INHABITED HOUSE DUTY BILL. (Hansard, 18 July 1851)

§ The MARQUESS of LANSDOWNE
said, that in the present state of the House he would not detain their Lordships longer than to state that this was a Bill to relieve the public from a tax of a much more grievous and objectionable character—the window tax—for the repeal of which the country had been calling for many years. The amount of the revenue raised by the window tax was about 1,800,000l., and the anticipated revenue to be raised by the house tax was 700,000l. He was opposed in principle to any relief from taxation which imposed one tax in the room of another; but, looking at the character of the tax to be repealed, and that which the present Bill imposed, he thought the relief so great as to justify the measure proposed. The greatest relief that would be given by the repeal of the window tax and the substitution of a house duty, would be in the great agricultural counties, which would be relieved to the extent of three-fourths, four-fifths, and six-sevenths, of what they at present paid. The classes who would next be benefited would he the middle and poorer classes in large towns. The noble Marquess concluded by moving that the Bill be read a Second Time.

§ LORD MONTEAGLE
said, this tax 975 formed one main element in the financial arrangements of the year, on which he could not help animadverting. It appeared that 1,100,000l. of the revenue were now to be sacrificed; but upon what principle was this year's budget arranged? Why, permanent taxation was remitted—that upon which the public credit mainly depended—and temporary revenue was retained; and of this temporary taxation, the income tax, by an Amendment forced upon the Government, was retained for one year only. On the one hand 1,100,000l. of permanent revenue were thus sacrificed; and on the other, more than 5,000,000l. of income tax was renewed for a year, so that in the event of the House of Commons not renewing it again, there must be a permanent deficit exceeding 4,000,000l. He observed that even the noble Marquess was sensible of the inconvenience generally attending the substitution of one tax for another, even although the tax substituted might be less obnoxious than the one removed. This might be found to apply to the substitution of a house tax, for the window tax. He warned his noble Friend that the public mind was peculiarly constituted in respect to taxation: it was singularly sensitive to the inconveniences of existing taxation—easily oblivious of the evils of taxation remitted; and he predicted that objections would soon be urged against the new house tax—the more because the tax was new. Indeed, for his own part, past experience, whilst acting under Lord Althorp, taught him that a house tax was open to serious objections; for it depended on valuation, which was always open to dispute, being a matter of opinion, not a matter of fact; whereas the number of windows was a plain matter of fact. He believed that the remission of the window tax would be complained of as chiefly relieving the higher order of houses, especially large mansions like Longleat or Woburn Abbey, whereas the house tax would fall lightly on such houses; so that the new house tax would have the appearance of bearing more hardly on the poorer than on the richer classes. The tax would press more heavily on such houses as the "White Lion," or the "King's Arms," than on magnificent mansions, the rateable value of which might not be so great; value necessarily depending not on the cost, size, or beauty, but on practical considerations, such as the returns for a business, connexion, situation, &c. He was 976 far from considering this to be unjust, for such houses would produce more of rent, if brought into the market, than the mansions of the rich and noble. He foretold that there would be hereafter as great a struggle on this house tax as upon the former one. He also anticipated, that if there were admitted to be a necessity for retaining the income tax permanently, there was no excuse for refusing to remedy the anomalies incident to it. He deprecated the principle of sacrificing an important portion of the permanent revenue because it was unpopular, and for the purpose of facilitating the financial arrangements of the year. He could not approve of these arrangements, the practical effect of which was that the property tax, peculiarly a tax for a period of public exigency, was substituted in time of peace, and without modification, in the place of a fixed and permanent tax. Let the property tax be perpetuated, if it were thought necessary; but let it not be renewed from year to year in this way, accompanied by the repeal of permanent taxes, and at a sacrifice of the financial interests of the country. He objected also to the exemption of all houses under 20l. per annum; as he always had objected to the exemption from the income tax of incomes under 150l. a year—a proposition which appeared to him (in the abstract) perfectly Jacobinical, unjustifiable, and unreasonable; for it countenanced the idea that persons who did not possess a certain amount of income were to be relieved from contributing to the resources of the State, as being not interested in the public expenditure, and deriving no advantage from the Army, the Navy, and the judicial establishments of the country. As to the income and property tax, he must again repeat, that if they intended to perpetuate it, they should never do so by renewals, for these continual renewals had the effect of placing the tax itself in danger, and led to repeals of other taxation that produced no good to the general interests of the country. On all these grounds he objected to the Bill, and to the financial arrangement of which it formed a part.

The EARL of STRADBROKE
did not approve of the Bill, nor of the exemption of houses under 20l. a year. The natural effect would be that there would be a great temptation to build houses of small value, and persons would escape the tax who derived large incomes from that class of houses, while those whose houses were 977 of a little greater value, and were, perhaps, less wealthy, would pay. There was no limit to the injustice of this principle when once admitted; and he thought such a tax should be paid equally by all classes, as all were equally benefited by the protection of the law and the police, or the naval and military establishments of the country.

