DIRECT AND INDIRECT TAXATION.

of Credit) increased by 21.92 per cent. ; in the second period it increased by no But where did that increase come from? less than 38 per cent. Taking the It did not come from Customs and Exwhole 20 years together, our popula- cise. It came from stamps, which, in tion has increased in the whole period 1875, stood at £10,232,000 and had by 19 per cent.; the four heads of risen in 1895 to £21,403,000, and it taxation have increased by 16 per came from Income Tax also, which had cent., and the Income Tax by 15 per risen from 2d. in the pound, producing cent.; but the expenditure has increased £4,032,000 in 1875, to 8d. in 1895, by 68 per cent. ["Hear, hear!"] producing £16,100,000. The fact is And how has that increase taken place that the direct taxpayers of this country The Army Estimates have increased by have borne the bulk of our new burdens. £4,066,000, the Navy Estimates That has been the continuous direction £8,866,000, to which we have to add of our financial policy for 50 years. I more than £2,000,000 in the year in take the usual classification of all duties which we now stand. The Navy expendi- on consumable articles as indirect taxature of last year was larger than in any tion, and all other taxes as direct taxayear known since the close of the great tion. I go back to 1841, the year war; but the Navy Estimates of the before Sir Robert Peel imposed the Inpresent year are more than double those come Tax, and I find that of every £1 of the year 1875-6, and yet there are some that was raised by taxation, 14s. 74d. persons who are not satisfied. [Cheers and was paid by the consuming classes, and laughter.] Well, the Civil Service Esti- 5s. 43d. was paid by the propertied mates have increased in the period to classes; but now, of every £1 raised by which I have referred by £1,266,000, taxation, 10s. 5d. is paid by the conthe education charges are increased by suming classes and 9s. 7d. by the pro£6,673,000-nearly quadrupled since pertied classes. Let me carry it a little 1875-76; the amount in aid of local further. The tax revenue in 1841-42 taxation has increased by £6,634,000, stood at a little under £50,000,000. though I must add that it would be hardly Seventy-three per cent. of that was paid fair to put down all that to increased by indirect taxation, and 27 per cent. expenditure, because part of it, at any by direct taxation. In 1861-62 it was a rate, was merely a transfer from one little under £64,000,000. Sixty-two pocket to another. ["Hear, hear!"] per cent. of that came from indirect Lastly, the cost of collection of the taxes taxation, and 38 per cent. from direct has increased by £113,000. Now, I taxation. In 1891-92 it was £83,200,000. think the Committee will see that if our Fifty-six per cent. of that came from inexpenditure goes on increasing at the direct taxation and 44 per cent. from rate it has done during the last 20 direct taxation. In 1895-96, this last

years, and the revenue shows no year, it was £92,482,000. Fifty-two

greater elasticity, we shall be within per cent. of that has been paid by inmeasurable distance of a time when direct taxation, and 48 per cent. by we shall have to choose between dimin- direct taxation. There has been a ishing or putting an end to the re- gradual transfer of burden from the induction of our National Debt and an direct to the direct taxpayer of this increase of taxation. I do not envy the country. [Sir W. HARCOURT: 'An Chancellor of the Exchequer, whoever equalisation."] I said a transfer of the he may be, who has to impose increased burden. The result is that whereas in taxation to any large extent on our pre- 1841, £1 7s. 31d. per head of the popusent financial system. He will have no lation was produced by indirect taxation, easy task. [“Hear, hear!"] I should and 10s. 1d. by direct taxation, now like to draw the attention of the Com- £1 4s. 9d. comes from indirect taxation mittee to the way in which the increased and £1 2s. 6d. from direct taxation. expenditure of the last 20 years has That, I think the Committee will see almost entirely been borne. Customs, has been a progressive and remarkable ["Hear, hear!"] I do not policy is wrong. [Opposition There is no doubt that under

Excise, Stamps, and House Duty pro- change. duced in 1875 £59,412,000. In 1895 say the they produced £75,367,000.

cheers.]

