I should like to ask as to the order of business.

I do not think there is any reason for departing from the general plan which I have laid down in regard to the course of business. According to that plan the House will first finish the Committee stage of the Finance Bill and then proceed with the Committee stage of the Education Bill. Tomorrow is allotted to Supply and Friday to private Members.

I wish to make a modification of the programme of business which I have sketched out. My right hon. friend the Chancellor of the Exchequer has pointed out to me that it would be better to dispose of the report stage of the Finance Bill as well as the Committee before we resume the Education Bill, which I hope will be taken on Monday.

in the Chair.

My hon. friend is raising a very large question on a small Amendment, for he is proposing practically to abolish the income tax. I am afraid I cannot agree to that, and I hope the Committee will pardon me if I decline to enter into that subject. The immediate effect of the Amendment would be, if adopted, that we should be deprived of 94 per cent. of the £38,000,000 we hope to get for income tax, and I feel sure my hon. friend does not seriously wish that. I have no doubt he has attained all he desires by taking this opportunity of calling attention to the question.

I understand that the hon. Member, who has made to the Committee a very interesting speech, desires rather to raise a question of principle by this Amendment than to make a proposal which could be embodied in legislation at the present time. With regard to the question of principle, I am afraid that we differ. The hon. Member desires to see the revenue of this country raised almost entirely, at any rates to a much larger extent than at present, by direct taxation; and be says he finds nothing sacred about the canon that the yield from direct and indirect taxation should be nearly equal. I have never put forward that proposition in any such light. I have pointed out that about two years ago the yield of the two was about equal, that at the present time the yield of direct taxation is larger in proportion than the yield of indirect taxation, and that that has been the tendency for many years past in the taxation of this I country. But I do not think I ever said that, in my opinion, it was a law of economics that the yield of the two should be precisely identical. With the merits of the proposal actually before the Committee I need not deal, because no doubt, owing to the difficulties of the position which any hon. Member occupies who desires to increase taxation, the hon. Gentleman has not been able to deal with the matter in a way the Committee could possibly adopt. The yield of the tax, if the hon. Member's proposal were adopted, would be much less than the yield of the additional penny which I have proposed to add. So large a proportion of incomes are taxed at their sources that no one can tell with any approach to accuracy how many persons there may be with incomes over £5,000 a year. But I doubt whether there are more than 10,000 persons in this country enjoying incomes above that limit; and therefore the yield of the hon. Member's proposal would be a comparatively small matter. I would point out that by the Amendment, as it is worded, persons who enjoy an income over £20,000 a year would not pay anything extra at all.

I ask to omit the words "up to £20,000." They were left in by error from a previous form of the Amendment.

The great difficulty in this matter is the practical difficulty. I do not at all object to the view that very wealthy persons should pay more taxation than those with small incomes; but you must be careful what you do, because if you generate a sense of unfairness in the mind of wealthy persons as to the taxation levied on them you will he subject to all kinds of evasions, and, therefore, defeated in your benevolent views. The principle of the income tax is the taxation of income at its source; and the proposal of the hon. Member would require that all persons with incomes above a certain limit, which he puts at £3,000, should be subject to a process of self-assessment by which they are to declare their total incomes. The hon. Member quoted the experience of the colony of Victoria. I do not think you can gather anything of value from a country of the size of the colony of Victoria. The persons there with incomes above £5,000 must be well known, as well as the nature of their investments. But in this country it is the habit of wealthy persons—and the wealthier the person the more confirmed the habit—to spread their investments over all kinds of securities. You can get at the income of the large landowner or the person who has all his eggs in one basket. He would be assessed to the fullest extent. But his neighbour, who had spread his investments over 100 or 1,000 securities, would not be caught at all. Who could possibly tell whether such a person made a proper return of his income? I believe it would be impossible for the officers of the Inland Revenue to find it out. You have to trust to the honour of men, and that is a, very grave temptation. In our system we already have self-assessment under Schedule D and if the hon. Member knew as much as I do about the inner working of Schedule D he would hesitate very much before desiring to extend it. We have had some experience in this country—though a long time ago—in this matter. The original income tax of 1799, invented by Mr. Pitt, was for four years levied by the process of self-assessment, and then was wisely altered to the present system. The result was that the yield under the new arrangement of 1s. income tax was the same as the yield of a 2s. tax under the process of self-assessment. If the hon. Member will look back to Mr. Gladstone's declarations on this matter he will find the strongest opinion expressed as to the danger of this principle of self-assessment. Mr. Gladstone objected to it because, as he said—

"It leads to grievous frauds on the revenue and renders the real inequality of the tax far greater than the many inequalities which strike the public eye, and mainly because of the tendency to immorality which is essentially inherent to the nature of the operation."

I remember a, case where a number of persons, assessed under Schedule D as traders, lived in a street which had to be pulled down. They claimed compensation for loss of business, and they put their profits at £48,000. The jury gave them £27,000; but they had returned their profits for income tax at £9,000. That is what self-assessment means. But it means more than that. I have had returns under my own eyes of persons of the highest standing in this country—some of them Members of this House—who would be quite incapable of any fraud in such a matter, and who by pure negligence or ignorance have returned their incomes at sums infinitely less than they were found to be when the matter was inquired into by the officers of Inland Revenue, and they were required to put it right. The present system is the fairest, best, and simplest ever invented for the income tax. If we are to tax in future years the wealthier classes of the community more heavily than they are taxed at present, we should seek to do it by some compensating tax rather than by interfering with the great principle on which the income tax is framed.

said that the right hon. Gentleman the Chancellor of the Exchequer had not spoken against the principle of graduated taxation, but of the practical difficulties in the way of giving effect to the suggestion that been made by the hon. Member. No doubt there were difficulties, and the right hon. Gentleman had a very high authority to shelter himself behind. There was Mr. Gladstone, and he was not sure that his right. hon. friend the Member for West Monmouthshire did not agree with Mr. Gladstone and the right hon. Gentleman the Chancellor of the Exchequer with regard to these difficulties. But unless those difficulties could be coped with in some way they would always have the income tax levied in a way different from all other taxes, the principle of which was the ability to bear the burden. A person with a large income could bear the tax more easily than a person with a small income taxed on the same proportion. When it was remembered that the principle of graduation was, to a certain extent, accepted with regard to income under Schedule D, it was difficult to take up such a non possumus attitude as that taken up by the right hon. Gentleman the Chancellor of the Exchequer. There was the example of the Colonies before us. He had always been assured that in the colonies they had had no difficulty in the working of a differential scheme. He admitted that it was a much easier and more simple matter to levy a tax in Victoria than in this country, where matters were more complicated, but of the two evils he would choose a differential scheme to the present system. He felt that our system of taxation was wholly unsatisfactory. Whether it was the levy of a new duty on corn or the arrangements under which they levied the income tax at every turn, one found the scheme of a very haphazard kind. Even the right hon. Gentleman would not commit himself to any principle as to how the difference between direct and indirect taxation was to be maintained. Having regard to the growing expenditure we had to face in future years—an expenditure which would probably increase rather than diminish—in years to come the Chancellor of the Exchequer would have to consider means of raising the revenue on a basis which was less felt, and which would least cripple those who had to pay. That involved the consideration of the whole of the taxation canons of this country the chief of which was "ability to bear." He had never believed himself that it was impossible, or that it passed wit of man to further the system of graduating the income tax inherent in the present system, and if the hon. Member went to a division he would vote with him in order to mark his sense of the unsatisfactory nature of the present system, and the desirability of putting that burden more on the right persons than it was now.

said that the hon. Gentleman opposite stated that the amount of taxation which an individual should bear was based upon his ability to pay the taxation. Would the hon. Gentleman say that the present method of assessing the income tax, which was the ad valorem method, did not represent the "ability to pay"? Would the hon. Gentleman, or the hon. Gentleman who initiated the discussion, or the greatest professors of finance opposite, say how they were to measure the ability to pay? It was no use arguing against the present method as being unsatisfactory unless it could be shown how another method could be substituted. What was an income tax or a contribution to the State in respect of income? It was a contribution the ability to pay which was measured by the amount of income. So far as that tax was concerned, he thought that was the right method to adopt, although he was not sure that it would be right to levy all the taxes of the country upon that system; but in the absence of any other means of measuring the ability to pay, the ad valorem method was the right one. It had been suggested with regard to the poorer classes that first of all should be deducted the amount necessary to keep a man alive, but that doctrine did not apply to the men with £5,000 and £10,000 a year, yet the hon. Member who suggested this differentiation suggested that the man with £5,000 a year was not able to pay as much by half as the man with £10,000. He could not agree with that view. He boldly said that of these two men one ought to pay double and no more than double what the other paid. They were both wealthy men, and if that was not the true test of the ability to pay what on earth was. He had never heard any answer yet to that question. But he would go further. In his opinion the whole system, scheme and principle of graduated taxation was wrong, mischievous, and calculated to diminish the returns of the tax in every case. It was fallacious, and it was not new. It was at least as old as Robin Hood, who took from the rich to give to the poor. He maintained that in all taxation, in all contributions to the State levied on the people by way of taxation, a man's ability to pay must always be measured by the amount of his means. This was a rough and ready method of measuring ability to pay; it might not be quite accurate, but roughly, it was just as between man and man. With regard to the practical difficulties, the hon. Gentleman who proposed this extraordinary change was no doubt aware that three-quarters of this duty was levied at the source of income, that was to say by deduction, and if this suggestion were accepted the whole of the income tax would be imperilled.

said there was no proposal to touch the present income tax, but only a proposal that some should pay more.

agreed, but pointed out that that principle involved that every man in future would have to make a declaration.

