§ Motion made and Question proposed: "That the Customs duty now charged on tea shall continue to be charged until the first day of July, nineteen hundred and ten, that is to say:—
§ Tea, the pound … … fivepence."
§ —[The Chancellor of the Exchequer.]
§ Mr. E. G. PRETYMAN
I think that this discussion which we are engaged in is rather more than an ordinary Debate. It is one of the greatest issues and one of the greatest struggles in which our Parliament has been engaged for a generation. That being so, it seems worth while in a word or two to make just a mention of the forces which are arrayed on either side of the House, and the peculiar issues which are at stake. We on this side of the House are few in numbers, but I do not think that hon. Gentlemen opposite will deny that we represent a moral force in the country, which is greater in influence than our mere numbers in the Division Lobbies, and that we are entitled, and I put forward the claim, to consideration for the arguments which we use not merely in reference to our numbers in the Lobby, but to the forces which we represent in the country. The Government and hon. Members who support them are strong in numbers, but they do lack the force of public opinion behind them—["No, no."] Yes, that is capable of proof. I do not mean to imitate hon. Gentlemen in making assertions which I cannot prove. I was not allowed to continue my sentence; the sentence was this: They do not carry public opinion behind them so far as that has been established by any election or by any test. I do not take my statement further than that.
908 What test was applied at the last election? Will hon. Gentlemen on the opposite side maintain for one moment that the issues upon which the last election were fought are the issues which we are discussing in this place? ["Yes."] That cannot be substantiated. What were the issues? To enumerate them, the issues upon which the General Election were fought were four in number. They were Chinese labour. ["No, no."] Yes; that cannot be denied—does any hon. Gentleman deny it? I merely make the statement that was one of four great issues. The second of the four great issues was the cheap loaf; the third great issue was the reduction of public expenditure; and the fourth great issue I may summarise in two words—"pulpit politics." I do not put that forward as a controversial matter, but as a fact, and I think a generally agreed fact. I do not deny it is a fact that it is convenient to hon. Members opposite to have forgotten. It may be convenient to them to have forgotten it, but I recall it because it is germane to the issues now before us. On those issues I have mentioned I do not think the party have a satisfactory record before the country after three years of office, and therefore they turn from those objects which were the objects on which the country was asked to decide at the last opportunity they had, and they have now come to the House of Commons and have proposed Socialism. Hon. Members below the Gangway laugh, but they have been endorsing this Budget from one end of the country to the other because it embodies Socialistic principles. We had a misreport of a statement by the Parliamentary Secretary of the Local Government Board. He has denied the statement which was attributed to him, but I do not think that statement was required, because it is obvious from the speeches which we have heard from the Chancellor of the Exchequer and from the right hon. Gentleman the Member for Dundee, who spoke last in the Debate, that it is Socialism and nothing else which is the foundation of this Budget.
909 I proceed to prove my assertion as far as I can, and why do I say that? The Socialistic propaganda to which the country has been treated during the past few years consists of two proposals: First we have the general recital of all the ills to which flesh is heir to, and all the troubles from which all the poorer classes in this country suffer from. We have that followed by a contrast with a sort of millennium which might follow when everybody's wishes were to be gratified, and in the second place we have the exaggerated statement of facts that the millennium can be reached by taxation on property. That I venture to put forward as a generalised epitome of what Socialism amounts to as it is put before the country. I appeal to the House whether that is not a correct epitome of the speeches which we have heard from the Chancellor of the Exchequer and the right hon. Gentleman the Member for Dundee. Those speeches consist of nothing else than a statement of all the evils from which this country is suffering, and a suggestion that could be mitigated, elevated, or even abolished by the kind of taxation which is proposed by the right hon. Gentleman the Chancellor of the Exchequer. The right hon. Gentleman the Member for Dundee, in his speech last night, boasted that this Budget was a proof that the resources of Free Trade were not exhausted, and he challenged, and in fact he derided hon. Gentlemen on this side of the House, because he said we had supposed the Government to be arrested by the dead wall of Cobdenite principles. We did not think they were arrested by the dead wall of Cobdenite principles. We thought they were arrested by the dead wall of common honesty. The right hon. Gentleman shakes his head, but I think when he has examined the figures which he proposes he will see that he has confiscated what practically amounts to the entire income of certain individuals in the population. He shakes his head, but that, I am afraid, will not help the individuals who are going to be ruined. I do not call that common honesty, especially when the individuals are few and the persons who are supposed to be benefited are many.
I do not think either the general propaganda is very honest, because we have the spectacle of hon. Gentlemen opposite when they are discoursing on Free Trade, and when they are never tired of telling the working classes of this country they are in a better position, they are better 910 off, and that they have advantages which are denied to any other working class in any other country. When they are discussing taxation they tell this same working class that they are suffering. They draw a lurid picture of the overcrowding and of the suffering. Yes, but I beg to observe this, that both Free Trade and what is called landlordism have co-existed for a great many years, and what right have hon. Gentlemen opposite to attribute every advantage which is possessed by the working classes of this country to Free Trade, and every disadvantage which they possess to the existence of property and of capital? There is no proof of one assertion any more than the other, and I have never yet known any hon. Gentleman attempt to prove it on the platform. It is an argument ad hoc. Anybody who studies the conditions or the influences which govern the complex position of the working classes in a complex civilisation such as ours knows that they are not to be disposed of by ex parte platform statements of that description. We must go into detail, but not as the right hon. Gentleman appears to have done in this Budget, by including every Socialistic nostrum which has been suggested during the last two or three years, and embodied in concrete legislation absolutely regardless of consequences. I wonder what advan-take there is in proving hardships to the right hon. Gentleman and a Government with a majority like theirs. Will the right hon. Gentleman, if hardships are proved, consider them?
§ Mr. PRETYMAN
Will he do justice and fairness. I hope that may be done, but I am bound to say some of us rather come down to this House feeling that we are like the lamb in the fable. We are told that we foul the water, and that it is useless to say we are down stream. We shall be devoured all the same whether we are down stream or not. We had the last speech in the Debate from the right hon. Gentleman who represents Dundee. He is President of the Board of Trade, and he represents certainly many influences which are of great interest to the House. I do not think that we can possibly accept for a moment his statement as to the origin of taxation upon land, and the reasons why land should be differentially treated from any other form of property. He stated reasons why land should be differently treated. There is only one reason 911 why land has had different treatment from any other form of property. That is because originally it was the only form of property, and therefore rates and taxes were originally imposed on land because it was the only property which could bear those. Therefore, as other forma of property have grown and increased, it naturally happens that the burden has not been shifted as the abilities to bear them have grown in other classes of property relative to the ability of the land. There is a survival of heavy taxation on land out of proportion to the taxation which is borne by other forms of property. It is entirely a delusion to suppose that in its essence property in land as regards taxation differs from any other form of property. Let us examine that more closely. The management of land is a business, just like any other business, and if you look at land and money together land is raw material, money is currency, and when you are placing taxes on land you cannot pay in land—you can only pay in money. Therefore it is essential that those taxes when they are placed on land, just as on any other business, should only be placed upon the actual results in currency of any completed transaction. That is a most important principle, because otherwise what happens? Industry is planted in any form on the land or in any other direction. It is planted by capital, it is tended by labour, it is guarded by the State; and the State naturally demands its share of the fruit when the harvest is ripe. But is that the principle which the right hon. Gentleman adopts with regard to land? He does not wait until the fruit is ripe. He descends in the earlier stage of growth, when there is no fruit, and when there is nothing which can be realised at all with which to pay the tax. He interrupts the growth of the industry.
§ Mr. PRETYMAN
The industry of agriculture, the industry of developing land. That interruption is an evidence of the mind with which hon. Gentlemen approach this question. I do not for one moment accuse them of unfairness; I accuse them only of not having studied the question. The hon. Gentleman smiles, but I think he has some confusion of mind between running about and making statements on platforms and having a real knowledge of the working of an industry in which one is engaged. The two things are not quite the same. To read about taxation and 912 the management of land in books, to cull theories from what you read, and to go and expound those theories on the platform is one thing; to get a living out of the cultivation of land is something totally different. I venture to point out to the Government that in taxing land they are placing taxes not merely upon an industry, but upon the most important industry in the country, an industry which is as tender as any other industry, which, like any other industry, is prepared to bear its fair share of the burden of taxation, but, like any other industry, cannot afford to be strangled at its birth. From what source is the owner of agricultural land to obtain the money to pay the tax of one halfpenny in the pound upon the capital value which he is annually to pay—
§ Mr. PRETYMAN
Perhaps the right hon. Gentleman will allow me to complete my sentence. I ask from what source will the owner of agricultural estate obtain the halfpenny in the pound upon capital value which he is to pay for ungotten minerals? There is no source from which it can be obtained. The owner of an agricultural estate is to be charged on the whole capital value of the undeveloped minerals—on what principle? That he will not sell them. How is the right hon. Gentleman going to distinguish whether the owner of these undeveloped minerals will not sell or cannot sell? What is the test to be? The hon. Member for Newcastle-under-Lyme is smiling, as though I had put forward a ridiculous proposition. Does the hon. Member suppose that every undeveloped mineral field the existence of which is known could be sold to-morrow for development?
§ Mr. PRETYMAN
I am glad to know that there is a point of injustice beyond which the hon. Member is not prepared to go, and that he imagines that that point of injustice has not been reached by the Chancellor of the Exchequer. But it has been reached. I read the right hon. Gentleman's statement most carefully, and I entirely admit—it must be so—that the 913 ½d. in the £ on undeveloped building values cannot be charged on purely agricultural land. We are much obliged for that concession, but I do not see how it could be. You might as well say that you would not charge the owner of inland property for any salt water found upon his estate. I do not think the right hon. Gentleman deserves many thanks for that gracious concession. But he does propose to charge the owner of agricultural property for ungotten minerals, and he has not indicated from what source that tax is to be found, nor has he said by what means the owner is to be enabled to realise any of the value of his property. I can assure the President of the Board of Trade that he is doing a great injury by placing taxes of this description upon the industry of land. By attempting to place higher taxation upon land treated as an industry and as the raw material of an industry he is irreparably injuring the interests concerned in that industry. What did the hon. Member for the Blackfriars Division of Glasgow say yesterday? He objected to the tax on petrol. Why? Because he thought it might to some extent interfere with the engineering industry, and he did not like a tax being imposed which might tend to reduce employment in that industry. I sympathise with the hon. Gentleman, and I see the justice of his view. But surely he is not so set on the taxation of land that he cannot give some fair consideration to another industry than his own. Can he not see that the agricultural labourer is as much interested in resisting the penal taxation of his industry as the hon. Gentleman's constituents are in resisting the tax on petrol which affects their industry? The point in regard to this land taxation is not that it is going to ruin the comparatively few individuals who happen to own the land, but that it is going to deprive those who cultivate and work upon the land of the source of their wages. The industry in land concerns owners, occupiers, and labourers, and I say, without fear of contradiction, that there is no industry in which there is greater unity of feeling, and where more mutual sacrifices are made between employers and employed than in the agricultural industry. What is the right hon. Gentleman's object in introducing this Budget and in proposing this heavy taxation? His object, as he states it, is to give pensions to the aged and to provide insurance for the sick. Why, Sir, those who own land were giving pensions to the aged and paying wages to the sick before 914 the right hon. Gentleman was born, and now he will deprive us of the power to do it. That is the present which he offers to the agricultural labourer.
Then there was another fallacy put forward by the President of the Board of Trade. He was good enough to state, and I think it has been generally agreed on that side of the House, that the imposition of these penal taxes—but I will not say "penal," I do not wish to use any adjectives—the imposition of these taxes upon unearned increment and undeveloped land would cheapen land. There is a confusion of thought on this point. It may reduce the price, but it does not follow that it would cheapen the commodity. What will the price be? The price will be the difference between the present value and the value left when the tax has been paid. But you have to pay the tax, and all the difference will be that the owner of land will have the residue of the value and the State will have the tax. What difference will it make to the man who has to pay in the future, so far as the price is concerned, whether he pays all to the owner or something to the owner and something to the State? There is no lowering of price in reality—absolutely none.
The right hon. Gentleman also has another theory of taxation, and I think a very remarkable one. He says that indirect taxes will fail us in war, and that therefore we ought now in peace to impose as heavy direct taxes as possible. I do not know whether that is the principle upon which the right hon. Gentleman manages his Department, but it is not the principle upon which those over whose interests he presides manage their businesses. That if the principle holds good, as it does, that indirect taxes certainly cannot be increased in time of war, and may very probably have to be reduced, I should say that the old principle is the sound one, namely, to conserve your sources of direct taxation, particularly the income tax, so that when the necessity arises you have an unused well from which you can draw until the emergency is passed. We now have the theory that the emergency well is to be drawn upon and nearly emptied in peace time. Upon what resource will the right hon. Gentleman rely when the trouble comes? Further, the right hon. Gentleman's praise to this Budget is that nothing in it touches the physical efficiency of labour. Again, I think there is some lack of perception of the difference between 915 the apparent incidence and the real incidence of a tax. It is true that labour will in some cases pay nothing, and in other cases only a very small proportion, of the direct taxation thrown by this Budget upon the nation. But is there no injury to those who lose their employment through it? Does that involve no loss to the physical efficiency of labour? What is the difficulty of labour at this moment? Will any hon. Gentleman below the Gangway deny that the difficulty with which labour is confronted at this moment is unemployment? I say that the Budget is the worst blow at unemployment. [MINISTERIAL cheers.] Hon. Gentlemen are welcome to that slip; I think my meaning is quite clear. I consider that as regards agricultural land particularly, and the industries which depend upon, and are interlocked with the development of land, those industries will suffer to an extent which will greatly aggravate unemployment, and tend to drive labour from the country districts into the towns even more than is the case at present. There is one further remark of the right hon. Gentleman to which I wish to refer. He suggested that the landlords and landowners who were hit hard by these new taxes would not be so mean as to reduce their benefactions and charities. It is not a question of desire; it is a question of power and capacity. Where are they to find the money? I do not know whether the right hon. Gentleman did me the honour to read the letter which I sent to "The Times" yesterday. Possibly not. But how is a landowner in that position to find the money to continue either work upon his estate or work which he has been accustomed to do for the benefit of his poorer neighbours? Nobody would desire to reduce his charitable expenditure provided he had the money, but if the money is taken from him in taxation he must by some means or other reduce his expenditure; he must either discharge people in his employment or reduce the subscriptions which he has hitherto been able to give.
I would now say something specially with regard to land. Whence does the special hardship in the taxation of land arise? There is one reason mainly, and one reason—I want to say everything points to one reason, to one method—in which taxation both on income, and of death duties, falls more heavily upon agricultural land than upon any other class of property. That reason is this: the 916 method of assessment which is adopted in dealing with it. Agricultural property, in fact, all realty, is assessed under what is known as Schedule A. That means that the gross rental is taken, less certain definite outgoings, such as tithes and rates, and that the allowance of one-sixth upon buildings and one-eighth upon land is made from the difference, quite regardless of what the actual expenditure may be in these respects; and that that having been done, the residue is treated as actual income, and is charged with income tax, and is the basis of the charge, and that alone. It is a matter of common knowledge that in a very large proportion of agricultural estates that allowance is wholly and entirely insufficient. It is a tradition—and I am happy to say I believe it is a sound tradition of those who own agricultural land in England and Scotland—that the claims of the estate come first in regard to the incomes which are derived from it. It is the first duty of the owner of the land to provide for the requirements of the estate, and it is not until those requirements are provided for that he expects to obtain any income for himself. That the right hon. Gentleman the Chancellor of the Exchequer practically admitted in the very complimentary expression which he made use of in regard to ownership of agricultural land. I am sure the owners of land are grateful for that recognition, but they would still be more grateful if he would follow up that recognition by acting upon the knowledge he appears to possess, and which, when we read the Budget, we thought he could not have possessed; and if he would treat the owners of land as the owners of other classes of property are treated. We desire to shirk no burdens. Where the owner of land has a free income from the land which he can spend at will, or which he does spend at will upon his own personal amusement or private advantage, I say he ought to be charged, and he ought to pay, rates of duty and taxation upon it exactly as would the owner of an income derived from any other source. But by what possible fair process can a man who has an income of only £1,000 to spend upon himself pay on that income death duties based upon an income of £2,000 or £3,000, while the possessor of a similar income from other property will pay upon £1,000? We do suggest to the right hon. Gentleman that that grievance could be remedied by the very simple expedient of taking the ownership of land out of Schedule A and putting it into Schedule D. 917 Now that suggestion arises from the interruption which the right hon. Gentleman the Chancellor of the Exchequer made to some remarks dealing with this very subject which were made by my right hon. Friend his predecessor in office. He then, in reply to the words of the right hon. Gentleman, said that the difficulty with regard to the assessment under Schedule A was that sometimes the allowance of 1–6th was sometimes too much and sometimes it was too little. That point would be met by removing the assessments under Schedule A and placing them under Schedule D, where, if the allowance is too much, the tax will be raised, and where it is too little the tax will be made less.
§ Mr. LLOYD-GEORGE
May I be allowed to say that the difficulty is this, as the right hon. Gentleman knows perfectly well, that it would involve examining the accounts of every estate in the kingdom—it would practically involve an annual audit of every estate in the kingdom. I should like to hear the hon. Member deal with that.
§ Mr. PRETYMAN
The right hon. Gentleman has anticipated in his remarks what I was going to ask. It is the very point with which I proposed to deal. The difficulty was caused by placing land under Schedule A. I admit the landowners were consenting parties. They consented for two reasons. First of all because no such inquisition was proposed at all for any other purpose; secondly, because the rate of tax secured seemed not over unreasonable. You may stand to a burden or an inconvenience in regard to a small matter. It is just a question how much it is worth to avoid an inquisition. It might be worth while with such taxes as we have been in the habit of paying. It might be worth while with a double income tax of 8d. But when it is a double income tax of 1s. 2d. and a super-tax, and death duties of 5s., with a reduced income to tax, then that is a burden which we cannot afford to double, and rather than have it doubled we prefer to have the inquisition. There is another reason, that an inquisition is proposed now. The right hon. Gentleman proposes, in regard to any tax on land values for his own purposes that there should be a most complete inquisition into the ownership of all kinds of property. I claim in return, if there is to be an inquisition to enable the right hon. Gentleman to increase our burdens, we are entitled to demand a fair inquisition in order that our burdens may be reduced 918 where the case warrants. My proposal is not, I think, without its advantages. I think if there is one feature in the right hon. Gentleman's Budget, which he probably introduced with rather less pleasure than any other, one in regard to which he has more qualms than in regard to any other, it was the abolition of the old Sinking Fund. For what purposes does he propose to apply the old Sinking Fund? He proposes to apply it to a Development Grant. But the landlords' expenditure is doing exactly what the Development Grant is proposed for. Exactly!—and without cost to the State, without expensive machinery, and that waste which inevitably accompanies State action in matters of that description where they are carried into detail. I do not propose he should replace the Development Grant, but I do say with regard to detailed local work, that work can be done by the owners of land infinitely better, with less waste and with better results, than it can be if done by the State. The function of the State—we do not desire—not one word will I say to suggest to the right hon. Gentleman that he should withdraw his suggestion of a Development Grant. We require a Development Grant, but that Development Grant should be limited to such objects as the State can effect better than the private owner. There ought to be co-operation. I venture to say the right hon. Gentleman's objects will be much more usefully and much more satisfactorily attained if he will agree to place landowners under schedule D, and if he will allow deductions under schedule D for such objects on which money is expended by the landowners, and which he contemplates spending the State money upon in the Development Grant, and thus he will be able to reduce the Development Grant. He will also be able to escape from an absolutely untenable Parliamentary position, that the Development Grant, which may be in amount from £3,000,000 or £4,000,000 in one year, should be expended at the discretion of a body outside Parliament.
§ Mr. PRETYMAN
The right hon. Gentleman shakes his head, but that is exactly the appearance, the interpretation, these proposals have, and that has been hitherto accepted on both sides of the House. I am glad to say that he recognises that that is not a possibility of the situation, but that only increases his difficulty; and I think that if he will put 919 landowners under schedule D, and will give his Development Grant for public works, which can be combined with the exertions of the landowners, there will be great economy to the State—greater efficiency; he will be able to apportion definitely the Parliamentary grant annually at the discretion of Parliament to purposes of the Development Grant: he will be able to continue to devote his old Sinking Fund to the purpose for which it has been devoted for many years, namely, the reduction of the National Debt.
If the right hon. Gentleman will not do that, it means that he is destroying individual effort by taxation, and that he is endeavouring to replace it by State action. Now, I do add to the appeal to the right hon. Gentleman as to the character of the inhabitants of this country. If there is one fact more than another which distinguishes our fellow countrymen among the nations of the world it is their initiative and their power of action when they are thrown upon their own resources. We have a genius for individual action. When we act as a State in public matters, I am afraid we fall far behind other nations.
