TOPICS OF THE DAY.
THE BUDGET. THE Budget is a fair Budget, and though democratic in the new principle it introduces, it is not democratic in the bribing way. The classes will suffer heavily from it in the end, but the masses gain nothing from it at present, except beer a trifle more watered. The details are complicated to an extreme—and, as we think, wholly unnecessary—degree, but the broad principles are simple enough. .Sir William Harcourt has a deficit of £4,500,000 to meet, caused partly by the increase of the Navy, and partly by the rapid increase in the coat of education, which has swollen to more than £6,000,000 a year in the present year, and in the next year will require £470,000 more. Landlords, moreover, are not to pay Income-tax on their gross rents, but on their rents minus outgoings, which are estimated at one-tenth in the case of agricultural land, and one-sixth in the case of houses not let on repairing lease. Sir William Harcourt is very proud of that remission, and it is just enough, the outgoings being, in fact, business expenses, but if his Radical friends let that pass without a hostile vote, we greatly mistake their temper. At all events, there is this great deficit ; and the Chancellor of the Exchequer meets it by four devices. First, he abstracts £2,123,000 from the Sinking Fund for the payment of new debt,—the debt raised for the last increase of the Navy. We do not see any particular objection to that abstraction, as it. Only delays the extinction of the new debt by a year, and as the money is taken for the Navy ; but it makes Sir William Harcourt personally a little ridiculous. He chose, exactly as if he were making a speech to a jury, to anticipate the effect of the one damaging admission he would have to make, by an asseveration that he would never make it. Delay the repayment of debt,—" that would be fatal and cowardly and unworthy of a great nation." We "have no proposals to make which will have the effect of diverting from the discharge of debt any part of the permanent fund which is now applicable to its liquidation. With us that is fundamental." I will set aside,' says the re- pentant spendthrift, half my income for the discharge of my debts. I shall not, however, this year pay my butcher and tailor, for you see clearly that is new debt.' There is something very like impudence in a statement of that kind made in his place by a great Cabinet Minister; but as the impudence does not, to the best of our judg- ment, hurt the State, we may pass it by as a mere illus- tration of the speaker's way of persuading, and proceed to the other devices. The next is another penny demanded from the English Isaachar, the Income-tax payer. He will probably think 8d. in the pound a heavy tax to pay in peace time ; but, as when he has more than £500 a year it does not matter at elections what he thinks, we may also pass that by. Under £500 a year, he gets abate- ments, £160 if he has less than £400 a year, and £100 if he has less than £500, which will relieve a large class whose votes do matter, all the better-paid clerks, most of the fore- men and other aristocrats of labour, and an innumerable body of struggling shopkeepers. We have no objection to raise, for, though £500 is a high limit, we have the satisfac- tion of thinking that it will be final. Mr. John Burns says nobody ought to have more than £500 a year, and the democrats of his type who will ultimately affect taxation, cannot therefore in common decency fix a higher limit of exemptions, though they may of course vote larger abate- ments. The balancing taxes on the body of the people, 6d. a gallon on whisky and 6d. a barrel on beer, are not heavy ; they recognise the principle that all men should pay a share of State expenses, and they have two incidental advantages. One is that taxes on liquor always seem fair to the general community, as taxes on a doubtful luxury, and taxes on beer tend to throw the whole trade into the hands of the greatest brewers, who, besides being best able to afford taxation, undoubtedly sell the people the best article,—a real gain to the popular health. The Irish will, of course, make a fuss about whisky, knowing that Tories will not vote against the undemocratic side Of the Budget ; but Sir William Harcourt took the national plea out of their mouths. It is England, not Ireland or Scotland, which consumes the mass of whisky that the smaller countries have the pleasure and the profit of pro- viding. The objection which was instantly raised in the House, that wine also ought to have been taxed would be perfectly just, and indeed unanswerable, but for inter- national complications. France and Spain would in- stantly have commenced a system of reprisals for the new duties.
There remains the " democratic " section of the Budget.. Sir William Harcourt has carried out two of the proposals of the finance reformers ; he has equalised the Death,. duties upon realty and personalty ; and he has graduated those duties. As we wish all realty to be declared per- sonalty, we have no grave objection to raise to the first change. Everybody admits its justice in principle, and we do not see, if laud is to be taxed at all, where the inex- pediency comes in. It is said that the new heir having so- much to pay will for four years be unable to make improve- meats; but is not that objection a little unreal? Any other- debt would debar him from making improvements ; and why should the State alone among creditors upon that argu- ment forego its rights ? It is a right, if property is to be taxed on devolution by death, and land is taxed equally with personalty ; and the State so arranges matters as to be a lenient creditor. Payment must be, and will be, by instalments ; and we think Sir William Harcourt's decision. to charge interest on the instalments is unbearably usurious—we suppose it is put on in the hope that, landlords will mortgage their lands and pay at once,. but that is bad for the country—but the payment should be made. As to the argument that the tax will reduce the value of landed property, so will the tax reduce the value of Consols, or anything else, the only difference- being in the visibleness of the effect. We do not believe, however, that the broad effect will be anything of the kind. The tax will increase the tendency of land to fall to the. rich, who make the most lenient landlords, who care moss for improvements, the "condition of the estate" being with them a question of dignity, and whose heirs cam usually pay the tax without anticipating future resources. Theequalisation is right enough, but we cannot understand why Sir William Harcourt did not go a step farther,— reduce the five Death-duties to one, instead of two, and by knocking the whole question of kinship on the head, get rid of all complications together. If, as he says, settle- ments are frauds on the Exchequer, and the State stands in the position of owner of the first charge on all property, why did he not embody those principles in his Budget, and charge a percentage all round, and for all alike ? He complains of the profits which go to lawyers under the complexity of the present system, but we venture to say there are few men in England, outside the profession, who. will be sure under his Budget what their heirs will have to pay on a, mixed property, say, of £50,000.
