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

THE SUN, LONDON, TUESDAY EVENING, APRIL 19, 1858,

necessity arise—which may God in His mercy avert (hear,
hear)—with it judiciously employed you mayagain, if need
be, defy the world. (Loud cries of hear, hear.") This,
then, is the purpose which the income tax has served—
that niethe time of vital struggle, it enabled you to raise
the income of the country above its expenditure of war
and civil government (hear), and that service so performed
was performed at a time when men do not minutely in-
quire into the incidence of taxation ; they do not then
indulge themselves, in the adjustment of details; but are
lefraldelest they should lose the 'mass- and the substance.
(Hear, hear.) But times when the hand of violence is let
loose, and when whole plains are besmeared with carnage,
are the times when it is desirable that you should have the
power of resort to this mighty engine, to make it again
available for the defence and salvation of the country.
(Hear, hear.) Well, sir, the income tax dropped along
with the purpose of the income tax in 1816. But it was
destined to be revived. Sir R. Peel, in 1842, called forth
from repose this giant, who had once shielded us in war,
to come and assist our industrious toils in peace (hear,
hear) ; and if the first income tax produced enduring and
memorable results, so I am free to say, at less expenditure
by far in money, arid without those painful accompani-
ments of havoc, war, and bloodshed (hear, hear)—so has
the second income tax. The second income tax has been
the instrument you have introduced, and which, I hope,
ere long you may perfect, the reform—the effective reform
of your commercial and fiscal system (hear, hear) • and I,
for one, am bold enough to hope and to expect 'that, in
reforming your own fiscal and commercial system, you
have laid the foundations of similar reforms--slow per-
haps, but certain in their progress—through every country
of the civilised world. (Cheers.) I say therefore, sir,
that if we rightly use the income tax, when we part with
it we may look back upon it with some satisfaction, and
may console ourselves for the annoyances it may have en-
tailed, by the recollection that it has been the means of
achieving great good, immediately to England, and ulti-
mately to mankind. (Cheers.) Let me now attempt to
present to the committee a closer analysis of this duty. I
shall assume that it is your view, as it is the view of the
Government, that we cannot at the present moment, with
a due regard to the public interests, dispense with the in-
come tax. Let us look a little into its composition. Let
us attempt to investigate the charges that are brought
;against it.- --T-am not one of those who make light of those
charges. (Hear.) In my own individual opinion, it is
'perfectly plain, from the mode in which the income tax
was put an end to at the terminatien of the war, that it
'is not well adapted for a permanent portion of your finan-
cial system. (Hear.) Whether it is so or not, on which
there is a great difference of opinion, yet I think this is on
all hands agreed—that it is not adapted for a permanent
:portion of your fiscal system, unless you can, by recon-
struction, remove its inequalities. (Hear.) Even if you
;could remove its inequalities, into which we will patiently
examinee-there wOuldestinemain in my mind objections
of the gravest phara4er. (Hear, hear.) The reconstruc-
:tion of your income tax would, I think, under any circum-
stances, be found to open up social questions of the most
serious import ; and the machinery of the income tax, in-
volving, as it necessarily does, to so large an extent, the
objectionable principle of self assessment, in my opinion,
can never be satisfactory to the country. (Hear, bear.)
'First, 'because self assessment leads to grievous frauds
,upon the revenue, and renders the real inequality of the
tax more trying than any of those inequalities which im-
mediately strik the eye and feelings ; and, secondly, be-
cause of the tendency to immorality, which is, I feareessen-
tially inherent in the nature of the operation. But now let
us examine the composition of the income tax. First, let
me observe that we al e too much in the habit of speaking of
this impost as merely a simple tax ; it is rather a code or
System of taxation. In mere bulk it is a volume ;it has
been elaborated by many successive strokes in successive
years ; it combines a large mass of precedents: and in short
it is a vast and complicated system of taxation, by which
we succeed in raising, in round numbers, 5,600,0001. a
year. One-twenty-eighth part of this sum is 200,0001. Now,
if you investigate the composition of schedule A, you will
find that land and houses—which I take together, because
their position is substantially analogous—including the in-
comes charged upon them in respect to mortgages and set-
tlements, pay no less than 12- 28ths of the tax, or about
2,403,000/. Now, let us look at the other great element of
this tax, namely, the payment that proceeds from trades.
