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The Pamphlet Collection of Sir Robert Stout: Volume 14

The Stamp Duties

The Stamp Duties

Like other of our national fiscal errors, these date back to the ill-omened reign of William III.—the period that launched the National Debt, invented the sanguinary chimæra called the "Balance of Power in Europe," and loaded the trade of the country with every conceivable burden. The first Stamp duties of 1694 varied from 40s. to 1d. upon each sheet or skin of vellum, parchment, &c., used for certain legal processes, while simultaneously every London hackney-coach was charged with a 50s. licence, to be good for 21 years, on payment of £4 per annum in addition. Three years later, the Exchequer attacked the poor class of Pedlars and Hawkers, charging each of these £4 a year, and an additional £1 for every ass or other beast they might employ in the earning of their living. In 1778, it appeared that this duty on Pedlars, &c., realizing £8,000 a year, cost £2,800 (or 35 per cent.) to collect, whereupon the tax was handed over to the Hackney Coach Commission, and in 1831 this office was further amalgamated with the Board of Stamps, which body in 1856 became a Commission of Inland Revenue. But though offices are consolidated and expenses of collection reduced to a minimum, the main grievances imposed by such class taxes and imposts remain substantially unredressed, if indeed they are not yearly augmenting. For instance, take the following table showing the gross amount collected from what are called "Stamps," and the details of each head of revenue included in that term :—
Years ended 31st March. Deeds and other Instruments. Probates of Wills. Legacies and Successions. Insurances, Fire. Insurances Marine. Bills of Exchange, Bankers' Notes, and Composition. Receipts and Drafts. Other Receipts. Total.
£ £ £ £ £ £ £ £ £
1868 1,602,193 1,635,835 2,882,748 971,019 162,974* 820,796 562,548 834,064 9,475,177
1869 1,572,571 1,591,729 2,769,711 1,018,654 79,637 827,152 567,455 814,541 9,241,450
1870 1,686,942 1,769,130 2,953,591 442,861 83,923 853,201 583,569 915,336 9,288,553
1871 1,665,110 1,856,250 2,949,047 99,300 900,080 603,275 906,667 8,979,729
1872 1,842,422 1,852,560 3,360,489 283 109,772 987,100 648,843 938,079 9,739,548
1873 1,955,287 1,943,306 3,177,710 119,159 1,102,111 694,604 1,005,856 9,998,033
1874 1,991,006 2,065,210 3,413,712 127,398 1,127,945 733,158 1,039,478 10,497,607
1875 1,995,792 2,153,797 3,400,375 124,734 1,044,496 747,301 1,081,234 10,547,729
1876 2,204,251 2,253,842 3,531,142 49 119,259 993,591 781,907 1,139,333 11,023,374
1877 2,091,551 2,184,979 3,675,802 118,975 910,162 789,130 1,106,464 10,877,063
1878 2,090,157 2,236,173 3,722,161 120,379 915,068 814,668 1,132,508 11,031,114
1879 2,040,787 2,284,760 3,304,965 112,601 859,506 825,560 1,193,342 10,621,521
1880 2,076,196 2,532,492 3,700,606 120,560 839,109 812,792 1,225,159 11,306,914
1881 2,175,475 3,064,616 3,592,777 130,383 867,854 877,300 1,224,709 11,933,114
1882 2,120,761 3,515,409 3,540,585 141,693 884,487 889,520 1,255,720 12,348,175
1883 2,048,271 3,759,391 3,536,538 153,690 889,334 910,485 393,316 11,691,025
1884 1,912,514 4,063,011 3,335,816 158,434 875,578 934,046 402,032 11,681,431
1885 1,811,945 3,978,586 3,741,609 145,554 827,241 934,381 446,869 11,886,185
1886 1,800,681 4,103,644 3,332,963 136,381 777,461 963,260 447,696 11,600,614

* Duties reduced.

Stamp Duty upon Fire Insurances repealed from 25th of June, 1869.

Receipts from Fee and Patent Stamps carried to "Miscellaneous Revenue" from 1st April, 1882.

page 173

The Legal Deed Duties.

The heavy charges in Stamps on Leases, Conveyances, Agreements, and other legal documents, are here shown to produce about two millions per annum, or as much as an additional 1d. in the £ on the Income and Property Tax Schedules of the whole kingdom, and when it is remembered that 140,000 persons had to pay the £1,811,945, while ten times that number would contribute to a similar amount in Income Tax, it may be fairly pointed out that the unhappy 140,000 transferees of Land, Houses, &c., had to pay 10d. in the £ additional tax on their incomes, besides the 5d. in the £ which they parted with as payers of Income Tax. Now the Financial Reform Association strenuously asserts this to be an injustice and a hardship. Why should men be taxed for selling a house or a field when no tax is imposed for selling a ship or a bale of cotton goods? There is no basis of equity in such taxation, and the only class that can benefit from it are the close corporation of lawyers, whose charges (sufficiently exorbitant in all respects) are further aggravated by these Government Stamps on legal deeds. And this is not all, for some of the house property may change hands many times a year, and is taxed afresh every time it is transferred.