That is the character of our people. We cannot alter it, and the Chancellor of the Exchequer, who, in a vain desire to imitate other nations who are differently built to ourselves, tries to destroy individualism, he will destroy good individualism, and he will place in its place bad Socialism. We are not built that way. Why, if you follow the growth of Empire in India and South Africa, from Lord Clive to Cecil Rhodes—if you take all these men, what has built up our Empire but individual effort? What initiative, I will ask the right hon. Gentleman and hon. Members opposite, what initiative has the State ever taken in the expansion of the Empire? The State has stepped in at a later stage, and the State has developed and confirmed what individual initiative has begun. But it is the beginning that is everything. Of course, when the structure, the burden, became too heavy for the individual to bear, it has been taken over and developed by the State. That is the history of our Empire; that is the history of most of our great institutions to-day. What about co-operation, friendly societies; what about the innumerable evidences of private effort with which the country abounds? I believe that if the right hon. 920 Gentleman will in this respect preserve private effort so far as it is possible, and will only replace it to a minimum extent by State action, he will be doing much better work. If I want a proof of that I could find it in the speech which he himself referred to. Look at afforestation. I will give that as an example of what I mean. It covers the whole ground. What is proposed? what does it appear is proposed? So far as we have gathered from the suggestions made the proposals of the right hon. Gentleman propose to place these heavy burdens upon landowners, and to give them no special treatment in regard to expenditure on woodlands—to place these enormous sums of money—
§ Mr. PRETYMAN
Well, I am glad to hear it. He says he does propose to give something. I am very thankful to the right hon. Gentleman, and the landlords will be obliged for it. Well, the right hon. Gentleman's proposals are as yet, let me say, in a form in which it is difficult for us to understand them. Therefore I will not go on to contrast them with anything. But I put two abstract propositions. On the one side you have the possibility of choking private effort, together with the heavy taxation of agricultural property, irrespective of whether or not it develops afforestation. That is a possibility which we fear from the policy of the right hon. Gentleman. On the other hand, and in return for that, that they are to pay an immense sum of Parliamentary money, to be devoted to a Development Grant, which is to be spent in planting woods, which landlords will no longer be able to plant themselves. The policy I advocate is this; if there be a Development Grant that Development Grant should concern itself with afforestation, but it should not concern itself with the planting of large areas. It should concern itself with experiments, with development, and the acquisition of information; with other matters which are rather beyond the reach of the ordinary private landlord, with research and scientific examination, with forestry in all its branches. This Development Grant, I say, should be used for employment, and the owners of land should be encouraged through taxation to spend their own money in increasing the afforestation of the country, and not that the State should undertake it. If I want to find a reason I have not to look further than the Return 921 issued to this House by His Majesty's Department of Woods and Forests. I observe that the Woods and Forests Department in the various woods under their charge, excluding the Windsor Parks, had in receipts during the year from their own management £23,904, and that their expenditure was £25,171. I do not think that is an illustration of very profitable State management, and I am afraid that the right hon. Gentleman, if he follows the suggestion of the Royal Commission and entered on an undertaking supposed to cover eventually nine millions of acres, the loss which is small in amount in regard to the transaction I have mentioned would mean national disaster in an undertaking of that magnitude. I have so far only been dealing with the increased burden put upon the community in regard to existing taxation. I should like to say a few words now upon the entirely new forms of taxation which are proposed. I think the right hon. Gentleman is here embarking on a very doubtful experiment. His proposals are four in number. By the first he proposes to place 20 per cent. on what he calls unearned increment. We have heard a great deal of unearned increment as an oratorical unit upon the platforms. No one has ever yet explained what unearned increment means—never, at any rate, so that I could understand it. I have no doubt the right hon. Baronet (Sir John Brunner) pities my want of understanding. Perhaps I have so much experience in land that I see more of the difficulties than those who have not quite so much. How does the right hon. Gentleman propose to arrive at this unearned increment? He proposes to arrive at it by an original valuation, which, I understand, is to be made by the owner; but on what principle is the owner to be asked to give this valuation? I venture to tell the right hon. Gentleman across the floor of the House that I should absolutely refuse to make any such valuation at all, not on the ground that I would not, but on the ground that I could not. It is an extremely difficult calculation to say what is the value of land in urban districts. On what hypothesis and by what exercise of ingenuity is anyone to say what the valuation is to be when this Budget is passed? The owner is to estimate it, but the effect of the passing of this Budget—if it is to pass—and of this particular enactment in the Budget—if it is to pass—will make it impossible to make this calculation. By what principle can the right 922 hon. Gentleman go to the owner of land in the neighbourhood of a town and demand from him at the point of a bayonet to state what the valuation of his land is to be? And what is to be the effect of the statement when made? The landowner is between the devil and the deep sea. If the owner of the land over-values, he will be paying a tax higher than he ought to pay; if he under-values it he is told by the right hon. Gentleman that severe and unfortunate consequences will ensue for him. What is he to do? I do not believe that in the history of nations, certainly in the history of taxation, such a proposal was ever made. It is grotesque to hear the statements made by irresponsible speakers, upon platforms, but that is one thing; but for the Chancellor of the Exchequer to come down here with such a proposal and attempt to pass it into law is somewhat past a joke. You upset a great industry, you create uncertainty in the minds of investors, and you propose an absolutely fantastic method of obtaining the value. The Prime Minister appears to think my statement is a strange one.
§ Mr. PRETYMAN
He does, but I will ask the Prime Minister himself. Perhaps he will explain to us presently by what possible means he expects the owner of urban land to state exactly what value his land bears so as to be subjected to the burden of taxation which this Budget is going to impose. How is he going to get it? A long period will elapse before the market will adjust itself to the new conditions. A new standard of values altogether would have to be established. A private owner, before any of these transactions have taken place, is, when in absolute ignorance of what the value of his own land, to be asked to state the value upon which his land ought to be taxed, and if he states it wrong he is to be subjected to a very high penalty. A more unfair, more ludicrous, a more monstrous, a more preposterous, and a more impossible proposal was never put before any legislature. On what ground? Why, the ground is even worse. If I could find more adjectives I should do so to characterise the ground, but I have exhausted my adjectives over the right hon. Gentleman's other effort, and I leave the House to imagine what it is that should be applied to the object which it desires to serve. Now what is that? That is that a certain community has been expending public money out of the rates, and that that has enhanced the 923 value of property owned by private individuals in that particular area, and that therefore that is an injustice, and that the increment which comes to the owner of the land should be taken by the public. [Cries of "Part of it."] Yes, part of it; part of the increment is to be taken by the public. By what public? By the public who spent the money? Why, I wonder what the city of Glasgow would think. The hon. Member for the Blackfriars Division of Glasgow is, I believe, an advocate of the taxation of land values, and he thinks that the city of Glasgow has expended large sums of public money which has absolutely gone into the pockets of private owners. He desires the town of Glasgow should get some of that back. Does he consider the proposals of the right hon. Gentleman the Chancellor of the Exchequer are going to help him? Here we have the spectacle of the local authority and the private individual squabbling as to which of them is to have a certain proportion of the approved value of a piece of land. The right hon. Gentleman the Chancellor of the Exchequer comes down and says, "I will settle this for you by taking the lot for myself," as illustrating, I suppose, the well-known fable of the fox and the piece of cheese. I do not think these communities will agree to that. Then he proposes ½d. in the £ upon all land which is undeveloped, and the ground upon which he proposed that tax was that the owner of valuable land which was required, or likely to be required in the near future, the owner of land which was increasing in value was in a different position to the man who reinvests his dividends. Yes, he is in a very different position. The man who reinvests his dividends has received the cash every year out of which he pays his tax. The man who has land increasing in valuation, and which the right hon. Gentleman suggested he will not sell, but which in 99 cases out of 100 he would sell, but cannot sell—it is exactly the same as regards minerals—could only pay this tax out of actual receipts if the whole of the building land in this country was to change hands within a year. A man may not be able to sell his land. He is forced into the market. Hon. Members opposite desire to force him into the market. If they do, what will be the consequence? Who is going to buy the land? Hon. Gentlemen opposite imagine thousands of eager artisans with their pockets full of money desirous of acquiring the whole of the building land and of erecting houses upon it. Of course the 924 proportion that could be taken by them would really be an infinitesimal part of the whole. Those who buy the land will for the most part be speculators. I am not speaking at random. That is what has been the result of similar legislation in other countries. In the United States land changes hands very quickly. It does not remain long in the hands of any individual. Notwithstanding what the right hon. Gentleman said, I maintain that in this country in most instances those who have land acknowledge their responsibility, and that a good deal of the money derived from it is spent by the owners of land in furthering improvements, in the promotion of charitable objects and for the benefit of the community. How many parks have been given by owners of land near towns? The benefactions of the owners of urban lands amount to a considerable sum, so if the land, instead of being held by men of that class, passes into the hands of speculators, who will hold it from year to year and then pass it on at an enhanced price, all that will be changed and the condition of those who hope to benefit will be ten times worse than it was before. I will just say one word on the question of reversion. I should like to ask the right hon. Gentleman a question about leases. He did not tell us what he meant by leases. Does he apply the term to an agricultural lease? There is no definition. Is it to be applied to an agricultural lease or to what may be called a rural lease? A man may have a house in a country district standing on 10 or 20 acres of land. He lets it at a peppercorn rent to a man who undertakes to put it in good repair on a 21 years' lease. That is a common case. At the end of that lease does the right hon. Gentleman propose to come down upon the owner and tax him? He has gone without rent for twenty-one years, and in return he is to receive the enhanced value of his property at the end of that period. Is that unearned increment? Does the right hon. Gentleman propose to tax that? I ask him to explain that point. I think by the time the right hon. Gentleman has guarded against all these things it will be Christmas.
Now I come to the death duties. What are death duties? They are duties upon capital. What is the capital of the nation? It is the property in the hands of the private individuals of the country, and when you are living upon that capital and spending it upon the annual expenditure of the year you are spending it much in 925 the same form as you would do by borrowing for the purposes of the Navy or any other purpose. That was tolerable when the amount was comparatively small, but it has now grown to a very large extent under these proposals. If the death duties remained as they were under the present graduation they would realise £18,600,000 on the right hon. Gentleman's calculation. Taxes are now proposed which will raise £26,000,000 from death duties, which is national capital to be taken and spent as revenue every year. In addition the right hon. Gentleman abolishes the old Sinking Fund, and he also takes £3,000,000 off the new Sinking Fund. I can remember no greater improvidence ever having been proposed by any responsible finance Minister to this House. After studying the speech of the Chancellor of the Exchequer very carefully I am bound to say that I do not believe the right hon. Gentleman has made himself master of this subject, which is one of great complexity and great difficulty. The right hon. Gentleman has not held his present office long, and this is his first Budget. I would suggest to him that before making himself responsible for enormously increasing a burden which falls with peculiar hardship upon a great number of his fellow citizens he should endeavour to make himself master of the principles upon which his taxation is based, and see that no injustice is inflicted by it.
I do not think much notice was taken of a small proposal which the right hon. Gentleman made to the House. On page 512 of the "Parliamentary Debates" containing his Budget speech the Chancellor of the Exchequer says he proposes to correct a small anomaly. Shortly put, the small anomaly alluded to is that at the present time under the Estate Duty Act if somebody dies and leaves property subject to a life interest, and then it passes on to the third person, if the person who has the life interest dies before the testator, the third person only pays one death duty. The right hon. Gentleman says that is an anomaly, and he proposes to treat the successor as though that person had taken the property, and two death duties are to be paid instead of one. That is of course an obvious injustice. I do not, however, bring it forward as an injustice, but simply to show that the right hon. Gentleman has not studied the principles upon which this Act is based. I would add that the right hon. Gentleman says 926 this was an anomaly which he believes was an accidental effect of the legislation of 1894.
§ Mr. PRETYMAN
The right hon. Gentleman says "Hear, hear." Does he know that the legislation of 1904 under the death duties imposed what was the introduction of an absolutely new principle which did not effect existing taxation, and was not based upon the same principle? Does he know that the estate duties are based upon property which passes at death, the property passing at the death of the deceased in which the deceased had an interest? It is the death duty which the State exacts on the death of an individual for the passing of the property, and it is a death duty pure and simple. The old duty was a succession duty. A succession duty is one thing, and a death duty is another. The right hon. Gentleman has confused the principles of a death duty, which is when a death actually occurs the property in which the deceased had an interest passes to somebody else, and pays a duty as a condition of so passing. That is the principle, and under that principle the duty can only be paid when a death occurs when the property passes. But a succession duty is wholly different and to impose a duty which is a death duty upon the death of a person who never had an interest in the property is a proposal which shows that the Chancellor of the Exchequer never even studied this question before making his proposals to the House. The total effect of these duties is so crushing upon individuals that they should be considered with the greatest care. This House will consider and discuss as a matter of the greatest importance the question whether an extra penny should or should not be put upon the income tax, but here we have a duty which, reduced to terms of income tax, means not a penny but shillings, and yet a question of that kind is decided without any consideration of the hardship which it will inflict. I will not deal with the licence duties, because that has been most amply and ably dealt with by the hon. Member for Ayr Burghs, and I could not add to what he has said. I will comment only upon one remark, which was made by the Postmaster-General, in which he stated that this was another method of obtaining the object which they desired in their Bill of last year.
§ Mr. PRETYMAN
I do not speak without the book, and if the House will bear with me a moment I will quote the exact words. The right hon. Gentleman said:—I admit that we attempted to deal with this matter last year in a somewhat different way.I will only say, in passing, that that is a rather valuable admission.
§ Mr. PRETYMAN
Because this is a Budget for taxation and we have put forward a suggestion from this side of the House that the right hon. Gentleman is attempting to obtain through the Budget objects which he has not been able to carry through the Legislature of the country by means of legislation. That suggestion has been repudiated, and if the words of the Postmaster-General do not amount to an admission of the accuracy of our suggestion, then I do not quite know their meaning.
§ Mr. BUXTON
What I endeavoured to point out to the House was that last year we endeavoured to deal with the question of licensing and the value of the property given by the State to the trade by giving a certain time limit, at the end of which the reversion would come to the State. That was rejected, and this year we are asking the trade to contribute something which may not be a very large sum to the general taxes which have to be imposed in a different way, because we are asking that year by year some portion of this monopoly value should go to the State. That is the submission which I put forward.
§ Mr. PRETYMAN
I do not think anything the right hon. Gentleman has said affects the point, and I cannot alter the opinion I have expressed. I quoted the right hon. Gentleman's own words, and I leave hon. Members to draw their own inference from them. In regard to intentions, I am not a lawyer, but I believe there is a legal maxim to the effect that intentions must be inferred from actions. It is not clear what the intentions of right hon. Gentlemen opposite are, and we have to infer them from their actions. When we see the character of their measures and their Budget we infer what has already been suggested, that they are attempting to carry through in the Budget objects which they have failed to attain by ordinary legislation. That is a ground for us discussing this Budget most fully, be- 928 cause we regard it not merely as an ordinary Budget, but as one embodying a large number of legislative proposals.
In conclusion, I would only say that the point which principally interests us is that I have seen some signs in the right hon. Gentleman's demeanour that he does even now desire to consider representations upon matters which arise in Debate on this side of the House, and that he is prepared to show a fair spirit in dealing with them. That is the matter with which we are principally concerned, and we can only judge the right hon. Gentleman by the actual proposals which he is prepared to make. We shall await those proposals with very great interest because, if he will believe me, the statement which I made in a communication in the Press on Monday is by no means overdrawn. There are large numbers of individuals in this country who will practically have their whole incomes withdrawn from them if taxation is imposed on the lines now proposed. I state that as a fact which I know.
§ Mr. PRETYMAN
The right hon. Gentleman shakes his head, but I do not know that he is prepared to refute the figures I have given. If he is I shall be glad to hear his reply. I observe that there has been an answer from the Noble Lord who presides over the Board of Agriculture, and he suggests that I should dismiss my agent. I beg to state that in matters of expenditure I am myself responsible, and I do not leave them to an agent. I take any responsibility of this kind upon my own shoulders. I state that not only in my case, but in innumerable cases landlords are spending upon their property practically the whole of what they can ever expect to receive for a very considerable number of years, and if that money is taken from them it will be taken not so much from them as from those who have hitherto been enjoying the benefits.
I apologise for the length at which I have dealt with this question, and I thank the right hon. Gentleman for the signs he has shown of attending to the suggestions I have made. I hope before those portions of the Budget to which I have referred pass into law the House will realise that this is a most serious question. Taxation is the most serious question that this House can be asked to deal with, because it is dangerous in itself. I would ask hon. Gentlemen below the Gangway not to mix up political, legislative, and 929 social questions too closely with taxation, because the incidence of taxes is difficult to follow. I hope in approaching this Budget we shall do so from a financial and a fair point of view, and I trust we may before these Debates are concluded be able to convince the right hon. Gentleman that many of his proposals—brought forward perhaps in good faith and with the desire to effect objects which the whole House has at heart—will inflict more injury on the individual than they will bring advantage to the State. I hope the Chancellor of the Exchequer will approach this question with the object of redressing those grievances and obtain the money be requires in a manner which will inflict less injury upon the whole community and yet provide for the obvious necessities of State expenditure.
§ The ATTORNEY-GENERAL (Sir William Robson)
I think that the able speech to which we have just listened calls for a reply. The hon. Member drew an inference favourable to his own party from the results of the by-elections, so far as they have advanced, but there has scarcely been time yet to notice the effect of this Budget on the electoral mind. The hon. Member denies that the Government have the right to introduce a Budget on these lines by reason of their mandate at the last General Election. Does he suggest that amongst the grave issues at that election there was not to be found Free Trade? The last election was essentially a Free Trade election. The country was called upon by both parties to decide between Tariff Reform and its appropriate finance on the one hand and Free Trade and its appropriate finance on the other hand. This is a Free Trade Budget; and I cannot imagine a more inexcusable dereliction of duty on the part of the Liberal party than to ignore what was more than a mandate—a command—to adjust the burdens of the people so that they should fall as little as possible upon their trade and industry. When hon. Gentlemen opposite indulge in some epithets of abuse, I think that we are entitled to ask for some discrimination in the selection of the epithets which they hurl at our heads. They say that this Budget is Socialism. The hon. Member said this is a Socialistic Budget. He seems to have convinced some of his friends of that.
§ The ATTORNEY-GENERAL
No one before made that particular charge in this House, and I think that the reason why that charge was not levied in the House was because of the admirable definition of Socialism given by the Leader of the Opposition, who said that Socialism means and can mean nothing else than that the community or the State is to take all the means of production in its own hands, and that private enterprise and private property are to come to an end. That is Socialism and nothing else. I do not think that the hon. Member can say that these Resolutions come within the category of what the right hon. Gentleman the Leader of the Opposition described as Socialism. With regard to the proposals as to ungotten minerals, what the Resolution proposed to bring under taxation is not ungotten minerals but the value of ungotten minerals. If hon. Members opposite are prepared to tax ungotten minerals instead of value I think they will find that they are putting their friends into a very serious position. The value in this connection is the market value. It means the price that can be got in the open market if you realise the minerals, and therefore the Government are not taxing a phantom or a speculation, but are taxing that which is capable of realisation.
§ Sir W. ROBSON
The hon. Member is entirely mistaken in supposing that the tax is on minerals which cannot be realised. I am not giving him anything fresh, but drawing his attention to the Resolution. The hon. Member opposite went on in his speech to refer to unearned increment, and he took Glasgow as an illustration. He said that these taxes would not lower prices.
§ Sir W. ROBSON
He said that the effect on the price to the purchaser would be no less. What, then, becomes of the terrifying argument of the Leader of the Opposition in this connection? He said that when the tax was laid on land in the neighbourhood of Glasgow the result would be such that he drew an alarming picture of what would happen. He said that not only would the market gardeners be edged out, but that the countryside would come in. There would be immigration into Glasgow. Why 931 should people go in except that land had been made cheaper? The right hon. Gentleman refers to an argument which is intended to bear a great part with reference to the increase in the death duties. The hon. Gentleman has adopted a most ingenious argument for adding to the horrors of this Budget. The Government has levied a super-tax on living persons and a death duty on the estates of persons who are dead, and who, whatever may be their misfortunes in their new state, will at all events not be called upon to pay taxes. In order to show what terrible burdens we are placing on the living person, the hon. Member has spread the death duties over the life of the existing taxpayer in the form of what the hon. Member calls income tax. The hon. Member said it is reducing it to income tax, and proved that the living person in one case will pay 6s. 5d. in the pound. The hon. Member's friends, not content with paying their own taxes, proceed to collect the taxes of their descendants—their sisters, their cousins, and their aunts.
§ Mr. PRETYMAN
The method which I adopted of calculating the actual incidence of the death duties in terms of income tax is the actual method adopted by the Committee appointed to consider the income tax, of which the right hon. Gentleman the Member for the Forest of Dean was the Chairman. Even when the new death duties were proposed by the late Sir W. Harcourt the ground on which they were proposed was that they were deferred graduated income tax.
§ Sir C. DILKE
Although it was very much against my opposition, that was the official position put before us by the Board of Inland Revenue.
§ Sir C. DILKE
It was not the Committee in this case. It was the Board of Inland Revenue. It was the Government.
§ Sir W. ROBSON
Still more will I advise the hon. Member opposite not to be misled by Governments. I am dealing with the plain methods which the hon. Member has chosen to adopt in order to magnify this burden of the income tax upon the living person. He has hypothetically assumed that the living person is to be treated as having upon him the 932 burden of those who come after him. In order to get up this terrifying account of the Budget the hon. Member has been obliged to go beyond the limits of ordinary human existence. The hon. Member supposed that a man—who, mind you, is cutting down his charities—will in future pay the death duties payable by absolute strangers. That is not a reasonable way of dealing with the burdens imposed by this Budget. He made another observation which I will deal with in a later stage of my remarks. I have only one remark with regard to the instance he gave. He said my right hon. Friend did not understand the difference between the principle of the succession duty and the general estate duty. Well, the anomaly which the right hon. Gentleman seeks to correct is of far too technical a character for me to go into now. It is one in which the Courts of Law very nearly agreed with the Government. The proposal was one to alter the result of a decision which construed the old Succession Duty Act in a way not intended by those who framed it. But the subject is too technical to deal with now. One cannot but think that the Government have two advantages which are not usual to Governments in Debates upon Budgets. The first is that the expenditure which has given rise to this taxation is nowhere denounced as excessive or wasteful—at all events, not on the other side of the House. I dare say there may be those who denounce it on this side of the House. Indeed, so far from being charged with extravagance, we are still charged with parsimony—[Mr. WYNDHAM: "Hear, hear"]—and the right hon. Gentleman the Member for Dover applauds that. Indeed, the Opposition say we are not spending enough—we are not taking too much from the taxpayer—we are taking too little. That is seriously the charge made against us. Therefore, we may look to the sort of Budget we should get from the Opposition, supposing their policy and suggestions were adopted, and the Bill had come to be presented to this House. My right hon. Friend has reminded the Committee of the sum of 4½ millions which the Opposition would have added to the cost of old age pensions. There are other matters. There is the Navy and the Army, as to which further expenditure was demanded by the Opposition. In addition to this, there is the further expenditure which the Opposition, judging from their policy, would have had to meet in relation to Irish land. 933 If you put these expenses together, on the most modest estimate I think they will come to 10 or 12 millions. [Cries of "More."] More, no doubt. Putting it at 10 millions, that is equal to fourpence in the pound on the income tax. I make no complaint as to the merits of the proposed expenditure, but we must approach this Budget with that consideration carefully in our minds. Now, there is another advantage which the Government have. They have the advantage of an Opposition which has in this matter shown very great courage and candour—it has put forward an alternative scheme of taxation. The Opposition do not even wait for our Budget in order to propose theirs. So that in discussing the Bill now before the Committee we ought not to discuss the proposals as though they were isolated proposals; we must discuss them by way of comparison. How do our proposals compare with those of the Opposition? How do the Government's proposed duties on stamps and the liquor monopoly compare with a tax on manufactured articles—articles which in a very large degree are raw materials for some of our most important industries? How does a tax on unearned increment or ungotten minerals compare with a tax on the export of coal, a branch of trade which is at the very foundation of our great system of sea transport?
