FINANCE BILL.

§ Mr. AUSTEN CHAMBERLAIN

I beg to move to leave out the word "now," and at the end of the Question to add the words "upon this day three months."

I think it must be with a sigh of relief that the House will enter on the last and shortest stage of this long and contentious measure. For myself, I have spoken so often and so much upon it that I can assure the House that it is with real reluctance I trespass once more on their patience. It falls to my lot in the last stage of the strife to repeat on behalf of my party the Motion I made on the Second Reading and to summarise the objections which we feel to the proposals of His Majesty's Government. I suppose no Bill has ever occupied the time and attention of the House so long as the present Finance Bill, or cast so heavy a strain on the general body of Members of the House, and especially on those on one side or the other who have most closely followed the discussions. I take the opportunity of acknowledging the good temper with which the Chancellor of the Exchequer has borne the prolonged strain to which he has been subjected, and, I would add, the readiness he has shown on many points to meet criticisms in regard to his Bill. Indeed, I suppose no Bill has ever been so cut and carved in the course of its passage through this House as the Bill which comes up for Third Reading to-day. One-third of the Clauses as they stand in the Bill to-day are new since the Bill was introduced. Its length has been increased 50 per cent. and its complications many hundreds per cent. I believe the Chancellor of the Exchequer rather prides himself on these alterations. He thinks that they show the sweet spirit of reasonableness in which he has conducted the discussions on the Bill. I do not wish to underestimate the necessary changes which a measure of this complication must in any case suffer in its passage through this House if it is to be made a really efficient and equitable measure, but I must say that on this occasion the changes have gone beyond anything that can be explained in that way. They are, in fact, the measure of how ill-prepared the Bill was when it was first presented to us, with how little forethought it had been conceived, and with how little knowledge of the circumstances and the facts of the matters with which it was dealing. I think it was the daughters of Pelias, in classical story, who cut their father into pieces and boiled him in a pot in the vain hope that that might prolong his life. The 1656 Chancellor of the Exchequer has treated his little bantling in very much the same way. I do not remember that the original experiment was successful. Perhaps the Chancellor of the Exchequer's will not be successful either, for, so far as we at any rate are concerned, though some blots have been removed from the measure, and some of its grosser inconsistencies have been alleviated, our objections to the principles on which it is founded remain unchanged. But before I come to them may I make one observation on the general financial situation? We have now enjoyed four years of Liberal finance. It is perhaps worth while to consider the result it has had upon our national position. At the last election many pledges were made by hon. and right hon. Gentlemen who are sitting opposite. Many charges were brought against their opponents. There was no pledge more frequent than the pledge that they would study economy and reduce our "bloated expenditure." There was no charge more frequent than that we had been "grossly and wildly extravagant."

As months pass and years go on, we get farther away from the last election and nearer the next, and a new set of pledges are already being given and a new set of promises made by hon. Gentlemen opposite, it is worth while to pause for a moment and ask how they kept the old ones. [An HON. MEMBER: "Old Age Pensions."] The last Budget for which we were responsible provided for an expenditure estimated at £151,750,000. The Budget which we are considering to-day provides for an expenditure of £162,500,000. The promises of economy have resulted in an increase of £10,250,000 in four years. And that is not the whole truth; that does not show the full increase for which the party opposite is responsible, for they have subtracted £3,500,000 from the provision made by their predecessors for the redemption of debt, and the true comparison is, to a Budget of £166,000,000 in the present year, with an increase of £14,250,000 over that for the extravagance of which they denounced their predecessors. And this in spite of the fact that they are reducing the provision for paying off old liabilities, and are not meeting the new ones; in spite of the fact that they have cut down the provision for the Navy below the point of safety, and ordered new ships for the payment of which they make no provision in the existing 1657 Budget, leaving the liability, with all the added liabilities that they can see to be met from the Budgets of future years. And further, this is at a time when, as I ventured to point out to a few Members who were present in the House the other day, competition of every kind is growing keener with us year by year. Competition in naval armaments waxes without ceasing. We cannot afford to lag behind with our defences. Competition in commerce, rivalry in industry, are becoming keener and more strenuous every day. It is a time when anyone, if he had the power, would sooner lighten the burden upon our industry than add to the heavy weight which it already has to carry on its shoulders. It is a time above all things for husbanding our resources. Yet that is the time which the Chancellor of the Exchequer and his colleagues have chosen for foreshadowing in necromantic vistas the vaguest schemes as to which nothing is certain, either their nature or the time when they would be fulfilled, as to which nothing is certain except the additional burden which they will place on the national shoulders and the National Exchequer. I think that the Chancellor who has so big a gap to meet in the national resources created by the past policy of his Government should be a little cautious about how he launches forth on fresh promises before he has paid the old debts which the Government have created.

How do they meet this great debt? The first observation I have to make in this connection is that half the Bill with which we are dealing has absolutely no reference whatever to the fiscal situation. You might have omitted the whole of the Land Clauses from the Bill, and the revenue would not be a penny the worse. On the contrary, it would be the better. If that is true of the revenue, still more true is it of the country, for the cost of these new taxes to the Treasury is but a small portion of the cost which they will inflict on the country as a whole. For every pound the Government spends on valuation, private citizens will have to spend another pound checking and examining their calculations, and all these burdens that will fall upon private citizens, all the expenses of seeking skilled advice, of possible lawsuits and of appeals, burdensome as they are, and will be, to the wealthy taxpayer, will be a crushing and, in many cases, an intolerable burden to the poor man, who is equally affected. The Chancellor 1658 of the Exchequer in his wilder moments talks, if I may say so, a great deal of clap-trap about his own Budget. He is always fond of representing the opponents of his Budget as a few rich men who grudge a halfpenny a year or a penny a year to expenditure on the defences for which they have clamoured, or on helping the necessities of the poorest of their countrymen. I am not here to claim unexampled generosity for the richer classes in this country. I suppose all of us, whether we are rich or poor, dislike taxation. The taxgatherer from all times has never been a popular person, but I will say that the people who are supposed to be affected by these Land Clauses, the great landed interests of the country, at any rate, have as good a record as any class could show alike for public service and private generosity. You will find no class in any country who have more fully or more generously discharged both their public and their private obligations, and if they rebel with others against the proposals of this Budget it is not because the wealthy among them object to paying their full share of taxation. If it were we on these benches would not be here to support their cry. It is because you do not tax men, in this Budget, according to their wealth; you do not tax wealth equally where you find it, because you pick out in the Land Clauses and other places capital invested in particular forms for exceptional and injurious treatment; because you translate into the clauses of what pretends to be a Finance Bill all the rancour and animosity which you have accumulated in political campaigns.

Let the rich bear their share and pay according to their wealth, and let the poor pay according to their necessity. Let the taxation of the rich be apportioned to their means, as the taxation of the poor is apportioned to their means. But do not pick out particular forms of property, without regard to whether the owners are rich or poor. Do not create an invidious distinction against them which is founded on no basis either of equity or exigency. Our objection to this Budget is not, as I have said, to be met by detailed Amendments here or there, because they leave its inherent views untouched. It is constructed not with any single-minded view to provide for our financial necessities, not even with a view to providing for our financial necessities, coupled with the desire to make the taxes work at the same time with the greatest possible amount of general good 1659 to the community, but it is conceived with the desire and avowed intention of placing special burdens on special people, and those not the people who are most able to bear them, because those people are under the ban and censure of the party who have the majority in the House now. In order to carry out this scheme the country is invited to embark on an expenditure of something over two millions in order to secure—what? Aid for the current year? Three hundred thousand pounds. Two millions are to be cast upon the water before they will see any money back into the national revenue. Does anybody believe that the Government would embark on a scheme of that kind for the purpose of getting all that they can hope to obtain from the taxes now under review? It is not to establish those taxes at their present level that this long campaign has been conducted, or this vast expense incurred. It is because if you once pick out particular individual and particular forms of property for special taxation, if you once establish the machinery to do so, then your rates, which are 20 per cent. or 10 per cent. to-day, become 50 per cent. or 100 per cent. tomorrow. The principles on which you defend and justify the beginning will serve you equally well to carry you to the ultimate aim of those who are the true parents, the real authors of this policy. They make no concealment of it. They do not pretend that the increment in land is so certain and secure, so special and peculiar, that that is right in regard to the landlord which is not right to the capitalist whose capital is invested in other places. Hon. Gentlemen opposite watch their neighbours' houses burning. They are happy; they warm their hands at the fire, but presently their own thatch will be alight. Men are there ready to apply the torches. Then we shall be interested to see how those who so cheerfully vote special taxes for others will bear special taxes imposed on themselves. I do not desire at this stage of the Bill—I do not think it would be fair to the House to enter at any length upon a detailed examination of the clauses, which we have looked at by night and by day for weeks and months together. Lest anyone should suppose that with all this cutting and carving, with the thirty or more new clauses, with all these Amendments and changes, you have made this Bill either just or logical, let me briefly notice one or two features which still remain.

1660 Agricultural values we were told were to be excluded altogether from this taxation. It was not until the Report stage that Liberal Members sitting for agricultural constituencies appeared to realise how slight was the protection which they received, how hollow the promises that were sounding in their ears. The moment a parcel of agricultural land finds a possible purchaser at anything beyond its agricultural value, all the added wealth that the labour and sweat of the owner or occupier has put into the land is confiscated—is swept away. Agricultural values in those circumstances—I take the words of the learned Attorney-General—are "superseded and ignored," and the State comes in and says, "This is none of your doing; pay us a toll of 20 per cent to-day and as much more to-morrow as we like to take." Will you ever persuade the small owner, who, by ceaseless labour and toil, has improved the fertility of his land, who has brought up its value, that if he sells it to a builder it is just to tax all that improvement which he made as an agriculturist on the ground that it is now "superseded and ignored" in some building value, and thus deprive him of the fruits of his labour? Is it fair even in the case of a landlord? You want to force the landlord to sell and build on the land—to turn the land to building use in such conditions. Before he can do so, he must pay his tenant for all that his tenant has done to increase the value of the land. Then you go to him and say, "Oh, but this is unearned increment." "I have paid for it," he says. "Paid for it?" reply the Government; "that is neither here nor there. It is a social value added by the community; we are the community, and we take one-fifth of it. See how moderate we are."

