§ The scale set out in the Second Schedule to this Act shall, in the case of persons dying on or after the thirtieth day of April, nineteen hundred and nine, be substituted for the scale set out in the First Schedule to the Finance Act, 1907, as the scale of rates of Estate Duty, and two per cent. shall be substituted for one per cent. in Section seventeen of the Finance Act, 1894 (in this Part of this Act referred to as the principal Act) as the rate of Settlement Estate Duty:
§ Provided that where an interest in expectancy within the meaning of Part I. of the principal Act in any property has, before the thirtieth day of April, nineteen hundred and nine, been bon fide sold or mortgaged for full consideration in money or money's worth, then no other duty on that property shall be payable by the purchaser or mortgagee when the interest falls into possession than would have been payable if this Section had not passed, and in the case of a mortgage any higher duty payable by the mortgagor shall rank as a 1740 charge subsequent to that of the mortgagee.
§ The Second Schedule, referred to in the Clause, contains the following scale of rates of Estate Duty:—
| Where the principal value of the estate | Estate duty shall be payable at the rate per cent. of | ||
| £ | £ | ||
| Exceeds | 100 and does not exceed | 500 | 1 |
| Exceeds | 500 and does not exceed | 1,000 | 2 |
| Exceeds | 1,000 and does not exceed | 5,000 | 3 |
| Exceeds | 5,000 and does not exceed | 10,000 | 4 |
| Exceeds | 10,000 and does not exceed | 20,000 | 5 |
| Exceeds | 20,000 and does not exceed | 40,000 | 6 |
| Exceeds | 40,000 and does not exceed | 70,000 | 7 |
| Exceeds | 70,000 and does not exceed | 100,000 | 8 |
| Exceeds | 100,000 and does not exceed | 150,000 | 9 |
| Exceeds | 150,000 and does not exceed | 200,000 | 10 |
| Exceeds | 200,000 and does not exceed | 400,000 | 11 |
| Exceeds | 400,000 and does not exceed | 600,000 | 12 |
| Exceeds | 600,000 and does not exceed | 800,000 | 13 |
| Exceeds | 800,000 and does not exceed | 1,000,000 | 14 |
| Exceeds | 1,000,000 | 15 |
§ Mr. EVELYN CECILmoved to leave out the words, "The scale set out in the Second Schedule to this Act shall in the case of persons dying on or after the thirtieth day of April, nineteen hundred and nine, be substituted for the scale set out in the First Schedule to the Finance Act, 1907, as the scale of rates of Estate Duty and."
We are now come to a fresh portion of this Bill which, in accordance with arrangements quite well known to the public, the Chancellor of the Exchequer will find himself face to face with a fresh phalanx of the Opposition, who have endeavoured to make a special study of this, portion of the Bill. I cannot pretend to. have any special claim to represent either millionaires or great landowners, but what I want to direct special attention to is not only the case of this comparatively small class but the case of the large class of small estates which will suffer severely from this increased duty, which I consider most unjustifiable, and I move to omit the Schedule in so much as it increases this duty to a wholly unjustifiable extent. I should like in the first place to point out the general objections there are to this high rate of duty quite apart from the particular objections to which I shall also refer. As regards the general objections to these Death Duties, they must 1741 be all considered in conjunction with the objections to the Income Tax, the Succession Duties and the Legacy Duties, as they all, to a great extent, hang together, and it is because they are all increased that the injustice becomes so flagrant. Later on, when we shall be able more specifically to discuss the Income Tax and the Succession Duty, it will be seen that they not only hang together, but that they must be considered as all weighing down and affecting seriously these various estates.
The first of my general objections is that these Death Duties are nearly always paid out of capital. There is a general and gradual diminution of capital as you increase the Death Duties, because it is very seldom, as you will find, that people make provision in their lifetime for Death Duties pure and simple. They pay their Income Tax out of income, but they leave the Death Duties to the chance of whatever their estates may be at the time of their death. So that it is undoubtedly true there is a gradual diminution of capital where there are very high Death Duties, and, as an inevitable corollary, where there is a general diminution of capital there must also in the long run be a general diminution of wages and employment. I cannot believe sometimes that the country has fully realised that you cannot strike as vigorously as the Chancellor of the Exchequer is now striking at capital through Death Duties without in the long run striking at wages and employment.
Capital and labour necessarily walk band in. hand; if you injure one you must injure the other. You cannot help it. If you strike at capital you must also to a very grave extent strike at labour, and if you strike at labour you strike at the capitalist. Let us look at what would occur in the first place as regards land, and in the next as regards business, suppose these Death Duties are imposed. I shall not go very largely into the question of land, because that has been very fully discussed in this House so far, and there will be other opportunities of discussing it by those who are experts in the matter, and I shall not encroach upon that ground, but before I quite leave the question of the effect of these Death Duties upon land I should like to call attention to the latest proposals—I believe they are the latest; one cannot be sure, they change so from day to day, and it is so very difficult to know where we are—which are in the form of an Amendment 1742 of the Chancellor's, that the Death Duties might be paid in land. [HON. MEMBEBS: "Hear, hear."] That seems to be a proposal that meets with the approval of certain hon. Members below the Gangway opposite.
§ Mr. CHIOZZA MONEYYou approved it yourselves—
§ Mr. EVELYN CECILI never approved of it.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)There are two Amendments down by the Opposition.
§ Mr. EVELYN CECILI never put down such an Amendment, and it seems to me to be a very unreasonable proposal. The Chancellor of the Exchequer put an enormous tax upon the landowner which we contend he cannot bear, and then he says, "If you cannot pay, hand over a chunk of your land to the Government. [HON. MEMBEBS: "Hear, hear."] Let me ask hon. Members on the Labour Benches who cheer that how they would like a tax of, say, £5 a year put on suits of clothes—
§ Mr. JOWETTYou could send the trousers to the Government.
§ Mr. EVELYN CECILAnd if the tax could not be paid, how they would like to give the Chancellor of the Exchequer power to say, "Hand over the trousers to me." I think it is nothing but robbery to apportion other people's property in that kind of way. You overtax a man to such an extent that he cannot pay, and then you say, "If you cannot pay hand over some of your property." That is the proposal of the Chancellor of the Exchequer, and it certainly does not commend itself to my approval. Look at the effect of the Death Duties upon a large business. They come—and must necessarily come—at an extremely inconvenient time from the point of view of the business. The head of a business—the supervising partner, perhaps, who has had all the strings of the business in his own control—dies. That is not the moment when you should charge 15 per cent. or any other per cent. upon the capital of the business if it is to prosper. It is sure to affect the business to some extent. The business not only loses the brains that guided it, but a considerable portion of the corpus of the capital. I submit you cannot tax any business, large or small, at such an inconvenient 1743 moment as the death of the largest partner without to some extent affecting the prosperity of the business, and therefore the prosperity of the whole neighbourhood and district. It creates disturbance of trade, and it will create reduction of employment. This is one of the most important results of the intensely heavy Death Duties either upon land or business.
But there is a second general objection to Death Duties, and that is their unevenness and the arbitrariness with which they will bear in different cases. It is a wellknown fact that some families have in them much more hereditary disease than others, it may be consumption, or any other disease, and it is likely that in these families there will be more successions than in healthy families. Upon these families Death Duties bear excessively hard, and unduly hard, and I urge it is not fair from that point of view to impose taxes which inevitably, from the course of human circumstances, are likely to bear much more heavily upon some families than upon others. This is an arbitrary tax, and it falls with excessive arbitrariness upon families whose health is weaker than on others.
A third general objection I have to Death Duties is that they discourage thrift. The spendthrift really gains an advantage over an industrious man. If I or anyone else choose to spend our money during our lifetime wastefully, or in any other right or wrong way we like, we stand in a far better position from the point of view of Death Duties from our own standpoint than if we had saved our money and been thrifty. I am not exaggerating in the least when I say that I have heard a good many people urge recently that they intend to spend somewhat more freely, rightly or wrongly, upon their own travelling or pleasure, simply because they say they prefer to spend it in that way and they think it is more useful to their purpose than if they keep the money and let the Chancellor of the Exchequer get it at their death. It may be an unreasonable feeling but it is a very human one, and I can assure the Government that it is a very general feeling, and that there are many who are saying just now, "What is the use of being thrifty, working hard and saving up money if the Chancellor of the Exchequer is going to pounce upon it in a wholesale manner and spend do upon certain objects of which he approves, but of which we do not approve?"
1744 In the fourth place, extra heavy Death Duties encourage their avoidance. It is not the Chancellor of the Exchequer who is the judge as to whether these Duties are just or unjust in any particular case, but the man himself who has to pay; he is the person who will decide whether, according to his conscience, he ought to pay or whether he conceives these duties to be so grossly excessive and unfair that he will avoid them in every possible way. The Chancellor of the Exchequer knows perfectly well from the provisions of Clause 43 that these duties are likely to be avoided by gifts inter vivos. It is quite certain that persons will not stand having to pay these enormous sums, and they will try to lessen their estates by giving gifts inter vivos to their children during their lifetime. That is the most natural thing in the world, which I think ought to be encouraged rather than not. That is by no means the only way in which people are likely to avoid undue impositions. They are likely to avoid them in a way which has been shown by Sir Henry Primrose, and which applies to many large businesses in the country. I do not happen to possess a large business, but if I did I have not the least hesitation in saying I should seriously consider how far I should split it up, how far I could transfer a large portion of it abroad, and how far it would be practicable in that case to retain my profits in any other country. It is perfectly possible, especially in some of the large businesses in the Far East, or in any other part of the globe, to constitute those businesses as separate companies, no longer returning profits to this country, and those great businesses may keep their profits over there, and have merely a branch business in this country. That has been pointed out by Sir Henry Primrose, and that is what, no doubt, will be done. I do not believe any amount of legislation can prevent this being done if the duties imposed are felt to be so grossly unjust.
There is another general objection to Death Duties which I should like to comment upon. I have always been brought up to believe that taxation and representation ought to go together. It appears to me that a new Liberal or Radical principle is introduced by the present Government, and it is that you ought to put the heaviest taxation on those who are least represented, and therefore the least able to defend themselves. Is that a fair or a just proposal? I venture to say that every one who has been brought up in the poli- 1745 tical school of the last generation, be they Conservatives or Liberals, would say that taxation and representation ought to go together, and that those who have large properties are entitled to special protection and special representation. Now the position is quite the reverse. There is no doubt in the mind of anyone who studies the details of this Budget that the Chancellor of the Exchequer is bent upon putting far the heaviest burden upon those who can least defend themselves. He is putting the burden upon large corporations who have no votes whatever, and upon large owners of property who have very few votes collectively.
I should like to call the attention of the House to some of the more particular objections to the large increase of duties which the Government are proposing. Assuming that graduation in itself is just—and that is an assumption upon which I do not propose at this moment to express an opinion one way or the other—it is certainly very liable to abuse. Graduation was introduced for these purposes more particularly in 1894, but it was steepened by the present Government In 1907, and again within only two years there is to be another excessive steepening proposed. That is why I remarked that graduation is very liable to abuse, and when these frequent steepenings occur it is no doubt being greatly abused. Look at the effect on moderate sized properties of these increases of duty. A man may have an estate just over £40,000, which sum invested at 3½ per cent. would bring in an income of £1,400 a year. Under the proposed scale his executors will have to pay in Estate Duty alone—and this is not considering Succession Duty, Legacy Duty, or Settlement Duty—£2,800, that is to say, exactly two whole years' income on an estate of £40,000. A man with an income of that amount has to keep up some society appearances, and his friends expect him to do so. I venture to say in such a case when a man is asked to sacrifice two years' income in Estate Duty alone it is grossly unjust. What, after ail, was Sir William Harcourt's intention when this graduation was introduced? We have just heard from Lord Rosebery a speech of great eloquence and great force. He was especially entitled to speak, as he was in the Cabinet with Sir William Harcourt. His evidence, therefore, is very direct. He had just heard from him that Sir William Harcourt's intention, in putting on these 1746 Death Duties, was to make up for and redress the inequality between earned and unearned income. That inequality was further dealt with by the Prime Minister in 1907. Lord Rosebery said that Sir William Harcourt, and therefore that Government of which the present Prime Minister was a Member, intended 8 per cent. as a maximum charge on even the largest estates. We have, however, not only Lord Rosebery's evidence. We have the evidence of another very eminent person, whose remarks and opinions are even stronger than Lord Rosebery's from the fact that he was the Chairman of the Inland Revenue at the time Sir William Harcourt was consulting him about the Budget, I mean Lord Milner. I do not know whether the Committee is aware that Lord Milner has given very fully his opinion of what the intention of Sir William Harcourt was when he fixed the maximum of these Death Duties at 8 per cent. Lord Milner at Bristol this spring said:—
It was not the intention of Sir William Harcourt that the great structure which he raised should be lightly altered, or that the rates should be rashly increased. I remember that at one time he was inclined to fix the maximum rate at 10 per cent., but after weeks, and I think I may say months, of consideration and of consultation with his expert advisers, Sir William Harcourt came to the conclusion that 8 per cent. was the highest rate which was either fair or financially wise to impose, and that only on the largest fortunes, amounting to upwards of a million.The House is well aware that the Chancellor of the Exchequer now proposes 15 per cent. The maximum has therefore gone up nearly double in the 15 years from 1894 to the present time. I have quoted Lord Rosebery and Lord Milner. Let us hear what Sir William Harcourt himself has to say about it. In this House, on 10th May, 1894, Sir William Harcourt used these words:—We affirm that, taking a moderate system of graduation, immense wealth should pay at a higher rate than smaller fortunes."Taking," let me observe, "a moderate system of graduation." We know from Lord Rosebery and Lord Milner that Sir William Harcourt's idea of a moderate system of graduation, after very careful thought, was 8 per cent. Where is the moderation of the present Chancellor of the Exchequer? I suppose we are to find it at Limehouse! If that is his idea of moderation or the moderation that ought to apply to Death Duties I can only say that his statesmanship and the wisdom of his finance are more than doubtful. Is the moderation that of the Lord Advocate? He has told us that he desires almost unlimited expansion, and, therefore, I 1747 imagine, there is no chance of his, at any rate, desiring to keep these duties within any moderate limits at all. We have seen the moderation of the President of the Board of Trade at Leicester. His words, I think, are beneath notice. He seems to me to act with an entire lack of principle and to be ready to adopt any programme which appears to be a short cut to the Premiership. We have also some idea of what a moderate system of graduation is from the speeches and writings of the hon. Member for Blackburn (Mr. P. Snowden). He tells us that he desires to see 7s. in the pound as a very reasonable tax. And if I consult the remarks of the junior Member for Merthyr Tydvil (Mr. Keir Hardie), he told us at Coalville on 10th July last that if the Labour party were twice as strong the tax on surplus wealth would be twice as large. I suppose that means instead of 15 per cent. we should have 30 per cent. Can these hon. Gentlemen give any guarantee that it will stop there? I do not believe they can bind their successors any more than Sir William Harcourt could bind his. I do mot know, therefore, quite where this steepening of the Death Duties is likely to stop, but so long as there is this intense feeling of nervousness and anxiety as to how much more tax is to be put on these properties there will be a great sense of insecurity and a great hesitation and diffidence in trying to increase the prosperity of the country or in bringing further wealth into it.Foreign countries are sometimes consulted by the Treasury Bench when they think it suits their purpose. The Government consult them for certain purposes, but they are not always inclined to consult them in such essential matters as Tariff Reform. Germany has no Death Duties whatever on lineal descendants. The Income Tax in different States, notably in Prussia, goes up to a maximum of 5 per cent., and in addition to that there are certain municipal charges, which I may also put at a maximum of 5 per cent., so that at the very highest, as the best of my information goes, they amount to 10 per cent. Here you are proposing 15 per cent. [An HON. MEMBER: "Not Income Tax."] But there are no Death Duties in Germany, and the Income Tax and the municipal charges there are only what you can fairly compare with our Death Duties, Income Tax and other charges. In France there is no Income Tax at present. There has been a good deal of talk about it in 1748 France, but I do not think there is any Income Tax such as ours. There are Death Duties. On the lowest estates they are 1 per cent. on lineal descendants, and. they rise gradually to 5 per cent. on the highest estates.
§ Mr. CHIOZZA MONEYTwenty per cent.
§ Mr. EVELYN CECILThe hon. Member will be able to give his version later on. I have stated the result of my inquiries, and it is also the opinion of Sir Felix Schuster—a point which will perhaps weigh more with the hon. Member than any statistics I may put forward. As regards the estate duty in France, I want to make this observation: that it is only a charge on the amount inherited, and not on the total estate, and, therefore, it is a much fairer measure of the ability to bear it. If a person receives £500 out of an estate which is valued at £500 only he only pays 1 per cent.; if he receives £500 out of an estate of £50,000 in France he only pays 1 per cent., but in England it is entirely different; you charge him 1 per cent. on an estate of £500, but should he receive £500 out of a £50,000 estate you charge him 7 per cent. under the proposals of the Chancellor of the Exchequer. Of course if the £500 is intended to be an addition to a poor man's fortune and to help him, 7 per cent. is a severe tax, whereas 1 per cent. would only be a fair measure of his ability to bear the burden. Look at this question in what way you will, whether from the general objection to the higher Death Duties, which are so financially unwise, or whether you look at the particular objection that they specially bear so unfairly on estates of a certain size, and are not at all what was orginally intended by Sir William Harcourt, who laid the foundation; or whether you look at the foreign comparison, which cannot be adduced as a support, it seems to be that the only conclusion that can be come to is that they are grossly unfair; that they bear exceedingly hardly on a large number of estates, that they ought not to be passed, and that no sane man will submit to them tamely or without a vigorous protest.
§ The SECRETARY of STATE for WAR (Mr. Haldane)The hon. Member has not spared his own Friends, for early in his speech he began with a reproach addressed, not only to the Government, but to his own side—a protest against the proposition to allow the Government to 1749 accept in payment or part payment of Death Duties a share of the property. I think it was a little hard to reproach the Government with that, because after all the Amendment put down toy my right hon. Friend is designed to take the place of a much more stringent but strangled proposition put forward in the name of his own political Friends. The hon. Member for Chelmsford has fought here; he has given hard knocks, and he has received hard knocks, but his worst enemy would not accuse him of being a Socialist. But that is what the hon. Member who has just spoken suggests; he describes his proposition as Socialistic. May I point out that that proposition goes further than the one standing in the name of my right hon. Friend, because it would compel the Government to take part of an estate in payment of the Death Duty. So much for the minor point raised by the hon. Member. Now I come to his very much wider point. I listened closely to his arguments, and I endeavoured to distinguish what he said against the increase of the Death Duties proposed by the Government on this occasion from what he said against the Death Duties generally. I find myself wholly unable to dissever the two. But if what he said as to the Death Duties, as to the way they interfered with thrift and plundered estates be true, I should like to task him what he has to say about the action of Mr. Goschen, who increased (the Succession Duties; and what about Lord Rosebery, the Prime Minister under whose Government was carried the very great and Successful Bill which has been taken advantage of and considerably added to by right hon. Gentlemen opposite?
§ Mr. AUSTEN CHAMBERLAINWhat does the right hon. Gentleman mean by "considerably added" to?
§ Mr. HALDANEClauses have been made more stringent, and the network has been filled in, with the result that there has been a considerable addition to the tax. Bearing these facts in mind, I think the hon. Member was as one crying in the wilderness—not at something to come, but at something which is past.
§ Mr. EVELYN CECILThe question is, what is moderation?
§ Mr. HALDANEI will come to that in a moment. I have been addressing myself to the question of the Death Duties. But what about moderation? What is it that these changes effect in the law? The 1750 average duty is 5 per cent. The hon. Member took extreme oases—he took the case of a millionaire whose estate pays 15 per cent., as if that were the standard of the duty exacted. But look at the law of France. There the Inheritance Duty on an estate of over a million is 20½ per cent.
§ Mr. EVELYN CECILFor a stranger in blood.
§ Mr. HALDANEThe hon. Member is taking the extreme maximum cases, and I wish to test them with similar extreme cases.
§ Mr. AUSTEN CHAMBERLAINBut the right hon. Gentleman is taking in one case lineal descent and in the other a stranger in blood. Let him take exactly similar cases.
§ Mr. HALDANEAn estate in this country, if over a million, will, if passing to a stranger in blood, pay 25 per cent.
§ Mr. EVELYN CECILPlus 2 per cent.—27 per cent.
§ 4.0 P.M.
§ Mr. HALDANENo; many will be exempt from the 2 per cent. The other day the German Government did something; still more objectionable to hon. Members, for it proposed that when a man dies intestate to abolish any right of succession to anybody beyond the children; the collateral would not take at all. The Government are not adopting any scale which contains any far-reaching proposition. We are taking a moderate tax, and the true comparison is to be found not in extreme cases. I take extreme oases against extreme cases, but I wish to deal with the average under the law as it is, and as it was when this Resolution was framed. I am now talking of the Estate Duty, and the average then was 5 per cent., and it will be under these proposals 6½ per cent. The average under Sir William Harcourt's Succession Act of 1894 was 4½ per cent., therefore you have increased from 1894 by under 2 per cent. and only l½ per cent. from the law as it at present stands, and I do not think that can be said to be excessive. If you take the smaller cases, the figures are smaller still. It is only the greater cases which bring up the average. The hon. Member went on to refer to foreign countries. He said: "Look at France, there is no Income Tax in that country, and you must take that into account in considering the 1751 question of the Death Duties." In France there are four direct taxes, which are, roughly, equivalent to the English Income Tax, and they produce something over £25,000,000 a year, so really it is absurd to say there is no Income Tax in France under this condition of things. Moreover, in other foreign countries, there have been proposals analogous to those contained in the Finance Bill on the value of property. A Land Tax has been introduced, which is precisely in the form of the Development Duty on land. Therefore, I do not think that the hon. Member gains much support for the argument against this proposal by taking analogies from foreign countries. But, after all, what does the argument of the hon. Member amount to? He says you are taking too much; you are asking too much in the way of taxation.
No doubt we are asking a great deal in the way of taxation, because there is a great increase of expenditure to be provided for, but is it unreasonable, in comparison with the resources of the nation? I read the other day an admirable pamphlet, written by an old Treasury official, Sir Francis Powell, and he pointed out that in working out the figures, right through our history, for some time past, the tax on national income of the nation had been 8 per cent., and he estimated the national income of the nation at the present time at something like two thousand million pounds, and he estimated that the hundred and sixty-four millions which is proposed to be spent by the Government this year will be in exactly the same proportion as was the case in the time of Mr. Gladstone 40 years ago. The Schedules of the Bill are the only mode of bringing out the money which is required, and the aim of this part of the Bill, and the whole point of the proposals which we are discussing at the moment, is to effect a beneficent distribution of the burdens. On the other hand, we rejoice that the resources of the nation are such that the nation can bear it. The figures of the Estate Duty are very steady, although I notice that there are various fallacious remarks made about it. Everybody knows that the value of securities depreciated very much after the South African War, and consequently, as those fluctuations in value have gone up and down, you sometimes find a certain amount of apparent diminution in the amount of the estates, which is really due to the depreciation in the value of the 1752 stocks and the property which makes them up, but if you average them you will find a steady growth in the yield in this country, and a steady growth in the amount obtainable from the taxation under the Death Duties.
Is it to be said that to take the duties which we are proposing to take at this moment is to put forward an excessive demand? Is it excessive to take at this stage a similar average to what has been taken in the past? I do not think it is. I quite agree, and I have always felt, that the case of land is the hardest of all cases, but I do not think there is any hardship in taking 15 per cent. from a millionaire's estate, where it is put upon property which is easily realisable. In the case of land, however, it is sometimes hard. For instance, take the case of a great house containing really valuable pictures, which it is really in the interests of the public to keep together. Up to the present they have been kept separate, but there is a proposal here which will very much lighten the budren in these cases, because all articles of artistic value, even amounting to a very large item in the estate, will be exempt from duty, until they are sold. Of course, they will have to pay duty, but they will not pay until then, but taking the duties all over the amount of growth in them, is certainly not, looked at and decided by the average, anything startling or big, as it is less than 2 per cent. from the 1894 level, and only 1½ per cent. over the later level. The hon. Member this afternoon took his argument further than that point. He says the Death Duties are objectionable, in so far as they are a real tax upon capital, but it is very late in the day to say that, and it is quite another view of Death Duties to that which has been held, not only in this country, but in every country for very many years, and that is, that as it is only by the assistance of the law that inheritance can take place it is right that the State, which makes inheritance possible and protects it, should have some toll.
If that is Socialism, it was the Socialism of Mr. Gladstone, Mr. Goschen, and the Socialism of the right hon. Gentleman opposite, who did not repeal the Death Duties. It has been the Socialism of every country that has had any history or any civilisation, and it is a little late in the day to raise the point which we now have put forward. Every one of these arguments was put with much more savage force against the Succession Duty of 1853, 1753 and I have been reading in one of the newspapers a choice collection of epithets which were hurled at the then Chancellor of the Exchequer when he introduced his Succession Duty. What is the true nature of these duties? I say emphatically that they are duties on capital, and proper duties on capital. A man by his energy and ability succeeds in earning more than his neighbours. Another man, by his good fortune, succeeds to more property than his neighbours. They have these things during their lives, and after their deaths they pass by virtue of the provisions of the law. In some countries they do not pass, but in this country we allow a very large latitude in the way of disposition of property. We have got past the days when the Church used to take toll for religious purposes, and now that you have not the Church it is quite reasonable that a principle which has always been part of English history should be carried out as it has been laid down in successive Acts of Parliament since the days of Peel, and should be continued at the present time, namely, that the State, which sanctions the inheritance and protects the man who succeeds to it, should take a moderate tax.
§ Sir EDWARD CARSONWhy not the whole?
§ Mr. HALDANEI will tell the right hon. and learned Gentleman why. Because this country is one which is governed by people who are, on the whole, moderate and reasonable. The propositions which from time to time are made for the reform of the law have always been denounced as unreasonable, and have always been accepted about five years later as being rather too moderate, and I do not know what the right hon. Gentlemen opposite may do when they come to deal with these duties; they will perhaps increase them. But we are going to make these taxes as steep as they are now and no steeper, and we intend to keep them, within certain limits, in a sound and businesslike fashion. This is a duty which is levied on what a man has in his life collected in excess of what his neighbours collected, and it is not an Income Tax, and he has no right to expect that the whole of it should pass to those who come after him, and who have done nothing, which ha has done, to collect it. He has no right to say it shall pass without diminution. All he has a right to say is that the diminution should be a reasonable one and in the nature of a moderate tax, and that is what the House of Commons aim at doing. The hon. 1754 Member said that taxation and representation ought to go together, and therefore as children take this money they ought not to be taxed to the Death Duties at all. It is ridiculous, however, to say that because children cannot vote therefore there ought to be no tax at all upon inheritance, and the argument of the hon. Member, if it was good for anything, would be good against all the proposals that have hitherto been made, as I have shown. The average increase of duty is only an increase up to 6½ per cent. from something like 4½ or 4¾ per cent., and the argument of the hon. Member, to be a valid one at all, should not have been taken in regard to an extreme case. It reaches further than it would be just for us to take. It should have been addressed to an average state of things, and if it had been addressed to that scale it would have proved that the tax does not err in being in excess of what is levied in other countries.
§ Mr. E. G. PRETYMANThe right hon. Gentleman who has just sat down, when he spoke the other day, said that he de-fended the Budget in his capacity as an hon. and gallant Member, and not in his capacity as an hon. and learned Member, and I think that his speech confirms that view, because I do not think there was any real answer in it to the arguments which have been advanced against these Death Duties at all. His speech divided itself, naturally, into two portions. First as to the defence of these Death Duties from the old familiar standpoint that similar Death Duties are imposed abroad. Are hon. and right hon. Gentlemen opposite prepared to accept that in justification of all taxes?
§ Mr. HALDANEIt was not a justification.
§ Mr. PRETYMANIf it is not a justification, where is its valu? Is it intended as a justification of this tax to say that there are such taxes abroad?
§ Mr. HALDANENo, certainly not. Otherwise my right hon. Friend would be proposing a tax on food. My argument was intended to refute the argument of the hon. Gentleman opposite, who said that they did not have any of these taxes abroad.
§ Mr. PRETYMANThen it is perfectly clear that so far it is no justification of the tax that it is levied abroad, and, in so far as the comparison goes, it is entirely fallacious, because in regard to France there is no Income Tax as there 1755 is in this country; there is a tax upon dividends, but there is no tax upon profits. I myself made an inquiry of a hotel-keeper in France as to whether he paid any Income Tax whatever on the profits of his business, and whether the proprietors of the largest businesses in the country paid any Income Tax whatever on the profits of their businesses. They pay none. There is a tax upon dividends and upon ownership, but if a man is building up a business and deriving an income from it in trade or industry there is no Income Tax upon it whatever. There is no annual tax.
§ Mr. HALDANEI, too, have inquired, and I discovered that in business after business there is a tax for the right of carrying on the business, though there is no Income Tax on profit.
§ Mr. PRETYMANThat is a licence, that is all, and it is a licence on certain trades only, and the two things are not on the same footing. It is always easy to take one particular tax and to find some single country where that tax may obtain in equal measure, although I do not think the Chancellor of the Exchequer can show us any single country where Death Duties alone, with or without Income Tax, are levied to the extent that he proposes in these duties. Here it is combined with many other heavy duties. The second part of the right hon. Gentleman's speech was directed to the question of hardship and to the general question of Death Duties, but he did not go beyond that, and he never attempted to defend the tax on what is, after all, a much more important ground. I do not propose to touch the question, of individual hardship at all. I propose only to deal with the question of national expediency and the effect of the tax upon the national prosperity. I will make the right hon. Gentleman a present of all his answer as to hardship. It is not nearly so important as what is to be the effect of the tax upon the community as a whole. First of all, what is this tax? Is it a tax on income, which can be reduced to income, or is it a tax on capital? Sir William Harcourt, who is the originator of this Estate Duty, when he introduced the Death Duties, was perfectly clear upon that point. He said:—
The measures of penal discovery and irritating inquisition which would be involved in any place which required the determination of every man's income from all sources would make the collection of the Income Tax so odious as to imperil its existence, and in all probability make it impossible to maintain the tax. A 1756 graduated Estate Duty may be, in fact, reckoned in terms of annual charge upon the estate, and in that aspect may be regarded as Income Tax, which is levied only upon realised property and does not fall upon what are called precarious incomes, so that in point of fact you arrive at the result which is aimed at in the demand for a graduated Income Tax falling upon what are called spontaneous as distinguished from industrial incomes.That is a perfectly clear statement that the author of the tax, Sir William Harcourt, imposed it and intended it to act as a graduated Income Tax. The first question is, What is its amount as a graduated Income Tax, and how does the comparison work? Fortunately for that we have official figures, and if analysed they give us a perfectly ready means of comparison which anyone can apply for himself. Sir Henry Primrose submitted to the Income Tax Commission a paper in which he dealt with this point, and showed how Death Duties should be reckoned in their effect upon income, and it works out at this, that every 1 per cent. on Death Duty is equal to a 3d. Income Tax. It is 2s. in the £ at the rate of 8 per cent. [An HON. MEMBER: "The figure is indefensible."] I do not think so. The figure may be indefensible from the point of view of showing that the successor is bound to replace this income. This 3d. is on the basis of replacement. Either it is replaced, or it is not. If it is replaced the burden is 3d. for every 1 per cent. of duty on any property and on any amount. We need not confuse ourselves with graduation, it covers the question of graduation. Every 1 per cent. of Estate Duty levied upon any property is the equivalent of a 3d. Income Tax for a whole generation upon the owner of that property if he replaces it. If he does not replace it he will have to that extent wasted the national capital; from that dilemma I can see absolutely no escape.But that is not all. The 3d. does not express the real state of the case, especially in regard to large incomes, because the basis of that calculation of Sir Henry Primrose was this: He assumed that practically the whole property had been yielding an income at the rate of 4 per cent., and it was on that 4 per cent. basis that he calculated his equivalent, but it is obvious to everyone that the capital value, particularly of a large estate, is in no sense 4 per cent., or anything the least like it, and there is a very considerable proportion of property which is producing no income at all. There is first of all residence, and there will be furniture, pictures, insurance, and other things of that kind which are producing no income at all, and over and above all that, in the case of landed property, it is a matter of general know- 1757 ledge that the income returned to the owner of the capital value will probably be 1 per cent., 1½ per cent., or 2 per cent., and I should say it is not far from the mark to say that where a man dies worth a large sum of money anything over £100,000 or £200,000, he has not been receiving an actual spendable income of very much more than 2 per cent. of his money. If that were the case the 3d. would become 6d. It falls in proportion. That is on a 4 per cent. basis. A 1 per cent. duty is equivalent to 3d., and, of course, if a man was getting 8 per cent. for his money the equivalent would only be l½. If he is only getting 2 per cent. for his money the equivalent would be 6d., and so on. Therefore the incidence of the duty is enormous. The question of whether the capital belongs to one man or to many men does not touch the question from my point of view at all. From the point of view of hardship it does, and the defence of these duties is always to point out a man who dies worth a million, and to say, "what is the hardship in taking £250,000 of that and letting his successor have three-quarters of a million?" That is not the point of view from which I hope the Chancellor of the Exchequer will defend the tax. There is a million of national capital from which the Chancellor of the Exchequer proposes to take a sum when it happens to belong to one man. It is equally national capital whether it goes to a brother, a son, a wife, or a cousin. Here is a million of national capital from which you propose to take 25 per cent. and to spend that as income. What business could stand on those principles? Are not the capital and the income of a nation to be regarded on exactly the same basis as any private capital or income which belongs to any individual, or is running any business? What can be simpler? The very facility of this is its condemnation; it is the easy road to ruin. The resource-less company director when he has no genius for finance and wants to pay a dividend draws upon capital, and that is exactly the position of the Chancellor. The burden is even greater, because, taking the rate at 20 per cent., you get an Income Tax of 5s.; you have to add to that the Income Tax which on a large estate is 1s. 8d., and on a landed estate you have to add Land Tax, which amounts practically to 1s. Then you have to add Inhabited House Duty, indirect taxes, licences, and rates as well, so that the double burden which is imposed upon property amounts in many cases practically to confiscation, and if you 1758 reduce this tax to income you are taking, for the purposes of the State, in taxation, either Imperial or local, a burden which is anything from 5s. to 10s. in the £.