to provide for 20 years ago, and it is more than double the sum of £51,709,000 which was the modest Budget Estimate of Mr. Goulburn in 1846-50 years ago. The increase over last year's Budget Estimate is due mainly, of course, to the vast increase of £3,122,000 in the Navy Esti mates. Every Chancellor of the Exchequer for the last 10 years has been burdened with the ever-increasing burden of this "old man of the sea." [Laughter and cheers.] I do not complain of it, because, in the first place, I believe the expenditure to be necessary—[cheers]

it the industry and enterprise of this revenue of the coming year. The Comcountry, our commerce and trade, and mittee will see from the papers in their our wealth, have been enormously de- hands that the expenditure of the coming veloped--["hear, hear!"--and, there- year is estimated at £100,047,000, fore, I suppose we may say it is justified £4,066,000 over the estimate of last by its results. But I must point out year. If we add the Estimate of that our system as it now stands does £7,310,000 for the Local Taxation Acnot add to the popular support which count, we have a total of £107,357,000. any Chancellor of the Exchequer can Now, that is an enormous amount; noenlist in aid of economy. I do not know body can deny it. It is £29,310,000 why it is, but in spite of his increasing more than Sir Stafford Northcote had burdens the direct taxpayer is too patient, or too comfortable, or too much immersed in business or in pleasure, or too idle to do more than grumble and pay. The indirect taxpayer of this country is very moderately burdened, indeed very lightly burdened if he neither drinks nor smokes. [Laughter.] We have arrived now at this position, that in time of peace we have an Income Tax of 8d. in the pound, we have Death Duties at a point which I suppose hardly anybody will wish to increase, and we have indirect taxation levied only on a very few articles of great consumption, and, in the second place, if it be necesthe list of which has not been added to sary, I know that it is far more economifor very many years, and the taxation cal that we should incur it at a time on which, with the exception of the when we have leisure to think out a systaxation on beer and wine and spirits, tematised plan on which it can be made, has not been increased at all since the than to defer works which we ought to year 1878. I wish to put before the do ourselves to be attempted some day Committee the present condition of our by our successors, and then to be financial system. I wish to ask them to provided for by Votes of Credit consider at their leisure what the posi- amounting to enormous sums, much of tion may be of the Chancellor of the Ex- which would certainly be wasted, and chequer who in some future year may all of which might be too late for the have to meet a continuing enormous in- object for which it would be required. crease of expenditure under this system ["Hear, hear!"] Therefore, Sir, I do of taxation, and I wish to ask them not grudge this increase in the Navy whether they are quite sure that in such Estimates of the current year. circumstances our present financial policy sanguine that next year may show a decan be maintained. I do not answer crease. I need not explain the other that question to-night, but I think I should have failed in my duty if, on a matter of this vast importance to the country, I had not done my best, in view of the increased expenditure of the present year, even in this time of prosperity, to place before the Committee what I think to be a cause of great anxiety. show a decrease of £30,000. ["Hear, hear!"] Sir, I hope the that they show an increase of £35,000, Committee will not be of opinion that I and I have this year, unfortunately for have detained them unnecessarily--me, to pay for the failures of my prede[cheers-on these matters. cessors some time ago. I have to ask Parliament to start an annuity £65,000 in order to make up the deficiency in an old annuity of £150,000, created under the Indian Army Pension

ESTIMATED EXPENDITURE FOR 1896-7.

I now turn to what will be of more immediate interest, the expenditure and Chancellor of the Exchequer.

I am

heads of the expenditure, because they
have been explained by the memoranda
which have been circulated with the
Estimates, but there is one point
to which I ought to
attention of the Committee.
solidated Fund Services would

call the The Con

naturally Instead of

of

Deficiency Act of 1885. Under the revenue of £17,410,000; making the system which prevailed between 1870 total revenue £101,755,000.

and 1884, India discharged her liability for that part of our soldiers' pensions

SURPLUS.

which was earned by service there, by If you deduct from this the expenditure

Fund.

to

of £100,047,000, you will find a surplus of £1,708,000. We have now to consider how that surplus can be dealt with. In the first place I should like to refer to one of the sources to which I have to that surplus is mainly due.

a

At

making a capital payment to us when the pension began, calculated on the probability of the pensioners' lives. But owing to delay in the calculations, to their omission to calculate the pensions granted before 1870, to the calculations being based on too high a rate of interest, and to the fund thus formed not consider from many points of view the having been properly invested, it was working of the Finance Act of 1894. discovered in 1884 that a heavy liability [Cheers.] I do not think that I should had been imposed on the Consolidated be justified in making any proposal to the. Committee for the repeal of that A new system was therefore introduced in 1884, and an annuity of Act, or for the alteration of any of the £150,000 for 60 years was set up main principles on which it was based. discharge the liability incurred under the [Opposition cheers.] That Act was old system. It has been found that in great alteration in the financial system 1884 the liability was so much under- of this country, and it is well that there estimated that it is now necessary to in- should be as far as possible a general crease the annuity as continuity in our financial system. I propose. Sir, the total sum I have to provide for is, any rate, when so vast a change as this as I have said, £100,047,000, and now has been made, proper time should be I come to the revenue. afforded to test it by its working; but I have received from various quarters, from the officials of the Inland Revenue and others, information as to various points in the working of the Finance Act which inflict hardships on the subject and disclose defects. ["Hear, hear!"] I believe that many of them were unforseen and not intended by those responsible for that Act. Some of those defects and some of those hardships have already been corrected, of course, under legal advice, by the ordinary course of administration. There are others, howwhich cannot be dealt with, because the law must be subject to the interpretation of the Courts before it I may say would be safe to touch them. that I think we must approach any Amendment of such a complicated

