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Chapter LVII, of Cassells Illustrated History of England, Volume 7 page 5

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There is no reason to doubt that the Minister honestly believed that the income tax would be only a temporary measure. He had avowed his faith in the doctrines of the free-traders on the elasticity of taxes under remission. The country had already seen the marvellous effects of taking off excise duties, in setting free industry, and so increasing the amount derived from other taxed articles; and they had just had an evidence of the truth of the converse of that maxim in the unproductiveness of the additional rates imposed by Sir Francis Baring. It was, at all events, not the part of the free-traders to deny that the remissions of taxation which the income tax rendered possible would soon be made up, and thus the abolition of the income tax made easy. Subsequent events, indeed, have shown that those calculations were well founded; but the Minister forgot that the elasticity of the national expenditure is at least equal to that of the national income. Once imposed, the income tax was little likely to be parted with by future Chancellors of the Exchequer. If the expenditure of the country had remained at the point at which it stood in 1843, there would soon have been no difficulty in dispensing with this great burthen on the industrious classes. This was all the Minister promised, and the subsequent enormous increase in the estimates cannot fairly be regarded as showing the Premier's scheme to be erroneous.

It is curious, however, that this very temporary character which Sir Robert Peel put forth as the best recommendation of his scheme afforded one of the most powerful arguments against the tax. A complaint was immediately made against the injustice of taxing precarious and permanent incomes - the earnings of the clerk or professional man, which may cease at any moment, or the income of the annuitant, or holder of a terminable annuity - and the revenue of the landed proprietor or fundholder at the same rate. The supporters of the tax contended that this objection was fallacious, because where the income was precarious, the tax would be equally precarious, and would, in fact, exist only as long as the income existed. These two schools of reasoners have not yet come to agreement upon this point, very able writers even among political economists having adopted each view; but among the most thorough defenders of the tax there were none who could deny that their reasoning applied only to a permanent impost; and that a man who invested in a permanent security ought not to be allowed, as he was, to pay a great deal less per annum in proportion to his property than others who had invested in annuities or other precarious securities, except on the understanding, that while the latter paid only as long as their income should last, the former should pay for ever. On Sir Robert Peel's own showing, his tax must necessarily be grossly partial in its operation in favour of the landowner, the fundholder, and all other holders of settled incomes. In. other respects, it could not be denied that the tax was extremely unfair. Unlike some indirect taxes, which reach all classes, it weighed and even now weighs heavily on the struggling industrious and most responsible portion of the population, to the almost complete exemption of the idle and profligate. In practice it has been found impossible to collect it with any approach to equality. Few persons, unless housekeepers, however large their incomes, find much difficulty in escaping from its operation. Add to this the vast injury to the morals of the people in the almost universal practice of making false returns, which has grown out of the fact that the Government are, in most cases, compelled to depend entirely on the consciences of the payers for their knowledge of the amount of their incomes. Many of these evils were pointed out at the time, and considerable opposition was manifested; but the splendour of the financial scheme, which was based upon the new impost, and the apparent impossibility of separating it from it, reconciled even some of the more advanced Liberal journals, which did not fail to sneer at the theorists who attempted to draw a distinction between incomes on the ground of the sources from which they were derived.