The right hon. Gentleman says it is not a tax upon income. He disagrees with Sir W. Harcourt, the author of the tax, who said it was in place of a graduated Income Tax. Now the right hon. Gentleman proposes not only to largely increase this tax, which we were informed was in lieu of a graduated Income Tax, but to impose a graduated Income Tax as well. I do not wonder he says it is not a graduated Income Tax, because if he had admitted that it was one that would remove an excuse for imposing a new one which he proposes to impose this year. I have referred to the point that if these Death Duties are not replaced there is clearly a direct loss of national capital. To that there can be no answer. If capital is taken and spent as income—
§ Mr. HALDANEIt goes towards the productive expenditure of the nation.
§ Mr. PRETYMANMay I ask the right hon. Gentleman what is productive expenditure?
§ Mr. HALDANEI should have thought that there was no more productive expenditure than money well spent in improving the government of the country.
§ Mr. PRETYMANThat is a kind of insurance, but it does not produce any increase of income. What would happen in the case of a water company whose directors said that nothing would be better than an increase of the directors' salaries?
§ Mr. HALDANEThat is not an analogy. What would happen to the directors and the company if they had no police to protect their wealth?
§ Mr. PRETYMANWhen their works were ruined and shut up the police would have nothing to do. If they took their capital and spent it as income that must be the result, and, therefore, 10,000 police would not prevent ruin. The police do not keep out ruin; they keep out the enemy from without. We are quite safe from the enemy from without, but are we safe from the enemy from within? What is the use of the Government pretending to protect the industry of this country when they are taking this method of ruining it? A surer method it is impossible to take. If you take this capital, and it 1759 cannot be replaced, it is so much national capital gone. What is the amount of it? It is £26,000,000 a year. That is the amount which under these taxes alone are to be taken from the national capital and spent as income. Is that sound financial policy? The Chancellor of the Exchequer thinks it is. Do the figures bear it out? The right hon. Gentleman and his Friends are always telling us that the national wealth is increasing enormously, and that, notwithstanding these Death Duties, the national capital is replaced somehow because it is steadily increasing. The figures show something quite different. Here we have a greatly increasing population; we have a nation which requires more and more maintenance expenditure every year, and, if what the right hon. Gentleman said were true, the amount of capital falling in to pay Death Duties every year would increase. Does it increase? [An HON. MEMBER: "There is evasion."] Well, evasion will cease when there are no more fortunes to tax. The amount of capital upon which Death Duties were paid was over £288,000,000 in 1899, and last year it was £271,000,000. It had decreased.
§ Mr. HALDANEWhat was the drop in the value of securities?
§ Mr. PRETYMANThe drop in the value of securities is only a branch of the ruin; that is merely a reflection of the kind of action the Government contemplate. Does the right hon. Gentleman think that we can drive some securities into the market without depressing the value of other securities? The extraordinary fallacy on the Government Bench is that they can take a bit of capital from one man and spend it as income without affecting other capital. They seem to think that other capital is insensitive and totally unaware of what is going on. As a matter of fact, if you attack one part of the great industrial concern, you will injure the whole of it, and you are bound to injure the whole of it. Of course, securities have fallen in value, and that fall is reflected in these figures. That is only part of the indictment against the Government to which the right hon. Gentleman has been good enough to call my attention. I have the figures here, and they show that on the whole the yield of the Death Duties has been falling. The largest amount of capital on which duty was paid in the whole of the ten years to which the figures 1760 relate was £288,000,000, and it has gradually gone down to £271,000,000. The lowest point was £262,000,000, so that on the whole it is true to say that the tendency has been to slightly decrease. There is no increase at all. Is that a justification for raising the duties? We have something further to go upon. My hon. Friend the Member for Stepney (Mr. Leverton Harris) asked the Chancellor of the Exchequer what was the average amount of the estates paying duty. We wanted to see whether there was an increase or a decrease. The reply showed that there has been a steady and material decrease for the last three years. [An HON. MEMBER; "Not material."] Well, I think it is very material. Hon. Members below the Gangway look on a decrease in the average of 1 or 2 or even 11 per cent. as not material, but if they know how in business matters are cut fine, how fierce competition is, and how much ½ or ¼ per cent. affects business they would understand that these decreases are not so immaterial as they suppose. The average value of estates on which Death Duties were paid three years ago was £4,400, then the average fell to £4,100, and then to £3,900, and this is the opportunity which the Government take to enormously increase the scale of duties. Therefore the obvious deduction is against the Government that you cannot spend capital and treat it as income without reducing the resources of the country. All the figures that are available prove the same thing, and, of course, in the immense body of industries such as this country possesses, an entity of such magnitude does its work slowly, and even this Government cannot ruin the country in four years. They have gone a good way towards it. I admit they have made good use of their time. The figures show that there is a distinct tendency towards the reduction of national capital. They also yield another fact which shows the same thing. The present Prime Minister when Chancellor of the Exchequer raised the Death Duties to get more money. Did he get more? Did not be get less with a higher rate of duty? Is not that what is going to happen?
§ Mr. HALDANEWould the hon. and gallant Gentleman say what year was highest in respect of yield from estates subject to Death Duties?
§ Mr. PRETYMANI have not the figures here for every year, but I think the figures show that the yield of the duties was lower after they had been raised than before.
§ Mr. HALDANECan the hon. and gallant Gentleman say if the highest figure was in 1899?
§ Mr. PRETYMANI thought the right hon. Gentleman referred to the total yield of the duties. The highest figure was in 1899.
§ Mr. HALDANEWell, that was after Sir W. Harcourt had increased the Death Duties.
§ Mr. CHIOZZA MONEYIn 1908 the estates that passed amounted to £247,000,000. Two years afterwards they amounted to £293,000,000 and that was six years after the imposition of the Death Duties by Sir William Harcourt.
§ Mr. PRETYMANThe figure I gave, £288,000,000, is exclusive, and that given by the hon. Member is inclusive.
§ Mr. CHIOZZA MONEYI have taken the figures from the Inland Revenue Report, and the amount for the year 1899–1900 was £293,000,000
§ Mr. PRETYMANWe are going back into ancient history, so far as these figures are concerned. I am not, arguing that there should be no Death Duties. If I have been taken as doing so I am glad to have the opportunity of stating that I am not arguing the question from that point of view at all. I am not objecting to Death Duties as long as they are not more than can automatically and reasonably be replaced. What Sir William Harcourt maintained was that he imposed a scale of duties which was as high as could reasonably be borne from the national point of view. That was his point, and the facts prove him to have been correct. The facts I have been giving have been quoted with that object, namely, to show not that all Death Duties but that your Death Duties are injurious to the nation. I think from necessity there must be Death Duties, but I maintain that the moment you increase them to a point when replacement becomes impassible you are not only doing no good, but you are doing harm to the country. What does it matter from that point of view how beneficent your object may be? When you are spending national capital which you cannot replace what defence is it to say that you are spending the money on old age pensions? You may be spending the money on the most beneficent objects in the world, but there must come an end, 1762 and the end is that which is actually desired by hon. Members below the Gangway. An hon. Member below the Gangway actually produced a suggested Budget. He proposed taxes on these lines, but he proposed a very much heavier tax upon large incomes. With what end? First of all to confer great benefits on the poorer classes. That is a most laudable object. Do hon. Members below the Gangway think that we should not like to see every child in the country supported and everybody made comfortable at the expense of the State? But where is the money to come from?
The CHAIRMANI think we had better not get into a discussion of all the objects of the Budget. If we do it will mean a second reading Debate on each of the new taxes. The question of all the purposes for which the money is required cannot be discussed on the Amendment now before the Committee.
§ Mr. PRETYMANI am sorry if I went too far. I must, if I may, object to what is proposed by hon. Members below the Gangway with the view to the ultimate extinction of all private capital. I would ask, when that ultimate extinction has come, where is the money to come from for those beneficent objects? I will not pursue the subject any further in view of your ruling. But it lies at the root of the whole matter. The argument which hon. Members opposite when on the platform perpetually use is that in imposing these and other taxes they are putting the burden on shoulders that can bear it, and that they are taxing the strong. But if you destroy the strong, what becomes of the weak? The industry of the country is supported upon the shoulders of the strong. The industry of the country is financed by men who are strong, and if you make it impossible for them to pursue their trade and industry to advantage by imposing penal taxation, you break down the strong and the weak with them. The moment the burden becomes so heavy that the strong cannot bear it, you put a burden on them which makes them fall, and with redoubled force the weak men who stand behind them also fall. The result of the duties will simply be to bring down the rich man to nothing but a moderate competence, to bring down the man of moderate income to poverty, and to bring the poor man to beggary.
§ Mr. CHIOZZA MONEYI have listened, as I always do, with admiration to the 1763 speech of the hon. and gallant Gentleman (Mr. Pretyman), and I am glad to add that I disagree with him even more than usual on this occasion. In regard to the main point of his speech, the effect of the heavy Death Duties upon the national income, I think he dealt with it, if I may say so, with some confusion of mind when he pictured the toll taken by the State in respect of Death Duties as a loss of capital. How can it be that within the borders of this nation? If the State takes a toll upon the estate left by an individual is there a loss of wealth in the country? It cannot be said that there is. Take one or two cases, and see what really happens. If it is land obviously the area of the country is not diminished by the mere toll taken by the State. If it be shares in an industrial company—say, a railway company—the undertaking of the company is not diminished by a single tie or sleeper because the State has taken toll. What really happens is this: In any given year there is a certain amount of capital offering for new investment. If through the operation of Death Duties the executors of certain individuals sell, or are compelled to sell, then those properties will pass from one hand to another hand in the nation, and the capital of the nation will not be diminished. The hon. Gentleman is entitled to argue that if there were not those offerings of old capital then possibly new capital might be called into existence; that new permanent capital might be created through the operations of that new investment, which would not be wanted if the State took this toll. But when he comes to argue that the whole point resolves itself into one of degree, and degree only, I think that the hon. and gallant Gentleman would be the first to admit that. He does not argue, of course, and he could not argue, that the actual levy by the State diminishes existing capital. He is only entitled to argue that the offer of old capital by the executors of owners dying may prevent new capital being called into existence. On that point it is a matter of degree only. The hon. and gallant Gentleman quoted the figures of Sir Henry Primrose which were given to the Income Tax Committee. I should like to deal with those figures, if I may be allowed. He argued that Sir W. Harcourt's 8 per cent. duty on a millionaire's estate was equal to a 2s. Income Tax, because he said £100 would buy a 30 years' terminable annuity of £5 and, therefore, £4,000 a year would buy £80,000 in 30 years. Surely the 1764 fallacy of that is apparent on a moment's, consideration. Is it really necessary to put by £5 a year to buy £100 in 30 years? If it were just put by by itself without interest it would amount to £150 in 30 years. If the hon. and gallant Gentleman inquires he will find this, that he can buy £100 at the end of 30 years by paying about £2 a year, and not £5 as Sir Henry Primrose argued. It comes to this, that Sir W. Harcourt's Death Duties on a millionaire's estate were very much less than 2s. in the £, considered as an Income Tax, and if the Death Duties proposed by my right hon. Friend are enacted, as they will be enacted, then the millionaire's estate will only pay an Income Tax of 1s. 4¾d. in the £.
§ Mr. WALTER GUINNESSI want to know whether he allowed anything for the loss of income on the capital which has been taken by the Death Duties? On the assumption that the capital will return 4 per cent., the amount obviously is twice as much again as he says.
§ Mr. CHIOZZA MONEYIf a further allowance is made to replace the income on the amount taken out a slightly increased sum would be required, but only a slightly increased sum. The major part of the problem is dealt with by the figures I have given.
§ Mr. WALTER GUINNESSTo makeup the loss of the annual income you must not only take what is necessary to get the total sum back in 30 years, but you must take also the loss of 4 per cent. during the lifetime of the successor, owing to a portion of the capital having been taken away; so it is twice as much again as the hon. Gentleman presents to us, and his. 2 per cent. becomes a loss of 6 per cent. on the slice of capital taken as Death, Duties.
§ Mr. CHIOZZA MONEYIf the hon. Gentleman works it out he will find that the figure does not come to anything like 2s. in the £. But take a broader survey, because it is most important that we should consider this question in its relation to the capital of the country. If we take the private capital of the country as only £12,000,000,000, what is the proposal of my right hon. Friend equivalent to? This toll of £21,000,000 would only represent one sixtieth part; and if we take the capital of the country as £15,000,000,000, as I think we are entitled to do, it represents only one-seventieth part. Can the hon. and gallant 1765 Gentleman contend, even in the matter of degree, that the capital savings of the country are in any way touched to any extent? The hon. and gallant Gentleman dealt at some length with the figures relating to estates. What he forgot to do was to compare those figures with the realised income of the country. He gave us figures—of course he did not give us a complete list—taken during the last 10 years. He did not give sufficient prominence to the fact that the years 1907 and 1908 were two of the largest years of the last 12 years. At the same time I should be quite willing to agree with him that the amount of capital brought under review for estate duties has not increased as it was expected it would increase. The explanation of the hon. and gallant Gentleman is, I suppose, that capital has been frightened out of the country and lost to the country. If that were the case the income of the country would be rapidly falling. But has the income of the country fallen? Take the same period. During that period the estates brought under review have been almost stationary, and during the same period of 12 years the gross income assessed for Income Tax has risen from £734,000,000 to £1,040,000,000 It is obvious that if these figures relating to estates fully represented the amount of the estates left at death these figures relating to income could not possibly obtain. Now we know that these figures have obtained, and therefore we know that the figures relating to Estate Duties have suffered from some influence. There are two influences. The first is this—that gifts inter vivos have been increasing. The second is that there has most unquestionably been, as I ventured to point out to the House recently on another occasion, a considerable amount of under-valuation for Death Duties, because if one takes the amount of property that passes it does not bear the relation which it ought to bear to these particular figures quoted by the hon. and gallant Gentleman. In other words, through the two influences I have named, the estates brought under review do not properly represent the wealth of the country. But the figures relating to income do more properly represent the facts, and since then they have increased by about one-third in a little more than a decade, which is a sufficient proof that the wealth of the country, the invested capital of the country, has not been trenched upon I will not say in any marked degree, but has not been trenched upon to 1766 any degree worthy of our particular consideration.
On that matter of degree of course the whole question of graduation rests. Roughly, the facts in regard to graduation are these, and are easily remembered. We have got about £300,000,000 passing every year at death, and we have the estimates of what is left put at a low amount. Of that £300,000,000, £200,000,000 are left by only 200 persons in a year. That is the case for graduation; that is the case which I have urged again and again upon the attention, of this House. When I see my right hon. Friend taking the toll which he proposes to take in his Budget, I say that when the graduation is considered it is not excessive. I do not know whether the hon. and gallant Gentleman used the word "Socialism," but certainly at the end of his speech he implied that he saw before him a vista of Socialism increasing, in which the property owners of this country would be chivied from one position to another. What are the facts? Take the hon. Gentleman who moved this Amendment. Would he really be content for proprety owners of this country to revert to a condition of absolute Individualism? When it comes to a controversy between Socialism and Individualism in this matter, then, if the hon. Gentleman relies upon Individualism, what becomes of inheritance? It disappears unless the property owner or executor or heir of the property owner can hold his own, and can hold what has been left to him against all comers. The whole theory of the Death Duties is not so much that it is an Income Tax, although that is an arguable position I admit, but it is that a sum or a charge, if you will, is exacted by the State in return for services which to the hear are very great services indeed. They are a return for the safe inheritance of the property kit by the deceased. Reliance upon Individualism in that connection would leave the heir in a very dubious position. There is another point with regard to this matter of which I would like to remind the hon. and gallant Member. When the State taxes, in whatever way, it does not decrease the wealth of the country; it merely transfers expenditure from one person to another person. Whether it is likely in any particular case to be good or bad for the country depends entirely upon what was being done with the money before it was transferred, or what would have been done with it 1767 if it was not transferred, and what will be done with it by the State. If we take a particular case, the hon. and gallant Gentleman seems to see a vision of people spending their money more furiously because of the taxes of my right hon. Friend. I thought that the proposition was a very different one. I thought that the argument, was that they would have to contract their expenditure, and that they may have to refuse their subscriptions to clubs, charities, and for other purposes of that kind. I am happy to think that they will spend their money more furiously.
5.0 P.M.
Take the case of a duke—I may be pardoned for referring to dukes, who are making themselves somewhat prominent just now—who refuses to continue his subscription to a football club. If his subscription had gone to the football club what would have happened? Possibly it would have gone to paying the rent of the football ground, or it might have been devoted to purchasing a football, or it might have been devoted towards paying the salary of a professional football player. That is one class of expenditure. When the State takes it what does it do? Hon. Gentlemen opposite would like to transform that guinea into part of a destroyer or of a battleship; but it might conceivably be transformed into the salary of a teacher. But, whatever becomes of it, the actual money does not disappear. My right hon. Friend is not going to drop the money into the ocean. He is going to take the money from some people who would spend it in one way and transfer it to people who will spend it in another way. But whether or not that expenditure is good or bad for the country is a question which is not settled, as the hon. and gallant Gentleman seems to think, by merely saying that the Government are taking the tax. We have got to keep in mind and ask ourselves what the State is going to do with the money. I hold myself that it is very much better at this moment, as far as I can read the situation, for that money to be put into the form even of a super-"Dreadnought," or into the form of an old age pension, than to devote it to the salary of a professional football player. All these things have to be considered on their merit, and whether or not they are for or against the best interests of the country is the question which must be decided by what we know as to the expenditure of wealth, and as to what we 1768 know, or what we decide in this Committee, as to what is to be done with the money which the taxpayers have paid. The question I submit to the Committee respectfully is very much more complicated than has been submitted to the Committee by the hon. and gallant Gentleman. It goes very much deeper and very much further than he put it to us this afternoon. It is such considerations as those I have advanced which should be seriously considered, to see whether we can—I do not say we are now, but certainly we may—much more usefully, much more fruitfully, devote to national purposes a larger proportion of the total income, the total wealth of the country, than is disposed of at this moment by the present individual expenditure. Again, the State may not merely use this money for current expenditure in the building of schools, in training teachers, or in building up a navy, but I hope to see such money employed in the way proposed by the Bill introduced by my right hon. Friend for public development.
Is there anybody who compares this nation with other nations of Europe; is there anybody in this Committee who is satisfied with the attention given to national economic development by the State? I do not think that anybody can be satisfied. It would be out of order for me to go into the purposes of the Development Bill; but generally I may say this, that in more than one direction the State might very usefully employ money which would not fructify or be used to such good purpose by private individuals, and very possibly, therefore, the transfer of money by Death Duties, instead of meaning a waste of national capital, may mean an addition to national capital—at least, we can make it do so, if we agree to do it. I myself believe there is certainly more to be said for the argument of the hon. Gentleman who opened this Debate on the point of the uncertain application of these duties as between one family and another. I am a very strong supporter of the view that persons should contribute to the State in proportion to their resources. Hardship may, indeed does, arise where property passes. I can name one place where the title has passed, and, I presume, the estate with it, every 16 years; on the average every 16 years that estate has passed. In another case the title and property have passed every 40 years. Obviously the incidence of the Death Duties in these cases is very different, very unequal, very unfair, and, therefore, I do think there is something to be said for that argument. That is why I 1769 myself look into the future, and think that, if either party of this House desires to raise money—as hon. and right hon. Gentlemen opposite will find that they themselves will have to do—I should like myself to see more reliance placed on Income Tax and less reliance placed on Death Duties, for the particular reasons to which I have referred. But up to the point to which my right hon. Friend has taken these duties I cannot admit, I cannot allow from the national point of view, or from the point of view of individual hardship, that there is anything to be said against the proposals of my right right hon. Friend.
Reference has been made to France and the inter vivos duty. Here are the facts. For lineals the range of Succession Duty in France is from 1 to 5 per cent.; between husband and wife the range is up to 9 per cent.; between brothers and sisters up to 14 per cent.; between uncles and aunts and nephews and nieces up to 13½ per cent.; for relations it ranges up to 19½ and for strangers up to 20 per cent. My right hon. Friend has gone back five years for the purposes of the Death Duties, and if in that five years anything is given away from the estate it is as though the owner had died five years ago. The French, by the inter vivos duty, raise one million, in addition, to 10 millions from ordinary Succession Duty, making 11 millions, in a country where the amount of wealth which passes in any one year is very much less than in England. [An HON. MEMBER: "No."] It is so; I think you will find that, whereas in this country about £300,000,000 a year pass under review for Death Duties, in France only £200,000,000 a year pass, showing that the proportion of wealth in the two countries is as three to two. While it is true that the French Succession Duties are not quite so heavy as they axe in this country, they do approximate to the amount which is levied in this country. All these facts remind us, indeed, that all modern civilisations are compelled, not merely for the purpose of defence in the ordinary use of the term, but for those greater and wider purposes, which, I rejoice to think, are gaining greater ground, to increase their expenditure—whether it be France, Germany, or whatever country is named. It is not because of armaments alone that those countries—which have the only alternative that hon. Gentlemen opposite offer—pay increased Death Duties, Income Tax, and Land Tax; and, that being the case, I think that the proposals now under discussion may be viewed with 1770 confidence and without any alarm that we are in any way interfering with or injuring the welfare of the nation, which we all have at heart.
§ Mr. WALTER GUINNESSI am sure that, at all events, those who sit on these benches have been awaiting with great interest the declarations of the hon. Member who has just sat down with regard to the Death Duties. We have had a really instructive economic address from him, as we all expected, but we have had very little on the merits of this particular proposal to increase the Death Duties. The reason I have been awaiting it with so much interest is that we all remember an interesting letter which the hon. Member (Mr. Chiozza Money) wrote to the "Daily News" before this Budget was introduced. That letter was published in that journal on 14th April, and in it the hon. Member argued very strongly against any increase of the Death Duties.
§ Mr. CHIOZZA MONEYI think the hon. Gentleman will agree with me that a more accurate description of that article would be this: I argued that the yield of the Death Duties was not satisfactory, owing—for the reasons I gave in my speech—to the increase of Death Duties passing inter rivos. My right hon. Friend has now provided against that, and thus removed my objection.
§ Mr. WALTER GUINNESSThe Committee will be able to judge if I read an extract from what the hon. Gentleman wrote in his letter:—
Although the average rate of Death Duty was raised by Mr. Asquith, the Death Duties in the financial year just closed yielded less than in either 1908–7, 1901–2, or 1899–1900 This avoidance of the Death Duties is not only a perfectly legal but a perfectly moral thing, and as the State can scarcely tax gifts there is no remedy for such avoidance to be found without the compass of Death Duty taxation. What then would be the effect of a further increase of the Death Duties. There is unfortunately little doubt that to raise the duties much further would be to increase the value o£ estates passing inter vivos. The probability is that by raising the duties a little more revenue could be obtained, but the increase would be by no means proportionate to the increase of the rate of tax. Indeed, there is the possibility that so muck stimulation might be given to the gifting of property, that the yield might actually fall.I think these words show far better than anything I can say that the contention of the Opposition with regard to these in creased duties is correct. I think we must all feel disappointment at the hon. Member not having been able to put forward arguments in support of his conversion.
§ Mr. CHIOZZA MONEYI dealt with the whole of the points in my speech.
The CHAIRMANIt would toe inconvenient if hon. Members always thought it necessary to interrupt when their arguments are not, in their opinion, fully appreciated. I think the hon. Member need not explain that he has dealt with the points.
§ Mr. WALTER GUINNESSThe House listened with great interest to the hon. Member's speech, and no doubt he did deal with some of the points. In discussing this proposed increase of the Death Duties, I think we must look at the question in two ways. First of all, we must look to see whether the increase in revenue which it is hoped to derive from the tax is reliable, and whether we can realise a regular yield. The question whether the yield will increase or decrease must greatly depend on whether the tax is or is not easy of avoidance. It is well known that the Death Duties are easy to avoid if it is worth while to do so, and when you get this tax, in an extreme case, up to one-fourth of the total value of the estate, it is certainly worth any-body's while to hand over a large proportion of his estate during his lifetime to his heirs. The figures of the last two years show in the return from the Death Duties that the point of diminution has already been passed in the case of these taxes. The rate was raised in 1907, and so far from bringing in any greater yield the return has actually fallen. In the year ending 1907 the yield was £15,236,000, then after the rate was raised, in 1908, the return was £14,359,000, and in 1909 it had fallen still further to £14,173,000. Those are the yields, leaving out Legacy and Succession Duty, although of course we cannot really look at Estate Duties alone. We must also bear in mind the enormously increased rate on Legacy and Succession Duties, which, I think, will make it almost impossible to leave estates in settlement.
I think that the Government have apparently realised that this big decrease is explained by the fact that people are handing over their estates during their lifetime, and that they are trying to make up for the loss by the desperate expedient of raising the rate, regardless of the fact that they are undoubtedly by so doing drying up the sources from which this revenue is to be obtained. Therefore I think this tax is a very uneconomical one, 1772 and one which cannot be relied upon, because as soon as the period comes to an end during which gifts inter vivos will be ruled out, and will be made liable to duty, that there will be a very large drop, and if this rise is now made the drop at the end of whatever period is taken will be so much as that you will probably get less than you do from the tax at its present rate. Then one must look at the tax from the point of view of its economic effect, whether it is going to destroy capital and discourage industry and the employment which depends on that capital. I think to realise the probable effect of this tax we must notice the fact that the scale is so greatly steepened at its lowest end. That is the outstanding feature of the new graduation. The Government have apparently realised that the pyramid of wealth is very broad at its base, but that it grows very small indeed at its apex. They have come to the conclusion it is impossible to found a really productive tax on the apex, and that if they want to get a large revenue they must take it very low down. Therefore, we find that the smallest estates are very heavily taxed; in fact, the tax is almost double if you compare it with the taxation in Sir William Harcourt's Finance Act of 1894. Originally under that Bill estates up to half a million pounds paid 7 per cent. Now not estates of half a million pounds pay 7 per cent., but estates of from £40,000 to £60,000. Therefore this tax has been brought far lower in its oppressive action than Sir William Harcourt ever dreamt of.
The right hon. Gentleman the Secretary of State for War said it was rather late in the day to raise the argument that this tax was going to deplete capital. Surely when the graduation is so enormously steepened as it is there is every likelihood you may deplete capital, even though you did not when the same rate of tax was only applicable to incomes about ten times as large. When you put on this increase on small incomes I think it is almost certain you will drive people to pay this out of capital, because they will not be able to pay it out of revenue. I will not discuss the justice of this tax. I know that when the Chancellor of the Exchequer goes "Limehousing" his sense of justice rather seems to depend on the numerical importance of the class that is asking for justice. I will rather restrict myself to discussing the financial expediency of this tax, and I do 1773 think if it can be proved that this tax is going to be paid out of capital and not out of income it is certain you are depleting the resources of the nation. It would be otherwise if you were applying the whole of the product of this tax to decreasing the National Debt. It might be right to tax in order to wipe out the National Debt, which, after all, has only been raised on the security of our national capital; but the Death Duties this year bring in £18,600,000, and the decrease in the National Debt is to be only £7,000,000, so that the Death Duties are bringing in two and a half times more than the sum which you are using to decrease the debt of the nation. We have had the argument this afternoon that Death Duties were imposed on the assumption that they were a form of deferred Income Tax, and that the successor would prevent capital being depleted by insuring against the operation of the tax. That was quite possible in 1894, but since the tax has been enormously increased I believe it is quite impossible. The hon. Member for North Paddington dealt with Sir Henry Primrose's figures. He said that it was not a fair statement of the case to say that every 1 per cent. increase in the rate of Death and Succession Duties meant a 3d. increase on the annual value in the £. I have worked it out on a basis which I will give, and I find it comes to more than 3d. I make it out as rather more than 3½d. I will not take the case of large estates, although, of course, the ratio is just the same. I think it is quite possible that in the case of large estates millionaires may be able to insure, but I do not believe that the small man possibly can. I think you will find the insurance premium so onerous that rather than insure he will be content to hand on his estate diminished to his successor.
I agree with the hon. Member for North Paddington that it is very difficult to understand Sir Henry Primrose's argument as to the incidence of these Death Duties. It seems to me you must take two factors into account. I think that the difference between the hon. Member and myself is that he is only taking one factor into account, namely, the factor of insurance premium. The two factors I would take into account are—first, the loss of income and then the insurance premium. Let us take the loss of income at 4 per cent., and let us also accept the hon. Member's figure that you can insure against Death Duties at 2 per cent. I think 2 per cent. payment on the £ at 3½ per cent. 1774 amounts to rather over £100 in 30 years, so that I think 2 per cent. is probably quite a fair figure at which a man of 30 years of age can insure his life against Death Duties. Let us take an estate of £40,000 bringing in, at 4 per cent., an income of £1,600. The successor to that estate must face an additional Income Tax of 2s. 5d. in the £. He has got to face two-thirds of that amount owing to the decrease of capital to which he has to submit, and he has got to submit to one-third of that amount owing to the insurance premium of 2 per cent. In the same way the man who does not inherit from his father, but from his cousin, would have to submit to an annual tax on this basis of 5s 1d., in addition to his Income Tax of 1s. 2d. I think it is quite certain in the case of the estate of £l,600 that the man will not have a sufficient margin, and that he will prefer to cut down his insurance premium, and not to replace the capital so as to hand on his estate undimmished. For that reason, I believe, it is perfectly certain when you graduate this tax as at present, so that it presses far more onerously on the small income, that you will, at all events in the future, deplete our national capital. I think that that is disastrous from every point of view, and I think also it is very undesirable to hide from the country the true state of affairs by concealing the diminished return which will really be brought in by Death Duties by the increased rate, although you know perfectly well, at the end of the period, when gifts inter vivos are no longer liable to be taxed, that there will be a very large drop in the tax, and that the future revenue will be to that extent greatly decreased.
