The Sun.
London, England, 1853-04-19 00:00:00

thetwr
tn
with
, public but
respecto b
revenue.s t observe r v
hei sthl ea effecthde,
thei
landholder
householder
u s t
ih a
uvs et with
tr e g a rd to
asetxoerhishimself
house,
and the mortgagee must either look out himself,a or pay his
liaei
Iry ye etrh forer e looking oakni
yn g
incomeout
which i s
isna °pneejecilynand do not be
income, except the income of the fundholder. (Hear,
and and a laugh.) If that were so, the fundholder would enjoy
an entire pre-eminence in taxation, and the degree of that
pre-eminent it would rest with you to fix. I honour the
sense of justice of the hon. member for Montrose, and so I
honour the sense of justice of those gentlemen—the ac-
tuaries—who have recommended the fundamental recon-
struction of this tax, and who do look at the durability of
incomes. If they had made their proposals in 1798, Ido
not know that the fundholders would have had much
reason to complain ; but, on the contrary, I believe
that, upon the whole, they would have been gainers. I
think, however, that the proposal of the actuaries is un-
sound in principle. I conceive that it is unsound in prin-
ciple to levy the income of the country in substance by a
tax upon its property, for I think that income is the
proper basis of taxation. I do not mean, however, to
hold that as an extreme doctrine, but, if we have a pro-
perty tax at all, let us have, in substitution for the income
tax, a good and honest property tax, such as the actuaries
propose. Unfortunately the actuaries have the plan which
they recommend entirely to themselves, for no one has
ever been found to propose it in this house. In fact, no
body will propose that plan, for every one knows that it
is a mathematical speculation upon paper. It is not a
project to be submitted to an assembly of men whose
bounden duty it is to provide by practicable means for the
constantly recurring wants and services of the country.
The project of the actuaries I pass by, because, while it is
of all others the most self-consistent, it is also, I will not
hay the most difficult, but it is placed the farthest beyond
the reach even of imagination as a possible measure. Now,
I will request the committee to go yet further with me
upon one more point with regard to the funds, which I
think to be highly practical in its character, and which I
beg to commend to their particular attention. I have used
every means in my power to analyse the means in which
the funds are held. In old times there was a very
general belief in the existence of hobgoblins. [An hon.
member exclaimed, in a tone of earnestness, which
Occasioned much laughter, "Of what ?"] Of hobgob-
lins (the Chancellor of the Exchequer replied, amid
renewed laughter), and now throughout the country you
May here and there find those who have a somewhat
analogous conception of an awful being they call the fund-
holder, whom they picture as rolling in wealth, and living
in worthless indolence upon the toil and sweat of his
country,Allear, and a laugh)—but it is very difficult to
find out whether the existence of this monster is a fact or
a fiction. I cannot obtain a complete analysis of the man-
ner in which the funds are held. The State, as we know,
has no knowledge upon the subject. The Bank of Eng-
land, which pays the dividends, knows only one circum-
stance, and that is whether the dividend is paid to a joint
account or a sole account. A very remarkable change has
been taking place of late years in the manner in which the
funds are hld. About 15 years ago the funds were chiefly
hold in sole accounts by.individuals, and I think you may,
upon the whole, take it nearly for granted that the sole
accounts indicate—and I speak in the presence of practical
authorities—absolute property, with some few, exceptions.
So lately as 15 years ago much more than one:half of the
stocks were held in sole accounts, and therefore represented
absolute property ; but mark the change tqat has taken
place. At present it is otherwise. The whole amount of
stock held in sole accounts is at the present moment
280,000,0001., and out ofthat about 60,000,0001. represents
the incomes of persons who are exempt from the income
tax by reason of their incomes being under 1501. a-year.
