The Sun.
London, England, 1861-02-20 00:00:00

THE SUN, LONDON, WEDNESDAY EVENING, FEBRUARY 20, 186 L

very much that he occupied the position in which his hon.
friend the member for Lambeth placed him to-night, he
anse on former occasions it was his dl* • impor-
tant proposals to the hettt, ; and certainly he was glad to
acknowledge that the hon. member took a mos' prominent
part not only with respect to the Succession D y Bill, but
on others which placed the revenue of the c, witty under
the direct control of that house. He had th < restest &dig-
' faction in rendering that public tribute to his friend, be-
cause he made proposals which were in themselves just, and
which were law at the present time. On the present deett=
sion, however, his views were entirely opposed to those of the
hon. gentleman, because ho believed ft was neither just nor
rood for any practical purpose that the house should re-
solve that real property should pay the same probate titty
as personal, Any one would suppof!o OlWt the distinction
rt As this, that one property will real and the other personal,
and that the pereenti paid all and the real nothing. But the
hon. gentleman entirely omitted a most important fact, that
a very large portion of personal property which passes into
the hands of others pays no probate duty at all, because it
passed under settlement and was exempt—
Mr. WILLIAMS—But it ought not to be so.

The CHANCELLOR of the EXCHEQUER—The suc-
cession duty did not apply to money in the funds, and ho
believed that if his hon. friend's motion passed) it WoOld
lead to a greater anomaly than now existed. l-le would pass
that by; but he did not think the speech of his hon. friend
clearly described what was meant by the succession duty.
He spoke of the succession duty in the time of Fitt; but he
(the Chancellor of the Exchequer) ventured to say that
none of the arguments which the hon. gentleman used in re-
ference to that time applied to the present. His hon. friend
said that what was then urged ought to be done at present;
but at the same time, what his hon. friend urged in that re-*
spect was but a very small part of the question. His right
hon. friend, now Home Secretary, when he was Chancellor
of the Exchequer, succeeded in extending the duty, but the
view taken of the subject by his hon. friend would, in the
first place, be produetive of very small effect, and in the
next, it had nothing to do with the discussion. The Suc-
cession Duty Act was analogous to the Legacy Duty Act.
It was a tax on property paid ant of property itself. But
the probate duty was entirely different in its character. It
was a stamp duty, and one without compliance with which
persons proving the will could do nothing, and could not
give effect to the will. The probate duty, too, was not only
a duty of great antiquity in itself, but it was most effective
for its purposes. He should like to know if they adopted
the zesolution of his hon. friend hoW they could carry it
out. With respect to hereditary land, it did not require
any will at all to pass. There was nothing that could
enable them to lay hold of the land in its passage, and to
obtain payment of taxation in such a manner as his hon.
friend proposed, and his hon. friend would agree with him
that in dealing with taxation they must not look at it
theoretically but practically. What would be the first thing
that a person who had come into the possession of land
should do in order that he might pay according to its
value ? He should go through three or our different
operations in order to get at its real value. Could any-
thing be more inconvenient ? Why, in such a process,
they would be required to take two or three times more
from a person in taxation than would go into the coffers
of the State. The proposal of his hon. friend would not
only entail great expense and inconvenience in the
valuation, but it would also entail great loss. See how it
would operate. Suppose there were three or four co-
heiresses, who came in for landed property, and who re-
quired
to value their land, and that sue co-heiress pro-
posed to go into the market to value her portion of it in
order to effect an adjustment, see what consequences and
difficulties the resolution of his hon. friend would be pro-
ductive of. Why, it would not at all work. If a man's
landed property were unsettled property, they would not
seek the mode of taxing it proposed by his hon. friend,
but they would seek some other mode in order to bring
about the taxing qualifications. His hon. friend proposed
to apply the probate duty to land ; but the probate duty
which he proposed to apply to land took no cognisance
whatever of unsettled property, and by his plan some-
thing like four-fifths of the property of the county would
be lost. The principle contended for by his hon. friend
would be attended with very great inconvenience and hard-
ships, if practicable atoll; but as Chancellor of the Exche-
quer he was prepared to say that it would not be found
practicable at all. He must call in a whole legion of official
persons to assist him in carrying out his plan. He must,
for instance, call in the Attorney-General and a host of
other persons, in order, by some means, to enable the Chan-
cellor of the Exchequer to lay hands upon the pro-
perty. They had no difficulty in getting at the
landed income of real property, but they had great
difficulty in getting at that of other and different property.
The probability was, that instead of bringing landed pro-
perty into a position to yield taxation to the State in such
a manner as his hon. friend proposed, they would do
infinitely worse—they would sustain loss and confer no
benefit on the State. (Hear, hear.) He could not accede
to the proposal of his hon. frietid, and he thought the pro-
posal he had made—and he was sure he would not make
it if he did not think it just—would net prove practicable,
and even if they regarded it for fiscal purposes, it would
not be warranted. (Hear, hear.) It was his duty, look-
ing at and considering all the circumstances,. to resist the
motion. (Hear.)

Mr. WILLIAMS, amid loud cries of "Divide," said
the right hon. gentleman had made a most ingenious
speech, but the right hon. gentleman had never, notwith-
standing, touched upon the point which he (Mr. Williams)
had in view. He maintained that it was most unjust not
to tax landed property in the manner proposed. If a poor
man was left the smallest sum of money by way of legacy
be was subjected to two and a half per cent. taxation,
while landed property was allowed to pass without paying
any duty to the State.

The house then divided, and the numbers were—
For the motion .. 51
Against
Majority
The motion was consequently lost.
INCOME TAX.