§ Mr. MUNRO FERGUSONThe hon. Member for North Paddington spoke on the inequality of the Death Duties as applied to families. I should like to refer to the inequality of the Death Duties as applied to industries and as between different industries. The Chancellor of the Exchequer has been much more reasonable than any Chancellor of the Exchequer that I can remember in respect of the suggestions which have been made to him from either side of the House I cannot remember any Chancellor of the Exchequer—and I remember them for the last 25 years—who has been so reasonable in taking into consideration suggestions that have been made and in putting them into his Bill. I am quite sure that no Bill has been modified by so many suggestions. For example, there was the first part 1775 which dealt with the Land Clauses, and whether we approved of them or not, at any rate a great number of suggestions were accepted. I merely call attention to the fact because I have not the slightest doubt that reasonable and practical suggestions would be received by him also with respect to the Death Duties as they were with respect to the Land Clauses. Therefore I shall put what I believe to be, or what might be, the prejudicial effect on two industries which I understand best, namely, agriculture and sylviculture. I will deal with the incidence of the duties on those industries. On the general question, whilst I quite approve of the proportion of taxation which it is proposed to levy in the lump from Income Tax, Supertax and Death Duties, I think that upon the whole the proportion taken from Death Duties is high as compared with what is taken from Income Tax and Super-tax. The Super-tax is a new tax, but I think it is a very reasonable one, and no exception can be taken to the basis upon which it is to be levied. Indeed, I think that that tax might be a great deal higher without doing harm to any industry; and certainly another penny on the Income Tax would not imperil any industry; but the Death Duties as they stand in the Bill will extirpate one industry and probably deteriorate another. The rotation for a soft timber crop is only 100 years, while that for a hard wood crop runs up to 200 years. In Germany the old oak rotation was three centuries, but it has been reduced to two. In the space of two centuries nine or ten Death Duties might be levied off a growing crop, while three or four Death Duties might be levied off a coniferous crop. With the disappearance under this Bill of the 25 years' arrangement which has hitherto prevented the Death Duties falling with all their weight upon wood, I think the private owner will disappear. I have always said that a great part of the work of afforestation will have to be done by the State; but I think it would be a great mistake to extirpate the private owner from this region. Amongst the private estates in Germany you find the best examples of sylviculture, and the individual will always beat the State at his own trade so long as he has sufficient capital. Therefore I think it would be a public misfortune to extirpate from that particular sphere of activity the individual landowner who afforests. The lock-up of capital is so long, and the risks during a rotation of one or two centuries are so 1776 great, that to levy the Death Duties as proposed so many times over would make it necessary to clear the woods which are now standing and render it utterly impossible to carry out any system of new planting in the future. That, at any rate, is my view of the case. I think, therefore, that sylviculture ought to be treated specially, and that if the industry is not to be checked it must be treated as a separate estate. To give a standard of comparison, if 25 years' purchase of feu duties is a fair basis of valuation for Death Duties, as I think it is, about 12½ years would be a fair rate for the rent of land and the timber growing upon it. Unless some special arrangement is made, I do not see how you can avoid doing great injury to sylviculture by these Death Duties.
As regards agriculture, the Death Duties have been limited by the 25 years' arrangement, which is now to cease. The tendency of the Inland Revenue has been to make that 25 years the minimum rather than the maximum. In some cases which have been brought to my notice there has been an allowance of 5 per cent. for management, and in other cases 10 per cent. for maintenance, while at other times the allowance for maintenance or management has been refused. The rate has, therefore, now got to be very high on agricultural land. Here, again, it may be said that the taxation is unjust as between the owner of agricultural land and the owner of other forms of property. But what, to my mind, is more important is that, just as the Income Tax is avowedly levied on too high a basis upon agricultural land, upon a fancy schedule—Schedule A—instead of on the Schedule on which every other industry is taxed, if the Death Duties are levied at too high a rate on agricultural land, you will denude the equipment fund so far that agriculture must deteriorate. After all, all the value in arable land is the equipment, and unless there is some clear income there is no fund from which to provide that equipment. Of course, there are several ways in which the Death Duties can be met. Under the provision to be made by the Government for allowing land to be transferred in payment of Death Duties, no doubt a considerable quantity of land might be transferred to the State. In respect of sylviculture I think that that would be a very sound plan, but I have more doubt about it in the matter of agriculture, because I do not think that the State, at present at all events, is fitted to 1777 manage a large quantity of agricultural land. Instead of agriculture being a 2 per cent. investment, it might be only a 1 per cent. investment in the hands of the State. Therefore, the opening for the transfer of land is very limited. Then there is insurance. On that point I am inclined to think that, taking a man of 50 years of age, it would require about one-third of his clear income from agricultural land to insure against Death Duties, and that again would mean a very serious diminution of his power to equip. Of course, economies can be practised by the owner. But economies very often mean a cessation of the necessary development works.
Upon these grounds I think that the Death Duties, as proposed in the Bill, will weigh very heavily upon agriculture, and that they will put an end to sylviculture unless some provision is made to deal specially with the industry. I hope that these points will be considered before the Report stage. Whilst I fully support the general propositions of the Government with respect to the amount of new taxation, that should be levied from large incomes in the lump—from Income Tax, Super-tax, and Death Duties—I think the proportion to be taken from Income Tax is not high, and that we have come to rattier a high line in the matter of Death Duties, which have to be taken in conjunction with the Succession and other Duties. Saving upon a large scale is not a quality unduly to depreciate. The man who saves really occupies much the same position in the social system as the chalk strata has in the geological system. He becomes the reservoir of the community, from which the Treasury has to draw the national revenue, and the man who saves is more apt to be depressed by the Death Duties than by the Income Tax and Super-tax. Death Duties fall with great weight upon agriculture and sylviculture, because of the great locking up of capital in the one case, and because no sufficient deductions are made for the cost of maintenance of agricultural land.
§ Mr. GEORGE CAVEWe have listened with great interest to the practical speech of the hon. Member opposite (Mr. Munro Ferguson), who has touched on one aspect of a very large question, namely, the extent to which Death Duties, especially as now proposed, are in effect a tax upon industry. The hon. Member for North Paddington (Mr. Chiozza Money) attempted to controvert the view that this is a tax upon capital. Take the case of a man who succeeds to a business. If you 1778 tax him upon his profits, he pays the tax out of income, and allows less for his ordinary expenditure. If you tax him upon his capital you take away a part of the fund which but for the tax he would invest in his business; consequently, he must withdraw from his business, and therefore from his productive funds, a large and increasing proportion. Hence, if the nation is spending for income purposes, a part of the capital of its citizens, it must be reducing the amount of capital available for productive use, and, therefore, injuring to that extent the industries of the country. One answer given to this argument is that if you tax a man's capital he will save it from his income; that he will insure or provide beforehand, so as to replace his capital. One might guess that that would be so; but Members will recollect the circular issued this year by a large number of bankers of great experience, not drawn from one side in politics, who said that their experience was that Death Duties are paid out of capital and not saved out of income. I do not see how you can go behind that. Their experience is, to my mind at any rate, conclusive. The War Secretary said that you are taking from capital something which you are using for productive expenditure. He was challenged rather unkindly to give an instance of the productive expenditure to be made out of these taxes, and he could think of nothing but the police. It is certainly new political economy to me that expenditure on police, or on "Dreadnoughts," or on any of the great purposes for which the revenue of the country is raised, is productive expenditure. [An HON. MEMBER: "Education."] Of course, it is nothing of the kind. It is a commonplace of political economy that that expenditure is non-productive expenditure. Then another argument was this—and I was surprised to hear it from the Treasury Bench. It is said: "Oh, but capital must pay for protection." I thought it was part of our common law that property was entitled to protection, and that property was to descend from testator to donee? I think it is a dangerous argument to use to represent the State as standing by like a brigand and saying: "We will let you pass, and allow you to keep your property, if you give up 15 per cent." One other point, because it has not been dealt with. It is this: Have the Government considered, and can they tell us, what will be the increased yield by reason of the increase in the Estate Duties? We have 1779 had more than one warning on that point. The House will remember what was said in 1900 in the Memorandum of the Commissioners of Inland Revenue:—
It does not seem possible to contemplate seriously any addition to the total amount now levied on property passing at death, the existing charges being as high as can safely be imposed.That was their view in 1900. The present Prime Minister took a different view in 1907. He screwed up the Death Duties by a considerable amount. He estimated to bring into the revenue by that increase something like £1,000,000. What was the result? He had his answer at once. In the very next year, with the higher duties, the yield of the tax went down. They fell by over £700,000 in one year. The fall was not confined to that year. There has been a fall yearly ever since. You could not have better proof than these figures that you do not increase the yield by putting up the tax. You do increase the hardships, but you do not get more money for the State. You risk getting less. That may seem a paradox, but it can be proved by the figures. Surely the reason is this: that when you put up the tax in this way the larger estates escape. They escape by a process of gift in life, a process which no one has yet condemned [An HON. MEMBER: "They shift their obligations"]—but which indeed so many great Liberal statesmen have praised. Mr. Gladstone himself recommended that as a fair and proper thing to do. But he did not confine himself to words. He practised what he advocated, and made over a great bulk of his estate to his son during life. If that is so, it is not a thing to be condemned, but the natural result of raising the duty. The effect is that you lose income to the State. Another effect is—I do not think hon. Members opposite will agree with me—that if you put your duty too high you will encourage the investment of money abroad. That may be a good or a bad thing. I will not go into it on this particular Amendment, but I believe it to be absolutely true, because one hears it from people who are experienced in these matters. Many wealthy men in this country are driven in these days to invest their money where they will not come under these taxes. This is the practical point which has not been answered at all. I invite whoever speaks on the other side to address himself to that one figure: "How is it that in 1907 when the tax went up the yield went down?"1780 I said the large estates escape. I do not think the smaller estates do. If you look at the figures you will find that the great bulk of estates coming under the Death Duties are not large but small estates. Of the 38,000 last year more than half certainly were between £5,000 and £25,000. That is, they were estates of the very kind which I think ought to receive special protection. To them you are applying higher taxes under this Bill. These are the estates of men who are not wealthy, but who have saved a little perhaps during a busy life, and have put aside from £5,000 to £25,000 for their wives and children, and yet they are to be pressed more heavily under this Bill, not only by an increase of the Estate Duties, but by a doubling of the Settlement Estate Duty. I think the figures given earlier by the Chancellor of the Exchequer in reply to the hon. Member for Stepney (Mr. Leverton Harris) are instructive on this point. Those figures show the result of a higher taxation. They show that the average value of the estates coming under the taxation decreases year by year. The statement showed that in 1906–7 the average value was £4,472, in 1907–8 it was £4,100, and in 1908–9 it was £3,900. I believe the more you increase the tax the more that will be true. You are depleting the capital of the country, and pressing hardly on small estates, and you are pressing matters to a point where, far from this tax being a valuable and increasing source of income to the country, it will become less and less valuable year by year, and less and less expedient to adopt.
§ Mr. E. A. RIDSDALEI do not propose to follow the example of certain speakers earlier in the Debate in comparing the methods of taxation adopted in this country and abroad. We have always understood that in finance we stand first among the countries of the world. That being so, I do not propose to look abroad for any system to adopt in lieu of that practised in this country. The right hon. Gentleman the Minister for War and the hon. Member for North Paddington, in defending this increase of the Death Duties referred to the Death Duties as being a toll taken by the State for the passing of property from the deceased owner to those whom he wished to devolve the property upon. I quite agree with that defence. I quite accept the principle of the Death Duties. But what is this? This is not the Death Duty as originally foreshadowed. This is the scheme to advance 1781 the Death Duties. I am aware that the Death Duties were advanced in 1907. It may be said: "Then why did you not speak in 1907, and not leave it till 1909?" Well, the increases which took place in 1907 only took place on the very big estates, and were very small increases. The lowest estate to which the increases applied was an estate of £150,000, and then the increase was only ½ per cent. It was not till the estate reached a quarter of a million that they increased as much as 1½ per cent. What then? I do not wish to urge it unduly, but I do not think that the Minister for War seriously meant to say that whereas the original duties were sufficient to secure the safe transfer of property under the late Conservative Government, it was necessary to increase the same in order to secure the transfer under a, Liberal Government in 1907. Now in 1909 matters have gone so far—they have gone in many things a great deal further than some of us can follow—that it is absolutely necessary, it is said, in order to secure the safe transfer of so small a sum as £5,000 and a few odd pounds to increase the duty by so much as 25 per cent. I really think—
§ Mr. HALDANENot 25 per cent. on £5,000, but on millionaire estates.
§ 6.0 P.M.
§ Mr. RIDSDALEMy right hon. Friend misunderstands me. What I said—or all I intended to say—was that the increase in the duty on the transference of £5,000 now in 1909 compared with what it was in 1907 and previous years was an increase of 25 per cent. In other words, the duty, which was, so far as my memory carries me, 3 per cent. in those years, is now 4 per cent. It is, in some cases, 33⅓ per cent., and I really believe I have understated the case. I cannot think that there is any argument to show why it should be necessary from any point of view that an estate of the sum of £5,000 should pay an increase of 33⅓ per cent. in order to pass into the bands of those to whom the deceased wills it. These are not wealthy people. The estates that are between £5,000 and £10,000 are owned by people in the middle and lower middle classes, who have toiled hard to amass this sum by personal thrift and by considerable personal sacrifice, and it is very hard to come down on them suddenly and say, "We are going to increase the tax which you are paying by adding 33⅓ per cent. to the duties." If you are going to increase a tax I believe in going by slow gradations. In 1782 one of the cases the increase is no less than 60 per cent. I know the argument is put forward: "It is all very well, but you can always insure against the Death Duties; it is the duty of every prudent man who wishes to leave some sort of provision for his wife and family to do so." So long as you left the Death Duties at their original figure no one could have perhaps objected to that. But no one can insure against the future where the Chancellor of the Exchequer suddenly comes down to the House of Commons and announces the increases that he has announced. No foresight, no human prudence, can insure against a contingency like that! In other words, you are getting these vast increases in a way which no prudent man by any possibility can in any conceivable manner insure himself adequately against. I heard it said in this Debate that the Death Duty is only a deferred Income Tax. Therefore I suppose the increase in the Death Duty is only a deferred increase in the Income Tax. But really I must entirely dissent from that proposition. I do not think the Death Duty can be fairly described as deferred Income Tax. I think it would be just as fair and reasonable to describe death as deferred sleep. The fluid pulse has ceased to circulate, it sets as it were in capital, and you can no longer draw upon that capital sum. The hoarded wealth has become firm and has become concrete in the shape of buildings and in other works, in ships, and in the shape of the thousand and one other forms in which capital will crystallise itself once it is put out for profitable use. You cannot take away from this concrete investment of capital money in the same way that you could from annual income coming in to the individual. What happened is that if an individual has saved his money and put his small profits out in the form in which he thinks it would bring in wealth to himself, and incidentally give employment and occupation to others, while increasing the whole wealth of the country, he thinks that, having so invested it, he will merely derive income from it. But when he dies the State comes down and says to his heirs: "We want a chunk of this land or so much of your railway, or the poop of your ship," or whatever else the State requires. That part of the invested capital cannot be taken without injury to the whole, even if the individual capitalist borrows the money, which is the usual way to provide for these Death Duties.
1783 If he raises a mortgage upon whatever his capital is, the raising of that mortgage incidentally weakens his position as a trader. He is always water-logged with this accumulation of debt, and he cannot, so well as he used to do, compete in the markets of the world. It is quite true that my right hon. Friend the Chancellor of the Exchequer has appreciated that this is a very serious matter, and he has placed upon the Paper an Amendment, which, as I understand it, means that estates shall be allowed to pay the Death Duties in kind; that, by arrangement, the State can take some of the property instead of taking cash. I do not propose to discuss that matter beyond saying that it seems to me that a piece of land, or, say, part of the stock of a second-hand clothing establishment, are rather curious ornaments to a Finance Bill. I do not propose to deal with that matter further; but there is one other matter about which I do wish to speak, and that is that the continual fallings in of these sums of capital paid into the Exchequer are met by the realisation of the more liquid forms of securities. When the executors are called upon to pay not a small sum annually but a large sum all at once to the Exchequer, the way they get that is by selling the more marketable form of security, and where the money is raised by way of mortgage, then the mortgagee sells liquid security, and the executor hands the proceeds over, and whenever an executor sells part of the estate, there is a continual drain of realisable securities in the markets of the country. The result of that is that prices, more especially of gilt-edged stocks, tend continually to fall, and no doubt it has been a source of some astonishment to all of us that the price of Consols remains so persistently low.
To a certain extent this is no doubt due to the fact that investors, rightly or wrongly, have got scared, but a very important factor is the continual drain of money for those Death Duties, and it will continue to go on, and if those Death Duties are increased to the extent which my right hon. Friend suggests then this dribble will be very largely increased. I believe my right hon. Friend, as far as my memory serves me, carried forward at the close of last year a sum of £7,000,000 which had not been invested for the Sinking Fund up to that date. Not only has ordinary Sinking Fund money been pouring into the market to support Consols, but I assume that £7,000,000 was also put in to support Con- 1784 sols too. Yet in the face of that we find the market still in a flat condition and I suggest to my right hon. Friend that the flatness is largely the result of the flight of capital at these large increases in the Death Duties. Hon. Members have spoken of capital going abroad as of no injury to the State. If you ask any bank, especially a bank connected with Canada, they will tell you that money has been going abroad, and very largely abroad. Hon. Members may laugh at the suggestion that capital cannot leave this country without having a bad effect upon the prosperity of the country. Although it may be a very important factor in the development of Canada, it undoubtedly is a very serious factor to those who wish to raise money for native industries, and to those workers who are dependent upon native industries. I think perhaps that that is accentuated by the fact that at the present moment we have money which is barely lendable, yet at ordinary times, when money is cheap, it is brought into the stock market in order to derive a better rate of interest. This is not going into Consols now, and it is not being used for ordinary trade purposes. It is idle and idle from mistrust. I really think that is a point that ought to give any Government reason to pause which has the prosperity of the country at heart. I would urge my right hon. Friend to think before he insists upon passing this financial Resolution in its somewhat exaggerated form that if it is so necessary to derive large sums of money from the richer classes—and I believe the richer classes are perfectly ready and willing to pay—in that case it is far better that he should take it in the form of income than in the form of capital.
§ Mr. JOHN CLANCYThe Debate has lasted for a considerable time and has been taken part in only by English Members, and the question has been considered so far only from the English point of view. It will not surprise the House if I say that it ought to be considered from the Irish point of view also. In putting that side of the case before the Committee I do not intend to deal with some of the general topics which have been touched on. I shall not deal with the question whether there ought to be Death Duties or not. I desire to draw attention to the fact solely that if these increased Death Duties now are so hard to bear in the case of England, and especially in the case of the poor millionaires of whom we hear so much, there 1785 is a very much more genuine grievance in the case of the Irish agriculturist. I think it is quite impossible to consider this particular Amendment which relates to the increase in the scale of the Death Duties without referring, not in detail, but incidentally by way of reference to other provisions of the Bill. In regard to Ireland, there are three or four points on which I should like to say a word, and in regard to which the observation may be made that the increase proposed by this Bill is really even more burdensome in the case of Irish agricultural property than in the case of English agricultural property.
In the case of Ireland I call attention to this fact especially. In 1894, in the case of Sir William Harcourt's great Act, the market value of the land for the purpose of Estate Duty was taken as the basis of assessment. It was stated that at the price to be obtained in the open market was the value of the property for the purposes of the tax. With regard to agricultural property special exemption was made not dealing with Ireland or Scotland only, but in the case of the three Kingdoms, by which it was enacted that the value for the purpose of Estate Duty was to be limited to 25 times the value of the property after making other deductions. One of the principal proposals of this Bill is to repeal that provision, so that henceforth the normal market price of the property sold in the open market without any deduction in the shape of that practically allowed by the proviso to Sub-section 7, and henceforward no deduction whatever would be allowed in the case of agricultural property. That might not work very much harm in England—I mean in the case of the interest in land which is freehold or leasehold. In the case of yearly tenancies in England there is no saleable value. The yearly tenancy in England is never sold; it is not worth anything, and if it were worth anything it would be sold. What is the case in Ireland. They are quite the most valuable property owing to the exceptional circumstances of Ireland, and owing to the exceptional competition, especially from small holders, the most valuable kind of agricultural property is yearly tenancy. What would be the result if this Bill passed as it is? Not only will the Death Duties be increased, but the increase will be aggravated in the case of Ireland by reason of the fact that competition exists in Ireland for holdings, that there is a value in Ireland for such holdings that does not exist in England at all, and that consequently you will have a tax 1786 directed against Ireland especially which does not apply to the whole of the United Kingdom.
I do not propose on this occasion a special Amendment for Ireland. I do not suggest to the Chancellor of the Exchequer that he should adopt a proposition exempting Ireland from this new provision, but I do say that he ought to accept or put down an Amendment which would protect the tenancies which have a saleable interest in the market. I do not understand why a proposition like that should not be accepted. In this proposal there is a discrimination against Ireland, under which England will be free and Ireland will be taxed. There are other classes of holdings besides those of yearly tenants. There are farms bought out under the Land Purchase Acts. In these cases I am not so sure that the necessity for some special provision is so plain as it is in the case of yearly tenants, because at present the practice has been, and I think it is in accordance with the law, to deduct from the normal market price, although the practice has been to deduct from the capitalised value of the annuity. I for one am of opinion that unless there is some special provision making the practice continue that it will be altered by the provisions of this Bill. The deduction is now made as a debt in accordance with the general law applied to England, Ireland, and Scotland; but if this Bill passes, and the normal price of land without any deduction is to be the basis of assessment, we run great risk of having no deduction made in respect of unpaid money under the Land Purchase Act. I would suggest to the right hon. Gentleman that there should be an Amendment to this Bill or a new Clause preserving the practice hitherto adopted and ensuring beyond all doubt that the practice should not be changed.
In the third place, it seems to me that a very great hardship is caused in Ireland in another matter, namely, the mode of paying in the case of those holdings bought out under the Land Purchase Acts. In England you take very good care by the Land Transfer Act of 1897 to secure that, although the property on passing was to be personal property for some purposes, it was to remain real property for the payment of duties or otherwise. The meaning of that was that in the case of personal property you have to pay out within the year the whole amount of the Estate Duty, whereas in the case of real property you need not pay anything for one year, but you might pay eight years afterwards and 1787 pay by half-yearly instalments. In the case of Ireland, owing to the Local Registration of Title (Ireland) Act, under which every holding in Ireland must be registered, the very fact of registration, by another provision, turns the property from realty to personalty, and the result is that in the case of all these holdings, which are in point of fact and in substance real property in the strictest sense of the term, the man who is bought out has to pay at once the whole of the Estate Duty, whereas if the Local Registration of Title Act did not declare his property to be personal property he would have had nine years to pay the duty. Then there is the question of the small estate. A property left which is valued between £100 and £300 gross is subject to a fixed duty of 30s. only. If it is a property between £300 and £500 it is subject to a fixed duty of 50s. Consequently, if you deduct in any case the amount of the unpaid purchase money of the holdings bought out under the Land Purchase Acts that holding will not get the benefit of the Small Estates Clause. Is that fair? The mere fact that the rent has been abolished and that an annuity payable for nearly 70 years has been substituted for the rent ought to make no difference in principle and in point of substantial justice. In my opinion some provision ought to be imposed by the Government, preserving the power for the benefit of the Small Estates Act, which they would have in England if they were paid out under any circumstances except those prevailing in Ireland. I have mentioned these matters in order to show that if the increase in the scale of duties is burdensome in England that increase is rendered exceptionally burdensome in Ireland by reason of those four or five matters to which I have called attention. It seems to me a matter of plain public policy and expediency to take care that Irish agriculturists are not overburdened with taxation applying to all classes of the community. The Imperial Treasury has lent money on the face of the credit of the Empire for the purchase of these estates, and Irish ratepayers have made themselves willingly and voluntarily responsible for the payment of any deficiency in the annuities. They have done so on the faith that Parliament, after having conferred those benefits, would not take other steps to pauperise them, and thus make certain that these annuities would not be paid. I do not desire to stand between the House and the Leader of the Opposition, but I thought it right in 1788 advance of the speech of the Chancellor of the Exchequer to draw attention to these matters, which are especially important, as showing that the increase of these duties, if it affects England or Scotland, affects Ireland in a much greater degree.
§ Mr. A. J. BALFOURI do not propose to follow the hon. and learned Gentleman who has just sat down in his reference to the particular bearing which this tax will have in Ireland as distinguished from England and Scotland; nor perhaps should I altogether agree with the particular illustrations he has brought forward in defence of his thesis. I will, however, go this length with the hon. and learned Gentleman: My main objection, or one of my main objections, to this tax is that it is a tax on capital, and so far as it is a tax on capital I agree that there is no part of the United Kingdom likely to be more severely hit than Ireland, from which country capital has fled, I am afraid for various reasons, and to which it is being sought to coax it back in such proportions as are likely to increase the prosperity of that important part of the United Kingdom. It is more upon general considerations that I propose to say a few words to the Committee, and in doing so I shall be as careful as I can not to trench upon the sphere property covered by future Amendments, or to deal with objects for which this taxation is being raised, objects which the Chairman has very properly ruled cannot be discussed on the present occasion.
May I begin by congratulating the Government upon having come to a portion of their Bill which really is more like an ordinary Finance Bill than either of the two portions we have previously considered. Unlike the first portion, it does raise money, or at all events it is hoped that it will raise money. Unlike the first and the second part, it attacks no particularly special interest, and the framers of this third part have forgotten the maxims of the new finance, and have not followed the President of the Board of Trade in his view that the business of the Chancellor of the Exchequer is not to consider what a man has got or where he got it from. I feel now, almost for the first time since this long controversy began, that I really am engaged in a purely financial discussion which touches finance and finance alone, and I propose to deal with it only from that point of view. The main question I want to ask the Committee is whether this 1789 is or is not a method of raising money which will or will not add to the general prosperity of the country, or, to put it in a more legitimate way, whether it will diminish that prosperity as little as other taxation of equal magnitude would diminish it? I hope that the Chancellor of the Exchequer, when he proceeds to answer me, will not imitate the rather haphazard methods of the Secretary for War, who, I think, was not fair in the reply he made to my hon. Friend behind me. My hon. Friend behind me introduced the topic of foreign examples, and pointed out how widely the case of France and the case of Germany, to say nothing of other countries, differ from our own case, and how different were the proposals which had received acceptance in those countries from the proposals now made from the Treasury Bench. The Secretary for War dealt in a much too cavalier fashion with that argument. On this point I rather agree with the hon. Gentleman who spoke last but one. I do not know, however, that it is necessary for me to go into these controversial questions of foreign parallels drawn with other countries, because they rather take our minds off the broad issues. May I observe, however, that when my hon. Friend pointed out how different the case of France was from the case of England, it is not a good argument for the Secretary of State for War to say that the maximum in England is 15 per cent. whilst the maximum in France is 15½ per cent. That is not the way in which the Government ought to deal with this question. It utterly misrepresents the facts. The maximum under this Bill will be 25 per cent. excluding the 2 per cent. on settled estates. The maximum in France is only 20 per cent.
§ Mr. HALDANEI said so.
§ Mr. BALFOURThe right hon. Gentleman admitted it when my hon. Friend rose and corrected him, but he will forgive me if I say that he will see, when the report of his speech is issued to-morrow, that he certainly did attack my hon. Friend for having quoted France when, according to the right hon. Gentleman the maximum in France is really greater than in England. That is not so. The right hon. Gentleman was equally rash in his dealings with Germany. In Germany, as I understand the matter, the Income Tax and the Death Duties and duties upon property of that character or of an analogous character are not merely contributions to Imperial purposes, but they are a substitute, or almost 1790 a substitute, for rates, and that is a thing of importance to remember if you compare real property in this country and real property in Germany. May I rather protest against the airy way in which the right hon. Gentleman quoted the proposal made before the German Reichstag. He said there was going to be special treatment of intestate estates as if it had been passed into law, it would really not have the least reference to the Debate before us. It has no reference, and it is not passed into law. That was a proposal rejected by the German Reichstag. If the Government are going to pursue the argument of foreign analogies, I hope they will do it in a more careful spirit that that which characterised the hasty and rash excursions of the right hon. Gentleman into the field of comparative international finance.
I congratulated the Government, in the first sentences of my speech, on having at last reached the region of legitimate finance. In one point I do not think this is finance more legitimate than their other finance. It is not legitimate in this particular: They are increasing taxation of a kind in technical language known as inelastic. They have already had the experiment of raising the Death Duties without any increase of revenue, and on top of that experiment they clap a fresh duty on in the hope that that augmentation will bring in fresh revenue. It has never been supposed to be good finance to increase the burdens on the people and not to increase the revenue of the Exchequer. Surely it is the very worst way of raising national revenue, and, unless the Chancellor of the Exchequer can bring forward facts of which neither he nor his colleagues have given us any indication at present, I think he will hardly deny that the figures, he has given us with regard to the yield of the duty during the last ten years, and the experience we have had with regard to the last attempt of the Government to raise an increment on the duty, show that we are here dealing with a source of revenue which is inelastic, and is, therefore, open to one of the most serious objections which can be brought against any new proposal for taxation. What is the explanation of that inelasticity? It was dealt with in a very interesting passage of a rather interesting speech by the hon. Member for North Paddington (Mr. Chiozza Money). If I understood the hon. Gentleman rightly, he admitted the fact that the total sum on which the revenue had been raised either did not increase at all or had increased very little. 1791 He did not deny the fact that the last experiment made by the late Chancellor of the Exchequer showed that financial experiments of this character may, and had, lately proved to be doomed to very serious disappointment. He has his explanation, and it was based upon the contemporaneous fact that, while Death Duties are going down or, at all events, are not rising, the Income Tax is rising, and he said that the Income Tax, after all, must have some direct relationship to the capital possessed by the country.
If you find that the income goes up whilst the capital subject to the Death Duties does not go up, it shows there is some weakness in a system under which the Chancellor of the Exchequer does not find that body of capital awaiting taxation which the general indications of the country led him to anticipate. Does not that suggest that taxation of this kind has reached a point when it is practically impossible to prevent those who are taxed so arranging their affairs that the result of the tax in many cases is disappointing, and will not the result of increasing the tax be to increase also the disappointment? I do not like to use the word evasion; indeed, it is quite inappropriate. I remember when we first became familiar with this topic in 1894, Sir William Harcourt was never tired of telling us that, if the result of this taxation was to produce an increase in the amount of gifts between living persons, nobody would rejoice more than he. He could not imagine a more legitimate or admirable social result from his taxation. Therefore, if I use the word evasion, I do not use it as carrying any condemnation. There is no condemnation. I believe there are any number of methods by which the tax can be avoided, and not merely gifts inter vivos. I have no doubt there are many kinds of property which can only evade this tax by gifts inter vivos, but there are many other kinds of property which can be so treated that the State does not get the toll which the hon. Member and the Chancellor of the Exchequer alike desire to raise. If that be true, as admitted by the hon. Gentleman it is true, even under the existing scale fixed by the late Chancellor of the Exchequer, how much more will it be true when that scale is augmented by the very large amount which the Government propose to place upon this tax? I should say, therefore, that the very circumstances, referred to by the hon. Gentleman as showing 1792 that capital is really increasing, although you do not see the increase in the Death Duties, shows that, from a practical point of view, from the point of view of a Chancellor of Exchequer anxious to raise money, we have reached a point at which it is inexpedient, so far as my judgment goes at all events, to augment a tax which has already reached a level at which the inducements to avoid it is so great that people will take the trouble and make the sacrifices by which avoidance can be really effected. That is a practical point, and it is one, as we are now discussing legitimate finance, or, at all events, finance which is finance and not something quite different, which specially requires an answer, and I have no doubt will get an answer from the right hon. Gentleman who is going to follow me.
