Note 65 — Chapter XIX · THE CONSERVATIVE REACTION.

Another difficulty for the Independent Elector was that of seeing how Mr. Gladstone could abolish the Income Tax. Mr. Disraeli, who soon began to repent his haste in trying to outbid Mr. Gladstone on this point, suggested that difficulty in a speech at Newton Pagnell. He did not withdraw from his declaration that he desired to get rid of the Income Tax. But, he said, “If Mr. Gladstone asks me ‘are you prepared to repeal the Income Tax by means of imposing other taxes?’ I am bound to say it is not a policy I should recommend.” Mr. Gladstone never divulged his plan. It is, however, obvious that he could have easily got rid of the worst features of the Income Tax by readjusting the House Duty. A House Duty, Mr. Mill said, is the fairest of all direct taxes, and a man’s house-rent is—with certain exceptions—a sure guide to his means and substance. If, for example, Mr. Gladstone had put 1s. 6d. in the £ on all houses above £10 rental, or if he had graduated the duties from 4d. to 3s. in the £ on rentals of from £10 to over £300, he could have supplied the place of the Income Tax which yielded £4,875,000. The difference would have been this—that a man with £200 of income, presumably paying £25 a year for his house, would—less 9d. of existing house duty—have paid at the 1s. 6d. rate 18s. 9d. a year of “a means and substance” tax on his rent, instead of the £2 10s. he then paid in Income Tax. The relief of local rates might have been obtained by handing over the old House Tax or a portion of it to the local authorities.