To turn from agricultural values to the condition of friendly societies. Have they any reason to be grateful to the Chancellor of the Exchequer, they who have invested their money in property of this kind? He has not saved them from this tax; he has only altered the time at which it is collected. If they want to occupy a particular bit of land with their own offices, that, indeed, may be exempt, but all their capital which is invested in this land will be subject to these taxes whenever they turn it over and deal with it. [HON. MEMBERS: "Why not?"] Hon. Gentlemen say "Why not?" Then you recognise it is done? That is an admission of which we take note. Then do 1661 not go to the country now and tell your friendly societies that they are exempt. You know it is not true. Ask them why they should not pay like other men. I agree there is no reason if you are to have those taxes why they should not be taxed also, but you are discouraging thrift, the most popular form of thrift among the working classes, and one of the most valuable to the social stability of the community as a whole.

But, then, that is not all. You not merely tax an increment which exists, but you tax where there is no increment at all. Take the case of builders or companies engaged in developing land. They have to strike an average of a good speculation and a bad one. It is recognised that they must do so. In your Income Tax law you allow them to set the losses at one place with the profits at another, and you tax them on the difference. Here you ignore every case where they had an unfortunate speculation, and every time they have shown good judgment and had a successful result you come in to claim a share of their profits. You tax them on their trade profits, and you tax other people in certain cases on profits which they never receive at all. Take the case of the incumbent of glebe land which enters upon the attention of the Government. He enjoys a revenue from that glebe only, so long as he is incumbent. He may leave or he may die the day after you have levied your tax. You take a capital sum from him on the ground that he is going to receive increased revenue, while not a penny of that revenue may ever reach his pocket.

This is the logical, fair, reasonable Bill, doing justice as between man and man, and interest and interest, which six months' labour of the House of Commons has produced out of the efforts of the Chancellor of the Exchequer. What is the object of it? Not revenue, for, as I have already said, that revenue you will not get. The object was stated by one of the hon. Members for the City of Liverpool in a passage in one of the shortest speeches on record when he said that the object of this Bill is to force land into development. Is your Bill calculated even to do that? I venture to say if a man does not want to develop his land he need not. He has only got to sign a five years' agreement with some cricket club, of more or less stability or reality, and his land is exempt from the Undeveloped Land Tax. What is the result? Every man who is willing to say "For five years at least I mean to hold this land up" can escape 1662 scot free from the tax. It is only the man who is trying at the very earliest moment to develop his land will be hit, and the man who will be most hit is the man who is actually engaged in the work of developing the land. I do not know that it is worth while going into all these intricacies. Five acres of land attached to a rich man's residence is exempt, and five acres of market garden subject to tax. And this is the poor man's Budget.

Is it worth while at this stage of our discussion—I do not think it is, at any rate it is not for me who have spoken so much on the subject to spend longer than I can help on details of this kind, but I must say one word upon the general effect of taxation of this kind. You want to develop land, and what do you mean by developing it? In order to develop it you need men who will put their money in it and risk their money on it. Half the development of the country, much more than half the development, you may say almost the whole development of the country, is done on borrowed money. Do you think you will borrow money on better terms with this kind of taxation hanging over the head of every man who engages in it, when the State claims a share of every profit that he makes, whilst absolving itself free of risk for his losses. When it taxes him, not merely as it does every man who has similar wealth engaged in any other forms of industry or commerce, but lays upon him a special tax, levied on him alone, it must have the effect of discouraging men from investing their money in this particular way. A worse day's work for the housing of the working classes, a worse day's work for the building trade, this House has never done and never will do than on the day on which it passes this Bill—by the treatment of those, be they rich or poor, and a great deal more poor men are affected than rich men, who have invested their money inland, good or bad.

What are you to say of the spirit and the manner in which the Budget treats other trades? Take the treatment of the licensed trade. It is unequal as between man and man; it is unfair as between trade and trade. It is placing upon that trade such a burden as no trade in this country has ever been asked to bear, and one which, by the admission of the Government themselves, would crush out of existence many of those who are now earning their living in this business. Is that a fit object of taxation—is it proper so to plan your tax that you destroy without 1663 compensation the means of livelihood of honest citizens, many of whom since the Act of 1904 have had a Parliamentary title as long as they were well-behaved, and for which they have paid by insurance collected from themselves, and many of whom, such as in the case of the 1869 beerhouses, had a Parliamentary title much older than the Government? When the Lord Advocate goes about the country suggesting that we on these benches will break Parliamentary obligations, I think he had better examine the beam in his own eye before inquiring into the mote in ours. Let him fulfil the Parliamentary obligations for which he and his colleagues are responsible before they accuse others of being willing to break obligations of the State to its citizens. Taxation levied on such a scale that it makes carrying on business impossible to many of those who are engaged in a lawful calling—that is not taxation for the revenue, it is taxation for revenge. The speeches of the Government show in what a revengeful spirit they approached the problem.

Look again at whisky. We had a very interesting statement from the Chancellor of the Exchequer on Friday last, and he has been kind enough in the interval to supply me with some further information for which I asked him on the subject. I gather that he anticipates at least that the consumption of whisky in this country is going to be reduced 20 per cent. as a result of the enormous new duty which he has imposed. I think, having regard to all that has happened, that he is underestimating the reduction in consumption. He talks about stocks being reduced to their lowest level. No doubt they are. But does he think that they are going back to the old level? My information leads me to a different conclusion. A smaller trade requires lower stocks; and I do not think you will find that the merchants of the country, when the fate of this Budget is decided, if it becomes law, will hasten to replenish the stocks for which they no longer have any use. Twenty per cent. reduction in consumption produced by a tax! [An HON. MEMBER: "Hear, hear."] I know the views of the hon. Gentleman. He regards the trade as an immoral trade. He regards all alcoholic liquor as poison; and some other hon. Gentlemen opposite agree with him. Let them have the courage of their convictions, and say what is the truth, "This is not taxation in order to raise money; this is taxation to stop drinking, and to drive 1664 men out of the trade in drink." Consider what it means. Twenty per cent. reduction, one-fifth of the output, and an increased cost over all the remainder that is produced. Many distilleries and businesses cannot support the combination of extra charge and diminished output. The Government are destroying the trade, under the name of raising revenue.

Let me put it another way. If this new tax of 3s. 9d. per gallon on whisky had not reduced the consumption, making allowances for the anticipatory clearances in March, and for the fact that the tax did not come into force until one month of the present year had elapsed, it ought to have produced to the revenue something like £5,000,000 in the year. How much is it going to produce? £800,000. I venture to say that, when you look at these facts, the tax as a fiscal weapon, whatever it may be as a political weapon, stands condemned. You would have done better had you been more moderate; you would have obtained much more than you will do by your present exorbitant demands. It is the boast of the Government that no trade is injured by their Budget. No trade? Not the building trade? Not the trade in land? Not the licensed trade in all its branches? Not the tobacco trade? The Financial Secretary to the Treasury told us the other day that Bristol was well content. I had a letter from one of his most important constituents, who, after being good enough to say that he agree with all that I said in my speech the other day, states that never in the history of the trade had it suffered such a blow as is inflicted upon it by the present Budget. Is this the way to help trade and to foster employment, at a time when trade needs every encouragement and employment every increase that the wisest legislation of the State can give? Then, as if this were not enough, the Government have recourse for the second or third time to the Death Duties. Again you increase the chunk which you take out of the capital of the dead man whenever his property passes on death. That, carried to the length to which you have carried it, may have widespread and disastrous consequences to the rural life of this country. But these evil consequences will not be confined to the rural districts. Every small private business, with none too much capital to spare, struggling against the competition of the huge combinations which are an increasing feature of our modern life, will be hampered, cribbed, cabined, and confined, whenever one of its 1665 partners dies. Money which ought to be available for the development of the business, for remodelling its machinery, or for extending its premises, will go into the maw of the Exchequer, there not to pay off the capital liabilities of the State, but to meet our current expenses. These taxes, carried to the length the Government have carried them, might be a last resort in a great emergency. They are grievous if they are necessary; they are criminal if they are not necessary.

4.0 P.M.

We, at any rate on these benches, believe that there is a better way of meeting the financial necessities of the country. There are other precedents in taxation, both in foreign countries and in British lands beyond the seas, than those which the Chancellor of the Exchequer has thought fit to embody in his White Paper. Let us learn by their experience. All around us change; are we alone to stand still? Every science advances; has political economy alone said its last word? Let us open our eyes, and not swaddle ourselves in the theories of a bygone age. Our greatest needs at this moment are employment for our working people and security for our industries. Let us seek to build up instead of to destroy. Cease to ruin particular trades by burdens too heavy for them to bear. Cease to place upon the necessaries or comforts of the poor exorbitant rates of taxation. Spread your net wider. Let the luxuries of the rich bear their part too. Let the vast masses of foreign importations, which come to our shores to compete with the produce of our own labour, bear their share, and pay some toll for the benefits of the market by which they profit. The foreigner will bear his part, as our manufacturers have to bear their part, in the taxation of foreign countries when they seek to trade with protected nations, and as every political economist, from John Stuart Mill downwards, who is not first a Member of Parliament and a partisan, admits that he must do if you impose import duties. But if, when all is said and done, a portion of the tax falls upon our own people, the burden will be less irksome than in the form in which you impose it; and men will be better equipped to meet it. "Give us work," our people may well say, and we will find you the revenue. "Give us security for our industry, give us good employment, and you will benefit the Treasury," which will share in the prosperity, which is the prosperity not of a class but of a nation. Put our people on 1666 an equal footing with our great competitors, give them a fair start in the race, and I am not afraid of the result. You will then not only have opened a new source of revenue to fill the gap which is yawning at your feet, but you will have done something to relieve the greatest of our social necessities; you will have found work for the workless and bread for the hungry.

