The Sun.
London, England, 1863-04-17 00:00:00

to incomes liable to the income tax. (Hear, hear.) At a
later period, under the pressure of war, the limit was car-
ried dotvn to £l5O. When Sir It. Peel revived the tax in
1842, he revived it at that amount, but he did so entertain--
ing the hope of its early extinction. (Hear, hear.) When in
1853 the tax was renewed for seven years, and again with
a hope of its extinction which proved to be fallacious—
(hear)—the limit of the tax was taken downwards, and
fixed at £lOO instead of £l5O. The ground upon which that
was done, and I think justly done by Parliament was this—
It was shown that no class of the community had benefited
more by the general extension of trade and the increase of
profits resulting from the imposition of the income tax, and
the diminution of protective and other indirect duties, than
that class whose incomes ranged between £lOO and £l5O a
year. It was, I may say, due in justice to those who had
incomes somewhat above £l5O per annum that those whose
incomes were immediately under that sum should not be
allowed to escape untaxed. I think we are about right in
saying that the application of the duty might commence
with incomes of £lOO. Ido at the same time most confi-
oently state, having now held my present office for a
considerable term of years, and I know I shall be sup-
ported in the view which I take by all the authorities con-
cerned in the working of the tax when I say it—that
the real sore place in the working of the tax is to be found
in the weight with which it presses on incomes ranging be-
tween £lOO and £2OO per annum. lam myself, I may say,
the confidential recipient of the sorrows and grievances of
the taxpayers of the country. There is scarcely a morning
which does not bring me complaints of the pressure of the
income tax, and I believe I am stating the case moderately
when I inform the committee that 19 out of 20 of those com-
plaints come from persons having incomes between £lOO and
£2OO a year. One thing which makes the tax especially gall-
ing to that class is this, that there is no portion of the in-
comes of the country—and this is my fixed opinion—on
which the tax is more :accurately and fully levied than it is
upon the lower class of incomes. The concerns of those
who possess only these smaller incomes are more transpa-
rent than those of their richer fellow-countrymen; every
neighbour can see through them ; they live in glass houses,
and deception, if they were disposed to deceive, is for them
almost entirely impossible. They pay the tax fully and
rigidly, while they say a good many above them do not in
that respect follow their example. (Hear.) Then comes
another difficulty in the case. There is a very large portion
of the labouring classes—and until the distress in Lanca-
shire there was a much larger portion—in whose case the
aggregate income of a single family amounts to more than
£lOO per annum, but in whose case we could not touch the
family with the tax because the income of the father at the
head o' it did not amount to £lOO. It was felt quite impos-
sible to institute an inquisitorial investigation into the little
earnings of the rest of the family. That, too, is a reason for
dealing gently with incomes between £lOO and £l5O per
annum. What we find to be the two pinching points in the
operation of the tax are where it falls upon incomes of £lOO
a year and a little o vex., and £l5O a year and a little over that
amount also, The proposal of the Government is this,—
and it will in my opinion go far to meet what we think to
be, I do say the strict and rigid justice of the case,
because mathematical justice is hardly applicable to this
subject, and in principle there is no injustice in calling upon
any man who is able to pay income• tax to dc so, but that
kind of equitable justice which it is the desire of Parlia-
ment to administer with a due regard to public prudence
and policy, and that degree of pressure which is practically
brought to bear on flesh on blood in matters of taxation.
We say,retain incomes of £lOO a year as the point at which a
man will become taxable; fix upon incomes of £2OO as the
point at which he may be brought under the full sweeep of
the tax ; remove the distinction at £l5O altogether, abolish
the double rate, have only one rate, but allow every taxable
person whose income ranges between £lOO and £2OO a year
to make a deduction of £6O from his taxable income. The
effect of that will be to get rid almost entirely of those sore
points in the operation of the tax to which I have alluded.
