§ Motion made and Question proposed: "That in the case of persons dying on or after the 30th day of April. 1909, there shall be substituted for the rates of estate duty set out in the First Schedule to the Finance Act, 1907, the following rates:—
|Where the principal value of the estate||Estate duty shall be payable at the rate per cent. of|
|Exceeds 100||and does not exceed 500||1|
|Exceeds 500||and does not exceed 1,000||2|
|Exceeds 1,000||and does not exceed 5,000||8|
|Exceeds 5,000||and does not exceed 10,000||4|
|Exceeds 10,000||and does not exceed 20,000||5|
|Exceeds 20,000||and does not exceed 40,000||6|
|Exceeds 40,000||and does not exceed 70,000||7|
|Exceeds 70.000||and does not exceed 100,000||8|
|Exceeds 100,000||and does not exceed 150,000||9|
|Exceeds 150.000||and does not exceed 2) 0,000||10|
|Exceeds 200.000||and does not exceed 400,000||11|
|Exceeds 400,000||and does not exceed 000,000||12|
|Exceeds 600,000||and does not exceed 800,000||13|
|Exceeds 800,000||and does not exceed 1,000,000||14|
|Exceeds 1,000,000||15.and does not exceed|
§ —[Mr. Lloyd-Geurge.]442
§ Mr. STANLEY BALDWIN
I do not propose to keep the Committee long, but. I wish to make a few observations on the steepening of the gradient with regard to the death duties as proposed in this year's Budget. We have this advantage in discussing the subject of the death duties, that we have in black and white the proposals of the Government. We are not fighting in the twilight, trying to elicit various details as we have been trying with singular want of success during the past week. We know the best and we know the worst of the case, and we shall be able to discuss the whole of the proposals of the Government. This is hardly the occasion to criticise the death duties as such, because the principle has been conceded for many years. The only question at issue between us and the Government is whether by the steepening of the gradients, especially on the more moderate-sized estates, you are not doing more damage to the financial stability of the country than you are doing good to the Exchequer. The objections to any form of death duty, of course, are obvious, and there are no new ones but what objections there were have been steepened in their gradient just in the same way as the duties have been affected. They group themselves principally into three forms. They inflict hardship on the individual, they penalise thrift, and when they are raised to such a scale as they have been raised this year you are running a very grave risk of paying for current expenditure out of your capital. With regard to 443 the increased difficulty which this steepening of the gradients throws on the individuals who have to meet the death duties, the Prime Minister has been assuring us that the scale of income tax in this country is a very moderate one, a somewhat changed point of view from that which he took three short years ago; but that is neither here nor there in this discussion. I would merely remind the Committee, and I hope I shall be able to do it in two or three minutes without being tedious, that the charge which a thrifty man has to meet on account of these increased duties by insurance practically doubles the rate of income tax he is paying on that total. [An HON-. MEMBER: "More."] If you take a man with an estate which will come in for death duties at about £80,000 and allow him an income of 4 per cent. derived from that money—and where the estate is agricultural land it would not be so great—you will find that the death duties liable on that estate come to no less than two years' income, and if he has to provide £2,400 for insurance, if he is healthy and sufficiently young that he can get the insurance effected at a 3 per cent. premium, the payment of that premium means an additional income tax of no less than 14 pence.
Take a man with a very much smaller estate, who in many ways would be liable to feel this tax more. Take an estate of £15,000. The amount of insurance that man would have to cover under the new scale would be equivalent to an extra tax of 9d. in the £. If the man is too old to insure himself at a reasonable rate, if his health does not allow it, if he is not a prudent man, if he has the enjoyment of his income, this largely increased block of capital in many cases will be raised with very considerable difficulty. I want at this point to draw attention to what I think is the most peculiar hardship of all these cases of death duties. I approach the subject with some reluctance and with some trepidation, because even the courage of the hon. Member for Preston the other day could hardly induce him to trespass on the subject. I allude to the question of the widow. I know that the widow is unpopular in this House. I know that the Chancellor of the Exchequer entertains very different feelings for her from those he would entertain if she had the vote, and I must may if anything can convert me to be a suffragette it would be the treatment meted out under our financial system to 444 widows. Take the case of the wife of a man who is earning an income under conditions where he can get an exemption owing to his income being earned. Supposing he is a profesional man, as many of these men are. Of course the moment that man dies the income of the family falls considerably owing to the death of the breadwinner. Not only has there to be provided an increased block of capital out of the estate, but the widow herself has to pay 5d. more income tax on her reduced income. There is one other point connected with the death duties which I think ought to be brought out, although I do not think it is a new point, but, like all other points, it becomes further accentuated by the steepening of the gradients. I want hon. Members to consider for one moment the value of a sovereign to a man from what is almost an ethical point of view. If a man has a sovereign, and he chooses to spend it on himself, whether he spends it on clothes, beer, or mineral waters, or as his fancy may lead him to spend it, he has the full enjoyment of it and the encouragement of the State to spend it, and he derives pleasure from its consumption. But the moment he decides to save it and put it by for his wife and children, the value of that sovereign drops from 20s. to 18s. 6d. or 19s., according to the size of his estate. If that is not penalising thrift I do not know what is. Any system of taxation that makes a man hesitate as to whether it is worth his while to go on saving money must be a bad system of taxation for the morale of the citizen. Wherever you find by legislation of this kind a tendency to lessen the disposition to save among well-to-do people you may be quite sure that the example of thriftlessness set up amongst them will be very quickly followed by those in less fortunate circumstances. Considering that thrift has never been a virtue of the English people in every class of life, I think our legislation should be directed to making it worth a man's while to save, and we ought to encourage him to do this in every possible way.
But there is one point which to my mind is the most serious of all, and it is that the time will come under these steepened gradients when we shall be taking, if we have not been doing it before, capital and employing it in the annual expenditure of the country. I know quite well it has often been said, and it has been held with some show of plausibility, that death duties are only a form of deferred income tax. If that be the case under the Harcourt duties 445 of 1892 it is very questionable whether it is the case to-day, and although this is a matter that is not open to proof, I believe there is a closer cause of connection between the consumption of capital in annual expenditure and the want of employment in the country than appears on the surface. It stands to reason that you cannot go on employing large blocks of capital on the one side, and on the other maintaining wages and providing work for the millions of men in this country who want it. The cause of unemployment is a subtle one, and there are many links in the chain. Many of the causes that exist are hidden out of sight, but I am none the less convinced of what I have just stated, and I believe my conviction is shared by most men who have had much business experience, more especially connected with banking. There is another point in connection with the incidence of the death duties, and, as far as I know, no Government has attempted to deal with it, and that is the question whether an estate, of whatever size, is hit rapidly in a succession of years by a succession of deaths. Where you get deaths occurring at more frequent intervals than a generation you begin to make an attack upon the corpus of the property that nothing can resist; and I do not believe you can get away from this fact: that you are using up your capital, and therefore you are lessening the amount that is available for the production of fresh work, and indirectly for distribution amongst the wage-earning classes of the community. I should like, if I may be allowed to do so, to offer a suggestion to the Chancellor of the Exchequer. It is this. I believe that it is impossible to go on raising these rates of death duties indefinitely, as it is impossible to go on raising the income tax indefinitely, without doing an immense amount of harm indirectly to the productive industries of this country I remember, Mr. Emmott, at one time when I was a small boy, staying in a mountainous country, that I received strict injunctions not to amuse myself by rolling stones down a mountain. I got hold, one day, of a large rock, and sent it down the mountain side. It bounded down by leaps and bounds, and finally finished its career in a plantation of sugar cane, where it did an infinitude of damage. I cannot help thinking that the position of the Chancellor of the Exchequer is something like mine on that occasion. The Chancellor of the Exchequer finds himself in an exalted position on the top of a 446 mountain. He sees some Duke of Westminster here and a Rothschild there on the mountain side. He also sees a rock and a crowbar at his feet. He thinks that if he can dislodge the rock he can hit these men. He starts the rock rolling. It goes down the hill, and it only stirs a hair on the head of those men whom he wishes to hit, but the rock goes down into the valley and scatters destruction amongst thousands of men who put him in the position in which he is to-day.
§ Lord KERRY
I believe that these Resolutions are absolutely inseparable the one from the other, when you consider the effect which they will have, but I should Committee in dealing with this Resolution which is to follow. I wish to ask the Committee, in dealing with this Resolution, to consider the burden which it will place upon property in connection with the burdens imposed by the subsequent Resolutions. The Resolutions must be looked at collectively, and with regard to their cumulative effect on property. I think that it is really unnecessary to go into the details of this subject, because everyone is agreed as to the broad results which these new rates of death duties will have. The Chancellor of the Exchequer spoke of merely "adjusting the rates," but I believe that the effect will be to double the burden which is to be put on property. It will be a heavy burden in all cases. It will very heavily increase that burden, if not, as I said, actually double it. I want to address my remarks on this question more particularly to the effect which this scale of death duties will have on agricultural property. I do not deny that there is a hardship on the owners of personal property, but it must be admitted that in the case of agricultural property the hardship is much greater than on other property. It will affect in the first place the owners of agricultural property; in the second place the community, which depends on that property; and in the third place the State. I am not going to quarrel, any more than my hon. Friend who has just spoken, with the principle of the death duties. I do not think that anyone will contend that a large property passing at death should not pay a fair contribution-to the expenses of the State. The Chancellor of the Exchequer has talked a great deal about the various parties in the community paying their fair share. The issue is whether the taxes he proposes on owners of large property are a fair share. I want to bring before the notice of the House 447 the question of agricultural land, and whether it is able in the long run to pay the taxes. In order to get at the results from these death duties one must look upon them in the form of an annual charge on the property, and that is not a very easy thing to arrive at.