§ The ATTORNEY-GENERAL (Sir William Robson)

I have to compliment the right hon. Gentleman upon the felicity with which, after more than six months of debate, he has been able to come, I think more closely, to the issues between the two parties than either he or any other Member on that side of the House has done during the whole course of the Committee or Report stage. He has, if he will allow me to use a popular phrase, at last "touched the spot." He tells us that his complaint against us is that we do not cast our net wider. We have apparently chastised him with whips. He would have us chastise him with scorpions. He makes a complaint against us that we have hampered trade by our Budget. We all know the classic, or, rather, the Scriptural illustration, in which a great potentate is said to have somewhat inconsistently reproved sin. Satan reproving sin is, I think, a mild type of inconsistency compared with the right hon. Gentleman the Member for Worcester rebuking us for having hampered trade. He began by referring to our increase of expenditure. He told us that we had, in fact, added something like 14¼ millions to the expenditure of the country. He said, "But that is not the whole truth." He is quite right. It is not the whole truth. The whole truth would spoil his point. I should like to ask the right hon. Gentleman with regard to that reproach two simple questions. First of all, which of the expenditure would he not have incurred; and next, I would like to ask him how much of the expenditure would be reduced if his party had had their way? They have throughout urged and insisted upon great expenditure. In Bill after Bill which had been brought before the House we have not heard from the other side a single effective or genuine demand for the reduction in the estimates laid before us. I think if we had given way to their demands for expenditure we should have had a much greater deficit, and had to devise many more new taxes. I think the right hon. Gentleman is right. We should have 1667 had to spread our net a great deal wider. Then he went on to attack the motives of the Government in the proposals that they have laid before the House. It is always easy to attack motives. You can only meet an attack of that kind by a denial, and by a denial very easily disbelieved. But I think the charge of vindictiveness in relation to a policy which has been so long before the country as that relating to the Land Clauses ought to have been really supported upon something more than epithet and allegation. The whole country knows perfectly well, and the right hon. Gentleman can scarcely be unaware, that the policy of land taxation has been an item in the programme of the Liberal party for many years—for nearly the whole of our time—and that it has been affirmed by substantial majorities in a Tory House of Commons. We have had a Land Bill laid before a House of Commons composed—I was going to say almost wholly, but certainly composed mainly of Tories, and that Bill was passed by a large majority. It was a Land Bill introduced just before a General Election. Did it meet with any active Tory opposition? Certainly, so far as I remember, I believe it was mainly opposed by only one hon. and learned Member. It received many Tory votes. It was far more comprehensive in its sphere than this Bill, but it was not denounced as a revolution. I do not remember that it was even called Socialistic. Certainly no one suggested that its promoters or introducer were animated by purely vindictive motives. The right hon. Gentleman has repeated in slightly different form the advice that he had so frequently given to Parliament and the country that we should broaden the basis of taxation. That is the meaning of his peroration, of one may unkindly analyse and dwell upon a peroration. We are to spread our net wider. I think that is exactly what we are doing. We are broadening the basis of taxation. That does not seem to satisfy our advisers! They have implored and warned us that we must find new sources of revenue. That is just again what we are doing. The question is: In what direction are we to broaden?

Let me put before the right hon. Gentleman the choice that lay before us. We had to broaden the basis of taxation, and there were three directions in which it was open to us to move. I should like to ask the right hon. Gentleman which of them he would have chosen and why? On the one hand, we might have taxed property. 1668 In that case, of course, we ran the risk of diminishing in some degree the growth of capital in the country. But every tax of necessity in some measure affects the growth of industrial capital, and affects it adversely. We might, on the other hand, have laid our burdens, as the right hon. Gentleman suggested we should have done, on the great machinery of trade. We should in that have proceeded to hamper and interfere with the great source both of national wealth and national revenue. Well, we thought—and I do not proceed, of course, to argue the question, but only to state conclusions—we thought—and I think rightly—that we would lose more on Income Tax than ever we should gain with a tariff which interfered with the operations of trade. Then there was a third course: That was to broaden the basis of taxation by laying burdens upon the general necessities of consumption in the country. That would mean a tax on labour, a tax on labour in its most insidious, most mischievous, and most dangerous form. Well, now, these were the three courses open. We had no difficulty about our choice. There was the taxation of unearned and often wholly unexpected wealth. A tax on industry is fatal to the profits of capital, because you really not only diminish the amount, but, what is much worse, the productivity and efficiency of the capital which remains. There was taxation of labour, under the form of general necessities of consumption. As I have said, we made our choice, and it is perfectly obvious that the right hon. Gentleman has made his choice. We decided that the fittest of these three possible subjects of taxation was the taxation of unearned and often wholly unexpected wealth. Will any hon. Gentleman not carried away by party feeling or party prejudice look at these three alternatives as we have had to look at them, and say that we did not on the whole make a fair and essentially moderate choice? The question I admit that I have put to myself is that you may carry the taxation of property, even though it be unearned and unexpected, to a point at which it becomes confiscation. You may easily do that. But that cannot be suggested against this Budget. We have heard from the right hon. Gentleman to-night, not for the first time, animadversions upon the smallness of the amount expected. So that whatever we have done we have not gone as far as confiscation. Our tax is novel, and so would any tax be that hon. Gentlemen opposite would have to introduce. But it 1669 cannot be called extravagant or extreme. We have had humour and satire cast upon the smallness of the amount we expect to get. Well, hon. Gentlemen opposite seem a bit puzzled—I thought that even the right hon. Gentleman himself, well as he knows the Bill, clear as his arguments have always been throughout—also seemed to be in a little doubt as to whether to condemn this tax for its oppressive enormity or its futile triviality.

§ Mr. AUSTEN CHAMBERLAIN

For both.

§ Sir W. ROBSON

The right hon. Gentleman says both. He is more courageous than many of his colleagues. I have watched, with the interest of a philosophical spectator, the line of argument of hon. Gentlemen opposite, and I have noticed a little hesitation in their minds as to what really is the party line in this particular respect. I cannot understand why, when taxes are put upon property of a particular kind, this should be met with such a degree of almost ethical indignation as the right hon. Gentleman has shown. What is his reason for shouting "Robbery" and "Socialism" on this tax upon unearned increment, while he yet treats as highly meritorious and most moral taxes upon the operations of trade or upon the purchasing power of wages—a tax on labour? The right hon. Gentleman's policy to-day is quite clear. It has been that long enough, but to-day he has been a little more explicit. He would tax trade and he would tax labour. We have made our choice. He has made his. I hope the country will understand clearly what it amounts to!

I pass from the right hon. Gentleman to deal with the arguments which he has not advanced to-day, but which I think lie at the root of the objection of the party opposite to this measure. They have denounced again and again the Budget as a measure of Socialism. I regard that as something more than an epithet. I think it is an argument worthy of analysis and consideration. I would beg hon. Gentlemen opposite quite sincerely as one as much opposed to the doctrine of pure Socialism as they are, to consider a little more carefully the charge of Socialism which they are bringing against this Budget; because, in my view, they are giving the hon. Gentleman the Member for Blackburn (Mr. Snowden) and his Friends an unjustly and dangerously good advertisement. Depend upon it: There could be nothing worse in the interests of property than to tell people that 1670 these taxes, so closely and so obviously founded on simple justice, are to be placed to the credit of Socialism.

In my opinion that cuts at the very root of Socialism. I am afraid I shall not carry the hon. Member for Blackburn (Mr. Philip Snowden) with me in this regard. What is the essential principle of Socialism? It is the substitution of State action, which I regard as cumberous, ignorant, and hidebound, but which the hon. Member for Blackburn would treat as elevated, noble, and disinterested, for individual enterprise and energy. I pass over the question who is right in his adjectives. I say Socialism means the substitution of State action for that individual enterprise and energy which has built up the great machinery of industry on which civilisation subsists. The keynote of this Bill is the protection wherever it is imperilled by the operation of our taxes of individual enterprise and energy. We have stuffed its clauses with provisoes and safeguards against the taxes falling upon the industries and enterprise of the commercial and working classes. I wonder when the right hon. Gentleman comes to frame his Budget—perhaps he may, I am not making prophesies—will he be able under the system of taxation he has foreshadowed to-night to make exceptions and provisoes? Will he be able, as we have done in the case of the smaller holders and owners, to exempt the poor? Will he be able to exempt industries, to exempt enterprise, to take care that no man's capital is interfered with, that no man's speculations are imperilled? I hope he will be able to do it as well as we have done it, but I am afraid not. The very keynote of this measure is an endeavour to prevent anything like a tax or burden falling upon industry. How can that be called Socialism? Why, so far from being Socialist, we are daily reproached by hon. Members opposite on platform after platform and in the House for our commercial individualism.

We are told that this Bill, whatever it may appear to be, however moderate its taxes, however small their amount, must be rejected because there is an incurable Socialist temper or Socialist intention or policy, of which this is but the first step, stamped upon it. That is what we are told at one moment when we have hardly got out of our ears the reproaches that we were antiquated Cobdenites. The doctrines of Cobden are the very antithesis of Socialism. I seem to remember some phrases that occurred to the mind of the Leader of the Opposition in a very important 1671 work upon the fiscal question, though it professes to be only a series of economic notes, in which he reproaches those who prefer that which is natural in the economic sphere to that which is State contrived. He tells us that belongs to an antiquated mode of thought, and he goes oh to reproach the Free Trade party and warn them against a feeling of deep distrust of Legislatures. These are words from "Economic Notes on Insular Free Trade." Then the reproach was that we were anti-Socialists. That has been the reproach again and again. To-day we are so Socialistic we cannot be trusted, although we make most vigorous protestations against the charge. I ask hon. Members opposite seriously whether their fear is well founded. It is a charge against our intentions and against our policy, against, if you like, our political temper. I think that fear which is at the root of the opposition to this Bill would vanish if they would look at the financial situation as a whole and at the policy of this Government as a whole. I would remind them of one measure we have in hand at this very moment, which is taking some part of our hard-worked time during this Session—a measure which inevitably makes the greatest blow against Socialism of any measure ever passed in this House or in any other House—the Irish Land Bill. There you have this Government which you are charging with being Socialist—charging not on truth but on suspicion—proposing and carrying through this House a measure which will give a most enormous extension to the power of private property in this country. It establishes here a solid guard of I should say a hundred Members for some indefinite period who will be pledged to vote and fight against every single article of the Socialist creed; and yet you profess to fear our Socialism. Even the Socialists themselves voted for it to a man. That, I think, ought to make you cease your alarms, not only in regard to the Government but in regard to the hon. Member for Blackburn and his Friends below the Gangway, although their claim to an independent existence is that they desire to limit the range and rights of private property, yet when there comes the question about voting for it they go peacefully and patiently into the Lobby in support of it.

