HL Deb 21 June 1853 vol 128 cc476-501

Order of the Day for the Second Reading read.


My Lords, in moving the Second Reading of the Income Tax Bill, I may be permitted to place before your Lordships a general view of the objects entertained by Her Majesty's Government in making this proposition, and to point out the advantages which they expect the country to receive from its adoption. At the first formation of the Government, I stated to your Lordships that there would speedily be experienced great financial difficulties, or rather a financial crisis, by the failure of a large portion of our revenue, in consequence of the early cessation of the income tax; and I added that it would severely try the ingenuity and ability of the person who was in the position to be called upon to repair that breach. My Lords, the income tax having expired in the month of April, it became necessary for Her Majesty's Government to consider what course it was expedient to pursue. I believe it would have been found impossible to allow the income tax to expire without renewal, as it would have been impossible to find a substitute for that tax. The surplus at our disposal was insufficient to enable us to take this course, and the taxes necessary for the purpose of supplying the deficiency occasioned by the loss of the in- come tax would have been so onerous, so oppressive, so unequal, that they would in fact have created more dissatisfaction, and have been more unpalatable to the people than the income tax itself. We therefore had no hesitation in deciding upon renewing the income tax. But then the question arose, in what manner, for what period, and with what modifications, should this be attempted. My Lords, it must be admitted that there is something in the nature of the income tax itself, notwithstanding the immense and incalculable advantages we have derived from it both in war and peace—there is something in its nature which is open to radical objections. There is no doubt but its inquisitorial nature is highly irksome and objectionable, and cannot be separated from it. It allows also the principle of self-assessment, which affords facilities, not to say encouragement, to fraud, very much to the loss of the revenue, and to the injury of morality:—that also is an objection which cannot be removed. It must also be admitted, that for some time past, and especially recently, a growing feeling has existed that the tax itself is unequal and unjust, from the mode in which it is imposed. It has been felt that to tax trades and professions the same as land—that to tax precarious incomes in the same manner as realised incomes, is in itself unjust; and this feeling has gradually extended so as to embrace the whole body of popular opinion, and it is demanded in every quarter, both by public men and in the press, that some change should take place by varying the rate of taxation according to the different sources of income—a principle, also, which received additional weight from having been adopted by Her Majesty's late Government, who announced, by their organ in the House of Commons, their intention to adopt it, although without explaining any special mode of carrying out this system—which, not explaining or announcing, they probably had not clearly in view. But, my Lords, I think, notwithstanding the prevalence of this conviction to which I have referred, and for which, I must admit, there is much foundation, my right hon. Friend the Chancellor of the Exchequer so dealt with that notion in the speech with which he introduced his financial measures, that he absolutely silenced all opposition to his plan, which he proved to be the only one capable of being put into operation. I do not recollect, in the whole course of my life, any instance in which the triumph of reason over strong conviction was more signally displayed than by my right hon. Friend. I do not say that he proved that the mode of assessing the tax adopted is just and equal; but he proved that any other mode is impossible, and that any attempt at another mode would be attended with still greater inequality and injustice. Now, my Lords, what is the inference to be drawn from this? What is the result to which we have come in consequence? Not that the income tax should not be renewed, but that it should not form any permanent portion of our financial system; and that, in renewing it, we should take care to secure means by which it should be extinguished in a given time—by which, in fact, I may say, it should expire of itself. My Lords, with this view we resolved upon the renewal of the tax. But to give the public confidence as to its cessation was most desirable. I fear that, from what we have seen—from what has already taken place— that if we had proposed to renew it for two or three years, with the declaration and intention that it should then expire—I fear that neither Parliament nor the country would have entertained much confidence in the cessation of the tax; and therefore it became necessary to give a proof of the sincerity of the Government in the manner in which they proposed the renewal of the tax, and to provide means which should obviously, at the given period, enable you, if you thought fit, to get rid of it without sacrifice and without loss. We therefore propose, my Lords, to re-enact it for two years more at the present rate of 7d. in the pound; for two years further at the rate of 6d. in the pound; and for three additional years at the rate of 5d. in the pound—by which arrangement the tax will terminate in the year 1860; and at that period we shall have provided a substitute for the tax, without any additional burden or sacrifice whatever. My Lords, I will not attempt, of course, to predict what may happen in the course of seven years; the events that are yet in the womb of time are beyond our foresight, and we can only form our plans according to the circumstances which may be anticipated in the ordinary course of affairs. I think, however, that in the descending rates of the tax we have given an intimation, a pledge, an evidence, of our sincere desire for the gradual reduction of the impost; and I shall state in a few moments the mode in which at the period I have mentioned we shall have provided for its total extinction. Now, my Lords, in renewing the tax, we also propose to make large remissions of taxation, in such modes as shall be most beneficial to the trade and commerce of the people, and shall add most to their comfort and prosperity. In this we shall follow the policy and the example of the late Sir Robert Peel, from which the country has already derived such inestimable advantage, and from which, I trust, that it will derive still more. As the estimated surplus of the year amounts to no greater sum than 800,000l., of course, to effect this object other sources must be sought, and I shall state to the House, in a few moments, how they are to be obtained. In the first place, we propose certain extensions of the income tax itself. It appears, I think, but reasonable that incomes below 150l. should be charged with the tax. The possessors of incomes between 100l. and 150l. have