Mr. HUBBARD, in rising pursuant to notice to move
for a select committee to inquire into the present mode of
assessing and collecting the income tax, said he did not feel
called upon to offer any apology to the house for attempting
to remedy, as far as lay in his power, the injustice and in-
equality by which the incidence of the tax was accompa-
nied. It was a charge which had been denounced by Mini-
ster after Minister, the great excuse which had been ad-
vanced to justify its imposition being the stereotyped
phrase that it was meant to be merely of a temporary na-
ture. At the present moment, however, there appeared to
be every prospect that it would be continued for some time,
and the question of the shape which it ought to assume
was therefore one which commended itself to the serious
attention of Parliament. In the first year of its existence
the amount of the tax had borne to the aggregate revenue
of the country the proportion of £5,500,000 to £58,000,000,
while the proportion was at the present day £12,500,000 to
£70,000,000, and he must be a very sanguine man indeed
who anticipated that the revenue for the next financial year
could be brought up to the necessary amount without the
renewal of the burden which, under the head of which he
was speaking, was levied on the people. But it was not
simply because the income tax seemed to be inevitable that
he desired to see the mode in which it was raised undergo
revision. He did not mean to question the justice of the
statement that it was an admirable weapon to which to
have recourse in time of war, or that it, produced great re-
sults, but he must contend that if it were to be laid up in
the fiscal armoury care should be taken that its edge was
kept keen and bright, that its use did not inflict heavy
blistering wounds and leave behind lasting and rankling
resentment. Now what, he would ask, were the features
of the tax which caused to be attached to it the odium
in which it was generally held ? It was, .in the first
place, said to bo inquisitorial, but the complaints made
against it upon that score were, he must admit, in his
opinion, somewhat exaggerated, because, after all, the state-
ment of a man's income, which was rendered necessary in
the process of its collection, need be made only to a very few
persons, who were bound to be secret and discreet in the
performance of their official functions. Although, however, 1
he made that admission, he could not help regarding the
tax as extremely unjust and unequal in its incidence, and
as tending as a consequence to foster and sustain an ime
mouse amount of immorality. Into the history of its opera-
tion it was unnecessary that ho should enter at any length.
He might, nevertheless, state that Ilr. Hume had in 1851 ob-
tained a committee to inquire into the subject, and had sub-
mitted to their consideration a scheme supported by the
recommendations of eminent actuaries, for removing the
inequalities by which the imposition of the tax was sur-
reundell. That scheme the committee had regarded RR im-
practicable, but he should beg hon. members not to nu
away with the idea that no means of providing for the more
equitable incidence of the tax could, therefore, be devised.
For his own part, he had endeavoured to discover some
such scheme, and in explaining his views upon the subject
he should take the word " equitable" to imply the levying
of the tax upon everybody according to his means. Taken
in that light, no species of taxation, he might add, could be
more equitable than indirect, to which, however, there was
the strong objection that its adoption to an unlimited extent
was calculated to press heavily upon the labouring classes
far-sighted saga-
city objection of which Sir R. Peel with saga-
city and laudable courage showed he understood
the force
when he undertook the 'Herculean task of making Eng-
land the Emporium of free .trade and abolishing those
burdens which bore upon the subsistence of the people.
Following the history of the income-tax from the period of
its imposition by that great statesman up to the present
day, he found that it had been placed before the House of
Commons in the light of a compensation tax, which, if
justly levied, ought to be levied upon the same principle
as the indirect taxation which it superseded. In dealing
with that view of the case he might be allowed to quote
the opinion of the late Mr. Wilson on the subject, who,
in the summary of his scheme for the equalisation of
the income-tax, which he had been fortunate enough, a few
. days ago, to find in the pages of the Economist, said :
" The broad principles upon which I have proceeded may
Ibe thus plainly stated :—I have attempted to regal d income
not at its nominal amount, but in proportion as it is, from
its character, actually available for immediate expenditure ;
because it is exactly in that relation that it would have con-
tributed_ to revenue Linder the system of Custom and Luise

...
duties,,which the income-tag lies repl.ab'ed to a certain
i
eitent." .
Such was the language of Mr. Wilson, and he felt assured ]
the house would receive with deference the expression of
the views on the subject of taxation of a gentleman whose
great financial research and energy of mind had enabled
him to acquire a position in this country which caused him
to be selected for the discharge of those high and
important' ditties in the performante Of which his
life had been sacrificed. (Hear, hear.) He would
iio* 13roceed to the consideration of the matter to
which they had to apply these rules. All incomes must
come under one of three heads. They were either the pro-
duct of capital in the 4haVe of interest, rent, or the usufruct
hi rnoiaey ; or they were the product of capital utilized by
the application of skill and labour ; or, lastly, they were
the product of unskilled labour itself. With the last
category they had now no concern. They could not
beneficially levy a tax from the earnings of pure labour.
In the first place, the cost of collection would be enormous
compared with the amount received ; secondy, the impost
would largely fall, as a matter of course) on the capital
which employed that labour ; and thirdly, it would wholly
neutralize the happy results of the great change made by
Sir It. Peel. Their attention must, therefore, be confined
to the trio first categories be had riattled. With respect
to the first category—viz., incomes arising from invest-
ments either in visible property or money lent on any
public or private security, these comprised all that class
Which some persons have described as " the lazy In-
come," but which he preferred to term " spontaneous in-
comes," because they were produced independently of
any personal labour or exertion by the individual
owners. All those incomes, when they had been brought
to their relative equality of bearing, arid had had
allowances made for burdens of various kinds which
ought to be, but which were not, deducted from
the present tax, should in his opinion, be treated as incomes
of the highest character, and subjected to the largest amount
of takatioh which Patliatnent in its wisdom shotiid think it
necessary to impose. In the next category he placed all
trading and professional incomes, all salaries, offices, and
employments to which personal laborer attached. The great
distinctive mark belonging to these Was that they were all
industrious incomes; of Which labour Was an indispensable.
element—if the labour ceased the income leased also
Being naturally precarious in their nature, they required
large abatements to be made from theta on account of the
' futhise provision which the individual was obliged to makes
either for himself or for others dependent on him. (Hear,
' hear.) And here he must say he hoped the house would
be content to deal with classes of income, and not with the
cases of individual owners. He therefore deprecated all
those invidious arguments which had the eiteet of confusing
things totally distinct in. their .nature. He deprecated
all ad captandum arguments arid appeals ad ntisericordiam
in favour of interesting and defenceless woolen, Orphaned
daughters and widowed mothers, struggling on a pittance
derived from the public funds, as also all contrast between
such deserving persons and the selfish bachelor who, revel-
ling in the enjoyment of a large income derived from personal
exertion, would therefore receive the benefit of any allowances
granted to industrious incomes. He hoped the house would
deal with the question in a large and statesmanlike spirit,
and without any revival of bygone party struggles. Taming,
then, to the first class of incomes to which he had alluded,
he would quote the following opinion given by Mr. Wilson,
to whom he had before referred. Mr. Wilson said :

" With respect to all incomes, I consider that the tax
should be regarded in relation to the essence of the property
from which the income is derived, and not to the accident
of the tenure under which it is held at any particular mo-
ment, so that all incomes are treated in relation to their
source only, without regard to the tenure of their owner—
exeepting terminable annuities, which stand on special and
distinctive ground."
