On the 5th of April Sir Charles Wood, after his usual manner, brought forward a new Budget. He proposed now to levy a uniform duty of ninepence on the annual value of houses, and sixpence on shops, without reference to the number of their windows. This would in nearly all cases impose a smaller burden on houses than the Window Tax, the capricious and unequal incidence of which had made it intensely unpopular—the greatest relief being given to the houses which had more windows than were proportionate to their annual value. The loss from the Window Tax and the reduction of the duty on coffee left a surplus of £924,000 for emergencies, and Sir Charles Wood was still deaf to the demand for the abolition of the Income Tax. The Tories contended that the tax had been granted to meet a deficit. There was now no deficit, therefore the tax ought to be removed. The Whigs admitted these facts, but denied the conclusion drawn from them. The tax, they argued, ought not to be removed, because a new reason had risen for its continuance, namely, that the Income Tax enabled the Government to minimise the loss to the revenue which might be entailed by the abandonment of protective duties. This, in fact, is the clue to all the tangled Income Tax controversies of the time. The Income Tax was in truth the keystone of Peel’s Free Trade policy. The Tories, therefore, spared no pains to strike it out of the fabric of fiscal legislation which he and the Whigs had built up. Yet the injustice and frauds perpetrated under the Income Tax were admitted on all sides; and finally an effort was made by Mr. Hume to limit the renewal of the tax to one year, and refer the whole question of its assessment and incidence to a Select Committee. Mr. Hume’s motion was carried against the Government by a vote of 244 to 230. But the fatal objection to it, as Mr. Sidney Herbert pointed out, was that, unless the Government had the Income Tax secured to them for three years, they could not make permanent
THE CAFFRE WAR: NATIVES ATTACKING A CONVOY.
reductions in the duties on coffee and timber. It was absurd to dream of entering on a policy which involved further remission of taxation, so long as £5,000,000 of the revenue—for that was what the Income Tax brought in—depended on an annual vote of the House. Then the concordia discors of the majority was made manifest. As everybody had voted with Mr. Hume from different motives, it was impossible to get competent men to serve on the Committee. That difficulty, however, was after much trouble overcome, and the Government made the best of the situation. They accepted defeat; Lord John Russell, however, stipulating that, whatever might be done, the national credit must be maintained. In other words, he accepted the proposal on the ground that, though the motion granting the Income Tax for one year only was carried, there was no serious intention of refusing to renew the tax if necessary; and that it would be necessary was, of course, certain, unless the £5,500,000 derived from it were replaced by protective duties. This was not a very logical position, and Mr. Disraeli seized the opening which it gave him. Hume’s victory, technically speaking, implied that the financial arrangements of the country were in a provisional state.
GROUP OF DYAKS.
Why, then, asked Mr. Disraeli, sacrifice any revenue at all till something like permanence had been imparted to these arrangements? On the 30th of July he brought forward a futile motion to this effect in a grandiose speech, and was supported by Mr. Gladstone, whose antipathy to the Government was fast becoming uncontrollable. Yet Mr. Gladstone’s argument was sound enough. To surrender the Window Tax for one like the hated House Duty, which rested on a narrow basis and was vitiated by special anomalies of inequality and injustice of incidence, that had secured its abolition in 1834, was surely bad finance. And what was gained? Six-sevenths of the house property of the country were exempted from taxation—house property being a fair enough subject for taxation, provided it be assessed on fair general principles. Nothing could be more precarious than the position of the Income Tax; yet but for it the surplus in hand, which Sir Charles Wood was flinging away, would not exist. Mr. Disraeli, however, in spite of Mr. Gladstone’s support, lost his motion. His inconsistency in voting for Mr. Cayley’s proposal, on the 8th of May, to abolish the Malt Tax, which yielded £5,000,000 of revenue, and in protesting, on the 30th of June, against the sacrifice of £1,600,000 of surplus, as ruinous to public credit, was, of course, disastrous to his pleading.
In the debates on Colonial Policy the Government were more successful than could have been anticipated. Mr. Baillie’s motion censuring Lord Torrington’s maladministration of the affairs of Ceylon was defeated by a large majority, which, says Mr. Greville, set the Cabinet, smarting from various reverses at the time, “on their legs again.”