derived great advantage from the remissions of taxation which took place in 1842 and 1845, and from the measures which have been adopted in consequence of the existence of an income tax; they will also derive great advantage from the remissions of taxation now about to be made; and it seems but reasonable, therefore, that they should be prepared to share in the burden of the income tax, which is now about to be modified. However, it is intended that incomes from 100l. to 150l. shall only be taxed at the rate of 5d. in the pound, so that incomes of 150l. will pay 7d. for the first two years, 6d. for the next two years; whilst both they, and incomes down to 100l. will pay 5d. for the remaining period of three years. The sum estimated to be obtained from this extension of the tax is 250,000l. Then, my Lords, comes the extension of the income tax to Ireland. Now, my Lords, in principle it cannot be denied that there is no doubt that Ireland ought to be equally taxed with England. This principle was acknowledged by Sir Robert Peel in 1842, when he imposed the income tax, by the compensatory tax he proposed for Ireland —a duty on spirits of 1s. a gallon, and an increased stamp duty. It is true that the spirit duty was very speedily repealed, and some time afterwards a very large proportion of the stamp duty was also remitted. But the principle of equal taxation cannot possibly be controverted; and it is proposed now to extend the income tax to Ireland—a measure by which it is expected that 450,000l. will be obtained. This principle is, indeed, so just and obvious that I doubt very much whether the representatives of this part of the United Kingdom would have consented to the renewal of the tax at all without the extension that is proposed. But although Ireland has received the same advantage as the other parts of the kingdom have derived from the imposition of the income tax on England in 1842, and the measures of general relief passed in consequence, still the situation of that country, no doubt, requires consideration, and calls for large and liberal dealing. Although the distress under which that country has laboured with such severity has been mitigated, and indeed has ceased, still the effects of the calamity of 1847 remain to be alleviated and removed; and in imposing the income tax, it has been thought wise and just to make a great remission of the burdens now imposed upon Ireland. My Lords, the consolidated annuities represent a capital of 4,500,000l., 1,500,000l. of which may be said strictly to belong to the establishment for the relief of the poor; but the other 3,000,000l. are more or less connected with the land. Now, my Lords, the Committee of your Lordships' House which sat upon this subject, I believe, recommended the remission of 2,000,000l, of these consolidated annuities; but it is the intention of Her Majesty's Government to propose the remission of the whole. This, my Lords, may be considered a boon which, I think, may fairly compensate for the imposition of the income tax, inasmuch as a large portion of those annuities, the capital of which represents an annual charge of 245,000l.—three-fourths of them, I believe—would endure for forty years, whereas the income tax will expire in seven years. The condition of Ireland, of course, varies in different parts of the country, and, therefore, those remissions of burdens, however desirable, and however fair on the whole, operate unequally in different parts. There is no reason, perhaps, why Belfast should not pay an income tax just as well as Glasgow or Liverpool; whilst, on the other hand, the western provinces are utterly unable to discharge their existing obligations. But although the remission may be more welcome and more sensibly felt in one part of the country than another, still the remission of the whole amount appeared to be the most just and equitable mode of proceeding. I will now state to your Lordships the whole remission of taxation which it is intended to make, by means of which a permanent income will be secured, and from which we anticipate the extinction of the income tax. From 1853 to 1860, the period at which the income tax will expire, the remission will take place, and the gross loss to the revenue in the present year, arising from this remission, will be 165,000l. I will state the amount for the whole period, in order that persons may be enabled to contrast the income tax as it will exist at the end of this period, with the amount of permanent taxation we shall have realised in order to extinguish it. The remission of the soap duties will be 1,126,000l.; stamp duties, 420,000l.; assessed taxes, 290,000l.; post horses, 54,000l.: reduction of colonial postage, 40,000l. Then, as regards the Customs —tea duties, 3,000,000l.; minor duties, 123,000l.; and from other sources, 262,000l. In short, we calculate that the whole amount of remitted taxation during this period will amount to 5,315,000l. Now we calculate, according to the example of former experience, that this amount of remitted taxation, large as it is, will recover itself in the course of this period of seven years, just as the remissions of taxation in 1844 and 1845 have had that effect; and taking the same average as we have already experienced during the period since 1842, we have arrived at the same result. The present income tax amounts to 5,550,000l., and the additions now proposed being 590,000l.—making a total of 6,140,000l. The new permanent sources of revenue to meet the extinction of that tax will be, a legacy duty producing 2,000,000l., spirit duties 436,000l., licences 113,00l.; making a total of 2,549,000l. There will be an anticipated reduction of charge on the 3¼ per cents, the result of the operation of Mr. Goulburn's measure, amounting to 624,000l. The average annual diminution of charge, according to that which has taken place during the last three years, will amount in seven years to 640,000l. In the year 1860 will fall in the Long Annuities, being 1,292,000l., with other annuities amounting to 854,000l., making 2,146,000l. So that the whole of the reductions of charge, and the permanent sources of income which I have mentioned, will amount together to 5,959,000l., making an amount within 180,000l. of the now existing income tax; so that, if the Legislature should think proper, the income tax may be dispensed with without any charge or sacrifice. Now, my Lords, I must say that this appears to me to be a solid system of finance. It has already been received with great acceptation by the country, and has met with very general approval. I believe it to he a system under which—coupled as it is with great relief to the mass of the people, and persevering, as it does, with that system of free trade which has been so wisely adopted, and if we should be fortunate enough to preserve the inestimable blessings of peace which we have experienced for the last forty years—I believe it to be a system under which this country will see times of happiness and prosperity such as have not before been witnessed. My Lords, I beg to move the second reading of this Bill.

Moved —"That the Bill be now read 2a."