As the House knows, various methods have been suggested for estimating the average annual charge on properties of different sizes. Of course, insurance has been suggested, but I must remind the Committee that that is a very hard task—a very hard task to suggest to those who wish to make provision for the death duties. Why? Under certain circumstances it would pay everyone with regard to the death duties to insure, namely, if no death duties were to be paid until 20 or 25 years hence, but that is not the case. Therefore the average term of life must be very largely reduced, and the insurance will be proportionately heavier. Even if you do insure for the death rates you will have to insure for a larger sum than what is actually due. Another method is for the successor to regard the sum which he is called upon to pay as an annual charge for the rest of his life. Various methods have been proposed in dealing with such cases. It has been proposed that he should take out an annuity. Whatever these methods of compensation may be, it is quite evident that under the scheme now proposed the annual charge will be extremely heavy, and especially heavy in the case of large estates. Take agricultural property, for instance. Anybody who knows anything about agricultural property will bear me out when I say that the true income is generally 30 or 40 per cent. of the nominal value, and my suggestion is that if we increase the death duties it will destroy the larger part of that income and leave nothing at all for the owner of the property to live on and to keep up his house. If that is true, or partly true, it must be admitted that there will be a very large injustice to owners of agricultural property. I should like to say a word as to the effect on the community which lives on that property. Every owner of agricultural property has a sentimental feeling towards his property on which he and his ancestors have lived for many years. Everyone knows well that the last thing such an owner would wish to do would be to sell that property. He would make every effort to keep it going. What will he do, 448 when he is hard pressed by these proposals? He will reduce as much as possible the amounts spent out of his income in repairs and new works. That is a very varying sum as all owners of property know. It is anything from 60 per cent. down to 25 per cent. or lower, but surely the effect of this legislation will be to compel him to spend less on repairs and upkeep, and to reduce the expenditure to a minimum. The best estates will be brought down to the level of the worst managed estate. That will be the first effect of the hardship which owners of property will have to undergo. They will refuse to spend money on unremunerative work. They will not build labourers' cottages, and they will dismiss men where they can dismiss them. A landowner will be forced to collect his rents more stringently than before, and he will be unable to give the abatements which he has been in the habit of giving in the past. Of course, the last thing which will happen will be that he will find himself so beset by difficulties that he will have to let his house and become an absentee. Hon. Members know full well the evils that have arisen from absentee landlordism in Ire land, and surely they do not want to bring about a similar state of things in this country by these financial measures.
Lastly, how will this stiffening of the. death duties affect the State itself as a revenue-collecting authority? The Chancellor of the Exchequer has told us that these death duties provide a revenue-producing machine of the highest efficiency. Will the effect of his legislation be to make that efficiency continue? Surely it will have the contrary effect. I do not deny the right hon. Gentleman may get the extra money for a year or two, but I feel confident that the ultimate effect will be very adverse to the monetary requirements of the Government. First, the landlords will be forced to sell, on succession, blocks of their property, in order to realise the necessary death duties. As a result, there will be many forced sales all over the country, and it is extremely doubtful whether people will be ready to buy the land so offered. In that event there will be general depreciation in the value of land and a consequent diminution of the future death duties and of the present income tax which the Chancellor of (he Exchequer is in receipt of. Besides that, it must be obvious that as the estates are pared off bit by bit they will gradually descend into the lower category of the death duties, and the sum received by the State 449 will correspondingly diminish. Therefore, I should have thought that in the interests of the State, if not in the interests of the individual or of the community living on the land, it would be well to reconsider these tremendous imposts, which are especially heaped on the agricultural industry by the Budget of the right hon. Gentleman. What I really would like to know is what attitude the Government take up towards this question? Do they expect that owners of agricultural property should produce the necessary death duties out of the superfluity of their savings or of their accumulations? Do they expect the owner of a landed property will be able to save the money out of his luxuries? If they do I think we shall be able to show that such a thing is absolutely impossible. First the land will be starved, and eventually it will be sold. That is what will inevitably happen in the endeavour to meet these imposts. If the Government do not take up the attitude that the money is to be paid out of savings, do they frankly admit it is to come from the corpus of the estate? I know that that view is taken honestly and straightforwardly by hon. Members below the Gangway, who wish to see all property, and especially landed estates, become small by degrees and beautifully less. In that, no doubt, they voice the opinion of a certain section of the community. But is that opinion really shared by the Chancellor of the Exchequer? It seems to me from the answer given to one of my right hon. Friends, and from arguments which were adduced at the beginning of this Debate, that that is so. The idea, he said, taking the instance quoted by my right hon. Friend of an estate of £100,000, which would have to pay death duties amounting to £10,000, so that the successor would be left with £90,000, the idea was, he said, that that successor should at once set to to make his £90,000 into £900,000. I am sure any agricultural landlord will be very grateful to be shown how that can be done. It may be possible in the case of personal property held in investments or in the case of fortunate speculations, but no one can possibly contend that there is any chance of an owner of agricultural property increasing his capital except by the very hard process of putting by any savings he may be left in possession of by the Chancellor of the Exchequer. If it really is the attitude taken up by the Government, that the money must be found out of the corpus of the estate, and that estates are gradu- 450 ally to be reduced, it seems to me they throw over altogether the rules laid down by economists whom they are so fond of quoting. We heard a great deal about Mill when it was a case of taxing unearned increments. I believe one of the principles which Mill held most dearly was that in no case should the present value of property be confiscated. Surely if the Government say that intentionally they are taking blocks of property at each succession, which property has no prospect of being replaced, that is only another way of confiscating the present value of a man's property. And if that is their attitude I do not think they can complain when we say that the death duty and other proposals contained in this Budget are proposals of a confiscatory and predatory nature.
§ Mr. MUNRO FERGUSON
I am not going into the general question of the death duties, but there are one or two points in connection with them where I think they press hardly and operate with excessive severity. I think, therefore, the attention of the right hon. Gentleman may fairly be called to them. I should like to make this point as regards the question of the basis of valuation on which the death duties will be raised. Unless that basis is a fair one, I agree with all that has been said by the Noble Lord opposite (Lord Kerry) to the effect that the incidence of the increased death duties will fall very heavily upon agriculture and upon agriculture as an industry. I do not propose to deal with the position of the owner in particular. I will take agriculture as an industry, and compare it with other things. I ask, in the first place, that it should be treated on an equal footing with other things. I should like to remind the Chancellor of the Exchequer, with a most sympathetic spirit towards his general proposals, what the burdens upon agriculture are, because it is very hard for any one unconnected with agriculture to appreciate what the position really is. The crux of the position is to be able to secure from agriculture sufficient to provide for the proper equipment of the land, because without that proper equipment there will ensue agricultural deterioration. The yearly income tax, apart from the deferred income tax as it has been called, presses heavily upon agriculture, both upon owners and occupiers, because it is not levied as in the case of other industries upon profits. I do think that agricultural incomes ought to be taxed under 451 schedule D. Then, as regards the owner, the incidence is heavy, because on a well-equipped estate the deductions, one-eighth and one sixth, do not nearly cover the cost. I would not care to see encouragement given to a badly managed estate by granting it an undue abatement. Maintenance, renewals, and management absorb so considerable a proportion that probably the net income is about one-half of the gross income. I cannot give the figure more accurately, because the rates vary so much in different parts. But, at any rate, it is a very large proportion. Now, again, the incidence of local taxation upon the agricultural industry is increasingly severe, because Parliament is constantly imposing some new and onerous burdens upon realty which, no doubt, are necessary, and have to be met out of increased rates. Rates are levied on realty for every kind of purpose, although agriculture often derives little or no benefit, direct or indirect, from the expenditure it has to contribute, while personalty is not called upon to make any corresponding sacrifice. Therefore I venture to suggest it is high time that the minority Reports of Sir George Murray and of Lord Balfour of Burleigh were taken off the shelf and the recommendations put into force. As to the deferred income tax, as the death duty has been called, I am not concerned now, to deal with the question of its increase under the Budget, though that may arise at another stage.
All I am anxious to urge is the need for a fair basis of valuation for the agricultural death duties, and for this reason, that those death duties fall with exceptional severity on the equipment fund to which I have already referred. Ordinary agriculture is a co-partnership in which the owner embarks about four-fifths of the capital and the occupier one-fifth. That, at any rate, is about the proportion in my country. Taking Scotland as a concrete example, it will be found that owners have 100 millions invested in permanent equipment, and expend yearly about 2½ millions for renewals, maintenance, and management. There is only the prairie value left in agricultural land and an exceedingly low rate of interest upon the equipment fund, but in spite of all we manage to keep the plough going, and the standard of agriculture is high. In a great many cases the cost of agricultural equipment and of maintenance have 452 hitherto been met by revenue from outside sources. They have been derived from coal or feus, or possibly from some marriage of a financially attractive character. The fact is outlays to a considerable extent do not come, as in other industries, from the profits of agriculture, but from extraneous sources and through the purchase of estates by men who have made their fortunes in the industrial world. Some of these other sources of the landowner's income, are, I think, properly met and dealt with in the Budget, and, on the whole, it appears that in the future agriculture must be regarded as being more in the nature of a self-supporting industry. As regards the death duties, there is no certainty as to when death will occur, nor as to the valuation which will follow. It is not every owner, as has been pointed out, who is in a position to insure, owing to health, or age, or other circumstances, to meet these death duties; sale or mortgage will often be the only expedient, while the taxation proposed will render insurance or mortgage more onerous. The sale of agricultural land, in any considerable quantity, will be apt to be in the nature of a forced sale, and if it is to be avoided owners will be compelled to limit their outgoings, which would be to the deterioration of agriculture. It must henceforth be the object of the owner, if the burdens are excessive, or if they are raised on an unjust valuation, to restrict his capital expenditure, in order to have the money in hand when the call comes. The relief which agriculture obtained, by the transfer of land from hard-up to well-to-do people, will be lessened, because it will sweep away the small margin of profit left through growing burdens, and in consequence of the competition in equipment, in order to obtain a tenant. The incentive to a buyer will no longer be sufficient to insure the transfer of an estate, or a portion of an estate, in regard to which its owner can no longer discharge his liabilities to others who would have been willing to have undertaken them.
