HC Deb 08 July 1896 vol 42 cc1032-40

(1.) Where this or any other Act enacts that income tax shall be charged in any year at any rate, there shall he charged, levied, and paid during that year in respect of all property, profits, and gains respectively described or comprised in the several schedules A, B, C, D, and E. in the Income Tax Act, 1853, the tax at that rate: for every twenty shillings of the annual value or amount of property, profits, and gains chargeable under Schedules A, C, D, or E in the said Act; and for every twenty shillings of one third of the annual value of lands, tenements, hereditaments, and heritages chargeable under Schedule B. in the said Act in respect of the occupation thereof.

(2.) The deduction of one-eighth out of the duties chargeable under Schedule B shall cease.

(3.) All enactments relating to income tax which are for the time being in force shall apply to the duties of income tax from time to time granted by any Act, so far as the same are consistent with that Act.

*MR. WHITTAKER moved that Income Tax should be applied for every 20s. "of one-third" of the annual value or amount of property, profits, and gains chargeable under Schedules A, C, D, or E. of the Income Tax Act, 1853. He said the object of the Amendment was to secure that the assessment of all kinds of property should be on the same basis. It was desirable the Committee should have an opportunity of discussing the extraordinary exemption of farmers' profits from payment of a due proportion of the Income Tax. Whatever profits they made they should pay on them in precisely the same way and at the same rate as those who derived their income in other ways did. If a man earned £900 a year he paid Income Tax at 8d. in the pound, but if assessed under Schedule B he was only assessed at one-third of the £900—namely £300. From this he had an exemption of £160 which brought the amount on which he paid Income Tax to £140. That was most unjust and unequitable. ["Hear, hear!"] It meant that on Schedules A, C, D, and E a man with £900 would pay an Income Tax of £30, but with precisely the same income under Schedule B it would be £3 13s. 4d. Whatever the income or whatever the source of it, the tax should be at the same rate. He did not say that farmers should pay on income they did not earn, but when they made the same income as other people they should pay the same. The practical result of the present arrangement was that we were losing a million a year that farmers might be relieved of their Income Tax, and others should pay an additional half-penny in the pound to make up for the tax remitted to the farmer. The House had recently assisted the farmer in his rates, partly on the ground that he was heavily taxed, whereas the fact of the matter was, he was the most lightly taxed individual in the community.

*THE CHANCELLOR OF THE EXCHEQUER

said the effect of the Amendment would be to reduce the Revenue from the Income Tax by £10,000,000 a year; and the reason of this extraordinary proposal was that farmers at present did not pay Income Tax enough. [Laughter.] For many years it had been considered by Parliament, in times when farming was far more prosperous, that the assessment for Income, Tax on farmers might fairly be taken on one-half the rent in England and one-third in Scotland and Ireland—one-eighth being deducted from that half on account of the payment of tithe—until in 1894, when, on the Motion of the Liberal Government of which the hon. Gentleman was a supporter—the position of the farmer in England being then notoriously a bad one—the assessment for Income Tax was practically reduced to one-third, as in Scotland and Ireland. ["Hear, hear!"] He admitted that Schedule B returned very little to the Revenue. But the reason was that farmers, with few exceptions, made very small profits. A more extraordinary proposal than a proposal to increase the assessment for Income Tax on farmers, considering the time at which it was made, he had never heard in the House. ["Hear, hear!"] The hon. Gentleman was quite entitled to make it, but any one who knew anything about agriculture, knew that there was no real ground for believing that farmers were not taxed according to their capacity. [Cheers.]

MR. LABOUCHERE

asked whether the right hon. Gentleman would say—if, as he had asserted, he thorougly understood agriculture—that a farmer who paid £900 per annum in rent had only a profit of £300?

*THE CHANCELLOR OF THE EXCHEQUER

replied that he knew from his own knowledge that farmers who paid £900 a year rent lived in a very different way now from what they did 20 or 30 years ago. ["Hear, hear!"]

MR. EDMUND ROBERTSON (Dundee)

said the Chancellor of the Exchequer complained of the extraordinary time at which the Amendment was moved. But the right hon. Gentleman must remember that the House had just made an enormous addition to the resources of the farmer. [Opposition cheers.]

*THE CHANCELLOR OF THE EXCHEQUER

But you say the benefit of the Rating Bill will go to the landlord. [Cheers.]

MR. E. ROBERTSON

said he was accepting the word of Ministers that the benefit of the Bill would go to the tenants. Why, then, the Chancellor of the Exchequer should say that this was an extraordinary time to move such an Amendment he could not make out. But he had admitted that the proposal to reduce the proceeds from the Income Tax by an enormous amount was one the House could not accept. The Amendment was moved by his hon. Friend as a protest against the discrimination which was made in the matter of the Income Tax in favour of a particular class.