My Lords, I do not rise for the purpose of opposing the second reading of this Bill, because I am quite aware that the state of the finances of the country as just explained by the noble Earl is not such as would enable the present or any other Government to dispense with that large sum of money which is brought to the Treasury through the medium of this most objectionable tax. But I must say that the speech of the noble Earl appears to me, from first to last, to be a contradiction throughout of the premises he lays down, and the conclusions at which he arrives. I cannot help observing, further, that some of the noble Earl's calculations are so vague that it is absolutely impossible to reckon with any degree of certainty upon what may be the state of affairs in 1860. The noble Earl began by stating all the objections that have been urged to the income tax; the noble Earl admitted that it was unjust and inquisitorial in its character; and, following out the calculations and arguments which have been used in another place by the right hon. Gentleman the Chancellor of the Exchequer, he said this is a tax peculiarly suited to a time of war, and ought as far as possible to he retained for the emergency of war. The Chancellor of the Exchequer has further said, that it is a weapon which ought not to be held in our hands, but should be hung up within reach against the wall, ready to be brought to our aid in case of emergency. Having, however, established the entire unfitness of the tax as a source of ordinary revenue, the noble Earl then proceeds to come to the conclusion, that, not in a time of war, but for the general service of the country in a time of profound peace, upon the arguments put forward by the noble Earl and his Colleagues, we should continue the tax for a period more than double the period for which it had been asked by any preceding Administration. It was stated in the first instance by Sir Robert Peel, when he introduced this system of taxation, that he calculated it would be required for three, or at most five, years, and that then it might be dispensed with; but as each succeeding Government found the period for which it was to endure coming to a close, every Government found itself, in consequence of the reductions of taxation made in the interim, in the position which rendered it absolutely necessary to ask for a continuance of the same tax for a further limited period, notwithstanding all the objections to which they admitted it to be open. But the difference between the proposals of all former Governments and this is, that, whereas they asked it to be renewed for a limited period in consequence of the actual state of the revenue, the noble Earl and his Colleagues ask for it in order to carry still further those principles of taxation on which the noble Earl pronounced so warm a eulogy. But, after having come to the conclusion, that, notwithstanding the objectionable nature of the tax, and its inquisitorial character altogether, it was still necessary to continue it for a longer period than ever it had been asked for on any former occasion, the noble Earl next proceeds to discuss the character and partiality and anomalies of the details of the tax; he tells you that it is inquisitorial and objectionable in its details; that it is impossible to deny that between various classes of the community it acts with gross and grievous injustice; and the consequence, I naturally thought, would be, that the noble Earl, in proposing the tax for so lengthened a period, would, at all events, do all in his power to remove that injustice and those inequalities to which he acknowledges it to be obnoxious. The noble Earl tells you it was the intention of the late Government to make certain modifications which he admits to have been equitable in principle; he did not allude to that description of property which is most favoured in the imposition of the income tax—namely, the funded and monied property of the country, where there are no deductions, where the income is permanent and without any drawbacks; but he alluded to the intention of the former Government to make a distinction—which he admitted to be a just and equitable distinction in principle—in the amount of the tax paid by realised and precarious incomes. He says he did not know in what manner the late Government intended to carry their measure into effect, or what were the details of their plan, and he concluded that those plans were not matured. The noble Earl will forgive me if I remind him that he has come to a hasty conclusion, inas-much as the late Government had not the opportunity of bringing forward its Budget in detail, and nothing more was brought before Parliament than the general statement of the outlines of their general policy. The most important part of the policy of the Government was rejected; and, consequently, my right hon. Friend who was at that time Chancellor of the Exchequer never had the opportunity of explaining the manner in which he proposed to carry into effect the proposition of which the noble Earl acknowledges the justice, but, at the same time, he says he is not prepared to carry it into effect. The noble Earl takes credit for the financial ability and skill, and what may be called the strong conviction, which characterised the speech of the right hon. Gentleman the Chancellor of the Exchequer in bringing forward and supporting the proposition for maintaining the income tax with all its acknowledged injustice; and attributes the success attending the passage of the Income Tax Bill through the other House of Parliament to his powerful reasons even against the convictions and the facts of the right hon. Gentleman; but he forgot to recite among the prime inducements which might have obtained the acquiescence of the other House, that at the same time the Chancellor of the Exchequer undoubtedly deprived certain classes of the advantages they might have expected from the equalisation of the pressure of the income tax, by establishing a distinction between fixed and precarious incomes, he threw out, at the same time, a great boon to all those classes by the imposition of a new and most oppressive tax in the shape of a succession tax upon a description of property that has hitherto been exempt from it. Now, I have a very great respect for the power and great ability in debate and the arguments of the right hon. Gentleman the Chancellor of the Exchequer; but I venture to retain my own opinion strongly that the success of the income tax in its present amended form is not to be attributed to any power in the arguments of the right hon. Gentleman, but is owing to the counter attraction and the advantage of having a very heavy tax thrown upon real property, The noble Earl having established that the income tax is inquisitorial and improper—having next assumed, and, indeed, I may say proved, that the manner of its assessment is grossly unjust and partial—having come to the conclusion that it is right to continue that injustice and that partiality, proceeds to take credit to Her Majesty's Government for not making it a portion of the permanent revenue of the country, Now, so far from indicating any intention of relieving the country from the pressure of this tax, the Government actually ask for a continuance of it for more than double the period asked by any former Administration. it is true they do hold out a prospect, although a little clouded by various hints and insinuations (and certainly no man can tell what the state of the country may be at the end of seven years, or even seven months, or seven weeks)—they take credit for having provided for the remission of this tax at the end of seven years. Now, I wish I could believe what the noble Earl wishes the House to believe, that there will be any disposition—or indeed any power—on the part of the Parliament to give up the income tax at the expiration of seven years. I should have been more disposed to give the noble Earl and his Colleagues credit for really intending to act on the principles which they profess, of doing away with the income tax at the end of seven years, if they had begun earlier, or had proposed a more rapid diminution of the tax. But the fact is, that the Chancellor of the Exchequer proposes to retain the tax at the full amount for a period of two years—he then continues diminishing it by a penny for a period of two years more. At the expiration of that time he takes off 2d. out of the 7d., and it then remains unaltered till the expiration of the seven years. At that period, all at once—it being admitted that it is impossible to get rid of the 7d. —he believes that at the expiration of seven years, Parliament will consent to get rid of the tax of 5d. —that is, requiring a surplus of between 4,000,000l. and 5,000,000l. sterling to enable them to do so. If the Government had proposed to reduce the tax by one penny each year for the period