§ EARL GREY
protested against the accuracy of the statement that the window tax was to be repealed because it was unpopular, and not because it was objectionable. Inquiries of late years, in which the noble Earl opposite (the Earl of Shaftesbury) had taken so active a part, led to the conclusion that the operation of the window tax on the health of the people made it absolutely necessary that it should be repealed. In substituting, then, another tax on the dwellings of the people, no fairer principle could be adopted than to make the tax fall on the value of the houses; and he believed that it would, eventually, fall on the persons most able to bear it, the ground landlords. The window tax was unpopular, because it was liable to decisive objections on the score of health. He concurred in the sentiments of his noble Friend (Lord Monteagle) regarding the inconvenience of the position in which Government had been placed by the income tax having been voted only for one year; bnt he was willing to trust to the desire of the country and the House of Commons to maintain the national credit. He had formerly expressed the opinion that incomes under 150l. a year ought not to be exempted, and that opinion he still maintained. There were, however, fiscal considerations to be taken into account; and, from the difficulties intervening, it had been thought scarcely worth while to collect the tax on incomes less than 150l. He could never, however, understand the grounds on which parties who had money in the funds had the income tax returned to them, because their incomes were said to be less than 150l. a year. He would in like manner admit that the remission from taxation of all houses under 20l. value was not a correct principle; but it must not be forgotten that there would have been a great practical inconvenience, if in substituting one tax for another they had imposed on a vast number of persons a heavy burden to which they had not before been subjected.

§ The EARL of SHAFTESBURY
had sincere pleasure in bearing his testimony to the important service which the Government had rendered the country by repeal- 978 ing the window duty. The tax had interfered most seriously with the moral and physical well-being of the people. Now that the tax was repealed, great facilities would be afforded for improving the dwellings of the working classes, and from such improvement he anticipated that great good was destined to accrue. The relief was not to be estimated by the mere money relief. The window tax had interfered with the operations of the Society for Improving the Dwellings of the Poor. They had been obliged to construct a great number of separated dwellings at the sacrifice of considerable expenditure, which might to a great extent have been saved had they been able to erect them all under one roof. In the case of one building with fifty tenants under the same roof, the window tax would have added about 70l. or 80l. to the annual rental. The relief which had been afforded was great, and it would result in increased health and the improved moral condition of the vast proportion of the community.

§ The MARQUESS of LANSDOWNE
concurred with the noble Earl who had just sat down as to the improvement in the sanitary condition of the people, which must necessarily result from the repeal of the window duty.

The DUKE of ARGYLL
said, the whole of these discussions tended to a much larger view of the subject than they at first indicated, since they showed the infinite difficulty of adjusting direct taxation upon an equitable principle. The income tax had been originally agreed to to accomplish a certain purpose—namely, the repeal of other taxes; but now that that object had been attained, he did not think they should go on repealing one indirect tax after another, and maintain the obnoxious principle of direct taxation. The whole of these conversations and the objections urged against this and all other direct taxation, went to show that we must found the finances of this country, in the main, on indirect taxation. So far as his (the Duke of Argyll's) own opinion went, he was not a Protectionist; at the same time, if it were admitted that the finances of the country should be mainly raised by indirect taxation, we must go upon this broad principle—that small taxes must be raised over the largest possible surface; we must tax those articles which were most extensively used. There was no abstract objection whatever to a tax upon bread, any more than to a tax upon light, or clothes, or any other article. All taxes were in themselves an evil; and 979 if taxation was not imposed upon the principle of protection, he did not know upon what abstract ground any one could say that indirect taxation should not be raised from food. The question was, how you could best raise a sum of money equitably from all classes. If it were desired to raise a larger sum from the rich than the poorer classes—which was only reasonable—then the articles used by the rich should be taxed—their carriages, horses, servants, &c.; but the other classes of the community should not be exempted; but there should be raised in small sums, upon those articles which were universally used, a considerable portion of the taxation of this country. It was one of the evils of a weak and feeble Government making its way through the storms of opposing and divided parties, that it was unable to act upon any one broad principle of finance, and that it had to resist the pressure against an unpopular tax, by substituting in its stead some other tax, which Government itself confessed to be founded on a false and erroneous principle.

§ The EARL of CARLISLE
did not rise to defend the strength of the Government, or the principle of direct taxation; he wished merely to observe that if the noble Duke intended to hold out, as a means of getting rid of the income tax, a reimposition of duty upon the admission of food, he would not do much to advance the views he professed, when he said he was no Protectionist.