§ Tea.…the pound Six pence."—(Mr. Chancellor of the Exchequer.)
§ SIR WILLIAM HARCOURT
The right hon. Gentleman in commencing his speech made an appeal to the sympathy of the House. It has been said that nothing so much commands human sympathy as a good man struggling with adversity. I am quite sure that the House has thoroughly appreciated the ability, the clearness, and the straightforwardness of the statement which the right hon. Gentleman has made. It would not be at all appropriate, nor would it be-usual, to go into a great number of-matters with which the right hon. Gentleman has so fully and so ably dealt. They will require careful examination. What he has said on the subject of Consols I think many people will not entirely agree with, but the figures and the arguments he has presented are such that they require to be carefully examined. At one time it was said that we were going to be ruined by the high price of the public securities. I ventured on that occasion to say that that was a danger of which we were likely to be relieved by the present Administration, and they have fulfilled that prediction. I never can think myself that when we want money—as we have wanted money, and as we are going to want money—it is a good thing that we should get so very much less than we should charge upon posterity in the price of Consols. But there are one or two subjects and one or two facts which, I think, after what I may call the cheerful optimistic tone of the right hon. Gentleman, require consideration. One of these is not the relief of taxation which he has given, but the taxation that remains in excess of that which existed before the war. I am not going back as far as the right hon. Gentleman has gone back for a comparison of the condition of the people. He seemed to think it was a great point to have made, that we are only paying per head of the population a very little more—[The CHANCELLOR of the EXCHEQUER: A little less.]—or, rather, a little less than was paid per head of the population at the 259 conclusion of the French War. I was going to say, God help us if that is so! What was the condition of the people after the French War under the burden of the debt that had been created? That condition, and the depression of the people consequent on the taxation which was imposed, are horrible to think of. The real thing to ask, and what the House must ask, and what the country will ask, is this: How much more are you going to pay in taxation now than you did four years ago? The increase in the taxation of the country is £40,000,000, and what are you going to take off? You are going to take off £10,000,000. The consequence is that the residuum you have is £30,000,000 of increase of taxation, not due to the war at all, but due to the normal increase in the country's expenditure. In 1898 the taxation of the country was £99,000,000. This year it is £140,000,000, an increase of £41,000,000. Upon that you are going to make a reduction of £10,000,000. The consequence is that the country is saddled with an addition of £30,000,000 as compared with the taxation that existed in 1898. Now, Sir, why? What is the justification of raising £30,000,000 more from the people of this country than you did four years ago? That is a question to which the right hon. Gentleman has not addressed any part of his remarks. If you go back again to the last years of the last Liberal Administration there is a difference of £47,000,000, You have taken off from that £10,000,000, and therefore there remains an increase of £37,000,000 upon the normal expenditure of this country. The Secretary to the Board of Trade went down to his constituents at Leeds the other day and said he was not prepared to admit that the Government had imposed on the nation a greater burden than the nation could with comparative ease bear. In my view that is not the opinion of the nation at all, and it is not the opinion of the nation that there is any justification for having raised the normal taxation of the country in the space of four years by £30,000,000. The right hon. Gentleman made use of one sentence which was very interesting, and upon which I think we ought to 260 have some further information. He said, addressing the Parliamentary Committee of the Co-operative Congress—who represented 1,600 societies, paid £500,000 a year in sugar, and £400,000 in corn stuffs—that people complained of the great expenditure. He then went on to say that, while everybody complained of the great expenditure of the country, he hoped he saw his way to a substantial reduction of expenditure, but that he would very much like to know where the deputation would begin to reduce taxation. The right hon. Gentleman said he did not wish to enter into any argument upon that subject, but that great numbers of people contended that the Army cost too much and ought to be reduced. No one, he added, could more heartily wish that the cost of the Army should be reduced than he, and he was not without hope that it might be reduced. I hope that before we part with the Finance Bill we shall know what are the foundations of that hope. We should very much like to know what reduction on this £30,000,000 of extra taxation the right hon. Gentleman the Chancellor of the Exchequer hopes to make, what foundation he has for entertaining such a hope, and how far the Secretary of State for War concurs in that expectation. We ought to have some specific information on that subject, because I believe that desire exists largely in this House and still more largely in the nation. It is no use for the Chancellor of the Exchequer to make general statements of that kind unless he is able to show what it is that he expects or hopes for in the reduction of expenditure, of which he held forth a prospect.
Now, Sir, there is a point which must be challenged at once, and it is in reference to direct and indirect taxation. That is a subject which will occupy the attention of the nation, and which ought to occupy the attention of this House. How does this question of direct and indirect taxation stand? In the days far back, before the imposition of the Income Tax, nothing could be more unjust than the taxation of this country. Almost the whole burden of that taxation fell upon the consuming classes, and the Income Tax was introduced for the purpose of relieving that unjust burden. The truth is, Sir, that all taxation—nobody can deny 261 the fact—comes out of income; but the income of three parts of the people consists of their wages. Therefore the taxes must fall upon the income of the working classes. What has the right hon. Gentleman told us only this afternoon? He has told us that this year wages have been falling, that the produce of the Income Tax has been rising and rising every year; therefore the greater part of the relief has been given to that class whose condition is obviously improving, and not given to the class whose income he admits is falling. I did not exactly follow the figures given by the right hon. Gentleman. I find, from a valuable return of my right hon. friend the Member for Wolverhampton, that in 1880 the total revenue from taxation was £69,000,000. At that time the Customs and Excise, which you may take generally to represent articles of consumption, was £44,500,000, and direct taxation £24,000,000. Ever since that time it has been the policy of the Finance Minister of this country to equalise the burden of direct and indirect taxation. That has been the consistent policy of this country. It was felt to be unjust that the great masses of the people should pay a larger amount than wealthier and better-to-do people. No man earning under £160 a year—that is, no man belonging to the working or wage-earning classes—will derive one farthing benefit from £8,000,000 of the £10,000,000 reduction; no man earning £3 a week and under will derive any advantage whatever from four-fifths of the sum you are now giving away in regard to Income Tax. Since the Finance Act of 1894 came into full operation it has been the consistent policy of the Finance Minister of this country to reach to and to maintain an equality between direct and indirect taxation When the late Chancellor of the Exchequer in 1900 made proposals for increased taxation he said—During the last five years the proportion by which our revenue has been derived from direct and indirect taxation has not materially varied. There has been no material variation. I think these proportions are fair, and I do not agree with those persons who would desire to upset them largely on either side, and I think that in the taxation which we now propose we should endeavour as far as may he that these proportions should not be materially altered.262 That was an acceptance of the principle of equality between direct and indirect taxation as the continued policy in finance of both Parties in this country. We hear a great deal of continuity of policy, but this Budget is a reversal of the financial policy of this country in this most material particular. The late Chancellor of the Exchequer undertook to follow out that principle of continuity of equality between the two classes of taxation, and he did it in the most rigorously just manner. In 1901 he imposed Income Tax to the amount of £9,700,000, and indirect taxes to the amount of £6,000,000. In the next year he imposed Income Tax amounting to £5,000,000 and indirect taxes amounting to £8,200,000.
§ SIR WILLIAM HARCOURT
If the right hon. Gentleman chooses to deduct £2,000,000 from that I do not agree with him, nor do the miners of this country, either in the North or the South, agree with him. They are of opinion that the tax has had a most injurious effect upon their trade, and it has in point of fact injured their wages, and therefore I do not think that it ought to be struck out. But just let us reserve that £2,000,000. Last year the right hon. Gentleman imposed an Income Tax of £2,000,000 and a Corn Tax of £2,650,000.
§ SIR WILLIAM HARCOURT
That was not so estimated by the late Chancellor of the Exchequer. He estimated for £2,000,000, and the extra £600,000 was not expected to be collected in the year. That makes a total of direct taxation £16,700,000, and of indirect taxation £16,800,000, subject to what has been said about the Coal Tax. Therefore there was £100,000 more indirect than direct taxes imposed. If you choose to strike the Coal Tax out, you will find that, substantially, the amount of direct and indirect taxation raised since the war, and for the war, was as nearly as possible, even. Out of 263 the whole revenue of last year I find that Customs were £34,650,000 and Excise £32,600,000 and I add to that £1,000,000 of Excise out of the local fund for beer and spirits. The direct taxation was, Income Tax £38,800,000, Estate Duties £18,000,000, Stamps £8,200,000, and Land Tax and House Tax £2,500,000. Therefore, the total of direct taxation was £67,500,000, and that of indirect taxation £67,250,000. That shows that on the present basis the two systems of taxation were as near as possible on an equality. At the end of the war you come with a Peace Budget, and under those circumstances, having £10,000,000, and leaving an additional burden of taxation on this country of £30,000,000 as compared with the state of things before the war, when you distribute that £10,000,000 you give £8,000,000 to the well-to-do classes and only £2,000,000 to the working classes. I say that is scandalously unjust. That principle cannot be defended and will not be accepted. I envy the sense of humour with which the right hon. Gentleman announced the abandonment of the Corn Duty, remembering the arguments that were adduced in its support when it was introduced. When we remember the profound economic demonstrations of the Prime Minister as to those upon whom the incidence of this tax would fall, and how he held us up to scorn for maintaining that this was a tax which by any possibility could fall upon the consumers——
§ SIR WILLIAM HARCOURT
I recollect very well these arguments, and it would take some time to have them read by the Clerk at the Table. I say there is nothing more ludicrous than the situation of the Government in first fighting for this Corn Tax, as they fought last year, and now coming forward and saying that its repeal will be a great boon, and the only boon which they will give to the consumers of the country. The Chancellor of the Exchequer used a phrase which was amusing, tie said it 264 was a tax that was liable to misrepresentation. We all know very well what that means. After all, by-elections are a valuable institution, and all the profound political economy of the Prime Minister has been refuted, and he is, I presume, a convert in consequence of the by-elections.