*THE CHANCELLOR OF THE EXCHEQUER

said that if the hon. Gentleman wished for an explanation of the discrimination of which he complained, let him go to an authority which he would not dispute—the right hon. Gentleman the Member for Monmouthshire, who, as Chancellor of the Exchequer that reduced the farmer's assessment for Income Tax from one-half the rent to one-third of the rent, a proposal which the hon. Gentleman himself supported. [Cheers.] But he rose principally to accept the admission from the Front Opposition Bench that the benefits of the Rating Bill were to go to the tenants—[loud Opposition cries of "No"]—and that being so, when Parliament was giving a considerable boon to the tenants with one hand it ought not to take it away with the other. [Cheers.]

MR. DALZIEL (Kirkcaldy Burghs)

said that he would remind the Chancellor of the Exchequer that they were now dealing with totally different circumstances from the circumstances of last year so far as the farmer was concerned. The reduction by the late Chancellor of the Exchequer of the farmers' assessment from one-half to one-third, last year, was intended as a relief to agriculture. The present Government had, according to their own statement, given the farmer substantial relief by the Agricultural Bating Bill, and that justified to some extent a reconsideration of the position of the farmers so far as taxation was concerned. Therefore his hon. Friend the Member for Dundee was not inconsistent, as the Chancellor of the Exchequer insinuated, in supporting relief to the fanner last year and suggesting its revision this year. Again, he did not understand his hon. Friend to have made the admission that the benefits of the Rating Bill would go to the farmer. His hon. Friend merely accepted the statement of Ministers on the point for the purposes of his argument. Certainly, the Opposition had never accepted the doctrine that the Rating Bill was for the benefit of the tenants.

MR. CHARLES McLAREN (Leicester, Bosworth)

thought his hon. Friend should withdraw the Amendment. It would reduce the amount of Income Tax payable by the landlord on his assured rent to the level of the amount of Income Tax payable by the farmer on his uncertain profit. The Amendment would, therefore, make a still greater present to the landlord than the Rating Bill. He thought the tax under Schedule B was an unjust tax, and he should like to see it abolished altogether. However small the scale on which the farmer might be taxed, he was constantly charged under Schedule B on profits that could never have existed.

*MR. WHITTAKER

said his object in moving the Amendment was to raise discussion, and as he had no wish to put the Committee to a Division upon it, he desired to withdraw the Amendment.

Amendment, by leave, withdrawn.

MR. STRACHEY moved to leave out "third" and to insert "fourth." The object of the Amendment was to reduce the assessment on farmers for Income Tax under Schedule B from one-third to one-fourth the rent; and in that it was only following up the policy of the late Chancellor of the Exchequer who expressed his great sympathy with the distress from which tenant-farmers were suffering, and regretted that circumstances prevented him giving them further relief. It was a small thing he was asking for by his Amendment. The amount raised last year under Schedule B was only £189,000, so that the concession, if granted, would be a small one. His object in moving the Amendment was not to secure a great boon to the farmers—for that, as he had shown, it could not mean—but to give the present Government the opportunity of following up the act of justice done to the farmers by the late Liberal Government. It was no use saying that there was no money available for the distressed tenant-farmers, when the Chancellor of the Exchequer had just been giving money lavishly to the wealthy classes.

*THE CHANCELLOR OF THE EXCHEQUER

thought that the hon. Member could not appreciate the position of the farmer under the existing law. The farmer never paid Income Tax on more than one-third of his rent, however large the profits made; and, if he made no profits at all, he could apply to be assessed under Schedule D, or might appeal for a remission of the tax, and so escape Income Tax altogether. Farmers' profits were by no means large, but there must be cases where they were more than one-fourth of the rent; and therefore he did not think it would be fair to accept the Amendment.

MR. JOHN DILLON (Mayo, E.)

thought the case against the Amendment was overwhelming, because the present law afforded ample protection to farmers who were making no profits. But where the law was unjust was in making no provision for taxing to the full those farmers in exceptional circumstances who were making large profits.

MR. DISRAELI (Cheshire, Altrincham)

supported the Amendment. The relief would just make the difference to the tenant-farmer who was earning a small profit.

MR. LABOUCHERE

said that there were few persons with whom he sympathised more than Highlanders. Irishmen, and farmers—[laughter]—but he always regarded with suspicion the attempts of their representatives to obtain for them exemptions from taxation. They were never satisfied. ["Hear, hear!"] It was said that the farmer made no profit. Then how did he live. ["Hear, hear"and laughter.]

MR. DISRAELI

He lives on his landlord. [Laughter.]

MR. LABOUCHERE

said that the farmer was able to pay rent, and as long as he was able to do that, he ought to receive no relief from the State. [Cheers.] The hon. Member ought to explain to the farmers of Cheshire that they must make common cause against the landlords; and he should be happy to join in that campaign. [Laughter.]

MR. DISRAELI

The farmers of Cheshire always pay the rent.

