§ Order of the Day for the Third Reading read.
§ Moved —"That the Bill be now read 3a."
rose to state a variety of objections he entertained to the tax. His main objection was, that it was a tax upon capital in a most injurious form. His next objection was, that, under the name of an income tax, it was in most 794 material respects a tax upon outgoings or expenditure. It was a tax upon capital, and especially upon capital laid out in that form of expenditure which had the greatest claim to exemption—namely, the capital involved in agricultural, commercial, and manufacturing improvements. The farmer or landowner expended money in improving his land, the merchant in extending his commerce, and the manufacturer in extending his old or inventing new machinery. They expended their capital not for the sake of immediate profit, to be returned, in the ordinary way of profits, in a short time; but the instant that these profits appeared, and the invested capital began to be returned, the taxgatherer stepped in, and, under the name of a tax upon income, levied a tax upon capital which had been invested in improvements in one case, in the purchase of machinery in another, and in extending commerce in a third; but in all these cases it was capital that was really taxed, not income. If an allowance could be made to these parties for the years during which they received no profit arising from the investment, it might be said that they were justly dealt by, and that there was no hardship in the case. But that was manifestly impossible; and the more they examined into the tax, the more plain did the fact appear, that this was an evil incidental to the nature of the tax, and not to be removed. If it was a tax upon capital, it was also a tax upon outgoings or expenditure, for it taxed all the articles the merchant or the manufacturer must purchase for the purpose of extending his trade or his manufactures. [The noble and learned Lord then addressed himself to the inequalities of the tax, laying great stress upon the anomaly of taxing life incomes, life annuities, the incomes of professional men, and of merchants and manufacturers, in the same amount as incomes derived from realised capital.] It was this inequality which excited so much repugnance to the measure. All these objections had been urged against the Bill at the time of its introduction in 1842; but in order to induce a variety of interests—he would not say bribe, though that was the word now in use—to abstain from opposing the measure, a variety of concessions had been introduced. In the first place, the Members and their constituents from the sister kingdom had been approached by the framers of the measure, and Ireland was altogether exempted from the operation of the tax, and the great weight of their opposition to the 795 tax was neutralised. In the next place, all incomes under 150l. were exempted, and the opposition of the great bulk of the middle classes was thereby neutralised— there was no other reason for fixing the limit at 150l. Incomes of 1001., and down to 701. a year, might equally well be taxed. The only objection to taxing the lower of these amounts was, that they would then be commencing to tax the wages of labour, which would necessarily rise in exact proportion to the amount by which they were taxed. In the present case, the law was improved by including Ireland, and by extending the tax from incomes of 1501. to those of 100l. a year. The opposition to these extensions was provided for and met by the Government through the medium of the succession tax, which was said to be imposed for the purpose of equalising the burden of taxation. That might appear a very plausible argument; but they ought not to lose sight of the extent of the local burdens on landed property. Land was the main contributor to the poor-rates, from which personal property was in a great degree exempt. It was true that mills and factories also paid poor-rates; but they did so only for the extent of ground which they occupied, and not in proportion to the profits which were made within them. While the owners were thus paying a disproportionately small share of the rate, there was a continual manufacture of paupers going on in their mills. Adverting then to the inquisitorial feature of the income tax, the noble and learned Lord urged that it was inseparable from the tax. Its inquisitorial character, the disclosures of men's circumstances to which it led, might be very little painful and unimportant to the landowner and to the farmer; but it was unpleasant and disagreeable to the professional man, and most hateful, and, in some cases, most injurious, to the trader and manufacturer, whose credit was necessary to successful speculation. In many instances the exposure of their affairs would be fatal. It was argued that the Commissioners were honourable men, and that implicit reliance might be placed upon them. They were said to act as arbitrators between the public and the taxpayer. But, if that were so, they were arbitrators over whose appointment the taxpayer exercised no influence whatever. In general, these Commissioners were the last persons before whom the taxpayer would like to make a full disclosure of his circumstances. It ought not to be forgotten, that under the old Bill power 796 was given to the Commissioners to obtain information from friends and connexions of the taxpayer, even from his bankers, and exempting only his clerks and confidential agents, such as his lawyers. It was true that the penalty for refusing to give evidence was very small; but there were a great many persons in such cases who would be but too willing to be examined. Their Lordships had indeed no power to make any alterations in the Bill; but he would recall to their attention a suggestion he had made on a previous occasion— namely, to divide the Bill into two—one referring to the details of the measure, the other dealing with the principles of the imposition of the tax; so that their Lordships should have the opportunity of greatly modifying the machinery of the measure without in any way interfering with the privileges of the other House of Parliament. If a man made a return believing it to be perfectly true, and if it turned out that he