§ Mr. E. H. CARLILE
On a point of order, Mr. Chairman. Is the right hon. Gentleman in order in discussing a Budget not before the House?
I think, in a general Budget Debate, it is not out of order to refer to other taxation proposals which have been made by other people.
§ Sir W. ROBSON
The hon. Gentleman need be under no apprehension that I am going to discuss Tariff Reform. I am only going to mention things by way of comparison. I was saying how would a tax on ungotten minerals compare with a tax on export coal, an article which is at the very foundation of our great system of sea transport?
§ Sir W. ROBSON
How would a supertax compare with a bread tax, a meat tax, or a milk tax, or a tax on any other necessaries of life? That is the real problem before the Committee. It is a problem of comparison. It is very easy indeed to hurl ill-considered epithets—perhaps well- 934 considered epithets—against the Budget as though there was not another Budget looming in the rear. The right hon. Gentleman the Leader of the Opposition said: "You are choosing taxes which have no elasticity." Well, I must say that I am not much in love with elastic taxes. If I were permitted to choose, I should like to choose taxes that could be stretched as little as possible. But how do their taxes compare with ours in the matter of elasticity? In 1907 we imported something like 154 millions of manufactured articles. About 26 millions were re-exported, leaving about 128 millions as the subject matter of the 10 per cent. tax which the hon. Gentlemen opposite recommend should be levied. On that amount they would obtain something like 12 millions; in other words it would be just about adequate to meet the expenditure which the Opposition have proposed in addition to that proposed by the Government. We have a deficit of about 16 millions. Their tax on manufactured articles would just about have covered the deficit they would have created, and which we have not created. Where would their elasticity be? Would the Opposition, when they found the deficit greater than they had expected turn the 10 into 20 per cent. on manufactured articles? When they had taxed manufactured articles they would still find some 16 millions facing them. Is the tax on food to be elastic? If so I should like to know what is to be the limit of its elasticity. It has proved amazingly elastic in protected countries; it was amazingly elastic when it prevailed here. The tax on food, according to the published Budget of the Opposition—the Glasgow Budget—would produce about eight millions a year. So if you take the whole of their taxes on manufactured articles and on food, the Tory Budget, according to their own showing, would still show a deficit of eight millions. How are they going to meet it? The Opposition would have to come to the taxes now proposed by the Government. Which of them would they select? I think I am entitled to ask that. We have been accused in pretty strong language of being blind, ignorant, and arbitrary. That is the language used against us by the Leader of the Opposition. But I noticed that he spoke with some reserve. He does not go to the same extreme in his arguments as in his language. He referred to the Government scheme in regard to the super-tax and graduation, and all he said was that he found it very stiff.
935 I do not think any Government dealing with the existing financial situation could solve it except by doing something which someone would find was stiff. That was the language of the right hon. Gentleman when he was dealing with this question. He spoke in the first instance with reserve, but as the Leader of the Opposition felt himself carried away by the Parliamentary eloquence, of which he is so great a master, his reserve disappeared, his rhetoric overcame his reserve, and then he gave us a denunciation of every tax that we proposed, and the super-tax and the increased death duties were overwhelmed and set aside in the remarks which he made to the Committee on the iniquity of the excessive taxation of capital. What did he leave himself for his next Budget, and what did he leave us now? The super-tax is put aside entirely by the denunciation of the licence duty. The taxes are, he said, the most atrocious form of taxation, and are evidently put on in a malicious and vindictive spirit. The increase of the income tax? He could not avail himself of that because he has warned us what an injury to the tax is inflicted by the way in which we have brought it up, or rather by the point at which it previously stood. Land taxes are anathema of anathema, and therefore he could not have resort to them. What has he left? There are only stamps and tobacco. Nothing but the Stock Exchange and the humble solace of the working classes. We cannot consider this Budget without considering the alternatives which you may have to solve the question. We ought to expend, it is said, at least £12,000,000 more, but when they have put before us their scheme of taxation it does not provide for anything more, so far as manufactured articles are concerned, than the excess, which is not part of this Budget at all, and it leaves them with £8,000,000 to get out of food, and they have to meet £8,000,000 more on their own showing. How are they going to get £8,000,000 more out of people? Is that to come out of the increased taxation of food? Apparently it is. So that the country, in criticising our Budget, must consider that on the showing of the Opposition as to their policy there is no substantial or practical alternative except to meet the expenditure to an even larger extent by a tax upon the necessaries of life.
I think when the right hon. Gentlemen see to what they have committed themselves, when bye-elections have done their worst and when a general election has fol- 936 lowed in their wake, and given right hon. Gentlemen opposite the great majority that they hope, there will come a time when they will have to deal with this problem, and they will find themselves driven to the taxes to which we have had recourse, and they will not be so ready to charge political opponents with motives of sheer vindictiveness. I think we have shown a financial situation which left us, as Free Traders, with no resource but to lay before the House last year, as this, the proposals that we have, and it was scarcely necessary to attack our provision for the expenditure on old age pensions. Hon. Members have said a great deal about the iniquity and folly of taxing property, but how would they provide for old age pensions except by a tax on property? I would put it to them as fair-minded men—and they are fair-minded men when they are not led astray by Tariff Reform fallacies—would it be treating the English people, especially the English poor, with common fairness to promise them at election after election old age pensions, which were taken to be a gift at the expense of the rich for the benefit of those who were poor—would it be fair to put the expenditure of the old age pensions upon the food of the people, would it be fair to put it upon anything which seriously or substantially added to the burden of the poor? I say the advocacy of old age pensions which went on for so many years, with so much electoral advantage to hon. Members opposite, implied and carried with it the obligation to pay that cost out of property, and not out of labour, and not out of food; so that if hon. and right hon. Gentlemen had done as they suggest they would have done, and met old age pensions out of indirect taxation, which, of course, falls mainly on the poor, they would have done something for which I cannot find an epithet, and for which hon. Members opposite cannot themselves find an epithet. The right hon. Gentleman described something—I forget what it was—as utterly revolting, and it would be utterly revolting to have allowed the cost of old age pensions to be put on the bread of the English working man.
Then, as to the licences, I have listened to the excellent speech of the hon. Member for Ayr Burghs with alarm as to the fate which would fall upon those who were the subject of the high licence duties. I viewed with serious alarm and misgiv- 937 ing the figures he gave to the House. Just before he sat down, however, he relieved my mind by saying that he meant to put it on the barrel of beer and that it would be a substantial addition to the cost of the brewer. I am now happily relieved, therefore, as far as the hon. Member is concerned, and the cost will go, I understand—I am not complaining of its going—on the consumer. I think that does something to lessen the grievance of which hon. Members opposite complain, and complain with some force, that this indirect taxation has not had to bear its adequate allotment, but here is an indirect tax which would not fall with crushing force upon the individual, but which can easily and promptly be put upon the consumers. I believe that often this heavy taxation upon a particular trade issues in a profit, and anybody who bought petrol yesterday or to-day will have made that discovery, and, therefore, the tax on petrol is doing extremely well. Now I come, and I am sorry I have been so long in coming, to the question of land values, and first of all let me refer to the argument which has been put forward as if it was obviously an answer to our proposals. "Why," hon. Gentlemen say, "should land receive different treatment? Why should that property be treated for purposes of taxation, or any other purpose, as being different from any other form of property?" Do other forms of property and industry receive loans from the State at 1 per cent. such as those which are made to landowners for drainage, etc.? Do other forms of property get bought out at the public expense as the Irish landowners are being bought out now? I should like to know what the landlord would say to any other trade in the community which came and pointed out that it no longer made its normal profit, and asked the State to buy it out at a price which would give it its normal income?
Land is differentiated, and must be differentiated. Take the case of settlements. Every lawyer knows you cannot settle personal property as you can settle real property for a very good reason, so that land in England has always been, is now, and must ever be, treated in some respects differently from any other form of property. I am not going to say a word against the ownership of land or against landlords. I have always—whatever the effect may be on the controversy immediately in respect to the land—said that the English landlords are entitled in any discussion in which they are con- 938 cerned to have it said in the most emphatic terms that there is no class of property owners in England or anywhere else who, on the whole, have been less sordid or have, on the whole, been more generous in the way in which they have shown a sense of the obligations of ownership than the landowners of England. Therefore do not let it be supposed that in my references to landlords I am speaking of them in a spirit of vindictiveness or in any depreciation of their virtues. In the case of Glasgow, in the case of suburban land, the right hon. Gentleman the Leader of the Opposition contested the proposition that there was a corner in land. It is very easy to take up a phrase like a corner and call upon anyone to prove its actual existence. No one has ever suggested a corner in land. You do not need a corner in land to bring about what happens in fact. You get land in the neighbourhood of a great city valued at £25 an acre going up, and sometimes very suddenly, to £2,000 an acre. Does not that indicate a demand for land in a particular neighbourhood above the proportion of the supply? The land is there. There are 3,000 acres within the boundaries of Glasgow, and yet only 40 or 60 acres every year for building are obtained. Moreover, in spite of that great quantity of available land, you get a most enormous increase of capital value. Does not that show a very great and pressing need for some adjustment which shall bring that land more quickly into the market? The difficulty, we are told, is as regards the assessment. We do not deny that the duties that we have imposed are difficult of assessment. I think the difficulty is only initial rather than permanent. It is a difficulty which will exist in the earlier stages of the tax, but when once you have set to work I do not think that you will find the assessment of this tax more difficult than was found in the case of income. It was an exceedingly difficult thing to assess the income tax, and those who introduced it were told that the assessment was impossible, and even with the utmost inquisition you would not be able to get a fair assessment on which you could found a good tax. That difficulty, no doubt, is great as far as we are concerned, because we have not got the benefit of practical experience. Whenever we introduce a new tax we do not get the same advice and assistance from the permanent officials who are accustomed to work the taxes as we do when a tax is merely being increased. The principle of unearned increment has been 939 very vigorously attacked by the Leader of the Opposition. Let us leave, for a moment, the details of assessment, which are merely machinery, and ask ourselves whether in principle this tax is permissible and fair A year or two ago the Prime Minister, in introducing his Budget, thought fit to discriminate between earned and unearned incomes, and, I believe, the discrimination that he then adopted has met with universal approval, not only among expert financiers, but among nearly all classes of the community. Of course, it tells hardly upon accumulated earnings. A man is taxed on one figure according to his actual income, and at another rate according to his investments or his inheritance. Take the case of his investments—a case which most severely tests our principles. In order to acquire them the taxpayer has to receive something more than was absolutely necessary to maintain him according to his station in life. He has been able to save and to invest, and the return of his investments is due in a larger measure to social co-operation than is the salary or profit which is the direct reward of his own labour. Therefore, that method of discrimination was introduced and has universal acceptance. But you nave an immensely stronger case when you are dealing with profit accruing to the taxpayer wholly dissociated from any labour of his own—indeed, not only dissociated from his own labour, but due directly to the general labours of the community as a whole. Is, or is it not, a fit subject for taxation? I agree that it would be unjust to go beyond taxation to confiscation, but is there anything about that particular kind of property which makes it sacrosanct, which makes it confiscation to touch it, and which makes it wrong even to discuss it? It is so fit as a subject for taxation that there are some persons of the Socialist persuasion who think you should not be content with taking a part, but that you should go on and claim it all as a restitution or a right. Hon. Members opposite are treating us as if we were doing that. We are out for taxation, and not for confiscation.
I would also remind hon. Members, in order to show not merely the justice of this tax, but its scrupulous fairness and consideration, that a tax on unearned increment is not, as hon. Members opposite described it, a tax on all future values. Before the tax applies you take the existing value, which is the market value, and 940 which includes, of course, something for the future value, so that you take the land as it stands now and value it, including all the owner's hopes and expectations of future profit, and put that figure on it, and the tax on the unearned increment only falls on what the taxpayer receives for his private profit, or expects to receive beyond its value at the date of the Act. Can anyone say that is a tax which bears about it any signs of vindictiveness? It is a tax which shows on the part of the Government a careful and scrupulous consideration of the rights of the landowner. On reversion hon. Members who live in London are only too painfully aware of what the claimant has to do. All that makes a great source of profit for the landlord. We are not complaining of it, and we are not seeking to deprive the landlord of it. What is the particular sanctity attaching to contracts of that sort that they should be free of all fiscal burdens? Why, in times when the working man is to be mulct in taxes on his tobacco, should that class of contract escape all contribution? With regard to undeveloped land, I agree that we have extreme difficulty of valuation, and there we shall welcome assistance if it be given as regards the length of time it takes to pass it on, but here the right hon. Gentleman and those who followed him have charged us with some peculiar kind of iniquity in the taxation of what they called mere hopes and expectations. "You are taxing values which cannot be realised," he told us. I do not know what he means by realised. We are taxing values which may be pretty substantially materialised. If you take the case of an acre of land which began at £20, and has gone up to £2,000, and which can get £2,000 at any moment in the market, I do not think you are taxing mere hopes and expectations. I should be very glad to have a balance sheet composed entirely of such hopes and expectations. We are taxing a very substantial source of revenue.
In putting forward this Budget we know perfectly well that we are not undertaking an easy or a simple task. Budgets which increase taxes cannot expect to be popular. It is not we who pretend that we can tax the nation into wealth. We are asked to devise schemes under which taxes will become not only acceptable but positively desirable, though they will add to the public burdens in a way which also increases the private profits of favoured trades and sections—profits which are added to the burden of the taxpayer. All 941 we can do is to put forward a Budget, and we believe we have done it, which shall so distribute these burdens as that they shall leave unfettered the trade of this country on which we depend for subsistence, for prosperity, and for national defence and safety, and also add as little as may be to the hardships of those upon whom such burdens will fall with the most crushing force.
§ Lord ROBERT CECIL
We have listened to a speech which I think is at any rate some months premature. No doubt it is a rehearsal of a speech which the hon. Gentleman contemplates making to his constituents as soon as the General Election takes place. He began his speech by explaining with some heat that the Budget was not a socialistic Budget. I do not care very much about terms, but if I understood anything of the speech of the President of the Board of Trade his doctrine certainly was this that he desired to impose taxes upon land and liquor, and to put the two together for some purpose ulterior to that of obtaining money for the State. I do not understand what that purpose in the case of land can be except as a step in the direction which hon. Gentlemen below the Gangway desire, namely, the nationalisation of the land and its acquisition by the State for their purposes. If that is not Socialism then I don't know what it is The hon. Gentleman went on to make a very gratuitous attack on my hon. Friend because he referred to the death duties as deferred income tax, and when he was reminded that that had the authority of a very distinguished Committee of this very House, and also of officials of the Inland Revenue—
§ Sir C. DILKE
It was an acceptance only of the fact that it was put before us by the Government. I do not think we accepted the consequences.
§ Lord ROBERT CECIL
The right hon. Gentleman was a Member of the Committee, and I will not dispute for a moment with him as to the intention of the Committee, but when a Committee insert in their Report a statement which they quote from the responsible officials of the Government it is generally assumed that the Committee endorse it.
§ Sir C. DILKE
I ought to add that there was no majority on the Committee for any paragraph in the Report but one. I am not attempting to found an argument on that fact, but it is worth noticing, because 942 the report of the chairman, that is, my own report, was upset by the Committee, and the Report which was run against it by the right hon. Baronet the Member for Spen Valley, and which had the support of the Government, was negatived in almost all its essentials.
§ Lord ROBERT CECIL
The case is more complicated than I was aware of, but I do not think we really need the support of any Committee, or even of the distinguished officials of the Inland Revenue, to see that the death duties, whether you treat them as deferred income tax or in any other way, must be a burden upon the individual who has to pay them, and that you are perfectly at liberty in estimating the burden to convert the capital sum into an annuity, and when you have done that you see what the annual burden is upon the individual who has to pay it, and you are able to add that to the income tax and see how much will be paid. That is all my hon. Friend has done. It is a very simple operation. When the hon. Gentleman, with rather cheap sarcasm, talked about hypothetical calculations and made a strange reference to taxes in the next world and things of that kind, I think he might have left that kind of thing rather to junior Members of the House. Then he went on to say that this was a Free Trade Budget and that this was the only possible alternative to Tariff Reform. If there is no one else in the House to do so, I should like to enter my respectful protest against any such doctrine. We should be in a considerable difficulty if we were told we had to select between such taxes as these, for which the hon. Gentleman and his colleagues are responsible, and Tariff Reform. My own belief is that both proposals are wrong, but the only thing we have to consider on this occasion is whether this Budget is right or wrong. If I understood the argument of the Attorney-General at all, really what it came to is that he had no alternative. That is the tyrant's plea. You have to show that your Budget is just, and it is absurd to come and tell the House of Commons that in default of being able to say that your Budget is just they have to accept it because there is no alternative. The resources of taxation are certainly not exhausted, and the observations I am about to make in criticism of this Budget will certainly assume that there are other alternatives even within the realms of Free Trade.
943 A good deal has been said by hon. Members on the other side about the Budget being necessitated by the expenditure on the Navy. I do not deny that there is a portion due to that, but it is a very small portion. It is something like one-sixth of the whole deficit that has to be met by taxation, and, therefore, when hon. Members say that we are not entitled to criticise the Budget because we are in favour of a large Navy, they are really not dealing with the facts as they actually are. But the real substance of the deficit is caused by old age pensions. I do not think that will be disputed. Nearly £9,000,000 of the deficit is due to old age pensions, and what does the Attorney-General say about that? He says it is essential that the whole of the old age pension expenditure must be put on property because it must be a gift from the rich to the poor. I consider that a most immoral doctrine. Old age pensions may be right or wrong, but any Minister who comes and says that they ought to be a gift from one class to another, and in the second place that any such operation is within the power of the Government is, I say, not worthy of the position he holds. I venture to recall to the House some observations which were made in regard to old age pensions, and to say that everyone of the criticisms made from this side of the House which could have been justified since the passage of the Bill into law have been justified. Let me remind the House briefly what we said. We said that the exemption condition would turn out to be intolerable. We hear from the benches below the Gangway of cases of most grievous hardship arising from that exemption. We said that there would be a considerable number of unjustifiable claims. We heard at question time today from the Chancellor of the Exchequer that in one part of the country, at any rate, the officials were right in concluding that there have been a large number of unjustifiable claims. We said that the estimate of the cost was far too low. It was put by the Government originally at six millions, it rose in the course of the Debate to 7½ millions, and it has turned out to be nearly nine millions. We said that the method by which they proposed to raise the money was absolutely unknown to the Government. We have only to consider the proposals now made by the Chancellor of the Exchequer to see that we were right in that also. We said 944 that if it happened that, coincidentally with the payment of old age pensions, a great call should be made on the State, owing to any great danger or emergency that might arise, there would be difficulty in financing the scheme. That event has actually arisen, and, consequently, we are face to face with this deficit. Lastly, we said that the method of providing non-contributory pensions was an extremely extravagant and injudicious method to employ, and the Chancellor of the Exchequer in his speech introducing the Budget justified the criticism we made on that point. I do not know whether the House has in mind the passage in which the Chancellor of the Exchequer pointed out that he was not prepared to adopt a non-contributory scheme for pensions to people below the age of 70 who had reached the age of 65, and the reason he said was this: The right hon. Gentleman said there were much more urgent claims to be met—claims arising from sickness, disability, death of the bread-winner, and so on. That is what we said constantly during the whole of the discussions on the old age pension scheme, and that passage of the Chancellor of the Exchequer's speech might have been lifted bodily out of the speech made by the hon. Member for Preston in moving the rejection of the Bill on the second reading. He put the case with even greater force than the Chancellor of the Exchequer. We have to consider what the result will be. The Chancellor of the Exchequer told us that in Germany, by the expenditure of three millions, benefit of 40 millions was secured to the working class. [An HON. MEMBER: "Employers contribute."] No doubt there are contributions from the employers too, but three millions of taxation produces benefit of 40 millions. Here we have to spend nine millions, and only secure nine millions so far as that can be described as a benefit to the working classes.
§ Mr. CHIOZZA MONEY
May I point out that the contributions exacted from the German employers are just as much taxes as if they were called taxes. That is to say, they are enforced contributions through the State from the individual for a national purpose.
§ Lord R. CECIL
I do not wish to be led into a long discussion of that matter, but I do not at all agree that the contributions of the employers, though they are in form compulsory, and yet producing to the employers great actual benefit, are in the same position as taxes on people 945 in the sense with which we are now dealing with these taxes. I did regret that from the Chancellor of the Exchequer's speech it seemed rather doubtful whether the Government have laid to heart the lesson they ought to have learned from that experiment in pension legislation. After all, I say this is spilt milk, and the question we have now to consider is, how are we to raise the money? In a very characteristic speech delivered by the President of the Board of Trade last night he referred quite truly to the fact that there were two different ideas underlying the finance that was recommended to this country. He identified those two ideas with two parties in the State. I am not quite sure that he was historically accurate in doing that, but undoubtedly there are two schools of finance which do exist. According to one school the great thing to be regarded is the case with which you will get the money. According to the other school the great thing to be regarded is the economy you will teach. One school looks to the contentment of the taxpayer, and the other school to the credit of the State; or to put it differently, one has most at heart the prosperity and well-being of the taxpayer of to-day and the other the prosperity and well-being of the tax-payer of to-morrow. Both of these schools have, I venture to think, a great deal to say for their doctrines, and the wisest financier will adopt something from both of them. The contentment school no doubt do prefer indirect taxation, because it is unnoticed, and because it is imposed on necessaries and is involuntary. The other school prefer direct taxes because they are more noticeable, and because they are inevitable. It seems to me that if you are to take these two kinds of taxation the wise financier will seek to raise the great bulk of his money, or a considerable part of his money, particularly that which is to come from the rich, and, therefore, under our existing conditions, the weaker class, by the easier methods. It is quite plain that that is so.