§ MR. A. J. BALFOUR
I really think that if the right hon. Gentleman is going on quoting my words he might quote them accurately. He is not representing anything I said in this House. Perhaps he will read my words if he has my speeches there.
§ SIR WILLIAM HARCOURT
If I had guessed that this sacred tax would be taken off I should have brought a pile of Hansards which would have demonstrated that it was a tax which would under no circumstances ever be abandoned by a Conservative Government.
§ SIR WILLIAM HARCOURT
I only regret the absence of an hon. Member on the other side who on that occasion ejaculated "Well done." Now the Chancellor of the Exchequer says it is to be undone. I am very glad that the Corn Tax has been repealed. It was an infamous tax. The Government have at last been persuaded by the nation to take that view of the subject. I say that we take issue with the Government, and shall continue to do so, both here and elsewhere, upon the question of the unjust disproportion in dealing with this £10,000,000. There is one other thing which I should like to call attention to. Having said that you are left now with £30,000,000 more of taxation than the country was paying before the war, I should like to point out that this is the last remission that you have any present prospect of receiving. That is the important point. What the House has got to consider very carefully before this Budget is passed is, what are the prospects of a greater economy and less expenditure, and what are the prospects of a greater revenue? If there are no such 265 prospects, there can be no prospect of further remission. As far as I understood the Chancellor of the Exchequer's remarks in reference to dealing with the Sinking Fund, they do not seem to me to be satisfactory. He said he was going to make the Sinking Fund proportionate to the debt. People speak of the capital. The National Debt is not a capital sum. It is an annuity payable every year. The right hon. Gentleman gave some figures of what was expected to be done in future years towards the repayment of the National Debt. If I caught his figures aright the sums he I will appropriate to this purpose will be less than those which have been so applied on the average for many years past. In many years as much as £7,000,000 was paid in discharge of the debt. I think it will be found that there is no real addition to the sum appropriated to the extinction of the debt before the debt was increased. Is there any prospect of reduced expenditure? When your six Army Corps are fully developed, will they cost less than they are costing now? I imagine not. I believe that the development of the new system will be more, and not less, expensive than the present system. Are we to cease to pay for the Army in South Africa? Why should we not? Why should not South Africa pay for the Army there as India pays for the Army in India? Why should not this great wealth, which we are always told about but do not always see, discharge the cost of the Army in South Africa? But there is not much prospect of it Then what is the prospect of a diminution of the charges for the Navy? The right hon. Gentleman made the usual flourish about the Navy to which we are accustomed. But it is rather curious that I received this morning a pamphlet from one who is a high authority on this subject—I mean Lord Brassey. He says—The British Navy Estimates for 1903–04 amount to £34,457.000, as against £31,225,000 in the previous year. Heavy expenditure for warlike preparation is a strange sequel to the conclusion of peace.You would have thought that that was said by some miserable Little Englander. Lord Brassey is not a Little Englander but a Great Englander.The policy on which we have entered is not the policy on which the great statesmen of 266 the past—Lord Beaconsfield not less earnestly than Mr. Gladstone—insisted. Our expenditure has grown beyond all precedent, and is not to be borne without detriment to the national progress and prosperity.Then Lord Brassey proceeds to give in detail a demonstration of the unnecessary extravagance which is now going on in naval expenditure.
I can see no prospect whatever of diminution in your expenditure. The right hon. Gentleman has truly said that he wants a great deal more money for domestic purposes and for all sorts of reforms at home. But we never know from day to day what rash new enterprises we may be embarking on; what entangling alliances, which you take up one day and find it difficult to drop the next, and which involve you in wholly unforeseen expenditure. What prospect is there of relief in any other quarter? You perorate about the Empire; but it is not the Empire that pays. It is Little England that pays. I know there has been an attempt to induce the Empire to pay; but the Empire does not see it. The Colonial Secretary has made most pathetic appeals, with tears in his voice, to the Colonies one after another. His sermons have been excellent, eloquent, and pathetic. But the contributions to the plate have been small. The cost of the defence of the Empire is £64,000,000 a year. What do we receive towards that from the rest of the Empire? I am quite sure it does not amount to half-a-million. What has been the response of the Colonial Conference to these appeals? It is a very remarkable fact that while those appeals are printed in full the answers are not given. But the answers are to be found in the fact of the contributions; and I am afraid that those contributions of the Empire have passed into the wallet of disappointed hopes. Australia is not at present in a financial position, however much she may desire it, to make great contributions; and Canada, the most flourishing of all our possessions, takes a view which I cannot find it in my heart to condemn. She says through Sir Wilfred Laurier, that she does not wish to embark on unlimited militarism. As to the contribution of £30,000,000 from the Transvaal, at present it is rather a bird in the bush. Talking of 267 expenditure, what is South Africa going to cost you in the future? Do you think that you have exhausted your expenditure in South Africa? Do you think that the £35,000,000 which is to be borrowed on your guarantee is going to do the whole of the business? How much of it will be left after you have purchased the railways and developed the country? Irrigation alone has been put at £30,000,000, and therefore in all these directions I see no hope of relief, but rather calls for further expenditure. Then there is Rhodesia. It is and always has been insolvent, and depends on grants-in-aid from the Chartered Company. I am glad to see that Lord Cromer has put his foot down heavily on that wild cat scheme, the Cape to Cairo railway, and I hope we have heard the last of it. But seeing that you ask the nation to pay £30,000,000 more in taxation than it paid four years ago, we call upon you to justify that demand and to tell us why, now that the war is over, you stand in a different situation to the nations abroad from that in which you stood four years ago. You require an increased expenditure of £30,000,000, of which £20,000,000 are for the Army and Navy alone. What is the position that justifies that increased taxation in four years?
We have heard a great deal lately of co-ordination. I should like to see a little more co-ordination in our finance. I should like to see some sort of opinion formed as to the burden which it is justifiable to put upon the country, and to see the expenditure arranged accordingly. Mr. Disraeli said, and it is a well known saying that expenditure depends upon policy. Very well; we will judge your policy by its expenditure, because if your expenditure depends upon your policy, I suppose the argument is that a great expenditure means a great policy. But you may have a great expenditure from a foolish policy. You have arrived at an expenditure which, in the judgment of all sober-thinking men—and I am sure I may include the present Chancellor of the Exchequer as well as the late in that category—it is impossible to continue. The late Chancellor of the Exchequer told you that you were going on in a manner in which it was impossible to proceed; that the country cannot 268 stand the yearly addition of five and a half millions to the normal expenditure which seems to have become an inveterate habit. The prospect of further loans will make further calls upon your resources. There is further expenditure of every kind, that sort of lax finance to which we have almost become accustomed; when you offer a million or so to your friends in agricultural rates, and when you find a difficulty one afternoon with the parsons over your Education Bill, you get the Chancellor of the Exchequer to give a million or so to voluntary schools. That is the sort of thing that destroys finance and increases expenditure; it is not the result of a well-considered system by which taxation may be reasonably dealt with. What is the cause of these bloated armaments? The wealth of a nation, like the wealth of an individual, depends on his margin and his reserve; but when you have added £159,000,000 to the National Debt you have gone far to exhaust your reserve; and when you raise your normal taxation by £30,000,000, you have gone very nearly up to your margin of increased taxation. Increased taxation has never been known at any time in the history of this country such as has recently taken place in the normal expenditure of this country. These bloated armaments, as Lord Beaconsfield called them, are the result of a policy of inflation—a flatulent policy. It is said that after a hot fit there comes a cold fit. I am glad to know that war is a pestilential disease. It has been characterised by high fever, by a high temperature, and by delirium-The delirium has passed away, thank God. We have now the subnormal stage, which is the stage of convalescence, and which leaves the patient weak and depressed. That is the condition in which the war has left you and everyone who has had the misfortune to suffer from it. Thank God we have arrived at peace. Let us now devote ourselves to the works of peace, for, for dilapidated finance such as yours, there remain only the sovereign remedies of retrenchment and reform.