was in error to the amount of a guinea, he was liable to a penalty of 20l.; but, though the principal was fined 20l., the accessory or accomplice was liable to a fine of 50l. This was an instance of the evils which resulted from drawing Acts of Parliament, not by the head, but by the hand and the scissors. They had been told that among the strongest objections to this tax was the circumstance that it afforded the greatest facilities to the Government for obtaining from the people whatever sum they desired to gain. They had in the instance of this tax a machinery established of most prodigious force—ay, and which did not disdain even the meanest fractions; a machinery which had been justly compared by a noble Marquess opposite to the force of the elephant, whose trunk could raze oaks, and could pick up the minutest article—a needle or a pin. They had a machinery established which enabled the Government without the slightest difficulty, without any delay, without any new measure, without any adaptation of new means to a new end, but by the simple turning of a screw, to raise 100,000l. or 200,000l., or, going on to the extent of its powers, to raise hundreds of thousands and millions with the same facility. This was a tax with which he would trust no Government —not even the Government of his noble Friends opposite, for whom he entertained, as they well knew, the greatest personal respect and esteem. To no Government would he give, if he could possibly avoid it, the management of such a dreadful ma- 797 chinery as this, He could not help mentioning, in order to show the great resources which this tax placed at the command of the Government, that when, in 1842, the tax was proposed, it was estimated to produce3,000,000l. or 4,000,000l. —while the actual result had been from 5,000,000l. to 6,000,000l. or little short of double the amount which it had been foretold and expected that it would yield. If the same rate of income tax which existed in 1816, when the tax was abolished, at which time it yielded 15,000,000l., were now imposed, without bringing it down to incomes of 150l. or 100l. a year, instead of giving the Exchequer 15,000,000l., it would produce at least 25.000.000l. It must be remembered that in 1816 the Bank-note was at a considerable discount. The 20s. note had been down as low as 14s., he believed, and was then worth 16s. or 17s.—certainly less than 18s.—so that a tax producing 25,000,000l. with the currency of 1816, would yield 28,000,000l. or 29,000,000l. at the present day. One of his objections to the maintenance of this tax, which he wished to see confined to cases of war and stern necessity, was the fearful amount which might be so easily raised by it. He thought it of the utmost possible importance that not only this country, but all the world, should know that, without the least difficulty—nay, with the greatest ease—we could increase, if the necessity occurred, the revenue of this country, from its present large dimensions to somewhere about 20,000,000l. a year more, and that without pledging our credit, without pledging a single tax, or mortgaging any one portion of our revenue. If the necessity should arise—which might God in his infinite mercy prevent!—this country could by one turn of the screw, by the mere expenditure of a little paper, pen and ink in figures and calculations, add to its revenue 20,000,000l. a year, without incurring a shilling of additional debt. Nevertheless, he felt that, with all the disadvantages and evils and mischiefs which were inseparable from this tax, it was still a matter of necessity, in the present state of the finances of the country, that it should be continued. In 1806, when the income tax was 10 per cent, it was imposed till the end of the war, and no longer. The I war ended in 1814, but it broke out again in 1815, and after its final termination a great fight against the continuance of the income tax took place in the House of Commons. The attempt had well nigh 798 succeeded, although the Act imposing it expressly limited it "to the end of the war, and no longer." He and those who acted with him, however, resisted the attempt, and successfully. He might be told that the same thing might be done in 1860; but he had no hope of that. A great change had taken place elsewhere, and the campaign of 1816 against the continuance of the tax could not be fought over again unless there was another great change in the interval. How did the opponents of the tax conduct the campaign in 1816? By means of petitions. For five or six weeks, from four o'clock in the afternoon till two or three o'clock in the morning, petition after petition was presented, and each petition was debated. If an account were given of the proceedings of the five or six weeks during which that campaign against the income tax was fought, it would describe one of the most extraordinary scenes ever witnessed within the walls of the House of Commons, and a resistance which was perfectly successful. He remembered, and might mention, one incident which occurred during those discussions. After the fight had continued some three weeks or more, one night, about eleven or twelve o'clock, a question was put from the chair about bringing up the petitions, and all the Members on one bench—who might have been supposed to be exhausted by the long sitting—rose in competition with each other to catch, as it was called, the Speaker's eye; and the gallantry of those men in standing by their colours under such circumstances so struck the House that they were hailed with a general cheer of applause. At length, after dividing on the reception of petitions night after night, they divided on the continuance of the tax, which was negatived by a majority of 37. In consequence, however, of the alteration which had taken place in the other House with respect to the presentation of petitions, such a stand for the destruction of the tax could not be made in 1860. Whether his apprehensive prediction might be fulfilled or not, it was impossible to say; but he could not allow this Bill to pass its last stage in their Lordships' House without again entering his protest against it, and repeating the reasons which he had on other occasions urged against the measure.