§ Lord R. CECIL
The hon. Member has, if he will allow me to say so, a monomania on that point. It is quite plain that there is no use giving a warning to those who have not power. If you are going to have educational and precautionary finance, it must be directed to those who command the greater mass of votes in the country. It is no use warning those who are num- 946 bered by ten thousand of extravagance if you do not also warn those who have the great electoral power of the country. Therefore, your taxes, so far as they affect the rich, should be as easy and gentle as possible, not necessarily, of course, that you are not to draw so much money from them, but you should draw it in the most attractive way. On the other hand, such taxation as you think should be put on the large and powerful class ought to be put on in such a way as to draw their attention pointedly to the results of the legislation which makes it necessary. It does appear to me that this Budget does proceed on precisely opposite principles from those which I have endeavoured to describe. There are two classes of taxpayers—a considerable class of what the Attorney-General described as the propertied, but richer, smaller, and weaker class, and there is a certain amount of taxation on the large and poorer class, but all the taxation imposed on the rich class is direct, and all the taxation imposed on the poorer class is indirect. [An HON. MEMBER: "No."] Every bit of it, and not only so, but it is all imposed on the rich in the most offensive way that can possibly be devised, and the most oppressive way that can possibly be arranged.
Let me illustrate that from the land taxes. These are taxes directed against property, and therefore against a very small class of the community indeed. Take the tax on unearned increment. I am not saying for the moment that unearned increment is sacrosanct, and ought never to be taxed; but the unhappy owners of the increment pay taxes, like others, through income tax and the other taxes that fall upon them. I do not say that they ought not to be taxed, but I confess I was a little surprised at the defence of that tax put forward by the President of the Board of Trade. He and the Attorney-General both seem to regard land as in a different class for financial purposes from any other property. I cannot imagine why. I listened carefully to the President of the Board of Trade, and I did not hear him give a single reason why it should be treated as a different class. The Attorney-General described all sorts of conditions which affect the tenure of land and the legal position of landowners. That has nothing to do with fiscal capabilities. Why should one man who has £1,000 invested in land pay a tax on one principle, while another man who has £1,000 laid out in stocks be taxed on another principle? Of course, if the speech of the President 947 of the Board of Trade is, and I rather think it is, to discourage private ownership of land, that is a different matter altogether. That might be a good ground, but you may carry it rather far.
I pass from the defence which has been offered of these peculiar taxes to consider the method by which they are to be exacted. That will involve considerable inquisition into private affairs, and every conceivable kind of additional grievance which can be thrust on the taxpayer's back. The tax on undeveloped land is the most oppressive you can conceive That is a tax not on what a man has got, but on what he has not got, and may or may not receive. It is a tax on the capital value which land is thought to possess. It is the most oppressive kind of tax that can possibly be devised, and that is a kind of tax which you impose upon this small, rich, and powerless class. It is all very well for hon. Members whose imagination takes them back into mediaeval times to talk about things, though they may know little about them. But to suggest that nowadays the rich class in this country is the most powerful class really is to go against the facts of the case.
I pass for a moment to the licensing question. I wish to call the Chancellor of the Exchequer's attention to the fact that he proceeds here in exactly the same way. He has devised a new kind of licence duty. He tells us here in this House that in certain types of public-houses in this town these will raise the duty from a duty of 1 per cent. on the annual value to a duty of 50 per cent. Is there any conceivable person who will tell me that that is a proper method of taxation—to raise a duty which is now 1 per cent. to 50 per cent. at one blow? I venture to say that that would never be suggested except that the owners of that kind of property are not the possessors of a very large number of votes. Let me take for a moment the income tax. There it is proposed to put a super-tax on the income of the rich—on a class which, by the Chancellor of the Exchequer's own admission, only extends to 10,000. Does he propose to carry the income tax down so as to include any of those who do not pay income tax at present? Not a bit. There again you have the same principle which runs through the whole Budget—the direct tax put on the rich and small class, and the indirect tax reserved for the large and the poor class. And I desire to 948 say this about the income tax: It is supposed to be a kind of typically direct tax. I venture to think that that is a complete mistake. Undoubtedly, when it was first created it was a typically direct tax—that is to say, it was a tax imposed upon the classes which had the great voting power in the country. In 1853 when the tax was imposed the great mass of political power was in the hands of the middle-classes, and the income tax, which was then created, undoubtedly fell upon them, and did operate as a serious cautionary measure to prevent extravagance on the part of the Members of Parliament and the Government of the day. That is no longer true. The income tax payers today number may be a million or may be a little more. The voters number seven millions. Only one-sixth or a little more than that of the voters pay income tax, if you assume that every income tax payer is a voter, which he certainly is not. And, therefore, to talk about the income tax nowadays being a direct tax in the sense in which that expression was used by the late Mr. Gladstone is completely to misunderstand the matter. It is no longer a direct tax on those who have the power to control the destinies of the country. Yet I agree with what has been said by an hon. Member. I do not think it is possible by any trickery with your finances to prevent the whole mass of the people bearing the burden which you put upon them. I do not believe the doctrine of the Attorney-General and his friends on those Benches that you can really throw the burden, even if it were desirable to do so, upon the richer classes. I do not think that is possible.
§ Lord R. CECIL
I think a moment's reflection will show the hon. Member that that is a mistake. I do not deny, that if you held the hon. Member's views, and you really wanted to get even with the capitalist somehow, you can do them a great deal of injury, but that you can make them bear the whole burden of the taxation is demonstrably false. It is quite plain—indeed I am ashamed to take up the time of the Committee by pointing out—that if you take money out of a man's pocket it means that he must deprive himself of something. Normally, he will deprive himself of some pleasures or very commonly will reduce the amount of enterprise and energy and fresh development which he puts into his business. Whichever course 949 he takes—it must be one or the other—he is bound to put some part of that burden on the class who are thereby thrown out of work. I do not say whether it is desirable economically or not, but it is absurd to tell me that by imposing taxes on the rich you make the rich, and the rich only, pay. You make all classes of the community pay, however you arrange your taxation, and that is why I venture to call the attention of the House to the present condition of the income tax. In its present condition it is not only an indirect tax, but it is a particularly vicious form of indirect taxation. You throw upon the income tax payer the first burden of the tax. You conceal from the whole of the rest of the community that in point of fact they are also bearing a portion of that tax. The result is they are absolutely ignorant of the fact that they are really finding the money, or the greater part of it, for the expenditure in which you have indulged. I observe from the speech of the President of the Board of Trade that his ideal financial system was to throw the whole burden of the taxation upon accumulated capital, and upon the taxation of those things which were not the necessaries of life. In other words, what he desires is that there should be a great section of the community which would be free from all permanent contribution to the taxes of this country. That is, indeed, what is aimed at by this particular Budget, because you will observe that if a man does not smoke or drink he does not contribute a penny directly, though, as I said, he does indirectly, to the payment of this deficit, if he happens to be a working man.
I venture to appeal to the whole Mouse, without distinction of party, to consider very carefully whether it is wise to have that ideal in our taxation. Do you really wish to set up a tax-free class? It is not the first time in the history of the world that the class which has had political power has used that power to give itself immunity from taxation. It was tried by the noble classes over and over again in the evil times hundreds of years ago. It did not produce good results, even for the classes who tried it, and it produced extravagant administration, and produced ultimately the greatest poverty for the classes that were actually taxpayers. It is really essential to finance—in this I freely admit that I am altogether out of my character, because I am only recalling the many observations of the late Mr. Gladstone in this House—to have as an element in your taxation some tax which 950 will bring home to those who dictate the legislation of this country the effect of the legislation which they dictate. This is, I cannot help saying, a class Budget. That is a deplorable circumstance, but I am afraid I must add that it is not altogether unexpected, because the besetting sin of the party opposite has always been class legislation. It is a most surprising defect to me, when I consider the maxim which hon. Members opposite so genuinely and sincerely believe in with reference to finance, and which is often expressed in the convenient phrase, "That taxation should be for revenue purposes only." Are hon. Members prepared to say that the proposals of this Budget conform to that rule? Is the taxation you wish to put on land for revenue purposes only? I do not know how some hon. Members will answer the question, but I venture to think, after the speech last night of the President of the Board of Trade, that his answer was an emphatic and, indeed, exultant negative. From the point of view of fiscal purity I venture to think I may appeal to hon. Members on that ground. Is it much worse to use a tax in order to benefit a particular class than it is in order to injure a particular class? I confess I see very little distinction from the point of view of fiscal purity. I am not sure that there is even very much distinction from the point of view of political expediency. I cannot believe that it is right to use taxation for the purposes of advancing the morality of temperance faddists or the prejudices of Radical politicians.
And that is not the worst, I am afraid, that may be said about this Budget. I am afraid it cannot be acquitted of political dishonesty. I feel, listening to the speeches of the Chancellor of the Exchequer and the President of the Board of Trade, that they have deliberately set themselves this task, namely, to conceal from the working classes of this country that by the legislation of last year a great burden has been put upon the finances of the country—a burden which the working classes must, at any rate, in very large part discharge themselves. It would have been far more honest and far more straightforward and far more in the ultimate interests of the country at large and of the working classes themselves if you had said boldly, "You have spent 9 millions a year, which will advance to 11 or 12 millions. You have now got to pay for it, and we will put it on as a tax which you shall feel, and you shall understand that you will have to pay for it." They think they 951 can avoid paying for it. They are mistaken. They will have to pay for it. You cannot spend money without every class in the community feeling the effect of it. Hon. Members recognise that when they are dealing with armaments, but for some mysterious reason they do not recognise it when dealing with old age pensions. The truth is the truth whatever hon. Members may think. They will find it is so in the long run. It is because this Government by their speeches and their measure have endeavoured to conceal that truth from the working classes and the poorest classes in the community that I for one cannot withhold my condemnation.
§ Sir CHARLES DILKE
The Noble Lord is under the impression that the feeblest class of persons in our community, and relatively the feeblest class in all the world, are those who command one House in the Legislature exclusively, and have a pretty strong representation in the other. It is a most extraordinary position also that he believes the licensed victuallers and those interested in the sale of spirits in this country to be the least influential class among the electorate. He also asked us triumphantly, as did his predecessor the Member for Essex, how it can be asserted by any reasonable man that land is different from any other form of property. I thought it was accepted by all, except a very few, of the strongest Conservatives, to some degree greater or less; but I will appeal to the late Lord Salisbury. He admitted the position, though he contested a particular form of applying it. I received from Lord Salisbury his suggestions to the Members of the Royal Commission on the Housing of the Working Classes. I made special proposals with regard to vacant land in towns. When signing the Report he dissented after signing. He added an explanation that he would not accept the particular form which was signed by Lord Cross and the other Conservative Members generally of the Commission. He added that, after signing the Report, apparently because he wished to tax capital generally instead of income, Lord Salisbury himself had proposed in the case of vacant land in and around towns, that there should be exceptional power of compulsory purchase at a low price, and that the power should be confined to the local authority alone; no one else was to have the power to buy—["What price"]— 952 at a price to be fixed by arbitration, but with none of the usual conditions, none of the usual advantages of arbitration. It was to be confined to land in and around the towns, and the proposal was based entirely on the same doctrine which has been asserted chiefly from this side, namely, that there was pressure upon towns by reason of lands being kept vacant, and that they must be dealt with by special legislation. The Noble Lord and the hon. Member for Essex both think that this Budget is specially hard on the rich and is specially favourable to the poor. What I wish to put is the very opposite, and my right hon. Friend the Chancellor of the Exchequer occupies the pleasant position of being in the middle place between these two views, one of which is far more extreme than that which he is able on this occasion to represent. The Member for Essex used somewhat exaggerated language when he spoke of ruin in connection with the death duties; yet he was one of those who, on the occasion of their introduction, made a series of speeches against them and carried many Amendments to the scheme in order to reduce the bulk of the property taken under those death duties. Did he seek to repeal them when he took office under the late Government? Very rightly and very properly he took office with great advantage to the State in connection with the Navy, and he did good service to the State, but he accepted the death duties, and, I think, on one occasion helped to slightly increase them—just as the party opposite, when they come into power, will accept, and, as I think, gradually increase some of the taxation which is now proposed. He also said that indirect taxation cannot be made use of in war—I think the statement was that it could not be increased in time of war.
The fact is that indirect taxation is always increased in time of war. One of the first things they fly to is the tea duty, which is a crushing tax upon the poorest of this country. No income tax is ever so oppressive as the tea duty, which strikes most heavily on the poorer parts of the country. Those who pay the tea duty contribute an enormous proportion towards the revenues and the expenditure of the State. What tax are you increasing among the small taxes on this occasion? It is one which is more open to objection from the anti ad valorem point of view than any other tax—I refer to 953 tobacco. The tobacco tax is one against the increase of which some of us have voted through the whole time we have been Members of this House. It is stated in "The Times" this morning by a man in the tobacco trade that 650 per cent. of the average price of the unmanufactured article is taxation, and, undoubtedly, this amounts to 2 per cent. on the best class of cigars smoked by Members of this House, and 200 per cent. on the tobacco of the working classes. The increase on tobacco tells as heavily against the poor parts of this country as it tells against Ireland, or against any part of the United Kingdom. When it is said that the Budget is in favour of the poor and of the working classes, my reply is that in the poorer parts of rural England this Budget is in favour of the middle classes. With the exception of those who consume strong liquors it does not really hit, and it proportionally benefits all those between the class on whom the tea and tobacco taxes press most heavily, and those who have incomes over £3,000 a year. People in this House, some of them, undoubtedly, have large incomes, but £3,000 a year is an enormous income in the rural parts of this country, as it is in Ireland.
It is the middle classes—the comparatively rich—who will gain under this Budget. I am not arguing to prove a case, I am arguing to get at the truth. A leaflet issued by the Tory party has been circulated in my constituency, and it is directed, not against the increase of the tobacco tax, but against the whole of the tobacco duty from beginning to end. I will take it that the increase of duty is to be abolished by the Tory party. I have always been in opposition to the tobacco duty. I opposed it when Sir Stafford Northcote increased it, and I am perfectly certain that if the party opposite came into power they would take off the increase. I am equally certain that the present Government will take it off again as soon as there is a possibility of doing it. I have not any very great confidence in the theory of the other side of any pretended principle which seems to lie behind. I say that the poor of the working class in this country pay far more than they ought to pay in taxation. Some of the suggestions of the Chancellor of the Exchequer affect the ratepayers; a large portion of the right hon. Gentleman's speech affected them. He referred to them in sympathetic language, but with no tangible result for 954 the ratepayer. I think when he comes to consider how he has left this matter of the local rate, he will see the need for sharpening it up, and for giving downright promises for next year. There are many points relating to the interests of the poor, and the interests of the poorer ratepayers and people affected by his proposals, some of which are to be made this year, and some of which are foreshadowed for next year. There is the contributory scheme, for example, which was enthusiastically rejected by the Liberal party as regards the first experiment, and which, from its character, is calculated either to limit altogether the benefit arising from extension of the scheme he proposes, or else it will be necessarily accompanied by special and to some extent costly provisions for the benefit of those who, because of their miserable position, cannot make these contributions which might reasonably be expected in some cases from others. What did the Chancellor of the Exchequer say on this point? He told us as strongly as possible that this House and Parliament is absolutely pledged with regard to what he called the meritorious pauper. The enormous surplus which he will have next year—for there is a great deal more money in the case of some of these taxes than he apparently thinks, taxes which I strongly approve—may be used in support of this extension. Under graduated income tax, for example, worked in connection with the death duties, the rich people of this country will have to do what every other taxpayer has had to do, and that will prevent an enormous amount of evasion of taxes, and a large amount of income will be brought into taxation by this Budget sooner or later. If the income tax is applied with a great deal of discretion and tact where the richest people are, they will get used to telling the whole truth and making a clean breast of their accounts; but there is a great deal of innocent evasion of the income tax at the present time People justly take the view that they sometimes pay twice over, and they do not trouble to return every item of their income. What is this money, when it is obtained, to be sepent on? Is it to be spent on "Dreadnoughts" first? I am in favour of the expenditure on "Dreadnoughts" if it is necessary, and I accept the Government's position in regard to that. The second head named was the Development Grant. In the third place, is it to be spent upon the meritorious pauper? The right hon. Gentleman used 955 these words, which are alarming to the local authorities and to the ratepayers. He said:—Should precipitate 'Dreadnought' building prove unnecessary then the money (next year) would find its use either in the social programme or that much promised relief to the ratepayers.Well, I do not give much for the ratepayer's chance. The Minister has preferred "Dreadnoughts" and a social programme. I should like something a little more definite with regard to a class of the community who are nearly all the community—the local ratepayers. From every Minister for the last 20 years, in fact, for the last 35 years, we have had the constant pledge to put an end to the system of doles and give local authorities a new source of taxation, but they never got it. The result was always the same, that they got more doles, but not as much as they had been promised. The same extravagant system continued and we had not the attempt at equalisation of rates, with the result that there was frightful waste.
I differ from hon. Members opposite who think that this subject of taxation was not before the country at the last election. If ever a subject was before the country I should have thought that it was. I do not desire to oppose their statement that in some constituencies there was a good deal about Chinese labour. I heard nothing about Chinese labour in my Constituency. HON. MEMBERS: "Oh!"] I state the fact. I heard nothing of it. I heard everybody pledged as to local taxation and various suggestions made as to ground landlords. This is a matter at all events which must be considered, and it seems to me that this is the proper occasion. I invite my right hon. Friend the Chancellor of the Exchequer to say something a little more definite than he has said in his first speech, alarming as it is to read. These were his words. I do not think he meant them wholly, he was a little over-cautious, and it is bad from the point of view of the unfortunate ratepayer and the local authorities. He said:—The local ratepayer has been promised consideration by successive Governments, and he is surely entitled to get it.He said it could be done, and that this Budgetwill enable me to make good that promise.That is next year after his Budget and after the social programme. [An HON. MEMBER: "Dreadnoughts."] Yes, and after "Dreadnoughts." I ask him to state 956 what he will do and in what degree as a minimum. Hon. Members opposite know that there is an increasing tendency to throw everything on to the local rates, and they know how utterly unable the local authorities are to deal with some of the questions. Under the circumstances they do their duty fairly well, more or less. We see instances of the price of land going up when it is wanted by the county council, and although I do not say that there is anything criminal, there is a certain amount of jobbery in the ordinary English council. I do not say it is better or worse than in the boroughs, but there is that tendency. We have an instance of the expenditure of the councils in the subject of education, where we see that the rural population do not wish to have to pay too much. We do not cure those evils by increasing the subsidy. That system is universally condemned. We ought indeed to look at local finance, and see what portion of Imperial taxes is proper for local collection and use. People are terrified at the income tax and at the new land tax; but the German Empire has both. It has, for instance, for local purposes, an income tax collected by the same authorities, and very often much higher than the national income tax, and far higher than anything we have, or shall have. Then their special facilities values of land tax is enormously greater and far greater than any that is likely to be proposed at any time in this country. The Chancellor of the Exchequer has pledged himself to deal with the case of the meritorious pauper, and to remove the disqualification for old age pensions after 31st December next year. He has only gone as far as that in the present year. "If," as he states, "we receive from the local authorities a substantially equivalent contribution"—that is, thank you for nothing. He states he is in negotiation, but I admit that in another place he suggests he does not expect it all back, because a sum is to be provided for in next year's account. But there is that unfortunate phrase, "substantially equivalent contribution," unless it is a mistake in the Official Report.
§ Mr. LLOYD-GEORGE
I am not sure what the phrase was that I used, but I did not intend the substantial equivalent contribution to be 5s. per week.
§ Sir CHARLES DILKE
The words given are:—If we receive a contribution from local funds which would be substantially equivalent to the relief which would be afforded by withdrawing such a large number of paupers from the rates,957 I take it now that he means half.Then something could be done to remove this crying hardship.Something can be done to remove this hardship, and it seems he is engaged in negotiations which are rather like the negotiations between Japan and Corea, because all the forces are on one side, and the other side can do nothing except take what they get. That is not an encouraging prospect, and it is very far short of the tremendous pledge which he gave in the beginning of his speech referring to the subject last year. There were only two things mentioned in the Budget speech as to anything that would be done for the local authorities. There was a second, about the roads, but the roads were not to be done for the benefit of the local authorities, but for the benefit of the motorists. They were a thing apart. But I go far beyond that subject. What has been stated would not satisfy me. I do not think it would satisfy the right hon. Gentleman himself, or anyone who wished those promises to be kept, that is the promise to take the occasion of this Parliament to improve the relations between local authorities and the State. I do not wish to Hansardise, that is to quote too many of the right hon. Gentleman's speeches, but I appeal to him to look at the speech of the Prime Minister and to look at the speech of the Secretary of the Admiralty delivered at Manchester, and others on this subject. I feel sure that anybody reading that rehearsal of the pledges on this subject will feel that we have gone far too long without attempting to redeem those pledges.
It was thought that land values and unearned increment in some form were to be sources of local taxation, but I am afraid that has gone. Of course in this there is the difficulty of boundaries. Some cities have all their rural territory within the boundary, and some do not have all the towns they profess to represent. You got, for instance, Aston in Birmingham, cases where they have got their own so-called town within their boundaries, while in other cases you have a great rural territory outside. Although you have that difficulty of boundaries I think the question is one that ought to be dealt with. It is not like one of those promises that used to be put off, as, for instance, the question of redistribution used to be put off by the party opposite, and, indeed, many questions I could mention by the party on this side. The promises on this question have 958 been going on for 25 years, and they are not the kind of promises you can put off to the end of Parliament when the keeping of such promises never happens. I will not deal with other matters which have been the subject of some discussion today. One difficult point connected with these land taxes was explained last night by the hon. Member for Barnsley in a fashion which darkens counsel so far as I am concerned. He said that it was a tax on royalties. Whatever it is, it is not a tax on royalties, because royalties are on developed coal, and this is a tax on undeveloped coal. I should think it comes very near being a tax on what are technically called in the Crown Administration of Forests "dead rents." They are leases by the Crown or by the owner of the right to work a seam of coal at a hypothetical royalty which would exist if the coal were being worked, but they are often lying as dead rents for 50 years. There are also cases where some such small seams are occasionally worked when the price of coal rises above a certain level. It would be difficult to deal with these cases. I think, however, the position has been made clear by the explanation of the Attorney-General this afternoon, and I will say no more about it.