of seven years, I should have thought that would carry with it the evidence of the sincerity of the Government, inasmuch as the reduction then would operate so gradually that it would probably have been within the limits of the ordinary surplus revenue of each year; whereas 5d, was manifestly beyond the extent of any probable surplus that would arise at that time. The noble Earl takes credit for saying that at the expiration of seven years there will be a sufficient surplus in the Exchequer to enable them to get rid of the tax. He enumerates some additional items, which I am quite prepared to give him credit for—namely, the conversion of the 3 per cents, consequent upon Mr. Goulburn's arrangement, and the falling in of the long annuities in 1860, which would give a considerable portion of the anticipated surplus. But, in order to make out this, first of all he takes the income tax to amount to 5,800,000l.; he then shows that there will be, by the reduction he calculates upon, as a matter of course, in the charge for the interest of the debt, and these other reductions-—that there will be, in point of fact, a saving equal to the 5,800,000l. which he is to lose by the remission of the income tax. But in order to establish this surplus he is obliged to go further, and to assume that the gradual reduction of the income tax will not only he recovered by the additional income derived from the extension of the tax to smaller incomes, but that the effect of the reduction of taxation generally would have been so great that the whole amount of the 5,800,000l. will be made good to the revenue. No doubt there will be an increase in the revenue, and an increase in the consumption of the necessaries of life, arising from the reduction of taxation in many branches. But observe, that the whole question which he assumes, and the whole basis of the calculations on which he expects to get rid of the income tax at the end of seven years, is, that the amount of the increase should be so great as in itself to have restored the whole amount lost by those reductions, and bring hack the revenue to its original amount notwithstanding those reductions. My Lords, that is the merest speculation, the merest chance, on which it is absolutely impossible to form the slightest opinion or found the slightest calculation, which may be affected by a hundred different circumstances, and on which it is impossible to build the smallest possible data for calculation; and yet it is upon the accuracy of that calcu- lation he depends, and it is upon the responsibility of it he rests, for the possibility of meeting the deficiency in the revenue occasioned by the remission of an income tax of 5,500,000l. at the end of seven years. I shall now call your Lordships' attention to a few points in the argument of the noble Earl, which it appears, to me defeats itself, and to another upon which he has made a miscalculation, which when pointed out I am sure the noble Earl will himself admit. He says, calculating the revenue he will derive from the income tax, that its present amount is 5,500,000l.—that he will have an additional sum of 250,000l. arising from the extension of the tax to incomes below 150l.—that its extension to Ireland will produce 400,000l. more, this being the additional sum arising from its extension to classes who have not been hitherto subject to it. But he has forgotten that before the end of that period the tax will be reduced to 5d., and consequently the amount of the tax will be so much less. [The Earl of ABERDEEN was understood to dissent.] I may not be able? to follow out the whole of the noble Earl's financial statement; but it cannot be contended that the present produce of the income tax at 7d, is to be equalled by its future amount. Surely there is some mistake here affecting two-sevenths of the noble Earl's calculation—upon which calculation rests the present prospect of getting rid of the income tax at the end of seven years. I shall not enter into any further details; but if it is to be a permanent tax, which I am confident it will be, I do not dispute the theoretical justice of charging Ireland with her share of the income tax; but I cannot help thinking that, considering the calamities that Ireland has recently gone through, it would have been better to postpone it till the property of that country is better able to pay than it is at the present moment; but if it is to be a temporary tax, I hardly think it worth while to undertake the inconvenience of subjecting Ireland to it. I cannot, I repeat, object to the landed property of Ireland being taxed if it is to be a permanent one; but when the noble Earl, on the other hand, tells us that there will be a remission of 4,000,000l. of the capital of the consolidated annuities, that appears to me the oddest species of compensation for the imposition of an income tax that can possibly be imagined. Because certain districts are so heavily burdened that it is impossible for them to bear it, the noble Earl says, I will relieve them of a burden which it is impossible for them to bear, and that it is be taken as a compensation for a new burden on other parts of the country and other districts and individuals who have never before been subjected to the operation of this tax—it is like compensating one man for what he loses by taking something out of another man's pocket. The proposed measure may be a compensation to one class of indviduals; but it appears to me that it will be hard to show how the setting off of one class against another can be a compensation to both. My Lords, I have only one word more to say, and that is, as to the probable discontinuance of the income tax. The noble Earl takes great credit for following the system introduced by the late Sir Robert Peel, and the advantages derived from the constant reduction of duties and remission of taxation. But do you not observe that he thereby destroys his whole case? For although it may be true, as the noble Earl assumes, that, at the end of seven years this country may have recovered the revenue they are now sacrificing, and the income they are now giving up, provided no new deductions take place: if, during the course of these seven years, you are to go on reducing taxation, and making further remissions, yet, if you go on as fast as it recovers, taking off fresh taxes, and using up the surplus as fast as you make it, in order to carry out the principles of free trade—and that I have no doubt will be the case, with the present feeling of the country and of Parliament, and the noble Earl has himself declared his intention to pursue that course by the successive reductions of taxation—the effect will be to negative all his previous arguments, which rest upon the assumption that the remission of taxation will be recovered by the country. If the noble Earl goes on making fresh reductions, it is quite clear that, instead of having 5,500,000l., there will not be a shilling more in the Exchequer, whether the country be prosperous or not, and that you will not have the available surplus you calculate upon. I do not now enter into the question as to whether the country is likely to be then in a more prosperous condition or not. All I say is, that if you go on as the Government say they intend to do, you will not have available the 5,000,000l. of surplus which they calculated upon to enable you to get rid of the income tax. I must say, I believe that there will be a perpetual reduction of taxes going on so long as there is any surplus to dispose of. I do not believe that Parliament will submit—more especially after the encouragement that has been given to a perpetual reduction of taxation—I do not believe that Parliament will submit for the next seven years to see a surplus accumulating which would amount to the whole surplus of 5,500,000l. per annum, without being disposed to avail themselves of it, in order to bring the revenue and expenditure nearer together; consequently, they will defeat the object which the Government have in view of remitting the income tax at the end of seven years. I submit to the income tax, because I believe it to inevitable. Your Lordships are aware that you have no power of modifying or dealing with the details of a measure of this kind. I am not prepared to ask your Lordships to refuse altogether to do what may be necessary to maintain the credit of the country. I am not deluded by the suggestions on the part of the Government that it is intended to be merely a temporary tax, or to credit the evidence they have given of the sincerity of their determination to get rid of it within a limited period. I believe there must be, and that there will be, continual renewals of the tax, and that we must submit to it now with all its inequalities and all its injustice—that we must submit to a tax, nominally for seven years, but of which neither the noble Lord nor I shall ever see the end.


