MR. LLOYD GEORGE'S CONCESSION.
ALTHOUGH the Chancellor of the Exchequer clearly indicated, in the earlier stages of the Budget discussions, an intention to make a concession to the owners of agricultural land, his actual proposals, outlined in the House of Commons this week, certainly go beyond what was generally anticipated. In effect, the author of the Limehouse speech proposes to make a concession involving half-a-million a year at the least to the landowning class which he and his supporters have been denouncing up and down the country. If this had been done by a Tory Minister, there would have been a howl of indignation from every Radical throat, and we can readily imagine that even under present conditions many Radicals felt extremely uncomfortable when they read their papers on Tuesday morning. That the concession- is in itself just nobody can deny ; but the desire for justice to landowners is the very last thing that has appeared to actuate Mr. Lloyd George in the speeches which he has made in defence -of the Land- taxes. These taxes have been defended by every kind of appeal to prejudice, all directed to showing that land- owners as a class are such a vicious and contemptible body of men that the State is justified in laying hands on large slices of their property, while leaving the owners of other forms of property relatively unscathed. It is an agreeable change to find the Chancellor of the Exchequer at last making a perfectly sober statement, and justifying his latest financial proposals by an appeal to principles which all Englishmen can recognise as just. The grievance of the landowner who is taxed under Schedule A of the Income-tax is, indeed, in many cases a serious one. His property may be in such a condition that he is compelled to spend a very large portion of his gross income—in some cases possibly the whole of one year's income—in putting it into decent repair. Yet he is taxed upon his gross income, subject only to a rebate of 12 per cent. in the case of land, and 161 per cent. in the case of buildings. This is in direct conflict with the general principle of the Income-tax that a man should pay on his spendable income.
The most satisfactory method of meeting the injustice would be to abolish Schedule A altogether, and allow landowners to make a return under Schedule D. This was the original idea in Mr. Lloyd George's mind, but he has, he tells us, been compelled to abandon this scheme on account of the administrative difficulties involved. He stated that there were at present six hun- dred thousand accounts to be examined under Schedule I) every year, and that if landowners were placed under Schedule D it would be necessary to examine an additional two million accounts. Incidentally, we may remark that the implied confession that there are approxi- mately two million owners of land in the United Kingdom is an interesting commentary upon the favourite Radical theory that land is a monopoly. Probably the number of separate landowners is rather under two millions, for a good many separate properties are held in different counties by the same person, who may therefore be reckoned twice over ; but there can be little doubt that the separate landowners in the United Kingdom considerably exceed in number one million five hundred thousand. The cost of examining two million additional accounts under Schedule D is no doubt an important argument against the abolition of Schedule A. It is, however, hardly an argument to be used by Mr. Lloyd George, who is proposing to inflict upon the country a. far greater expendi- ture for the purpose of ob+aining a fanciful valuation, not only of every separate property, but of every separate plot of land in the United Kingdom, which woiald -involve not two million, but more likely twenty million, separate accounts. Mr. Lloyd. George's second administrative reason against the proposed change is that it would involve the abandon- ment of the very' convenient practice of levying Income-tax at the source.. At present the tenant of a, farm or of a house pays Income-tax under Schedule A at the beginning of tho year, and deducts it, either from his next quarter's rent, or in proportionate amounts from the rent payable throughout the year. Under this system the Inland Revenue authorities obtain the Income-tax payable by owners of land with a minimum of cost and friction. If, however, the landowner is to be dealt with as a person, and is to make out a statement of the profits he derives from his business of landowning, the Inland Revenue authorities must apply to him direct instead of collecting the tax through his tenants. This objection is still a serious one, and would have been more serious a few years ago. During the last few years, however, so many changes have been made in the Income-tax, and so many more are now contemplated, that the system of collection at the source is gradually breaking down. A man can now claim abatement of Income-tax on the ground that his income is less than £700 a year ; or on the ground that it is less than £2,000 a year and is earned, in which case he pays at a lower rate ; or on the ground that it is between £2,000 and £3,000 and is earned, in which case he pays at another rate; while finally, if his income is above £5,000 a year he has to present a. separate statement and pay a super-tax upon the excess above £3,000. All these changes destroy the pristine simplicity of the old Income-tax, and to that extent diminish the case for preserving the practice of collecting at the source. It may be that in future years we shall have to abandon this practice altogether, and to deal direct with every individual, compelling him to make a complete return of his whole income from all sources. When this has been done a further reform of the utmost value will be possible,—namely, the substitution of a local Income-tax for the present inequitable system of local rates.
We do not, therefore, regard Mr. Lloyd George's argu- ments against the substitution of Schedule D for Schedule A as being finally conclusive, though we admit that for the moment, in view of the complications of the Budget, he is justified in seeking for a simpler method of mitigating the recognised injustice from which landowners now suffer. His proposal is to continue the present abatements of 121 per cent. and 161 per cent. respectively off gross incomes derived from land and houses, but in addition to permit the landowner to send in a claim for any extra expenses he may have incurred in the management or upkeep of his estate up to the total amount of 25 per cent. of the gross income. If he can prove this claim, he will receive a refund of the additional amount due to him. Mr. Lloyd George admitted that in some cases 25 per cent. would not cover the landowner's outgoings, and held out hope that in future this proportion might be raised. For the moment, however, he could not offer more because of the loss of revenue involved.
He then made the very serious announcement that in order to find. the money for this concession he would have to make a fresh raid upon the Sinking Fund. We sincerely hope that a. strong protest will be made both in the House of Commons and in the City against this proposal. Consols are now standing at less than 831, and it ought to be the primary duty of a Chancellor of the Exchequer to strengthen the credit of the country by increasing the Sinking Fund. So much attention has been concentrated on Mr. Lloyd George's schemes for new taxation that few people have noticed how greatly he has added to his demands for money, even since the Budget was introduced. To enumerate a few items : £600,000 is to be set aside for roads, for what purpose no one can conceive, unless it be to compete unfairly with the railways ; £500,000 a year is to be made a charge upon the Consolidated Fund for the Development Fund Grant, and apparently another. £200,000 is to be - asked for on the Estimates for the same purpose. This, as far as can be made out, is in addition to the £200,000 for - the unemployed. Here are sources from which money can • be found, both for doing what Mr. Lloyd George admits to be justice to landowners, and also for increasing the Sinking Fund. On purely financial grounds alone, the Development Fund Bill ought to be rejected, and we venture to suggest that the House of Lords should demonstrate their political sense, as well as their patriotic purpose, by rejecting this Bill, while leaving the Finance Bill, or at any rate its most injurious features, to be rescinded on some future occasion.
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