The only other remarks I desire to make on this occasion are by way of caution about the Development Grant. I entirely agree with the Leader of the Opposition and the hon. Member for Chelmsford as regards the agricultural side of the Question. No one who has seen the extension of co-operative agriculture recently can doubt that there is a great deal to be done in that direction with the aid of a Development Grant. On the other hand, no one will doubt that where a Development Grant exists it is liable to lend itself to jobbery, and it might easily become either a form or, what is worse, a bottomless pit—something like a child's money-box into which from time to time the little windfalls are put, which windfalls, in some well-regulated families, the child never sees again unless he has the sense violently to break the box open. There are risks about such funds—risks of jobbery, of the wrong people being quartered on the fund, and of its being used for wrong objects. With regard to forestry, I was alarmed to-day at the promise made across the floor by the right hon. Gentleman. It is true that he has not swallowed the Afforestation Report and the nine million acres, but he evidently believes all the doctrine on which that Report is based, because he 959 quoted the weird statistics as to the merit of a country being measured by the amount of forest it contains. That was too much even for the Board of Agriculture, one of whose most brilliant officials, who is in favour of forestry, said that the argument would not hold water, because if the ancient Britons had had the advantage of a Board of Agriculture, and he had been an official of that Board, he would have been able to present more satisfactory statistics than any country in Europe can do at present. Last year we pointed out to the right hon. Gentleman that the mere fact of being able to do certain things is not sufficient unless you can show that they represent the best use you can make of your money. I am all in favour of what he definitely said with regard to the extension of the School of Forestry and the experiments to which the hon. Member for Chelmsford devoted his speech to-day. But there was a terrible thing said, which I commend to the consideration of my right hon. Friend, by the chief agitator upon this subject, Mr. Rider Haggard, namely, that unemployment is afforestation's opportunity. Forestry is not to supply temporary employment for the unemployed; it is to be considered as an occupation in this country. It does not pay on bad land, but it pays almost for a certainty on good land in a hundred years, and the State alone can stand out of its money for that time. I adjure my right hon. Friend not to yield to the blandishment of the hon. Member for Chelmsford and give him the money for the landlords themselves to spend on their own forests. You cannot walk into a man's garden every day, or investigate his favourite pheasant breeding establishment, and tell him that he must not cut the boughs of a particular tree because it interferes with shooting; you cannot keep that control over the clearings of the wood which is essential if you are to have good oak timber on good land. If I were a Scottish landowner I would cheerfully accept the suggestion that the State should buy up five million acres of land in Scotland and send up the price of land for my benefit. But, for heaven's sake, in starting this local development fund, let the right hon. Gentleman see that there is real force in the arguments put before him. Do not let him quote the assent of the Coast Erosion Commission, which was not appointed on the subject at all, and which contained one gentleman with a fair knowledge on the subject and one good botanist, who may or may not 960 know much about it. Do not let him take that Report as a serious and weighty judgment in favour of afforestation, either as a remedy for unemployment or as a safe operation for the State. I have already put in a caveat with regard to the proposals in the social reform portion of the programme—unemployment and invalidity. I am not hostile, but I want to be convinced. There are no precedents for what is here proposed. We have very peculiar difficulties, which I am sure are in the minds of the representatives of the working classes. We have here what Germany has not. We have secured for ever the payment to the working man of the entire compensation for accident by the employers. We have the recognition that a disease of occupation is an accident, and that responsibility is wholly thrown upon the employer. On the other hand, we have old age pensons at over 70 years of age entirely paid by the State. These make essential differences between ourselves and Germany. The difficulty of combining a contributory system with these principles, which have been settled and cannot now be changed, is not only enormous, but it involves the principle of deductions from wages, to which the working classes as a whole are strongly opposed. And if any such arrangement can be engineered in spite of the enormous difficulties, and if you can deal with the friendly societies and trade unions, for heaven's sake do not do so unless you are sure you are being just to the poor who cannot make trade union or friendly society contributions. My main point is that in anything my right hon. Friend proposes in these directions he should have in view the need for protecting those who are not the greatest gainers by this Budget, namely, the very poor, and also those who contribute to the almost half of our expenditure which takes directly or indirectly the form of local rates.
§ Mr. RICHARD HAZLETON
Every Member who has spoken in the course of this Debate has recognised that it is quite impossible in the course of a single speech to deal exhaustively with the Budget statement and proposals of the Chancellor of the Exchequer. No one has attempted to do so, and I venture to think no one will. I hope the Chancellor of the Exchequer will not take it in any uncomplimentary sense if I say that, after the oratorical Marathon to which we listened on Thursday last, his supremacy in long-distance oratory is unlikely to be challenged even 961 by his colleague the Minister for War. The most that one can attempt in this Debate is to offer a general criticism of the main proposals of the Budget from a particular point of view. The Noble Lord the Member for Marylebone criticised the Budget from the point of view of a high Tory; the right hon. Member for the Forest of Dean spoke from the point of view of a British Radical; the point of view from which I propose to discuss it is, of course, that of Ireland. Before doing so, however, I should like to say a word or two from a wider standpoint. Even after the few days we have had for the consideration of this Budget there seems to me some difficulty in arriving at a settled judgment upon it. It is too vast, too comprehensive, too far-reaching, and too near for us to be able to estimate it properly as yet. We shall have to wait probably for a considerable time before a final verdict can be passed upon it, but in the meantime we are called upon to pass an immediate verdict. Like the Leader of the party to which I have the honour to belong, were I a British Democrat instead of an Irish Nationalist, I would be inclined, on such consideration as I had been able to give to it, to hail this Budget as the greatest achievement in Imperial finance within modern times. The Noble Lord who made such an interesting speech a short time ago spoke as a Tory Free Trader, and attacked the Budget on the ground that there were other and better alternative resources left to Free Trade. I am sure that the advocates of Free Trade who support this Budget will be glad to hear that. If Free Trade wanted a vindication this would be its vindication, that within the limits of your Free Trade system you can make ample provision for your national security, without at the same time neglecting to make provision for social reform. But it not only vindicates Free Trade, for except in so far as it affects Ireland, it vindicates Liberalism. Courage, I venture to think, had gone out of Liberalism. The Chancellor has restored it. If only the treatment of Ireland in this Budget had been different, I could say of it most sincerely that, whatever its effect upon the fortunes of the Liberal party, it would redound to the honour and credit of this Liberal Government. For the first time it really asserts in practice the principle that wealth has its duties as well as its rights. It does not leave the poor man untaxed, or his burdens unin- 962 creased, but it does make it perfectly clear that those who enjoy a great or a moderate share of that financial prosperity which the State has enabled them to attain, ought to be made, rightly made, and will be made, to contribute in the future a juster proportion than they now do to the continued welfare and security of the State. Of course, this Budget has been attacked, and no doubt in the future will be attacked, as robbery, plunder, and confiscation. That is inevitable. But, apart from Ireland, it is not true. The first effect of this Budget, as has been pointed out in the course of this Debate, was a rise in Consols. Though the Tory Leaders may exceed themselves in invective, and appeal for support to the cupidity of those who have been, or who will be, affected by this new taxation, I think the masses of the people of England, if they are alive to their true interests and to the interests of their country, will rally to the support of this Government and this Budget. In saying that, I am speaking on the broad lines of this Budget, without in any way committing myself to such details as closer examination may show to require amendment.
That being my opinion of the Budget, it is with pain and with anger that I turn to consider its effect upon Ireland. Let me say at this stage, that although we have been two days upon this measure, although we have had four long speeches from right hon. Gentlemen upon the Treasury Bench, not one single one of them who spoke on behalf of the Government has dealt with the case of Ireland, or answered the speech of my hon. and learned friend the Member for Waterford. I would like to ask in all sincerity, why has the Chancellor left us no alternative but to oppose this Budget? Why is it that the one respect in which his courage has failed him is dealing fairly and honourably with Ireland? He had a great opportunity. He has lost it—thrown it recklessly and wantonly away. He might in this measure by a simple act of justice have made for himself a place in Irish history equal almost to the place of Gladstone. Honour called for that act of justice on his part. The Act of Union called for that act of justice. Every principle of Liberalism and democracy called for it. There is a clause in the Act of Union to which I should like to draw the attention of the Members of the Committee, because the Liberal party, and the Chancellor of the Exchequer, and this 963 Liberal Government have never evidently read it. This clause provides:—For exemptions and abatements in the case of Ireland, where taxation, after the amalgamation of the two Exchequers, bears unduly upon Ireland.That is the case at the present time. Why has not the Chancellor of the Exchequer said boldly and fearlessly to the people of England: "Ireland, according to our own Royal Commission, is already heavily overtaxed beyond her just and fair proportion. It is true that the cost of government in Ireland is almost as great as the revenue derived from Ireland. But that is the fault of the system over which Ireland has no control. Until control is conceded, or until at least the present un-equality in taxation is removed, I, as a Liberal Chancellor of the Exchequer, cannot make myself responsible for increasing the unjust burdens upon the shoulders of the Irish people."
That is what the Chancellor of the Exchequer ought to have said. It is upon these lines he ought to have acted. Failure to do so is a black spot upon his measure, which renders it an absolute impossibility for us to support him. We claim exemption from increased taxation. We claim the remission of existing taxation. We claim restitution of past plunder. The government of Ireland, wasteful, costly, and extravagant, absorbs nearly the payment of as much money as you raise in Ireland. We do not want you to govern Ireland at all. All we want is to be left alone, and to be allowed to govern ourselves, and to tax ourselves in our own way. By your system of misgovernment you make us hate your Empire. By your system of taxation you make us pay more than our just proportion for it. Not content with existing plunder, you seek in this Budget to increase it. As applied to England and Scotland this Budget may be regarded as a triumph of Liberalism. As applied to Ireland it is nothing less than a triumph of legalised robbery. Further, I say that were it possible for us in Ireland to organise a strike against this increased taxation not one single penny of it would find its way into the British Treasury. Now, having stated that general position, I need only briefly refer to some of the new proposals of this Budget, taking them in the order announced by the Chancellor of the Exchequer.
With regard to the tax on motors and petrol, all I will say is that Ireland in this 964 matter ought to have a separate body to deal with the revenue, and to deal with the regulations that will have to be made under the change. There can be no difficulty about that, and I am sure the Government will make none. In my opinion the General Council of the Irish County Councils is admirably suited to act as Road Commissioners in Ireland. Speaking for myself, I should hope that it will be to that body that these duties will be delegated, and I take it as a matter beyond discussion that the new duties from both these sources that will be raised in Ireland will be exclusively devoted to Irish purposes. With regard to the proposal of the Chancellor of the Exchequer about the new Development Grant that is to be started for dealing with afforestation and kindred problems, it is of course impossible for me to say anything, as the proposal is not yet before the House, or before the Committee, even in outline. I will only say this, that in considering this matter I would urge the Chancellor of the Exchequer to remember that there is such a place as Ireland, and to draft this scheme in such a manner as will make it acceptable to the Irish people in so far as it is likely to affect them.
I think in principle most of us, if not all of us, upon these benches approve of the changes in the income tax, and the new super-tax on incomes of £5,000 a year and over. I shall not now go into the merits of that. I will only say that while approving of the principle of these taxes, we are opposed to their extension in Ireland, as all further taxation upon us is unjust and oppressive. The same remarks apply to the new death duties, and to the estate duties. But in the case of these I shall touch upon a point that may prove to be one of very considerable importance. Under the present law the valuation of agricultural property for death duties cannot exceed 25 years' purchase of the rental, after allowing for expenses. That limitation under this Budget is to be abolished. In the future the valuation is to be based upon the competitive market value. Now, in Ireland, as is notorious, the competitive market value of land is very often more than the real or true value. We are faced with this position. Under the old system of landlordism, landlords paid the death duties upon their landed property. That property is now passing: from them to the new occupying owners, and I ask: Is taxation to be taken off the Irish land twice? Is it not an injustice to 965 us that these new owners who are practically, I think, for the next 68½ years the tenants of the State and not owners at all, should pay these full duties, whilst the ex-landlords will have to pay them also out of the purchase money that they received for their estates? That and the question arising from the alteration of the law in regard to valuation, are questions that must be examined into most closely, as they are of vital importance for us in Ireland. They are calculated, in my opinion, to work out most oppressively and injuriously upon all those agriculturists in Ireland who, owing to the present inflated prices of Irish land, will be hardly able, if able at all, to meet their obligations to the State. I pass from that, and on the new stamp duties I shall say nothing at present, except to emphasise the point made by the chairman of the Irish party yesterday with regard to the stamps upon transfers of Irish land. That is most important. The Chancellor of the Exchequer tells us that he estimates these new stamp duties to bring in £1,450,000. I venture to say that of that sum very considerably more than our fair share will be derived from Ireland, because of the large amount of transfers that are taking place in connection with Irish land. Now I come to the new licence duties. I confess at once that in dealing with these I am in somewhat of an unfortunate position. No man in this House is a stronger advocate of temperance than I am. I have voted for every temperance measure brought forward in this Parliament for England, Ireland, and Scotland. I have done more than vote for them; I have believed in them and taken an active part in their promotion. But my first allegiance is to Ireland, and, therefore, though I approve in principle of these new licence duties, I am not going to vote for their extension to Ireland. My duty in the matter is perfectly clear. I cannot for a moment hesitate as to what course I should pursue. I say to the Chancellor of the Exchequer: if he will take off from Ireland other duties amounting to the sum total of those he is imposing in his Budget, then I will vote for these new licence duties. That is the position I take up, and I am sure my temperance friends in and out of this House will understand it. The same condition applies to the new duties of 3s. 9d. on spirits, and for the same reason I cannot vote for that any more than I can for the new tax on tobacco. In saying that, I should like to add this: that I object to 966 this tax upon whisky, not as a tax upon whisky so much as a tax upon Ireland, and I oppose it upon that ground. With regard to the tax on tobacco, I think it is an especially cruel tax to Ireland, for, in addition to the hardship, it will be, as pointed out by the Leader of the Irish party yesterday, to those poor people to whom tobacco is more of a necessity than a luxury, it will jeopardise the future of what is likely to be an important Irish industry.
I blame the Chancellor of the Exchequer and the Government all the more for this because they were fully aware of what was being done and attempted at the present time in Ireland with regard to the growing of tobacco. Now it will be seen from the position we are forced to take up—the position that you ought not to impose any fresh taxation of any kind whatever upon Ireland—that we are at somewhat of a disadvantage in approaching the consideration of the details of this Budget. "Good government," said Sir Henry Campbell-Bannerman, "is no substitute for self-government." Good taxes, we say, when not in substitution but in addition to over-taxation, are bad and wrong and indefensible. Such of these taxes, therefore, as we may consider good in themselves are vitiated in our eyes, and we are bound to resist their imposition no less than those which we consider bad in themselves. We shall have an opportunity at a later stage of going more fully into details on these various proposals, but at this stage what I am concerned with, and what we are all concerned with, is to state the main reasons why we cannot support this Budget. For my part, I say with regret that I find myself unable to do so. I find myself cut off by the deliberate policy of the Government from supporting what, but for the wanton disregard for the claims of Ireland, I would consider a great measure of democratic finance. You are bleeding us to death in Ireland. The revenue you raise from Ireland is higher at the present time than the revenue of Roumania, higher than the revenue of Sweden, nearly four millions higher than the revenue of Norway, more than double the revenue of Denmark, three and a half times greater than the revenue of Greece, and double the revenue of Switzerland. All these countries support a national Government, a civil service, an army, and consular service, and, in some cases, a navy out of their revenue.
The taxation in these countries is approximately:—Sweden, £1 16s. per 967 head; Denmark, £1 13s. 6d. per head; Norway, £1 19s. 6d. per head; Switzerland, £1 7s. 3d. per head; Roumania, £1 12s. per head; Greece, £1 4s. per head; and Ireland, £2 3s. 11d. At the same time, I venture to say it will not be disputed by anyone who knows the conditions that for that enormous sum we have in Ireland at the present time the worst Government in Europe. I ask is it yet too late for the Liberal Government to stay its hand? I venture to think it is not. Our support, I would point out to the Government, ought to be worth something for this measure. It can yet be secured by a frank recognition of the justice of the Irish demand. The Irish policy of the Government has been in the main a failure. It has been a failure because it has lacked courage, because Liberal statesmanship in Ireland instead of rising to the heights it reached in South Africa sunk to the depths of the miserable Irish Council Bill. You say you cannot give us Home Rule in this Parliament. We have accepted that position, but you can give us at least an instalment of financial justice. Your pledges and your principles alike commit you to do that, but you have not done so, and you are not doing so in this Budget. Free from the shadow of the House of Lords—because I do not think that any hon. Member, no matter what part of the House he sits in, seriously believes that the Lords will dare to throw out this Budget—free, therefore, from the House of Lords, you have now an opportunity of showing the sincerity of your professions that you are anxious to extend some measure of justice and fair play to Ireland. You are throwing the opportunity away, you are alienating our sympathies. You are setting up further barriers between your people and ours. You may succeed in robbing us of a few more millions, but I tell the Chancellor of the Exchequer, and I tell his Government, in spite of their big majority, they may make us pay, but we will make them pay later for this injustice to Ireland.
§ Mr. H. BELLOC
We have had during this discussion, which is supposed to be a general discussion, a good deal of matters touched on which are properly regarded as matter for discussion at the Committee stage. I propose to deal very little with any of these details. I propose to bring before the House briefly two points which struck me, and that struck many of us who heard the Chancellor of the Exchequer 968 make his opening speech. The two points are these. That this, in every sense, in every detail, and in all its extent, is a Radical Budget; that it can be supported whole-heartedly by, I was going to say the most extreme, perhaps I had better say the most convinced, democrat who site upon this side of the House. It can be so supported in all its details with one exception, upon which I desire to touch briefly, because it will be dealt with more fully by hon. Members opposite. That is the disastrous exception of the way in which the Irish people have been treated. With that exception this Budget is one which can be supported by the most convinced and most independent Member of the majority if there be a convinced and independent democrat in the House. That cannot be said, unfortunately, of past measures of the Government. This is not the moment for introducing once more, as one can do outside the House, the question of the absurdity of what is called the party system. We have had measures brought in by one party and another which were never demanded by the country, and we have had measures supported and passed into law directly in opposition to the public opinion of this country, and those of us at this side of the House who have chosen to come to Parliament as the representative of those who sent us here have not lost the opinion and confidence of our Constituents in our attitude towards such measures. In my opinion, the Licensing Bill in its final stage was so immensely unpopular with the mass of the English people, certainly with the mass of the people that sent me here, that I had no hesitation in voting against it. Of the various education bills which were brought before Parliament I can only say it depended on the side one took; whether a man of my conviction sent to represent an English Constituency with its complex religious and educational problems should vote for or against them. But in the case of this Budget, with that one exception, namely, the manner in which Ireland is treated, any man who cares for political justice can vote for the Budget whole-heartedly, and regard it as the best Budget ever brought into the House. The only point that occurs to me in connection with the democratic quality—if I may say so of it—is this: Is it not so democratic that we are in danger of not carrying it. As to whether the House of Lords could throw it out or not, that is a subject which I shall deal with in a moment. But the danger lies also in the very fact that the 969 Budget is framed upon a fairly definite principle, many as are its provisions, and that that principle is the very principle to which the majority on this side of the House were sent here by the electors. It is so downright from that point of view, its provisions are at once so novel of their kind, that I fear for the future fate of portions of these provisions, although I am certain they have behind them the overwhelming opinion of the people of this country. The number of people in this House who, as wealthy men, are touched by a measure like this is very large, and it is quite out of proportion to what you get in any ordinary representative assembly of Englishmen. Although I am not so ignorant of my colleagues as not to be able to imagine its conscious effect, I fear its unconscious effect when they begin to balance up the losses and gains. That we shall carry this Budget so far as public opinion is concerned, if we explain it on platforms before our constituencies, I have no doubt whatsoever. It has been called a platform Budget, and it is so in this sense, that any man with a good acquaintance of English social positions and with a good reading of economic science can defend this Budget point by point and line by line. That is more than you can say for some of the measures which have been passed through the present Parliament.
With regard to the proposals contained in this Budget let me take four points, namely, the surtax upon incomes over £5,000 a year, the provisions affecting the sale of liquor, the indirect taxes upon articles of large consumption like tea, sugar and tobacco, and the policy suggested with regard to land. With regard to the surtax I remember that the Leader of the Opposition was careful to say that he did not oppose the principle upon which it is based. The distribution of wealth in this country as between the rich and the poor bears no relation to that of any other modern society. By a graduation of the income tax we are merely extending a principle which has been generally recognised by the middle classes for a generation, because the income tax has for a generation been differentiated on the smaller incomes. In my opinion the majority of those who will have to pay the surtax will not complain. It is a fact that there is no outcry against the imposition of the surtax, although it deals with a very powerful class of people who have 970 hitherto been immune from their fair share of the general burdens of taxation.
I think the Chancellor of the Exchequer has done well in sparing the incomes of the professional classes. I do not mean that a young professional man beginning his career as a barrister, or a doctor, is not earning a sum of money which in a rational society ought to amply provide everything which he requires with a large margin for taxation, but we are not living to-day in a rational society. Every hon. Member knows that upon earnings which in a happier state of society a man would be able to enjoy life, and have a good margin, they are now pinched because so much has to be given up keeping pace with the people with whom they happen to be born. I think this is the first Budget in which there has not been an attempt made to raise a large sum of money, bearing a very large proportion to the total, from the professional classes. I think the Chancellor of the Exchequer has done an act of social justice in not striking at that class in this Budget.
It is an accident, and an unfortunate accident, that the extra tax upon spirits forms an unjust burden upon Ireland. It is unfortunate in many senses, and it gives a man who is as ignorant of Ireland as he is of the North Pole, an opportunity of saying, "Oh! it is whisky they want." Who is there denies that intemperance is a danger to an impoverished people? I know that the fight against intemperance in Ireland is being waged as earnestly as in any other country in the world, but if you take the article of common consumption in any particular locality you are specially taxing those people. It is a fact that Ireland is grossly overtaxed already, and when you are placing extra taxation upon a poor country which is already overtaxed you are inflicting a still greater injustice. If you make a young professional man pay sixpence on the income tax, while the big ground landlord is only paying Is., you are not only inflicting an injustice 50 per cent. greater upon the poorer man, but a much larger percentage, and that is the kind of injustice which this tax is inflicting upon Ireland.
