THE CHANCELLOR OF THE EX- I am bound to say that I cannot take an CHEQUER proposed :-

THE CHANCELLOR OF THE EX- the year that is closed, 1895-96, is conCHEQUER proposed:

he did not speak at all too strongly with reference to that. My right hon. Friend behind me (Sir W. Harcourt) pointed out that two years ago in his Budget statement. But we want a tax on which the Chancellor of the Exchequer can immediately put his hand and which will at once respond to pressure, which requires no fresh machinery; and the Income Tax in a country like ours must be regarded as the great reserve fund for special emergencies. Sixpence in the pound is a very fair peace rate for the Income Tax, and if it is fixed at that amount then you are in a position in time of special difficulty to make a rapid But this year

estimate of revenue based upon the tax- | The Income Tax is a reserve in time of ation of last year will not only meet the war and difficulty; it is a power of expenditure but will produce 13 million reserve for special expenditure. I apmore, whether the first claim upon the preciate what the Chancellor of the Government and the House is not the Exchequer said as to the great reserve claim of the taxpayer for relief from of the Sinking Fund, and I think that some of his burdens. [Cheers.] At the present moment there is no Income Tax. The Income Tax has come to an end, and the Committee is now about to settle at what rate it is going to impose the Income Tax for next year. The proposition of the Government is that the Income Tax should be imposed at the rate of 8d. in the pound. Now, is 8d. to be taken as the normal rate of Income Tax in this country in time of peace, and is the Income Tax payer to have no relief? I would recall to the mind of the Committee what has been the rate of Income Tax ever since it was imposed. From the imposition of the tax in 1841 to the time of the Crimean increase of our revenue. War the rate was 7d.; during the war the Chancellor of the Exchequer proposes it was raised to a very high figure, but to leave it at 8d. It may be asked if immediately the war was over it was this so, 'Why do you not move its reduced to various figures. There was reduction in order to test the opinion of an increase in 1859, if my recollection is the House on the question?" I am right, owing to a naval scare of that aware that the Chancellor of the Excheyear, over which four or five millions quer could not take off a penny in were expended, and the Income Tax was the pound, but it is clear that he raised to 9d. or 10d.; but, at all events, could take off a half-penny; and in 1864 it came back to its original level there have been precedents for an of 7d. In 1865 it was 6d. ; 1866, 4d.; Income Tax being fixed at the odd 1867, 4d.; 1868, 5d.; and in 1869, figure. My reason for not making this 6d. In 1879 and 1880 it was 5d. ; proposal is because I do not see that 1881, 6d. ; 1882, 5d. ; 1883, 6d. ; there is the available margin of 1884, 5d.; and in 1885, 6d. From £1,750,000 for us to deal with even if 1888 to 1893 it stood at 6d. My right we wished to apply it to the purposes of hon. Friend behind me in 1894 raised it the Income Tax. I may say in passing to 7d., and in 1895, which is the year that I do not like the mode in which the we are now dealing with, in order to Budget statement is presented to the give relief to small payers of Income Tax Committee by the Treasury as the final and also some relief to owners and occu- Budget sheet. If it is to be introduced piers of land, which he assumed at 1 in our permanent returns or statistical million, he put the tax at 8d. The abstract, we shall be deceived and the House will see that 8d. has never been basis of our calculations will be disturbed the normal place rate of the Income Tax. as to what our financial Estimate is. In It was estimated to produce £15,500,000; his final Estimate the Chancellor of the it has produced considerably more this Exchequer put the income next year, year, notwithstanding the losses by recent based on the taxation of this, at allowances. In these circumstances, £101,750,000, but in what is called the when taxation allows of an increase of final balance-sheet the revenue next £2,250,000 in expenditure-that is the year is £100,500,000. How is that increase of expenditure in this year done? It is done in this way. When which the Chancellor of the Exchequer the Chancellor of the Exchequer comes provides for-I think that the Income to deal with the Death Duties this Tax payer has a claim for some relief. balance-sheet deducts £200,000 in ["Hear, hear!"'] I put it on this ground. respect of proposed alterations in the

law; therefore he will have
less income. But the next
deduction is this:-
:-

"Amount required for the Agricultural Rates Bill in Ingland, and for proportionate grants to Scotland and Ireland £1,175,000."