There is one other point on which I may be allowed to say one word before I touch upon what seems to me the greatest objection to this part of the Government's proposals. That objection arises from the admitted injustice of this tax as between different persons of equal wealth. That injustice is admitted by the hon. Gentleman the Member for Paddington. He said, and I think he said perfectly truly, that a tax of this kind, levied at uncertain intervals upon the corpus of a property, affected different properties of equal magnitude in quite different ways. He gave a case in his own experience in which the same property, I think he said, had changed hands many times, or several times, at intervals over 16 years. If that property was a considerable one, and it was not settled, it is quite evident it must have been practically wiped out of existence. It must have entirely changed its character in magnitude. The total of that particular property must have dwindled under this fiscal treatment to a relatively insignificant amount, and no one can pretend that is a just treatment of those particular owners of property as compared with other owners of property of equal magnitude. I think the Government really ought, to set themselves to work, in face of the experience we have had of these Death Duties and when raising the scale, to find some method of rendering a gross injustice of this kind practically impossible. I do not know whether it is—
§ Mr. LLOYD-GEORGEWe have said that over and over again. It is very difficult to deal with. I think the right hon. Gentleman himself has said it.
§ Mr. BALFOURI can quite believe that, because the injustice becomes all the more apparent. We have often had occasions to point out that admitted injustices which are tolerable when the scale of taxation is small become intolerable when the scale of taxation is greatly raised, and I think the Government are bound to do their best to deal with an admitted injustice which is so great in some cases that while some kinds of property may go through this ordeal, severe as it is, without serious diminution, other kinds of property of equal magnitude—that is the important point—may be entirely wiped out. That is a very serious objection to any tax. If it is inevitable it is a strong argument in favour of keeping the tax at as low a level as you can. I do not want to dwell upon the personal aspect of this or indeed of any other tax more than I can help, but it is one we cannot altogether neglect. It is relevant, and therefore I will add what fell from the hon. Gentleman the Member for Leith (Mr. Munro Ferguson), who pointed out that this might be especially hard upon certain classes of the agricultural industry. That, after all, is not the main point which moves me to think this is a very dangerous fiscal proceeding. The main point which moves me is the one dealt with by the hon. Member who moved the Amendment, and by others on the other side of the House, namely, that this does affect the capital accumulations of the country. There is a difference on this point amongst the authorities on the Treasury Bench. The Secretary of State for War, who, so far, is the only Minister who has addressed us in Committee on the subject, quite plainly and avowedly states his opinion that this is and ought to be a tax on capital. That is what it is designed to be. It is a tax on capital and not on income. That is what the Government desire, as well as what they anticipate. But that was not the view taken by Sir William Harcourt in 1894. A quotation, read by my hon. and gallant Friend near me, quite conclusively proved that it was contrary to any principle put forward by Sir William Harcourt, and other quotations equally conclusive could be produced. I have a recollection of the Debates in which I took some part, and the whole argument of the then Government was that these new Death Duties were a form of Income Tax adopted because they could be graduated, whereas the Income Tax in its ordinary form could not. That opinion is evidently not shared by the present occupants of the 1794 Treasury Bench. Sir William Harcourt always indicated that, if he could have seen his way to a graduated Income Tax, he would have preferred that course; and he was only forced to adopt this form of tax because he believed, in the first place, that a graduated Income Tax was not possible, and, in the second place, that on the scale on which he put these Death Duties it would be, broadly speaking, not only practicable for each owner of property in turn to fill up the gap caused by the Death Duty, but that it would be easy to do so.
The Government have now entirely changed their position. They say it is not an Income Tax, and they do not expect the gap to be filled up. That is a vital change of policy—a change both vital and fundamental, and it is perfectly useless for any Member of that bench to say that they are merely continuing Sir William Harcourt's traditions when they come down to this House and recommend additions to the Death Duties which Sir William Harcourt would never have sanctioned—when they advocate principles diametrically opposed to those by which Sir William Harcourt was guided. Let the House not be deceived into thinking that this is an old tax furbished up to meet new necessities. It is a new tax, with new objects, having, in the opinion of those who framed it, entirely new and undisputed results which the originators of the tax, years ago, never contemplated. If it be admitted it is a tax on capital, it cannot be turned into a tax on income. It certainly cannot. Is it a good tax? For the first time I have heard a responsible financier advocate openly, avowedly, and unashamedly the propriety of taxing capital as such. The present Government are committed to a graduated Income Tax. The hon. Member for North Paddington says: "It is true, it is a tax on capital, but," he asks," what is the harm in it." You take a certain amount of money not from the income of "A" but from the property of "A." You take that and the State appropriates it, and he says "What reason have we to believe it will not be just as good for everybody that the State should have it as that 'A' should have it." That may be a good doctrine. It certainly is a new doctrine. There is a phrase which used to be current in orthodox financial circles to the effect that what you want money to do is to fructify in the pockets of the people. I do not know that that is very good rhetoric, but it was a familiar phrase universally accepted as a 1795 commonplace of sound finance. That, however, is not the new finance. We are having a great many new doctrines in finance put forward, but we have to-day heard for the first time from a responsible Minister that we ought not to consider where the money comes from. Now you hear their defender (the Member for North Paddington), and you also hear by implication the Ministers themselves, asserting that they regard with perfect equanamity the taxation not of the income of the individual but of the capital from which that income comes, and which, by implication, is very largely the source of the enterprise and commercial energy on which this and every other community must practically live. I do not know how far the Government are going in this respect. Are they going the full length of the hon. Member for Paddington? Are they going to contemplate with perfect unanimity the fact that they are not asking citizens to defray from their annual revenue the annual cost of Government, but they are asking citizens from their capital to meet the annual expenditure? That is a point which must not be left out of account. You raise your national income, your Exchequer income, each year to meet the yearly expenditure of the country. Surely you ought to do it from the annual income of the country; otherwise you put the State collectively in precisely the position of the individual. If you insist that he shall spend out of his capital for the year that which is required to meet his household books, the time must come when he can meet those household books no longer. I do not wish to press the analogy too far. I quite admit there is a distinction between the individual and the State, but, broadly, there is truth in that objection. Never before has that truth been denied by any responsible Government. The hon. Member for North Paddington, the only speaker who has defended with the greatest courage and in the greatest detail these new doctrines, seems to think that the proper thing to tax in the country is its capital. He seems to hold that no injury is done in that way, because capital will be quite as fruitful in the hands of the Government as it is in the hands of the private individual. There are cases, of course, in which it may be true, but you cannot alter the universal proposition about matters of this kind. If you consider the individual case you will see, at all events, there are a certain number of cases in which it is not true, and that proves that it will in- 1796 flict injury on the community at large. Take any ordinary commercial business in this country. The tax-gatherer comes down at the moment when the head of that business dies. If he has been in active work the tax-gatherer comes down at the very moment when there is a change in the government of the institution, and when, naturally, the greatest difficulty is arising—when there may be a strain upon the finances, due to the fact that the capital has to be shifted. He comes down and says that an important fraction of the capital of the business is to be appropriated by the State for other purposes. The Member for North Paddington surely will not say that that is good for the business, or that it can be met out of the savings of the business? Broadly speaking, there is no pretence that it can. It therefore comes out of the business; and how can it be otherwise than injurious, especially to the great mass of relatively small businesses—I mean businesses which are small compared with the huge joint stock and syndicate enterprises, with which we are becoming more and more familiar in this country? How, I ask, can it be otherwise than injurious to the smaller manufacturers, who do not always find it easy, in the vast productions carried on on these gigantic scales, to hold their own, and who naturally do not wish to incur any special burden? Nobody can deny, whatever their views are, whether they toe Socialistic or otherwise, that so long as you are carrying on the industries of your country by private enterprise it must be injurious, not merely to the owner of capital, to tax the industry which that capital nourishes, but also to the men whom that capital employs.
7.0 P.M.
What is true of small businesses is equally true of agriculture. An hon. Gentleman who recently spoke told us that he regarded with considerable dismay the effect that this tax was going to have on a large number of Irish cultivators. Everybody knows it must have a serious effect upon the management, from a commercial, industrial, and national point of view, of a large number of moderately-sized landed estates in this country. The hon. Gentleman the Member for Leith speaks with much authority on this subject, and just now he spoke in no uncertain voice. It really hardly requires any argument to show that where the burden of local taxation is thrown, as you propose, on the land, you are taking out of that income what is equivalent to a very large amount of the capital required for its proper conduct. 1797 I may here make a passing reference to the scheme of the right hon. Gentleman for allowing this tax to be paid partly in kind. I will reserve what I have to say on that subject, although I adhere to what I have on previous occasions urged on that point, until this particular Amendment comes up. But with that Amendment, or without it, the fact; remains that agriculture is in the same difficulty. Middle-sized estates in agriculture are in the same position as middle-sized manufacturing enterprises. You cannot hit middle-sized manufacturing enterprises or middle-sized landed estates without doing an immense amount of harm, not to the owner alone, but to the whole business of which he is the head and for which he provides the funds. I do not wish to labour that point further, but I do hope the right hon. Gentleman will tell us how he justifies this change of policy on the part of himself and his Friends. How does he and those who worked with Sir William Harcourt in 1894 justify a change which fundamentally and completely changes the whole scheme? How do they justify this revolution in their fiscal ideas? How do they now say, what they never said 15 years ago, namely, that the Death Duties were not tolerable if they were regarded as capitalised interest? How do they justify a new departure which for the first time avowedly and explicitly taxes capital because it is capital, and they glory in the fact? That is the main question which I venture, respectfully, to put to the Chancellor of the Exchequer. The task which lies before him is not that of merely repeating the old defences of an old tax. It does not consist of merely saying this is an extension of a method of taxation originally passed 15 years ago and assented to since by both sides of the House; he has to justify an absolutely new departure and a new principle, and to show that the ill consequence will not follow which every Chancellor before himself, on whichever side of the House he may sit, has expected is the inevitable consequence—bearing in its train not merely the taxed persons, but all with whom they are connected—which must inevitably follow upon a scheme of imposts which avowedly and intentionally taxes not merely the income, but the capital of the community.
§ Mr. LLOYD-GEORGEThe discussion has gone much beyond the immediate Amendment. I am not complaining of 1798 that. On the contrary, I recognise that it is quite impossible to discuss merely the Estate Duties without glancing at the other Death Duties in the subsequent Clauses, because I can quite understand that they have all got to be taken together in considering the burden which it puts upon estates at death. The right hon. Gentleman has, if I may say so, made a very powerful and searching examination of our position as to the Death Duties which was a very fair one. He, at any rate, has not been guilty of the extravagance which has been practised by almost every other critic of the Death Duties. He has not taken extreme cases as if they were typical cases. Almost every other critic of the Death Duties, whether inside or outside this House, has always gone to the extremest cases, as if they were the ordinary case. It is said that a million is the usual sort of thing to be left by trading people. That is what we were assured even last week; the trader leaves his million, it is said, to his partner. Of course, that is the maximum, and a very exceptional and extreme case, and if there is a man who is fortunate enough to make a million in trade and to have a partner who is a bachelor, with whom he is on such excellent terms as to get the whole of his property, I do not think he ought to complain at having to pay 15 per cent. We have had cases of that sort, and also cases in which 25 per cent. is the figure. Twenty-five per cent. is a very extraordinary and unusual case. I am sorry to say that the millionaires' estates that come to the Exchequer range from six to eight per annum, and the Chancellor of the Exchequer is extremely lucky if he gets eight. The usual thing is something like six or seven, and it is absurd to take these extreme cases, as if they were the cases by which the Death Duties proposed by the Government have to stand or fall. The vast majority of cases, however, range from £5,000 to £10,000, £15,000 and £20,000, and I was very glad that the right hon. Gentleman was not carried into those extravagances and into that rather unfair method of taking extreme cases. [An Hon. MEMBER: "What about Gorringe?"] I observe a disposition on the part of hon. Gentlemen opposite to discuss the Gorringe case when it is irrelevant, but always to avoid it when there is a full chance of discussing it. I will come to it in a moment, as I have something more to say about it, though it goes back to the whole controversy of the land, about which we have had three months' discussion, which 1799 I should think would satisfy hon. Members for some time.
The right hon. Gentleman has asked me a series of questions, and I will do my best to answer him, and I will answer him seriatim. He said, first of all, "Is not the revenue an inelastic one? Take the figures of the last few years, do they not demonstrate clearly that this is a falling revenue, that instead of being a fruitful tax it has become an increasingly barren tax, and therefore from the point of view of finance it is an undesirable tax to continue." If the figures demonstrated that, I think it would be undesirable that you should revert to the tax—if the statistics of the last ten years proved it to be a constantly diminishing tax. That is not the case. The figures upon which the right hon. Gentleman relied are figures quoted by the hon. and gallant Member for Chelmsford (Mr. Pretyman), and although the hon. and gallant Member is a very close student of this particular tax, I think he has been misled in regard to the figures. Let me take the figures from 1897 to 1908. When you deal with Death Duties you have to take figures, at any rate, of 10 or 11 years. You cannot take the figure for this year and compare it with the last; you cannot take the figures of these three years and compare them with the preceding three years; they depend upon so many circumstances that you must take as wide a survey as you possibly can in order to arrive at any conclusion with regard to the effect of the Death Duties.
Before I come to the figures let me give one word—I will not say of warning to the Committee, but of reminder. There has undoubtedly been since the war a very undoubted fall in the value of securities. I am not trying to distribute the blame, but before the war Consols were at 114 (I am speaking from memory), and there was a very considerable drop not only in Consols but in securities all round. As far as the Death Duties are concerned, the great bulk of the properties which pass through the Estate Duty Office are either in the form of land or in the form of other British securities; it may be buildings—you must remember that all the buildings in the country pass through as well as land—railways and every other trading business passes through, but I am perfectly certain of this that the great bulk of the businesses which pass through the Death Duty Office is in respect of British capital. There was an undoubted fall com- 1800 pared with the year before the war in the year that followed after the war. In the year immediately before the war the total estates in respect of which Death Duties were paid amounted to £326,000,000. That is in 1899, and that is gross, without any deductions. That figure of £326,000,000 was the highest figure which the Death Duties had reached up to that date. The following year, 1900, it fell to £294,000,000, and that was purely due to the fact that the securities had tumbled down in the market; but I am not going to apportion the blame. The following year, 1901, the sum was £320,000,000, and in the following year £298,000,000. Between 1900 and 1902, therefore, there had been an increase, though it was not the same rate of increase, and in the following years there has been an appreciation.
I am going to take four triennial periods, and that is rather a good test. The first began in. 1897, and the total estates which passed through the Death Duties Office in those three years come to £880,000,000; in the second triennial period they come to £913,000,000, in spite of the fall in securities, and in the third period, 1903, 1904, and 1905—securities were still falling heavily—there was a falling off to £890,000,000. The last triennial period the figure has gone up to £944,000,000. So, comparing the first triennal period with the last, there has been an increase on the estates in respect of which Death Duties are paid of £64,000,000 sterling. So far, therefore, from there being any steady diminution, it has been a steady increase taking all these 12 years. These figures I have taken from the official statistics.
§ Mr. PRETYMANMay I interrupt the right hon. Gentleman on this very question of figures? I have the actual figures given by the right hon. Gentleman himself in answer to a question in the House of Commons on 10th May last, in which he gave the figures of the capital sum on which Estate Duty has been paid during each of the last ten years. I have these figures, and in the last five years immediately preceding this date the total is £1,390,000,000, and in the preceding five years it was £1,370,000,000, and this is practically on equality with the last five years and the five years immediately preceding.
§ Mr. LLOYD-GEORGEI will take that from the hon. and gallant Member. I have not time to look, but here are the figures, which I have taken from the Fifty-first Report of the Inland Revenue Commissioners, and what the hon. and gallant Gentleman 1801 has done is that he has taken in a five years period two or three years probably when securities were at their very worst. He is including in the first five years the period when securities were at their very highest. I am taking three years: 1897, 1898, and 1899. The total amount is £880,000,000. I am taking the last three years, and the total amount is £944,000,000. Why should that be unfair? That shows that, really, so far from there being a constant decrease, there is a real progression, and that, therefore, the very basis upon which the right hon. Gentleman starts his argument is not consistent with the facts and the figures of the case. I think I have answered his point in regard to that.
I come, to the next point. The right hon. Gentleman asks: Is it a good tax? He says you are inflicting a burden upon industry. Of course, you cannot take three millions of money, ranging up to £8,000,000 eventually, without its being taken out of some fund. If we were imposing the tax merely for the sake of imposing a tax and merely for the sake of drawing in millions out of the pockets of individuals without drawing it for some justifiable public purpose, and for this purpose we have to assume that the object is a justifiable one, because, if it is not, any tax is a. bad one; but, if the object is a justifiable one, I do not see the distinction really between taking £3,000,000, £5,000,000, or £8,000,000 in this form and taking it out of businesses annually in the form of an Income Tax. Assuming that you have to take the millions at all, I think it is preferable. The right hon. Gentleman says you are taking it from a business just at the time when it is embarrassed, and when there are other charges upon it. This is a mistake he has made in common with every critic in connection with that argument. He assumes that in the businesses of this country, in the case of death, you actually draw your £5,000 or £10,000 duty from the business. In the first place, a very large proportion of the businesses—certainly the biggest businesses—in this country have been converted into limited liability companies, and, when a partner dies, he does not take the money out of the business. He has the shares. That is what he is dealing with. He may not be able to get rid of the shares at a price which he thinks should be adequate, but, at any rate, the money is not taken from the business. That is really the case in re- 1802 gard to the vast majority of the great businesses of this country, and, when it comes to small businesses, the scale is a very low one, and you only pay upon the net amount after making every deduction. The right hon. Gentleman talks about heavy charges, and the hon. Member for Brighton (Mr. Ridsdale) made a strong criticism on these proposals. He said a business may be waterlogged. But a waterlogged business does not pay a heavy percentage of its revenue. If it is a business of that kind it only pays on the net; if there are debts, then they are all deducted; if it is overwhelmed by liabilities there is no margin on which it pays. My hon. Friend knows that when you value an estate for Death Duty purposes you do not put 100 per cent. upon it. It does not pay anything approaching full value. I say this after full inquiry into the matter. I am surprised at the hon. Member (Mr, Joynson-Hicks), who has been a solicitor and has passed a good many of these accounts. I have no doubt he did his duty by his clients, but the more he did his duty by them the less the percentage was to the State; and, speaking as one solicitor to another, I am saying what the vast majority of the profession say, that you do not pay anything like the full percentage upon the value of a property. Therefore, a waterlogged property which pays 25 per cent. is a figment of my hon. Friend's own imagination.
§ Mr. RIDSDALEThat is not the case I intended to put. Supposing a small shopkeeper, with £5,000 capital, is taxed now at £200. My suggestion is that the £200 tax waterlogs the business.
§ Mr. LLOYD-GEORGEMy hon. Friend is so anxious to criticise the Government that he does not take the trouble to know what the Bill is. I am not touching the £5,000 man at all. He is still paying his Death Duties at 3 per cent., therefore there is really nothing in that criticism. The right hon. Gentleman said, Is it a good tax? I still say it is a fair tax. It is a just tax and it is an effective tax. No unjust tax can be effective in the long run, so that when the hon. Baronet (Sir F. Banbury) cheers my statement that it is an effective tax, it is inferentially an admission that it is a just tax. You have to raise so many millions of money. We have distributed that. We have taken a certain amount in direct taxes, a certain amount in indirect taxes, a certain amount on unearned increment, and we propose to take a certain amount in Death Duties. What 1803 is the transaction that that represents? Take any figure. Do not take millions, because it looks as if you were attacking millionaires. If a Chancellor bases his finance upon millionaires his schemes will come to grief. I do not want to take extreme cases, but take a case of £25,000, £50,000, or £100,000. A man leaves that net after payment of all liabilities and debts and encumbrances, because that is what he pays upon—upon a fairly liberal valuation. How has he been able to accumulate that? From the security which is given by the State. The protection to his property, the protection of this country even against invasion, has enabled the country to accumulate greater wealth than any other country. But all that costs money. Not only that, but money which is spent upon education, upon improving the condition of the people and making them more efficient even as wealth-creating machinery, is part of the £25,000 or £50,000. With an inferior population in intelligence, in physical condition, in general contentment, with a state of greater insecurity against dangers of invasion, he would not have accumulated his £25,000 or £50,000. All that costs money to the State. Is it, therefore, unfair to say, when you are passing that £25,000, £50,000 or £100,000 to someone else, the State ought to take a toll upon it, not merely in recognition of its services, but to enable it to continue those services in future for all, even for the person who has inherited the money and who may convert the £25,000 into £250,000 under similar conditions? What is unfair in that? This is talked about as if it were some great raid upon property, and the hon. and gallant Gentleman (Mr. Pretyman) said, "Do you know what it costs? It means an addition of 2s. to his Income Tax." That is not the way to put it. Supposing we charged a man who had accumulated property an Income Tax throughout his life. The average life is 30 years, as far as Death Duty calculations are concerned. What sum of money invested at compound interest would represent the additional charge we impose under our new scale? Threepence three-farthings in the £ is the addition. This is the revolution; 3¾d. is the end of all. It is a ludicrous contention. Why should it mean ruin? The hon. and gallant Member said that the effect of the Death Duties had been that the average value of the estates paying duties had gone down. Why has the 1804 average of the estates gone down? It is not because the wealth of the country has gone down, and that was the suggestion of the hon. and gallant Member; but they have gone down, because there is a wider distribution. The hon. and gallant Member said that the average had gone down from £4,400 to £3,900 in three years. He asked: Does not that show the paralysis that is gradually creeping over the wealth of the country because of the Death Duties? What is the real position? In 1898 there were 71,000 estates for Death Duties. In 1908 there were 85,000 estates, so that if you divide the much bigger figure by 85,000 and find that the average has gone down, does it show that the wealth of the country is decreasing? It shows that there are more people coming into their fair share of the fruits of the earth. That is really what it means. Again I ask: What do hon. Gentlemen opposite give us by way of alternative proposal? How do they say that we should raise the £8,000,000 of money in a way which would do less harm ultimately? What would it mean on corn? The raising of this sum of money on corn with a preference would be 5s. a quarter duty. [An HON. MEMBER: "We do not propose that."] I thought the hon. Member was asking for it. I am glad to know that he has some other alternative. I thought the hon. Member was in favour of Tariff Reform. Would not a tax on corn do far more harm? I say that it would do more harm to the country as a whole. Really all these things that have been said about the Death Duties have been said of every proposal ever made of this character. I know that when I propose to increase these duties Sir William Harcourt is quoted against me. When Sir William Harcourt proposed to increase them Mr. Gladstone was quoted against him. There has not been a proposal by Mr. Gladstone or Sir William Harcourt in regard to which exactly the same arguments were not used. It is very interesting to know that exactly the same arguments were used against Mr. Gladstone when he first proposed the Succession Duty. In a Debate in the House of Commons in 1853, when Mr. Gladstone proposed the Succession Duty, an hon. Member said:—
The whole object of the Chancellor of the Exchequer was war against property. It might he popular in some quarters, but he was sure it would be productive of hardship to industry. He warned the right hon. Gentleman how he struck a blow upon public confidence, the effect of which might be felt to an extent of which he had no present conception.[An HON. MEMBER: "Who said so?"] That is from a speech by some Conservative 1805 Member who was criticising the Budget of that day. I think it was Sir John Pakington. Another Conservative Member ended his peroration upon the same kind of proposal with these words:—He could not give his support to a Bill which he believed would inflict the greatest hardship and the most serious and burdensome consequences, and which, when its real effect becomes known, would in 20 years make the right hon. Gentleman to be considered one of the most dangerous and mischievous Chancellors of Exchequer this country had ever seenSpeeches of that kind were delivered then. There is, therefore, no novelty in all this vituperation. The same charges, almost in identical language, were made years ago. We were told that the whole country would turn. I could quote passages in which it was said that the House of Commons would repeal the duty. We have had a Conservative Administration since then, and Mr. Goschen, in 1888, increased the burden. The Leader of the Opposition was in power for some years, and he did not alter any of these things. These are simply, I will not say part of the stock in trade, but the kind of attack upon any proposal of a Government which may be expected. I say that in distributing the burden which we are compelled to place on the shoulders of the people of this country we have distributed it fairly and equitably, land in a way that will inflict no damage on any industry in this country.
§ Mr. A. J. BALFOURI do not rise to make another speech. I do not think the right hon. Gentleman's speech had much reference to the one that preceded it. I wish to emphasise the very important figures the Chancellor of the Exchequer gave about the number of estates. In answer to a question on 7th September, the Secretary to the Treasury said that the number of estates in 1906–7 was 67,220; in 1907–8, 68,670, and in 1908–9 68,465. I understood the Chancellor to say that there had been an immense increase in the number of estates. I cannot reconcile that statement with the figures given by the Secretary to the Treasury.
§ Mr. LLOYD-GEORGEI think I can explain to the right hon. Gentleman. The numbers I quoted were of estates passed under review.
§ Mr. SAMUEL ROBERTSThe general opinion of the commercial and financial community of this country is that the duties now under consideration are the greatest and most serious part of this Budget. The Committee will remember 1806 that a resolution was passed at a great meeting of bankers in the City of London stating that the great increase in the Death Duties, already materially raised two years ago, would prove seriously injurious to the commerce and industries of this country. We are agreed, I believe, on both sides of the House, that some Death Duties must be levied. They have been levied now for a long period of years. They were levied, I believe, in the time of the Romans, but the point at issue between the Chancellor of the Exchequer and ourselves is as to whether this is a reasonable and moderate rate, or a rate that is going to injure the industries of the country? The commercial classes think that these new duties are going to be very serious in eating up capital instead of allowing that capital to be devoted to commerce. The Chancellor of the Exchequer, in his Budget speech, said that rates had increased from 5 to 7 per cent., but the right hon. Gentleman did not include what is the most important item. He did not include the increase in the Legacy and Succession Duty of 1 per cent., and he did not include the increase in the Settlement and Estate Duty. These two occur in the vast majority of estates. If you add these two, it makes an increase of from 5 to 9 per cent. in those cases. What is the amount of the increase? Last year the Death Duties yielded £18,370,000, and the Chancellor of the Exchequer estimates that the year after next the increase will be £7,425,000, or nearly 40 per cent. We cannot, in considering this matter, look upon the Death Duties alone. We must regard also that important tax which is allied with it, namely, the Income Tax. The Chancellor of the Exchequer proposes ultimately to get an increase from this tax of £6,720,000. Together these sums make over £32,000,000 increase in these two important taxes. I should like to read to the Committee the opinion of Sir Robert Giffen in the "Quarterly Review" of July last on this question. He says, referring to this figure:—
It is altogether excessive and dangerous without the heavy increase made by the Budget. Such sums cannot be raised without becoming real taxes upon capital, taking from the community much that would otherwise have been saved and devoted to industrial investments—that is to the promotion of the wealth of the country and the payment of wages.This tax is going to fall most heavily on-small estates. I do not know whether the Committee are aware of the number of estates which come up for taxation every year. A very large majority of the small estates are under £10,000. Last year the 1807 number that came up for review and taxation was 38,411, and it is a very remarkable fact that out of that large number 34,000 did not exceed £10,000. How are these little estates going to be dealt with by the Budget? They are to be affected very largely indeed. Suppose there is an estate of between £5,000 and £10,000, with a widow and a young family left. The rate per cent., if that estate is settled, as very often they are, is 4 per cent. The increase under the Chancellor's proposals will be from 4 per cent to 6 per cent. Go a step higher, and take estates from £15,000 to £20,000, and the duties will be increased from 5 per cent. to 7 per cent. In the case of estates of between £20,000 to £25,000 the corresponding increase will be from 5 per cent. to 8 per cent. These are very serious cases, and must bear very hardly upon those families who have to meet this situation.One point has been mentioned this afternoon which I think the Chancellor would meet if he was able, and that is a case of death occurring frequently in families. As we know, families do vary in health and strength, and in some families death occurs very frequently, at intervals of a few years, and the Chancellor comes in and demands the whole duty over again. Take the case of a £100,000 estate. The Estate Duty in such a case after three deaths will be £30,000, or nearly one-third of the estate. In the case of an estate of £1,000,000 after three deaths these duties will amount to nearly half a million. Sir Herbert Maxwell sent a remarkable instance to "The Times" newspaper in the month of July, in which he said that a neighbour of his in Scotland died in the year 1899. He left two sons. Full duty was paid on the father's death. The eldest son died three years afterwards. The whole set of Estate Duties had to be paid over again, and the younger son came into the property, charged with the liability of paying the jointure of the widows of his father and his elder brother, which crippled him so much that he had to give up his house where his forefathers had spent 300 years. The result of this is not only that he has not the means of keeping, his house in what has been the home of the family for more than three centuries, but that he is unable to maintain the expenditure necessary to secure the fruits of operations undertaken prospectively by his predecessors, such as plantations, etc. It is the working people on that estate who will suffer most. Where the master as put 1808 in a crippled condition and not able to keep up his situation as it used to be kept up, it is his servants and labourers who will suffer. I venture to make a suggestion in an Amendment which may not be reached, and therefore I would ask the Chancellor kindly to pay attention to it. My suggestion is that if death occurs within 10 years after Death Duty has been paid once there shall be a, graduation of that 10 years if Estate Duty has to be paid over again in that interval. That is to say, suppose death occurs in the first year alter the Estate Duty has been paid once there shall be only one-tenth of the whole duty paid. If it occurs in the second year, there shall be two-tenths paid, and so on until the tenth year, when the whole Estate Duty will be again paid. I think some proposal of that kind would be workable, and certainly it would be more just as between one family and another that Estate Duty should not be levied too frequently.
About the result of these duties I received a letter a short time ago from a solicitor in large practice, I think the largest practice, in the City of Sheffield. He had written the letter for the purpose of sending it to "The Times" newspaper, but I had written a letter to him about a matter, and he sent this on to me, and said I could make use of it. He says:—
Some years ago a friend of mine bequeathed an amount of 4 per cent. Guaranteed Railway Stock valued for probate purposes at £l,500 to his trustees upon trust to apply the income to the repair and upkeep of workmen's clubs. Since his death I have paid duty, namely, Estate Duty, Settlement Duty, and Legacy Duty to the amount of £285, and the payment of these duties absorbed rather more than five years' interest as the stock was at a premium. Now, under the present Budget proposal, that property would have to pay £345, or 23 per cent. of the value.He finished the letter up:—This is, however, not the worst of it, as testators will in the future find some better and cheaper mode of carrying out their charitable instruction. I shall take very good care not to let any clients of mine waste their money in the same way as the testator referred to in my letter.I hope, therefore, that these very heavy duties will not be charged at all, and so interfere with the charitable intentions of testators. Reference was made this afternoon to a comparison between English Death Duties and foreign Death Duties in France and Germany. France has been dealt with, and there is no doubt about it though they have Death Duties there the Death Duties are very moderate compared with those in this country. With regard to Germany, they are extremely moderate. In the year 1908 the whole produce of the Death Duties in Germany only amounted to a little over a million of money, in a country with a larger population, and 1809 quite as wealthy, I think, or nearly so. The Minister of Finance in Germany estimates the burden of Succession. Duty in this country—that is, Death Duty—at 9.42 marks per head of the population, compared with 5 or ½ per cent. in Germany. Take Italy; the Death Duties there are only a little over 2 per cent. as a maximum, and they are levied in fractions the same as they are in France. I do appeal to the Chancellor to consider that this is a very grave step which he, in the name of the country, is taking; that the commercial classes regard it distinctly as a tax upon capital which ought largely to be devoted to the industry of the country; that it is a discouragement to thrifty people—and I think there is no doubt about it that it is the saving classes of this country who are the backbone of our prosperity; and, finally, I hope that the Chancellor will consider the cases of those small people and those small estates to which I have ventured to allude, and also the cases of death—and I think this as a very great hardship—occurring frequently, and the toll being taken, with the result that the estate is gradually reduced from perhaps a large estate to a very small one.
