HC Deb 18 April 1907 vol 172 cc1202-3

Having been impressed with these general considerations, I last session moved for the appointment of a Select Committee, which sat under the presidency of my right hon. friend the Member for the Forest of Dean. This Committee took evidence, and made a valuable Report; and I am sure that the House is very much indebted to the members of the Committee for their labours. They were unanimous, as I gather—and it was a Committee which represented all parts and sections of the House—in upholding the necessity of making a difference between earned and unearned incomes. What is am earned income? It is not easy to draw a distinction, but we can but do our best. First of all, there are the incomes of all officers and employés paid by salary. That, I think, includes the clergyman. Although he derives his income and pays income tax under Schedule A from the glebe or tithe rent-charge, his income is really paid to him in consideration of the services rendered by him in the performance of his clerical duties. Secondly, it clearly includes every class of professional man; and, thirdly, all traders whose income is substantially —and I lay stress on the word "substantially"—derived from their own personal labour. In the first two categories no difficulties arise at all. The difficulty arises in the third class—how to take into account the amount of capital a man brings into his business, and to deal with the class of incomes which are either wholly earned or partly earned and partly unearned, means a degree of logical precision where there will be the greatest possible difficulty in hindering overlapping in dubious cases. I am satisfied, however, that a much more practical way of dealing with this branch of the question is to confine the differential treatment to earned incomes which do not exceed £2,000 in amount. The Select Committee suggested £3,000, but I think that £2,000 is quite as far as you can fairly go. I confine the differential treatment, therefore, to persons whose total income from all sources does not exceed £2,000—not merely their earned incomes but from all sources. In the case of a man who is left £40,000 or £50,000 a year by his father, and by becoming a director of companies earns another £1,000, I think it is absurd to give him a preferential treatment on the score that he is a man with an earned income. I do not think that the principle should be carried to that extent. First of all, therefore, the earned income in respect of which relief is given should not exceed £2,000, and secondly, the whole income from all sources should not exceed £2,000.