People's Budget - Overview

Overview

The Budget was introduced in the British Parliament by David Lloyd George on 29 April 1909. Lloyd George argued that the People's Budget would eliminate poverty, and commended it thus:

This is a war Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests".

The budget included several proposed tax increases to fund the Liberal government's welfare reforms. Income tax was held at nine old pence in the pound (9d, or 3.75%) for incomes less than £2,000, which was equivalent to £154,524 in today's money—but a higher rate of one shilling (12d, or 5%) was proposed for incomes greater than £2,000, and an additional surcharge or "super tax" of 6d (a further 2.5%) was proposed on the amount by which incomes of £5,000 (£386,309 today) or more exceeded £3,000 (£231,786 today). An increase was also proposed in inheritance tax and naval rearmament.

More controversially, the Budget also included a proposal for the introduction of complete land valuation and a 20% on tax increases in value when land changed hands. Land taxes were based on the ideas of the American tax reformer Henry George. This would have had a major effect on large landowners, and the Conservative-Unionist opposition, many of whom were large landowners, had had an overwhelming majority in the Lords since the Liberal split in 1886. Furthermore, the Conservatives believed that money should be raised through the introduction of tariffs on imports, which was to benefit British industry and trade within the Empire, and to raise revenue for social reforms at the same time (protectionism), although it was also unpopular as it would have meant higher prices on imported food. Interestingly, according to economic theory, such tariffs would have been very beneficial for land owners, especially in agricultural produce (see Corn Laws).