said, it might seem presumptuous in him to rise to address their Lordships immediately after the noble Earl the leader of a great party in this country; and it might also seem unnecessary that he should address them at all, considering that their Lordships had no power of making any alteration in Bills of this description; but he felt that he should not be doing the duty which he owed to the noble Lords who placed him in the chair of the Committee appointed by that House to consider the question of parochial assessments, if he did not call the attention of their Lordships to a clause in the present Bill, which was directly opposed to the unanimous recommendation of that Committee, and which seemed to him to be the insertion of the narrow end of the wedge, which at no distant period, he feared, would make a large fissure in the Exchequer. He alluded to that clause of the Bill which, for the first time in legislation, acknowledged the principle that the profits, fees, and emoluments of the clergy were to be admitted as fit subjects of any allowance leading to a reduction of taxation, so far as concerned those charges which were incurred wholly and exclusively in the performance of clerical duties. He must say, that when he saw the charities of the country subjected to this tax, he did not think it quite wise to make this uncalled-for concession to the clergy. He knew one great hospital in this town, the revenue of which would be reduced by the imposition of the tax on successions to the extent of excluding no fewer than 250 patients a year; and when he saw that, and compared it with this concession to the clergy, he did think it was a matter which ought to be more fully explained than it had yet been before it became law; and the more so, because no mention of this matter had been made in Parliament by the promoters of the clause. He wished the House to look to the evidence given before the Committee on Parochial Assessments by Professor Jones, who thought that the utmost fair concession to the tithe-owner was the amount of the salary of the curate. Mr. Meadows White said that tithes were given for the purposes of the duty of the officer, and added, that an obligation to discharge the spiritual duties was the purchase price of the tithes. The Committee advised the House that no special deductions should be made for tithes, to which all other property is not entitled. The new view taken in this Income Tax Bill is full of danger to the Church. He begged to observe, also, that he thought they were extending too widely the basis of direct taxation. They all knew that indirect taxation was less felt than direct taxation, and hence was always paid more willingly. It had been stated that persons would be induced to bear this tax because some of its inequalities would be remedied by another direct tax which was now before the other House of Parliament. He doubted, however, the value of the arrangement, and would remind their Lordships, that as the total taxation on the income of the nation was about 33 per cent, and that direct taxation bore to indirect taxation the proportion of 5 to 7, it was unwise to add to the direct taxes. The indirect charges on direct taxes fell heavily on individuals; the indirect charges on indirect taxes fell on the nation, which was better able to bear the burden. He believed that a reaction must soon come in the public opinion on this subject, for the one was paid by Con- straint, and of necessity, with ready money; while the other was paid by consent, and on credit. The income tax and local taxes must be paid on the day of demand. The taxes on tobacco and beer no one knew when he paid. He begged to remind them that when they talked of dealing with land, it must be divided into two divisions—that of land held under settlement, and land held in fee; land for life, where there was a life interest only, and land which a man might spend as he spent his money. He admitted that a great boon would be given by the arrangement in the Succession Duty Bill to land in fee. There could be no doubt about that; but, as regarded life interest, there would be no boon whatever. The concession was, that the lands should be valued as an annuity. As regarded land in fee it was a boon; but as regarded settled estates it was no boon, for by the present law, if land was left as a legacy by will for a life interest, it was valued just as Consols were valued—on the value of the life; and so both real and personal estates were on an equal footing; but, unless the clause was altered, land would pay one year's purchase higher than Consols would pay, as the tables of 1796 and of 1853 differed to that extent. The burden on an estate for life would be very heavy, as the tenant for life must borrow to pay the tax, and so begin with a debt, while the owner in fee could sell enough to pay the tax, or, by a bonâ fide gift to his successor during his life, could avert the tax; therefore, although a boon was given to lands held in fee, a heavy burden was laid on the holder of life interest. But who were the chief owners in fee? The commercial and monied men who had lately bought land, and who, in truth, were the great gainers by all the modern changes of taxation. This new tax was not quite understood. It was called 1, 3, or 10 per cent; but it was much more. Take a life of forty on the date of succession, and look to the table in the schedule, where it was shown that the son will pay on each 100l. per annum, called I percent, 14l.; the brother, called 3 per cent, would pay 42l.; the Stranger in blood, called 10 per cent, would pay 140l.; besides all the costs of valuation necessary to enable him to make a true return. Prom this last indirect expense Consols would be exempt, and therefore real estate was still unduly to be burdened. If, then, the Income Tax Bill, and the Bill which was to remedy the inconvenience of that measure, were to be made the foundation for the Parochial Assessments Bill next Session, he warned their Lordships that they would afford no sufficient excuse for continuing to exempt from parochial assessment that property which hitherto had contributed nothing towards it.


