Lord Hoffman was the after dinner speaker at the CIOT London Branch dinner last week. He noted that some people consider tax law to be rather dull "But sometimes you get volcanic eruptions". He noted that 100 years ago there was just such a taxation crisis following the House of Lords rejection of the "People's Budget".
This wasn't just any old Budget as were to learn when the relevance of the story became clear.
Lord Hoffman advised us that the Lords did not approve of a proposed massive hike in the rate of income tax. It had been 9d (4p) in the pound but the Budget proposed increasing it to a shilling (5p) in the pound on incomes over £2,000. Coincidentally this is apparently equivalent to £154,000 in today's money. There was also to be a surtax of 6d (2.5p) in the pound on incomes over £5,000 (equivalent to £386,000 today).
As Lord Hoffman noted: perhaps this puts a new perspective on the 50% (50p) rate that now applies to incomes over £150,000.
The increases were considered so outrageous apparently that the House of Lords abandoned convention and rejected the Budget.
Whose Budget was it? in 1909 this was the first Budget of a new coalition Government that had been taken office after the general election had produced a hung Parliament. 101 years ago the largest party (just) was Liberal with 275 votes, The Conservatives had 273 seats but also had a majority in the House of Lords.
The coalition was led by the Liberal party with support from.... Labour.
Somehow I don't think we'll get a repeat next week. Do you?
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