§ In the case of property of any person dying on or after the thirtieth day of April, nineteen hundred and twelve, passing to a wife or a husband or a lineal descendant, or a brother or a sister, or a father or a mother, or an uncle or an aunt, such property shall, if during any time during the ten years next succeeding it again pass by death to any successor in title of the relationship above mentioned, become liable only to a reduced rate of Estate Duty calculated on the following basis: If the property pass in the same year in which duty has already become leviable there shall be chargeable only one-tenth of the amount leviable under Section one of the Finance Act, 1894, or any Amendment thereof; if in the second year two-tenths; and so on for each additional year an extra tenth of the amount chargeable under the said Section until the limit of abatement is reached.
Motion made and Question proposed, "That the Clause be read a second time."
§ Mr. S. ROBERTS
I postponed this Clause last night for the convenience of 3105 the Committee, but I wish to move it now so as to keep this important subject before the mind of the Chancellor of the Exchequer. It is no new subject. It was dealt with at the time of the Harcourt Duties in 1894, and I myself moved a similar Clause three years ago. Sir Samuel Evans then replied, and the only reasons he gave for refusing to accept this Clause were that the Government could not afford the money, and that death and death alone must be the principle with which the tax is paid. It is unjust that the tax should be extracted from the same property, it may be, every year. The recognised basis of the Death Duties, I believe, is that they should be taken on about an average of a generation is just over twenty-five years, but under present circumstances cases of hardship occur where a family property can be entirely taken away if death occurs frequently.
There was a case in Scotland a few years ago where a family had been in occupation of their property for 300 years. The owner had been very anxious to develop his estate, and to give employment. He died, and the property devolved on his eldest son and Estate Duty was paid. The eldest son died within three years of his father. The estate passed to the second son who found himself in this position. He had the jointures of two widows to pay and he was so hampered in financial matters that he had to give up living there not only to the disadvantage of himself but also to the very great disadvantage of the people in the neighbourhood, for a very large number of persons had been employed in plantation work and they lost their employment. It was, therefore, not only a family grievance but also a question of public policy. Next take the case of a business in which a man's whole capital is invested. The owner dies. The business passes to the son, and Death Duty is of course paid. The son dies and Death Duty has to be paid again out of the business with the result probably that that has to be wound up altogether. Here again you have a grievance not only on the part of the individual but also on the part of the public, which loses by the discontinuance of the business.
The question has got more acute in consequence of the steepening of the Death Duties. If it mattered in the old days it is a far more important matter to-day that some remission should be made. I find that before Harcourt's scale was instituted, in the year ending March, 1894, the 3106 total net yield of Death Duties, including legacy, succession and Probate Duties, amounted to £9,941,000. When the present Government came into office in 1906 the yield for the Harcourt Duties had risen to £17,344,000 but in the twelve months ending March last the total yield had increased to over £25,182,000 and that represents the sum we are now yearly taking from the nation's capital which has been accumulated by the industry of the people. That amount is being taken year by year by the State from the population and from individuals, and I say that from the point of view of public policy some provision ought to be made by which some reasonable abatement can be allowed in the case of deaths occuring within a certain period. I am not pledged to the plan I have ventured to put down on the paper. My suggestion is simply that there should be an abatement in cases where the death occurs within ten years of the payment of death duties, and that that abatement should be a decreasing abatement from nine-tenths in the event of the death occurring in the same year, with a proportionate abatement year by year until after ten years, the full duty again becomes payable. The recognised period is twenty-five years—a generation, but my proposal only provides for an abatement up to ten years. I do not expect that the Chancellor of the Exchequer will be able to accept my Amendment to-night, but I bring it forward in order to keep this question before the attention of the Government in the hope that next 3pear the right hon. Gentleman will have this grievance in mind, and make the much-needed provision for it. They are exceedingly hard cases, and I think they are hard cases which ought to be remedied.
§ Mr. LLOYD GEORGE
I think I am right in saying that this is an old and hardy annual. It is one of those questions which, when they come before us at first sight look like real grievances which stand in need of redress. What, however, is the other side of this state of things? I think it will be found, although I cannot speak with the same experience as the hon. Gentleman, that he has only put one side of the case. I do not say that he did not present the side which he did present clearly and fairly, but I think he should put something on the other side. What happens in these cases? It means that a man has come into property 3107 sooner than he would ordinarily have expected to do so. Take the case the hon. Member has given. The father dies, and the whole business devolves upon the eldest son. That son dies; it is an unexpected death, and the second son who would not have a right or an expectation to come into the property comes into it in the course of a year or two. I do not agree with the hon. Member that considerable property would not come to him in that case.
§ Mr. LLOYD GEORGE
It would not disappear altogether. I want to point out that the man, to whom in the ordinary course the property would not come, when he would have no right to expect that property at all, gets it. It is hard to talk about a case like that as a hard case. From the point of view of property, it is more like a piece of luck. When a man gets property when he has no right in the ordinary expectation to get it, I do not think it is too much to ask him to pay a contribution to the State. In this case there is also the extraordinary difficulty in tracing the assets. If it was land you could do so, perhaps more easily, but you could not do it with a business. How are you to say that the property which came to the third man is exactly the same as was left by the first?
§ Mr. LLOYD GEORGE
It would be very difficult for the State to check it, With regard to land you might do it, but it would be difficult with regard to a business or any sort of personality to do it satisfactorily. Then there is my third argument against you. If you are to give an abatement calculated on the number of years, how are you going to give it at the other end of the scale where there elapses more than a generation, where the time between the collection of the duty is abnormal? Is the amount going to be doubled in that case? Unless it is, the State suffers. It is hit all round. The individual gets the advantage in cases where the person comes into property which he had no right in the ordinary course to expect. I think if the hon. Member will investigate the cases he will find there is no real grievance. I have seen a good many of those cases and most of them are cases in which a man gets 3108 property which he never expected to get. and often he is very glad to pay the Death Duties.
§ Proposed Clause put, and negatived.