abraham, William (Rhondda) | Bellairs, Carlyon | Creston, Rt. Hon. Richard Knight |
| Acland, Francis Dyke | Bennett, E. N. | Cewley, Sir Frederick |
| Agnew, George William | Birrell, Rt. Hon. Augustine | Channing, Sir Francis Allston |
| Ainsworth, John Stirling | Black, Arthur W. | Cherry, Rt. Han. R. R. |
| Allen, A. Acland (Christchurch) | Boulton, A. C. F. | Clough, William |
| Armitage, R. | Bowerman, C. W. | Clynes, J. R. |
| Asquith, Rt. Hon. Herbert Henry | Brace, William | Cohbold, Felix Thornley |
| Balfour, Robert (Lanark) | Bramsdon, T. A. | Collins, Stephen (Lambeth) |
| Baring, Godfrey (Isle of Wight) | Brocklehurst, W. B. | Collins, Sir Wm. J. (St. Pancras, W.) |
| Barlow, Percy (Bedford) | Brodie, H. C. | Cooper, G. J. |
| Barnard, E. B. | Brooke, Stopford | Corbett, C. H. (Sussex, E. Grinstead) |
| Barnes, G. N. | Brunner, Rt. Hon. Sir J. T. (Cheshire) | Cornwall, Sir Edwin A. |
| Barry. E. (Cork, S.) | Burns, Rt. Hon. John | Cotton, Sir H. J. S |
| Barry, Redmond J. (Tyrone, N.) | Buxton, Rt. Hon. Sydney Charles | Craig, Herbert J. (Tynemouth) |
| Beauchamp, E. | Byles, William Pollard | Crooks, William |
| Beaumont, Hon. Hubert | Carr-Gomm, H. W. | Crosfield, A. H. |
| Crossley, William J. | Lehmann, R. C. | Robinson, S. |
| Davies, David (Montgomery Co.) | Lever, A. Levy (Essex, Harwich) | Robson, Sir William Snowdon |
| Dewar, Sir J. A. (Inverness-shire) | Levy, Sir Maurice | Roch, Walter F. (Pembroke) |
| Buffy, William J. | Lewis, John Herbert | Roe, Sir Thomas |
| Duncan, C. (Barrow-in-Furness) | Lloyd-George, Rt. Hon. David | Pese, Charles Day |
| Duncan, J. Hastings (York, Otley) | Luttrell, Hugh Fownes | Rowlands, J. |
| Dunn, A. Edward (Camborne) | Macdonald, J. R. (Leicester) | Russell, Rt. Hon. T. W. |
| Dunne, Major E. Martin (Walsall) | Macdonald, J. M. (Falkirk Burghs) | Samuel, S. M. (Whitechapel) |
| Essex, R. W. | Mackarness, Frederic C. | Scott, A. H. (Ashton-under-Lyne) |
| Esslemont, George Birnie | MacVeagh, Jeremiah (Down, S.) | Seaverns, J. H. |
| Evans, Sir Samuel T. | M'Laren, H. D. (Stafford, W.) | Seddon, J. |
| Everett, R. Lacey | M'Micking, Major G. | Seely, Colonel |
| Falconer, James | Maddison, Frederick | Silcock, Thomas Ball |
| Fenwick, Charles | Mallet, Charles E. | Simon, John Allsebrook |
| Ferguson, R. C. Munro | Manfield, Harry (Northants) | Soames, Arthur Wellesley |
| Fiennes, Hon. Eustace | Markham, Arthur Basil | Soares, Ernest J. |
| Fuller, John Michael F. | Mason, A. E. W. (Coventry) | Stewart-Smith, D. (Kendal) |
| Fullerton, Hugh | Massie, J. | Strachey, Sir Edward |
| Glendinning, R. G. | Masterman, C. F. G. | Strauss, E. A. (Abingdon) |
| Goddard, Sir Daniel Ford | Micklem, Nathaniel | Summerbell, T. |
| Gooch, George Peabody (Bath) | Mond, A. | Sutherland, J. E. |
| Greenwood, G. (Peterborough) | Morgan, G. Hay (Cornwall) | Taylor, John W. (Durham) |
| Greenwood, Hamar (York) | Morrell, Philip | Tennant, Sir Edward (Salisbury) |
| Grey, Rt. Hon. Sir Edward | Muldoon, John | Tennant, H. J. (Berwickshire) |
| Griffith, Ellis J. | Nicholls, George | Thomas, Abel (Carmarthen, E.) |
| Gulland, John W. | Norton, Captain Cecil William | Thomas, Sir A. (Glamorgan, E.) |
| Haldane, Rt. Hon. Richard B. | Hussey, Thomas Willans | Thomasson, Franklin |