In order to illustrate the change which is proposed, I will
state what would be the effect of it on various incomes,
taking the tax at its present rates of 9d. and 6d. On
an income of £lOO the tax is now £2 10s, under the new sys-
tem it would £1 10s. On an income of £12.5 it would be £2
Bs. 9d, instead of £3 2s. 6d, as at present ; on an income of
£l5O, £3 7s. 6d, instead £5 12s. 6d; and on an income of
£175, £4 6s. 3d, instead of £6 Ils. 3d. (Hear, hear.) Those
who entertain very strong objections to the income-tax may,
perhaps, think it would be better to retain all its inequali-
ties. I have, however, always felt, and I continue to feel,
the force of these objections; but at the same time I think
it is our duty to remove, wherever it is practicable, those
inequalities which produce great public discontent. I speak
the opinion of all who are practically conversant with the
working
of this branch of the revenue when I say that the
adoption of this proposal will be a great, I may almost say
an immeasurable boon to those classes whom it concerns.
(Hear, hear.) Now, sir, we have got the pickaxe into the
fabric of the surplus, suad having disloged one or two bricks,
we shall find it very easy to bring the whole of it to the
ground. The subject which I have now to bring under the
consideration of the committee is that which I had better call
the tea or sugar rather than the tea and sugar duties.
It is very clear, in the first place, that the ques-
tion of what we loosely but intelligently call the war
duties on tea and sugar occupies a front place among
those questions which have at the present time to be dealt
with by Parliament. (Hear, hear.) In the second place, it
is, I believe, the view of Parliament, as it is also of Govern-
ment, that in a case where we are happily able to offer a
reduction of taxation, regard should be had both to the de.
scriptions of direct and indirect taxation. Now, it is quite
impossible for us to make an effectual change with respect
to the tea and sugar duties. The cost would be too great of
reducing the tea duty to Is., and the sugar duties to the
point at which they stood before the Russian war. It ap-
pears to us perfectly clear that, whatever we do, we ought
not to divide the remission into two or more parts, but
rather to choose one of two subjects. (Hear, hear.) It will
be much better, as it seems to us, to make such an altera-
tion as will give a sensible stimulus to trade, consumption,
and revenue, than to dole out and divide into minute pro-
portions the relief which it is in our power to bestow.
(Hear.) Therefore it comes to be a question between tea
and sugar, and it is, I suppose, the first time in the history
of mankind that these two articles have been placed in hos

tile competition with each other. (A laugh.) Nature
seems to have ordained an intimate alliance between them,
which has been satisfactory to the experience of us all, and
I am very sorry it falls to my lot to propose a severance
even in appearance. It is obvious, however, that if you
confer a boon on the one it immediately overflows on the
other, because the old combination in their use makes it per-
fectly certain that if you reduce the duty on sugar you will
produce an increased consumption of tea, and it' you reduce
the duty on tea you will have a larger demand for sugar.
(Hear.) There is no difficulty in either case in regard to
the stocks, because we have an abundance of both. Sugar
is for the moment the cheaper of the two, but its cheapness
depends on the continuance of a great calamity to mankind—
the war in America. The arguments in favour of a reduction
of the duty on sugar appear to me to be these—first, that
the duty nine years ago was actually lower than it is now,
while the tea duty never has been in point of fact lower
than at present ; and second, that the trade in sugar is larger
and more important than that in tea. The arguments for
tea will readily suggest themselves to the minds of hon.
members, There are some secondary considerations, but
these cannot decide the case. Our pecuniary relations with
China, our military establishments there, our interest in
developing the commerce of that country, are, no doubt, im-
portant national considerations, but can hardly be allowed
to turn the scale in a question like this. There is, however,
a negative argument for tea which is of some importance,
and which is derived from the state of certain proceedings
with regard to sugar. The subject of sugar is one of great
complexity in its practical application, more especially in
regard to the drawbacks allowed on refined sugar when ex-
ported from the country where it has undergone manufac-
ture. On the proposition of the French Government, most
of the countries which possess an important sugar refining
trade have agreed to send representatives to Paris to con-
sider the detailed regulations now in force on the subject.