The Death Duties.

It will be seen from the table last given that these taken together constitute a heavy branch of the National Revenue. When compared with the Schedules of the Income Tax, for instance, we find that last year Probate Duty brought £4,103,644, Legacy and Succession brought £3,332,963; total £7,436,607, while Schedule A, at 8d. in the £ on all the Rents of the Kingdom brought in only £5,101,442, and Schedule D, at the same rate, on all the Profits of Trades, £7,502,109; and before we proceed to expose the anomalies in the incidence of the death duties, we deem it a public duty to affirm that the taxation of property at death and inheritance is taxation on a false basis. It is the system of the Robber chiefs of old, who stepped in after the death of a father and said to the son or widow :—"Now, you shall not have any of this man's accumulations unless you buy them from me,"—and that is what is called "Black Mail." Adam Smith long since pointed out that all taxes on the transference of property from the dead to the living fall finally and immediately upon the legatee. Ricardo said the same, adding that such taxes, like those on transfers and deeds, prevented the National Capital from being distributed in the manner most advantageous to society. There is an entire series of fiscal anomalies in the operation of these death duties, but we may point out only a few, viz.:—
1.Many corporations who own real estate escape paying altogether. Several Municipal and Ecclesiastical Corporations hold great landed estates, and the Charity Trusts alone (of which there are 50,000) hold 524,000 acres of land, with a gross rental of more than one and a half millions per annum.
2.The heirs of the great landlords pay but a trifling percentage, and that percentage is levied only on an estimated life-interest capitalized, instead of on the full value of the freehold. The Ducal Estate of £50,000 a year, and which is worth £1,500,000, descending to an heir-at-law aged 64, pays three per cent., or £12,800, Succession Duty but a merchant or manufacturer leaving personalty of the same value would have to pay £45,000 Probate Duty, and another £45,000 Legacy Duty—in all £90,000!
3.Small legacies of money are oppressively mulcted as compared with large fortunes.
4.Grossly unfair advantage is taken of intestacy, mainly to the vexation and detriment of persons of small means.
5.Foreigners holding personalty here escape Legacy Duty, but Englishmen leaving personalty abroad become liable to pay.
6.The scale based on consanguinity acts with cruel hardship upon many of our struggling people! A millionaire's child pays nothing to Legacy Duty for personal estate, but the adopted child of a mechanic pays ten per cent. A man marrying his deceased wile's sister would only pay three per cent, on any properly she might bequeath to him, but if he died first she would be charged ten per cent, on anything he left to her. A legacy from a stepmother pays ten per cent., but a legacy to a stepmother pays nothing—and so on.

Legacy and Succession Duties.

Amount paid at each Rate in the Year ended 31st March, 1886.

Legacy Duty.
Rates of Duty. Amount of Duty. Amount of Properly upon which Duty was paid.
£ £
1 per cent. *229,481 22,941,851
2½ per cent. 9 371
3 per cent. 1,016,813 33,879,096
4 per cent. 4 93
5 per cent. 188,618 3,771,256
6 per cent. 26,890 448,003
8 per cent. 35 444
10 per cent. 1,030,665 10,303,539
Under 56 G. 3. c. 56 167 30,720
Total £22,492,682 £71,375,373
Succession Duty.
£ £
1 per cent. 335,428 33,296,497
3 per cent. 267,112 8,828,308
5 per cent. 42,100 835,334
6 per cent. 11,109 183,772
10 per cent. 228,867 2,272,618
Total £884,616 £45,416,529

Mr. Joseph Dodds, M.P. (a Vice-President of the Financial Reform Association) has persistently attacked and exposed the inequities of the system upon which the Death Duties are and have been assessed. To his agitation has been mainly duo the reforms carried out in 1880 and 1881 (by successive Ministers) in the collection of Probate Duty, which reforms have palpably relieved the burden upon small personal estates, and in a pamphlet Mr. Dodds has dealt exhaustively with the whole subject in view of further simplifications and reforms.—["Death Duties," by Joseph Dodds, M.P. Published at Financial Reform Offices.] It may be mentioned, as showing the extent of benefit conferred by Mr. Gladstone's alteration of this duty in 1881, that the total number of estates exempted by it from Legacy Duty amounted to 32,915 in the first twelve months.