§ LORD MONTEAGLE
said, he was disposed to entertain stronger hopes than his noble and learned Friend, that this tax would be brought to a termination at the 799 time mentioned in the Bill before the House. He considered that this measure contained within it greater securities that the tax would terminate at a particular period, than the words "to the end of the war and no longer," in the Act to which the noble and learned Lord had referred. He must say, although it might sound somewhat paradoxical, that he thought they had a further security for the termination of the tax in the seven years' term of continuance which the Government had proposed. If ever the financial danger connected with the imposition of such a tax in time of peace was augmented, it was, he thought, when the tax was proposed for a short period, without at the same time providing by anticipation such a security as enabled Parliament and the public confidently to see their way to the termination of the tax. The result of proposing the tax for a short period, was, that every time its renewal was proposed, the Government had to make a sacrifice to popularity in one shape or another as distinguished from sound financial policy, in order to induce Parliament to renew the tax. Among the national exigencies which justified such a tax, he reckoned a financial crisis as well as a warlike crisis; and he thought that in a case of financial emergency the Government were entitled to resort to a measure of this kind. He thought, therefore, that in 1842 the Government of Sir Robert Peel was justified by the financial crisis that then existed, in proposing the imposition of an income tax. The mistake was, that its duration was not limited to that of the financial crisis. This tax was too great a temptation to place at the command of Parliament. It was easy to renew: it might even be popular to increase. The great battle now to be fought out was that between direct and indirect taxation; and if Parliament allowed itself to be tempted to substitute for the most part direct for indirect taxation, the public credit of the country and its social state would both be brought into the greatest peril. A formidable conflict would be excited between the owners of realised property and the producers of wealth. If Parliament entered upon such a course, each class would be led to seek to shift the burdens of the State from itself, forgetting that it was impossible to inflict injustice upon one class without injuring the other. His noble and learned Friend had said, for instance, that this was not only a tax 800 upon capital, but a tax on capital before it had produced income. Well, in that case, could its mischievous results be confined to the class of capitalists who paid the tax, and would they not extend speedily and inevitably to the labourers whom they employed? It was not, therefore, right or just to teach the working classes that by any alteration of taxation, indefensible in principle, they could shift the burden from themselves, and place it upon others. A tax upon capital would become a tax on labour; for capital unfairly burdened would seek a more profitable investment. He never, indeed, would maintain injudicious duties on consumption, which must, in fact, diminish consumption, and thus defeat themselves; but he had always maintained that moderate taxes on consumption, which were as far as possible voluntary taxes, and were associated with enjoyment on the part of the person who paid them, were far different, and much safer, both with respect to their probable permanence, the facility with which they were raised, and the cheerfulness with which they were paid, from the direct taxes, which were enforced on the direct application of the taxgatherer. Nor did he object to the reduction of duties on articles of consumption. On the contrary, he thought that such taxes should be as low as possible, in order, by an augmented consumption, to produce the greatest possible amount of revenue. But when he saw indirect taxation swept absolutely away—when he saw a large portion of the assessed taxes which fell upon the wealthy classes given up, moderate customs duties upon a large number of articles unconditionally repealed—he felt great difficulty in agreeing to substitute for them a tax like the present, and agreeing to pass a Bill such as was now proposed, not in time of war, not at any great financial crisis as in 1842, but simply as part of the ways and means of the year. It was true that they received an important security from the framers of the Bill, and especially the right hon. Gentleman who introduced it; the tax was now so connected with the falling in of the terminable annuities as to afford a guarantee for its termination at the period assigned. But that depended on the good faith of the Government, and the firmness of Parliament. He considered that Parliament, by accepting this Bill, pledged itself against the renewal of the tax; but if his noble Friends, or their successors in office, 801 should desire to gain popularity by rashly repealing indirect taxes, and thus sacrificing the public income between this time and 1860, the public would ultimately be disappointed in their just expectations, and the alternative would present itself of making the income tax perpetual, or of endangering public credit. The people of England would be defrauded of their compensation for the grant of 50,000,000l.; for this Bill practically amounted to a grant of that enormous sum. One means upon which the Government rested to enable them to accomplish that object was, the imposition of the succession tax on real property; but he hoped that, while it was proposed to place real and personal property, in case of death, on the same footing in this respect, care would be at the same time taken, in justice to the land, to place the transfer of real and personal property, inter vivos, on an equal footing also. There was another point to which he wished to call the attention of their Lordships, and that was the proposal to tax a certain class of incomes at 5d. in the pound, a second class at 7d., while land, according to the admission of the Chancellor of the Exchequer, was to be taxed at a rate equal to 9d. in the pound. Was this reconcilable with the just and eloquent denunciation of a graduated property tax? He maintained that that was a most unjust proposal, and inconsistent with the principle upon which the Government professed to have framed their Bill—namely, the principle of avoiding all inequality of taxation between different classes of incomes. He held that the rate ought to be the same upon all incomes, and he felt considerable alarm at the admission of the contrary principle. This new principle, begun in injustice, might lead to socialism and confiscation. He, therefore, protested against it in the strongest terms.
