moved as an Amendment "to leave out the word 'now,' and at the end of the Question to add the words 'upon this day three months.'"

It is with a sense of the gravity of the action which I have taken that I rise to move the rejection of this Bill. The form of the Motion which I have put upon the Paper is, I think, unusual in connection with the Finance Bill, but it is not unparalleled. It was the form chosen by the Gentlemen now in office on the occasion of the Finance Bill of 1899, when the Sinking Fund was last reduced. I do not, however, base myself upon that precedent, for I do not propose to challenge the action of the Government in regard to the new Sinking Fund; and though I am wholly opposed to their suggestion that the old Sinking Fund should be permanently abolished, that question is not raised by this Bill, and therefore proposals in that respect do not appear in these clauses. As I say, the form of my Motion is unusual in dealing with Finance Bills, and I hasten to anticipate some possible criticisms which may be made against it.

It may be said that I offer no alternatives to the scheme which the Government has propounded. That is true; but it has never been usual for the Opposition to offer alternatives upon occasions of this kind. The alternative which we have in view is as well known to this House as it is to the country, and if the pledges by which this House was returned prevented it from adopting, or even considering it, we have every reason to be satisfied with the progress which our scheme makes on the further consideration given to it by the country. It may be alleged against me that I specify in my motion no objection to any particular taxes that are included in this Bill. That is quite true, but it is because these objections are not new. The taxes proposed by the Government are open to serious and grave criticism, and I shall have to make some criticisms upon them, but I desire to direct the attention of the House, not to this or that individual tax, but to the Budget proposals as a whole. A tax, taken by itself, may be defensible, but may become intolerable when combined with other burdens imposed under other names upon the same shoulders. Taxes standing separately may have something to be said for them, but taken as a whole, by their cumulative weight, may be forged into a weapon of oppression and confiscation; and it is therefore that my Friends and I have chosen to make our Motion for the rejection of the Budget scheme of the Government as a whole in order that we may draw the attention of the House and the country to its cumulative and total effects. As I say, I shall have to deal with some of the taxes in some detail, but before doing so I hope the House will permit me to enter into some general considerations as regard the Budget as a whole. What is the claim made by the Prime Minister and by the Chancellor of the Exchequer on behalf of this Budget? It is that having to provide additional revenue of something like £16,000,000 they have done so without disturbance of business, without any violation of the canons of sound finance, and in perfect harmony with the principle of our existing financial system. I challenge every one of those assertions. I say that judged by any one of those tests the Budget fails. I do not accept the whole of those tests myself. I am no out-and-out admirer of the principles of our present fiscal system, but, since those principles are held to be an absolute bar by the present House of Commons to the alternative we suggest, it is by those principles that we must judge the present Budget. Let me make good what I have said. Let me say a word about the Estimates of the Chancellor of the Exchequer. He constantly speaks in his speeches of having to raise £16,000,000 of additional money, but that is not the case, and that does not quite accurately express what he is doing or attempts to do. He takes £3,000,000 from the Sinking Fund, and that requires no additional taxation. It is, therefore, not £16,000,000, but £13,000,000 which he needs. It is not £13,000,000 he takes, but a good deal more—in fact, it is anything, on the Chancellor of the Exchequer's own showing, from £22,000,000 to £23,000.000, without allowing for the increased revenue which he anticipates, but cannot estimate, from certain of his taxes in future years. The Prime Minister, in a speech before the Recess, said I approved of the Chancellor's action for this year, but not for a full year. Unless the Chancellor of the Exchequer is looking forward to future years some of his taxes are not worth imposing, because on his own admission he does not anticipate that he will gain any appreciable revenue from them in the current year. It is not to the revenue of the next year and the years after that we must look to see what is the burden which the Chancellor of the Exchequer is imposing upon the country. I may point out that in one respect the right hon. Gentleman has inverted my argument, because I never approved of the Chancellor of the Exchequer raising more than he required. What I said was that I was glad on this occasion he at any rate sought to raise the revenue which he was expending, and I contrasted his action with that of the Prime Minister last year, and said it was unfortunate that the Prime Minister last year should have abandoned £3,000,000 of revenue at the very time when he was imposing £9,000,000 of new expenditure, thus aggravating the problem with which we are confronted this year. That is the first objection that I take to the Budget proposals, namely, that they are raising more money than the necessities of the country require or that the proposals already approved by Parliament demand. How much more the Chancellor of the Exchequer is taking than is required no man can undertake to say, not even the Chancellor of the Exchequer himself. No man having studied the individual proposals of the new taxes, who is conversant with the circumstances and who has studied the proposals, accepts the estimates of the Chancellor of the Exchequer. No one con- netted with the licensing trade believes the Budget estimates in regard to the revenue which will be derived from them. None of those who support the super-tax accept the Chancellor of the Exchequer's estimate of the revenue which it will bring in. The Chancellor of the Exchequer himself founds that estimate, if I understand him rightly, upon the calculations made by Sir Henry Primrose, whose estimates for every other purpose he rejects. Sir Henry Primrose argued before the Income Tax Committee that this tax would lead to great evasion and great avoidance of duty, to the transfer of capital out of England beyond the reach of the Income Tax collector; and that, therefore, its yield would be diminished beyond what was expected, and that having regard to administrative difficulties of collection the tax was not worth imposing. The Chancellor of the Exchequer says that Sir Henry Primrose is wrong in everything except his estimate, and yet he bases his own estimate upon the estimates made by Sir Henry Primrose.

When you come to those who are the real advocates of the super-tax, namely, the hon. Member for Paddington (Mr. Chiozza Money) and the right hon. Baronet the Member for the Forest of Dean (Sir Charles W. Dilke), they laugh at the Chancellor of the Exchequer's estimate, and tell him that he has opened a gold mine far richer than he supposes. I think it is probable in regard to his land taxes also, if they prove workable—at whatever cost of hardship and injustice to individuals—he will secure a much greater sum than he takes credit for. The Chancellor of the Exchequer refuses in regard to several of these new taxes to give the House any estimate whatever of their yield in a full year. Over the Parliamentary Paper he has presented of the estimate of revenue in this and future years his avowed ignorance of the subject-matter with which he is dealing is writ large, and he expresses his utter inability and the inability of his advisers to give any estimate of the ultimate produce of his taxes. I believe this is the first time that a Chancellor of the Exchequer has come down to the House of Commons and proposed a series of taxes of the produce of which he could give no estimate in an ordinary and normal year.

Let me turn to the other claims, made for these canons of sound finance, for which this Government are the self-appointed guardians. The first is that you should tax for revenue only. I think that has now gone by the wall. It is hardly worth while to argue it; in fact, the defence made is not that these taxes will produce revenue, but that they will get round the House of Lords on the Licensing Bill, that they will cheapen the price of land, that they will force land into the market and develop towns, and will generally facilitate the progress and development of the country. Take another of these canons of sound finance, namely, that you are not to take more from the taxpayer than you get into the Exchequer. I do not think the Government will pretend any longer that they have fulfilled that canon. The Chancellor of the Exchequer explained to an astonished Committee just before we parted at Whitsuntide that in order to get £1,600,000 a year from the distillers of whisky, he was going to endow them with £4,000,000 for themselves, and, in order to take his new revenue from the brewers of beer, he is going to put upon the consumers of that article an increased tax which he estimates at no less than £20,000,000. There never was a case where so little went into the Exchequer and so much went into private pockets, and this upon the showing of the finance Minister himself.

And now for the third canon, namely, that, having to raise this great sum for purposes in which all classes of the people are interested, the burden should be fairly spread. Does anyone pretend that this burden is fairly spread? Have you listened to the speeches from Irish and Scotch Members as to how an industry peculiarly localised in their countries is affected by a part of this taxation? I have never been able to understand why, if we grant the premises that this expenditure is necessary for the common weal and for the benefit of all classes, those who happen to be teetotalers and non-smokers should be exempt from any contribution unless they come up to the Income Tax level. But it is peculiarly unfortunate that you should have chosen for your indirect contribution in the first place a tax which causes, owing to its special incidence, a special sense of hardship in Ireland and the poorer parts of Scotland; and in the second place a tax which is already abnormally high in proportion to the value of the article, namely, tobacco, on which it is imposed, and which has the grievous disadvantage that no one has been able to contrive a system by which the tax should bear a proportion to the value of the articles purchased, and that it falls with wholly disproportionate weight on the cheapest tobaccos, which are smoked by the poorest people.

I may add that the Chancellor of the Exchequer himself anticipates as not improbable that the effect of raising the whisky duty will be to transform some whisky drinkers into beer drinkers, and therefore to deprive distillers of customers for the benefit of the brewers and when I add that his land taxes will fall with repeated blows upon what is after all a minority, though not so small a minority as some hon. Gentlemen opposite think, then I have made out briefly, but I hope plainly, my contention that the Budget fails, judged by this test also. What are we to say of the claim, which is the special boast of the Government, that the Budget causes no disturbance of business? Are they still of that opinion?? That I think was the proud boast of the President of the Board of Trade. Ask anyone concerned in any of the taxes which you are imposing, and you will get an answer that should at any rate open your eyes. Ask hotel keepers and restaurant keepers, ask distillers and the agriculturists depending on them—ask anyone connected with land or house property—ask the small-cultivator owner, say in Worcestershire or other parts of the country—ask the owners of garden cities, who have made a most desirable experiment—ask the insurance companies and the friendly societies with their vast investments in mortgages and ground rents—ask the small tradesmen and the thrifty workmen, with whom no form of investment is more popular than that in small house property—ask builders, who are engaged in the development of land round your great cities, and one and all will reply that you have upset every calculation on which they have hitherto proceeded. They will also tell you that they are now obliged to consider if at all they are to carry on in their old forms businesses which your Budget renders impossible. The taxes which the Government impose by this Budget are bad in themselves. That is not all. The principles of the Government are worse. Your super-tax is to stand at 6d. An income over £3,000 is considered by the Government to be a superfluity when the total income exceeds £5,000 a year. That is for the present. The hon. Member for Blackburn says that is very well for a beginning. He says, "You are apt pupils. We will build on this foundation in future years." Your undeveloped land duty stands at a half-penny in the pound. "A poor thing, but it is mine own," says the Lord Advocate. Again that will be a beginning. Your reversionary duty is 10 per cent., your increment duty is 20 per cent. Increments are considered as unearned windfalls, and their owners should be happy if we leave them any part of them. If you take only a tenth or a fifth, you say, "See how moderate we are." [LABOUR cheers.] Again comes that sinister echo from the benches below the Gangway, where the true authors of this Budget sit. What security or confidence have you left to any man who has invested money in the classes of property which come under your ban? Every argument in defence of these taxes—every statement you make—justifies a further raid on the lines upon which the Government have started. This is no temporary disturbance of a trade you are making—I mean of a particular trade—in this Budget, such as occurs when you increase or decrease a duty like the tea duty. You are creating and maintaining a general and permanent spirit of unrest, disturbance and distrust which will have an effect on the fortunes of our country long after you have ceased to be responsible.

I ask the House to look for a few moments at the machinery by which this existing system of taxation is to be worked. We were told, until we were almost sick of hearing it, to wait and see the Bill. Our doubts, we were told, would be removed, and our criticisms would be shown to be unfounded. This Bill is a document of 60 pages. Putting aside the schedules it involves over 70 references to other Acts of Parliament before you can ascertain, I was going to say, the meaning of its promoters, but is it made clear to them? Is it too much to say that the Finance Bill should be clear. This is not. The duties of citizenship should be clearly defined, especially when the citizen is under every kind of pain and penalty to assess himself to these new and complicated taxes. I defy any Member of this House or owner of property affected by the new land taxes to say what his duties are under the Bill, or what his return ought to be, without the aid of the most expert and most expensive advice from lawyers, solicitors, and surveyors. One more observation. Surely under a taxation Statute the taxpayer should be protected against unjust extortion by appeal to an impartial tribunal, and, by preference, to a Court of Justice. Yet, in this case, he is to be at the mercy, and, unhappily, at the arbitrary mercy, of a body of Commissioners, who are not merely to decide on most complicated questions of fact and law, but whose speculative opinions on the most difficult points are to be the law without control or appeal, except to referees, any number of whom may be appointed, and let me add may be dismissed, by the Government, for they have no permanent tenure, no independent status, no rules laid down for their guidance, no procedure prescribed, and no other qualification except this vague one that they must have had experience in the valuation of land. What are the classes of questions which this tribunal have to decide? Let me take a few of them. They are to decide what is the total value of any piece of land, what is its site value, whether it is developed or undeveloped, whether it ought to be developed or may properly remain undeveloped, what deductions are to be made for any improvements of which the land is deemed advised, and what improvements the land ought to be deemed to be advised of. The valuation made at one period of that piece of land as a whole is to be apportioned, perhaps 20 years later, in respect of a parcel of land which has been sold, and which never was valued separately from the whole. They are to decide what are the amounts of the duties due, whether the increments in Reversion Duty are being charged upon identical values, and that is a very complicated matter; they are to define what is reasonable access to the land to be given to the public, and still more marvellous they are to decide whether it is a public benefit that that access should be given. That the Commissioners are to decide without appeal. That is so simple a question that the advice of a referee is not required on the subject. They are to decide what is bonâ fide development and what covenants are reasonably necessary for the protection of property and what are not; and where they are apparently not reasonably necessary they are to over-ride them. Apart from valuation they are to decide what works are of a permanent character and what sums will be required to divest the land of that. If you wish to appeal from the Commissioners to the referee in those instances in which an appeal is allowed to you, you must do it in accordance with rules to be made by the Treasury, so that the taxing authority again comes in to interfere in the administration of the taxation law, and to define not merely what your rights are, but how you shall exercise those rights. Were ever such questions submitted to the decision of such a tribunal? And let me mention, lest this should be given as an answer, I am aware that on points of law an appeal may be permitted, or rather a case stated, for the decision of the High Court, but it is not the taxpayer who is to have the right to state the case to the High Court, it is only if the referee, who has experience in the valuation of land, but not in the interpretation of Statutes, feels that he desires the information on points of law. The aggrieved party is not to be allowed to state the case. Was ever a man's property pledged to such a tribunal since the days of the Tudor Star Chamber.

Now I come to the taxes themselves. First I would refer to the absolute failure of the Bill to redeem, I will not say the promise, but the expectation which the Chancellor of the Exchequer held out to us in the discussion of the Resolutions. I cannot go through the whole of those discussions seriatim to prove the failure in each case, and I will therefore take a couple of illustrations. I fail to see that the Chancellor of the Exchequer has met, as I understand he undertook to meet, the case of mixed traders, or those who hold what are commonly called grocers' licences. I see a slight modification in his hotel clause, to judge from cases which were brought here as test cases during the Resolution stage of our discussion, but, on the whole, I say he has failed to meet the grievances of the hotel keepers and the great restaurant keepers. He has also wholly failed to fulfil the expectations which he aroused in our earlier discussions with regard to the Income Tax. He admitted at once that the anomalies of our present Income Tax law, arising from the inadequate definition—the unjust definition—of what income is but he has done nothing to remove those anomalies. I am alluding to the levying of Income Tax upon receipts which are not incomes. It applies to the land—Schedule A—and the suggested alternative put forward by the hon. Member for Chelmsford to allow land-owners to be assessed under Schedule D. It is a much bigger question than that, it refers to wasting securities, and this is a difficulty which must be faced, now that you are imposing the tax on the high level, which is intended to be a permanent level, of 1s. 2d. in the £, and the need for remedy is rendered much stronger when, in addition to the ordinary tax of Is. 2d., you have a super-tax of 6d. on bigger incomes. I will not go back to the assessment of land under Schedule A, which the Chancellor of the Exchequer admitted was a case of gross injustice to owners of agricultural land, and to which, in face of a little hesitation, he only pleaded that the cost of righting the injustice would be so enormous. I think he said on a later occasion it would cost something like £3,000,000. I believe that to be an exaggeration, but, even taking the figure as the Chancellor of the Exchequer puts it, what does it amount to? It is an admission of the gravity and of the extent of the injustice which you are doing, and the heavier the loss to the Exchequer from putting a tax on a fair basis the grosser the injustice you are committing by keeping it on its present basis. The greater the loss which the Chancellor of the Exchequer proves will accrue to the Revenue, the greater he shows to be the sum which he is unjustly extorting from those who are to be asked to pay it. I do not want to dwell upon that, because we argued it before and it can be argued again, and the case is familiar to the Chancellor of the Exchequer. But look at other instances—and let me take two. Let me take the case of a man who is tenant for life of a settled estate drawing an income from mines. Suppose that his income is £6,000. Are you going to charge super-tax on it or not by your Bill? You are; but that £6,000 is not income; a great proportion of it is capital. As he exhausts his capital in the earth he must, if he is a prudent man—and, at any rate, by the terms of his settlement in many cases—he is bound to replace the exhausted capital in the ground by investing part of what he draws from mines in securities of another kind. His net income may be £4,000 a year, and £2,000 may be capital that he has to re-invest. You are going to charge him 1s. 2d. in the pound a year on the whole £6,000, and you are going to charge him 6d. super-tax on £3,000, because you count his income as £6,000 when it is only £4,000, and the net result is that, out of his income of £4,000 a year, he will have to pay an Income Tax alone, without making any provision for Death Duties or other contingencies, of something like 2s. in the Hound. Let me take a similar case. one which came under my own notice the other day, though, I hasten to add, perhaps unnecessarily, that it is not my own case. It is the case of a person who sold out certain securities in stocks and shares, investing the capital therefrom resulting in the purchase of leasehold property. The income of this person when the money was invested in stocks and shares was under £5,000; the income of that person now that it is invested in leasehold property is over £5,000, but the real spendable income of that person remains the same, or approximately the same. The difference is made up of the sinking fund which the investor is required to put by year by year during the currency of these leases in order to replace by the time that the leases expire the capital sum which he invested. What are you going to tax him? Let me add that in the particular case which came to my knowledge this was not a speculative transaction—it was not gambling, lout legitimate business—a transaction undertaken by a person who was the owner of the ground rents—I am not speaking literally accurately, but for the purpose of my illustration I may say he was the owner of the ground rents—undertaken in order to get rid of the middleman, so that he might deal direct with the sitting tenants and be in a position to grant them new leases as and when they should apply to him to do so. The leases were 99 years' leases, that were expiring within a period of something like 20 years, and in order to be free to deal with this land to the best advantage of the estate and the sitting tenants my friend bought out the middleman, and by that act of buying out the middleman renders himself subject to the super-tax, which would not fall upon his real income and ought not to fall upon his income now.

Do not let me be told that these are hard cases, and that hard cases make bad law. That may be true, if hard cases are rare and exceptional, but these cases are of common and daily occurrence; every one of us could multiply them ad lib from their private experience and from their correspondence and inquiries, and I think you will find that these hard cases are rather the rule than the exception. Do not, moreover, let me be told that this is a grievance to which these people have always been subjected. It is perfectly true that the existing tax has always been levied upon that basis, but you admit that that is injustice, and when the Income Tax was low, or when it was thought that it was a temporary imposition, and when it was thought that if it rose high it was only for the moment, though at that time this unfairness may have been borne with some grumbling, but still on the whole with equanimity, it is quite a different thing for a man to be called upon to bear a uniform tax at a moderate figure, even upon a higher assessment than is his due—it is one thing to do that, but it is quite a different thing to call upon him to pay a very high tax upon that assessment, and in addition a super-tax to which on his real income he is not liable, and which, in fact, the promoters of the tax never intended to attach to a person in his real position.. The fact of the matter is, that in this case the Income Tax definition of income is an arbitrary creation of the law, and that for taxing purposes you create a fictitious income, which you do not allow a man to use as income under any of your legislation, notably under your bankruptcy law. If a man who is forced by you, under penalty of being a dishonest citizen, to make a return of his income on your basis proceeded to spend his income on that basis, when he found himself in the Bankruptcy Court, as he undoubtedly would before long, he would probably be sent to gaol as a dishonest debtor, and at any rate his discharge would be suspended. Can it be right that when you are taxing a man you should put his income at the maximum figure, which you forbid him in all other aspects of his life to treat as his real and spendable income? I say, having regard to the provisions of the Budget in relation to the Income Tax, it is imperative that before we pass this Bill, and at the earliest possible moment, the Chancellor of the Exchequer should place upon the Table the means by which he thinks this injustice should be remedied, and that he should do it before these additional burdens are put on the taxpayer. I am sorry to make such claims upon the time of the House, but a Budget which it took five hours to summarise, and which it will take many more hours to explain, may be some excuse for lengthy speeches, and, as far as I have gone, I have, as the House will see, tried to avoid unnecessary dwelling upon points which were raised earlier in our Debates, and rather to bring some new considerations before the House.

I want to turn to the increment value duties, and again I have to note the failure of the Chancellor of the Exchequer to redeem what on this occasion I thought was promised, namely, that he would protect the purchaser of land, whose land had subsequently fallen in value, against being subsequently charged with increment duty on any recovery of value within the original price. That I understand to be the Chancellor's undertaking, but that is not the Bill. He confines the protection such as it is to property within 20 years before the passing of the Bill. Why before the passing of the Bill? It is this kind of confusion of thought, not to say ignorance of fact, which seems to me to lie at the root of these taxes. The Chancellor of the Exchequer and the Government appear to think the recent fall in values has been an wholly abnormal circumstance never likely to occur. It is of yearly occurrence in one part of the country or another. It is not confined to 20 years before the passing of the Bill. It will occur in 20 years and 200 years after the passing of the Bill, and if it is just to protect the man who purchases within 20 years before the passing of the Bill, it is just that the same protection should be extended to the subsequent purchaser. Then why limit it to 20 years before the passing? Why exclude the man who purchased 30 years before the passing of the Bill? I saw in the newspapers the other day the very hard case of a man who had purchased 30 years before the introduction of the Bill in a letter contributed by Sir John Rolleston, a former Member of the House. Why is he to be excluded while a purchaser 10 years later is to have the benefit of the provision? If there is any argument on the subject, the longer a man has been out of his money, the worse his speculation has been, the stronger is the argument for relief.

That leads me to another observation. In assessing land for this tax, you make no allowance for loss of interest, though that is the first element of a business transaction that an investor in this class of property has to consider. He has to say to himself: "If I purchase this property, I shall have to accept a nominal return on my money—less than I could obtain in Consols or any other first-class security. I shall have to be content with an interest of 1 or 2 per cent. for an indefinite number of years, but I shall be recouped in the first place by the absolute security which I hold, and in the second place by the prospect of a rise in the capital value when my land is ripe for development." How do you treat him? You rob him of his security, and then you rob him of a fifth of the increase of capital value. You call the rise of capital value unearned increment, and having given the dog a bad name, you proceed to hang him. It is not unearned increment. It is deferred interest—as much a part of the consideration which he bought as the land itself or as marketable securities which you hand to him across a table. That is not all. It was, I think, generally understood when the Chancellor of the Exchequer made his Budget statement that this tax was a tax on ground landlords, a small and in some quarters an unpopular class—one of those minorities which the Chief Secretary for Ireland cheerfully devotes to sacrifice in order that he may enjoy an Irish holiday. But the Bill taxes the same thing twice over. It taxes not merely the ground landlord, but the leaseholder, and it taxes him on the same increment on which it is going again to tax the ground landlord. You tax the same thing twice over. You tax it not merely on sale when money passes and is available to pay the tax, but you tax it at death, when in many cases it will be extremely inconvenient, not merely for the land-owner, but still more for the leaseholder, to find the money to pay the duty. When I say you tax it twice over, I understate what the Government are doing. They tax it three times over, for they count the same value again when it comes to death duties, and assess their death duties upon it without any allowance for their other taxation. Is that having due regard to justice and equity? To me it seems that to use taxation in this way is to forge out of your Bill the fiercest weapon of oppression.