§ Mr. JOHN DILLONI wish to ask the Chancellor of the Exchequer for some reply to the case made by the hon. Member for North Dublin (Mr. J. J. Clancy). He will remember that my colleague in his speech pointed out that it is absolutely necessary to consider this proposed increase in the Death Duties as portion of the whole system of dealing with the Death Duties in this particular Bill, and that he proved quite clearly that the scheme which has been submitted in this Bill for dealing with the Death Duties discriminates against Ireland most unfairly, especially as against the poorer and smaller estates in Ireland. That being so, of course, if the Chancellor of the Exchequer was not prepared to meet the case made by my hon. Friend it would undoubtedly make the proposed increase of the Death Duties in this particular class very much more objectionable from our point of view. The Chancellor of the Exchequer will remember that my hon. Friend mentioned four points, which I do not propose now to repeat. They were pointed out very clearly by the hon. Member for North Dublin, and I am sure they will be within the recollection of the Chancellor of the Exchequer. But it would be a very great satisfaction to us if 1810 the Chancellor could give us an indication of what the policy of the Government on these points is.
§ Mr. LLOYD-GEORGEThe hon. Member for North Dublin did make three points which I have noted. As I understand his contention was this—not that Ireland ought to get preferential treatment in respect of the Death Duty, but that if the Bill was retained in its present form Ireland would get worse treatment than Great Britain. In one or two particulars I am rather disposed to agree with the hon. Member. I have looked into the matters referred to by the hon. Member for North Dublin. The first of the three points is with regard to tenant right. Here there is no such thing as Death Duties imposed upon tenant right at all. We do not value the right of a tenant to a holding which is held from year to year. In Ireland it has a very marketable value which in certain cases runs up, I believe, to as much as 40 years' purchase. In its present form undoubtedly the Irish tenant will be worsened to that extent. There are one or two Amendments down on the Paper which, as far as I can see, are quite unobjectionable, and which will meet the case, in the name of the hon. Member for North Dublin.
§ Mr. AUSTEN CHAMBERLAINWill the right hon. Gentleman say what it is intended to do by those Amendments?
§ Mr. LLOYD-GEORGETo leave tenant right exactly where it is at the present moment, so that it shall not be in a worse position than it is at the present moment. The second point is there is some doubt as to whether you deduct the unpaid portion of the land purchase annuities as if it were a mortgage. It is obviously unfair that you should charge the whole value of the freehold without deducting what is after all a mortgage upon the property to the State, and I understand there is also a grievance with regard to unpaid purchase money. If that is the case I should certainly put that right. The purchaser might pay the Death Duty upon the whole amount taken into account in calculating the gross, and that is obviously unfair. The third point is that in Ireland, for some curious reason, a tenant's holding, although it is really a freehold, is treated as personal, so that he does not get the advantage of paying in eight annual instalments. That is obviously unfair, and it is purely the result of the interpretation in 1811 the Law Courts of the effect of local Acts. It would be realty here, and therefore the freeholder would get the benefit of Sir William Harcourt's Act. I agree that the freeholder in Ireland ought to get the same treatment. These three Amendments I shall be disposed to accept. I do not want to discuss them now. Obviously it would be out of order. But I mention them as indicating the view of the Government, which is also the view of the hon. Member for North Dublin, that Ireland should have the same treatment in that respect as the rest of the United Kingdom.
§ 8.0 P.M.
§ Viscount CASTLEREAGHI had hoped to hear from the right hon. Gentleman in his speech more adequate justification for what is obviously a great inroad upon the capital of this country. In all the speeches from this side of the House there has been conveyed the question whether it is right that the right hon. Gentleman should make his inroad upon the capital of the country. The principle of the Death Duty has been admitted for some time, and in going back to the year 1894 I think I am right in saying that the taxation, when brought in on that occasion was of an entirely novel character, and was rather in the nature of an experiment. Consequently, I think that before any addition is made to that taxation the experiment should have been allowed to go on a little longer than 15 years in order that it might be effectually seen whether or not the experiment was successful, or likely to be successful. It is not my intention to discuss anything in the nature of hardship or unfairness, which the right hon. Gentleman took so long a time in his speech to disclaim. I do not think that has anything to do with the question. What we really want to know is whether taxation of this kind will injure the stability of capital in this country. This taxation has been increased in the last 15 years on two occasions, and the Chancellor of the Exchequer and the Government, in making this proposed addition, are adopting a very dangerous course. The original object of the Death Duties was, naturally, to raise money, but coincident with that object there was also the further object of encouraging thrift among the people of the country. Sir William Harcourt himself said that it was to encourage the settlement of property. It was undisputed that the Death Duty on that occasion would be paid out of savings for the purpose, or out of income. I think we 1812 can look to no higher authority than Lord Rosebery, who, in his speech the other day, told us that at the time he was head of the Government he stated that the object of the Liberal Government of 1894 was that the Death Duty should be established at the figure of 8 per cent., which should be the highest point to which it could ever rise. Certainly neither Sir William Harcourt nor himself had ever contemplated that the Government would go to the extent that this Government is doing. There are manifold objections to the Death Duties, and I suppose the most important is that they fall at a very inopportune moment—at the time when the breadwinner has been taken away, and when the family are faced with a great many difficulties. It is obvious that the higher you make this tax the heavier you make the incidence to those who survive, and it naturally multiplies to a great extent the hardships with which that family is confronted.
The Death Duties are naturally a very fluctuating source of revenue. They fluctuate from 14 millions on one side to 14 millions on the other. The amount which can be derived from the Death Duties—I am supported in this opinion by the hon. Member for North Paddington in a letter which he wrote to the "Daily News" some time ago—has reached, I think, the highest point which we will see. I think I am right in saying that the figures which have been brought forward rather point to the fact that any stringent form of Death Duties, any high and drastic taxation, brings about a great number of evasions; and I believe when the Death Duties reach the point to which the right hon. Gentleman is now bringing them they will not produce so much as if the scale was on a lower figure, as at the present moment, because people will go out of their way, being forced to do so, to evade this drastic form of taxation which falls upon them. I think there is a great fallacy abroad in this country—and it is a fallacy which certainly is held by hon. Gentlemen on the other side and their leaders, among them the tight hon. Gentleman himself—that there are only two classes of people in this country, the workman and the millionaire. The workman in a great many cases does not pay the Death Duties, and I do not think that the millionaire, in many instances, deserves much compassion in respect of the Death Duties he has to pay; but there are classes between these two on which this tax, although 1813 graduated up to a certain point, will fall heavily. It will act and react in a very harsh manner on those individuals who have a certain amount of capital, and who come between the working classes and the millionaires. As I stated, when Sir William Harcourt brought the Death Duties in the maximum was to be 8 per cent., and it was to act, as was said, when graduated, as a 4 per cent. Death Duty all round. The right hon. Gentleman the Chancellor of the Exchequer is converting that 4 per cent. into a 6½ per cent. duty all round, If he does not think that 2½ per cent. extra is a very heavy and drastic burden to place ion a great many individuals in this country, all I can say is I cannot agree with him on that point. In the last 15 years the Death Duties have been raised twice. Two years ago the right hon. Gentleman the Prime Minister, in his Budget statement, raised the Death Duties, and now they are again to be raised at the end of 15 years, in a Very oppressive form.
This brings me to say a few words with regard to the old idea of the Death Duties—the idea that they should be paid out of savings or out of income. It is obviously impossible now that these duties, which are imposed by the Chancellor of the Exchequer, can be paid out of anything whatsoever except capital belonging to the individual. In making this impost the right hon. Gentleman is effecting a very serious inroad, indeed, on the amount of capital in this country. There might be something to be said about making this inroad on capital if it was used for entirely different purposes from those proposed; but I very strongly condemn the policy of the Government in making use of the capital of the country for the purpose of defraying annual expenditure. It is impossible to get away from the fact that the capital which belongs to the individual in this country employs labour, and we know well that it is an axiom that labour and capital go hand in hand. Without the one the other is powerless. I go so far as to say that capital in the hands of individuals employs more labour than if
§ that capital was sequestered by the State and placed in the hands of the State. We know very well that the State is a very large employer of labour, and I venture to say that the portion of capital taken from, the individual, and which that individual has used for the employment of labour, can be used by the State for the purposes of annual expenditure; so that the amount of capital thus withdrawn does not employ the same amount of labour as it did before. Either capital is used for employment or it is used in an extravagant manner as annual expenditure. I have always held the theory—and I know I am not alone in the idea—that any money which you pay in the form of Death Duties, which takes away the capital of the country, which takes away the national capital, should be used for the purpose of defraying the National Debt, the capital debt of the country. We have seen in the last 15 years that £350,000,000 have been taken in Death Duties—£350,000,000 of the national capital of this country, and it is obvious that, in another generation, about £600,000,000 of capital will have been taken in Death Duties. If that were used for the purpose of paying off the National Debt, there might be something to be said in support of this higher form of taxation. If the £600,000,000 were used in the way I suggest, it would remove from around the neck of the people of this country a millstone which is weighing them down at this moment to a degree more than they can bear. I really should have liked to have had from the Government a more adequate justification of the objects they have in view in sequestering the national capital of this country for the purpose of using it in annual expenditure.
§ 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, 169; Noes, 81.
1815| Division No. 635.] | AYES. | [8.12 p.m. |
| Acland, Francis Dyke | Barnard, E. B. | Bryce, J. Annan |
| Allen, A. Acland (Christchurch) | Beauchamp, E. | Buckmaster, Stanley O. |
| Allen, Charles P. (Stroud) | Bell, Richard | Burns, Rt. Hon. John |
| Ashton, Thomas Gair | Berridge, T. H. D. | Burnyeat, W. J. D. |
| Baker, Sir John (Portsmouth) | Bethell, Sir J. H. (Essex, Romford) | Burt, Rt. Hon. Thomas |
| Baker, Joseph A. (Finsbury, E.) | Black, Arthur W. | Buxton, Rt. Hon. Sydney Charles. |
| Balfour, Robert (Lanark) | Boulton, A. C. F. | Byles, William Pollard |
| Baring, Godfrey (Isle of Wight) | Brace, William | Carr-Gomm, H. W. |
| Barker, Sir John | Bright, J. A. | Cherry, Rt. Hon. R. R. |
| Barlow, Sir John E. (Somerset) | Brunner, J. F. L. (Lanes., Leigh) | Clough, William |
| Clynes, J. R. | Lambert, George | Robson, Sir William Snowdon |
| Cobbold, Felix Thornley | Lamont, Norman | Roch, Walter F. (Pembroke) |
| Collins, Stephen (Lambeth) | Layland-Barrett, Sir Francis | Rogers, F. E. Newman |
| Corbett, C. H. (Sussex, E. Grinstead) | Lea, Hugh Cecil (St. Pancras, E.) | Rose, Sir Charles Day |
| Cornwall, Sir Edwin A. | Lever, W. H. (Cheshire, Wirral) | Runciman, Rt. Hon. Walter |
| Cotton, Sir H. J. S. | Levy, Sir Maurice | Samuel, S. M. (Whitechapel) |
| Cox, Harold | Lewis, John Herbert | Schwann, C. Duncan (Hyde) |
| Curran, Peter Francis | Lloyd-George, Rt. Hon. David | Schwann, Sir C. E. (Manchester) |
| Davies, M. Vaughan-(Cardigan) | Luttrell, Hugh Fownes | Shackleton, David James |
| Davies, Timothy (Fulham) | Lynch, H. B. | Sherwell, Arthur James |
| Davies, Sir W. Howell (Bristol, S.) | Macdonald, J. R. (Leicester) | Shipman, Dr. John G. |
| Dewar, Arthur (Edinburgh, S.) | Macdonald, J. M. (Falkirk Burghs) | Simon, John Allsebrook |
| Dickinson, W. H. (St. Pancras, N.) | Maclean, Donald | Snowden, P. |
| Dobson, Thomas W. | McKenna, Rt. Hon. Reginald | Soares, Ernest J. |
| Essex, R. W. | M'Laren, Sir C. B (Leicester | Stanger, H. Y. |
| Esslemont, George Birnie | M'Laren, H. D. (Stafford, W.) | Stanley, Hon. A. Lyulph (Cheshire) |
| Evans, Sir S. T. | Maddison, Frederick | Stewart, Halley (Greenock) |
| Everett, R. Lacey | Mallet, Charles E. | Stewart-Smith, D. (Kendal) |
| Faber, G. H. (Buston) | Markham, Arthur Basil | Straus, B. S. (Mile End) |
| Fenwick, Charles | Marks, G Croydon (Launceston) | Strauss. E. A. (Abingdon) |
| Fuller, John Michael F. | Marnham, F. J. | Summerbell, T. |
| Fullerton, Hugh | Masterman, C. F. G. | Taylor, John W. (Durham) |
| Gibb, James (Harrow) | Molteno, Percy Alport | Tennant, H. J. (Berwickshire) |
| Gill, A. H. | Money, L. G. Chiozza | Thompson, J. W. H. (Somerset, E.) |
| Glover, Thomas | Morse, L. L. | Thorne, G. R. (Wolverhampton) |
| Harcourt, Rt. Hon. L. (Rossendale) | Morton, Alpheus Cleophas | Thorne, William (West Ham) |
| Harcourt, Robert V. (Montrose) | Murray, James (Aberdeen, E.) | Trevelyan, Charles Philips |
| Hardy, George A. (Suffolk) | Myer, Horatio | Verney, F. W. |
| Harmsworth, R. L. (Caithness-shire) | Newnes, F. (Notts, Bassetlaw) | Vivian, Henry |
| Hart-Davies, T. | Nicholson, Charles N. (Doncaster) | Walsh, Stephen |
| Hazel, Dr. A. E. W. | Norman, Sir Henry | Ward, W. Dudley (Southampton) |
| Helme, Norval Watson | Nussey, Sir Willans | Wardle, George J. |
| Henderson, J. McD. (Aberdeen, W.) | Nuttall, Harry | Wason, Rt. Hon. E. (Clackmannan) |
| Higham, John Sharp | O'Grady, J. | Wason, John Cathcart (Orkney) |
| Hobhouse, Rt. Hon. Charles E. H. | Parker, James (Halifax) | White, Sir George (Norfolk) |
| Holt, Richard Durning | Partington, Oswald | White, J. Dundas (Dumbartonshire) |
| Hooper, A. G. | Pearce, Robert (Staffs, Leek) | White, Sir Luke (York, E.R.) |
| Hope, W. H. B. (Somerset, N.) | Perks, Sir Robert William | Whittaker, Rt. Hon. Sir Thomas P. |
| Horniman, Emslie John | Pointer, J. | Wiles, Thomas |
| Howard, Hon. Geoffrey | Ponsonby, Arthur A. W. H. | Williams, W. Llewelyn (Carmarthen) |
| Hudson, Walter | Radford, G. H. | Wilson, J. W. (Worcestershire, N.) |
| Isaacs, Rufus Daniel | Rainy, A. Rolland | Wilson, P. W. (St. Pancras, S.) |
| Jardine, Sir J. | Rea, Rt. Hon. Russell (Gloucester) | Winfrey, R. |
| Jones, William (Carnarvonshire) | Rees, J. D. | Wood, T. M. M'Kinnon |
| Jowett, F. W. | Richards, T. F. (Wolverhampton, W.) | |
| King, Alfred John (Knutsford) | Roberts, G. H. (Norwich) | TELLERS FOR THE AYES.—Mr. |
| Laidlaw, Robert | Robinson, S. | Joseph Pease and Captain Norton. |
| Lamb, Ernest H. (Rochester) | ||
| NOES. | ||
| Anstruther-Gray, Major | Faber, George Denison (York) | O'Donnell, C. J. (Walworth) |
| Balcarres, Lord | Fell, Arthur | Parkes, Ebenezer |
| Baldwin, Stanley | Fletcher, J. S. | Pease, Herbert Pike (Darlington) |
| Balfour, Rt. Hon. A. J. (City Lond.) | Forster, Henry William | Peel, Hon. W. R. W. |
| Banner, John S. Harmood- | Foster, P. S. | Percy, Earl |
| Baring, Capt. Hon. G. (Winchester) | Gardner, Ernest | Powell, Sir Francis Sharp |
| Barrie, H. T. (Londonderry, N.) | Gibbs, G. A. (Bristol, West) | Pretyman, E. G. |
| Beach, Hon. Michael H. H. | Gordon, J. | Randles, Sir John Scurrah |
| Bowles, G. Stewart | Haddock, George B. | Rawlinson, John Frederick Peel |
| Bridgeman, W. Clive | Hamilton, Marquess of | Renwick, George |
| Bull, Sir William James | Hardy, Laurence (Kent, Ashford) | Ridsdale, E. A. |
| Burdett-Coutts, W. | Harris, Frederick Leverton | Roberts, S. (Sheffield, Ecclesall) |
| Butcher, Samuel Henry | Hermon-Hodge, Sir Robert | Rutherford, Watson (Liverpool) |
| Carlile, E. Hildred | Hill, Sir Clement | Salter, Arthur Clavell |
| Carson, Rt. Hon. Sir Edward H. | Hills, J. W. | Stanier, Beville |
| Castlereagh, Viscount | Hope, James Fitzalan (Sheffield) | Stanley, Hon. Arthur (Ormskirk) |
| Cave, George | Hunt, Rowland | Starkey, John R. |
| Cecil, Evelyn (Aston Manor) | Joynson-Hicks, William | Stone, Sir Benjamin |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Kerry, Earl of | Talbot, Rt. Hon. J. G. (Oxford, Univ.) |
| Clive, Percy Arthur | Kimber, Sir Henry | Thomson, W. Mitcheil-(Lanark) |
| Cochrane, Hon. Thomas H. A. E. | King, Sir Henry Seymour (Hull) | Thornton, Percy M. |
| Courthope, G. Loyd | Lambton, Hon. Frederick William | Walrond, Hon. Lionel |
| Craig, Captain James (Down, E.) | Lane-Fox, G. R. | Warde, Col. C. E. (Kent, Mid) |
| Craik, Sir Henry | Lee, Arthur H. (Hants, Fareham) | Williams, Col. R. (Dorset, W.) |
| Dalrymple, Viscount | Lowe, Sir Francis William | Wyndham, Rt. Hon. George |
| Dickson, Rt. Hon. C. Scott | Lyttelton, Rt. Hon. Alfred | |
| Doughty, Sir George | Mason, James F. (Windsor) | TELLERS FOR THE NOES.—Sir A. |
| Douglas, Rt. Hon. A. Akers- | Morpeth, Viscount | Acland-Hood and Viscount Valentia |
§ Question put accordingly, "That the words proposed to be left out to the word 1816 'thirtieth' ["thirtieth day of April"] stand part of the Clause."
1817§ The Committee divided: Ayes, 170; Noes, 82.
1819| Division No. 636.] | AYES. | [8.20 p.m. |
| Acland, Francis Dyke | Hart-Davies, T. | Ponsonby, Arthur A. W. H. |
| Allen, A. Acland (Christchurch) | Hazel, Dr. A. E. W. | Radford, G. H. |
| Allen, Charles P. (Stroud) | Helme, Norval Watson | Rainy, A. Rolland |
| Ashton, Thomas Gair | Henderson, J. M. (Aberdeen, W.) | Rea, Rt. Hon. Russell (Gloucester) |
| Baker, Sir John (Portsmouth) | Higham, John Sharp | Rees, J. D. |
| Baker, Joseph A. (Finsbury, E.) | Hobhouse, Rt. Hon. Charles E. H. | Richards, T. F. (Wolverhampton, W.) |
| Balfour, Robert (Lanark) | Holt, Richard Durning | Roberts, G. H. (Norwich) |
| Baring, Godfrey (Isle of Wight) | Hooper, A. G. | Robinson, S. |
| Barker, Sir John | Hope, W. H. B. (Somerset, N.) | Robson, Sir William Snowdon |
| Barlow, Sir John E. (Somerset) | Horniman, Emslie John | Roch, Walter F. (Pembroke) |
| Barnard, E. B. | Howard, Hon. Geoffrey | Rogers, F. E. Newman |
| Beauchamp, E. | Hudson, Walter | Rose, Sir Charles Day |
| Bell, Richard | Isaacs, Rufus Daniel | Runciman, Rt. Hon. Walter |
| Berridge, T. H. D. | Jardine, Sir J. | Samuel, S. M. (Whitechapel) |
| Bethell, Sir J. H. (Essex, Romford) | Jones, William (Carnarvonshire) | Schwann, C. Duncan (Hyde) |
| Black, Arthur W. | Jowett, F. W. | Schwann, Sir C. E. (Manchester) |
| Boulton, A. C. F. | King, Alfred John (Knutsford) | Shackleton, David James |
| Brace, William | Laidlaw, Robert | Sherwell, Arthur James |
| Bright, J. A. | Lamb, Ernest H. (Rochester) | Shipman, Dr. John G. |
| Brunner, J. F. L. (Lanes., Leigh) | Lambert, George | Simon, John Allsebrook |
| Bryce, J. Annan | Lamont, Norman | Snowden, P. |
| Buckmaster, Stanley O. | Layland-Barratt, Sir Francis | Soares, Ernest J. |
| Burns, Rt. Hon. John | Lea, Hugh Cecil (St. Pancras, E.) | Stanger, H. Y. |
| Burnyeat, W. J. D. | Lever, W. H. (Cheshire, Wirral) | Stanley, Hon. A. Lyulph (Cheshire) |
| Burt, Rt. Hon. Thomas | Levy, Sir Maurice | Stewart, Halley (Greenock) |
| Buxton, Rt. Hon Sydney Charles | Lewis, John Herbert | Stewart-Smith, D. (Kendal) |
| Byles, William Pollard | Lloyd-George, Rt. Hon. David | Straus, B. S. (Mile End) |
| Carr-Gomm, H. W. | Luttrell, Hugh Fownes | Strauss, E. A. (Abingdon) |
| Cherry, Rt. Hon. R. R. | Lynch, H. B. | Summerbell, T. |
| Clough, William | Macdonald, J. R. (Leicester) | Taylor, John W. (Durham) |
| Clynes, J. R. | Macdonald, J. M. (Falkirk Burghs) | Tennant, H. J. (Berwickshire) |
| Cobbold, Felix Thornley | Maclean, Donald | Thompson, J. W. H. (Somerset, E.) |
| Collins, Stephen (Lambeth) | M'Kenna, Rt. Hon. Reginald | Thorne, G. R. (Wolverhampton) |
| Corbett, C. H. (Sussex, E. Grinstead) | M'Laren, Sir C. B. (Leicester) | Thorne, William (West Ham) |
| Cornwall, Sir Edwin A. | M'Laren, H. D. (Stafford, W.) | Trevelyan, Charles Philips |
| Cotton, Sir H. J. S. | Maddison, Frederick | Verney, F. W. |
| Cox, Harold | Mallet, Charles E. | Vivian, Henry |
| Curran, Peter Francis | Markham, Arthur Basil | Walsh, Stephen |
| Davies, M. Vaughan-(Cardigan) | Marks, G. Croydon (Launceston) | Ward, W. Dudley (Southampton) |
| Davies, Timothy (Fulham) | Marnham, F. J. | Wardle, George J |
| Davies, Sir W. Howell (Bristol, S.) | Masterman, C. F. G. | Wason, Rt. Hon. E. (Clackmannan)) |
| Dewar, Arthur (Edinburgh, S.) | Molteno, Percy Alport | Wason, John Cathcart (Orkney) |
| Dickinson, W. H. (St. Pancras, N.) | Money, L. G. Chiozza | White, Sir George (Norfolk) |
| Dobson, Thomas W. | Morse, L. L. | White, J. Dundas (Dumbartonshire) |
| Essex, R. W. | Morton, Alpheus Cleophas | White, Sir Luke (York, E. R.) |
| Esslemont, George Birnie | Murray, James (Aberdeen, E.) | Whittaker, Rt. Hon. Sir Thomas P. |
| Evans, Sir S. T. | Myer, Horatio | Wiles, Thomas |
| Everett, R. Lacey | Newnes, F. (Notts, Bassetlaw) | Williams, W. Liewelyn (Carmarthen) |
| Fenwick, Charles | Nicholson, Charles N. (Doncaster) | Wilson, J. W. (Worcestershire, N.) |
| Fuller, John Michael F. | Norman, Sir Henry | Wilson, P. W. (St. Pancras, S.) |
| Fullerton, Hugh | Nussey, Sir Willans | Wilson, W. T. (Westhoughton) |
| Gibb, James (Harrow) | Nuttall, Harry | Winfrey, R. |
| Gill, A. H. | O'Grady, J. | Wood, T. M'Kinnon |
| Glover, Thomas | Parker, James (Halifax) | Young, Samuel |
| Harcourt, Rt. Hon. L. (Rossendale) | Partington, Oswald | |
| Harcourt, Robert V. (Montrose) | Pearce, Robert (Staffs, Leek) | TELLERS FOR THE AYES.—Mr. |
| Hardy, George A. (Suffolk) | Perks, Sir Robert William | Joseph Pease and Captain Norton. |
| Harmsworth, R. L. (Caithness-shire) | Pointer, J. | |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Castlereagh, Viscount | Foster, P. S. |
| Anstruther-Gray, Major | Cave, George | Gardner, Ernest |
| Arkwright, John Stanhope | Chamberlain, Rt. Hon. J. A. (Worc'r) | Gibb, G. A. (Bristol, West) |
| Balcarres, Lord | Clive, Percy Archer | Gordon, J. |
| Baldwin, Stanley | Cochrane, Hon. Thomas H. A. E. | Haddock, George B. |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Courthope, G. Loyd | Hamilton, Marquess of |
| Banner, John S. Harmood- | Craig, Captain James (Down, E.) | Hardy, Laurence (Kent, Ashford) |
| Baring, Capt. Hon. G. (Winchester) | Craik, Sir Henry | Hermon-Hodge, Sir Robert |
| Barrie, H. T. (Londonderry, N.) | Dalrymple, Viscount | Hill, Sir Clement |
| Beach, Hon. Michael Hugh Hicks | Dickson, Rt. Hon. C. Scott | Hills, J. W. |
| Bowles, G. Stewart | Doughty, Sir George | Hope, James Fitzalan (Sheffield) |
| Bridgeman, W. Clive | Douglas, Rt. Hon. A. Akers- | Hunt, Rowland |
| Bull, Sir William James | Faber, George Denison (York) | Joynson-Hicks, William |
| Burdett-Coutts, W. | Faber, G. H. (Boston) | Kerry, Earl of |
| Butcher, Samuel Henry | Fell, Arthur | Kimber, Sir Henry |
| Carlile, E. Hildred | Fletcher, J. S. | King, Sir Henry Seymour (Hull) |
| Carson, Rt. Hon. Sir Edward H. | Forster, Henry William | Lambton, Hon. Frederick William |
| Lane-Fox, G. R. | Randies, Sir John Scurrah | Thomson, W. Mitchell-(Lanark) |
| Lee, Arthur H. (Hants, Fareham) | Rawlinson, John Frederick Peel | Thornton, Percy M. |
| Lowe, Sir Francis William | Renwick, George | Valentia, Viscount |
| Lyttelton, Rt. Hon. Alfred | Ridsdale, E. A. | Walrond, Hon. Lionel |
| Mason, James F. (Windsor) | Roberts, S. (Sheffield, Ecclesall) | Warde, Col. C. E. (Kent, Mid) |
| Morpeth, Viscount | Rutherford, Watson (Liverpool) | Williams, Col. R. (Dorset, W.) |
| O'Donnell, C. J. (Walworth) | Salter, Arthur Clavell | Wyndham, Rt. Hon. George |
| Parkes, Ebenezer | Stanier, Beville | |
| Pease, Herbert Pike (Darlington) | Stanley, Hon. Arthur (Ormskirk) | TELLERS FOR THE NOES.—Mr. |
| Peel, Hon. W. R. W. | Starkey, John R. | Evelyn Cecil and Mr. Leverton |
| Percy, Earl | Stone, Sir Benjamin | Harris. |
| Pretyman, E. G. | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
§ Mr. SAMUEL ROBERTSmoved to leave out the words "and 2 per cent. shall be substituted for 1 per cent. in Section 17 of the Finance Act, 1894 (in this Part of this Act referred to as the principal Act), as the rate of Settlement Estate Duty."
The Committee will remember that the Settlement Estate Duty was first imposed by Sir W. Harcourt in 1894, by Section 5 Of the Finance Act of that year, which provided that "where property in respect of which Estate Duty is leviable is settled by the will of the deceased, further Estate Duty, called Settlement Estate Duty, on the principal value of the settled property shall be levied at the rate hereinafter specified," and it is specified at 1 per cent. The Chancellor of the Exchequer in his Budget statement explained to the Committee the reasons which prevailed in Sir William Harcourt's mind for setting up this duty. Previously to that year, the Committee will remember, there was a fixed 3 per cent. Probate Duty payable on all estates. That duty was altered in a graduated scale ranging from 1 to 8 per cent., and Sir William Harcourt thought that where property was settled, and therefore according to that Act of Parliament Estate Duty should only be payable once during the continuance of the settlement, it was only just and right that some equivalent should be paid by the receiver of the legacy or bequest which was settled to make up in some way the loss of duty where only one Estate Duty was levied. The Chancellor of the Exchequer made this statement:—
When we remember that the expedient of settling a whole estate is often adopted as an alternative to dividing it in the first instance, that the average age at which a life tenant succeeds is probably much higher than that of the average beneficiary taking full property, and last that the difference in value between the fee simple of the property and the life interest or life interests of the tenant or tenants for life passes, in theory at any rate, directly from settler to the remainder man, it is not unreasonable that a substantial abatement should be made from the present value (calculated on a strictly actuarial basis) of what would probably be the future liability in respect of Estate Duty, in the event of the whole estate being charged in full every time it passed upon death under the settlement.The position therefore is this: where a testator dies Estate Duty is paid on the 1820 whole of the corpus of the property. If any part of the estate is settled, an extra 1 per cent. is paid by the settled portion of the property, and no further duty is leviable in respect of the settled property until it comes into the possession of a person competent to dispose of it, that is, a person who owns it absolutely, and can dispose of it by sale or otherwise. The proposal now is to increase that 1 per cent. Settlement Estate Duty to 2 per cent., because the Chancellor of the Exchequer said that what was an equivalent when the graduated scale of Sir William Harcourt was fixed in 1894 is not an equivalent to the Estate Duty as now stiffened up. I do not think that that completes the whole question. The question is this: is it the public policy of the State to encourage or discourage settlements? I say that it is distinctly in the interests of public policy. A testator, as very often happens—in fact, in most cases—leaves a widow and young family, too young to be trusted with absolute control. The only safe and proper policy in such a case, both for the children and for the estate, is to settle that property. If you make the duty burdensome by raising it you pro tanto discourage testators from venturing to settle property, because they have not only to pay full Estate Duty but, in the case of the families, under this Bill, unfortunately both the Legacy and Succession Duties are reinstituted at the rate of 1 per cent. where the succession is in direct line. That 1 per cent. was repealed by the Act of Sir William Harcourt, but now the Government propose that where an estate is left in the way I have described there shall be three sets of duties, namely, the Estate Duty on the whole corpus, the Settlement Estate Duty at the rate of 2 per cent., and Legacy or Succession Duty, according to whether the property is personalty or realty, at the rate of 1 per cent. I venture to submit to the Committee that these duties are too heavy, and that a Settlement Estate Duty, at all events, of 1 per cent., is quite heavy enough in a case of this kind. If you stiffen it up in proportion to the way you are stiffening up 1821 the Estate Duty you will to that extent discourage testators, and, therefore, you will be following a course which, in my opinion, and, I think, in the opinion of most sensible men, will be a mistake. It will not be conducive to their benefit that property should be left to a young man or young woman at an age when they are not fit to have it left under their full and absolute control. The only safe way in their interest, at all events, and also, I think, in the interests of the estate, is that the property should be properly settled, especially where you have small estates. A majority of estates of this kind are small estates, and therefore that is all the more reason why full liberty, without unduly fettering each testator, should be given them to leave the property settled.