§ MR. WHITE RIDLEY (Stalybridge)
The right hon. Gentleman who has just sat down was very alarmed 269 at the rapid progress of our national expenditure during the last five years, and he drew most serious and alarmist conclusions from it. The Chancellor of the Exchequer was, as I conceive from his speech, equally concerned and equally anxious about the state of our national expenditure, but he did not draw the same alarmist conclusions as the right hon. Gentleman. I do not think that anyone who has viewed carefully the gradual rise of our national expenditure during the last half century can come to any other conclusion than that the present state of affairs, although calling for anxious consideration and careful treatment, such as the nation expects from the present Chancellor of the Exchequer, is not one which called for any alarmist cries, or that it puts us in any serious doubt as to the solvency of the nation. When I look at the expenditure during the last five years, and compare it with the state of affairs during the last half century, the marvel to me is not so much that expenditure has increased at a great rate as that that increase in expenditure did not begin sooner. When we look back to the sixties and compare the amount collected per head by the State over the prosperous period of the sixties and seventies, we find that the normal sum per head received from the population varied from £2 8s. 11d. to £2 9s. 11d. from 1861 to 1895. Then there was a sudden increase per head up to £3 8s. 8d. last year, and now, according to the Budget which has just been introduced, it stands at £3 per head. Thus, in the prosperous years from 1861 to 1895, when the wealth of the country, not only in the aggregate but per head, was increasing by leaps and bounds, the amount collected by the State remained practically stationary. During that period, gauged by almost any standard you like, the wealth of the nation per head was increasing. Let us take the Income Tax, which Mr. Gladstone declared in 1860 to be the only satisfactory test of wealth. The assessment in 1860 was equivalent to £12 per head of the population; the assessment now is equivalent to £20 per head of the population. There is another test, the yield of the Income Tax. In 1861 the yield per penny was £1,100,000; now it is £2,500,000. Let us take any other 270 test, such as bank deposits and life insurance, and it will be found that there is no single standard that does not show that the wealth of the country is rapidly increasing, and the marvel is that the State did not sooner appropriate more of the wealth of the country for carrying on its business. There are the annual returns of imports and exports. In 1860 they amounted to £325,000,000, or £13 per head; now they are £801,000,000, or £19 per head. This is not a sudden but a gradual increase that has been going on year by year ever since 1860. The money collected by the State per head has not gone on rising year by year; it remained practically stationary up to 1895; and, therefore, I think that there is some ground for saying that great as has been the increasing expenditure since 1895 it is only expenditure which is commensurate with the wealth of the country; and the remarkable thing is not that it has risen so quickly since 1895, but that previously the amount collected by the State had not increased in proportion as the wealth of the country increased
There is another point of view. What has been the chief cause of the great rise in expenditure since 1895? It is admitted on all sides that it has been increased expenditure on armaments. And why have we been obliged to increase our expenditure on armaments? Because we have to consider our relations with foreign countries and compete with them in the race for power. I have attempted to find out what the increase in expenditure has been on the part of some of our chief competitors since 1895. It is very difficult, as the Budgets of foreign countries are differently constructed from ours, and in giving the figures I cannot pretend that they are a perfectly accurate comparison. For the purposes of comparison we have taken the receipts, because that would exclude the money borrowed on loan. Taking the receipts of the United Kingdom in 1895 as £93,000,000, and in 1902 as £133,000,000, there was an increase of 40 per cent. The United States increased their receipts from £71,000,000 to £104,000,000, or 48 per cent., Germany, from £66,000,000 to £123,000,000, or 95 per cent., and Russia from £146,000,000 to £194,000,000, or 33 per cent. These figures gave rise to consideration. We might also take the 271 revenue per head which is collected by other countries as compared with this country. In the United Kingdom in 1902, about £3 5s. per head was collected, in France, £3 15s., in Germany, £3 15s., and in the United States£2 15s. The United States are in a different category. They boast, and justly boast, that they enjoy immunity from many of the burdens which the older European nations are liable to. These figures excluded local charges. In the case of Germany we have to add the charges in the various States and that would also apply to the United States. These figures are not very disquieting. We collected £3 5s. per head, while both France and Germany had collected £3 15s. These figures, and the statement of the Chancellor of the Exchequer, show that there is no justification for alarmist views of our national finances. I would rather say they show, if anything, that we might apply the analogy of a great business, and that it is necessary and proper to keep up our great expenditure if our business is to be kept up to date. The Government in pursuing the policy of increasing expenditure upon armaments and upon other necessary things, such as education, is only pursuing a wise and cautious policy which every employer of labour and every business man would pursue. The Government is following the methods of business men by increasing and improving its methods to suit the times, not being afraid to incur more expenditure in order to reap great and lasting benefits.
MR. HALDA E (Haddingtonshire)
Whatever feelings we may entertain towards the Budget the right hon. Gentleman the Chancellor of the Exchequer has produced, there is one thing with which I think we shall all agree and rejoice in, and that is the business-like and moderate fashion in which he made his statement and the clear desire for economy and improvement which dominated the entirety of his speech. We on this side of the House feel a greater affinity towards the right hon. Gentleman than we do to some of his colleagues, and we feel we should like to see more of his spirit prevailing in the measures of the Government than has prevailed in the past, and if we have to take 272 exception to not one but many things in the Budget he has produced, it is because we feel that the hand which framed the Budget has not throughout been the hand of the right hon. Gentleman. The broad feature which has attracted attention in this House, and will attract attention in the country, is the one on which my right hon. friend the Member for West Monmouth put his hand. surely it is extraordinary that in a year of an unexpectedly large amount of surplus, you should dispose of the surplus in the proportion of five to one to remedy the grievance of the direct taxpayers, instead of relieving the indirect taxpayers to an equal extent. I am quite aware of the argument that you should look on your Income Tax as a national resource—something to be husbanded; that you should look upon it not only as the war chest, but as the resource fund of the nation for many other purposes. That is true, but there is a broader view which cannot be lost sight of after you have imposed an exceptional amount of taxation, and are approaching a relief of this kind; you ought to have some clear view of the relative positions of the various classes you are seeking to relieve. The right hon. Gentleman gave us some figures of the payment of Income Tax, and, according to those figures, the position of the Income Taxpayers is a remarkable one, inasmuch as a very small number of people raise a great deal of money. But the right hon. Gentleman touched upon another topic, and that was the character of the national income. He said the amount of the national income was difficult and almost impossible to obtain, unless you had the figures of the direct taxpayer. But the national income has been estimated; various estimates have been made of it, all of which have converged within large limits to one amount. The national income has never been put lower than £1,500,000,000 and it has been put as high as £1,700,000,000. If we take it at £1,600,000,000, that is owned to the extent of about £800,000,000 by the Income Tax payers. The Income Tax payers are a comparatively small class; they are only 4,000,000 people out of a population of 42,000,000. These 273 4,000,000 persons hold half the national income, and therefore it seems to me that if you take as a standard the ability to bear taxation into consideration at all, the Income Tax payer has certainly not the first claim to anything like the extent of reduction which the right hon. Gentleman the Chancellor of the Exchequer has proposed—half the national income, £800,000,000, among some 4,000,000 people.
§ MR. HALDANE
Well, families. Take it as you will, it seems to me an extraordinary state of things that this small section, taking half the whole income of the country, is to get the benefit of the remission of taxation that the right hon. Gentleman proposes in the proportion of five to one. Before this is carried out, we certainly ought to have all the figures clearly before us and inquire very carefully into the ability to bear taxation. While I am bound to make these criticisms on the Budget of the right hon. Gentleman, there is another thing to which I am coming which it gives me great pleasure to admire, and that is the sum which he has set aside as the fixed charge for the extinction of the National Debt in the future. £27,000,000 is a very satisfactory and substantial sum; it is an increase of £4,000,000. We had £23,000,000 before on the old National Debt and we have now £27,000,000 on the National Debt as it stands at this moment. If my estimate is not wrong that should pay off the whole debt in a half century from now. I am quite aware that it is a very sanguine view which presupposes that we shall stick to the proportion of £27,000,000 for fifty years, but I do say that that is a standard we should set before the nation as part of our continuous policy not to be departed from as Government succeeds Government, and if we do that we shall see our National Debt disappear in the time that I have indicated. But while it is a good feature that there should have been an increase in the charge for the extinction of the National Debt to the extent of £4,000,000 a year I am not able to take quite the sanguine view that the right 274 hon. Gentleman has taken as to our relative financial position as compared I with other nations or the view taken by the hon. Member who spoke last. It is quite true that £27,000,000 is a substantial fixed charge for the payment of our National Debt, but as regards the debt itself I think we stand in a much worse position than most of the great Powers. Most of the other great Powers have a debt represented by some form of substantial assets, such as State I Railways, which they own—I am not speaking of France which is in a more difficult position than ourselves in that respect, but as regards some of the Powers the situation is different. Let us for instance take the case of Germany. The German Empire has an Imperial debt of about £121,000,000 which it is true is not represented by any asset, but the State debts are always represented by a substantial form of assets. The State debt of Prussia is £336,000,000, but the State Railway of Prussia, out of which the State makes a large profit, pays more than is necessary for that debt. Even in the case of Russia, which has a National Debt which is estimated at £700,000,000, the Government own over 23,000 miles of railway, a most substantial asset for that debt. In this country we own no assets except perhaps the Suez Canal shares. Ours is sheer debt, and that is the thing which differentiates us from Germany and Russia. France is in a worse position than we are. They have a National Debt of over £1,200,000,000, represented by no substantial assets, and there is a fixed charge for that of £47,000.000, which contrasts very favourably with our £27,000,000. The United States are reducing their debt rapidly. The Federal debt in 1865 was £531,000,000, to-day it is reduced to £190,000,000. Therefore it is that I say although we are paying our debt, we are paying it none too soon, and therefore I cannot take the sanguine view taken by the right hon. Gentleman as to our financial position.
It is true that we hold a very strong position, but if we are to retain our place in the comity of nations it must be assured that we shall continue to hold the position we have, and to do that you have to improve 275 the quality of the people and to spend more money on education than you are doing at the present time. That is one item I should have liked to have seen increased very substantially, in a rational manner, and I hope to see it figure in the Budgets of years to come as a very substantially increased item. It is all very well to speak of our being in a very substantial position, as the hon. Gentleman who spoke last suggested, but we must be assured that that position will be maintained. We have to look to the future, and we cannot be sure that the enormous advantages which we have reaped in the past, and which have given us the monopoly of the commercial supremacy of the world, will continue. We have competition growing up in every land; a new spirit entering into other nations, and, in my opinion, the duty which lies on us most heavily is to pay off debt as rapidly as possible. I trust we have now entered into some sort of policy of economy in some directions. I was struck with the way in which the right hon. Gentleman the Chancellor of the Exchequer made his references to the expenditure which this country is at present making on the Army, and I cannot draw any other inference from it than that the Government have made up their minds that the policy adumbrated this session will have to be, and ought to be, much curtailed, and that it refers to other views which did not prevail in the debates which took place recently, but which will, I trust, show themselves very markedly in the debates which will take place in the near future. The Government seem to realise that they have placed themselves in a wrong position—indeed, it almost looks as if they anticipate that they may have to submit themselves to the judgment of the country at no distant date. The right hon. Gentleman's Budget struck me as being somewhat of an electioneering Budget. But there is another side to the Budget, and I feel more and more as the Budget is reflected upon, that more and more it will be felt that the indirect taxpayers of this country have not had justice done to them.
