The Sun.
London, England, 1853-05-13 00:00:00

eeeeeeneeeee
the giving to family arrangements and to the possession of
land a certain stability, though that ought not to be pushed
too far, yet was an ancient part of our policy, and I am not
prepared to say that it is one I would wish to see aban-
doned. It would be going, however, too far to say
not only that you should escape the probate duty,
but that you should likewise escape every, description
of tax which the State may levy from other kinds of
property on successions. (Hear, hear.) It does not appear
to me that that distinction can be maintained with respect
to settlements in general, including land. Perhaps you
might say that there ought to be some consideration for
settlements in existence, but such a provision would impair
the provisions of your act for more than half a century.
If the provision were demanded by justice, this considera-
tion ought to form no- bar to its enactment ; but in my
view it is not demanded by justice, and therefore there
exists in the consideration I have adverted to a strong
reason against the suggested provision. At the present
moment we do no not ask the committee to vote upon
anything except the mere principle contained in the
resolution. We have adopted a form of proceeding
as nearly analogous as possible to that adopted by
Mr. Pitt in a corresponding case—namely, in the first
instance, we submit the subject in very general terms,
reserving for after consideration a number of important
and collateral questions. No doubt there are many
such questions. There is the question of the scale of
consanguinity, which gives rise to a great difference of
opinion, and which is a fair subject for difference of
opinion. (Hear.) It is known probably to the majority
of the committee that the scale of consanguinity, as now
fixed, is immensely in favour of direct succession ; which
is subject to 1 per cent. duty ; while, upon the succession
of strangers (and with them are ranked extremely remote
degrees of consanguinity) the tax is 10 per cent. ; and there
are, besides, various intermediate rates, which it is not ne-
cessary now for me to dwell on. This tax of 10 per cent. is
a material item in the consideration of the whole question,
for it falls on a limited portion of the property which
passes by death. (Hear.) Yet the produce of this tax
of 10 per cent. forms a considerable portion of the whole
amount of the legacy duties received by the Exche-
quer. (Hear, hear.) It appears, by a return lately pre-
sented to the house, that while the rate of 1 per cent.
levied in Great Britain on direct succession upon the
larger amount of property yielded last year 238,0001. of
legacy duty, the rate of 10 per cent, levied upon a much
smaller amount of property yielded 490,0001. Since 1797,
while the 1 per cent. duty levied on an enormously great
mass of property yielded 8,322,0001., the 10 per cent.
yielded in the same time 17,583,0001. (Hear, hear.) Two
important questions arise with respect to the scale of con-
sanguinity. Is it equitable that a very great difference
should be made between the tax on direct succession and
the tax on the succession of strangers or persons of
remote consanguinity ? I think the difference neither
inequitable nor impolitic ? Generally speaking those who
receive property by direct succession, are educated in ex-
pectations founded on that succession ; they are trained,
and have their habits and thoughts formed in relation to
the property they are to enjoy. (Hear.) Therefore, it
would be a great hardship to them to step iu and take away
any material part of that property which they had been
taught to expect they would receive, But the successions
of strangers are successions which are commonly of an un-
expected character, and are unconnected with any question
of training or expectation. Therefore it appears reasonable
that a scale founded on this principle of consanguinity
might be maintained. I will point out to the committee
that they must make their option between two things.
