§ Considered in Committee.
§ (In the Committee.)
§ Clause 17: —
§ [Mr. EMMOTT (Oldham) in the Chair.]
§ *MR. CHIOZZA MONEY (Paddington, N.)
on a point of order, said the Amendment which he had on the Paper in regard to graduating the income-tax, had been ruled out of order. He respectfully desired to point out that the matter had its origin in the Ways and Means Resolution, that the income-tax should be charged on 16th April, 1907, at the rate of 1s. in the pound. The Chancellor of the Exchequer had taken that rate of income-tax and had modelled and moulded it.
said he had ruled the Amendment out of order on the previous night, and had called upon the hon. Member for Windsor. The Amendment had been taken oft' the White Paper, so he could not now go into the question of his ruling. He called upon the hon. Member for Windsor.
§ MR. J. F. MASON (Windsor)
, in. proposing an Amendment reducing the income-tax from Is. to 11d., said his object in moving it was to protest against the view that Is. income-tax was to be looked upon as part of our fiscal system. He protested on two grounds, first, that the income-tax was the tax on which we had to rely in a case of national emergency; and, secondly, that one-third of the tax was war tax imposed for a temporary reason, and not intended to be permanent. As regarded the first of those grounds, he maintained that the elasticity which the income-tax had in a case of national emergency became of greater importance from the fact that the Chancellor of the Exchequer had told 725 them that he intended to keep the other war taxes permanently. It was quite evident that the great bulk of our indirect taxes had about reached a point at which they would not allow of any material increase. The income-tax was the one tax capable of being increased on short notice with the minimum derangement of the general trade and business of the country, because its effect was less direct than the sudden increase of indirect taxes on articles of consumption. The Chancellor of the Exchequer had told them that the tax was very easy of evasion, and that no doubt was particularly true of two classes of income-tax payers. In the case of small tradesmen there was no doubt a very considerable amount of evasion, owing to their accounts being kept in an imperfect, he might say muddled, fashion. The other class who could easily evade the tax were the very rich people who held large amounts of property in the form of securities. It was very easy indeed for a rich man to avoid a large proportion of his income-tax without in the least putting himself in an illegal position. Ho did not think it was at all in the interest of the community that he should enter into the details of how that could be done. The fact remained that there were these two classes of evasion. No one would dispute the fact that the higher the tax the greater would be the inducement to evasion. It followed that there must necessarily be a point at which that inducement to evasion would be so great that the loss would counteract the amount of the increased tax. The income-tax at 1s. produced £32,000,000, but it did not follow that a 2s. tax would produce £64,000,000. The point at which evasion would become highly operative was difficult to estimate, but even assuming that a 2s. income-tax would produce £64,000,000 no one would contend that a 3s. or a 4s. tax would produce a proportionately larger sum, and there must be a limit beyond which any further increase would be fruitless. It would be generally agreed that the higher the tax the less room there would be for expansion, and that was of the utmost importance in view of the fact that there was no other tax in our system which was capable of any expansion at all. One-third of the income-tax—namely, 4d. out of a shilling, was imposed as a war tax, 726 and that yielded about £10,000,000. The Chancellor of the Exchequer, in his Budget statement, said that these war taxes must be maintained so long as the war debt existed. He acknowledged that the argument was good so long as the results of the war tax were applied to the extinction of the war debt. The war debt amounted to about £138,000,000, and the war taxes to about £17,000,000, but out of that sum only £10,000,000 went to reduce the debt, the other £7,000,000 being applied to objects totally different and utterly disconnected from the war itself. Therefore the argument that the war taxes should remain as long as the war debt existed must necessarily break down, and the right hon. Gentleman must see that that was not a good reason to give for the maintenance. At a later stage the right hon. Gentleman said the war taxes must be looked upon more in the nature of permanent taxes because times had changed. It was quite true that times and circumstances had changed. The right hon. gentleman was now Chancellor of the Exchequer, and they had a Radical Government in power, but the point arose as to why these changed times should be put forward as a reason for keeping on war taxes permanently. Some few years ago before the right hon. Gentleman was Chancellor of the Exchequer he held a very strong view regarding the maintenance of these war taxes, for he then seemed to think that under no circumstances ought they to be maintained. In 1903 when the late Government were in power the right hon. Gentleman stated that the war taxes were no part of the permanent fiscal machinery of the country, but were temporary taxes imposed for the purposes of the war, and he assured the House that at the earliest possible moment they would be removed. He further stated that it was the duty of any Chancellor of the Exchequer at once to effect such reductions in the expenditure of the country as would enable him to withdraw with the shortest possible delay what were always intended to be temporary burdens. The Chancellor of the Exchequer had evidently changed his opinion since that time.
§ MR. J. F. MASON
said in that case they would have to seek for a reason why the right hon. Gentleman could not now effect what he previously stated was the duty of the Chancellor of the Exchequer of any Government at any time. They would probably find the reason in the fact that the right hon. Gentleman found that in his present position it was not so easy to make such reductions in general expenditure as he thought it to be before he took office. In addition to that, the right hon. Gentleman had probably been affected by considerable pressure from the hon. Gentlemen below the gangway to provide for social legislation of a very expensive nature in the future. Probably the strongest reason of all for the attitude which the right hon. Gentleman had been driven to take up was the fact that he had absolutely made up his mind to adhere to the narrow basis of taxation which, even if maintained for a few more years, would eventually have to be abandoned.
In page 6, line 31, to leave out the words 'one shilling' and insert the words 'eleven pence.' "—(Mr. J. F. Mason.)
§ Question proposed, "That the words ' one shilling ' stand part of the clause."
§ THE CHANCELLOR OR THE EXCHEQUER, (Mr. ASQUITH,) Fifeshire, E.
said the hon. Member had stated his case with great temperateness and brevity, and he would endeavour to follow his example. The Amendment he had proposed substituted " eleven pence " for " one shilling," and the first part of his argument as far as he understood it was based upon the assumption that a high income-tax tended to evasion, j and therefore, in the long run would defeat the object of the Chancellor of the Exchequer who imposed it. But assuming that to be a sound argument it could not apply to the difference between Is. and 11d. Did the hon. Member really think that that difference would lead to evasion? If he did not think so, what possible remedy was his Amendment? So far from the rise in the income-tax during the last few years having encouraged evasion it had done nothing of the kind. The yield per penny now with the income-tax at 1s. was 728 substantially greater than it was a few years ago when the tax was 8d.; and even when the tax rose to 1s. 3d. during the war the growth in the yield per penny still went on. They had had some experience of a 2s. income-tax during the Napoleonic war, and one of the most striking circumstances connected with that high tax was that the yield per penny steadily rose and during the last year when that 2s. tax was imposed there was a larger yield than in any previous year.
§ SIR GILBERT PARKER (Gravesend)
asked whether the increased yield was not due to improved methods of collection and greater stringency?
§ MR. ASQUITH
said that by the improved methods they were only making those pay who ought to pay and thus perform their duty to the State; and that had no doubt tended to improve the yield. What he wished to show was that so far as past experience went even an income-tax raised to such a high figure as 2s. had not in practice led to the evasion referred to by the hon. Member. He quite agreed that there was a point—be did not say what it was and nobody knew what it was—at which the raising of the income-tax would have the unfortunate results to the revenue which the hon. Member very properly deplored, but he could not agree that that consideration had any direct bearing upon a proposal to reduce the income-tax by one penny. The hon. Member had stated that the difference between 8d. and 1s. ought to be regarded as a war tax and treated as such. Undoubtedly it was the case that before the war the income-tax was 8d. and now it was 1s. The war had been over five years, and although during those five years the present Government had only been in office about two years the income-tax remained at the point at which it was left by their predecessors. He adhered to the principle which he laid down in his Budget speech. He had been reminded that he expressed similar views in 1903, and no doubt it was refreshing to hon. Gentlemen opposite to find at least one Member whose opinions did not vary with the quarter of the House in which he sat. His first proposition was that the necessity for the continuance of a war tax did not cease with the discontinuance of hostilities; and his second was that by the reduction of 729 expenditure, and, when they were able to do so by the reduction of expenditure, they should aim at getting back to the state of things that prevailed before the war. Even with the considerable efforts that the present Government had made in the last two years to reduce the Debt there was still an addition to the National Debt, as compared with the state of the Debt before the war, of nearly £140,000,000. Until they had got back to the position which prevailed before the war he did not think they would be in a position to review taxation in the sense in which the hon. Member desired. In the next clause of the Bill he was giving substantial relief to income-tax payers, because he was reducing the tax on earned incomes which did not exceed £2,000 a year from 1s. to 9d. That was a substantial relief to the very class of income-tax payers upon whom the 1s. duty had pressed most heavily. He could not see any prospect of going further than that in the immediate future. He had never laid it down that the income-tax must be permanently maintained at 1s. He had been represented as saying so, although he had denied it a dozen times. He had never said anything of the kind. All he said was that, having regard to the condition of our indebtedness and to the large expenditure of the country, reduced though it had been since the present Government came into office, ho could not now assent to the reduction of this tax below 1s.
§ MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)
said the right hon. Gentleman congratulated himself and the House on his own consistency. He laid down when in Opposition that the war taxes should cease at the earliest possible moment, but it was only a couple of days ago that he held that certain war taxes should not cease under any circumstances whatever. He had made them permanent taxes instead of annual taxes requiring to be reimposed from year to year.
§ MR. AUSTEN CHAMBERLAIN
said the right hon. Gentleman did not make any distinction as to their own merits when he was in Opposition. The right 730 hon. Gentleman had replied to his hon. friend on the subject of evasion by asking whether anyone supposed that the difference between 1s. and 11d. would make any difference in the desire of the income-taxpayers throughout the country to evade the tax. He did not understand that to be the suggestion which was made. His hon. friend spoke of the income-tax as one of the great reserves for war, and pointed out that the higher it was kept the less it served the purpose of a reserve for war. He was looking forward, as wise men must do, to the time which might possibly occur, though they all hoped it would not, when the country would be exposed to the enormous financial strain which a modern war involved. If they started with the income-tax at 1s., to what point would they have to raise it in order to finance the war I Would they not be forced to raise it to a point at which evasion would become certain? It was no answer to say that during the recent war when great rises in the tax took place the yield per 1d. went on increasing, and equally did he think it was no answer to say that from the days of Mr. Pitt and his successors the produce of the income-tax from the moment it was placed on the present system of collection at the source had shown an increase in the yield per 1d. That was no answer for two reasons. In spite of what the Chancellor of the Exchequer had said, and not in contradiction of it, there was progressive efficiency of collection in the days of Mr. Pitt and his successors, but that efficiency was nothing like the efficiency at the present day. He spoke with the knowledge that these things were hardly capable of proof. In the time of Mr. Pitt and his successors the income-tax was regarded as hateful, and it was owing to the action of a Conservative House of Commons about that time that all records of it were destroyed. If he wanted to show how hateful the tax was to a section of the Liberal Party, he had only to refer to Mr. Gladstone's election manifesto in 1874, when he offered the country the repeal of the income-tax if they again returned him to power. The destruction of the records made it very difficult to say what was done in earlier years. What they could prove was that during the late war there was not an increase of evasion, but an increase of activity on 731 the part of people entitled to secure abatements. That was perfectly legitimate, as no Chancellor of the Exchequer wished to take a tax from people who ought not to be asked to bear the burden. He did not, therefore, make any complaint of people who were entitled to abatements making an effort to secure them, but he said that the very motive which actuated those people to take the trouble to secure abatements which they had never thought it worth while to take before would be effectual in actuating others to see whether, by making new arrangements, they could not avoid paying some portion of the higher tax, and in making others who were not very scrupulous try to avoid it, not only by legitimate means, but possibly by illegitimate means. The fact that the yield per penny went on growing did not show that that motive was not acting concurrently. In the first place, it might be assumed that the work of the country was growing, and that there was a greater amount of wealth on which to levy the tax. In the second place, there was the constant process of transferring private businesses into limited companies, and that enormously aided the accurate collection of income-tax at the source. The Chancellor of the Exchequer, though no doubt right in saying that it was not a penny one way or another that would make a difference in the efforts to evade the tax, had not proved that a considerable rise in the income-tax would not cause a very considerable growth of evasion and avoidance. He could cite in favour of his argument the Chairman of the Board of Inland Revenue, who, in giving evidence before the Income-tax Committee, spoke of the danger of evasion and avoidance which would arise if any considerable increase took place in the tax. The question of the penny was to a great extent beside the issue. It was not a question whether or not the normal rate of the tax ought to be at 1s. in time of peace. He was one of those who held that it ought not, one reason being that it left an insufficient reserve in the limit to which it could be carried as a war tax. He thought that in time of peace it was an undue burden on trade. The Chancellor of the Exchequer himself had recognised the claim, as indeed every thoughtful man must, that the income-tax was a burden on trade, and that, in 732 its indirect if not its direct effects, it touched people who were not themselves payers of the tax. It affected the amount of money available for the carrying on of business; it affected the expenditure of a great number of people, and might cause them to limit their expenditure. Indirectly, therefore, the tax had a great effect on wages and employment, and it reacted on the Exchequer, because any limitation of wages and of the activities of trade reacted on the other taxes which the-Exchequer received. A high income-tax had a bad effect on the stamp duties and on the Customs and Excise duties. The Chancellor of the Exchequer said that he had never laid it down that the normal rate of income-tax should be permanently fixed at a 1s. in the £. No, he did not think the right hon. Gentleman had, but what he had done was to say that he could not afford to sacrifice the revenue from the 1s. tax as at present imposed. Was not that the very same thing as if he had said that he could not see his way to lower the income-tax below 1s.? The right hon. Gentleman had spoken of the great growth of expenditure on the Army and Navy, and concurrently with that the growth of expenditure on education; he had also stated that he would endeavour to persuade the House of Commons to pass a scheme of old-age pensions. He thought that the scheme of the right hon. Gentleman in regard to the income-tax was unsound, and therefore, under the circumstances, he would vote for the Amendment—not that he thought there was any substantial difference between 11d. and 1s., but because he felt that Is. was too high a rate to maintain.
