most cases, is a worthy person utterly unconscious of the character of
the methods by which he is enriched, is enabled with resistless
strength to absorb to himself a share of almost every public and
every private benefit, however important or however pitiful those
benefits may be.
I hope you will understand that when I speak of the land monopolist, I
am dealing more with the process than with the individual landowner. I
have no wish to hold any class up to public disapprobation. I do not
think that the man who makes money by unearned increment in land, is
morally a worse man than any one else, who gathers his profit where he
finds it, in this hard world under the law and according to common
usage. It is not the individual I attack; it is the system. It is not
the man who is bad; it is the law which is bad. It is not the man who
is blameworthy for doing what the law allows and what other men do; it
is the State which would be blameworthy, were it not to endeavour to
reform the law and correct the practice. We do not want to punish the
landlord. We want to alter the law. Look at our actual proposal.
We do not go back on the past. We accept as our basis the value as it
stands to-day. The tax on the increment of land begins by recognising
and franking all past increment. We look only to the future; and for
the future we say only this: that the community shall be the partner
in any further increment above the present value after all the owner's
improvements have been deducted. We say that the State and the
municipality should jointly levy a toll upon the future unearned
increment of the land. A toll of what? Of the whole? No. Of a half?
No. Of a quarter? No. Of a fifth--that is the proposal of the Budget.
And that is robbery, that is plunder, that is communism and
spoliation, that is the social revolution at last, that is the
overturn of civilised society, that is the end of the world foretold
in the Apocalypse! Such is the increment tax about which so much
chatter and outcry are raised at the present time, and upon which I
will say that no more fair, considerate, or salutary proposal for
taxation has ever been made in the House of Commons.
But there is another proposal concerning land values which is not less
important. I mean the tax on the capital value of undeveloped urban or
suburban land. The income derived from land and its rateable value
under the present law depend upon the use to which the land is put. In
consequence, income and rateable value are not always true or
complete measures of the value of the land. Take the case to which I
have already referred, of the man who keeps a large plot in or near a
growing town idle for years, while it is "ripening"--that is to say,
while it is rising in price through the exertions of the surrounding
community and the need of that community for more room to live. Take
that case. I daresay you have formed your own opinion upon it. Mr.
Balfour, Lord Lansdowne, and the Conservative Party generally, think
that that is an admirable arrangement. They speak of the profits of
the land monopolist, as if they were the fruits of thrift and industry
and a pleasing example for the poorer classes to imitate. We do not
take that view of the process. We think it is a dog-in-the-manger
game. We see the evil, we see the imposture upon the public, and we
see the consequences in crowded slums, in hampered commerce, in
distorted or restricted development, and in congested centres of
population, and we say here and now to the land monopolist who is
holding up his land--and the pity is, it was not said before--you
shall judge for yourselves whether it is a fair offer or not--we say
to the land monopolist: "This property of yours might be put to
immediate use with general advantage. It is at this minute saleable in
the market at ten times the value at which it is rated. If you choose
to keep it idle in the expectation of still further unearned
increment, then at least you shall be taxed at the true selling value
in the meanwhile." And the Budget proposes a tax of a halfpenny in the
pound on the capital value of all such land; that is to say, a tax
which is a little less in equivalent, than the income-tax would be
upon the property, if the property were fully developed.
That is the second main proposal of the Budget with regard to the
land; and its effects will be, first, to raise an expanding revenue
for the needs of the State; secondly that, half the proceeds of this
tax, as well as of the other land taxes, will go to the municipalities
and local authorities generally to relieve rates; thirdly, the effect
will be, as we believe, to bring land into the market, and thus
somewhat cheapen the price at which land is obtainable for every
object, public and private. By so doing we shall liberate new springs
of enterprise and industry, we shall stimulate building, relieve
overcrowding, and promote employment.
These two taxes, both in themselves financially, economically, and
socially sound, carry with them a further notable advantage. We shall
obtain a complete valuation of the whole of the land in the United
Kingdom. We shall procure an up-to-date Doomsday-book showing the
capital value, apart from buildings and improvements, of every piece
of land. Now, there is nothing new in the principle of valuation for
taxation purposes. It was established fifteen years ago in Lord
Rosebery's Government by the Finance Act of 1894, and it has been
applied ever since without friction or inconvenience by Conservative
administrations.