That must withdraw much of that extraneous help from agriculture which it has had in the past. The argument as applied to sylviculture is still stronger, because of the century which must intervene between the improvement and the equipment. I am no advocate of large estates, nor of the existing land system, because I think there is wide scope for national communal and occupying ownership. I only say we cannot break down the existing system without 453 making provision for setting up another, without destroying agriculture. One advantage of breaking up large estates is that agriculture would escape the death duties, and the Treasury would no longer receive them from agriculture. The Treasury would then, in fact, have to be prepared to find some hundreds of millions for that equipment of land which the landowners hitherto provided. Boot out owners of mining royalties or building values, and the interests of the community would be speedily secured by some other form of control. Boot out the agricultural owner and the State must step into his shoes and assume the character of an improving landlord in Britain, as it is already doing at the present day, or will have to do in some parts of Ireland—the State will have to undertake many obligations, which is the surest way I know of of doubling the National Debt. Whatever the merits or demerits of the present national land system, it tends to economy in national expenditure, and it also tends, as I think we shall find, to produce revenue for the Treasury. I suggest that the total duties should be levied upon an equitable basis of valuation. For example, few duties can be readily sold, when the Lord Advocate is not making too many speeches, at about 28 years' purchase. The valuation of agricultural land on the same basis should not exceed 14 years.
§ Major ANSTRUTHER-GRAY
May I interrupt the hon. Gentleman for a moment? Can he tell me where he would sell feu duties for 28 years' purchase?
§ Mr. MUNRO FERGUSON
I put it roughly at 28 years' purchase. They were 30 at one time; I do not think they are below 28 at this time. I think that is a fair rate.
§ Mr. MUNRO FERGUSON
I think that is a fair rate, because the nett and the gross income in the one case is one, and the nett income is about half the gross income in the other case. A distinction is recognised already between agricultural and other incomes, in respect of one-sixth or one-eighth deduction, and if that deduction is just in the case of the annual tax, it is equally just in the case of the deferred tax, and I think the deduction should also be made in the case of the deferred tax as in the case of the annual tax. Woodlands on the richer estates have hitherto 454 practically escaped death duties, because the 25 years' maximum which the right hon. Gentleman the Leader of the Opposition put into the Finance Bill of the late Sir William Harcourt. The 25 years' maximum under which the death duties on agricultural land are raised is, in the case of the richer estates, covered by the estate without there being any need to call upon the woodlands. But upon the poorer estates they are liable, and the incidence of the death duties on sylviculture will be detrimental, because they will tend to force immature timber into the market, and for that reason I would commend that and other points to the consideration of the Chancellor of the Exchequer. I do so with great confidence, because I know of no one who is more ready and more able to accept a practical hint from a practical man. As it happens, I had some chickens at some of the roosts that have been raided by the right hon. Gentleman, not in such good condition as he could have wished, but still safe for the bag, because they are all pinioned. There are stronger birds upon the wing, and I hope his sporting tastes may enable him to discriminate so as to have a varied bag at the end of the day. But there are forms of realty which cannot evade the Treasury net, and which yeild an income which conies in very easily, as compared with agricultural income, to which I have alluded—minerals and ground values, and so forth. On the score of ability to contribute, I have always thought that these got off too easily, although I hold by the reservation which I made earlier in the Session, that if it has been the local community that creates the building values, there does not seem to me to be any strong reason why the State should collar them. I agree that they can best be collected by the State, but at the same time—
§ Mr. MUNRO FERGUSON
I was only going to point out, Mr. Emmott, that if the State is going to keep these values that I thought it made an additional ground for the revision of the incidence of local taxation upon realty. That was in connecting with and in view of my plea that in case of' any increase of the death duties it would be fair to take the other burdens upon agriculture into consideration, and I have, only got to say further that while personally I feel deeply impressed with the necessity for finding more money for the Fleet 455 and for the Territorial army, as well as for social legislation, I am no less attached to the financial and commercial system which this. Budget so far preserves, and I would say this, that my plea for agriculture does not affect any principle, nor does it involve any irremediable loss of revenue, in securing equality of treatment for that industry as compared with every other industry in the country.
§ Mr. PRETYMAN
I entirely agree with the main sense of the speech of the hon. Member for Leith Burghs who has just spoken. I do believe that of all the hardships suffered under these death duties, and I do not want to speak of individual hardships, I want to treat it on a general and national basis, as all taxation has to be treated—of all the hardships, those affecting agriculture and agricultural estates will certainly be found to be the most serious. I also agree with him from the point of view of machinery. As I have already indicated, when addressing the House recently in regard to the new land tax, the machinery through which this hardship can best be approached is the machinery of valuation and assessment. It is perfectly clear that where a tax or a duty is a multiple of an annual duty levied by assessment you can regulate a tax by regulating the assessment; and it is also obvious that if you treat agricultural property equally with other property, when and only when you reduce the annual tax on which the tax is based to exactly the same basis, namely, that of money actually raisable or chargeable upon other forms of property, if that can be done, it is obvious that the special grievance of agriculture would thereby disappear, if the Chancellor of the Exchequer could show that the assessment of the actual receipts from the agricultural property is on the same basis as it is on all other kinds of property. We should then be unable to contend that we were suffering from any special hardship, and it is perfectly clear that we should then be confined as to the justice or injustice, the wisdom or unwisdom, of the, death duties as a whole. I should like to say one word upon the general question of the effect of the death duties under the scheme of taxation, and I cannot help saying something to endorse what was said by my hon. Friend the Member for Worcester, who started this Debate in regard to the effect upon national capital. We had a statement showing the amount which the Chancellor of the Ex- 456 chequer expected to realise finally by these new taxes, and if you add that to the sum which he has estimated the old taxes would produce if left on their present basis, you will find that the total sum to be raised by the death duties in future amounts to 26 millions of national capital, and that sum exceeds by one million pounds the total sum which they now propose to allocate to the National Debt service. So that you are to provide £25,000,000 annually to reduce the National Debt, but you are at one and the same time to expend annually £26,000,000 of national capital. It is national capital and nothing else. That position is strengthened by the observation which the Chancellor of the Exchequer himself made that he did not expect owners of property to pay the tax out of their annual income, but that they were to break off portions of their property, and pay it in that way. To my mind the only possible defence of the death duties as a national system is that the thrift of the nation in any one year will replace the amount of capital which is being, abstracted for the annual requirements of the State. I do not see how you can get away from that. The whole basis of Sir William Harcourt's proposal of the death duties was that it was difficult to graduate the income tax, that graduation was desirable, and that large sums are accumulating in the hands of a few people, and that the. way to get at these sums in the most convenient manner was to take that deferred graduated income tax in the form of death duties when those properties passed from one hand to another. That is the basis of the proposal, and it is the principal basis, provided it is perfectly clear that the sum taken will be replaced by national effort annually. There we get at once to the question, "What does that depend upon?" It depends, of course, upon two things—first of all upon national prosperity as a whole, and secondly on the rate at which these duties are imposed, or rather the proportion which the whole payments due under these duties bear to the national progress and the advancement of national wealth. It is impossible, of course, to arrive at an actual estimate; you can only judge by results, but at the present moment there is clearly a decline in national prosperity. Trade and prosperity are not advancing but declining, and therefore on that national ground it is a most unfortunate moment to choose to increase by no less than 7½ millions the amount which you are abstracting from national capital. The Chancellor of the Exchequer is very fond 457 of appealing to Continental opinion and example. I read with some interest a German criticism of his Budget, which was that the right hon. Gentleman was taking his money, not from the realised fruits of industry, but from the capital upon which industry was based, and which was being used as its life-blood, and that therefore he was taking it in an injurious form.
These are my two criticisms upon the general policy of the death duties, and I agree most strongly with the opinion which has been expressed that the weight of these criticisms mainly depends upon the scale and amount on which these duties are based. From what knowledge I possess I unhesitatingly express the opinion that to raise these duties to the extent which is now proposed on capital which is being used in the industries of the country at large is to spend the national capital to a larger extent than it ought to be spent, and to unduly interfere with and hamper and injure the general trade and prosperity and industry of the country. I admit that up to a certain point the State will derive a greater advantage by obtaining the revenue in that form than it will suffer harm; but the moment you pass that point and take more money than industry can afford you are then damaging the State, you are reducing your sources of revenue, and as the hon. Member for West Derbyshire, Lord Kerry, remarked, "Where are you going if you are spending the capital?" You are told he cannot afford to pay these duties out of income, and I can show that he cannot. You have to sell the capital and hand it over to the Chancellor of the Exchequer, and that process is applauded by those who wish to see large capital businesses and large estates broken up. When you have broken them up, and when these high scales of duty no longer produce revenue, because there are no more large businesses or large estates to pay, where are you going to get the duty? I suppose you will attack some other industry. Of course, the consequences will be very disastrous, not only to those who have to pay the money in the first instance, but to those who hope to benefit from the taxes when they are levied.