They may maintain the present scale of consanguinity, but
if they determine to lower materially the rate of 10 per
cent., reducing it to 5 or 6 per cent., they must raise
the rate of 1 per cent.; or else lose the money
now received by the Exchequer. That I think is a
vital consideration. Though at this period I do not desire
to enter into a very full discussion upon the question to
which I adverted more than once in the course of tbe re-
marks,—the question, whether even though you may think
that there is no ground for maintaining any absolute exemp-
tion of any ereat mass of property, yet there may be good
and sufficient reasons for adopting a different machinery,
and practically, if not nominally, a different rate of tax with
respect to certain classes of property, yet it appears to me
that the present law is not only wrong in drawing too
broad a distinction—that is to say, the distinction
between taxation on the one side, and no taxation
on the other—but is especially wrong in the way
in which it strikes that distinction. We mean, there-
fore, to make a change, which, though not precisely de-
scribed in the words of the resolution, and though the
committee will not at present be asked to give an opinion
on it, is so important and vital a portion of the plan of the
Government that it would be wrong in me to omit notic-
ing it. We propose, instead of distinguishing, as the pre-
sent law distinguishes, in favour of settled and real pro-
perty against unsettled personalty, to abolish that distinc-
tion altogether and to draw a new distinction between
property, which may be well described, not in legal phra-
seology, but in language more popular and intelligible, as
rateable property whether real or personal on the one side,
and non-rateable property on the other. An advantage
will be given to rateable_ property, whether real, leasehold,
copyhold, or by whatever technical description it may be
known, and the full burden of the tax will fall on invisible
and non-rateable property. Without referring to transfers,
the considerable burden borne in other respects by rateable
property ought fairly to be taken into view when fixing a
legacy duty for these descriVions of property. The pro-
p.;:al we shall make with respect to rateable property is
this. We do not propose to establish a different rite of
duty ; but we propose that the person succeeding to that
kind of property should never be charged with the duty
on any interest in the property higher than his life interest.
Von. may ask what will be the effect of this as compared
with charging libu on tho perpetuity ? That is matter of
Computation, and admitting of some latitude of opinion ;
bo.t you will' not be very far from the mark if you say that
the effect of that distinction with the collateral distinc-
tions we propose to draw will be, that rateable property
would have only to pay about one-half, as compared with
the amount paid by property not falling within the de-
scription of rateable property—invisible or non-rateable
property—would not be in all cases charged on the perpe-
tuity. A person would pay where he acquired the absolute
dominion over the property, but where he succeeded to a
lesser interest he would only be charged on that. It may
be asked, why should rateable property be favoured
in this form ? It is on account of the other charges to
which it is subject, and not borne by the property to
which we propose to apply the full rate. But it is an
object not only to give something as countervailing
the burdens borne by real property, but to take care that
you so adjust your taxes as not to allow it to become an
engine for forcing or perpetuating charges of succession.
These are our reasons for freeing rateable property. But I
may be asked—and this is a most important question—why
we think that it ought to bear a less share of the tax.
Hon. gentlemen may ask if we use this particular form for
conferring that advantage—viz., the form that the person
succeeding to the possession of rateable property shall not
be charged on anything more than the life interest—why we
do not charge him on the property to which lie has suc-
ceeded in the perpetuity, but at a lower rate. I wish to
state that question, and to bring it fully before the notice
of the committee. It is a question of very great difficulty,
requiring very impartial and very careful deliberation, and
in the discussion of which I trust every collateral considera-
tion connected with the fate of parties, of Ministers, and of
Government, may on all sides be excluded, in order that the
alteration of an arrangement so intimately connected with
the social system of this country may not be frustrated
from want of care and prudence in the adjustment. I fully
admit it is by no means decided, when you have deter-
mined that real property is entitled to some favour of this
kind, that then you ought to give this favour in the form
of charging the tax on the life interest only. But I think
the objection to charging on the life interest that will be
made is this, that it takes away from the life interest the
advantage that you propose to confer on that class of pro-
perty as compared with all others, because the person suc-
