APPLICATION OF INCOME TAX ACTS. (Hansard, 9 July 1896)

§ *MR. ERNEST GRAY (West Ham, N.)
—whose speech was interrupted at half past Five on Wednesday—said the Amendment was more than an appeal for relief of taxation on behalf of a deserving class—the class of small traders, on whom the burden of local and 1123 Imperial taxation fell with exceptional weight. It was the expression of a principle which it was desirable to intro duce into the procedure of the collection of the Income Tax—namely, that those who received and enjoyed incomes should be themselves directly taxed for income purposes, and that those who under the existing law did not enjoy the income should not be called upon to pay the tax. That principle seemed so just that it was hardly necessary to insist upon it. When the Income Tax Act of 1842 was passed, a husband could appropriate the income which his wife earned; but under the Married Women's Property Act the wife had now the full enjoyment of her own earnings. It appeared to him that the Act of 1842 became iniquitous after the passing of the Married Women's Property Act, for while the wife enjoyed her own income the husband had to pay the tax on that income which he did not himself receive. The present First Lord of the Treasury, speaking in Committee on the Finance Act of 1894, when this very question was under discussion, stated that the plan adopted by the Treasury in regard to the joint income of husband and wife was unjust and absurd, and that the joint incomes of husband and wife should always be separated. That criticism had such an effect on the then Chancellor of the Exchequer—the right hon. Member for Monmouthshire—that on report he inserted an Amendment which went in some way towards relieving the grievance complained of. But it did not go far enough. It met the case of wives who derived their incomes from professional sources, but not the case of wives whose incomes were derived from industrial pursuits. Many men who were constantly away from home or followed dangerous occupations, put their wives into small shops from which small incomes were derived, as a security in the event of their death. Take the case of a man's salary about £3 a week and the wife's profit, derived from the shop, £1 per week, and on the two sums taken together, the husband would have to pay income tax on £48. The tax might be small in such a case, but when the income was small the burden even of a few shillings was great. He could see no reason why wives managing small shops in that way should be denied the relief which was given to wives with 1124 incomes from professional sources. He hoped the Chancellor of the Exchequer would be able on report to make this small concession which would be valued by a very deserving class.

§ SIR WILLIAM HARCOURT (Monmouthshire, W.)
said the Chancellor of the Exchequer was good enough to regret his absence yesterday when this Amendment was proposed. He, too, was sorry he was not present; but he rose now to express his entire concurrence with the arguments by which the right hon. Gentleman bad resisted the Amendment. The question was discussed at great length on the Finance Act of 1894, on an Amendment moved by the hon. member for North Islington, and he agreed to give the relief asked for in cases where the income of the wife was derived from professional sources. But, evidently, the member for North Islington was not easily satisfied—[laughter]—or perhaps it was that gratitude was not a political virtue. [Laughter.] The hon. Member and his friends were asking for more, and he earnestly hoped the Chancellor of the Exchequer would not give them what they wanted. He had no hesitation in saying that, if the Amendment were adopted, a most serious blow—he was going to say a fatal blow—would be struck at the revenue from Income Tax. It was true that the present First Lord of the Treasury, during the discussion of the Amendment to the Finance Act of 1894, stated that the incomes of the husband and wife should always be treated separately. That was all very well for the right hon. Gentleman: he was only harrying a Liberal Chancellor of the Exchequer. [Laughter.] Now he desired to rescue a Conservative Chancellor of the Exchequer from the doctrines of the First Lord of the Treasury. [Laughter.] The case of a locomotive driver, whose wife carried on a small shop, had been quoted But there was no limitation in the proposal of the Amendment to industrial pursuits. It applied to all cases of joint incomes of husband and wife. Take the case of a man with a salary of £300 a year who had the fortune to marry a wife with a nice little competence of £200 a year. That was £500 a year between them, and they would obtain the exemption, while another man who had a hard-earned income of £500, and married a 1125 wife with no money, was to get no relief at all. ["Hear, hear!"] Which was the harder ease? These claims were put forward by people who had not sufficiently considered the question, and it was necessary to be most careful in acceding to them. He went as far as he could in 1894, and at that time the whole Tory Party maintained the doctrines which the Chancellor of the Exchequer now wisely resisted. The right hon. Gentleman had been asked to pledge himself to do something on Report, but he hoped he would do nothing of the kind—["hear, hear!"]—in spite of the hon. Member for Islington and the hon. Member for West Ham; and he should take this precious opportunity of supporting the Government when it was in the right. [Laughter.] He begged Gentlemen on the Opposition side of the House not to be led away by the sort of argument which had been used, because it was a blow at the principle of direct taxation. They had been labouring with difficulty for years to reach an equilibrium between direct and indirect taxation; and all these exemptions were in the direction of weakening and diluting direct taxation. ["Hear, hear!"]