And if there is nothing new in the principle of valuation, still less
is there anything new or unexpected in the general principles
underlying the land proposals of the Budget. Why, Lord Rosebery
declared himself in favour of taxation of land values fifteen years
ago. Lord Balfour has said a great many shrewd and sensible things on
this subject which he is, no doubt, very anxious to have overlooked at
the present time. The House of Commons has repeatedly affirmed the
principle, not only under Liberal Governments, but--which is much more
remarkable--under a Conservative Government. Four times during the
last Parliament Mr. Trevelyan's Bill for the taxation of land values
was brought before the House of Commons and fully discussed, and twice
it was read a second time during the last Parliament, with its great
Conservative majority, the second time by a majority of no less than
ninety votes. The House of Lords, in adopting Lord Camperdown's
amendment to the Scottish Valuation Bill, has absolutely conceded the
principle of rating undeveloped land upon its selling value, although
it took very good care not to apply the principle; and all the
greatest municipal corporations in England and Scotland--many of them
overwhelmingly Conservative in complexion--have declared themselves in
favour of the taxation of land values; and now, after at least a
generation of study, examination, and debate, the time has come when
we should take the first step to put these principles into practical
effect. You have heard the saying "The hour and the man." The hour has
come, and with it the Chancellor of the Exchequer.
I have come to Scotland to exhort you to engage in this battle and
devote your whole energy and influence to securing a memorable
victory. Every nation in the world has its own way of doing things,
its own successes and its own failures. All over Europe we see systems
of land tenure which economically, socially, and politically are far
superior to ours; but the benefits that those countries derive from
their improved land systems are largely swept away, or at any rate
neutralised, by grinding tariffs on the necessaries of life and the
materials of manufacture. In this country we have long enjoyed the
blessings of Free Trade and of untaxed bread and meat, but against
these inestimable benefits we have the evils of an unreformed and
vicious land system. In no great country in the new world or the old
have the working people yet secured the double advantage of free trade
and free land together, by which I mean a commercial system and a land
system from which, so far as possible, all forms of monopoly have been
rigorously excluded. Sixty years ago our system of national taxation
was effectively reformed, and immense and undisputed advantages
accrued therefrom to all classes, the richest as well as the poorest.
The system of local taxation to-day is just as vicious and wasteful,
just as great an impediment to enterprise and progress, just as harsh
a burden upon the poor, as the thousand taxes and Corn Law sliding
scales of the "hungry 'forties." We are met in an hour of tremendous
opportunity. "You who shall liberate the land," said Mr. Cobden, "will
do more for your country than we have done in the liberation of its
commerce."
You can follow the same general principle of distinguishing between
earned and unearned increment through the Government's treatment of
the income-tax. There is all the difference in the world between the
income which a man makes from month to month or from year to year by
his continued exertion, which may stop at any moment, and will
certainly stop, if he is incapacitated, and the income which is
derived from the profits of accumulated capital, which is a continuing
income irrespective of the exertion of its owner. Nobody wants to
penalise or to stigmatise income derived from dividends, rent, or
interest; for accumulated capital, apart from monopoly, represents the
exercise of thrift and prudence, qualities which are only less
valuable to the community than actual service and labour. But the
great difference between the two classes of income remains. We are all
sensible of it, and we think that that great difference should be
recognised when the necessary burdens of the State have to be divided
and shared between all classes.
The application of this principle of differentiation of income-tax has
enabled the present Government sensibly to lighten the burden of the
great majority of income-tax payers. Under the late Conservative
Government about 1,100,000 income-tax payers paid income-tax at the
statutory rate of a shilling in the pound. Mr. Asquith, the Prime
Minister, when Chancellor of the Exchequer, reduced the income-tax in
respect of earned incomes under L2,000 a year from a shilling to
ninepence, and it is calculated that 750,000 income-tax payers--that
is to say, nearly three-quarters of the whole number of income-tax
payers--who formerly paid at the shilling rate have obtained an actual
relief from taxation to the extent of nearly L1,200,000 a year in the
aggregate. The present Chancellor of the Exchequer in the present
Budget has added to this abatement a further relief--a very sensible
relief, I venture to think you will consider it--on account of each
child of parents who possess under L500 a year, and that concession
involved a further abatement and relief equal to L600,000 a year.
That statement is founded on high authority, for it figured in one of
the Budget proposals of Mr. Pitt, and it is to-day recognised by the
law of Prussia.
Taking together the income-tax reforms of Mr. Asquith and Mr.
Lloyd-George, taking the two together--because they are all part of
the same policy, and they are all part of our treatment as a
Government of this great subject--it is true to say that very nearly
three out of every four persons who pay income-tax will be taxed after
this Budget, this penal Budget, this wicked, monstrous, despoliatory
Budget--three out of every four persons will be taxed for income-tax
at a lower rate than they were by the late Conservative Government.
You will perhaps say to me that may be all very well, but are you sure
that the rich and the very rich are not being burdened too heavily?