§ *MR. MCCRAE (Edinburgh, E.)
said that the right hon. Gentleman had given the Committee a very interesting exposition of the merits of the income-tax, but had said little in support of the Amendment of the hon. Member for Windsor. He would point out that the right hon. Gentleman the late Chancellor of the Exchequer had not given a fair account of what took place when quoting from the evidence of Sir Henry Primrose. No doubt Sir Henry Primrose said that they could increase the income-tax to such an extent as to lead to evasion. Sir Henry Primrose, however, did not say that that would happen 733 if the tax wore fixed at 1s. 3d. or 1s. 6d. in the £ he was only speaking of a super-tax of about 2s. in the £. The late Chancellor of the Exchequer said that when the income-tax had been increased to 1s. 3d. there were many more claims for abatement than when the tax was lower. But these claims were made by people who were entitled by right to abatement, and Sir Henry Primrose did not say that they would evade the increased tax unless it were oppressive in amount. The Committee, in fact, were impressed by the fact of the honesty of the British tax-payer.
§ MR. AUSTEN CHAMBERLAIN
admitted that he had used the words "evasion" and "avoidance," and there was a technical difference between them. Evasion was an illegitimate denial of the tax, and avoidance was a legitimate denial of the imposition of the tax. The hon. Gentleman spoke of avoidance as if it were a refusal to recognise a moral obligation. He did not think there was any moral obligation on the part of any taxpayer to pay more taxes than he was legally liable to pay. There was no question of morality if his income did not come within the limits laid down by law. But, as the Chairman of the Inland Revenue Board had pointed out, there was a great power on the part of rich people to remove their income beyond the limits of the income-tax, in which case there would be no legal liability.
§ *MR. MCCRAE
said he quite agreed as to the distinction which the right hon. Gentleman had made between "evasion" and "avoidance" But he thought that anyone who had gone carefully into the subject would admit that the rich man could not avoid a suggested increase to a very large extent. The evidence went to show that if the rich man evaded or avoided the increased charge on the income-tux ho eventually had to pay in one way or another. This was no question, in his opinion, of a war tax. The particular penny between 11d. and 1s. was not in the nature of a war tax. The right hon. Gentleman himself was responsible for it. After the South African War was over the income-tax was reduced by his predecessor; but the right hon. Gentleman when he came into office found that the general expenditure of the county had increased to such an 734 extent that he had to meet it by increasing the income-tax by an extra penny. The right hon. Gentleman had, therefore, the credit or the discredit of putting on an income-tax, not for war purposes, but for ordinary expenditure. He thought that his right hon. friend the Chancellor of the Exchequer had shown that he had considered the claims of the income-taxpayers. If the Amendment of the hon. Member for Windsor were carried the income-taxpayer would receive a relief of £2,600,000; but the Chancellor of the Exchequer was not at present prepared to sacrifice that amount, although he was prepared to give relief to the extent of £1,250,000. He hoped that, after the explanation of the Chancellor of the Exchequer, his hon. friend would withdraw his Amendment and allow the Committee to proceed to the much more interesting subject of differentiation raised by the next Amendment.
§ SIR GILBERT PARKER
urged that the income-tax was intolerably high. He pointed out that although the income-tax was suddenly raised after the Crimean War from 7d. to 1s. 2d. and afterwards to 1s. 4d., it was subsequently lowered to 7d. within three years. At that time Mr. Gladstone expressed the opinion that a high income-tax bore very heavily indeed upon the expansion of trade and the general operations of trade, and therefore had an influence on labour and unemployment. Mr. Gladstone admitted that a high income-tax bore more heavily on the direct tax-payer than on the indirect tax-payer, for the reason that it was easier for a person to pay a tax over a considerable number of articles of consumption than to pay it in a lump sum at the end of the year. There was no doubt that our national expenditure had gone on increasing since the income-tax had varied from 2d. to 1s. 4d. in the £. The Chancellor of the Exchequer had not applied the whole of the extra income-tax the abatement of the war debt, and therefore he insisted that to maintain the tax at 1s. was improper. A shilling income-tax was a very considerable item to people of moderate incomes, and although the Chancellor of the Exchequer was making a concession, Members on that side, and he supposed Members on the other side also, would press the reduction in. the hope that another year the right 735 hon. Gentleman would do what past Chancellors of the Exchequer had done in similar circumstances after a great war, and make a reduction of at least 2d. in the £. In view of the circumstances of trade, labour, employment, and wages, which this heavy income tax affected, he strongly supported the Amendment.
§ MR. CHIOZZA MONEY
said the hon. Gentleman who had just sat down had drawn a rather pitiful picture of the small income-tax-payer, but the far larger number of income-taxpayers under the scheme of the Chancellor of the Exchequer did not pay a rate of 1s. or even of 9d. in the £At the same time, in view of the wording of the Bill and of the form in which they passed this legislation, he could not blame anyone for forgetting that the rate was subject to certain abatements and exemptions. He pleaded with the Chancellor of the Exchequer to make once and for all a clean sweep of the system of affecting to charge a certain rate of income-tax, and afterwards moulding the normal rate, as it was called, into something entirely different. He believed the term "normal" was used by the late Chancellor of the Exchequer, but he ventured to question the use of the word in this connection. What was a normal rate? Surely a rate which was submitted to so many subsequent changes that it disappeared in the larger number of cases ought not to be called a normal rate. The better term would be "nominal" or "maximum." He was surprised to find that intelligent persons often were entirely ignorant of the real rate of income-tax they paid. He had talked to a minor official of the British Government who was ignorant of the fact that he paid only a few pence in the £ upon his income. He protested once more against the idea that the income-tax was the war reserve of the country. There was only one war reserve, and that was the income of the British people. That reserve was diminished just as much by a tax on motor cars, which was an income-tax of a capricious nature, as by an income-tax proper. It took money from some people because they indulged in a certain amusement, and it did not take money from other people, who were just as rich, because they indulged in a different amusement. It was the taxable 736 capacity of the British people that had to be considered, and it was a simple thing to show, even if they only had regard to incomes above, £160 a year, that the taxable capacity of the people was rising. It was a fortunate thing for the nation and also for the Chancellor of the Exchequer. As a matter of fact, the income-tax of the upper 5,000,000 of people was rising by a sum which could not be less than £30,000,000 per annum. The burden of income-tax on trade had been referred to. Granted that any tax must in some sense be a burden upon the individual, whether he be a trader or otherwise, it could not be urged that traders in this country were subject to a greater burden than those in Germany. Not only was the big trader in Germany subject to a State income-tax of 1s., but he had to pay also a civic income-tax, which in many towns amounted to 1s. 3d. or 1s. 6d. in the £. Such a man in one of our towns would merely have to pay a rate which would be assessed on the rental value of his house, and would probably not amount to more than £60 to £80 per annum. When they compared that with the man in Germany who had to contribute for civic purposes from £200 to £400 per annum, it would be seen that the position of the trader in this country, so far from being worse than the position of the trader in Germany, was certainly more favourable in point of taxation. The right hon. Gentleman opposite raised the income-tax by 1d. in time of peace, but the present Chancellor of the Exchequer had lowered, also in time of peace, the maximum rate by 3d. for a large number of income-tax payers, and yet he was assailed as if he were a sinner in this matter.
§ MR. SAMUEL ROBERTS (Sheffield, Ecclesall)
said he would like to make a final appeal to the Chancellor of the Exchequer with regard to the income-tax, and to give the right hon. Gentleman an opportunity of replying to the extraordinary remark made yesterday in Committee by the President of the Board of Education, who said he was in favour of abolishing all indirect taxation. Was he aware that if that position was taken up the income-tax and death duties would have to be trebled to meet the deficiency? He could not think the Chancellor of the Exchequer wished to associate himself with that view, 737 and he hoped the right hon. Gentleman would satisfy the Committee on the point. He appealed to the right hon. Gentleman on three grounds. In the first place he and his predecessors had promised the country from time to time that the income-taxpayer should receive relief in the first instance. The late Chancellor of the Exchequer in 1904, when he had to raise the tax from 11d. to 1s., said that in his opinion the income-taxpayer would have the first claim to relief, and that he hoped the sacrifice ho was then asking of him would not endure for long. It had endured for three years, and the present Chancellor of the Exchequer when he made his Budget statement last year associated himself with the remark of his predecessor that a uniform rate of 1s. in the £ in time of peace was impossible to justify and difficult to collect. The right hon. Gentlemen said he did not regard an income-tax of a shilling as permanent. If that were so, could he give income-taxpayers some hope that when he made his next Budget statement, if the present Government were in office another year, he would take their claim seriously into consideration? His second point was that the direct taxes wore a burden upon the trade and industry of the country, affecting not only profits but ultimately the wage-earners. The Chancellor of the Exchequer himself had admitted this. Thirdly, the income-tax was the great reserve in time of emergency. The hon. Member for North Paddington had said that the reserve fund was the income of the country, but in practice the reserve fund was twofold, consisting as it did in the suspension of the Sinking Fund and the imposition of the income-tax. On the three grounds he had mentioned he appealed to the Chancellor of the Exchequer to reconsider his decision with reference to the shilling income-tax. If he would not grant any reduction this year, would ho give some hope to income-tax-payers, who had borne this burden for a long time with patience and in a patriotic spirit, that he would consider their claims on the next occasion?
§ MR. VICTOR CAVENDISH (Derbyshire, W.)
said the impression he gathered on the Income-tax Committee was that there were a number of means available for people to avoid the income tax which were not generally known, but that if a heavy and 738 abnormal income-tax was to become a permanent part of our fiscal system, avoidance would be much more resorted to in the future than at the present moment. He was perfectly prepared to accept literally, and in the sense in which he believed he meant it, the statement of the Chancellor of the Exchequer that it was not his wish to make a shilling income-tax an integral and permanent part of our fiscal system. A deliberate statement was made yesterday by the right hon. Gentleman that the increased duties put for war purposes on tobacco, beer, and spirits were to remain at any rate at the figure at which they now stood, and possibly some of them might be increased. With the obligations now resting upon the Chancellor of the Exchequer, and the demands which were bound to be made upon him in the future, was there any reasonable hope that the income-tax of Is. in the £ would be reduced by a single penny during the existence of the present Government? He felt sure that the somewhat startling disclosure of the state of mind of the Minister for Education was but an unguarded expression of opinion, and did not represent the policy of the Government; and he was glad that the suggestions of the hon. Member for North Paddington did not meet with acceptance from the Chancellor of the Exchequer. The hon. Member had endeavoured to combat the statement that one of the objections to a high income-tax was the need of a war reserve. When they talked of the tax as a war reserve they meant that we should have a tax for which all the machinery was available, and which tax being low in time of peace could be put on rapidly in war time with as little dislocation as possible. It was understood that the Budget for the year was one of a series, and was framed, not for the purposes of the year only, but with a view to enabling the right hon. Gentleman to meet future demands. But he objected to the holding back of relief to income-taxpayers for some ulterior purpose. It was not as though means would not be available in future years by which the right hon. Gentleman could find funds for his purposes, and they were entitled to make their protest by supporting this Amendment.