| Harcourt, Rt. Hon. L. (Rossendale) | Nuttall, Harry | Thompson, J. W. H. (Somerset, E.) |
| Harcourt, Robert V. (Montrose) | O'Donnell, C. J. (Walworth) | Tomkinson, James |
| Harvey, W. E. (Derbyshire, N.E.) | O'Donnell, T. (Kerry, W.) | Ure, Rt. Hon. Alexander |
| Howorth, Arthur A. | O'Grady, J | Verney, F. W. |
| Hedges, A. Paget | Parker, James (Halifax) | Vivian, Henry |
| Hemmerde, Edward George | Pearce, Robert (Staffs, Leek) | Walsh, Stephen |
| Henderson, Arthur (Durham) | Pearson, W. H. M. (Suffolk, Eye) | Ward, John (Stoke-upon-Trent) |
| Henry, Charles S. | Philipps, Col. Ivor (Southampton) | Ward, W. Dudley (Southampton) |
| Herbert, Col. Sir Ivor (Mon., S.) | Philipps, Owen C. (Pembroke) | Warner, Thomas Courtenay T. |
| Higham, John Sharp | Pickersgill, Edward Hare | Wason, Rt. Hon. E. (Clackmannan) |
| Hobart, Sir Robert | Pixie, Duncan V. | Wason, John Cathcart (Orkney) |
| Hobhouse, Charles E. H. | Pointer, J. | Watt, Henry A. |
| Hogan, Michael | Pollard, Dr. G. H. | White, Sir George (Norfolk) |
| Holden, E. Hopkinson | Price, C. E. (Edinburgh, Central) | White, J. Dundas (Dumbartonshire) |
| Holland, Sir William Henry | Priestley, Arthur (Grantham) | White, Sir Luke (York, E.R.) |
| Holt, Richard Durning | Priestley, W. E. B. (Bradford, E.) | Whitley, John Henry (Halifax) |
| Hope. W. H. B. (Somerset, N.) | Radford, G. H. | Wiles, Thomas |
| Horniman, Elmslie John | Rainy, A. Rolland | Wilkie, Alexander |
| Howard, Hon. Geoffrey | Raphael. Herbert H. | Williams, J. (Glamorgan) |
| Hutton, Alfred Eddison | Rea, Walter Russell (Scarborough) | Williamson, A. |
| Hyde Clarendon G. | Pees, J. D. | Wilson, Hon. G. G. (Hull, W.) |
| Illingworth, Percy H. | Randall, Athelstan | Wilson, J. W. (Worcestershire, N.) |
| Isaacs, Rufus Daniel | Richards, T. F. (Wolverhampton, W. | o Wilson, W. T. (Westhoughton) |
| Jardine, Sir J. | Richardson, A. | Wood, T. M'Kinnon |
| Jenkins, J. | Ridsdale, E. A. | |
| Johnson, W. (Nuneaton) | Roberts, Charles H. (Lincoln) | |
| Jones, Leif (Appleby) | Roberts, G. H. (Norwich) | TELLERS FOR THE AYES.—Mr. |
| Jowett, F. W. | Roberts, Sir J. H. (Denbighs) | Joseph Pease and the Master of |
| King, Alfred John (Knutsford) | Robertson, Sir G. Scott (Bradford) | Elibank. |
| Lardner, James Carrige Rushe | Robertson, J. M. (Tyneside) | |
| NOES | ||
| Anson, Sir William Reynell | Clive, Percy Archer | Harris, Frederick Leverton |
| Arkwright, John Stanhope | Coates, Major E. F. (Lewisham) | Harrison-Broadley, H. B. |
| Ashley, W. W. | Craig, Charles Curtis (Antrim, S.) | Hay, Hon. Claude George |
| Balcarres, Lord | Craig, Captain James (Down, E.) | Hill, Sir Clement |
| Baldwin, Stanley | Craik, Sic Henry | HOpe, James Fitzalan (Sheffield) |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Dalrymple, Viscount | Hunt, Rowland |
| Banbury, Sir Frederick George | Doughty, Sir George | Joyson-Hicks, William |
| Banner, John S. Harmood- | Douglas, Rt. Hon. A. Akers- | Kennaway, Rt. Hon. Sir John H. |
| Barrie, H. T. (Londonderry, N.) | Du Cros, Arthur | Kennedy Vincent Paul |
| Beach, Hon. Michael Hugh Hicks | Faber, George Denison (York) | Kerry, Earl of |
| Beckett, Hon. Gervase | Faber, Capt. W. V. (Hants, W.) | Keswick, William |
| Bignold, Sir Arthur | Fell, Arthur | King, Sir Henry Seymour (Hull) |
| Branch, James | Fetherstonhaugh, Godfrey | Lambton, Hon. Frederick Wm. |
