The Sun.
London, England, 1856-04-09 00:00:00

INCOME TAX.

Mr. MUNTZ having presented a number of petitions
against the present mode of levying- the income tax,
and also having read a statement that had been ad-
dressed to him from a person in Ireland, pro-
ceeded to bring forward the subject of which
he bad given notice ; it was as follows :—" That, in the
opinion of this house, an equitable adjustment of the
income and property tax is essential to the interests of
the country, particularly as regards the rates of pay-
ment upon industrial and professional incomes, corn-
pared with those derived from fixed property." The
hon. gentleman proceeded to point out the inequa-
lity of the present mode in which the tax was levied,
and contended that an equitable re adjustment
was absolutely necessary. He thought a pro-
perty tax properly levied one of the best taxes pos-
sible, because those parties who were in the receipt of
large sums arising froth landed property were
c .rrpelled to contribute to the wants of the country.
They allowed the rich to escape their fair proportion of
this tax, whilst the poor man bad often to pay on more
than he really earned. It was a question of expediency
with Government to get all they could, and net what they
were entitled to. No man ought to advocate the continu-
ance of such a system, and he felt eatisfieci that when its de-
fects became thoroughly known no man would be found
to defend it. Thehon. gentleman then proceeded to exem-
plify the working of this tax on income, landed property,
and funded property, which, he contended, showed the
unequal and unjust nature of the tax. He called on the
house to remedy the injury he had pointed out.
Mr. P. URQUHA.RT seconded the motion, but in
so doing he disagreed with many of the deductions
of, the hon. member for Birmingham. Public opi-
nion was strung against this tax, and very
soon it must be attended to, and an attempt made by
the Government to remedy the inequelities of it.
The CHANCELLOR of the EXCHEQUER. said
that although the hon, member for Birmingham had not
gone very fully into the subject, nor stated with any
distinctness the ground upon which he asked the house
to reverse the policy which bad been folio iced by thie coun-
try with regard to an income tax since it was first intro-
duced by Mr. Pitt, nevertheless the motion was of such
importance that it would, if the house were to assent to
it, although it was put in the terms of an abstract, mo-
tion, -engage them to enter into the task of an entire re-
construction of the existing income tax. (Hear hear.)
Now, he would, with the permission of the house, just
state briefly the existing conditions of the tax. The
I, pre, ent income tax was at the rate of Is. 41. in the
pound, which was equal to Cl 13s. 4d. per cent ; and ac-
cording to the existing law it was continued for one year
from the excbangeof the ratifications of a definitive treaty
of peace, from the sth April next following, at the exist-
ing rate. On the sth April, 1858, it would, according to
the existing law, be reduced to sd. in the pound, and ac-
cording to the same law it would cease a.together in
April, 1860. It was under these circumstances that the
hon. member invited the house to take a course which,
would necessitate an entire alteration of the principles
and detailed provisions of the existing law ; and in call-
ing on the house to enter upon that very arduous under-
taking the hon. member had carefully abstained from in-
dicating anything more than a mere general principle
upon which that reconstruction would have to be carried
out. It reminded one of Dr. Johnson, in one of his lives
of the poets, having taken occasion to speak of a criti-
cism upon Dryden's translation of Virgil, mentioning
that the critic had been careful to place at the end of his
critique a translation by himself; upon which Dr. John-
son remarked that, at all everits, he who did so was en-
titled to the praise of being a fair critic. Now he (the Chan-
cellor of the Exchequer) wishes he could bestow the same
praise on the hon. gentleman in the present case. He
, wished that, in criticising the existing income tax, and in
condemning its principle and details, the hon. gentleman
had told the house with something like distinctness wbat
was the nature of the tax which-he would substitute for
it. It would be perfectly competent to 'the hon. gentle-
man, in committee of ways and means, when there
might be a question of raising the means for the expen
diture of the next year, to move resolutions, and indi-
cete in detail the nature of the tax be would propose to
substitute f. r the existing income tax. Ali taxes, whether
direct or indirect taxes, were subject to serious objections.
There was no person of any ingenuity and knowle.ige
who could not take any individual existing tax, and point
out the great disadvantages of which it was productive.
It was in the very nature of taxation that every tax should
produce some incidental evils. All that could be said
was that Government was, upon the whole, a beneficial
institution, and that Governtneet could not be carried on
without taxation; and that t!-.e best or the least had
.raxes that could be levied were those which the
Government ought to impose and collect. But
he was afraid that if a finance minister were
to wait until a tax could be found absolutely
perfect, and one that should attain ideal excellence, if
the Chancellor of tl.e Exchequer were to pause ui til he
`found a tax to which no sound or specious objections
could be made, he woulit have to present himself mann-
, ally with an empty budget. (Hear, hear) The hon.