§ THE POSTMASTER-GENERAL (Mr. SYDNEY BUXTON, Poplar) Tower Hamlets,
said that hon. Gentlemen opposite did not appear to appreciate fully the financial position. They had to consider on what taxes relief should be given when relief was possible. The mover of the Amendment founded his argument on two grounds—that the high rate of the tax led to evasions, and that the addition was a war tax and should be removed in time of peace. The first of these had been dealt with by the Chancellor of the Exchequer, and he would only remind the Committee that experience in the last few years had not shown that evasions increased with the increase of the tax. The reduction to 11d. would not have any effect on the evasion difficulty. It was said that the tax had boon made much more productive of late years because of the conversion of private firms into limited companies. But that was an effect which was experienced during only two or three years. The income-tax return had increased, and they were satisfied that the Amendment of the hon. Gentleman would in no sense affect the question of evasion, and they would get just as much at a shilling as they would get at 11d. It was also argued that this penny ought to be taken off because it had been put on for war purposes; but this was an entire fallacy as regarded the penny. During the war something like £33,000,000 of taxation was imposed, and it was mostly described as for war purposes, but as a matter of fact it was not j all applied to war purposes, some of it going to meet increased expenditure. In the year following the war, Mr. Ritchie took off £12,000,000, having a greatly improved revenue and the expenditure being reduced, but his successor had found it necessary again to put on the penny which had been taken off the income-tax. He, therefore, did not think that it could be claimed that this particular penny could be regarded as having been put on for war purposes. In regard to the whole, question of the war expenditure, while it was true that the income-tax was increased nominally for war purposes, at the same time the taxes on articles of consumption j —tea, corn, sugar, and other articles—were also increased. While income-tax had been relieved of 3d., the corn duty had gone, and the tea duty had been reduced by a penny. ["Coal."] He had not; mentioned coal, because it was denied on 740 the other side of the House that it was indirect taxation. In regard to indirect taxation there had been some relief, while the income-taxpayer was) still suffering, not from the war expenditure but from the extravagance in expenditure of the late Government, which raised the ordinary expenditure of the country from £90,000,000 to £140,000,000*. While the income-tax had had some relief since the war, and while indirect taxation had also had some relief, there still remained a lot of heavy burdens on both classes of taxation. What alternative was offered to the proposal of the Government? The Amendment proposed that his right hon. friend should lose over £2,500,000, but no means had been suggested of filling that void. The hon. Member for Gravesend had suggested a tax on corn and meat, but that would involve a change of our fiscal system, and that question had been settled and disposed of by the House. The Committee well knew that his right hon. friend, looking to the future and the schemes he had in hand, had not the money available to meet demands for a reduction of taxation. He for one would like to see the income-tax and other taxes reduced, but taxation was an evil which the country must accept; and much as he would like to see a reduction of taxes, he certainly would not support the reduction of the income-tax if it was to be accompanied by an increase of the taxes on articles of consumption.
§ *MR. H. H. MARKS (Kent, Thanet)
said he should certainly support the Amendment of his hon. friend. They had heard that afternoon the affirmation by the right hon. Gentleman of his opinion that the taxes which had been described as war taxes should be the first to be repealed or reduced; and they had heard from him, whatever they might have heard from other authorities, that 4d. of the existing income-tax was by him regarded as war tax. It was true, as the right hon. Gentleman had pointed out, that the late Government had not reduced this particular war tax; but they had not had the advantages and the opportunities which had fallen to the Chancellor of the Exchequer, and the fact that they had not had those advantages and opportunities might possibly be 741 deemed an explanation of their failure to reduce the income-tax. But in addition to that the war had only ended two years during the time they were in office, and two years had elapsed since then The right hon. Gentleman had said that he could hold out no hope, either now or hereafter, of going further than he was going at present; but he had left them to understand that it was not that he was not willing to do it, but that it was not in Ms power. He would venture to remind him that the amount which had been lost to the Exchequer by the repeal of the export duty on coal would have more than sufficed to allow of this 1d. reduction in the income-tax. Might he further remind the right hon. Gentleman that the export duty on coal was repealed at the time when it was steadily increasing its return without any burden on the general interests of the country? But even if they had not had the export duty on coal to rely upon, the right hon. Gentleman might by a little prevision have provided by this time a very substantial part of the amount which was asked for reduction of the income-tax. If it had occurred to him a year ago to do as he had done this year, and if he might say so, speaking for himself personally, what he thought the right hon. Gentleman had wisely done this year, namely, increased the death duties, he would have had enough by this time for a reduction of the income-tax. It was true, as the Chancellor of the Exchequer had said, that lie had made some remission in regard to a certain class of incomes, a very indefinite and as yet undetermined class of incomes, which were to have a rebate of 3d. in the £. But the 1s. income-tax was a burden on the trade of the country and was a danger to the wages received in the country. The remission now proposed would not affect the large employers of labour, and, therefore, would not influence the question of wages. A reduction of income-tax which would affect the general business of the community, benefit the large employers of labour, and in that way ultimately affect wages also, would be of substantial benefit, and it was such a benefit as was proposed by the Amendment of his hon. friend.
§ *MR. GEORGE D. FABER (York)
said 742 the Postmaster-General had pointed out that if the Amendment were carried it would be necessary to provide for £2,500.000, and that the Chancellor of the Exchequer could not find any source from which he could provide for that amount. Hon. Members on his side had been asked to reply to that. He had his own answer ready. It could be done by indulging in a small, an almost infinitesimal, measure of fiscal reform. If the Chancellor of the Exchequer could get over the fundamental objection which he had to any operation of the kind, he would find that many of his difficulties would melt away as by the stroke of the enchanter's wand. The right hon. Gentleman had told them that the income-tax was to be regarded as an integral portion of the fiscal system. He supposed they were all aware of this, although no Chancellor of the Exchequer had ever said it in terms before. The Chancellor had also stated that it must be his duty to budget, not for one year only, but for several years; and there again he did not believe any Chancellor of the Exchequer had ever given utterance to such a proposition before. Most Chancellors had considered that sufficient for the year was the Budget thereof. There was no doubt, however, that it was this statement of the Chancellor's which had caused many Members to think that 1s. income-tax was intended to be permanent, but the Chancellor of the Exchequer had not said that; he had only said that it was the duty of a Chancellor to budget for several years, and that the 1s. must be the income-tax for the series. The right hon. Gentleman had further stated that the war taxes did not come to an end when the war was over. He agreed, but there again no Chancellor of the Exchequer had ever before laid down such a proposition. He believed that after the Crimean War all the great statesmen and economists of that time took the view that the end of the war should end the extra financial burdens imposed upon the people. The Chancellor of the Exchequer had founded the whole of his financial policy upon the assumption that the war taxes must continue until the whole of the £130,000,000 war debt was paid off. The direct war taxation of 4d. in the on the income-tax represented £10,000,000, and the indirect war taxes produced another £10,000,000. 743 or £20,000,000 in all of war taxation. Surely the Chancellor of the Exchequer ought to apply the whole of that £20,000,000 to reducing the war debt. But he was doing nothing of the kind.
§ *MR. GEORGE D. FABER
said the 1s. income-tax was directly connected with it, because 4d. of it was alleged to be kept on in order to pay off some of the war debt, but the Chancellor of the Exchequer was not doing this.
§ MR. ASQUITH
said this was not a question of a war tax at all. They were discussing now the difference between 11d. and 1s. The tax was reduced to 11d. after the war, and then another 1d. was put on after the war for peace purposes.
§ *MR. GEORGE D. FABER
said the right hon. Gentleman stated in his Budget speech that so long as the extra war burdens remained the claim of a war tax to be removed was, in his opinion, inadmissible.
§ MR. ASQUITH
said that during the war the income-tax was raised from 8d. to 1s. 3d. Certainly 3d. of the present tax was a war tax, but that argument did not apply to the present Amendment.
§ *MR. GEORGE D. FABER
said the Chancellor of the Exchequer stated definitely in his Budget speech that he would not remove the £20,000,000 of war taxes until the £130,000,000 of war debt had been paid off.
§ MR. EVANS (Glamorganshire, Mid.)
said he wished to call attention to the most extraordinary decision recently given in the House of Lords, which decided a point that nobody had thought j of since 1854. The House of Lords had just decided that all sewers vested in public authorities were assessable to the income-tax. Under the recent decision every sewer in the country was now assessable to income-tax unless the law was changed. The effect of that would be that whereas now exemption 744 was being given to all small incomes-under £160, if sewers were assessed it followed that a good many smaller ratepayer would be assessed. [An HON. MEMBER: "Is this in order? "] He thought it was quite in order, because if all sewers were assessed they could reduce the income-tax from 1s. to 11d.
§ MR. AUSTEN CHAMBERLAIN,
on a point of order, said the subject the hon. Member was raising was very important and must be discussed at some time or other; but he wished to know whether they were entitled to discuss subjects of this kind upon an Amendment to reduce the income-tax from 1s. to 11d.
I think the hon. Member is raising a subject which ought to be discussed on the question that the clause stand part of the Bill.
§ *MR. GEORGE D. FABER (in continuation of his speech)
said his argument was that the income-tax as it now remained at 1s. was a war tax, and he founded his argument upon that fact. If, however, the right hon. Gentleman assured him that the income-tax did not fall within the war taxes. of course his argument fell to the ground. If, on the other hand, it was held that the income-tax was one of the war taxes, then his remarks were entirely in order. He thought the Chancellor of the Exchequer had come to an insufficient conclusion on his premises, because he had contended that these war taxes of £20,000,000, most of which consisted of the income-tax at 1s. in the £, were levied for the purpose of paying off war debt, but as a matter of fact he was not doing that. All he paid off last year on this score was £500,000 and all he proposed to pay off this year was £1,500,000, whereas the whole of the £20,000,000 should have been applied to this purpose, in each year.
Really the hon. Member's remarks are not in order on this Amendment. They are more appropriate to a later clause.