There is, therefore, a :sum of about 220,000,0001. held by
persons who may be' considered as holding perpetuities in
the funds, and whom the reformers of the income tax would
regard as entitled to the distinction of exemption from
that tax. Now, the amount held in joint accounts was in
February, 1852, 427,000,0001.—(hear, hear)—and I have
no doubt that it is at this time much more. One-third of
the funds, upon the whole, are held in sole accounts, and
two-thirds in joint accounts. Now, what do these joint
accounts mean ? I will tell you very nearly what they
mean. These joint accounts may be divided, I believe,
into five classes, one or other of which may be taken as in-
cluding very nearly the whole. In the first place, the joint
accounts include a large class of charities, comprehending
the great account of the Commissioners of the National
Debt for savings' banks, amounting to 33,000,0001. These
suing are all by law exempt from income tax. Then; in
the second place, we have the Chancery and Bankruptcy
accounts, amounting to between 50,000,0001. and
60,000,0001. I don't imagine that it is the desire of this
committee, or of the reformers of the income tax, to lay
upon the moneys locked up in Chancery and Bankruptcy
an exceptional tax. A third class which enters into the
joint accounts is made up of those cases in which English
firms—particularly banking firms also—hold large sums of
money on account of foreigners. I imagine that; although
Englishmen who have investments in the funds very cora-
, monly hold them in their own names, it is very common
for foreigners to have stock held in the names of their
banking or mercantile correspondents. It has been a po-
pular doctrine to tax the foreigner, but I think that no
person in this house would wish to tax the foreigner in
this particular form. It has been .a long-contested ques-
tion with respect to income tax in England whether the
foreigner is not entitled to exemption altogether. The late
Sir R. Peel subjected him to taxation in 1842, but the pro-
posal was strongly opposed, and I think every member of
this house will agree that it would be very impolitic to lay
an exceptional tax of this kind upon the foreigner. The
fourth class interested in joint accounts, and a very large
class too, is the class indicated by life interests less than
perpetuity. When Mr. Horsman made a proposal with
reference to the income tax in 1848, one of his main argu-
ments was founded on the absurdity of taxing life interests
at the same rate at which perpetuities are taxed. Of late
the income tax reformers have had much less compassion
for the life-interest men, and few of them have seemed to
regard their case at all. My opinion is that, if the
income tax were reconstructed it would be very diffi-
cult to shut out the life-interest men ; but surely it
would be very hard to raise the tax upon the funds as far
as regards that large portion of holders who have a mere
life interest. The fifth class interested in joint accounts
consists of trading companies and associations holding funded
property. Now, are you to lay an exceptional tax upon the
capital of persons so engaged in trade ? I should say that
it is very much better to leave English trade where it is,
paying 7d. in the pound, in the place of the 9d. paid
by land and houses, and with the power of invest-
in.. 'money in the funds when it is convenient for purposes
or banking, or for other trades, without the fear of excep-
tional taxation, than to break up the whole system, and
ensconce the trader in schedule C, that you may reimburse
him by exceptions in schedule D. Now, the strongest case
urged for the reconstruction of the tax is the case of sche-
dule C • but in schedule C, against 220,000,0001. held by
persons in their own right, you have 430,000,0001. not held
by persons hi their own right as mere individual property,
and when you have established your exceptional tax against
the funds, your very next step must be to exempt the
whole of this 430,000,0001. Well, that is what I have to
say upon schedule C. I shall now touch very briefly upon
the remaining case of schedule D—that is to say, of sche-
dule D as respects the professions. I have made it my
business, Sir, to ascertain what proportion of the whole
payment under schedule C proceeds from professional per-
sons, and I find that, including certain amphibious classes,
it is above 300,0001., or rather more than one-twentieth
part of the whole income tax ; but there are several per-
sons who are returned as professional persons who, for the
purpose of a new classification of the income tax, must be
considered as traders, such as auctioneers, house-agents,
and farm-agents. The country surgeon frequently com-
bines with his profession the trade and capital of a drug-
gist and apothecary. Solicitors, again, in many places
are, to no small extent, considerable capitalists ; their ca-
pital is invested in their trade, and the income tax must
be paid upon it as it would upon capital invested in any
other trade. Taking these mixed. cases out, the net sum
that may be said to be paid by the professions is about
250,000,0001., which is about 1-22 d part of the whole in-
come tax. Now, Sir, Ido not at all deny that the case of
professional men appeals to the sympathies. In my opinion
it is one of the reasons which indicates that the tax ought