§ MR. CHAPLIN (Lincolnshire, Sleaford)
In many respects I listened with 276 great pleasure to the statement of my right hon. friend the Chancellor of the Exchequer, but while I heard with approval many parts of his speech, such, for instance, as those dealing with the reduction of the debt and the disposition of the greater part of the surplus, there was one of his proposals to which it is only fair and right I should say at once I am absolutely opposed. I find myself agreeing very much with what fell from the right hon. Gentleman opposite as to-the position of a Government who, after all they have done and all they said last year, now come forward and deliberately repeal a tax which, on their own statements, repeated over and over again, could not possibly injure anybody, and which was avowedly imposed for the purpose of broadening the basis of taxation. Lest there should be the slightest doubt as to the accuracy of my statement, let me remind the Committee of a few sentences which fell from the late Chancellor of the Exchequer in introducing the Budget last year. He pointed out how great had been the tendency to increase expenditure, and he said—I went so far as to say that in my judgment if that rate of increase continued the country must come within reach of actual financial ruin.He proceeded to take measures which he thought were adequate to the circumstances of the time. He said—Looking to the ever-increasing demands made upon the Exchequer flowing from our modern civilisation, we must expect some increase in our expenditure in years to come. I am therefore endeavouring now, as I endeavoured last year when I asked the Committee to raise additional taxation in order to meet the charges of the war, so to frame that taxation that when peace returns and it is possible also to return to ordinary expenditure, we may have no difficulty in settling our financial system on a basis which would be equitable to all payers of taxation in the country. Therefore, in seeking for new indirect taxation, what I desire to find, as I desired to find last year, is an article of practically universal consumption, from which therefore a large revenue can be produced to the Exchequer without any injurious or oppressive burden on any individual or on any class. My primary duty is to look for revenue, and my ideal of a tax is that which will yield the most revenue with the least injury and inconvenience to the community.He then referred to the old registration duty on corn, and after using a great variety of arguments, he proved conclusively that in his opinion that was the 277 least injurious tax which could be imposed for the purpose of providing an increase of revenue; and made it the chief feature of his Budget. The right hon. Gentleman was more than justified, and is more than justified by the results which are before us at this moment, in all that he said with regard to the infliction of the smallest possible injury upon any class of the community. It was only yesterday that I received the monthly statement which is circulated by the Board of Trade under the auspices of the Government—of which my right hon. friend ought to know as much as anybody in this House—I mean the Labour Gazette, and there I find in black and white that in more than one of the towns in the North of England the prices of bread and wheat are at present both lower than they were before the imposition of the tax. Why does my right hon. friend do this? He says it is because he wants to do something for the consumer. By the repeal of this tax he will do nothing whatever for the consumer. He will not affect or change his position by one iota. If he thinks he is going to lower the price of bread he will be just as much mistaken as were hon. Gentlemen opposite when they said last year that the imposition of the duty would permanently raise the price. If he really wanted to do something for the consumer it is patent to everybody how he could have done it. He had £2,000,000 to dispose of. The present duty on tea is 6d. What did it produce last year? The actual figures for 1901–02 are £5,792,967. If my right hon. friend, wishing to do something for the consumer, had devoted his £2,000,000 to the reduction of the duty on tea he might have reduced it by nearly one half, and thus have done something which would have been of substantial interest and use to the consumer. What does my right hon. friend expect to gain by this? What have the Government got in their minds? What are their supporters going to gain? So far from gaining the respect, I think they will gain what they fully merit, the ridicule of their opponents, and, unless I am very much mistaken, they will arouse the resentment—I do not like to say the contempt—of thousands of their friends in all parts of the country. 278 Of their friends and supporters in this House, whom they seem to forget, by their present attitude they are making fools; they are making absolute fools of them in the eyes of the country by all that they deliberately took them through last session. Now, when all is over, when they have got a large revenue from the tax which was imposed for the purpose of broadening the basis of taxation for all time without inflicting the smallest injury upon a single member of the community, for some reason, known only to themselves, they throw away the whole of these advantages, and at the same time deprive the consumer of a real and substantial benefit which they could have given him by reducing the duty on tea by one half. I confess that it has seemed to me sometimes lately that the Government were going through the operation known as deliberately riding for a fall, and I must say of this last act of theirs, that if that fall should be thereby precipitated, I, for one, should consider that they most heartily deserved it. I am perfectly sincere in making these observations, though I make them with real regret, because, as I said just now, I listened with great approval to the greater part of the statement of my right hon. friend, and also because I honestly believe that his conclusion will have the effect of converting into a fiasco what I, and many others in this House and elsewhere, think would otherwise have been a most excellent Budget. I am sure of this, that it will be regarded by countless friends of the Government as an act of financial folly and weakness which has seldom, if ever, been equalled.
§ MR. McKENNA (Monmouthshire, N.)
It is impossible not to sympathise with the indignation expressed by the right hon. Gentleman who has just spoken. He is the one strong and consistent man on the other side. The arguments he has now stated are the arguments we listened to last year, and though we did not then agree with him, he was received with cheers on his own side of the House, and was supported in the lobby. How hon. Members opposite can fail to support him now I do not understand. But I rose more particularly to say something on the subject of the Sinking 279 Fund. The Chancellor of the Exchequer, in the beginning of his observations, rather represented that he was going to strengthen the Sinking Fund, and he spoke of that as a most desirable object. To our infinite astonishment, when he came to actual figures, we found that so far from strengthening the fund he was reducing the amount provided by his predecessor last year. On June 4 last, when the late Chancellor of the Exchequer restored the Sinking Fund, he re-established the fixed debt charge at the figure of £23,000,000 a year. That fixed charge was for the purpose of meeting the interest on the old debt and the Sinking Fund on the whole of the debt. The interest on the new debt which has been incurred on account of the war did not come out of the fixed charge. That interest last year reached the sum of £4,500,000, and had to be added to the £23,000,000, so that the actual provision made by the late Chancellor of the Exchequer for the Sinking Fund and the payment of interest was £27,500,000. The present Chancellor of the Exchequer, who was full of pious expressions as to the advantage of large purchases of Consols in the open market, and the need of our paying off the debt, instead of increasing that amount, as the late Chancellor of the Exchequer suggested should be done, has actually reduced the amount by £500,000. An hon. Member opposite spoke of the exceeding prosperity of this country. It is true that certain classes are exceedingly prosperous, and I would ask whether there is any better way in which some of the surplus of our prosperity could be used than in paying off our great National Debt. Let me remind the Committee of what took place in 1899, when the late Chancellor of the Exchequer reduced the fixed charge of the debt from £25,000,000 to £23,000,000 a year. At that time the Chancellor of the Exchequer explained that in a very few years the interest on the Debt would be lowered, and that a large number of the then existing terminable annuities would cease to have to be paid; and he showed that in a very few years there would be £9,000,000 a year available for the Sinking Fund. That, he said, was too much, and ho was going to take out of the hands of future Chancellors of the Ex- 280 chequer the temptation to invade the Sinking Fund, and he therefore created a large new block of terminable annuities and reduced the amount of the fixed debt charge. He held the Sinking Fund should be an annual sum, more or less the same over succeeding years for the reduction of the debt. The amount he provided then was for the reduction of a debt which was £150,000,000 less than it stands at to-day. The amount then left was £5,800,000 a year, and he told us at that time that he was happy to say, that being the minimum, that as years went by that amount would be increased. He did not wish to see it increased to such a large amount as £9,000,000, but what has the present Chancellor of the Exchequer done T With a much larger debt than the Chancellor of the Exchequer dealt with in 1899 he has reduced this provision.
§ SIR FREDERICK BANBURY (Camberwell Peckham)
The hon. Member has forgotten the reduction in Consols.
§ MR. McKENNA
No, I have not forgotten that, for that was one of the reasons the late Chancellor of the Exchequer gave in fixing a reduced amount. Now, upon a larger debt the right hon. Gentleman proposes to reduce the amount of the fixed debt charge still further. It is true that the amount is nominally to be increased from £23,000,000 to £27,000,000, but as I have shown already under the old fixed debt charge the interest on the new war debt would not have been included. He has therefore added £4,500,000 a year to the liabilities on the fixed debt charge, and has not increased the amount of the fixed debt charge, as he should have done if he had left it in the same position as it was under the late Chancellor of the Exchequer. Whether the right hon. Gentleman be right or wrong in his policy, he must not take credit to himself for having made an added provision for the reduction of the National Debt. The hon. Member for Exeter has been asking that a new and additional Sinking Fund should be created for the reduction of the war debt of £160,000,000, but the right hon. Gentleman has not done that; on the contrary, he has actually reduced the amount which was provided last year by 281 his predecessor by £500,000. I do not know whether the hon. Member will be satisfied with the exchange, but I certainly say that in making this change the right hon. Gentleman has not, I think, acted the part he should have done. The right hon. Gentleman is, I submit to the Committee, more or less bound to the pledge made by the late Chancellor of the Exchequer on June 4th of last year, and he is bound by that pledge, if he does anything at all, to increase the old fixed debt charge. Instead of that he has reduced it by half a million. That to my mind is one great objection to the right hon. Gentleman's scheme. It has been pointed out with very great force that the right hon. Gentleman, for every £5 he has taken off taxation, has given £4 to the classes who are admitted to be well off, and only £1 in relief of taxation to the classes who we know, from the Returns he has given, are less well off now than they have been in previous years. But quite apart from that, ought not the Chancellor of the Exchequer, when he comes to reduce taxation, to have given us some inquiry as to the actual amount of taxation which is borne by the working classes in this country? What does the man with 30s a week pay? In answer to a recent deputation the Chancellor of the Exchequer said that owing to the extended franchise it was only right the working classes, who had a share in the Government, should also bear a share in the payment of the taxation of the country.