That is not the proposal.

pointed out that in the case of a man with an income of about £5,000 a year from investments, it was immaterial whether it was more or less than £5,000, because the tax was collected at the source. This proposal would require a declaration from everybody subject to the income tax, which would be most mischievous to the collection of that vast amount which was collected by deduction. There was no law at the present time which required a man to declare to a public official the amount of his income, unless he desired to avoid payment of the tax on the ground that his income came below a certain amount. The obligation to pay the tax, therefore, made it generally unnecessary. For a man to have to declare the exact amount of his income to a public official would be a most offensive thing. In Trance they were considering the advisability of imposing an income tax, and the objection which was raised to it was on this very ground. He had pointed out to one gentleman that there was no law of this kind in England, and he was told that if the English practice were adopted in France, half the objection to an income tax would be got rid of. In his opinion the graduation of the income tax had been overdone by the right hon. Gentleman the Member for West Monmouth in his Finance Act of 1894. He believed graduation was wrong, mischievous, and calculated to diminish the returns of every tax, and certainly it would do so in the case of the income tax.

said that no doubt every system of graduation must be to a certain extent a burden on some, but he believed the hon. Member who had just spoken was the only Member of the House who believed that in our taxation the principle of graduation should not apply to taxation both in regard to house duty, the death duties, and the income tax. The question of indirect taxation, as against direct taxation, did not arise in this discussion, because the point which was to be considered was the best way of getting the amount required from the income taxpayers. Although he believed it would be an advantage to graduate the income tax to a higher extent, he was one of those who believed it could not be graduated from the top to the bottom. He would rather sec a proper system of taxation from £700 a year upwards to the top of the scale, than the ingenious proposal of his hon. friend, because he did not see, if income tax was to be graduated, why people enjoying incomes between £700 and £3,000 should escape the principle of graduation altogether. The House had accepted the general principle of graduation of the income tax, and the whole point of the Chancellor of the Exchequer's speech had turned upon the practical difficulties in the way, but he did not think the right hon. Gentleman had conclusively shown that income tax could not be graduated to a greater extent than at present.

said he did not forget that there were some cases which showed that the mere number of sovereigns was not the only factor to be considered in considering what was to be paid. He would not produce such an illustration in face of hon. Gentlemen sitting opposite, who were apt to treat the position of landowners with an amount of flippancy. The illustration to which he wished particularly to call attention was the case of great corporations existing for charitable, philanthropic, or other semi-public purposes. Once they introduced graduation—though even in the case of some of them their income was in the aggregate very large—the only effect of their measure would be practically to penalise people of a very necessitous class, who were dependent on the operations of these corporations. That was a difficulty which must always be kept in view, and was one which, in his opinion, must always stand in the way of this proposal.

expressed his astonishment at the astounding misstatement made by the hon. Member for King's Lynn that, at the present moment, no member of the community was required to declare his income. Surely the hon. Member must know that, with regard to tens of thousands of people, declaration was absolutely compulsory. The income tax collectors habitually required tens of thousands of persons who had no investments, professional men and others, to declare the whole of their income. Nor was it more difficult to put upon proof the man who enjoyed his income from investments, than the business or professional man who had no investments. Professional men and traders were required to declare their incomes, and, when they made a return to the surveyor of taxes if that gentleman was not satisfied, it was not accepted. He knew many cases in Ireland where the income tax had been doubled, trebled, and quadrupled by the surveyor. The fact of a man considering that his social position required him to keep up a certain amount of state or establishment at his country place could not be accepted as a reason why he should be let off his "fair contribution" to the Exchequer. Eloquent speeches had been made on the theme of broadening the basis of taxation, but it seemed to him that the expression was a euphemism for diving into the miserable resources of the poor in order to meet the enormously increased expenditure of the country. The time would come—and was, he believed, near—when there would be a reaction on this question. When the people understood the true meaning of "broadening the basis of taxation" they would seek to secure that broadening where it could really be effected, viz., on the rich classes of the country. They would want to know on what ground the proposal of a graduated income tax was resisted, while the food of the poor was taxed, and there would be no answer that could be given. This question would come up on the Budget every year, until the people thoroughly understood that all the talk about the impossibility or difficulty of such a system was the merest moonshine, pretext, and humbug, for the purpose of protecting the possessors of large incomes. He should support the Amendment, not because he thought it went nearly far enough, but because it affirmed a good principle. The number of large incomes had been enormously increased by the facilities for watering capital, and the levying of extra tolls on the labour of the country afforded by the extention of the system of limited liability companies, and the people who enjoyed those benefits to the extent of £5,000 and upwards a year ought to pay an additional contribution to the expenses of the country, especially as they were the class who were mainly responsible for the increase of the expenditure.

said the hon. Member was hardly correct in saying that people had to make a return of their full incomes. Incidentally, no doubt, if a man had only one source of income the return was a return of his whole income, but the essence of the present proposal was to make it compulsory for persons to give a return as a return of their whole incomes. That was a thing which it was practically impossible to obtain; the evasions would be great, and the result very unsatisfactory. The system on which the income tax was assessed or arranged was certainly not an ideal one. Many alterations required to be made, particularly in regard to the mode of assessment and the system of appeal. But the proposal now made would not do. In his judgment the man who made a large fortune was the least taxed man in the country. During his life he paid a relatively small amount, and before the death duties were enlarged he (the hon. Member) had always advocated some adjustment in that matter. The death duties, however, had largely altered the position of affairs. Suppose a man made £1,000,000. During his lifetime, as compared with smaller men, he paid comparatively little. There was an advantage in that, because it was desirable, both for the welfare of the community and in the interest of the State, that people should not be overburdened with taxation when endeavouring to be successful, because the success of the individual meant the success of the nation. But when such a man left this world, his successors were dealt with by the Chancellor of the Exchequer in a very different manner. If the son succeeded to the £1,000,000, £80,000 had to be paid in death duties. That meant that in addition to the 1s. 3d. or whatever the income tax might be, he was really paying the amount that that £80,000 would produce to him as an annuity. Then, in turn, the grandson on succeeding to the balance of £920,000, would pay another £75,000, and so it would go on. In each generation the Chancellor of the Exchequer would take from that £1,000,000 an amount, which if capitalised, would represent a very handsome sum of additional income tax. He had always approved the principle of the death duties, although he had criticised the way in which it was carried out. The death duties formed practically a large addition to the income tax of persons such as those he had referred to, but he was not prepared to say that all had been done that might be in that respect. That, however, was quite another question. The system of a graduated income tax appeared to him to open the door to the greatest amount of what the Chancellor of the Exchequer had called immorality; it would be impossible to get a fair statement, and when a statement had been obtained, it could not be checked. Everybody would be required to give what was practically a certificate of his income, and that he would look upon as a great evil. In view of the system of death duties, any system of graduated income tax would be unfair at present, and unless the whole questions of death duties and income tax were taken together such a plan as was proposed would inflict serious injury.

thought that the hon. Member for North Islington supported the graduation of the death duties in a very peculiar manner. It was easy to riddle with criticism the plan proposed by his hon. friend, but a principle was involved which all on that side of the House ought to support. The Chancellor of the Exchequer sheltered himself rather too much behind Mr. Gladstone and his celebrated speech on the income tax in 1853. The whole proposal of Mr. Gladstone in that speech was based on the fact that he hoped the tax would be of a temporary character. It was now not only a permanent tax, but a very heavy one. The right hon. Gentleman had not attempted to deal with the fact that the principle was in force in Prussia. It was not necessary to refer to Victoria. In Prussia, naturally the conditions were more nearly allied to this country, and if this could be done in Prussia surely they might consider whether the same principle could not be put in force in this country. He felt very strongly for the class who had to earn their incomes as compared with those who inherited incomes. The professional man had many hardships to bear and he had to pay enormous rates for life insurance, but in the case of a man with an inherited income the payments devolved upon his heirs. He hoped the Chancellor of the Exchequer would give these people some relief. It was ridiculous to argue that a man with a large income could not pay easier than a man with a small one. With the income tax at 1s. 3d. in the £, a man with an income of £800 would pay £50 a year, and would have £750 left; and a man with £8,000 a year, would pay £500 and would have £7,500 left. Surely the latter could bear additional taxation better than the former. He agreed with the Chancellor of the Exchequer and the right hon. Gentleman the Member for West Monmouthshire that the difficulties were very great. They had been told by the Leader of the House that it was the policy of the Government which had led to this great expenditure, and that if they wanted a reduction in taxation they must have a change in the policy of the Government. He thought there ought to be some compensatory tax placed upon those who were taxed in 1896 by his right hon. friend the Member for West Monmouthshire. He thought that if Mr. Gladstone could be the Chancellor of the Exchequer now he would find some method of either reducing the expenditure or of raising taxation more justly than was the case at the present time. He suggested that the Chancellor of the Exchequer should follow Mr. Gladstone's example and resolutely cut down the Estimates and attempt to reduce taxation in the direction of increased economy rather than increased expenditure. There was a principle involved in the Amendment which he should support, although the proposal might not be faultless in regard to details.

