Victorian Asylums: the Tax Factor

A packed and attentive audience enjoyed the latest History of Tax group lecture presented by Professor Chantal Stebbings at Farmers' and Fletchers' Hall on 8th February 2011. She is Professor of Law and Legal History at the University of Exeter and her research focuses on the interface between the establishment of contemporary legal institutions and their foundations. Her particular interest is in the law of taxation. Professor Stebbings is a Fellow of the Royal Historical Society and was elected a Fellow of the Institute of Taxation by thesis. She is a regular participant in the University of Cambridge Centre for Tax Law discussion groups.

Her topic for the WCTA History of Tax group was " Victorian Asylums - the Tax Factor". Her talk first set the scene as to why asylums became more prominent in the Victorian era and then proceeded to discuss the taxes paid by these institutions, illustrated by some slides of various asylums throughout the UK. The Victorians had clearly given much thought to their design and appropriate beautifying architectural features, echoing the appearance of the Country House.

We learned that the term "lunatic" was applied to the temporarily insane, while the term "idiot" referred to those considered insane from birth, for whom there was no prospect of recovery. In 1845 there were thought to be 25 thousand insane people, and this had risen to 124 thousand by 1907. The growth in insanity during the 19th century has been attributed to population growth, increased life expectancy, and environmental and social problems associated with the industrial revolution such as long hours and lead and mercury poisoning. As the definition of lunacy was gradually extended, some unscrupulous families tried to ensure that relatives were certified in order to acquire the lunatic's property. Professor Stebbings advised us that Wilkie Collins' the "Woman in White" was, and was considered to be at the time, an accurate picture of how this unscrupulous abuse could be perpetrated.

The main taxes affecting asylums were land tax, income tax, poor rate, window tax and house duty. There were no statutory exemptions for asylums and non-fiscal considerations such as social policy were not considered. The consideration of charitable status only really began in the 1890s. Much taxation was land based, and the asylums were big landowners, since many of the asylums were located in spacious grounds away from the main city dwellings, as fresh air, work on the land and access to the open countryside were all seen as helping people recover their sanity.

There were three possibilities to reduce the tax burden for Victorian asylums: the courts, hoping that the Inland Revenue would take a pragmatic view or lobbying for concessions via Parliament. In practice, the asylums did not have sufficient clout for the third option, could sometimes make private arrangements regarding local rates but not generally with the Inland Revenue with regard to the second, so in practice they plumped for the first option and were keen litigators.

The asylums needed to deny the charge to tax or claim an exemption. Some asylums argued that they were not the occupier of the land in order not to pay land tax. As asylums had many windows trying to mitigate window tax was also a key area. There were a number of cases regarding whether the medical superintendent's residence was the occupation of distinct apartments or part of the asylum for tax purposes. Some asylums claimed exemption from tax under the Common Law exemption for the Crown and Crown Purposes, which prisons claimed. Other public asylums claimed statutory exemptions as "hospitals". Private asylums could not claim as the legislation was only in respect of non fee paying asylums for the poor.

Professor Stebbings concluded by advising that asylums were not passive, but rather were prepared to litigate in order to keep their tax bill low. They were successful where the judiciary and the Inland Revenue were pragmatic resulting in greater understanding of the fiscal issues surrounding public asylums and therefore compromise on the taxation demands levied upon them.

After many questions from the floor James Dixon thanked the speaker and discussions continued afterwards at the Hall over a glass of wine and later at a nearby restaurant over supper. I am sure that everyone who attended the event would like to thank Professor Stebbings for a most enjoyable evening.

Morag Loader

16 February 2011