year

ever,

ESTIMATED REVENUE FOR 1896-7. Hon. Members have in their hands a paper showing the Exchequer receipts in the past year. I estimate that this the Customs will produce £21,020,000, an increase of £264,000 on the receipts of last year; that Excise will produce £27,000,000-I take throughout the basis of the existing taxation, an increase of £200,000 over the Exchequer receipts of last year; Death Duties I put at £10,950,000, a decrease, for the reasons I have already explained to the Committee of £650,000; General Stamps I put at £6,700,000, a decrease of £650,000; Land Tax at £1,000,000, a decrease of £15,000, owing to ordinary causes; House Duty at £1,475,000, a decrease system as this with the greatest caution, of £20,000; Property and Income Tax lest in attempting to remedy one hardat £16,200,000, an increase of £100,000; ship we may only succeed in inflicting making a total tax revenue of £84,345,000. But the points on which I I estimate the Post Office to produce propose to ask the Committee to make £11,660,000-an increase of £280,000. some alteration in the law, for the beneI estimate the income from telegraphs fit of the taxpayer, relate to hardships, at £2,940,000, an increase of £100,000; which, as I understand, were really unfrom Crown Lands, £415,000; Interest on the Suez Canal Shares £695,000, an increase of £5,000-[loud cheers]— from miscellaneous, £1,700,000-an in- The first point is this.

another.

foreseen.

ESTATE DUTY CHANGES.

I propose that

crease of £167,000, or a total of non-tax where any legacy, succession, or temporary

of interest not only to the possessors, but also to the great masses of the population in the large towns who constantly derive benefit and pleasure, either by way of loan or otherwise, from these collections. [Cheers.] There are some minor points with which I need not trouble the Committee, as they will not affect the Revenue. In all I estimate a loss of revenue from the changes I propose of about £200,000 a year. This leaves me still with £1,508,000.

LAND TAX AMENDMENTS.

Estate Duty which under the Finance articles by those who have inherited them Act of 1894 is merged in the new instead of discouraging them by extraEstate Duty has prior to that Act, ordinary taxation of this kind. [Cheers.] been paid on the principal value of any If sold, they are liable to be taken property, and such property subsequently away to foreign countries instead of becomes liable to the new Estate Duty being kept at home where they would be under the same disposition, an allowance shall be made for the Legacy, Succession, or temporary Estate Duty already paid. [“Hear, hear!"] As the law stands the unfortunate subject has to pay these duties twice over. The second and third proposals are to prevent the duty being claimed either where a person has created a life interest in his own property and the property reverts to himself on the termination of that interest, or where he has, in settling his property, created a life interest subsequent to his own, and, through the lapse of such interest in his own lifetime, his life interest becomes enlarged into absolute ownership. There I think the Committee will agree with have been cases of considerable hardship under both these heads. Then I propose to adopt the Legacy Duty rule in two points -first, to enable an annuitant to pay the Estate Duty by instalments, instead of having now to pay by a lump sum. The second point is with regard to the mode in which the Estate Duty is charged on works of art or other objects or collections of national or historic interest not yielding income. [Cheers.] That rule is not to charge the duty on such articles until they are sold or come into the possession of a person competent to dispose of them. Of course, in such a case these articles could not be aggregated with the rest of the estate for the purpose of the duty, but will pay according to their value. I make this proposal not by any means only in the interest of the families which happen to possess such objects, though I think it a hardship that they should be compelled, as they would be often under the existing law, to part with things which would lose half their interest if severed from the families, or [Cheers.] The method by which this relief even the houses, to which they belong should be given is, of course, a matter of and have belonged for generations. I difficulty, and requires serious considerathink it a hardship that they should be tion. It has been suggested to me that the compelled to part with heirlooms which best way to give relief to agriculture to families might be of incalculable im- would be to put an end to the temporary portance. I think it is hard that our duty of 6d. upon beer. ["Oh!" and system of taxation should run the risk of laughter.] Well, Sir, that suggestion enforcing sales in any such cases, but, came from a brewer. [Loud laughter.] more than that, I think it is contrary to In my belief those who are connected public policy. ["Hear, hear!"] We with agriculture would prefer more direct ought to encourage the retention of such relief. [Cheers.] Looking to what I Chancellor of the Exchequer.