The hon. Member for Chelmsford (Mr. Pretyman) and the right hon. Gentleman the Member for St. George's, Hanover Square (Mr. Lyttelton) asked: "What is your unit of valuation?" We were told to wait for the Bill and it would all be clear. What is the unit of valuation in the Bill? There is no unit. It will be such as these Commissioners in their wisdom determine. The valuation is to be conducted at the expense of the individual. The individual may be content with the valuation of his estate as a whole, which he has no present or future intention of developing or selling. The Commissioners may order him to value each field by itself, or each parcel of a field as they may choose to cut it up on the ordnance map. But assuming that they do not use that power, as indeed they cannot assess the value of each piece as it will ultimately come into the market, how are they to arrive at the proportion which the value of a particular parcel of land sold to-day bears to the value of the land as valued as a whole 15 years ago. This is dealing in speculations, in hypotheses, in abstract ideas which bear no relation to the facts of common life in matters of which not even the most expert valuer has any possible experience, and as to which the ablest opinion in the world is pure speculation, just as likely to be wrong as to be right. I note, in passing, as an illustration of the spirit with which this Act is drawn that if it turns out at any subsequent time that the valuation was too low by a mistake, not by any intentional fault or default, the unfortunate taxpayer is to pay the Government his arrears and taxes with interest. But if the Government have pocketed more than was their due, they are to return him the simple difference.

I pass to the tax on reversions. If I understand the intentions of the Government properly, their tax on reversions is based on the assumption that the landlord to whom a reversion falls due gets something for which he has given no consideration. I wish the Secretary of State for War would help his colleagues to a little of that clear thinking on this subject which he is always recommending as a panacea for all our evils. That idea of the Chancellor's is pure moonshine. It does not bear the slightest relation to fact. What does happen? The landlord in every case takes payment in land or money. He either develops the property himself and builds upon it and charges a rack rent, or, being unable or unwilling to do the development himself, he procures someone else to do it, and charges a low ground rent in place of the rack rent, leaving the man who develops to enjoy the rack rent. In either case the business basis of the transaction is the same. The rent which is to be paid, whether as a rack rent to the land-owner or as a ground rent, is calculated upon the same premises, and the return on his expenditure and on his capital, whether in land or money, is approximately the same to the ground landlord. Why do you tax one and not the other? What possible justification can you have for making this distinction between the two ways of developing an estate? You cannot allege that by penalising those landlords who give improving leases at low rates you are going to promote the best development of property or serve the interests of the housing of the working classes. Let me take an illustration. If I name a single estate it is only because it is typical. A great portion of the Cadogan estate in London fell in not so very long ago. The landlord of that estate, like any man in a similar position, had two courses open. He might relet at rack rents the buildings which he then found on the land. That was, as it nearly always is, the most immediately profitable course to him, but it was the most undesirable from the point of view of the community. It meant perpetuating a good deal of slum property and the prevention of any well-considered scheme of general improvement throughout the estate. He chose the other alternative. He sacrificed revenue in order to deal with the estate as he thought best, I daresay in the permanent interests of the estate, but also as being the best fulfilment of the duty of a great landlord. What are you going to do? You are going to tax him on the highest value that he could have got for the property as it stood. You are going not merely to subject him, if he takes the better but the less remunerative course, to that loss of income to which he voluntarily subjected himself, but you are going to tax him on the assumption that he might properly have used his property to the worst advantage, and put more money into his own pocket. I understand the Government think that the long leasehold system is on the whole detrimental to the interests of the country and the development of our towns. I differ from them entirely. I believe it to be on the whole the best method of combining the free capital in money with the fixed capital in land which is required for the proper development of industrial centres and the due supply of buildings for the people. Even if I thought with them that the system was undesirable, and if I wished to bring it to a close, I would at least strive to make my measure such that it should reach rather those landlords who do not do their duty than penalise most heavily those who have the highest sense of the obligations they owe to those who develop their estates.

A few words in regard to the duties on undeveloped land. I think these are the most wonderful and the least comprehensible of the many wonderful and many incomprehensible proposals of the Chancellor of the Exchequer. No answer has been attempted to the arguments which have been brought against it. I will not speak of the speeches of my right hon. Friends on this side of the House. No answer has been attempted to the criticisms of the hon. Member for Preston (Mr. Harold Cox) or the hon. Member for Aberdeen (Mr. J. McD. Henderson). They are based upon the same kind of confusion of thought which underlies the whole treatment of land by the Government, and they are carried out with the same kind of difference between profession and performance which is writ large over all the clauses of the Bill. Do you believe that you have saved agricultural land? I will undertake to prove that you have not. I will not do it now, but in Committee if friends of mine do not prove before then that you are going to hit, not only the big agriculturist, but the small cultivating owner, whom at least you might have spared. I fancy I see the faces of those men when they are called upon by the Commissioners to fill up papers showing the total value of their land, the site value of their land, the deductions which should be made from the total value, and all the rest which is embodied in these complicated clauses. I fancy also that I see the faces of Liberal Members of Parliament when they are faced by their constituents who have to make these returns. As I am speaking of the small men who have to make returns, may I ask the Government what is the reason for the peculiar and unexplained, and hitherto unmentioned, exemption which occurs in clause 16 sub-section (4):—"Owners of agricultural land in Ireland may, if they think fit—" Owners of agricultural land in England and Scotland shall make these returns, and if they do not the Commissioners or the Government will fine and penalise them; but: "Owners of agricultural land in Ireland may, if they think fit, make, but shall not be required to make, returns under this section." Why this exemption in the case of Ireland?

indicated dissent.

The Chancellor of the Exchequer says it is not an exemption. Well, I cannot find terminology which is more exact.

It is purely because we have all the facts in the case of Ireland officially declared under Acts mostly passed by the right hon. Gentleman's Government.

Now we have got the explanation of the Government. [An Hon. MEMBER: "Not as to site values."] We have not got the site values. I will not stop to discuss that matter now, but if the Government have got all the facts why do they even permit men to make a return? If you have got it already, it is there. We will return to that in Committee. We have noticed from time to time a certain subservience of the Government to both of the parties who sit on the benches below the Gangway, and we view with a little suspicion those clauses which are apparently intended to buy off opposition by giving to the supporters of the Government in that part of the House certain concessions which they will not allow in the justice of the case to our side. I would ask the Chancellor of the Exchequer whether it has ever occurred to him to estimate the effect of the tax on the particular and normal cases around any of our big towns. I had the curiosity to make a rough calculation with respect to a very small estate in the neighbourhood of my home at Birmingham. I estimate that the tax will mean anything from 7s. 6d. to 10s. in the pound of the revenue derived from the land. A Constituent of mine not far off tells me that in his case the tax will absorb the whole of the revenue which he derives from the land.

The right hon. Gentleman might give me the figures with respect to that.

I will. We can provide the Chancellor of the Exchequer with any number of figures. I would only make one stipulation. If we prove to the Chancellor of the Exchequer that the tax will be 10s. in the pound of the revenue of the land, will he admit that it is exorbitant, and will he withdraw it? I have had a great number of cases sent to me from different parts of the country showing what the effect of the land taxes will be.

I want to know what is the proposition. Is this the right hon. Gentleman's proposition? If he can prove to me that the proposals in the Bill will involve a charge of 10s. in the pound upon the land which will be subjected to this particular tax—

No. I thought I had made myself clear. I took a particular case in the neighbourhood of my own home. In that case my calculation is a rough one, because I do not know what the site value of the land is or what the total value is, but I estimate that the tax would be something like 7s. 6d. or 10s. in the pound. A Constituent of mine made a similar calculation as to a property four or five miles away, and also in the neighbourhood of Birmingham, and he calculated that it would absorb all his agricultural rental. If we show that you are taking 5s., 7s. 6d., 10s., or 20s. in the pound, will you moderate your proposal? An hon. Member says that he can produce cases where the tax would amount to 30s. in the pound. But my difficulty is this, and I tell the right hon. Gentleman quite frankly, that my correspondents have a profound distrust of the Chancellor of the Exchequer. They feel, and I think not without just cause, that while they are willing to trust me with detailed information about their estates, they are not willing to trust the Chancellor of the Exchequer, who might use it against them. If you are willing to be convinced by illustrations of this kind we will give more definite information. We will give him the facts and figures. Apparently the Chancellor of the Exchequer does not think that these things are possible under the proposed taxes. It seems to me that they will occur in the neighbourhood of every large town.

What is the basis on which he estimates the value of that land? Is it on the assumption that the land is ripe for development and could be developed to-morrow? That is not so, and I defy you to find any man engaged in dealing with land who will support your argument that that is a feasible thing to do. A man may sell his land to-day or he may sell it next month, and, by a gradual process, the whole of this land may be developed, but it is outside the power of any landlord, or all of them, to force the whole of that land into the market at once, or, at least, it is outside of their power to force on its immediate development. You can force it on the market, and you may make it impossible for them to hold it, but you cannot force builders to build. Men will not risk their money in property until there is a reasonable chance of finding occupants for the houses. The process of development is nearly in all cases slow and costly. A town may for a time extend in one direction, and then, suddenly, there comes a change, an accident happens sometimes, or some circumstances occur which you cannot trace, and cause the development of the town to take a different turn, and land which yesterday seemed to be on the verge of being developed, and where roads have been laid down, remains without tenants or builders for years, and the growth of the town, if the growth continues, goes in another direction. I say it is a slow, costly, and capricious growth. The moment that development begins the owner loses his agricultural rent, and it is many years before he secures his full building rent, yet during all these years you are going to tax him on revenue which he has not received, based on capital value which he cannot get. You tax him as a criminal withholder of land from the people because he cannot find a purchaser, or because he cannot find a tenant for the house which he has put up. You do not stop there, if I read the Bill rightly. Heaven knows what are its intentions, but there is a proviso in section 10, sub-section (2), which goes further. The unhappy man has hitherto supposed that when he developes his land, he will, if this Bill ever becomes law, be rid of the tax on undeveloped land. Not a bit of it. The Government are far too wise to let him off so lightly as that. He has got not only to develop the land, but to keep it permanently employed for the purposes for which it was developed. The sub-section says:—

"Provided that where any land having been so developed becomes vacant or unoccupied, or ceases to be used for the purposes for which it has been developed, it shall after the expiration of one year be treated as undeveloped land for the purpose of undeveloped land duty until it is again developed."

I build houses upon my land and they are occupied, and I cease to be liable for this duty just as I come into the revenue which enables me to pay it. That is the happy accident which the Government suppose will happen. But then suppose that the town ceases to develop—there is a spell of bad trade or the Government closes a Government factory. My tenants no longer have work, and they are obliged to go elsewhere where work can be found. The houses become empty, and lie empty for a year, and thereupon the Government says, "This is undeveloped land," for if it becomes vacant or unoccupied it ceases to be remunerative.

indicated dissent.

The Government do not know their own Bill. Their taxes are bad enough, in all conscience, but apparently their Bill is even worse than their intentions. I build a factory on the land, and an industry starts there, but it becomes bankrupt, as industries sometimes do, and the factory is thrown upon my hands. I cannot get a new tenant, and it lies empty for a year. I open a quarry, thinking that perhaps as the Government are carrying out large dock works there will be a demand for British granite. I am a fool for my pains, because they prefer to buy granite from a Norwegian company, and, the tenant getting no orders, the quarry is thrown on my hands, and I am taxed for not having developed that which I have developed and the product of which I cannot dispose of.

I need not dwell again upon the effect that this clause is going to have upon the amenities of all the suburban residences attached to our towns, but I beg the House to consider this matter in the light not of the individual residents only, but in that of the interests and the good government of the town around which the villas exist. We demand more and more public services for our local and municipal life. It is one of the difficulties of the present day that more and more of the well-to-do are moving out away from the towns into the country; they come in at such times as suits their convenience for their own business, but they cannot be called back again in the evening to take their share of public work, and they cannot give their time to the municipal life of the cities in which they live. That is a great misfortune. We cannot altogether prevent it, but for heaven's sake let us do nothing to increase it. My own town of Birmingham is favourably situated in this respect. It has a great estate joining it with houses of every capacity, which are very attractive by reason of their grounds to men of affairs. business men, and professional men, and people engaged in the active life of the town; and I venture to say the town owes an enormous amount to the way in which that property has been developed, because it renders available for the service of the town so many men who would otherwise move further out into the country, where they would be too far off to render this municipal service. What are you doing? You take a man's house which stands in more than one acre of ground. You tax it under your present system on its value as a residence standing on, say, 10 acres of ground. That is what makes it valuable. If it had not the 10 acres of ground you could not let the house. You could not let the house with one acre of ground. You would have to pull it down and build smaller residences. You get an increased tax by reason of the increased value. Then you come down with the undeveloped land tax, and you fine the man upon the nine acres of land on the ground that he is improperly using them and preventing the growth of the town. Could anything be more monstrously unfair, more grossly unjust or more ruinous to the interests of the community?

I have two remarks upon the general effect of these land taxes upon the community to make before I leave the subject. I wonder whether the Government has considered what the effect is going to be on the insurance societies, the great friendly societies, the great working class investment societies, with which landed property has been a most favoured class of investment? When the time comes I am certain you cannot apply all these provisions to those great corporations. If you cannot apply the provisions to them, by what reason or with what kind of justice can you do to individuals that which you admit would be unjust in the case of these gloat corporations? In the next place, I want to ask the Government have they considered the effect which these taxes are going to have upon mortgagees and mortgagors all over the country? I have had sent to me a very able statement about these taxes, prepared by the Council of the Surveyors' Institution. I hope the Chancellor of the Exchequer will read it carefully—the memorial from the Council of the Surveyors' Institution. I cannot express my present point better than by quoting some of the words which I ask the House to allow me to read from that document:—

What is the economic effect of these Land Taxes? They are taxes upon capital, and the peculiarity of taxes upon capital of this kind is that the burden is not spread over succeeding generations. They are rather a fine on the present possessors. What man to-day would offer the same price for property subject to these taxes as he was willing to give the day before the Budget statement was announced? The new purchaser will now discount these burdens. He will discount according to his best political sense the probability of these burdens once imposed being further increased by the Chancellor when he needs a little bit more money. He will discount new burdens, and he will pay the present possessor so much less for the land which he buys. You do not distribute the burdens. You take a chunk out of the possessions of the present owner. The new owner comes in having discounted the new burden, and the very object with which you introduce the tax will have failed. I do not say anything as to revenue. There is no pretence that these laud taxes are introduced for revenue. They contribute practically nothing to the revenue of this year, and the Chancellor of the Exchequer is wholly unable to say what the effect will be on the revenue of other years. His object is to cheapen land by making it impossible for present owners to hold it, and forcing them to sell. The new purchaser will buy on terms which will discount the burden which is being imposed. You will not cause the land to be built on. You will merely transfer its ownership at a loss from one party to another, and cause the present owners to suffer a great sacrifice, and that for no public good. When you add to that all I have said on these taxes, and the cumulative effect of the Death Duty and Income Tax on every small estate which has no free money attached to it, whether that estate belongs to a private person or a manufacturing company, when you think of the effect on those estates, how businesses will be crippled for capital by the demands which are now made upon them, and that even on an estate of £5,000 the cumulative effect of the new Death Duties and the new Income Tax may amount to something like 1s. 7d. in the £ on the income of the owner during his lifetime—when you consider these things I ask, Was there ever a Budget of which it could be less justly boasted that it caused no disturbance in the trade or industry of business of the country? We are told that it is the final triumph of Free Trade and the death blow to the policy of Fiscal Reform. Sir, in the spirit in which it is offered, I accept the challenge, and I am ready to go to the country at any moment upon it. Taxes on capital; accumulated capital, wherever you can find it, treated by the Budget as an offence almost on the part of its possessor; taxes on owners of land in every form, big or little, freeholders or leaseholders treated as men who are detaining that which is the property of the public; taxes on the poor man's tobacco, already taxed far in excess of its actual value; taxes on the whisky made in Scotland and in Ireland; taxes on the beer brewed in England; an Income Tax raised to 1s. 3d. as its normal figure, and with an additional 6d. on every income which, whether it exceeds £5,000 or not, a definition of the law can make to appear above £5,000—if that be the highest effort of Free Trade finance in dealing with a fiscal emergency, then the sooner we take our two alternatives to the country the better I shall be pleased, and I fancy the better the country shall be pleased also.

It was quite unnecessary for the right hon. Gentleman to offer any apology in his speech for the unusual, if not altogether unprecedented, course which he has taken in moving the rejection of the Finance Bill. It is exactly what we anticipated and what we expected, for we believe with the right hon. Gentleman that we have now come to the parting of the ways. This is the alternative presented by the Government to the proposals of the right hon. Gentleman and his Friends. I can well understand the fierceness, the vehemence, and the earnestness of the attack which he has made upon this Bill, for if this Bill becomes law it will, I think, in spite of the brave words which have just been addressed to us by the right hon. Gentleman, prove the death blow to the alternative policy which he has to offer to the country. This Bill is, I think, among the most important that any finance Minister has ever presented to the country, and it carries with it wide and far-reaching consequences. This is my right hon. Friend's answer to the challenge of those who have said that the taxable resources of our country are exhausted, and that a strain has been put upon the fabulous wealth of the rich and the well-to-do of this country which has come very nigh to breaking point, and that in order to provide not only for the present, but for the future needs of the nation, it will be necessary for him to embark upon a vast extension both in size and in number of Customs duties to be levied upon imports of the necessaries of life. My right hon. Friend now makes it plain that the taxable resources of this enormously wealthy country are not nearly exhausted. He says: "I can find the money that it is necessary to find for the requirements and demands, present and future, of the country without resorting to Customs duties levied upon necessaries of life, upon things which men use in their daily life. I can do it without impeding the flow of British commerce, without interrupting the free exchange of commodities, without hampering and harassing the great industries of the country, and without putting British commerce once more in fetters and in chains. I propose to find the money, not by taxing men's necessities, but by taxing their superfluities and their luxuries; I propose to find the money by taxing those who are well able to bear the burdens. I propose to find the money by inviting a modest contribution from those who are at the present moment participating in what is a truly national property." ["No."] Yes; I hope to show that in the sequel, but one step at a time. That, I think, in broad and main outline, expresses the proposals of my right hon. Friend.

Hear, hear.

The right hon. Gentleman the Leader of the Opposition assents, at all events, to that proposition. I can hardly expect that he will assent to some of my later propositions. I observed a notable omission from the right hon. Gentleman's speech. He said not one word about the purposes to which the money is to be devoted. I, for my part, attach enormous importance to the purposes to which the money is to be devoted—hon. Members may think undue importance. This extra taxation is confessedly required for three main purposes—to provide for the already too long delayed development of our national resources, to provide pensions for the aged poor, and to provide for the national security, the defence of our shores and our commerce. We may differ to some extent probably about the exact amount of money to be devoted to these purposes, but I think we are all agreed that the purposes are worthy. That seems to me not only to clear the way of very fruitful sources of controversy in this discussion, but also to displace much of the criticism which was offered by the right hon. Gentleman and get rid of many of the complaints which have been directed against the proposals of the Chancellor of the Exchequer. Take, for example, the capitalists' attack upon this Budget, with which the right hon. Gentleman has dealt at some length this afternoon. I suppose he will agree with me that it has been expressed in its most authoritative form in the communication addressed by the great bankers of the City to the Prime Minister not many days ago. What is the gravamen of the charge which they and the right hon. Gentleman make against my right hon. Friend? It is that by this Budget he is imposing an excessively heavy burden on the shoulders of the wealthy, that this will result in the curtailment of their expenditure and investment of capital, and that, in the long run, it will result in diminishing employment and reducing wages. That is the charge which the right hon. Gentleman made—made in general terms, no doubt, at the close of his speech, in the eloquent peroration to which we have just listened. That would be a very lamentable result, I agree, if were true. But is it true? Will capital take wings and fly away when it is confronted by this demand made by the Chancellor of the Exchequer for an additional contribution for most remunerative employment? I am quite certain that the land will not take itself away, and my own impression is that the proposals of the right hon. Gentleman will tend to increase rather than to diminish the effective employment of land. There may be a difference of opinion, but I shall give reasons by-and-by. In the meantime I should like to ask the House to consider for one moment what effect the proposals of this Budget will have upon available capital, and what effect it will have upon the demand for employment. Either the money the Chancellor of the Exchequer proposes to take in extra taxation will come from money which the rich and well-to-do would have spent, or from money which they would have saved and placed in investments. I shall assume in the first place that it will come from money they would have spent. The right hon. Gentleman proposes to take that money and employ it for the three purposes which we are all agreed are worthy public objects—the provision of old age pensions, national development, and national security.

There is no mention of those.

Surely the right hon. Gentleman knows, and he himself recognises, that the Chancellor of the Exchequer has sketched a great plan of Social reform. No further back than 9th April last the right hon. Gentleman said the Chancellor of the Exchequer was quite right, and that it was his business to find the money, not only for what he immediately requires, but which would give him the larger revenue he would require in future years.

For purposes already approved.

I do not understand that the right hon. Gentleman challenges the propriety of the Chancellor of the Exchequer's finding sources of revenue which will be available in future years. But let me suppose that this money is to be distributed for national security and development and pensions for the aged poor. Will right hon. and hon. Gentlemen opposite say that this is not more productive expenditure than expenditure on luxuries? Will they say that it would give less employment and diminish the demand for remunerative labour? Who shall say that this is not a profitable employment of the money that is taken? Hon. Gentlemen opposite no doubt will say that the rich and well-to-do people would devote that portion of their incomes which the Chancellor of the Exchequer proposes to take to purposes of luxury, and that by the extent to which they did not so devote it the people who are engaged in the business of supplying those luxuries would experience a diminution of employment. That is perfectly true, and it is inevitable where you propose to impose taxation. Again, I say, if you take that money which has hitherto been spent on luxuries, and employ it for useful public services, surely it is a more productive employment of the money. At all events, hon. Gentlemen opposite would not deny that it will not diminish the aggregate amount of employment in the country. I look for one moment to the object of the tax. Suppose the money, instead of being taken out of expenditure, is taken out of savings for investment. Will you starve the supply of capital, or diminish the demand for employment? I say you will not. I say that the Chancellor of the Exchequer if he resolutely carries out the social reforms which he has sketched for us, and if he devotes the money to these three purposes to which I have referred, will be indulging in sound capital expenditure—a capital expenditure which will result in the improvement of the permanent condition of the people, which will improve our national resources, and which will necessarily give a rich return that may well be expressed by the term "industrial prosperity."

The right hon. Gentleman agrees with me in this, that there are limits to the economic taxation of the rich. Certainly, no one will deny that. I think that both capital and ability demand a certain amount of remuneration, otherwise you will not have an adequate output. If you encroach upon that necessary remuneration you will starve the sources. Does any hon. Gentleman who has read the history of the growth of wealth in this country during the past few years for a single moment maintain that my right hon. Friend has even approached the dangerous limit? I find that last year, which we called a year of depression, no less than 1,000 millions of pounds were brought into account in the Inland Revenue Department. I find that within ten years past, whilst the gross income under that particular account has increased by some 31 per cent., the expenditure of the country has only increased by 15 per cent. In view of facts like these, who can reasonably say that my right hon. Friend has seriously encroached upon the taxable resources of the country, or that the rich and well-to-do people will not be able to bear this additional burden without the slightest discomfort? I turn now to the familiar outcry that when you impose this additional burden upon the well-to-do, they will take themselves away and their belongings with them. I know that in many instances there are rich people who are in no hurry to go, and who do not mean to go away. Why, there is no country in ' which the rich and well-to-do have half so good a time as here; there is no country in the world where their property is so safe, and there is no country where the well-to-do get a better return for their money than in this country. I do not believe that any one of them will go. To do them justice, they do not say they will. It is the friends of well-to-do people whom we have never seen and never met who say they will go away, but I know not whither they will betake themselves where they will not meet with the delicate attentions of the Minister of Finance. Will they betake themselves to what hon. Gentlemen regard as a real Paradise of a commercial land Germany—which is at present sweltering in financial chaos, and where I observe the scientific tariff has gone clean to smash, and where I observe duties are now going to be imposed on the ordinary resources of life, upon light and heat, upon coal and gas, in order to meet what is, after all, an ordinary humdrum Budget for twenty millions. I do not think that the rich and well-to-do will leave a country where they are so uncommonly well off as they are in this country.