§ MR. McKENNA
They do pay a share in a most tangible form. That is the great misunderstanding on the opposite side of the House. The right hon. Gentleman may not know the small items of his household expenditure Personally, I do not know when the price of the articles which are taxed goes up or down—I am alluding to the price of bread, beer, tea, sugar, spirits, and wines. I do not know the fluctuations in the prices of these articles, and no more do the majority, I believe, of hon. Members in this House. But for the working classes a rise or fall in the price of these articles is a most tangible fact, and 282 they feel every week the sums they have to pay through the rise in prices. Ought the right hon. Gentleman to be content with mere percentages of the amounts paid in direct and indirect taxation, or ought he not to tell us what a working man with 30s. a week does actually pay in taxation? I venture to say that the right hon. Gentleman will find that under this Budget a man earning 30s a week pays more than one-twentieth part of what is paid by a man earning £30 a week. I do not know what principle of taxation would be acceptable to hon. Gentlemen opposite, but I do say that I do not believe there is a single hon. Member in this House who would go less far than this—that a man with 30s. a week ought not to pay a larger proportion of his income than a man with £30 or £300 a week. I think he ought to pay a much less proportion. I think there is a minimum amount necessary for living which ought not to be subjected to taxation at all. Can the right hon. Gentleman tell the Committee what is the proportion of income which a working man earning 30s. a week pays and what the man with £30 or £300 a week pays. I have gone into some figures, and so far as I can judge of the expenditure from reading a number of budgets of the working classes on 30s. a week, and comparing them with incomes of £30 a week, I have been driven to the conclusion that a man with 30s a week pays a larger proportion of his income in taxation than the man with £30 a week. If that is true is it not a crime for those who have control of the taxation of this country to take taxes off the rich and leave them on the poor? I would ask the Chancellor of the Exchequer, who will have plenty of opportunities, and who has unrivalled means at his disposal for considering this question, to give the House upon some future date an estimate of this description, which he can make with the greatest accuracy. We have thousands of specimen budgets of working men, and if he will make a comparison of the taxation borne by working classes and by the wealthier classes he will be able at a later stage in the course of these proceedings to tell the House whether justice has been done to the working classes or not. Whether 283 the backbone of the right hon. Gentleman's Party will be dissatisfied or not I do not know, but I believe that those who are most clamorous for the reduction of the Income Tax would consent to a smaller reduction of that tax in order to take their fair share of the burdens off the shoulders of those poorer than themselves, and who are far more heavily burdened at the present time by taxation.
§ SIR GEORGE BARTLEY
I should like to say a few words, because I have taken a very great interest in the subject of taxation as affecting the two classes of the community. It is perfectly true, and I do not think anybody can deny it, that the ordinary man who consumes a reasonable amount of alcohol, and earns £1 a week or so, does pay a larger proportion of his income in taxation than the richer man. I do not think that argument can be got over at all. But, Sir, the conclusion, and the only conclusion, to be drawn from that is that you must remodel the whole system of your taxation, and you must alter the system of taxing alcohol. As long as you do tax alcohol to the enormous extent that you do the working man earning small wages and drinking a reasonable amount will continue to pay an undue share of taxation in proportion to his richer neighbour. But surely no sane man with the welfare of the country at heart, in order to establish a system that theoretically would be absolutely fair, would do away with the taxation on alcohol; yet that is the only solution of the particular difficulty of which the hon. Member complained. If you are theoretically to tax every man strictly in proportion to his earnings, you must do away with the tax on alcohol. As long as you have a system under which you derive an enormous taxation from alcohol, the greater part of which must be paid by the working classes from their present modes of living, I say that it is absurd to attempt a theoretical system with absolute fairness. But we cannot solve this matter simply upon these grounds. A good many years ago I endeavoured to get out the budgets of a number of persons, and I came to the conclusion that ignoring alcohol the man who paid a larger proportion of his 284 income than any other class was the small man who paid Income Tax. He is the man more hardly hit than anybody else. I could not help being struck with the remarks of the right hon. Gentleman who spoke last but one, in which he said that the Income Tax payers were a small class of the community. He said that only 4,000,000 paid Income Tax, but we must remember that those 4,000,000 are, practically speaking, 4,000,000 families, which makes a large difference in the calculation. Taking the average family at five, it means 20,000,000, and although there may be some instances in which two members of a family pay Income Tax, those instances are very few. I think you may take it that, roughly speaking 20,000,000 persons are concerned in the payment of Income Tax. Those who have studied the Income Tax returns must have come to the conclusion that the great bulk of the increase of Income Tax payers is at the bottom of the scale. The number of people who are getting into the class of Income Tax payers is ever increasing, and there is no more hopeful sign of the prosperity of the country. It seems to me that that is a reason why they should be considered as a class. In the last three or four years these persons have suffered very severely; they have suffered more than any others, and it does seem to me that it is a most reasonable thing that they should be relieved first. Mr. Gladstone always held that Income Tax payers should be relieved, and that Income Tax should be regarded as a sort of reserve. But if you maintain it at l1d. you can hardly say that it is a reserve. The tax should be reduced for the safety of the country, and certainly in fairness to those who pay it.
My right hon. friend behind me has objected to the remission of the duty on corn. I should like to state candidly my opinion upon that. I am placed in this difficulty. We have heard, and I agree with the statement, that this tax does not fall with any hardship on anybody. This was the argument for it two or three years ago. I myself do not believe that it affects the price of bread one bit, and, that being so, I cannot see that it is very wise to make an alteration in it. 285 I wish to see the basis of taxation widened and I would much prefer that some other indirect taxation had been taken off. However, I think it is fair that the payers of indirect taxation should have some advantage, and therefore I suppose we must agree to this. But it is a little difficult to understand why the repeal of a tax which two years ago did not affect anybody should now be regarded as a boon. The other subject I should like to refer to is that of the incidence of the Income Tax. Every year during the discussion of the Budget I have urged that the incidence of the Income Tax should be considered, and I am glad to see that at last the Chancellor of the Exchequer is going to appoint a Committee to consider it. To my mind the incidence of the Income Tax does want considerable attention. I have always urged that Income Tax should be a tax on income. In many cases it is not. There may be such cases as the Chancellor of the Exchequer referred to, in which men pay on£2,000 or£3,000 a year instead of on£50,000. All I can say is that there must be careless collectors in those districts. At any rate, they are extreme cases. There are many cases in which the Income Tax paid, especially by the smaller payers, is much larger in amount than they have any right to pay. There are many cases in which the tax is not a tax on income at all, and I hail with great satisfaction the statement of the Chancellor of the Exchequer that the subject will be gone into. The present state of affairs has been a crying evil for many years, and although I doubt very much whether the Exchequer will gain by the inquiry, I think the tax will be made fairer. I do not think the late Chancellor of the Exchequer would agree with this proposal. I think he repudiated the idea of investigation. I have always held the theory that there should be a different scale for what are called spontaneous incomes, as compared with industrial incomes, that the tax should be lower in the case of those persons who have to depend on their labour for their incomes, and higher in the case of those whose incomes are not attained by the sweat of the brow. This is a large question, and one which I do not wish to dwell upon now. I am extremely glad 286 that the Chancellor of the Exchequer has seen his way to relieve Income Tax payers. It seems to me that the action he has taken is a fair one. I repudiate altogether the idea that the Income Tax falls only on the rich No doubt there are some rich people in the country still—I am glad there are—and they pay heavily in the Death Duties, which is a form of deferred Income Tax. In the course of a few generations a great part of a millionaire's wealth is absorbed by the Chancellor of the Exchequer. I should not mind accepting a million on those terms myself; but still the fact remains that a great part of it does ultimately come into the Exchequer by means of this deferred system of Income Tax, in addition to the Income Tax paid during the millionaire's life. The smaller Income Tax payer is, after all, the backbone of the country; he has paid a large share towards the war expenditure of the country, and I think it is only fair and proper that he should be the first to be relieved.