§ Bill read 3a.
The EARL of WICKLOW
rose, pursuant to notice, to move the omission of the 13th clause, and the substitution of a clause whereby the assessment in Ireland might be assimilated to that of England. He denied that there was any unwillingness on the part of the landed proprietors of Ireland to pay this tax, and he hoped, therefore, it would not be supposed that he was attempting to defeat the Bill by a side wind. On the contrary, he had always advocated the payment of the income tax in Ireland as well as in England, thinking the principle of exemption vicious. He 802 thought that both countries ought to have the taxation assimilated, and when the late Government was in office he had suggested the propriety of relieving Ireland from the burden of the consolidated annuities, and substituting an income tax. He had felt satisfied that that would be productive of the most beneficial effect, as it would relieve the poor and impoverished parts of the country, while the new tax would only be imposed upon parties having property, and fairly bound to contribute to the public burdens. He was rejoiced, therefore, to find that the late Government had taken up the same idea, and had proposed to apply the income tax to Ireland. Unfortunately they had not been able to carry their views into effect; and now, by the Bill before their Lordships, the landlords of Ireland, whether they received their rents or not, would be compelled half-yearly to pay the full amount of this tax. Their Lordships were aware that during the last few years the landlords of Ireland had in many cases received only a fractional part of their rents, and it would be at once seen how hardly the proposed arrangement would press upon them. It was a piece of injustice which he hoped the House would not sanction. He admitted that the Bill contained a provision, entitling the landlord to receive back the income tax he might have paid on account of the bankrupt or insolvent tenants; but, besides the difficulty of obtaining anything back from the Treasury, any one who knew anything of Ireland must be aware that there was no such thing known as a bankrupt or insolvent tenant "according to law," although absconding tenants were numerous enough. In the Amendment he was about to propose, he was not interfering with the tax at all; the principle of the Bill was left untouched, and the only effect of adopting his Amendment would be to have an amended Bill passed through the House of Commons, which would entail the delay of a week, and nothing more. He trusted their Lordships' sense of justice would induce them to submit to this trifling inconvenience. He did not think that any Government would dare to introduce a provision into the English Income Tax Bill requiring the Marquess of Westminster, Lord Portman, or the Duke of Bedford, to pay the tax for their tenants, and then recover it from them in the best way they could. Such a provision would not be for a moment tolerated in this country. He believed no representatives of either the land or the pror 803 perty of Ireland in the other House had given their sanction to the arrangement proposed by the Government; it was supported, however, by another class, upon whose support and in whose views the Government coincided, unfortunately, to a great extent. Now, it was well known that in Ireland the Roman Catholic priests were the great, and some persons thought them the only, constituent body. Their principal dependence was on the dues paid them by their flocks, and it was of course their object to save the tenantry from the payment of this tax at the expense of their landlords. He entreated of their Lordships, under these circumstances, to give a favourable consideration to the Amendment he was about to propose. He had ascertained since he gave his notice, that by substituting the words, "shall be charged upon and paid by the occupier," for the words standing in the 13th clause, that the object he had in view would be effected, and he now begged to move that Amendment.
