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The difference between these estimates was a surplus of revenue over the charges of 3,741,000l. Before stating the mode in which it was proposed to deal with this surplus, he specified certain additions to the revenue. He proposed to equalize the duty on chicory and coffee, and to place upon an equal footing certain taxes upon licences, removing anomalies therein and making Clubs liable to the duties payable for the sale of wine and spirits, and withdrawing the exemption under the Income Tax Acts of corporate trust property and charitable endowments. These additional taxes would amount to 133,000l. a year, raising the estimated surplus to 3,874,000. He then stated the manner in which it was proposed to apply this amount in the remission of taxation. He proposed, he said, to repeal the petty charges upon mercantile transactions, including the stamp upon bills of lading. With respect to the minor incomes now liable to income tax, the limit at which the full tax should attach had been fixed by Mr. Pitt at 2001. a year. Since then the limit had been carried down to 1507. and to 100%. Nineteen out of twenty of the numerous complaints which now reached him, proceeded from persons whose incomes fell between 1007. and 2007. a year. The Government now proposed to give a relief to this class of contributors, which, if it did not square with exact mathematical justice, would, he believed, meet the equity of the case, and afford a seasonable mitigation of the pressure now complained

He proposed to retain 1007. as the minimum limit at which the tax should begin, to abolish the present double rate and have

sugar

only one rate, but to allow persons having incomes between 1007. and 2007. to deduct 607. from their taxable income. The effect would be, he believed, to remove most of the sore points in the working of the tax. The result would be this:-On an income of 1007. the tax was now 27. 10s., under the new system it would be 17. 10s. On an income of 1257. it would be 27. 8s. 9d., instead of 31. 2s. 6d. as at present; on an income of 150l., 31. 78. 6d., instead of 51. 12s. 6d.; and on an income of 1757., 47. 6s. 3d., instead of 67. 118. 3d. With regard to the tea and sugar duties, it appeared to the Government that whatever they did they ought not to divide the reduction into two parts; it therefore became a question between tea and sugar. He compared the arguments for and against the claims of each, observing that the question of the duties was one of great complexity, and that the most important argument in favour of tea was that the present duty was more than 100 per cent. on the value of the article, whereas the duty on sugar was only half the value. Moreover, by reducing the duty on tea, a more considerable reduction would be made in the price to the consumer than by a similar operation upon sugar. The proposal of the Government was, therefore, to reduce the duty on tea to 1s. the pound, and that the reduction should take effect immediately after the Resolution had been adopted by the House. It was proposed to continue the sugar duties only till next year. The result of these remissions, and of a reduction of 2d. in the pound in the general rate of the income tax, would be a loss of revenue to the following amount:

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The surplus of revenue being 3,874,0007., and the loss by remission of taxation 3,343,0007., there still remained a surplus of 531,0007., which the Government did not propose to part with, and he appealed to the Committee to support them in retaining this amount in their hands.

These were the financial proposals of the Government; but before he took leave of the subject the Chancellor of the Exchequer craved the attention of the House to some statements which he desired to make respecting the progress of certain important branches of trade, and the results of some portions of recent financial policy. In the first place, with regard to the paper duty, the right hon. gentleman said that, although the effect of a repeal of an excise duty was in general gradually developed, the result of this remission had been hitherto satisfactory. The import of foreign paper had risen from 15,767 cwt. in 1856, to 193,639 cwt. in 1861. What was still more gratifying was that the manu

facture of British paper had considerably increased. In the first year after the repeal of the duty, the quantity exported had increased by 34,000 cwt., and with regard to rags, an article about which so much alarm had been expressed, lest the supply should wholly fail, it appeared, on the contrary, that the quantity imported having been in 1856 only 10,287 tons, and in 1860 10,827 tons, in 1862 it rose to no less than 23,943 tons. As respected wine there had been an increased import of 109,000 gallons, and an increased revenue of about 30,000. The augmentation had been chiefly in Spanish wines. French had slightly decreased. With regard to our trade with America, that was a question of painful interest to this country on account of its bearing upon our own manufactures and our trade with France, the results of which were highly important, as this was the first time when it could be said that the Commercial Treaty had been a full year at work. Mr. Gladstone stated the results as follows:

"The export of British goods to the United States in 1859 was 22,553,000l.; in 1862 it was 14,398,0007., showing a decrease of 8,154,000l. The export of foreign and colonial goods to the United States had in the mean time increased. They were in 1859, 1,864,0007., in 1862 they were 4,052,000l., an increase of 2,188,0007., but nearly the whole of that increase was represented by the article of cotton wool taken from this country to the United States, which was no less than 1,721,000l. The case of our trade with France is very different. In 1859, the last year before the treaty, the export of British commodities to France was 4,754,0007.; in 1860, when the treaty was in very partial operation, indeed, the exports were 5,250,0007.; in 1861, when the treaty took effect towards the close of the year, they rose to 7,145,0007, without including the article of corn, which made a further increase; but as it was entirely due to the casualty of a bad harvest in France, whereas there was a great supply from foreign markets in this country, it would disturb the calculation if I took that into account. The exports rose to 7,145,0007., showing an increase of 2,391,000., and in 1862, with the treaty in operation all the year, they again rose to 9,210,000l., showing an increase of 4,456,000l.; in point of fact, doubling their amount before the treaty. That does not set forth the whole of the advantage, because in foreign and colonial produce the augmentation was yet more remarkable; for I need not remind the Committee that the foreign and colonial produce that we send to France we have ourselves obtained by exchange for British produce, so that increase in the export of foreign and colonial produce is effectively an increase in the export of British manufactures. The foreign and colonial produce sent to France in 1859 was 4,800,0007., and in 1862, 12,614,000. The total amount of exports to France, which in 1859 was 9,561,0007., had in 1862 gone up to 21,824,0007. In fact, while we had a decrease in the total trade to the United States of 6,618,000l., that decrease was a great deal more than