He asked the house to accompany him through the sche-
dules as they stood in the present Income-tax Act. In
Schedule A the first item mentioned was "land." It was
acknowledged that land was taxed at a rack-rent, and yet
everybody knew that rack-rent was subject to payments for
insurance, repairs, and agency before the landowner could
be said to have the net income available for his expenditure.
He proposed, therefore, that a deduction should be made
equivalent to these necessary outgoings. On houses, to which
the same argument applied, he thought there ought to be a
still larger abatement, because the expense of repairs was
greater than on mere farm buildings. He next came to mines
and quarries, which were now rated to the income-tax on
the gross income without regard to the fact that such pro-
perty mightbe in a state of rapid exhaustion. A rational man
having an income of that description would ascertain the
probable duration of such property, and lay by a compensa-
tion fund to keep its amount intact. The house ought, on the
same principle, to allow a deduction from the income-tax in
order to compensate the outgoings on mines and quarries.
In schedule B stood farms, but he did not propose to touch
them, because he did not know that their occupiers, at
least, had anything to complain of. In respect to schedule
C, the public creditor was subject to this serious grievance,
that when he happened to hold his claim on the Govern-
ment in the shape of a terminable annuity the Government
took the liberty of taxing not only the interest which he
received, but the capital that was repaid to him. (Hear,
hear.) Ho wished to see that injustice terminated. Schedule
D dealt with industrious or precarious incomes. In regard
to these he thought he was not asking too much if he said
that an abatement of one-third of their gross amount should
be allowed before they fell under the incidence of this tax.
(Hear, hear.) He suggested that the same indulgence
should be extended to all offices and employments included
under Schedule B. He was not without authority in
making these recommendations, because in the Succession
Duty Act, introduced in 1853 by his right hon. friend, it
was provided that in estimating the annual value of lands
used for agricultural purposes, houses, buildings, tithes,
rent charges, and other descriptions of property yielding a
fluctuating income, allowance should be made for all neces-
sary outgoings. That was what he asked—all necessary
outgoings. He asked that those who had to pay a tax year
by year should have the same measure of justice awarded
to them as owners of property when they came to be taxed
on succession. That class disposed of lands and houses.
As a corroborative circumstance it might be mentioned
that in the income-tax recently promulgated iu India an
allowance was made on houses, but it was limited to one-
sixth part of the rental if the owner could show he had
spent that in outgoings during the term for which he had
been assessed. Again, with reference to mines and manors,
the 26th section of the Succession Duty Act made the
deduction of all necessary outgoings. These were his
precedents for the allowance of all necessary outgoings.
He now came to terminable annuities, and here the
right hen. gentleman the Chancellor of the Exchequer had
himself supplied a remedy for the evil in the 31st clause of
the Act, and according to the tables in the schedule annexed
to it for calculating those annuities. He simply proposed to
introduce the medium of justice provided by those tables
themselves. With reference to precarious incomes, the main
question which engages the interest of the community,
opinions thoroughly coincided as to the remedy to be ap-
plied. That remedy was that they should make a consider-
able abatement on incomes of that description before taxing
them. Mr. John Stuart Mill upon this point said,—" I
would tax temporary or precarious incomes at a lower scale
than permanent or certain incomes (not becalse of their
lower selling value), but because their possessors are liable
to be called upon to save something to provide for their own
future years or for those dependent on them." Thus,
while rejecting the scheme proposed by Mr. Joseph Hume,
Mr Mill gave a definition of his own which led to the same
result. Some maintained that incomes of this nature should
be taxed at one-half, others at three-fourths of their amount.
He had been led by a series of calculations founded on what
was stated by Mr. Porter in his "Progress of the Nation"
to adopt a somewhat different rule. In 1852 the question
of a revision of the income-tax was mooted in that house,
and inthe following year a new Income-tax Act was passed'
under the auspices of his right hon. friend. In the 54th
clause a concession was introduced for the first time—that
a saving of one-sixth out of any ineonie, if invested in the
purchase of a life or deferred annuity, should be deducted
from the income before it was brought under the incidence
of the income-tax. This was his precedent—that was his
justification. Parliament had no right to treat the whole
industrious classesas children, saying to them that if they
were economical and saved their money and invested it in a
policy of life insurance, or a deferred annuity, a special in-
dulgence would be given to them. The industrial commu-
nity had a right to exercise their economy in any particular
channel. Having once admitted the principle of a deduc-
tion, Parliament had no right to tie them down as to the
way in which they should exercise their economy for the
purpose of receiving the amount of deduction conceded.
There was but one thing he found fault with in this clause.
Instead of one-sixth he would make it two-sixths, and no-
thing could bo better than its effectual application. The
same indulgence he found was given in the Indian Income-
tax ; so that the principle had been adopted by the mem-
bers of her Majesty's Government in several successive
stages; and it would be very agreeable to the house to apply
it in a still more expansive manner. Now, as to the mode
of assessing industrial income, Mr. Hume proposed to
' charge interest,—say, at 3 per cent, upon the capital, or
assumed capital, engaged in :industrial professions, to ca-
pitalise according to the age, or (in ignorance of the age) at
14 years' purchase, the residue of profits, after deduction
of interest, and then to charge the income-tax. A trader
having £lO,OOO capital, and making £9OO a-year, would be
treated thus by Mr. Hunte's process, the income-tax being
3 per cent. :—Profits, £100; charge interest, £3OO on ca-
pital of £lO,OOO ; capitalise £6OO. at 161 years' purchase,
£10,000; total, £20,000; interest at 3 per cent. £600; in-
come-tax at 3 per cent. on interest £lB. The plea for a
limited assessment on industrial incomes which he had
ventured to advance was founded on the assumption that,
comparatively with incomes of a higher class two-thirds
only were expended, and the assessment he recommended
was therefore limited to two-thirds; thus, in the above
case, the £9OO returned as profits would be assessed at 2
per cent., or £lB, without requiring either the capital or
the age of the trader to be communicated. Another grie-
vous feature of the operation of the tax in its existing
shape was the immense amount of fraud which attended
its collection. (Hear, bear.) He was sure that the Chan-
cellor of the Exchequer who had so lively a sense of what
was just and honourable, could not fail to regard with in-
tense pain what he believed to be the necessary continu-
ance of a tax which involved the perpetuation of such a 1
mass of immorality. (Hear, hear.) The amount of delin-
quency which came to light was immense, and it might well
be supposed that the amount which did not come to light
was still more extensive. It was obvious that schedule D
did not return anything like what it ought to do. The fact
was that people felt they were being robbed, and when a man
was smarting under injustice, whether that injustice came
front a private individual or from a Government, he would
endeavour to do justice to himself in his off n way. (Hear,
hear.) The only remedy was so to alter the tax as to make
it, as far as possible, fall with equal weight upon all classes
of the community. (Hear, hear.) It was a curious fact
that, as the Act now stood, two men earning the same
amount of income might pay the tax in very different pre-
portions, without a violation of the law on one side or the
&her. For example—one might make an income of £lO,OOO
in each of three successive years, and, of course, ho would
pay income-tax upon that amount.