§ The EARL of ABERDEEN
said, it was perfectly true that when the Bill was first Drought in it contained the provision the noble Earl wished to introduce, and it had been brought to its present form solely from the conviction of the extreme inconvenience which would attend the collection of the tax as at first proposed, and of the propriety and necessity of adopting the present mode. Indeed, he might say, the subject had received much consideration on the part of Government, and it had been with considerable hesitation and doubt that they had introduced it in the form to which his noble Friend had referred, and it was only in consequence of consideration and discussion that the present form had been adopted. The reasons which had induced the Government to adopt the present mode were these: the extension of the income tax to Ireland took place under very favourable circumstances. The valuation adopted as the basis of the tax was that of the poor-law, which was, it would be admitted, highly favourable to the possessors of land, as it was, generally speaking, below the rental. Where the rental wa3 lower than the valuation, however, the landlord could pay on the amount of his rent; and therefore, in every point of view, consideration had been had for the interests of the proprietors. If the principle of his noble Friend were adopted, he should like to know what would be the proportion of tenements in Ireland which would pay; and, 804 if the landlords were answerable, as in England, for all holdings up to 101., what number it would include? The objection of his noble Friend would equally apply in that case. It must be manifest, where the occupier up to a 41. rent was liable, the multitude of persons from whom the tax was to be collected would be such as to render it scarcely possible to be accomplished; and if the tenant were to pay the tax with the prospect of a claim on his landlord for reimbursement, it was clear that with such a description of persons it would produce the most serious consequences that could be conceived, and give rise to the greatest alarm and discontent, because it would be impossible to persuade persons of that description that a new tax was not attempted to be levied on them; and very often, in effect, that would be the case. The object here was not to impose the tax on the landlord, but on the immediate lessor, and it was from him the tax would be drawn. If not, it would be difficult to say where the tax was to be sought. If the tax was to be received from the first person receiving the rent, he was easily known; but otherwise it would be often difficult to ascertain who was to pay it. There was a provision in the Bill which enabled the Crown to come upon the occupier for the tax if they thought fit. There were cases, no doubt, in which the tax would not be paid by the immediate lessors. The change had been made from a conviction of its necessity to the peace and welfare of the country, and no other consideration had weighed with his right hon. Friend in the other House in making the alteration; and, though the tax was not levied in the same mode as in England, there was nothing to characterise it as a different law. The law was the same— the burden the same—the amount of impost the same—and the difference in levying it was not a difference in principle, but arose from the nature of society in Ireland, and the nature of the holdings in that country, which rendered a different mode necessary. He could not see where was the injustice of which his noble Friend complained. The objection raised by the noble Lord on the circumstance of the landlord not receiving his rent might exist in Scotland and England. [The Earl of WICKLOW: No, no!] Not only might it exist, but it existed in England and Scotland very largely. That, however, was no objection on principle. The noble Earl had himself good reason to know he had 805 exaggerated the difficulty on that point; and he (the Earl of Aberdeen) knew that in a large part of Ireland there was no sort of reason to exempt it, any more than parts of England or Scotland. He did not deny that there was still great distress and difficulty in recovering rents, but the noble Earl had grossly exaggerated the amount of it. Under all the circumstances, he could not give his sanction to the proposed alteration, and hoped the House would support the clause as it stood.
§ LORD BEAUMONT
said, he could not allow noble Lords from Ireland to bear the brunt of this fight alone. He looked upon the question not merely as an Irish question, but as one of principle. This Bill by its principle professed to tax income, and property yielding that income; but its very machinery belied that profession. It singled out a certain class of persons, and placed the tax upon them in the name of property, which property might produce no income at all. That was directly contrary to the principle of all income taxes. An income tax did not take from the capital of a man so much money, but took a certain percentage from the income produced by that capital. They must do that by their tax, or it bore a lie upon the very face of it. An attempt like this to seize certain portions of capital would not be endured in England, although it was now sought to be applied to Ireland; and therefore he felt the warmer on the subject, when he saw that an attempt which the people of this country would resist to the utmost was about to be made where the weakness of those opposed to it would render it successful. He had heard many futile attempts to answer a plain statement; but, in all his life, he never heard so weak a defence as that which the noble Earl at the head of the Government had just made to his noble Friend. As every sentence fell from the noble Earl's lips, he perceived that the noble Earl in his heart was conscious of the weakness of his own argument. The noble Earl said that the Government yielded with reluctance to the suggestion that had been made to them in another place. Well might they yield with reluctance to a proposal which attacked the whole system of our taxation, local and public, in this country. Why, every political economist and every statesman regarded taxes on the land as taxes in reduction of rent, and held, that the taxes being paid, the residue alone went 806 to the landlord as rent. The whole income derived from the produce of the land in the first place went into the hands of the occupier: the occupier was, therefore, liable for the taxes upon the produce in the first place; but he deducted them afterwards from his rent, and the remainder went to the landlord. But what were they about to do by this clause? They did not go to the land and tax its produce, but, on the contrary, they went to the man who ought to receive merely the residue, and placed the tax upon him individually. The result would be, that they would take from the landlord the amount of the tax, while he might not receive one fraction of the produce, as, for instance, in in the case of a non-paying tenant, who would thus receive the whole income of the sale of the produce, while the landlord would have to pay the tax on the portion he never received. That was a principle which would be most injurious to the very moral character of the country, because it set at defiance all just principle, and would actually encourage and give a boon to those persons who were reluctant to pay their lawful debts, namely, their rent. Giving such persons a great advantage, and putting the burden only on occupiers who paid their rent, would be holding out a direct inducement to iniquity, and to the withholding of payment of lawful debt. The fair and just principle would be to induce the occupiers of the soil,' and the first originators, as it were, of the income,; derived from it, to exert themselves to the utmost to pay their rent, because they knew when they paid that fairly that their receipts would include a full acquittance of this tax. Such legislation as this, he was convinced, would add more confusion to the already confounded state of the law between landlord and tenant. It was also an injustice to the landlords, who had already been badly treated by the poor-law; and now they were going to heap one wrong upon another wrong, as if they intended to crush them. It might be difficult to carry out a just principle in Ireland; but be that difficulty what it might, that Government which did not attempt to overcome it would not do its duty. The state of Ireland was such that it would bear no paltering with. It was difficult for the landlords to do their duty, and avail themselves of an opportunity of restoring the land to a healthy state; and although their exertions had been great in that respect, they had met with nothing 807 like encouragement from the Government, and he might almost say from Parliament. Under these circumstances the Legislature ought to be cautious: if it gave them little or no encouragement, at all events to do them no absolute wrong; but if it passed that Bill as it stood, he said it would inflict upon them a monstrous wrong.