I pass now to the taxes upon luxuries. If luxuries are to be taxed, I suppose it is absolutely essential that they should be the luxuries in most widespread use, because if they are not the cost of collection and the diminished consumption will very much reduce the result. Where can you find luxuries which are in more widespread use than tobacco and whisky? It cannot be said that the Chancellor of the Exchequer has acted in a vindictive spirit, because it is apparent that the burden, such as it is, will be remarkably widespread. The right hon. Gentleman opposite says it is not a taxable revenue because the producers of the commodities taxed are going to increase the price far beyond the amount of the taxes. I am told that they will do so, and is not that an object-lesson? I wonder what the right hon. Gentleman (Mr. A. Chamberlain) will say when he introduces his Budget with his 1,789 different articles ail with a new tariff, and when he finds the producers of those articles adding on not merely the modest tax which he says he is going to impose, but a swingeing addition, which will mean a great deal more The tax on whisky is 3s. 9d. and to that they are adding 2s. 11d. in some parts of my county. I say at all events that that is a warning to him, and I will add this, that the consumers have the remedy in their own hands, as they need not take the article.

I turn now to the taxes round which the battle rages most fiercely. We naturally expected that. I refer to the taxes upon land. Differing from the hon. Member for Preston (Mr. Harold Cox), I think this subject is capable of being discussed without any inflamed rhetoric and without employing argument superficially attractive, as he says. I think it is capable of being discussed in quiet, sober, and sedate language, and in dealing with it I shall endeavour to do so. In approaching the subject I will keep in view what my hon. Friend has so frequently enjoined upon, at least in his most serious observations on this topic, namely, that you never tax a thing, but only persons, and that you only use the thing as a measure or standard by which to fix the amount that a person contributes, and that it is out of moneys and not out of anything that these taxes are raised. I am very grateful to my hon. Friend for his heroic effort to liberate us from the most grinding of all things, from the grinding of a phrase. I shall remember that I am dealing merely with the standard of taxation, and that the tax collector does not walk off with the land or lay hands on it, that he appropriates no man's property, but merely takes the value of the land as a measure by which he fixes the very modest contribution which the Chancellor of the Exchequer asks him to make to the needs of the country. Speaking in general terms, there are three separate and distinct land taxes proposed in this Finance Bill. The first is the tax of one-fifth upon the increased value which a man receives from land he sells in the future, as compared with the value which it possesses to-day. It is said that a man may have bought this land at a higher price at some anterior date, and that it would not be fair to take the value of it now and make a charge upon it. The Government have recognised the fairness of the contention, and they have taken a period of 20 years, which is going a long way back. Hon. Gentlemen may laugh, but I think the right hon. Gentleman the Member for the Central Division of Glasgow (Mr. Scott Dickson) will corroborate me when I say that in all land valuation the valuators on both sides disregard transactions that occurred a long way back. We say, therefore, that in going back 20 years, we are really giving a very handsome margin. Within that 20 years we shall only charge the tax upon the increment above the value which the man can show it possessed within 20 years back, not, he it observed, upon the improvements on the land, not, be it observed, on the buildings, but on the bare land itself. I forbear entering into further details just now as I will fill in the details in answering the objections to the proposals.

The second tax is the Reversion Tax of 10 per cent., which is a charge to a man who had given, or whose ancestors had given, long leases, that is leases of over 21 years' duration. When that lease falls in, and when the land goes back, and the improvement and the buildings go back, if the value is then greater than it was when the lease was granted the charge is made of 10 per cent. on the difference. If he has bought the reversion of the lease within 30 years of the time that the lease falls in, then in that case no duty is charged, because we assume that, having bought the reversion, he has really paid for the value which he is going to get at the end of the time. I say very little about this Reversion Duty, because long leases are very unfamiliar to my country. Scotchmen would have been astonished to have heard the right hon. Gentleman speaking of the advantages derived from the long leasehold system. Long leases do exist in one or two remote and separated parts of the country, but the system is exceptional and unpopular, and landowners find it practically impossible to dispose of their land on long lease. We do not like the idea of somebody else walking off with our property. That increment value of 10 per cent. is taken upon the value of the bare land.

The third tax, that excited the fiercest opposition from the right hon. Gentleman, is ½d. in the £ upon undeveloped land. [HON. MEMBERS: "Capital value."] Yes, the capital value of undeveloped land. What is undeveloped land? Undeveloped land is not agricultural land. It is not land, in this Bill, that derives its value from its agricultural properties, nor is it land that derives its value from pastoral properties. Undeveloped land is the land which is quite fit and suitable for use for building and for use for industrial purposes, but which is not built upon and which is not used for industrial purposes. That land is of value. No one will deny it has a value, and its owner thinks it can have a still greater value, and he holds on to it because he is waiting for a rise of price, waiting for a price 10, 20, 30, 40, sometimes 50 times what the original price was, a price which comes entirely from the presence and the demand and the wealth and the activity of the community around it, and which he does absolutely nothing either to create or maintain. At the present moment such a man is not in the least degree in a hurry to put his land to building use or to industrial purposes, because as long as he holds it he pays neither taxes nor rates.

Accordingly, he is not in a hurry to dispose of it. He is waiting, as the phrase goes, whilst his land is ripening in value. Ripening in value really means that the needs and the demands of the community are becoming daily and hourly more intense, and as they grow more intense up goes the price of land, and, positively, ripening, simply means his neighbours are needing that land more and more. I assume that they are wealthy people who are able to pay for it. Accordingly the man holds on whilst his land ripens in value. Ripening in value has another side. It is accompanied by overcrowding in the neighbourhood. We propose that the man who derives a profit or an advantage he can have at any moment—[HON. MEMBERS: " No, no."] I recognise the objection. I quite understand what is in hon. Gentlemen's minds. I hope to be able to meet the objections. I shall shirk none of the objections which have been urged, and I hope to answer them as I proceed. During all this time that the land is increasing in value we propose that the man shall offer a contribution to the needs of the community which is exactly proportionate to the value of profits which presumably he derives entirely from it and which he can make available at any moment. Could there be in theory, at all events, any better foundation for a tax than that? By making the man's contributions to the needs of the community exactly in proportion to the advantage to be derived. Whether you are able to make that a practical means of raising revenue or not is a different question. Theoretically there can be no answer to this foundation upon which the tax upon land rests. Now I turn to the objections which have been urged to putting a tax upon the value of land. I think the objections fall under three separate and distinct heads, and under these heads I propose to meet the points made by the right hon. Gentleman opposite. The first of these objections are to the principle upon which the proposal rests—I call them prejudicial objections. Secondly, there are objections to the valuations, and thirdly, there are objections to the use and applications of the valuations once you have got them. The first, or prejudicial objections, are that you are not entitled to treat land differently from other forms of property, or to put it in the more accurate language of the hon. Member for Preston, you are not entitled to pick out and punish particular individuals who have invested their money in the soil of their country and treat them as if they were the enemies of mankind. I think that was the language used by the hon. Member for Preston. Well, that is the picturesque language in which he describes a man who is asked to pay one halfpenny in the £ on undeveloped land. I do not quarrel with the hon. Member as to whether or not that is inflammatory rhetoric. To that I have a simple answer. Is land different from other forms of pro- perty? Now the hon. Member for Preston said that it is different from other forms of property; but then he says that this does not carry you very far. There I differ from him. In my judgment it does carry us very far—the whole length of the way. I will endeavour, as far as I can, to enumerate in what essential features, as distinguished from other forms of property, I think land differs, and then the House can see whether or not it is right. First I would say that land differs from other forms of property in this, that its existence is not due to its owner; secondly, it is limited in quality; thirdly, it is absolutely essential for existence and for production; fourthly, it owes its value exclusively to the presence of the market created by the activity of the community, and it owes none of its value to anything which the owner does or spends. [Cries of "Oh, oh."] Well, in so far as it does the Government do not propose to subject it to any tax. Lastly, but by no means least, from the point of view of the expert tax collector, because of its immobility and visibility which prevents the owner from evading or deceiving the tax collector.

I have enumerated the essential qualities by which I think land stands distinguished from other forms of property; and, if so, I hold that it is justifiable, to use Adam Smith's expression, "to put a specific tax on that peculiar property." The hon. Member for Preston has constantly assured us that there are other forms of property which, equally with land, ought to fall under taxation, and which have the very same qualities as land. What are these forms of property which partake of the same nature as land, and which ought to be taxed in exactly the same way? The hon. Member for Preston has not yet told us. At all events, his hunt for similar analogous sources of revenue for the Chancellor of the Exchequer has not been very encouraging. I think the House will remember that one night the hon. Member regaled us with a description of a domestic servant crying cut in the wilderness for parlours to clean, and he went on to ask us what was the prairie value of a law officer of the Crown on the top of a lofty Scotch mountain? I quite agree that the answer is absolutely nothing. But suppose a busy, active, litigious population grew up around him? The value would still be nothing unless he toiled hard, kept his knowledge up-to-date, and kept his mental faculties in full vigour. Even then the unfortunate man would probably be open to competition by eager, industrious men anxious to take the bread out of his mouth. But where is any analogy between the parlour-maid calling aloud in the wilderness and, for example, the learned Attorney-General on the top of Mount Ararat and the case of a plot of ground? I suppose nothing has impressed observant men who have noted modern development more than the enormous increase in the value of land in the neighbourhood of large towns. What is the origin of that increased value? The sleepless activity of the people around, their presence, their needs, and their progress. Whether the value of the land increases, diminishes, or remains stationary is due to nothing that the owner of the land does or spends. I, therefore, submit to the House that land does stand in an entirely different and peculiar position to other forms of property. The next prejudicial objection, and one which was urged with great force and earnestness by the leader of the Opposition as well as by the hon. Member for Preston, is that the whole proposal rests upon the delusion that land is held up, that there is a corner in land, and that its value has been squeezed up to the great injury of the community, especially the poorer classes, instead of which they said there is nothing of the kind. I differ with them upon the facts. Well, let me say that my belief in the soundness—

I think what I said was that so far as I am aware no case was proved, and that certainly it was not general.

I am quite willing to take the argument on the assumption of what the right hon. Gentleman has said. It does not affect my argument in the slightest degree. But I do not base my belief on the justice of this tax entirely on the hypothesis that the land has been held up. The subject is the value which is entirely created by the enterprise and growth of the community. It signifies nothing to me whether the land has been held up. People do not hold up land in the sense that they keep it out of the market altogether and refuse to sell it at any price, except on the very rare occasions when a man buys a piece of land to secure amenity of his mansion. What is meant by holding up land is this: that a man is perfectly willing to sill the land at a price.

At a ruinous price. It cripples the whole of the building industry.

I do not say so. All I say is this price may be perfectly moderate and perfectly reasonable; but it may be a price considerably above the agricultural value. The owner holds up the land until he can secure the price which he considers from his point of view is a moderate and reasonable price. Be it so, I propose that they should offer a contribution to the needs of the community strictly in proportion to that reasonable and moderate price. If it is said that there is land which is a drug upon the market, and will not command any price, I say then the valuer is able to understand that value. He will see to it. Certainly I have very frequently heard it urged on behalf of railway companies and great corporations seeking compulsory powers and anxious to buy a plot that it is a drag upon the market, and nobody will have it. I have never yet heard a man whose property it is proposed to take compulsorily by a corporation or a railway company say that property was a drug in the market.

You never heard of two valuers agreeing.

Oh, yes, I have often heard of it. I will deal with that point which my hon. and learned Friend mentions by-and-by. All that I can say is that I do not propose to take any man's land away from him. I only propose to take a contribution from him upon the price that the land would fetch if he chose to put that land upon the market. It is absurd to question whether or not that would be a very high price, or a moderately high price. The proposal of the Chancellor of the Exchequer does not rest upon an excessive price or upon the holding up of land. He says: "Here is the value, give me a contribution?" Now I think those are all the objections that were urged to the theory or principle of the proposal.

I come now to the objections urged to valuation. I observe that the hon. and gallant Gentleman the Member for Chelmsford (Mr. Pretyman) speaks upon this question, if he will allow me to say so, with extreme interest, fulness of information, and with marked moderation. He is broadminded in the matter. It was only when he came to this objection that he exhausted his vocabulary. So prodigal was he of his protests and epithets, that he had none left when he came to discuss Schedule A of the Income Tax. I wish he had left some for Schedule A. I abominate Schedule A. If he had showered his epithet over Schedule A I would have said "Amen." The right hon. Gentleman who opened our discussion this afternoon opened fire upon the Chancellor of the Exchequer because of the inequalities that might be perpetrated under Schedule A. Nothing would rejoice my heart more than to hear the Chancellor of the Exchequer announce some day or another that he would resolutely deal with Schedule A. [An HON. MEMBER: "Hear, hear."] Yes, I admit we are fleeced under Schedule A. If I had my way there would be justice done. What the hon. and gallant Gentleman said was that if he were asked as to what was the value of his undeveloped land, he could not make a return. I am sceptical on that point. I would simply ask the hon. and gallant Gentleman to bestir his imagination. Let him suppose for a moment that a railway company or a great corporation, armed with compulsory powers, came into the market and wanted that land. I will warrant that the hon. and gallant Gentleman would name his price like a lamb and stick to it like a leech. I am not blaming him for it. I would do the same myself.

But there is no real difficulty in finding out what is the value of undeveloped land. It is done every day. It has been done every day for half a century. The valuer takes the land separately. Then he takes the buildings. He adds the two together. That is the sum used for both rating and taxing purposes. It is on this method that a contribution will be asked. I am not saying that it is a correct method—this fixing of a man's contributions for rates or taxes. I think it is an entirely wrong method. But the real truth in the objection urged is not so much the possibility of doing injustice as to the uncertainty, the capriciousness, the arbitrariness, and the conjectural character of the method. It is said that you may reach a result, but, as the right hon. and gallant Gentleman urged, that result will not be a satisfactory result. It will be a matter of speculation, of guess - work, of conjecture. Well, if all that means that it will be a matter of opinion then I agree. All valuation is a matter of opinion, and necessarily must be so. From what right hon. Gentlemen opposite say you would imagine that we are dealing with an exact science, and that you will reach a valuation in much the same way as you obtain a result in a trigonometrical and arithmetrical calculation, where you arrive at an absolutely certain figure. Valuations are of necessity imperfect; but the diffi- culties that confront a valuer, and that have confronted valuers in the matter of the valuations for rates and taxes, are far greater than the difficulties that will confront the valuer under this Act. [Cries of "No, no."] Indeed they are. Have hon. Gentlemen opposite ever considered what a valuer has to do [Cries of "Yes."] He has to find out the annual value of a drain pipe, of a pier—I don't mean a wharf, but a pillar. He has to get the yearly value of rails, and of the fifty different things that no rent is ever paid upon or a man is ever asked rent for. He has to get this value on dwelling-houses. People occupy their own houses and pay no rent. Yet somehow or other the annual value of dwelling houses is found. Matters might be difficult at first, troublesome at first, but I say it will only be at the commencement of the new Act. All these enormous difficulties which I have mentioned have been actually surmounted in my own country, at all events during the last 50 years. I remember well the assessor of the great city of Glasgow, whose duty it was to value no less than 200,000 different offices or holdings. During the last three years there has been no single appeal from his valuations.

Shows how easy it is to value.

The hon. Member is perfectly correct. I was quite sure he would come to agree with me. An objection which was urged with great force was that you must find out your unit of valuation, and the right hon. and gallant Gentleman who mentioned this said—and I think quite rightly from his point of view—that this was where the real difficulty centres. It is so. But let me state the case this way: Take the case of a man who has 5,000 acres of land. Of these 200 or 300 immediately adjoin a large populous centre and have a building value. The hon. and gallant Gentleman said: "If you average the value of the whole 5,000 acres you will find that it comes down below £50 an acre, and therefore the owner of that 5,000 acres will escape under your Act altogether." "On the other hand," he said, "you may find a small man who buys two or three acres of building land, and that man would fall under your tax." The hon. and gallant Gentleman asks, "Is that just and fair? "I think not. He asks how you would treat the 5,000 acres. Well, my answer is this. I would begin by dividing the agricultural from the building land. I would then take the building land and divide it into lots. I would judge the value of Lot 1 from its readiness to sell. The second lot, which would probably sell less readily, would be judged accordingly, and so with the third lot, till I came to the lots that had a remote chance of selling, and I would discount the years in which I anticipated they would find a market. And so back to the agricultural value. Such a process of valuation would cost very little.

Let me give an instance to hon. Members. I remember very well the desire of a railway company to take a strip of land immediately adjoining a provincial town in Scotland and extending a considerable distance out into the country from the borders of the town. The valuers on both sides had little difficulty in dividing that land up into lots. They certainly differed about the exact price which each lot was valued at, but they did not differ with regard to the land which was useful for immediate building and the land which would be suitable for building in future years. That is exactly the valuation which could be done under this Finance Bill. The right hon. Gentleman complained that we had not set forth in the Bill the exact instructions to be given to the valuer. That is not only unnecessary, but it is impossible. You could not really set down in a Bill the exact instructions, because each case has to be considered by itself. An expert valuer has no difficulty whatever in treating the matter. Where valuers differ is not on the value to be placed on the land. On the one hand you have the valuer engaged by the people anxious to sell at a big price; on the other hand, the valuer is engaged by the person desirous of escaping that big price. The right hon. Gentleman (Mr. Chamberlain) speaks of the right of appeal on the valuation to the judges of the Appeal Court. Do they really know the value of building land as well as the ordinary expert valuer? They do not profess to be experts in the value of land. The right hon. Gentleman observed that it was the referee alone who can state a case. Well, if the words are insufficiently clear as regards the referee, the clause can be amended to the effect that the owner of the land should be entitled, if he asks for it, that the referee should state a case; but that is really a matter of detail, and I have not the smallest doubt but the Chancellor will agree. My hon. Friend surely knows that the difference is only this: Whereas in the first part of the Bill the referee is entitled in his own hand to state the case, and would presumably never refuse to state a case if asked, hon. Gentlemen opposite say we should like to be assured and to have it made certain that the owner of the land should be entitled to claim to have a case stated. That seems a very simple matter, and can easily be remedied. As to the application or use of the land after the valuation is actually made, the first objection that was urged was by the Leader of the Opposition. He said if you cheapen building land, and consequently lower the rent, you will give an artificial stimulus to that exodus from the country to the town which we all so much deplore. I think I would take my chance if I could get cheap houses for the people of the town—commodious, substantial houses at cheap rents—I think I would take my chance of stimulating the exodus from the country to the town. But surely the right hon. Gentleman knows perfectly well that is not the form of exodus from country districts to towns on which this question rests. I hold very strong views. If we could, I do not say stop, but I say we could largely check that tendency if we were only able to get for our country folk an easier access to the lands. The second objection urged was by by hon. Friend the Member for Preston, who says that if you impose this tax you will not bring land into the market, but you will do exactly the reverse—you will keep land out of the market—and he offered an illustration of building companies which would hesitate to form streets and make drains and so on because they would be under the apprehension that if they did so the land would be treated as of special value, and there would be the tax upon it. Surely my hon. Friend cannot have made any attempt to study the real character of these proposals. Why, the very object of this Bill is not to put any burden at all upon building societies that have expended money in improving the land by expenditure which they may have made in drains, kerbs, sites, and the rest of it. Depend upon it if the land was ripe for building and was really undeveloped building land they would not escape the tax merely because they hesitated and delayed laying out their grounds. There is the third objection urged to the application of this tax, and I think it is the most serious probably of all. It is said that the commercial use of land is not always best from the national and social point of view. It is said if you tax men upon the value of their land they will proceed with lightning-like rapidity to cover the whole of their available land with buildings, and that you will see dwellings and shops reared upon their building land much to the detriment of the health of the community and to the amenities of the town. Many people urge that, and some people actually repeat it. To hear these people you would actually suppose the very best use you could put building land to would be to erect holdings and huge tenements upon them. In nine cases out of ten it is the worst use. Let me here in passing say that I think the right hon. Gentleman who opened the discussion was not correct in his interpretation of the Bill when he says once you develop the land and then leave it vacant and unoccupied you will fall under the tax even if you cannot find tenants for your buildings. I do not so read the provision. I cannot see how, if the ground is covered with buildings, though tenantless, it can be regarded as undeveloped; but if any words are found necessary to make the matter clear these words will be put in.

The words of the section are: "So as to be used for the purpose for which it is developed." If it is developed as a factory and the factory ceases to be used, does not that at once cease to be used as a factory?

"Or ceases to be used for the purposes for which it is developed." Well, I do not think it ceases to be used for the purpose for which it was built if it simply becomes tenantless for a time. I think what is intended to be covered by the clause is the case where a man buys a property and clears away existing buildings and leaves the site undeveloped. He is quite ready to sell the site.

I am much obliged to the right hon. Gentleman. In that case, if you put up houses, it does not matter whether they are occupied or not, the ground ceases to be undeveloped. You may run up any kind of a shanty and charge a prohibitive rent for it.

I think not. It must be a bonâ fide building. Obviously the building referred to by the right hon. Gentleman would be designed to evade the tax and would quite obviously not be a building on undeveloped land. That is merely by the way, and was to answer the criticisms of the right hon. Gentleman; but what I really was anxious to say was this, that the proposal to put a tax upon the value of the land alone would not have that detrimental effect upon a town and its vicinity, and that it would not result in the running up of shanties or of American sky-scrapers. In most instances, I will not say in all, the best use you can put a piece of ground to in the immediate vicinity of a large town is to erect villas with gardens around them. I have frequently seen ground in the neighbourhood of Glasgow which was restricted to such use as this. Then it is said that is restricted ground, which has a less value. My reply is you are merely restricting ground to its very best uses. If you stopped the restriction, and if a man was anxious to best develop his land in the neighbourhood of towns he would build exactly the same class of villas with gardens round them. In order to make quite certain that there may be no mistake or deleterious result from the imposition of this tax the Bill most carefully provides wherever you have parks or gardens, or recreation grounds or open spaces to which the public have easy access, wherever you have grounds for cricket fields, football fields, and the rest of that kind of amusement ground, the greatest care is taken that they shall not fall within the category of undeveloped land.

That is not in the Bill.

Indeed, it is, and the right hon. Gentleman, as an ex-Chancellor of the Exchequer, must see why such a provision as that is inserted. All I am concerned with now is to say that this Bill will not militate against open spaces, the lungs of our great cities, where you find them existing, and where there is some security for their existence. In these cases they must be treated as you find them, and not as building land. I have said that this is a great Budget—a great democratic Budget. It is a Budget which will, and does, lay heavy burdens upon the broad backs of those who are able to bear them, as well as increasing the burdens upon those who are less able to bear them. It is not a spiteful or a vindictive Budget. I agree that spiteful or vindictive taxation is vicious in finance. This tax is neither one nor the other; it is not a tax put on for spite, and it is not a vindictive tax. It is a tax imposed for revenue, and if more revenue is secured than was anticipated that is not the fault of the Chancellor of the Exchequer. The people of this country are not greedy or selfish people; the people of this country are a peaceful, orderly, law- abiding people who feel no envy of the wealthy classes and no jealousy of those who enjoy better fortunes than themselves. They will bear their burden without murmur and without complaint, and surely it will be well for the rich and the well-to-do who are affected amongst us to bear their share of the burden manfully, to bear their fair share and not to give their fellow-citizens any cause for envy or jealousy, and to enable us to reap that benefit of that feeling of good fellowship existing between all classes in this country, that feeling of unity and solidarity, that feeling of absence of envy and jealousy which I, for my part, regard as the greatest security we have for the strength and stability of the State.