the 8 e
cTheand£2s,ooo other might make
£5,000 the first year, nothing
income would be £30,000, and the
average, as in the oththird. His aggregate
er
case, £lO,OOO, but in the first year
notwo would pay
nothing at all, while in
than
£lO,OOO ; or his average income
him to pay upon more
piece of legislation in the
Amore absurd
for three years. Amo
he would pay upon
.Sst,hooeot,hiinrdtthhoe
secondA C t wouldh e
enacted, and this portion of
way of taxation was surely never
the Act, at all events, ought
ined before Mr. ume s
shape. One of the witnesses exam
h t made the fol-
committee, who had been himself a mere an ~
lowing statement :—" The merchant makes his own rest the
not to be left in its present,
The greatest indulgence is in that respect shown himy

State. Merchante and pforessiottal teen make their own re-
turns at their discretion, and whatever the retiirn is it is
hardly possible to find out whether it be true or not." The
witness, therefore, expressed the opinion that, in conside-
ration of the opportunity thus afforded to merchants and
prs;fessional men to cheat the Exchequer, they ought to be
satisfied with the income-tax in its present shape. The
mercantile community looked upon such evidence with ex-
treme disgust, and the last thing which a man possessed of
any Potion of morality or integrity would do would be to
eteil himself of the stibterfage suggested to him by the
witness in question. (Heat, heat.) The house would see
that the main conclusions at which he wished to arrive
were—first, that spontaneous incomes should be assessed
upon 'the net instead of the gross rental ; and, secondly,
tied Upon industrial incomes an abatement should be
made of one-third. Ife believed that the amount of
abatement which he proposed might be stated as f allows :
upon land, 1-12th ; upon houses, 1-6th; and upon industrial
incomes, 1-3 d. An important question was the amount of
loss which the revenue might sustain from the adoption of
such a measure of reform. There would undoubtedly be a
diminished revenue arising from land and houses, although
the new modes of aesessinent which had been recently,
mooted might go a considerable way in supplying the de-
ficiency so created; but, with respect to schedule D, upon
which he proposed to make the largest abatement, he was
perstietleil that the amount of loss would be little or nothing
at all. Ito had that •sonfidence in the innate integrity and
justice of Englishmen that ho believed they would when
fairly treated act fairly in return, and that the Government
efordd got as much out of two-thirds of the, assessment,
under sucli d system as he had suggested, as from the whole
assessment at present. (Hear.) The Income-tax Act, it
might be said, was a very large measure, and its recon-
etruction would be a work of great magnitude. He ad-
mitted that, butt still, he thought that the measure of re-
form he had ineeted them to consider might be given effect
to by very brief and simple provisions. It would only re-
quire the following enactments ;---1. That an allowance
from the rack or valution rent of lands be made of one-
twelfth for necessary outgoings. 2 That an allowance from
the reek at Yalution rent of houses be made of one-sixth for
necessary ontgoinge. 3, That an allowance be made upon
the rents or royalties of mines, quarries, and ironworks,
upon proof of diminished value for the replacement of capi-
tel. 4. That upon tithe rent charge, besides the parochial
fates, an allowance shall be made of 5 per cent for repairs,
irisiiteneei and agency, and when care of souls is annexed a
surd of &lOC/. ifs ettrete's stipend. 5. That upon profits of
trades,: professions, and salaries, and offices and employ-
ments having duties discharged by the holder in person, an
allowance be made of one-third prior to the assessment. 6.
That section 133, of sth and 6th Victoria, cap. 3,5, be re-
iealed. 7. That all trade returns shall state the amount of
nterest paid oil borrowed capital, the same to be assessed on
the full amount thereat. 8. That for the purpose of assess-
ment to the income-tax the interest of the capitalised value
of all annuities terminable with years or life shall be calcu-
lated ettording to the tables 1 and 3, appended to the Suc-
cession Duty Act. It was with much anxiety, but not
*ithout confidence, that ho submitted the resolution to the
deeisinn of the house. He was deeply impressed with the
magnittide of the interests at stake. and well aware how
vitally important it Was to the finances of the country that
the mode of taxation by which they were supplied should
bea regulated
gulw
taht eidt
theby sympathiesequity
sense
people. ; A
na nddfusrhtrerld,
lie carry
honour, integrity and morality, than even for the advance-
ment of our country in wealth and material prosperity.
cryo not but feel a greater solicitude for our national
(Hear, hear.)
The CHANCELLOR of the EXCHEQUER—The task
which I have to perform May at any rate have an agreeable
commencement, because it is my
iity to acknowledge in the
face of the house that no one can be better entitled than
s
my hon. friend to submit this most important and most in-
tricate question to the notice of the house, inasmuch as he
is a man qualified for the work equally by his
position, by
his character, and by the high reputation which he has
acquired in the discussion of questions of peLitical economy.
(Hear, hear.) Having said so much of the perb:ln who
makes the proposition, I wish that I could continue in a
similar strain ; but I must confess that both the proposal of
my hon. friend for a committee of inquiry, and more espe-
cially that which it is not possible to separate from his pro-
posal of a committee, viz., the particular nature of tho plan
which he has submitted to the house, and which is to be
the text and guide of the inquiry—compel me to pursue
a different course. (Hear, hear.) I shall not enter
into any general statement of opinion about the
income-tax. My own opinions upon it—as far as
they are general opinions— have been declared long 'ago,
when I formerly held the office which I have now the
honour to fill ; and I am not aware that I have in any re-
spect departed from them. I should also say of my hon.
friend's motion that I shall not look so munch at its terlits
and its technical character as to what is its avowed object.