§ The DUKE of NEWCASTLE
said, he was glad to observe that the noble Lords who came from the other side of the Channel had treated this question in a much more calm and dispassionate spirit than the noble Lord who had just sat down; for although his noble Friend who made the Motion had fallen into a mistake, and had not appreciated the motives of the Government in making a change in this clause, still he had stated his own case with perfect good temper and fair argument. The noble Lord (Lord Beaumont), in the course of his impassioned address, had just made a statement which he confessed he, for one, found it perfectly impossible to comprehend. He confidently appealed to the sober and collected judgment of the House, whether this was not purely and exclusively a question of propriety and convenience, and whether any principle or any injustice could possibly be involved in the clause as it now stood? The noble Lord said the Government durst not make such a proposal for England or Scotland, and made a heated address, which, if their Lordships had been all composed of the same excitable materials, would probably have provoked such an attack upon Her Majesty's Government as was often made upon some unfortunate people at an Irish fair. Well, what was the provision of the law in this matter as regarded England? Why, every landlord was liable for every tenant paying under 10l. of rent in England and Scotland. [A Noble LORD expressed dissent, and asked what was the Act?] He could assure the noble Lord that such was the effect of the law, although he could not at that moment point out the particular Act. Therefore, if they assimilated the law for Ireland with that in force in England, the practical effect would be, that in the great majority of instances the landlord, and not the tenant, would have to pay; because in Ireland the great majority of the tenants, unfortunately for themselves and for the landlords and the country itself, were rated much lower than in England. But as regarded Scotland, at any rate, they might be told that the whole taxation was entirely and exclusively placed upon the land. Well, the noble Lord said 808 that they were discussing a great principle, and contended that this clause involved a gross violation of principle—that, in short, it was a most flagrant iniquity and wrong; and really one could not help wondering that he did not conclude such a string of heavy accusations with a Motion of want of confidence in Her Majesty's Government. But what was the case with the landlords in Scotland? Did they find that an injustice was done them; or that that which they proposed to apply to Ireland worked injuriously to their interests? Many-proprietors in Scotland voluntarily, and although not compelled to do so by law, took the course which they proposed should be pursued in Ireland, and paid the tax themselves, without allowing the tenant to pay it. A noble friend of his had that evening assured him that he was in the habit of paying the tax on his rental in all instances. But the totally different circumstances of the two cases should not be forgotten: in the one instance you were calling for a tax from the payers of rent who were themselves liable to the tax; whereas in Ireland you would be calling on men to pay the tax who would eventually not be liable to it, thereby introducing an inconvenient and complicated system. The noble Lord who had last sat down said that nothing could be more unjust than this income tax, and that the provisions of the Bill gave the lie to its principle; and in support of his views he stated, that the landlords would, in many cases, have to pay the tax on incomes which they did not receive. Well, he (the Duke of Newcastle) and all their Lordships admitted the Act to be faulty, and the principle of the tax to be imperfect; but this did not affect the question now immediately under consideration. There had been printed that morning some important statistical information, showing the exact state of the occupiers of land in Ireland at this moment, and he would take leave to state the general results to their Lordships. The total number of occupiers in Ireland, valued at 6l. and under, was no less than 564,144l.; and the number of occupiers rated over 6l. and under 200l., was 397,575l. Add to these last the numbers under 6l., and it left tenants valued under 200l., 961,719, or very nearly 1,000,000l. Now, let it be recollected that the payers of the income tax in Ireland would only be liable on a rental of not less than 300l. The number of occupiers valued over 200l. was 3,716, and there could not be the slightest doubt 809 that those rated over 300l. would not he more than 1,000 or 1,500. There was another circumstance to be remembered which occasioned a difference between England and Ireland in this matter, that