In regard to realty, and especially in regard to agricultural property, I should like to point out one or two definite reasons why that property stands on a different footing from other property in regard to payments of these duties. The first point 458 is; that the income which arises from realty in any form, but mainly from an agricultural estate, bears such a totally different relation to its capital value from what it does in any other form of property. There is a very large proportion of the capital value of an estate which produces absolutely nothing, and it of course must be remembered in regard to all death duties that when a man dies the capital value of his whole estate is aggregated, and in that whole estate, especially in regard to large estates, a very large amount of property is included which clearly yields no income whatever—pictures, timber, amenities of various kinds, the house, the furniture, and many articles and objects which are not supposed to yield any income whatever—and the result of that is, that the remaining property which does yield income has not only to bear the rate due to its own magnitude, but also the rate due to the magnitude of the entire estate, including that part which produces no income whatever, to help the estate out. It follows from that, that in regard to large estates the real incidence of the scale of graduation in reference to the actual income available from which to pay it is very much higher than appears upon paper. That is true of all estates.
In regard to realty, the next point I wish to make is the serious disability that it suffers from being treated in regard to valuation as an undivided unit. In regard to payment of the duty, it is treated as divisible. A man has a homogeneous estate of say 5,000 acres. As an undivided unit it has a considerable value, and is honestly worth £100,000. It is valued at that, and the owner has no reason to quarrel with the valuation. He has a house upon it, and the estate has good grounds. The Chancellor of the Exchequer says, "I value that estate at £100,000. and I levy duties upon it," and I have figures here which prove that in many cases these duties will amount to at least a quarter of the whole capital value of the estate. You have, first of all, to pay on a settled estate 9 per cent. estate duty. You have to pay under this new proposal 2 per cent. settlement estate duty, and you may then have to pay, even when the estate goes from father to son, 10 per cent. succession duty. If you convert that into income tax, and add the income tax rate which is now payable, something like a quarter of the estate has to be paid away to the Exchequer. The Chancellor of the Exchequer says to the 459 [owner, "You are not expected to pay this out of income, but out of corpus." The owner has to realise—I do not think under present conditions he will find it very easy to mortgage it, when all these duties are placed upon property. These matters are all cumulative in their amount and in their relative effect in regard to security and confidence in dealing in land, and we have these new land taxes which we are told are started on a small scale, but which may be increased in the future, and anyone who is going to lend money on land will have to look to that consideration, and the question of being able to raise money on land in the future is one of very great difficulty. If the owner of the estate has to sell land to realise £25,000 what is going to be the effect? How much of that estate has he to sell to raise £25,000, and how much will the residue of the estate be worth when he has sold it for £25,000? I unhesitatingly say, from practical experience, that in many cases, when he has sold enough land to raise £25,000, he would be very lucky if he had £50.000 worth left. It is much the same as if the Chancellor of the Exchequer said, "I insist on charging a duty upon any china plate which is owned by any person who dies, and he has to pay me the quarter of the plate and to keep three-quarters for himself." You cannot treat land, where the value depends upon the unity being maintained, on the same basis as property which is personalty. Where you have a large block of shares, and where you take on that block a certain percentage in order to pay a tax on the value of the remainder, it remains wholly unaffected. With land it is entirely different. The third disability under which land rests is that is is nearly always in settlement. Under these new proposals that will be a great disadvantage. Sir William Harcourt, when he introduced death duties, made very careful calculations, and made a very careful statement in regard to that calculation of his on the 1 per cent. I should like to read his words. He said:—After much reflection I have come to the conclusion that we ought to follow the principle now in force under the probate duty and allow one payment to cover the settlement. Some people think tills is a very great sacrifice because of the number of lives in the settlement. You may have a number of lives but you can only have one generation. It may well be that a young life in free testacy may cover a longer period than all the lives in the settlement.He proceeded from that to argue that after most careful calculations and con- 460 sideration the 1 per cent. settlement duty which he proposed was on the whole a fair equivalent on the part of the taxpayer, seeing that the duty was only to be paid once on the death of a person competent to dispose within the currency of the settlement. The Chancellor of the Exchequer is not only levelling up the duty, but he is also doubling the settlement estate duty, and he is also doubling in many cases the succession duty, which is a very heavy burden.
The hon. Member is now discussing the succession duty Resolution. That does not arise on this Resolution except in so far as it affects the total burden on estates.
§ Mr. A. J. BALFOUR
On that point of order you are no doubt aware that by arrangement all these Resolutions are to be disposed of by Wednesday, and these particular Resolutions by to-morrow night. Might there not be some convenience in slightly, in the general interest, relaxing the ordinary rule of order, as it cannot lead to any unnecessary waste of Government time. It is a point of difficulty and delicacy, but I thought I might ask your advice upon it.
§ Mr. LLOYD-GEORGE
I think it would be better if we could by arrangement discuss the whole of these estate duties together in the same way as we discussed the stamp duties. It is difficult to discuss one of these Resolutions except in reference to the whole, and I felt that although the hon. and gallant Member opposite was going outside the strict rules of order, his speech was perfectly germane to the taxes as a whole. I would only suggest to you, Sir, again that, with the assent of the House, it would be very desirable to discuss these taxes as a whole, for the other Resolutions bear, to some extent, on the taxes we are discussing now.
If it is the general wish of the Committee that some latitude should be allowed in the matter, as in the case of the discussion of the stamp duties, I will not say that it should not be allowed. I said that the latitude then allowed was not to be made a precedent, and I do not see that by my allowing latitude in this case any harm will be done. But for my own sake, and more particularly for the sake of other Chairmen in future, I must again say that I cannot admit this to be a precedent. I will allow it in this case.
§ Mr. A. J. BALFOUR
Unless there was an arrangement on both sides of the House to finish the discussion on ail the Budget Resolutions by a certain date it would be intolerable.
§ Mr. PRETYMAN
I appreciate your ruling in this particular case. It is impossible to consider the incidence of the estates duties except in relation to the succession duties also, and the point I wish to make is this. In the course of a settlement, whoever takes the property pays the succession duty. The increased rate of succession duty which the Chancellor of the Exchequer is now imposing is not to be paid merely once during the settlement, but it is to be paid three or four times. A man leaves property to his cousin or his nephew, with the remainder to his son, and with a succession to an unborn grandson. All these lives in succession will pay the extra 5 or 10 per cent. succession duty in addition to the estate duty. That seems to me a most intolerable burden to be placed upon them. How can such a burden be borne? I feel sure the right hon. Gentleman will deal with that question. I took him to assent to an observation that these duties cannot be raised indefinitely. He said there must be a breaking point. I should like to ask what his breaking point is. It has been shown in figures that you cannot deal with this matter without taking these duties as income from the point of view of the State. That is the only sound way to look at these duties. You may have the case of an estate of £100,000, and you may have a burden amounting to 6s. 5d. in the £. In that case I believe the figure is rather under-stated, and I should like to ask the right hon. Gentleman whether he considers that 6s. 5d. in the £ is a fair burden. That is what the duty is now where succession duty, estate duty, and settlement duty fall together.
§ Mr. PRETYMAN
The right hon. Gentleman shakes his head, and I hope it may not be so, but that is the way it presents itself to me. What is the effect of this tightening up of all these different duties? First of all, there is the increased estate duty, the increased settlement duty, and the increased succession duty—all enormous increases, which taken together increase the present death duties by something like 50 or 60 per cent., and in large estates very nearly doubles them. Then 462 the right hon. Gentleman has withdrawn the exemption from husband and wife. That is a very hard case. Surely there must be some sense of justice between the State and the individual. It arouses a feeling of injustice and unfairness on the part of the subject when the Crown says to husband and wife, "For the purposes of income tax we treat your two properties as divisible in order that we may get more income out of them, but when you die we treat them as indivisible in order that we may get more death duties out of them." I do not think that the injustice is worth the money you will get out of it.
Then we have the very serious proposal to alter the date within which gifts, inter vivos, are to hold good. Is that a defensible proposition? [Cheers.] I am very glad that hon. Gentlemen opposite have some sympathy with the question. It is entirely outside the scheme of the death duties altogether. It is trying to get at one and the same time death duty and succession duty out of a property. Sir William Harcourt made the distinction perfectly plain when he said that estate duty is a duty taken from the property of the dead and that succession duty is a duty paid by the living. You cannot mix the two principles up. It was agreed, with Sir William Harcourt's assent, that one year was a reasonable compromise. I have a vivid recollection of that matter being discussed. We had very prolonged Debates on that question, and it was agreed, with Sir William Harcourt's assent, that one year should be taken as a reasonable period in which to that there should not be these gifts made merely to escape, duly in articulo, mortis. With that I entirely agree, and when you go beyond that, and take a period of five years, what burdens are you going to throw on the living? What is the position of a man in good health and sound mind, who, in the ordinary course, makes over a marriage settlement to his daughter into a trust and appoints trustees? He meets with an accident three or four years afterwards—How is that duty going to be paid? Who is to pay it? What is to be the position of the trustees under the settlement? Take another case: A man makes over property in his lifetime to a son or daughter, who predeceases the father two or three years later, and leaves the property to be dealt with by an executor, and the father dies a year or so later, the whole thing happening within a period of five years. How many transactions are you going to hunt up in that 463 case? The thing is really wholly impracticable. [Cheers.] And I am glad that appears to be the general sense of the House. I hope the right hon. Gentleman will deal with it when he speaks.