said the conclusion at which two millionaires once arrived as to the minimum sum required for a man to have his town house and his country house, his yacht and his opera box, was £40,000 a year. He drew from that the deduction that if it were right that an income of £5,000 a year should not pay more pro rata than an income of £500 a year, then the graduation ought not to begin until the minimum sum of £40,000 a year had been exceeded by the individual. It had been complained about on the other side that the fair basis for taxation should be the margin of income after the proper minimum of expenditure had been undertaken. He represented in that House something like 12,000 heads of families, at least 11,000 of whom had incomes which either fell below the limit of abatement or below the taxable limit of income altogether, and he said on behalf of those people, that if the Government were going to widen the basis of taxation with regard to indirect taxation and caused them to pay more on the commodities they consumed they must in fairness and justice widen the basis of direct taxation also and do something to make superfluities pay more in the same ratio as essentialities. This principle of graduated income tax was not only sound, just, and fair, but practicable. If the Chancellor of the Exchequer would take the matter up in a practicable spirit with the desire to discover a method, a method could be found. A method had been found in the fiscal policy of other countries, and in giving the Amendment his hearty adhesion, he expressed hope that the Chancellor of the Exchequer would be able to give his attention to it in the coining year.

I wish to say a very few words upon this Amendment. I intend to vote for this proposal, not because I think that £5,000 is the limit which we ought to take, but because it establishes a principle of which I approve. I think it is time for us to look out to see whether the wealthier Members of the community are paying anything like their fair share of taxation. The hon. Member for North Islington acknowledged, with perfect frankness, that the richer parts of the community did not bear their proper proportion of taxation.

I said that they paid a lighter share than others.

The hon. Member admits then that they pay a lighter share?

What I said was that a man who made a large fortune paid less in proportion than others.

It is the opinion of a good many of us, that the richer part of the community do not pay as much in comparison as the poorer parts. I will not now enter upon the question whether that difference has been equalised by the death duties. Up to a very large sum of money the death duties are not greater than the probate duty was before. The only objection I have heard which operated on my mind has been the practical objection that it is necessary to assess the whole income. The difficulty is that you will require to know that totality of each person, because it is in reference to that, that the tax will have to be imposed. I do not want to undervalue the importance of this difficulty, but I know that it has been suggested in many quarters that the difficulty can be got over. I believe that it has been got over in other countries, and I think we ought to have an inquiry for the purpose of seeing whether we can or can not overcome this difficulty. The Chancellor of the Exchequer has appointed at different times small Departmental Committees for dealing with points connected with revenue, and his predecessors have appointed Royal Commissions and Committees of this House for like purposes. I do not think that it is satisfactory for this matter to remain as it is without the Committee of the House being really satisfied that this is an insuperable difficulty. It is far too protracted a matter to enter upon now, but, speaking for myself alone, I do; think that the Chancellor of the Exchequer ought to say that he will take steps for the purpose of investigating, or get some competent persons to investigate this question, whether in the form of a Committee of the House or a Departmental Committee. We should not be content to sit down with our hands folded under a system which surely is not just between the various classes of income tax payers.

I think that there is a great deal in what the hon. Gentleman has said. I am not satisfied with the present system. I am not satisfied in regard to the matter dealt with in the next Amendment on the Paper as to the present abatements of income tax. I think there is a good deal to be said in favour of graduation, but there is also a good deal to be said against it. With regard to the particular point of this Amendment, I will certainly consider the suggestion which has been made—I cannot go further than that today—and see whether it is possible to carry out the suggestion.

said that in view of the promise made by the right hon. Gentleman he would ask leave to withdraw the Amendment.

The hon. Member must not suppose that I make any promise. If he wishes to take the opinion of the House he should not withdraw the Amendment.

said he would not press the Amendment.

said the Amendment he had on the Paper dealing with the questions of exemption and abatement was one with which he should be reluctant to deal at any length in view of the statement made by the Chancellor of the Exchequer on the previous Amendment, but he should like to receive from the right hon. Gentleman an assurance that the matters referred to in the Amendment would be dealt with either on the report stage of the Finance Bill, or in the course of the year, when the question of graduation was being considered. He would formally move the Amendment in order to afford the right hon. Gentleman an opportunity of giving the assurance asked. He moved.

There are two points in the hon. Member's proposal. One is the exemption of everybody from income tax whose income is under £200. That does not seem to me to be a matter for inquiry at all. The other point has reference to the graduation of the abatements. That is a matter which, as the hon. Member has already said, forms part of the question we have just discussed, because in any inquiry into the possibility of making persons with larger incomes pay more income tax there must also be included the possibility of relieving those with the smaller incomes from a certain amount of the tax. Whatever I may be able to do with regard to the suggestion of the hon. Member for Dumfries will include that part of the hon. Member's Amendment which relates to abatements.

said that he was afraid he must proceed with the Amendment in view of the answer of the right hon. Gentleman. He understood that the right hon. Gentleman was not prepared to deal with the question on its merits in the present year, or to give any guarantee that it would receive attention before next year's Budget was presented. He thought it was only right that the case of the small income tax payers should now be placed before the Committee. It seemed to him that their case at present was an extremely hard one. Financial authorities on both sides of the House had repeatedly admitted the reasonableness of the principle upon which the Amendment before the Committee was based. The right hon. Member for West Monmouthshire had extended the exemptions in 1894, and had had hardly credit enough for the relief he then gave to this class. He then said—

"I have always felt, and it is a universal sentiment, that if the income tax is to be maintained at a high figure—and the present rate of expenditure holds out little hope of reduction—we should make some attempt to adjust its pressure so as to make it less intolerable to those least able to bear it. Everybody must agree that the pressure is most severe upon those of very moderate incomes."

In 1894 the income tax stood at only 7d., and his right hon. friend, in imposing an additional penny, gave back out of its proceeds of £2,000,000, no less than £840,000 to the smaller taxpayers. In 1898 the Chancellor of the Exchequer had further endorsed this principle, and given £100,000 more in exemptions. Now they had an income tax of 1s. 3d. There appeared to be every likelihood of the income tax remaining at the increased figure for a long time, so that the present was a suitable occasion for considering the incidence of the tax, with the view to its being equitably adjusted. From the discussions which had taken place during the last two days, it was clear that it would be perfectly easy for the right hon. Gentleman to dispense with the increase of the income tax on the present year. His main reason for not dispensing with the income tax was that he had been pressed in influential quarters not to withdraw the indirect taxation with which he had accompanied the imposition of the extra penny on the income tax. He would not urge the right hon. Gentleman to withdraw that extra penny—it would be a monstrous proposition—unless he accompanied that by the withdrawal of the corn duty which was decided upon yesterday. The hon. Member had no special regard for the large income tax payers who were called upon to pay the extra penny, but he contended that in regard to the lower middle class—shopkeepers, farmers, and others whose incomes ranged from £160 to £1,000—their position at present was extremely hard. These were not people who had profited by the war. The people whose incomes had increased were the large contractors who had received enormous profits, the shareholders of firms like Kynochs, who had doubled their dividends, and the great speculators who had made millions out of the misery of the South African war. They were the persons who ought to be called upon to contribute most largely to meet the enormous increase in the ordinary expenditure of the country, the cost of armaments, and the expenses of the war. It had often been said by his right hon. friend the Member for Montrose that we ought to make people feel the responsibility of encouraging war by giving the tax collector freer access to their pockets. He absolutely disclaimed any adhesion to that principle. He did not care a straw what men's opinions were. It was simply a question of the just incidence of taxation, and equality of sacrifice on the part of every individual in the community. There were a great many women of small means who found it difficult to make ends meet, and they were called upon to pay this increased income tax although they had no responsibility for the war at all. He held that the present Budget was unfair. During the past two or three years the Chancellor of the Exchequer had endowed himself with vast margins of money each year, ranging from £10,000,000 to £20,000,000, for which no ostensible purpose was assigned in the first instance. He had now £40,000,000, which had been assigned for war purposes, set free by the conclusion of the war. It seemed, therefore, that an equitable reduction of the income tax might now be made. The policy the right hon. Gentleman had adopted was both shortsighted and unjust. The right hon. Gentleman was not to assume that the proposal he now made came from any Party source. The Standard, one of the most eminent and staunchest supporters of His Majesty's Government, printed an article the previous day, in which it said—

"The burden, which might easily have been lifted from the shoulders of the great middle class, has been deliberately and needlessly kept on their backs, and this in defiance of equity and a tacit understanding. This policy has aroused more exasperation among the persons affected by it than, perhaps, the Chancellor of the Exchequer and his colleagues realise. If they could see a tithe of the letters which pour into our office, they would perceive how deeply middle-class Conservatives have been moved by what they naturally regard as gross and heartless neglect of their interests. The great community which pay income tax—and more especially the vast multitude of persons of moderate means, on whom this unpopular impost presses with the utmost severity—are growing tired of the continued indifference with which they are treated by the Party chiefs."