said, he considered the income tax as one of the most inquisitorial, unjust, and oppressive imposts that had ever been known in this country. Its inequalities were acknowledged even by the Chancellor of the Exchequer himself, and yet no attempt had been made to remove them. He, for one, was ready to bear his fair share in the taxation of the country; but he objected to this Bill, because, while it professed to impose an equal tax of 7d. in the pound upon all descriptions of property, it really imposed a tax of 9d. in the pound upon land—a description of property which was already more heavily burdened than it should be. Again, the succession tax, which it was said would remove the inequalities of the income tax, could be considered in no other light than a land tax. It was plain, therefore, that the landed interests had not justice done them in the financial arrangements of the present Government. Another objection he had to the income tax was, that, while tradesmen and others were assessed upon their net income, the owners and occupiers of land, on the contrary, were assessed upon their gross income. He found that the incidence of the income tax of 1803 was less offensive in this respect, inasmuch as it allowed certain necessary deductions to be made from the gross income of landowners and farmers, which were altogether omitted in the present Act. By 43 Geo. III., c. 122, these deductions were on account of land tax paid, public drainage rate, or fencing and repairs, 5 per cent if chargeable in Schedule B—2 per cent otherwise, also for tenths, procuratures, & c. He would extend the allowances made by the thirty-seventh section to the above payments, to expenses of drainage, of insurance, average repairs of buildings, and to all such outlays as the owner may covenant to make, to maintain the present value of the premises. He found the Act of 1803 imposed a penalty on surveyors for making vexatious surcharges: this was also omitted. He also complained of the mode in which the Commissioners for assessing the tax were appointed. He would allow all justices of peace, duly qualified, to act as Commissioners, as in the case of the land tax; but his chief objection was to the injustice inflicted upon the landed interest; and he maintained that if that injustice was removed, the tax would be rendered more satisfactory, and more acceptable to the country.


said, there were many great anomalies and inconsistencies in this tax beyond those which the noble Lord (Lord Berners) had pointed out. Take, for example, the case of money invested in improvements, or in trade, with the view of being replaced by profits in the future, but not immediately. Suppose that 10,000l. were invested either in the improvement of land, or in trade or manufactures. The most prudent man so investing never looked forward to obtaining any return from it for the first two or three years. Well, but how was that dealt with? The instant it began to yield income, it was pounced upon by the Income Tax Comsioners, and taxed, just as if it were ordinary income. But this, in point of fact, amounted, not to a tax upon income, but to a tax upon capital; because when the party invested his 10,000l. he did it with the expectation that the profits which would accrue at a distant period would compensate him for having received no profit at all during the first two or three years, and would ultimately replace his capital with a profit. To take those profits, then, as the measure of taxation, was taxing, not the income, but the very capital. He stated this as one of many objections; but to it, as well as to many of those difficulties and objections which had been pointed out by the noble Lord, and by others, there was one observation applicable, which was, that it was inevitable, and that no modification which could be made in the tax could ever relieve it from that objection—could ever get over that difficulty—could ever remove that injustice or inconsistency. There were other objections which arose from the very nature of the tax itself. For example, it pressed heavily upon one species of income, and unjustly, as it was said. He did not call it unjust. He called it unequal and inexpedient that it should be so apportioned; but he did not call it unjust, and there were reasons why it should not be called unjust. An income arising from fee-simple property was dealt with precisely in the same way as income arising from settled property. The income of a tenant in fee was taken exactly as the income of a tenant for life. That was a hardship. He did not see that it was impossible, as in some other cases, by any modification, to get rid of that anomaly; hut the difficulty was extreme. Again, there was another case. Income arising from property of any sort, whether land or personalty, was dealt with exactly in the same way as income which was the fruit of labour; so that a person working as hard as he could in order to support himself, to maintain his family, and to lay up a certain provision for old age, or the day of sickness, was taxed exactly in the same way, to a penny, on his income so gained, as the person who derived his income either from landed possessions, or from capital invested in trade, or the funds. This was another inequality, no doubt, which, however, might be lessened. Nevertheless, the difficulties of arranging this, when they came to be examined, had been found to be, he was going to say, insuperable. Certainly they were all but insuperable, and that it was which had made his Friend, the late Lord Melbourne, say in 1842, that he was quite aware of the great hardship of the tax; that he was quite aware of its pressure upon every class; but that that, in his view, constituted its great recommendation, because no property escaped, and everybody was compelled to pay. The answer to that, however, was obvious. "True, everybody is compelled to pay; but might they not be compelled to pay in different proportions, so as to relieve them, to a certain degree, from the pressure, and to lessen the inequality of the tax?" Still, all those who had dealt with this subject, both in former times and more recently, had found that the nearer one examined it, the more evident it became, that partly from the difficulty of finding a due and just scale, and partly from the great and inevitable risk of evasions, it was impossible so to construct the tax so as to meet these objections. These were not the only difficulties and objections. There was one which could be remedied by no modification whatever, and that was the inquisitorial nature of the tax. Inquisitorial as to the possessors of landed estates it really might be said not to be, because it was perfectly immaterial to the landowner what publication was made of the amount of his income in a given parish, inasmuch as it was perfectly well known to all the inhabitants of that parish. His burdens, probably, were less known, but even those, perhaps, were generally guessed at. The injury to him, therefore, was exceedingly trifling compared with the injury to other persons. How was it with those who were engaged in trade, and, perhaps, in that moderate amount of speculation which was essential to trade, and which was of a perfectly justifiable nature? The disclosures made by the inquisition of this tax might be not merely most prejudicial, but almost fatal, to the credit and prospects of a person engaged in business. Then, with respect to professional incomes. He did not say that such inquisition and disclosures were so prejudicial to the professional man as to persons deriving their income from profits in trade; but still it was annoying, galling, and distressing to him to find the amount of his income disclosed; and, although, no doubt, generally speaking, the Commissioners appointed under