FINANCIAL AND COMMERCIAL POLICY—RETENTION OF THE INCOME-TAX, ETC.
The great scheme of commercial reform alluded to in her majesty’s speech at the opening of the session was brought forward by Sir Robert Peel, in a committee of ways and means, on the 14th of February. The right honourable baronet commenced by saying that though he had considerable experience in the discharge of official duties, and though he had often addressed the house on matters of great public concern, he could not approach the subject on which he had then to address the committee without great anxiety, and a deep consciousness how inadequate and imperfect the explanation would be which he should endeavour to place before it. After the declaration made in her majesty’s speech, that it was the intention of ministers to propose the continuance of the income-tax for a certain number of years; he had no other alternative than to submit to the house the general views which the government took of the financial condition and the commercial policy of the country. In explaining their views, after referring to the estimate of the probable revenue and expenditure made by the chancellor of the exchequer in April, 1844, and, after showing that the surplus revenue, on which he had calculated for the whole year had been greatly exceeded by the actual amount of revenue received on the 5th of January, 1845, he proceeded to estimate the surplus revenue which would be in the exchequer on the 5th of April in the present year, at a sum not less than £5,000,000. He next submitted to the house an estimate of the probable receipt of the revenue for the year ending the 5th of April, 1846, on the assumption that the house would not sanction the income-tax. He calculated that the receipts up to that period would be £51,000,000, and the expenditure £48,557,000; but if they deducted from this surplus the revenue derived from half a year’s income-tax, which would become due in the interim, and from the payment of the instalment from China, there would then be a small deficiency in the revenue as compared with the expenditure of the year. The question then arose, whether ministers were justified in demanding, under such circumstances, an increased expenditure on account of the public service. He was satisfied that they were justified. He did not propose an increase in the army, but he could not consent to its diminution. The military estimate for the present year would be £6,600,000; and there were reasons which induced him to propose an increased estimate for the navy; namely, the growing necessity for a further protection to our commerce in every part of the globe, and in the establishment of three new naval stations—one on the coast of Africa, another in the Pacific, and a third in the Chinese seas. He should propose an increase of four thousand men, which would cost £184,000; and in respect of the vote for the navy, and tire ordnance connected with the navy, there would be in the votes of this year an increase of nearly one million. He thought the revenues of the next year would meet this increased expenditure, even if the house would not consent to continue the income-tax. It was quite clear, however, that if it did not continue the income tax, there would be a decrease of revenue in the following year. The question, therefore, which he must put to the committee was, whether they would run the risk of deficiency by making no provision to meet it, or whether they would postpone the consideration of the deficiency till the year 1846. But ministers were induced to propose the continuance of the property-tax for a further period. If the committee sanctioned it, the revenue on the 5th of April, 1846, would amount to £53,700,000; and so long as the other sources of revenue were productive, might be calculated at that sum, deducting only a sum of £600,000 from China, which would only be receivable for one year more. He would take the amount then at £53,100,000, and deducting £49,000,000, the estimated expenditure, from that sum there would be a net surplus of £4,100,000, or if the committee acquiesced in the increased naval estimates, £3,409,000. Sir Robert Peel next approached the most important question of all; namely, the mode in which this surplus was to be applied to the relief of taxation. If the property-tax were continued, ministers intended to make a great experiment with respect to taxation; and in explaining their views Sir Robert Peel said that he would first take the customs, and submit to the house a proposition with respect to the duty on sugar. On brown Muscovado sugar, which now paid a duty of 25s. 3d., he proposed to reduce the duty to 14s.; on free-labour sugar he proposed that the protecting duty should not exceed 9s. 4d., and therefore the duty would be 23s. 2d.; on British plantation sugars he proposed that the duty should be 16s. 4d., instead of 25s. 3d.; that the duty on sugar imported from India should be 21s. 9d.; and that the duty on free-labour foreign sugar should be 21s. 9d.—thus retaining the whole amount of discriminating duty which was imposed last year, but applying that discriminating duty in a different manner; giving 9s. 4d. as a protection on Muscovado sugar, and an increased protection of lis. 4d. on the more valuable and costly article. Sir Robert Peel said that he proposed to reduce the duty on molasses; and after giving an estimate of the supply of sugar which he considered likely to come from our possessions this year, stated that the effect which would be produced on the price of sugar by this reduction in the duty would be a reduction of three halfpence per pound. The estimated loss to the revenue from this source would be £1,300,000. Sir Robert Peel next proceeded to state that in the tariff of 1842 he had abolished generally the duty on all exports, with the exception of some few articles: he now proposed to abolish the duty on all articles. By this plan the export duty on coal would cease to exist, which would be a loss to the revenue of £120,000. He next proceeded to a consideration of the duties on raw materials used in manufactures: the tariff included eight hundred and thirteen such articles, and he proposed to remove the duties applicable to four hundred and thirty of them; which would occasion a loss to the revenue of about £320,000. He next stated that he was prepared to abolish the duty on cotton-wool, which would cause a loss to the revenue of not less than £680,000. These were all the alterations he proposed in the customs; and the right honourable baronet next proceeded to the excise-duties. Among the duties which he proposed to to repeal was the auction-duty on the transfer of property. He likewise proposed that auctioneers, instead of taking out several licences, at an expense of five pounds each, for selling different articles, should take out one general licence only, at fifteen pounds each; and as the number of auctioneers was 4000, this would produce a revenue of £60,000. Sir Robert Peel next stated that he proposed to relieve the article of glass from all duty, the loss of revenue arising from which would be £642,000. This was the whole of the articles, he said, on which he proposed a remission of taxation; and the total immediate loss which the revenue would sustain by their repeal or abolition, would amount to £3,338,000, which would nearly absorb the surplus of £3,409,000. He confessed that this was a bold experiment; but, responsible as he was to parliament for its success, he was not afraid to ran the risk of making it. He then proposed to the committee to continue the income-tax for a further limited period of three years; because he had a confident persuasion that the reduction in the price of articles of great importance would be, if not a complete, yet a great compensation for its burden. He would not say that it might not be wiser to give a longer time than three years for testing this experiment; but he thought that parliament ought to have a control over the duration of such a tax. Sir Robert Peel concluded by expressing a hope that the house would be prepared to decide on the principle of his resolutions on the following Monday, the 17th, and after several members had made some brief remarks on isolated parts of the plan, most of them expressive of satisfaction with it, he moved that the chairman report progress; and gave notice that on the following Monday he would move—“That it is the opinion of the committee, that, towards raising the supply to her majesty, the respective duties on property, professions, trades, and offices, and the stamp duties in Ireland, granted by two several acts passed in the fifth year of her present majesty, be continued and further granted to her majesty for a time to be limited.” This resolution was read in a committee of ways and means on Monday, the 17th of February, after which Lord John Russel addressed the committee, factiously opposing the scheme of the premier, without offering any sound practical suggestion, or propounding any principle. Several amendments were moved by various members; but they were all negatived, and the bill passed through committee. A discussion of considerable length was renewed on the 10th of March, by Mr. Charles Duller, but the bill was read a third time and passed.
In the house of lords the principal discussion on the income-tax took place on the 4th of April, when the third reading of the bill was moved by the Earl of Ripon. The bill was read a third time and passed.