Let me consider for a moment the case of clubs. I am one of those hon. Members who said to my Constituents when I was asked how I would deal with clubs: "I would put the club and the public-house exactly on the same footing." I know what happens to the Reform Club, and it seems to me that a well-conducted club like that is conducted very much the same as 971 a hotel, and if the State taxes the sale of a particular commodity in one place I cannot see why it should not tax it when the same commodity is sold in another place. And now with regard to that famous tax upon production—namely, the manufacture of beer. One of the best speeches we have heard on this subject was that made by the hon. Member for Ayr Burghs, because it was breezy, confident, and a good deal of it was cogent. From what the hon. Member said, it seemed to me at first there was going to be an enormous extra tax put upon beer; but when I came to reflect I found that the tax amounted to less than 4d. on a 36-gallon cask. On the strength of that it is said the price of beer should be raised, and I know at least one constituency where the raising of the price of beer will do more harm than it will do good. If the working man is called upon to pay extra for his beer, as has been stated, the multiple by which he is being cheated ought to be recorded on the walls. What is 4d. on 36 gallons? To give a very cogent domestic example with the ordinary consumption of beer which servants are allowed, it comes to about one halfpenny per week. It means that in my particular case, with five people dependent upon me, an extra halfpenny per week, and I am willing to pay it. If a man is brewing a million gallons a year this Budget cannot affect him much. When a man is brewing four and a half gallons a year, a man must drink two gallons of beer before he is taxed a farthing. It is as wise a thing as was ever done in the history of our finance when the duty on tea has not been increased. There has been no occasion when there was a claim for some large demand for taxation on which tea has not been taxed. It is an automatic tax. It falls upon those who can ill afford to pay it. It falls on the very poor. It affects poor women. As I say, it falls upon those who can least afford to pay it. There has never been a wiser act done when, under the temptation to put on this easy and automatic tax the hand of the Chancellor of the Exchequer was stayed.
The tax on tobacco will fall mainly on the very poor. I do not know whether it would have been possible to graduate it and let it be imposed according to classes. I should have thought that it would have been perfectly possible to do that. As to the land tax, it seems that during this Debate all history books have been burnt and that political economy has not been taught in England. 972 In the abstract, one can make out a case of land on the assumption that it is different from other kinds of property. If land were well distributed I do not think people would bother their brains very much about abstract considerations—about it being different from other forms of property. In agricultural countries where land is well distributed you do not find land a question of national dispute, but in English history the fact remains we have allowed the land to fall into fewer and fewer hands so far as great blocks are concerned. It will be found that no State has ever tolerated such a condition of affairs for so long a period as we have. You have no case like it in a nation of free men or in a self-governing country. It is a social anomaly that 9,000 men own the better half of a country in which some 30,000,000 people live. That is an anomaly of the grossest kind; and it is that question with which this Budget is dealing, and dealing, I may say, in a most gentle manner. Far more sweeping methods might have been found. We have heard about the ungotten minerals and about land kept back from the builders, and kept back deliberately. Everybody who cares for municipal reform can point that out as a grievous anomaly. In my Constituency I can point out lands which have been kept back. The assessment of those places will not be difficult. A halfpenny on capital value will not be oppressive. We should have supported, quite properly, double such a tax. I cannot but regret that the tax on unearned increment has come so late in our national life. If the big towns are doomed to greater extension, which I shall greatly regret, it will prove a valuable asset to the State. If we had adopted some such principle 70 or 50 years ago, what strength should we not have given to national finance. Who would have suffered? The small squires, who would have been quite happy with small incomes, became millionaires by the growth of the great towns. If this principle had been laid down earlier England would have been vastly better off.
I have said a word on the injustice which a Budget, however framed, seems unable to avoid to the Irish people by over-taxation, and I would add my voice to that which has been raised on those benches opposite to suggest, if it is possible, a policy of discrimination. The sum concerned is comparatively small according to the calculations of the Chancellor of the Exchequer; to the Irish people it is a large one, and as a matter 973 of principle it is of vast importance. If in bringing in this strong and most democratic Budget there could be tacked on that principle—that the Irish people should be placed on a fiscal parity at least with England and not be taxed more than England—I think it would be a wise and memorable act. No such discrimination has yet been made in an English Budget. I should vote for this tax in any case as a Member for an English Constituency, but I should vote with enthusiasm for any such principle of discrimination as I have referred to if brought in at a later stage by the Chancellor of the Exchequer. Well, now, to close. I will not discuss whether the Upper House can tamper with the Budget or not. I take one very typical Peer in the modern House of Lords—Lord Northcliffe. I read all his daily papers, which circulate largely in London, and I find in them, without exception, the expression, in one form or another, that it was the duty of that great body that he adorns to destroy this Budget. In the "Observer" he said it was a thing any second Chamber in Europe would do. Personally I, like the leader of the Nationalist party, hope they will throw out the Budget; but I do not think that they will commit such a colossal act of folly. It will be so monstrous, and show such an inconceivable ignorance of the temper of the Constituencies, that not even an organised monopoly of the London Press will make it possible. It is perfectly true that if the House of Lords destroys a particular and popular measure, their action may pass unnoticed; but if you go down to the English Constituencies and tell them that 16 millions are wanted, mainly on account of old age pensions and the supposed naval insecurity, and the Government propose to get that from the great ground landlords and not to put it on the things that the people consume, except whisky and tobacco—do the Lords think they could win an election under such circumstances?
I might add that with this Budget we have not only entered upon a more democratic phase, but it looks as if we have come dangerously near the limit of what can be raised under the existing fiscal system of the country. For generations the great nations—our rivals—have been rapidly catching us up and we cannot continue to live in that financial supremacy in which we have lived in the past. A Tariff Reformer may ask, "Why do you not adopt the alternative?" The answer is that under the alternative 974 the revenue would sink and we should be playing with our national supremacy. That is the bedrock on which I stand in the matter. Even if it can be proved to me that the national revenue could be slightly increased by the adoption of the alternative, I should vote against such a proposal from the point of view of our international position and what Free Trade makes us.
Mr. G. D. FABER
I will not attempt to follow the hon. Gentleman through the various topics of his most interesting speech; neither will I discuss with him what will be his attitude on the platform when the next election comes, although I may say that I do not think he will find the position when the General Election comes altogether as pleasant a one as when last he wooed his present Constituency. Neither will I follow him in that most interesting question of what will be the fate of this Bill when it gets to another place, I think we have got quite sufficient to do in following this Bill when it is put into our hands, through all its various intricacies and most complex situations without venturing into the region of prophesy as to whether or not another place will treat it in this or that way. I rather got up to speak from a point of view which I do not think has yet been put before this Committee, and that is the point of view taken, I believe, by the majority of the bankers of this country; and, after all, bankers, although they may not be the providers, at least are the distributors forming the channel through which the material means pass, by which the commerce of this country is carried on. I have had an opportunity of talking to bankers on both sides of politics, with men who agree in many of the cardinal principles of Radical politics and those who sit upon the opposite side of the House, but one and all have expressed to me in unmeasured terms the deep disquietude, not to say alarm, with which they view the tremendous blow which is dealt by this Budget at the credit and the financial position generally of this country. I think it was Lord Milner who said the other day upon the Budget, and said truly enough from one point of view, that it was the old joint, and that you were cutting deeper into it and getting nearer and nearer to the bone. That is true. The income tax is higher, the death duties are higher, and so forth, but not content with cutting deeper and deeper and nearer to the bone of the old joint, you are engrafting upon this Budget of 1909, for the first time, the 975 principles of undisguised Socialism. That is why the whole banking community of the country view the position almost with alarm. It is indeed, if not the triumph of Socialism, at any rate the triumph of the beginning of Socialism. I saw that the Secretary of the Local Government Board contradicted the first report of a speech of his made the other day. The first report indicated that he had described the Budget as being the triumph of Socialism. The hon. Gentleman has asserted that he did not put the matter in that way, and, of course, we at once accept his denial, but the hon. Gentleman below the Gangway, the Member for the Blackfriars Division of Glasgow, said last night openly and un-disguisedly that it was the thin end of the wedge. And it is the thin end of the wedge, and every man in this Committee must know that this new legislation, these new projects in the direction of the super-tax, in the direction of the tax upon undeveloped land and the tax upon unearned increment, form some of the cardinal principles of Socialism. It is the thin end of the wedge. It is the planting or the sowing of a seed, or rather the planting of a sapling, if I may put it in that way, that may progress much more quickly than some right hon. Gentlemen on the other side of the House may think—the planting of a sapling which may become the upas tree which may overshadow and overcome the prosperity of this great country. No wonder that there were discussions and discussions and dissensions and dissensions in the Cabinet, and it has been an open secret that there were, because after all there are in the Cabinet forces still—and I am thankful for it—of the old Liberalism, which is unwilling to see this influx of new and predatory principles; but, unfortunately, the old Liberalism in the Cabinet has not been able to stand its ground, and the new element has had the best of it, and we see it in the Budget.
Some hon. Member said, I think, in the course of the Debate that the Prime Minister had the best of it in regard to the "Dreadnoughts," and the younger members and more forward members have had the best of it in regard to Socialism. I am not inclined to put it in that way. I think the dangerous element in the Cabinet have had the best of it in both ways, both in regard to the insufficiency of the "Dreadnoughts" and in regard to the dangerous and Socialistic elements that we find within the four corners of this Budget.
976 I will speak strictly financially in the remainder of the remarks I shall venture to address to the Committee. I would venture to note how far away the present Ministry has drifted from the old and great and best principles of Liberal finance. You cannot have a better illustration of it than when you examine the treatment the Sinking Fund—the lodestone of public finance in this country—is subjected to by the Chancellor of the Exchequer's proposals. I use the words "Sinking Fund" in the commonly accepted meaning, but to speak correctly I should refer to the treatment to which the old and new Sinking Funds have been subjected. If you search "Hansard" for two generations past you will find it has been the great and cardinal principle of one great Liberal Chancellor of the Exchequer after another that you shall not touch the Sinking Fund—hands off the Sinking Fund. It has been the Ark of the Covenant almost of Radical finance in the past. Mr. Gladstone, Mr. Lowe, Mr. Childers, the late Sir William Vernon Harcourt, one and all, have never ceased and have never been tired of impressing upon the House of Commons that the one great foundation-stone of finance in this country is, that the Sinking Fund shall not be touched, because if it is the reduction of the national debt must thereby be delayed. Not to go further back than the year 1899, when a Conservative Government proposed to reduce the new Sinking Fund of £25,000,000, at which it then stood, to £23,000,000, what happened? On the second reading debate the whole of the artillery of the then Radical party was directed against the attack upon the Sinking Fund. An Amendment was moved by Sir Henry Fowler, now Lord Wolverhampton, directed solely to the attack, as they called it—rightly, from one point of view—which had been made upon the Sinking Fund. I was looking the other evening at the Division List, and every single Member then on the Radical side forming part of the present Government went into the lobby upon that point, aye or no, was it right that the new Sinking Fund should be diminished by a couple of millions.
The late Sir William Harcourt eloquently thundered forth against any such tampering with the Sinking Fund. The financial position of the country then was infinitely better than it is now. The national indebtedness was £120,000,000 less than it is to-day. Consols then stood at 110. To-day they are 85. It is true the interest is ¼ per cent. less, and that is an 977 element in the case, but not one which explains the whole matter. The income tax, which is always regarded as one of our great reserves in time of war, stood at 8d., so that the whole position was vitally different from what it is to-day. It did not affect the judgment of the then Radical party upon our conduct, yet to-day, when the national position is worse by £120,000,000, when we are taxed upon a war basis in time of peace, the Chancellor of the Exchequer comes down with an easy air and says, "Cut down the Sinking Fund." How soon high ideals, even on the part of some Chancellors of the Exchequer, fade away under the stress of political exigencies. What did the Prime Minister say in 1907 as to the idea which he proposed to aim at in respect of the national debt? He said:—The country should aim at getting back to the state of things that prevailed before the war. Even with the considerable effort that the present Government had made in the last two years to redeem the debt there was an addition to the national debt, as compared with the state of the debt before the war, of nearly £140,000,000, that until they got back to the position which prevailed before the war they did not think they would be in a position to review taxation in the sense in which it was desired.Has that £150,000,000 of war debt been paid off? Not a bit of it. £50,000,000 at the most. Still £100,000,000 remains, and still the position of the whole national debt is £120,000,000 worse. When are we going to get back to the position indicated in that speech? Never in this generation or in the next, if you start on a course such as you are starting upon in this Budget of tampering not only with the new Sinking Fund but with the old. I would not say tampering with the old Sinking Fund but destroying it altogether. The great Liberal Chancellors of the Exchequer would turn again in their graves if they know what this unworthy successor of theirs proposes to do.
The present Prime Minister said only in 1906 that—An income tax at the uniform rate of 1s. is impossible to justify. It is a burden upon the trade of the country which in the long run affects not only profits but wages.It is true the income tax is not at the uniform rate of 1s. As far as earned incomes are concerned, between £1,000 and £2,000 the tax stands at 9d.—that is getting on in the direction of a war tax—and between £2,000 and £3,000 it will be 1s., rising to 1s. 2d. between £3,000 and £5,000, with a super-tax of 6d. above £5,000. But if you take the average of the whole income tax of the country you will find it certainly stands at an average rate of 1s., which was so strongly condemned 978 by the Prime Minister in his speech three years ago. Now for the super-tax. Here, again, it is worth while calling the attention of the Committee to what the Prime-Minister said in his Budget speech of 1907 as to how you are to work the super-tax, because, as was plainly proved during the inquiry before the Select Committee on which I had the honour to serve, the super-tax must be a second income tax. You. cannot have the ordinary collection; there must be a special collection. It is a special income tax based upon personal declaration. The Prime Minister pointed out this difficulty insuperably connected with the super-tax. He said:—How are we to get compulsory declaration? Only by giving something for it. Otherwise you will find yourself confronted with a good many formidable difficulties.That criticism of the Prime Minister must strike any mind that examines closely into the subject. It is true that we have a personal declaration now in order to get income abated, but then you are getting an advantage. A man will make a personal declaration if he is going to get a benefit thereby, but if the only thing he is going, to get is an addition to his income tax, as the Prime Minister pointed out, you are confronted by many formidable difficulties in the working out of any such scheme. The Chairman of the Board of Inland Revenue, Sir Henry Primrose, referred to the same difficulty in the long and exhaustive evidence he gave before the Select Committee. He pointed out the difficulty which would be experienced in discovering those on whom the super-tax was to be imposed, and then the difficulty of discovering what were their incomes. That is the view of the then head of one of our great permanent departments intimately connected with the raising of the revenue of this country. I do not think that the Committee has the least conception of the difficulty that awaits the working of this tax. You will have to immensely increase your staff. You will have to initiate a system of personal inquisition and all the harassing financial questions which will be highly distasteful to those involved, and which almost necessarily will induce them to take advantage of any expedient by which they may legitimately avoid any such obnoxious process. You are going to lose revenue in the long run. I venture to anticipate that. It is only a prophesy, but I think that through this super-tax you will lose revenue. You will have withdrawn from the grasp of the income tax gatherers not only the super-tax, but the original income tax. I have said 979 before, and I venture to say again, that you cannot retain in the financial grasp of this country fluid capital if it makes up its mind to go elsewhere. The strongest Government supported by the strongest possible majority cannot keep fluid capital in the country if it considers it is being unfairly dealt with. It will go elsewhere, where it thinks, at any rate, it can experience fairer conditions. Capital will more and more leave this country. Everybody who is concerned with the money of the country as a banker—it is my business—will tell you that money is leaving the country. It is sometimes said that money has no conscience. What money seeks is safety. If money thinks it is not getting safety here, and that it is being unfairly treated, it will go somewhere else where it thinks it will enjoy a greater sense of security. [An HON. MEMBER: "Where?"] There are plenty of places. I need not go into a disquisition as to where money will fly to. Hon. Members will find before they finish that it will go elsewhere. Certain classes have been taxed almost to extinction by the death duties. I am not talking of millionaires, but of the owners of property all over the country, and especially landed property. They have not been able to stand up against the force of the taxation. In respect of the death duties you are going to make them much worse. We know that we brought nothing into the world and that we can take nothing out of it. [An HON. MEMBER: "You can leave something behind."] This Radical finance is insisting that we shall not only take nothing out of the world, but that we shall not be allowed to leave anything behind. All these propositions in regard to raiding the Sinking Fund, income tax, raising the death duties, robbery of the licensed trade, and the new taxation of land, are, in the opinion of those who represent the finance of the country, dealing a series of body blows at the credit and the best financial interests of the country. We look forward with the greatest and gravest apprehension to the future. If this is done in time of peace, what is going to happen—may God forbid that anything of the kind should happen—if some war should occur in which this country most unhappily might be involved? Where is your reserve fund? What have your great Radical financiers told you, one and all? They have told you to keep the income tax low in time of peace in order that it may be a reserve fund in time of war, and they have 980 told you to keep your Sinking Fund in full force in time of peace, so as to be able, if war should come, to raise fresh money on the security of the country. You are undermining the whole foundation of the finance of the country if war should overtake us. I tremble to think. [Laughter.] The right hon. Member for the Northwich Division does not mind so long as his alkali works are left untouched.
Mr. G. D. FABER
The House knows that I never have the least desire or intention to say anything discourteous of any hon. Member in any quarter of the House. I have always tried to avoid anything of the kind. I am trying to put forward from my point of view as a financier the great principles on which security in days to come will depend, and it is a little irritating to find one's argument received as it has been on the other side. I have no desire to say anything offensive, and if the right hon. Gentleman regards what I said as offensive I at once withdraw it. I was saying that I did view with the greatest possible disquiet the position into which our finances are being put in time of peace. I do not see how we could get safely through the tremendous financial calls which would be made in time of war if we pursue this method of taxation in time of peace. I do not think you can afford to put such a tremendous burden on the finances of this country. Mr. Gladstone said in one of his speeches in regard to the income tax—he was not a friend of the income tax—that we had called forth the giant who had shielded us in time of war to assist our interests in time of peace. You are relying too much on that giant now in time of peace; you are relying too much on the giant represented by income tax, the giant represented by the money of this country. You are making too great a call upon him in time of peace. If, and when the time of war comes, you appeal to that giant to come forth once again to shield you in time of war, I am very much afraid that you will have taken out of him the best part of his life blood, and, in fact, bled him white; and, much though he may desire to assist you, you will find that those arms, once so strong to assist you, will drop powerless by his side.
Sir JOHN BRUNNER
I can assure the hon. Member who has just sat down that I have not the smallest notion that he has been guilty of any discourtesy to me, and as to my laughter, I am sorry it has appeared to be an inconvenience that my voice is rather too strong; but there are times when hon. Members opposite do occasionally indulge in laughter also. The hon. Gentleman is a master of the subject with which he dealt for a considerable part of his remarks, and I have been greatly disappointed not to have heard from him something about the method in which a wealthy Englishman takes his resources abroad in order to be safe in some distant part of the world from taxation. I do not know how I could take my money abroad and escape English taxation; and if only the hon. Member, in the fulness of his knowledge, had explained this, I should have been a wiser man than I am to-day. It is not he alone who has used this argument; his Leader has used it and spoken in an airy fashion about drawing a cheque and taking one's capital abroad to other countries. So far as I understand the matter, a man cannot escape English taxation unless he exports himself. And I do not think there is any prospect whatever of England becoming, in my time at all events, so disagreeable as a place of residence that working men will fly from it in horror. I would have thought the various classes of wealthy men in this country would find it difficult to set about this operation of sending their capital abroad and so escaping taxation. If I think of all the great manufacturers of the country, I do not know how they are going to transfer their capital abroad. Certainly they may sell their shares but the shares will remain here and will remain subject to taxation here. I do not know how it is done. It has been a distinct disappointment to me that a man who knows all about it has not made it clear. The Noble Lord the Member for Marylebone had something to say about this Budget being a gratification of Radical politicians' prejudices. I am a Radical politician, and I have been for many years, and I acknowledge it with pride and with gratitude that this Budget is a gratification of my prejudices as a Radical politician. I have had prejudices ever since I was a politician, and it is a very long time ago since I began. I have had very strong prejudices against the method of taxation which has ground the faces of the poor, and this Budget, because it does not tax 982 the poor, meets with my approbation. It does tax the poor to some degree, but only in a fashion in which it tends to diminish their expenditure. Therefore, this Budget in that particular has my hearty approbation. The hon. Member for Essex spoke, following my right hon. Friend the President of the Board of Trade, in giving a letter of credit or a certificate of character to the agricultural landowners of this country, and he said that they had provided for their labourers. I remember having seen the figures as to the proportion of agricultural labourers in workhouses, and it is a very large proportion.
Sir J. BRUNNER
The great land owners of the country employ a very small portion of the agricultural labourers of the country. Nine-tenths of the agricultural labourers are employed by the farmers and not by the landowners. I regretted to hear the right hon. Gentleman the Leader of the Opposition threaten us with evasion of the taxes when our Budget is passed. That only makes me set my teeth and determine that I will make evasion as difficult as I possibly can. He and others have spoken of their determination to reduce their charitable expenditure.
Sir J. BRUNNER
The right hon. Gentleman the Leader of the Opposition and the Gentleman who followed him assured the House that the result of this Budget would be to diminish the charitable gifts of the wealthy.