Hitherto each country has been accustomed to allege
against the others that what are called drawbacks are really
bounties. It is of great importance to the European trade
in this cardinal article that a common understanding should
be arrived at. Nothing will be done in the course of the in-
quiries in Paris to bind the judgment of the Executive Go-
vernment, much less of the House of Commons ; but if
legislation on s ugar were postponed we should approach the
consideration of the details with advantage when we have
before us the results of this comprehensive and minute in-
quiry. (Hear, hear.) Perhaps the most important argu •
went for tea as bearing immediately on the case is that the
present duty on tea is much higher than the corresponding
duty on sugar. (Hear, hear.) I will take not the prices
of tea or sugar at this moment, but the ordinary averages.
The duty on tea is more than 100 per cent., while the duty
on sugar is only equal to about a half of the value of the
article. In a question of relative justice in the distribution
of relief this consideration has appeared to the Government
ofe
dpaidi
to be of the greatest importance. (Hear, hear.) By a
reduction of duty we can much more considerably lower
the
weightpri c
of
anger, tea
than u
ty of anger.is, The price of a hundred
on an average, about 355.
If we take off 3s. to reduce the duty to a minimum, it
brings the price to 325., which is a reduction of about
8 per cent. On the other hand, the price of a pound
of tea is 35., and if we take oft 5d., that reduces it to

2s. 7d., or about 14 per cent. It will, therefore, be obvious
to the committee that we have reason to anticipate a more
considerable and buoyant effect from the reduction of the
duly on tea than on sugar. (Hear, hear.) Hence, it is the
intention of the Government to propose to the committee
to reduce the duty on tea to ls. per lb. (Cheers) We also
propose that the reduction shall take effect immediately
after the resolution has been adopted by the house. In
point of form there is no necessity for a resolution, but cne
will be submitted, because that is the simplest mode of
ob-
taining the judgment of the house. We intend to take the
resolution on Thursday week, and to report it on Friday.
We are of opinion that the tea duties should be granted
only until the Ist of August, 1864. I must not presume to
say that the duty on sugar can be reduced next year, or in
the year following, or at any particular time, but, being in
hopes that it will be considered together with the duty on
tea, in regard to the question of
Permanent or annual duty,
it is most convenient to renew the tea duty only until the
period I have named. The committee w.ll
understand that

if the proposal to reduce the duty on tea to Is. is adopted, it
will be a final measure as far as we can presume to look for-
ward into the future. The financial result of the change will
betas follows :—ln 1862-3 we consumed 77,500,0001 b. of tea,
which paid £5,497,000; in 1863-4 if we went on without any
change in the law we should estimate for a consumption of
79,636,0001 b., which would yield £5,640,000. The loss of
sd. per lb. on that amount would be £1,659,000. We think,
however, we may venture to reckon upon an increased con-
sumption in the first year of 6,000,0001 b , producing
£300,000, and in that case the loss would be only £1,359,000.
We, therefore, reckon on a net loss on the Budget Estimate
of £1,300.000. This is not a case in which ocular demon-
stration is at all necessary, hut my hon, friend the mem-
ber for Lancaster, mistrusting, I suppose, the intelligence
of the committee, has been good enough, at the close of his
long campaign as a leader of the movement for the reduc-
tion of the tea duty, to for ward to me two small parcels, one
labelled " a pennyworth of tea at 15.," and the other " a
pennyworth of tea at Is. 5c1." (A laugh.) The matter is
one of considerable importance, because it sometimes
happens, when duties of this kind are reduced, that a por-
tion of the profits goes into the pockets of the dealer; but
my hon. friend, a man of the highest character and honour,
possessing the confidence of the whole mercantile world,
especially of the East India and China trade, has pledged
himself to me personally that in every case the man who
buys a pennyworth of tea under the new duty shall have
the same increase over what he would have bought under
the old duty, as is represented by the large packet which I
hold in my right hand. compared with the small packet
which I hold in myleft hand. (Hear, and laughter) It will
be recollected that the estimate of receipts from the income
tax for 1863-4, taking the tax at 9d. in the pound, was that
the tax would produce in the course of the financial year.