The House has listened with very great interest to the speech we have just heard, and whilst there is a great deal in it with which, of course, on this side of the House we disagree, we all admire the way in which the Lord Advocate has expressed himself, and the extremely moderate terms in which he has made his statement. But while the right hon. Gentleman at the end of his speech was careful to say that throughout the whole Budget there was nothing in the shape of spite, may I remind him that he is the one Member of the Government who suggested that as the Licensing Bill had not been accepted by the House of Lords the right hon. Gentleman should put swingeing duties on the trade? The Lord Advocate cannot get away from that phrase, which I should like to remind him is a sort of antidote to the peroration which he has just delivered. I have a word or two to say upon the land question, although I do not think it ought entirely to occupy the consideration of the House.

I should like to ask why these Land Values clauses come first in the Finance Bill, because they are the least important financially, in my opinion, of all the proposals of the Chancellor of the Exchequer. Are they placed first for tactical or political purposes, or is it intended to weary out the Opposition with the long discussion which must inevitably arise in order that they will be less able to discuss the very much more serious questions which come later on? Has it been necessary to place these clauses in the forefront of the battle in order to oblige that very militant section of the supporters of the right hon. Gentleman who have been pressing this subject upon the Government for some time past? It appears to me to be a tack. Perhaps the right hon. Gentleman does not know what a tack means. I may explain that it is the principle of attaching to a Financial Bill something which ought to be proceeded with upon its own footing. In this case the Chancellor of the Exchequer attaches a Bill which is not only a Land Taxing Bill, but is also a Valuation Bill of a most important character, and that certainly ought to have been brought in as a measure on its own footing and dealt with by Parliament and by both Houses in a Constitutional manner. It is intended by this proposal to deny that right to the other House. I do not know how that will turn out, but I do say that the Land Clauses bristle with contentious matter, and are most bewildering even to competent lawyers, who have been quite unable to make head or tail of them. What must be the position under these circumstances of the unfortunate layman who endeavours to understand these clauses and the various applications to which they are put? We have five different values to deal with. There are two classes of site value, a total value, an ungotten mineral value, and an original site value, and they are so mixed up that it is extremely difficult to make anything of them.

I do not desire to deal at any length with the question of the Land Taxes, but I should like to ask the Lord Advocate one or two questions. I would like to know what is the position of the Scottish feuar? Is he regarded as the owner of the property or not? The right hon. Gentleman devoted a considerable part of his Report on the Land Values Committee to showing that the feuar was not really an owner in the accepted sense of the word, because he laid down that the feu duty was rent. If the feu duty is rent, and that principle is accepted by the Chancellor of the Exchequer, who has to make the return? Is it the feuar or the superior owner of the property? When the Postmaster-General was making his speech in answer to the Leader of the Opposition on the 3rd of May, I put the following question to him. I said:— The Postmaster-General, after conferring with the Prime Minister, said:— before them. If a building, a factory, or a house is in the possession of its owner, and not let, the court would come to some agreement as to what its annual value ought to be, but will anyone say that that valuation, with lots of examples around, and possibly with buildings, and a visible site value, is at all comparable with the type of valuation demanded under this Bill, where you have to imagine land in a condition in which it has not existed for a long time, where you have to imagine a market and a buyer and seller who do not exist. The right hon. Gentleman compares that with valuing a house, a garden, a factory, or a site which he sees before him, and which can be dealt with by the valuer, and is very easy to determine.

I desire to explain to the House the reason for my interruption, because I do not wish hon. Members to be misled by the manner in which the right hon. Gentleman picked it up and suggested that I was agreeing with him on this particular point when I certainly disagree with him entirely. One of the greatest objections I have to these clauses is that they set up a state of things which entirely supersedes a system of valuation which has been the admiration and the envy of England for a long time past, and which works in an easy, smooth, and satisfactory way. All this is being entirely ignored and cast aside by the Chancellor of the Exchequer, who by his proposals refuses any right or opportunity of dealing with the subject of valuation to those who deal with it under the present system. I should like to point out into whose hands these enormous powers are to be given. They are to be handed over to what are called the Commissioners of Inland Revenue, who for all practical purposes in Scotland are the surveyors of taxes. Few people realise that under the new system initiated by Sir Henry Primrose we have had repeated and constant changes of surveyors in Scotland. We have had sent down young and inexperienced men, half of them with only ten years' experience, and one-fourth with only four, possessing a considerable knowledge of Income Tax collection, but knowing nothing about valuation, who, after having been appointed assessors, are invariably taken away just when they are beginning to understand their business and the locality. These are the people whom the Commissioners of Inland Revenue would have to depend upon in dealing with these intricate questions of valuation. This House is now being asked to accept a proposition of this kind which will entirely repeal that excellent system of valuation which we have had so long in Scotland, which has worked so extremely well, and will place these great questions in the hands of surveyors of taxes, the appeal from them being to a referee appointed and paid by the Treasury and dismissible by them. That, I think, is an indignity which Scottish Members ought to resent. But Scottish Members on the opposite Benches are not very articulate in their dissent. They will accept anything whatever from this Government. You will find very few articulate speakers amongst them, and when they do take exception to the doings of the Government they always begin by expressing an apology for having to criticise the Government. I appeal to the Scottish Members opposite if they have any influence with the Chancellor of the Exchequer to try and persuade him not to deprive us of the system of which we are all proud—not to deprive us of the introduction of local knowledge into this matter. With all possible vigour we should, in season and out of season, protest against our Scottish system of valuation being altered as it is proposed to alter it. It is proposed to be displaced by a mere beaucratic and an extremely unsatisfactory system.

But I want to come to the important proposals of the Government with regard to the licensing trade and the liquor trade generally. It is just as well to remind the House that this trade pays a very large portion of the Imperial revenue. It contributed last year £38,500,000. While I am well aware that the trade is willing to pay its share of the new taxation, yet the share which it is now asked to pay is greatly beyond its strength. I think that the proposals of the Government are extreme, that they will involve the greatest possible hardships in many cases, and bring inevitable ruin on a large number of people. No doubt the present scale presents anomalies, but the new proposals would create much greater ones, and would in many cases impose intolerable burdens. It has been frankly acknowledged by the Prime Minister and other Cabinet Ministers that these taxes cannot be borne by the trade, but must be borne by the public. That demolishes the argument about the monopoly value. In addition to the taxation on beer and spirits there is a heavy compensation rate to be paid in England and Wales. Besides, there has been an enormous increase of rating in England, while there has been a diminution in the amount of liquor consumed. There is no justification for the interference such as is proposed with great manufacturing businesses. Brewing and whisky distillation are allowable, and you have no more right to tax distilleries than you have a right to tax other places of manufacture. The Prime Minister has said: "The principle of ad valorem duties does not apply—nor, in my opinion, is it applicable—to licences which confer no monopoly privileges, but which are issued principally for registration purposes." While it may be possible for small houses to pay this percentage just because they are small it is absurd to suppose that the highly-rated houses can possibly do so. A great and a heavy charge is going to be placed on publicans' licences. I do not think that the Bill has done much to remove the objections which have been urged to this scale. As to the Kennedy judgment may I remind the Financial Secretary that no Kennedy judgment applies to Scotland, and that the values in Scotland differ to the values in England. How can the Chancellor of the Exchequer justify the proposals in the Bill in the face of the deliberate statements to the contrary which the Prime Minister has made? The proposals will not hold water for a moment, and they must be dealt with without considering the Kennedy judgment. What about the Highlands hotel, which are open only for a couple of months a year? Highland hotels are very large, and are highly rated. They cannot pay this taxation. There is only one reasonable way of dealing with these hotels, and that is to tax the quantity of liquor which is actually sold. Under the scheme of the Government the duty is raised on small houses, and the same percentage applied throughout (except as to those above £700, where probably only houses with high site value would benefit). I am grateful for the concession to charge the 3d. tax on the standard barrel, where the brewer so desires, but I am authorised by the Scottish brewers to say they would prefer that tax to be added to the beer duty and charged monthly.

I do not want to go into the question of all these licences, but I should like to point out there are very many which involve gross hardship, especially in connection with Scottish grocers' licences, which are chargeable on rateable value. These are to be paid on the general busi- ness, while he is restricted in his trade to selling nothing less in the way of spirits than quart bottles. One of these traders told me the other day he had carefully taken out, a list of 1,790 sales, extending over three weeks, and in that time he only sold 25 quart bottles of spirits, the rest being disposed of in smaller quantities, some pints and some half-pints. Is it really suggested seriously that where spirits are sold in sealed vessels—and I agree that they should be sold in such vessels—is it really suggested that a man who only wants to buy a pint of whisky shall be compelled to purchase a quart Is it desirable that a working man should take home more than he actually needs'? We know the story told the hon. Baronet the Member for Inverness, one of whose constituents informed him that whisky did not keep in his house. It must be a great pity and contrary to the interests of temperance, that anyone should he compelled to buy more than he wants. It will undoubtedly ruin a great number of Scotch traders, who are very deserving, hardworking people, and who carry on a trade which is most useful to the village, seeing that they provide not only groceries and other things, but general stores. It certainly will ruin them to pay these licences.

There is another anomaly which must be borne in mind. A publican, on payment of £10 will be able to sell both off and on, while the grocer next door, paying £21, will only have an off-licence. In the case of Glasgow a publican paying a duty of £50 will have the privilege of selling off and on, while the grocer next door, paying £70, on the same valuation will have to pay for the privilege of selling off only. I hope that point will receive the careful attention of the right hon. Gentleman. There is only one other subject with which I want to deal. I want to say a word or two on the new spirit tax. I have in my Constituency a very large number of malt distilleries. There are 17 or 18—in fact, 21 in all—and they view with the gravest apprehension the placing of this heavy tax on their business. They consider it will be a very serious hindrance to the business, which has been very much depressed during the last two or three years, and which will be still more seriously hit by the great restriction in consumption which they expect to follow. They authorise me to say that unless some means are taken in some way or other to prevent the purchase and use of new and inferior spirit, not only will the result to the community be very serious, but that it will mean the ruin of their industry. Of course, their product expensive. They say that, a much larger quantity of grain whisky will be used than of malt whisky; that it will gradually replace their product; that many people, rather than pay the extra price of malt whisky, will prefer to get such whisky as they can at the old price. I think the right hon. Gentleman has ridiculously underestimated the yield of his heavy tax, and I believe that the extra 3s. 9d. will produce a revenue far higher than is indicated by the figures which have been mentioned in the course of this discussion. I have some figures which have been submitted to experts, and, as far as I can make out, the most conservative estimate of the yield during the first year—that is, the year with which we are now dealing—will represent £3,600,000 instead of the £1,600,000 suggested by the right hon. Gentleman. I have made allowances, and I daresay the Financial Secretary of the Treasury is sufficiently well aware of the figures to be able to correct me. I have taken last year's consumption and charged it. at 11s. I have also included the April consumption and the forestalled 3,000,000 gallons and charged that at 11s. That leaves me with 33,325,000 gallons. From that I take the enormous figure of 3,600,000 gallons, in order that I may be perfectly well within the mark, as the loss on consumption likely to arise from the increased prices. I think it will be admitted that that is an enormous reduction to make. I charge the balance at 14s. 9d., and that gives me £21,813,354, or a total of £25,356,923—a difference of about 3½ millions sterling. If that calculation is anything like correct—and I fancy it is rather too low—the right hon. Gentleman will find that he has plenty of money to play with, and that he does not require the full 3s. 9d., so that he can give an advantage to both Scotland and Ireland in regard to this extraordinarily heavy tax. He certainly ought to do it, and if, in the doing it, he were to indicate, as I hope he will, that no whisky of any sort—no spirits of any kind—are to be taken out of bond for potable use until they are two years old, he will do more for the cause of temperance than he probably realises.

I was very much impressed with the evidence given before the Royal Commission as to the physiological effects of new and old whisky. It was tested on monkeys, and the effect no doubt was exactly the same as if the experiment had been tried on human beings. In the one case, after taking the raw spirit, the monkey became perfectly savage, while in the other case, in which the monkey got a similar quantity of old spirit, he became delighfully and pleasantly drunk, and showed himself perfectly willing to make friends with anybody who approached him. A week afterwards the process was reversed, and the monkey who got pleasantly drunk on the old whisky, was given the new spirit, and became as savage in his turn as the other monkey had proved, while the second monkey got equally pleasantly drunk on the old spirit. We were very much impressed by that evidence, and it induced us to recommend in our Report that it was very desirable that spirits should be kept in bond for two years. I believe that would really be enormously to the advantage of the community, and I think distillers would be very glad if such an Act were passed. I press this very strongly on the Financial Secretary to the Treasury, and I intend to press it upon the Chancellor of the Exchequer as often as I can in the course of these Debates. I certainly should like to see him carry out a recommendation which I believe is not one of the worst of those made by the Royal Commission of which I had the honour to be a member. I have said all I really want to urge, but I may add I think it is very unfortunate, and not very fair, that the right hon. Gentleman should have singled out this particular trade in its most depressed condition for such a heavy punitive tax. I do say that in this proposal the Chancellor of the Exchequer is taking far more out of the pockets of the licence holders than the Licensing Bill of last year proposed to do at the end of 21 years. The monopoly value as defined by the Prime Minister, negatively but not positively, I admit, meant in many cases a great loss, but this new licensing duty will mean a still greater loss if enforced on the scale at present proposed by the Chancellor of the Exchequer. I think all this goes to prove the very great necessity for a modification of the Government proposals, and it has only to be stated to prove to the House that there is a great necessity for that modification. Perhaps later on, possibly in September, the right hon. Gentleman will bring up a new scheme of Licence Duties which will be more acceptable than that now before us, and which is contained in the schedule. I suppose it is inevitable, but still I think it is most unfortunate, that these important proposals should be embodied in the schedule instead of in the Bill itself, because it means they will have to be discussed by the House when it is jaded and sick of the whole business, and not likely to be able to give it the necessary attention. I may remind hon. Gentlemen opposite that when Mr. Gladstone revised the Beer Duty in 1880 he placed his proposals in the body of the Bill. I do not know whether it will be possible to follow that example in this case, but I do urge it is most unfortunate that these great propositions should have to be discussed at a period of the year when Members of this House are tired out. I hope that in the meantime the Chancellor of the Exchequer will listen to what has been said to him, and will decide to make some modifications in the scale which will bring it more in accordance with justice and fairness than the Bill is as it now stands.

The hon. Member has made an extremely able contribution to the Debate on this subject, and with reference to the allusions he made to grocers' licences, I think he has touched upon a point with which the Government will really have to deal. I agree very largely with those who think that the basis upon which these licences have been placed will have to be altered. The hon. Member for Ayr Burghs spoke of this Finance Bill as being largely in the nature of a Bill for tacking legislation upon finance proposals. I remember—I do not think he was in the House at the time—that in the year 1890 the late Lord Goschen, who was then Chancellor of the Exchequer, brought in a proposal with regard to the taxation of spirits, with a view to basing upon it a clause, which was included in the Customs and Inland Revenue Bill that year, dealing with the subject of the reduction of licences, so that I think the hon. Member will find that Lord Goschen, in his Budget of 1890, carried out the policy which he now condemns. I listened with very great pleasure and admiration to the extremely able and brilliant speech of the right hon. Gentleman the Member for East Worcestershire, who opened the Debate this afternoon. I listened to that speech with very great pleasure, because it was an exceedingly able review of the considerations brought before the House by this Bill. There were many suggestions in the speech with which I am to a large degree in sympathy, but I must say that its very brilliancy convinced me more than anything else of the solidity of the principle on which this Bill is based. It seemed to me, looking at and following the passages of his speech and his exceedingly clear and in many portions powerful arguments with regard to the proposals of the Bill, that he struck no vital blow at any principle upon which the Bill rests—no vital blow whatever. The right hon. Gentleman illustrated the complication of the machinery, the possibility of hardships upon parties and individuals, and of difficulties of working, and he made, in my opinion, more than one suggestion for removing those difficulties and objections worthy of attention. In fact, however, he rather admitted, in one passage of his speech, my answer, because he conceded that he would be met by the reply that hard cases make bad law. I do not in the least complain of his having introduced the consideration of a great many hard cases, because I for one think that it is of vital importance, before the acceptance of this Finance Bill, that hard cases shall be wisely and dispassionately considered and, so far as is possible, dealt with by the Government. I want to give to this Budget Bill a whole-hearted and almost unreserved support. My first ground is, that it helps the working agriculturist and helps the industry of agriculture more than any proposal laid before the House of Commons in the 25 years I have myself been in it. My second point is, that this Bill for the first time seems to set up a standard of absolute equity and justice in contribution between classes, as compared with one another, towards the total expenditure of the nation. At the right time I am prepared to justify that argument by contentions and figures somewhat similar to those with which I am afraid I sometimes wearied my right hon. Friend opposite in dealing with tea and sugar and other duties in the past. But that is my second ground for giving this Finance Bill my heartiest support. The equality of pressure, the equality of taxation, the equality of distribution between one class and another towards the total vast expenditure which, it is admitted on all hands, this House of Commons has a solemn duty to meet and provide for by the best means possible. My third ground is one from which some bon. Members opposite will heartily dissent and that is, that this Bill seems to me, the boldest, the most logical, the most decisive application of the principles of Free Trade, and when it is passed, as I am sure it will be passed, it will form the firmest and most irresistible barrier to the economic fallacies, which I regret to see have captured the minds of many of my hon. Friends opposite.

I want to say one or two words about the conduct of this Bill by my right hon. Friend the Chancellor of the Exchequer, whom I am glad to see in his place. I have had a good deal to do in the last three years, since my right hon. Friend has been in office, with various legislative proposals which he has put before the House. I am familiar with the course he adopted on the Merchant Shipping Bill and with the still more important discussions which occurred on the Patents Bill—a Bill of vital importance to the industries of this country, and all I can say, although I do not know that my right hon. Friend wants any testimonial from so humble a back-bencher as myself—all I can say is, that at any rate he approached the complicated issues, the conflicting interests which were involved in those measures, such as will be involved in the discussion of these proposals, with an openness of mind, with a tact and with a conciliatoriness of spirit which, I do think, give some assurance to hon. Members opposite that in the great interests which are concerned in the discussion of the Budget this year any real hardships, any real difficulties, and any real grievances, will be considered in the same temperate and conciliatory spirit by my right hon. Friend in the course of the progress of this Bill. I do look forward, therefore, to the prolonged discussions which we are condemned to on this Bill with some idea that it will not be an internecine struggle, but I hope they may tend, in view of the enormous duties resting upon this country and this House, to friendly and happy reconciliation of differences on many points—I do not say on all, but on many points—and may lead to the final carrying of this Bill in a form which will render it less repugnant to those who dissent from much which has been stated in regard to it. As I said, my first interest in this Bill is what seems to be its supreme interest to Members who, like myself, have for years past devoted a very large part of their Parliamentary time and energies to the promotion and welfare and development of agricultural interests and the improvement of the position of the tenant farmers of this country, and also, indirectly, I may claim to have my share,, and, of course, many other hon. Members can claim a greater share, in promoting the interests of the improving and progressive land-owners of this country, as well as the tenants of this country. I should like to tell my right hon. Friend the Chancellor of the Exchequer that I am proud of this, that having worked so long for those interests—I am proud that it has been a Government so advanced, so progressive, so fearlessly inspired in its policy in regard to many questions, which has taken up this case of the land and has really tried to help agriculture by the proposals of the Budget. The question which is familiar to us is this, the working tenant farmer, the land-owner, the land as the raw material of the working tenant farmer, the too insufficient capital of the working farmer very often, and the capital of the progressive and improving land-owner also in this country—the whole of those interests have been heavily oppressed for generations past, both by Local and Imperial taxation.

Everyone admits, and it has been common ground to Members opposite, as well as to Members like many of us who represent agricultural districts on this side, and who really care about the agricultural industry in this country, that they have provided far more than their share both of Local and Imperial taxation in the past. That great burden has only been lightly touched by many of the proposals hitherto advanced by previous Governments, but now we are in this position. We have, admittedly, a new era of immense expenditure before us, we have a new crisis of financial experiment before us, and we have to provide for a very much larger sum, and I do congratulate the Government on having at any rate deliberately excluded agricultural land from bearing anything like the burdens which are being placed upon the rest of the community with a view of meeting this gigantic expenditure. As I have said before, I am not in love with the phrase "taxation of land values." I have frequently expressed my opinion that that phrase is a pitfall of logical and economic fallacies, and has done an immense amount of mischief to the very cause to which it was intended to contribute support. We all know perfectly well that sound, good sense has been imperilled by the introduction of vague and utterly impracticable theories which would, if they were carried into effect, involve not only the paralysis of agriculture in their application, but also a great increase of unemployment in the country. I have seen the most unsound articles in some Radical newspapers on this subject, though at times I have also seen a good many more sensible articles in Radical papers opposing what was said. But I will not discuss this point. I will only say this: that for people to talk vaguely of imposing a penny in the £ tax on all land, whether it is remote from villages or anything else of that nature, is an insane proposal, and I am very glad that the Government have, in this Budget, slammed the door upon that proposal, and taken the actual measure of the real situation. I listened with the greatest pleasure and satisfaction to the speech of my right hon. Friend the Lord Advocate, which convinced me that I was exactly right in my appreciation of this Budget.

The real point of this Budget in regard to agricultural land is this, that there is a frank recognition of the complete distinction which exists between land which is being worked for the benefit of the whole nation by the agricultural tenant and improved by the progressive agricultural land-owner—a distinction between the value of that land in regard to the right of the public to call upon it for any contribution—and land to which an artificial value has been given, and is continuously being given, by the efforts of the whole community. It seems to me that the whole of this Budget draws an accurate and definite distinction between those two classes of land, and I was very glad to hear the Lord Advocate express some sympathy with an idea, with which I heartily agree, which was brought forward the other day by the hon. Member for Chelmsford (Mr. Pretyman). It seems to me that you must carry this principle further of distinguishing between agricultural land and agriculture as an active industry, which you must not tax either on its raw material or its operations, and the land which has this artificial value given to it, and the suggestion of the hon. Member for Chelmsford, that you should change from Schedule A to Schedule D in the taxation of the owner of agricultural land seems to me an absolutely just one, and I sincerely trust that my right hon. Friend will see his way to adopt that proposal. I would also express my opinion in favour of the view which was expressed by the right hon. Gentleman opposite this afternoon, and which, if I am not entirely in error, was to a certain extent assented to by the Lord Advocate afterwards, that is the fairness of treating in a different way sums set apart as a sinking fund for the payment of death duties, or for purposes of that kind, which would, if they were reckoned into the total of a man's income, place his income above the limit for the super tax, and thus place upon him an unjust scale of taxation. It seems to me that that is also a suggestion which ought to be carried out by the Government, and I hope it will be done.

The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) spoke rather melodramatically of the Death Duties as paralysing the agricultural community. If he considers that the Sinking Fund is, as I hope, to be exempted from duty, and therefore that the highest encouragement will be given to owners of land to devote a portion of their income to insuring against death duties, he will see that that argument is largely answered. As to the Increment and Reversion Duties, I have listened to arguments from right hon. Gentlemen opposite during the course of these Debates without feeling my withers in any degree wrung. It seems to me that you are on absolutely sound and unassailable ground—though there may be hardships, and I hope they will be dealt with—when you say that the great increments which occur in these vast urban estates should be asked to contribute fairly to the taxation of the country. I do not think myself that an increment duty of one-fifth imposed in this way as a death duty, which may also be insured against in the same way as other forms of death duty, is not perfectly fair and perfectly just. There may be exceptions and restrictions which would mitigate certain evils, but I can see no injustice whatsoever in the principle either of the tax or of the Reversion Duty. I think there has been some force in the argument which has been laid before the House again and again that, after all, it is the energy and enterprise of the locality which largely contribute rather than the State itself to the creation of these values. I accept fully what I conceive to be the argument of the Government that these taxes are better levied and assessed and also perhaps more equitably and economically administered if they are centrally administered, but I would ask my right hon. Friend to consider this point. One of the greatest merits of this Bill, in my opinion, is this: You are having an immense relief to the rural ratepayer by the contributions for the Motor Tax and the Petrol Tax, and £600,000 a year is to go to the reconstruction and to the improvement of the main roads in the country. You also have the Agricultural Development Grant, and I cannot conceive that it will fail to do a great deal to relieve rural ratepayers in matters like agricultural education. Here we have this at present, perhaps, not very considerable increment and reversion duty going into the Imperial Exchequer. The fact that these values are largely contributed to by the energy and enterprise of the immediate locality does constitute a very strong reason for him to adopt, in respect of the application of the money of these taxes, what it seems to me he has adopted for the relief of the rural ratepayer in the Agricultural Development Grant and in the road expenditure. I hope the Increment Duty and the Reversion Duty may be treated as cornerstones on which my right hon. Friend may begin to build up a system which the country surely has waited for far too long—a system of some regular, systematic, thought-out, scientific relief of the urban ratepayer, who deserves just as much consideration from us as the rural ratepayer.