§ Question put.746
§ The Committee divided:-Ayes,265; Noes,95. (Division List No. 265.)747
|Abraham, William (Rbondda)||Elibank, Master of||Leese,SirJosephF.(Accrington|
|Alden, Percy||Ellis, Rt. Hon. John Edward||Lever, A. Levy(Essex,Harwich|
|Allen, Charles P. (Stroud)||Erskine, David C.||Lever, W. H.(Cheshire,Wirral)|
|Asquith,Rt.Hon.HerbertHenry||Essex, R. W.||Levy, Sir Maurice|
|Astbury, John Meir||Evans, Samuel T.||Lewis, John Herbert|
|Baker, Sir John (Portsmouth)||Everett, R. Lacey||Lloyd-George, Rt. Hon. David|
|Balfour, Robert (Lanark)||Faber, G. H. (Boston)||Lough, Thomas|
|Baring,Godfrey(Isle of Wight)||Fenwick, Charles||Lupton, Arnold|
|Barlow, Sir John E. (Somerset)||Ferens, T. R,||Luttrell, Hugh Fownes|
|Barlow, Percy (Bedford)||Ferguson, R. C. Munro||Lyell, Charles Henry|
|Barnes, G N.||Fiennes, Hon. Eustace||Macdonald, J. R. (Leicester)|
|Barry, RedmondJ.(Tyrone,N.)||Findlay, Alexander||Macdonald,J.M.(FalkirkB' ghs|
|Beale, W. P.||Fowler, Rt. Hon. Sir Henry||M'Callum, John M.|
|Beauchamp, E.||Fuller, John Michael F.||M'Crae, George|
|Beck, A. Cecil||Fullerton, Hugh||M'Kenna, Rt. Hon. Reginald|
|Bell, Richard||Gill, A. H.||M'Laren,H. D. (Stafford, W.)|
|Bellairs;, Carlyon||Gladstone,Rt. Hn. HerbertJohn John||M'Micking, Major G.|
|Benn,W.(T'w'rHamlets,S.Geo.||Glendinning, R. G.||Mallet, Charles E.|
|Berridge, T. H. D.||Glover, Thomas||Markham, Arthur Basil|
|Bethell,SirJ.H.(Essex,Romf'rd||Goddard, Daniel Ford||Mason, A. E. W. (Coventry)|
|Billson, Sir Alfred||Gooch, George Peabody||Massie, J.|
|Birrell, Rt. Hon. Augustine||Grant, Corrie||Masterman, C. F. G.|
|Black, Arthur W.||Greenwood, G. (Peterborough)||Menzies, Walter|
|Boulton, A. C. F.||Grey, Rt. Hon. Sir Edward||Micklem, Nathaniel|
|Brace, William||Guest, Hon. Ivor Churchill||Molteno, Percy Alport|
|Bramsdon, T. A.||Gulland, John W.||Mond, A.|
|Brigg, John||Gurdon, Sir W. Brampton||Money, L. G. Chiozza|
|Bright, J. A.||Hall, Frederick||Montagu, E. S.|
|Brocklehurst, W. B.||Harcourt, Rt. Hon. Lewis||Montgomery, H. G.|
|Brooke, Stopford||Hardy, George A. (Suffolk)||Morley, Rt. Hon. John|
|Bryce, J. Annan||Hart-Davies, T.||Morrell, Philip|
|Buchanan, Thomas Ryburn||Harvey, A. G. C. (Rochdale)||Morse, L. L.|
|Burns, Rt. Hon. John||Harvey, W.E. (Derbyshire,N. E.||Morton, Alpheus Cleophas|
|Burt, Rt. Hon. Thomas||Haslam, Lewis (Monmouth)||Murray, James|
|Buxton, Rt.Hn.SydneyCharles||Haworth, Arthur A.||Myer, Horatio|
|Byles, William Pollard||Hazel, Dr. A. E.||Nicholls, George|
|Cairns, Thomas||Hedges, A. Paget||Nicholson, CharlesN.(Doncast'r|
|Cameron, Robert||Helme, Norval Watson||Norton, Capt. Cecil William|
|Campbell-Bannerman, Sir H.||Henry, Charles S.||Nussey, Thomas Willans|
|Carr-Gomm, H. W.||Herbert,Col.Sir Ivor(Mon.,S.)||O'Donnell, C. J. (Walworth)|
|Cawley, Sir Frederick||Herbert, T. Arnold (Wycombe)||Parker, James (Halifax,)|
|Clough, William||Holland, Sir William Henry||Pearce, Robert (Staffs, Leek)|
|Coats,SirT. Glen(Renfrew, W.)||Holt, Richard Durning||Pearce, William (Limehouse)|
|Cobbold, Felix Thornley||Hope,JohnDeans (Fife, West)||Philipps, Owen C. (Pembroke)|
|Collins, Stephen (Lambeth)||Hope,W.Bateman(Somerset,N.||Price, C. E. (Edinb'gh.Central|
|Collins,SirWm.J.(S.Pancras,W||Horniman, Emslie John||Price, RobertJohn(Norfolk, E.)|
|Cooper, G. J.||Horridge, Thomas Gardner||Pullar, Sir Robert|
|Cory, Clifford John||Howard, Hon. Geoffrey||Radford, G. H.|
|Cotton, Sir H. J. S.||Hutton, Alfred Eddison||Rees, J. D.|
|Cowan, W. H.||Idris, T. H. W.||Renton, Major Leslie|
|Crombie, John William||Illingworth, Percy H.||Richardson, A.|
|Crosfield, A. H.||Jackson, R. S.||Roberts, Charles H. (Lincoln)|
|Davies, David(Montgomery Co.||Jacoby, Sir James Alfred||Roberts, John H. (Denbighs.)|
|Davies, Ellis William (Eifion)||Johnson, John (Gateshead)||Robertson,Rt.Hn.E. (Dundee)|
|Davies, Timothy (Fulham)||Johnson, W. (Nuneaton)||Robertson,SirG.Scott(Bradf' rd|
|Davies, W. Howell (Bristol, S.)||Jones, Leif (Appleby)||Robinson, S.|
|Dewar, Arthur (Edinburgh.S.)||Jones, William(Carnarvonshire||Robson, Sir William Snowdon|
|Dewar,SirJ.A.(Inverness-sh.)||Jowett, F. W.||Roe, Sir Thomas|
|Dickinson, W.H.(St.Pancras,N.||Kearley, Hudson E.||Rogers, F. E. Newman|
|Dickson-Poynder, Sir John P.||Kekewich, Sir George||Runciman, Walter|
|Dilke, Rt. Hon. Sir Charles||Kincaid-Smith, Captain||Rutherford, V. H. (Brentford)|
|Dobson, Thomas W.||King, Alfred John (Knutsford)||Schwann, C. Duncan (Hyde)|
|Duckworth, James||Laidlaw, Robert||Schwann, Sir C.E.(Manchester)|
|Dunn, A. Edward (Camborne)||Lamb, Edmund G. (Leominster)||Scott, A.H.(Ashton-under-Lyne|
|Dunne, Major E. Martin(Walsall)||Lambert, George||Seaverns, J. H.|
|Edwards, Enoch (Hanley)||Lamont, Norman||Shaw, Charles Edw. (Stafford,|
|Edwards, Sir Francis (Radnor)||Layland-Barratt, Francis||Shipman, Dr. John G.|
|Silcock, Thomas Ball||Thompson,J.W.H.(Somerset,E.||White, J. D. (Dumbartonshire|
|Sinclair, Rt. Hon. John||Tomkinson, James||White, Luke (York, E. R.)|
|Smeaton, Donald Mackenzie||Torrance, Sir A. M.||Whitehead, Rowland|
|Soames, Arthur Wellesley||Toulmin, George||Whiteley, JohnHenry (Halifax)|
|Soares, Ernest J.||Trevelyan, Charles Philips||Wiles, Thomas|
|Spicer, Sir Albert||Ure, Alexander||Willams, J. (Glamorgan)|
|Stanger, H. Y.||Verney, F. W.||Williamson, A|
|Stanley, Hn. A. Lyulph(Chesh.)||Wadsworth, J.||Wills, Arthur Walters|
|Steadman, W. C.||Walker, H. De R. (Leicester)||Wilson, Hon. C.H.W.(Hull, W.)|
|Stewart, Halley (Greenock)||Walters, John Tudor||Wilson, Henry J.(York, W.R.)|
|Strachey, Sir Edward||Walton, SirJohn L.(Leeds, S.)||Wilson, John (Durham, Mid.)|
|Strauss, E. A. (Abingdon)||Walton, Joseph (Barnsley)||Wilson, J. W.(Worcestersh. N.)|
|Stuart, James (Sunderland)||Waring, Walter||Wilson, P. W. (St. Pancras,S.)|
|Sutherland, J. E.||Warner, Thomas Courtenay T.||Wilson, W. T. (Westhoughton)|
|Taylor, Theodore C. (Radcliffe)||Wason, Eugene(Clackmannan)||Wood, T. M'Kinnon|
|Tennant, H. J. (Berwickshire)||Wason, JohnCathcart(Orkney)|
|Thomas, Abel(Carmarthen, E.)||Waterlow, D. S.||TELLERS FOR THE AYES—Mr.|
|Thomas, SirA.(Glamorgan, E.)||Watt, Henry A.||Whiteley and Mr. J. A.|
|Thomas, David Alfred(Merthyr||Weir, James Galloway||Pease.|
|Thomasson, Franklin||White, George (Norfolk)|
|Acland-Hood,Rt.Hn.SirAlexF||Dalrymple, Viscount||Mildmay, Francis Bingham|
|Anstruther-Gray, Major||Dixon-Hartland.SirFredDixon||Moore, William|
|Ashley, W. W.||Douglas, Rt. Hon. A. Akers-||Morpeth, Viscount|
|Aubrey-Fletcher,Rt.Hon.SirH.||Duncan,Robert(Lanark,Govan||Muntz, Sir Philip A.|
|Balcarres, Lord||Faber, George Denison (York)||Nield, Herbert|
|Baldwin, Alfred||Faber, Capt. W. V. (Hants, W.)||O'Neil,Hon. Robert Torrens|
|Balfour,RtHn.A. J.(CityLond.)||Fell, Arthur||Parker, SirGilbert (Gravesend)|
|Banbury,SirFrederick George||Fletcher, J. S.||Percy, Earl|
|Barrie, H. T. (Londonderry N.||Forster, Henry William||Powell, Sir Francis Sharp|
|Beach, Hn. MichaelHughHicks||Gardner, Ernest (Berks, East)||Ratcliff, Major R. F.|
|Beckett, Hon. Gervase||Gordon, J.||Ronaldshay, Earl of|
|Bignold, Sir Arthur||Haddock, George R.||Rutherford, W. W. (Liverpool)|
|Boyle, Sir Edward||Harrison-Broadley, H. B.||Sheffield. Sir Berkeley George D.|
|Bridgeman, W. Clive||Hay, Hon. Claude George||Sloan, Thomas Henry|
|Brotherton, Edward Allen||Helmsley, Viscount||Smith, AbelH. (Hertford, East)|
|Bull, Sir William James||Hervey, F.W.F.(Bury S. Edm'ds||Smith, F.E.(Liverpool, Walton)|
|Burdett-Coutts, W.||Hill, Sir Clement (Shrewsbury)||Starkey, John R.|
|Butcher, Samuel Henry||Hornby, Sir William Henry||Stone, Sir Benjamin|
|Carlile, E. Hildred||Houston, Robert Paterson||Thomson, W. Mitchell-(Lanark)|
|Carson, Rt. Hon. Sir Edw. H.||Hunt, Rowland||Thornton, Percy M.|
|Castlereagh, Viscount||Kennaway, Rt. Hon. Sir John H.||Valentia, Viscount|
|Cavendish, Rt. Hon. Victor C.W.||Kenyon-Slaney, Rt. Hon. Col. W.||Walker, Col. W.H.(Lancashire)|
|Cecil, Evelyn (Aston Manor)||King, Sir Henry Seymour(Hull)||Walrond, Hon. Lionel|
|Cecil, Lord John P. Joicey-||Lambton, Hon. Frederick Wm.||Willoughby de Eresby, Lord|
|Cecil, Lord R. (Marylebone. E.)||Lane-Fox, G. R.||Wilson, A. Stanley(York, E.R.)|
|Chamberlain, Rt Hn J.A.(Wore.||Lee, ArthurH.(Hants., Fareham||Wolff, Gustav Wilhelm|
|Coates, E. Feetham (Lewisham)||Liddell, Henry||Wortley, Rt. Hon. C.B. Stuart-|
|Cochrane, Hon. Thos. H.A.E.||Lockwood, Rt. Hn. Lt. -Col. A. R.||Wyndham, Rt. Hon. George|
|Collings, Rt. Hn. J.(Birmingh'm||Long, Rt. Hn. Walter (Dublin, S.||Younger, George|
|Corbett, T. L. (Down, North)||Lonsdale, John Brownlee|
|Craig, Charles Curtis(Antrim, S.||Lowe, Sir Francis William||TELLERS FOR THE NOES— Mr.|
|Craig, Captain James(Down, E.)||Lyttelton, Rt. Hon. Alfred||James Mason and Mr.|
|Craik, Sir Henry||Marks, H. H. (Kent)||Samuel Roberts.|
§ *MR. ANNAN BRYCE (Inverness Burghs)
moved to insert at the end of Sub-section (2) words to provide that, in the case of companies with limited liability registered under the Companies' Acts, income-tax should be charged on the amount distributed as dividend. He said the subject to which he wished to direct the attention of the Committee was one mentioned last year in the course of the Second-Reading debate on the Finance Bill. The Chancellor of the 748 Exchequer at that time expressed certain sympathy with the idea embodied in this Amendment. Income-tax, theoretically, was chargeable upon net profits, but in the case of a great many companies the present method of assessment bore with extreme hardship, because instead of being charged on the net profits it was charged upon imaginary profits which were the result of arbitration by the Inland Revenue itself. In this Amendment he proposed that the method of 749 assessment on limited companies should be by a charge on the dividends paid to their shareholders. He could give a good many illustrations of the unfair way in which the present method of assessment bore upon certain companies. He would take the case of a petroleum company. It started by spending a certain amount of money on wells and machinery. It afterwards found that these wells ceased to give the amount of oil they gave at the beginning, and the company consequently had to spend out of its profits—unless they raised fresh capital—the money required to dig new wells, and the result was that in a great many cases they had to pay double or three times what they really ought to pay if the tax were levied upon their net profits. He knew a company which had only been in existence for a few years. That company had paid £39,000 in dividends, and if it had been assessed on the dividends at the rate of 1s. or 1s. 2d. —the rates in operation at the time when the dividends were paid—it would have paid only £2,000 in income-tax, whereas as a matter of fact it had paid no less than £5,500. At the same time it had lost half of its capital and had written off a large sum for depreciation and renewals. He knew another case where a company had paid £1,000 income-tax in the course of a few years, though it had never paid any dividend at all, and its capital account at present showed a debit balance. But it was really not necessary to elaborate this, because the Chancellor of the Exchequer was aware of the nature of the hardship. The Income-tax Commissioners would not suffer in the long run if they permitted the change now proposed to be carried out, because if a company only paid income-tax on net profit it would thereby become every year more solid, its life would be longer, and so the Inland Revenue would in the long run benefit. In some countries this principle had been recognised. In Belgium, for instance, income-tax was paid only on the dividends distributed to shareholders. In regard to mining companies generally in Australia and New Zealand the same principle was recognised. In New Zealand the mining companies were charged income-tax upon dividends, and not upon an arbitrary determination of what the net profits 750 were, and besides that they were allowed to make large reductions for depreciation and renewals. One objection to hit proposal was that it was supposed there might be a danger to the Inland Revenue in allowing reserves to be piled up through the non-payment of dividends, but he would point out that that could not be done beyond a certain point. Moreover it was perfectly simple to provide that if any company was liquidated for the purpose of distributing its reserves income-tax could be charged on the amounts put from time to time to reserve. He trusted that the Chancellor of the Exchequer would see his way to make the change which he had suggested, and so give some relief in the cases that he had mentioned.