in some instances the valuation of the land exceeded the rental. The Government were anxious to assimilate the law as far as it was possible; but as regarded the machinery, since the circumstances of the two countries were not similar, it would be mere pedantry and folly to attempt to make the law in both cases the same. Now, it did not require argument to show the extreme inconvenience of calling on a person to pay on a valuation, and requiring him to pay to a taxgatherer a larger sum than he could recover from his landlord. That would be a case of great hardship on a numerous body of tenants. They must not forget, too, that there still existed a great complexity of interests where the landed tenants of Ireland did not hold directly from the landlord; and they could not lose sight of the fact that many of those who were called "middlemen" in Ireland had from a variety of circumstances been reduced to a state in which it was found that they did not treat with uniform liberality and kindness those who paid them rents. In such instances you would be under considerable risk that this tax might be used by the middleman as a means of extracting arrears of rent from the tenants, which could not be obtained in any other form. The period between which the rent became due, and the time when it was paid, was generally longer in Ireland than in England. The taxgatherer then would come and call upon these small tenants, not for their tax, but for their landlord's tax, and compel them to pay it at least twelve months before the rent became due out of which it was to be paid. That would be introducing another element of discord. His noble Friend appeared to consider, that, because this principle had been introduced into the poor-law, that, therefore, was a reason why it should be introduced into the income tax. But the cases were not analogous. The income tax was not a tax to which the tenants were liable; they were merely made the vehicle for paying the tax. But, with regard to the poor-law, it stood on a totally different footing, and it had been thought wise by the Legislature to make both parties deeply interested both in the collection and expenditure of the rate. It was upon that ground that 810 tenants were made liable jointly with landlords in regard to the poor-law. The policy of the two cases was, therefore, as distinct as possible. The policy of the one was, to make the interest of the landlord and tenant identical; the policy of the other was, not to involve the tenant in the payment of the tax, which must be eventually paid by the landlord. He thought, therefore, that there was no reason for assimilating the law, except some fancied and pedantic analogy between two countries whose circumstances in this particular were so distinctly and prominently different.
The MARQUESS of CLANRICARDE
said, the argument of the noble Duke who had just sat down seemed to be this—that the plan proposed by the Bill was the most convenient for the collection of the tax; but though it might be the most convenient for the Government, it would be extremely inconvenient for Ireland. He (the Marquess of Clanricarde) contended that, according to all sound and honest principles, the same mode of assessment ought to be adopted in both countries. The noble Duke had told them of the large number of small holders in Ireland; but how many were there in England below 101.? It was not proposed to collect the tax from the small holders in either country. The noble Earl had said that the principles of the poor-rate and of the income tax were the same; but he contended that they were quite different from each other. The noble Duke said, that they were calling upon the tenant to pay a tax upon income, to be deducted from his rent, but which the landlord would not receive for a year. If that were so, were they not also calling upon the landlord to pay a tax upon income which he would not receive for a year? The fact was, that by this Bill they were driving the landlord against the tenant. That was a grave argument, and their Lordships might be assured they would not hear the last of it. He hoped the matter would even yet be reconsidered by the Government. If they allowed it to go, it was impossible that this could be the last time their Lordships would hear of this question. It tended chiefly to affect the very class of the community which was the most intelligent and the most loyal—the very class of the people of Ireland that ought to be conciliated. He certainly thought it a most impolitic, inexpedient, and unwise measure. Who were they that would be affected by it? Not the disloyal—not the agitators, but those 811 men on whom the country could most faithfully rely. He thought it was a most unjust measure, and he called upon the Government to give it serious reconsideration.