And the article goes on to say:—

"They are not at all inclined to submit patiently to being squeezed and mulcted beyond their due, when the emergency has passed. So strong is this legitimate resentment, that the Government are fortunate in not being compelled at the present moment to appeal to the constituencies."

That might appear to be a mere quarrel between the right hon. Gentleman and the particular friends of the Government in the Press, but he thought that it showed conclusively that there was a just case for the alleviation of the pressure of the income tax at the present moment on persons with incomes of £200 to £1,000.

thought that his friend was a little unreasonable after the attitude taken up by the right hon. Gentleman the Chancellor of the Exchequer, who had promised to appoint a Committee of experts on the question raised by the hon. Gentleman's Amendment, He was in entire sympathy, however, with all his hon. friend had said in regard to the poorer class of taxpayers, who, as Mr. Gladstone had said, practically paid income tax on the whole of their incomes, while the rich did not do so to the same extent. He could not agree with the first part of the Amendment extending the exemptions from £160 to £200. If they had a great tax of this sort, it ought to rest on a very substantial basis. Having regard to the very fair way in which the Chancellor of the Exchequer had met them in this matter, he trusted that his hon. friend would not press his Amendment to a division.

said he very much agreed with what the hon. Member for Poplar had said as to the action of the hon. Member for East Northamptonshire. He could not help thinking that he had got his speech ready and would not waste a chance of delivering it, and that he was anxious, more especially, to show his agreement for once with the Standard newspaper. He desired it should be perfectly clear that he was under no pledge with regard to the acceptance of the principle either of a graduated income tax or of an extension of abatements. The hon. and learned Member for Dumfries referred to what he and others had said as to the practical difficulties—he might use even a stronger word—of a graduated income tax, and asked if some inquiry might not be instituted into the matter. That seemed to him a suggestion very well worthy of consideration, and he promised to give it that consideration. As the effect of any such graduation would be to increase the burdens on the higher taxpayers, and therefore to relieve the lower taxpayers, the principle of the hon. Member's proposal must also come within the scope of any inquiry that might be instituted into the subject. He hoped, therefore, the debate might not be further prolonged.

said he did not want the Chancellor of the Exchequer to rest for a moment under the delusion that some hon. Members would listen for a moment to any proposal which would throw a heavier burden on the wealthier classes in order to grant exemptions to persons having an income of from £300 to £500 or £600 a year What the additional taxation of the wealthy was wanted for was the relief of the poorer class of taxpayers.

said that on the understanding that the Chancellor of the Exchequer was preparing to institute an inquiry very shortly into the whole subject of exemptions, he would withdraw his Amendment.

said he had nothing to add to what had already been said.

said that the Committee had been engaged for two hours in discussing a graduated income tax. He had a proposal for a graduated income tax, which had the merit of being practical and equitable, and he hoped the Committee would support it. His proposal was a graduation between the income tax levied in Great Britain and in Ireland. He maintained that it would be quite easy to levy a heavier tax in Great Britain than in Ireland. He would even go the length of saying that the income tax in Ireland should not be more than 6d. He contended that to levy an income tax in Ireland was altogether inconsistent with the preamble of the Bill. That preamble set forth—

"We, your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Ireland, in Parliament assembled, towards raising the necessary supplies to defray your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto your Majesty the duties hereinafter mentioned."

Now, the people of Ireland have never freely and voluntarily resolved to grant an income tax which pressed in a particularly burdensome manner on a large number of the poorer classes in Ireland. He had no sympathy whatever with those who thought to lessen the burden of the income tax on persons who ought to pay it. If he had the honour of a seat in an Irish Parliament he would be in favour of the principle of an income tax, but it would be a tax levied for the good of Ireland and for the development of Irish resources. At present the income tax was levied in Ireland from people who had no part whatever in the expenditure of it. The income tax was first imposed as a war tax in Great Britain in 1793, and was repealed in 1816. It was renewed in 1842 by Sir Robert Peel—first, because he had to meet a deficit, and secondly, to enable him to make certain fiscal reforms for the benefit of the manufacturing interests of the country. In 1845 the tax was again renewed by him. On neither occasion was the tax extended to Ireland, the ground stated being—

"That it had never been imposed on Ireland, even during the pressure of European wars, and that as Great Britain would derive the greater advantage of the fiscal changes which were then made, it was but fair that they should bear the tax that was imposed to enable these changes to be made."

In 1853, Mr. Gladstone, being Chancellor of the Exchequer, decided still further to relieve the burdens on manufactures and on articles of consumption, and for the purpose of effecting these objects he proposed in his Budget to extend the income tax to Ireland for a limited number of years, and to equalise the spirit duties. Now it was 1853 that the financial grievances of Ireland began. The income tax was to be extended to Ireland only for a limited number of years, but it had been imposed ever since. A set-off was given by wiping out a capital debt of £4,000,000, which had been contracted mainly for the relief of the poor during the great famine of 1847–8–9. That £4,000,000 was wiped off, and beyond that Ireland had paid £30,000,000. Therefore, the Committee would not be surprised if on every occasion when it could be raised, this question was raised by Irish Members, and it was pointed out how Ireland had been defrauded during all these years of over £25,000,000. He claimed that Ireland was entitled to an exemption of this tax altogether, and she was certainly entitled to have a lower tax. If the principle of graduation was to be enforced at all, this was the opportunity to take of putting it into operation as between, not individuals, but two countries so differently circumstanced. It should be remembered that in Ireland income tax was paid in the large majority of cases by the possessors of small incomes. They were the people hardest hit. He had no objection to income tax, as a tax; he thought it was the most beneficent tax of modern times; but, while he held that opinion, he held that the position of Ireland was totally different to the position of this country. In the first place this was a war tax, and Ireland should not be called upon to contribute to the cost of a war of which she did not approve, and in the second place the continuance of the policy of levying income tax on Ireland was a direct violation of the promises of Sir Robert Peel and Mr. Gladstone. If this was a tax being voted by an Irish Parliament for the development of Irish resources it would he a very different matter. In that case he would be in favour of a fairly strong income tax. As it was, he hoped that this Amendment would be accepted by the right hon. Gentleman, and that he would reduce the sum of income tax in Ireland from 1s. 3d. to 1s. in the £.

said the hon. Member not only objected to the income tax now to be levied in Ireland, but also asked that the tax leviable by the Finance Act of the previous year should be reduced by 2d. Of course he was well aware that Irish Members had consistently objected to war taxation, but he could not see that disapproval of one form of expenditure justified this claim for exemption. But the whole speech of the hon. Member led up to topics that were now excluded from debate, and from the very nature of the case this was so. It could not be argued against this tax, as had been argued against the tea and other duties, that it was levied upon the poorest part of the population; and he could not see why shareholders in Guinness's brewery, Harland's shipbuilding works, or in Irish railways should not be taxed on their dividends equally with the same class of taxpayers in England. But arguments upon these matters must be postponed until the financial relations of the two countries were under discussion.

said he had no desire to put forward the doctrine that the rich men in Ireland should be exempt from the tax any more than the rich people of England. He had always taken the view that this was a tax in which no Customs difficulties were involved, and, therefore, could be dealt with more easily than other taxes. If it was being raised for the development of Irish resource, as he had said before, he should have no objection to it. He begged leave to withdraw his Amendment.