In order to get at this payment accurately, we must de-
scend a little deeper than the mere classification of the
echedules. There are in schedule A some considerable
lasses of property which pay duty along with land and
houses, to the extent, I think, of something like 27,0001. a
Year, which- are essentially trading concerns. For the pur-
pose which I have in view I must likewise take out of sche-
dule B the sum paid for the occupation of land, and place
it along with trades, with which it is essentially analogous
in character. This gives me 330,0001. more, and then I
dome to what I may call trades proper—namely, those
eihicehthiaopgpeliakre in
1,200,0001. e
Thesepand
threew which pay aofsturmadeosf
something
iia schedules A, B, and D, contribute an income of no less
than 1,800,0001., or 9-28ths of the whole tax ; and the two
together—that is to say, land and houses and trades, pay
4,200,0001.; or 21-28ths of the whole tax. There remain
the funds in schedule C, which pay 750,0001., or I.7th of
the whole tax, and salaries in schedule E, which pay about
1417th of the tax. Professions in schedule D, after striking
out those which partake rather of -the character of trades,
:Pay 250,0001., or about 1-22 d of the tax. Thus, we see,
the funds, salaries, and professions make up tl e remaining
4th of the tax—three-fourths being paid by lands and
',houses and by trades. It is said that gross inequality is
the characteristic of the tax, and that it ought not to be
levied—that it is unjust to tax' precarious and realised in-
come alike. What income is precarious, and what income
is realised ? Income derived from trade would, I presume,
bo called precarious - and, without wishing to anticipate
the judgment of the committee, I may probably assume
that this is their opinion. Observe that, after all, the main
question is between land and trade. Everything else, in
respect of bulk and magnitude, forms but a mere outline of
this, the main question. Land and houses, we find, pay
an income tax of 2,400,000/., and trade pays 1,800,0001. ;
between them they pay three-fourths of the whole tax. It
is, therefore, evident that the justice of the present rela-
tions between land and trade must go a considerable—l do
not say the whole—way towards the solution of the great
question, whether the tax is, in the main, a just tax or not.
Let Ifs; then, look at the tax as it stands between land and
houses and trade, and if the committee will do me the fa-
vour to follow me in the estimate I am about to enter upon,
it' shall be my endeavour to place the matter before them
in as clear a light as possible. My first object is to show
the amount of tax really paid by land. When persons say
that realised and precarious incomes ought to pay different
rates, and that therefore the tax ought to be reconstructed,
they forget to inquire whether at the present moment rea-
lised and precarious incomes, as represented by land and
houses on the one hand, and by trades on the other, do not
pay different rates. Let us, in the first place, see at what
rate land and houses pay. Land pays in the gross 7d. in the
pound upon an income not assessed by the possessors of
the property, but by strangers independent of them, and
this sum is paid without any, the smallest, deduction in
respect of the difference between gross and net income.
(Hear, hear.) It is obvious that, in order to estimate
how Much land and houses really pay, we must deduct
the whole of the difference between the gross and the
net income: Nay, we must do amore than this, because
the owners of land and houses are not the only
persons beneficially 'interested in this description of
property ; for instance, a large body of mortgagors
encumbrancers, and life-renters, who, although they pay 7cl'.
in'the pound on their "share of the proceeds of land and
houses, do not make up the difference between gross and net
receipts. In the estimate lam about to submit to the
committee I have been guided by inquiries which every
'member is as capable of making as I am. I can only say
that the estimate has been framed in a spirit of modera-
tion, and tested, as well as the case admitted, by reference
to persons most familiar with the subject. About
80,000,000.., the gross income of land and houses, pay the
tat. At 7d. in the pound, this gives, in round numbers,
2,333,0001. What are the deductions which ought to be
'allowed for the difference between gross and net income,—
I will not say according to an arbitrary standard of equity
—but if we' should break up the present scheme and con-
struct' a new one, what should we be called on, and of
course I must say, what shOuld we in justice be compelled,
to allow on this score 7 In. Scotland the difference allowed
but we have the' burdens. The first
bet Ween gross "arid net income from land is known by the
ge charge for repairs, and under this
designation of "`public burdens." - We have no analogous
and draining. Repairs
d, but as regards houses
mustin
tem
allow for insurance,
constitute
a'oeirsasda
ttssiletti ngsdlgeatelrrhah.geneedd:aHg;
chargerine
agr, ;
upon ditch,yoi
landing a
i
ill
,and also for law charges, without which it is impossible to
conduct business connected, with landed property and
houses. (~ Heae,e from the , Opposition.) You must
allow —I will not say all the cost of management, but as
much of it as you allow to'a merchant under. schedule D
and
—you must allow foi clerks,' sub-agents, ground-bailiffs,
ffi rec
oces, stationeiy, eipts, and so forth. You must allow
feri abatementrreareefrent, you must likewise allow for what is
called of rent which is a real deduction from
income. (" Hear," from the Opposition.) How much
shall we allow under these heads ? What is the gross de-
duction we must make from the income of 80,000,000/,
supposed to be received by the owners of land and houses ?