I venture to say that the rejection of this Bill will do more to encourage Socialism than anything else we can possibly do. Depend upon it, whatever the 1672 motive of our policy might be, the results of yours will encourage Socialism. The right hon. Gentleman spoke of the record of the landed classes on matters of government. I will not say one word which might seem to show any lack of appreciation of the great services which the English landed class, like every other class in England, has in its turn rendered to the political life of this country. The life of England is made up of the efforts and virtues of all classes. But there is one part of the record of that great class which I think they do not like to reflect upon, or did not a few years ago, and that was their fiscal record in relation to the very questions which are now coming for consideration before the country. That is a record of which the country ought to be reminded, but not to be reminded in the interests of the wealthy classes of this country. That is a record which will be brought again into life if the landed classes propose to reject this Budget because of the burdens it puts upon them.

We were told by the right hon. Gentleman again and again—it is an old charge—that this Budget is something more than fiscal, more than financial, and that seems to be treated as a reason—I believe it is being put forward as a reason—why extreme action should be taken against the Budget outside this House. I daresay it is more than financial. I am rather surprised, however, to hear that reproach from the right hon. Gentleman, because I understood that his Budget when it comes, I am not going to trouble about it, would also be more than financial. The right hon. Gentleman the Leader of the Opposition last May at St. James's Theatre congratulated those whom he was then addressing—the Fiscal Reform Association—upon the fact that their motives also were more than financial, that their propaganda did not turn on really material considerations, but that their fiscal and financial proposals were animated by imagination and sentiment, and he said if they were not they would not be fit to govern an Empire like this. I do not see why hon. Gentlemen opposite should be at liberty to bring forward Budgets that are animated by imagination and sentiment. When the Leader of the Opposition said it would be folly not to connect with other objects, I do not see why they should have that privilege, and we should be debarred from considering the collateral consequences of the taxes we suggest. I am glad that this Bill, though a Finance Bill, has not been framed with 1673 out regard to greater considerations. The higher considerations to which it has regard have put finance on a higher plane. It is quite true that in laying our taxes we have had regard to matters which are not merely those of imagination or sentiment, but we have had regard also to history. We have made an advance—the furthest advance that has yet been made—from those evil days destined, I daresay, soon to disappear, when the burdens cast upon the poor were so adjusted, nay, when they were deliberately created, so as to give some private profit to favoured sections of the community. We have passed away from those days, and against that policy we put these proposals. I have stated they hamper trade not at all; certainly as little as any tax could possibly hamper trade, and the real objection to them is not that which we have heard with such frequent iteration during the last few months; it is that they treat property which is due substantially to the efforts of all as being a fit subject for contribution to the needs of all. Hon. Members opposite may procure, but not in this House, the defeat of these proposals. The more they are defeated the more they will be debated; the more they are debated the more resolute will become the intention of the English people to see that they are applied—applied, it may be, in forms which will make hon. Members opposite regret their opposition to these taxes.

§ Mr. HAROLD COX

Although I am strongly opposed to some portions of this Bill I voted for the second reading, and I intend to vote for the third reading. I do not propose to repeat the arguments I have used against the Land Taxes. The House is well aware of my opinion in regard to those taxes. I believe they are utterly unsound in principle, and I am convinced that if they come into operation they will become so unpopular that there will be a universal demand for their repeal. If the Land Taxes formed the whole or even an important part of this Budget I should vote against the Bill. But they do not form the whole of it nor even an important part of it. Financially they are utterly insignificant. I will take the greatest estimate given by the Chancellor of the Exchequer of all the Land Taxes this year. He says they will yield £600,000, and half of that goes to the local authority. Another £250,000 is required for the levying of the taxes, leaving a net sum of £50,000, and therefore we have had all this hullabaloo over £50,000. But that is not 1674 the Budget. The real Budget is a series of taxes to meet a deficit of about £14,000,000 sterling, and that is what I support. I object, it is true, to some of the taxes, and I stated upon the second reading my reasons for believing that a tax on beer would have been preferable to a tax on licences. My objection to a tax on licences is the same as my objection to taxes on land, namely, that you are picking out a particular form of property for taxation. But beyond that I have a further objection that all the taxes in the Budget are too high. The Whisky Duty, the Tobacco Duty, the Death Duties are too high, and the Income Tax is also too high. I think it is dangerous to have such a high rate of taxation on any of these things in time of peace.

But who is to blame for this? I do not blame the Chancellor of the Exchequer. I think we must exonerate him from the primary blame. The Chancellor of the Exchequer is not to blame, but this House is to blame for voting the expenditure. The right hon. Gentleman has got to find the money. When I first came to this House I was pledged to economy in public expenditure, and I took that pledge partly because I did not think you would be able to preserve Free Trade without economy in public expenditure. I took that pledge with a good heart, because it was put forward as part of the programme of the Liberal party. Speaking at the Albert Hall on 21st December, 1905, the late Prime Minister said:— The fact is yon cannot pile up debt and taxation as they have been piled up without feeling the strain in every fibre of society. Expenditure calls for taxes, and taxes are the plaything of the Tariff Reformer. Militarism, extravagance, and Protection are weeds which grow in the same fields, and if you want to clear the field for honest cultivation you must root them all out. With those words ringing in my ears I went to my Constituency and pledged myself to economy in public expenditure, and I have done my best to adhere to that pledge. I do not say that I have been very successful. Since the Liberal party has been in power the expenditure has increased by something like £16,000,000 a year—just a little less—but what has the party opposite done to stop that increased expenditure? As the Attorney-General has pointed out, on no single occasion have they protested against this increase in the expenditure. On the contrary, they have taken action which, if it had been followed, would have led to a still further increase in our expenditure. It seems to me that hon. Members opposite are very much 1675 in the position of those ladies who spend a large part of their time changing their frocks, each one more beautiful than the preceding one, and thoroughly content with themselves, but when the time comes for paying the bill they turn round horror-stricken with their extravagance. The House is committed to this expenditure. The bill must be paid, and the real Budget before us is a very good way of paying it.

This Bill proceeds on two sound principles, namely, that you should tax people according to their means, and that you should tax luxuries and not necessaries. Those are two perfectly sound principles. Let me take up a point raised by the Attorney-General. I venture to express my entire agreement with the hon. and learned Gentleman in saying that there is nothing Socialistic in this part of the Budget. I know that the hon. Member for Blackburn has picked out one portion, namely, the Super-tax, and he has said that that is the essence of Socialism or the most Socialistic portion of the Budget. I venture to disagree with him, and although I bow to his superior authority as to what is Socialism, I think in this particular case he has made a mistake. He has rather taken the Socialism of the street corner than the Socialism which he himself would be likely to put forward. The hon. Member for Blackburn's philosophic conception of Socialism is that the State should become the owner of all the materials and the director of all the industries of the country. I wish to point out that hon. Members opposite have now accepted the Super-tax, and they cannot go about the country denouncing it as Socialistic, because they have accepted it. Personally, I do not see any Socialism in the means adopted for raising revenue. Socialism lies more in the expenditure; but, again, hon. Members opposite accepted the expenditure. Let me take as a test the case of the old age pension. A year ago, by an Amendment which I moved to the Old Age Pensions Bill, I raised the question as between contributory and non-contributory pensions. That seemed to me to be a clear test case between Socialism and non-Socialism. A contributory pension means that the individual is to be made responsible for his own future as well as for his own present, whereas non-contributory pensions mean that the State is to be made responsible for the individual, and that is the dividing line between Socalism and non-Socialism. When the House decided upon my Amendment what happened? 1676 The Leader of the Protectionist party voted with the Government and the Leader of the Unionist party walked out.

Let me go a little further. The Government with their Socialism have succeeded in landing a very large fish. In the Development Grant you have pure Socialism. Hitherto it has been our boast that this country has been able to develop its resources by individual effort, but now it is proposed that the State is to develop the country. What happens? There is the right hon. Gentleman the Member for Wimbledon (Mr. Chaplin), whom we have all regarded as the very type of the sturdy, self-reliant Englishman, and yet when it was proposed that the State under the Development Grant should do something for agriculture, the right hon. Gentleman jumped at the bait, hook and all, and was landed. He does not mind Socialism so long as somebody else pays for it. The means adopted for meeting this vast deficit are not Socialism, but the deficit has been created by Socialistic expenditure which hon. Members opposite have voted for. How do hon. Members opposite propose to meet this expenditure, because that is the real issue? The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) rather upbraided hon. Members on this side of the House for not being sufficiently progressive, and he said we were living in the past, and did not move with the times like other countries. But what does the right hon. Gentleman propose? I know what is in his mind. They say, "Are you going to be bound by theories adopted 60 years ago, because that is not progress." No, but according to the right hon. Gentleman opposite progress means picking up the ideas of 70 years ago. To my mind that is not progress but atavism. I wish the right hon. Gentleman had developed his thesis a little more. One of the right hon. Gentleman's points against the Land Taxes was that, though they would yield an absolutely insignificant revenue, yet they would be extremely burdensome. Is that not the case with many of the taxes which he proposes? Is it not the very essence of a Protective Tax that it imposes a heavier burden upon the consumer than is equivalent to the revenue which it brings to the State? What are they going to tax? We know hon. Gentlemen opposite propose to tax food. They are also going to tax clothing, furniture, and building materials. They are always talking to the carpenters, and saying, "We will make more employment for 1677 you, because we are going to tax imported doors and window frames." What are doors and window frames used for? They are used for the building of houses. Consequently it is part of the policy of hon. Gentleman opposite to make housing more expensive. They are going to tax everything that comes into the poor man's house. They are going to tax it heavily, or otherwise they will not get the revenue they require.