In page 6, line 35, at the end, to insert the words "Provided that, in the case of companies with limited liability registered under the Companies' Acts, income-tax shall be charged on the amount distributed as dividend.' "—(Mr. Annan Bryce.)
§ Question proposed, "That those words be there inserted."
§ THE PRESIDENT OF THE BOARD OR EDUCATION (MR. MCKENNA,) Monmouthshire, N.
said that his hon. friend had stated that certain companies did not always divide their profits in dividends each year, but sometimes distributed them over a series of years Not long ago they had heard of public companies subscribing out of reserve to the Municipal Reform League. As a matter of fact, the proposal of his hon. friend would work very unfairly, because the profits of one year might be reserved for the purpose of equalising dividends in future years, and the operation of the Amendment of his hon. friend would in certain cases be to increase the charge on the taxpayers of the country. The tax should be levied on the profits of the year in which they were made. The real fact was that under the present law companies, like individuals, were taxed upon the profits which they had made during the current year, and that principle ought to be applied all round. The law took no cognisance of the particular purpose to which the profits were devoted; and the Amendment of the hon. Gentleman 751 would introduce a change in dealing with a company as distinguished from an individual.
§ MR. AUSTEN CHAMBERLAIN
said that the right hon. Gentleman had said that there was no reason why they should afford to a company a right which was not conceded to a private individual. But he had a good deal of sympathy with the intention of the hon. Gentleman who had moved the Amendment, although he admitted that the subject was very difficult to deal with. It would have a bad effect on the financial Budget of the year, but he did not see why it should be unjust to the State in the long run. Let them take the case of a capitalist who had paid a large sum of money for a patent right which was to run for fourteen years. He would not consider that he had earned any profit until after he had paid off the money which he had expended in securing the patent right, although he had made considerable profits in the meantime. For his part he would be glad if the right hon. Gentleman was able to meet such a case, and he did not think that he would lose revenue in the long run.
§ Sir F. BANBURY (City of London)
did not think that the right hon. Gentleman had met the case presented by the hon. Member for Inverness Burghs as to the equalisation of dividends. The shareholders would not allow any large sum to be set aside for that purpose or to be paid out of reserve for any other purpose. It seemed to him ridiculous that the same rule should apply to public companies as to private individuals. He instanced the case of the Nitrate Company; the capital was £1,000,000. The gross revenue for the last seven years was £1,097,574, and allowing 5 per cent. for depreciation of machinery, £33,721, the seven years' assessment for income-tax would be £1,063,853. But that company was a wasting company. The depreciation fund for exhaustion of raw material as the grounds were worked out and depreciation of buildings, etc., would amount to £457,479. The amount available for dividend would be £606,374 and on that income-tax ought to be charged, instead of on the 1,063,853 on which it 752 had been charged. The shareholders had thus been taxed on profits to the extent of £457,459 which they had never seen and which they never would except in the fact that the capital had been maintained on which they would have to pay death duties. When he presented this case to the Chancellor of the Exchequer all the reply that the right hon. Gentleman made was that it had been the custom for sixty years to make this charge to the income-tax, and he considered that that was a sufficient answer. He quite admitted the difficulty which the right hon. Gentleman had to encounter, but there was substance in the Amendment of the hon. Member for the Inverness Burghs, and if it had been the practice for sixty years it was the duty of the House of Commons to put it right.
§ Sir E. CARSON (Dublin University)
said that when he was Solicitor-General he had a great deal to do with the administration of the Income-tax Act, and he could assure the Committee that it was exceedingly difficult to collect that tax on the basis of income earned and income derived from investments. Of course, it was very easy to say that there-was something attractive in the Amendment brought forward by the hon. Member for Inverness Burghs. To take the case which was put by his hon. friend of a wasting security, why should not that nitrate company be charged income-tax? He, as a private individual, was charged in respect of the house of which he had purchased the lease and that lease ran out year by year until at the end nothing was left. As a prudent man he might put by so much each year to provide for that, but if the company was given this concession that concession must also be given to him. Or they might take the case of a hard working man like himself, whose capital was his health and his length of life. As a prudent man he must put by something every year because he might not be able always to make an income. Was he to pay upon that and the company go free? If they once departed from the sound principle laid down by the Income-tax Acts and examined what was done by the profits he believed they would raise such a confusion that it would be 753 impossible to allay it. He thought they ought to allow certain deductions. He thought the deductions were rather narrow, and, what was more, he believed they were laid down at a time when business was carried on under different conditions and that there were many things which might be allowed as legitimate outgoings which were not allowed now. He thought they might extend the deductions, but however attractive the Amendment might seem he did not think it would be possible to carry it into effect.
§ MR. ASQUITH
said his right hon. friend had answered far more ably than he was able to the argument of the hon. Baronet the Member for the City of London. The real truth was that when they began to deal with these wasting securities they found themselves drawn into inextricable confusion. He quite agreed that the case stated was a one of apparent hardship at first sight, but the hardship, as his right hon. friend had pointed out, came on at an earlier stage, at the stage of the ascertainment of what was profit. This question, if it was raised at all, ought to be raised on a proposal to amend the rules of the Income-tax Acts, as to what ought or ought not to be allowed in determining income. It was, he thought, foreign to this Amendment and foreign to this clause. But once they had determined what the profits of a business were, and they should determine that on rules which were uniform, for income-tax purposes it was quite irrelevant to inquire as to what was done with them. What was done with them depended entirely on the will or caprice of the person who made them, and for income-tax proposes it did not matter what he did with them. As his right hon. friend stated they could not discriminate between a company and an individual. On these grounds it was impossible for him to accept the Amendment.
§ MR. FELL (Great Yarmouth)
said he wished to raise a point which he could best explain by giving a concrete case. He believed he would have the sympathy of the Chancellor of the Exchequer in the matter. Supposing a company made a profit of, say. £100,000, but did not 754 divide that money amongst the shareholders, employing it instead to write down losses incurred in business. If that £100,000 had been distributed among the shareholders as profits, the smaller shareholders would be entitled to recover that portion of the income-tax accruing to them by way of abatement. But the company being assessed on the whole amount at Is. in the £, there was no possibility of the shareholders ever getting back that portion of their abatement. He thought some remedy for this might be found in the Amendment. It was a distinct hardship on these people that they should not get the abatement to which they were entitled.
§ Sir F. BANBURY
said he would just point out in reply to the right hon. Gentleman that depreciation was already allowed to the extent of 5 per cent., and if that deduction was allowed there could be no reason why the property tax should not be deducted. When once the principle was admitted that under certain conditions deductions could be allowed for depreciation, it must be also admitted that in some cases the depreciation might be larger than in others and that larger deductions must be allowed. He could not see that the argument of his right hon. and learned friend of the man with a house had any relevancy to this point, and he certainly hoped the right hon. Gentleman would consider next year whether or not he could increase the amount allowed for depreciation.
§ *Mr. ANNAN BRYCE
said he would be perfectly willing to accept the suggestion of the hon. Member for the City of London. If the right hon. Gentleman the Chancellor of the Exchequer would consent to that it would meet his view. He quite appreciated the difficulty of making a distinction between companies and individuals. But having in view the fact that it was done in other countries he failed to see why it should not be done here. What he wanted to emphasise was the hardship inflicted on a great number of shareholders n companies with a diminishing capital. He happened to know that the Income-tax Commissioners deplored the fact 755 that they were at the present time so tied by the rules that they were not able to do as they would like to do in these matters. He hoped the right hon. Gentleman would consider this matter next year. He begged to withdraw his Amendment.
§ Amendment, by leave, withdrawn.
§ Question proposed, "That the Clause stand part of the Bill."
§ *MR. CHIOZZA MONEY
trusted he would be forgiven for speaking again on this particular clause, but his reason for so doing was that the issue involved was so very great. He referred to the issue of a graduated income-tax. He had himself prepared, at some trouble, an Amendment with reference to a graduated income-tax which had been ruled out of order, but had it been adopted it would have brought in another£6,000,000 to the Exchequer. It was not so much, however, on the ground of gaining additional revenue, although that was an exceedingly important point in this connection, that he desired to raise the subject, as on the ground that more justice needed to be done between the various orders of income-taxpayers. No matter what amount the Chancellor of the Exchequer desired to raise, whether it was £32,500,000 as in the present year, or £20,000,000, or £50,000,000, regard should be had to the means possessed by the various class, of the income-taxpayers. The present rough system of graduation as left by the Conservative Government some years ago was effected by a series of abatements, and they were so crude that he doubted whether any hon. Member could write down a rough idea of the graduation arrived at. Under that system nobody knew exactly where he was, and no man could say without inquiry and calculation what amount of income-tax was paid by the lower class of income-taxpayers. A man who under the present system of abatements only paid a few pence in the £was under the impression that he paid a large amount of income-tax. And that fact was impressed upon his mind because of the Party capital made by both sides, and 756 also by newspapers, out of this tax. There was no more popular appeal to the public than to tell them that the Government in power was taxing them very heavily. That was the reason that the small income-taxpayer laboured under the impression that he was more oppressed than any other class. But while the impression of hardship was exaggerated, there was undoubtedly too rapid a rise in the scale at the lower end, Between the figures of £250 and £300 a year lay hundreds of thousands of income-taxpayers who depended entirely on their health for their incomes. If inquiries were made into the position of the lower middle class, it would be found that the position of many of them in society was exceedingly insecure and that they were subject to terms of unemployment quite as serious as those which were suffered by the labouring classes. He held that considerable relief could be given to this class by a proper system of graduation. The principle of graduation had been gradually admitted, not only by statesmen, but academic economists. It was not so long ago that he heard Professor Marshall say that a graduated income-tax was the ideal form of taxation. What had stood in the way was the want of knowledge of the taxable incomes. It was impossible to give proper graduation unless there was some idea of the different incomes of the different taxpayers. That was a very strong argument indeed for taking measures to ascertain the actual income of the income-taxpayer. How did the matter stand? Until this Budget was framed the position was that two-thirds or three-fourths of the income-taxpayers were called upon to declare their income. His right hon. friend, by introducing a new step in graduation, would now ascertain the individual incomes of some 950,000 out of 1,100,000 taxpayers. It was argued that because the abatement, like the differentiation, was something in which there was an advantage to the taxpayer, therefore the taxpayer made the declaration in the hope of getting something, and that it was a very powerful engine for obtaining a declaration from that class. But that argument fell to the ground for the reason that in a large number of cases 757 the income-taxpayer did not declare his income in order to obtain an abatement, but had it declared for him by a third person, his employer.
§ THE FINANCIAL SECRETARY TO THE TREASURY (MR. RUNCIMAN,) Dewsbury
Is all the income declared by the employer or the amount paid by the employer?