§ SIR WILLIAM HOLLAND (Yorkshire, W. R., Rotherham)
I confess I do not for a moment think that the anticipations of the right hon. Gentleman the Member for Sleaford are likely to be realised, and that hon. Members on this side of the House are in the least disposed to ridicule the Chancellor of the Exchequer for having repealed the Corn Duty. On the contrary, I, as one of the rank and file on the Opposition side of the House, warmly congratulate the Chancellor of the Exchequer on having taken that step, not only because of the intrinsic amount involved, but because the removal of the Corn Duty is tantamount to the removal of a constant peril—the peril lest we should be forced to return to that policy of Protection which we had thought was abolished once for all. So long as that duty remained it stood as a constant encouragement to those in the country who were anxious to have it substantially increased, and the day might by-and-bye have arrived when a weaker Chancellor of the Exchequer would have yielded to the enormous pressure which would undoubtedly have been brought to bear upon him. But I think that the good intentions of the Government in regard to the Corn Duty 287 are more than discounted by their evil intentions with regard to the Sugar Tax, which will be still further increased when the proposals of the Sugar Convention come into force. I certainly think, with those speakers on this side of the House who have preceded me, that the most glaring defect of the Budget is the paltry character of the relief which is afforded to the poorest class of the taxpayers. By the proposals of the Government the equilibrium between direct and indirect taxation is destroyed, and unfortunately it is destroyed entirely in the wrong direction. If the remission of£10,000,000 is to be given one would have thought that the greater part should be given to those who stood most in need of relief, and not that£8,000,000 should be given to the richer classes and only£2,000,000 to the poorer. I can quite understand that this Budget may be defended by some on the ground that the Government are once more looking after their friends. I will not pursue that topic, which I know is a sore one in certain quarters on the opposite side of the House; but I submit that the Government have still undoubtedly some friends amongst the very poorest classes of the community. So that, even on that theory, there would have been some justification for benefiting them more substantially than they are to be benefited by the present Budget. I do not know whether the Chancellor of the Exchequer has regarded the question of the Income Tax in this light, but to me it does appear that the Income Tax is differentiated from indirect taxation in that even without changing its amount the actual sum to be contributed does vary with the varying income of the individual, so that a smaller income carries with it its own relief; but indirect taxation, on the other hand, does not vary very much with the income of the individual. When a man is doing uncommonly well he may spend more on drink and on tobacco than he would at other times, but in the matter of food the case is entirely different. If less wages are brought home on a Saturday by a working man, his children are just as hungry on that Saturday as they were on the previous Saturday when he brought home a larger sum, and from that point of view I think a special claim can be established for the amelioration of those whose lot is 288 not only poor, but is becoming poorer still. It has been clearly shown by the Chancellor of the Exchequer to-day that he is aware of the fact that the wage earners are earning less now than for some time past. I daresay hon. Members may have noticed that month after month the paragraph headed "Changes in the Rate of Wages," in the Labour Gazettehas invariably begun with the statement that the nett effect of the changes in the rates of wages reported during the month was a decrease of so much. That has been the monotonous tale for a great many months past, and it shows that the indirect taxes which have been contributed by the working classes, although not altered specifically in their amount, are gradually becoming a much heavier burden than when wages were higher. I cordially approve of the determination of the Chancellor of the Exchequer to institute an inquiry into the incidence of the Income Tax. There is a great case for investigation in regard to that particular tax
I am sorry that the Chancellor of the Exchequer could not see his way to remove the Coal Tax. It does have the effect of hampering trade in many directions. I know that it has led to the loss of many important foreign contracts for coal, and the loss of these contracts obviously will be to diminish the volume of work for those engaged in the coal trade. We are in the habit of priding ourselves, and not without reason, that this assembly mirror public opinion in the constituencies-more or less accurately, but I put it to the Chancellor of the Exchequer whether he honestly thinks that the constituencies approve of a Budget amounting to between£140,000,000" and£150,000,000 in time of peace. For the last year or two in regard to this subject our tongues have been more or less tied. While the war was on the success of our arms was undoubtedly the first consideration of Members, not only on that side of the House but also on this side, but now that, happily, the sword is sheathed, it is time for us to put our house in order. I would like to ask where are the economists on the Government benches now? There was one a few months ago, but I 289 am afraid that when the right hon. Gentleman the Member for Bristol retired from office, the solitary representative of economy simultaneously disappeared. It is true that his successor this afternoon expressed a pious hope that our Army expenditure might be reduced, but a pious hope is not the language of a sturdy economist. The Chancellor of the Exchequer did not, I think, wear the garb of an economist when he sought to defend the present outlay on armaments by proving that it was less in proportion to our income than it was forty; years ago. A famous predecessor of his, Lord Randolph Churchill, in 1887 resigned his position as a protest against the military expenditure of the time I do not think there are many Members on the Treasury Bench who would contemplate resignation on that score now, although there is ten times more reason for it. If the Government is not more alive to the necessity for economy, I believe, judging from the by-elections we have had lately, that a determined electorate will insist on their views in regard to this matter being paid more attention to. I think it is obvious to every Member of this House that unless we husband our resources in time of peace we shall be incapable of making the supreme sacrifices in which the nation will be involved in time of war, for we shall be impoverished by having parted with and squandered money which is described as the sinews of war. Hence it happens that economy may from this point of view be regarded as the highest patriotism.
I think it is also obvious to most Members of the House that the least satisfactory item of expenditure is the£34,500,000 we are called upon to provide for the Army. That outlay has met with very severe criticism, and no more effective critics have made their voices heard in this matter than hon. Members on the other side of the House below the Gangway, who have spoken to such good purpose; during the present session. The proposals of the Government with regard to the Army have been proved again and again to be both costly and inefficient, and it seems to me that in this important branch of expenditure we can ourselves take independent action almost without reference to other nations. We can decide on the plan on which we 290 shall form our Army, upon its size and its nature, without reference to continental Powers. In regard to the Navy however, it is obvious that we have not at all the same freedom, for every Naval Power fights on a common battleground. Therefore it is obviously our duty to keep pace with the leading nations of the world; but I am very much afraid that instead of keeping pace we are, in their eyes, at the present time, guilty of forcing the pace. The Chancellor of the Exchequer himself this afternoon recognised that many of our continental rivals would themselves welcome any proposals for the diminution of the outlay on the naval armaments of the respective countries. I can understand that among the different Governments there is considerable jealousy as to who shall take the initiative, lest the taking of the initiative should itself be interpreted as a sign of weakness. That I take to be a sentimental objection of which we in this country, with all our wealth, need have no fear. And whenever sentiment prevents us from facing facts, it becomes a National peril. That Statesman, Liberal or Conservative, will deserve well of his country and of the civilised world who does the best that in him lies to stop the policy of beggar-my-neighbour in armaments, and who works for a prôrata reduction, securing beyond all cavil our relative superiority as an essential factor, which, so far as I know, every great Power is willing to concede to us as being nothing more than our due.
MR. GIBSON BOWLES (Lynn Regis)
It is usual for those who have taken an interest in and who study finance to postpone their remarks on the Budget to the future occasions always afforded for the discussion of it, and the reason is that the Budget usually contains elements of complication which require to be considered quietly and deliberately before financiers pronounce upon it. That is less so this year than usual. The right hon. Gentleman's Budget statement is simple, broad, bold and intelligible, and, with a single exception to which I will come presently, I think his Budget is a good one. The right hon. Member for Sleaford seems to think it shows that the Government are riding 291 for a fall. I do not quite think that. If they had that intention and desire, the "bullfinch" of the Bagdad Railway would have furnished them with an excellent opportunity; and I think I could myself have made sure of securing for them their desired fall. But much to my satisfaction they have swerved aside from that jump and have gone through a gap. I do not believe they are riding for a fall; I should rather think they are riding for a dissolution. I am encouraged in that belief by the speech of the right hon. Gentleman the Member for Monmouth. The first part of the right hon. Gentleman's speech was admirable. It was the speech of a financier, in which he dealt clearly and accurately with the Sinking Fund. But the second part of his speech was sentimental, if not hysterical. That was the speech of an electioneering agent preparing the ground for a General Election. My remarks on the speech of the right hon. Gentleman the Chancellor of the Exchequer will be very few, but to one of them I think some importance should be attached. In the first place, I cannot but think, in spite of the right hon. Gentleman's protestations, that his estimates of the forthcoming year's revenue are extremely generous; that they are, in fact, too high. He estimates an increase of revenue for the year ending 31st March, 1904, of£3,200,000, or an increase of 2 per cent. over last year. I cannot think that the prospect of the increase in trade and of the prosperity of the country generally sufficiently justifies an estimate of so generous a character as that. Of course, I am aware that the right hon. Gentleman must rely on his Departmental officials, and I cannot and do not imagine that he exercised any influence in the preparation of the estimates of expenditure in order to improve his Budget statement this evening. That is, I think, impossible, for I have always found the right hon. Gentleman simple, plain, honest and straightforward. But there is, for in stance, one item in that estimate of revenue which, I believe, cannot be expected to be realised, and that is the expected increase of£2.200,000 in the Customs for the coming year, on the basis of existing taxation. I hope I may be 292 wrong. As to the Sinking Fund, I would point out that there are in our system two Sinking Funds. One is the old Sinking Fund, which is the excess, if any, of realised and actual revenue over realised and actual expenditure. That is the Old Sinking Fund. And the other, or New Sinking Fund, represents the balance which remains of what is called the Fixed Charge for Debt after the Interest on the Funded Debt, the Interest on the Unfunded Debt, the charge for Terminable Annuities, and the cost of management have been deducted from that Fixed Charge. To the New Sinking Fund I will return later. But as to the Old Sinking Fund, it is manifestly affected by an over-estimate of revenue such as I fear here. If any mistake of over-estimate has been made in the estimates of the revenue of the year, the result will be a serious damage to the old Sinking Fund. My own impression is that there is some over-estimate of the revenue to be derived next year, and that, consequently, the Old Sinking Fund will suffer.
Then, as regards the revenue for Crown Lands, as the Committee know, the department which administers the Crown Lands are allowed, contrary to the practice that governs all other departments, and contrary to the very principle of our finance, to deduct the whole of their expenses from the proceeds of these lands, and only pay the balance into the Treasury. Now, a very remarkable thing has occurred in connection with these Crown Lands. Up to the year 1901 the net amount received for the Crown Lands was always increasing. They had gradually risen from something like£300,000 to£500,000, at which they stood in the year ending March 1901. And naturally so, in spite of the Department of Woods and Forests making their own deductions. But from the beginning of the new reign the Crown Lands proceeds have steadily gone down. In the year 1902 they fell to£455,000; last year they were the same amount; and for this coming year the estimate is£445,000. Why is it that the receipts from the Crown Lands, which must be increasing in value, have gone down£55,000 in three years? I should like the right hon. Gentleman to give me some explanation of that. It suggests to me that the moment has arrived at which a sound financial system requires that the Woods and Forests Departments should be treated as all 293 other Departments are treated, that is to say that they should pay into the Exchequer the gross receipts from the Crown Lands and that the House should vote the amount of their expenditure, instead of their being allowed to deduct it in what are apparently ever-increasing amounts. That is, however, a relatively small matter. The right hon. Gentleman makes his estimate of expenditure£144,000,000, and he adds expenditure from capital account, a sum of, I think, some £7,000,000. I need not remind the Committee that there is no such thing as a capital account in this country. We put all our revenue on one side of the account, and all the expenditure on the other, we neither have, nor could have, any balance sheet, and no one can estimate our full financial responsibilities or our full assets. Then the right hon. Gentleman adds local taxation and brings up his expenditure to a much larger sum. But even that larger sum does not represent the whole. I would remind the Committee that our public accounts are completely and absolutely false. In addition to the items mentioned by the right hon. Gentleman, there are appropriations in aid, payments out of gross revenue, and many receipts of the Civil Service which are never brought into the account, at all. As a matter of fact, the items I have mentioned ought to be added to both sides of the account, in order that the accounts might be made true. In addition, there is local taxation, which is now something over£100,000,000 a year—I am speaking of the three countries—and the local debt is considerably over£300,000,000. That also has to be kept in mind.