MR. LABOUCHERE

That is why they are such fools. [Laughter.] Let them go to the landlords together and insist on a reduction of rent. If this relief were given to the farmer, more would be asked for next year. He represented shoemakers and not farmers, and he did not see how they would come in under this Amendment. Therefore he was entirely opposed to it. [Laughter.]

MR. J. HEYWOOD JOHNSTONE (Sussex, Horsham)

hoped that the Amendment would be pressed to a Division. The relief was small, but it would he welcome to the farmers, and the Amendment carried with it an important principle. He did not know whether the words were new, but a sub-clause of this clause provided that the deduction allowed for Schedule A should be discontinued. When Schedule B was charged at one-half the rate of Schedule A, it was arranged that one-eighth of Schedule A should be deducted so that Schedule B was really charged at one-half of seven-eighths of Schedule A. If this deduction were to be discontinued, then the relief offered by the Amendment was the more necessary. Nobody who was acquainted with the condition of the tenant-farmers would say that one-quarter of the rent was not rather a high figure on which to be assessed for Income Tax. It was said that the farmer who made no profits would be assessed under Schedule D, and so escape Income Tax. But that course involved much trouble to the farmer, and he had to produce books which would satisfy the assessor—for many farmers not an easy thing to do. There were many farmers paying small sums as Income Tax, though they were not legally liable to pay any, simply because the difficulty and trouble of proving their claim to exemption were so great. The right course would be to put them altogether under Schedule D instead of under Schedule B.

SIR JOHN BRUNNER (Cheshire, Northwich)

thought that the time had arrived when farmers might be encouraged to keep better accounts, in the same way as all other tradesmen in the country kept hooks. If it was so difficult for them to do so, hon. Members who had to deal with technical education in rural parts of the country might advise the County Councils to introduce bookkeeping as a part of the curriculum.

MR. LLOYD-GEORGE

agreed that farmers should keep their accounts in the ordinary way, and that they should be assessed in the ordinary way. There was no reason why farmers should have exceptional treatment.

*THE CHANCELLOR OF THE EXCHEQUER

hoped that his hon. Friends who were anxious to do something for the farmers in this matter would note that, if this Amendment were carried, Schedule B would soon come to an end. The result would be infinite trouble to the farmer, who would have to show to the satisfaction of the assessors that he had made no profits. The probable effect would be that many a farmer would be charged with more Income Tax than he had to pay at present.

MR. DILLON

agreed with the Chancellor of the Exchequer, but he did not believe in the system of benefiting the farmer class so long as the landlord system existed. The proposal of the hon. Member was to give relief to farmers who were doing well, and he thought that this relief would ultimately go to the benefit of the landlord.

MR. E. ROBERTSON

said that the speech of the Chancellor of the Exchequer had convinced him that he would be doing right in supporting the Amendment.

MR. STRACHEY

believed that the Inland Revenue authorities objected to give assistance to farmers in this way because it would lead to the decrease of returns of profit. The conditions under which the farmer was at present assessed were neither just nor convenient, and he agreed that it was far more desirable that the assessment under Schedule B should be abolished altogether, and that the farmer should be assessed under Schedule D. He hoped the Chancellor of the Exchequer would consent to look into the matter. ["Hear, hear!"] The farmers did not wish for any special exemption, and the question was whether they should not be assessed upon the same principle as manufacturers and other people—that was to say, only on the profits they made after deducting even-kind of expense they had had to incur to make those profits. ["Hear, hear!"] The farmer would be only too willing to pay on the profits he made. ["Hear, hear!"]

*THE CHANCELLOR OF THE EXCHEQUER

said he would look into the matter suggested by the hon. Member for Somerset.

MR. COURTENAY WARNER (Stafford, Lichfield)

, in supporting the Amendment, contended that a reduction ought to be made in the tax upon the farmer in proportion to his rent.

MR. DISRAELI

said that what had been stated by the right hon. Gentleman the Chancellor of the Exchequer and others since he addressed the House had considerably modified his opinion in respect to the Amendment, and he wished to state that he should not now support the Amendment. [Cheers and laughter]

MR. J. W. LOGAN (Leicester, Harborough)

said he felt it his duty to vote against the Amendment, the object of which was to reduce the duty levied on the farmer. It was a landlord's question really, and if the farmer wanted relief he and the landlord should make arrangements by which it could be given in reduction of rent, or in other ways. Some relief had already been granted to the farmers, and the Committee ought not to be called upon to further reduce his taxes. Since the passing of the Act of 1894, most of the farmers of the country had been brought within the limit of abatement, and, therefore, the majority of them escaped paying Income Tax altogether. He objected to the Amendment also because it was still further in the direction of giving special relief to a special industry. He was opposed entirely to that system of legislation, and he was not to be deterred from voting against the Amendment because the hon. Member for Dundee said the effect of its adoption would be to do away altogether with Schedule B. He hoped the Amendment would be rejected.

Question put, "That the word 'third' stand part of the clause."

The Committee divided:—Ayes, 261; Noes, 55.—(Division List, No. 322.)

Clause 20,—