ceeding to real or to leasehold estate would, under that
plan, be liable to pay as much as if he were succeeding to
personalty ; and therefore it must fail, so far, Lin giving
effect to the principles laid down. But, when we take a
comprehensive survey of the mode in which the different
classes of property are dealt with under the laws which
touch upon points of this kind, I think we shall find
that there are much greater objections to the other
mode of proceeding viz., that of charging the suc-
cessor to real or rateable property upon the perpetuity
if he gets it. It is quite obvious, if we adopt
this method of proceeding—if we charge the life
renter of the estate on his life interest, and the
person who comes into possession on the death on
the perpetuity—that we at once establish a system of law
which will work in favour of the large and against the
small proprietor--(hear)—and which will create a division
and conflict of interests among different descriptions of
landed proprietors, which, I think, it will be most undesir-
able, to say the least, to introduce. (Hear, hear.) It
would be legislating in a most invidious sense. Those gen-
tlemen who appear here are generally connected with the
settled property of the country, and it would be in-
vidious, indeed, if we were to adopt proceedings in a
matter of this kind which would advantage the large at
the expense or to the disadvantage of the smaller landed
proprietors. (Cheers.) I am sorry to detain the com-
mittee, for I know from experience that although it is re-
lieved by its importance, the subject is one of the dryest
kind ; but I must confess, I think when you look closely
into this matter that you will find that the relation be-
tween the life renter of realty and the absolute possessor
of realty is not at all analogous to that which exists between
the possessor of money in the funds and the absolute pos-
sessor of mere personalty. The possessors of entailed
estates in this country acquire great social and great politi-
cal influence ; gives them a commanding station in the
paths to the professions, and to Parliament, and to the
various offices which lead to distinction and power. The
position of an English nobleman and English gentleman is,
on the 'whole, one of the most desirable the world can
show ; but there is no distinguishing line which can be
drawn between the possessors of entailed estates and the
holders of small properties that can justify a distinction in
the tax. Such are the main principles of the course we
propose to pursue. The other course would, indubitably,
have a dangerous tendency to shake the present laws of
entail and settlement in the country in a manner I should
not wish to see, to jeopardise them, and to put them to
the risk of being considered not in their character of a
general, but in that of a class' interest. (Hear, hear.)
These are, I think, the principal reasons, first of all, why
we should propose to draw a distinction, not as the law
now draws it, but on the more just principle of taxing
the successor to rateable property on his life interest in
it, Another point of importance in the consideration
of this , question, in connexion with its social bearing
—(hear, lear)—was the case of fully encumbered estates,
(Hear, hoar.) Upon the principle of charging upon the
life interest in the case of a succession to an encumbered
estate, the mode of proceeding would be. this. In the first
place, we should ascertain the age of the proprietors, and,
having his age, we should have the number ofth years
ale ' p
the
ur-
chase that we ought to charge. We should en t
gross rental of the property, and from that we should have
to makes the deductions necessary to arrive at the net rent,
because there is no reason such as prevails in respect to
ors rental
the inc4)me tax, to compel to go upon the gr
in the case I have been considering. In this case the net
rental s.nd the net interests are to be charged. Having as-
certainod the net rental we muot also deduct the amount
of the encumbrances, and it will, I am afraid, frequently
happon that the net rental remaining will beextremely
small hi amount, and yet at the same time--ant that is
precisetr the conjuncture to which I wish to call attention
—there .might be in the property a large accession of cat&
tal vab ue For if we take an estate that will sell in the
marketr for 50,0001., then we shall get a gross rental of from
laii),(9oo/.. to 16,0:;01., and a net rental of 13,0001. or 14,0001.,
olimothie.
„:si-iyetearrentetalt,h"andnotl
if if a suppose that the property is mortgaged to the
amount. of 303,000/ these mortgages must absorb 12,0001.
eave more than 1,20 or
annual v sane of his life proprietor,
which will represent the
to
char
upon
the
capital value,
Now, I think if we were
taxed e perpetuity, pti,haatvalue, which we should do if we
the tai : which must iave
would be a way of putting on
prietor . It might be wlse, I the eaffeett of displacing the pro-
under E tch circumstances to disiliaceolicili,mfso:ifthenie)arorpflietor
There a 3 ust be many such cases in the country.( The TeeegTi.s)-

lature has recommended a proceeding of ,this _kind.in Ire
land, and hasemade Wision for facilitating its progress.