I will not go into the details of the complicated and difficult Resolution in regard to the tenant for life. I would only say that I think the right hon. Gentleman in that proposal is going to do an injustice. He is going to impose two duties within the currency of one settlement if I understand that proposal rightly. I am quite aware of a case which was tried in the courts, and I am aware of its effect. The effect of the judgment in that case—I am addressing myself now to the Attorney-General—was that on the payment of duty that only covers part of the property where the tenant's life interest has been deducted duty is escaped on the remainder of settlement. That is regarded as a hardship by the State, and it is proposed now to adjust it by creating a greater hardship by putting duty on both. Will the hon. and learned Gentleman bear me out in saying that the difficulty would never have arisen if the simple scheme of Sir Wm. Harcourt had been adhered to? His scheme was that the duty should only be paid once in the settlement, but in order to get money more rapidly there was an exception to that, and where the first death after the passing of the Act on any estate was not the death of the settler but of the tenant for life, the duty was to be paid. It was the greediness of the State that created the difficulty. They wanted to get more money. In this case they think they have not grabbed all, and they want to grab a little bit more. It is grossly unfair, and the only possible ground for the right hon. Gentleman if he tries to deal with it fairly, is that if the duty is to be paid on the death of the tenant for life, it ought not also to be paid on the death of the person who is competent to dispose and whose death occurs before he comes into possession of the property. Under the proposal which is now made the man who gets the property will pay, and the man who never had it will have to pay as well.
We come now to the last point of these increased duties. It is the removal of the limitation of 25 years' value on agricultural property. I do not quite understand the object of that. I think I am right in saying that it is an extremely rare thing when an agricultural estate does amount on valuation to 25 years purchase. We 464 have had a statement from the Treasury that the average is something like 17 or 18 years. Of course, my objection would be very largely removed if the right hon. Gentleman when dealing with that point would deal also with the question of assessment. If you put agricultural property on a basis of assessment exactly equal to other property the number of years' purchase should be the same. If that unfairness is removed other objections will be removed with it. What is the process which agricultural property now goes through? The duty is levied. Some provision will have to be made for it. I think, with the scale of duties as it is now, it is a real hardship, and it is felt as an injustice, that a man who is thrifty and who puts by money to enable his successor to pay the duty should, as the result of that very act, have an increased amount of duty to pay under the scale on which it is charged. That is taken as a reason by the State for adding to the burden to fall upon him. I really think that when the magnitude of the duty imposed on the general scale is considered there ought to be some allowance for insurance. In income tax if a man insures his life he is allowed within a limit one-sixth of his income. If a man insures his life he is allowed to deduct insurance. On the same principle if a man insures against death duties he ought to be allowed within a limit to deduct that from his income, and that he and his successors must protect themselves against such demands from the Chancellor of the Exchequer.
As things stand, it simply amounts to this, that where the State says to a man, "I mean to take one-fourth of your property," it is simply a case of the Chancellor of the Exchequer and that man pitting their brains one against, the other, and obviously the instinct of self-preservation will drive a man to any shift to enable him-to secure somehow out of the Chancellor of the Exchequer such a fund from which his son or successor may succeed in meeting his wholly outrageous imposts, and in such a form that it will not add to the burden which will fall upon his son at his death. Surely in his own interest if the Chancellor of the Exchequer wishes to keep the money in the country he. ought to see that the money that is put by for this purpose to maintain the capital of the country is the capital of the private individual which the Chancellor of the Exchequer is to squander. That is another objection to that duty. It is so easy to come down on capital. There are many 465 hon. Gentlemen opposite who run great businesses. What would they think if they were to deal with the capital of the business as the State is dealing with its capital, because the State has no capital—unless you take the Suez Canal shares—except the capital owned by individuals who pay taxes? The State has to be run as a business on exactly the same principles as a private business. We have hon. and right hon. Gentlemen opposite earnestly desiring to bring population back to the land. We have a proposal before us of a Development Grant. I venture to say however much good the Chancellor of of the Exchequer's Development Grant may do, the harm, if these duties be imposed on agricultural properties without a very large measure of relief by altering the basis of assessment, will enormously exceed any advantage which agriculture will gain by the expenditure of the development grant.
What actually happens on an agricultural estate? When a man succeeds to an agricultural estate—I think hon. Gentlemen from Ireland will bear me out in this: that the love a man has for the land on which he was born and brought up, and on which his ancestors lived is very great—the very last thing a man will do is to part with his land. Before parting with his land the whole estate is stopped for a scries of years; perhaps for one or two generations that estate is stopped. The State takes no cognisance of that. The State levies duty on this enormous scale just the same as if it were being worked. There is no question of his desire to keep the estate in order, and spending the amount of money which is required on it. It is a question of his capacity to do it. He cannot pay the same money at the same time to the Chancellor of the Exchequer and at the same time spend it. I have got here the actual figures of an estate for which I can vouch. I do not put this forward as a case of hardship. I am not dealing with this case from the point of view of hardship to the individuals at all, but from the national point of view whether it is desirable to withdraw from the land money which is now being spent on it for the benefit of all those who are living in rural districts. Now at this moment death duties are the bane of the countryside already on the present scale.
Here is an estate on which for 18 years the average rental was about £15,000 a year, and the total money received in 18 years was £261,175. That is the gross 466 total actually received from rents and royalties. Out of that £43,000 was paid in tithe, £6,298 in land tax, £10,494 on the maintenance of river walls and sea defences. All these are statutory deductions in the case of taxes. In addition, £15,000 was paid in management (which is rather less than £1,000 a year all told), £81,000 for repairs on buildings, £4,140 was insurance, £29,000 for fencing, draining, and developing it, new buildings £72,000, then on woods £2,160; other items £7,881, property tax £12,308, succession duty £14,635—making a total expenditure during the 18 years on the estate of £298,792, exceeding the total receipts by £36,984. There has been no doubt exceptional expenditure. I am not quoting that as a case of hardship. I do not put it any higher than it is. My point is not a question of hardship. My point is under the present death duties that estate will have had to pay in that time, according to the best calculation I can make, something approaching £100,000 death duties, about £80,000; and my point is not the hardship at all, but if the £80,000 had got to be paid in taxes to the Chancellor of the Exchequer it would have had to be withdrawn from the expenditure on the estate, and people who have now been properly housed would not have been properly housed and farms which have been properly equipped would not have been properly equipped, and the defences of river walls would not have been kept up, and the rateable value, the capital value, of that section of England from which the State desires to draw a continual revenue would have had its value depreciated and its income reduced; and not only as a source of income to the owner but as a source of revenue to the State there would have been a large depreciation as a result of the imposition of this taxation. That expenditure has only been possible, and the conditions of that section of the country can only be what they are now, because the owner of that estate succeeded before the death duties were imposed and not after.
I do not wish to use any harsh language. A good deal might be said as to hardship and as to injustice, but I want to put it higher than that. I do honestly believe that the right hon. Gentleman, if he imposes these duties upon this scale upon agricultural property, will inflict a hardship upon agricultural ownership from which it can never recover. I believe it to be absolutely impossible for owners of 467 land who are in any sense whatever dependent on the income from their property to bear these burdens. Of course, there are men who have enormous resources in other directions and to whom their estates are merely playthings, but is it desirable that ownership of land should be confined to men of that character? I think this country owes much to those who have been brought up on medium-sized agricultural estates in the country, and this I look upon as a most important point. I think if there is one thing in our social economy from which we suffer more than any other at this moment it is the want of personal touch between employer and employed. The very great businesses are run by directors and owned by shareholders, and you have on the one side arrayed the interests of capital and on the other side you have arra3'ed the forces of labour, and often they would agree if they could be brought together; if they knew each other ' and had been brought up together as people still are, thank God, on country estates, then I think we should get on better as a nation than we do now. You have now still almost exclusively in rural districts a close touch between the owners of land and those who farm and work the land. They know each other's wants, each other's requirements, each other's difficulties, and I warn the right hon. Gentleman, if he persists in this policy of regarding land merely as an object for taxation, and if he persists in regarding owners of land—I do not think from what he says that he docs do so—as enemies of their country—
§ Mr. PRETYMAN
His kindly feelings will not help this country if the taxes are put on. There is a common saying that a horse hurts just as much if it kicks you in play as if it kicks you in earnest, and I am sure I speak truly when I say that all who are interested in land truly appreciate the recognition which the right hon. Gentleman has shown of our efforts; but if he does recognise that, let him help us, and not put a burden on us which we cannot bear. I hope and trust that this matter will be. considered in that national way, and that nothing will be done by this House which would deprive the country of the benefit of the work of the owner of the land, those who farm the land, and those who work upon the land, working 468 together and enabling people to come to this House who have a personal knowledge—farmer, owner, labourer, whichever class they belong to. I believe that we who have that knowledge and have been brought up from our boyhood in all classes on the land can bring to bear a knowledge and opinion on this point which honestly deserves the respect of the House and the attention of the right hon. Gentleman.
§ The ATTORNEY-GENERAL (Sir William Robson)
The right hon. Gentleman who has just spoken and those who preceded him have exercised considerable ingenuity in condemnation of these taxes or, at all events, in explanations of the adverse effects which the taxes will have on the general capital of the community and the comfort of the taxpayer. We on this side of the House, at all events, do not deny that every tax affects adversely the general capital of the country, and is certainly unfavourable in some measure to the people who are taxed. If that is accurrate it seems to us somewhat irrevelant to point out in regard to any particular tax that it diminishes the funds available in the country at large for the general purposes of the people who pay the tax. Of course it does. Every tax does that. With every consideration for those hon. Gentlemen on our side of the House who are of opinion that certain taxes are desirable for their own sakes, that is not our view. Every penny we take out of the pockets of these people is pro taitto a mischief to their industry or comfort or subsistence. We believe that if possible that money ought to be left to private profits. The only plea for any tax is absolute State necessity.