to be a temporary tax ; but I hope the committee will
pause before it rushes to the conclusion that upon account
of the case of professional, men (for I think I have in some
degree disposed of the other cases) they will proceed to
such a labour. • I will not call it an Herculean labour, be-
cause an Herculean labour means a labour that Hercules
could accomplish, and this I am persuaded he could not ;
but to such a labour as that of breaking up and reconstruct-
ing the income tax. (Hear, and a laugh.) It would be a
pity to find yourselves compelled to break up the income
tax on account of those whose case is so limited in com-
parison to the whole range of the tax that they only pay
1-22 d part of the amount. But then you may say, " Why
not exempt them altogether • why not give them a fa-
vour ?" And there is a great deal in point of feeling to re-
commend that ; but there is a great deal in point of feeling
to recommend many things in this world of ours, upon
examination of which you find insuperable obstacles in the
way of giving scope to that feeling. (Hear, hear.) Now,
I will tell you why you cannot exempt professional in-
comes without breaking up the scheme of the tax. In the
first place there are the auctioneers, house-agents, farm-
agents, and others I have referred to, now nestling within
the professions, with whom there would be considerable
difficulty if there were an attempt to exclude them from
benefits to which persons in the position of professional
men were to be entitled. Again, you would have great
difficulty in knowing what to do With the clergy. Your
feeling would tend with equal force both ways. You would
think it extremely offensive to reconstruct the income tax
on behalf of professional men, and yet to make the clergy-
man with 1501. or 2001. a year pay the higher rate. (Hear,
hear.) But, if you let him in, lam not so sure that you
would be pleased to extend the same favour to the dean
and the bishop. (Hear.) You will find the samvee
certainly
rtffiticiulnity
there ; but there are other and more serious difficulties
than those. Many persons holding salaried offices—not
public servants—now charged in schedule D, have
a much worse tenure, and an inferior interest in their in-
comesy than professional men. Above all, there is what I
warned you of in respect to averaging classes. A large
class of retail traders have an interest in their trades
much
inferior to that of professional men. Their shops, and
trades, and businesses
,chgaonngeetho-anandorrs mownc.hauqdm "cpkreoriessTiohneayl
men, class, puttingth aside the
ti case of sick-
arneessaaerasetauresof permanence itself exceptionalcompared with a certain de-
wscarirpntitobne onforathmeistmteaelekrecwilassse
tohfatt they will
traders. (Hear.) I must
tax,o
bd
ri ffie
ack gup of the income
u nty wh e n the y come t find the greatest
Let me for a moment peutcaseconsider,iitn the midst of their
to
of
youthe annui-
tants.lwifheotheseadnbdy, the
people are. Professional persons, at all events, are men
charge
Almighty with the care of wives and chil-
dren,generally, with a capacity to
duty. But when you come to life annuitants, the
deal with the d
your hands justice, dischargeyou thatn
desolate widow, with the orphaned daughter,
with the defenceless woman, whose right it is to expect at
tenderness, and protection. Are their
incomes precarious, or are they not? I will take some lady
who has been bred in the lap of luxury, and who then upon
the death of her parent finds herself with the interest of
5,0001. or 6,0001. to live upon for the remainder of her
days. I want to know whether that is to be subjected to
the higher tax as an income from realised property? Will
you then tell me that upon the daughter and the widow
you will lay that exceptional tax, and yet speak of doing
justice, because you put the higher tax upon her in order
that you may put the lower tax upon bankers and brewers,
and physicians and lawyers ? (Hear.) I appeal to you as
men upon this point. lam convinced, whether the views
of the present Government be right or wrong, whether our
propositions meet your approbation or whether they do
not, that you never will consent to draw that distinction
in favour of the great and energetic commerce of this
country, and against the pittances on which the great por-
tion of these women subsist. (Hear.) Sir, the unparal-
leled indulgence of the committee--(cheers)—has brought
me nearly to the close of this portion of the subject, and
there is but one more point that I need refer to.. It is
commonly supposed that it is either some crotchet of an
individual, or the general, laziness and haa.ttentionpf offi-1
vial persons to th.eir duties, that prevents them giving
effect to the wishes which many gentlemen laudably enter-

tain to see these inequalities of the income tax, which Ido
not not deny, removed by a reconstruction ; but I will
selves ill'
volved and
out the kind of difficulty in which you find
volved when you set about that work, for I can trulyetfor fairly say—and I think if Ido not command
d fairll will demand full credit for them—l can truly an
as an individual, yet that the characters of myer colleagues
could
say that it has been our most earnest desire,
with justice attain that object, to consult the public
about
in regard to the proposition which we might make„.