said that, in the course of his remarks, his right hon. friend the Chancellor of the Exchequer had raised a very important question. The remark to which he referred was the reference to a graduated income tax, a principle which no Chancellor of the Exchequer had ever listened to or encouraged, and he hoped his right hon. friend would make it clear that no such suggestion could have any kind of claim to his support or authority. He was quite aware that the remarks of his right hon. friend were made in connection with a proposal for dealing with the question of abatement, and he hoped he would take the opportunity to explain that in connection with any inquiry he might institute into the incidence of the income tax, he in no way committed himself to tampering with that dangerous doctrine of a graduated tax, which had always been repudiated by the Conservative Party. The rigid hon. Gentleman might also make clear the principle he had in mind, in his references to direct and indirect taxation, and the supposed necessity for keeping an equal proportion of amount in these sources of revenue. That was a principle which many had, in the course of the debate, carried far beyond what was probably intended by the remarks of his right hon. friend. The income tax payer was relatively a very large contributor to all indirect taxation, and there were some forms of indirect taxation that fell entirely upon income tax payers, for instance, the wine duties; and to say that an increase in the wine duties should be accompanied by an addition to the income tax was unfair, and an absurdity. Even the Cobden Club recognised the necessity of remedying the intolerable position into which we were drifting—a position in which the tune was called by those who did not help to pay the piper, and he held in his hand a memorandum signed by the Committee advocating the abolition of all exemptions upon incomes exceeding £100 per annum, so as to ensure a fair distribution of the tax amongst all classes. The Chancellor of the Exchequer should listen to the warning of the Cobden Club rather than encourage an inquiry into the means of concentrating the weight of taxation more and more on a few shoulders, which was universally admitted to be contrary to public policy.

said that this tax should not be allowed to pass without a word on the present occasion. We had come to the end of the war, peace had been restored, and in consequence the Chancellor of the Exchequer had been released from a great many of his burdens, but instead of taking a penny off taxation he inaugurated the peace by placing a new and heavy burden on the country. When they discussed this question before, they had not the advantage of having the figures before them, but now they had all the facts in a Paper recently issued. That Paper showed that after providing for the restoration of the Sinking Fund, the interest on the new Debt, the grant for South Africa and to the West Indies—after providing for every thing required, the Chancellor of the Exchequer had in hand a surplus of nearly £6,000,000. Put the Paper did not go to the bottom of the situation, and he wished the Chancellor of the Exchequer would deal with the Committee a little more kindly in this matter. There was a surplus of £4,029,000, from the loan of the previous year which was not mentioned. If the two surpluses were added together that made a surplus of nearly £10,000,000. It was therefore an extraordinary state of things, that instead of taking off taxation, the right hon. Gentleman should have imposed new taxation. He pressed the Chancellor of the Exchequer to explain to the Committee what was to become of the surplus of the loan of last year. The right hon. Gentleman had stated in reply to a Question that £2,500,000 of it had been used for Exchequer balances but even then there remained a balance of £1,500,000 that should be added to the present surplus, so that the surplus would amount to £7,500,000. They had no right to build up such surpluses as these at a time when the burden of taxation was so heavy on the people. They must remember that rates were also growing, and they also had to be met by the same people who paid the taxes. He felt he was in some difficulty with regard to this matter, because the corn tax, which ought to have been got rid of, had been carried by the Committee and relief had been refused with regard to the tea duty. This was the third increase in direct taxation. The House was generally in favour of direct taxation, but he was not always in favour of it. He was not in favour of increasing taxation unnecessarily, and at the present time the income tax pressed just as heavily on the trade and commerce of the country. Ireland had been mentioned in regard to the proposal that a different income tax should be levied upon her. He would like to point out that while ten years ago the income tax levied in Ireland amounted to £550,000, this year the amount was £1,100,000. In ten years it had been doubled. He would not discuss the matter further, but merely point out that the increase of income tax had fallen with exceeding weight on Ireland. It had been more than doubled since the Chancellor of the Exchequer entered office, and at a moment when some relief might have been expected, it was being still further increased. In what position would the country be a year hence? The heavy charges in connection with the termination of the war would have been disposed of, and there would be a revenue of £22,000,000 above the normal expenditure. If the Government were left in possession of that revenue, they and their supporters would not fail to discover some means of increasing the already extravagant expenditure of the country, and the House ought to pause before they allowed that revenue to remain without some good reason being given. The moment was an extraordinary one at which to increase the tax, and he should certainly refrain from supporting the Clause.

said he had nothing to add to his previous statement, except that the hon. Member was entirely mistaken as to the amount of the balance of the loan.

rose to move a new Clause reducing the coal duty from one shilling to a penny. He reminded the Committee that when the export duty on coal was proposed strong objection was taken to it on the ground that it was a reversal of the established fiscal policy of the country, and that in many markets it would prove to be a bounty of 1s. per ton in favour of the foreign producer. Last year there might have been something to be said for the tax as a temporary impost in the financial emergency arising out of the war, but now, with a peace Budget and a surplus, according to the Chancellor of the Exchequer's own figures, of £6,000,000, the time had surely come when this exceptional tax, placed upon one and only one great industry, might reasonably be discontinued. Why should the tax be imposed on coal only? There were other great industries—such as the armament manufacturing industry and others—which had made huge profits out of the war, and it seemed to be contrary to the true principle of taxation, viz., that every man should be taxed according to his ability to pay, that this special impost should be placed on coal, while these other great and profitable industries went absolutely free of any such special tax. The Chancellor of the Exchequer in his Budget speech had declared that there was nothing in the experience of the year to justify the prophecies of evil made on the imposition of the tax. He, therefore, desired briefly to state how the tax had operated in Yorkshire, Durham, and Northumberland. Before the export duty was proposed, the British coal producer was handicapped in securing trade in foreign countries by considerable import duties, amounting to 11¾d. in France, 1s. 11¾d. in Russian northern ports, 2s. in Spain, 1s. in Denmark, and 1s. 6¾d. in Portugal. When, in addition to these, a 1s. export duty had to be borne, the working of the coal trade was seriously affected. Eighteen months ago coal prices were shillings per ton higher than at present and the conditions of the trade had materially altered. In times of high prices the coal owner could bear the 1s. duty; it simply meant 1s. less profit; but when prices had fallen to the extent, for instance, of from 16s. to 9s. for best steam coal, and from 23s. 6d. to 9s. or 10s. for coke, the position was altogether different. Had the prophecy of the Chancellor of the Exchequer that the foreign buyer would have to pay the duty been borne out by the fact? During the inflation of the coal trade, Belgium, Germany, and France used every effort to increase their output of coal; they succeeded, and today Germany especially was a more effective competitor with Great Britain in the European markets than ever before. The Westphalian Syndicate was artificially restricting its output by 20 per cent., and the price to be obtained for English coal in the market, say of Hamburg, was absolutely fixed by the price which the Westphalian Syndicate would accept for its coal. Therefore, the price the British producer was able to get in the markets where German, French, or Belgium coal entered into competition was the relative value the buyer attached to English as compared with foreign coal. But from that price had to be deducted the freight and the export duty, the balance being the price at the pit's mouth. If the duty were now repealed it would mean that the British producer would get 1s. more at the pit's mouth. It could not be said that Yorkshire, Durham, and Northumberland had a monopoly. They knew that within the last two or three years German coke had secured five-sixths of the trade of the Baltic ports and had ousted English coal. By the completion of the canal to Hamburg, along which Westphalian coal could be sent at a very low cost, competition in the Hamburg market was keener than ever it had been before. About a fortnight ago the Belgian coalowners reduced their coal at one stroke by three francs per ton. With regard to railway rates, they had been told by the Chancellor of the Exchequer that 50 per cent. less was charged by the English railway companies for the transport of coal for shipment than was charged for transporting it for manufacturing purposes. The right hon. Gentleman must have been misinformed, because, with the exception of small manufacturers consuming only occasional trucks of coals, which cost railway companies much more to handle and ought to be charged higher, all the large manufacturers, whether in the iron, steel, or chemical trade, had their coal carried at precisely the same rate as the railway companies carried coal for shipment. The Chancellor of the Exchequer pointed out in his Budget speech that the exports of coal were higher by 300,000 tons in the first three months of this year than last year. That was perfectly true taking the exports as a whole, but the exports fell in 1901 as compared with 1900 by 2,200,000 tons. One extraordinary feature was that this fall in the exports of coal was almost entirely in connection with four foreign countries. Though there had been increased exports from South Wales, yet the exports to Germany, Holland, Belgium, and France, mainly supplied by Yorkshire, Durham, and Northumberland, actually went down over 2,000,000 tons in 1901 as compared with 1900.