Sir Robert Peel calculated that the tax would yield 3,350,000 a year, a sum which, with an addition to the spirit duties in Ireland, and an export duty of 4s. on coals, would not only cover the existing deficiency, but enable him to remit indirect taxes to the amount of 1,200,000. The sliding scale had brought little credit to the Minister, and the income tax was in its nature an unpopular measure; but the proposal to reduce the custom duties on 750 out of the 1,200 articles in the tariff - to remove prohibitions altogether (in itself a vast concession to free trade doctrines) - to reduce the duties on raw materials of manufactures to five per cent, or less - to keep the duties on articles partially manufactured under twelve per cent., and on articles wholly manufactured under twenty per cent., was a scheme which excited general admiration. The measure was, indeed, contested by the Whig Opposition at every stage. The preliminary resolutions were debated for eight nights. There were many of Sir Robert Peel's old supporters who looked on the financial plan with distrust, as being founded, in a great measure, avowedly on those principles of political economy which they had been accustomed to sneer at; but, in truth, it was not unfavourable to the interests of their party. We have already seen that the new tax - at least, if a temporary one - was calculated to impose a far greater burden upon the manufacturing and moneyed class than upon the landowners; in fact, by exempting incomes under 150 a year, and assessing land only upon its net rental, the burden was imposed almost entirely upon that middle class which was the especial object of the dislike of Tories of the more advanced kind. At the same time, by cheapening articles of general consumption, the Minister did something towards securing popularity among the working classes, who, as exemplified in the Chartist agitation, were not always disposed to take part against the selfish schemes of the landowners. Sir James Graham, in his speech on the budget, said that the object of the Government was gradually to reduce the price of all articles of first necessity, and added, "I am persuaded that the working classes clearly understand this, and that it is a fixed and rooted belief with them that this tariff, taken in conjunction with the scheme of direct taxation, is one calculated to promote the interests of the great bulk of the community." ' The weak and vacillating Whigs now saw how good a chance of popularity they had lost. They were indignant at finding that the Protectionist Minister had outwitted them by capping their timid advances towards free trade by a scheme which, while it inflicted no injury upon his party, constituted a really bold and sweeping reform of the tariff. Their pamphleteers delighted to recall the saying of Mr. Canning, that Peel was the sublime of mediocrity. They praised his many domestic virtues, his adroit talents in debate, his steady application to business, his freedom from jobbing, and his "plain habits," only to sneer at him as a " second-rate man." They said he had originated nothing except the London police; that no speech of his had ever lived beyond the day; that no sayings of his were quoted, or remembered for their wit or their wisdom; that all about him, like his person, was common-place; second-hand, " well got up." They said that the agricultural kings of Moab little thought, during the elections of 1841, when they called him to a high place to bless their wheat and their short-horns, that he would so soon take up his reduced scale and his tariff to confound their expectations, and to make them eat their own words, and to vote against their own motions. With some show of reason it was said that all the great leading measures which have been advocated and carried since he came into public life, had been opposed and mistaken by him for sources of mischief; while afterwards, ninety-nine people out of a hundred (and himself amongst them) hailed them as great advances in the paths of liberty, justice, and humanity. They taunted him with the fact that he began by opposing Mr. Horner's celebrated resolutions on the currency, and ended by himself carrying the return to cash payments; that he opposed Sir Samuel Romilly's humane attempts to simplify our criminal laws, and to mitigate their revolting severity; and then, many years later, took some hesitating steps in the same direction, but, satisfied or alarmed with a few digests, left its revolting severities untouched and unrebuked. They reminded him that he had twitted Mr. Canning, in 1827, with his inability to resist the abolition of the Test and Corporation Act, and was himself, under the compulsion of Lord John Russell, no later than the following year when Secretary of State, an example of the very inability he had denounced; that for the first twenty years of his political life he was the uncompromising opponent of Catholic Emancipation, and yet suddenly opened the sessions of 1829 with an unrestricted Emancipation Bill; that in 1826 he approved of educating the Irish Protestant and Catholic children together, and of giving them Scripture extracts as school books - in 1832 he disapproved - in 1835 he re-approved - and in 1842 he united both opinions by approving in words, and discouraging by deeds, this system; and finally, that in 1815 he defended, in 1833 he denounced, and in 1842 he imposed an income tax.

Their taunts, however, though true enough, had little practical effect. The Income Tax Bill passed, after considerable opposition in the Commons. An amendment proposed by Lord John Russell was rejected by a vote of 302 to 202, and another amendment, proposing the reading of the Bill on that day six months, having been thrown out on the 18th of April by a vote of 285 to 188, the third reading was carried by a majority of 130 on the 30th of May. No debate took place in the Lords until the third reading, when the Bill passed by a majority of 71.