| Bull, Sir William James | Fletcher, J. S. | Lane-Fox, G. R |
| Burdett-Coutts, W. | Forster, Henry William | Law, Andrew Banar (Dilwich) |
| Campbell, Rt. Hon. J. H. M. | Foster, P. S. | Lockwood, Rt. Hon. Lt.-Col. A. R. |
| Carlile, E. Mildred | Gardner, Ernest | Long, Col. Charles W. (Evesham) |
| Carson, Rt. Hon. Sir Edward H. | Gabs, G. A. (Bristol, West) | Lonsdale, John Brownlee |
| Castlereagh, Viscount | Ger don, J. | Lowe, Sir Francis William |
| Cave, George | Goulding, Edward | MacCaw, Wm. J. MacGeagh |
| Cecil. Evelyn (Aston Manor) | Alfred Guinness, Hon. R. (Haggerston) | Magnus, Sir Philip |
| Cecil, Lord R. (Marylebone, E.) | Guinness, W, E. (Bury St. Edmunds) | Marks, H. H. (Kent) |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Haddock, George B. | Masan, James F. (Windsor) |
| Chaplin, Rt. Hon. Henry | Hamilton, Marquess of | Meagher, Michael |
| Mildmay, Francis Bingham | Renwick, George | Staveley-Hill, Henry (Staffordshire) |
| Moore, William | Roberts, S. (Sheffield, Ecclesall) | Talbot, Lord E. (Chichester) |
| Morpeth, Viscount | Ronaldshay, Earl of | Thornton, Percy M. |
| Morrison-Bell, Captain | Rutherford, John (Lancashire) | Walker, Col. W. H. (Lancashire) |
| Nicholson, Wm. G. (Petersfield) | Rutherford, W. W. (Liverpool) | Walrond, Hon. Lionel |
| Oddy, John James | Salter, Arthur Clavell | Warde, Col. C. E. (Kent, Mid.) |
| O'Doherty, Philip | Scott, Sir S. (Marylebone, W.) | Williams, Col. R. (Dorset, W.) |
| Pease, Herbert Pike (Darlington) | Sheffield, Sir Berkeley George D. | Willoughby de Eresby, Lord |
| Peel, Hon. W. Robert Wellesley | Smeaton, Donald Mackenzie | Wortley, Rt. Hon. C. B. Stuart- |
| Pietyman, E. G. | Smith, Abel H. (Hertford, E.) | Younger, George |
| Randles, Sir John Scurrah | Smyth, Thomas F. (Leitrim, S.) | |
| Remnant, James Farquharson | Stanier, Beville | TELLERS FOR THE NOES—Sir A. |
| Renton, Leslie | Starkey, John R. | Acland-Hood and Viscount Valentia. |
§ Question put accordingly: "That the words be there inserted."
164§ The Committee divided: Ayes, 106; Noes, 222.
165| Division No. 110.] | AYES. | [12.50 a.m |
| Acland-Hood, Rt. Hon. Sir Alex. F. | Fletcher, J. S. | Morrison-Bell, Captain |
| Anson, Sir William Reynell | Forster, Henry William | Nicholson, Wm. G. (Petersfield) |
| Arkwright, John Stanhope | Foster, P. S. | Oddy, John James |
| Ashley, W. W. | Gibbs, G. A. (Bristol, West) | O'Donnell, C. J. (Walworth) |
| Balcarres, Lord | Gordon, J. | Pease, Herbert Pike (Darlington) |
| Baldwin, Stanley | Goulding, Edward Alfred | Peel, Hon. W. Robert Wellesley |
| Balfour, Rt. Hon. A. J. (City Lond.) | Guinness, Hon. R. (Haggerston) | Pretyman, E. G. |
| Banbury, Sir Frederick George | Guinness, W. E. (Bury St. Edm'nds) | Randles, Sir John Scurrah |
| Banner, John, S. Harmood- | Haddock, George B. | Remnant, James Farquharson |
| Barrie, H. T. (Londonderry, N.) | Hamilton, Marquess of | Renton, Leslie |
| Beckett, Hon. Gervase | Harris, Frederick Leverton | Renwick, George |
| Bignold, Sir Arthur | Harrison-Broadley, H. B. | Roberts, S. (Sheffield, Ecclesall) |
| Bull, Sir William James | Hay, Hon. Claude George | Ronaldshay, Earl of |
| Bradett-Coutts, W. | Hermon-Hodge, Sir Robert | Rutherford, John (Lancashire) |
