§ Considered in Committee.
§ (In the Committee.)
§ Clause 1 agreed to.242
§ Clause 2.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ *(12.3.) MR. ROBY (Lancashire, S.E., Eccles)
I rise to move an addition to Clause 2. It is intended to effect the object to which I drew the attention of the House on the Second Reading of the Bill. My Amendment, if carried, will secure the exemption of grammar schools and charitable institutions from the payment of Income Tax. I do not know whether the Committee will remember that on the Second Reading I ventured to draw attention to the fact that although from the year 1842 until the last two or three years the Inland Revenue Commissioners had acted on the ordinary interpretation of the words "charitable purposes," they were, by some perverseness of ingenuity, induced to try and bring within the Act grammar schools and a considerable number of other institutions which had till then enjoyed exemption from the time that the Income Tax was first imposed. It seems to me it is exceeding altogether the right bounds of administration to impose the tax upon these institutions, except by legislative enactment. I am rather cheered in taking this view and calling the attention of the House to it by the fact that the same question was actually raised in 1863 when the Treasury issued a Minute upon it in the sense of the Amendment I am now proposing. In a letter from the Inland Revenue Commissioners in that year to the Treasury, they said that their solicitor had drawn attention to the fact that there was some doubt as to the interpretation of the term "charitable purposes," and they had three courses only open to them. One was to revise all the exemptions hitherto allowed; another was to impose the tax in all fresh cases, but not to interfere with the enjoyment of the privilege of exemption by existing institutions; a third was to continue the present practice. The Commissioners went on to point out in their letter the difficulty involved in the matter of dealing with this subject, and to the increased odium which would attach to the Income Tax if it were im- 243 posed upon these institutions. They urged that the point deserved very serious consideration as to whether it would be politic, or even justifiable, to so impose it. The Lords of the Treasury, in their reply, admitted that the question would have to be considered with a view to a remedy on a suitable occasion, but thought the actual administration of the tax had acquired so much of prescription as ought to stand good, at least, against any interposition by an authority purely administrative. That was in 1863, and since then nearly 30 years have elapsed. The exemptions continued until two or three years since, and I venture to assert that the interpretation which has now been placed upon the words "charitable purposes," as the result of which the payment of Income Tax has been forced upon many grammar schools and charitable institutions, is, if not illegal, at least utterly unconstitutional, and that it ought not to have been adopted without the consent of Parliament. It may be said that the matter is waiting adjudication in the House of Lords. I am aware that there is one case in which an appeal has been carried to the House of Lords. It was heard, I believe, in February last year. The decision has not yet been given, and the delay of 14 months, I think, implies that their Lordships themselves are not very clear on the matter. At any rate, be that as it may, their decision will not set the matter at rest. That can only be done by inserting words to the effect I have suggested in this Act. Supposing that the Lords decide that the interpretation of "charitable purposes" which has until recently been adopted by the Inland Revenue Commissioners is to be maintained, then my Amendment will give full effect to their decision; but if they do not come to a decision at all, then I say it is utterly unreasonable to continue the present uncertainty. And, again, if their Lordships hold in the particular case before them that the charity is not exempt from the payment of Income Tax, I venture to assert there will still be no decision which would apply to all the charities attacked by the Commissioners in their present course. I am told a 244 very competent authority has remarked that it has taken at least 200 years to establish the definition of charitable uses by which until two or three years since the Commissioners were guided, and that it will take another 200 years to establish a different definition. I hold it is entirely wrong to come down upon the charities of this country and to enforce upon them the payment of a tax which I maintain Parliament never intended should be paid by them. In conclusion, I may say that if any better words can be suggested by the Government I shall be quite willing to accept them; but I am inclined to think, and I have been told that it is so by those who are well qualified to advise in this matter, that the words of my Amendment will adequately secure the object which I have in view.
§ (12.14.) MR. GOSCHEN
I understand it is the general desire that the matter should be more fully discussed than is possible at this hour, and I would suggest that the hon. Member should meet us by agreeing to bring up a clause on the Report stage. We could then deal with the remainder of the Bill. The hon. Member's Amendment is not on the Paper, and cannot therefore be very carefully examined.
§ MR. H. H. FOWLER (Wolverhampton, E.)
The question is a very important one, and the Committee ought to have the words of the clause before them, as well as the Minute which was issued during the Government of my right hon. Friend the Member for Mid Lothian. I do not think that the Report stage would be the most convenient time for the discussion, especially after the last fortnight's experience of Report of another Bill; and I would suggest that Progress should now be reported.
Committee report Progress; to sit again upon Monday next.