No doubt many questions arise in connection with the as-
sessment and levying of the income -tax which may be in-
quired into by a committee with more or less of utility, but
at any rate without any peculidr difficulty er danger. If,
for example, we were to take the question of the arbitrary
standard, so to call it, which has been fixed far levying the
income-tax under Schedule D—a system which the Legis-
lature has established according to the best of its information
and belief, but which of course involves many points open
to discussion, if wo were to refer to the question whether the
income-tax should be collected half-yearly or quarterly ;
these and many other matters might be the subjects of in-
quiry by a eommittee without raising any difficult or dan-
gerous questions. But those are not the subjects to which
my hon. friend wishes to direct our attention ; and I must
say that I think he has done wisely in confining himself in
his speech to the exposition of his main purpose, because
either he or his committee would be distracted from that
purpose by mixing with a question so grave and so deep as
that upon which he has just now dilated those other mat-
ters which refer, in comparison, to the merely technical de-
tails of administration. (Hear, hear.) My hon. friend's
proposal is that different rates of tax should be laid upon
the different schedules. (Hear.) He has stated that in a
manner which gives a colour to his proposal for a com-
mittee—(hear)—nor can the house vote in favour of his
motion without attaching at least a provisional sanction to
his plan for reconstructing the income-tax. (Hear.) My
hon. friend has himself stated this point in a most candid
and ingenuous manner ; for he said that he could not ask
for a committee from this house if he was not prepared to
preface that demand with the submission of a plan which
should be apparently unexceptionable in its main outlines
and general principles. The demand for a committee
of inquiry is a very grave demand—at least it is a very
grave one for those who take the view that is token by
Her Majesty's Government with respect to any plan
which shall alter the main structure of the income-tax
by imposing different rates of tax upon the different
schedules. To a committee of general inquiry, particu-
larly if generally desired by the house, they might not
have seen—l ventured upon a former occasion to intimate
that I did not think they would see—any vital objection ;
but, at present, the issue which we are join must in the
main be not whether we are prepared to adopt the precise
details of my hon. friend's plan, but. whether we aro pre-
pared to give encouragement to the principles which are
at the bottom of those details and which formed the sub-
stance and staple of his speech, (Hear, hear.) I do not
think that Tier Majesty's Government would be justified
in assenting to the proposal of an inquiry so prefaced,
avowedly and without disguise holding up the banner
which my hon. friend has lifted upon this occasion, unless
they were prepared at least to say that they saw no dill
culty of a character approaching to danger in any coun-
tenance of a plan founded upon such a basis. I do not
wish to ruffle the sensibility of an author, but I think that
my hon. friend is entitled to less credit for originality
than he seems to think. It is my fate almost daily to
receive financial suggestions identical in their purport
from scores of gentlemen, each of whom believes himself
to be the original and sole parent of the idea. That
is not quite my hon. friend's case ; but I see opposite
me two right hon. gentlemen who may substantially
claim some of the credit which is to be given to his
plan. Tho right hon. gentleman the member for Wilts
proposed in the committee of 1852 that the tax on
Schedule D should be three -fourths of the tax
on Schedule A. (Hear, hear.) My hon. friend pro-
poses that it shall be two-thirds. The difference between
them is not great, but such as it is it was very nearly split
by the right hon. gentleman the member for Bucks, who,
on the part of thejGovernment, proposed in 1852 that the
tax on Schedule 1) should be 5d., and that on Schedule A
7d. in the pound. The authority of the right hon. gentle-
man, lent at that period for a moment to a plan substantially
like that of my hon. friend was, I think, subsequently—l
must say to my great satisfaction—withdrawn. But my
hon. friend substantially reproduces this proposal that we
should proceed to adjust by deduction—for hedoes include
another feature in his plan—that we should proceed to ad-
just by deduction the several payments of income-tax in
most, at least, of the different schedules, and to establish a
great difference by a very great reduction in the case of
Scedule I). That, I think, is a very fair description of the
general character of the plan of my hon. friend. I will not
enter at large upon the financial portion of the speech of
my hon. friend ; but 1 must say that I was struck with the
sanguine temperament which appeared to have dictated it.