Are you sure that you are not laying on the backs of people who are
struggling to support existence with incomes of upwards of L3,000 a
year, burdens which are too heavy to be borne? Will they not sink,
crushed by the load of material cares, into early graves, followed
there even by the unrelenting hand of the death duties collector? Will
they not take refuge in wholesale fraud and evasion, as some of their
leaders ingenuously suggest, or will there be a general flight of all
rich people from their native shores to the protection of the
hospitable foreigner? Let me reassure you on these points.
The taxes which we now seek to impose to meet the need of the State
will not appreciably affect, have not appreciably affected, the
comfort, the status, or even the style of living of any class in the
United Kingdom. There has been no invidious singling out of a few rich
men for special taxation. The increased burden which is placed upon
wealth is evenly and broadly distributed over the whole of that
wealthy class who are more numerous in Great Britain than in any other
country in the world, and who, when this Budget is passed, will still
find Great Britain the best country to live in. When I reflect upon
the power and influence that class possesses, upon the general
goodwill with which they are still regarded by their poorer
neighbours, upon the infinite opportunities for pleasure and for
culture which are open to them in this free, prosperous, and orderly
commonwealth, I cannot doubt that they ought to contribute, and I
believe that great numbers of them are willing to contribute, in a
greater degree than heretofore, towards the needs of the navy, for
which they are always clamouring, and for those social reforms upon
which the health and contentment of the whole population depend.
And after all, gentlemen, when we are upon the sorrows of the rich and
the heavy blows that have been struck by this wicked Budget, let us
not forget that this Budget, which is denounced by all the vested
interests in the country and in all the abodes of wealth and power,
after all, draws nearly as much from the taxation of tobacco and
spirits, which are the luxuries of the working classes, who pay their
share with silence and dignity, as it does from those wealthy classes
upon whose behalf such heartrending outcry is made.
I do not think the issue before the country was ever more simple than
it is now. The money must be found; there is no dispute about that.
Both parties are responsible for the expenditure and the obligations
which render new revenue necessary; and, as we know, we have
difficulty in resisting demands which are made upon us by the
Conservative Party for expenditure upon armaments far beyond the
limits which are necessary to maintain adequately the defences of the
country, and which would only be the accompaniment of a sensational
and aggressive policy in foreign and in Colonial affairs. We declare
that the proposals we have put forward are conceived with a desire to
be fair to all and harsh to none. We assert they are conceived with a
desire to secure good laws regulating the conditions by which wealth
may be obtained and a just distribution of the burdens of the State.
We know that the proposals which we have made will yield all the money
that we need for national defence, and that they will yield an
expanding revenue in future years for those great schemes of social
organisation, of national insurance, of agricultural development, and
of the treatment of the problems of poverty and unemployment, which
are absolutely necessary if Great Britain is to hold her own in the
front rank of the nations. The issue which you have to decide is
whether these funds shall be raised by the taxation of a protective
tariff upon articles of common use and upon the necessaries of life,
including bread and meat, or whether it shall be raised, as we
propose, by the taxation of luxuries, of superfluities, and
monopolies.
I have only one word more to say, and it is rendered necessary by the
observations which fell from Lord Lansdowne last night, when,
according to the Scottish papers, he informed a gathering at which he
was the principal speaker that the House of Lords was not obliged to
swallow the Budget whole or without mincing.[18] I ask you to mark
that word. It is a characteristic expression. The House of Lords means
to assert its right to mince. Now let us for our part be quite frank
and plain. We want this Budget Bill to be fairly and fully discussed;
we do not grudge the weeks that have been spent already; we are
prepared to make every sacrifice--I speak for my honourable friends
who are sitting on this platform--of personal convenience in order to
secure a thorough, patient, searching examination of proposals the
importance of which we do not seek to conceal. The Government has
shown itself ready and willing to meet reasonable argument, not merely
by reasonable answer, but when a case is shown, by concessions, and
generally in a spirit of goodwill. We have dealt with this subject
throughout with a desire to mitigate hardships in special cases, and
to gain as large a measure of agreement as possible for the proposals
we are placing before the country. We want the Budget not merely to be
the work of the Cabinet and of the Chancellor of the Exchequer; we
want it to be the shaped and moulded plan deliberately considered by
the House of Commons. That will be a long and painful process to those
who are forced from day to day to take part in it. We shall not shrink
from it. But when that process is over, when the Finance Bill leaves
the House of Commons, I think you will agree with me that it ought to
leave the House of Commons in its final form. No amendments, no
excision, no modifying or mutilating will be agreed to by us. We will
stand no mincing, and unless Lord Lansdowne and his landlordly friends
choose to eat their own mince, Parliament will be dissolved, and we
shall come to you in a moment of high consequence for every cause for
which Liberalism has ever fought. See that you do not fail us in that
hour.