The hon. and gallant Gentleman has pleaded in very eloquent and effective terms for the land interest, but he seemed to convey an impression to the House, as well as to his own mind, that agricultural land is being made a subject of some adverse differentiation as compared with other kinds of property. ["Hear, hear."] Hon. Members appear to accept that. I should like to explain, however, that it is not the fact. We are dealing here with taxes, and is it suggested that a heavier burden is laid on the land than is laid on other kinds of property? Nothing of the sort. Throughout the whole of his speech the hon. and gallant Gentleman seemed to be pleading for some interest which he regards as exceptionally oppressed. It may be that the burden falls with some degree of severity on land, but it falls on other sections of interest with exactly the 469 same purpose. There is no differentiation against agricultural land or the agricultural interest.—none whatever. It falls on agricultural property precisely as it falls on other land, and the eloquent appeal of the hon. and gallant Gentleman in respect of agricultural land might with equal force be applied to railway shares and stocks. There are sections of the community who look for their incomes almost entirely to dividends on railway shares and stocks, and I do not think the House would listen to an appeal for special treatment of those forms of property, though the same argument might be applied to them as that which is applied by the hon. and gallant Gentleman to agricultural land. He apparently rather claims differential treatment in favour of agricultural property. Take one argument which he advanced, and which seemed very plausible, that which dealt with cases of hardship. He said that in the case of agricultural properties there were large portions of dutiable land which is left by the landlord unproductive, consisting of park, timber, and various other surroundings of a rich man's estate. The hon. and gallant Gentleman seemed to think it was very hard indeed that the owner of land in such a case as that should have to pay death duty out of what remains of the estate which happens to be productive. Does he really suggest that this class of property in the ease of a great land-owner, this unproductive class of property, should be exempt from death duties? That appears to be the only purpose with which the hon. and gallant Gentleman could possibly have advanced such an argument. What does it mean? It means that because a rich man has happened to put a great deal of his property into an unproductive form, a form which the poor man cannot afford, therefore the rich man is to be exempt while the poor man is to pay.
I think the hon. and gallant Gentleman will see whither his argument leads him when it comes to be logically and fully developed. He was pleading, not for equal treatment, but for preferential treatment on behalf of this particular class of property. He instanced other cases of hardship which would arise from the estate duty. They are rather rare cases, and not at all normal cases. We must take the Budget as a whole. There are burdens which will be laid on the land that are not laid on other kinds of property. The hardest case he suggested was one where he said that the State might appro- 470 priate on the death of the owner duty up to 25 per cent. I am not denying that in certain rare cases there is a possibility of a large proportion being taken. He said you might get 10 per cent. payable on the property passing from father to son. But under what circumstances? Not by virtue of succession to his father under ordinary circumstances. It is where there has been a settlement made first upon the father and then afterwards upon the son. In such a case the son pays succession, not on his relationship to his father but on his relationship to the settlor. I agree in that case a very heavy burden will be laid upon the land; but do not let the House suppose that such a case is a common one; do not let it be supposed, as might be imagined from the strong argument of the hon. and gallant Gentleman, that this is a normal case. It is nothing of the kind. The hon. and gallant Gentleman made reference to a case which, I confess with some fear and trembling, I shall have difficulty in making quite clear to the Committee. The hon. and gallant Gentleman first of all pointed out that Sir William Hare our principle in his great Budget was to substantially get one payment in each generation, so that when there was a series of life interests followed by reversion to a particular person, he only charged in respect of the one person separate duty, and the one person paid only the once, no matter how many life interests might have been provided for by the settlement. The principal argument of the hon. Gentleman referred to the one payment of estate duty in each generation. That is really the principle aimed at. Let me take the case of a settlement by will.
A testator leaves by will to A certain land, with remainder to B. In that case the settlor, the person who makes the will, or his successor, will have to pay the estate duty upon death, because it is a free estate, and therefore comes within the terms of the Act. In such a case as that A, the life tenant, does not pay the estate duty, because he has to pay at the death of the settlor, and it does not become payable again until another generation comes—viz., when B, to whom the property comes in remainder dies, then comes a fresh payment of the estate duty. Therefore you see that Sir William Hareourt's principle is applied, and there is one payment of the estate duty for each generation. Let us take the case of a settlement made for life. There the settlor makes the estate over to A for life, and afterwards to B. When the settlor dies, no duty is paid 471 on his estate, because on the terms of the Estate Duty Act the duty only becomes payable when the property passes at death. It did not pass at death, but during his lifetime, and therefore no estate duty was paid. According to Sir William Harcourt's principle, we have not, in the case of the death of the settlor, to take the duty; therefore, on the death of A, the life tenant, those who follow him will pay the estate duty. Then comes B, on whom the estate is settled. When he dies the estate duty becomes payable. That is what happens when each of these persons dies in his proper turn. But supposing B perversely goes and dies before A, then there happens something for which adequate provision has not been made.
B dies, but B has never had any property, said the hon. and gallant Gentleman, and why should duty be paid on land by the man who never had if? But B has the reversion, and that is something worth having, and that is all he pays on death. He pays simply on what he gets, and the State collect the value of his life interest. B is got out of the way, and A still goes on living, and then dies. My right hon. Friend the Chancellor of the Exchequer says we will take the estate duty on the death of A, because we are entitled to it on the principle that estate duty should be paid in each generation. Under two or three decided cases A said, "Under what section do you seek to charge the duty? "There is no section that prevents A's successor from paying the tax. Another section says that under the circumstances where the payment has once been made in respect of a certain property, then that payment is, so to speak, to frank the existing life tenant. That was held to be good law on the words of the section—words not intended to cover any particular case. I do not trouble the House with the exact words of the section. What we are seeking to do by this Resolution is this: We take in the case I have put the duty on these reversions. We have got no duty in respect of the enjoyment of the property during the A generation, or the generation of the man who has left the property, and therefore we are going to say under these circumstances that A shall pay as well as B. We are simply applying Sir William Harcourt's principle of one collection of the estate duty in respect of each generation.
§ Sir W. ROBSON
Yes. If we collected only where there was an absolute right of the disposal of property I should think we would have to do without it in a good many cases. The agricultural interest would certainly gain by that, as property is nearly always in settlements. If we were to tax only upon the life interest we should very soon have to remodel our death duties in order to collect a proper amount. Let me assure the House that I feel the difficulty of explaining that which is difficult enough for the most expert tribunal. The House will take it from me that all that is being done by this not very clearly expressed Resolution is to apply the principle of Sir William Harcourt which the hon. and gallant Member quoted with approval—that is to try and get estate duty out of each successive generation under one or another set of circumstances.
§ Sir W. ROBSON
We do not. In the Resolution, so I understand—I am not an expert on Parliamentary procedure—we do not provide for exceptions. The exceptions are afterwards dealt with in the Bill. In the Resolution you take authority of the widest possible kind, and in the Bill you deal with the exceptions. The hon. and gallant Member brought out the income tax as 6s. 5d. in the £. I despair of convincing the hon. and gallant-Member that nobody pays 6s. 5d. income tax, or is likely to. The House would understand that that 6s. 5d. is a very hypothetical figure. It is on the assumption that a man takes the trouble not merely to pay his own income tax, but to pay the taxes which are likely to fall on his successors. That is very noble of him, and I am sure any of us who are likely to succeed are very grateful for such an instinct on the part of our predecessors. But it is not to be taken that the predecessor is taxed to the extent of the burden which he pays voluntarily. Do not put the fault of that down to the Chancellor of the Exchequer, because it is not a matter for which he can be called responsible.
Those are the main points, but with regard to his general complaint of the extent to which this tax and all taxes deplete the capital of the community, when is the time to remember that and when is the proper 473 occasion for all this eloquence? Not when you are voting for the tax, but when you are voting the expenditure; that is the time for it. I daresay the limits of all Parliamentary order might interfere with any hon. Member who got up and complained, say, of old age pensions or the naval votes, and that they were more than the country could bear. But whatever the Parliamentary order that is the logical and reasonable time to make the complaints we have heard to-night. I have sat on these benches during the discussion of the old age pensions, and I doubt whether we would observe the same generous spirit when we came to the Budget. I am sorry to say we do not observe the same generous spirit. I have heard, and not only do I not complain, but I approve, I have heard a careful exposition of the evil effects of taking away people's money for State expenditure. We cannot have too much of that, but do not let it be confined to Budget Debates, because that is not by any means the best time for it.
§ Mr. G. CAVE
From time to time during his speech the hon. and learned Gentleman used the expression, "We on this side of the House." I am in the recollection of several Members of the Committee on both sides who heard the speech of my hon. and gallant Friend the Member for Chelmsford (Mr. Pretyman) when I say that his appeal was made not to one side of the House rather than the other side. It was a serious and earnest appeal to all those who have an interest in the industry of agriculture and in the land of this country, and I hope we will continue to deal with the matter in that spirit so far as we can. The hon. and learned Gentleman (Sir William Bobson) began his speech by suggesting that these death duties are not a special tax on land. No doubt he is correct, but I think no one suggested that the amount of the death duty on land was greater than the death duties on personal estates. That is not the point that was made by my hon. and gallant Friend. What he said was that those duties fell more severely on land than on other kinds of property. I think it is obvious to us all that that is so; and let us take one or two points. If you levy a charge on the capital of railway stocks or shares you can raise the amount of that charge at once. You can sell 15 or 20 per cent. of your railway stocks or shares in 48 hours and without any kind of injury to the remainder. With regard to land the case is entirely different; you cannot pay the tax by contributing an un- 474 divided part of the land. You cannot sell part of your land at short notice; you. cannot raise this tax as you can raise it on personal estate; you must resort to other means. Is it not true that if you have to sell, say, sufficient land to raise 25 per cent. of its value, you must in many cases sell not 25 per cent. of the land, not a quarter of the land, but a very much larger proportion than 25 per cent? Take an estate of £100,000, and assume that you have to raise £25,000. To do that you. must sell very often more than a quarter in value of your land. You must sell it at a sacrifice, and in doing so you lose more than your 25 per cent. Besides, you may very often injure the remainder of your land.