'gentleman attacked an existing tax ; and, of course,
every tax which levied a large suns of money annually
(and the sum levied by the existing income tax in the
ilast year was no less than 16.482,000/4 must naturally
. produce many complaints and grievances on the pat t
of the public, and alleged cases of injustice and incon-
, venience done to individuals. The hon. member com-
pared it with a mere vague and general description of a
different principle, and gave the house no opportunity
of comparing one scheme with another ; namely, the
plan of the existing tax with the tax which ho would
substitute for it. Now, having listened to his speech,
and to that of the honour able gentleman who seconded
his resolution, but who seemed to differ with him
on many material points, as almost all persons who
;discussed this very difficult subject were apt to differ
when they descended to -minpte particulars, he pre--
Ist:treed that b ,th those boo. gentlene,n agree ! in declar-
ing, by this resolution, that the rates of payment on
industrial and proles Lanai incomes ought to be fixed on
`a lower scale as compared with those derived from 'fixed
property. This principle, the assertion of which was of
course familiar to every member of the house, was what,
he apprehended, there two hon. gentlemen desired to
enforce • and it resolved itself very much into this ques-
tion, whether this should be an income tax or a property
tax ? That was a short and accurate eratement, he
believed, of the views of the hon. member for Birmingham.
The hon. member wished that the income tax should be
repealed, and that a property tax should be substituted
for it. Now, in the first place, he would point out the
feet, to which the house would give due weight, that
the income tax was introduced by Mr. Pitt during the
late war ; that it underwent considerable alterations
.from 1797 to 1815, when it was repealed ; that it fur-
nished the sinews of war during that great contest,
and that nobody at that time was able to recom-
mend to the adoption of Parliament any plan n hie!),
on the whole, fulfilled the conditions of an unobjection-
able tax better than the present system. Well, Sir R.
- Peel, in 1842, profiting by the experience of Mr. Pitt's
income tax in the late war, introduced it in its present
form, departing. in some particulars from the tax which
existed during the war, but still adhering in the main
to the principle as well as to the details of that tax. The
bon, member at the present moment called upon the
house to depart from all that experience, and to found
the law upon a totally new principle. Let them just
consider, then, the grounds upon which such a change
was recommended. He believed that those who dis-
cussed this question on both aides Cooke as an axiom the
well-known dictum of Adam Smith on the subject of taxa-
tion : "The subjects of every state ought to contribute
towards the support of the Government as nearly as
possible in proportion to their respective ability ; that
is, in proportion to the revenue which they respec-
tively enjoy under the protection of the sta.e;"
Adam Smith did not say, "in proportion to the
property which they respectively possess under the
protection of the state," but he said, " in proportion to
the revenue which they respectively enjoy ;" and that
was a distinction to which the attention of the bone
ought to be directed. In imposing a tax of this sort, he
(the Chancellor of the Exchequer) thought the state
ought t' look, not to property, but to income. The
ability of each person to pay ought, in his opinion, to be
mew-tired simply for an annual part. The bargain which
the state seemed to make with the taxpayer was this—
" We will give you protection for a year, and you pay
Iyour taxes for a year." Beyond that period or some,
limited period of that sort, the regards of the wet, could
riot well be extended. It seemed to him that taxation,
could not be censiderevl as prospective. that it was not'
just
.to tax expectante, wbieh ' was the princip'e upon
which the whole of the property tax was funded. What
the state ought to look to was the present value cif
ansu
h. income
That,
it
troi
friend,
den enjoy oeywdastaoriadh
(ii use,rr, ,e:twia,i,:hd
wnh'tl great, i ts
submission value
t o
to the matter. Now, if nn the other hanYdi,rtrhelee'llatnitta,.
member's principle were adopted, of taxing, pot income
' 'but property, what would be the coneggn'encss it in-
volved ? He would read an extract from a report which
the late Mr. Hume proposed for the athiption of the
committee of 1852, by which this queeti .rt of a property
or income tax had been very fully considered. The re-
port, which was not adopted by the committee, but
which fully emlniclied his views, ended with the follow-
ing important and striking passage :—" Your commit.
tee submit finally that the taxation of this country is
not fixed on any intelligible principle, and that it be-
comes more and more apparent every year, especially if
the property tax is to be a permanent tax" (by which
was meant the income and property tax), " that the
whole of the present system of taxation must be revised ;
that the best tax, the tax most . easily levied, offering
the fewest obstacles in the collection, the least likely
to encourage evasion and fraud, will be likely to be
an equal tax on the realised and industrial pro-
perly of the United Kingdom." Now, everybody
who read that passage, which was the result of very
deliberate thought, would perceive that if the
principle of that report were fully carried out, the whole
of our existing taxes would be swept away—income tax,
customs, excise, stamps, and everything—and that an
equal tax would be substituted on the realised and indus-
trial property of the country. That seemed to be the 1
legitimate conclusion to which the doctrine would lead,