§ MR. CHIOZZA MONEY
said that in nineteen cases out of twenty, in the case of clerks and travellers and income-taxpayers of that description, the amount declared by the employer was the entire income of the taxpayer. That was inquisition with a vengeance, for we actually made inquiry not from the poor man but from the poor man's employer. Yet the employer himself had not to declare his entire income. To pass to the other end of the scale, such rich men as made their incomes entirely from their own business now declared their entire income under Schedule D, and he failed to see why there should be any difference in the inquisition between the man who gained his sole income from his trade and the man who derived his income from a number of rents and investments and who had not to make under our present system any return whatever. The next point that had been urged against graduation of income-tax was that it was not practicable, but there had not been much heard of that argument since the appointment of the Income-tax Committee. If it was thought advisable to graduate only small and moderate incomes then the Committee declared that it was practicable to do so by "degression." If it was thought advisable to graduate the income-tax to obtain higher revenue, then it was possible, the Committee declared, to use the method of a super tax. He did not favour a super tax in the form of arranging a second tax to clap on top of the existing tax. He thought, rather, that the arrangement should be in the form of a plain and simple scale rising from the lower incomes to the highest. The scale could be symmetrically arranged in a way that would appeal to the common sense of the income-taxpayers. If that were done—and the same system was already in 758 existence in the world—he was perfectly sure that the income-tax would be placed on a much more equitable basis than at present, and it would be popularised so far as it was possible to popularise any tax whatever. The idea of justice would attach to it which did not attach to it now. But it was said that even if a scale were arranged it would not be worth doing, because there was. not a great deal to be got from it. He doubted that. There could be no doubt that the net income of the income-taxpaying classes in the present year would not be less than £800,000,000. If they made allowance for non-personal incomes, they would have not much under £750,000,000 net as the income of the tax-paying classes taxable under a graduated scale. He regarded that as a most conservative estimate. What could they do to obtain increased revenue from such an income as that? Could they do it without injuring the trade of the country and without trenching upon capital savings, to which, in the present order of society, they must have regard? Of the £750,000,000 roughly about £250,000,000 represented incomes below £700 a year, and £500,000,000 the incomes over £700 a year. Looking to the expenditure of the rich, the extraordinary development of luxuries and of the trades which ministered to those luxuries, it was not surprising that statistical inquiries showed that of the £500,000,000 probably £200,000,000 was the aggregate of incomes over £5,000 a year. That deduction did not surprise them in view of the condition of society, as they knew it to-day. If they assumed that there was an income of £250,000,000 up to £700, £300,000,000 between £700 and £5,000, and £200,000,000 over £5,000, then it was a simple matter to show that by an income-tax graduated not above Is. 6d. in the pound they could produce an income larger than would be produced by the scheme of his right hon. friend, certainly not smaller. They could further show that by a tax which did not exceed 2s. in the pound at the highest point and which only averaged 6½ Per cent. they could easily raise a sum of over £50,000,000 if they required it. He urged that these considerations should have weight with the Chancellor of the Exchequer in framing 759 his Budget. Another argument advanced was that the trouble involved was too great. He could not admit that for a single moment. After all, the total number of assessments did not exceed 1,100,000. It was easy to name a country where they had to deal with 3,500,000 assessments in a single year. If in a foreign country that number could be successfully dealt with, and a practical plan of graduation carried out, reaching up to £5,000 a year, why should not this country be able to deal with a scheme of graduation with only 1,100,000 assessments? The argument about trouble, at least, ought not to be used. The House was now sitting as a single Chamber, for they were treating of matters with regard to which there was no House of Lords. There was nothing which stood between his right hon. friend and the prosecution of his financial proposals. If it was the case that a very large number of social measures were simply at a standstill for want of ways and means, and when they had Members on the other side continually preaching that they had a method of raising revenue—
§ *MR. CHIOZZA MONEY
said he at once bowed to the Chairman's ruling, but he would conclude by observing that at any rate there was an opportunity for dealing with this matter which could not be frustrated, and he trusted, therefore, that the considerations which he had ventured to urge would receive careful attention.
§ MR. EVANS
hoped that the answer to be made to his hon. friend on this occasion would not close the door against the proposal for graduation of the income-tax. But he felt that it came rather late, though it had been discussed in the Budget debate, and also on the Second Reading of the Bill. He was not quite sure what the Chancellor of the Exchequer had said in those debates, but he trusted that nothing he said now would make it difficult for him to travel along this road and to carry out the recommendations of the Committee, which, appointed by him last session, 760 had reported unanimously in favour of graduation. He desired to call the attention of the Chancellor of the Exchequer to one other small matter. This clause, and the income-tax which it authorised, would touch, according to the recent decision of the House of Lords, a species of property which had never been touched before. Since the Act of 1853 was passed it had never dawned on anybody until last year, when it occurred to someone living in the Celtic fringe between Monmouthshire and Glamorgan, that the income-tax should be levied on the public property of local authorities, which they were bound by Act of Parliament to provide. He did not think the decision was necessarily confined to a sewer vesting in a public authority, as liable to income-tax. It was a most extraordinary decision. He would call attention to one phase of the matter. Assuming that it was right to assess these public properties to income-tax, the result was they that brought as contributors to the income- tax small ratepayers of less than £160 a year, a limit of income which did not contribute at all. The cost of providing and maintaining public works like sewers came out of the rates, paid to a large extent by ratepayers whose incomes were under £160 a year. The assessment being under- Schedule A, the income-tax which the property had to bear was Is. in the £, so that the small ratepayers had to bear the burden on the higher scale. He ventured, therefore, to bring this decision to the attention of the Treasury and of his right hon. friend the President of the Local Government Board, who was also concerned in the matter.
§ MR. ASQUITH
said he did not propose to add anything to what he had already said in his Budget speech on the subject of graduation. He must, however, refer to the point which had been raised by the hon. and learned Member for Mid. Glamorganshire. The decision he referred to had only recently been brought to his notice. It had come upon him as an old practitioner in these matters with some degree of surprise. As he happened to be Chancellor of the Exchequer he should be the last to complain if the sewers of the country, which had so 761 long been exempt, now contributed to the income-tax. His hon. and learned friend had suggested that the decision would impose upon the small ratepayer for the first time the burden of contributing to the income-tax. He imagined that the indirect contribution of the small ratepayer under this head was almost infinitesimal. He supposed there were very few of our great municipal bodies some part of whose undertaking was not at present assessable for income-tax in respect of the profits they were making, and, therefore, the grievance was no new one. He would, of course, carefully scrutinise the development of the matter, and note whether the gloomy anticipations of his hon. and learned friend were realised, but he did not think the additional burden on the small ratepayer was likely to be serious. He appealed to the Committee to pass the clause in order that they might devote the remainder of the evening to the important questions which remained to be considered.
§ Clause agreed to.
§ Clause 18: —
§ *Mr. JOWETT (Bradford, W.)
moved an Amendment, the object of which he explained was to confine the special relief proposed to be given under the clause to those who enjoy incomes of not more than £1,000 a year. The Bill provided that in cases where the total income did not. exceed £2,000 a year, the tax on earned incomes should be at the rate of 9d. in the £ instead In his opinion, which was shared by many hon. Members and by a very large number of people outside the House, the relief given to persons whose incomes ran up to £2,000 a year was not justified, in view of the poverty which existed among other sections of the community. During the debate which followed the introduction of the Budget it was pointed out by another Member of the Labour Party that there were no fewer than 2,000,000 families in the country who were in receipt of incomes of £1 per week, and that in many cases 15s. of that £had probably to be spent upon food alone. The Chancellor of the Exchequer had declined to give any relief to those taxpayers. He declined to reduce indirect 762 taxation; the sugar tax was still to remain, and there was to be no reduction in the tea duty. That being the case, it-appeared to him to be exceedingly un-reasonable that relief should be given to those whose incomes amounted to more than £1,000. The Chancellor of the Exchequer could have given the relief of Id. per £ reduction on tea at a cost of £1,000,000 per annum, and if his Amendment were adopted the amount yielded to the Exchequer would have defrayed this expanse. The Chancellor was anxious to create a fund for old age pensions. Here was £1,000,000 a year that he could add to a nest egg which was so much spoken of. He asked hon. Members to register by their vote whether they thought with him that it was a most improper proceeding to offer relief to every individual in the community with an income of £2,000, while refusing everything except promises—given, he admitted, in good faith—to those un-fortunate persons by whom the payment of every single penny was separately felt. He begged to move his Amendment.
In page 7, line 11, to leave out the word 'two,' and insert the word 'one'." —(Mr Jowett)
§ Question proposed, "That the word 'two' stand part of the clause."
§ MR ASQUITH
said he had listened attentively to the speech of the hon. Member, and as far as he could follow his argument, it meant that they were giving too much relief to the income-tax payer and too little relief to the consumer in the shape of remission of indirect taxation. The hon. Gentleman had not argued his case on its merits. The Select Committee which reported on the subject were, he believed, unanimously in favour of £3,000 as the limit.
§ *SIR CHARLES DILKE (Gloucestershire, Forest of Dean)
said the Committee was unanimous in regard to £2,000, but not £3,000. But, even the differentiation below £2,000 was only assented to by himself in connection with the adoption, of graduation.
§ MR. ASQUITH
said that, at any rate, the Report recommended £3,000, and he gathered that they were unanimous as regarded £2,000. To draw an arbitrary line in a matter of this kind was extremely difficult. It was impossible, perhaps, in one sense, to justify the exclusion of a man who had £2,001 a year while another with £1,999 was included, but that was a common feature of all systems of graduation. To use an old phrase, "you must draw the line somewhere." In drawing the line there might be undue benefit on one side, and undue hardship on the other. He had been asked why he had made the limit £2,000. He had done so because it was the only practical way of bringing relief to a class of income-tax payers who were eminently entitled to come within the scope of his ameliorative measure of differentiation. Who were they? They were the smaller business class and professional men whose incomes ranged from £700 to £2,000 a year. He did not speak of the class with incomes up to £700, because they had already relief in the shape of abatements. He wished to bring in for relief the smaller business men, and also employees who, no doubt, were in positions of considerable responsibility, and, above all, the professional men of the country on whom the present scale of income-tax bore very hardly. To confine the limit to incomes of £1,000 would be to leave out of the scope of the remedial measure, a large number of persons who were entitled to it. A country doctor might be earning £1,500 a year, and if they took into consideration his necessary expenses in order to maintain his position as a professional man among his neighbours—the expenses of his house, the bringing up of children, and the maintaining of the standard of external comfort and appearance, and it should be remembered that that was all contingent upon the maintenance of his health and the duration of his life, for when health failed or life ceased, all those dependent upon him were left entirely at the mercy of fortune—if they compared that man's income with a corresponding income which a man derived from investments, it was impossible for anybody to argue that the tax fell with equal weight upon both men. 764 By maintaining the tax at an equal rate as between those different classes, a grievance was inflicted upon the middle classes of the country who earned their incomes, and that was what made the tax so unpopular among them and so difficult to collect. The hon. Gentleman opposite had brought before the notice of the House the position of those who were specially called the labouring class. The hon. Member and his friends in their legitimate and most proper desire to remove avoidable hardship from their own class, when they were dealing with a tax which did not directly affect that class—although he believed that in the long run it did affect them if it did not do so directly—should not forget the grievance and injustice which the income-tax in its higher scales inflicted on those who were subject to it. He was perfectly certain that it was the duty of the Government to retain the tax, and he could not imagine any Chancellor of the Exchequer contemplating our financial future in the absence of the income-tax, and, he would say, the income-tax at a substantial figure. He would say that the incorporation of the income-tax as a permanent part of the financial machinery of the country was incumbent on them, but they should see that as among the classes on whom it fell its incidence was as fair and equitable as possible. Now that they had come to the conclusion that it was not a temporary but a permanent tax, their first duty it seemed to him was to see how far they could make it fair among those upon whom it fell. If the Government were to accept the terms of the Amendment of the hon. Member, there would be left out of the remedial operation of the scheme a very large number of people who, in his judgment, were specially deserving of differential and equitable treatment. He earnestly appealed to hon. Members to look at this matter on its own merits, and to consider it as it affected the different classes of income-tax payers. If they agreed with him that the income-tax must be treated as part of our financial system, he asked them to assist in making it as just as possible to those sections of the community upon whom it had hitherto pressed with undue severity.
