Thus, when the Income Tax is at 1s., an income of £180 pays less than 1½d. in the £, an income of £300 pays less than 6d. an income of £500 pays less than 8½d., and an income of £700 pays less than 11d.

I now give an explanation of the various Schedules under which the tax is collected. The abatements, it should be understood, refer to all the Schedules.

Schedule A, sometimes called Property Tax or Landlords' Tax, is assessed upon the rents received by the owners of lands, houses, etc. It is directly assessed upon occupiers, who, if they are tenants, deduct the tax from their next payment of rent. Thus it is a Land and House Tax which the landowner or houseowner cannot possibly escape.

It should also be explained that the term "Lands," as used in connexion with Schedule A, refers to Agricultural lands, and the farm-houses and farm buildings, etc., thereon. The term "Houses" refers to houses, business premises, etc., together with the gardens, pleasure grounds or yards upon which they stand.

Owners of agricultural lands are allowed to deduct for repairs one-eighth of the rent. Owners of houses and other buildings are allowed to deduct for repairs one-sixth of the rent.

Schedule B covers profits from the occupation of lands, and taxes the incomes of farmers, nurserymen, and market gardeners.

Farmers' profits (unless farmers elect to be dealt with under Schedule D) are assumed to be one-third of the annual rent of their farms. Thus a farmer paying a rent of £480 or less is not subject to income tax, as one-third of £480 is £160, and incomes of £160 or less are not taxable. Nurserymen and market gardeners, however, are taxed on their profits in the same way as in the case of other business men.

The chief point to which I direct attention is that very few farmers pay income tax at all.

The arbitrary assessment of farmers at one-third the rent of their farms is an absurdity. A farmer paying a rental of £480 is usually a well-to-do man, but he escapes income tax because his income is assessed as £160. A farmer who pays a rental of £600 and who in an average year probably makes at least £400 a year, is, on the one-third basis, assessed at £200. The income tax of farmers is for the most part paid for them by the industrial classes, who are taxed pro tanto to relieve agriculture.

Schedule C deals with profits from British, Indian, Colonial and Foreign Government Securities. So far as possible these profits are taxed "at the source." Thus the Bank of England, in paying Consols dividend, deducts income tax, and leaves the fundholder to claim repayment afterwards if his income should be less than £160 per annum.

We now come to that important branch of the tax known as Schedule D.

The profits included in this Schedule consist of those from trade and industry, from professions, from all employments or vocations except public offices, from oversea investments which are not Government securities, and from interest on loans secured on the Public Rates, etc.

In the case of income from trade, assessments are made upon the average profits of the past three years. Let us suppose that a merchant in the period, 1893-1902, made the following profits: 1893, £1,100; 1894, £900; 1895, £1,200; 1896, £1,300; 1897, £1,400; 1898, £1,400; 1899, £1,500; 1900, £1,600; 1901, £1,200; 1902, £1,200; 1903, £1,500; 1904, £1,600. The table on page 301 shows how the profits are assessed under Schedule D.

Thus, while between 1893 and 1904, the income was in two years above £1,500, the assessment never rose above £1,500. The result, it will be seen, is to deprive the State of the advantage of the maximum income.

It follows that the assessments under Schedule D, from this cause alone, are always something less than the actual income of the persons assessed.