The proposal to graduate the duties is a graver one, and one on which it is necessary to be perfectly plain. Wedoubt if there are ten men in England, outside a. limited class of landed millionaires, who, if they were not afraid of the democracy, would not accept its principle. We ourselves accept it, though we have always had a doubt whether, in strict justice, the State is not a seller of protection and other advantages for such and such pay- ments from the individual. If that is true, though the State has a right to charge the man with £100,000 of property ten times what it charges the man with £10,000,, it has no right to alter the rate of charge. The baker might as well sell Mr. Picton a loaf for 6d., and charge 60d. to Lord Rothschild. Just or unjust, however, this latter view is unworkable. It is wholly inconsistent with indirect taxation, which is self-regulated, and it has in all our recent legislation been given up. The principle we work on is that the community should pay the indirect taxes, and that the direct taxes should be laid on those best able to bear,—those, in fact, who have the largest surplus for expenditure at will. That being conceded, it. is fair to ask the inheritor of a million to pay at a higher rate than the inheritor of £100,000, and the only question is as to the expediency of the rate to be levied. That must be moderate, for if the State plunders, it will speedily shake its credit by driving all capitalists to foreign in- vestments, and by preventing the investment of foreign capital, now very large, in British securities. It is a regular practice with foreign capitalists, and especially foreign millionaires, to place a certain proportion of their- wealth in Britain, so as to be outside the chance either of revolution or confiscation. We think that 10 per. cent„ 2i. in the pound, is the highest Death.duty that could be inflicted without perceptible results on national prosperity; and even 8 per cent., the more moderate duty proposed by Sir William Harcourt, may have some singular results in the way of evasion and concealment of capital abroad. It will certainly have the effect almost of cruelty on the great landlords, who might, in a case of rapid successions, be half-ruined, as also might be the owners of great city properties. Still, all these people have their compensations, and the country at large would not object to the suggested rates but for its latent dread of what is to follow. Has democracy the power of restraining its thirst for pecuniary equality ? It has done so in America, where the Constitution prevents the special taxation of any class ; and it has done so in France, where an attack on property always ends in an appeal to the bayonet ; but it has not, we are told, done so in some Cantons of Switzerland ; and in Britain, where we have no written Constitution, and the democracy is absolute, we should have some grave fears, not indeed of the envy of the people, for, except among Radical journalists, millionaires are popular, but of their ignorance. Nearly the first comment on Sir William Harcourt's Budget was Mr. Picton's, the labour representative ; and his instinctive utterance was that it was so wrong for anybody to leave a million, that the tax on his heirs ought to be 50 per cent. It does not seem to have struck Mr. Picton that a millionaire would baffle that at once by giving £100,000 straight out to his heir during his lifetime, giving it, we mean, by cheque in payment for a horse or a curio, without either settlements or deeds of gift. He will understand that argument, though we suppose that to tell him that to break all the great fortunes, to pull down Chatsworth, and render grand collections impossible, would destroy the variety, and therefore lower the whole scale of our civilisation. Men, too, like Arkwright or Bessemer, who make fortunes almost of necessity by making new indus- tries which render hundreds of thousands comfortable, must have some right to bequeath those fortunes where they will ; or else why make them ? Mr. Picton is, of course, only a rash individual, but he represents great masses of the ignorant ; and it is in his speech that the danger of the new proposal can most visibly be seen. But for that danger, which we believe to be immensely grave, the mass of Englishmen being no more able to realise a million than the educated are to realise a quintillion, we should say that Sir William Harcourt's proposal for graduated Death-duties was, in the circumstances of the time, a moderate and reasonable one. Of course the principle is applicable to the Income-tax, and would be in application much more dangerous, but fortunately, that is almost impossible. Three-fourths of the whole Income- tax is levied automatically by disinterested persons, and before the income reaches the recipient, and to alter that arrangement would, as Sir William Harcourt admits, besides impairing the productiveness of the tax, lead to inquisitions which would in no long time be fatal, as they were in America, to the tax itself. It is the accidental but supreme merit of our Income-tax, that it reveals no man's income to anybody.
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