§ Question put.766
§ The Committee divided: —Ayes, 237; Noes, 45. (Division List No. 266.)767
|Acland, Francis Dyke||Dickinson, W.H.(St.Pancras, N.||Lloyd-George, Rt. Hon. David|
|Alden, Percy||Dobson, Thomas W.||Lough, Thomas|
|Allen, A. Acland(Christchurch)||Duckworth, James||Luttrell, Hugh Fownes|
|Allen, Charles P. (Stroud)||Dunn, A. Edward (Camborne)||Lyell, Charles Henry|
|Anson, Sir William Reynell||Edwards, Clement (Denbigh)||M'Callum, John M.|
|Ashley, W. W.||Edwards, Sir Francis (Radnor)||M'Calmont, Colonel James|
|Asquith, Rt. Hon. Herbert Henry||Elibank, Master of||M'Crae, George|
|Astbury, John Meir||Erskine, David C.||M'Kenna, Rt. Hon. Reginald|
|Baker, Sir John (Portsmouth)||Essex, R. W.||M'Laren, Sir C. B. (Leicester)|
|Balcarres, Lord||Esslemont, George Birnie||M'Micking, Major G.|
|Balfour, Robert (Lanark)||Evans, Samuel T.||Magnus, Sir Philip|
|Banbury, Sir Frederick George||Eve, Harry Trelawney||Manfield, Harry (Northants)|
|Banner, John S. Harmood-||Everett, R. Lacey||Markham, Arthur Basil|
|Baring, Godfrey(Isle of Wight)||Faber, G. H. (Boston)||Marks, G. Croydon(Launceston)|
|Baring, Capt. Hn. G.(Winchester||Fell, Arthur||Massie, J.|
|Barker, John||Ferens, T. R.||Menzies, Waiter|
|Barlow, Percy (Bedford)||Ferguson, R. C. Munro||Meysey-Thompson, E. C.|
|Barrie, H. T. (Londonderry. N.||Fiennes, Hon. Eustace||Mildmay, Francis Bingham|
|Barry, Redmond J. (Tyrone, N.||Findlay, Alexander||Montagu, E. S.|
|Beale, W. P.||Fletcher, J. S.||Moore William|
|Beauchamp), E.||Fuller, John Michael F.||Morgan, G. Hay (Cornwall)|
|Beckett, Hon. Gervase||Furness, Sir Christopher||Morrell, Philip|
|Bell, Richard||Gladstone, Rt. Hn. Herbert John||Morse, L. L.|
|Bellairs, Carlyon||Glendinning, R. G.||Morton, Alpheus Cleophas|
|Benn, Sir J. Williams(Devonp'rt||Goddard, Daniel Ford||Newnes, F. (Notts, Bassetlaw)|
|Benn, W.(Tw'rHamlets, S. Geo.||Gooch, George Peabody||Newnes, Sir George (Swansea)|
|Berridge, T. H. D.||Gordon, J.||Nicholls, George|
|Bethell, Sir J. H.(Essex, Romf'rd||Grant, Corrie||Nicholson, C'harles N. (Doncast'r|
|Billson, Sir Alfred||Greenwood, G. (Peterborough)||Nield, Herbert|
|Birrell, Rt. Hon. Augustine||Gretton, John||Norton, Capt. Cecil William|
|Boulton, A. C. F.||Grey, Rt. Hon. Sir Edward||Partington, Oswald|
|Boyle, Sir Edward||Gulland, John W.||Pearce, William (Limehouse)|
|Bramsdon, T. A.||Gurdon, Sir W. Brampton||Philipps. Col. Ivor(S'thampton)|
|Brigg, John||Haddock, George R.||Price, RobertJolm (Norfolk,E.)|
|Brocklehurst, W. B.||Hardy, George A. (Suffolk)||Priessley, Arthur (Grantham)|
|Brooke, Stopford||Harrison-Broadley, H. B.||Priestley, W.E. B. (Bradford,E.)|
|Bryce, J. Annan||Hart-Davies, T.||Pullar, Sir Robert|
|Buchanan, Thomas Ryburn||Harvey, A. G. C. (Rochdale)||Radford, G. H.|
|Buckmaster, Stanley O.||Haworth, Arthur A.||Rawlinson, John Frederick Peel|
|Burns, Rt. Hn. John||Hedges, A. Paget||Remnant, James Farquharson|
|Burt, Rt. Hon. Thomas||Helme, Norval Watson||Renton, Major Leslie|
|Butcher, Samuel Henry||Henderson, J.M.(Aberdeen, W.)||Ridsdale, E. A.|
|Buxton, Rt. Hn. Sydney Charles||Herbert, Col. Sir Ivor(Mon., S.)||Roberts, John H. (Denbighs.)|
|Byles, William Pollard||Herbert,T. Arnold (Wycombe)||Roberts, S. (Sheffield, Ecclesall)|
|Cameron, Robert||Hervey, F.W.F.(Bury S. Edm'ds||Robinson, S.|
|Carlile, E. Hildred||Hill, Sir Clement. (Shrewsbury)||Robson, Sir William Snowdon|
|Causton, Rt. Hn. Richard Knight||Holland, Sir William Henry||Ronaldshay, Earl of|
|Cave, George||Holt, Richard Durning||Rutherford, V. H. (Brentford)|
|Cecil, Evelyn (Aston Manor)||Hope, W. Bateman(Somerset, N.||Sandys, Lieut.- Col. Thos. Myles|
|Cecil, Lord John P. Joicey-||Jackson, R. S.||Schwann, C. Duncan (Hyde)|
|Cecil, Lord R. (Marylebone, E.)||Jardine, Sir J.||Schwann, Sir C. E. (Manchester)|
|Chance, Frederick William||Jones, Leif (Appleby)||Scott, A.H.(Ashton under Lyne|
|Chaplin, Rt. Hon. Henry||Jones, William (Carnarvonshire||Scott, Sir S. (Marylebone, W.)|
|Clough, William||Kearley. Hudson E.||Shipman, Dr. John G.|
|Coates, E. Feetham(Lewisham)||Kekewich, Sir George||Sinclair, Rt. Hon. John|
|Coats, Sir T. Glen(Renfrew, W.)||King, Alfred John (Knutsford)||Smeaton, Donald Mackenzie|
|Collins, Stephen (Lambeth)||King, Sir Henry Seymour(Hull)||Smith. F.E. (Liverpool, Walton|
|Collins, Sir Wm. J.(S. Pancras, W.||Laidlaw. Robert||Soares, Ernest J|
|Cory, Clifford John||Lambert, George||Stanger, H. Y.|
|Cotton, Sir H. J. S.||Lamont, Norman||Stanley, Hn. A. Lyulph (Chesh.)|
|Cowan, W. H.||Layland-Barratt, Francis||Stewart, Halley (Greenock)|
|Craig, Charles Curtis(Antrim, S.)||Leese, Sir Joseph F.(Accrington)||Strachey, Sir Edward|
|Craik, Sir Henry||Lever, A. Levy(Essex, Harwich)||Strauss, E. A. (Abingdon)|
|Dalrymple, Viscount||Lever, W. H. (Cheshire, Wirral)||Stuart, James (Sunderland)|
|Davies, W. Howell (Bristol, S.)||Levy, Sir Maurice||Sutherland, J. E.|
|Dewar, Arthur (Edinburgh, S.)||Lewis, John Herbert||Taylor, Theodore C. (Radcliffe)|
|Dewar, Sir J.A.(Inverness-sh.)||Liddell. Henry||Tennant, Sir Edward(Salisbury,|
|Thomas, Sir A. (Glamorgan, E.)||Wason, John Cathcart (Orkney)||Wilson. Henry J. (York, W.R.)|
|Thomasson, Frankin||Waterlow, D. S.||Wilson, John (Durham, Mid)|
|Thompson. J.W.H. (Somerset. E||Watt, Henry A.||Wilson. J. W. (Worcestersh, N.)|
|Thomson, W. Mitchell- (Lanark)||Weir, James Galloway||Wilson, P. W. (St. Pancras, S.)|
|Torrance, Sir A. M.||White, J. D. (Dumbartonshire||Winfrey. R.|
|Toulmin, George||White, Luke (York, E.R.)||Wortley. Rt. Hon. C. B. Stuart-|
|Ure, Alexander||Whitehead, Rowland||Yoxall, James Henry|
|Walrond, Hon. Lionel||Whitley, John Henry (Halifax)|
|Walters. John Tudor||Whittaker, Sir Thomas Palmer||TELLERS FOR THE AYES— Mr.|
|Walton, Sir John L. (Leeds, S.)||Wiles, Thomas||Whiteley and Mr. J. A.|
|Waring, Walter||Williams, Col. R. (Dorset, W.-||Pease.|
|Wraner, Thomas Courtenay T.||Wilson. A. Stanley(York, E.R.)|
|Wason, Eugene (Clackmannan)||Wilson. Hon. C.H.W. (Hull, W.)|
|Abraham, William (Rhondda)||Hall, Frederick||Richardson, A.|
|Barnes, G. N;||Harvey. W.E. (Derbyshire, N.E.||Samuel, S. M. (Whitechapel)|
|Black, Arthur W.||Hazel, Dr. A. E.||Shaw. Charles Edw. (Stafford)|
|Brace, William||Henry, Charles S||Steadman. W. C.|
|Bridgeman, W. Clive||Houston, Robert Paterson||Wadsworth, J.|
|Brotherton. Edward Allen||Johnson, John (Gateshead)||Walker, H. De R, (Leicester)|
|Cleland, J. W.||Johnson, W. (Nuneaton)||Walton, Joseph ((Barnsley)|
|Cobbold. Felix Thornley||Lamb, Edmund G. (Leominster||Wardle, George J.|
|Davies. Ellis William (Eifion)||Macdonald, J. R. (Leicester)||White, George (Norfolk)|
|Davies. Timothy (Fulham)||Macdonald, T.M.(Falkirk B'ghs)||Williams, J. (Glamorgan)|
|Duncan. Robert(Lanark, Govan||Masterman, C. F. G.||Wilson. W. T. (Westhoughton)|
|Edwards, Enoth (Hanley)||Money. L. G. Chiozza|
|Fen wick, Charles||Morpeth, Viscount||TELLERS FOR THE NOES— Mr.|
|Fullerton. Hugh||O'Donnell, C. J. (Walworth)||Jowett and Mr. Charles|
|Gardner, Ernest (Berks, East)||Parker, James (Halifax)||Duncan.|
|Gill, A. H.||Pearce, Robert (Staffs., Leek)|
|Glover, Thomas||Raphael, Herbert H.|
§ MR. VICTOR CAVENDISH
asked whether after the Committee had passed certain words it was in the power of the Committee to raise the question of the interpretation of those words.
said he did not think there would be any difficulty in this case; because Subsection (7) gave the definitions and the question would properly arise then.
§ MR. J. F. MASON
moved to leave out the words "the rate of ninepence," in order to insert "three-fourths of the normal rate. "He proposed this Amendment in no spirit of antagonism, but with a view to throwing out a suggestion which might be useful to the Chancellor of the Exchequer in dealing with this subject in the future. It would simplify his work and make the intention clear in regard to the two classes of income-tax payers. As the Bill stood at present the two classes were dealt with in two clauses of the Bill. On the question of a decrease or increase in the normal rate the case of the 9d. tax-payers would have to be considered by itself, but his suggestion was that some ratio between the two 768 classes should be established, so that if the normal tax was increased the special tax should be increased also. He was quite aware that this might be a difficult thing to do, and might mean calculations going into farthings, but after all that was not serious. Since he put down the Amendment it had occurred to him that it might be easier instead of a ratio to-establish a difference, and say that the rate in one class should be so many pence less than the other. His desire was that something should indicate that it was not the intention to increase or decrease the rate in one class, and leave the other fixed for all time.
In page 7, line 16, to leave out the words 'the rate of ninepence,' and insert the words 'three-fourths of the normal rate.'" — (Mr. J. Mason)
§ Question proposed. "That the word proposed to be left out stand part of the clause."
§ MR. McKENNA
said that the hon. Gentleman had admitted the difficulty of applying his Amendment in practice. His real objection to the proposal was that it 769 would be unwise to indicate any desire to bind the action of future Parliaments as to the relation between the two classes of income-tax payers. Special circumstances might arise which would have to be dealt with in the arrangements for a particular year.
§ Sir F. BANBURY
said he agreed with the right hon. Gentleman that it would be unwise to fix a ratio between the two classes of income-tax payers. As he understood the position, the reason for the difference of abatement was that the Chancellor of the Exchequer found he was unable to reduce the income-tax which at present stood at Is., and the right hon. Gentleman had also told the Committee that he did not mean that that shilling tax should be imposed for ever—that it was impossible to reduce it this year, but that perhaps it might be possible to reduce it in the next three or four years. The right hon. Gentleman had admitted that it was a heavy charge on those who had earned income only, and therefore earned incomes under £2,000 were to be charged at the rate of 9d. personally he did not approve of one of, say, £2,100, and another tax for a man who had an income of £2,000. However, he agreed that the proposal of the right hon. Gentleman the Chancellor of the Exchequer was the best solution of a very difficult case.