§ The ATTORNEY-GENERAL (Sir William Robson)I think the hon. Member has gone perhaps beyond the scope of his own Amendment in dealing with the whole principle of settlement, and asking whether the Government proposes to encourage or discourage settlement as a means of arranging family affairs.
§ Mr. SAMUEL ROBERTSDiscouragement by reason of the increase of duty.
§ Sir W. ROBSONThe principle of Settled Estate Duty is well established, and will not, I think, be disputed from any part of the House. I do not think it necessary to follow the hon. Member into any general principle, because I think it may be said, and should be said, that the present incidence of these duties is to encourage settlement, which the increase that the Government proposes will not in any way tend to discourage. It may have the effect of removing some undue preference which settled property now gets as against other property. But, indeed, although that would be its tendency, I doubt very much whether in considering the advisability of settlement anyone takes into consideration the amount or incidence of Settled Estate Duty. The question we have to decide on this Amendment is solely and simply, Is the increase necessary and, under the circumstances, the legitimate and proper means of raising the money which is required? When Settled Estate Duty was first imposed it was imposed as a tax suplementary to Estate Duty, because it was thought that if no duty were imposed at all in respect of settlement many estates and interests might pass which would escape the burden of 1822 Estate Duty altogether. It was thought then that Settlement Estate Duty was a fair equivalent, and would put settled and unsettled property on to something like the same footing. It has been discovered by experience which, I think, can scarcely be disputed that the proportion of Settled Estate Duty imposed with that object in view turns out to have been insufficient. It was thought under the original scheme of the late Sir William Harcourt that it might be taken for granted that property would pass about once in 30 years, and the rate of settled Estate Duty under Sir William Harcourt's Act was put at 1 per cent—instead of being rated at 3 per cent—on the basis of the average enjoyment of the property for that period of time. It was then calculated that the Estate Duty would work out at about 2½ per cent. on the whole amount of property chargeable thereto. In fact, the duties had worked out at 4¾ on that property. It has been ascertained by experience that the amount of Estate Duty upon the capital value of the estate passing was under-estimated by Sir William Harcourt, and that instead of the average being 2¾ or 2½ per cent., it has been nearer 4¾ per cent. Under the new scale it will be about 6½ per cent., so that 1 per cent. no longer remains an equivalent for the lost Estate Duty such as it was thought it would be under the Act of 1894. However, the reason given by the Chancellor was, I think, a sufficient reason, and perhaps better reason than referring to these calculations, and that was that in raising the Estate Duty he was in fact compelled, not only by fiscal, but by logical reasons, to raise also the Settled Estate Duty, which is an equivalent, in some degree in certain cases, to the Estate Duty. He considers that the Settled Estate Duty was in the first instance made too low. As an equivalent, seeing that we have since raised the Estate Duty as a whole, the extra 1 per cent. I do not think unjust and unfair.
§ Mr. AUSTEN CHAMBERLAINI rather regret we did not have the figures which the Attorney-General has given to us in the discussion which closed a few minutes ago. I understood the hon. and learned Gentleman to say that where Sir William Harcourt estimated that the average tax on estates passing by death would be either 2½ per cent. or 2¾ per cent., under the scale which he then set up it has turned out to be 4¾ per cent. Very well, the first point which rests upon that is that Sir William Harcourt's tax was very much 1823 heavier than he thought. Obviously it was very nearly double what he expected it to be. That is not all. That is not the only way in which Sir William Harcourt's calculations have been shown to be wrong. It is no reflection upon Sir William Harcourt's scale to say that all his expectations have not been realised. He was dealing with the matter without experience, and could not therefore be exact. No doubt he had his advisers, and they used the best calculations available at the time. There was another respect in which the matter went wrong, and went wrong to the disadvantage of the taxpayer and the advantage of the Treasury. The hon. and learned Gentleman said that the tax was fixed at 1 per cent. with reference, to the number of years which it was expected an ordinary succession to endure. He took that number at 30 years. In discussing the Land Taxes it has been stated by the Government that the period has come round more rapidly than was expected at the time, and that instead of the enjoyment of the estate averaging 30 years it averaged nearer 25 years. I asked the hon. and learned Gentleman what the figures 2½ per cent. and 4¾ per cent. were. He told me they were the average percentage which the State too it from the fortunes passing at death. It has nothing to do with how often they passed; it only means that it is shown they realise more than Sir William Harcourt expected. You take a larger sum than he expected. The Attorney-General's statement shows no connection between the Death Duties and the frequency at which these deaths occur and property passes. It appears that in all respects Sir William Harcourt's Death Duties were very much more onerous than he believed. It is not denied he thought he put his duties high enough, but it was found, from experience, that they were higher, and they occurred at more frequent intervals than he thought; and, with that knowledge, and using as an advancement of their proposals that the increase obtained was much higher than was thought would be the case, the Government put the Estate Duties, and also the Settlement Estate Duties, on a higher scale now. I agree that the Settlement Estate Duties ought to bear a proportion to the Estate Duties, and if I thought the Government had made out their case on the last proposition that we were discussing some time ago, I do not think what my hon. Friend has said would have caused me 1824 any grave doubts as to the wisdom of the present proposals; but I do not think that the Government made out their case on the last proposition, and if my hon. Friend goes to a Division I shall vote with him.
§ Mr. CAVEThere is one point which has not yet been covered that I should like to refer to. It is common ground that the Settlement Estate Duty was imposed in order to make up for the advantage enjoyed by settled property by reason of Sub-section (2), Section 5, of the Finance Act of 1894. Under this provision, once Estate Duty was paid upon property that was settled, no further-Estate Duty would be paid while it remained settled. You are taking away, by Clause 41, a great part of that advantage. It is a fact now that where property as settled and the reversioner dies first, duty is paid at the reversioner's death—no further duty is paid upon the death of the life tenant. This Bill proposes to alter that, and to take away from settled property this advantage which it has enjoyed under Sub-section (2) of Section 5. Is it right, at the very moment when you take away that advantage, to double the duty imposed upon settled property for the purpose of counterbalancing that advantage? Certainly, if you are taking away half the advantage, you ought to diminish the duty or leave it where it is. That is good reason for the Amendment moved from this side of the House. The conclusion arrived at by the right hon. Gentleman opposite leaves the advantage entirely out of account. Let me add one ether consideration. You are, I think, by this particular proposal discouraging settlements; you are increasing the duty on settlements made by will, and to that extent and by the provisions of Clause 41 you are discouraging settlements. More than that, by a later clause of the Bill you are increasing very greatly the Stamp Duty, so that in at least these four different ways, first by this provision, then by the next clause, then by the increase of the Succession Duty, and then by the increase of the Stamp Duty you are discouraging settlement. I cannot help thinking that it is part of the Government's policy to discourage this very reasonable and justifiable practice. For the reasons I have given I oppose the doubling of this duty.
§ Mr. WATSON RUTHERFORDI do-not think that ordinary people outside the rank of lawyers altogether appreciate the 1825 peculiar position which the Settlement Estate Duty occupies. The Settlement Estate Duty is imposed with the ordinary Estate Duty upon all property that is settled or contingently settled. It was held by a series of decisions culminating in the case of the Attorney-General and Farley that in all cases where there was a contingency settlement of any estate that the whole estate became immediately liable to Settlement Estate Duty. I will give a familiar illustration. It is that of a man who, when making his will, desires to leave his property to his wife for life, but ultimately to his children equally. He happens to have among his children either one or two daughters, and he settles shares upon the daughters. He provides in his will that his daughters' shares shall be held upon trust by her giving her an income for life, which is then to go to her children, and if she has no children it is to come back, and to be divided amongst his other issue. That is the ordinary will which the common or garden testator usually makes. It will hardly be believed by the ordinary layman that it was solemnly held by the Courts that upon the Finance Act of 1894 the effect of a man making his will in that ordinary way was that the whole of his estate was held to be contingently settled, that his son might die under age, and that the whole estate might drop into the share of the daughter, and conjointly be settled. The result was that by a series of decisions the estate of anybody who died having made a will of that ordinary kind was held to be liable, not only to full Estate Duty, but to full Settlement Estate Duty. That was fixed at 1 per cent. It is now proposed to double that. I venture to think that of all the Estate Duties ever inflicted upon a people, this of Settlement Estate Duty is the most irksome and irritating, and especially with regard to the decision of the Courts when they impose the full Settlement Estate Duty upon the whole of the estate. On the occasion when there was one daughter who might conjointly succeed to the estate it became a great hardship. By the Finance Act of 1898 it was provided that where a property was conjointly settled, and paid the whole of the Settlement Estate Duty, when a contingency arose, when the son, for instance, attained the age of 21, the executors could apply to the Inland Revenue and get back the exact proportion already paid in advance, and it left the duty upon the piece of property now found not to be settled. 1826 What has been the result? Upon this point I challenge the hon. and learned Gentleman in charge of the Bill. The result has been that in more than half the cases where the settlement Estate Duty has been so paid, and where in the events I have mentioned the property was not really settled at all, in more than half the cases the duty has not been applied for back.
§ The DEPUTY-CHAIRMAN (Mr. Caldwell)The hon. and learned Member is really not discussing the Amendment which is down on the Paper.
§ Mr. WATSON RUTHERFORDI was anticipating an Amendment of mine which is on the Paper—
§ The DEPUTY-CHAIRMANThat is not in order, neither is the discussion of it in order. This Clause simply deals with the question of raising the rate, whether it shall be from 1 per cent. to 2 per cent. and nothing further.
§ Mr. WATSON RUTHERFORDMay I be allowed to submit that if I can show that the tax is unjust or unfairly levied as it exists at present that is an argument against doubling the tax?
§ The DEPUTY-CHAIRMANIt is not in order on this Amendment to discuss questions of that kind.
§ Mr. CAVEThis point is not of so much importance so long as the tax is a low one, but when it is proposed to raise the tax by doubling it, surely it is open to us to consider whether that proposal is a just one or not.
§ The DEPUTY-CHAIRMANThat question does not arise under this Clause. The scope of the Clause simply deals with the question of increasing the rate, and what the hon. and learned Member has been referring to would come on the new Clause dealing with this matter.
§ Mr. PRETYMANDebate will become impassible if, in considering the question of the doubling of this tax, we are not allowed to consider what the incidence of that tax is. I put it that it is germane to the question of doubling a tax to state what the incidence of that tax is, and what the particular hardships are.
§ The DEPUTY-CHAIRMANYes; but the hon. and learned Member was going into the terms of an Amendment which is further down on the Paper.
§ 9.0 P.M.
§ Mr. WATSON RUTHERFORDI was informed that my Amendment would be out of order, and I realised that that was the case. If my Amendment had been in order it should have been put in the shape of a new clause, and, therefore, my intention was to argue against the doubling of the tax on the ground that the incidence of the tax was already very onerous without being doubled. I will not refer again to that particular point, because I desire to obey the ruling of the Chair. The argument against the doubling of this tax is confined entirely to the fact that the duty itself has been found—and this has practically been admitted by the Legislature—to be levied at the present time and imposed in a manner which does cause great hardship. Under the Act of 1898 it is provided that in the cases I have referred to there should be a rebate of the duty. Several cases have come under my own observation where the amount of the duty was not large. The amount of the duty in the cases I have mentioned was something under £60. I had three or four eases of that kind in my own experience.
§ The DEPUTY-CHAIRMANOrder, order. The hon. and learned Member is again disregarding my ruling.
§ Mr. WATSON RUTHERFORDI apologise for appearing in any way to disregard you ruling, and it was not my intention to do so. I did think, however, I should have been allowed to refer to the general hardships of the Settlement Estate Duty upon this Amendment. If you rule that I shall be out of order entirely in referring to the general hardship of that duty as it stands as an argument why it should not be doubled I feel that I cannot continue the Debate.
§ The DEPUTY-CHAIRMANThe hon. Member is discussing this question as it it were a separate and distinct matter. I allowed the hon. Member to proceed and develop his points in a general way, but he subsequently went into details on the matter, and that is not in order.
§ Mr. WATSON RUTHERFORDI may be allowed to conclude in a few general words protesting against this Settlement Estate Duty. It is bad enough for estates varying from £3,000 to £7,000, £8,000 or £10,000 to have to pay not merely the ordinary Estate Duty, but to be charged on the whole amount and then to be subjected to all the annoyance of trying to get pieces of that duty back when the contingencies arise which I have mentioned. 1828 It is bad enough to be subject to all that taxation and all that difficulty, but here is perhaps the most objectionable tax that exists to-day in the whole taxation of the country, and what do the Government propose? Do they propose to take it off? No; they propose to double it. The whole raison d'être for this particular Settlement Estate Duty which was given when it was imposed, and which was supposed to be the reason why it was created was that when property was settled there was less chance of it coming up and paying the ordinary Estate Duty, and, therefore, the provision against that was clear. But now in the very next Clause of this Bill all that protection is swept away, and the whole basis on which Settlement Estate Duty was founded, the whole reason for which it was created, is swept away by Clause 41 of this Bill, and instead of being asked to abolish this tax we are actually asked to double it. I think we have a case both in regard to the way this duty as levied, and more especially the difficulty of getting these pieces back under the new provisions contained in Clause 41. I think we have got an unanswerable case against the imposition of this double tax in regard to the Settlement Estate Duty. It is for those reasons that I join with my hon. Friends in supporting the Amendment.
§ Mr. JAMES HOPETwo points were raised by my hon. and learned Friend the Member for Kingston (Mr. Cave) which the Government have made no attempt to answer. The original 1 per cent. was imposed against certain contingent advantages. They are to be abolished by a later Clause in the Bill, and that is therefore a reason, not for doubling, but for abolishing the tax already existing. The other point made by the hon. Member was that this was not to be taken in isolation. It is accumulative. There are other provisions, such as the Stamp Duties, in this part of the Bill. Those points were made by the hon. Member for Kingston, and were enforced by the hon. Member for Liverpool (Mr. Watson Rutherford), and I think we ought not to go to a Division until some answer has been made. I would ask the Attorney-General whether it is really the wish of the Government to discourage settlements? So long as a fair toll is paid to the Revenue, and so long as they are not used for evading taxation, they are a thing to be encouraged and not discouraged; but by the accumulative effect of their Bill the Government rather seem to discourage than encourage them. I repeat those two questions, and ask the Attorney- 1829 General or the Financial Secretary to the Treasury to answer them. I would ask, further, what is the yield expected from the extra 1 per cent. Imposed?
§ Question put, "That the word 'and' stand part of the Clause."
§ The Committee divided: Ayes, 155; Noes, 68.
1831| Division No. 637.] | AYES. | [9.10 p.m. |
| Acland, Francis Dyke | Harmsworth, R. L. (Caithness-shire) | Rainy, A. Rolland |
| Allen, A. Acland (Christchurch) | Hart-Davies, T. | Rea, Rt. Hon. Russell (Gloucester) |
| Allen, Charles P. (Stroud) | Haworth, Arthur A. | Rees, J. D. |
| Ashton, Thomas Gair | Hazel, Dr. A. E. W. | Richards, T. F. (Wolverhampton, W.) |
| Baker, Sir John (Portsmouth) | Helme, Norval Watson | Ridsdale, E. A. |
| Baker, Joseph A. (Finsbury, E.) | Higham, John Sharp | Roberts, G. H. (Norwich) |
| Balfour, Robert (Lanark) | Hobhouse, Rt. Hon. Charles E. H. | Robinson, S. |
| Barker, Sir John | Holt, Richard Durning | Robson, Sir William Snowdon |
| Barlow, Sir John E. (Somerset) | Hooper, A. G. | Roch, Walter F. (Pembroke) |
| Barnard, E. B. | Hope, W. H. B. (Somerset, N.) | Rogers, F. E. Newman |
| Bell, Richard | Hudson, Walter | Samuel, S. M. (Whitechapel) |
| Berridge, T. H. D. | Isaacs, Rufus Daniel | Schwann, C. Duncan (Hyde) |
| Bethell, T. R. (Essex, Maldon) | Jardine, Sir J. | Schwann, Sir C. E. (Manchester) |
| Black, Arthur W. | Jewett, F. W. | Shackleton, David James |
| Boulton, A. C. F. | King, Alfred John (Knutsford) | Sherwell, Arthur James |
| Brace, William | Laidlaw, Robert | Shipman, Dr. John G. |
| Bright, J. A. | Lamb, Ernest H. (Rochester) | Simon, John Allsebrook |
| Brunner, J. F. L. (Lancs., Leigh) | Lambert, George | Snowden, P. |
| Bryce, J. Annan | Lamont, Norman | Soares, Ernest J. |
| Buckmaster, Stanley O. | Layland-Barrett, Sir Francis | Stanger, H. Y. |
| Burns, Rt. Hon. John | Lea, Hugh Cecil (St. Pancras, E.) | Stewart, Halley (Greenock) |
| Burnyeat, W. J. D. | Lever, W. H. (Cheshire, Wirral) | Stewart-Smith, D. (Kendal) |
| Burt, Rt. Hon. Thomas | Levy, Sir Maurice | Straus, B. S. (Mile End) |
| Buxton, Rt. Hon. Sydney Charles | Lewis, John Herbert | Strauss, E. A. (Abingdon) |
| Byles, William Pollard | Lloyd-George, Rt. Hon. David | Summerbell, T. |
| Carr-Gomm, H. W. | Luttrell, Hugh Fownes | Taylor, John W. (Durham) |
| Cherry, Rt. Hon. R. R. | Lynch, H. B. | Tennant, H. J. (Berwickshire) |
| Clough, William | Macdonald, J. R. (Leicester) | Thompson, J. W. H. (Somerset, E.) |
| Clynes, J. R. | Maclean, Donald | Thorne, G. R. (Wolverhampton) |
| Collins, Stephen (Lambeth) | M'Laren, Sir C. B. (Leicester) | Thorne, William (West Ham) |
| Cornwall, Sir Edwin A. | M'Laren, H. D. (Stafford, W.) | Trevelyan, Charles Philips |
| Cotton, Sir H. J. S. | Maddison, Frederick | Vivian, Henry |
| Cox, Harold | Mallet, Charles E. | Walsh, Stephen |
| Curran, Peter Francis | Markham, Arthur Basil | Ward, W. Dudley (Southampton) |
| Davies, M. Vaughan- (Cardigan) | Marks, G. Croydon (Launceston) | Wardle, George J. |
| Davies, Sir W. Howell (Bristol, S.) | Marnham, F. J. | Wason, Rt. Hon. E. (Clackmannan) |
| Dewar, Arthur (Edinburgh, S.) | Masterman, C. F. G. | Wason, John Cathcart (Orkney) |
| Dickinson, W. H. (St. Pancras, N.) | Molteno, Percy Alport | White, Sir George (Norfolk) |
| Dobson, Thomas W. | Money, L. G. Chiozza | White, J. Dundas (Dumbartonshire) |
| Dunne, Major E. Martin (Walsall) | Morse, L. L. | White, Sir Luke (York, E.R.) |
| Essex, R. W, | Morton, Alpheus Cleophas | Whittaker, Rt. Hon. Sir Thomas P. |
| Esslemont, George Birnie | Myer, Horatio | Wiles, Thomas |
| Evans, Sir S. T. | Newnes, F. (Notts, Bassetlaw) | Williams, W. Llewelyn (Carmarthen) |
| Everett, R. Lacey | Norman, Sir Henry | Wilson, J. W. (Worcestershire, N.) |
| Fenwick, Charles | Nussey, Sir Willans | Wilson, P. W. (St. Pancras, S.) |
| Fuller, John Michael F. | Nuttall, Harry | Wilson, W. T. (Westhoughton) |
| Fullerton, Hugh | 0'Grady, J. | Winfrey, R. |
| Gibb, James (Harrow) | Parker, James (Halifax) | Wood, T. M'Kinnon |
| Gill, A. H. | Partington, Oswald | Young, Samuel |
| Glover, Thomas | Pearce, Robert (Staffs, Leek) | |
| Harcourt, Rt. Hon. L. (Rossendale) | Pointer, J. | TELLERS FOR THE AYES.—Mr. |
| Harcourt, Robert V. (Montrose) | Ponsonby, Arthur A. W. H. | Joseph Pease and Captain Norton. |
| Hardy, George A. (Suffolk) | Radford, G. H. | |
| NOES. | ||
| Acland Hood, Rt. Hon. Sir Alex. F. | Clive, Percy Archer | Harris, Frederick Leverton |
| Anstruther-Gray, Major | Cochrane, Hon. Thomas H. A. E. | Hermon-Hodge, Sir Robert |
| Arkwright, John Stanhope | Courthope, G. Loyd | Hill, Sir Clement |
| Balcarres, Lord | Craig, Captain James (Down, E.) | Hills, J. W. |
| Baldwin, Stanley | Craig, Sir Henry | Hope, James Fitzalan (Sheffield) |
| Banner, John S. Harmood- | Doughty, Sir George | Joynson-Hicks, William |
| Baring, Capt. Hon. G. (Winchester) | Douglas, Rt. Hon. A. Akers- | Kimber, Sir Henry |
| Barrie, H. T. (Londonderry, N.) | Faber, George Denison (York) | King, Sir Henry Seymour (Hull) |
| Beach, Hon. Michael Hugh Hicks | Fell, Arthur | Lane-Fox, G. R. |
| Bowles, G. Stewart | Fletcher, J. S. | Lee, Arthur H. (Hants, Fareham) |
| Bull, Sir William James | Forster, Henry William | Lowe, Sir Francis William |
| Burdett-Coutts, W. | Gardner, Ernest | M'Arthur, Charles |
| Carlile, E. Hildred | Gordon, J. | Mason, James F. (Windsor) |
| Carson, Rt. Hon. Sir Edward H. | Guinness, Hon. W. E. (B. S. Edmunds) | Meysey-Thompson, E. C. |
| Castlereagh, Viscount | Haddock, George B. | Morpeth, Viscount |
| Cave, George | Hamilton, Marquess of | O'Donnell, C. J. (Walworth) |
| Cecil, Evelyn (Aston Manor) | Hardy, Laurence (Kent, Ashford) | Parkes, Ebenezer |
| Pease, Herbert Pike (Darlington) | Salter, Arthur Clavell | Walrond, Hon. Lionel |
| Peel, Hon. W. R. W. | Sandys, Col. Thos. Myles | Warde, Col. C. E. (Kent, Mid) |
| Powell, Sir Francis Sharp | Stanier, Beville | Williams, Col. R. (Dorset, W.) |
| Pretyman, E. G. | Stone, Sir Benjamin | |
| Randles, Sir John Scurrah | Thomson, W. Mitchell-(Lanark) | TELLERS FOR THE NOES.—Mr. |
| Rawlinson, John Frederick Peel | Thornton, Percy M. | S. Roberts and Mr. Watson Rutherford. |
| Renwick, George | Valentia, Viscount |
§ Mr. SAMUEL ROBERTSmoved, in the first paragraph, after the word "and" ["rates of the Estate Duty, and"], to insert the words "where the principal value of the settled property exceeds ten thousand pounds, and does not exceed £25,000, one and a-half per cent., and where the principal value of the settled property exceeds twenty-five thousand pounds."
The Committee will see that the object of this Amendment is to graduate the Settlement Estate Duty, so that settled estates under £10,000 shall pay as now 1 per cent., those between £10,000 and £25,000 l½per cent., and those over £25,000 the percentage proposed by the Government, namely, 2 per cent. I submit this Amendment with confidence. It is in the interest of small estates, and under this Bill it has been recognised that these small estates are entitled to consideration. If the Committee will look at Clause 42 they will see that the Government have recognised that small estates ought to pay less; in fact, their new proposal is that where an estate is under £15,000 in value there shall be no Legacy or Succession Duty levied; where the legacy is under £1,000, whatever the value of the estate may be, there shall be no Legacy Duty; and where the person taking a legacy under £2,000 is a widow or a child under 21, whatever the value of the estate, there shall be no Legacy or Succession Duty levied. Bearing these provisions in mind, I submit that my proposal is most reasonable, and I hope the Government will accept it.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)The effect of this Amendment, as the hon. Member very truly said, would be to graduate the duty down in the case of very small estates. But the hon. Gentleman must realise that there would be a certain loss of revenue in carrying it out, and there would consequently have to be a corollary: if the Estate Duties are to be graduated down in the case of small estates they would have to be graduated up in the case of larger estates. I take it the hon. Member is not prepared to accept the latter alternative, and I very much regret that the Government cannot see its way to agree to his proposal.
§ Mr. PRETYMANI think that is a most extraordinary reply. Considering that the Government have already graduated duties at the bottom, I should have thought they had graduated them also at the top to as great an extent as was possible. If they have not done so I do not see how the right hon. Gentleman's argument applies. Surely, in the case of small estates like these, it is not worth while to inflict this extra duty of 2 per cent. To exact this small amount would only create a great sense of hardship. If the right hon. Gentleman has no better argument to adduce than that he has already put forward, I must say he has no answer at all. We certainly have right on our side.
§ Sir E. CARSONWhat would be the amount of loss to the revenue if this Amendment were accepted? It would certainly prove a great relief to small estates. The Government have already admitted in regard to the Legacy Duty, the Succession Duty, the Estate Duty, the Income Tax, and various other taxes that they ought to be graduated. Why should a different principle be applied to the Settlement Duty?
§ Mr. HOBHOUSEIt is evident that the amount involved is very small—not very appreciable, but still there would be a loss. It has been pointed out in previous Debates that this is a composition for several possible payments, whereas in the cases alluded to by the right hon. Gentleman (Sir E. Carson) only one duty is payable.
§ Mr. PRETYMANDoes the right hon. Gentleman suggest that compensation for a low rate of duty should be equal to the compensation for a high rate? Surely, if 2 per cent. is fair compensation for a duty on which the rebate may be as high as 15 per cent., it is not possible to defend a claim to impose 2 per cent. where the rebate is only 3 per cent. The right hon. Gentleman cannot possibly defend that.
§ Mr. EVELYN CECILThis is a very small concession to ask, and I hope the right hon. Gentlemen will reconsider their decision. They have shown they are 1833 anxious to do what they can for small estates. Here, probably, an infinitesimal amount is involved, and the estates concerned would certainly be grateful for the concession. The Government have always been willing to listen to appeals on behalf of small estates.
§ Mr. CAVEI also hope the right hon. Gentleman will listen favourably to this appeal. The proposal is in the case of estates under £25,000, instead of doubling the Settlement Estate Duty to only increase it by 50 per cent. There is a good deal of reason behind this, and although it is a very small matter to the Exchequer it is not small to the persons interested. Taking an estate of £20,000, it may mean a matter of £100, and that is a matter of some importance to those beneficiaries who are not well off. We were told that the proposal was to double the Settlement Estate Duty, because we were raising the Estate Duty generally, and therefore you had to compensate matters. That is a very good argument as regards a large estate, but not so in regard to the small estates, where you are not increasing the Estate Duty, or at all events the increase is not so great pro rata, and the rise in Settlement Estate Duty ought to bear some proportion to the rise in Estate Duty. I must press the Government for a more favourable consideration of this Amendment.
§ Mr. HALDANEI unfortunately had not the pleasure of being here earlier in this Debate, but I heard what the Secretary to the Treasury said, and I agree with him. The real situation is that the Settlement Estate Duty at 1 per cent. never compensated, or anything like compensated., for the loss of revenue through settlement. It was intended to give an advantage to settlements, but a much larger advantage was given in the result, when we bad the benefit of experience, than was originally contemplated. The 2 per cent. does not compensate either, and to begin to graduate and differentiate down would mean a very large differentiation at the other end. We do not think it right or desirable that we should enter upon this process of graduation, having regard to the fact that the Settlement Estate Duty is nothing like an equivalent for the loss which arises from the settlement. The Settlement Estate Duty was instituted for the purpose of meeting certain cases of succession, and it was felt that it would be hard in cases where there 1834 was settlement not to allow some abatement. It was thought at the time that 1 per cent. would not wholly compensate for the loss of Settlement Duty and the various charges of the settlement, and that it would approach near them. Experience has shown that it is nothing like so much, and even 2 per cent. does not compensate under the present scale, or anything like it. Therefore, if we were to carry out the proposal of the hon. Member we should have to graduate at the other end, and I am sure there would be great feeling about that, and it is better from that point of view to take the argument put forward by the Secretary to the Treasury, and to hold to the principle of 2 per cent. as the price of exemption from the Settlement Duty.
§ Mr. JAMES HOPEThe argument of the Secretary of State for War amounts to this: We cannot be logical, therefore we cannot be just. We cannot graduate downwards without a new Resolution. Therefore he says they will stick to the 2 per cent., but it is estimated that in many cases 2 per cent. is more than an equivalent for the Settlement Duty. What would be the loss to the Treasury if this Amendment were accepted? The Secretary to the Treasury failed to answer this, but perhaps information is now available?
§ Mr. HALDANEThe loss would be £150,000 to the Exchequer if the Amendment were accepted, and it would be unfair to adopt it having regard to the fact that the small estate escapes the differential duty or has to pay it on a smaller scale, and having regard to the loss it is not just to the Exchequer to forego the ordinary Settlement Estate Duty and bear the large loss which I have indicated.
§ Mr. COURTHOPESurely the right hon. Gentleman's last argument destroys his former argument, that the Settlement Estate Duty was an equivalent for the Settlement Duty. Here is a Minister who gets up twice on the same Amendment, and on the second occasion he entirely destroys the argument which he used on the first. It is an extraordinary thing that no better opposition should be given to the Amendment than that given by the right hon. Gentleman. I hope some notice will be taken of this extraordinary state of things outside, though I fear the public at large may not be sufficiently up to these technical matters to appreciate the extraordinary arguments which the representative of the Government has used.
§ Mr. JAMES HOPECould the right hon. Gentleman say what will be the total yield of the extra 1 per cent? The Secretary to the Treasury was not able to answer that question.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 68; Noes, 169.