£10,500,000. A reduction of the tax to 7d. would cause a
diminution in the year's receipts of £2,350,000, or £1,175,000
for each penny of the 9d. That would be the loss upon the
tax for the whole year, but the whole of the loss would not
be felt in the present year. A careful estimate made by the
Board of Inland Revenue shows that the loss in the present
year would be £1,600,000, and that a further sum of £7b0,000
would stand over till 1861-5. Then there is also the plan
which I recently submitted to the committee for the reliet
of minor incomes. For an entire year the loss from that
source would be £400,000; for the actual financial year we
take it at £300,000. It therefore follows that you may re-
duce the income tax 2d. in the pound for the whole com-
munity, and you may likewise adopt a further plan of relief
for minor incomes, at a cost to the revenue in the present
year of £1,900,000, with a further prospective charge of
£850,000, Here, in passing, I cannot refrain from calling
the attention of the committee to a subject of considerable
interest, and reiterating an opinion which I ventured to ex-
press in a former session, but which was received with
some not unnatural scepticism—the opinion, namely, that
the change by which we take up three-quarters of the
income tax in the year in lieu of only one-half as be-
fore, is a change of the greatest and most beneficial im-
portance. When we took only one-half in the year the
effect was this—we legislated under the pressure of great
necessity and only got half of what we wanted, while, on
the other hand, when we repealed the tax or remitted a
portion of it one-half of the whole remission went, not into
the year for which we were making provision, but into the
year beyond, as to the peculiar necessities of which we were
entirely ignorant. We have now by means of the change
just mentioned got the income tax much more in hand, but
I suppose it is necessary that we should always be one full
quarter in arrear. It is necessary, I mean, in England.
Our Scotch friends ate in a more happy position, because
they collect the whole of the tax within the :year. We
cannot do so in England, but we have devised means for
levying three quarters, which enables us to make our finan-
cial arrangements with more certainty and success, and
with more immediate reference to the necessities of the
State, than before. (Hear.) As the system of collection
now stands, £1,900,000 out of:a total loss of £2,750,000 will
come upon the present year, but only £1,483,000 out of the
whole effect of the changes we are proposing would have
come upon the present year if the plan had been continued
of levying two instead of three quarters of the tax within
the year. (Hear.) I shall now, with the permission of the
committee, put together the various remissions, so as to
bring them under one view. The relief upon the small
charges— that is, the loss for the year—will be £143,000.
The relief to minor incomes will be £300,000. The re-
lief to the consumers of tea will be £1,666,000, but the loss
to the revenue for the year will be only £1,300,000. The
loss for the year from a reduction of 2d. in the general rate
of the income tax will be £1,600,000. The total loss for
the year will be £3,343,000. Bu-, I wish to call particular
attention to the fact that a further loss of £898,000, nearly
the whole of it due to the income tax, but some of it to the
small charges, will fall upon the financial year 1864-5. We
incur a loss for the present year of £3,343,000 ; but we ask
the house to give its legislative sanction to changes which
between the present year and the next will bring about a
loss of £4,241,000. When I add to that total loss to the
State the further relief which the consumer will derive
from a part of the duty on tea being made up by increase
consumption, it appears that the whole amount
of remission of taxation which you are to-night
asked to take into consideration is £4,601,000. (Hear.)
The several branches of revenue which I stated to the come
mittee in giving an estimate of income for the present year
must be corrected as follows ;—For the Customs, instead of
£54,180,000, it will be necessary to take £22,737,000; for the
income-tax, instead of £10,500,000, it will be necessary to
take £8,625,000; and there is an addition to other branches '
of inland revenue amounting to £58,000. The surplus before
the deductions, but including the various minor changes by
which we propose to raise additional sums of money, was
£3,874,000, and hence, the loss by remission being L 3,343,000,
there is a remaining surplus of £531,000, With that surplus
we do not propose to part—(hear;—and we trust, for many
reasons, the Committee will give as its support in resisting
any efforts, however well meant, to diminish it. (Hear.)