that sum

so much because that £250,000 less has been item of anticipated and paid for in the preceding year. I want to put to the right hon. Gentleman this-that the Navy is apparently £1,000,000 less than it really is, and the Army £250,000 less than it really is. [The CHANCELLOR of the ExCHEQUER: "No."] The right hon. Gentleman has had the advantage of last year's surplus; he has £1,250,000 provided for out of last year's income. I do not find fault with anything that has been done, but I say, looking at the financial position of the country as whole, we really have not this year, however much we may be disposed to

a

You might as well deduct from that side of the account the item for the Army, the Navy, or the Civil Service. It is a transfer no doubt, but the revenue is raised out of the taxes of the people. It would be a very great dislocation of the mode of keeping accounts if, when there is raised from taxation £101,750,000, it is put down as £100,480,000. But that is a small think we have, defrayed our expendicriticism which I make in passing, ture; if we defrayed the whole year's because I shall proceed to argue, not on expenditure out of the year's income we the revenue being £100,500,000, but should be £1,250,000 worse off than we £101,750,000. The first question I put are. Therefore, when we are talking to the Chancellor of the Exchequer is, about the surplus, I say that it ought to "Is there a surplus!" First, take the be reduced by that sum. I think that Navy. The Chancellor of the Exche- the expenditure was wise, just, and quer puts the Navy amount required at prudent, and it was quite right for the £21,823,000, and the Estimate for last Chancellor of the Exchequer and the year was £18,701,000, which would First Lord of the Admiralty to do what show an increase of £3,122,000. Now, they did. I am not criticising their the payment for the Navy last year action in any way, but I am looking at was £19,724,000, but £1,000,000 of our position as a whole. No doubt was charged in the shape the Chancellor of the Exchequer may of a Supplementary Estimate. That say with truth, "I have got enough £1,000,000 really formed part of the of money to meet the demands naval expenditure for this year; so far made on me this year, and at the as shipbuilding, armour plates, and end of this year, if I have no other stores were concerned it really was a sum demands made, I should have that surin aid of the expenditure of the present plus." But we have to deal with the year. This year the expenditure is put finances of the country as a whole, and down at £21,000,000, but if there had I say that our expenditure is not as put not been the Supplementary Estimate of in this balance-sheet as a smaller sum, £1,000,000 it would have been but the larger sum to which I have £22,000,000, and that sum is provided called attention. Next year we have to for out of last year's surplus and taxa- deal with a considerable increase in our tion. Therefore if the right hon. Gen- expenditure. I will tell the Chancellor tleman had had to provide the whole of the Exchequer where I expect his Naval expenditure out of this year's increase will be. I have been led to revenue he would not have had this surplus believe that the second year of a of £1,750,000, for £1,000,000 of it would Naval programme is much more expenbe gone. I put the same question to sive than the first, and the third the right hon. Gentleman with reference year more expensive than the second. to the Army. The Army Vote this year Assuming that the Chancellor of the shows a saving of a small amount, but a Exchequer carries out his programme Supplementary Estimate was presented without diminution, there must be an for the Army in respect of the Volunteer increase of several hundreds of thousands capitalisation grant. It states in a foot- of pounds next year in order to carry note, I think, that £496,300 was voted out the programme of Naval expenditure last year, half of this is in respect of this to which the Committee is already comyear's expenditure; and therefore this mitted. I am also told that there will year's expenditure will be £250,000 less, be an increase in wages next year. Sir Henry Fowler.

But that was not the

{23 APRIL 1896} Some 5,000 men are to be added to the regard to cost. Navy, and a great part of their wages end of the business. Early in 1885 Mr. will come upon next year's Votes. Then, Gladstone came to the House and asked with respect to the Army, the Chan- for the celebrated Vote of Credit of 11 cellor of the Exchequer will not deny millions. Six millions and a half out of that £250,000 will have to be provided that sum were wanted for special milinext year when there will be the full tary preparations in connection with the capitation grant. There is also the Russian advance towards Afghanistan, necessary automatic increase of the and four millions and a half were wanted Army and Navy. These facts ought to for the Soudan. Although I believe that make the Committee pause before they sum was not ultimately spent, and that sanction an extra expenditure next year the amount was brought down to a fracof something like £2,000,000 under the tion over 10 millions, yet Mr. Childers Agricultural Land Rating Bill. The in his Budget had to deal with a deficit new Education Vote must be increased of 14 millions, with the result that the by several hundred thousand pounds Sinking Fund had to be suspended and next year; and the existing Education other expedients adopted in order to Vote involves annually an increase of provide the money. The country ought several hundred thousand pounds. There- to be told now what the Government fore, whether I am right or wrong with are going to do. In a time of peace reference to last year, I say that the enormous military preparations are going right hon. Gentleman can barely provide on, and if the Committee think that for half the additional expenditure to Egypt is going to pay for all that is done which he asks the Committee to assent, they will be very greatly disappointed. and he has made no provision for the Sooner or later England will have to automatic increase of the expenditure pay, for the policy that has been adopted of the Army, Navy, and Civil Service. is hers, and the initiative has been hers. The Income Tax will have to be in- Then what is the position in South creased in order to meet this expenditure. Africa? Is no money going to be spent But this is not the whole story. There there? Some hon. Members seem to is to be expenditure in yet another think that the Chartered Company will direction this year. The Chancellor of defray everything, and I hope they may, the Exchequer has assumed that we are but my belief is that there will be some to be in a state of perfect peace, that considerable addition to our expenditure there is no trouble in any part of the in that part of the world. The figures I world, and nothing likely to cause us have given show that at the end of the trouble in Egypt or the Soudan, for year you will have to meet an expendiexample. ["Hear, hear!"] The Chan- ture of at least £104,000,000 when your cellor of the Exchequer must have a income is only £101,750,000, which is lively recollection of what took place 12 to be reduced by £300,000 under the years ago. In 1884 Mr. Childers arrangements respecting the Land Tax brought in his Budget in April, and put and the Estate Duty. The Government the Income Tax at 5d. In August we are proposing by Act of Parliament to had a Vote of Credit for the Soudan of make perinanent additions to the ex£300,000 and in November another for penditure of the country, and if their the Army of £1,000,000 and a third proposals are carried the Chancellor of for the Navy of £324,000. What was the Exchequer, independently of any then the state of things? Parliament sum which may have to be found for unhad to be called together in November, expected contingencies, will have to face and the then Chancellor of the Ex- this time next year an expenditure of chequer had to propose that the Income something near £104,000,000. That is Tax should be increased to 64d. in order why I do not ask the right hon. Gentleman to meet these exceptional charges. That to make any reduction of the Income Tax. was what occurred when we last took In the present position of affairs we part in operations in the Soudan. The cannot afford to reduce taxation, nor can Committee must not forget the history of the past. If history repeats itself in regard to policy it will repeat itself in