| Campbell, Rt. Hon. J. H. M. | Hill, Sir Clement | Rutherford, W. W. (Liverpool) |
| Carlile, E. Hildred | Hope, James Fitzalan (Sheffield) | Salter, Arthur Clavell |
| Carson, Rt. Han. Sir Edw. H. | Hunt, Rowland | Scott, Sir S. (Marylebone, W.) |
| Castlereagh, Viscount | Johnson-Hicks, William | Sheffield, Sir Berkeley George D. |
| Cave, George | Kannaway, Rt. Hon. Sir John H. | Smeaton, Donald Mackenzie |
| Cecil, Evelyn (Aston Manor) | Kerry, Earl of | Smith, Abel H. (Hertford, E.) |
| Cecil, Lord R. (Marylebone, E.) | Keswick, William | Stanier, Beville |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | King, Sir Henry Seymour (Hull) | Starkey, John R. |
| Chaplin, Rt. Hon. Henry | Lambton, Hon. Frederick William | Staveley-Hill, Henry (Staffs.) |
| Clive, Percy Archer | Lane-Fox, G. R. | Talbot, Lord E. (Chichester) |
| Coates, Major E. F. (Lewisham) | Law, Andrew Bonar (Dulwich) | Thornton, Percy M. |
| Craig, Charles Curtis (Antrim, S.) | Lockwood, Rt. Hon. Lt.-Col. A. R. | Valentia, Viscount |
| Craik, Sir Henry | Long, Col. Charles W. (Evesham) | Walker, Col. W. H. (Lancashire) |
| Dalrymple, Viscount | Lansdale, John Brownlee | Walrond, Hon. Lionel |
| Doughty Sir George | Lowe, Sir Francis William | Warde, Col. C. E. (Kent, Mid) |
| Douglas, Rt. Hon. A. Akers- | MacCaw, Wm J. MacGeagh | Williams, Col. R. (Dorset, W.) |
| Du Cros, Arthur | Magnus, Sir Philip | Willoughby de Eresby, Lord |
| Duffy, William J. | Marks, H. H. (Kent) | Wortley, Rt. Hon. C. B. Stuart- |
| Faber, George Denison (York) | Mason, James F. (Windsor) | Younger, George |
| Faber, Captain W. V. (Hants, W.) | Mildmay, Francis Bingham | |
| Fell, Arthur | Moore, William | TELLERS FOR THE AYES.—Captain |
| Fetherstonhaugh, Godfrey | Morpeth, Viscount | Craig and Mr. Hicks-Beach. |
| NOES. | ||
| Abraham, W. (Cork, N.E.) | Brace, William | Craig, Herbert J. (Tynemouth) |
| Abraham, William (Rhondda) | Bramsdon, T. A. | Crean, Eugene |
| Acland, Francis Dyke | Branch, James | Crooks, William |
| Agnew, George William | Brocklehurst, W. B. | Crosfield, A. H. |
| Ainsworth, John Stirling | Brodie, H. C. | Crossley, William J. |
| Allen, A. Acland (Christchurch) | Brooke, Stopford | Dewar, Sir J. A. (Inverness-shire) |
| Armitage, R. | Brunner, Rt. Hon. Sir J. T. (Cheshire) | Duncan, C. (Barrow-in-Furness) |
| Asquith, Rt. Hon. Herbert Henry | Burns, Rt. Hon. John | Duncan. J. Hastings (York, Otley) |
| Balfour, Robert (Lanark) | Buxton, Rt. Hon. Sydney Charles | Dunn, A. Edward (Camborne) |
| Baring, Godfrey (Isle of Wight) | Byles, William Pollard | Dunne, Major E. Martin (Walsall) |
| Barlow, Percy (Bedford) | Carr-Gomm, H. W. | Essex, R. W. |
| Barnard, E. B. | Causton, Rt. Hon. Richard Knight | Esslemont, George Birnie |
| Barnes, G. N. | Cawley, Sir Frederick | Evans, Sir Samuel T. |
| Barry, E. (Cork, S.) | Channing, Sir Francis Allston | Everett, R. Lacey |
| Barry, Redmond J. (Tyrone, N.) | Cherry, Rt Hon. R R. | Falconer, James |
| Beauchamp, E | Clough, William | Fenwick, Charles |
| Beaumont, Hon. Hubert | Clynes, J. R. | Ferguson, R. C. Munro |
| Bellairs, Carlyon | Cobbold, Felix Thornley | Fiennes, Hon. Eustace |
| Bennett, E. N. | Collins, Stephen (Lambeth) | Fuller, John Michael F. |
| Birrell, Rt. Hon. Augustine | Collins, Sir Wm. J. (S. Pancras, W.) | Fullerton, Hugh |
