HC Deb 08 July 1896 vol 42 cc1040-5

(1.) Where this or any other Act enacts that income tax shall be charged in any year at any rate, there shall be 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. G. C. T. BARTLEY (Islington, N.) moved, at the end of the clause, to add the words:— (4) Where the total joint income of a husband and wife charged to income tax by way either of assessment or deduction does not exceed £500, the exemption relief or abatement granted by Section 34, Sub-section 2, of the Finance Act, 1894, by considering the income of the wife as a separate income from the husband for any profession, employment, or vocation of the wife chargeable under Schedule D. or Schedule E., shall be extended to the incomes of wives charged under all or any schedule of the income tax. He said he would not attempt to justify the Amendment, because the principle of it was really established in the Act of 1894. In 1894 the then Chancellor of the Exchequer assented to an Amendment under which the incomes of married people, if they did not exceed £500 a year, were to be considered as two incomes, both subject to the abatement When the matter came to be worked out it was found that the exemption only applied to a certain number of people—that only married women carrying on, practically speaking, one or two businesses, viz., specialists or teachers, got the exemption. Take the case of two sisters contributing to one income. If one was engaged as a teacher and the other carried on a small shop, only the first one would get relief. A great deal might be said against granting exemptions; but if they were granted at all, they ought to apply to everybody alike. Ever since 1894 he had tried to get an Act passed to do away with the anomaly which arose, but hitherto had been unsuccessful. He therefore trusted the Chancellor of the Exchequer would see his way to accept this Amendment.


said the Act of 1894 provided that where a joint income was under £500 a year, and the wife was engaged in some profession, like that of teaching, by which she earned part of that income, the wife and the husband might claim to have, as it were, separate incomes. In that case each might obtain either total exemption if his or her income were under £160, or an abatement if it were over that figure. Therefore, obviously, in such husband and wife were placed by the Act of 1894 in a better position than a single person possessed of an income of £500 and under. His hon. Friend wished to extend this exemption not only to all cases in which the wife earned an income in any other way than by the exercise of a profession, as, for instance, by keeping a shop together with a husband, but also to cases where the joint income of £500 was derived partly or entirely from interest on property or from rents. That was a very large extension of the principle of the Act of 1894, and although it would be much pleasanter for him to agree with his hon. Friend's proposal, yet he felt bound to place before the Committee the fact that it was one of considerable danger to the revenue. He wished the righthon. Gentleman the Member for West Monmouth, who had to deal with this subject in 1894, had been in his place, for he was sure he would support what he was going to say. The effect of his hon. Friend's proposal would be this. Supposing a husband and wife had an income of £500, they would say, derived from keeping a shop. It would be practically impossible for the officers of the Inland Revenue to ascertain, if a claim were made for an exemption of this kind on the ground that the wife was a party to the carrying on of the business of a shop, whether that claim was well-founded or not. Nobody could tell how much the wife did, or how much she did not do towards earning the joint income. And it would create this anomaly, that, assuming that in such cases the exemption were generally granted, as he feared it would have to be generally granted, a childless married person, for instance, whose wife could employ herself in this kind of way, would have a great advantage over a married person who had children and whose children would necessarily require the care of the wife, so that she would not be able to devote her services towards assisting the husband in the shop. Again, supposing the wife died, and the shopkeeper was left a widower with children. At once his assessment for Income Tax would be raised because the wife would be dead. He would probably have to employ and pay some person to look after the children, yet the operation of this clause, of which he had had the advantage in his wife's lifetime, would not be extended to him in his new position. It would be a bonus to the married person without children, as against the married person with children, and far more against the widower with children. Of course, the unfortunate bachelor, for whom, he dared say, the Committee would have no mercy—[loud laughter]—would be in a still worse position. Therefore, the effect of his hon. Friend's Amendment, by attempting to extend the exemptions granted by the Act of 1894, would be to create very much greater anomalies than those which at present existed. He would carry the matter a little further, and say that when they once took this clause beyond the point at which the law stood now, where the income was derived solely from personal exertions without any reference to interest on capital, they would find it most difficult to exclude income derived from investments and property. Why should they relieve a husband and wife who had a joint income of £500 a year, they would say, arising from investments in funds or railways, or from rents of houses or lands? Why should they allow each of them to divide, as it were, that income between them and claim exemption on the ground that it was a joint income, and that, therefore, each of them should only be assessed for half of it, while in other cases, where the income solely belonged to one or the other, he or she would be assessed on the full amount? The matter was a technical one, and he could not profess to deal with it with the lucidity that a lawyer would be able to do, but his advisers at the Inland Revenue assured him that the effect of the Amendment would be to create a very large deficit in the returns of Income Tax. He feared he could not face that deficit, but he would undertake to examine this question and see whether, confining the principle, as it was now confined, to incomes earned by personal exertion, cases could be added to the exemption which did not now come under it, ["Hear, hear!"]


agreed that the matter was a technical one, and if he could have framed his Amendment so as to limit it simply to earned—that is to say, industrial—incomes, he would have done so. He was perfectly satisfied with the undertaking of the Chancellor of the Exchequer.

SIR ROBERT REID (Dumfries Burghs)

said he recollected perfectly well that a great deal of pressure was put upon the late Government to enlarge the exemptions which were included in the Act of 1894. He was very sorry that his right hon. Friend the Member for West Monmouth was not in his place, but speaking entirely for himself, recollecting as he did the very grave reasons which were given in 1894 against extending the exemptions even though it was to deserving persons, he could not now be a party to any Amendment of this kind. It was found possible to extend the privilege to incomes derived from professions, but when they came to such things as small businesses it was made clear to the late Government that immediately the revenue would be defrauded, because all the profits, or the greater portion would be imputed to the share of the wife, and by that means an enormous gap would be made in the revenue. He was sorry that he should be obliged to vote against the Amendment, because he was sure that it would be the feeling of every Member of the Committee to relieve such cases as were contemplated. The exemption applied to comparatively poor people in whose behalf the hon. Member opposite had always moved—["Hear, hear!"]— and they could not grant it. But they could grant exemptions to people who had stores of pictures worth £20,000, £50,000, £100,000, or even £1,000,000. ["Hear, hear!"] When once they began the game of exemptions from financial impositions they found it extremely difficult to draw the line, because when they granted exceptions for artistic reasons or for sentimental considerations, some hon. Members, with the consistency which had marked the conduct in this matter of the hon. Member for Islington, brought a case forward in respect of persons who were far more in need of relief, and then they found they could not grant it. While he was sorry this was an Amendment which the Chancellor of the Exchequer could not accept, he thought the right hon. Gentleman was right, and he would support him in the interests of the revenue.


expressed a hope that the Chancellor of the Exchequer would examine the matter between now and the Report stage.


said he could not give an undertaking to examine the matter before the Report stage.


reiterated the hope that the right hon. Gentleman would be able to do so. It was felt that the concession made by the late Chancellor of the Exchequer did not meet the desires of the Committee at that time, for, while professional incomes received the benefit of the concession, incomes derived from trade did not share in the advantage.

And, it being half-past Five of the clock, the Chairman left the Chair to make his report to the House.

Committee report Progress; to sit again to-morrow.