1901 is not the present year.

said that the exports of coal from the north-eastern ports during the first three months of this year had gone down by 100,000 tons as compared with the first three months of last year. He was trying to show that as far as Yorkshire, Durham, and Northumberland were concerned a real injury had been done to the coal trade by this tax. Referring to a colliery in his own constituency which exported five-sixths of its produce, he said that since the imposition of this tax its exports to Hamburg had fallen from the rate of 70,000 tons a year to 35,000 tons a year, its exports to Holland from 15,000 tons to nothing, and its exports to Belgium from 120,000 tons to 50,000 tons. The price realised, after deducting the freight and the shilling duty, did not leave a farthing profit on the coal produced at that colliery, and if there were a further fall in the value of coal it would be necessary that the colliery should be stopped, which would throw 1,000 miners out of employment. Those miners were now only working three days per week instead of six, and at the same time they had had the bread tax put upon themselves and their families. The difference in the cost of production at this colliery, working three days instead of six, was no less than 9d. per ton. The reason why their exports had kept up was because the demand for coal at home had fallen off, but in order to have the cheapest production of coal, it was necessary to have a full output, and though they had had to accept prices that would not pay in many cases it was better to do that rather than work the collieries short time. This tax, so far as the counties which he had mentioned were concerned, was paid not by the foreign consumer, but by the coal owner and the coal miner. Within a very short time the wages of miners had been reduced 17½ per cent., and at the present moment negotiations were going on in the Midlands to reduce miners' wages by 10 per cent. The Committee was warned last year that it was the coal owner who would have to pay this duty, and that a considerable proportion of it would ultimately have to come out of the miners' wages, and this had already happened. The reductions in wages in his own district had been rendered necessary by this export duty, which prevented coal owners getting an extra 1s. per ton at the pit's mouth. As trade declined and as prices fell, the injury to the coal industry, especially in the North of England, by reason of this export duty would be greatly increased, and the tax would become more and more unjust. Another reason why this tax ought to be repealed was that it was most unfair in its incidence. If the tax was applied to the whole of the coal trade of the United Kingdom, and if, instead of 1s. per ton on exported coal, the Chancellor of the Exchequer had charged 2d. per ton upon the whole coal of the United Kingdom, if he had put one-half of that 2d. upon the royalty owner and the other half upon the colliery owner, he did not think there would have been the same outcry against the tax. Another injustice was that this was not an ad valorem tax. Some collieries could put their coal on board at a cost 1 of 6d. per ton, whilst in other cases it would cost 2s. or 3s. per ton. Therefore, if the right hon. Gentleman wished to impose an equitable tax, it should be put on the coal at the pit's mouth. Supposing 2s. 7d. per ton was the rate to the port of shipment from certain collieries and 6s. 1d. per ton was the selling price. That would mean 3s. 6d. per ton at the pit's mouth, and then there was 1s. per ton export duty to deduct. In the case of another colliery, which was nearer the port, the coal owner could afford not to charge 6s. 1d., but 5s. 11d., by reason of the fact that it would only cost him 6d. per ton to the port of shipment. Therefore this coal owner would receive 5s. 5d. as against 2s. 6d. by the other owner. He submitted that that was not a fair and equitable method, and it ought to be altered in this particular Budget. Was it reasonable or fair that 1s. per ton should be levied on coal worth 6s. 1d. per ton, while the same tax was levied upon coal worth twice that sum? There should be an ad valorem duty, and the tax ought to be borne according to the value of the coal at the pit's mouth. Last year the Chancellor of the Exchequer put forward as a very strong argument in favour of the imposition of this export duty on coal the fact that it was desirable that the nation's resources of the best quality of coal should be husbanded. As the realisable prices at the pit's mouth were falling lower and lower, colliery owners ceased to work the expensive seams, so that week by week and month by month they were being driven to concentrate themselves upon working the cheaper seams. So far from the tax conserving the best and most valuable classes of coal, it was operating in the other direction, and the expensive seams were being worked more extensively. The tax, therefore, had not fulfilled in the slightest degree the objects which the Chancellor of the Exchequer had in view when he imposed it. He would give one or two actual facts as to how the tax was operating with regard to the export trade of Yorkshire, Durham, and Northumberland. The French East Railway Company, which had always drawn its supplies of locomotive coal from England, had this year concluded a contract for 150,000 tons of German coal, which would be shipped from Rotterdam. What was the difference between German coal producers and ourselves with regard to the contract? The German competitor had no export duty to pay on his coal, whereas the British coal owner was handicapped by having to pay the 1s. export duty. If that was not a clear example of a 1s. bounty in favour of the German producer, there never was a bounty in this world. A communication was received last week from Kiel with regard to a contract for 8,500 tons which came to this country last year and which this year had gone to the Westphalian Syndicate, the export tax imposed here just making the difference which caused the loss of the order. In times of low prices it must make the difference. Westphalian coal had displaced much of the English coal. During the year ending 31st March 1901, a colliery in South Yorkshire sent to Hull for shipment 203,000 tons, but for the year ending 31st March, 1902, the quantity was only 108,000 tons, a diminution of 96,000 tons: whilst the output of the colliery for the same periods went up from 668,000 to 834,000 tons, an increase of 166,000. As coal had recently been more difficult to sell at home, the Committee could imagine how much the coal tax had affected the trader. A communication from St. Petersburg the other day stated, in regard to a particular contract, that the buyer would only give a certain price for English coal, because he had an offer of German coal at a particular price. There, again, was a case whore German competitors were not handicapped by any export tax on coal. He had shown to the Committee that, so far as Yorkshire, Durham, and Northumberland were concerned, this tax had already operated most injuriously, and it was not necessary to wait for another year to ascertain its effect. It was already beginning to be felt by the wage-earning class of the country. Undoubtedly we had not heard the last of the reduction of wages, because the trend of trade was downwards, and in proportion as prices fell the 1s. export duty would become a still greater hindrance to trade and to the securing of contracts in some parts of Europe. He agreed that in certain parts of the world competition was not so severe. He trusted the Chancellor of the Exchequer would give careful consideration to the statement he had made, and agree to the addition of the clause to the Finance Bill. He had been asked, "Why make two bites of a cherry? Why not propose the repeal of the tax altogether?" In the present circumstances of the coal trade, and having regard to the fact that they were paying an additional impost in the way of income tax, if the Chancellor of the Exchequer would let them have 11d. per ton out of the 1s. he would be quite prepared to give him the other 1d. for luck. He moved the following clause—

The hon. Member has repeated and amplified the speech on this subject which he delivered on the Second Reading of the Finance Bill. He has spoken solely with reference to coal in Yorkshire, Durham, and Northumberland, and I think he has taken his instances practically from certain collieries only, and mainly with regard to certain kinds of coal. The hon. Member practically proposes the entire abolition of the coal tax of last year. There is no indirect tax which I should be so reluctant to interfere with at the present moment as the duty on coal. I entirely differ from the arguments and conclusions of the hon. Member. I will take the whole coal export trade of this country. We were told that the coal duty was going to stop it. Well, the assertion has been proved to be absolutely untrue. In introducing the Budget I gave the figures of our total export of coal for the years ending 31st March, 1900, 1901, and 1902, and I showed that, with the exception of the record year 1900, by far the highest export year which has ever been known was the year ending 31st March last. Of course, I admitted then, as now, that the experience of the first year of the tax was not conclusive, because up to the end of December largo exports were made under previous contracts, on which an exemption was allowed. But now I will take the record of the first five months of the present year, in which the exports have been practically under new contracts made since the passing of the tax. In the five months ending the 31st of last month the total export of coal from this country was 23,057,567 tons, including, of course, bunker coal. That was the highest amount exported in any similar five months that have ever been known. That is what the hon. Member says is the terrible effect of the coal duty. In the record year 1900 there were 22,637,000 tons exported in the same period. In the first five months of 1901 the total was 22,546,000 tons.

Does the Chancellor omit bunker coal?

No, certainly not. Why should I omit bunker coal? That is the total export of coal.

Bunker coal does not bear the shilling duty at all.

Yes, but that does not affect my point of view. The bunker coal export has largely increased because it does not bear the duty, and therefore the shipowners have taken far larger amounts in their bunkers than they did before, instead of coaling at coaling stations abroad, where probably they would have got foreign coal.

That is due to the absence of the tax.

Very well; but the mines are employed, the mine owners are selling their coal, the miners get their wages, and the industry is going on.

Wages are greatly reduced.

That may be, but the reduction of wages is not the result of the tax, but is due to the fall in prices. Now I will take the German trade to which the hon. Member referred. Our exports to Germany in the five months ended May 31st, 1901, were 2,146,000 tons, and in the similar five months of this year they were 2,140,000 tons. Where then is this terrible competition of the Westphalian coalfield which was supposed to have done so much harm? The Government are bound to consider, as time goes on, the effect of the coal tax on this industry, as they are bound to consider the effect of all other indirect taxes on the various industries of this country. But for that purpose the business of the present year will afford an infinitely better standard of comparison than that of last year. So far as the year has yet gone, there is absolutely nothing to show that the hon. Member has any cause for complaint. This subject is at present under investigation by a Royal Commission, and they will, no doubt, make a Report as soon as they have any facts to which they think it desirable to call the attention of Parliament. I trust the debate will not be prolonged, for I cannot possibly accept the Amendment.

said that though he represented a mining constituency he was not going to allege that the tax had fallen on the men. His experience in South Wales was that up to the present time the tax had been paid by the buyers. The tax had not injuriously affected the coal trade to any considerable extent, but it had worked partially in regard to small coal. The Chancellor of the Exchequer had limited the duty to coal at 6s. per ton f.o.b. His hon. friend had spoken of coal in the North of England being sold at 6s., 8s., and 9s. per ton; but he know of coal in South Wales which only fetched 3s. 6d. per ton. He himself was quite ready to sell the Chancellor of the Exchequer as many thousand tons of small coal as he liked at 6d. per ton.