| Black, Arthur W. | Cooper, G J. | Glendinning, R. G. |
| Boland, John | Corbett, C. H. (Sussex, E. Grinstead) | Glover, Thomas |
| Boulton, A.C.F. | Cornwall, Sir Edwin A. | Goddard, Sir Daniel Ford |
| Bowerman, C.W. | Cotton, Sir H. J. S. | Gooch, George Peabody (Bath) |
| Greenwood, G. (Peterborough) | Manfield, Harry (Northants) | Rowlands, J. |
| Greenwood, Hamar (York) | Markham, Arthur Basil | Russell, Rt. Hon. T. W. |
| Grey, Rt. Hon. Sir Edward | Mason, A. E. W. (Coventry) | Samuel, S. M. (Whitechapel) |
| Griffith, Ellis J. | Massie, J. | Scott, A. H. (Ashton-under-Lyne) |
| Gulland, John W. | Masterman, C. F. G. | Seaverns, J. H. |
| Haldane, Rt. Hon. Richard B. | Meagher, Michael | Seddon, J. |
| Harcourt, Rt. Hon. L. (Rossendale) | Micklem, Nathaniel | Seely, Colonel |
| Harcourt, Robert V. (Montrose) | Mond, A. | Silcock, Thomas Ball |
| Harvey, W. E. (Derbyshire, N.E.) | Morgan, G. Hay (Cornwall) | Simon, John Alisebrook |
| Haworth, Arthur A. | Morrell, Philip | Smyth, Thomas F. (Leitrim, S.) |
| Hedges, A. Paget | Muldoon, John | Soames, Arthur Wellesley |
| Helme, Norval Watson | Murray, Capt. Hon. A. C. (Kincard.) | Soares, Ernest J. |
| Hemmerde, Edward George | Nicholls, George | Stewart-Smith, D. (Kendal) |
| Henderson, Arthur (Durham) | Norton, Capt. Cecil William | Strachey, Sir Edwara |
| Henry, Charles S. | Nussey, Thomas Willans | Strauss, E. A. (Abingdon) |
| Herbert, Col. Sir Ivor (Mon. S.) | Nuttall, Harry | Summerbell, T. |
| Higham, John Sharp | O'Brien, Patrick (Kilkenny) | Sutherland, J. E. |
| Hobart, Sir Robert | O'Connor, John (Kildare, N.) | Taylor, John W. (Durham) |
| Hobhouse, Charles E. H. | O'Doherty, Philip | Tennant, Sir Edward (Salisbury) |
| Hogan, Michael | O'Donnell, T. (Kerry, W.) | Tennant, H. J (Berwickshire) |
| Holden, E. Hopkinson | O'Grady, J. | Thomas, Abel (Carmarthen, E.) |
| Holland, Sir William Henry | Parker, James (Halifax) | Thomas, Sir A. (Glamorgan, E.) |
| Holt, Richard Durning | Pearce, Robert (Staffs, Leek) | Thomasson, Franklin |
| Horniman, Emslie John | Pearson, W. H. M. (Suffolk, Eye) | Thompson, J. W. H. (Somerset, E.) |
| Howard, Hon. Geoffrey | Philipps, Col. Ivor (Southampton) | Tomkinson, James |
| Hutton, Alfred Eddison | Philipps, Owen, C. (Pembroke) | Ure, Rt. Hon. Alexander |
| Hyde, Clarendon G. | Pickersg111, Edward Hare | Verney, F. W. |
| Illingworth, Percy H. | Pirie, Duncan V. | Vivian, Henry |
| Walsh, Stephen | ||
| Isaacs, Rufus Daniel | Pointer, J. | Ward, John (Stoke upon Trent) |
| Jardine, Sir J. | Pollard, Dr. G. H. | Ward, W. Dudley (Southampton) |
| Jenkins, J. | Price, C. E. (Edinburgh, Central) | Warner, Thomas Courtenay T. |
| Johnson, W. (Nuneaton) | Priestley, Arthur (Grantham) | Wason, Rt. Hon. E. (Clackmannan) |
| Jones, Leif (Appleby) | Priestley, W. E. B. (Bradford, E.) | Wason, John Cathcart (Orkney) |
| Jowett, F. W. | Radford, G. H. | Watt Henry, A. |
| Kennedy, Vincent Paul | Rainy, A. Rolland | White, Sir George (Norfolk) |
| King, Alfred John (Knutsford) | Raphael, Herbert N. | White, J. Duadas (Dumbartonshire) |
| Lardner, James Carrige Rushe | Rea, Walter Russell (Scarborough) | White, Sir Luke (York, E. R.) |
| Lehmann, R. C. | Rees, J. D. | Whitley, Join Henry (Halifax) |
| Lever, A. Levy (Essex, Harwich) | Rendall, Atheistan | Wiles, Thomas |