As to the Income Tax, I rejoice that the right hon. Gentleman is going to have an inquiry into it. The time is ripe for that. There are abuses connected with the Income Tax which are perfectly monstrous. I do not allude to taxing all incomes in the same way, because it is all income, however earned, and therefore all taxable as such. My hon. friend opposite claims that one sort of income ought to be taxed in one way, and another sort of income in another way. I say nothing of the kind. Whether you get income from property or from your brains, it still is income. If income comes from personal ability, when the ability ceases the tax 294 ceases also; but if income is derived from permanent property the tax is permanent and continues. I see no grievance in that. What I do regard as a very serious grievance are the exemptions from Income Tax and the abatements which now exist in respect of the smaller incomes up to£700 a year. As a matter of fact, you only tax one-half of the incomes in the country, whereas you ought to tax them all. If you did that the result would be that a 6d. Income Tax would do the work that a 1s. Income Tax now does. I am aware that there would be difficulty in levying a tax on small incomes, but that is a question of machinery. Small levies of small taxes are not new. Penny and halfpenny postage stamps are small, but they mean a very considerable amount of revenue, without any inconvenience or trouble to the payer. As to the Corn Tax, the right hon. Gentleman the Member for the Sleaford Division and other hon. Members representing agricultural constituencies thought, when the tax was imposed, that a great new principle had been announced—a principle of eternal verity which would never be departed from. I ask myself what sort of a face the right hon. Gentleman the Member for West Bristol will present when he finds tha4t the Corn Tax for which he argued with so much conviction is repealed. I agree with the present Chancellor of the Exchequer. I rejoice at the repeal. When the late Chancellor of the Exchequer put this tax on, I agreed to it with the greatest possible reluctance, and only because, as I explained at the time, of the very great emergency which had arisen. That emergency has now passed away; and now we have a new Chancellor of the Exchequer who most properly thinks it is his bounden duty, if he touches indirect taxation at all, to take off the tax on corn. I am convinced he is right. After all, it is a hard thing to tax the food of the people; and I congratulate the right hon. Gentleman in taking off this tax which his predecessor put on.
Now, I come to the one serious criticism I have to make. The right hon. Gentleman in appearance has increased the Permanent or Fixed Charge for the National Debt. In reality, he has 295 diminished it. He has added£4,500,000 of extra Fixed Charge representing new funded debt—and therefore necessarily to be added—to the£23,000,000, and should thus have arrived at a Fixed Charge of£27,500,000. But he only proposes to make the new Fixed Charge£27,000,000, and he thus diminishes the balance available for the New Sinking Fund by£500,000. His new Fixed Charge of£27,000,000 is in reality not more but less than the old£23,000,000. And even this£23,000,000 was already£2,000,000 too little. Everyone interested in finance protested against the diminution from£25,000,000 to£23,000,000 when it was made by the late Chancellor of the Exchequer. Having diminished the fixed charge set aside for the Debt, the right hon. Gentleman seeks to justify himself by the expectation of certain sums he is to get from the Transvaal. But he is to get these sums out of loans he himself is to provide. In effect the Transvaal says that if the right hon. Gentleman will lend the money it will pay what it owes. But that will not be in the present; it is only an expectation; and I submit that the Sinking Fund should not be dealt with by expectation. You must have real, solid, realised facts when you are dealing with such an important pillar of public finance and public safety as the Sinking Fund. The most important feature of our finance lies in this permanent Fixed Charge. I regretted to see that sum largely reduced by the late Chancellor of the Exchequer; and I regret to see it diminished, even in a small degree, by the present Chancellor of the Exchequer. Nor do I think the reasons given by the right hon. Gentleman are at all sufficient. This is the one blot in his Budget. I do not think that any importance is to be attached to the right hon. Gentleman's calculations as to the final extinction of our debt; for whenever a Chancellor of the Exchequer tampers with the Sinking Fund, he always enters into an elaborate calculation by which he shows that he has invented a system which, if he only gets his diminution of the Sinking Fund on that particular occasion, will result in the whole of the National Debt being paid off in thirty or forty or fifty years 296 as the case may be. I must just read; to the right hon. Gentleman one extract which I hope will be chastening to him and prevent him indulging in these expectations as to the end of the National Debt. In May, 1887, Mr. Goschen, the then Chancellor of the Exchequer, when proposing to reduce the Fixed Charge from£28,000,000 to £26,000,000,said—The Chancellor of the Exchequer desires to observe that, according to a calculation which has been made, the proposed Fixed Charge of£26,000,000 will, if maintained, redeem the whole of the present Funded Debt(£600,000,000) at par in about fifty-two years, and the whole of the present National Debt(£700,000,000) at par in about fifty-six years.Now mark, that was in 1887, so that Mr. Goschen, Lord Goschen as he now is, predicted, arranged for, and settled finally for the total extinction of the National Debt in the year 1943. The right hon. Gentleman says now—"I am; going to make another arrangement for the Sinking Fund by which the whole of our National Debt will be got rid of in 1953." Thus putting off the end for another ten years, and I am afraid the next Chancellor of the Exchequer may present yet another fancy picture to us, but still put off the extinction of the National Debt to a still later date. As I have said, few remarks on details can be made upon a Budget on its presentation. With regard to this Budget, with the exception of the treatment of the New Sinking Fund, which I consider a mistake, I think it is a bold, a courageous, and, on the whole, a good Budget, and, in my belief, that will be the opinion of the country at large.
§ MR. SYDNEY BUXTON (Tower Hamlets, Poplar)
The hon. Member who has just sat down considers, with the one exception of the Sinking Fund, that this is a good Budget. In my opinion, and I believe the opinion of most of those who sit on this side of the House, that is the only good feature in it, because whichever way we look upon it it is a most disappointing Budget. Of course we agree with the proposal to get rid of the unfortunate tax put upon us last year, the Corn Tax, but I must say it will be rather difficult for the Government to argue that the remission of this£2,500,000 on the Corn Duty will be any 297 relief to the indirect taxpayers; for they argued last year that it was no burden. I think hon. Members opposite will agree that if you give something like£10,500,000 to the payers of direct taxation it is only fair that the payers of indirect taxation should have some relief This£2,000,000 given on the Corn Tax will not be, in their opinion, a relief, and therefore I hope we may have the, support of hon. Gentlemen opposite when we come to consider further reductions on the lines of indirect taxation, Nobody will dispute the proposition that the proposal of Chancellor of the Exchequer last year, and what he stated afterwards, was that if after putting on an extra penny last year the national position was such that he was able to relieve the country of that extra penny or two pence this year, he should combine it with a considerable relief to the indirect taxpayers. We should not object to the two going hand-in-hand; but we object to the preposterous proportion of the relief to be given to direct taxation as against the infinitesimal relief given to indirect taxation.
The right hon. Gentleman said that of the taxation of the last two years;£17,500,000 was put on direct taxation, and£15,500,000 upon indirect taxation, Now he proposes to relieve direct taxation by£10,000,000, and thus leave only£7,500,000 a year, whilst he leaves upon indirect taxation a burden of£13,000,000; a year, a burden, the Committee will bear in mind, which is not due to the war, but to the gross extravagance of the Government in regard to expenditure. And I am afraid that this is the last remission we are likely to have for some time to come, for the obvious reason that the Chancellor of the Exchequer is presenting this year an increase of expenditure of no less than£11,000,000. Since 1895, in a period of eight years, the expenditure of the country, owing to the gross extravagance of the Government, has risen by no less than£46,000,000; this year the Chancellor of the Exchequer has anticipated a reduction of£2,500,000. The Government anticipates a reduction next year of£2,500,000 in ordinary expenditure. This is from a Government which in eight years has increased the right the ordinary expenditure by£46,000,000, and even in the current year is increas- 298 ing it by£11,000,000. It is surely too much for us to expect to get any reduction of expenditure from the Government constructed on its present basis. I am afraid, therefore, that this is the last opportunity the right hon. Gentleman will have of giving any relief of taxation, and that makes it all the worse that he should have devoted the whole of his relief to direct taxation.
I have said something with regard to the expenditure of the country. The annual taxation imposed during the last three years amount to something like£33,250,000, while the elasticity of the revenue due to the increase of wealth and population has produced another£22,250,000 since the Government has been in office. They have therefore had the handling of no less than£55,500,000 Unfortunately, the increase of expenditure has been so great that it has swallowed up a large proportion of that, and these taxes on sugar, tea, corn, and so forth are really due to ordinary and not to war expenditure.
The right hon. Gentleman, in defending the way in which the Government have met the liabilities of war, put the cost of the war, at£217.000,000, and said that out of that sum£67,500,000 had been met from revenue. But the point as regards the Government is this: How much additional taxation have they imposed for war purposes? The liabilities were£217,000,000, but the extra taxation in the three years amounted only to£48,000,000. I am sorry the right hon. Gentleman fell into the fallacy which seemed to permeate the mind of the late Chancellor of the Exchequer. We had to point out over and over again that while it was quite right during a time of borrowing to suspend the Sinking Fund because it was exactly the same whether you applied it to the liquidation of new debt or to the purchase of old debt, it was not right, in considering how much had been met from additional taxation, of the Sinking Fund.