Sir J. BRUNNER
It is quite obvious that I was perfectly understood. The last time I spoke in this House I prophesied that there would be a change in the scene that would be witnessed on the opposite side of the House. Last month hon. and right hon. Members opposite were patriotic to a degree, and I prophesied that there would be a great deal of eloquence, I said amounting to screaming, when the question of paying for this patriotism was before the House. Now there is what I may call, with great respect, a certain coy reluctance to paying for the defence of the country. ["No, certainly not."] Well, is it a coy reluctance to pay for old age pensions?—It is one way or the other. ["No."] The reluctance, at any rate, is obvious. I 983 am inclined to think that it will be emphasised as time goes on. I want to thank the Government for this Budget, and I think I may thank them for it from beginning to end. It displays, to my mind, a very noble courage, because, in spite of the Noble Lord the Member for Marylebone, I think the working classes of this country have a great deal of power, and when the Government makes up its mind to deal, as I put it, fairly as between rich and poor, they incur the hostility of the rich, and when they do that I commend them for their courage. The nation obviously has to take up the burden. I am now here to-night to declare my readiness on my own behalf, and on behalf of my Constituents, to take my fair share, and they their fair share, of that burden. I am going to take care that I shall have my fair share of that burden. I call this Budget not only courageous, but wise. I am absolutely satisfied that no man will be crushed by the burden. Not even if he does drink as much as he did before will he be crushed. As to the man of £50,000 a year, he is going to pay in income tax an extra £1,491 a year, and I do not think he will be crushed by that. My right hon. Friend the President of the Board of Trade has put in other words, but I commend the Government in that they have in this Budget done nothing which will interfere with the health of any man, woman, or child in the country. How different it might have been if the Budget had been in the hands of a Tariff Reform Chancellor of the Exchequer. Our sugar would have been more highly taxed. ["No, no."] I have very little doubt about it; I may by courtesy be allowed to express my opinion. I believe that sugar would have been more highly taxed, and that the health of children would in consequence have suffered. I am of opinion that the food of their elders would have been taxed, and again I say their health would have suffered in consequence. There are two ways in which the German nation is now obviously deteriorating before our eyes. One is that their workmen are becoming leaner and less muscular, and that the comfortable classes are running very fast to gross obesity.
§ Earl WINTERTON
As this is a very important point, will the right hon. Gentleman point out on what official information he bases that extraordinary statement, or on what general information?
Sir J. BRUNNER
The general information of the evidence of my own eyes. The Noble Lord knows the young men of Oxford, and no doubt he knows the young men of Cambridge. Let him go and look at the young men in the University of Germany, and you will see that they are what I described, namely, as running to obesity. I am reminded that His Majesty the Kaiser has recently said very much what I have said just now. I have to thank the Government for attempting, as they do in this Budget, to get a greater share towards the expenses of the country from the rich. I say they are courageous, they are wise, and they are just. The provision of the Budget which appeals to me most strongly is that with reference to the National Development Grant. It is a matter which will affect every family in the country if it be only wisely managed. The object of this National Development Grant has been for a great many years the aim of my life. I have seen in some of the newspapers some complaints directed against its provisions, which I think are not at all justified, and which to my mind betokens some lack of imagination. May I say what I think ought to be the very first aim of this National Development Grant? I think it should be for the development of the health of the people. We have lately heard a good deal of thoughtless patriotic talk about increasing the health of our young men by military drill. ["Hear, hear."] Let me tell my hon. Friend that I spoke of it is rather thoughtless patriotic talk. We ought to begin at the beginning. We ought to begin with the health of infants, and in order to help towards the health of infants it is our duty as a community to teach the young women how to manage the baby. Not only would far fewer children die, but far fewer weeds among them would survive, and that is a matter which would cost very little money, and I commend that object to my right hon. Friend the Chancellor of the Exchequer. This National Development Grant I believe is intended by and by, as it grows, to assist in the development of the national physical resources of the country, but I should like to tell my right hon. Friend the Chancellor of the Exchequer that, when he begins to consider the development of the national physical resources of the country, he will have not to depend upon chance sums of money falling in at the end of the year, but he will have to borrow boldly and largely to attain his aim. I am of opinion that, with the single exception of war 985 time, when it is impossible to raise the expenditure by annual taxation, the nation ought never to borrow except for an investment. There is a great deal to be done by way of investment of national funds, and by and by I hope to have an opportunity of recommending that to this House.
The next claim upon this Development Grant would be the development of the national intellect. I hope that not only agricultural science, and I should like my hon. Friend the Member for Essex to hear me declare it, that not only agricultural science, with which I am in hearty sympathy, but every other science will receive attention out of this grant. This is important for every man in the House for the reason which I have already given, and that reason is this: It is not her army that has made Germany great, and it is not her navy that will make Germany any greater. She will be weaker when she has completed her navy. No, it is her schools. I think that the man is a good patriot who develops the intellect of the country. It must not be forgotten that whilst we here, with our enormous wealth, contribute only £191,000 to the highest education of the young people of this country, Prussia alone, not to speak of Germany, spends £450,000 per year on one school. I say, until we reverse those proportions, Germany will continue to beat us. I do not think I need say I do not want to be beaten by Germany. Tariff Reform will not help English manufacturers. The House and my hon. Friends engaged in manufacture, and more especially those who are carrying on manufacture in the old fashion, may take it from me if they put even moderate duties upon manufactured goods coming into England there will be many a German manufacturer who will come into this country and set up works here, and when they come they will wipe the floor with your manufacturers. You may depend on it that the English factories will, a great many of them, have to be scrapped if you adopt Tariff Reform.
I should like to make one declaration about the licensing duties. The figures that were given yesterday about Messrs. Whitbread were very startling, and I hope that some explanation will be given so that they shall be less alarming. About those licensing duties I want to make a declaration. My right hon. Friend the Chancellor of the Exchequer has been appealed to time after time in most impressive tones not to be vindictive. I have frankly to acknowledge I personally am vindictive, And I am ready to explain why— 986 I am anxious to explain why. In the course of the tieing of 85,000 houses in this country the brewers have taken away at least one-half of the living of 85,000 families without a pennyworth of compensation, and I have to acknowledge, and do it frankly, that I bear a grudge, and I want to punish them for doing that if I can. I am glad indeed to thank my right hon. Friend for making a very marked distinction between hotels and restaurants, on the one hand, and the long bar, on the other hand. Hotels and restaurants are a social need, an absolute necessity, without which we should be greatly inconvenienced, but I wish to declare that I look upon the long bar with a total absence of social life, where the public must stand up and drink and go out to make room for the next. I look upon such treatment as an absolute unmitigated curse. Therefore I acknowledge with gratitude the service the Government has rendered to the country in making this distinction.
The proposals of the Government with regard to the taxation of land are what I have been advocating for more than a quarter of a century. I have, therefore, to thank the Government for having brought them before the House. The hon. Gentleman the Member for Essex spoke of the great hardships of the owners of agricultural land and these new taxes. But the owners of agricultural land do not own anything like half the total value of the land of the country. I do not look upon the agricultural landowner as a mischievous creature. Therefore I bear him no grudge; but I am thinking of the urban landowner and I say of him that he is a man who has absolutely no economic value towards its society. He is of no value whatever—a mere receiver of rent, and is of no economic value whatever. Those owners of urban land are a very small class, but I think I may say without exaggeration that they have benefited more, actually benefited more, in money by the progress of the country during the last 60 years than any other class, and that they have so benefited without doing any single service to the community. Other classes work, and, by working, benefit the community. This particular class not only has it not paid its fair share, but it has been improperly and unrighteously excused from its fair share of the taxation of the country, both local and Imperial.
I congratulate my right hon. Friend in that he has at last attempted to do justice between this particular class and the rest of the community. Do not let us suppose 987 that we are going to be harsh to any class of poor people in the taxes upon urban lands. The poor man who is an owner of urban land does not hold his land up. It is only the wealthy among the owners of urban land that are able to take advantage of the unjust exemption from taxes that exists to-day. If it had been the rule for hundreds of years that all rates and taxes should be levied on capital value and not on the accidental rent coming in, this inequality would never have obtained; and I want to go back or to begin to make a change, so that all the rates and all the taxes shall be put upon the capital value and not upon the accidental rent. When there is no rent coming in there is in reality a great income—I am speaking of rich men who can afford to wait—because the increase in value is the equivalent of an income. It is only the rich that we are accusing, and I thank my right hon. Friend with all my heart that he is at last rendering justice—for it is nothing but absolute justice—as between man and man. The ordinary method of assessing land is upon the rent that a willing tenant would pay from year to year, and in the case of a house the tenant does the ordinary tenant's repairs. Therefore, when the rent is below the value of the land, the occupier would also pay a very small amount in rates and taxes; and if only we begin to put the tax upon the capital value instead of upon the actual rent, we shall be doing an act of the purest justice. I have not the shadow of a doubt that this Budget is going through. I am ready to support the right hon. Gentleman as long as he finds it necessary that I should attend here, and I shall give my last Vote on the Budget with a heart as full of thankfulness to him as I had in giving my first.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)
I have to apologise to the Committee for having to inflict a second speech upon them after the very long one I had to inflict on Thursday, but a good many questions have been addressed to me in the course of the Debate, and many points have been raised to which I think it would be for the convenience of the Committee that I should address myself at this stage of the proceedings. The Government have every reason to be gratified with the reception which has been accorded to the Budget. It is not merely the reception in the House; I think we have every reason to be pleased with the way in which it has been received in circles 988 where we had cause for apprehension as to its reception. A very large section of the Press used some very wild language about the Budget, but it does not seem to have had the slightest effect upon the great commercial centres of the country. I was greatly amused when reading a very ably-conducted paper, which in its leading article attacked the Budget more violently perhaps than almost any other paper in the country. After reading the leading article I looked at the financial page, where I found that the financial editor said:—Stock Exchange members will be actually very light-hearted. Financially and politically the outlook for once in a way is bright, and it looks as if there ought to be some business to tax.I think on the whole that the best answer to the leading article was the comment of the city financial editor as to the way in which business men looked at the proposals of the Government. The same remark will apply to the reception in this House. There has been a good deal of very severe criticism, but on the whole it has been very temperate and very moderate, and, with the exception of some indescribable epithets which the hon. and gallant Member opposite thought it consistent with the rules of the House to give expression to, I think the language has been most restrained.
There is one thing which emerges from these two days' Debates, namely, that most of the main features of the Budget have been unchallenged. I would rather dwell upon that. First of all, the indebtedness, which is the basis of the Budget, has not been criticised in substance. Old age pensions and the Navy are responsible for the deficit against which I had to budget, and no section of the House has challenged that deficit. I do not think that any responsible speaker—I am not drawing distinctions, because I cannot recall anyone—has challenged the plan of the Budget not merely for the liabilities of this year, but for all the liabilities in sight, which is another feature of the plan of the Government. The right hon. Member for East Worcestershire on Thursday actually approved of that; he thought it the only business way of dealing with the situation. Nor have the objects of future liabilities been criticised. The Navy, the deserving pauper, the Development Grant, industrial insurance, and the relief of local burdens.—these are the main objects which we had in view in budgetting not merely for this; year, but for the coming year; and it is very remarkable that not merely were all these leading features in our proposals 989 practically uncriticised, but, as far as the right hon. Gentleman who stated the case for the Opposition is concerned, the bulk of the taxation which we propose was also unchallenged. Let the House recall that speech; I listened to it very carefully, and I read it afterwards. I am referring to the indictment presented on the whole case by the Leader of the Opposition. I quite understand that he could not possibly criticise every little detail in the Budget. That is not the point I am making at all. But if there were any outstanding proposal with regard to taxation which he regarded as unjust he certainly would not have passed it over without comment. Let the Committee just recall his speech. Income tax he did not criticise; the increase of 2d. he said not a word against; the super-tax he said nothing about.
§ Mr. LLOYD-GEORGE
At any rate, if the super-tax were really the monstrous sort of proposal for robbing the rich which it has been described as being in some of the papers, I do not think the right hon. Gentleman would have just passed it by with a mere cautionary sentence. He did not devote any part of his speech to criticising or condemning the super-tax, and he did not say a word about the proposal for the relief in respect of children. Most remarkable of all, though there may have been a sentence on the point, he did not attack the estate duties; stamps he said nothing about; the motor tax he said nothing about; and he did not criticise even tobacco. Let the Committee bear in mind what that means. It represents at least three-fourths of the revenue we are raising this year, and nearly nine-tenths of the revenue to be raised next year. Here is a Budget as to the monstrosity of whose proposals even the hon. and gallant Member opposite, whose command of language leaves nothing to be desired, cannot, after careful searching, find adjectives which will adequately describe his feelings, and yet the Leader of the hon. and gallant Member actually leaves three-fourths of this revolutionary and Socialistic Budget without a word of criticism.
§ Mr. LLOYD-GEORGE
The right hon. Gentleman says you will get it in time. You will get minute criticism. I have not the faintest doubt that we shall, and we 990 are perfectly prepared to meet it; but, still, the right hon. Gentleman is experienced Parliamentarian enough to know that the Leader of the Opposition, who is about the acutest Parliamentary critic that this generation has seen; whose performances as Parliamentary critic are not merely a matter of admiration to his opponents, but of absolute wonder—he is sufficiently experienced to know that the Leader of the Opposition would not pass over leading features of that sort if he really felt so much about them. Three-fourths of the taxation of the Government he had practically nothing to say against. And this is the very wicked Budget that is going to subvert society and destroy the powers of this country. One Gentleman on the opposite side believes that. There is, I believe, only one.
That is a position upon which I think we can congratulate ourselves. The City unmoved! On the contrary, Consols and Government securities going up! Gilt-edged securities improved! The only thing I observed is that the American market was weak. Now, that is because, I believe, they are increasing the tariff. Well, now, I would ask the attention of the Committee to another fact. Criticism has been concentrated really not on the great taxes of the Government, but on practically two proposals, land and licences. I should like to consider these two proposals in detail, but before I do so I think it would be perfectly fair for me first of all, if the Committee will bear with me, to address myself to two or three questions rather aside from the main proprositions, and raised by two Members of the House. If they will allow me to wander outside the main lines of the Budget I shall be glad, for after all it is necessary to address myself to criticism of this sort. The first point was put by the hon. and learned Member for Waterford. I understand that hon. Members from Ireland complain that no reply to their observations has been given by the Government. That was only because I kept myself back as late as possible to reply to criticisms with which I could more properly deal perhaps than my colleagues. The hon. and learned Member says that this Budget treats Ireland very harshly. Of course, you cannot tax without hitting somebody. As I ventured to mention the other day, and, if I may venture to repeat the observation, the only tax that is popular is a tax on somebody else. But when you are taxing for common purposes, you must have a common 991 contribution. Let me put this to the hon. Member: There is no part of the country that derives nearly such benefit in proportion from the money which we raise from this Budget as Ireland; and I think it is fair that we ought—not that we should not ask Ireland for a contribution, but that we should not draw a distinction either in favour of or against Ireland. That is all we have done. The contribution of Ireland, generally speaking, is about 6.5 per cent. of the taxation of this country. The contribution we ask for in this Budget is 4.5 per cent., so that really we are asking Ireland for a contribution which is considerably less than the one she is making at the present moment to the Imperial revenue.
The hon. and learned Member talked as if Ireland was purely interested in spirits, and had no interest, for instance, in beer. Surely he knows perfectly well that is not the case. If we taxed beer, exactly the same sort of complaint would have come from that great industry. Ireland, I believe, consumes a very fair share of the product of the brewery. I believe the whole of the increase is rather in the consumption of malt liquors as against spirits in Ireland, so that if we had taxed them, we should have had an increasing contribution from Ireland instead of a diminishing one. The hon. and learned Member, rather unfairly I thought, in describing the great poverty of Ireland—which nobody has been readier to acknowledge than I have—especially after the reports we have had from our revenue officials regarding the condition of the people in the west—said: Is it fair to tax their tobacco for "Dreadnoughts"? Well, but he knows perfectly well—no one better—that out of that deficit there is only £3,000,000 for the Navy, and £9,000,000 for old age pensions. Why did he choose the fourth, and ignore altogether the three-fourths, which is a very important factor, and which Ireland has had a bigger share of than any other part of the United Kingdom? No man in this House was more prepared to meet the demand from Ireland than I was. I belong to a small nationality myself. Therefore I can appreciate the feeling of Ireland with regard to many of her grievances. But at the same time I do not think the cause of Ireland is advanced by a demand of that sort and supported by that kind of argument. Take tobacco. There was mentioned the case of a peasant who had earned £23 a year. Out of that £23 a year he consumed 5½ 992 ounces of tobacco per week. The hon. and learned Member said: "Is it really fair that you should tax a man who contributes so to the revenue?" That is not what we do. Is it too much to ask that a peasant who at 70 years of age is to get 5s. a week for himself and 5s. for his wife—10s. a week, more than he ever earned—is it, I say, too much to ask him to sacrifice half an ounce of tobacco every week for a return of that kind? I do not think it is. Take our proposals with regard to future expenditure. There is no part of the country which stands a better chance to get its fair share. Take, if you like, the treatment of the meritorious pauper, with which we are pledged to deal, and which is absolutely inevitable. There is no part of the country which will derive as large a benefit in proportion as Ireland will in that respect. I have not the faintest doubt that the same will apply in regard to the Development Grant and the other proposals of the Government. All I can say is that if we imposed special taxation upon Ireland, and that Ireland gained no advantage, and if we went out of our way to disturb the present relationship, the hon. Member would have some cause to complain, or if we were raising money for purely British purposes in which Ireland did not participate. But we are not doing that; we are improving the proportion of taxation, and Ireland is deriving, I will not say more than her fair share, but more than her share in reference to population, and that being so, I do not see how it would be unfair to call upon Ireland to contribute the same as the poorest parts of the United Kingdom are contributing.
§ Mr. JOHN REDMOND
The right hon. Gentleman in his argument has entirely ignored the Report of the Financial Commission. In support of that Report the right hon. Gentleman and the Members of the Government to which he belongs all voted when it came before this House.
§ Mr. LLOYD-GEORGE
I can assure the hon. and learned Gentleman I am not ignoring it at all; on the contrary, this is a contribution, and not an unsubstantial contribution, towards solving that problem. The hon. and learned Member will surely see that. I am altering the proportion in the new taxation for the first time from 6.5 to 4.5 per cent. Is not that recognition? But not merely that, but I am altering the proportion of the contribution made to Ireland also. Ireland has got it both ways, and I think the argument of the hon. and 993 learned Member might be fairer even to a British Government. I have no doubt at all that these questions will be raised again, and that is all I need say for the present.
§ Mr. LLOYD-GEORGE
I have not convinced the hon. and learned Member altogether. So much for the moment for the case of Ireland. Now I come to the question of the Development Fund. I agree with the hon. and gallant Member for Essex in one thing he said in what was, if he will allow me to say so, a very powerful speech, which he delivered this afternoon, and which was heard, I am sure, on both sides of the House with great admiration—I agree with him in one proposition he laid down, that money ought not to be spent upon this development by the State if the landlords can do it better for themselves. I think that will be agreed to. If things can be done better by individuals it is certainly a mistake for the State to meddle. But I want him to remember this. He, I know, is not merely a representative of good landlords, but he is a very enterprising landlord. But what he and a few landlords like him do, the vast majority of landlords cannot afford to do. I want him to bear that in mind. No one knows it better than he does. There are a few landlords here and there who are very wealthy, and have great resources, and who are also very public spirited. The Duke of Bedford is a case in point. He has done these things, but after all we cannot depend upon a few landlords scattered here and there through the country, and even these are coming to the end of their resources. [OPPOSITION cries of "They are at the end."] Oh, yes, but that was long before my poor Budget was ever talked of. [Cries of "You finished it."] No, I do not agree. They have been finished for the last 100 years, but still they are going strong. But that is not the point. I do not want to be drawn into that argument prematurely. I have no doubt it will come up later on. But here is a matter which is of very vital importance to the agriculturists of the country, and I do not think you can depend upon the sporadic enterprise of just a few landlords who can afford it, and who have got exceptional resources that will enable them to experiment. I do not think it is fair to them. It is drawing rather too much upon the resources of the richest in the country. There is the case of the 994 Duke of Bedford, who has been trying to dispose of property of that kind worked upon this highly scientific principle. I think we ought to do what other countries in the world are doing. It is no reflection upon the landlords.
I repudiate the suggestion that came from the Leader of the Opposition. He thought my proposals were a reflection upon the landlords for not having done their duty; I rather think he took that line, and I repudiate the idea altogether. It is simply what is done by every civilised community in the world. We are doing less than any others, and I think it is about time we did something. I will give the Committee, if they will bear with me, a little of my experience in this matter when I was at the Board of Trade. There was one thing which, I think, was brought home to me there, and every Member who knows an agricultural district knows it is perfectly true, how the development of local transport has almost come to an end. For some time the light railway business was flourishing. You hardly ever hear of it now, and the reasons are perfectly obvious. You cannot find landlords ready to cripple their resources by giving more than they can afford to the light railways in their districts. These light railways purely as dividend producing concerns do not pay. They pay from the point of view of the development of the resources of the community and pay a hundredfold; but they do not pay from the point of view of producing 3, 4, 5, or 10 per cent. As a rule these light railways are required in the poorest districts, and they ought thus to be treated as roads are treated. When an authority makes a road across the country it does not look at it from the point of view of what it can pay in cash. It deals with it from the view that you have got to open up the country, and the same thing ought to apply in the development of the transport for bringing up produce to the market; and what we discovered was that the local communities who were in those poor districts could not afford to go on contributing for the purpose, and that the grant they received was quite inadequate. In Ireland there has been a good deal of money spent on this matter, and I honestly do not see why it should be confined to Ireland. When you are going to help the poorer districts in any country the Government should fairly assist. It is in the interests of the whole community that that should be done.
995 I am not going to dwell on that point, because I shall have to introduce a Bill, or one of my hon. Friends will have to introduce it, and that will be the time to state the whole case for development. I only say this much now with regard to that point. Other points were raised not merely by hon. Gentlemen opposite, but by hon. Friends of mine, with regard to the Sinking Fund and with regard to afforestation. I cannot go into that now at any length which is adequate to its importance, but there will be a separate proposition before the House, and I shall then state my arguments for it. All I ask my hon. Friends and the House generally is that they, at any rate, will preserve an open mind until an opportunity occurs of discussing it and presenting the case which I wish to make in favour of it. The only thing I will say now about it is this: it has been asserted that the old Sinking Fund has always gone to the reduction of debt. As the hon. Member for Gloucester pointed out on Thursday last, during the whole time of the late Government the old Sinking Fund never went to the reduction of debt. [OPPOSITION cries of "Yes."] Well, I cannot recall a single case when it went for that purpose, and I know that very often the money was spent upon the most futile enterprises abroad, upon works which have been abandoned, and which are not of the slightest use at the present moment. If that money had been used for productive enterprises in our own country something might have been made out of it.