said, that he should give his vote in favour of the Motion of the noble Earl, who had proposed to omit the 13th clause of this Bill. It was not that he thought there was any injustice in extending the income tax to Ireland, for he had often heartily commended the opinion that the tax should be so extended; and as soon as the other House of Parliament was informed by the Chancellor of the Exchequer that it was intended to extend the income tax to Ireland, he (Lord Campbell) thought it was a most just and expedient measure. But, at the same time, he entreated the right hon. Gentleman that he would so modify the mode of collecting the tax that it should be a tax on income, and not a tax upon those who had no income. It would appear that the right hon. Gentleman had, in the first instance, proposed to extend to Ireland the same mode of levying the tax which was adopted in this country; and in that case he (Lord Campbell) could not help thinking that the first thoughts had been the best thoughts. Now, he thought it had been clearly demonstrated that a tax such as that proposed by Her Majesty's Government for Ireland could not be said to be a tax upon income, whatever it was; and surely it was most unjust to tax a person merely because he was an owner in fee-simple, but derived no revenue whatever from it. It was quite notorious that although there were parts of Ireland where rents were well paid, there were other parts where they were not paid at all; and when his noble Friend, speaking hypothetically, alluded to cases where rents were only half paid, he (Lord Campbell) believed that he might quite as easily have supposed instances where nothing was paid. But what was the remedy offered by the Chancellor of the Exchequer? Why, it was a mere mockery. The landlord paid the tax in the first instance, and then he was to look for it to his tenants; and where the tenant was bankrupt, insolvent, or had absconded, some redress was afforded. That, however, did not reach the evil; for what redress was to be obtainable when the tenant refused to abscond, or when he was neither bankrupt or insolvent, but simply would not pay, whether 812 he was able or not. He must say, if all the consequences which seemed to him likely to follow from the passing of this Bill came about, that then indeed an Irish property would be what lawyers termed a hereditas damnosa.
§ LORD MONTEAGLE
was understood to say, that although every Financial Minister, from Mr. Pitt down to Sir Charles Wood, had refused to extend the income tax to Ireland, on account of the difficulty of a proper machinery being found for its collection, the present Chancellor of the Exchequer, not merely content with including Ireland within the operation of the tax, had extended to her a measure much more obnoxious and difficult to be worked out than the English Bill. Indeed, there were certain districts in Ireland in regard to which it would be next to impossible successfully to deal with its provisions. The Bill gave to the tax collector the alternative of proceeding against any one of three persons at his own unrestrained pleasure. He might either have his remedy from the landlord, the immediate lessor, or the occupant. Now, he submitted that would place the law in Ireland in a state of vagueness and uncertainty the most objoctionable; indeed, he could conceive no greater servitude than to live in a country where the law was in a state of uncertainty. He and his friends did not want to impose a suggestion upon the Government that would have the effect of defeating their operations; they merely wished to revise the clause, so that the Irish Income Tax Bill of the present Chancellor of the Exchequer might approach nearer to the spirit which had actuated former Financial Ministers in dealing with Ireland.
The DUKE of ARGYLL
wished to explain a statement which he had made to the noble Earl (the Earl of Wicklow), and which had been somewhat misunderstood. He had told the noble Earl that the practice in Scotland was uniformly the same as that which they proposed to introduce into Ireland. A great portion of the Western Highlands of Scotland was similar to property in Ireland. It had suffered severely from the famine of 1846–7, and there had been large arrears consequent upon the tenure of land being subdivided; but the landlords had uniformly undertaken the payment of the income tax, not because they preferred it, but because the other course would be more oppressive on the tenant, and he believed the landlords of 813 Ireland would find it to their advantage to pursue a similar course.
The EARL of CLANCARTY
My Lords, as, in the discussions that have taken place elsewhere upon this Bill, there has appeared much difference of opinion respecting the employment of the police force in Ireland in enforcing its provisions, I wish to take this opportunity of expressing to your Lordships my decided conviction that it is a perfectly legitimate duty to cast upon that body. The primary object of their appointment is to maintain the peace of the country, and they undoubtedly have been shown to be for that purpose most efficient whenever called upon to act; but the duty of upholding the law with reference to illicit distillation of spirits, is one in the performance of which they would render the greatest service to the peace and morality of the country. It is almost a necessary consequence of the increased duty upon spirits, that endeavours will be made to evade the law, by the manufacture and sole of illicit whisky, involving not alone loss to the revenue, but a return to habits of intemperance, from which the peasantry of Ireland have of late years been comparatively free, and inducing tricks and combinations for the evasion of the law, most demoralising to the population. If it should be made a duty on the part of the police to enforce this branch of the revenue law, it will be nearly impossible to escape detection in infringing it, and the temptation to attempt it will be removed. The police are a very popular force; but nothing, I conceive, will better entitle them to popularity, than their being instrumental in upholding the law generally, and especially the law now proposed, which, if not well enforced, will tend so much to affect the peace of the country.
§ On Question, their Lordships divided: — Content 18; Not-Content 34: Majority 16.
§ Resolved in the Negative.
The EARL of LUCAN
moved the omission of the 42nd clause, which allows one-third of the interest paid on money borrowed for the purposes of drainage to be deducted from the income tax. The noble Earl explained that his object was to obtain the deduction of the whole.
§ After a short discussion, which was inaudible,
§ Their Lordships divided:—Content 10; Not-Content 21: Majority 11.
§ Bill passed.
§ House adjourned till To-morrow.