* The 1 per cent, duty was repealed as from 1st June, 1881, under the Act 44 & 45 Vict. c. 12.

How Land Escapes the Death Duties.

Years inclusive. Probate, &c., *Duties, commenced in England, June 28. 1694; in Scotland. 1779; in Ireland, March 25, 1785. Legacy Duty, commenced in Great Britain, June 1, 1780; in Ireland, March 25, 1785. Succession Duty Imposed in 1852. Totals. Years inclusive.
£ £ £ £
1797 to 1806 1,676,843 409,146 2,085,989 1797 to 1806
1807 to 1816 4,682,832 5,377,636 10,060,468 1807 to 1816
1817 to 1826 8,112,216 9,855,259 17,967,475 1817 to 1826
1827 to 1836 9,287,238 11,955,581 21,242,819 1827 to 1836
1837 to 1846 10,117,772 11,394,953 21,512,725 1837 to 1846
1847 to 1852 6,526,214 7,909,735 14,435,949 1847 to 1852
1853 to 1858 6,154,929 5,549,778 2,823,485 14,528,192 1853 to 1858
1859 to 1869 17,080,713 19,751,271 6,906,179 53,738,163 1859 to 1869
1870 to 1881 30,753,689| 31,125,400 8,678,181 71,557,270 1870 to 1881
1882 to 1886 19,420,016 13,301,813 4,185,699 36,907,528 1882 to 1886
£113,812,462 £116,630,572 £22,593,544 £254,036,578
page 174

This Table, of itself, affords a sufficient answer to the clamours of the landed gentry and others, who complain that Real Property is sadly overburdened in the matter of Taxation. It shows that from 1797 to 1886, Personalty paid, in the shape of Probate, Administration, and Legacy Duties, from which Realty is wholly exempted, no less a sum than £230,000,000. And this is only part of the case; for of the produce of the Probate Duty for 111 years in England, i.e., from 1694 to 1805, for 26 years in Scotland, and for 31 years in Ireland—as also of the produce of the Legacy Duty for 17 years in Great Britain, and for 32 years in Ireland—we have no account at all. Furthermore, Real and Personal Property were both included in Pitt's Legacy Bill of 1780. Its division into two Bills was deemed expedient, and the Commons passed both; but the Lords only adopted that relating to Personalty, rejecting the other; so that for upwards of 70 years Realty enjoyed entire exemption from these duties. Yet again: the Succession Duty imposed in 1853, as some sort of palliation for this gross injustice, has been frittered down to one on the Succession valued as a life annuity, and made payable by easy instalments, so that its annual yield, instead of the £2,000,000 anticipated by Mr. Gladstone, or the £8,000,000 by Lord Cairns, is only something between £600,000 and £800,000. Once more : what if the successor die before the instalments are paid? Considering these and other matters of the like nature, are not the Landholders somewhat imprudent in disregarding Mr. Cobden's warning not to put the people upon inquiring into Taxation, lest they should discover how "they have been robbed and bamboozled for ages by the Aristocracy."

* No account for England or Scotland till 1805, or for Ireland till 1817.

No account tor Great Britain prior to 1797, or for Ireland till 1817.

Two years only.

| For new conditions of these duties in 1881, see page 167.

The Marine Insurance Duty.

It is surely unnecessary to do more than indicate the self-evident absurdity of a financial system that has abolished taxes on fire insurance, but leaves them still to be exacted upon the insurers of property and goods by sea. A stamp of trifling amount, like that on Life Policies (for the rate of which see page 167), would answer all necessary purposes of Registration.

The Duty on Bills and Notes.

These being taxes on persons who need to borrow money are unjust and oppressive. Every time the bill or promissory note is renewed the tax is relevied, and it thus, in thousands of cases, becomes more than trebled and quadrupled in its incidence. It is a petty system to single out in this way one class of the people and make money for the State out of their exigencies. The mercantile and trading community of the country are heavily enough handicapped by Customs and Excise, and by the exactions of the Probate Law and of Schedule D, without the Exchequer nibbling at their pockets for this £777,000 a year for bill-stamps. About nine and a half millions in number of these bills pay Stamp Duty yearly, but the quarterly amount being almost exactly one-fourth, shows how regular are the renewals and how frequent the re-taxation of each person.

Receipt Stamps.

In 1853, this duty, hitherto of variable amounts, and on a graduated scale, was reduced to a uniform penny rate on all receipts over £2 in amount, the result being a great increase in the produce to the revenue. In 1852 it realized £154,696; in 1872, £648,843; in 1886, £967,260.