I will turn to the third Land Duty—the tax on undeveloped land. Undoubtedly it introduces a new principle into our taxation. I have heard it alluded to by many hon. Members opposite as a purely Socialistic proposal. We have had in the last few days placed in our hands a very interesting Return from the consuls in the United States of America as to the application of this sort of duty there. It is exceedingly instructive in many particulars. The taxation there is some five to ten times as heavy as the taxation suggested by my right hon. Friend. It is an enormously heavy tax. They take 1,000 dollars' worth of land, and so many cents in the 1,000 dollars are taken year by year. In the State of Massachusetts some 16 or 17 cents in the 1,000 dollars are taken out every year, and in New York 24 cents are taken from the capital value of the land and buildings. No one in his senses would dream of calling the United States of America a Socialistic State. Every idea of American industries and the use of American capital and everything else is absolutely opposed to the principles of Socialism. Much in this Bill undoubtedly mitigates some of what seemed to be the dangers of this proposal, but I have some sympathy with the view of the right hon. Gentleman (Mr. Austen Chamberlain), when he described this proposal as in some cases taxing a man on a revenue which he is not receiving, based on a capital value which he cannot get. I think the whole of the proposals contained in those clauses deserve the most careful consideration of the Government. I have listened with great satisfaction to some remarks which fell from the Lord Advocate in which he evidently showed that the Commissioners would apply a system of graduated discounts according to the proportion towards which this land approached actual ripeness for building and when it was possible to be sold. It seems to me that that is the principle on which this tax ought to be worked out if it is to be maintained in the Bill.

But I am bound to say that the state of things in the United States does not give me any very great sense of satisfaction as to this particular proposal. It originated in the States partly, as in any new country, from the plan of taxing on a percentage of all the capital value, not only of land, but of buildings, stock-in-trade, and everything else. But what has been the actual result? An altogether disproportionate part of it falls upon land, just as in the case of our own taxation personal property largely escaped from the contribution that was intended. There is the most wholesale evasion of taxation of personal property in the United States, and the operation of the tax has been found rather to paralyse and check the development of industry and of industrial occupation in the neighbourhood of towns, rather than help that development which some of its enthusiastic supporters have wished to see. But I would warn the Government against adopting wholesale this principle of taxing the capital value of land without further consideration. I know some cases in the United States of this sort of hardship. I know of a small estate which produces nothing to its owner. It cannot be sold at present for anything like the valuation which is put upon it. It is unlikely to be sold for many years, and is exactly in the position described by the right hon. Gentleman (Mr. Austen Chamberlain). It is paying at present a tax of some £7 or £8 per acre every year on the assumed capital value. What is the position of that land? The owners have to fence it and protect the timber upon it, and generally look after it at their own expense, and this immense annual tax of £7 or £8 an acre is contributed to the township revenues and so to the State. That is absolutely unjust, and I hope nothing of that kind will come about in this country. My right hon. Friend is only going to ask for 1–480th of the capital value of the land, and in the case I referred to 1–50th of the alleged capital value of the land is exacted every year. It seems to me the suggestions made by the hon. Baronet the Member for Chippenham (Sir John Dickson-Poynder) at some earlier stage of our discussions, that whatever increased value was legitimately taxable in land of this kind should be assessed, and should be taxed at the time at which it is actually coming into useful occupation—actually going to be developed—is a good one, and I hope the solution of this tax may be found in that direction. I hope the ideas which were thrown out by the Lord Advocate to-day in regard to graduated treatment when the land is approaching the actual realisation of its value may be fully and effectually carried out.

I wish to say a word about the Old Sinking Fund and the Agricultural Development Grant. My right hon. Friend (Mr. Lloyd-George) has been somewhat sharply assailed both in this House and the country for unorthodox finance and rank Constitutional heresy in making the proposal to intercept the Old Sinking Fund. I think that any suggestion of that kind is absolutely unfair, not only to past, present, and future Chancellors of the Exchequer, but also to the great officials of the Treasury. It is absolutely unfair to assume that they will come forward with Estimates which will involve enormous and artificial subsidies in coming years to be applied in the way proposed. I do think that the proposal of my right hon. Friend is a very sound one, namely, that, instead of allowing legitimate savings to drift into a relatively unproductive fund for the extinction of existing debt, they should be put into a fund which will contribute to the creation of ever-growing sources of revenue in the country. I think that is a noble, splendid, and genuine conception, and I hope the Chancellor of the Exchequer will stick to his idea and boldly carry it out in the pursuit of this policy. I shall be glad when occasion offers to show by figures based upon calculations made by the right hon. Gentleman the Member for West Birmingham in the first instance, and followed out by many of us since, that the incidence of taxation has been more heavy on the poor man than upon the rich for financial generations past. The hon. Member for Wirral (Mr. W. H. Lever), in the first Debate on the Budget, put the taxes paid by the poor man at double that of the rich man. I should not put it as high as that, but I should say that the ratio was something like 3 to 2. These are figures at which I have frequently arrived by calculation of the actual expenditure of working-class families and also of wealthy families on dutiable articles, which is the only way in which you can approach to anything like scientific accuracy on a matter of this kind. As to this Budget being a bulwark of Free Trade, I shall not trouble the House with the obvious argument to-night, which is that, after all, if you provide for a steadily growing revenue out of sources which are equitably adjusted according to the taxable and contributory capacity of the various classes called upon to contribute, if you make ample provision for a fleet to defend the Empire, and if you provide for the purposes of social reform, then I say we shall have cut away for ever the possibility of hon. Members ever being listened to in this country when they propose placing taxes on the necessaries of the people.

The hon. Baronet who has just sat down (Sir F. Channing) commenced by saying that he gave wholehearted support to the Budget now before us, and he proceeded to enumerate a large number of points which he hoped the Government and the Chancellor of the Exchequer would modify considerably. I think that with a good deal of what the hon. Baronet said we might agree. We certainly would agree in what he said in praise of the Chancellor of the Exchequer's persistency and consistency in this House. The hon. Baronet went on to say that if we all showed the degree of pleasantness which he hoped we would show, we should not have to continue very long into the hot summer months in the discussion of this Bill. Speaking for myself, I should like to say that the Chancellor of the Exchequer set us a splendid example when in Opposition, and I am not prepared to take lying down any Bill that seriously violates the principles I hold dear at heart. I am sure that fighting spirit will commend itself to the Chancellor of the Exchequer. It is because I believe the proposals in this Bill do violate those great principles that I will give it my courteous but strenuous opposition from beginning to end. Anybody who has listened to the Debates which have taken place in reference to this Budget must see, if they really look at it from an impartial point of view, that these new land taxes ought in common justice to be rejected by Parliament, for this obvious reason, that they violate the first canon of sound taxation, namely, that burdens should be imposed only in respect of ability to pay, or, in other words, that they should cause equality of sacrifice. I am extremely sorry that the Lord Advocate has been obliged to go away, because he, after all, has done yeoman service to the Chancellor in going up and down the country agitating on behalf of this new principle of land taxation. The hon. and learned Gentleman has not agitated in what I think he described as a sober and quiet manner. He has not hesitated to use language which was perhaps more expressive than polite, and he has done his best to inculcate opinions, which I believe to be wrong, in the minds certainly of the people of Scotland. That takes me back to the committee of which the Lord Advocate was chairman. He was a very ardent and active honorary vice-president of the Scottish League for the Taxation of Land Values, a league which has been described as the only active organisation for carrying out the principles of that half-educated fanatic, Henry George. I think the Chancellor of the Exchequer also shares the honour and glory of belonging to this great Henry Georgite institution. There are other Members sitting opposite who were connected with it. I believe the Secretary to the Admiralty also boasts of being a vice-president of this great society. So keen was the Lord Advocate, the legal representative of Scotland on the Front Government Bench, to see that his beautiful principles were carried into effect, that when discussing the Bill before the Select Committee he did not hesitate, although the Committee numbered 10 Radicals to four Conservatives, to carry by his casting vote a Resolution to authorise the breaking of existing contracts, and he was supported by the Solicitor-General for Scotland. The Amendment in Committee was moved by myself as follows: "That we are of opinion that the violation of existing contracts would be indefensible." How can the Prime Minister complain if the people of this country have not confidence in the statements which he and the Chancellor of the Exchequer have made that anybody who invests in bonâ fide and honest industries need not fear the proposals made by the Government? I ask the Prime Minister how he can reconcile that with the proposals in this Budget affecting reversions, all the details of which have been thoroughly thought out before each bargain was fixed? Now it is proposed to take away under this Budget property which was calculated to be worth so many pounds, shillings and pence at the end of the term. How can you justify that with the statement of the Prime Minister, who, speaking in July, 1907, to a meeting of the representatives of insurance companies, said that there was no intention under any pretext of public policy to rip up obligations which were incurred in good faith and for value? Then the right hon. Gentleman says that there is no reason whatever or justification for the lack of confidence which has been shown in an increasing degree in the promises of the Government of the day. I know how keen the Prime Minister is not to make any statement which could be construed by the British public as one which he is not determined to stick to through thick and thin, and, that being so, I cannot suppose that he agrees to the proposal in this Bill to tax reversions in the way suggested.

Any new taxes upon land, in my opinion, not accompanied by correlative taxes on personal property are inequitable. In point of fact, I think that Parliament, as a sheer matter of justice, ought to try to do their best to reduce the disproportion of the taxation as between personal property and real property. Even before the equalisation of the Death Duties by the late Sir William Harcourt land bore more than its proper share of the national expenditure. If I wanted any corroboration of that, I would remind the House that there was a Treasury Return presented to this House in 1885, on the Motion of Sir Richard Paget, which showed that real property paid in proportion to its value about 25 s. in taxes for every 20 s. paid by realised personal property. The hon. Baronet (Sir F. Channing) referred to the opinion of the late Lord Goschen—or, as he then was, Mr. Goschen—who on 23rd April, 1888, speaking in the House of Commons, said that, when all the facts were taken into consideration—

That was stated before the equalisation of Death Duties. What is to be said now, when the partial exemption from these Death Duties—the only financial privilege enjoyed by real property—has been taken away, but special charges upon real property, such as the Inhabited House Duty and the Land Tax, are retained? If the House will bear with me I would like to go a little bit into the history of this. We were urged to do it by the Lord Advocate, who, supporting his contentions, suggested that we should look into the past history of this question. This Land Tax, still retained, though at a considerably reduced rate, furnishes a curious instance of the process by which financial burdens have been shunted on to real property—on to the land. The Land Tax originally was the charge on all invested and permanent property. We have the report of the Inland Revenue Commissioners for 1885, where they say:—

The Royal Commissioners on Local Taxation, in their Report, say that while personal property subject to Imperial taxation is about three times as great as real property so taxable, the non-rateable property contributes to local objects, if elementary education is excluded, only a little over 6 per cent, of the whole expenditure, and nearly 83 per cent. falls upon the rates. In order to relieve this inequality the Report goes on to propose various forms of relief, among them that there should be an increased payment from the Death Duties on personality for local purposes, and that the transfer of trading and establishment licences should be made complete and power should be given to increase their amount; while the assignment to local purposes of a fixed portion of the Income Tax is also deserving of consideration. That was the majority Report. The minority Report, which has been constantly referred to by the advocate of special taxation of land values, supports an owner's site value only as a "make-weight to accompany increased provision made by the State in aid of services locally administered." And it goes on to say that a new charge is justified on the ground that it would be counterbalanced by the relief proposed to be granted in the shape of increased subventions. I think that there is no doubt, taking Imperial and local taxation together, that there is an excessive strain on real property. That is supported by the very able statement, if I may say so, of Sir Robert Giffen in January, 1905, who said:

There is another reason why I think that the proposed land taxes should be rejected, that is because they introduce, in my opinion, a new and very oppressive system of valuation. The Chancellor of the Exchequer told us in his opinion £50,000 will be sufficient to cover the cost of the valuation. He has not told us what he thinks will be the cost to the owners of the land, who, at all events, are not going to take any valuation easily or lightly that may be put upon them by the Government. Before the Committee to which I have referred we had an expert on this question, and he told us, in his opinion, it would cost half a million pounds to value Glasgow, and he divided the half million as to £360,000 cost which will be thrown upon the owners of the land, and £140,000 for the valuation, and all who have had any practical experience of the valuation of land will agree that the £50,000 mentioned by the Chancellor of the Exchequer is but a drop in the ocean, which will go but a little way to carry out the work of valuation. As against this £50,000, may I give you two cases which will wipe it out straight away. I refer first to the case of the London County Council, to which I belonged for some years. In the year 1892 they began to make a ground plan of London which has not been finished yet. £1,500 was the figure at which they put the cost proposed for doing the work. I gave the other day £15,000 as a figure which it had already cost, but I am told that the amount is nearer £30,000, and that they will have considerably to exceed that large sum before it is finished. Here you have the mere making of a ground plan of London, which will cost considerably more than £30,000, a sum that would represent a very large proportion of the £50,000 allowed for by the Chancellor of the Exchequer. The second case to which I would refer is that of the Corporation of Glasgow, who decided to make a register of the streets of Glasgow in 1907. They have been a considerable time at the work and have not finished it, and already they have spent over £20,000 on making out this list of streets alone. Those two items are going to cost more than the amount which the Chancellor of the Exchequer devotes for making the valuation, and I do not think that the Chancellor of the Exchequer really believes for one moment that £50,000, or anything approaching it, would be sufficient to carry out what he expects to get done under this Bill. The Chancellor of the Exchequer in his heart must know that this amount is quite inadequate.

Perhaps he hopes to get some money for this purpose out of the Development Fund, which the hon. Baronet referred to as the Agricultural Development Fund. There, again, he cannot have read the Bill. As far as I know there is no particular sum of money placed aside for the advancement of agricultural interests. I believe the Chancellor of the Exchequer did express a hope that out of this development grant of £200,000 he would be able to devote something to promoting the interests of the great agricultural requirements of the country. The land under this Bill is not to be valued on its annual return, but it is to be valued upon a hypothetical estimate of its potential value, what it might bring in annually if it were applied to different purposes from the actual user. Who is to describe really what is the best use to devote particular land to? The Lord Advocate said the best use of land—and I was delighted to hear it—was to have gardens and open spaces around small villas. Another man would say: by the Lord Advocate to-day. A little above, on the same page, there is another remarkable statement. Talking about local taxation, it says that taxes are levied for several purposes directly from all property, real and personal, within the area of their several jurisdictions. I say if you are going to raise taxation, disagreeable as taxation always is, then raise it fairly, raise it equitably, raise it on every form of property that you can bring into your clutches. The hon. Member, one of the leaders of the Labour party, I think would be the first to deny the statement which he made on 24th January, 1906, that he regarded unearned income, whether from land or capital, as being alike an impost on the industry of the nation, and therefore a fit subject for taxation. He added:—

Very thin.

Yes, the very thin end of the wedge, but the insertion of which will in the near future enable them to carry out the whole doctrine of Henry George, which is to tax to extinction not only rent, but all rental value. The right hon. Gentleman the Chancellor of the Exchequer has not said that these are his views, and I think he will hesitate before he commits himself to such a policy as that. I am quite sure of this, that the learned Attorney-General, like the Lord Chancellor, would be amongst the first to repudiate such an idea, and that he, like the Lord Chancellor, distinguished men as they are, would regard the proposal as silly and absurd, to say nothing worse. The words used, I think, were that such a scheme would not be entertained by any common-sense class of people. We shall have opportunities of discussing other systems during the Committee stage of this Bill. I look forward to it. I was delighted to see the Lord Advocate present to-day, and to find that the Chancellor of the Exchequer was not going to continue to keep him muzzled in the background for fear he again gave the case away. He has given it away before, and I cannot help thinking that he has given it away to-day by what he has said. I would tender a. little bit of advice to the right hon. Gentleman, and that is to trust his case to the distinguished hands of the Attorney-General for England, instead of to the Lord Advocate, who gave away the case to-day, as he has done on previous occasions. No one would suggest that he is a Henry Georgite. There were several leagues represented before the Committee, and perhaps it may be desirable to say the Henry George League. Nobody would venture to say that if a man owns stocks or shares in a company, or if he owns a policy of insurance, he should be taxed upon his securities before they yield any income because they have a market value. I do not think the Chancellor of the Exchequer will agree to that. Land, in my opinion, is a form of property which ought not to be treated differently from personalty. It has been a favourite form of investment for many years past. Money has been invested in the land because of the confidence felt in the strength of the law of this country, and it will be a bad day for this country if confidence in land investment is to be shaken by any legislation of any Government. The Government apparently assume that legislation is necessary to compel the owner to put his land to the "best" use. We have heard a great deal about land being held up, but I do not think anybody in this House can give us an instance, a real instance, where that has occurred except in London; there you have a splendid instance of the holding up of land in the Holborn to Strand improvement by the late Radical majority of the London County Council, who wanted to have the whole of the land of London. They held up this land, determined not to sell it at any price, and put on such restrictive covenants that they frightened away any likely lessees who might come along. The present majority of the county council have adopted a saner view. They saw that the ratepayers of London were losing each year a sum of about £200,000 on this land, and stopped it. They are now doing their best to attract lessees to the land by imposing better, easier, and more businesslike conditions than had been imposed by their predecessors.

There can be no doubt that if the owner finds his property valued at a larger sum than is represented by its present rental, and he is taxed on such increased valuation, he will be tempted to put his property to what has been called "a more profitable use." As has been pointed out, what may be to him a more profitable use in the vast number of cases would not be the most profitable use from the point of view of the community. It is not in the interests of the community that central parts of the town should be crowded with the greatest possible number of buildings of the greatest possible height, nor is it to the advantage of the community that gardens and open spaces under private ownership should disappear. The United States of America have been referred to as giving an example of what we may expect from legislation such as this which is now proposed. In New York land, instead of becoming cheaper, has become considerably dearer, and open spaces, instead of being used as lungs for that City, have disappeared. Overcrowding in New York has enormously increased, and, in the words of Dr. Wallace, who was president of the Land Nationalisation Society:— taking a large mass of evidence, there was no material holding up of land in Glasgow. To talk about the holding up of land, to my mind, is to mislead the public. There was one instance, and one only, which I heard before that Committee. It was the instance of a man from Glasgow who came to support the theory of Henry George, and to denounce the holding up of land. Examination brought out that he himself had held up land, that he held it too long, and that the result was his inability to get back even the mortgage he had on the land. I do think that those who talk about holding up land to the detriment of the community should at all events have some ground on which to base their arguments instead of giving us such general statements. In the course of the Budget Debate on the Report stage the President of the Board of Trade stated that in Glasgow alone there were 120,000 people herded together in single-room tenements. On the other hand, there are 40,000 tenements in Glasgow to-day which are unlet and untenanted. The same might be said of the City of London. It is estimated by a competent authority that there are unoccupied premises in London sufficient to house another half-million of people. At all events, owners have every inducement to bring their land into the building market as soon as possible. Far from there being any monopoly in building land, there is, in my experience, very keen competition amongst owners of the building land to attract building lessees. The real interests of the community and of the owner are identical. Obviously, the object of the owner who has building land to let is to let it as soon as it is ripe for building. He may miscalculate, as did the witness at the Glasgow Commission, to whom just now I referred, but in most cases the principle of self-interest may be trusted to act. That is a statement which was borne out by the hon. Baronet the Member for Wilts. You may safely trust to self-interest guiding the owner to act aright when dealing with his property. If it is better for the owner to wait, it certainly is better too for the community, which is able to obtain higher rates and taxes from the increased price. The fact that you propose to apply this differential taxation to land can only be explained by the old rancour of Gentlemen opposite against the ownership of land, and still more by the policy of Henry George, to which I have referred. That is a policy which will not commend itself to the country, and I do not believe really commends itself to the responsible Ministers of to-day. The two chief Law Officers of Scotland have pledged themselves to it and have gone to the extent of forcing through Committee a Resolution which had for its object the abolition of existing contracts. Their conduct is such as cannot commend itself to Scotland as a whole, and it will require the skilful handling of the Attorney-General and the Law Officers of England to get this House to support this measure. As I told the Chancellor of the Exchequer at the beginning of my remarks, I feel deeply on this question. I have no intention of relaxing my opposition to it, and when we come into Committee and to close quarters I believe we will be able to show many more evils than have been exposed even by hon. Gentlemen opposite, and we may hope, having placed those strong objections before the Government, that they will see their way to modify considerably the proposals before the House.

The hon. Member who has just spoken has represented himself to be a thick-and-thin opponent of the Government's Budget. I confess I am a thick-and-thin supporter. I cannot help thinking that the hon. Gentleman really misunderstands the effect of assessment on capital value. I travelled at the end of the year before last in South Africa. I did not know before I went there that the whole of the rate of the municipalities and towns in South Africa was based on capital value, that the land and the buildings are separately assessed and that the rating is graded upon both separately. [An HON. MEMBER: "It is a new country."] I think it would very much surprise the hon. Member to learn how that system works out. Here our system is on annual values, which permits a person to pay his rates on annual values and yet be utilising a valuable property for very poor purposes. I would refer to one case that specially struck me in the town of Johannesburg; it was the site next door to the great Carlton Hotel, which anyone who knows Johannesburg knows is the finest hotel in South Africa. It was, of course, in the main street, and next to it I noticed that there were some three very poor shops, entirely different to the rest of the shops in that district. I made it my business at the mayor's office to find out the valuation, and I found that those three shops were valued at £2,600, while the land on which they stood was valued at £36,000, so that whilst the owner chose to keep poor property on expensive land, he had to share in the burden of governing Johannesburg. Then the hon. Gentleman went on to say he did not believe that anybody on this side of the House could mention a case where land had been held up. I had an experience some years ago of a piece of land within about three-quarters of a mile of the Bank, and it was held up for over 20 years, while £30,000 was asked for the site the whole of that time. Of course, the owners would not have held it up if they had been paying this half-penny in the pound or if they had even paid something towards the rates. They paid no rates because it was bringing in nothing. They paid no Income Tax because there was no income, and yet that £30,000 was being asked all the time, and at the end of the 20 years the neighbourhood became so congested that somebody had to give it. I do not want to mention them publicly, but I could give them chapter and verse for that case.

I am one of those who heartily approve of the Budget of the Government, and, in fact, this is a Budget which, to some extent, helps to realise one's political hopes and aspirations held for some years. Of course, to raise thirteen and a half millions of extra taxation will mean increased burdens, but I have asked myself, in considering this Budget, do the Government propose to raise it in such a way that there will be a growing margin as the years go on for increased expenditure both on the Navy and Social Reform? Again, is it going to be raised in such a way that it will not only not stop consumption and production, but gradually will lead to increased employment and industry? Is it going to be raised in a way that will fairly allocate the burden amongst the various classes of society in proportion to their ability to bear the burden? Is it going to be raised in such a way that the charge cannot be substantiated, that it falls prejudicially on any class or on any form of property? I honestly believe that the Chancellor of the Exchequer has placed proposals before the House that will succeed in meeting these conditions, and that the more the subject is threshed out in debate the more the general principles will be vindicated and justified. I have no doubt that many details may possibly have to be modified, but I even go a step further and say I believe that the passing of this Finance Bill will be a step in the direction calculated to cure some of the social ills in the right way by increasing the volume of national employment and the profits of national commerce.