we afford to increase our expenditure. "Hear, hear!"] There is one other matter to which I desire to refer

interest

Resolutions. namely, the financial gravity of the hon. Gentleman has made a very situation if the Chancellor of the Ex- ing speech, mainly upon the subject of chequer is paying off debt at 12, 13, or the Income Tax. I think I can remember 14 per cent. premium. The fact that the day when my right hon. Friend the Consols have risen to 114 is a very present First Lord of the Admiralty was serious matter as far as the position of able to reduce the Income Tax to 6d., the National Debt is concerned. My and was criticised by the right hon. opinion, which is shared by more compe- Gentleman on that account for having tent authorities, is that there has been produced a rich man's Budget. an artificial rise in Consols as against [Laughter.] I think I remember only Chancellor of the Exchequer. No Chan- the other night, when I ventured to call cellor of the Exchequer has a right the attention of the Committee to the without the consent of Parliament and great advance that had been made in without its full knowledge to be redeem- the amount the Income Tax payers have ing the National Debt at such a to bear of the burdens of the country premium as 12, 13, or 14 per cent. since the year 1875, as compared with The national creditor is entitled to the payers of indirect taxation, that the 23 per cent. until 1903, when he right hon. Gentleman the Member for becomes entitled to an annuity of £2 10s. Monmouthshire ejaculated, "Yes, that which the Government will subsequently is equalisation of taxation." I am very have a right to redeem with a hundred glad to hear from the Front Bench sovereigns. It would be an act of extra-opposite a plea for the Income Tax vagance and folly for us to assist in any payers. [“Hear, hear!"] I do not way in keeping up fictitious prices as at all agree with the opinion which against ourselves. I do not suggest any the right hon. Gentleman rather sugsuspension of the National Debt, for I gested to me as my own opinion that 8d. think that the resources of finance are should be the normal figure for the not exhausted and that we can keep the Income Tax. ["Hear, hear!"] I sinking fund in a state of efficiency agree rather with what has been said— without continuing operations which that when we are able to reduce it in encourage those who are, I believe, time of peace we should do so in order making clever speculations upon the to secure a more powerful engine in the financial position of the Government and time of war. ["Hear, hear!"] But selling us these stocks at high prices. the right hon. Gentleman himself *THE CHANCELLOR OF THE admitted that, looking to the position EXCHEQUER (Sir MICHAEL HICKS of our Revenue and expenditure as BEACH, Bristol, W.): I am very much disclosed in the present Budget, no indebted to the right hon. Gentleman reduction of the Income Tax was for the observations with which he possible; indeed, he went on to argue commenced his speech and for the that the figures which I gave the other remarks he made with regard to the night to the Committee did not really question he last alluded to. I can represent accurately the financial situaassure him that that question is tion of the year, and that I was too receiving my anxious consideration. I optimistic in the view I took of the am no more fond than is the right hon. expenditure as compared with the Gentleman of purchasing Consols at Revenue. I do not at all admit the justice 113 or 114 by way of redemption of of the first part of the criticism of the debt, and I have given instructions which, I think, certainly have not placed the Government lately as a competitor in the market for Consols. [Cheers.] What else I may be able to do is a matter on which I hope the right hon. Gentleman will allow me to reserve my opinion. I feel the difficulty of the situation, and I wish to be allowed not to say anything further on the subject. [Hear, hear!"] The right Sir Henry Fowler.

right hon. Gentleman. He seemed to think that for some reason which he did not give, the supplementary Estimates, of last year were normal supplementary Estimates, and that, although our Naval Vote, for example, had increased to an amount of more than £21,000,000, we should have a supplementary Estimate of £1,100,000 again next February, as we had this year. I can assure the right hon. Gentleman that there is no reason