| Levy, Sir Maurice | Richards, T. F. (Wolverhampton, W.) | Wilkie, Alexander |
| Lewis, John Herbert | Richardson, A. | Williams, J. (Glamorgan) |
| Lloyd-George, Rt. Hon. David | Ridsdale, E. A. | Williamson, A. |
| Luttrell, Hugh Fownes | Roberts, Charles H. (Lincoln) | Wilson, Hon. G. G. (Hull, W.) |
| Macdonald, J. R. (Leicester) | Roberts, G. H. (Norwich) | Wilson, J. W. (Worcestershire, N.) |
| Macdonald, J. M. (Falkirk Burghs) | Roberts, Sir J. H. (Denbighs.) | Wilson, W. T. (Westhoughton) |
| Mackarness, Frederick C. | Robertson, Sir G. Scott (Bradford) | Wood, T. M'Kinnon |
| MacNeill, John Gordon Swift | Robertson, J. M. (Tyneside) | |
| MacVeagh, Jeremiah (Down, S.) | Robinson, S. | TELLERS FOR THE NOES.—Mr. |
| M'Laren, H. D. (Stafford, W.) | Robson, Sir William Snowdon | Joseph Pease and the Master of |
| M'Micking, Major G. | Roch, Walter F. (Pembroke) | Elibank. |
| Maddison, Frederick | Roe, Sir Thomas | |
| Mallet, Charles E. | Rose, Charles Day |
§ Mr. LLOYD-GEORGE claimed: "That the Main Question be now put."
§ Main Question put accordingly.
166§ The Committee divided: Ayes, 224; Noes, 103.
169| Division No. 111.] | AYES. | 12.15 a.m. |
| Abraham, W. (Cork, N.E.) | Boulton, A. C. F. | Cornwall, Sir Edwin A. |
| Abraham, William (Rhondda) | Bowerman, C. W. | Cotton, Sir H. J. S. |
| Acland, Francis Dyke | Brace, William | Craig, Herbert J. (Tynemouth) |
| Agnew, George William | Bramsdon, T. A. | Crean, Eugene |
| Ainsworth, John Stirling | Brocklehurst, W. B. | Crooks, William |
| Allen, A. Acland (Christchurch) | Brodie, H. C. | Crosfield, A. H. |
| Armitage, R. | Brooke, Stopford | Crossley, William J. |
| Asquith, Rt. Hon. Herbert Henry | Brunner, RI. Hon. Sir J. T. (Cheshire) | Dewar, Sir J. A. (Inverness-sh.) |
| Balfour, Robert (Lanark) | Burns, Rt. Hon. John | Duffy, William J. |
| Baring, Godfrey (Isle of Wight) | Buxton, Rt. Hon. Sydney Charles | Duncan, C. (Barrow-in-Furness) |
| Barlow, Percy (Bedford) | Byles, William Pollard | Duncan, J. Hastings (York, Otley) |
| Barnard, E. B. | Carr-Gomm, H. W. | Dunn, A. Edward (Camborne) |
| Barnes, G. N. | Causton, Rt. Hon. Richard Knight | Dunne, Major E. Martin (Walsall) |
| Barry, E. (Cork, S.) | Channlng, Sir Frederick Allston | Essex, R. W. |
| Barry, Redmond J. (Tyrone, N.) | Cherry, Rt. Hon. R. R. | Esslemont, George Birnie |
| Beauchamp, E | Clough, William | Evans, Sir Samuel T. |
| Beaumont, Hon. Hubert | Clynes, J. R. | Everett, R. Lacey |
| Bellairs, Carlyon | Cobbold, Felix Thornley | Falconer, James |
| Bennett, E. N. | Collins, Stephen (Lambeth) | Fenwick, Charles |
| Birrell, Rt. Hon. Augustine | Collins, Sir Wm. J. (S. Pancras, W.) | Ferguson, R. C. Munro |
| Black, Arthur W. | Cooper, G. J. | Fiennes, Hon. Eustace |
| Boland, John | Corbett, C. H. (Sussex, E. Grinstead) | Fuller, John Michael F. |
| Fullerton, Hugh | M'Laren, H. D. (Stafford, W.) | Roth, Walter F. (Pembroke) |
| Glendinning, R. G. | M'Micking, Major G. | Roe, Sir Thomas |
| Glover, Thomas | Maddison, Frederick | Rose, Charles Day |
| Goddard, Sir Daniel Ford | Mallet, Charles E. | Rowlands, J. |
| Gooch, George Peabody (Bath) | Manfield, Harry (Northants) | Russell, Rt. Hon. T. W. |
| Greenwood, G. (Peterborough) | Markham, Arthur Basil | Samuel, S. M. (Whitechapel) |