The amended copy of the proposed tariff was laid on the table of the House of Commons on the 5th of May; and its details explained by the Premier in a speech which served to bring out still more strongly the anomalous position in which he was placed. His speech was a long elaborate statement distinguished for its excellent temper, its clearness, and, above all, by its singularity as delivered by the Conservative leader. He went over all the sections of his subject, showing how the removal of prohibitions would benefit everybody; how the reduction of duties on raw materials would stimulate trade; how the diminished duties on provisions would make living cheaper for all; and how the lesser protection to manufactures would injure none. For the agricultural interest he had to offer cheap foreign clover seeds. The duties on wood came next. In consequence of the high duties on foreign wood entered for home consumption, it had been frequently imported into the country, then re-exported to France and Germany, and finally re-imported as furniture on a payment of 20 per cent. It was not surprising that the cabinet trade of this country had, under these circumstances, been transferred to Germany and France. The reduction of the duties on dye-woods and ores was also calculated to be of great benefit to manufacturers. The high duty on copper ores had been found to operate in such a manner that copper smelted in bond in this country could not be used here; while copper was actually imported which had been smelted in England and France with our own fuel. Similar advantages were anticipated from the reduced duties on oils, which are extensively used in our manufactures. While one of the chief - whale oil - had risen from 60 or 70 a tun in a few years to 95, or even 111 a tun, in the United States it could be procured for similar purposes at 3s. or 4s. Coming to timber, the Minister reminded the House of the celebrated dictum of Mr. Deacon Hume, that we have abundance of untaxed coal, abundance of untaxed iron, and that we only wanted abundance of untaxed wood, in order to be provided cheaply with the three great primary raw materials of employment and necessary consumption. Entering into further details, he said that he found beef, fresh or slightly salted, was absolutely prohibited; he proposed to admit it at 8s. per cwt. Lard, an important article in the consumption of the poor, and for manufacturing purposes, would be admitted at 2s. per cwt., instead of 8s.; salt beef at 8s., instead of 12s.; hams at 14s. per cwt., instead of 28s.; herrings - a fish in which the poor were most interested - would be admitted at 10s. the barrel, instead of 20s. In the true spirit of free trade, he answered those who anticipated injury to our own herring fisheries from this change by asking why the inhabitants of the north of Scotland should not be able to compete with the Norwegians for the supply of Ireland; adding - " I say, reduce the duty on timber, enable the fisherman to build a better boat, in order that he may go further to sea and navigate in rougher weather, and then he will be able to compete with foreign fishermen. He has as much industry, as great skill, and by exposing him to a certain amount of competition, you apply a stimulus to greater exertion than is now called for from him." In the same way he showed the effect of the reduction on vegetables. The Government had come to the conclusion that the duty on hops was extravagant, and it was to be reduced from 8 4s. to 4 10s. He also devoted a considerable portion of his statement to convincing those who feared the reduction of the duties on live cattle, that their anticipations were groundless. He told his agricultural friends that it was from Holstein alone that any great supplies of cattle could be brought; and that they might be certain that not a single ox, fat or lean, would cross the Bay of Biscay. Inquiries had taught him that the trade of feeding lean cattle had become quite profitless, except for the sake of the manure. Lean cattle from the Continent would mend that. In proof that high duties did not protect the home manufacturer, Sir Robert caused some merriment by producing a letter from a smuggler - " not addressed," he said, "to myself, of course," but a bona-fide letter written by a man of large means and capital in regular intercourse with London. It was dated December, 1841. After offering his services on the goods for a certain port, the Premier read the conclusion of the writer as follows: " lam able to forward to you every week blondes and laces (I mean articles manufactured at Lille, Arras, Caen, Chantilly, &c.), at a very low premium, by the indirect channel. The goods would be delivered in London the same week of the reception... for which articles prices would have to be determined, but certainly a great deal Under your Custom House duties." " Is it not clear," asked the Minister, triumphantly, " that it would be more beneficial to the domestic manufacturer that he should know the extent of the competition to which he is subjected; that he should be aware of it, and not be exposed to an illicit, unseen competition, against which he can take no precautions? "

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