What! 6d. per ton! I should like to be a competitor.

said he would go further and say that if the hon. Member was willing to buy 10,000 tons at 4d. per ton he was quite willing to sell. He wanted to impress the Chancellor of the Exchequer with the fact that this tax pressed heavily on districts, such as Nottingham and Derby, which lay far away from the port, to which a freight of 3s. and 4s. a ton was charged. Formerly they were able to ship, but not now. He asked the Chancellor of the Exchequer, therefore, to make this an ad valorem tax and not a tax with a limit of 6s. f.o.b. Of course he did not deny that the tax had done harm to the coal trade. All taxes were more or less injurious to trade, but he was not going to admit that the tax had been of a ruinous character during the last twelve months. He was certain that the reduction in the price of coals in South Wales was not due to the tax.

said he could not allow the statement made by the Chancellor of the Exchequer, to the effect that miner's wages were not being reduced in consequence of this tax, to pass unchallenged. His experience was quite to the contrary. It was perfectly true that the contracts were free up to the 31st December last, and so far as last year was concerned wages were not much affected by the tax; but at this moment they were affected by it, and the very last reduction suffered in the North of England, ten weeks ago, was due entirely to the coal tax. His hon. friend the Member for Mansfield said that coal buyers were paying the tax.

To some extent.

said he would like to know under what circumstances and conditions they were paying the tax. At present they were prepared to give a certain price free from all considerations of the tax. If they had to pay the export duty their price to the coal owners was 1s. per ton less. Wages in the North of England were calculated according to average realised selling price of the coal each quarter; and it was to the coal owners, advantage to take the lower price so as to reduce the average at the end of the quarter and thus reduce the workmen's wages. He believed in a largo number of cases the foreigner was paying the tax, but under conditions such as he had just stated, and the work men's wages were consequently affected by the tax. He had never said that the coal trade would be ruined by the tax, but had always contended that it would seriously affect the workmen's wages, as was being proved every day now that; the tax was fully operative. Therefore, he insisted that it was an unfair and unjust tax. The Chancellor of the Exchequer had said that it would be one of the last taxes he would give up, and that coal ought to bear some taxation. If the right hon. Gentleman would take his stand on the principle that all coal raised in this country ought to bear a tax he did not believe they would be inclined to disagree with him; but he had singled out particular districts, which were exporting districts, and taxed the coal raised there 1s. per ton, which was large enough to have an injurious effect on the workmen's wages. If the Chancellor of the Exchequer imposed a duty of 2d. per ton upon all coal raised in the United Kingdom he would get every penny as much as he now received from the export duty of 1s. per ton. In fact, he thought the right hon. Gentleman would get rather more, because every coal owner was compelled to make a return to the Home Office of the amount of coal he produced, and he was sure that the cost of collection of a universal 2d. tax per ton would be much less than that of the export duty. Then the tax would be so very small that the effect upon workmen's wages would certainly not be anything so great as under the present tax. He sincerely hoped that before the Chancellor of the Exchequer had another Budget to prepare he would take this matter into his serious consideration.

said he only wanted to add a word to re-enforce what had been so well advanced by the hon. Member for Barnsley. The great objection to the tax last year in the North of England originally was that its incidence created a sense of injustice. That sense of injustice had not been removed. The assistance which the Chancellor of the Exchequer received last year in passing the tax arose very greatly from prejudice created by the high price of coal charged to consumers in this country. But the high price of coal was charged for an entirely different class of coal from that which was exported, and on which the duty had to be paid. The Chancellor of the Exchequer had complimented the Members from the Midlands upon their support of the tax, but it was not on them that the burden of the tax fell. The tax fell on special districts, and in these districts it operated very harshly. It called from the right hon. Gentleman the promise that he would make some modifications. Still, that did not get rid of the whole difficulty, nor was it to be removed by quoting wholesale figures, as the Chancellor of the Exchequer had done. First of all, bunker coal was included in his figures, and upon bunker coal the tax did not fall. It struck him, though it was impossible to follow it up on the spur of the moment, that this increase in the amount of bunker coal taken in this country was in itself a proof that the tax did affect the price. The Chancellor of the Exchequer let fall the suggestion that if bunker coal was not taken in this country the shipowner would have to fill up with foreign coal. But he thought it was much more likely that the shipowner would have to fill up with foreign coal in the future under this tax. That went to prove that a certain amount of coal was being driven out of our markets by the operation of this tax, and that the coal owners had been obliged to seek other markets in places not affected by the tax. The Chancellor of the Exchequer in his figures did not distinguish between different kinds of coal. It was possible that the export of some kinds of Welsh coal had increased, and that that made up the figures; but, without knowing what the wholesale figures were, that was no consolation to the district affected by the tax. Where there was monopoly coal of a special kind, which people abroad must have almost at any price, the consumer paid the tax; but where the coal had not a monopoly value then the tax must fall upon the producer in this country. They were getting tired of the argument that this small tax would not have any effect upon the price. The argument was that, having regard to the oscillations in the price of coal, this 1s. could not have any real effect upon the price. If they put a small weight on one side of a pendulum the pendulum would continue to swing, but they would alter the centre over which it swung. And so will this tax. The oscillation of the price would continue, but it would be affected by the tax. Therefore, the tax must have an effect upon wages. Wages had fallen in the districts to which special reference had been made and there was a prospect of a further reduction. This tax must bear its part in the reduction of wages. On one point he agreed with the Chancellor of the Exchequer. It was too soon yet for them to be able to gauge the effect of the coal tax. But that argument cut both ways. The Chancellor of the Exchequer had expressed himself as having an open mind to this extent—that the course of trade ought to be watched. He could assure the right hon. Gentleman that they would join him most earnestly in watching the course of trade, and in drawing, as soon as possible, the moral which, he was, afraid, was certain to be drawn from the operation of this tax.

said that the argument of the Chancellor of the Exchequer seemed to be based on the quantity of coal exported, but the right hon. Gentleman did not seem to have taken into consideration the fact that during the last few months there had been an extraordinary fall in freights, which had been an advantage to our coal-owners in competing with countries like Germany, France, and Belgium, and to a certain extent had neutralised the effect of the tax. During the last six or nine months freights had been lower than they had been for fifty years. But ship owners could not continue carrying coal at the existing freights, because during all this time ships had been losing money, and, therefore, some change must be expected. He had never argued that this tax would ruin the coal trade, but he still maintained that it was mischievous and injurious, and its effects would be felt to a much greater extent in the future. In those countries where there was no coal, and which were dependent on English coal, the foreigner paid the tax; but wherever there was competition, then the coal owners would suffer. Contracts would be taken at a shilling a ton less than if there was no tariff, with the result that the men at the pit's mouth must bear the loss. The Chancellor of the Exchequer had, in his figures, left out of account certain charges amounting to about 1s. 9d. per ton, which on 220,000,000 tons amounted to something like £18,000,000 a year. If they took £18,000,000 a year from the alleged profits, it showed that for the fifteen years in regard to which the right hon. Gentleman had quoted figures the average return was about 4 per cent. In a speculative trade like the coal trade that was not an unreasonable return. He hoped the right hon. Gentleman would explain how he came to quote those figures without considering a larger reduction for rents, material, and other costs, because the figures quoted influenced both the House and the country.

disclaimed being one of those who had said the tax was going to kill the coal trade. All he said was that when the demand for steam coal fell off they would feel the effect of the 1s. tax. When the right hon. Gentleman made his statement last year he no doubt believed the statement he made was correct. Last year the Chancellor of the Exchequer stated his belief that the working man would not pay this tax. In South Wales the miners had put their accountants to work in order to discover if the Chancellor were correct. The result was to make it clear that, whoever did pay, the coal owners, by a nice device, had been able to keep the shilling off the books. The miners received a certain percentage on their wages, but of every penny the coalowners got for their coal they manipulated this shilling per ton, and it did not appear on their books as the price of coal free on board. When the miners of South Wales were prepared to prove up to the hilt that the tax cost them 8¾per cent. in their wages, they had made out a case which, in his opinion, the Chancellor should consider. Wages in South Wales had gone down 15 per cent, in the last two months, and 30 per cent. since the imposition of the tax. Wages were on the downward grade, and one thing he feared was that the miners were about to give notice to terminate the sliding scale arrangements. If that should happen, he knew of nothing that would cause greater confusion among the South Wales collieries. That the employers did receive this advantage he had no doubt, and he was equally sure that the miners received no benefit. He was afraid that the House would find that this tax would be probably one of the greatest preventives of an amicable settlement in South Wales. There was also sufficient proof that the miners had already had a reduction in their wages. Although the war was finished, and peace had been proclaimed, shippers were not carrying coal, and South Wales was suffering very greatly. Not only would the demand fall off, but so long as this tax remained, wages, he was afraid, would continue reduced to the tune of 8¾per cent. He hoped, therefore, that the Chancellor of the Exchequer would think twice, now that he had these facts placed before him, and would do all he could to meet these difficulties.