For how did he treat the case of Schedule D ? He says
that there are enormous evasions in Schedule D, because
persons engaged in trades and professions feel that by law
they are robbed. My hon. friend feels deeply the immo-
rality attending the collection of the income aax ; he knows
that that immorality is concentrated in Schedule D, and he
proposes to reward Schedule D by a reduction of one-third
of the tax. (Hear, hear.) But what a sanguine view my
hon. friend takes of the Morality of the people I He says,
"They commit this peccadillo because they feel that they
are robbed by the law, but if you will only deduct one-third
from the tax which they are liable to pay it will set it all
right again." (Hear, hear.) You will recover and recoup,
he says, the one-third of the tax leviable under Schedule
D, surrendered by law, in consequence of the honesty of
the taxpayer, moved by this appeal to his feelings. The
offer must be of precisely 33 per cent.—that is the standard,
that is the temperature which is necessary to bring him up
to par in morality. (Laughter, and " Hear, hear.") I
must confess that I entirely differ from may hon. friend
with regard to his opiniou as to results. As I have
spoken of the immorality under schedule D, I must
not omit to state my conviction that a large portion of those
who pay under it every farthing that they ought, and in
in every case of doubt rule the doubt against themselves--
- (hear)—but there is no doubt that all the roguery in the
country larks in the folds of that schedule. In the, year
1850 I produced before the house the undoubted case of
the residents of a particular street in London, who had re-
turned their profits for the income tax, and had also re-
turned them for compensation, and who had in the latter
case returned them at 10 times the amount which they had
returned for the former purpose. (Hear, hear.) I ask my
hon. friend, does he not think that these worthies who
were unfortunately not individuals, for they were inhabi-
tants of a street taken together—does he think that the
magical and soothing effect of his 33 per cent. would have
been such that they would have raised their statement of
profits ten times, or does he think that perhaps the truth
was between the one-tenth which they sent inafor income
tax, and the tenfold sum which they demanded for com-
pensation ? If so, it is clear that these gentlemen would
have been sad losers by my hon. friend's proposal, because
to come up to the true standard of their profits they would
hate had to add infinitely more than one-third to their

assessments. tI must say I think parts of the speech of
my hon. friend were calculated to exercise influence over
the Ittiwis of the taxpayers under schedule D. It is cer-
tainly a strong, expression to say that they cheated the
Exchequer because they felt that the Legislature was rob-
bing them, and I felt sorry to hear that expression used,
for it is not impossible that ono of these wavering con-
sciences--(laughter)—when in doubt as to the return
which he should make on the next issue of assessments,
may recollect that a gentleman of my hon. friend's high
character declared in his place in Parliament that he
was robbed by the Legislature--(hear, hear)—and may
find some comfort and encouragement in the operation of
reducing his profits from the sanction which he may
think ho derives frem that statement. But when my
hon. friend went on to comment upon the inefficiency of
Schedule D in making every man tax himself—omitting to
state that no man is taxed higher than his income in any one
year, and that the benefit of averaging is given to him when-
ever the average is in his favour—instead of telling us that
the Legislature robbed the taxpayer under Schedule D, he
ought, I think, to have drawn a more just and generous in-
ference, and to have stated the length which the Legislature
has gone to diminish in some degree the severity and inqui-
sitorial nature of the tax, exposing itself to criticism violat-
ing uniformity, and introducing a positive anomalyinto the
enactment in order to mitigate the incidence of the tax on
the traders of this country. (Hear, hear.) That, however,
was not the use he made of his argument. Let us now look
at the proposals of my hon. friend. He proposed to proceed
in the most agreeable manner by a method of deduction. He
goes first to one man and says, " I deduct so much from you"
—he next goes to another and says the same, and from the
last, under Schedule D, he makes an enormous deduction.
It would be a most pleasant process to go on deducting all
day—to give to every man his relief. The landlord might
think you were not sufficiently liberal to him in deducting
only one-twelfth, but it is impossible to criticise too closely
the plan of my hon. friend—it was conceived in a spirit of
such unbounded generosity. (A laugh.) Lands were to have
one-twelfth, houses a sixth, mines something which none of
us sitting here exactly understood—(laughter)--and Sche-
dule D was to have a third. Who is to pay for these deduc-
tions ? (Hear, hear.) I want my hon. friend, when he makes
these captivating speeches, to write on the frontlet of the
financial edifice which he constructs this graffel and true
doctrine—" The abatement of one man is the taxation of
another." (Hear, hear.) If you take away id. to relieve
somebody under Schedule D, you must put it on somebody
else. It is not enough to say, in general terms, " Such is
my confidence in the morality of the English people that
they will pay up, and set the account nearly right ;"
that I can assure you is not the way in which we must
deal with the hard and rigid figures of finance. But my
hon. friend says he will deal with classes. I suppose he
will not deny that by his scheme schedule A is to be more
highly taxed in proportion than any other. if you make
deductions of one-twelfth and one-sixth on the two great
elements, lands and houses, in schedule A, and if from
scheduleD you deduct one-third, or twice the amount, it
follows that you raise the taxation on schedule A relatively
to schedule D. (Hear, hear.) I should be very sorry to
commend my hon. friend to the purgatory of reading Par-.
liamentary speeches, especially such as have been delivered
by myself; but in a responsible position, and endeavouring
to convey results of the best inquiry which the Government
of the day could make, I did state to the house that at that
moment, with a sevenpenny income-tax, while schedule D
paid 7d. on the net income, schedule A paid not less than
9d. Has my hon. friend examined into the question, or
why does he think it would be just to impose further bur-
dens on schedule A ? (Hear.) He says you ought to take
one-twelfth, or about 8 per cent., off lands. A deduction to
that extent would in some cases be insufficient, while in
in others it would be exorbitant and wholly unnecessary.
In Scotland, for instance, where most of the charges are
borne by the tenants, why should the landlord have one-
twelfth deducted ? As to the article of agency, I cannot at
all admit that it forms a legitimate deduction. If a man
does not choose to take the trouble of collecting the proceeds
of his own property, he is not to expect that the charge
which he thus incurs will be allowed him. (Hear.) In
cases, moreover,where the landlord does not pay for repairs,
8 per cent. would be an extravagant and needless boon ;
while, if he is liable to them, the allowance would be in-
-lequate. My hon. friend's calculations with regard to
b•-• break down utterly. It is totally impossible to make
houses - an average of repairs. They may depend on
anything liar the building materials, on the nature of
twenty things-ou whether wet or dry, on the ren-
the particular climate, • ' • classes of occupiers. In
tale of the houses, and the 'd be an ample allow-
many instances five per cent. won.- eeteld not be suffi-
ance for repairs ; in others 25 per cent. us. denies the
cient to cover the reduction in value. Noboay e deny
inequalities of the present tax ; I cannot pretend te
them—l do not seek to disguise them; but my hon. filen,
by coming in and giving a boon to some taxpayers would
aggravate the sense of these inequalities sustained by others.
It has always been a popular notion to fix different rates o
schedules, and it is possible that this house may some dayf
be drawn into a resolution in favour of such a plan ; and,
indeed, it would have been more convenient if my hon:
friend had adopted that eutuso instead of moving for a com-
mittee of inquiry. A bill based on such a resolution may
even be brought in, but I tell my hon. friend that never
will such a plan as he has proposed stand the scrutiny to
which it would be exposed before passing into law. My hon.