the Act had a due regard to the importance of secrecy, yet it had been more or less found that by degrees the truth, and sometimes what was not the truth, but the merest guesses and facies, oozed out, and became the subject of exceedingly vexatious discussions and criticism. Independently of the disclosure which was one evil, the mere inquisition was a great evil. To call on a man to disclose his private affairs, even where this was not attended with damage to his interests, was vexatious in a very high degree. This was an evil inherent in the tax, and which no modification of the tax could remedy: if they wanted to tax a man's income they must first get at it, and he did not see how that could be better done than under the present system. For these various reasons, an income tax was a tax which he had always regarded with the greatest dislike, and which he had done his best, in former years, to oppose. It was now thirty-seven years since, by an accidental majority of thirty-seven votes, he had the satisfaction of putting an end to the tax in the other House, aided by a noble Friend of his not now in his place, who fought with him against the tax for the whole six weeks of the contest—a contest in the course of which, he would venture to say, not one argument was adduced in favour of the tax which bore investigation for one single moment without being completely disposed of. In 1842, and again in 1851, moved by the various objections to the tax, which he had already stated, he moved a series of resolutions on the subject, in which he contended that the income tax could not safely, and ought not in justice, to be imposed, except under peculiar circumstances—except as wedded to war, except as the inevitability of some severe financial pressure which could not otherwise be obviated. On the former oc- casion his illustrious Friend, now, unhappily, no more, the noble Duke, then sitting on the Ministerial bench, and his noble Friend Lord Ripon, then President of the Board of Trade, said not one word, either of them, in favour of the tax itself, or against the principle of the string of resolutions which he moved in opposition to the tax, except precisely on the ground of the necessity of the tax as a temporary provision to meet an extraordinary pressure. He was, to a certain extent, relieved at the assurance that his noble Friend the noble Earl (the Earl of Aberdeen) regarded this continuance of the tax as only a temporary continuance for a certain limited period, thus bringing the measure now moved within the scope of that of 1842, which was declaredly a measure only justified by necessity, and to be continued only so long as the necessity should exist. He was afraid that his own chance of benefiting by the announced discontinuance of the tax in 1860 was by several years smaller than that of his noble Friend, supposing the tax then to cease; but his distinct impression was that neither those living at the end of the current seven years, nor those living at the end of the next following seven years, would see the end of this, to him, execrable tax. He by no means indulged in the sanguine expectations of his noble Friend on the subject. That peace was now about to be disturbed, God forbid that he or any one should have reason to apprehend; though that war was not to be apprehended before the next seven years should have elapsed, who could venture to say? An income tax unjustified by absolute State exigency appeared to him worse than any other tax—save a tax on the food of the people—save a tax on the knowledge of the people—save a tax on law for the people; and with this conviction he should be, on principle, quite as ready now as before, to propose the resolutions which he proposed in relation to the Income Tax Bill of 1842; but, accepting the statement of the Government as to the necessity of the measure, he would offer to it no further opposition than the expression of his opinion on the principle of the tax.


said, that as one of those who opposed the introduction of this tax by the late Sir Robert Peel in 1842, he must beg to say that he had never ceased to feel the objections which he then stated to the principle. He should not offer any direct opposition to the proposal of the Government; he only wished he could regard it as of so limited a duration as that indicated by his noble Friend; but his opinion was, that when 1860 came, the Chancellor of the Exchequer of that day, be he who he might, would find himself in no position to discontinue the impost now proposed to be continued. Moreover, he considered it an extremely dangerous tax, inasmuch as it might enable a strong Government to encourage extravagance; while, on the other hand, it might be taken advantage of by a powerful and unscrupulous Opposition to deprive the Government of an indispensable branch of revenue. It was dangerous, also, because it partook of the nature of graduated direct taxation, which, despite the principles which the right hon. framer of the measure had so eloquently enunciated, he had, nevertheless, introduced into this measure, which, while it, as was admitted, practically taxed the landed interest 9d. in the pound, taxed another interest 7d., and another 5d. He did not object to the principle of the extension of the tax to Ireland, but he did object to the mode in which it was proposed to be levied and collected in that country. It was proposed by the Bill to collect the tax from the landlord before he had received one shilling of the rent on which his payment should be based, and this he thought most objectionable. He did not wish to subject the country to the inconvenience that might arise from the alteration of this Bill, and the sending of it back to the other House, but he thought it might be practicable for the Government to introduce another Bill remedying this and other injustices. If, however, this was to last for seven years, he, for one, should never cease in his opposition to it. Another point to which he wished to allude was, that he did not see that any provision was made for the consideration of the repayment of that part of the income which went to pay the rentcharges in Ireland. He thought the noble Earl should not have left those provisions of the Bill, which were entirely new provisions, without explanation or remark; and, as regarded Ireland, he considered it very unwise and very unjust to have laid this tax upon that country at a time like the present; for there never was a moment when there was more reason to give further inducements there to the outlay of capital and to improvement, and thus to give strength to the springs of her nascent prosperity. There was still great pressure, and he thought that it would therefore hare been right to postpone it at least for another year. As to the ground on which the tax was so extended to Ireland, it had no basis in reason, justice, or practically in fact; instead of, at least, proceeding on the principle that the taxation of Ireland and England should be assimilated, the framers of the measure held it out as a bargain with Ireland—as a commutation, upon very favourable terms to Ireland, for those consolidated annuities, the real nature of which had been so well exposed before their Lordships' Committee. It was unfair to represent the whole of those consolidated annuities as a debt due from Ireland, when, in point of fact, it had been shown that a large portion of them could not only not be recovered, but were not in justice demandable. The real statement of the case, then, was, that the Government called upon Ireland to pay upwards of 400,000l. a year, in order to be relieved from the payment of little more than 200,000l. a year, which was the utmost extent which she ought to be required to pay in respect of the consolidated annuities.