There may be a time—lhope it is not come, and that it may
yet be very distant,---when you may have to introduce a
similar measure for England. What we have to consider,
then, is to frame a tax in a way that will not have the effect
of forcing the proprietor to part with his estate. Ido not
believe that you could find any tax to put upon the capital
value of an estate such as that I have been describing,
which, if it passed into its possessor's hands in a direct line,
would not have the effect of compelling him to bring his
estate into the market. The proposition we propose to
make is this, that a person succeeding to such a property
shall be charged on his net life interest only according to
his age, and the number of years' purchase his life may
Le worth. If the proprietor of his own free will chooses
to bring his estate into the market, and it realises
500,0001., then, instead of charging him on the 1,1001. or
1,2001. a-year net rental, as he has become a wealthy
man, he is to be charged on the value of his succession.
Anything less than that will not be full justice to
the claims of the exchequer and claims of other
classes. (Hear, hear.) In the event of the subsequent
voluntary alienation of the property the claim of the ex-
chequer will arise, but when the successor to the property ,
continues to hold it the charge will only be on the net life
interest. I hope hon. gentlemen will look upon this me-
thod of proceeding as a very powerful reason for adopt-
ing the principle of the Government proposal. (An
honourable member made an inquiry as to the duration
of the claim of the exchequer under this head.) The
claim of the excnequer will revive in the event of
alienation at any period during the holder's lifetime.
At his death there must be a new succession, but, if
the alienation of the property takes place at any
period during his life, the claim of the Crown will revive
against the actual possessor for the difference between the
amount of legacy duty which he may have paid upon his
life interest and the amount of legacy duty due upon the
value, after allowing for the encumbrances. I believethere
are other more legal, more technical considerations con-
nected with the tenure of land that will be affected by the
course I am now proposing, and I believe I am correct in
stating that the plan of the legacy duty as proposed by Mr.
Pitt was of a similar description, and withtne acknowledged
purpose of charging the duty upon the life interest. These
are the main points to which I think it necessary to call
the attention of the committee at the present moment.
But I think it is necessary I should say a few words with
regard to the probable proceeds of the tax, because I see in
various quarters anticipations of proceeds which I cannot
follow or comprehend. Some are sanguine, others very
ridiculous and extravagant, and unable to stand a mo-
ment's examination. With regard to Ireland, I have
heard it stated in this committee that the amount of
legacy duty which we shall derive from Ireland, will be
about 300,0001. I myself believe that its amount will be
somewhere between 60,0001. and 80,0001. (A laugh.)
This, I am afraid, is calculated to take the colour, and
the life, and hope out of the pictures that have been drawn,
and to bring them down to very homely and mean pro-
portions— (hear, and a laugh)—but at the same time,
as the computations I have mentioned are the best which
I have been able to obtain with the aid of that experience
and. ability I can bring to bear upon it, I will not enter at
length into the question of the computation of amount;
but I think I ought to call the attention of the house,
and especially of hon. gentlemen opposite, to one common
source of error. Ono hon. gentleman said, with regard to
this matter, I had stated that this legacy duty would raise
a revenue of two millions. Such an idea never passed my
mind, and such words never passed my lip ; yet it was
stated that I intended to levy ten millions on the land.
The right hon. gentleman opposite seems to deny having
this impression. I do not doubt he avoided such a mistake,
but not only in newspapers and out of doors, but in this
house, it has been distinctly stated. The source of the
fallacy I think is this :—The landed class in this country
hold the first place in regard to influence, station, and
power, and I hope they will long occupy it. (Hear, hear.)