friend proposed with regard to mines—the property, of all
others, which is most intricate and difficult to comprehend,
except under most favourable circumstances—that every
mine in the United Kingdom should be valued with a view
to the imposition of income-tax, and that the valuation
should be renewed from year to year. Why, to attempt to
obtain anything like trustworthy accounts of the value of
the different interests in particular mines would, in the first
place, lead to such an amount of fraud as would flood Sche-
dule A as well as Schedule D with immorality, and, as-
suming the valuation to be made in the best and most satis-
factory manner, it would double, treble, or quadruple the
incidence of the tax by the expenses necessary for arriving
even at a proximate conclusion. My hon. friend founds an
argument on the Succession Duty Act, which provided, with
respect to certain branches of real property, that valuations
should be made with allowances for outgoings. But under
the Succession Duty Act we were dealing with property
which was not to pay small amounts every year, but which
was to pay a large amount once in 35 or 40 years ; and it is
perfectly intelligible how, in the one case, it. might be well
worth while to incur the heavy expenditure inseparable
from valuation, while in the other such an outlay
would be unwarranted and unnecessary. (Hear.) There
is a provision for valuation in certain cases. There is a
provision for entering into an examination of outgoings in
order to fix the amount. And, by-the-by, I must remind
my hon. friend that when Parliament passed that act we
did not say that outgoings should be estimated at one-sixth
or one-twelfth, but we said that there should be an exami-
nation of what the outgoings were. (Hear.) What was a
perfectly good plan in the case of the succession duty would,
from the nature of the case,, be a totally impracticable one
in the case of the income tax. In Schedule D my hon.
friend says there must be a deduction of 33 per cent.—a de-
duction on everything in that schedule • but there is to be
no deduction in Schedule A. I say no 'deduction, because
the compensations which my hon. friend proposes would be
much more than balanced by the additional burdens which
Schedule A. should bear in consequence of the relief to
Schedule D. But in Schedule D there is to:bete uniform de-
duction of 33 per cont., and in this waymy hon. friend pro-
poses to cure an injustice and get rid of an anomaly. Now,
let me see how my hon. friend cures the injustice and gets
rid of the anomaly. There are many businesses under
Schedule D worth 25 years' purchase. (No, no.) I do not
pretend to say they aro all of so fixed a character that each
is worth 25 years' purchase. (No, no.) I do not mean to
say that this is the average value of trades and: businesses.
I speak no.v of businesses of the highest class, and I say
you may find some under Schedule D which are worth 25
years' purchase. The profits of a banking business are in
many cases worth 25 years' purchase. From that down-
wards you come to what are worth 15, what are worth 10,
what are worth 5, and what are worth less than 5. My
hon. friend proposes to apply a uniform deduction of one-
third to the whole. If hon. gentlemen who hear me think
25 years' purchase too high for any business, let them take
any figure they like. It is not necessary for me to state
what figure I consider to be the correct one. It is enough
for me to say that there is an enormous difference in the
values, and that if I take the best business under Schedule
D, it is worth five or six times as much as' the worst busi-
ness ; but my hon. friend proposes to snake a reduction of
33 per cent. on the best, and to put the worst on only the
same footing. (Hear.) If you can make a deduction which is
'compensated for without any unjust burden being placed
in another direction, that is very fair ; but if everything
which my hon. friend takes off of anybody must be put on
somebody else, then I say his plan only aggravates the evil
which it professes to cure. (Hear, hear.) And what per-
sons are to bear the brunt of my hon. friend's plan ? They
are the fundholders. Ho has invented a deduction for the
landlord, he has invented a deduction for the owners of
mines, he has invented a deduction for the holders of
houses, and he has invented a deduction for persons in
business; but he admits that he has no deduction for the
fundbolder. (Hear, hear.) And who is the fundholder ?
The fundholders are a body of 300,000, and the great mass
of these are persons holding £2O, £3O, £4O, or £5O a-year.
The great bulk of them are people holding life interests.
My hon. friend declines to deal with individuals; he says
he deals with classes. Take as a class the Arsons with
small incomes—persons whose incomes may bel£loo a-year,
and whose interests are but for a short term, whose lives may
not be worth five years' purchase; and my hon. friend
pro-
poses to aggravate on these people the burden and percent-
age of the tax in order that he may deduct 33 per cent. from
the Income-tax payable by the wealthiest banker in Lon-
don. If the object of the house be to cure an injustice and
get rid of an anomaly, I do not know what arguments may
hereafter be in vogue, but the arguments used by my hon.
'friend are not those by which the financial proceedings of
this house have hitherto been directed. I wish to treat
with the utmost respect the feelings of those who I know
entertain—and honestly entertain—the idea that an equal
rate of income-tax is unjust. I have always felt that that
sentiment is not supported by reason, and such has been
the opinion of much greater men who have had to deal
with this tax. But though it is not supported by reason it
is deeply rooted in the popular mind, and therefore, as
far as it goes, it is an objection, and a strong objec-
tion, to the use of the income-tax as a permanent im-
post. Necessity drove us to the income-tax in 1842, and
necessity has attached us to the use of it. (No, no 1)
When I used the word "attached" I meant not as a bride-
groom is attached to his bride, but as a captive is attached
to the car of his conqueror. (Laughter and cheers.) Others
may be of opinion that on the whole the income tax is a con-
venient instrument for raising a revenue ; but I assure my
hon. friend and those who think with him that I think
great respect is due to the feelings of those who are un-
doubtedly impressed with the belief that the general ar-
rangement of the tax is unjust, while I am of opinion that
it is incapable of improvement. My hon. friend has shown
,us that this question is one between Schedule A and Sche-
dule D. I do not regard this as a mere motion for inquiry,
because after his speech it is impossible to separate the in-
quiry he asks for from this proposal itself. The case, I say,
lies between Schedules A and D, because Schedule C can
scarcely be taken into account when we consider its
num-
bers. I think my hon. friend was not successful when deal-
ing with the case of the fundholders when he reminded us
of the act which provides that no tax shall be levied on divi-
dends paid on money lent for the public cor venience. It
may be that in form you have not kept faith with the pub
lic creditor, but in everything else you have ; because laying
the tax on the dividend is mere machinery. You have
merely required him to pay the same proportion of his in-
come as any other person pays, and no more ; but, with the
law before him, my hon. friend proposes to act in a manner
that would not be in accordance either with its letter or its
spirit. He is sailing very near the wind. Before the house
comes to the conclusion that the arrangement of the income
tax ought to be altered in the manner propo'ed bylmy hon.
friend. I would entreat them to consider what we did in 1853.
The Government of Lord Aberdeen was then in office. It
was thought that a part of the burden ought to be removed
from incomes which were the produce of exertion, and
put upon incomes which were not the produce of exer-
tion ; and the Government did that in the first place by
exempting from income tax within certain limits—one-
sixth—whatever portion of income might be applied for
life insurance. And here I :would say that my hon. friend
ought to take salutary warning. from his own abjection.