said, that the continuance of the tax, at the end of the seven years, must entirely depend, of course, on the decision of the then existing Legislature; but he begged, most emphatically, to deny, on his own part, and, he might add, on the part of the Government, that in proposing the present continuance of the tax for the term specified, they had any contemplation of its extending beyond that period. It would be wholly opposed to the opinions which he had ever declared, were he to sanction this tax as a portion of the permanent taxation of the country. He should be the most inconsistent of human beings were he now to support any such theory. He had uniformly opposed the tax, as a permanent tax, not only upon his own judgment, hut upon the confirmatory judgment of Sir Robert Peel, of Lord Grenville, of Lord Grey, of nearly all the most eminent statesmen of the last twenty years; and he was glad to avail himself of the present opportunity to state, that in no degree had he changed his opinion on this point. The noble Lord opposite had assumed that, by introducing the date of seven years into the Bill, the Government had taken a course different from any former Government, as implying that the tax would be engrafted on the financial system of the country. Now, the ground upon which the date was introduced, was precisely the reverse. It was done on the assumption, which he contended was a just one, that, while permitting the continuing of the tax for such a period, in the meantime they were providing the means of getting rid of the tax altogether. The sole ground upon which that duration of time was justified, was, that they were in a position of things upon which they could rely with confidence, and which justified their expectation that, at the end of seven years, it would he in their power to put an end to the tax. They had the satisfaction of finding that the diminution of certain imposts which checked trade and cramped the resources of the country had had the effect of extending that trade and increasing those resources; thereby furnishing the country with the prospective means of adding to the revenue, and putting it into the power of Parliament to extinguish this tax. What could the Government do, but put it into the power of a future Parliament to get rid of the tax? They could not tie up the hands of future Parliaments or future Governments. If they had abolished the tax, it might have been revived by a future Government; but that which the present Government could do was to recognise the expediency and practicability of getting rid of the tax—and that was what he contended this Bill did. It contained in itself the elements of gradual diminution, showing an intention on the part of the Government that the tax should be extinguished. He did not know whether, in his peculiar position, he was to consider himself in office or out of office; but in one capacity or another, he might state his belief, that those who lived to Bee 1860 would see an end to this tax, provided Parliament at that time was so disposed; and that was all that, under the circumstances, the Government could engage for, and all that their Lordships could seek to obtain. In all that had been said against this tax as a permanent tax, he entirely agreed; he thought it was to the greatest degree objectionable—a tax upon improvements— but, above all, objectionable by being inquisitorial, and by being inquisitorial not merely upon the purses but upon the feelings of those who paid it. That alone made it a matter of great consideration to get rid of the tax. Another objection was, the essential indispensable inequalities which were connected with the tax—inequalities which every Minister and Parliament desired to get rid of, but which no Minister had been able to do; which would be intolerable if the tax was permanent, and which were only tolerable because it was temporary. Upon these grounds he recognised the necessity of adopting the renewal of a tax in the shape in which it was proposed, extending it only for a limited period, and providing for its gradual extinction as it approached the period of its termination in 1860, which he trusted many of their Lordships would live to see. He could not but say that his noble Friend had hardly fairly stated the bargain between this country and Ireland upon this subject, when he said the consolidated annuities ought to have been got rid of altogether, on grounds entirely distinct from the extension of this tax to Ireland. [The Marquess of CLANRICARDE made an observation.] If his noble Friend did not mean that, a great part of his argument fell to the ground, because, although he agreed with his noble Friend that it was not consistent—he would not say with the justice, but with the mercy of Parliament—to require the repayment of the whole of those moneys, yet it was a moment for enabling the Government to do that which no Government could have done unless they had accompanied it by the income tax, namely, to sweep away the whole of the consolidated annuities altogether, and efface every vestige of a series of complicated demands, which had been a dead weight upon that part of the Empire, and had tended more than anything else in many districts to check its progress. He thought that the arrangement was advantageous to Ireland, and that in extending this tax to Ireland, not only were they doing that which was right, but were doing it in a manner to make it bear fairly upon the property of the country. He believed, as he had stated, that the tax would be got rid of at the end of the period mentioned in the Bill. He admitted that the tax was one which it was desirable should be reserved for times of war; but he believed that it was justified by its probable results at present, and that whenever war did come, then this tax would be found a powerful giant ready to be enlisted in the service of the country, appropriated to the great object of military defence, and placing its finance, and with its finance its military power, foremost among the nations of the world, and enabling this country to maintain the proudest position a country could occupy.


said, it was not his intention to offer the slighest opposition to the proposal that the tax should he extended to Ireland, for he confessed that he did not think the generally impoverished condition of that country could he put forward as a reason why persons possessed of a certain amount of property there should not he subject to a charge imposed on persons possessing the same amount of property in this country. He should further say that he thought it was an exceedingly judicious plan on the part of the Government to have taken the opportunity afforded by the imposition of that tax to remit the consolidated annuities. In his opinion, of all taxes that could be imposed on Ireland, the income tax was the least objectionable; and he should have considered that Ireland ought to have been subject to her fair proportion of taxation, whether that odious tax, the consolidated annuities, had or had not been withdrawn. He, however, saw some difficulties as to the mode of assessment, and these he wished removed. The noble Earl would, perhaps, inform them at this stage what system was to be adopted, and whether it would be that of England or of Scotland. He would not ask the noble Earl to give an answer at the present moment, but he hoped his attention would be directed to the question when the Bill went into Committee. It was very true, it might be said, that the other mode of assessment was adopted in Scotland; but the object of Irishmen was to resemble, not the Scotch but the English mode of assessment, and to enjoy the principles of English law. There was a vast difference in the mode of assessing the tax in England and in Scotland; and as there was always a vast amount of rent in arrear in Ireland, he felt convinced that, if the Scotch mode of assessment were adopted, the loss it would entail upon the landed proprietors in Ireland would be more than they were able to bear.

Bill read 2a accordingly, and committed to a Committee of the whole House on Thursday next.