In conclusion, I wish to say a word in regard to the proposals of the Government concerning the Sinking Fund I am glad the right hon. Gentleman is going to reconstitute the Sinking Fund on its old basis, and make the charge of the 299 debt a fixed charge. We shall all agree to that, but I think it extraordinary that the right hon. Gentleman should have left the impression on the Committee that he was going greatly to increase the application of the Sinking Fund to the redemption of debt. In his last speech as Chancellor of the Exchequer his predecessor distinctly said that he intended as soon as peace came to increase the Sinking Fund, but the right hon. Gentleman, instead of increasing it, is actually diminishing it by£500,000. The whole argument of his predecessor in 1899, when he reduced the fixed charge from£25,000,000 to£23,000,000 (and the right hon. Gentleman adopted his view this afternoon) was that the amount of the fixed charge ought to bear some relation to the burden of the debt. The Sinking Fund in 1899 was just under£6,000,000, with a debt of£630.000,000. If that is a minimum Sinking Fund for a debt of£630,000,000, the Sinking Fund for a debt of£800,000,000, as it now is, ought to be£7,000,000 or£8,000,000 a year. If that amount is added with the interest to the old Sinking Fund, the amount is not£27,000,000 as the right hon. Gentleman proposes, but more like£31,000,000 or£32,000,000 a year. The right hon. Gentleman said the proportion of the Sinking Fund had increased of late years. But£120,000,000 had been added to the total of the debt. Looking to the fact that we are giving£12,000,000 to remission of taxation, the right hon. Gentleman makes a most miserable proposal in regard to the extinction of debt. I should have thought that after the warning we have had in South Africa and China our experience there would have induced the Chancellor of the Exchequer to have made some better proposal. We shall have other opportunities of discussing the real blot on his proposals, namely that he is relieving the Income Tax payers to an unnecessary extent and not relieving the taxes upon the necessaries of life.
§ Mr. J. FITZALAN HOPE (Sheffield, Brightside)
We are not so heavily burdened now as in the past, for we enjoy very great immunity which we can hardly hope for in the future. In support of this view I should like to 300 call Sir Robert Giffen. Although we may not agree with all his theories, still on matters of finance his authority is undoubted. Sir Robert Giffen writing in The Times on January 10th last year said—The abnormal character of the financial period which began about 1860 and continued to a recent date should be distinctly recognised. So many fortunate circumstances at the same time cannot be counted on in the history of any country. The growth of real expenditure may indeed be expected to continue. … but in all other respects the conditions seem likely to be more ordinary. In the way of outlay, especially, to guard against the armaments of foreign Powers, the good fortune which rendered possible the penuriousness of the sixties and seventies has ceased. It may be doubted whether that penuriousness was always as well advised as it was popular. … Bnt in any case there cannot be a doubt that our former immunity from the common lot of nations is at an end. Great military Powers have become great naval Powers, and we must be strong by land as well as by sea if the Empire is to continue at all.He makes an estimate of what probably would have to be our normal expenditure in future, and he said that if it was£160,000,000 a year even then we should not be worse off than we were on the average in the sixties. This is borne out by a comparison of two other authorities, Mr. Dudley Baxter, who wrote in the year 1869, and the hon. and learned Member for Haddington, who spoke on this matter last year, and who has also spoken to-night. I notice that there was a slight variation in the hon. and learned Gentleman's statement, because last year he put the whole national income at no less than£1,750,000,000. To-night he takes it at£1,600,000,000, and of course if the latter figure is right the argument is somewhat invalidated, but only to a slight extent, and it remains substantially the same. Mr. Dudley Baxter in 1868 put the national income at£800,000,000, but the expenditure in 1868 was£68,000,000, and at the same proportion now, on the hon. Member's estimate of last year, it would have been£148,375,000; therefore on the figure we have heard to-night, we are better off in our expenditure than we were in 1868. Our expenditure is 8 per cent. now as against 8½per cent. then, and even if you add the burden of the rates it works out at about 11½per cent. of the total in each case. You really get a better 301 result if you compare the amount of our debt to the whole volume of national capital as estimated by the best authorities. Let me just say that I think the hon. and learned Gentleman underestimated the debt of France. As figures have been supplied to me by Monsieur Jules Roche the present debt in France amounts to an equivalent in English money of a sum representing no less than£1,535,000,000, or considerably more than double our own. Taking this proportion between the National Debt and the whole volume of capital I draw even more favourable conclusions. I take the figures of last year, namely£768,000,000 as the whole volume of the debt, and it is practically the same this year. In 1865 it was considerably more, for it was then£815,000,000. But according to Sir Robert Giffen's calculation, the total wealth of the country was somewhere about£6,000,000,000 in 1865 and now it is£15,000,000,000. Of course if you go back to more remote times you will find, taking what we owed in 1815, that it was 33 per cent. of our total estimated wealth, and by that calculation we arrive at the enormous total of£5,000,000,000. I suppose Sir Robert Giffen would be the first to acknowledge that in all these calculations there is a certain speculative element. Making a very large deduction for them, the fact remains that our debt in proportion to our national wealth is nothing like as great now as it was in the time of Mr. Gladstone's great Budget. I do not want to put this before the Committee in any way as depreciating, but as praising economy, but I especially deprecate the idea that either of our two great fighting services should suffer. I confess that I was a little concerned—by some remarks made by the Chancellor of the Exchequer about the growth of our Army expenditure, which I confess was somewhat different from the tenor we have heard from other speakers within the last few months from the Front Benches I know there are some hon. Members who think you can economise on the Regular Army by some definite development of the Auxiliaries, but I cannot think that they have thought out the difficulties of such a course. While on the one hand there is complaint of the 302 cost of the Regular Army, on the other hand there is complaint amongst the Auxiliary Forces of the increased amount of work which is now expected from them. I know that is a serious question, and I trust the Commission recently appointed will find some way out of it. If you are to depend less on your Regular, and more on your Auxiliary Forces, it is certain that you will have to get more work out of your Auxiliaries. The statement which has been made is totally misleading, and I cannot get away from this conclusion: that unless you are to depend more on the Auxiliaries, you must maintain a larger Regular Army and pay them more.
There is one little matter, perhaps rather technical but none the less important, I to which I would draw the Committee's attention for a moment. I refer to the rule whereby unexpended balances at the end of the year are not allowed to be carried over by the Departments, but are obliged to fall into the Sinking Fund. That, I believe, leads to great extravagance, because it entirely takes away from the officers of the Department any incentive to economy. They know that if they economise it is not they nor their work that will benefit by that economy. This matter was gone into by a War Office Committee some two years ago, and it was very distinctly condemned, and several instances were then brought up of the extravagance to which it led. It is not the practice in Germany, and although I know that very strict constitutional jurists will be against me, I think we will economise much more by allowing these balances to be brought forward in the ordinary way of business. There are two courses open—the one is to reduce expenditure, the other is to find fresh sources of revenue, and I believe it is to the latter we shall have to go. I have not the time nor the wish to consider this matter just now, but I will just mention this fact. Last year we re-organised the tariff of the Transvaal on this kind of basis. It was 7½per cent. on most things; it was I nothing on necessities and materials for the development of the country; it was more on luxuries If we applied that tariff at home, I believe that£8,000,000 a year is a very low estimate 303 of what would be gained without inflicting any palpable injury on the consumer. But if the consumer is the plea, let us consider that now in the course of taxation the consumer is very severely hit. I do not speak of the tax on corn which is now to be remitted. I have always thought that the burden of that disappeared in competition and was paid by the foreigner I am bound to say that if the result of the remission is that food becomes any cheaper next year I shall be very glad, but I shall be much surprised. Undoubtedly the Sugar and Tea Duties do press very severely. I think that, roughly speaking, the duty on sugar amounts to something like 30 per cent.ad valorem,and on tea to 75 or 80 per cent. I do believe, if remission had to be given to indirect taxation, that it would have been more appreciated on either of these items. Personally I believe we shall have to go further and extend our basis of taxation, and get more out of the foreigner who competes with us. I confess I think that the Estimates of the Chancellor of the Exchequer are a little sanguine as to the future. I hope, however, that I may be wrong. But, whatever the means, the duty remains, and whatever the unpopularity we may temporarily incur, it would be nothing to the maledictions, both loud and deep, that would fall in the hour of trial upon a Government that had failed to tell the people what they knew to be the truth and to call on them to make timely provision for the common need.
§ MR. EMMOTT (Oldham)
The Budget which the right hon. gentleman the Chancellor of the Exchequer has submitted to the House tonight has been variously described. We have been told that it is a dissolution Budget, and that the Government are riding for a fall. Personally, I would describe it, in the language of the cricket field, as an attempt "to stop a rot." It must have been a source of satisfaction to the Chancellor of the Exchequer to be able to propose such a large reduction of taxation in this his first year's Budget. The question of the Sinking Fund has been dealt with so fully by hon. Members on both sides of the House that I will not say more than this with regard to 304 it, that it must be evident, even if we get the money from the Transvaal and from China, that the additional provision being made for the Sinking. Fund is not at all in proportion to the addition that has been made by the nation to the National Debt. The great point on which I think the Chancellor of the Exchequer is to be congratulated is in reference to the remission of the Corn Duty. There is no doubt that some hon. Members opposite are bitterly disappointed with regard to this, but, personally, I rejoice that this is not to be a permanent tax. It was, to a small extent I admit, a protective tax. It certainly bore more hardly on the very poor than any other tax, and I rejoice that the right hon. Gentleman has seen his way to remit it. Speaking, in my constituency last night I said that if the Chancellor of the Exchequer reduced the Income Tax by 3d. he would have no money left for further remission of taxation. The course of events has proved the evil of making prophesies before one knows the facts. The right hon. Gentleman has not only reduced the Income Tax by Id. more than I foreshadowed, but he has remitted the Corn Duty as well.
§ And it being half-past Seven of the Clock, the Chairman left the Chair to make his Report to the House.
§ Committee report Progress.
§ To sit again this evening.