1837| Division No. 638.] | AYES. | [9.40 p.m. |
| Acland-Hood, Rt. Hon. Sir Alex. F. | Fell, Arthur | Parkes, Ebenezer |
| Anstruther-Gray, Major | Fletcher, J. S. | Pease, Herbert Pike (Darlington) |
| Balcarres, Lord | Forster, Henry William | Peel, Hon. W. R. W. |
| Baldwin, Stanley | Gardner, Ernest | Powell, Sir Francis Sharp |
| Banner, John S. Harmood- | Gordon, J. | Pretyman, E. G. |
| Baring, Captain Hon. G. (Winchester) | Guinness, Hon. W. E. (B. S. Edm'ds.) | Randles, Sir John Scurrah |
| Barrie, H. T. (Londonderry, N.) | Haddock, George B. | Rawlinson, John Frederick Peel |
| Beach, Hon. Michael Hugh Hicks | Hardy, Laurence (Kent, Ashford) | Renwick, George |
| Bowles, G. Stewart | Harris, Frederick Leverton | Ronaldshay, Earl of |
| Bull, Sir William James | Hermon-Hodge, Sir Robert | Rutherford, Watson (Liverpool) |
| Burdett-Coutts, W. | Hill, Sir Clement | Salter, Arthur Clavell |
| Carlile, E. Hildred | Hills, J. W. | Sandys, Col. Thos. Myles |
| Carson, Rt. Hon. Sir Edward H. | Hope, James Fitzalan (Sheffield) | Stanier, Beville |
| Castlereagh, Viscount | Joynson-Hicks, William | Stanley, Hon. Arthur (Ormskirk) |
| Cave, George | Kimber, Sir Henry | Thomson, W. Mitchell-(Lanark) |
| Cecil, Evelyn (Aston Manor) | King, Sir Henry Seymour (Hull) | Thornton, Percy M. |
| Clive, Percy Archer | Lane-Fox, G. R. | Valentia, Viscount |
| Cochrane, Hon. Thomas H. A. E. | Lee, Arthur H. (Hants, Fareham) | Walrond, Hon. Lionel |
| Craig, Captain James (Down, E.) | Long, Col. Charles W. (Evesham) | Warde. Col. C. E. (Kent, Mid) |
| Craik, Sir Henry | Lowe, Sir Francis William | Williams, Col. R. (Dorset, W.) |
| Dickson, Rt. Hon. C. Scott | M'Arthur, Charles | |
| Doughty, Sir George | Mason, James F. (Windsor) | TELLERS FOR THE AYES.—Mr. |
| Douglas, Rt. Hon. A. Akers- | Meysey-Thompson, E. C. | S. Roberts and Mr. Courthope. |
| Faber, George Denison (York) | Morpeth, Viscount | |
| NOES. | ||
| Acland, Francis Dyke | Evans, Sir S. T. | Maddison, Frederick |
| Allen, A. Acland (Christchurch) | Everett, R. Lacey | Mallet, Charles E. |
| Allen, Charles P. (Stroud) | Fenwick, Charles | Markham, Arthur Basil |
| Ashton, Thomas Gair | Foster, Rt. Hon. Sir Walter | Marks, G. Croydon (Launceston) |
| Baker, Joseph A. (Finsbury, E.) | Fuller, John Michael F. | Marnham, F. J. |
| Balfour, Robert (Lanark) | Fullerton, Hugh | Masterman, C. F. G. |
| Banbury, Sir Frederick George | Gibb, James (Harrow) | Molteno, Percy Alport |
| Barker, Sir John | Gill, A. H. | Money, L. G. Chiozza |
| Barlow, Sir John E. (Somerset) | Glover, Thomas | Morgan, J. Lloyd (Carmarthen) |
| Barnard, E. B. | Haldane, Rt. Hon. Richard B. | Morse, L. L. |
| Beauchamp, E. | Harcourt, Rt. Hon. L. (Rossendale) | Morton, Alpheus Cleophas |
| Bell, Richard | Harcourt, Robert V. (Montrose) | Myer, Horatio |
| Berridge, T. H. D. | Hardy, George A. (Suffolk) | Newnes, F. (Notts, Bassetlaw) |
| Bethell, T. H. (Essex, Maldon) | Harmsworth, R. L. (Caithness-shire) | Norman, Sir Henry |
| Birrell, Rt. Hon. Augustine | Hart-Davies, T. | Nussey, Sir Willans |
| Black, Arthur W. | Haworth, Arthur A. | Nuttall, Harry |
| Boulton, A. C. F. | Hazel, Dr. A. E. W. | O'Donnell, C. J. (Walworth) |
| Brace, William | Helme, Norval Watson | O'Grady, J. |
| Bright, J. A. | Higham, John Sharp | Parker, James (Halifax) |
| Brunner, J. F. L. (Lanes., Leigh) | Hobhouse, Rt. Hon. Charles E. H. | Partington, Oswald |
| Bryce, J. Annan | Holt, Richard Durning | Pearce, Robert (Staffs, Leek) |
| Buckmaster, Stanley O. | Hooper, A. G. | Pointer, J. |
| Burns, Rt. Hon. John | Hope, W. H. B. (Somerset, N.) | Ponsonby, Arthur A. W. H. |
| Burnyeat, W. J. D. | Hudson, Walter | Radford, G. H. |
| Burt, Rt. Hon. Thomas | Isaacs, Rufus Daniel | Rainy, A. Rolland |
| Buxton, Rt. Hon. Sydney Charles | Jardine, Sir J. | Rea, Rt. Hon. Russell (Gloucester) |
| Byles, William Pollard | Jones, William (Carnarvonshire) | Rees, J. D. |
| Carr-Gomm, H. W. | Jowett, F. W. | Rendall, Athelstan |
| Cawley, Sir Frederick | Laidlaw, Robert | Richards, Thomas (W. Monmouth) |
| Cherry, Rt. Hon. R. R. | Lamb, Ernest H. (Rochester) | Richards, T. F. (Wolverhampton, W.) |
| Clough, William | Lambert, George | Ridsdale, E. A. |
| Clynes, J. R. | Larmont, Norman | Roberts, G. H. (Norwich) |
| Collins, Stephen (Lambeth) | Layland-Barratt, Sir Francis | Roberts, Sir J. H. (Denbighshire) |
| Corbett, C. H. (Sussex, E. Grinstead) | Lea, Hugh Cecil (St. Pancras, E.) | Robertson, Sir G. Scott (Bradford) |
| Cornwall, Sir Edwin A. | Lever, W. H. (Cheshire, Wirral) | Robinson, S. |
| Cotton, Sir H. J. S. | Levy, Sir Maurice | Robson, Sir William Snowdon |
| Curran, Peter Francis | Lewis, John Herbert | Roch, Walter F. (Pembroke) |
| Davies, M. Vaughan-(Cardigan) | Lloyd-George, Rt. Hon. David | Rogers, F. E. Newman |
| Davies, Sir W. Howell (Bristol, S.) | Lupton, Arnold | Rose, Sir Charles Day |
| Dewar, Arthur (Edinburgh, S.) | Luttrell, Hugh Fownes | Samuel, S. M. (Whitechapel) |
| Dickinson, W. H. (St. Pancras, N.) | Lynch, H. B. | Schwann, C. Duncan (Hyde) |
| Dobson, Thomas W. | Macdonald, J. R. (Leicester) | Schwann, Sir C. E. (Manchester) |
| Dunne, Major E. Martin (Walsall) | Maclean, Donald | Shackleton, David James |
| Essex, R. W. | M'Laren, Sir C. B. (Leicester) | Sherwell, Arthur James |
| Esslemont, George Birnie | M'Laren, H. D. (Stafford, W.) | Simon, John Allsebrook |
| Snowden, P. | Thorne, William (West Ham) | Williams, J. (Glamorgan) |
| Soares, Ernest J. | Trevelyan, Charles Philips | Williams, W. Llewelyn (Carmarthen) |
| Stanger, H. Y. | Vivian, Henry | Wilson, J. W. (Worcestershire, N.) |
| Stewart, Halley (Greenock) | Walsh, Stephen | Wilson. P. W. (St. Pancras, S.) |
| Stewart-Smith, D. (Kendal) | Ward, W. Dudley (Southampton) | Wilson, W. T. (Westhoughton) |
| Strachey, Sir Edward | Wardle, George J. | Winfrey, R. |
| Straus, B. S. (Mile End) | Wason, Rt. Hon. E. (Clackmannan) | Wood, T. M'Kinnon |
| Strauss, E. A. (Abingdon) | Wason, John Cathcart (Orkney) | Young, Samuel |
| Summerbell, T. | White, Sir George (Norfolk) | |
| Taylor, John W. (Durham) | White, J. Dundas (Dumbartonshire) | |
| Tennant, H. J. (Berwickshire) | White, Sir Luke (York, E.R.) | TELLERS FOR THE NOES—Mr. |
| Thompson, J. W. H. (Somerset, E.) | Whittaker, Rt. Hon. Sir Thomas P. | Joseph Pease and Captain Norton. |
| Thorne, G. R. (Wolverhampton) | Wiles, Thomas |
§ Mr. LLOYD GEORGEI beg to move to leave out the second paragraph of the Clause. I propose this Amendment because I want to insert a new Clause which will cover not only Estate Duty, tout Succession Duty as well, so that the mortgagee shall be protected. Amendment agreed to.
§ Motion made and Question proposed, "That the Clause as amended stand part of the Bill."
§ Mr. JOYNSON-HICKSIn a previous discussion to-day the Chancellor of the Exchequer made some reflections on the profession to which I have the honour to belong with reference to the valuations made for the purposes of the Estate Duty. I should like to say a word with regard to the method of valuation. When the right hon. Gentleman made the statement referred to, I think he spoke from his own personal experience.
§ Mr. LLOYD-GEORGENo; from observation of others.
§ Mr. JOYNSON-HICKSI felt that the eminent custodian of the National Revenue would never connive at anything like defrauding the Revenue, but he did not hesitate to cast a wholesale aspersion on the legal profession. I have had considerable experience in regard to valuations for Estate Duty purposes, and I can state that the utmost value is put on the whole of the property. Unless the valuation is satisfactory to Somerset House they insist upon a subsequent valuation being made. Where estates consist, as nearly all estates do, of stocks and shares, from Consols downwards, the Stock Exchange quotation is taken as indicating the absolute value. When the valuation is sent in the Somerset House officials go through the Stock Exchange list of the day, and if there is the slightest mistake, even to the extent of ⅛per cent., word is sent that the valuation is too low, and further Estate Duty is charged. The same is done in regard to house property. A most careful examination is made in order to ascertain the 1838 value. I was concerned professionally with the valuation of property on which Estate Duty for a certain amount was paid. The property was afterwards put up for sale, and we could not get anything like the valuation on which duty was paid. It was not quite fair that the Chancellor of the Exchequer should make that statement as to the way in which Estate Duty valuations are made. We do not object to this Clause because we object to pay our fair share of the taxation of the country, but I do want to make it perfectly clear that we, on this side of the House, want to know where the raising of these duties is going to stop. In 1894 the Estate Duties w ere raised very largely; they were raised again in 1907; and they are to be raised again in 1909; and I cannot see why on the basis of the argument used by the Chancellor of the Exchequer there is any reason that they should not be raised again in 1911, 1913, or 1915. I wonder that no Member of the Labour Party got up in the course of the Debate and challenged the Chancellor of the Exchequer to really carry out the principle propounded in the well-known book of the hon. Member for Blackburn (Mr. Snowden). It is because this part of the Budget relating to Estate Duty carries out to some extent the theories of the hon. Member for Blackburn that we object to it. I agree with the speech made by the Secretary of State for War that every person who has property is bound to pay a certain share towards the taxation of the country for the benefit of the protection which he gets from the body politic, but where is this taxation to end, and where does resumption by the State begin? We do not object to anything that is necessary to keep the State going, but we do object to the Socialistic doctrine that the State has a right to resume possession of property which has up to the present moment been the property of private individuals. We want to know where the Chancellor of the Exchequer parts company with the hon. Member for Blackburn, and I am afraid he will not tell 1839 us. If he will not tell us, we are really en titled to know before passing this Clause whether he agrees with the principle of the hon. Member for Blackburn as to taking 25 per cent. I do not want to be accused of defending millionaires, but I say that if you take 25 per cent. of any man's property, be he multi-millionaire or not, you are rapidly approaching the point where taxation ceases to be taxation and becomes confiscation or resumption by the State. An hon. Member below the Gangway said you have not gone far enough, and—
§ The DEPUTY-CHAIRMANThe hon. Member must confine himself to the Clause which is under discussion.
§ Mr. JOYNSON-HICKSI understood that this Clause was a clause which raised the rate of Estate Duty upon practically all the estates of the country, and raised it upon the estate of the millionaire to 15 per cent., and by a subsequent clause Legacy Duty is raised to 10 per cent., and I was commenting on the fact that those two duties, the duty under the Clause we are now discussing and the duty in a succeeding Clause, give the State one-fourth of the entire property in certain circumstances of the millionaire, and I was suggesting that this Clause—
§ The DEPUTY-CHAIRMANThe hon. Member must confine himself to the Clause under discussion.
§ Mr. JOYNSON-HICKSI was doing my very best to confine myself to the Clause, but this is the only point in the Bill where we can discuss the cumulative effect.
§ The DEPUTY-CHAIRMANThere will be an opportunity on the third reading.
§ Mr. AUSTEN CHAMBERLAINMay I call attention to the fact that the Chancellor of the Exchequer, in his interesting speech earlier in the evening, admitted it was not possible to discuss this particular tax without reference to the other taxes with which it is connected. Of course, I quite agree that it would be out of order to discuss in detail the other tax, but will you not allow Members on this side of the House to make that reference to the other taxes in connection with this tax which the Chancellor of the Exchequer himself thought fair?
§ Mr. LLOYD-GEORGEIt is perfectly true I did say the reason why I did not 1840 raise the point of Order was that I thought it very desirable that there should be latitude. That latitude was allowed on an Amendment, and the understanding was that the general Debate was taken practically on that one Amendment. I am not saying that the other taxes are not to be criticised each on its own merits, but the general Debate was to be taken on that Amendment. That was the understanding on which we were proceeding, otherwise if a strict point of Order was taken the Chairman would be bound to rule that no such general reference to taxes should be allowed. Every speaker, one after the other, went into the matter thoroughly and discussed the whole thing, as it was the general feeling of the House that there ought to be one Debate on the whole of the Taxes.
§ Mr. AUSTEN CHAMBERLAINI do not want to suggest that we should have exactly the same debate on every clause, but I think it impossible to discuss this tax without reference to other duties which are included in another clause. I think it would be quite out of order to discuss those duties in detail, but I venture to protest against my hon. Friend or other Members being prevented from taking into account in discussing this Clause the fact that there are other taxes which are linked with this tax, and which will increase the levy which this tax makes.
§ The DEPUTY-CHAIRMANIn discussing this Clause you must deal with the tax under this Clause, and under this Clause alone.
§ 10.0 P.M.
§ Sir FREDERICK BANBURYI wish to submit that the question be fore the Chair is that the Clause stand part, and that it is competent to discuss any argument relating to this Clause, whether it was discussed on Amendment or net. I also ask in regard to your ruling that my hon. Friend can raise this point on the third reading whether it would be possible to do so, inasmuch as on the third reading he can only vote for or against the whole Bill, whereas he may be in favour of certain clauses and against other clauses.
§ The DEPUTY-CHAIRMANThat is a different matter. This Clause has been discussed fully. The hon. Member is not prevented on the Motion that the Clause stand part from referring to anything in the Clause, but he is certainly excluded from anything outside the Clause.
§ Mr. JOYNSON-HICKSI will endeavour to confine myself as closely as I can to the Clause. At any rate, it is not disputed that the Clause as it is now sought to make it stand part of the Bill does take in certain circumstances 15 per cent. in Estate Duty and 2 per cent. for Settled Estate Duties—that is, 17 per cent.—and I suggest to the Committee that that is not merely approaching but that it has gone beyond the borders of fair taxation and it has become resumption, or, as I call it, confiscation, by the State of a portion of the man's capital; and if it is allowable for the State and fair, reasonable, and right for the Slate to take 17 per cent. of a millionaire's capital, there is no reason whatever—I think that the hon. Member for North Paddington will agree with me—why they should not take 27 per cent., or as the hon. Gentlemen below the Gangway would say, that there is no reason why they should not take 37, 47, or 57 per cent. What we want to know is: Where are you going to stop? There must be a stop unless you are going to leave us all as the followers of the hon. Member for Blackburn would suggest. Is this to be for many years the final limit, or is the thing to be opened again within two or three years?
I may pass from the millionaires and refer for a moment to the much poorer man, the man with an income of from £200 to £300 a year, who has saved £5,001. That man, under this Clause, is to have further Estate Duty put on him to the extent of £50 extra. Even in the presence of hon. Gentlemen below the Gangway, I venture to suggest that a hard-working, small professional, or the hard-working, small trader, is just as much entitled to the sympathy of this Committee as the artisan; and I am fortified in that by the right hon. Gentleman in his Budget speech, where he said there was no class in the community—he was speaking of the classes whose incomes were under £500 a year—which has a much harder struggle or a more anxious time than the class composed of men earning so and so, who are often much worse off and more to be pitied than artisans who earn half their wages. Here is a man who earns £200 or £300 a year, who by dint of extreme economy and extreme thrift and hard work has saved up £5,001 in order to leave a couple of hundred a year at 4 per cent. to his widow and family. The taxation is to be increased under the provisions of this Bill, but there is no Estate Duty payable, and no Income Tax 1842 payable by these artisans, and the Chancellor of the Exchequer says they are not so much to be pitied as the small professional or the small struggling tradesman. By this tax you are taking a big slice out of the capital of the country. I am always prepared to sit humbly at the feet of the Member for North Paddington (Mr. Chiozza Money) on financial subjects. But when he says that this tax will not really deplete the capital of the country I cannot help thinking of the speech made by an equally great financial authority, namely, Lord Courtney, who is at all events a good Radical, at the National Liberal Club, at the time these duties first came up. I am prepared to accept the authority of Lord Courtney rather than even the authority of the Member for North Paddington, that this tax will come out of capital. Lord Courtney pointed out that, unlike the Income Tax, this duty must, if it was to be just, be applied to payment of the National Debt. If you take capital to pay off capital liabilities, that is one thing; but if you take capital and spend it on the ordinary purposes of the country, on the Army, on the Navy, and on education, and so on, you are deliberately eating up your capital. That is the opinion of Lord Courtney, and it is an opinion I am prepared to accept. From the business point of view I cannot help thinking that in plunging into these Death Duties rather than into Licence Duties or Income Tax, or whatever they may be, of the one hundred and one other duties which are charged under the provisions of this Bill, you are depleting the national capital. During the last 15 years the tendency has been growing to send capital abroad, and by sending capital abroad you decrease the possibilities of employment in this country.
§ Mr. LLOYD-GEORGEI trust the hon. and learned Gentleman will not think I am guilty of disrespect if I decline to follow him into all the considerations which he has put before the Committee. In the main they are the arguments which were advanced in the Debate which took place five hours ago, and in which we traversed the whole of the ground. The hon. and learned Gentleman asked me for a definite answer to a very specific question. He asked me whether in two years I propose to increase the percentage. I take note of a very gratifying and subtle flattery which is involved in that question, that I shall be here at all two years hence as Chancellor of the Exchequer in charge of the finances of the country.
§ Sir E. CARSONYou will be Prime Minister by then.
§ Mr. LLOYD-GEORGEThe right hon. and learned Gentleman is exceedingly flattering, but at any rate I give this undertaking, that as far as I can see from the prospect of national finances there is no reason why any Chancellor of the Exchequer, certainly two years hence or for some time, should submit to Parliament a proposal to increase the Death Duties. When I made my Budget statement, I stated that I was taking a survey not merely of the financial provisions for the year, but of the probabilities of the immediate future. At any rate, I wanted to impress on Parliament that we anticipated we should meet all our liabilities as far as human foresight could go. I can assure the hon. and learned Gentleman, with regard to the suggestion that I cast an aspersion on the profession to which he and I belong, so far from my having done so, I thought I was complimenting it. There are two different points of view with regard to valuation, and except perhaps in regard to theology there is no subject which causes a greater chasm between individuals than that of valuation. One person may say a thing is worth £10,000 and the other that it is worth £50,000, yet both are honourable men. After all, the solicitor tries to do his best by his profession, and when it comes to a conflict between the solicitor and the Commissioners of Inland Revenue, up to the present at any rate, the solicitor has always come out on top. Solicitors do their best for their clients, they deserve well of their clients, and I have no doubt their services are recognised. One other observation with regard to the Settlement Duty. I really deprecate the 2 per cent. being added to the 15 per cent. If the hon. Member would like to propose that there should be no Settlement Duty I think he would get very little backing from his hon. Friends. Two per cent. is a very good bargain, 1 per cent. is a very considerable bargain—even the 2 per cent. is an actuarial bargain. The 2 per cent. simply franks the estate for the next death. You have no right to add the 2 per cent. to the 15 per cent. Death Duty. You are simply paying 2 per cent. to frank the estate for perhaps the next two deaths. It is a very unfair criticism which is directed to the 2 per cent., and it ought not to be added to the 15 per cent. I thought it was necessary to answer the hon. and learned Gen- 1844 tleman, and I think I have now dealt with the points he has raised.
§ Mr. AUSTEN CHAMBERLAINThe right hon. Gentleman in defending himself against the suggestion that he had cast an aspersion on the legal profession, made observations which I hope he will take to heart. He said there is nothing which causes a greater chasm between people than the question of valuation. They are all honourable men, he said, yet one man places the value of the thing at £10,000 and another at £50,000. That being the nature of valuation, the right hon. Gentleman none the less thought that the valuation of all the landed property in the kingdom was so simple a matter that it might be trusted to Inland Revenue officials without any appeal to any court of law. [An Hon. MEMBER: "Question."] If it is not the question I must apologise to impatient Members for venturing to make observations in reply to the speech delivered by the Chancellor of the Exchequer, and, after all, if they did not think it necessary to interrupt him, they need not think it necessary to interrupt me.
§ Mr. LLOYD-GEORGEI was dealing with valuation for Estate Duty.
§ Mr. AUSTEN CHAMBERLAINHis observations were of wider application, and were intended to be of wider application. He did not say that these peculiar differences arose only in regard to Estate Duties. He said a great many things which. I think he will find it a little difficult to support in the course of these discussions. He has never said anything quite so foolish as that. Then he tried to reassure the hon. Member behind me by saying, well, as far as he was concerned and as far as he could forecast the future, he saw no reason why the Chancellor of the Exchequer in two years or in the near future should either increase the Death Duty scale which he is setting up. I confess that that would be more reassuring if Sir W. Harcourt had not said exactly the same thing. The right hon. Gentleman may perhaps tell me, or his friends, that after all Sir William Harcourt's scale has lasted for 15 years, and that that is a fair time to expect any settlement to endure. But that would not carry greater comfort, for the party, almost at the first opportunity when they returned to power, revised Sir William Harcourt's scale. It is no comfort to us or to the country to say that Sir William Harcourt's scale lasted without being increased or its severity 1845 being added to as long as the Liberal party was excluded from office. It is a poor pledge to offer to a frightened taxpayer, either for the Chancellor of the Exchequer personally or for the party with which he is connected. Except from his anxiety to treat my hon. Friend with no discourtesy, and therefore to offer some kind of answer to some of the questions which my hon. Friend had put, I cannot say that the Chancellor of the Exchequer added to the information at our disposal or to the argumentative case of the Government by the reply which he has just made. He did, earlier in the evening, undertake to answer the questions which my right hon. Friend (Mr. Balfour) had put to him. He said he would answer them seriatim, but, carried away by his own persuasiveness, he entirely forgot the question with which my right hon. Friend concluded and which was the principal question to which my right hon. Friend desired to have an answer. Let me remind him of what it was. When the Death Duties were proposed by Sir William Harcourt he proposed them in lieu of a graduated Income Tax. As my right hon. Friend said, and as is common knowledge, had Sir William Harcourt seen his way to work a graduated Income Tax he would have preferred a graduated Income Tax rather than to graduate the duties, and so, I think, would anyone who has considered the matter. But Sir William Harcourt, like every other responsible statesman up to the present time, thought that the difficulties of graduating the Income Tax, the hardship and confusion to which it would give rise, the inquisition into private affairs which it demanded, and therefore the hostility that it would arouse, and the injustice it would work, were so great that you could not attempt to graduate the Income Tax. The present Government no longer hold that opinion, they are going to graduate the Income Tax. Putting that on one side, it was as an alternative to a graduated Income Tax, and not as an adjunct to it, that Sir William Harcourt proposed the Death Duties. Hs argued the matter, therefore, from the point of view of Income Tax—Income Tax not payable year by year, but deferred till the death of a man from whom it was due; and he alleged that the proper way to meet these taxes, the way every sensible and prudent man would meet them, and the way it was reasonably easy for him to do so, was by an insurance where the premiums would take the place of the annual tax, and would provide on his death the 1846 money for the cumulative duties which became payable. The Government have thrown over the whole of that theory of the Death Duties. In place of regarding them as deferred Income Tax collected at death instead of annually during life, they now deliberately put forward the theory that they are a chunk out of the capital of the deceased man, which he or his heir is to pay for permission to transmit his property to his descendants, or to those whom he wishes to succeed him. My right hon. Friend asked, "What is your justification or reason for that complete change of front? "The Chancellor of the Exchequer gave no answer. It is an old debating device to begin with an air of great candour, acknowledging the force of the reasoning which your opponents have brought to bear, recognising the moderation of their speech; to go on to say that as you now have serious arguments to meet you will proceed to meet them; then to lose yourself in a maze of words and sit down without having touched the case which you professed to be going to demolish. In that art the Chancellor of the Exchequer is a pastmaster. He does it with the best of temper, with a good deal of humour, with much applause from, his own side, and, I imagine, with a pleasant satisfaction at the knowledge that he has got himself out, as he hopes un-perceived, from a very disagreeable position to which he saw no other reasonable issue. But, after all, I think that this Committee and the country will note that the Chancellor of the Exchequer gave no-answer to my right hon. Friend, and that we have had up to this time—and I suppose we cannot expect to get it after this time if we do not get it from any Member of the Government before we part with this Clause—absolutely no justification for the change of front which the Government has made.
§ Mr. AUSTEN CHAMBERLAINThe Secretary of State for War might give an answer, but, after listening to his other speeches, does my hon. Friend think it likely that he will? I should, however, be very glad to hear him try. My right hon. Friend is entitled to have one Member of the Government at least try to answer the case which he put with so much force and moderation. No answer has been made up to the present time. The Government treat this as money to be taken out of capital, which the life-owner of the estate cannot and is not expected to replace. These 1847 admissions of the Government are in themselves sufficient, in my opinion, to condemn the rates to which they have raised this tax as a fiscal expedient. I quite agree that the extent to which the Death Duties trench upon the capital of the country is a question of degree, hat when you are imposing Death Duties they should be such that a man, with some reasonable sacrifice, can provide for in his lifetime. There is no reason why the Death Duties should make a greater in road upon capital than anything else. But I say what you are doing now is to put upon a man in the form of Death Duties the equivalent to an annual charge that is so extravagantly high that if it were in fact proposed as an annual charge the country would not accept it. You are at tempting to conceal, and to some extent have concealed, what is going on from the country, that the result of this tax to some extent already, and to a greatly added degree, as you increase the rate of tax, will be to deplete the funds which are available for the industrial development of this country; for not merely earning an income for their possessors, but for the production of new national wealth in the future; that you are not merely draining your resources at the moment, but causing at the very lowest a diminution of the rate of increase which those resources might reasonably be expected to attain. That is a matter of some gravity, because, whatever your resources may be, there is not much possibility that your expenditure is going to be reduced. On the contrary, whether it be from the pressure of foreign competition or the necessities of domestic development, many a man has hoped to see the restriction in expenditure, and there are those who cannot carry out their election pledges because of it. I do not believe that any man can make a great reduction in our expenditure; and, under these circumstances, anything which tends to reduce the capital of the country, and tends to lessen or destroy its wealth-producing power, is doubly bad. You have a great emergency to face—
§ Mr. H. MYER£240,000,000 for the Boer War.
§ Mr. AUSTEN CHAMBERLAINThe hon. Member is remarkable not only for the frequency of his interruptions, but for their irrelevancy.
§ Mr. MYER rose.
The CHAIRMANWill the hon. Member resume his seat until I have finished? I think it would be very much better to allow the right hon. Gentleman to continue his speech undisturbed.
§ Mr. AUSTEN CHAMBERLAINI say nothing about the interruptions, Sir, because it does not seem to me to affect my argument, and it would lead me too far astray. I say that if this were merely a passing emergency, where you required for temporary purposes a great accession of revenue, there might be something to be said for these high charges. At any rate, it would modify my objection. But when you have to look forward to an expenditure which cannot be reduced, which, I fear, will inevitably tend to grow, then it is doubly dangerous to do anything which saps the source of national wealth and productivity. A few other observations as to the extent of the increase which the Chancellor of the Exchequer has proposed. More fortunate than some of my hon. Friends, he has a speech which is relevant to every Amendment, and which even the Deputy-Speaker never interferes with—
§ Mr. AUSTEN CHAMBERLAINI ask leave to withdraw that observation; I was led astray by the incident of some little time ago. But I say that the Chancellor of the Exchequer has succeeded in framing a speech that is relevant to every Amendment, and which he introduces on most of them. The right hon. Gentleman says we must have money; we have got a deficit of £16,000,000; how are we to fill it? Of course, you have got to raise the money, but it does not follow because you are going to raise the money to fill this great deficit that the Government has created that you are to swallow whatever nostrums the Government provide. The right hon. Gentleman says, "We have this great, large sum to raise in taxation. Is my tax moderate? Is it reasonable? That is the only question you can argue." I am ready to meet him on his own ground. Is the increase he proposes reasonable and moderate? I share the dislike of the right hon. Gentleman for taking the millionaire as a typical example of the effect of his taxation. The right hon. Gentleman out- 1849 side the House is very prone to take the millionaire or the exceptional case, because he thinks they will meet with no kind of sympathy, and because he is confident the poor man will never believe that the man of great wealth can be in any possible distress or will realise what the outgoings of such a man may be. I share the right hon. Gentleman's objections to taking millionaires; they are not typical cases. Let us take a more typical case, the case of the small fortunes. What has the Chancellor done? A person with a fortune of over £5,000 and between that and £10,000 has his duty raised by 33⅓per cent.
§ Mr. CHIOZZA MONEYIt is raised by 1 per cent.—
§ Mr. AUSTEN CHAMBERLAINBetween £10,000 and £15,000 it is raised by 25 per cent., which is a heavy addition; £15,000 to £20,000, by 25 per cent.; £20,000 to £25,000, the duty is increased 50 per cent.; from £25,000 to £40,000, it is increased by 33 per cent., and from £40,000 to £50,000, it is increased by 50 per cent. That is what the right hon. Gentleman calls moderate increases in taxation. Heaven save us from the moderation of the right hon. Gentleman! See what the Government are doing. They have bewailed the case of a man who is dependent upon his own exertions for his income derived from secure investment. He has gradually built up a little fortune for himself, and the Government have taken credit, I suppose, on every platform in the country for the differentiation which the Prime Minister made between earned and unearned increment. These little fortunes of £5,000 or £10,000 are the result of earned increment managed by thrifty men with families for whom they provide, and what the right hon. Gentleman's predecessor gave to these men in the differentiation of the incomes the right hon. Gentleman the Chancellor of the Exchequer is going to take back from the children by his increased Death Duties. I never thought that the Prime Minister's proposals were well conceived, but I think at least when a Government is boasting of having given this relief, it should not, by a side-wind, strike at the men it is professing to relieve, and take away with one hand what it professes openly to bestow upon them with the other. The millionaire's ease may, or may not, be a hard one, but the cases of these small men are very hard, and the hardship in their cases 1850 is of a kind which my right hon. Friend the Leader of the Opposition drew attention to earlier in the day, and the hon. Member for Brighton also dwelt upon. The hardship in these cases is that their fortunes are very largely engaged in business, and when you deduct, at their death, from those fortunes these comparatively heavy sums, you are dealing, not merely a blow at them and fining their children by depriving them of what their parents hoped to secure for them, but you are dealing at the same time a blow at countless little businesses in the country which require all the capital they can get, and for which you cannot get fresh capital under such circumstances. The Chancellor of the Exchequer and the Prime Minister have boasted from time to time in second reading speeches and in platform utterances that this Budget hampers no industry. I believe in my heart that no Budget this House has seen during the last 50 or 100 years has done so much in countless ways to hamper and interfere with industry and with employment as the one we are now discussing.