§ Mr. LLOYD-GEORGE
The hon. and learned Gentleman is so very fair always I am sure he does not wish to convey an impression which would be an erroneous one. I think the impression would be rather taken from his observation that I am imposing a charge of 25 per cent. on an estate of £100,000. Under no conditions would the estate duty on that sum amount to 25 per cent.
§ Mr. CAVE
As a matter of fact, the amount of death duty on an estate of £100,000 might be over 20 per cent., but I should not intend for a moment to convey that an estate of that size pays 25 per cent. But there are estates, there are many estates, in respect of which the tax to be levied under this Resolution would exceed 25 per cent.
§ Mr. CAVE
Under these circumstances—the death of the owner and the devolution or bequest to some one other than his own children or near relatives. But I was dealing with the matter on another point altogether. I was attempting to show, and I think I have done so, that this tax falls more severely on land 475 than on personal property. There is another point which the hon. and learned Gentleman mentioned, and I only rose co deal with his speech. The hon. and learned Gentleman dealt with the point, I agree the somewhat complicated point, of the change in the law relating to settlement of estate duty. Really the point is not very difficult if one takes a concrete case. Take the case of property settled by gift on A for life with remainder to B. B dies, and as the law stands now you pay estate duty on B's death on the value, I agree, of the reversion. You do not pay again on the death of A. The effect of the change proposed is that you pay on the death of B, and you pay again the duty on the whole capital value of the estate on the death of A. In other words, there being but one actual devolution, the effect will be that you must pay the duty twice over. I agree that on the death of B you do not pay the duty on the full amount, on the full value of the estate, but you pay on the value of the reversion. But in the second case you pay on the full value of the estate. The value of the reversion depends on the age of the life tenant, and you may very well pay in that manner very nearly twice the ordinary duty payable on death. I think that the provisions of the Finance Act of 1894 and the decisions given under that Act, to the effect that you should not pay twice over in those cases, are fair and just, and that the change proposed to be made is not one which ordinary people will recognise as just.
The Attorney-General dealt with one other point. He was replying to the observations made by my hon. and gallant Friend (Mr. Pretyman) upon the proposed change in the law under which, if a man dies within one year of a gift, the duty is paid upon it. The proposal is to extend that period to five years. My hon. and gallant Friend asked what would be the effect in a case where a man in his lifetime settled property upon his daughter on her marriage. It has been held by the Court that in such a case if the man died within a year the estate duty accrued upon that settlement. In other words, if a man felt himself able to give his daughter £10,000 on her marriage, and he was unfortunate enough to die within a year, the State would take a substantial portion of the amount settled on the daughter. The effect of the proposed change would be to extend the present uncertainty which exists in these cases from one year to five.
476 I do not think the present rule is a just one, and if you extend the term you will make it far worse. Surely the real object of the original provision is to prevent evasion of payment of the duty. I put it to the Committee that you should not make the term longer than is necessary to prevent intentional evasion. I am glad to see that the Chancellor of the Exchequer accepts that view. A man who is anticipating his end may make an attempt to evade, but is it reasonable to suppose that a man in a perfect state of health, who may expect to live for a long time, will look forward as far as five years in anticipation of his death? I think that the term of five years is far too long. To prevent a person who intends to evade the Act one year is, I think, sufficient; two years, I believe, would be ample; but if you make it five years you will produce the effect that a gift made perfectly bond fide, with no prospect of death, and no desire to evade the duty, may become reduced in value by the unexpected death of the donor within five years. May I ask one question. Is the proposed charge intended to be retrospective?
§ Mr. CAVE
On the general question, I believe that these and other provisions in the Budget affecting land will have very serious effects upon the future of agriculture in this country. Many hon. Members opposite know a great deal about land. Is it not the fact that if, by reducing his capital, by impoverishing the owner of the land, who very often has only just enough, after fulfilling his legal and moral obligations, to make a fair living for himself, you may produce a result injurious not to him only, but to all whose living depends upon him. ' If a man suffers by a large exaction of estate duties he must reduce his expenditure; in some cases he must go further, and cease to live on his estate. He must go somewhere else and economise as best he can. He naturally desires to hold on to his property as long as he can, but for years sometimes he must deny himself and reduce his expenditure in many ways. The whole estate goes down. There is less labour employed, less money spent in wages, and less spent in the place where he lives, and everybody connected with the industry of agriculture in that place suffers. In hitting that particular owner you will perhaps unintentionally hit a. number of other people. I do not want to rest my case on hardship, 477 although hardship will be caused, but I believe that in hitting land and making it, as the President of the Board of Trade said, the subject of special taxation, you will, perhaps without meaning it, aim a serious blow at all who depend upon that industry.
§ Mr. J. M. HENDERSON
I do not desire to go into any general discussion of the death duties, but I should like to make a suggestion with regard to the graduation of the rate. I think the rate proposed will act with considerable hardship. If, instead of using the words, "Exceeds £1,000 and does not exceed £5,000, 3 per cent.,"' and so forth, the right hon. Gentleman would alter it so that it should read "'Beyond £1,000 up to £5,000, and beyond £5,000 up to £10,000," and so on, the, effect would be that up to £5,000 the duty would be 3 per cent., and on from £5,000 to £10,000 it would be 4 per cent., the original £5,000 being left at 3 per cent. A £100,000 estate would pay £8,000; a £105,000 estate would pay, according to the right hon. Gentleman's scale, £9,450, and, according to my proposal, £8,450; that is to say, 8 per cent. on £100,000, and 9 per cent. on whatever was the amount above £100,000. Up to a certain point the rate is fixed, and only the estate above that amount would pay the extra percentage. That would make a very great deal of difference. A small estate of £5,000 pays £150; if it is £5,200 the duty amounts to £208. I do not think that is fair or just. A man with an estate of £5,000 ought not to be subject to the feeling that if he makes another £100 it will subject the whole of his £5,000 to an additional 1 per cent.
As regards the general charges, I think small fortunes are very heavily hit. For the large fortunes it may be another matter, but I think the rates are very stiff for fortunes of £10,000, £20,000, or £30,000. The succession duties also are very heavy. I do not quite see why a legacy at present paying 5 per cent. should jump up to 10 per cent., nor why "husband and wife" should be construed "grandfather and grandmother." With regard to the term of five years, I think it is too long, and, although Members on this side of the House may follow the right hon. Gentleman into the Lobby, I feel sure that many of them are of my opinion, that these duties are somewhat stiff, and ought to be reduced. The period of five years is certainly far too long. Take the case of a man who gives his son £5,000 to start in business. The man may have not the 478 slightest intention or desire to die within the five years, but the consequence is that his son may lose a large portion of that money, and it is very hard that he should be subjected to that risk.
§ Mr. LEVERTON HARRIS
I do not propose to enter into the legal intricacies which have characterised a considerable portion of this Debate, because, unfortunately, I am not one of those who are learned in the law. Referring for a moment to what, I think, in the Chancellor of the Exchequer's speech is called an anomaly—and a very complicated anomaly it is—it seems to be exceptionally hard upon the person who has been known throughout this Debate as "B," that he should be liable for estate duties when as a matter of fact he has never enjoyed the benefit of the estate at all, having had only a reversion and having never inherited the corpus of the estate. I know that we on this side of the House cannot expect much sympathy from the Chancellor of the Exchequer when we are pleading the cause of those who would have to pay these estate duties. In a Socialist Budget, such as this, anybody who inherits either money or estates must make up his mind that he is to be an object of plunder, andj one cannot read such speeches as that of the Chancellor of the Exchequer at Swansea without being almost persuaded that it is a crime to be rich. I shall, therefore, base my appeal to the Chancellor of the Exchequer not upon individual cases or upon individual hardships, but rather upon the disastrous effect which, I believe, these estate duties will have upon our national credit and national security. But, in order that I may not make a blunder, let me ask a question. Both the Chancellor of the Exchequer and the Prime Minister, in the course of speeches upon the Budget, have given information to the House which I am not quite sure is entirely accurate. Both have said that the maximum and minimum limits of the new scale of death duties were to be identical with those of the scale already in force. The limit of the scale already in force is 15 per cent.
May I respectfully ask the Chancellor of the Exchequer what the value of estate at the present time is that pays death duties to the extent of 15 per cent.? I think that if the Chancellor of the Exchequer will refer to his Treasury Minutes and Reports he will find that there is no estate that pays 15 per cent. That is not the maximum. An estate of £3,000,000 pays 479 15 per cent., but only 15 per cent. on the excess of £1,000,000. Estate duties run at present up to 10 per cent. on £1,000,000, and it is the excess on £1,000,000 that pays 11, 12, 13, or 15 per cent., as the case may be. So that if you take the largest estate that you can conceive, the estate duty will never amount to a maximum of 15 per cent., which is the maximum in the proposed estate duties. Therefore, we have this: that the Chancellor of the Exchequer—I am sure perfectly innocent—has led the country to believe that the maximum limit is to be the maximum limit at present, where, as a matter of fact, that is not the case. May I ask the Chancellor of the Exchequer if I am right?