Looking to the state of the country, the scale of our expen-
diture, and the condilion of the world, her Majesty's Go-
vernment feel it would be inconsistent with their duty to
propose to the Committee the retention of a less surplus
than this, and they confidently and earnestly appeal to the
Committee for the support which I have asked against any
attempt to wrench it out of their :lands. With respect to
our plan as a whole, it is not, at any rate, one which pre-
tends to originality. The public had anticipated in themain
the proposals we were about to make. That has not been
oTwhiensgtatoteporfemthaetufarcetsd,istehle bearing of the public interests,osures, but to the state of the facts,
and what had taken place in former years, distinctly indi-
cated within certain limits what should be the course of
Government, if it sought to do justice to the country, or to
obtain the favour of the House of Commons. With regard
to the tea duty, for example, in addition to other reasons
which weighed with us, one was the position which had been
given to the question in a previous discussion in this house.
In 1860 it was the claim of the tea duty which her Majesty's
Government thought themselves bound to weigh carefully
against the claim of the duty on paper, and it was the claim
of the tea duty which in 1861 hon. gentlemen sitting op-
posite deemed it their duty, as the strongest claim which
could be made, to offer in tePposition to the claim of
the duty on paper. If there is to be a claim of owner-
ship in tie principal parts of this proposal, it belongs,
perhaps, to those who first published them to the world,
and I am not aware to whom it could be given with
greater credit—for the Government are not disposed to
contest the point of honour—than to my right hon. friend
the member for Cambridge, who last year proposed a
motion which certainly came to an untimely or even a vio-
lent death at the moment, but which has reappeared, I
trust, under happier circumstances, and which has formed
the basis of a plan of the Government. Sir, it is no motive
of dissuasion to us with respect to any financial proposals
that they should have already found favour in other quar-
ters. If we felt bound in regard to any former plan to fight
resolutely for our own proposals, and against those of others,
it has been from a sense of public duty. But if the time
arrives when we are enabled, compatibly with and in obee
dience to our public duty, to submit to the house plans which
have been already declared to be the favourite plans of others,
we, so far from being deterred on that account from making
those proposals, are the better pleased to think that it is in
our power, as we hope it may be, to unite the general senti-
ment of the house, and to secure its approbation, without
distinction of section or party, to measures for the relief of
the country. (Hear.) This is the state of the case with re-
spect to these plans. But before sitting down I will refer,
if the house will permit me, to what 1 said in a former part
of my speech, and also venture to submit a few facts which
appear to me to be full of interest. Sir, in commencing my
statement I had to make, and I frankly made, the admission
that the state of tension to which our finances had been
placed for the last four years had been raised to a somewhat
higher degree in consequence of the remission of duties
which we proposed in 1860. Now, as we are passing out, I
trust, of that exceptional period, I wish to state exactly to
to the house two things—first of all, what has been the
general state of our account during the last four years, con-
sidered as one account ; and, secondly, I wish respectfully
to present to the house the facts which I think—without in
the slightest degree desiring to impugn the opinions or con-
duct of others—demonstrate that we were justified, notwith-
standing the amount of the expenditure and the calls upon
the public purse, in asking the house on a former occasion
not to desist from the prosecution of the great work of
commercial reform, First, as regards the account of the
country for the last four years, I will
place it in a form
which I trust will be intelligible to every one, and will be
comprised in but a few words. I take the revenue and ex-
penditure on this principle—first of all, I charge against the
account everything in the nature of special resource, and I
which did not belong to
also credit it with special repayments made towards the re-
duction of the public debt. Taking the income and expen-
diture of the last four years together, there is a balance of
deficit amounting to £1,061,000. The expense of fortifica-
tions in the same period has been £2,070,000. The malt
credits and other a urns taken up hich
those years were
£2,472,000. But the sums paid away
during those years to meet charges belonging to former
years, particularly the drawbacks on duties abolished, which
were repayments of revenue received he former years, and
the charges for former wars, have been £1,292,C00. So that
the balance of special receipts during those tour years is
£1,180,000. The repayments of advances during the four
years, in excess over the advances made, have been
£,375,000; and the net decrease of the balance has been
£526,000. And so the total bum which we have used up