I take it at 16 per cent. I do not think this is an unfair
estimate ; I am certain that it is, in some instances, a very
low one. (" Hear, hear," from the Opposition.) If 16 per
cent. be a fair-deduction, it is evident we should reduce
the 'sum of 12,800,0001., which is actually expended before
the 80,000,0001. subjected to a tax of 7d. in the pound by
there-
fore, we have arrived at this poinf, that we have got, the 'Jeanne reaches the pocket of the owner ; and,
in-
stead Of 80,000,0001. of income, only 67,200,000/., and this
reduced amount pays a tax amounting to 2,333,0eee
(Cheers.) Then I come to another question upon which I
must again resort to conjectural estimate. What is a fair
estimate to make of the total amount, of charges on land
and houses all over the kingdom, in respect not only of
mortgages, but of settlements and all ether arrangements
of that kind ? I estimate that one-fourth part of [the gross
income derived from land and houses goes into the pockets
not of Persons beneficially interested in them, properly,
speaking, but into those of mortgagees and others who
the owners of land and houses do not receive 67,200,000 e. •
re-
ceive under settlements. If that be so, then it appears that
but fromthat sum you mustdediret, the fourth part of
80,000,000/.
This sum of' which reduces their income to 47,200,0001.
47,200,0001, es, then, the net receipt of those
beneficially. interested in land and houses. (" Hear," from
the Opposition.) But you will say the encumbrancers,
who receive the 20,000,000/.7 Pay the income tax. Well,
let us see what their quota amounts to, Sevenpence in the
pound on 20,000,000/. gives 583,000/. Deduct this sum
from the 2,333,0001. paid by the owners .of land and
houses, and the sum of 1,750,0001. will be left, and this is
the amount actually paid on an income of 47,200,000/.
find the result to be this,
figures I have stated, they will
and houses is taxed
that the income derived from lan—
a
pound.
If honourable members will take the trouble to apply the
at the rate, not of 7d., but 9d. in the (Cheersl
facie case for
know is this—supposing there be a prima
the ground of inequality
breaking up the income tax on
namely, the owners of
from the Opposition benches.) Then, what want to
between the two classes of payers,
trades,be made between
whole, think that if a difference ought to
be greater than that
the two classes, the difference ought to.ethe question whe-
therwhich now exists ? (Hear.) I do not ram
land and houses and those engaged in do you onthe
two classes ; I pass the question tlshow you that,
by ;
land at this moment
according to a rational estimate,
and lask any mode-
rate
pays 9d., and trade 7d. in the pound,
about to establish a
there ought to be any difference whatever between the
he
between the two classes,
man whether, if we were
different rate of payment
greater, than exists at
would think of making the difference
l t the right hon.
this moment? (Cheers.) 'ln Decemberas
that realised
gentleman opposite (Mr. Disraeli) proposed.
us income one
income'Should pay a tax of 7d., and
now
precarious
of 54d. Now, if any one will have the kindness to compare
my figures with the right hon. gentleman's proposal, it will
be found that, within a fraction of a farthing, the ratespaid
to
by the two' classes of income are at present equivalent
the present
7d. and 54d. (Hear, hear.) If we break u
and houses, it is
relieve' trade at the experise'of, land
well. that -those who may about to Sanction that purpose
fixing the Pre"
income tax it must be for some object. Ifpthat object be
should consider where they are to begin in