I have said they occupy the first place, and, if they do not,
they hold at least a foremost place in the country. They
have an immense influence, station, and power in the
country, but the income of the landed class, as a class, is
not at all in proportion to the influence and power which
they possess. (Hear.) A great many such cases as I have
already adverted to of extremely reduced incomes exist,
but their position still leaves them great social power, and
undoubtedly great political power. It is for that reason that
there is a strong disposition to exaggerate the amount of
landed income in the country. Now, the amount of landed
property, when compared with the rest of the income of
the country, and all the mass of income that will be sub-
ject to legacy duty, is comparatively trifling. lam almost
afraid to say how far I anticipate that the proceeds of this
tax will be from mere land. On a former occasion I ven-
tured to state that it appeared to me the land paid 9d.
in the pound or thereabouts of income tax, while other
classes paid 7d. (Hear, hear.) It was deemed that I had
proved too much, and we had to pay for it in a long debate
ending with a division. Perhaps a similar result will at-
tend the calcalations I take the liberty to make on this
occasion. I must say, however, lam afraid that of the
2,000,0001. but a very small propordon can be expected
to proceed from the land, and that for two reasons—not
only because we say the land should bear the lower rate.
but because the land will always show a small produce
that is subject to the tax. The hon. gentleman the mem-
ber for Belfast the other night, when I was absent from
indisposition, made an able speech, in which he discussed
this question, and by the light of his experience as a
professional man gave an opinion to the effect that the
amount of revenue to proceed from settled personalty under
a tax of this kind would be very large indeed. That is, no
doubt, what we teckon upon. We reckon upon a large
revenue from land, and when I speak of land it must be
remembered that there are two important kinds of property
connected with land, but which are not land. There is, first,
the income that is derived from mortgages ; and, secondly,
incomes proceeding to persons ou., of settlements fixed on
the land, but which are not' really property in land.
I do not think it is possible to draw any dis-
tinction in favour of personalty settled on the land, as
compared with any other personalty. Such incomes are
no more liable to local burdens than the money of mer-
chants or of bill-brokers, or any other purely undeniable
personalty, or than moncy in Vie funds. That description
of property, therefore, which is related to land, though not
land, must take its chance with other personalty, and bear
with it the full burden of the tax. So far as I can com-
pute, the proceeds of the tax from property of that descrip-
tion—the settled personaltyonland—wili be about 200,0001.
As to the proceeds of landed property, proper, I will not
venture into details, but I must say that I do not think the
proceeds of that landed property, which I distinguish from
houses and other messuages, can be rationally estimated to
pass 400,0001. Now, I have not heard anything stated that
has been nearly so low as that ; but I will tell the house
tho mode in which I have proceeded in making this esti-
mate. I have stated distinctly that I have separated and
struck off from this item the house property and all other
messuages, and I am now speaking of what are strictly
called territorial or agriculture estates. I sated the other
night that there are no secret sources of information on
this subject—there is nothing on this question that is not
open to every gentleman in this house. (Hear, hear.)
Under schedule A you find the gross amount of landed
property charged with income tax. It is about 49,000,0001.
a year, but there are deductions to come off that. The deduc-
tions, if I take them roughly at 16 per cent. will reduce it
to 41,000,0001. Then I have to make the addition of Ire-
land. The value of the whole rateable property of Ireland
is 11,200,000/. in round numbers. I have next to estimate
that portion which is not landed property, but which con-
sista of houses and other messuages, and that I put at from
7,000,000/. to 8,003,030/. This will give me a net income
from land in the three kingdoms of 48,000,0001. From
that 48,000,000/. I have to deduct the interest on mort-
gages and other encumbrances, which every successor to
land will be allowed to deduct before he is charged with
the tax. What this may be we are all alike able to judge;
we are all upon an equality in that respect, and may guess
at our pleasure ; but I take the interest on mortgages, and
other encumbrances on ;the laud at 25 per cent. That
leaves 36,030,0031. of annual income—that 36,030,000/. re-
presenting a capital value of 30 times as much. But then
comes the question, how often will the succession come ?
It seems to me not an irrational calculation to say, once
in 30 years. (Cries of " Oh, oh.") I may be wrong. At
any rate it is open to gentlemen to take another standard
of calculation. I can only say, I go as near the truth as
I can. (Mr. Disraeli—You make your estimate on the
income tax returns, but you don't deduct the sums under
1501. a year.) That is true. You will have to make an
addition for that, but the addition will be very moderate.