the income tax. (Cheers.) We have therefore stu_nalotTly
,f
and laboriously turned over the question again and 71.'7:
and have put it, I believe, in every light in which
capable of being viewed ; and now I will just give yeu
ar e.
specimen of the way in which, when you set about a r_e 2,1
if
struction of this tax, you find yourselves involved.
01
.7,1;
y feeling
suppose that, if the income tax be differentiated, you
the favour to what are called terminable annuitas,nt
The terminable annuitants expire in 1860, and they allot
a favourable case for those who wish to break up thff,
come tax. Of course, they will get the benefit of it. "-Lew
are worth so many years' purchase, and no more, and yon
can tell exactly how much represents interest and how much:
capital. You proceed, then, by exempting the termina
annuitants. Is that all? By no means. What do you %
with Government life annuitants ? Must you not exempt
them also ? Is not their case substantially the same with
the others? A man lays out money on an annuity for ,
life. Although the term of life is uncertain, such an annuity
has just as fixed a price in London as an annuityot,
the
expiry of which you fix the date. On the same principle,
therefore, you must exempt the Government life annuitant'
as you do the terminable annuitants ; but, if you do thst
you.cannot think of anything so monstrous as taxing
terests for life, or for a term upon leasehold propertle%
How will you be able to tax a man who has suppose In
on which he has paid a heavy fine, and of which there 10
_f
term of five or ten years unexpired? The great bulk;
the interest in the property is not his, but the landlornr%
the reversioner's, and you must evidently give him, the
fote, a share of the exemption. Then I must again remind_d
you of the class holding life interests in the funds.
can't draw a distinction between life interests in the fun).
and life interests in leaseholds. They must help to
the goodly company of exemptions. After them col• -
those who hold jointures and other annuities upon
Certainly, a life annuity in the funds is one thing, ant..--
life annuity upon land is another ; but the life interest
the individual is alike in both cases. When you have
those in, what do you 'do with life renters, and with
successor of entailed estates, who may be a second cousle
living in the East Indies, whom his predecessor may nevet
have seen, and in whonehe has no interest ? This may ur_ •
tedious to the committee, but these are practical question!
(Hear, hear.) Ido not say that there are no distinctions
between each of them. But what I say is this, that wluni
you come to define those distinctions, and to treat theme
ton the broad ground upon which you take your stand, and
say, " Here you will be exempt—there you will pay tm-;
•
exceptional tax," there is not one of the classes I ham
mentioned with respect to which arguments for exemption
might not easily be applied. The tendency of all these
exemptions, however, is the breaking up and destruction -
of the tax. I do not say " relinquishment," because re.
linquishment is one thing and breaking up is anothero_
Relinquish it for a time, and when emergencies arrive you
may do as your fathers did—take down the weapon from
the shelf, and make it serve you again for the ends of duty
(Cheers.) To relinquish it is altogether safe, because it is
altogether honourable. But to break it up is to encoursgf
the Mouse of Commons to venture upon schemes which
may look well on paper, and may serve the purpose of t
moment, but which will end in the destruction of the tai
by the absurdities and iniquities which they involve. Sia!,
if that is to be done it must be by those whose conscience:
enable them to take a different view of the character and
of the destiny of this great country. It will not be don°
by men who believe that, although you may enter upon
that fatal and seductive path, it will lead you into cinsf;
mires, will throw the whole finances of the empire into
confusion, and will deprive you of that ready and effectiv..o
resort to which hitherto you have been able in all times
look as a course open to you in circumstances of difficulty
general
and trouble. (Cheers.) Sir, the views of her Die.,
jesty's Government with respect to the income tax are, that
it is an engine of gigantic power for great national pur,
,
poses, but at the same time that there are circumstances
attending its operation which make it difficult, perhaPs
impossible, in our opinion not desirable, to maintain it 0!