| Greenwood, Hamar (York) | Mason, A. E. W. (Coventry) | Scott, A. H. (Ashton-under-Lyne) |
| Grey, Rt. Hon. Sir Edward | Massie, J. | Seaverns, J. H. |
| Griffith, Ellis J. | Masterman, C. F. G. | Seddon, J. |
| Gulland, John W. | Meagher, Michael | Seely, Colonel |
| Haldane, Rt. Hon. Richard B. | Micklem, Nathaniel | Silcock, Thomas Ball |
| Harcourt, Rt. Hon. L. (Rossendale) | Mond, A. | Simon, John Alisebrook |
| Harcourt. Robert V. (Montrose) | Morgan, G. Hay (Cornwall) | Smyth, Thomas F. (Leitrim, S.) |
| Harvey, W. E. (Derbyshire, N.E.) | Morrell, Philip | Soames, Arthur Wellesley |
| Haworth, Arthur A. | Muldoon, John | Soares, Ernest J. |
| Hayden, John Patrick | Murray, Capt. Hn. A. C. (Klncard.) | Stewart-Smith, D. (Kendal) |
| Hedges, A. Paget | Nicholls, George | Strachey, Sir Edwara |
| Helme, Norval Watson | Norton, Capt. Cecil William | Strauss, E. A. (Abingdon) |
| Hemmerde, Edward George | Nussey, Thomas Willans | Summerbell, T. |
| Henderson, Arthur (Durham) | Nuttall, Harry | Sutherland, J. E. |
| Henry, Charles S. | O'Brien, Patrick (Kilkenny) | Taylor, John W. (Durham) |
| Herbert, Col. Sir Ivor (Mon. S.) | O'Connor, John (Kildare, N.) | Tennant, Sir Edward (Salisbury) |
| Higham, John Sharp | O'Doherty, Philip | Tennant, H. J (Berwickshire) |
| Hobart, Sir Robert | O'Donnell, T. (Kerry, W.) | Thomas, Abel (Carmarthen, E.) |
| Hobhouse, Charles E. H. | O'Grady, J. | Thomas, Sir A. (Glamorgan, E.) |
| Hogan, Michael | Parker, James (Halifax) | Thomasson, Franklin |
| Holden, E. Hopkinson | Pearce, Robert (Staffs, Leek) | Thompson, J. W. H. (Somerset, E.) |
| Holland, Sir William Henry | Pearson, W. H. M. (Suffolk, Eye) | Tomkinson, James |
| Halt, Richard Darning | Philipps, Col. Ivor (Southampton) | Ure, Rt. Hon. Alexander |
| Horniman, Emslie John | Philipps, Owen C. (Pembroke) | Verney, F. W. |
| Howard, Hon. Geoffrey | Pickersgill, Edward Hare | Vivian, Henry |
| Hutton, Alfred Eddison | Pirie, Duncan V. | Walsh, Stephen |
| Hyde, Clarendon G. | Pointer, J. | Ward, John (Stoke upon Trent) |
| Illingworth, Percy H. | Pollard, Dr. G. H. | Ward, W. Dudley (Southampton) |
| Isaacs, Rufus Daniel | Price, C. E. (Edinburgh, Central) | Warner, Thomas Courtenay T. |
| Jardine, Sir J. | Price, Sir Robert J. (Norfolk, E.) | Wason, Rt. Hon. E. (Clackmannan) |
| Jenkins, J. | Priestley, Arthur (Grantham) | Wason, John Cathcart (Orkney) |
| Johnson, W. (Nuneaton) | Priestley, W. E. B. (Bradford, E.) | Watt Henry, A. |
| Jones, Leif (Appleby) | Radford, G. H. | White, Sir George (Norfolk) |
| Jowett, F. W. | Rainy, A. Rolland | White, J. Dundas (Dumbartonshire) |
| Kennedy, Vincent Paul | Raphael, Herbert H. | White, Sir Luke (York, E. R.) |
| Kilbride, Denis | Rea, Walter Russell (Scarboro') | Whitley, Join Henry (Halifax) |
| King, Alfred John (Knutstord) | Rees, J. D. | Wiles, Thomas |
| Lardner, James Carrige Rushe | Rendall, Athelstan | Wilkie, Alexander |
| Lehmann, R. C. | Richards, T. F. (Wolverhampton, W.) | Williams, J. (Glamorgan) |
| Lever, A. Levy (Essex, Harwich) | Richardson, A. | Williamson, A. |
| Levy, Sir Maurice | Ridsdale, E. A. | Wilson, Hon. G. G. (Hull, W.) |
| Lewis, John Herbert | Roberts, Charles H. (Lincoln) | Wilson, J. W. (Worcestershire, N.) |
| Luttrell, Hugh Fownes | Roberts, G. H. (Norwich) | Wilson, W. T. (Westhoughton) |