This I as ph tat A@ priimplo did, to a comiclorakdo

extent, attain the object and did not involve in it any unsafe
tendency of operations. But my hon. friend and the house
should recollect that it was with reference to this precise
subject—not the question between land and personalty, but
between fixed property and those incomes which do not pro-
ceed from fixed property—and for the purpose of reducing
the balance, that the Succession Duty Act was introduced.
There was an opinion which received countenance from
former Governments and prevailed widely in the house and
country, that the burden of taxation as a whole was such
that it called for some increased relative burden on fixed
property. It was for the purpose of meeting that feeling
that the Succession Duty Act was introduced. Wo said,
" We know not how to reconstruct the income-tax, but we
can apply a means for increasing the relative burden on fixed
property. ' I think the passing of the Succession Duty Act
may be taken as fairly setting at rest any question of this
nature. (Hear.) I hope my hon. friend will also bear in
mind that we were in hopes we had got rid of what aro called
questions of class legislation. He knows very well that no
plan of this kind has ever obtained authoritative support.
It was pressed upon Mr. Pitt and Sir R. Peel, and rejected
by them as entirely impossible. This house appointed a
committee to examine into the subject. The committee sat
for two years and made no report, and the only plan sub-
mitted to the committee has been condemned to-night by
my hon. friend himself. Gentlemen of the highest intelli-
gence, who were thoroughly conversant with the subject,
went into that committee predisposed to some alteration,
but they came out of it thoroughly convinced that the thleg
was impracticable, and, if practicable, would be mis-
chievous. (Cheers.) My hon. friend ought to bear in mind
that this is, after all, a question which sets class imme-
diately in conflict with class.l It is a question, " You shall
pay more—l shall pay less." The mode in which he would
give effect to the principl e is most objectionable, and the prin-
ciple itself is fraught with danger to the country. The
House of Commons has been at all times ready to adopt
every practicable method for lightening the operation of the
income-tax in those cases where it bears most hardly. To
such cases as I have mentioned—those of the poorest payers
of the tax—the attention of the house may be directed with
advantage, without the slightest apprehension of introduc-
ing a dangerous principle in operation. But Ido hope that
while the house retains the anxiety to apply practical re-
medies in cases of hardship, they will remember the great
' social dangers which arise from agitation and the excite-
ment of expectations which cannot be fulfilled, and likewise
the enormous, importance of the fiscal instrument with
which they are undertaking to meddle. (Hear, hear.)
These objections appear to me to apply in the fullest force
to the plan of my hon. friend. That plan, as I say, is
stamped on the motion which is made for a committee of
inquiry, and the Government, believing that no good could
arise from a committee of inquiry so undertaken, but that
it must result either in evil or disappointment, cannot do
otherwise than recommend the house to put a negative on
the motion of my hon. friend. (Cheers.) .

Mr. WHALLEY, who rose amid loud cries fora division,
expressed his regret that the Chancellor of the Exchequer
had not had the opportunity of replying to his plan, because
it was entirely free from all the objections made to the plan
of the hon. member. It was simply that such portion of
the revenue as was required to be raised by a property and
income tax should be raised in the same mod o and on the
same principles as the poor-rate. The bills for the proven •
tion of adulteration and the punishment of forgers of trade
marks had become necessary from the wholesale demorali-
sation of the trading classes, which had resulted from the
income-tax. In answer to the observations of the Chan-
cellor of the Exchequer that the Succession Duty Act was a
sufficient settlement of the question between landed and
personal property, ho reminded the right hon. gentleman
that the Constitution of the colliery from the earliest period
recognised land as the solo source from which the burdens
of the State should be defrayed.

Mr. HUBBARD, in reply, complained that the, Chan-
cellor of the Exchequer had not treated the question before
them on its merits, but had endeavoured to meet the force
of the arguments which he had used by a mere reference to
the effect which might be produced bn particular classes.
He (Mr. Hubbard) had deprecated invidious references to
extreme cases, but the Chancellor of the Exchequer, he was
sorry to say, had not thought proper to take the same
course. The right hon. gentleman endeavoured to get up a
feeling of sympathy for the fundholders, as persons in the
position of women and children and small 'annuitants ; but
it was not statesmanlike to single out individuals and
claim on their behalf the rejection of a measure like the
present, as if it were calculated to benefit rich landlords
only. (Hear, hear.) He wished the house to understand
he did not desire to confine the committee to his own
that thought he had sufficiently guarded himself frona
plan. -nation ; but the truth was, that his right hon.
any such imps. .
ve been satisfied whatever course he
friend would not • lie had simply asked for a committee
might have taken. It have referred to Mr. Hume's
his right hon. friend won't'
little it was able to do after
committee, and pointed out how .
ht forward a scheme
sitting.fer two years. •He had bro:.s
old that to grant a
that was plain and feasible, and he was
committee would be to identify it with his I!Zheme, and that
the house ought not to commit itself in that viZ.V. (Hear,
hear.) The house knew the terms of the motion which he
had submitted, and it was en the terms of that motion alone
that he asked them to decide. (Hear, hear.)
Sir S. NORTHCOTE rose amid loud cries of "Divide."
He only wished to explain to his hon. friend who had just
spoken the course which he should feel it is duty to pursue
if he pressed his motion to a division, and to express the hope
that after the speech of the Chancellor of the Exchequer,
and the expression of feeling on the part of the house, he
would not ask them to divide. (Hear, hear.) The nature
of the proposal his hon. friend had made was one that it
would be quite impossible to carry out to a satisfactory re-
sult. They could not separate the appointment of the com-
mittee from a favourable reception of his plan, and he could
not shut his eyes to the fact that there were many objections
to the adoption of that plan. (Hear.) The inequalities to
which it would give rise were sufficiently obvious. Take
the case of Schedule D, in which his hon. friend proposed
a reduction of 33 per cent. Schedule D included incomes
not only from trades, but professions; but a great income
derived from a trade in which a large capital was employed
would be put on the same footing with that received by a
lawyer, who by a day's ill-health might be deprived of his
income altogether. (Hear.) His hon. friend had discharged
his conscience by bringing forward this subject, and had
given the house an opportunity of considering his scheme.
He hoped he would be satisfied with having done so, and
not put his friends to the pain of voting against him. (Di-
vide, divide.)
The lions° divided, when the numbers were.—
For the motion
Against it
Majority .. ---4
The announcement of the numbers was received with
loud cheering.