We know what these sums are, for the income tax returns
give them ; and now I am afraid I have taken the incomes
to which the right hon. gentleman refers. The 49,000,0001.,
unless I mistake, which I have taken, is the gross assess-
ment under schedule A, irrespective of returns. lam
afraid, therefore, there is no addition to be looked for under
this source. (Hear, heat.) But the question is, how often
does the succession come ? I take an average of 30 years.
If it is on an average of 30 years, and if landed property
may be assumed to be worth 30 years' purchase, you will
have 36,000,0001. of landed propel ty on which to lay the
tax. (Hear, hear.) The next step is to ask, ac what rate
will that land pay duties ? The legacy duty at present is
levied on an average rate of 2 4-sths per cent.; but it is quite
plain that it will fall on landed property at a much lighter
rate ; and for this reason,—first, because no interest
higher than a life interest will be charged, which will re-
duce the rate of the tax one moiety ; secondly, because
landed property runs more in the direct line than per-
sonalty, for property descending to strangers is obviously
more out of the 'direct line than realty, and is charge-
able at a higher rate. If that is the case, and if the
present rate of -duty only averages 2 4-sths per cent.,
it is quite plain that the rate of duty on the landed
property cannot average so much as one moiety of that
sum, or 1 2-sths per cent., producing a sum of 500,000/. ;
but when I make that charge, I feel convinced you
must make considerably further reductions still, and
that you cannot estimate the proceeds which will be rea-
lised from landed property at materially more than
400,0001. I have stated briefly the grounds on which I have
arrived at that conclusion, and I have done so deliberately,
in order that the committee may be able to follow and
thoroughly understand them. The estimates—indeed,
I can hardly call them estimates—the dreams in which—
I was going to say wiseacres, butt as that term may be
offensive I will not use it—but the dreams in which some
persons have indulged have tended to propagate most dan-
gerous delusions on this subject, and have had the effect
of exhibiting me in the light of a person of monstrous
capacity, who was about to• raise fabulous sums from the
land by this tax. (Hear, hear.) If it can be demonstrated
that more will be raised from land than I have anticipated,
nobody will lend a more willing ear to such a demonstra-
tion than myself. Only let us see what are the real ant
borne fide grounds on which we are to base our expecta-
tions that the revenue will be larger, and I shall sincerely
rejoice at so satisfactory a result. (Hear, hear.) I will
not go into the question of personalty. There, again, we
have to trust to the income-tax returns ; and I may state
that as with regard to realty, so with regard to personalty,
there is a large portion of income that will not come under
the tax at all. I will not go into the question, but I ven-
ture to state that from realty and personalty of all kinds
the produce will within a period of 5 years about
2,000,0001. Ono other point I should explain as to the
payment of the tax on succestiessions to real property, and that
is the time at which the par succeeding may be expected
to pay. Generally speaking, where the successor is not
also the residuary legatee, the rents accruing will not be-
long to him on the first rent-day, but on the second rent-
day they may be expected to be paid to him. We there-
fore propose that he should not be liable to payment of the
tax till 12 months after he has succeeded to the property.
(Hear, hear.) We then propose that he shall be liable to
pay the tax in eight equal half-yearly instalments. In the
case of direct succession that arrangement would make the
tax easily payable, and so it would be even in the case of
the nearly indirect successors. In the case of 10 per cent.
successions the duty of 10 per cent., even on the life inte-
rest, would take up in four years a considerable share of the
income. So far as the State is concerned, it might be open
to consideration ta.make a further prolongation of the time,
but I doubt generally the policy of that course. It would
tend to bring about an accumulation of encumbrances—it
would, therefore, be better toleave it to the discretion of the
executive Government to provide, by extension of time, for
cases of that necessity. Generally speaking, therefore, the