§ Mr. LLOYD-GEORGE
The only point I made was this: There are two limits. First of all there is a minimum of 3 per cent. Then there is the 15 per cent. maximum. The hon. Gentleman made a very good debating point. But I do not go beyond the 15 per cent. in maximum, or come below 3 per cent. in the minimum duty.
§ Mr. L. HARRIS
I think really that the Chancellor of the Exchequer has perhaps helped to remove the apprehension that he created that the maximum limit which he is imposing is not higher than the maximum limit at the present time. As a matter of fact, it is higher in the manner in which I have described. I said just now that I do not intend to ask sympathy from the Chancellor of the Exchequer for the victims of these estate duties. I ask for none. I do not even ask for justice, because I know we shall not get justice for them. But I do ask the House to pause for one moment and consider what the effect of these estate duties is going to be to the State. I wonder sometimes whether the Chancellor of the Exchequer really does understand what the effect of these estate duties is going to be. Sometimes he seems to me to be—I do not want to use an objectionable word—either profoundly cunning or supremely innocent. That is especially the case in a statement which he made in reply to my hon. Friend the Member for Essex in the Debate the other day. Why, he said, should you spread the death duties over the income during the man's life? You never do that at the present time? I think the answer is really a very simple one. I will make the Chancellor of the Exchequer a present of it. It is this. That if you do not spread 480 your death duties over lives we are living upon our capital. The State cannot afford to do it. The Chancellor of the Exchequer continued with an illustration in which he said, suppose a man got £100,000 under a will, suppose he had to pay £10,000 legacy, succession, and death duties. He takes that out of the corpus, and retains £90,000. Then he made some rather flippant remark about investing the £90,000, and bringing it up to £900,000.
§ Mr. HARRIS
Yes, the £90,000 was to be invested and brought up to £900,000. It is all very easy for the Chancellor of the Exchequer to say that, but I should like to ask him where is that £10,000 to come from? It cannot come out of the clouds. That only shows the way in which he thinks fortunes are made. It must come out of what has been at sometime somebody's income. Somebody must have made it. Somebody must have saved it. It may be it was made 10 or 20 years ago. All the same, it comes out of income just as the estate duties of possibly 20 years hence may be coming out of the incomes of to-day. Let me go a little closer into the Chancellor of the Exchequer's figures, and see what the effect of the tax is. A man inherits £100,000. He pays £10,000 in estate, legacy, and succession duties. Is that not really a loss of income to the estate? The £10,000 which has to be paid for these estate duties admittedly has to come from somewhere. It may come out of insurance. If it does the premiums must have been paid of that insurance, and they have to be paid out of income. It may have to be borrowed. If so the loan has to be paid off, together with the interest, very likely in yearly instalments. That is a charge upon income. But even putting that on one side, take an estate of £100,000 which enjoys an income of £4,000 a year. You deprive that estate of £10,000. At once you are depriving the income of £400. That at all events is a charge upon income. It is a loss to the estate of the tenth part of its income. The amount is equivalent to an income tax of 2s. in the £. Let me presume that the man who inherits his estate of £90,000 is a prudent and provident person, and he wishes to see that the corpus of that estate is restored to its-original sum which it had when he inherited it. What does he do? He can make an estate sinking fund if he chooses during his life, or he can insure his life 481 for £10,000, so that it may be paid at his death, and so restore the estate to its original £100,000. In either case this is a tax upon income, a tax upon income which is actuarily ascertainable. I think it was the hon. Member for Wirral (Mr. Lever) the other night, in the course of his speech in which he was commending the Budget, told us that one might safely take the premiums as about 4 per cent. of the cost of insurance for men of ordinary average age. Therefore, if the inheritor of this estate desires to restore to the estate the corpus which it contains when he inherited it he has to pay a premium of 4 per cent. on £10,000, which is £400; or putting together this, with his loss of interest on the £10,000, it amounts to no less than £800 a year. This sum, if the Chancellor of the Exchequer will work it out in the terms of income tax, he will find it comes, I think, to about 4s. in the £—rather over. If you add to that the income tax which the inheritor has to pay on the income which he derives from the £90,000, you have a total payment—first of all loss of income on the £10,000, which the estate is deprived of, then the yearly premium on insurance of £10,000 to restore the estate to its former size, and the income tax which the inheritor pays on the estate, a total charge of over £1,000 a year, or a charge equivalent to one-third of the nett income that the estate provides.
I will not go into the case of the millionaire, although I think he is just as much entitled to justice as anybody else. But if you take the money out of the estate of the millionaire who has to pay on his estate of £1,000,000 an amount of 15 per cent., you will find, apart altogether from such taxes as land, undeveloped minerals, stamps, etc., that that estate will have to pay—treated in the same way—including interest on the part that the estate is deprived of, in order to pay the the estate duties and the cost of insurance of a sum sufficient to bring the estate up to its original condition at the inheritor's death, plus the income tax—you will find that the estate of £1,000,000, bringing in an income, if there was no tax, of £40,000 a year, will have to bear charges extending to £15,000, leaving only £25,000 of nett income. The Chancellor of the Exchequer will no doubt say that there is no reason why we should insure. If he will work out what happens in such a case he will find that this estate when it passes at the next succession—that is the second succession— 482 is paying a sum or is charged a sum on the estate of one million of £25,000 a year, and it produces a net revenue of £15,000, because the second estate duties have been deducted.
There is just only one other point which I would like to refer to. It was referred to by my hon. Friend the Member for Chelmsford (Mr. Pretyman). The death duties in the past, during the last few years, have yielded something over £18,000,000 a year—that is, estate legacy and succession duty. The Chancellor of the Exchequer is about to increase those by other £7,000,000. That will bring the total up to £25,000,000 per year. In order to pay these estate duties securities will have to be realised on the Stock Exchange or property will have to be sold. What will be the effect on prices of stocks and shares being put upon the Stock Exchange to the extent of something over £2,000,000 a month and the forcing of their sale? In the past the estate duties have been slightly over £18,000,000, but the Government has come forward with £16,000,000 from the Sinking Fund, leaving a balance of securities of £2,000,000 for the public to absorb. The position then to-day is this, that whilst you increase the amount which the Stock Exchange has to absorb by £7,000,000, you are reducing your Sinking Fund to £7,000,0000, and the result is that the public will have to absorb no less a sum than £19,000,000 a year of securities, which will have to be realised in order to pay these duties. The Chancellor of the Exchequer knows very well the effect—upon the price of Irish Land Stock—-of the fact of a possibility of new issues coming out. With the public knowledge that these sales will have to be absorbed I venture to believe that the effect on the market, continually being aware that £19,000,000 a year—or over £1,500,000 a month—of securities is to be absorbed by the public of the country, by fresh investors, is bound to have a very disastrous and depreciating effect upon the general body of securities. In his concluding remarks on the Budget speech the Chancellor of the Exchequer tried to justify these taxes so far as they are affecting the wealthy people of this country. With his Celtic pathos and oratory—which we all appreciate so much in this House—he told us of the sufferings and hardships of the poor people of this country. We admit it. I think everybody in this House admits that the poor in this country have very great hardships and very great sorrows.
483 Nobody will attempt to deny it. But we believe that not only is this increase in the estate duties going to have a very prejudicial and serious effect upon national credit and security, but we believe the effect of these great burdens are bound to filter down upon the very poorest class, which the Chancellor of the Exchequer is so anxious to protect. The Chancellor asked: Would a rich man wish to spare has own pocket at the expense of the poorest? He would be a very shabby rich man indeed if he. did. In the course of his speech he justified his estate duties and increased income tax as against the mere possibility of putting taxation upon the necessaries of life—tea, sugar, and such like. I should like to remind the Chancellor of the Exchequer of what appears to be a strange change in his opinion. It is not so very long ago since he pointed out these heavy charges would fall upon the Government for old age pensions, and how they might be provided for. He did not then suggest estate duties. What he said was this, by way of illustration just to show how it could be done: "A mere penny on sugar would cover the whole £10,000,000. The people would pay it willingly, because it would be an insurance"; and then he went on to say the whole tradition of Chancellors was to reduce taxation; but the line of the new Chancellor—he was referring to my right hon. Friend the Member for East Worcestershire—"is to say my predecessor put on £5,000,000, but I put on £15,000,000. My little finger shall be bigger than his loins."
§ Mr. HAROLD COX
I will only keep the Committee a few minutes, and the point I wish to bring before its notice is a very definite one, and not a very exhaustive one. It is this: that the jumps of the graduation are so rapid that the result may be that actually a person may be paying more in taxation than he is receiving from his estate. Take for example a man who inherits £500. He will have to pay upon the proposed scale £5. If, however, he inherits £505, he will pay £10 2s. in taxation, so really the extra amount he receives will not amount to the extra taxation he has to pay. This results from the fact that the graduation is not gradual enough. There-fore I suggest to the Chancellor of the Exchequer that he should consider the possibility of making graduation, especially on those small estates, more gradual and. with all humility, I suggest he might 484 adopt a decimal graduation, proceeding point by point. I know one of his predecessors at the Exchequer, when he first came across decimal points, consulted one of his advisers as to the meaning of those infernal dots.
§ Mr. H. COX
I believe infernal was not the word. Well, I would suggest to the Chancellor that he should proceed by decimal points, and in those small estates after, say, £550, he might proceed by tenths, which would make the graduation much more evenly felt by everybody, and would remove the distinct sense of injustice which now exists. I quite admit there would be a small loss to the revenue, but I am firmly convinced it would remove a grievance from a great number of people who believe they are suffering injustice at the present time.
§ Question put and agreed to.
§ Progress reported; Committee to sit again to-morrow (20th May).
§ Sitting suspended at Five minutes after Eight of the clock.