There is another point about the old Sinking Fund upon which there appears to be a good deal of misconception. The idea is that it is proposed to put it under the control of a Government Department, where it will be withdrawn absolutely from the control of Parliament. That is not the idea. The idea is that it should be a reserve which Parliament can direct. It would be very serious if it were put under, for example, the Board of Agriculture, or any other department, and spent absolutely without the control of Parliament. As I have said before, that is not the idea. The idea is that it should be just as much under the control of Parliament as it is at the present moment.
§ Mr. LLOYD-GEORGE
If as the hon. Member says the control of Parliament does not count, what control have we over 996 the finances of this country. I should like to say something about afforestation in reply to the right hon. Baronet the Member for the Forest of Dean. I agree with him, and I think I said so in the course of my observations on Thursday, that it would be a great mistake for us to plunge into a great afforestation scheme, and commit ourselves to a proposal for planting, I do not know how many millions of acres, without a most careful examination of the whole of our proposals. I thought I made that point clear on Thursday. [An HON. MEMBER: "So you did."] All we propose to do is, first of all, to do something for forestry schools; and secondly, we propose to do something for experiments in afforestation, and I understand my right hon. Friend quite approves of that. In this matter we must proceed very carefully and very cautiously. The right hon. Gentleman said that to plant the best land of the country with forests would be the very worst purpose to put it to, and I agree with him. The only proposal I have heard is for planting trees upon the waste lands of the country which are at present put to the worst use they can be put to.
The right hon. Gentleman makes a point about the local rates, and he wants something more specific from the Government as to what we propose to do for the local rates. He knows perfectly well that it would be quite impossible at the present stage to give any definite or specific pledges as to what we can do, because you cannot estimate with absolute accuracy what money will be available for next year. I agree we are only budgetting this year for the deficit which we have to find. Next year I agree that with a revenue which I shall provide, if the House of Commons adopts these proposals, there will be a substantial surplus—a very substantial surplus—to deal with these matters. As far as the Government are concerned they have hypothecated that surplus, first of all to pay the naval bill, which must be very much higher next year than this year—it will be considerably higher, but how much higher it is quite impossible for the Admiralty to state at the present moment. The hon. and gallant Member opposite, who has been at the Admiralty, I do not think would undertake to frame the Estimates for the Navy for next year even with some general knowledge of what the programme is. He knows very well that that depends very largely upon conditions which we cannot possibly foresee, but at any rate this will be the first charge, whatever the 997 amount is that will be necessary for the defence of the country.
Then there is the question of removing the pauper disqualification for old age pensions and industrial insurance. I think there will be a sufficient sum of money to deal with the pressure of the local rates, which I fully acknowledge to be a real and pressing grievance. I think this a very serious grievance not merely from the point of view of the ratepayer, but also from the point of view of the best type of municipal enterprise. I could not possibly at the present moment go beyond that, for the simple reason that no man can budget a year in advance or give an indication of what the surplus or the deficit will be twelve months in advance.
I come now to the criticisms passed in respect of our financial proposals. The real charge against the Budget is that we have chosen special industries for taxation, and we are told that it is quite unprecedented to choose special industries for taxation, that it has never been done and never will be done by hon. Gentlemen and right hon. Gentlemen opposite. I will take the sugar tax, for instance. That tax hit a special industry, and hit it very hard. All those who were dependent upon the sugar industry lost a good deal of money. There were trades where half the profits were wiped out in the following year by the sugar tax, and that was imposed by hon. Gentlemen opposite. At that time they never raised the argument that it was taxing a special industry.
Take a tariff. Do hon. and right hon. Gentlemen opposite mean to say it is possible to set up a tariff in this or any other country without favouring certain industries and hitting other industries very hard? They may say that what they have to look at is the balance of advantage. They may say that the first consideration for them is the good of the country as a whole, but no man who knows anything about the operation of a tariff will deny that the moment you set it up there are certain industries which are bound to be hit very hard indeed. Would that be considered by them as a fatal answer to the demand for a protective tariff? Of course it would not. You must look at the interests of the country as a whole, and you cannot sacrifice that for the interests of any industry or any branch of industry in this country. The right hon. Gentleman the Leader of the Opposition, referring to our proposals in regard to land, said that 998 there was no civilised community in the world where a discrimination was made in regard to licensing and land. The right hon. Gentleman surely could not possibly have studied the financial system of the United States, Germany, Italy, and our own Colonies. In the United States you have not merely high licences, but in States like New York you have special taxes on land values.
§ Mr. LLOYD-GEORGE
That is not the point, but I am sure there are both income tax and death duties. [Cries of "No, no," from the OPPOSITION.] Certainly there are in Germany.
§ Mr. LLOYD-GEORGE
The point of the Leader of the Opposition was that we were discriminating against one or two industries, and I have pointed out that in the United States you have a discrimination against both. The taxation of licences is already done in every civilised community. There is hardly one of our Colonies in which you have not got high licences or the taxation of land. As a matter of fact we are now making proposals which are years behind other countries. What is the proposal with regard to taxing licensed property? Is it unfair to put a tax on licensed property which you do not put on other property?
§ Mr. LLOYD-GEORGE
Then it is admitted that a certain amount of discrimination is certainly fair. If not, why do you support a system which taxes a public-house, but does not tax a grocer's or a draper's shop? Because that trade is in a very different position. You can raise a special tax upon the liquor traffic without infringing on the principles of the civilised community. Do hon. Members deny that you can raise such a tax?
§ Mr. LLOYD-GEORGE
We are dealing with taxation on licences, and on licences alone. Therefore, there cannot be any objection in principle to taxing licences or 999 raising licences, and here I agree with the hon. Member, and I am very sorry I did not hear the whole of his speech—it was, I understand, extremely fair and temperate. The hon. Member for Ayr last night said that the present system of taxing licences was an unfair one. I admit that.
§ Mr. LLOYD-GEORGE
I agree. I think the present scale is anomalous, and I said so, and we are taking steps to redress these anomalies. The hon. Gentleman said a fair way of taxing licences was in proportion to the liquor they sold. I think I can substantiate that.
§ Mr. LLOYD-GEORGE
I agree we have there a scale not merely absolutely fair—absolutely free from anomaly—but a scale which will be satisfactory to everybody all round, and especially to the revenue. I agree that in the main the fairest principle on which you can tax is the principle which is governed by the amount of liquor which is sold. You may get one house with a rateable value which is very high and another with a rateable value which is very low, and the one with the low rateable value may make much more money out of its licence than the other. That is exactly the proposition which I am trying to put, and I am trying to get a revaluation more or less upon that principle. That is the principle which has been embodied more or less in the Kennedy judgment. I am not responsible for the Kennedy judgment. I must take the law as I find it. I think that is the fairest way to assess these houses. We cannot do it in the present year, and we want money this year, therefore all we can do is to take the present basis this year, and we shall do our best to establish a system after the hon. Member's own heart.
§ Mr. YOUNGER
By doing so the right hon. Gentleman is creating infinitely greater anomalies than he is getting rid of.
§ Mr. LLOYD-GEORGE
I am accepting the very principle laid down by the hon. Member—that is, that the tax should be governed by the business which is done in a particular house. That is the real test of monopoly value. The right hon. Gentleman the Leader of the Opposition yester- 1000 day gave the case of the Whitbread Brewery by way of showing how very unfair these proposals of the Government were. He said that the proposals of the Government raised the taxation of this particular company by something like £36,000 a year, and then he said at the present moment all their profits only amounted to £27,000.
§ Mr. AUSTEN CHAMBERLAIN
My right hon. Friend said the increase of taxation was £7,000 more than the dividend on the ordinary shares.
§ Mr. LLOYD-GEORGE
That by no means represents the profits of that great firm. As a matter of fact, I think their profits were about £140,000. But still, let me put this to the Committee. The Government put on threepence per barrel, and that, I am told, is £9,500. We are told that that is very monstrous. Let me remind the Committee what the late Government did. They put a tax on of 1s. per barrel, and that cost Whitbread's on this basis not £9,500, but £38,000. We are confiscators; we are robbers, because we put it up to £9,500. What is to be said of Lord St. Aldwyn, who put it up to £38,000? And what is to be said of the Gentlemen who were his confederates in that act of confiscation and robbery? Of course they know perfectly well that that £38,000, that that 1s. per barrel, was passed on to the consumer, and if 1s. can be passed on to the consumer so easily, what is the difficulty about 3d., and I have no doubt it has been passed on long ago—passed on to the consumer long before it has been paid. As a matter of fact, I have seen no end of scales of how the prices have been raised—the price of whisky, the price of other intoxicants, the price of tobacco—all I can say is that if the prices are put up to these figures this proposal will mean a fortune for the trade, and they are making an enormous profit out of it. Everybody knows perfectly well that they are not going to pay this sum of money, and they do not mean to. In the country they are saying so, and they cannot have it both ways. They cannot come to the House of Commons and say, "Behold how we are robbed of £36,000," and go on the platform and say, "Behold how your beer, tobacco, and whisky are higher?" Take, again, land. We are discriminating against land; the only civilised country, we are told, where it has ever been suggested. I wonder sometimes whether people read the 1001 newspapers. Are they acquainted with the proposals of their own party in Germany?
§ Mr. A. CHAMBERLAIN
I do not care what party in Germany the right hon. Gentleman means; he has no right to assert that we have any connection with any party in Germany. The German party does not sit in this House.
§ Mr. LLOYD-GEORGE
Whatever effect this Budget may have upon property, it seems to have the most disastrous effect upon the right hon. Gentleman's sense of humour. I am not sure that it was ever very strong, but it is now completely shattered. I was saying that the Conservative party in Germany, the party which holds his views in Germany.
§ Mr. A. CHAMBERLAIN
That is not true. A joke is a joke when it is not an untruth. The statement which the right hon. Gentleman has just made has no foundation in fact.
§ Mr. LLOYD-GEORGE
When I said the party which holds the right hon. Gentleman's views I meant the party which believes in Protection. I understood the right hon. Gentleman was a Protectionist and believed in Protection. So does this party.
§ Mr. LLOYD-GEORGE
The Conservative party in Germany—I do hope I shall be allowed to use that phrase; I never knew it was a term of reproach and opprobrium—the Conservative party in Germany, the party of the land, the party of Protection, and the party that believes in building more "Dreadnoughts"—their suggested alternative for the purpose of raising the revenue there is an increment tax on land. That party, if I may be allowed to say so, is civilised. I believe in Germany; but the right hon. Gentleman will not allow me to associate him with Germany. It is not merely that. This revolutionary socialistic proposal is actually in operation in the most advanced commercial cities of the Continent. It has been for years a great success. The only difference between our proposal and theirs is, as one might expect, that ours is much more moderate. 1002 There you go back to the increment of 50 years. In some cities of the Continent you assume an increment where land has been held 20 years. We do not propose to go back at all. Whatever is in the possession of a man now we say, "Very well, you retain that." We begin by valuing the land at its present position, and we say whatever increment there is which is due to the money which he spends, as the hon. and gallant Member does, on the development of his property, will be credited to him, every penny, but of whatever is due to the industry and enterprise of the people we ought to have one-fifth for the people who made it. Then I am asked, Why do you do this with land and with nothing else? I will tell the hon. Member. My right hon. Friend the Member for the Forest of Dean referred to the very important Commission on the Housing of the Working Classes. This is no novel proposition. A member of that Commission was the then Prince of Wales, the present Sovereign, and they, by their Report, actually proposed a tax of this sort. They actually proposed a tax upon undeveloped land near the towns. Really, would a Commission under such auspices and with such signatures 20 years ago propose a revolutionary socialistic scheme? Hon. Members have only to apply their common-sense to see the absolute distinction there is between land and other property. Take if you like a town like Devonport. Devonport has been created as a great aggregation of people purely by the expenditure of Government money. The land there was practically worthless before the Government began spending money on it. At least it was worth very little. Millions of money have been spent there, and hundreds of thousands are spent in keeping the place going by wages. What is the result? The landlord has done nothing, but his property has gone up in value a hundredfold, and even a thousandfold what it was before. Is that due to his enterprise, his energy, or to any capital he has expended? It has all been done by the expenditure of the Government. Take on the other hand the case of a man living in a town—a tradesman or a professional man. He makes his business there, and he makes his income there. What he makes out of it is due to his own brains and exertions, and the moment these exertions cease his income ceases, but though the landlord makes no exertions the value of the land goes up. To say that there is no distinction between the 1003 two cases is to fail to grasp the elementary principles in a matter of this kind. The same thing applies to mining royalties. Anyone who has lived in a mining country as I do knows that. Take the case of South Wales or some of the mines in North Wales. Within living memory that land was common land. I am not going into the question how it ceased to be common land, but it is not so now. It was perfectly worthless land for agricultural purposes. Why is it now of enormous value? It is because a capitalist comes along and risks the whole of his capital. The capitalist takes great risk with respect to his capital in sinking a shaft. If he does not discover coal his money goes. But what does the landowner risk there? Not a penny. He gets his mining royalty if the thing is a success. He gets his rent even when the mine is not working—[An Hon. MEMBER: "And when it is losing money"]—and when money is actually being sunk in trying to find out if there is coal. The rent is paid at an extravagant price, and not only that, but for the surface he gets compensation, which is three times the value of it for agricultural land.
§ Mr. MARKHAM
May I inform the right hon. Gentleman that he gets 10 times the value of the surface for the damage caused?
§ Mr. LLOYD-GEORGE
Very well; I am glad to know that I have rather understated the case. But to put that in the same category as income which is made by that man who risks his capital in the mine is grotesque.
I would like to answer one other point raised by the hon. and gallant Member. He put forward a claim for preferential treatment for the landowners. He thought not only that there ought to be no discrimination against urban land, but that there ought to be a discrimination in favour of land generally as far as death duties are concerned. The hon. and gallant Member has written a letter to the Press on the subject of death duties. He treats them in this way, and I want to make it perfectly clear at the outset that we cannot accept that position—he says that death duties paid in respect of property should be spread over the income during a man's life. You never do that at the present day. Why should we do it? Suppose a man has got £100,000 under a will; suppose he has got to pay £10,000 1004 in legacy and succession and death duty. He deducts that out of the corpus, and then he retains the £90,000. He does not spread it over his income in his life. He tries to increase his capital, and converts his £90,000 into £900,000 if he can. Why should the landlord be in a different position? He has got to deduct it like everybody else from the corpus of his property, and, if necessary, he has got to dispose of his property to raise it. Why not? It is what is done in every other case. The hon. Gentleman has asked me a question with regard to schedule A and schedule D. I tell him frankly here I have a great deal of sympathy with his contention. I really do not see what there is to be said against it. But he must remember that neither I nor my predecessor is responsible for the present position. It is purely, after all, Sir Robert Peel's income tax plan. If I could find any way of adjusting it which would not be absolutely disastrous to the Revenue I should certainly do so, but I am assured by the officials that it is almost impossible to deduct after audit every year almost all the expenditure which is incurred by the landlords. However, I promise that I shall go into this matter still more carefully. I quite admit there is a good deal to be said for the contention that the present system penalises the good landlord, and what is equally bad in my judgment, not merely penalises the good landlord but gives a bonus to the bad landlord. Many landlords do not give one-sixth of their income for repairs. Many give vastly more. I think it very unfair that the income tax should rain on the just and the unjust in the same proportion, and if there could be same sort of national system which would enable us to do justice to the good landlord and also justice to the bad landlord then I should be very glad to help the hon. Gentleman, or, on the contrary, invite him to help me find some practical scheme. I really can assure hon. and right hon. Gentlemen opposite that the Government—and I speak for, myself and my colleagues—are sincerely anxious to do what is right and fair in this matter. It is a difficult task. There is a huge deficit to meet, for which Parliament as a whole is responsible. Our business is to distribute the burdens. It is a hard task, a very anxious task, a very invidious task to do so. I have endeavoured honestly to distribute them freely. I wish to do so in a way that brings privation to no home, however humble; I wish 1005 to do so in a way that creates injustice for no interest, however powerful it may be.
§ Mr. A. CHAMBERLAIN
I understand the right hon. Gentleman intended to answer my question in reference to the taxation of the reversion of leasehold property of great municipalities. At Question Time the right hon. Gentleman said he would answer inquiries in the general Debate.
§ Mr. LLOYD-GEORGE
I am very glad that the right hon. Gentleman has reminded me. I may say generally that I think it is very much better that these questions should be put in a discussion of this sort, where I can give a really full answer, rather than by question and answer at Question Time. No one knows better than the right hon. Gentlemen who have been Ministers themselves how impossible it is to give a really complete answer that is not misleading in a case of that kind. What we propose to do with municipal property is this: we do not propose to tax municipal property at all, because that would practically be simply taking it out of one pocket and putting it into another. Therefore there is no object at all in taxing municipal property. With regard to another question which was asked, that depends a good deal upon the landlords themselves. The hon. and gallant Member said that he, for his part, would not send in any declaration of value at all. If that is to be the attitude of all the landlords in the kingdom, then I agree that the valuation would be a much more costly operation. In that case all that would have to be done would be to send a valuer at once to the landlord's property. That would increase the cost enormously. I have estimated on the assumption that landlords will do exactly what income taxpayers do now—send in their valuations—and I have not the slightest doubt that, in the vast majority of cases, they will be accepted exactly as the declarations of the income taxpayers are accepted at the present moment. When they are not accepted, what will happen will be exactly what happens with regard to income tax. There will be some negotiations between the revenue officials and the landlords, and if they fail to come to an agreement then there will be a valuation. But I do not anticipate that during the coming year it will cost more than £50,000.
§ Mr. PRETYMAN
That is not the valuation I asked for. The valuation we sug- 1006 gest is to be made by the private individual. The right hon. Gentleman, in his former speech, said that if the valuation was found to be, too low very serious consequences would ensue to the private individual who has made it, and he suggested that the whole of the arrears afterwards adjudged and the valuation placed upon it by the owner would be exacted from him. Under these circumstances I think it would be extremely hard to ask the owner to say what is the value of his property when he has no means of arriving at it or of knowing how the value is affected by the tax which is now proposed to be put upon it. I do not suggest for a moment that landlords will be passive re-sisters in this matter, but that they cannot give a value, and that they will be very unwise to attempt to do so if a penalty is put upon them in case that valuation does not happen to coincide with the valuation of the valuer appointed by the right hon. Gentleman.
§ Mr. LLOYD-GEORGE
If the hon. and gallant Gentleman is under the impression that there is going to be inflicted upon the landowner a penalty should his valuation turn out not to coincide with that of the Government, all I can say is that my observations must have been misleading. But when he talks about collecting arrears, that is exactly what takes place in connection with income tax declarations.
§ Mr. LYTTELTON
The income tax is a matter of fact, and the valuation of land is a matter of opinion.
§ Mr. LLOYD-GEORGE
On the contrary, the right hon. Gentleman knows perfectly well that it is very difficult even with income tax to define what is income and what is capital, and very often men quite honestly underrate their income because they put to capital account what ought to go to income. The only thing that happens in a case of that sort is that when the income is finally established, then the arrears have got to be paid. I do not propose any penal consequences excepting that the arrears will have to be paid when the valuation is finally established by the valuer.
§ Earl WINTERTON
Perhaps the right hon. Gentleman would give me his attention with reference to a rather unfair and misleading remark which he made in reply to an interruption which I made. It is with reference to the taxation of the liquor traffic in this country and America. 1007 Perhaps the right hon. Gentleman will remember that in dealing with this matter he was careful to emphasise, and, I think, unduly, the amount of the licence duty in America, and the fact that in this country the licence duty was very low. I ventured to point out in my interruption that you should not only take into consideration the licence duty, but you must take into consideration the whole taxation of the liquor traffic of America. I do not think what the right hon. Gentleman said should go unchallenged. The right hon. Gentleman gave us distinctly to understand—it is more or less a technical point—that the liquor traffic in America has a larger total burden.
§ Mr. LLOYD-GEORGE
I did not think I made that impression, and I certainly did not wish to do so. On the contrary, in replying, I confined myself entirely to licensing. As to what the total burden is I am not quite sure. I want to confine myself to licensing.
§ Earl WINTERTON
If I may say so, he gave us the impression that the question of licences was the only question that matters. Of course the question of licences is a comparatively small matter compared with the whole, question. I will give him the figures, which have been carefully prepared, and I hope he will be good enough to look into them before this matter comes before the House in concrete form. As I understand it, if the liquor traffic was fixed in this country on the same basis as in America, instead of paying something like 38 millions it would only be paying 34 millions.
§ Mr. SHERWELL
Would the Noble Lord allow me to ask him a question? Will he kindly inform the Committee on what basis he arrived at those figures?
§ Earl WINTERTON
I cannot go into the figures at this late hour, but if he will look up the official statistics, the reports of the Federal Governments, as well as of the Government of the United States, he will find that I am right. On the basis of the taxation of the liquor trade in the United States the liquor traffic in this country would be only paying 34 instead of 38 millions. At any rate, it is grossly misleading for the right hon. Member and his Friends, I do not say the Chancellor of the Exchequer, to pretend that the licence duty is only of importance. Further, the right hon. Gentleman referred in his 1008 remarks to the fact that in New York a very high licence was imposed. He introduced what I thought was an irrelevant statement about the state of civilisation in New York. Personally I think the state of civilisation in New York is not very high, but that is a matter of opinion. The right hon. Gentleman omitted to state that all the places in New York where liquor is sold, clubs as well as bars, are subject to very high licence duty. Therefore it is unfair to take into consideration only the licence duty paid for drinking bars, and not the licence duties paid on clubs and what corresponds to our grocers' licences. In fact, you cannot estimate this matter without taking into consideration all the burdens imposed in all forms of taxation. But the right hon. Gentleman went on further in his speech to ask whether the taxation which he proposes is larger than that permitted by civilisation. The answer is that it is not, but that it is certainly larger than any other civilised Power imposes. I defy the right hon. Gentleman to find any country where, taking the burden as a whole, it is higher than in this country. The right hon. Gentleman has really to choose, between now and the introduction of the Finance Bill, whether he will come before the House in the guise of a philanthropist or of a usurer. The two callings are never combined, and at present it is very difficult to tell which the right hon. Gentleman proposes to adopt.
§ Committee report progress, to sit again to-morrow (5th May).
§ The House adjourned at Two minutes after Eleven of the clock.