I do not think hon. Members opposite, and perhaps only a few hon. Members in this House, have fully realised what even a little tax means to poor people upon an absolute necessity of life. I was talking only the other day to a poor man, who told me of the case of a widow left with a family who was rejoicing because bread had been lowered in price one farthing per loaf, her comment being, "That means threepence per week in my pocket." That may seem a little matter to hon. Members in this House, but it means a good deal to a, family with only about 15s. per week coming in, and a large family to keep. I hold that the poor should pay something toward the revenue, but they ought to pay in proportion to their means, and the tax on the necessities of life is in inverse proportion to their means, and falls most heavily upon the poor consumer. A tax on bread is not felt by rich people and scarcely by people moderately well-to-do, but it is intensely felt by the very poorest people.

May I call attention to what was, I think, a slip made by the Leader of the Opposition on a former occasion when speaking on these taxes? He said, in reply to something said on this side, that to his mind a tax which was not felt was a very desirable tax. What he really meant was a tax which was not seen, and I think he will see there is a great difference between a tax which is not seen and a tax which is not felt. It happens that most of your taxes on commodities are not seen, and that is why they are so easily imposed. I daresay the vast majority of the people of this country are not aware that they are paying a tax of 5d. on every pound of tea they buy. The tax is not seen, but it is felt. It is taken out of their household budget, and it means a skimping of something else. Hon. Members opposite have tried to get out of that difficulty by going about the country and saying they mean to tax the foreigner that the foreigner is going to pay these taxes. Do hon. Members opposite really believe that? They are 1678 very angry, perhaps rightly angry sometimes, when there is a misrepresentation from this side of the House, but do they really mean what they say when they get up and tell ignorant people that the foreigners are going to pay the taxes? If they mean that, why do they not make the taxes higher? Why are they not proposing to tax raw materials? Is there any alchemy by which you can discriminate and say the foreigner will not pay a tax on something you call raw material and will pay a tax on something you call a manufactured article? Is there any line betwen a small tax which the foreigner will pay and a large tax which the British consumer will pay? There is no posible line or discrimination. May I ask them this? Have they ever thought how the foreigner is going to pay these taxes of ours? How is it going to be done? I am quite sure all hon. Members opposite have got beyond that very crude phase of political economy which assumes that international commerce is settled by cash. They all of them know that international commerce is an exchange of goods against goods. Then, if the foreigner is going to pay our taxes, he can only pay them by sending us more goods, or, what amounts to the same thing, by taking fewer of our goods in exchange for his goods. How is that going to increase employment?

I go beyond that. I said just now that the financial proposals in this Budget were not in my judgment Socialist, but the financial proposals of hon. Gentlemen opposite are essentialy Socialist. They opposed, as I opposed, the Right to Work Bill; but what is it they are suggesting from almost every platform in the country? That they are going to make employment; that it is the duty of the State to find work. Is not that the crudest form of Socialism? Have they thought out how they are going to do it? There is nothing they are so fond of doing as glorifying home trade at the expense of foreign trade. They have an argument borrowed from Adam Smith—a very good argument, as any argument borrowed from that source must be—in which they say that, if instead of Englishmen trading with foreigners, you have two Englishmen trading together you will have more employment in this country. Yes, but that supposes necessarily that you must have less foreign trade. You cannot get back the trade which the Englishman has organised with foreign countries and locate that trade in this country without losing the 1679 foreign trade. That may possibly do very well for some constituencies, but I should like to know how it is going to do for all the Lancashire constituencies? Lancashire lives by foreign trade. Lancashire has built up a marvellous trade with the whole world, and you are going to destroy that in order to give a preference to home trade. How is that policy going to help your shipping industry, your ship-building industry, and all the people who have invested money in docks and harbours? Is their property to be destroyed? We heard only this afternoon of the wickedness of taxing an industry out of existence, but you are proposing to tax out of existence the capital which has been invested in docks and harbours. Let me put the matter, I hope, simply: You have two Englishmen, each of whom has organised a trade with some foreign country. Then the State—this Socialist State which calls itself a Tariff Reform State—steps in and says to these two Englishmen: "You shall no longer trade with the foreigner: you must trade with one another." These two unfortunate men reply: "Yes, but we do not want to. We do not want one another's goods. It so happens that the things we make have a market abroad and have not got a market at home." "Never mind," says the Tariff Reform party, "in the sacred name of Tariff Reform you must trade with one another." What is that but the crudest form of Socialism?

May I put another question to them? They have always told us, and I have no doubt my right hon. Friend opposite will repeat it again, that they do not mean to tax raw material. I have asked again and again some Tariff Reformer to tell me whether leather was a raw material or not. At last we have got the answer. Bermondsey has given the reply. [Mr. G. D. FABER: "Hear, hear."] I am glad, at any rate, that there is one hon. Member opposite sufficiently loyal to accept the verdict of Bermondsey. If I may assume that he speaks for his Leader and his whole party, the whole of the Unionist party is committed to a tax on leather. I am glad that they have the good taste not to repudiate that suggestion, because Bermondsey would be broken-hearted if they were to do so. But what about Lancashire, Leicester, and Northampton? They do not only use leather for boots and shoes in Lancashire, but leather is an essential material in the process of spinning, and tons of leather are thus used up every 1680 year. Is all that to be taxed? You suggest sometimes that the manufacturer should be compensated by giving him a drawback. How are you to give a drawback on the little fraction of leather used in a pound of yarn. It cannot be done. Sir Michael Hicks Beach, when Chancellor of the Exchequer, was approached on that question in regard to flour used in size in the manufacture of cotton, and he replied that you could not possibly give a drawback, because there was no means of measuring the amount used in a yard of calico. It is exactly so with leather. It must increase the burden on that great export industry, an industry which accounts for one quarter for the whole exports of the country. We know now that it is the policy of the party opposite to tax these export industries in order to encourage Bermondsey. If they think out their policy they will see clearly enough that their scheme, as they call it, for creating employment only means redistributing employment; for every plus there must be a minus, and their policy is to redistribute employment in this country by giving a subsidy to some industries and taxing other industries out of existence. I contend that is one the crudest forms of Socialism, and one of the most vicious.

5.0 P.M.

Then many of them, while attacking these taxes, have also complained of the manner in which some of them have been commended to the country. I sympathise with their complaint. I think it is a great pity that some of these taxes should have been commended by some of the arguments which have been used. I think it is a pity we should encourage envy of the rich or any class, but are they scathless? Have they never appealed to base motives in arguing for their taxes? Do they not go up and down the country saying, "Hit the foreigner, tax the foreigner"? Are they not stimulating a malignant hatred of foreign countries? And for what offence? For the offence of sending us the good things we want to buy. For these reasons I hold there is no essential difference between the Socialists above the Gangway and the Socialists below the Gangway, and I confess I am surprised that a man of such acute intelligence as Lord Hugh Cecil should recently have written to say that Tariff Reform is an alternative to Socialism. It is no alternative. It is another phase of Socialism. More than that, it is an additional phase, and this is the point I wish to press upon the House. Tariff Reformers accept all the things put 1681 forward by this side of the House which are in their essence Socialism. They accept non-contributary pensions, the feeding of school children, and doles to the unemployed, and, in addition, they would add a Socialism of their own. Therefore, I believe that Tariff Reform, instead of being an alternative to Socialism, means more Socialism. I believe that in opposing Socialism of both these types I am expressing the convictions of tens of thousands of my fellow-countrymen. I believe the majority of the people of this country have no desire either to plunder other people or themselves to be plundered. They wish to be left free to earn their own living. I know perfectly well that, in the growing complexity of modern life, and in the growing concentration of masses of human beings on a limited space, it is necessary more and more to appeal to collective action to do things which the individual cannot do for himself. It is because of that necessity that it is of infinite importance to preserve those influences to build up individual character. You cannot make a good machine out of bad materials. You cannot make a good State out of bad men. In the case of the State it is even more important than in the case of a machine that the materials shall be good. In the case of the State the materials are living beings. It is through them, and through them alone, that the State thinks and acts. Without them the State would be inert. It is they who give life to the State, not it to them, and, therefore, the final result in the progress of the nation must, in my opinion, depend on the strength, activity, and self-reliance of the individual citizen.