a portion of the permanent and ordinary finances of th°
country. (Cheers.) The public._ feeling of its inequality
is a fact most important in itself. ...The inquisition it ef:
tails is a most serious disadvantage. And the frauds tO
which it leads are evils which it is not possible to charac
tense in terms too strong. (Hear, hear.) One thinifii:,
hope this house will never do and that is nibble it
great public questions. Don't let them adopt the plan.
reconstructing the income tax to-day, and saying, "If tht,l,
does not work well, we'll try our hands at it again to-re°`
row." That is not the way in which the relations of clasen--
-,
are to be treated. - Depend upon it when you come to Cl
quarters with this subject, when you come to measure
im
see the respective relations of intelligence and labour sits
property, and when you come to represent those relations
in arithmetical results, you are undertaking an operatieo
which I should say it was beyond the power of man to e°11"
duct with satisfaction, but which, at any rate, is an opera;
tion to which you ought not constantlyto recur ; for if, as rai
hon. friend once said very properly, this country could 11';
bear a revolution once a-year, I will venture to say that"'
could not bear a reconstruction of the income tax once a
year. (Cheers, and a laugh.) Whatever you do in re'
gird to the income tax, you must be bold, you must lat
intelligible, you must be decisive. You must not pate!, with it. If you do, I have striven at least to point out -
I
well I
as myould feeble powers, will permit, the almost deseeraj,
ti w say, certainly the gross breach of duty' your country, of which
you will be guilty, in tire,
jeopardising one of the most valuable among all its meter".
resources. I believe it to be of vital importance, whether
you keep this tax or whether you part with it, that Y__,°ll
should either keep it or leave it in a state in which it would
be fit for service on an emergency, and that it will be MY
possible to do if you break up the basis of your income •
(Hear, hear.) Then you will ask me, "On what princt „P;
do you mean to proceed?—you have
made an argamenu,
far as you have gone, to show that the tax cannot be re;, •
constructed or amended." What we wish to do, and what
we shall aim at doing by the measure which I shall propos"
is this :—We wish, in the first place,
uncertainty respecting the income tax. (Cheers.) 161.
think it unfortunate that politic 1 • t have for
esircums ances
the last two or three years led toaastate of doubt regare- •
to put an end to the
to the continuance of the tax, and have even begotten by
degrees a feeling on the part of the public that is about to be entrapped unawares int the count'''.
o it (Hear, hear.) My belief is, that much of
theetuity'.
er*p
ing that prevails is traceable to that source, a -perpetuity
nd uneasy feel'
ra
far from thinking that the mere asking of the a Woe
to renew this tax for a given term, in eppo • .
al comm_
salon to asklutf.
you to make it perpetu , would be sufficient to allay floe,
anxiety or toiemoeetua, remove that doubt. There are a certain class
of transactions with regard to which the uncertainty about
the income tax tends most unfavourably—such as the ter-
minable annuities, for example. It is ve desirable that certainty should be restored to these transactions I thing
it also most desirable that effectual measures should
be
taken to mark this tax as a temporary tax. ut Ido
so much mean to commit the Government to B
an abstract
opinion to be acted upon in future years. my own
opinion is decidedly against the perpetuity of the tax as
permanent ordinary portion of our finances. But
state the wish of the Government i,to propose it as a tow;
porary tax, I' do not ask you to rely on their words to bits'
them or yourselves as to what you will do under all sir'
tocumstances at the expiration of the term which we propose
fix for its continuance now. I propose by positive
ado
ena
pt, ctmeto nt, by the measures which I shall invite you t
lay the ground for placing Parliament in such position that at a given period it may, if it think fit, Peru,
withathat tax. (Cheers.) We are most anxious to 4°
what can be done, in order to meet the public feeling as to
the inequality of the tax. For that public feeling we her,
not only respect, but sympathy, while we do not admit'
that it is our duty, as persons charged with the conguct of
public affairs, to shape our measures according to all feeling or sentiment whatever, until we have examined the
practical form which they are to take, and tried it by the
light of our understanding. (Hear, hear.) We pro Pose, - sir, to introduce certain mitigations into the operation of
the income tax. We propose to extend the principle of
commutations, which is now applicable only to trades, t°
professions also. (Hear, hear.) A more important miti-
gation which we propose to make is this :---!There is a
general feeling that a man ought to have, at any rate, the
opportunity of investing the savings he may make from
his income without being liable to the income tax upon
them. We do not think it possible to make provisions
of that kind applicable to savings simply as such. All
we can do is to say, "If you choose to invest your savings
in the form of a deferred annuity or life assurance, the
premium which you may pay upon that deferred annuity
-
or life assurance up to one-seventh of your income shall,
not be chargeable to your income tax, but may be deductea,
from your income tax before it is charged." (Hear, hear.)