I am aware that in the earlier stages of carrying out the principles of this Budget there will be a certain amount of inconvenience. There will be the necessity for the modification of some forms of expencliture and sacrifice on the part of those who, from the size of their income and the amount of their accumulated property, will have to pay extra under this Budget. But we cannot raise thirteen and a half millions of money without somebody paying and somebody having to bear an increased burden. I confess I have been amazed at some of the letters that one has seen in the Press of wealthy people complaining and threatening and saying that they are going to drop a guinea subscription here and a guinea subscription there. I make bold to say I do not think that those writers fairly reflect the general opinion of the wealthy classes of this country. Why do I make these assertions? I would say, first of all, that the proposals of the Budget would not lessen the purchasing power of the people in the necessaries of life. In all that concerns food, clothing, furniture, property in houses, and building, none of these will be raised in price by the increased taxation that is proposed. I think we are all apt to forget at times some of the factors that go to make good trade. We exaggerate, and in this House we are constantly exaggerating, the effects of the spending of the very rich. Good trade depends for its chief factor upon the masses of the people having a fair purchasing power—that is, having a margin beyond what is necessary to provide the bare necessities of life and a purchasable power for some of those various articles that help to make up the amenities and the comforts and that contribute to the amenities and the comforts of life. We are apt to forget that even in a matter of old age pensions no less a sum than £150,000 per week is going in increased trade all over the country.

One of the great advantages of any reform is really touches the social question is that they do good as they are worked out in daily operation. Personally I believe that there will not only be no lessening on the purchasing power, but, as I will try to show a little later on, a stimulus to increased production and consumption. I quite admit that in connection with alcohol and tobacco there may be, as the result of increased taxation, smaller production and consumption, but, after all, these are luxuries. They are not actual necessities, and it is only right that luxuries should bear a special charge. But even if there is a smaller consumption of either of these articles a stimulus will be given to other forms of industry that employ more labour in proportion to the capital employed in them. If the consumption of alcohol and tobacco were lessened it would mean that there would be a far larger margin of revenue, and I do not think sometimes that we realise what a difference it would make to the unemployment difficulty if the liquor bill of this country were very largely reduced. I believe if the liquor bill of this country were reduced to one-half we would hear very little of the unemployment difficulties. The non-interference with the purchasing power of the people is brought out very clearly in the proposals for increased Income Tax, for it appears to me that those increases, as well as the Super-tax, are so important that the purchasing power in the actual necessities will not be in the least affected. It may be said that in connection with small and unearned incomes and the withdrawals of exemption from persons who may be temporarily resident abroad, but who are in the service, in different ways, of those residing in the United Kingdom, my assertions do not apply. But I hope in these two matters in Committee the Chancellor of the Exchequer may be willing to consider possibly some modifications. With regard to the proposals relating to Stamp Duties and Estate Duties, they seem to be arranged so that the burdens will be borne in strict proportion, either to the amount of business transacted or the estate accumulated. And with regard to the latter, personally I should be prepared to see some of the smaller estates—say under £25,000—even more generously considered. It has been said that these increased Death Duties may unduly interfere with the future con duet of many business concerns. I admit that they will in some cases require consideration, rearrangement, and some thrift, but my impression is that compensation will be ultimately obtained by a better state of commercial prosperity, arising from general improvement of social conditions, and consequently a larger purchasing power.

In the course of the Debate on the Resolutions I noticed that some hon. Members seemed to imagine that with regard to businesses in many cases a business was owned by one individual. I venture to think that that is not often the case, and that all the partners do not die at the same moment, and that in working out no great inconvenience would be suffered. But, may I add, I think it could be shown in connection with the burden of estate duties in the past that businesses have been more damaged by inconsiderate and even wicked wills than any difficulties arising from estate duties. In my opening sentence I said that the money had to be raised in a way that would not only not stop the consumption and production, but that the imposition would lead to an increase of employment and industry. Here, again, I give my hearty support to the Budget, because it recognises the principle that a share of the increased value of land, which comes to it through no exertion or expenditure of capital on the part of the owner, shall come back to the community through the Increment Duty—and also that land, which has been taken out of agricultural use, which is not required for the general benefit of the community, and is not being utilised, should contribute a small annual tax on its capital value. The hon. Gentleman said that the holding up of land does not exist to any great extent. I quite admit that at the present moment, and during a time of depression, people do not value land out of agricultural use until it is ripe for building, but having watched the growth of London for just on 40 years I can put my finger on a number of estates where land was turned into building land before it was required. Bear in mind the injustice that is done in the case of the unoccupied land, i.e., land that could be occupied. In regard to every piece of such unoccupied land the owner is in effect saying to his fellow man, "You shall not work." I think that consideration is apt to be forgotten by a great many of our friends. After all, these principles of unearned increment have been much discussed during the last 25 years and in many parts of the world. I will not refer to the United States, I would rather take our own dominions beyond the seas, where they have been gradually adopted to a limited extent in various forms, and I think the universal testimony is that they have resulted in good to the various communities, and that these taxes on unearned increment have led in these countries, as I believe it will lead here, to the opening up of land to new uses and to the employment of additional labour. In a limited way the principle was partly recognised in Sir William Harcourt's great Budget of 1894, when, for the first time, the treatment of real estate was levelled with personal estate on the death of the owners. Those of us who have been trying to study this question have observed that under our present system of rating and taxation the first benefit derived from improvements made as the result of private enterprise, of local authorities, of extending facilities in communication, and some classes of Imperial legislation—the first benefit goes in the direction of improving the value of somebody's land. The effect of this is to reduce the value of the improvement, and through the enhancement of rates make the next step in social reform the more difficult.

I admit that the difficulty those of us who have taken an interest in the question have experienced has been to suggest a plan which would obtain the Increment Tax from the actual possessor of the increment value. Some contend that you cannot compare the dominions beyond the seas with this country. I quite admit that that is true to some extent, and that it is a very difficult thing in many cases so to impose the tax that it shall reach the person who has enjoyed the increment value. But here I think the Chancellor of the Exchequer has met the difficulty. He starts from present values. He does not attempt to diagnose the various values of the past; he only asks that of the present day values 20 per cent. of the increment, if any, shall come to the State when land is transferred on sale or on the death of the owner. And it cannot be too distinctly borne in mind that this increment is not a charge upon the improvements that the owner may have made, but simply on his land. The man who leaves good property alone is rewarded by being charged less in proportion than the man who knowingly tries to improve his property, and as a result has to pay a larger tax.

Again, in regard to undeveloped land, it seems to me only fair that the owner, who keeps it in this undeveloped state, should pay a small tax to the community who are helping to make and increase the value of that land, and as a price for keeping the land in the undeveloped condition. I am bound to say that that is what I found in South Africa. In every town and municipality in South Africa, where the rating is on capital values and the value of land is assessed separately from the buildings, the owners who choose to keep poor property on valuable land are in the meantime helping to bear the burdens of governing the community. It is often forgotten that he who keeps land unoccupied and unused—I only refer to land that can be used, and I would have a very broad mind with regard to public spaces, and public parks, and land needed for housing—but in regard to land which should be occupied and utilised, every one who is keeping it in an undeveloped state is doing an injustice to his fellow man by depriving him of the opportunity to use it.

I shall be asked on what ground are we justified in treating land in this way—so differently from other forms of property? My reply is—because it is land; that was created for us, and not by us; which is of limited area, and which is the basis of all labour. In its proper use not only does it form an important factor in the prosperity of every country, but it is that also in which every man, woman, and child is interested. I have often said, so long as our land system is our present system, give me a large land-owner rather than a small land-owner. The large landowner does, I admit, in the bulk of cases, look upon his estate as a trust, and a trust to be developed in conjunction with the general interests of the district in which that estate is situated. I have often, as I have gone through England—and all Members of this House who motor, as they go through England, must be aware of this too—that you go through estate after estate, and you can say accurately whether that estate is being developed to its best uses. Again, in some parts of England you come across a large number of estates which you feel are not being developed, are not being utilised as they ought to be in the general interests of the community. On the other hand, there are others which you can see, by the way, in which every cottage, every gar- den, every house, looks that they are being administered in a way that is a credit to the owner, and is to the general advantage of the whole community.

Of course, I admit that this change will, at first, hit those members of the community who, as the result of the present system, have been engaged—almost as a branch of commerce—in buying up estates of various kinds and developing them for building purposes, and who may find their properties depreciated in value—at any rate for a time. But, after all, we must remember that land being limited in area, this may not last for long in some places. Meanwhile, the cheaper land will give an impetus to building and industry generally, and, like all reforms that in being carried out may be a disadvantage to a few individuals, it will tend to the general advantage of the community as a whole. Let it not be said that in these proposals we are striking a blow at the principle of ownership. Nothing in these proposals affect the ownership in buildings, in property in land, and property of any kind. The proposals simply claim that a share of the increased value that the community have given to land, and land only, shall be repaid to the community, and that a small annual charge shall he paid on the capital value of unused land—so long as it is kept unused.

Immediately after the introduction of the Budget fears were expressed by some of the great bankers and merchants in the City of London, and disapproval was evinced with some features of the Budget. I, who have been in business in the City of London for nearly 45 years, am not in the least inclined to criticise or do anything but speak with respect of the opinion of those gentlemen. In the great bulk these gentlemen, to whom the City owes so much, are men of high character, to which we can all bear testimony. But I have been very much struck by this fact, in spite of their fears, I cannot find that a single market has reflected in the money articles of the various newspapers that those fears have actually been illustrated in the daily transactions. I have not been able to find a market where the prices have really depreciated since the Budget was published. After all, I think that is fairly strong evidence that in actual working those who are interested in these markets do not fear any evil results from this Budget. Even with regard to the estate market, a market which you might expect to suffer first, I have noticed some opinions expressed that there has been a great deal of uncertainty with the Government in the past. Now, however, they know the worst, they do not anticipate that the effects will be quite as they expected. Of course, it will mean a certain amount of disorganisation at first, a certain amount of holding back but if the accounts one has read reflected accurately the general feeling, I do not think that hesitation will last long.

In conclusion, I would only say that whilst any proposals that necessitate the demand of £13,500,000 from the people in increased taxation must mean sacrifice to some, I believe that in the proposals now before the House they have been met in a way that will not affect commerce, but in the end lead to improved commerce; that the purchasing power of the people in the necessaries of life will be increased rather than decreased; that the taxation on increment values and unused land will gradually and naturally lead to the opening up of land, and a consequent demand for larger employment, and that as a whole it will lead to a policy of betterment for the people of this country.

It is perhaps natural that the first speeches which we have had in the House have been devoted to land taxation, because these taxes are new. The hon. Member who has just sat down devoted the greater part of his speech to these taxes. I wish, however, to draw the attention of the House to some other points which have not been mentioned by most of the speakers this afternoon. I do so because I do not wish the Government and the Chancellor of the Exchequer to think that we on this side of the House have in any way dropped our opposition to the large increase which he is proposing to the already existing taxes which are in operation. Before dealing with that, however, I should like to make one or two remarks generally, as to the total amount which is required. It is a very large addition to the requirements of this country. It comes to my mind in rather a curious way from the Government who professed, when they came into office, that they would do their best to economise the resources of the country. The Chancellor of the Exchequer and the Prime Minister said:-

"These figures (quoting figures of past Budgets) make a return to a more thrifty and economical administration, the first and paramount duty of the Government."

Instead of that, three years afterwards we are told of a deficit of over £16,000,000. We admit that this money must be found. It cannot be helped. But at the same time, we do say this, that we on this side of the House are not responsible for the state of affairs with which you have to deal. The right hon. Gentleman the Prime Minister the other day went round to visit the city which I have the honour to represent, and he made an important speech there, and he tried to point out that in distributing the area of his new taxation he had dealt fairly and equitably with all classes of taxpayers. He said in that speech that from the Estate Duties, Death Duties, and Land Taxes he was proposing to raise during the year £6,850,000 from direct taxation. Then he went on to say that from indirect taxation he was proposing to raise nearly the same sum, namely, £6,100,000, that is from the extra Spirit Duties, extra Tobacco Duties, and extra new Licensing Duties, but the Prime Minister did not tell his audience the large figure which the Chancellor of the Exchequer and the Government expects on the direct taxation which they propose, and he did not tell them that ultimately he hoped to get from Income Tax and Estate Duties an enormous increase of £8,500,000, whereas from indirect taxation the increase which he expected was very little additional indeed. The right hon. Gentleman went on to say:—

"my first claim, therefore, is that in the general ground plan of our scheme we have distributed the area of new taxation upon fair and equitable lines. We have tried to hold the balance fairly and to secure that every class of the community shall contribute its proper quota."

Are they doing that fairly? Is every class asked to contribute its proper quota? How about the large class not subjected to Income Tax and who do not indulge in alcohol and who do not smoke—these people do not pay one farthing of this extra taxation. They pay not one farthing towards the increased taxation required. Is that fair? I commend them for their abstinence from alcohol and tobacco, but that is no reason why they should be allowed off their due contribution to the National expenditure, and I do not think that this class whom the Government are letting off would wish to be let off their due share of the National expenditure. Does the Chancellor of the Exchequer know what this class of people of whom I am speaking at the present moment, namely the non-smoker and non-drinker and non-Income Tax payer, contribute towards the taxation of the country? They contribute the large sum of 4s. 7d. a year or a week to the Exchequer through indirect taxation. You do not tax these people in any other way.

May I ask the hon. Gentleman what is the basis of these figures which the hon. Member has quoted?

Yes, I will state their basis. They were given last year, and I believe I am over-estimating their contributions now because these figures which were quoted last year included the whole of the Sugar Duty, and half of that was taken off last year. Indirect taxation per head of the population amounts to £1 6s., of which alcohol accounts for 16s. Therefore, if a person does not drink alcohol, he pays 10s. 10d., and if he does not smoke either he pays 4s. 7d. This large class, already contributing hardly anything, the Government do not propose to ask to contribute one farthing towards the additional expenditure, yet the Prime Minister goes down to the city that I have the honour to represent and declares that the Government try to hold the balance fairly, and tried to make sure that every class of the community should contribute its proper quota. Now, the other day the Prime Minister was trying to console Income Tax payers in this country by telling them that a percentage on large incomes in Germany—incomes of £4,000 or £5,000 per year—Income Tax amounts to 2s. in the pound—that is in Prussia, in the principal State. I was very much astonished when I heard that statement, because it is hardly understandable. I am quite sure the Prime Minister, if he was here, would be glad to admit what I say, because I think I could explain to him that, owing, no doubt, to his multitudinous duties, he has not had time to look closely into this matter. First of all, Prussian Income Tax includes the greater part of the local rates, and, moreover, the Prussian Income Tax is about the only State tax which the people in Prussia are called upon to pay at all. Less than one-sixth of the revenue of Prussia is derived from any taxes at all, and five-sixths of the revenue of Prussia comes from National property—mines, railways, iron works, salt works, etc. Therefore, it comes to this, that the general revenue in Income Tax when an income of £5,000 a year is taxed is 4 per cent., or about 10d. in the pound. Now, if the Prime Minister or the Attorney-General would refer to the Income Tax Committee's Report he will find that Mr. Mallett, of the Inland Revenue Office, put an appendix to that Report, from which I will read one or two lines which makes it perfectly clear that what I am telling the House is absolutely correct. It is only when we come to the higher Prussian incomes—that is £3,000 to £5,000 a year that the Income Tax derived from property would be equal to about 1s. in the pound tax. The average rate of Income Tax in Prussia on the whole number of payers is 1.97 per cent.; but taking only a corresponding number to our British Income Tax payers—that is equal people with incomes of over £150 a year—it is £160 in this country—the figure goes up to 2.6 per cent. Now to that you must add to persons with large incomes the tax which the municipality is allowed to add in addition to the State taxes, and the average rate then is raised to 4 per cent. in Prussia as against our 4.25 per cent. I think I have dealt with that point sufficiently to show that the Prime Minister in quoting the amount as 2s. certainly made a great mistake. I should like to deal with this question from another point of view. Supposing that the Prime Minister was right in his comparison between the German Income Tax and ours, was it fair? No, for this reason, that in Germany there is no Death Duty for direct descendants. In speaking about the Income Tax you must take into account the Death Duty, which is a tax on corpus. You must take Death Duties and Income Tax together. In the German States there is no Death Duty for direct descendants, and only a very small duty for indirect descendants—I think it varies from 4 to 10 per cent.., and last year it produced in all about £2,000,000. Under these circumstances. I think I may fairly say that in Germany the Death Duties are quite insignificant. According to the German Minister of Finance, the Inheritance Duty amounts to .5 marks per head of the population, whilst in this country it amounts to 9.4 marks per head. The Prime Minister also alluded to France, but I wish to point out that there is no Income Tax in France at the present moment. I know that there is a Bill before the French Parliament, and the Prime Minister said that under those proposals a man with £4,000 a year would be liable to an Income Tax of 1s. 5d. There again the Death Duties do not amount to very much. In France it is not called a Death Duty, but a Succession Duty, and it is levied under the name of the Registration Duty, and is estimated in the French Budget to produce £10,000,000 this year out of a total revenue of £160,000,000. When it is remembered that the proportion of direct to indirect taxation in France is 1 to 4, this Registration Duty cannot be considered a heavy tax at all. In the United States of America there is no Income Tax, and the Customs Duties bring in £86,000,000.

With regard to the Licence Duties, the Lord Advocate said that in putting on these duties the Government had no vindictive feelings at all, but, unfortunately, that is not the view of the trade and many other people, who have an intense feeling that these duties are vindictive, and have been imposed as a punishment for their opposition to the Licensing Bill of last year. Statements have been made in this House and in the country by hon. Members sitting on the Ministerial side that if this Bill is thrown out in another place other measures would be taken.

Hear, hear.

Hon. Members opposite have said that in those circumstances other measures would have to be taken to carry out this confiscation.

We never said that.

Perhaps they did not put it in that way but I will withdraw that word. There have, however, been speeches made of the character I have indicated. We have before us proposals to put on licences large extra duties, the effect of which will be to close a great many public-houses altogether, because they cannot carry on their business and live under the new system. If that is so, the position of those particular public-houses will be far worse under these proposals than they would have been under the Licensing Bill of last year, because under that measure, at all events, for 14 years they were secure, and if their licences were taken away during those 14 years, they would have compensation for the loss of their licences, whereas under this Bill no compensation is to be paid if the houses are ruined. I cannot understand proposals of this kind when we remember that the Government are receiving one-fourth of the tax revenue of this country from the trade—I think the proportion is £38,500,000 out of £130,000,000.

My hon. Friend behind me stated that already the limit of taxation on this trade has been reached. I may say here that I am not personally interested in any way in this trade. Already the licensing trade are called upon to pay extra taxes which it was not intended they should pay in years gone by. In the year 1890 it is well known that the beer and whisky duty was put on, and at that time it was intended to devote the revenue from it to compensation purposes. That proposal, however, failed, but the tax was kept on, and it has be en devoted to technical education. That alone is a heavy burden on the trade, and as it has existed for 19 years the Exchequer has received from it something like £18,000,000. Then there were the war taxes put on, and Sir Michael Hicks- Beach in this House said that he regarded those taxes as temporary. Already the nation has received from those war taxes something like £24,000,000 sterling, and we are now receiving £2,500,000 a year from this source, although the Chancellor of the Exchequer told the trade that this taxation was only to be temporary. Then the compensation levies on the trade amount to over £1,000,000 a year. It may be said that that is not really taxation, and perhaps in a strict sense it is not, because the money goes to form a compensation fund. It is, however, money which the trade have to pay, and, therefore, in stating the obligations placed on the trade at the present moment I am within my right in quoting that as a burden upon them. What is proposed under this Bill? It is proposed to raise the on-licences in towns of over 100,000 population by 50 per cent. of the annual value. That means an enormous percentage of increase on the present licensing duty. On a £10 annual value it means 58 per cent. increase; on £100 annual value 94 per cent.; on £200, 233 per cent.; on £400, 418 per cent.; on £800, 677 per cent. increase. I have here a list of 60 fully licensed public-houses, principally in the neighbourhood of London, and the present duties they pay amount to £1,699. Under this Bill they will have to pay £12,525, or between seven and eight times as much. Two breweries which have been mentioned—Whitbread's and Buxton's—stated in "The Times" on the 5th of May that this new taxation would impose on them the payment of £104,000 a year, while they paid in ordinary dividends last year only £81,000. The whole of the ordinary dividend is, therefore, gone if these proposals become law. There is in the City a firm which I have the honour to represent, and the managing director told me the other day that they paid in ordinary dividends last year £10,000, and he went on to add that the new charges would amount to £8,000. The whole of the ordinary dividend will go, except £2,000. From a national and moral point of view, what does the Government expect to do by these new taxes? The nation is more sober than it was owing to many causes, amongst them being the example set by the upper classes. Surely hon. Members do not laugh at that? The upper classes are becoming more sober every year, and that example permeates through the other classes. The result is that during the last 30 years the consumption of wine in this country is half what it was. During the same time the consumption of spirits has fallen about one-third what it was, and the consumption of beer has fallen 4.95 gallons per head. The Chancellor of the Exchequer, as Chancellor of the Exchequer, regrets this revenue is gradually falling off, and yet he proposes w put extra duties on the trade. The only point on which I wish to speak with respect to the new Land Tax is in regard to the proposed duty on minerals. Why should minerals be selected for taxation? Every owner is only too anxious to let his minerals. In taking a coal field leases are arranged at the outset, some ready to hand, others many years off. Through no fault of the distant owner he will have to pay the tax for perhaps 50 or 60 years, while his near neighbour who has sunk a shaft gets off. I should have thought that in the case of coal it should be the public policy of this country to economise our mineral resources. Instead of this we offer inducements to owners of land to get the minerals out. These minerals ought to be held in reserve. The national polio,' ought to be to conserve the coalfields, and not to get all the coal out as quickly as possible. If the tax is to be, why not put it on the output, then the charge would fall where there is something to pay it from. Perhaps the right hon Gentleman opposite will, as the Chancellor of the Exchequer is not present, make a note of what I have been saying and tell his right hon. Friend.

There is only one other subject to which I wish to refer, and that is the Sinking Fund. I do not know whether it is the intention of the Chancellor of the Exchequer to go on with his proposal with regard to the old Sinking Fund. I hope that he will drop it. It is a most dangerous thing to interfere with either of the two funds. Personally I regret very much that the Chancellor has reduced the fixed charge, for the reason that it was the figure fixed by Sir Stafford Northcote in 1875. Why did he fix it at the amount which he did? Because it had never been less than £28,000,000 before 1860, and he argued that if the country could pay that charge in 1880 it could, a fortiori, pay it in 1875. Ought we not to go on paying the same amount of money, especially when we remember that owing to the South African war many millions of money have been added to the National Debt. I cannot regard this Budget in any other way than as a Socialistic Budget. [A laugh.] My hon. Friend laughs, but he knows that what I say is the case. He knows what support has been given to the Government from his Benches. He knows the little book—the little red book—written by the hon. Member for Blackburn (Mr. P. Snowden), in which the hon. Member gives his idea of what a Socialistic Budget ought to be, and then he says to the Chancellor of the Exchequer, "I want to congratulate the right hon. Gentleman upon being a great and apt pupil of mine." There is the right hon. Gentleman's Socialistic tendency in this Budget, and it is fraught with danger to the country, it will discourage thrift among our working people, and it will drive capital away from the country. There will be less employment for our people, because there will be less capital to distribute for production, and finally it is a last effort of an out-of-date fiscal system. It is nothing else. The production of this Budget will mean that the fiscal system of this country must inevitably be changed, and Customs duties must be imposed corresponding in some measure with those of other nations, who not only obtain a large revenue from those duties, but while receiving that revenue, protect both their capital and the employment of their people.