§ Mr. PHILIP SNOWDEN

It must have been a very pleasant experience to the hon. Gentleman who has just sat down to deliver a speech met with silence on the Tory benches and with resounding cheers from those who sit on his own side of the House. I suppose that about two hours later hon. Members opposite will be repairing to the dining-room to eat the fatted calf and to celebrate the return of the Prodigal Son. I do not intend to follow the hon. Member in his curious and confused ideas about Socialism. I will come at once to the consideration of this question: If Tariff Reform and Socialism are one and the same creed, how is it that we Socialists are opposed to Tariff Reform? Let me turn to the two first speeches delivered in the course of this Debate—the 1682 speech in which the rejection of the Bill was moved and the reply furnished to it by the Attorney-General. The learned Attorney-General noticed an omission in the speech of the right hon. Gentleman who moved the rejection of the Bill, and it was an omission which I think must have been noticed by every other Member of the House. The right hon. Gentleman the Member for East Worcester began his speech by saying that he was going to state the objections of his party to this Finance Bill. I have followed, as far as I have been able, the speeches and arguments advanced in the country in opposition to these proposals, and, so far as I can judge, there have been not many objections but only one objection to this Bill, and that one has been that the Bill is Socialism, or, in the words of Lord Rosebery, it "is the end of all things—religion, property, and family life." I expected therefore that the speech of the right hon. Gentleman would be devoted mainly, if not entirely, to proving the identity of the proposals of this Budget Bill with what is known as Socialism. But he was singularly silent on that point, and, in consequence, I shall have to confine my remarks to dealing with the objection that this Budget Bill is Socialism. I may begin by attempting to define what we, who profess to be Socialists, mean by Socialism. The Attorney-General was right in saying that Socialism means State action, but that is not exactly the definition of Socialism which was given by the right hon. Gentleman the Leader of the Opposition at Birmingham about 12 months ago. If I may be permitted I will read the right hon. Gentleman's words, because they admirably serve my purpose. The Leader of the Opposition—speaking, I believe, at the opening of that curious anachronism, a. Tory labour club, about 12 months ago, a club which I believe has since found its way into the Bankruptcy Court—gave this as his definition of Socialism:— It seems to me there is no difficulty or ambiguity about the subject at all. Socialism has one meaning, and one meaning only. Socialism means, and can mean nothing else, than that the community or the State is to take all the means of production into its own hands, that private enterprise and private property are to come to an end, and all that private enterprise and private property carry with them. That is Socialism, and nothing else is Socialism. Social reform—— and I ask here the attention of the House to the distinction which the right hon. Gentleman attempted to draw between Socialism and Social Reform—I shall, later on, endeavour to show that there is really no distinction where the right hon. Gentleman attempts to establish it. The right 1683 hon. Gentleman goes on to draw a distinction between Socialism and Social Reform, and he says:— Social reform is when the State, based upon private enterprise, recognising that the best productive results can only be obtained by respect of private property and encouraging private enterprise, asks them to contribute towards great national, social, and public objects. That is social reform. I accepted the statement made by the Attorney-General that Socialism is State action. But it is something more than that. It is State ownership of the means of producing and distributing wealth. There may be State action which is not connected with the ownership, control, and management of industry. We as Socialists recognise that. We recognise, too, the existence of conditions which everybody deplores, and we recognise further that the cause of those conditions is to be found in the monopoly of the means of production and distribution—at any rate in the monopoly of land and capital. Our purpose is to substitute for private ownership of land and capital public ownership and control of both. But that is not a thing which can be accomplished at once. We realise that. Meanwhile we are anxious to do something towards bringing it about. The right hon. Gentleman defines Socialism as the State ownership of the means of producing and distributing wealth. May I say I do not accept that? The definition by Socialists of Socialism is not the State ownership of land and capital. That is only a condition of Socialism or a means of Socialism. Socialism means that all socially created wealth shall be owned by the community, and that its distribution shall be directed by the community for the good of the community. The national ownership of land and capital is a necessary condition to attaining a state of things like that. We recognise that we cannot reach our goal under the present system and at once, and we are anxious, therefore, in the meantime, to divert as much as we can, and as rapidly as we can, socially created wealth for the purpose of dealing with industrial and social evils which are the result of the private ownership of land and capital. Therefore, although the taxation of socially created wealth may not be Socialism in itself, it is a step towards Socialism, and therefore, in so far as this Budget taxes socially created wealth for social purposes, it is Socialistic. But it is not Socialism.

Now I come to the point whether there is anything new or novel in the proposals 1684 of this Budget. The Attorney-General, no doubt, described certain proposals as being novel, but I have not been able to discover any novelty whatever in any one of the proposals of the Finance Bill. To my mind there is nothing new in it. It is too late in the day to begin to talk about the beginning of Socialism; as a matter of fact we are well on the road to Socialism, and all the legislation of the nineteenth century has been nothing more nor less than an effort on the part of this House to deal with the evils resulting from the private ownership of land and capital. Throughout the whole of the nineteenth century we have been moving in our legislation towards Socialism—first of all by constantly increasing legal restrictions in the free and individual use of land and capital. Our public health legislation is an illustration of that. If you require further illustration there is the Factory legislation. There is no difference whatever in the economic effect upon private monopoly of the Workmen's Compensation Act and the factory legislation and public health legislation, and the direct taxation upon the profits on monopoly which has been acted upon by all parties in the State. The second way in which we are moving towards Socialism has been the gradual supplementing of private voluntary charities by public organisations for dealing with the poorest parts of our population. That is accepted by the party opposite and, indeed, by every party in the House, and the Old Age Pensions Act is an illustration of that. Then we have been trying to raise the condition of the poorest part of the population by such measures as the Education Act. What makes a measure of that kind all the more Socialistic is that to a very great extent it is provided for by taxation on socially created wealth. The third way in which we have moved towards Socialism is on the lines of the proposals of this Bill by constantly increasing the taxation on rent, interest and profits for the purpose of dealing with the results of the private ownership of land. Your Income Tax is an illustration of that. The fourth way, and the most Socialistic of all, is the gradual supplanting of private enterprise and private institutions by public initiative and public organisations. You have that illustrated in our magnificent and highly successful municipal and State undertakings. Now, one of the four ways in which we have been moving towards Socialism is by increasing taxation upon rent, interest and profits, which are 1685 recognised even by the right hon. Gentleman himself as being Socialistically created. Is there anything novel in any one of these things? What are Land Taxes? Land taxation simply proposes to tax socially created wealth for social purposes. That is nothing new. It is one of the difficulties of attempting to apply a principle partially. If you attempt so to apply a principle you are certain to create an apparent injustice. I have a certain amount of sympathy with those who urge that it is not fair to discriminate between social increment on land and social increment in other forms. That is an objection which cannot be urged against Socialism. It can be urged only against hon. Gentlemen opposite who do draw a distinct line about land and Capital. We do not make any such distinction, and it must be recognised that we are not in a position to put our ideas in a Finance Bill. We have to take what we can get, but if we had the power of saying in what way the revenue of the country is to be raised, I am quite certain no Socialist Chancellor of the Exchequer would distinguish between social increment of land and social increment in regard to the taxes which would ordinarily fall upon the community.

We support the land taxation proposals, not because we think they do everything or go far enough—we support them because they are as much as we can get at present, but when a Chancellor of the Exchequer comes forward to propose and apply taxation of unearned increment to any other form of property he will find that we shall be quite as hearty in our support as we are in the support which we have given to the Land Taxes in the Budget. In regard to the Income Tax proposals, I remember the right hon. Gentleman himself in Committee when we began to discuss the Income Tax part of the Bill expressed his relief that at last we were coming to legitimate finance. What is Income Tax? It is the taxation of socially created wealth, and the fact that the Government are imposing in this Finance Bill a Super-tax is nothing new. It is only a further graduation of the Income Tax. The graduation below £700 was, of course, adopted in order very roughly to make a man contribute more because of his greater capacity, and the Super-tax is nothing more than an extension of this principle. I notice that the hon. Member for Preston (Mr. Cox) referred to a statement I made in the country, that the Super-tax is the most 1686 Socialistic part of the Budget. That newspaper report did not quite express what I meant. The hon. Member for Preston tried to draw a distinction between the method of the taxation and the purpose to which the tax revenue was to be devoted.

I am quite ready to admit that it is quite possible for taxation not to be Socialistic, but it may be applied to a purpose which is Socialistic in its character. You have an illustration in this Budget. Take, for instance, the Tobacco Tax. The Tobacco Tax is not Socialistic it is not taxation of socially created wealth, but the Tobacco Tax is being applied to some extent to the financing of the scheme of old age pensions—a purpose which is Socialistic. The method of raising the revenue, however, is not Socialistic, and, therefore, it is most important that you should have, if you are going to have complete Socialism itself, that you should have harmony in the method of raising taxation and the purpose to which that taxation is going to be devoted. I said that I regarded the Super-tax as being the most Socialistic proposal in the Budget, and from this point of view: I believe it will be the best revenue-raising part of the Bill. I believe there are great possibilities in it, and, seeing that in connection with this Finance Bll certain schemes of social reform have either been proposed or foreshadowed which will require a large amount of revenue to finance, that is what I meant when I said that I looked upon the Super-tax as being the best part of the Budget, because I believe the schemes of social reform which are to be carried out by means of this Budget are to be rightly put upon the Super-tax For their finances. There is nothing new or novel in the proposals of this Bill. The Income Tax is not novel, the Land Taxes are not novel, the Estate Duties are certainly not novel. It is Socialistic in part, but it is not Socialistic in other parts. I have already referred to the Tobacco Duty. That is not Socialistic because the Tobacco Tax is indirect taxation, it is not taxation on social wealth, and it is taking from a very needy class of the community a great deal more than they can afford to pay.

We do not expect to have, of course, a measure which is consistently Socialistic from men who are not Socialists. For a long time to come we expect that the legislation which will be introduced even by a Government anxious to promote reform 1687 will be of an inconsistent character. It will be Socialistic partly and anti-Socialistic in its other parts. This Budget is neither complete Socialism nor is it revolution. Why, it is such a slight movement of the wheel as to be hardly perceptible, and I will tell hon. Members above the Gangway what it is: It is a preventive of revolution. What the right hon. Gentleman calls social reform is only a preventive of revolution. Do hon. Members above the Gangway think that such a state of things as exists in this country to-day can be indefinitely prolonged We have had 40 years of elementary education. The masses of the people have been taught to read. Reading has made them think, has made them feel more acutely. They are not going to be content for ever to be hewers of wood and drawers of water. The unemployed are not going to continue to walk the streets of our great cities and see their despair and poverty mocked by the evidences before their eyes of ostentatious wealth. Something is going to be done by this Parliament to remove these great inequalities of poverty and wealth, ignorance and culture, want and luxury, and we welcome this Bill because it is a very moderate beginning to deal with questions like that. We welcome the proposals to which I have referred, because they begin to apply, in a small way, proposals which we on these benches have been asserting for many yeans. We shall support the third reading of this Bill. I have only one word more to say. I want to refer to the alternative which was put forward by the right hon. Gentleman who moved the rejection of the Bill. I said at the beginning of my remarks that we who are Socialists are opposed to Tariff Reform. We are sometimes told by hon. Members that we are inconsistent in being Trade Unionists for the protection of our trades and in opposing a duty on articles coming from foreign countries. There is nothing inconsistent in that. I will tell them why we are opposed to Protection in the way of import duties. So long as you have a monopoly of land and of capital any import duty can only have one result, and that result is to increase the rent of the landlord or to increase the property of the capitalist. It cannot possibly benefit the workman. Where you have competition in employment there is always a tendency for wages to be forced down, and competition will prevent the wages rising, and no system of reform, as long as you have a monopoly of land and 1688 capital, can, under such a system, be depended upon to benefit the working classes.