me when I say that this must mainly go to the relief of agriculture. [Cheers.] I believe that even those who are disappointed will agree with me that agriculture has a fair claim to this relief. I know that agriculture is not the only distressed interest in this country. [Opposition cheers.] There may be manufactures and trades which are also suffering, but there is no interest of anything like the importance of agriculture which has suffered so much or so continuously or to which the general improvement of the condition of the country, to which I have already referred, has given so little relief. hope that in this matter I may claim the support of the right hon. Gentleman opposite, for a year ago, in response to an application for relief of this kind, he stated in this House :

:

I

interest would be among the first persons who "If I had any money to give away the landed would deserve the consideration of the House."

have already stated to the Committee as | Income Tax. That, I believe, will be a to the present position of the brewing sensible alleviation of the burden in the interest, upon which I could say, if places where the Land Tax is most necessary, a good deal more-["Hear, heavily felt. ["Hear, hear!"] Then hear!"-I think I may make this the Royal Commission also recommend claim upon their unselfishness on behalf that better terms should be given for the of their old allies, the agriculturists, redemption of the Land Tax. Mr. Pitt that they will consent to the continuance linked, so to speak, the redemption of of the temporary duty of 6d. Therefore the Land Tax with the price of Consols, I look to give relief to agriculture in in the belief that the value of land and another way. First I turn to the Land the value of Consols would rise or fall Tax. Now, the Royal Commission on together. He required that a certain Agriculture, who did not agree upon sum in Consols, or cash to that amount, everything-[laughter] — have unani-producing rather more than the annual mously reported that in their opinion amount of the Land Tax redeemed, relief should be given to agriculture in should be paid to the State where the the matter of the Land Tax. I need Land Tax was redeemed. In 1853 Mr. not dwell upon the anomalies, I might Gladstone reduced those terms by 171 almost say, the ridiculous inequality, of per cent. In Mr. Pitt's time, when the this tax. The Royal Commission have Funds stood at practically half what not recommended that it should be they are now, the redemption terms totally abolished, and why? Because of were comparatively very easy; but at the obvious injustice that the abolition the present price of Consols the only of the Land Tax would inflict upon a terms upon which the Land Tax can be large number of persons who have re- redeemed under this system practically deemed it; and I should be disposed to amount to 36 years' purchase or more. add that there is also this difficulty-the I propose to give a similar reduction to Land Tax has, since 1798, when it was that which Mr. Gladstone gave in 1853 made perpetual, become, not an ordinary—namely, to reduce the number of tax, but a rent-charge which has been years' purchase to 30 years, and to duly allowed for to the purchaser when- separate the matter altogether from any ever land subject to it has been bought connection with the rise or fall in and sold since that time. ["Hear, Consols. ["Hear, hear!"] There is hear"] The Royal Commission point also in this matter of the Land Tax a out that whereas the quota of Land Tax grievance which affects the taxpayers in for each parish is a fixed amount, the town parishes, where the tax is very value of many parishes has so largely small in proportion to the value fallen on account of agricultural depres- of the property subject to it. The sion that the fixed quota has become a of the Land Tax have also largely increasing burden, and they to pay for its assessment. I will instance 11 or 12 parishes in Essex, give the Committee a few instances of Norfolk, Suffolk, Lincoln, and Wilts the result. In Birmingham the total counties which have suffered very heavily from the agricultural depression - in which the burden of the Land Tax, having regard to the assessable value of the land liable to it in a parish, is double or treble what it was 15 years ago. What the Royal Commission have proposed is that the maximum rate of the tax, which is now 4s. in the pound, shall be substantially reduced so as to give relief in those extreme cases. I propose, therefore, in accordance with their recommendation, to reduce the maximum rate of the tax from 4s. in the pound on the value of the land liable to it to ls. in the pound on the assessment of those lands to Schedule A of the

payers

amount of the Land Tax is only £368 a year; but it has to be levied from 20,000 separate assessments, and those who pay it have also to pay in addition £165 a year, or pretty nearly half the amount of the tax, to the assessors for their work. In Salford the tax is £79 a year, raised from about 7,800 assessments, and £27 additional have to be paid to the assessors. In Oldham the quota is £23, paid by about 1,800 assessments, for which £16 extra have to be paid. I propose, in accordance with the request that has come, naturally enough, from several of these local authorities, that power should be given to raise the assessment in any year to an amount not