CUSTOMS AND INLAND REVENUE BILL.—(No. 297.) (Hansard, 16 June 1891)

§ *(10.21.) MR. ROBY (Lancashire, S.E., Eccles)

I rise to move an Amendment providing that the right of exemption from the payment of Income Tax shall be continued to institutions devoted to charitable purposes coming within the purview of the Statute 43 Elizabeth, c. 4. In substance the Amendment is the same as I moved in Committee, when no reason was given for its rejection. It will be remembered that the Chancellor of the Exchequer, when the proposal was first made in Committee, distinctly expressed his desire to give it further consideration, and recommended that the question should be deferred to 642 this the Report stage of the Bill. The right hon. Gentleman the Member for Wolverhampton suggested that the Committee stage was more convenient, and thereupon Progress was reported. I had then every reason to expect that some reason would be offered why the Amendment was refused. I say nothing about discourtesy, for the Chancellor of the Exchequer disclaimed any intentional discourtesy, and I acquit him of any such intention; but I do submit that it is hardly fair to ask Members to come to a decision without putting before them the reasons for and against the proposal upon which they are asked to decide. I will now put the case briefly. I am aware that there is a case now awaiting decision in the House of Lords, but I do not anticipate that the language of their Lordships in that discussion will be so wide in scope as to settle other than the immediate case before them. If they do, so much the better, and in that case I hope the Commissioners of Income Tax will not say these are mere obiter dicta not applicable to the case. But I do not purpose to raise a purely legal point. The issue I wish to raise is whether it is right or desirable that an administrative Department should suddenly change a policy followed for 45 years and exact Income Tax from charities that have not been made to pay for that period. The phrase "charitable purposes" is used in the Income Tax Act of 1842, and was understood then, and has been subsequently, as referring to charitable purposes coming within the meaning or purview of the Act of Elizabeth. It is a phrase well known in the Court of Chancery, and in their letter to the Treasury, in 1863, the Commissioners stated that, in dealing with the cases from time to time before them, they had sanctioned and adopted the interpretation put upon the phrase by their officer, Mr. Puller, namely, such purposes as came within the Act of Elizabeth. When the Charity Commission was established the same definition was adopted in regard to charities coming under their administration, and in 1855, when their powers were extended, a clause was passed confirming these exemptions from Income Tax. The Charity Commissioners, whose functions are based on the Act of the 43rd of Elizabeth, being the body appointed to 643 certify what charities having Stock in the Public Funds held under the Charity Commissioners shall be exempt from Income Tax, were certain to use as their definition the 43rd Elizabeth, chapter 4. I go a little further, and state that at this very time, as I understand, the question has arisen before the Charity Commissioners, and they have decided, notwithstanding the difficulties and objections raised by the Commissioners of Income Tax, and continue to hold that the charities which have Stock under their control are exempt if they come within the Act of the 43rd of Elizabeth. We have, at the present moment, this extraordinary case—that if we have two sets of Stock, one invested in the official trustees of charitable funds, and the other vested in the trustees of the charity itself, in many cases the Income Tax Commissioners will require the Income Tax from that which is vested in the trustees themselves, and will not be able to get it from that standing under the Charity Commissioners. I cannot help thinking that the language of the Court of Chancery, the continuous practice of the Income Tax Commissioners, from the commencement of the Income Tax Act in 1842 until the past few years, and the jurisdiction given to the Charity Commissioners, are quite decisive that charitable purposes ought to be defined in accordance with the Statute of the 43rd of Elizabeth. I propose to take for the words of this Amendment the very words by which the Income Tax Commissioners in 1863 declare the purposes which they have always treated as coming within the meaning of the exemption from Income Tax— Such purposes as come within the meaning and purview of the Statute of the 43rd year of Queen Elizabeth. Under those circumstances, I cannot quite see in what way the Government will propose to answer what I suggest. Reference has been made by the Chancellor of the Exchequer to the case pending before the House of Lords, but I do not see that that will remove the matter. It may possibly be said by some persons that the Income Tax Commissioners will be bound to follow the interpretation given to them by their counsel and solicitors, until it is removed in a particular case on appeal in the House of Lords. The only way to get out of 644 the difficulty is to give the words by statute the meaning which, I believe, they were always intended to bear, by adopting some such Amendment as that I move. I do not think I need say more. I cannot help thinking that what I have said ought to be sufficient. I would ask, Is it right, is it constitutionally proper, that after a long history of this kind, without application to Parliament or distinct declaration in public, an Administrative Board should be allowed to sweep a lot of charities into their jurisdiction as liable to pay Income Tax which had previously been exempt? According to my view, this is imposing taxation not sanctioned by Parliament. I think this is a grave constitutional question, and as such I bring it before the House, and I am fortified in my judgment by a Minute of the Treasury in 1863, which had the sanction of the right hon. Member for Mid Lothian.

§ *(10.35.) THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN,) St George's, Hanover Square

The hon. Gentleman under this proviso would really introduce a new principle with regard to the taxation of institutions, which he says stand on the same footing as charities under the definition of the 43rd of Elizabeth. The hon. Member objects to what he considers to be a new principle laid down by the Commissioners of Income Tax. They have laid down no new principle at all. The principle upon which they have acted throughout hap been that they would exempt all those charities which were intended for the poor, and that they believed to be in accordance with the Income Tax Act itself. I would point out that in the Income Tax Act itself exemptions are laid down which prove through the fact that they are put there, that the suggestion as to charitable purposes of the Act of Elizabeth was not in the mind of Parliament when the Income Tax was passed. I think the hon. Gentleman is 645 entirely wrong in believing that the Income Tax Act contemplated an exemption of those purposes for which the Act of Elizabeth was designed. I do not know whether the hon. Gentleman will say that it was designed to exempt all those purposes under the Act of Elizabeth, or whether they are now to be included. I would say they were not intended to be included, and I would argue that the hon. Member, learned as he is, scarcely knows what is to be included when he proposes these exemptions. The Statute of Elizabeth was not an Act dealing with taxation; it was simply an Act passed to prevent the malversation of charitable funds. There are many things included which are not charitable subjects in the ordinary sense of the term, but still the hon. Member wishes to exempt them. As instances of the trusts within the Statute of Elizabeth, which it would be absurd for the House to admit under the charitable trusts definition, I would mention:—Devising of lands to a priest and his successor, providing ministers for the service of religion, providing ministers for Protestant Dissenters, dissemination of the works of Joanna Southcott, augmentation of livings, Professorships of Archæology, conveyances of lands to a parish, Parliamentary grants, lectureships in Universities, duty on coals. I decline to admit, as coming within the definition for exemption a number of Trusts that do not at all come within the ordinary idea of any sensible person of what is meant by the exemption of charities. The practice of the Commissioners of Income Tax is to exempt property which really goes to the support and relief of the poor, but not to other purposes. In the Moravian case the endowment is no doubt for what we may call religion. It may be right or wrong to exempt it, but it can hardly be called a charitable purpose. The definition which the hon. Gentleman seeks to lay down is a great deal too wide. He may say our contention is too narrow, but when the case now before the Court is decided, it will be for the Government to examine any definition, so as to avoid any difficulties which may occur. I cannot accept the Amendment, which would carry the case beyond the point desired, which would lead to a number of contested cases before the Courts, and 646 which is not practical legislation. I do not think that at this period of the Session we can undertake to define the charities entitled to exemption; and, if so, the House would probably not care to take that matter in hand even at the suggestion of the hon. Member; therefore, I must oppose the Amendment.