said that he opposed the tax last year. It was, in his opinion, clearly proved that those who opposed it last year were in the right. He should not vote for the new clause, because he thought it was not a suitable time to derange the finances of the country. He had not altered his opinion that it was a mischievous tax, a partial tax, and that it affected some of the districts he represented in a very adverse way.

thought that the present state of things showed conclusively that there ought to be a Minister of Commerce protecting and representing the trade of this country. He had listened with great attention to the speech of the hon. Member for Barnsley, but he would not repeat his statistics. He was not a coal owner, but a ship owner; and so far all that had been said in the debate was from the point of view of the colliery owners and the labouring classes in the collieries. At Goole, Hull, and Grimsby, the principal portion of the trade was in continental steamers sailing in great numbers weekly to the nearest continental ports. For one reason or another the export of goods in his time had fallen off enormously, and steamers had to make up the difference by filling up with coal. Often the steamers took 500 tons of coal and 100 or 200 tons of other goods. The last offer he heard of from Hull to Ghent was at 2s. 2d. per ton, and he would like to know how a steamer could exist upon such a freight as that. Upon the last occasion when he endeavoured to protect the shipping interest, he was told by the Chanceller of the Exchequer that he did not represent it. Perhaps it might be news to hon. Members that the shipping members of the House of Commons did not think that their interests were being properly guarded, and they had determined to work together in Parliament in the interests of the mercantile marine of this country. Perhaps, under these circumstances, the Chancellor of the Exchequer would take a little more interest in the mercantile marine than he had done up to the present. Owing to the demand for large steamers, which had been constantly employed for war purposes, the demand for coal had been very considerable, and as a ship owner he could say that shipping at present was in the position that it was almost impossible to make a paying reight for any class of steamer, and more especially the tramps. Consequently, they had to fall back upon the export of coal, and the export of goods would annually decrease unless there was a great change in the policy of this country. Steamers were more and more becoming dependent upon the export of coal. The coal owners and the labour representatives had stated what the effect of this tax had been as far as their interests were concerned, and he had told the House what the effect on shipping had been as far as he was connected with it. Everything that the hon. Member for Barnsley had said upon this point was borne out by his own experience. They had also to consider the railway carriers, the ship builders, and the poor shipowners, and on their behalf he had not the slightest hesitation in saying that this tax was a great mistake in the political economy of this country.

said he did not regret the raising of this subject, because he thought it was very desirable that the Chancellor of the Exchequer should keep his attention directed upon this tax. He believed that the incidence of this tax had been most unfair in many respects on Northumberland and Durham. In Northumberland they exported something over 90 per cent. of their coal, and consequently this tax told upon them much more heavily than upon other districts. The falling off in the demand of coal owing to the export tax had very much more affected the Northern counties than the Southern exporting districts. This was a matter which affected employers of labour seriously. He could confirm what had been said by the hon. Member for the Wansbeck Division of Northumberland, that this tax upon coal had already told upon the wages of the men to a small extent. The increased cost of raising coal due to diminished quantity was a very serious matter in Northumberland, and it was doubly serious because the disadvantage in the increased cost owing to the lesser production became an absolute advantage to foreign competitors, because every ton of coal they raised instead of our raising it caused a diminution in their cost. If the Chancellor of the Exchequer insisted upon taxing coal in some form or other, he would suggest that be should tax the waste of coal. The waste of coal was very great. Coal was used very largely for the production of steam, and any expert would tell the right hon. Gentleman that almost half that coal could be saved by proper appliances. If the right hon. Gentleman could devise some means by which to tax the waste, he would confer a lasting benefit on the resources of the country, as it would force people to be economical. There would be no difficulty in assessing the amount of coal each engine should use, and then the use of coal free of duty could, be allowed up to a certain amount, and all waste over that amount most heavily taxed. The machinery for the collection of such a tax might involve some cost but it would pay, as a large revenue would at the time it was wanted be forthcoming, and the coal saved would defer the exhaustion of our national stock of fuel now so recklessly wasted.

was not opposed to the principle of the tax, and he quite appreciated the force of the argument of the Chancellor of the Exchequer that the Committee should wait for the finding of the Coal Commission, which was empowered to inquire into the effect and incidence of the tax. But if there were grounds for Members from Wales and Durham and Northumberland opposing the tax on the ground of its partial incidence, there was still more ground for Members from Scotland to do so, because the tax fell more heavily there than in South Wales, or Northumberland, or Durham. The Chancellor of the Exchequer had referred to figures showing that the export of coal had been sustained, but the export of the cheaper coal had largely fallen off. That indicated that special districts had suffered special hardship under the tax. He would support the tax if it were levied equally and fairly in all districts as an ad valorem duty, and he believed a larger amount would be raised in that way with less grievance than was the case under the present extremely unfair system; but, seeing the manner in which it actually was levied, he should oppose it now, as he did last year.

desired to reiterate the remarks he made last year as to the injury the tax would do not to the coal trade particularly, but to the general trade of the country. In the Hull district the additional 1s. had caused a great loss of freight, as the shipowner was not able to get the coal to make up a good freight. In that district, the steamers loaded with a variety of goods and a coal ballast, but the trade had been largely knocked on the head. The tax did a great deal more harm to the trade of the country than it did good to the Chancellor of the Exchequer. It decreased rather than increased the taxable area. In his own district the question of wages was a very grave one, and the deficit of freights had made a much smaller demand in the shipbuilding industry. In the colliery districts there was not much to complain of in the quantity of work, but there was as to the price that could be obtained for the coal, and the men complained of the decrease in the rate of wages. Then the question of wages affected the farmers. The farmers in Yorkshire and Durham sent almost the whole of their best meat to the co-operative stores. When wages went down the demand for bread might go up, but the quantity of meat consumed in the pitman's family went down, and the farmers complained. He hoped, therefore, if the right hon. Gentleman again looked into this question he would consider it from the point of view he had mentioned.

was understood to say that many Members had lost sight of the circumstance that coal had fallen in value not only in this country, but all over the world. He had always been a supporter of the coal duty, and he had no sympathy whatever with the Amendment. Having a great deal to do with carrying and buying coal, he believed the duty had had no prejudicial effect whatever as regarded the higher qualities of coal. It might be still higher, so far as those qualities were concerned, without causing any mischief. But it was different with regard to other qualities. The case put forward by the hon. Member for the Leith Burghs as to Scotland was perfectly true. The Amendment standing in his name on the Paper was one that he had been asked to put down by members of the trade. Their case was much the same as that stated by the hon. Member for the Leith Burghs—that certain districts of the country were prejudicially affected by the duty. He was glad to know that the Chancellor of the Exchequer was carefully watching the effect of the tax. He was sure the right hon. Gentleman did not wish to injure the coal trade in any way, and doubtless the time would come when he would meet the views of his Liverpool and Wigan friends, and so re-arrange the duty on small coal as to make it possible for such coal to be profitably exported from Wigan. At present it was not possible to do that, because the cost of conveyance to Liverpool was 1s. 9d. per ton, and when the wages were added the cost was brought up to above the 6s. limit; consequently the exemption could not be claimed, and the trade was stopped. There used to be a considerable business in this coal, but it could not exist unless something was done to meet the cost of railway carriage to the ports. The tax cut in

appealed to the Committee to come to a decision on the question. For reasons which commanded the assent of the majority of the House, he was not only unable to reduce taxation, but was obliged to increase it. Therefore, even for that reason alone, he had to resist the Amendment. But it was further admitted by a high authority that it would be impossible to tell the result of the tax for another year; it was also known that the matter was under the consideration of a competent Royal Commission, and he had promised to give attention to the condition of the trade.

said he thought the hon. Member for Barnsley had made out an excellent case for the re-consideration of this matter. The wages of the miners had been injuriously affected by the tax, and on that ground the representatives of the miners in the House were bound to resist its re-imposition. Considering that miners had already suffered a reduction of 8¾per cent. in their wages he thought that ought to have some effect upon the Chancellor of the Exchequer and the Government. The coal tax was an extra tax, and he hoped that next year it would be withdrawn altogether.