*MR. CARVELL WILLIAMS (Notts, Mansfield)
said that the solicitude of the ex-Chancellor of the Exchequer for the prosperity of his successor was quite touching. When this question was raised in 1894 the right hon. Gentleman said he could not afford to be logical. Events had shown that the right hon. Gentleman was mistaken in that respect, and probably he regretted by this time that his surplus had not been applied to other purposes than to some of those to which it had been actually appropriated. The right hon. Gentleman based his argument on the assumption that all husbands and wives had a joint purse. Unfortunately all married people did not live together, and even when they did, the wives availed themselves of the Married Women's Property Act, and took care to have the expenditure of their own money. The right hon. Gentleman was anxious to diminish public expenditure; but one way of doing that was to diminish the supply. When financial reformers had desired the abolition of a tax, they had not waited till the Chancellor of the Exchequer said 1126 that he could afford it. They insisted on abolition, and when the country had made up its mind, the Chancellor of the Exchequer abolished the tax, and found other means of meeting the deficiency, either by new taxation or diminished expenditure,

§ MR. G. C. T. BARTLEY (Islington, N.)
said that he should not ask the House to divide, because he was quite satisfied with the Chancellor of the Exchequer's declaration that he would endeavour to meet the case another year. He only desired to see all married women treated on the same lines.

§ *THE CHANCELLOR OF THE EXCHEQUER
I hope the hon. Member does not misunderstand me. I confined my remarks solely to industrial incomes.

§ MR. BARTLEY
Certainly.

§ MR. JAMES KENYON (Bury, Lancashire)
called attention to the collection of Income Tax in regard to works, factories, etc. For many years different associations of employers had been representing to the Commissioners the grievance as to the allowance for depreciation not only on buildings, but also on machinery. The Commissioners at Somerset House had received the representations with great courtesy, but no advance towards redress had been made in the last 20 years. The present rule was applicable to the state of things 30 years ago. The conditions had now quite changed, and in consequence of the high speeds at which machinery was now driven its life was considerably shorter than it used to be. He asked the Chancellor of the Exchequer to consider this matter, and he hoped the right hon. Gentleman would see his way to make some alteration. Another important matter was that any individual who was the owner of works got a false idea as to the value of them. He died, and the property was left to his family, who again had a false idea as to their value, and consequently were led to spend an income beyond their means.

*THE CHAIRMAN OF WAYS AND MEANS
The hon. Member is raising a question of assessment which does not strictly arise on this clause.

§ THE CHANCELLOR OF THE EXCHEQUER
said that if the hon. Member would furnish him with particulars he would look into the question.

§ MR. COURTENAY WARNER (Stafford, Lichfield)
mentioned the hard case of a man who had earned an income paying the same amount of taxation as the man who got his income from capital. The man who earned £1,500 a year had to pay the same Income Tax as the man who had £50,000 invested in Three Per Cents., and who, dying, left his money to his wife and family. He hoped that the Chancellor of the Exchequer in a future Budget would pay some attention to this matter.

§ MR. LLOYD-GEORGE
objected to the principle of differentiation contained in the clause as unfair. On Schedules A, C, D, and E the Income Tax payer had to pay the full 20s., but on Schedule B he had only to pay one-third. It was unfair that this differentiation should be made in favour of one class of the community.