I do not intend to argue whether this is a Socialistic Budget or not. I can only say that if it is, my idea of Socialism is entirely different from what is generally considered to be Socialism. In reviewing this Finance Bill, I consider that the main point which one has to take into consideration is what would be the alternative to the present proposals. I do not intend to follow the hon. Gentleman opposite into a discussion of the desirability or practicability of a Tariff Reform Budget or of providing the necessary revenues of this country by a system of import duties. I think he will admit with me that to provide the additional revenue that is required for the ensuing year, and also to make provision for the automatic increase of expenditure for defensive and social purposes, could not be budgetted for under a system of tariffs, however scientific, and therefore, even if hon. and right hon. Gentlemen opposite had been called upon to solve the present financial problem, I believe they would have been bound to have had recourse to some proposals such as are laid down in the present Finance Bill. I believe that the Chancellor of the Exchequer might have considerably lightened his task had he narrowed the area of his proposed taxation, and if he had confined his proposals to a smaller circle, and chosen fewer objects from which to obtain revenue. I consider that his proposals are to be commended for the reason that no interests and no classes are dealt with theoretically. His proposals are practical, and provide for an elasticity of the finances of the country in the future. I venture the opinion that in dealing with the finances of any country one should consider as regards taxation and expenditure to what extent they may be beneficial or prejudicial. As regards the proposed Land Duties, I am in full sympathy with them, and I may express the hope that as a result of the proposals the land will become more accessible and thereby the well-being of the people will be improved. As regards the increased Licence Duties and the additional tax on spirits and beer, I imagine they may tend to a decreased consumption of these articles, and therefore they should be hailed with satisfaction, even by the Chancellor of the Exchequer. Then, as regards the duties on motors and motor traffic, I look forward to the fact that as a result we may see a substantial improvement in our roads, a lessening of the dangers in connection with motor traffic, and a popularisation of that form of locomotion, especially among those classes that cannot take advantage of it. I recognise that the greatest hostility to this Budget will range around the Death Duties, the increase in the Income Tax, and the increment duties on land. It is asserted that through these extra duties and through this increased taxation capital will leave the country, and that there will be less desire to accumulate capital. I can imagine no greater fallacy than that. As regards capital in the ordinary course of events and in the course of time capital must change from one hand to another. I admit that through the Death Duties and Income Tax a certain displacement of capital must take place, but the amount that is required annually or weekly for old age pensions, which to a certain extent are to be obtained from the Death Duties and from the Income Tax, is at once placed in circulation. I think it will be admitted that the old pensioners who have obtained their pensions spend the money forthwith, and thereby place a certain amount in circulation. That money necessarily gravitates to other sources. It goes to the grocers' shops and to the other shops where necessary commodities are obtained, and ultimately it swells the capital of certain industries. In my opinion—and I think it is generally admitted—those countries are generally the most prosperous where the circulation is most free, and I am certain, without in any way being imbued with the Socialistic idea, that if the State is instrumental in causing freer circulation, it will not only confer a benefit, but even wealth and prosperity upon the country. But I cannot lose sight of the fact that this is not the first time that certain classes of the community have had forebodings as regards the proposals of this Government. In a letter which was addressed to the Prime Minister, which was influentially signed by leading firms in the City of London, it was pointed out that, though the taxes to which they had taken exception would in the first instance fall with excessive severity upon capital, they would also in the long run tend to discourage private enterprise and thrift and tend to reduce wages. I have experience in the City of London, and I can assure the Prime Minister and the Chancellor of the Exchequer that there are no indications that there is any slackening in the desire to accumulate capital in the City of London; but I have found that since this Budget first saw daylight there has been unusual activity prevailing in that quarter, and, in fact, there never has been for many years past a greater desire to engage in enterprise than at the present time. It will be in the recollection of this House that when this Government announced its policy as regards putting an end to Chinese labour in South Africa, and when it determined to give self-government to South Africa, from the City of London it was asserted with no uncertain voice that it would be the ruin of the gold-mining industry in South Africa, and that the poor shareholders would be in a hopeless condition. Certainly events have not justified that prediction. At the present time, I believe, mainly or largely owing to the attitude or policy of the Government in South Africa, the gold-mining industry was never in a better condition in recent years, and shareholders were never in a happier state of mind, and I am sure that, through the financial proposals of this Budget, the finances of the country will be established on a sound footing, in the same manner as the gold-mining industry has been established on a sound footing in South Africa. I believe that by these proposals the finances of the country have been placed in a condition so that any present requirements will be adequately provided for, and the future Imperial and social needs of the country will also be met.

The hon. Member who has just sat down has given a somewhat discursive survey of the possibilities that may attach to the Budget, and I am not going to follow him into the fields which he has traversed in South Africa and other places, but I should like to say a word or two with regard to the propositions which at an earlier hour were advanced from the Treasury Bench by the Lord Advocate. I have to say first, that I take some exception to the general principle, which the right hon. Gentleman alluded to as the foundation of his remarks. That is to say, I take some exception to the view that it is a necessary fact that 13 million pounds, because it is about 13 million pounds roughly, if you take the Sinking Fund charge—that £13,000,000 which has to be raised, must necessarily be raised in taxation alone. I for one do not subscribe to that opinion. I am bound to say, that when you come to consider matters of national security and naval construction in the immediate future and under the exceptional circumstances—because I hope they are exceptional circumstances in which we are placed at the present time—I think there is a good deal to be said for raising a portion of the money on a loan basis, and not for raising it on a revenue basis as proposed. ["Oh."] I only say this that if that is objected to, to invite controversy on the point, but I only say this that if that is objected o, on the score of financial orthodoxy, and I quite admit that except in exceptional circumstances, there may be that objection—if it is going to be objected to on that score, however, it comes very badly indeed from the party which is proposing a thing, which is much worse from that point of view, namely, a raid on the Old Sinking Fund. With that premise I come to the right hon. and learned Gentleman's speech. He hung his main review of the taxation of the Budget upon a survey of the land tax, and when I heard his speech upon the Land Tax I felt that in regard to that, as indeed with regard to the Liquor Taxes, that there was a sort of uncanny familiarity about them. One thought that he had heard speeches very like that speech before, and indeed when one reads the words of the Finance Bill itself, they have the same uncanny sense of familiarity. Hon. Members who know their Lewis Carroll will feel, as if they had stepped with Alice through the looking glass, and will feel that they are looking at a reflection of the Licensing Bill and the Laud Valuation Bill, and the reflection, be it observed, is of the very seamy side of those measures, and not of the side which was exposed to the public view in the first instance. That may be pure illusion on my part, but at any rate it was no illusion to the Lord Advocate when he was addressing audiences not in this House but in some of his missionary enterprises into the country. It was no illusion to him or his audience when they hailed with applause his remarks about "Swingeing" Duties in regard to liquor taxes. I confess when I read those careful periods of the right hon. Gentleman I paused, and I really did not know which I admired most, the eloquent invocation of the spirit of retributive justice, or the patient resignation with which the right hon. and learned Gentleman views the way in which his native country and its industries are treated by his colleagues 3n the Treasury Bench, because, be it remembered, that badly as Ireland comes off under this Budget—and we have heard a great deal, and no doubt we shall hear a good deal more of the way in which the Irish industries come off under this Budget—Scotland stands to come off far worse. I allude more particularly to the Liquor Tax. It may be new to some hon. Members in this House that, as a matter of fact, Scotland in the year 1908 paid, I found upon examination of the figures, very nearly three times her share in proportion to England per head of the population in duties on spirits and beer. As a matter of fact, the figures are 17s. 5d. in Scotland, and 7s. 9d. in England.

She drank it.

The hon. Member for Stoke says she drank it. That is what I call unintelligent criticism, because it is uninformed criticism. I am not entirely a novice in conducting this kind of argument, and I anticipated that objection and, as a matter of fact, I find that England in 1908 spent on spirits and beer per head of the population £3 9s. 9½., whereas Scotland only spent £2 11s. 4½ so that Scotchmen, instead of drinking more, actually drink less per head of the population. A more enlightened criticism might say it is quite just that Scotland should pay more, because in Scotland they drink a form of beverage which contains more alcohol as a rule than in England; but that criticism proceeds on a mistaken basis. I agree that there is a good deal to be said for a system of duties which should proceed upon what you might call an alcohol basis, and tax people according to the amount of absolute alcohol which they consume, but the present duties do not, and the duties proposed under the Budget do far less. As a matter of fact, last year Englishmen consumed 1.9 gallons of absolute alcohol and in Scotland only 1.3, which means that the Scotchman pays nearly three times as much on a quantity a third less. The new rates, if you look at it from the point of view of absolute alcohol contained in the beverages, accentuate that injustice, because under the new rates if a gallon of absolute alcohol is contained in beer it pays a duty of 4s. 2½d., and if a gallon of absolute alcohol is contained in spirits it pays 26s. duty. I do not know, and I do not inquire, how the argument on which these duties were founded precisely proceed, but it seems to me to be the most illogical which the wit of man could devise. Here is the argument: Because we, the Government, want money, and because the English brewers corruptly influenced—because that is the sinister suggestion—a branch of the Legislature to reject our proposals, therefore we will put special taxation upon Ireland. whose Members' votes, we think, we can count upon in general, and upon Scotland, where we think we have some seats which are moderately safe, and which would at least provide an asylum for distressed Cabinet Ministers—I do not know, and I do not ask, what course the votes of Irish Members are likely to take, but I know a little about the feeling in Scotland, and to the best of my knowledge and belief I assure them, and I assure those hon. Gentlemen opposite who are very fond of posing as the watch dogs of Scotch liberties, but who are very dumb dogs when the party Whip cracks, that when the people of Scotland come to have some voice in the matter what they say will not be altogether of a pleasant character.

The Land Tax proposals are indeed a small Bill in themselves. There are many fundamental points of detail to which we maintain, and shall always maintain, the very strongest objection, but I will only deal with this tax from a more or less general point of view. I take the Increment and the Reversion Duties together, because they hang together. They are both really founded on the same principle, or perhaps I might say want of principle, and proceed on the same basis of reasoning. The Lord Advocate spun a web of very fine language round the taxes, but I ask the House to look at them as they are set forth in the clauses of the Bill. Divested of all their fine language these two taxes are simply, in plain English, confiscation. I do not use the word in any abusive sense, but in its proper meaning. They are confiscation—the taking by the State of an arbitrary percentage of the value of the land, no matter how you arrive at it. This is not the first time in regard to land that we have heard similar proposals. These proposals are not new. They are proposals of the Glasgow Bill, which were considered over a period of getting on for eight months by a Select Committee, of which I happened to be a Member. The Select Committee took a great mass of evidence and presented their Report. The principle of the Glasgow Bill was really exactly the same as the principle on which this Finance Bill proceeds. It is true that the percentage which is taken by the municipality was only 10 per cent., and that the Chancellor proposes to take 20 per cent., and it is also true that the money was to go to what you might call the local chest instead of the Imperial chest. If you come down to root principles, the principle of both was the same, the taking of an arbitrary percentage. It may interest the House to hear the view to which this Committee, presided over by the Lord Advocate himself, arrived. They said:— year. The proposals in this Bill are to levy a rate which is to be a cumulative rate. The proposals in the Land Values Bill—or at least the proposals which underlay the Bill—were to levy a rate not cumulative but to be substituted for the existing rate. The Lord Advocate has made many pilgrimages up and down the country recommending certain doctrines in regard to land values. To-day we have the hon. and learned Gentleman getting up and addressing to the House arguments completely destructive of every argument adduced for its consideration before. I am asking really for information with regard to the Lord Advocate's position. He has made these pilgrimages, and I should like to know how his missionary efforts are regarded by his colleagues. I take one typical episode in the Lord Advocate's tour. He travelled far, and saw many cities and lands, and finally I discover, from a perusal of the journals of the day, that he arrived at Brora and Inverness on 21st September last. This is a typical instance of his missionary journeys. When he arrived at Brora he was accompanied by the hon. Member for Sutherland, and they were led by a band composed of drummers and pipers. The report goes on to say that a platform was erected at the end of a field, and was surmounted by banners, one banner having a sketch of the Houses of Parliament, and emblazoned on it was a man standing over the picture with a torch, and there was an inscription bearing the words, "Burn the House of Lords." With this appropriate and dramatic stage setting the hon. and learned Gentleman delivered his speeches at Brora and Inverness, and I have not the slightest doubt that he did so with his usual eloquence. I commend to the attention of the House, and more particularly to the attention of the more responsible Members of the Government, the resolution which was passed at Inverness. It was as follows: "That this conference of Highland land reformers is of opinion"—I summarise the opinion of the land reformers by stating that the resolution says that the existing land system is wholly bad. Then the resolution proceeds: "And hereby declare that a system of landlordism which compels the people who work to yield up under the name of rent the produce of their labour to other human creatures for the privilege of living upon God's earth, is robbery of labour, and obviously a wicked violation of the benevolent intentions of the Crea- tor." [Cheers.] It is all very well for the hon. Member for Stoke and others below the Gangway to cheer that declaration. We know their opinion already, but these are not the opinions that I wish to get at. I want the opinions of the Government on sentiments like that. When the Lord Advocate thanks a meeting for passing a resolution of that kind, does he speak as a Member of His Majesty's Ministry or does he not? If he does not, I wish to know at what precise point he doffs the clothes of his official office for those more airy garments which he wore at Inverness. I gather from the Lord Advocate's speech that these were his own personal convictions this afternoon. I know that these are the convictions of hon. Gentlemen below the Gangway, but I do not know how largely they are shared on the other side of the House. I suppose we shall be told this is the new Liberalism. Well, it is not the Liberalism which was held by those who made the Liberal party great in the past. It was not the Liberalism of Sir William Harcourt. I would remind the House that Sir William Harcourt, who was responsible for many other sayings to the same effect, was the author of the true and apposite saying that even if you take away a man's property in land by degrees, still it is an act of confiscation and injustice. The Lord Advocate, I dare say, does not reckon very much by confiscation or injustice. If I understood his speech the standard was to be no longer what is confiscation or injustice. You are apparently to set up a new standard, which is to be the limit of taxation on the rich, and the limit is to be the economic efficacy of the tax, which I suppose means that you are going to collect the tax from the rich, until you meet that fate which sooner or later overtakes all those who appropriate property not their own. [Cheers.] Hon. Members below the Gangway still cheer. They seem to think that they are never progressing at all towards social reform unless they are robbing Peter with the view to the immediate pauperisation of Paul.

I come now to the Development Tax. We are told that the raison d'être of the Development, Tax is that land is being held up, and if one judges by the speeches made in this House, it would seem that there is a sort of universal conspiracy on the part of all the landlords of the Kingdom to hold it up and keep it out of profitable use. I quite agree that there may be cases—I think there are isolated cases—where land is held up by a single man unreason- ably against the public interest. Where that does occur I am prepared to admit that there ought to be power to enable local authorities to acquire the land. What I say is, that if you are going to go on the assumption that that state of things is general, you are going against all the evidence presented to the Committee over which the Lord Advocate presided. We heard evidence for eight months, and we could never get one single case in which it appeared that land was unreasonably held up. All the evidence went to show that that charge was exaggerated. In Glasgow at the present moment there are some hundreds, if not some thousands, of unlet houses, and I would remind the House that the great city of Glasgow only grows at the rate of 50 to 60 acres a year, and that Edinburgh grows at the rate of 15 to 16 acres, so that the product of the tax is not likely to be so large as appears at first sight. I would observe that the proposals in the Bill seem to be in entire contravention of every doctrine on which I understood the party opposite have proceeded, because here you bring in a tax commending it to the attention of Parliament and of the country, not for what it is going to produce—because, according to the calculations of the Chancellor of the Exchequer, it will only bring in at the very outside a beggarly sum this year—but for what it will do. That is a precedent which I can assure the Chancellor of the Exchequer we are not likely to forget in future. I do not cast it up to hon. Members opposite, because nobody ever said of them that consistency was one of their great failings. But leaving matters of theory I come to the real practical point, which is this: Will the tax to be levied conduce to the provision of more accommodation at lower rent? The hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) says yes. I say it is very doubtful. I am not going into details, because those will come in more appropriately in Committee, but I will tell the House that in this Report of the Select Committee they will find some of the reasons stated at great length and with great fulness why that is very doubtful. But I will put it to the House very shortly like this. Whenever you have a tax which diminishes the profits of the builder you diminish at once in the building trade, as in every other commercial undertaking under the sun, the inducement to build. When you diminish the inducement to build, sooner or later you diminish the supply of houses. In diminishing the supply of houses ulti- mately you increase rents. I am not going to follow that further because, as I say, I will go into those points in full detail in Committee, but—

Will the hon. Gentleman say how the profits of the building trade will be diminished?

I should have thought that was fairly obvious; but I do not wish to detain the House by being drawn into that just now, but hon. Members will find that, as we will have to consider it at a later stage of the proceedings. But I will assume, for the sake of argument, that more houses will be built, and that they will be exactly the class of house we will want to see built—houses such as were built down at Scotstown, near Glasgow, rows of workmen's houses with a bit of garden in front and a certain amount of open space around each. The Lord Advocate says that is the best use that land could be put to. I quite agree with him. I should like to see houses built on that plan. But he says that is the best use in one breath, and in the next he commends to us a Bill which is going to tax that bit of garden. The right hon. Gentleman the Chancellor of the Exchequer will find out if he examines his Bill more carefully that it is that piece of garden that is going to be taxed. While I am talking about the class of houses that are going to be built, I may ask the Chancellor of the Exchequer how he proposes to collect the Increment Duty on tenement houses? If they are inhabited by the proprietors, in a very large number of cases they would have varying divisible interests in the soil on which the house stands. If they are inhabited by tenants they may be tenants whose tenancy would determine every week. That is a point on which we shall want information before we get very much further. But I go a little further and say: Suppose that all these houses are built, and suppose they are of a class we should all want to see built, what use are they to people who want to take them and have not got the money? Why have these people not got the money? It is because they have not got the employment to find the money. Until you begin to deal, and deal thoroughly, with the employment problem, you are only scratching at the surface in tackling any such proposal as this. It is perfectly futile to advertise that you are adding three, four, or five courses to the shilling dinner at the restaurant and send the advertisement to a man who you know has not got a shilling. For these reasons your Development Tax at the very best will do comparatively little good, and at the very least is going to do a great of harm to the innocent investor. Take two classes of investors. The first is the Friendly Societies, whose funds, as I find by the Registrar's report last year, amount to 52 million pounds. Out of those 52 million pounds 29 millions are invested in lands, buildings, and mortgages. How do they view these proposals? I take one instance. I find that the Hearts of Oak Benefit Society were considering the Land Values question, and passed a- resolution on the 8th of August in the following terms: point of view, why such a tax would not commend itself to the Government, but I cannot appreciate the point of this taxation which apparently assumes that every tax-gatherer is to have a knowledge of the working of the divining rod. The right hon. Gentleman must pardon me for saying that he labours unders a great misconception if he thinks that the proprietors of mines spend no money in keeping them open. I could give him several instances. There are many instances in my own knowledge. I could give him one where a very large sum of money was spent in the last 25 years simply in keeping a pit open. Another case is where quite recently, owing to floods and water percolating, two pits were closed and 6,000,000 tons of coal were abandoned. Suppose that happened if the Bill came into operation. Suppose you assess a man on minerals, and you find afterwards that the minerals are unworkable.

The Exchequer has to collect the tax on those minerals. Are they going to refund it? The right hon. Gentleman apparently thinks not; but by every principle of logic and of justice it ought to be refunded. I do not want to pursue matters of detail too far at this stage, but I think I have said enough to show there is very good reason for thinking that a great many of these land proposals are in a very crude and undigested state at present. We were told that the Finance Bill was going to make everything clear. I confess that to my limited intelligence the Finance Bill has made confusion worse confounded, and the only thing that seems really to emerge quite clearly in the twilight of these political gods is this, that Income Tax, Estate Duties, and Super-Tax together—because they must be taken together—are going to constitute so heavy a burden on movable capital that they will be avoided if possible by migration or the adoption of some other plan. The unfortunate man who happens to own property in land, and who has to sit still and be shot at is in a fair way, by the efflux of time, to be deprived of his property altogether. I find great difficulty in understanding what position the Government really do take up with regard to the future movements of capital in this country. We have seen at one moment that the Prime Minister seemed to doubt that capital is leaving the country or will leave the country. The Lord Advocate apparently also holds that view. But we have the opinion, the very responsible financial opinion, of all parties in the City of London and in the highest commercial circles of this country that capital is leaving the country. Later we shall be better able to judge which of these two opinions will prevail; but what I would point out is that at one moment the Prime Minister does not think that capital is likely to leave the country, and the next moment he apparently rejoices in the fact that capital does and will leave the country, because apparently, according to his view, the more capital leaves the country the more employment will be provided for the workers of this country. If that is so, all I can say is the right hon. Gentleman is singularly fortunate in having discovered the philosopher's stone and the solution of the unemployed problem. We were told that the true solution of the unemployed problem was to emigrate the unemployed, but the Prime Minister has discovered another way, and that is to emigrate our capital, and if you emigrate enough capital you will not have any unemployment. Time will show whether the optimistic faith of the right hon. Gentleman is justified or not. But in the meantime what is perfectly apparent is that the Government are deliberately screwing up the burden of taxation on certain classes by special taxes. The Lord Advocate in plain and set terms; from which there is no escape, approved that policy this afternoon. All I can say is that it is a policy which was certainly not the policy of the Liberal party in the past. It is a policy against which Mr. Gladstone in the name of Liberalism protested. He said that— at the prospect of casting someone else's bread upon the electoral waters. We were told by the Lord Advocate this afternoon that this Budget was the last stand on Free Trade. Even the "Daily Chronicle," faithful to the last, gave the gladiator salutation. In their issue of 15th May, they say:—

The hon. Member who has just spoken has made what he usually makes, a very interesting speech, and he told us in the course of it that it was his endeavour at this period of the Debates on the Finance Bill to confine his remarks to matters of principle, leaving questions of detail and questions of machinery for subsequent consideration. In the course of explaining matters of principle which had struck him about the Finance Bill, he has displayed, what I have often observed in Conservatives, a great admiration for Liberals of the past. There is no politician who seems to be snore truly Conservative than the person who is a Liberal on every subject except the matter in hand, and, as I understand him, if the country had been so fortunate as to have seen him in existence in an earlier generation, he would have been a strenuous supporter of the Liberal party of that day. The other general observation which the hon. Member made, and which struck me, was this: He examined some of the licensing proposals of the Finance Bill and some of the proposals on the taxation of land, and, having examined them, he declared that they were confiscatory. He somewhat destroyed the violence of that condemnation by explaining what he meant by confiscation. Confiscation, as he most accurately says, means nothing more than the process by which you divert property from the fist to the pocket. That is true of all taxes, or I would say true of all Free Trade taxes, because the overwhelming distinction as it appears to some of us between the taxation by which we stand and the taxation which is not referred to in the Motion for the rejection of this Bill, but which always comes out out in the peroration of hon. Gentlemen opposite. The overwhelming distinction between the two is that whereas the taxation by which we stand is designed to take the contributions which go to the public fist, for public purposes, for that is absolutely the object of much of this latter-day taxation, the taxation which the Tariff Reformers advocate is not to do this, but is at the same time in a greater or less degree to divert from the pockets of some people into the pockets of other people that which can only be rightly exacted by the law on terms that it is devoted to the public good.

The hon. Member dealt at similar length with the land proposals contained in the Budget. As regards the justification in general terms for the taxation directed at the ownership and occupation of land, I venture to say, and say boldly, that the arguments put forward this evening with such force and such clearness by the Lord Advocate have not been answered, cannot be answered, and are all-sufficient on that subject. It is true enough to say that you do not justify the taxation of land merely by pointing to the obvious fact that land is different from other commodities. It is necessary, as I think the Leader of the Opposition pointed out in his observations in various stages of this Debate, not only to show that land is different, but to show that it is different in those particulars that justify special taxation being put upon it. I do not desire to repeat the arguments so recently addressed to the House, but when one considers the limited quantity of the commodity, how its value tends to increase through no efforts of the owner, and when one considers its position as the necessary substratum of industry, there you have qualities which go to discriminate as between land and other matters. I know of nobody who has put that view with greater force than my Friend the hon. Member for Preston (Mr. Harold Cox). So extravagant does it appear to the hon. Member for Preston that anyone should say that land differs from other commodities for the purposes of taxation that he is very fond of drawing a concrete analogy between the ownership of land and the ownership of a pair of trousers. While that may or may not be an effective analogy. I cannot help observing that at an earlier stage the same hon. Gentleman had very different opinions. Those were views expressed before he was a Member of this House, and an extract from which appeared in the April number of " The Nineteenth Century and After":— tax unearned increment that it should not Land Tax which seemed very strange in do so unless at the same time it makes view of some other observations which he some compensating provision for the case in which the decrease has taken place. I challenge that proposition altogether. It is wholly contrary to the principle which lies at the basis of all taxation in this country. Take the illustration of the Income Tax, which has now been in operation for the best part of half a century. By it persons are taxed who are fortunate enough to have incomes, but no person has ever said that because the State imposes taxes on those who have incomes they should devise some form of compensation to those persons who have the misfortune of not having any increment.