| Macdonald, J. R. (Leicester) | Roberts, Sir J. H. (Denbighs.) | Wood, T. M'Kinnon |
| Macdonald, J. M. (Falkirk B'ghs) | Robertson, Sir G. Scott (Bradford) | |
| Mackarness, Frederick C. | Robertson, J. M. (Tyneside) | TELLERS FOR THE AYES.—Mr. |
| MacNeill, John Gordon Swift | Robinson, S. | Joseph Pease and the Master of |
| MacVeagh, Jeremiah (Down, S.) | Robson, Sir William Snowdon | Elibank. |
| NOES. | ||
| Anson, Sir William Reynell | Craig, Captain James (Down, E.) | Hunt, Rowland |
| Arkwright, John Stanhope | Cralk, Sir Henry | Joynson-Hicks, William |
| Ashley, W. W. | Dalrymple, Viscount | Kennaway, Rt. Hon. Sir John H. |
| Balcarres, Lord | Doughty, Sir George | Kerry, Earl of |
| Baldwin, Stanley | Douglas, Rt. Hon. A. Akers | King, Sir Henry Seymour (Hull) |
| Balfour, Rt. Hon. A. J. (City Lond.) | Du Cros, Arthur | Lambton. Hon Frederick Wm. |
| Banbury, Sir Frederick George | Faber, George Denison (York) | Lane-Fox, G. R. |
| Banner, John S. Harmood- | Faber, Capt. W. V. (Hants, W.) | Law, Andrew Bonar (Dulwich) |
| Berrie, H. T. (Londonderry, N.) | Fell, Arthur | Lockwood, Rt. Hon. Lt.-Col. A. R. |
| Beach, Hon. Michael Hugh Hicks | Fetherstonhaugh, Godfrey | Long, Col. Charles W. (Evesham) |
| Beckett, Hon. Gervasa | Forster. Henry William | Lonsdale, John Brownlee |
| Bignold, Sir Arthur | Foster, P. S. | Lowe, Sir Francis William |
| Bull, Sir William James | Gardner, Ernest | MacCaw, Wm. J. MacGeagh |
| Burdett-Coutts, W. | Gibbs, G. A. (Bristol, West) | Magnus, Sir Philip |
| Campbell, Rt. Hon. J. H. M. | Gordon, J. | Marks, H. H. (Kent) |
| Carlile, E. Hildred | Goulding, Edward Alfred | Mason, James F. (Windsor) |
| Corson, Rt. Hon. Sir Edward H. | Guinness, Hon. R. (Haggerston) | Mildmay, Francis Bingham |
| Castlereagh, Viscount | Guinness, W. E. (Bury St. Edmunds) | Moore, William |
| Cave, George | Haddock, George B. | Morpeth, Viscount |
| Cecil, Evelyn (Aston Manor) | Hamilton, Marquess of | Morrison-Bell, Captain |
| Cecil, Lord R. (Marylebone, E.) | Harris, Frederick Leverton | Nicholson, Wm. G. (Petersfield) |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Harrison-Broadley, H B. | Oddy, John James |
| Chaplin, Rt. Hon. Henry | Hay, Hon. Claude George | O'Donnell, C. J. (Walworth) |
| Clive, Percy Archer | Hermon-Hodge, Sir Robert | Pease, Herbert Pike (Darlington) |
| Coates, Major E. F. (Lewisham) | Hill, Sir Clement | Peel, Hon. W. Robert Wellesley |
| Craig, Charles Curtis (Antrim, S.) | Hope, James Fitzalan (Sheffield) | Pretyman, E. G. |
| Randles, Sir John Scurrah | Sheffield, Sir Berkeley George D. | Warde, Col. C. E. (Kent, Mid) |
| Remnant, James Farquharson | Smeaton, Donald Mackenzie | Williams, Col. R. (Dorset, W.) |
| Renton, Leslie | Smith, Abel H. (Hertford, East) | Willoughby de Eresby, Lord |
| Renwick, George | Stanier, Seville | Wortley, Rt. Hon. C. B. Stuart- |
| Roberts, S. (Sheffield, Ecclesall) | Starkey, John R. | Younger, George |
| Ronaldshay, Earl of | Staveley-HIII, Henry (Staffordshire) | |
| Rutherford, John (Lancashire) | Talbot, Lord E. (Chichester) | |
| Rutherford, W. W. (Liverpool) | Thornton, Percy M. | TELLERS FOR THE NOES—Sir A. |
| Salter, Arthur Clevell | Walker, Col. W. H. (Lancashire) | Acland-Hood and Viscount Valentia. |
| Scott, Sir S. (Marylebone, W.) | Walrond, Hon. Lionel |