An hon. Member talked of taxing the foreigner. There have been in the last two or three months elections in Germany; those elections have been fought almost exclusively upon the question of taxation. The Socialists to a man in Germany are opposed to taxation on imports. They are Free Traders, and they are oposed to Protection because of their painful experience of it. May I put this question, and possibly some Member who follows me may deal with it? If it is possible to raise a revenue by taxing the foreigner Why did not Germany during this year adopt the practice of taxing the foreigner? It required to raise something like £26,000,000 of taxation, and every penny of it has been raised by internal taxation. No, if I cared to give candid advice and useful information to hon. Members above the Gangway in view of the propaganda work which it will be necessary to do during an election campaign, I would say to them, "Do not talk to the working man of this country nonsense like that. You are depreciating their intelligence, you are insulting them, you are not playing the game of politics to your own advantage." I know the working people of this country, I belong to them, I have lived with them, and I know their capacity of thinking. I know their capacity of reason, and why I have faith in them is because of it. I think if you appeal to that intelligence it will respond. For these reasons we are going to support the third reading of this Bill, which will leave this House in two or three days backed up by an overwhelming vote. What will happen in another place I do not know, but if the worst comes to the worst, and if it be necessary that we should go to the country on this question, I can assure the Government that those who sit on these benches and the party which we represent outside will not be amongst the least of the earnest and enthusiastic supporters of that part of the Bill which I commend to the House.

§ Mr. EVELYN CECIL

The hon. Member who has just sat down has given us a very interesting speech upon what Socialism is from his point of view and what it is not. The hon. Member for Preston (Mr. Cox) gave us what I might call a lecture on Tariff Reform. The Attorney-General contented himself not with defending the Budget but with abusing the policy of the party to which I belong and saying the Budget had no Socialistic tendencies in it. 1689 I think I may dismiss the speech of the hon. Member for Preston by saying that we are perfectly satisfied with our policy, that we do not admit the conclusions to which he comes, and we are convinced that Tariff Reform is the best single remedy for the present state of unemployment because it destroys unfair foreign competition which is working against our trades and manufactures and the employment of our workmen, and will introduce equal terms for the British workman as against the foreigner. It of course also brings to the fore our great desire to create a united empire by means of Preference to our Colonies, and we are satisfied that that policy, will commend itself to the vast majority of the people of the electorate of this country, if only the other side give them a chance of understanding it. In spite of the hon. Member who has just sat down there is a good deal more to be said on the subject. He has explained to the House that he is in favour of the national ownership of land and capital, and he argues in favour of the Budget because he thinks that that ideal of his will be reached so soon as he has his way, and upon examination of different portions of the Budget I am certain that it will be found that he is likely to get his way, notwithstanding the remarks of the Attorney-General. The Attorney-General has told us that there is nothing new in the taxes here proposed. I certainly do not agree with him in that. These taxes, he says, cut at the very root of Socialism, and there are provisos and safeguards which will secure the nation against it. I fail entirely to see what these provisos and safeguards are. He talks to us of security against Socialism. I do not believe that security really exists. There is nothing less secure than security, and, looking at and criticising this Budget, I am afraid there is nothing less common than common-sense. Each of the essential portions of this Budget seems to me to savour of Socialism. Look at the Increment Value Duties, which proposes to take 20 per cent. off the increased value of land. Why remain at 20 per cent.? We are openly told that Socialists do not intend to remain at that figure. They believe they can secure the nationalisation of property by first introducing this machinery and then putting the screw on and increasing the percentage of the tax. I do not see that there is any logic or consistency in saying, as the Chancellor of 1690 the Exchequer does, that if there is increment value he is to have it, and if there is no increment value nothing will be charged. It is a form of saying "Heads I win, tails you lose," which is putting a sure tool into the hands of Socialists which assuredly they will make use of.

As regards these Land Taxes in particular, I sometimes wonder how far the charges imposed in this Bill affect the framers of the Bill. No doubt many aggrieved taxpayers will feel disposed to say that a little fellow feeling makes us wondrous kind, but what about the little fellow feeling in one's coat behind. I think that is an imagery, which very fairly describes the Chancellor of the Exchequer, and which very fairly assists his Socialist allies. Then turn to the vast increase in Death Duties and the effect of Death Duties, Income Tax, and Super-tax together. Their joint effect must necessarily be that there will be less money forthcoming for the development of new industries and new enterprises. That means less employment. It means that we are taxing capital which is in the course of being saved. It affects the desire for thrift, and it largely affects small estates. The Government pride themselves that this Budget does not touch trade. The right hon. Gentleman (Mr. Austen Chamber-Iain) has pointed out how it touches the building trade, the licensed trade, and the tobacco trade. But these vastly increased Death Duties also seriously affect trade. By abnormally increasing the Death Duties you are striking at every business in the country, and, therefore, you inevitably bring about a diminution of trade and business, and reduce the amount of employment. I quite agree with the hon. Member (Mr. Snowden) as to his view of the machinery of Super-tax. It may be perfectly true that those who have specially large fortunes ought to contribute more. I think they ought. They ought to contribute in full proportion to the needs of the country. But I object myself to this Super-tax on principle. I look upon it as a very dangerous weapon. You talk about super-taxing incomes over £5,000 a year, but why should you not come down very far below that figure it it suits your needs? If the hon. Member were Prime Minister it would not be £5,000 a year, but much more like £500 a year which would be super-taxed. And equally at the other end of the scale, why should you remain at the figure of 1s. 8d.? Why not Super-tax up to 5s. or 7s., or 1691 any other figure that suits the whim of the Ministry of the day? You are setting up a new Socialistic machinery which can be used to nationalise all kinds of property and to introduce State ownership and public control. I believe much more in private enterprise and energy for increasing the prosperity of this country, and I do not for a moment believe that if you continue to create machinery which may put weapons into the hands of the Socialistic party you are serving the best interests of this country or are likely to increase its trade or its employment. On the contrary, you will do precisely the reverse. You will diminish the trade, and you will force it to go into other countries where it is more fairly treated, and you will consequently diminish British employment and the wages of working men.

If these be rather special considerations, let me call attention to one or two more general considerations. Who will benefit by this Budget I Will it be the tenant? He does not gain anything in consequence of the extra taxes which are put on the landlord. Will it be the consumer, in the case of the Licence Duty? Not he. He does not gain anything because the trade is taxed. Who, then, will it be? Do hon. Gentlemen opposite suggest that it is the old age pensioner? What is the use of a system which discourages thrift and diminishes employment. I am heartily in favour of old age pensions, but I do not believe in old age pensions which are non-contributory and in a system which leads to national bankruptcy. What we want is a fair and just system which is financially sound and which distinguishes between the deserving and the undeserving, and I cannot imagine a more crude piece of government than introducing old age pensions without having thought out how they are going to be financially safeguarded, and then complaining that if the Finance Bill were to be thrown out by one House or the other there will be financial chaos, and that the blame would rest with one House or the other. The blame rests with those who initiate a policy which leads to all this financial trouble. I therefore place the blame wholly on the Government. If we have introduced a system of this kind which is likely to lead to national pauperisation, I do not think any class will benefit. I am certain that by this Budget no class will benefit, and it is perfectly ludicrous to talk of it as a poor man's Budget. He will be taxed severely for the purposes of discouraging 1692 thrift and diminishing employment, and if he has not yet found it out I am quite certain he will very shortly find it out, and that the authors of this unwise and disastrous policy will rue the day when they introduced it. The proposals of this Budget, from their Socialistic tendency, and from the chances which they give to the hon. Member and his party, create a general feeling of insecurity to property on the part of everyone who has sixpence in his pocket, and that kind of feeling, once introduced, is not easily allayed, and I very much fear that when that kind of feeling is about it necessarily forces trade into other parts of the world to the detriment of this country. I cannot believe that any Government can undertake such a policy with their eyes fully open to the consequences. It is perfectly futile for the Chancellor of the Exchequer to defend this policy by the appeals of the demagogue. He tries to catch votes which, for the moment, may be deceived by his appeal to prejudice and his grossly unjust and un-statesmanlike appeals to divisions between class and class., and if these votes are temporarily misled, as I can hardly believe they will be, nothing can happen but disaster to the country and a species of revolution which none of us would like to contemplate.

I feel the more concerned with the whole changed aspect of politics in this matter because I do not think anyone would have said at the time of the last General Election that the Radical party intended to go in for a revolution such as we have in this Budget. If you look at their election addresses or at their election speeches, can anything be found to suggest that this revolutionary and Socialistic Budget was likely to be introduced. I looked up one of the Prime Minister's speeches during the General Election, and, in view of what he then said, it is quite inconceivable that he finds himself in the position in which he now is. On 25th January, 1906, the Prime Minister, speaking at East Fife, said:— Turning to his own Department, the Treasury, he pointed out that he could make no reduction in taxation until the national expenditure had been reduced to a proper level. It must necessarily take some time before they can make much way with it. It was, however, not only their intention, but their hope and expectation, in the course of no very long time that they should have brought this inflated expenditure down to a proper standard to relieve the enormous and wholly excessive burdens now pressing upon the nation. I wish the Prime Minister would contemplate these words and give effect to them. Talk of retrenchment! There is none. My right hon. Friend has shown that the 1693 permanent annual charges upon the country have increased by £14,000,000 or £15,000,000, and this has been done by the party led by the Prime Minister who used these words, and he has in no way attempted to justify them or to carry them out. To adopt a policy of that kind is necessarily to play into the hands of those who desire to nationalise property altogether. It is not a sufficient excuse to say that you wish to raise money, and that money must be found somehow.

Attention called to the fact that 40 Members were not present. House counted, and 40 Members were found present.

§ Mr. EVELYN CECIL (resuming)

I should like once more to say that if the House passes this Budget framed on these principles which open out the way to endless extension, and the extension of which we are promised partly by Members of the Government and still more by Members below the Gangway, I think it will only have itself to blame if it finds that the trade of the country, the security of property, and the employment of the people are all put in the greatest peril.