FOOTNOTES:
[18] Lord Lansdowne has since been at pains to explain that he did not
use the word "mincing." That word ought to have been "wincing" or
"hesitation"--it is not clear which.
THE BUDGET AND THE LORDS
NORWICH, _July 26, 1909_
(From _The Manchester Guardian_, by permission.)
The Budget is the great political issue of the day. It involves all
other questions; it has brought all other issues to a decisive test.
_The Daily Mail_ has stated that the Budget is hung up. So it is. It
is hung up in triumph over the High Peak; it is hung up as a banner of
victory over Dumfries, over Cleveland, and over Mid-Derby. The
miniature general election just concluded has shown that the policy
embodied in the Budget, and which inspires the Budget, has vivified
and invigorated the Liberal Party, has brought union where there was
falling away, has revived enthusiasm where apathy was creeping in.
You cannot but have been impressed with the increasing sense of
reality which political affairs have acquired during the last few
months. What is it they are doing at Westminster? Across and beyond
the complicated details of finance, the thousand amendments and more
which cover the order paper, the absurd obstruction, the dry
discussions in Committee, the interminable repetition of divisions,
the angry scenes which flash up from time to time, the white-faced
members sitting the whole night through and walking home worn out in
the full light of morning--across and beyond all this, can you not
discern a people's cause in conflict? Can you not see a great effort
to make a big step forward towards that brighter and more equal world
for which, be sure, those who come after us will hold our names in
honour? That is the issue which is being decided from week to week in
Westminster now, and it is in support of that cause that we are asking
from you earnest and unswerving allegiance.
I do not think that there is any great country in the world where
there are so many strong forces of virtue and vitality as there are in
our own country. But there is scarcely any country in the world where
there is so little organisation. Look at our neighbour and friendly
rival Germany. I see that great State organised for peace and
organised for war to a degree to which we cannot pretend. We are not
organised as a nation, so far as I can see, for anything except party
politics, and even for purposes of party politics we are not organised
so well as they are in the United States. A more scientific, a more
elaborate, a more comprehensive social organisation is indispensable
to our country if we are to surmount the trials and stresses which the
future years will bring. It is this organisation that the policy of
the Budget will create. It is this organisation that the loss of the
Budget will destroy.
But, we are told, "it presses too heavily upon the land-owning
classes." I have heard it said that in the French Revolution, if the
French nobility, instead of going to the scaffold with such dignity
and fortitude, had struggled and cried and begged for mercy, even the
hard hearts of the Paris crowd would have been melted, and the Reign
of Terror would have come to an end. There is happily no chance of our
aristocracy having to meet such a fate in this loyal-hearted,
law-abiding, sober-minded country. They are, however, asked to
discharge a certain obligation. They are asked to contribute their
share to the expenses of the State. That is all they are asked to do.
Yet what an outcry, what tribulation, what tears, what wrath, what
weeping and wailing and gnashing of teeth, and all because they are
asked to pay their share.
One would suppose, to listen to them, that the whole of the taxation
was being raised from, or was about to be raised from the owners of
agricultural estates. What are the facts? Nearly half the taxation of
the present Budget is raised by the taxation of the luxuries of the
working classes. Are they indignant? Are they crying out? Not in the
least. They are perfectly ready to pay their share, and to pay it in a
manly way, and two hundred thousand of them took the trouble to go to
Hyde Park the other day in order to say so.
What are the facts about agricultural land? It is absolutely exempt
from the operations of the new land taxation so long as agricultural
land is worth no more for other purposes than it is for agricultural
purposes: that is to say, so long as agricultural land is agricultural
land and not urban or suburban land, it pays none of the new land
taxation. It is only when its value for building purposes makes its
continued agricultural use wasteful and uneconomic, it is only when it
becomes building land and not agricultural land, and when because of
that change it rises enormously in price and value--it is only then
that it contributes under the new land taxation its share to the
public of the increment value which the public has given to it.
Then take the death duties. One would suppose from what one hears in
London and from the outcry that is raised, that the whole of the death
duties were collected from the peers and from the county families.
Again I say, look at the facts. The Inland Revenue report for last
year shows that L313,000,000 of property passing on death became
subject to death duties, and of that sum L228,000,000 was personalty
and not real estate, leaving only L85,000,000 real estate, and of that
L85,000,000 only L22,000,000 was agricultural land. These death duties
are represented as being levied entirely upon a small class of landed
gentry and nobility, but, as a matter of fact, there is collected from
that class in respect of agricultural land only seven per cent. of the
whole amount of money which the Exchequer derives from death
duties.[19]