Take the case of Succession Duties. The State claims to impose a high duty upon property that passes to the fortunate relative, to the favoured friend who benefits by the death. Does anybody suggest that the State ought at the same time to offer a consolation prize to the relatives who do not get mentioned. That is contrary to the basis of all taxation as it has been understood in this country. The argument constantly repeated on platforms and sometimes mentioned in this House that we are not at liberty to call for a contribution with respect to unearned increment unless we make special provision for those cases in which the reverse has taken place, has no support from analogy with the history of our taxation. There is one other general observation as regards this subject which I would venture to make. It is true enough that land does not so widely differ from other forms of property that it is inconceivable and absurd that there should ever be taxation of unearned increment on other property. What is material to consider is this, to use the words of John Stuart Mill in discussing a very cognate subject:—"It does not follow that because the State cannot do perfect justice it should not do as much justice as it can." And it does not follow if there is unearned increment on property other than land that the State is committing a fiscal crime because it seeks to get some of the unearned increment from those who have it on land. If there is another instance, let it be taxed if it is practical to do so, but let it not be said that because unearned increment on land may have a parallel in unearned increment on other property, that that is an argument against the tax.

The right hon. Gentleman who moved the rejection of this Bill made, amongst other things, an observation as to this Land Tax which seemed very strange in view of some other observations which he also made. He reminded the House, in the course of his criticisms, that these land taxes are not expected to produce any considerable quantity of revenue in the present year. He regarded them as trifling from the point of view of producing revenue. But when he developed his argument he drew a picture of the damage and disaster that they were calculated to, do to the landed classes, and I gathered from him that the amount of money that the State was going to extort from these unfortunate victims was something tremendous. Now, whatever may be said of this or other systems of taxation, the sum which the State receives is the sum which the individual gives up, and I am at a loss to understand how in one breath this taxation is said to be calculated to produce something infinitesimal and in the next breath that the situation of those who have to pay the taxes is very desperate. The right hon. Gentleman offered an illustration of the effect, as he conceived it to be, of one of these taxes. If I followed him rightly, his illustration was drawn from the proposed incidence of the unearned increment, and he made what he called a rough calculation in reference to some property, I think, near Birmingham, and he said that the effect of this tax was going to be as much as 7s. 6d. or 10s. in the pound. [An HON. MEMBER: "Development Tax."] My hon. Friend tells me he thinks it was the Development Tax. Whatever it was, I should very much like to see a little more of those figures. If this Development Tax—this £d. in the pound on the capital value—is going to amount to 10s. in the pound, what is the capital value? It must be no less than £240 per £. It surprises me to hear that anybody—dealing with even the most imperfect calculation—can conceivably point to a case in which a burden of 10s. in the pound on the capital value is to be placed. [Several HON. MEMBERS: "The rental."] Yes, but how many years purchase has the right hon. Gentleman given them? I only point out simply that as a halfpenny is to a pound, so is 10s. to £240. It follows therefore that in the illustration given we are asked to believe that £240 bears the same relation to this 10s. as the capital value of the taxes put on. I fail entirely to understand how an illustration of that sort can really be justified. We are all anxious to see this argument developed. I venture to indicate that it will need a great deal of proof before it can be accepted as satisfactory by a great many of us.

Now the Land Taxes, as I venture to say, in principle have been justified and justified up to the hilt, by the argument which has been addressed to the House this afternoon by the Lord Advocate. The Chancellor of the Exchequer is sitting below me, and I would venture to indicate one difficulty which I confess I feel at present in the Bill. Possibly it is a difficulty more suitable for Committee than for a second reading stage. I see in clause 11 of the Bill that "undeveloped land duty shall not be charged in respect of any land where the site value of the land does not exceed £30 an acre." It does seem to me that it will be necessary to have a considerable explanation, and a considerable amplification, as to what is to be the unit, the embryo of valuation. It is, if I may say so, a separate point to the point so clearly made by the hon. and gallant Gentleman the Member for Chelmsford (Mr. Pretyman) at an earlier stage in the Debate. He was, I think I am not mistaken, dealing with other parts of the Bill. Here we are dealing with undeveloped land. It is quite obvious that it will be necessary to have some understanding as to what is the unit of valuation which is to be regarded when you have to come to a conclusion that any given land is, or is not, worth £50 an acre. Take an extreme case. Take 1,000 acres of which 500 regarded alone are worth £40 per acre, and the other 500 acres regarded alone are worth £200 an acre. It obviously makes all the difference whether for the purposes of making out your standard of £50 an acre you are to have regard to the whole of the 1,000 acres, or some portion. Some revision will have to be made by which it will be clear how the unit of valuation is ascertained and reasonably fixed, in order that justice may be done.

I do not propose to detain the House longer with regard to the Land Duties, but may I be allowed a few observations upon the other great department of the Budget which seeks to get a contribution for a monopoly. I refer to the Liquor Duties. In the discussion earlier in the Debate the hon. Member for the Ayr Burghs (Mr. Younger) spoke with his customary knowledge of the subject. The real argument, however, in general terms for the increased duty upon licences is an argument which is not often met, because it-cannot be met! What is the situation? The situation is that since the year 1880 there has not been any change or increase in the licence duty. The hon. Member for the Ayr Burghs pointed out that in certain respects the situation of the trade in which he is interested since 1880 had been prejudiced. But he did not point out how as regards the Licence Duties the situation of the trade had been greatly improved. Since 1880 there has been a reduction in the number of public-houses. Since 1880 the benches of magistrates have been increasingly unwilling to grant new publicans' licences. Since 1880 the average value of public-houses has gone up, since 1880 the Licensing Act of 1904 has been passed, and the consequence is that the public-house, which in 1880, in my judgment, was very inadequately taxed from the point of view of licence duty, is now ridiculously taxed. The fact, of course, is so well known that no one would be justified in this place in elaborating it; but in order to make good my point, I might mention that since the Act of 1880 forward up to now the amounts paid to the State for the privilege attaching to the monopoly of carrying on an ordinary public-house varies from the miserable and absurd figure of £4 10s. to the ultimate maximum of £50 a year, and £4 10s. was the amount exacted in the case where the annual value was not more than £10. I am not saying that in so small a house as that £4 10s. was too small an amount, but what is to be said of the other end of the scale? Of the absurdity of saying, in reference to a public-house which has an annual value of £700 or £800 or £1,000 a year, that the present contribution from a man who has got the monopoly to keep a public-house of that kind is to be a beggarly £50 a year. It is not merely that the graduation is absurd, but it is all the wrong way. It is a graduation down instead of up, and if the amount exacted in the case of a small public-house does bear some respectable percentage to the value of a public-house, £60 a year is a grotesquely small figure to assess on a house the annual value of which is £700 a year and over. There is no part of this Budget which can be more clearly justified on plain grounds of common-sense than the proposal that these contributions should be corrected until they bear some reasonable proportion to the value. We do not hear much complaint on this specific clause from the other side of the House, and for very good reasons. Anyone who has taken the trouble to consider the course of legislation in the United States of America or in our own Colonies knows perfectly well that fiscal authorities of every school would laugh at the idea that the English Parliament is content to exact this miserable pittance from those who have this valuable monopoly. I remember, in the course of last year, when I happened to be in Canada, I was told by one of the Ministers in British Columbia the way in which he regarded any question as to how properly to estimate the contribution to be made by a publican who wanted a new public house. An application came to the Minister of Justice in British Columbia for a licence for one of the islands along the coast, of which there are a great many, for a new public-house. [An HON. MEMBER: "For a new public-house?"] Yes, as far as I know there was no difference in our law between the amount to be paid for a new public-house. [An HON. MEMBER: "Yes, under the Act of 1904."] Oh, yes, I beg pardon, but let me point out how this matter is dealt with at the other side of the world. The application was for a licence for an hotel on one of the islands. It was pointed out that this was an island that up to the present had no public-house upon it, and it was held that if it is going to have a public-house it must have a policeman. If it is going to have a policeman it must have a magistrate, and the reasonable and fair way of regarding the amount that should be paid for the licence is the amount of the salary of one policeman added to the salary of one magistrate. The present scale of duties is a ridiculous one, and there is no part of this Budget in regard to which the proposals might more justly be increased. May I appeal to the Chancellor of the Exchequer to reconsider the way in which he proposes to deal with what are ordinarily called grocers' licences? I do think that whatever may be the right way of dealing with this matter, the proposals in the Finance Bill will work most unfairly upon a class which is entitled to fair consideration. I have had put into my hand a contrast which shows very strikingly how great the difference is if you take a public-house with an annual value of £100 a year and compare it with a grocer's licence of a similar value. As regards the public-house, the Chancellor of the Exchequer proposes to exact 50 per cent. of the annual value amounting to whilst the contribution asked for in the case of the grocer's licence is not £50; but if he does not require a dealer's licence a contribution of £70, and if he does require a dealer's licence he has to pay £97 odd. I do not think that distinction can be justified. The public-house exercises in respect to the whole of this trade a full monopoly, because it is at liberty to sell on and off the premises in open jugs and bottles as well as in closed bottles; the public-house can sell in any quantity, and the contribution which the State exacts for that privilege in the case of £100 annual value is £50. On the other hand, in the case of a mixed business, which includes the sale of wines and spirits and beer for consumption off the premises, it is restricted in many ways. If the grocer sells beer, it must be in sealed bottles; he has to sell wine in sealed bottes of not less than one pint, and if he sells spirits it must be in bottles which do not contain less than a quart, to be consumed off the premises, and he is also under a strict limitation as to the amount which he can sell at one time. That does not seem to me to be a reasonable way of dealing with the trade, whatever can be said for it on the score of temperance. It is not fair to deal with a man carrying on that sort of trade on the principle of the annual value of the premises which he occupies. A public-house is presumably of the size suitable for the trade it is doing, and in this case it may be a perfectly fair thing to exact a contribution which bears some proportion to the annual value of the premises, but it is not, necessarily, a fair thing when you are dealing with a business which includes the sale of many other articles, where you may have side by side one shopkeeper doing a small trade and another doing a large trade; yet, each is required to make the same contribution to the Exchequer. It may be said that the illustration which I take is one which is exceptional; but if it is a fair illustration standing by itself, then I submit it is not just, and I hope the Chancellor of the Exchequer will be able to propose some more equitable arrangement, because it is not right that we should leave this gross inequality between these two classes of traders.

I have occupied more time than I intended in dealing with these two great underlying proposals of the Finance Bill, but the third proposal, to have a stiffer graduation of the Income Tax and the Death Duties is one which we have heard next to nothing of in the course of the Debate to-day. The Leader of the Oppo- sition tells us that, as far as he is concerned, he does not suggest that the principle of graduation, as a principle, is unjust, but that every case should be examined on its merits. If the principle of graduation in connection with the Income Tax and Death Duties is admitted, and if the argument for taxing unearned increment is a tax that cannot be gainsaid, then the great fundamental principles at the bottom of this Budget are amply justified. There are two ways in which you can select suitable or unsuitable objects of taxation. You can tax people according to the size of their stomachs, or according to the size of their pockets. That is the real issue involved in this Bill, and I am not surprised that the right hon. Gentleman who moved the rejection of the Bill should have contented himself to proposing a bare negative, while reserving alternative proposals to a more convenient season.

An alternative policy is not the fundamental matter in hand.

My recollection is that last year and the year before Motions were made to the Finance Bills which did refer to an alternative policy.

We have enough to discuss now without discussing an alternative policy. I have very seldom addressed the House on the second reading of the Finance Bill, but I find exceptional proposals in this Finance Bill. I should like to discuss the question of the licences in the case of licensed houses, and I do not think that the case of hotels has been satisfactorily dealt with by the Chancellor of the Exchequer. I should have wished that the tax had been put upon the amount of liquor consumed, and the Chancellor of the Exchequer might even fall short of taxing the full amount of liquor consumed. While on the subject of licences I think I might refer to the reference made by the Chancellor of the Exchequer in his Budget speech to the operation of the Act of 1904. It has been said that there has been an appreciation of licences owing to that Act, and the hon. and learned Gentleman who has just sat down refers to the matter. I might refer to the whisky duty, aggravating as it does the special burden on Ireland—which I suppose was what my hon. and learned Friend opposite referred to when he spoke of taxes which take nothing from the public, but which, nevertheless, are to give a sum of £4,000,000 sterling to the trade and only produce £1,600,000 for the Exchequer. I might refer to the stamps which are going to be increased and enhanced in amount, and which are not going to make land transfer easier for the poor man or for the rich. I might refer to the tobacco taxes—this timid, paltry effort to make a decent appearance of imposing taxation impartially as between different classes of consumers. I might refer to the interception of the Sinking Fund by not less than £3,000,000 or more per year. Hon. and right hon. Gentlemen opposite hold up their hands in holy horror when we say it is possible some naval expenditure might be met by raising a loan, but the present Government are raising a great part of this expenditure and adding capital value to the debt of this country, which is estimated at something between £90,000,000 and £100,000,000, by diminishing by £3,000,000 the operation of the Sinking Fund. If stopping the Sinking Fund is not borrowing money, I should like to know what is. Then as regards the principle of graduation. The hon. and learned Gentleman spoke as if this Budget was the first to propose that principle. May I remind him it has been in force since 1894; and may I tell him also that the objection to this Budget is not to the principle of graduation, but rather to its application with such severity. The same objection would apply to any system of taxation which operated with undue severity and to the danger of its being carried too far tending to that kind of evasion which follows upon the taxpayers' conscience not being enlisted in support of the justice of the tax.

I might enlarge upon the undue elevation of the Income Tax, aggravating as it does the admitted unfairness of the tax on land ownership and making worse that unfairness; I might refer to the extraordinary powers which are given to executive officers under this Budget. I do not know whether friendly societies are going to be exempted from the provisions relating to land, but it is certain that corporations—undefined or rather imperfectly defined—are going to be exempted if they are charitable corporations. I should like to know whether you could have any question of greater magnitude than to settle whether these corporations that are going to be exempted are going to include religious corporations or not. Is it likely you could imagine a question, which is more a question of policy, or one more likely to provoke violent and embittered controversy, and these are questions which are going to be settled purely by an executive officer? I think it is time we had an end of this ludicrous fiction that you can charge judicial duties upon executive officers in any circumstances. If a question—any question of policy is raised, you are liable to have those storms of opinion arise in which any officer and his judgment must be swept altogether away, and all the infirmities of the position of the executive officer be brought into play. Unless you are going to charge the salaries of these executive officers on the Consolidated Fund, forbid discussion of their daily duties upon the Estimates, and make them irremovable except by an address from both Houses of Parliament, you ought not to charge them with duties of this tremendously responsible kind which I have described.

I remarked just now that the Income Tax proposals of this Budget aggravate the already overtaxed condition of land, and it is interesting to remind the House in this connection that ever since 1894 land has been admittedly overtaxed under the operation of the present law. It must not be overlooked that it was only because, it was supposed, that by the Succession Duties of 1853, land enjoyed a special advantage, that the inequitable state of things was allowed by Mr. Gladstone to continue. That privileged position of land was withdrawn in 1894, and ever since that land has been exposed to this unjust differentiation against it, in respect of the scale under which it pays income tax, and those are the circumstances under which it is proposed to aggravate the already existing burdens on land. In the most eloquent and interesting speech made to us by the Lord Advocate this evening he enumerated various differences which existed between landed property and other kinds of property. I do not think there was a single one of those differences which would not have been extremely relevant if we had been, as we are not, discussing a proposal to put special taxation on land not by the Exchequer but by the municipalities—everyone of them was relevant to that consideration that land is a specially localised asset which can be said to belong peculiarly to the municipality locally situated upon it, but that is not the proposal before the House. The proposal before the House is to tax for Imperial purposes land in the British Islands. It is contended that pro- perty in land is different from all other property. I propose to remind the House of some points of similarity between landed property and other property. It is a fundamental assumption of what is called the school of Henry George that this difference exists and cannot be got rid of. I suppose supporters of this Budget are prepared to repudiate in words the doctrine of Henry George, but I suspect some of them have an eye on considerable numbers of believers in those doctrines whom they know to exist among the supporters by whose favour they sit here. Whether that be so or not, I have observed that Henry George's doctrine seems to me to be one of those top-heavy things which falls of its own weight. If it be right it destroys itself all the applied doctrines which are sought to be founded upon it.

If it be true that land be the root of all other forms of property, then all other forms of property are nothing but interests, more or less direct, in landed property which depend for the development and maintenance of their values on the successful commercial use of land. Let us take some instances. Take the owner of a railway share. It is quite true that he may have nothing to show for his railway share but a sealed certificate and a stamped dividend warrant, but he is all the same a person whose investment depends for its value upon the wise and successful use of certain land bought at a great price, and the use on that land of the products of other land. And the value of his railway share is increased not in the least by his efforts, but by the presence and the increase of a large industrial population served by the railway. Let us take another instance. The holder of Consols may be nothing but a person to whom the State has promised to pay a certain number of sums of 50s. a year. But he is all the same an investor whose holding depends for its value on the maintenance and improvement of the national income—that is to say, he is an investor whose holding depends for its value on the maintenance and improvement of the national income and on the successful use of the lands which in all parts of the world are the fundamental assets of the investments from which the national income is derived. Let us take another kind of property, perhaps the most invisible kind of property which exists. There is the man with money on deposit in a bank, a thing whose only corporeal existence may be said to be an entry in a ledger. Even this man, by giving his banker the means of lending so much more money for use in commercial enterprise, is unconsciously furthering the extended use of land and the products of the land.

What is the only real difference between landed and other property? I submit that it is a difference which bears against and not in favour of the proposals of this Budget. The difference is this: If and when you tax property indiscriminately you are taxing the use of lands and the products of lands not in England only, but all the world over, but when the British Government sets about putting a differential or exclusive tax upon land the only land upon which it can operate is British land, so that your special taxes on land are neither more nor less than a special discouragement of the commercial and industrial use of the one main and necessary asset of home industries, and to the extent of the amount of the tax your special taxes might make it more advantageous to plant an industry on foreign soil than in a place where it will give employment to your own workpeople. The result will be that British land alone amongst all the properties of the world will be an investment in which you may lose, but you must not gain—at least, to the extent of the tax you cannot gain. In other words, the profit will be raided by the State, and the loss you will have to bear all by yourself. There are two or three different kinds of argument employed for the purpose of supporting the proposal of the Budget in regard to increment of land value. It is said that the landowner is withholding from the community a necessary commodity. As a matter of fact, he very often has not done anything of the kind, and the attempt to prove that he does so in at all a large number of cases has altogether failed. Very often, in fact nearly always, he has leased or lent his land for necessary and useful development, but you tax him in that case just the same in the form of your Increment or Reversion Tax, only you justify it in that case by a different and incompatible argument altogether, namely, by saying that the land-owner has contributed nothing to the increment value by any efforts of his own. I remarked just now that the man who buys a railway share when at low value and holds it for a rise renders just as much and as little service to the public as the man who buys land when the price is low. What is the service they both render? The President of the Board of Trade, speaking lately on a Ways and Means Resolution, seemed to labour under the delusion that a man who buys a share pours a certain amount of money into the coffers of the railway company. It goes to the seller and increases in no way the capital of the railway company. In both cases ready money is put down, and the risk is handed over to the buyer. By buying a share the buyer upholds values, just as the buyer of land upholds values. By upholding value credit is maintained, and by maintaining credit confidence is stimulated, and by stimulating confidence you have readiness and steadiness given to the employment of the people. If the practice of holding up land for a rise exists, it has already almost defeated itself. It is more than probable that the holders up of land have already lost their market for the reason of the increased mobility of the people, which, happily, through the development of the means of communication and travel, has been brought into existence by modern science. It is well known that there are whole zones of suburban land in London which have passed their top value. I know myself of certain parts, such as Clapham-road, which once were suburbs, and where there are whole terraces of houses, and where the tradition is, no doubt more or less correct, that at one time there was no householder who did not go to business except in his carriage and pair. Look at these houses now, and try to get a tenant who will draw a distinction between rack rent and ground rent, and see what kind of tenancy you can establish on any terms whatever. Let us take another proof of the probability that supposed holders up of land have lost their market. I am told, and I believe there is ground for saying, that more than one of the artisan dwellings companies have begun to find a distinct falling off in the demand for the habitations they provide, and that they have some difficulty in maintaining the rents which go to pay the dividends. If this be true, it appears that the Chancellor of the Exchequer in the pursuit of a principle is running to people who without his help have already lost their market, and are not going to give him the revenue which he has promised himself. You cannot look upon those land taxation proposals with-cut looking at the same time at the other burdens which it is proposed to place on the same kind of property—the Death Duties, for instance. The Chancellor of the Exchequer made himself very merry over the fact that Holland Park had not been dealt with in the way that was prophesied in 1894. Would anybody contend that in the hands of less wealthy people it would not have been cut up? What I want to point out is that the Death Duties of 1894 must have made it more difficult to keep the park going. If that is controverted, I should like to remind the Chancellor of the Exchequer of the distinguished Gentlemen in this House who, when the shilling duty was put upon corn, and the price of corn was found to have gone down after the imposition of the duty instead of having gone up, contended that the shilling duty must have arrested and made less the fall in price that otherwise would have occurred. I think so we may argue that the preservation of this park was probably continued not because of but in spite of the Finance Bill of 1894.

You are now, by your further tax, giving a further impulse to those disintegraing tendencies. Who are the people who have the most right to complain? After all, if the proposal was—and many people -have made the proposal—to impose rates upon land only, and leave bricks and mortar out of the property which you would rate, there will be something of logic in the proposal, because then you would be taxing the one and only asset that can be said to belong of right to the municipality—being the one only localised asset. But by your operation of levying an Imperial tax upon properties such as I have described you are increasing the hardship to the community that has the most to suffer by the destruction of parks and open spaces. Your tax does not go to any local municipality. It makes it, on the contrary, more difficult for any borough council or county council to acquire a park for the public. I could wish that this Budget showed a little more consideration for what may be called the residential use of land—a little more consideration for the population in our villages. There are many villages which contain a squire's house, but there are a great many villages which contain a squire's house which very few people, even if funds were available, would be found to buy—which for want of land or other amenities probably would remain empty when they ceased to be tenanted by the present owner. This Budget, at least in respect of its bounty upon children, and in respect of some other matters, shows that you may depart from the strict doctrine and shows that you may promote by reputable methods objects other than the filling up of your pocket. Why should not this Budget have done something to differentiate in favour of those small land-owners of moderate means who attempt to keep up something of the amenities of life among the villagers by themselves living among them? And why could not it have done something to differentiate in favour of the resident as against the non-resident landowner? In this most imperfect examination of the proposals of this Budget I trust I have shown some little reflection. The right hon. and learned Gentleman said that we had come to the parting of the ways, and I think he said rightly. I believe, not as he does, that this Budget will give the quietus to what he calls false fiscal proposals. I believe, on the other hand, that it will give the death-blow to the old systems of finance which are aimed at discouraging in every way the use of the labour of your own people and the resources of your own country.

Motion made, and Question, "That the Debate be now adjourned," put, and agreed to.—[ Mr. Bottomley. ]

Debate to be resumed to-morrow (8th June).