made up by the increase in the trade to France, for the augmentation was 12,265,000l. The effects of the cotton famine upon our general trade of course it is impossible for us to mitigate, so far as I know, by legislation; and I took the opportunity in 1861 of showing the immense stimulus that had even then been produced to the total trade of the country by the reduction of Customs' duties in the former year, and now in 1863 I am able to point to results operated by the arrangements made by France, under the able inanagement of my hon. friend the member for Rochdale, and I confidently put it to the Committee to justify Her Majesty's Government in the opinion they entertain that it was a matter of vital consequence that we should endeavour to apply to the trade and industry of the country that stimulus which we believed and knew would be given through the medium of judicious reduction and abolition. It is quite true that in 1860 we were obliged to have an additional 1d. of income tax because of those reductions, but I think it was worth having that additional 1d. when we consider that the effect of that legislation has been that in this period of severe trial to the industry of the country, not millions only, but tens of millions of that industry, have in all probability been put in motion and kept in motion owing to the legislation then adopted."

In conclusion, Mr. Gladstone requested the attention of the House to the results of an estimate he had formed, after careful calculation, as to the increase which had taken place in the taxable wealth of the country, during the nineteen years which had elapsed since the first imposition of the income tax. "In order to be as accurate as possible, I do not compare the entire income tax of 1862 with that of 1843, but I compare the income tax minus that portion of it which only represents public taxation, because it is quite plain if we have several millions added to the income in England from public establishments, that does not represent additions to the real wealth of the country. Therefore I take schedule A as representing property, railways, mines, &c.; B as representing farming profits; D as representing commerce and professions; and so much of E as belongs to private establishments; that is the basis or area of taxation. I exclude altogether Ireland, because Ireland was not taxed in 1842, and would, therefore, disturb the computation. I also exclude incomes below 1507. for the same reason. The income tax, at 7d. in the pound in 1842, attaching to Great Britain only, and only to incomes above 1507., was assessed upon an amount of income reaching 156,000,000l. Upon the very same area, with the same limitations, in 1861 the amount of assessed income was 221,000,0007., and I am not aware that there has been any change in the machinery of the tax, or any improvement in the powers of levying the tax, as compared with the powers of escaping it, that will in any way account for the difference. The difference amounts to no less than 65,000,000l. of annual income, or two-sevenths of the whole annual taxable income of the country, in the area described. That is a most remarkable result, but there is a feature of that result which, when carefully examined, is yet more remarkable,

and that is the accelerated rate of increase in the last year. I again invite the attention of the Committee for two minutes. I compare the two periods before 1853 and since 1853, when the basis was altered. In ten years, from 1842 to 1852 inclusive, the taxable income of the country, as nearly as we can make out, increased by 6 per cent. ; but in eight years from 1853 to 1861, the income of the country again increased from the basis taken by 20 per cent. That is a fact so strange as to be almost incredible. If I may presume to suggest a cause, I would suggest two-first of all the enormous, constant, rapid development of mechanical power, saving human labour, and the extension of machinery; but that has been in operation during the last 100 years, extending hands the economy of labour; the real and new cause that has been in operation has been the legislation of Parliament setting free the industry and intelligence of the British people."

This great increase of wealth had not redounded to the interest of the richer classes alone; he had reason to believe that the average condition of the British labourer had improved during the last 20 years in a manner scarcely to be paralleled in the history of any country.

Mr. Gladstone finally expressed his earnest hope, that the diminution of the public burdens, which he had now been able to propose, would be regarded by our foreign neighbours as indicative of our desire to reduce what M. Fould had recently described as an "expenditure of emulation ;" and that other nations would be induced by our example to proceed in the same course of reduction of armaments, thus contributing to strengthen elsewhere the tendencies of peace, order, and civilization, and to allay those unhappy jealousies which had hitherto prevailed among the civilized nations of the world.

The reception of this Budget was in the main highly favourable, both in Parliament and throughout the country. The two important remissions-those of the tea duty and of the income tax-were generally popular, and were acknowledged to be the most acceptable means that could have been adopted for appropriating the surplus revenue. The Conservative party in Parliament offered to these parts of the financial scheme no opposition; they regarded it, indeed, to a considerable extent as an adoption of their own policy. There were, however, some minor features of the financial programme which provoked a formidable hostility, and caused some even of Mr. Gladstone's usual supporters to regret that he had to a certain extent marred the breadth and simplicity of his scheme by such questionable ingredients. In his anxiety to correct anomalies, the Minister had proposed some modifications of the duties on stage-carriages, and also the extension to Clubs of the licence duties payable by the proprietors of hotels and coffee-houses. The first was really an insignificant matter, and scarcely worthy of notice. It was found that practical difficulties would arise in carrying it into effect, and in a short time it was abandoned. The second, though it

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