§ Mr. PEELThe question which has been put by the Leader of the Opposition and reiterated by the right hon. Gentleman the Member for East Worcestershire has met with no reply whatever from the Chancellor of the Exchequer. The right hon. Gentleman has been challenged to state what is the basis of these new taxes. Does the right hon. Gentleman contend that they are founded upon the cid basis, or is he establishing a new basis, the principles of which have been criticised by the Leader of the Opposition? I have seen and heard a certain number of Budgets introduced, but I have never seen before a Government so affectionately proud of a deficit as the present Government. The remarkable thing is that they have selected this special time when they are taking a larger slice out of the capital of the country than on any previous occasion to make a raid on the Sinking Fund, I want to allude to the figure which the Chancellor of the Exchequer gave to us at an earlier Stage in the Debate. He gave us one set of figures as to the gross amount of capital that came before the Exchequer for settlement each year. He gave a certain set of figures on 10th May, 1909, in answer to a question, and obviously there is a discrepancy between those two sets of figures. When the Chancellor was challenged upon that point, his object, of course, was to 1851 make out that the amount on which these Death Duties were levied during these ten years had not diminished but rather increased. The Chancellor said: "Oh, yes; the figures you are quoting are not my figures, but the figures on which the tax is levied." That is precisely the point we urge on this side of the House. The important point is not the amount of capital which comes up for review, but the amount on which he is going to levy his duties. Although there may be a great deal of capital, if the taxes are evaded or avoided or if there are exemptions, that capital may be said not to exist. If you will look at the figures on which the tax is levied, you will find that during the last ten years, which is a considerable time to extend your range, that there has not only been no increase, but there has been an actual steady downward movement. The Chancellor's argument about these triennial periods, on which he tried to show there had been an increase, after he had told us the decennial period was the period to take, is not one which I think will carry conviction with the Committee. The Chancellor tried to defend himself on another ground. He said the falling off was simply due to the decrease in the value of securities, comparing the two or three years before the war with the subsequent years. The time when securities have fallen and when presumably the property of the country is of less value is made the very occasion by the Chancellor for increasing the Death Duties. He tried, not very successfully, to rebut the attack that these taxes fall upon and affect large businesses, by saying these businesses were mostly those of limited companies, and that you do not sell a portion of the property of a company, but its shares. Everybody knows, of course, that, if large blocks of shares are cast upon the market the property and credit of the company is injured. You cannot deal with property in that way without injuring the credit of businesses, making it thereby more difficult to borrow capital. Probably they will have to borrow at a higher rate.
In this way there is a close connection between the steepening of Death Duties and large businesses. The Chancellor went further and said, in addition to large businesses of limited companies, they had small business partnerships, and so on. There are a great many large businesses indeed run by exceedingly few persons, in some cases by only one individual. In those 1852 cases the taxes fall directly upon the businesses, and they ought to be looked after. In this case the damage is direct and definite. This duty will fall on these businesses precisely at the time when the brain of the business has gone, when probably it is being conducted by trustees or executors unfamiliar with it, and possibly when there is a necessity for raising large sums of money for the purpose of carrying it on. The hon. Member for North Paddington said, "If you look at the capital of the country it may be decreasing as far as taxation is concerned, but the income is increasing, so what damage is there to fear?" But there are several considerations which would diminish, from the point of view of the cheerfullest Chancellor of the Exchequer, the effect of the increased income. One is that a large amount' of the increase is due to foreign investments; another large part is attributable to considerable purchases of annuities which, for the moment, give apparently a higher income to the people; and the third is the recent tightening up of the collection of taxes. Much Income Tax is now got in which escaped in former years, and if one, comparing the present Income Tax with that of ten or twelve years ago, could compare like with like, I do not think the discrepancy would be found to be so great as has been suggested.
The Secretary for War has tried to reassure the Committee by quoting the example of the late Mr. Gladstone. He said, Take the capital of the country in the last few years of Mr. Gladstone's time and compare that capital with the amount of taxation from Death Duties, and you will find it bears much the same proportion to the capital of that day that the new taxation and Death Duties bear to the capital of the country at this period." I am very distrustful about these great figures relating to the capital of the country. They are, I believe, arrived at by the multiplication of the income of the country. But when you examine that income and attempt on any basis to arrive at the capital by a multiple of the income you get a value which is very doubtful and dubious indeed. I was reading only a few days ago a speech delivered to a certain number of business men by a late very prominent Member of the Liberal party. [HON. MEMBERS: "Name."] He is a Member of another place, and it would hardly be in order to mention his name. His view is a very different one. He said if the late Mr. Gladstone were to meet the 1853 present financial luminaries of the Treasury Bench, those Gentlemen would have an exceedingly bad quarter of an hour at the hands of that deceased statesman.
§ Mr. JAMES MASONThe Chancellor of the Exchequer has told us on more than one occasion that the tax falls, not upon the man who leaves the fortune, but upon the man who succeeds to it, and therefore he ought to be very glad to get anything at all. The Leader of the Opposition raised the question of whether or not the tax was injurious to industry, and the Chancellor of the Exchequer said it was "better that the tax on industry should be taken at uncertain intervals than that it should be annually collected from the profits of the business. Apparently the reason he gave for that statement was that almost all businesses were now in the form of limited liability companies, and therefore the successor to shares in that business had only to sell a certain number of shares to raise the necessary money. I fail to see how that answer affects the point of whether the tax should be collected at uncertain periods or at a regular annual period; but is the right hon. Gentleman correct in saying that most of the businesses in this country are limited liability companies? At any rate, there are a great many businesses which are still private businesses, and it is in these cases where, I think, the right hon. Gentleman has failed to see the possible incidence and effect of these taxes. Take the case of a factory which has been built up by the energy and individual work of two or three individuals, who have during a long series of years put back every penny they can save into the capital of their business, and in that way have built up the capital. I know cases where this has been done to a very large extent. In such a case these two or three individuals have no capital, except that which is embarked in their business. One of these partners dies and leaves his interest to his son, and that business is immediately burdened by having to pull out of the business a large amount of money necessary to pay Death Duties on the share of the partner who is deceased. You may say that falls upon the son. It does not, as the pulling of capital out of the business enormously hampers it in the industry in which it has been embarked. Expansion has been going on for years, and in a business there is nothing more hampering than the curtailment of working capital. This does not fall upon the son who inherits his fortune from his father; 1854 the principal sufferers are the two other partners, who are in no way related to the deceased, and who, through no fault of their own, have to have their business considerably crippled because one of their members happens to die. This is one case of hardship. I do not propose to harp upon the question of hardship and injustice, but I am sure if I did it would be difficult to discriminate between this injustice and hundreds of others. But there is one case of hardship and injustice which arises under this tax owing to the extreme uncertainty of the period at which the tax will be paid. You have the case of three families. In one case you very likely have a succession of deaths occurring perhaps on an average of 10 years apart. In another you have the more normal case of son succeeding father at periods of about 24 to 30 years, and you have another possible case where the son is dead and the man who leaves the property is succeeded by his grandson, who may possibly hold the property for 50 years without being subjected to Death Duties. In this case you have the extreme difference of the incidence of the tax. In. the first family it practically means ruin in 30 or 40 years, whereas in the other case, where a very young man succeeds an old one, the tax may not become leviable again for such a long period that its incidence is comparatively light.
But my real objection to this tax, and to the increasing of it is that I believe the principle to be entirely wrong. The right hon. Gentleman (Mr. Haldane) apparently answered this afternoon that the principle was not under discussion, because it had been accepted, and because it was too late in the day. I think he might have said it was too late in the Session. But at any rate the question of principle does arise because it is quite obvious that if the principle of the tax is bad, that is a very good reason for not increasing it. The question of principle depends very much on the question whether or not the tax, really does destroy national capital. On a previous occasion when I raised this question of the amount of national capital which was destroyed during the last 14 years, the Chancellor of the Exchequer replied that it was an insignificant amount, in face of the fact that during the same period there had been an accumulation of £3,500,000,000 of capital, and that the capital of the nation was £15,000,000,000. These figures of national capital are extremely difficult to estimate, and are very uncertain; but the Chancellor of the 1855 Exchequer has undoubtedly taken the very highest figures he could get in giving that answer. He quoted Sir Robert Giffen, who has since written an article repudiating the use which has been made of the figures which he gave. To show the extreme uncertainty of the estimate made by Sir Robert Giffen, which is based on the Income Tax Returns, these same Returns have formed the basis of estimates of the national property, which have varied from below £8,000,000,000 in one case to nearly £15,000,000,000 in another. It. is certainly as reasonable, and, I think, much more, in fact, instead of taking the Income Tax Returns to multiply the capital which comes up for review for the purpose of the Death Duties by the average duration of ownership, and calculations which have been made on that basis have shown that the increase of national capital during the 12 years from 1895–6 to 1907–8 has been, not £3,500,000,000, but only £1,657,000,000, which makes all the difference in calling the destruction of £250,000,000 insignificant. It is more than one-seventh of the whole. Even that does not include the whole destruction of capital. We have destruction in other ways, and, during that same period, there has been a very large increase in our population, and if we bear all these things in mind, far from the destruction of capital having been insignificant, it has amounted to something like, per head, one-fourth of the amount that has been built up in the same time. Under this Bill this tax, which has destroyed a considerable amount of capital during the last 14 years, is to destroy a considerable amount more.
§ At the same time you are putting other taxes on capital in the shape of Land Taxes. I cannot help thinking that the Government pay very scant attention to certain weighty warnings which were given them by the merchants and bankers of London, of the City of London. I am sure that no one will deny that they are a body of men who are well qualified to give an opinion on such a subject. They told the Prime Minister that there was considerable danger of capital being reduced below the point necessary for the trade in which it is employed in this country. I wish to say a word as to the effect of this increase in the duty on thrift. No one will deny that with these taxes in force there will be a very strong temptation for a man who has to consider whether he shall spend £100 or save it to say, "If I spend it I am only spending £90, because the other £10 is coming out of the Chancellor of the Exchequer." I am sure that is a reason which will guide many people in deciding to save less than they have done hitherto, and if they save less, whence is to come the replacement of the capital you are about to destroy if it is not replaced by the savings of the individuals? How is the capital of the country to be kept up to the present level, and how is the increase hitherto maintained to be continued?
§ Mr. HALDANErose 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, 192; Noes, 92.
1857| Division No. 639.] | AYES. | [11.3 p.m. |
| Acland, Francis Dyke | Bryce, J. Annan | Dewar, Arthur (Edinburgh, S.) |
| Agnew, George William | Buckmaster, Stanley 0. | Dickinson, W. H. (St. Pancras, N.) |
| Alien, A. Acland (Christchurch) | Burns, Rt. Hon. John | Dobson, Thomas W. |
| Allen, Charles P. (Stroud) | Burnyeat, W. J. D. | Dunne, Major E. Martin (Walsall) |
| Ashton, Thomas Gair | Burt, Rt. Hon. Thomas | Erskine, David C. |
| Asquith, Rt. Hon. Herbert Henry | Buxton, Rt. Hon. Sydney Charles | Essex, R. W. |
| Baker, Joseph A. (Finsbury. E.) | Byles, William Pollard | Esslemont, George Birnic |
| Balfour, Robert (Lanark) | Carr-Gomm, H. W. | Evans, Sir S. T. |
| Baring, Godfrey (Isle of Wight) | Cawley, Sir Frederick | Everett, R. Lacey |
| Barker, Sir John | Cherry, Rt. Hon. R. R. | Fenwick, Charles |
| Barnard, E. B. | Clough, William | Ferguson, R. C. Munro |
| Barran, Sir John Nicholson | Clynes, J. R. | Foster, Rt. Hon. Sir Walter |
| Beauchamp, E. | Cobbold, Felix Thornley | Fuller, John Michael F. |
| Beaumont, Hon. Hubert | Collins, Stephen (Lambeth) | Fullerton, Hugh |
| Bell, Richard | Collins, Sir Win. J. (St. Pancras, W.) | Gibb, James (Harrow) |
| Berridge, T. H. D. | Cooper, G. J. | Gill, A. H. |
| Birrell, Rt. Hon. Augustine | Corbett, C. H. (Sussex, E. Grinstead) | Glover, Thomas |
| Black, Arthur W. | Cornwall, Sir Edwin A. | Gooch, George Peabody (Bath) |
| Boulton, A. C. F. | Cotton, Sir H. J. S. | Grey, Rt. Hon. Sir Edward |
| Bowerman, C. W. | Curran, Peter Francis | Guest, Hon. Ivor Churchill |
| Brace, William | Davies, M. Vaughan-(Cardigan) | Haldane, Rt. Hon. Richard B. |
| Bright, J. A. | Davies, Timothy (Fulham) | Harcourt, Rt. Hon. L. (Rossendale) |
| Brunner, J. F. L. (Lanes., Leigh) | Davies, Sir W. Howell (Bristol, S.) | Harcourt, Robert V. (Montrose) |
| Harmsworth, R. L. (Caithness-shire) | Markham, Arthur Basil | Scarisbrick, Sir T. T. L. |
| Haworth, Arthur A. | Marks, G. Croydon (Launceston) | Schwann, C. Duncan (Hyde) |
| Hazel, Dr. A. E. W. | Marnham, F. J. | Schwann, Sir C. E. (Manchester) |
| Helme, Norval Watson | Massie, J. | Shackleton, David James |
| Henderson, Arthur (Durham) | Masterman, C. F. G. | Sherwell, Arthur James |
| Henderson, J. McD. (Aberdeen, W.) | Middlebrook, William | Simon, John Allsebrook |
| Higham, John Sharp | Money, L. G. Chiozza | Snowden, P. |
| Hobhouse, Rt. Hon. Charles E. H. | Morgan, J. Lloyd (Carmarthen) | Soares, Ernest J. |
| Holt, Richard Burning | Morse, L L. | Stanger, H. Y. |
| Hooper, A. G. | Morton, Alpheus Cleophas | Stanley, Hon. A. Lyulph (Cheshire) |
| Hope, John Deans (File, West) | Myer, Horatio | Stewart, Halley (Greenock) |
| Horniman, Emsile John | Newnes, F. (Notts, Bassetlaw) | Stewart-Smith, D. (Kendal) |
| Howard, Hon. Geoffrey | Nicholson, Charles N. (Doncaster) | Strachey, Sir Edward |
| Hudson, Walter | Norman, Sir Henry | Straus, B. S. (Mile End) |
| Isaacs, Rufus Daniel | Nussey, Sir Willans | Strauss, E. A. (Abingdon) |
| Jardine, Sir J. | Nuttall, Harry | Summerbell, T. |
| Jones, Sir D. Brynmor (Swansea) | O'Grady, J. | Taylor, John W. (Durham) |
| Jones, Leif (Appleby) | Parker, James (Halifax) | Tennant, H. J. (Berwickshire) |
| Jones, William (Carnarvonshire) | Partington, Oswald | Thompson, J. W. H. (Somerset, E.) |
| Jowett, F. W. | Pearce, Robert (Staffs, Leek) | Thorne, G. R. (Wolverhampton) |
| Kekewich, Sir George | Pointer, J. | Trevelyan, Charles Philips |
| King, Alfred John (Knutsford) | Ponsonby, Arthur A. W. H. | Verney, F. W. |
| Laidlaw, Robert | Priestley, Sir W. E. B. (Bradford, E.) | Vivian, Henry |
| Lamb, Ernest H. (Rochester) | Radford, G. H. | Ward, W. Dudley (Southampton) |
| Lambert, George | Rainy, A. Rolland | Wardle, George J. |
| Larmont, Norman | Rea, Rt. Hon. Russell (Gloucester) | Wason, Rt. Hon. E. (Clackmannan) |
| Layland-Barratt, Sir Francis | Rees, J. D. | Wason, John Cathcart (Orkney) |
| Lea, Hugh Cecil (St. Pancras, E.) | Rendall. Athelstan | White, Sir George (Norfolk) |
| Levy, Sir Maurice | Richards, Thomas (W. Monmouth) | White, J. Dundas (Dumbartonshire) |
| Lewis, John Herbert | Richards, T. F. (Wolverhampton, W.) | White, Sir Luke (York, E.R.) |
| Lloyd-George, Rt. Hon. David | Roberts, Charles H. (Lincoln) | Whittaker, Rt. Hon. Sir Thomas P. |
| Lupton, Arnold | Roberts, G. H. (Norwich) | Wiles, Thomas |
| Luttrell, Hugh Fownes | Roberts, Sir J. H. (Denbighshire) | Williams, J. (Glamorgan) |
| Lynch, H. B. | Robertson, Sir G. Scott (Bradford) | Williams, W. Llewelyn (Carmarthen) |
| Macdonald, J. R. (Leicester) | Robinson, S. | Wilson, J. W. (Worcestershire, N.) |
| Maclean, Donald | Robson, Sir William Snowdon | Wilson, P. W. (St. Pancras, S.) |
| McKenna, Rt. Hon. Reginald | Roch, Walter F. (Pembroke) | Wilson, W. T. (Westhoughton) |
| M'Laren, Sir C. B. (Leicester) | Roe, Sir Thomas | Winfrey, R. |
| M'Laren, H. D. (Stafford, W.) | Rogers, F. E. Newman | Wood, T. M'Kinnon |
| M'Micking, Major G. | Rose, Sir Charles Day | |
| Maddison. Frederick | Rutherford, V. H. (Brentford) | TELLERS FOR THE AYES—Mr. |
| Mallett, Charles E. | Samuel, S, M. (Whitechapel) | Joseph Pease and Captain Norton. |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Doughty, Sir George | Moore, William |
| Anson, Sir William Reynell | Douglas, Rt. Hon. A. Akers- | Morpeth, Viscount |
| Anstruther-Gray, Major | Faber, George Denison (York) | Nicholson, Wm. G. (Petersfield) |
| Arkwright, John Stanhope | Fell, Arthur | Parkes, Ebenezer |
| Balcarres, Lord | Fletcher, J. S. | Pease, Herbert. Pike (Darlington) |
| Baldwin; Stanley | Foster, P. S. | Peel, Hon. W. R. W. |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Gardner, Ernest | Pretyman, E. G. |
| Banbury, Sir Frederick George | Gibbs, G. A. (Bristol, West) | Randles, Sir John Scurrah |
| Banner, John S. Harmood- | Gordon, J. | Rawlinson, John Frederick Peel |
| Baring, Capt. Hon. G. (Winchester) | Guinness, Hon. W. E. (B. S. Edm'ds.) | Renwick, George |
| Barrie, H. T (Londonderry, N.) | Haddock, George B. | Roberts, S (Sheffield, Ecclesall) |
| Beach, Hon. Michael Hugh Hicks | Hamilton, Marquess of | Ronaldshay, Earl of |
| Bowles, G. Stewart | Hardy, Laurence (Kent, Ashford) | Rutherford. Watson (Liverpool) |
| Bridgeman, W. Clive | Harris, Frederick Leverton | Salter, Arthur Clavell |
| Bull, Sir William James | Hay, Hon. Claude George | Scott, Sir S. (Marylebone, W.) |
| Burdett-Coutts, W. | Hermon-Hodge, Sir Robert | Stanier, Beville |
| Carlile, E. Hildred | Hill, Sir Clement | Starkey, John R. |
| Carson, Rt. Hon. Sir Edward H. | Hills, J. W. | Staveley-Hill, Henry (Staffordshire) |
| Castlereagh, Viscount | Hope, James Fitzalan (Sheffield) | Talbot, Lord E. (Chichester) |
| Cave, George | Hunt, Rowland | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Cecil, Evelyn (Aston Manor) | Joynson-Hicks, William | Thomson, W. Mitchell-(Lanark) |
| Cecil, Lord R (Marylebone, E.) | Kerry, Earl of | Thornton, Percy M. |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Keswick, William | Walker, Col. W. H. (Lancashire) |
| Chaplin, Rt. Hon. Henry | Kimber, Sir Henry | Walrond, Hon. Lionel |
| Clive, Percy Archer | King, Sir Henry Seymour (Hull) | Warde, Col. C. E. (Kent, Mid.) |
| Cochrane, Han. Thomas H. A. E. | Lambton, Hon, Frederick William | Williams, Col. R. (Dorset, W.) |
| Courthope, G. Loyd | Lane-Fox, G. R. | Wilson, A. Stanley (York, E.R.) |
| Craig, Charles Curtis (Antrim, S.) | Lee, Arthur H. (Hants, Fareham) | Younger, George |
| Craig, Captain James (Down, E.) | Long, Col. Charles W. (Evesham) | |
| Craik, Sir Henry | M'Arthur, Charles | TELLERS FOR THE NOES.—Viscount |
| Dalrymple, Viscount | Mason, James F. (Windsor) | Valentia and Mr. H. W. Forster. |
| Dickson, Rt. Hon. C. Scott | Meysey-Thompson, E. C. |
§ Question put accordingly, "That the Clause, as amended, stand part of the Bill."
1858§ The Committee divided:—Ayes, 192; Noes, 95.
1861| Division No. 640.] | AYES. | [11.12 p.m. |
| Acland, Francis Dyke | Haldane, Rt. Hon. Richard B. | Pickersgill, Edward Hare |
| Agnew, George William | Harcourt, Rt. Hon. L. (Rossendale) | Pointer, J. |
| Allen, A. Acland (Christchurch) | Harcourt, Robert V. (Montrose) | Ponsonby, Arthur A. W. H. |
| Allen, Charles P. (Stroud) | Harmsworth, R. L. (Caithness-shire) | Priestley, Sir W. E. B. ((Bradford, E.) |
| Ashton, Thomas Gair | Haworth, Arthur A. | Radford, G. H. |
| Asquith, Rt. Hon. Herbert Henry | Hazel, Dr. A. E. W. | Rainy, A. Rolland |
| Baker, Joseph A. (Finsbury, E.) | Helme, Norval Watson | Rea, Rt. Hon. Russell (Gloucester) |
| Balfour, Robert (Lanark) | Henderson, Arthur (Durham) | Rees, J. D. |
| Baring, Godfrey (Isle of Wight) | Henderson, J. McD. (Aberdeen, W.) | Rendall, Athelstan |
| Barker, Sir John | Higham, John Sharp | Richards, Thomas (W. Monmouth) |
| Barnard, E. B. | Hobhouse, Rt. Hon. Charles E. H. | Richards, T. F. (Wolverhampton, W.) |
| Barran, Sir John Nicholson | Holt, Richard Durning | Roberts, Charles H. (Lincoln) |
| Beauchamp, E. | Hooper, A. G. | Roberts, G. H. (Norwich) |
| Beaumont, Hon. Hubert | Hope, John Deans (Fife, West) | Roberts, Sir J. H. (Denblghs.) |
| Bell, Richard | Horniman, Emslie John | Robertson, Sir G. Scott (Bradford) |
| Berridge, T. H. D. | Howard, Hon. Geoffrey | Robinson, S. |
| Birrell, Rt. Hon. Augustine | Hudson, Walter | Robson, Sir William Snowdon |
| Black, Arthur W. | Isaacs, Rufus Daniel | Roch, Walter F. (Pembroke) |
| Boulton, A. C. F. | Jardine, Sir J. | Roe, Sir Thomas |
| Bowerman, C W. | Jones, Sir D. Brynmor (Swansea) | Rogers, F. E. Newman |
| Brace, William | Jones, Leif (Appleby) | Rose, Sir Charles Day |
| Bright, J. A. | Jones, William (Carnarvonshire) | Rutherford, V. H. (Brentford) |
| Brunner, J. F. L. (Lanes., Leigh) | Jowett, F. W. | Samuel, S. M. (Whitechapel) |
| Bryce, J. Annan | Kekewich, Sir George | Scarisbrick, Sir T. T. L. |
| Buckmaster, Stanley O. | King, Alfred John (Knutsford) | Schwann, C. Duncan (Hyde) |
| Burns, Rt. Hon. John | Laidlaw, Robert | Schwann, Sir C. E. (Manchester) |
| Burnyeat, W. H. D. | Lamb, Ernest H. (Rochester) | Shackleton, David James |
| Burt, Rt. Hon. Thomas | Lambert, George | Sherwell. Arthur James |
| Buxton, Rt. Hon. Sydney Charles | Lamont, Norman | Simon, John Allsebrook |
| Byles, William Pollard | Layland-Barratt, Sir Francis | Snowdon, P. |
| Carr-Gomm, H. W. | Lea, Hugh Cecil (St. Pancras, E.) | Soares, Ernest J. |
| Cawley, Sir Frederick | Levy, Sir Maurice | Stanger, H. Y. |
| Cherry, Rt. Hon. R. R. | Lewis, John Herbert | Stanley, Hon. A. Lyulph (Cheshire) |
| Clough, William | Lloyd-George, Rt. Hon. David | Stewart, Halley (Greenock) |
| Clynes, J. R. | Lupton, Arnold | Stewart-Smith, D. (Kendal) |
| Cobbold, Felix Thornley | Luttrell, Hugh Fownes | Strachey, Sir Edward |
| Collins, Stephen (Lambeth) | Lynch, H. B. | Straus, B. S. (Mile End) |
| Collins, Sir Wm. J. (St. Pancras, W.) | Macdonald, J. R. (Leicester) | Strauss, E. A. (Abingdon) |
| Cooper, G. J. | Maclean, Donald | Summerbell, T. |
| Corbett, C. H. (Sussex, E. Grinstead) | McKenna, Rt. Hon. Reginald | Taylor, John W. (Durham) |
| Cornwall, Sir Edwin A. | M'Laren, Sir C. B. (Leicester) | Tennant, H. J. (Berwickshire) |
| Cotton, Sir H. J. S. | M'Laren H. D. (Stafford, W.) | Thompson, J. W. H. (Somerset, E.) |
| Curran, Peter Francis | M'Micking, Major G. | Thorne, G. R. (Wolverhampton) |
| Davies, M. (Vaughan-(Cardigan) | Maddison, Frederick | Trevelyan, Charles Philips |
| Davies, Timothy (Fulham) | Mallett, Charles E. | Verney, F. W. |
| Davies, Sir W. Howell (Bristol, S.) | Markham, Arthur Basil | Vivian, Henry |
| Dewar, Arthur (Edinburgh, S.) | Marks, G. Croydon (Launceston) | Ward, W. Dudley (Southampton) |
| Dickinson, W. H. (St. Pancras, N.) | Marnham, F. J. | Wardle, George J. |
| Dobson, Thomas W. | Massie, J. | Wason, Rt. Hon. E. (Clackmannan) |
| Dunne, Major E. Martin (Walsall) | Masterman, C. F. G. | Wason, John Cathcart (Orkney) |
| Erskine, David C. | Middlebrook, William | White, Sir George (Norfolk) |
| Essex, H. W. | Money, L. G. Chiozza | White, J. Dundas (Dumbartonshire) |
| Esslemont, George Birnie | Morgan, J. Lloyd (Carmarthen) | White, Sir Luke (York, E.R.) |
| Evans, Sir S. T. | Morse, L. L. | Whittaker, Rt. Hon. Sir Thomas P. |
| Everett, R. Lacey | Morton, Alpheus Cleophas | Wiles, Thomas |
| Fenwick. Charles | Myer, Horatio | Williams, J. (Glamorgan) |
| Foster, Rt. Hon. Sir Walter | Newnes, F. (Notts, Bassetlaw) | Williams, W. Llewelyn (Carmarthen) |
| Fuller, John Michael F. | Nicholson, Charles N. (Doncaster) | Wilson, J. W. (Worcestershire, N.) |
| Fullerton, Hugh | Norman, Sir Henry | Wilson, P. W. (St. Pancras, S.) |
| Gibb, James (Harrow) | Nussey, Sir Willans | Wilson, W. T. (Westhoughton) |
| Gill, A. H. | Nuttall, Harry | Winfrey, R |
| Glover, Thomas | O'Grady, J. | Wood, T. M'Kinnon |
| Gooch, George Peabody (Bath) | Parker, James (Halifax) | |
| Grey, Rt. Hon. Sir Edward | Partington, Oswald | TELLERS FOR THE AYES.—Mr. |
| Guest, Hon. Ivor Churchill | Pearce, Robert (Staffs, Leek) | Joseph Pease and Captain Norton. |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Bridgeman, W. Clive | Courthope, G. Loyd |
| Anson, Sir William Reynell | Bull, Sir William James | Craig, Charles Curtis (Antrim, S.) |
| Anstruther-Grey, Major | Burdett-Coutts, W. | Craig, Captain James (Down, E.) |
| Arkwright, John Stanhope | Carlile, E. Hildred | Craik, Sir Henry |
| Balcarres, Lord | Carson, Rt. Hon. Sir Edward H. | Dalrymple, Viscount |
| Baldwin, Stanley | Castlereagh, Viscount | Dickson, Rt. Hon. C. Scott |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Cave, George | Doughty, Sir George |
| Banbury, Sir Frederick George | Cecil, Evelyn (Aston Manor) | Douglas, Rt. Hon. A. Akers- |
| Banner, John S. Harmood- | Cecil, Lord R. (Marylebone, E.) | Faber, George Denison (York) |
| Baring, Captain Hon. G. (Winchester) | Chamberlain, Rt. Hon. J. A. (Worc'r) | Fell, Arthur |
| Barrie, H. T. (Londonderry, N.) | Chaplin, Rt. Hon. Henry | Fletcher, J. S. |
| Beach, Hon. Michael Hugh Hicks | Clive, Percy Archer | Foster, P. S. |
| Bowles, G. Stewart | Cochrane, Hon. Thomas H. A. E. | Gardner, Ernest |
| Gibbs, G. A. (Bristol, West) | Lee, Arthur H. (Hants, Fareham) | Rutherford, Watson (Liverpool) |
| Gordon, J. | Long, Col. Charles W. (Evesham) | Salter, Arthur Clavell |
| Guinness, Hon. W. E. (B. S. Edmunds) | Lyttelton, Rt. Hon. Alfred | Scott, Sir S. (Marylebone, W.) |
| Haddock, George B. | M'Arthur, Charles | Stanier, Beville |
| Hamilton, Marquess of | Mason, James F. (Windsor) | Starkey, John R. |
| Hardy, Laurence (Kent, Ashford) | Meysey-Thomson, E. C. | Staveley-Hill, Henry (Staffordshire) |
| Harris, Frederick Leverton | Moore, William | Talbot, Lord E. (Chichester) |
| Hay, Hon. Claude George | Morpeth, Viscount | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Hermon-Hodge, Sir Robert | Nicholson, Wm. G. (Petersfield) | Thomson, W. Mitchell-(Lanark) |
| Hill, Sir Clement | Parkes, Ebenezer | Thornton, Percy M. |
| Hills, J. W. | Pease, Herbert Pike (Darlington) | Walker, Col. W. H. (Lancashire) |
| Hope, James Fitzalan (Sheffield) | Peel, Hon. W. R. W. | Walrond, Hon. Lionel |
| Hunt, Rowland | Percy, Earl | Warde, Col. C. E. (Kent, Mid) |
| Joynson-Hicks, William | Pretyman, E. G. | Williams, Col. R. (Dorset, W.) |
| Kerry, Earl of | Randles, Sir John Scurrah | Wilson, A. Stanley (York, E.R.) |
| Keswick, William | Rawlinson, John Frederick Peel | Younger, George |
| Kimber, Sir Henry | Renwick, George | |
| King, Sir Henry Seymour (Hull) | Ridsdale, E. A. | TELLERS FOR THE NOES.—Viscount |
| Lambton, Hon. Frederick William | Roberts, S. (Sheffield, Ecclesall) | Valentia and Mr. H. W. Forster. |
| Lane-Fox, G. R. | Ronaldshay, Earl of |