I am not at all prepared to say that we would stop at that,
if it were possible to do more. At the same time, this
plan has considerable recommendations. Ido not say that
it will meet the case of persons who being afflicted with
sickness cannot, except ruiner peculiar circumstances,
insure their lives, because, unfortunately, cases of that
sort it is beyond the power of the Legislature to meet.
But what Ido say is this—that it is a relief which will
admit of very extensive application. I cannot reckon that
the reduction from the receipts of the tax in consequence
of it will be less—though, of course, it is an uncertainty,
when we look to the total amount of life assurance in this
country—than 120,000/. a year. It establishes, however, "
no invidious distinctions between one class and another.
It is open to all those who choose to avail themselves of it ;
but while it is open to them all, we know that practical'y
the classes who are in the habit of assuring their lives are
just those very classes whom it is your main object to re-
lieve by the reconstruction of the tax—namely, the classes
of professional men and of persons who are dependent
upon their own exertions. I think it will be necessary to
propose that Government should itself become assurers
of life. If it is to undertake that charge, as will probably*
be the case, it will assure on the same principles as these
on which it is now a vendor of life annuities. But while .
I say that our object is to meet the public feeling as to the
inequality of the tax, and while I specify these modes of
goim, some way to effect that object, I have more to lay
before you upon this subject. And pray understand me.
Do not let me through my neglect be misunderstood, or
fail to state clearly the position of the Government. What
we understand to be the sentiments of the country, and
what we ourselves, as a matter of feeling, are disposed to
share in, is, that the income tax bears upon the whole too
hard upon intelligence and skill, and not hard enough upon
property as compared with intelligence and skill. (Hear,
. hear.) I hope that I state with accuracy, not the precise
measures that we propose, but the object which the re.:
constructors of the income tax have in view. Well,
that be their object—if they think that at present skill
and intelligence are too severely pressed, and that property
under the income tax pays too little, let me remind then
that they must not form their judgment of the condition
of classes from one single tax, or from another single I ax,
but that they must look to the general effect of the whole
system of taxation. (Hear, hear.) And all I implore of
them in that respect at this moment is, that they will re"
serve their decision upon the question whether the Govern' '
meat proposition sufficiently meets the case of skill and
intelligence, as compared with property, until they have
heard me throughout, if their kindness will permit them,
to do so. (Hear, hear.) Our proposition, then, in regard
to the income tax is this :—We propose to renew it for •
two years from April, 1853, at the rate of 7d. in the pouna.
The committee will recollect that I said we thought it
our duty to look the whole breadth of this difficulty in the
face—not to endeavour to escape it, not to endeavour to
attenuate, but to settle, if the committee would enable us,
the whole question of the income tax. (Hear, hear.)
propose, then, to re-enact it fel two years, from April,
1853, to April, 1855, at the rate of 7d. in the pound. From
April, 1855, to enact it for two more years at 6d. in the
pound--(slight murmurs)—aid then, for three more years
—(laughter and murmurs from the Oppoattion benches,
which prevented the conclusion of the sentence)-4 don't
wonder at the laughter4-fgr three Mare ye/nat.-him APril'
1857, at sd. (Hear, hear.) Under this proposal th°
income tax will expire on the sth of
.A.pril,llB6o, Sir,