§ Sir DANIEL GODDARD

Hitherto I have been a silent supporter of this Bill, and I should like to take this opportunity of explaining the general reasons why I heartily and thoroughly support the measure. I wish to consider the Budget in itself, and in relation to its general effect. The question the country has to ask is: Is this Finance Bill a fair and right way of raising the revenue that is required? After all, that is the true object of the Finance Bill. Whatever else may be said, it is to raise revenue to meet the expenditure of the country—expenditure which has been declared by hon. Members opposite to be too small. There was one remark which fell from the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) which I would like to make the text on which to hang the few observations I have to make. He said:— Let the rich bear their share as the poor pay according to their means. That is exactly the point we want to arrive at, and I would ask the attention of the House to the proportions in which this Bill proposes to raise new revenue. It will be remembered that it was about £15,752,000 which was to be added to the revenue. The Bill proposed to raise that revenue by means of Customs and Excise to the amount of £6,700,000. These taxes included, of course, the taxes on petrol, 1694 motor cars, the increase in the Spirit Duties, Tobacco, and the increased Licence Duties. It was proposed to raise by direct methods £7,500,000 from Estate Duty, Stamps, Income Tax, and the Land Duty. The point I wish to draw attention to is the proportion which the direct taxes bear to the indirect taxes. Since the Budget was first brought before the House there have been considerable concessions made, but they do not materially alter the proportions between one class and the other class of taxation. It works out in this way: 47 per cent. of the increase is imposed by indirect methods and 53 per cent. is imposed directly. I would ask, Is that an unfair apportionment of the taxation? Can that in any way be said to be unduly hard upon the owners of wealth? Is not the scale still largely against the workers and the poor? We use roughly the expressions "direct taxation" and "indirect taxation," but these are not exact terms. It is not always easy to define when a tax is direct or indirect. For instance, take licences. A licence is imposed on a public-house. In the first instance it is a direct tax upon the owner of the house, who may be a brewer, but if he chooses to raise the price of his beer, it becomes an indirect tax upon the consumers of the article. I prefer to use the terms which have the sanction of a very great financial authority in days gone by—the late Sir Edward Hamilton. In the Local Taxation Report of 1899, when dealing with the taxation finance of 1895–l6 he came to the conclusion that the national revenue was raised by taxes incidental to property—37 per cent., and not incidental to property 63 per cent. That was his method of dividing taxation instead of using the term "direct" or "indirect," I think it is a much more accurate way of calculating in these matters.

6.0 P.M.

Taking Sir Edward Hamilton's methods of calculation, and applying them to the last financial year, 1908–9, I find that the national taxation works cut in this way: Taxes incidental to property 44 per cent., not incidental to property 56 per cent. I have also tried to work out the effect of the taxation imposed by this Finance Bill in the same way, and so far as I can make out it will mean that the taxation incidental to property will be 48 per cent., and not incidental to property 52 per cent. That means that under this much-abused Finance Bill the percentage of Imperial taxation is still less on property than on other commodities. Of course, that is not 1695 the whole case, because if the percentage were equal it would not in any sense ensure equality of sacrifice as between one taxpayer and another. That will be easily seen if you work out concrete cases. I would ask. How does taxation in the last financial year bear on different classes of the community? Take, for instance, a working man earning £1 a week. I take him as a man with a wife and three children—a family of five altogether. I take another man earning £500 a year, with the same family, and a third man earning £2,000 a year, also with the same family. I know that if I were to take extreme cases I would make the burden appear very much greater on the working man, but I wish to be fair in coming to a judgment in this matter, and therefore I have not taken the lowest type of wage-earner—I have taken a medium case. I have taken an ordinary working man who drinks beer moderately and smokes moderately. In order to arrive at the calculation I have used a return which was made in 1904 as to the cost of living of the working classes. I take the quantities which people are supposed to consume. On that basis the working man pays £5 10s. a year—that is about 2s. 1d. a week. The man with £500 a year pays £36, and the man with £2,000 a year pays £137. Of course, the conditions of life vary in different ranks. I have taken all the commodities which a working man consumes in calculating the taxation. I have taken in the case of the £500 a year man a sum which I have multiplied by three, and I have added Income Tax, House Duty, and Land Tax. In the case of the man with £2,000 a year I have multiplied the taxation by six, because probably he has a larger household to keep up. What does that really mean? It means that the working man I have been describing has to pay 11 per cent. of his income in taxation, that the man who has £500 a year has to pay 7 per cent. of his income in taxation, and that the man with £2,000 a year has to pay 6¼ per cent. of his income in taxation. I admit it is only a rough calculation, but I do not think it is an unfair one at all. It shows how much is still needed to make taxation conform to what I will call the cardinal principle of equality of burden. But that is not the worst of the case. Even if the percentages of taxation were equally high in each case, it would not be sufficient. You 1696 have also to ask yourself: What have they left after they paid the taxation? That is a very serious point of view. This working man who has to pay £5 10s. out of his income of £52 has only £46 10s. left out of which to pay his rent and buy food for his family and clothing, and pay club money and all the expenses of a household for a year. Such a man must constantly be surrounded by anxiety and faced with penury. Take now the man with £500 a year, and deduct the tax from his income, and he has £454 left, so that he is not a poor man with that. Take now the man, with £2,000 a year. After paying his taxes he would have £1,860 left. Even a uniform percentage would not bring us near to an equality of sacrifice as between the various classes. It is clear to everybody who looks at it from my point of view that it is fair and just that the man who has £2,000 a year ought to pay a much larger percentage of his income than the man who has only £1 a week. That is the reason I regard with satisfaction the gradual approach to a graduation of the Income Tax and the Super-tax. We have in this Finance Bill the virtue of graduation of the Income Tax and a real graduation of the Estate Duties and the Death Duties, and I say that these two are distinct steps towards a juster distribution of burdens upon the taxpayer. I recognise while this Bill has regard to proportion according to the taxpayer's means, it introduces another principle, and an important principle, which I personally welcome. Of course, I am referring to these duties on land values. I agree with what has already been said that these are not entirely novel taxes, because, of course, since Parliament decreed in 1833 that the old Land Tax should only be charged on land, and no longer on personalty, we have had the principles of these duties in operation. What we are doing is to enlarge it.

I heartily agree with these duties because, notwithstanding what has been said, I do regard land as in a special category of property. My hon. Friend the Member for Preston (Mr. Cox) may repeat as often as he likes that land is the same as every other kind of property for this purpose, but I do not believe that he will be able to convert the ordinary man outside to that opinion. Property in land is not the same as other kinds of property. Every man in every station of life must use land in some way or another. There is not an unlimited amount of land, and in that sense it is not subject to the law of 1697 supply and demand as other property is. I think, therefore, it is perfectly right that land should be made an especial contributor to the public revenue, and one of the reasons why I think so is that it involves a new valuation, which is a thing very much to be desired, and which I believe will be welcomed all over the country. However reluctant hon. Gentlemen opposite may be to have this valuation, there can be no question at all that the country at large will rejoice to know that such a valuation has at last been undertaken. Another reason why I support this Finance Bill is because it is a readjustment of the burden of taxation, and the necessity for this is all the greater on account of the extraordinary growth of national wealth. To completely establish estimates of national wealth at various periods is an exceedingly difficult thing to do, but we are not without some means of judging of the matter. We can take the sums that are assessed to Income Tax—I mean the sums that have passed under the review of the authorities—and we can take the capital sums on which Death Duties have been paid; and these two I consider are clear indications of the growth of wealth. With respect to these we have this remarkable fact, that for every pound of income which passed under the review of Somerset House in 1868 there is now passed under review £2 4s. That is an enormous growth. It is a growth equal to 120 per cent. in the 40 years. We have seen the fact that the capital—I am not speaking of the amount paid, but the capital on which the amount is paid—the capital paying Death Duty now is nearly 2½ times what it was in 1868. That shows an increase of 130 per cent.

I think those are very striking figures, and form an additional reason why the taxes that are being imposed in this Bill should be passed. Of course, I admit at once that during that period of time the incomes of workmen have increased. This is also a fact that I think is too often ignored by the advocates of Tariff Reform, who seem to think that all our affairs are on the down grade. But what will be evident is this, that while the incomes of workmen have increased, they have not increased in anything like proportion to the growth of national wealth, and I think that is another very good reason for supporting the Increment Value and the Reversion Duties and the Undeveloped Land Tax, and such new imposts as are put into this Bill. There is no doubt that a great deal of the surplus wealth of the country is to 1698 be found in the enhanced value of the soil and the site value of the land, and the policy of the Bill aims at making visible wealth contribute more largely to the revenue. I do not overlook the fact that this Bill has indirect benefits in addition to raising direct revenue. First it is a revenue Bill. There is the money required to meet the expenditure, and this is the Bill to provide the money; but beyond that we provide for pensions, we provide for defence, and we provide for the admission of people from the ranks of pauperism to the ranks of pensioners by enabling the administration to hold out hopes of organised Labour Exchanges, by the hope of assisted insurance for wounded workmen, and by giving hope of experimental development in agriculture and in forestry. I think that all these things open the way to social reconstruction and higher comfort, and will commend the Bill to the hearty support of all lovers of their poorer fellow men. The one question which has run through all the Debates on this Finance Bill is the question, Who shall pay? We who are supporters of the Bill and of the Government say that those who have should pay a larger share. Our opponents say, I think, in effect, though they do not say these actual words, "No, let the toilers pay."

§ Mr. CHAPLIN

Quite the contrary.

§ Sir DANIEL GODDARD

That is what the right hon. Gentleman says, but what is the alternative? The only alternaticve that has been suggested, so far as I can make out, is that of taxing imports. Everybody must know that the effect of taxing imports will be to place a greater burden on the poor and the working classes. That is really why I made that observation, and if it is not so, let the Opposition show us how to raise 14 millions in addition to the present indirect taxation of the country. Until that has been done this Finance Bill will command the support of this House and, I believe, of the country. This Bill, which is now before the country, has been framed, studied, and amended with marvellous patience and with great ability, and I am not speaking now merely of the uniform courtesy which my right hon. Friend the Chancellor of the Exchequer has shown in the conduct of this Bill, but I am speaking also of the criticism and the discussions which have arisen on it, and have been carried on from different parts of the House. It is a complete, convenient, coherent, and just plan of raising the revenue 1699 of the country. There is no rival. There is nothing else to compare it with. A mere promise to make the foreigner pay by means of import duties surely by this time is known to be a document of no value. This Bill is just and practicable. It is the only businesslike method of raising the revenue required that is before us. It will aid in bringing much that is desirable to the poorer classes of this community, and for these reasons I very heartily give my support to the third reading of the Bill.

§ Mr. REMNANT

I do not propose to side track into the question of Tariff Reform or any other of