§ MR. MYER (Lambeth, N.)
said that, as to the abatement on incomes of £2,000 and under, he failed to see the difference between earned and unearned income. There were many persons, particularly women, who were in receipt of a certain income from private property, and they were deserving of a good deal of consideration on the part of the Government.
§ MR. AUSTEN CHAMBERLAIN
said that the hon. [Member for the City of London was of a very sanguine nature, if he expected that the whole income-tax would be shortly collected at 9d. He did not think that the Chancellor of the Exchequer had even expressed a pious opinion that he would be able to reduce the income- 770 tax soon. It must be remembered that if the House sanctioned the right hon. Gentleman's attempt at differentiation between the two classes of income-tax payers, a step would be taken on which there was no going back. He wished to ask the Chancellor of the Exchequer what was in his mind when he stated in the course of the debate that the normal course should be to maintain the difference between the two classes at 3d., or whether in speaking of elasticity he only referred to incomes on a higher scale.
§ MR. ASQUITH
said that when he spoke of the greater elasticity which in his view would be given to the tax by this differentiation he had in his mind primarily the tax as a whole. He thought it much easier in a case of emergency to raise the tax as a whole. Every Chancellor of the Exchequer, however, had to consider the question for himself.
§ Amendment, by leave, withdrawn.
§ MR. HICKS BEACH (Gloucestershire, Tewkesbury)
moved to leave out from Sub-section 2 of Clause 18 words which provided that relief under this section should only be given in respect of such earned income, if any, as remained after deducting the amount on which a person was relieved of the tax under Section 8 of the Finance Act, 1898, and Section 54 of the Income Tax Act, 1853. He said it appeared from the sub-section under consideration that a man with, say, £300 a year, of which £160 was earned and £140 unearned, would get no more relief than the man with £300 a year the whole of which was unearned. If the Chancellor of the Exchequer wished to grant relief to persons whose income was earned he ought to do it all through.
In page 7, line 19, to leave out all the words after ' Acts ' to end of sub-section."—(Mr. Hicks Beach,)
§ Question proposed, "That the words proposed to be left out stand part of the clause."771
§ MR. SYDNEY BUXTON
said that under the Bill as it stood no one would be worse off than before; that was to say, all the relief given was in addition to existing relief, and therefore in no case was any injury done. The reason why the abatement would be taken off the earned income in the first place rather than from the unearned portion was a question of administration as well as one of revenue. The real difficulty was in respect of administration.
§ MR. CONOR O'KELLY (Mayo, N.)
asked the Deputy-Chairman whether, when an objection of this kind was taken, it was customary to take account of the number of Members in the House at the time, because he contended there were forty in the House though they might not have been visible to the hon. Member for North Down.
§ House counted; and forty Members being found present—
§ MR. SYDNEY BUXTON
said the administrative difficulty in the way of meeting the proposal of the hon. Member for Tewkesbury was that the whole of the abatement and questions arising in connection therewith would have to stand over until later in the year. At the present moment, in the large majority of cases, the abatement was given at once and without question on the information supplied by the applicant. As regarded the unearned portion of income, in the vast majority of cases the tax was recovered at the source and had to be claimed back by the individual at a later stage. It must be obvious, therefore, that if the abatement was to be taken from both kinds of income combined, instead of from one, the whole of the abatement would have to be claimed at a later stage. From the point of view of both convenience and expense the proposal in the Bill was much better. Another disadvantage which would accrue to the applicants if the Amendment was accepted was that they would have to return the whole 772 of their incomes, to which people somewhat objected. Under the Bill they would only have to return the earned income and the abatement would be granted at once. The proposal would also cause a very considerable loss of revenue, and on the whole the conclusion come to was that the method proposed under the Bill was the better and fairer way.
§ MR. AUSTEN CHAMBERLAIN
said the point was one of such great importance that he regretted they had to discuss it at that hour and in a very thin House. It affected an enormous number of people, and those among the poorest of income-tax payers, who by the inclusion of the words which his hon. friend had moved to leave out were refused the relief which was given to other people in like circumstances. Before he treated the question on its merits he would like to say a few words on the statement made by the Postmaster-General in his defence of this clause as to the administrative difficulties. His refusal to give the proposed relief was based on the fact that the administrative difficulties in the way of the Amendment were too great. He did not think that was so, and he did not think that ought to be made an objection. He viewed with distrust the whole of this attempt at differentiation, because there was no doubt that the administrative difficulties were extremely great, and whatever solution was applied an injustice would be done to a great number of people. But if the Chancellor of the Exchequer was going to carry out this principle of differentiation he must be prepared to face administrative difficulties in order that he might deal out even-handed justice. Another objection taken to his hon. friend's proposal was that if it were adopted it would be necessary for applicants for relief to disclose the whole of their incomes— a thing which the taxpayer very much disliked doing. But he would have to do that under the Finance Bill. The Postmaster-General did not appear to have read the Bill he was attempting to defend. How was a man to prove that his income was below, say, £2,000 from all sources, without making such a disclosure?
§ MR. AUSTEN CHAMBERLAIN
Did the right hon. Gentleman seriously put that forward as the reason? That was an argument against the whole clause. If the right hon. Gentleman said it was so distasteful to the taxpayer then these administrative difficulties would not hold water for a moment. There might be administrative difficulties in the eyes of the Chancellor of the Exchequer, but he had not heard them. So far as they were stated by the Postmaster-General, he thought he had proved that they would not hold water. As to the merits of the case, they had long agreed that in regard to incomes up to £700 a year income-tax should not be collected on the whole, but that certain abatements should be allowed. The Chancellor of the Exchequer had now introduced an entirely new principle —namely, that incomes dependent on personal exertion should be charged at a lower rate than those which arose from investment, and he made a qualification that the relief should only be given in the case of incomes which did not exceed a certain sum. From the fact that a limit was fixed it might logically be deduced that the smaller the income the greater was the claim to relief. But the right hon. Gentleman was refusing the benefit of the new relief to the poorest people in many cases. In the case of a man with an income of £300, £160 derived from his own exertions and £140 unearned, by the words they were now discussing the Chancellor of the Exchequer would exclude him from relief, his first ground being that he left the man no worse off than before. That was true, but the only reason for putting the clause into the Bill was that people in such a position should have some relief. The second ground was that of administrative difficulty. No doubt it would cost the right hon. Gentleman a certain amount of money if he gave way, but if he did not he would create a sense of injustice in the minds of the people deprived of relief. Supposing a man earned £300 a year, £1(30 of that would be exempt from tax under the old abatement, and on the remaining £140 he would pay tax at 9d. What possible justification was there for 774 treating the old abatement in the first case in such a way as to reduce the new relief? It was unjust and illogical, and the injustice became the greater in the case of the smallest incomes.
§ MR. ASQUITH
said the argument put forward by the right hon. Gentleman was just the kind of argument that he expected to receive. The Government gave relief, and in the Bill made that relief as wide as possible, consistently with administrative convenience and the purposes of revenue, and then hon. and right hon. Gentlemen opposite-selected the case of a person who did not get any benefit, because he was just outside the changes put forward by the Government, and argued that case as a reason for not giving any relief whatever. He would take the case of two men with £300 a year. Under the existing law they got the usual abatement. In the one case the whole income was derived from earnings, while in the other £140 a year came from investments and £160 from earnings. Which of those two men was the better off and less entitled to relief? Surely the man who had £140' a year from investments. In other words, the man who ought rather to be relieved was the man whose whole income was derived from his earnings. He would be-the man who got relief, the other man would not. And if any other concrete case were taken, it would work out in the same way. They could not have a better illustration of the essential justice of the Government's proposal. The point only arose in regard to that class of cases which were already within the abatement lines. The income-tax payer who was getting less than £700 a year, already under the present system received considerable relief, and he was not sure whether the hardest case was not the case of the man with just over £700 a year, who got no relief at all. With regard to those who were under £700 they had provided that the new form of relief should not be in substitution for, but in addition to, that which they already received; but when they came within that class it was perfectly fair that the discrimination, so far as they made it, should be in proportion to, and according as, the income was derived wholly or mainly from investments- 775 They took the income and taxed it as it was, and if the man wanted abatement or relief, he could claim it just as now, and from the administrative point of view the plan of the Government was obviously much simpler than that suggested by the right hon. Gentleman opposite, for it combined the existing arrangement with the new arrangement which it was the intention of this Bill to establish.
§ MR. AUSTEN CHAMBERLAIN
said it did not seem to him that it was justice to a man with an earned income of £1,999 that he should pay at the rate of 9d. because the income was earned, and that a man who had £160 of earned income and £140 of unearned should be denied that relief on his unearned income.
§ MR. AUSTEN CHAMBERLAIN
said the man with such an income got no advantage. He was refused the advantage which the man of £1,999 got. He did not follow the administrative difficulty to which reference had been made. A man could make a return under either system. If he claimed under the Chancellor of the Exchequer's clause he had got to show his whole income yearly. If he was entitled to any abatement under the old Act he had got to get that back from the Inland Revenue who had previously collected it. He would have to do that under any circumstances, and what the Chancellor of the Exchequer was trying to do was to save the administration some trouble by making the taxpayers pay a higher rate. He was perfectly frank about these matters; he did not pretend to think that these changes were good, and, for the very reasons he had stated, these difficulties would arise, and they would implant a great sense of injustice in the minds of a large number of people, and he thought that that sense of injustice would be well founded unless the Chancellor of the Exchequer made some concession in these matters.
§ *Mr. GEORGE D. FABER (York)
said that a man with £300 a year earned income was at present entitled 776 to abatement in regard to £160 of it, and therefore he was taxed on £140 a year. Would he be entitled to the differentiation of 3d on the whole of his £300 or only on the £140 after deducting the. £160? Let them take the case of an income of £700 or over; that got no abatement at all because it was above the abatement line, but if a man had above £700 and under £2,000 a year earned income he was to be entitled to the differential relief of 3d. in the £. Surely that was very hard when they compared it with the poorer class of incomes which had been referred to. They were telling the whole country that everybody under £2,000 was to pay a rate of 9d. if his income was earned, and therefore if a man had an income of £300, he should have the benefit of the differentiation of 3d. upon the whole of the £300 and not merely on £140, the balance remaining after deducting the abatement. Therefore the man with an income of under £700 would not get the benefit of the full differentiation which was to be given to the man with £700 up to £2,000. It was quite clear to his mind that incomes under £700 were going to suffer very serious injustice.
§ MR. HICKS BEACH
said the Chancellor of the Exchequer had drawn the analogy of a man with an income of. £300 a year all earned. He ventured to draw the analogy of a man with an income of £300 of which £160 was earned and £140 unearned. It was quite true that the man whose income of £300 was all earned ought to have the preference over the man who only earned £160 of his £300 a year, but the man of £160 earned and £140 unearned was no better off and in no better position than the man with an unearned income of £300 a year. That was a point which the Chancellor of the Exchequer had not taken up. The Postmaster-General had told them that nobody would suffer. It was true that nobody would be worse off under this section than before. The whole point of the clause was to give the people relief in respect of earned income; but under the section as it stood they were not going to give relief to the people with small incomes, though they were entitled to it. The right hon. Gentleman had used another argument which lad reference to the loss of revenue, but 777 that was no reason why the Government should not give the advantage to the people with small incomes instead of to the people with large incomes. If it was the case that they would lose a considerable amount of revenue, then the only thins; they ought to do was to reduce the limit of £2,000 a year to £1,500. It was not the people with higher incomes who ought to get so much relief; it was the people with smaller incomes. The right hon. Gentleman had made a great point of the administrative difficulty in regard to the question of claiming abatements, and of the hardship of claimants who had to lose control over a sum of money for a considerable time; but he had heard people who were entitled to claim abatement declare that they found the system of repayment very pleasant, and even went so far as to assert that they preferred to have the income-tax at a higher figure because they got back a larger sum of money at the time they got their abatement.
§ *Mr. LUPTON
asked the Committee to consider, by way of illustration, the case of a man with an income of £800 a year, and another man with £300 a year. If there were no abatement at all, one of them would pay £15 a year and the other £40. Under the system of abatement which existed before this Bill the man with £300 a year had an abatement of £8, whilst the £800 a year man got no abatement at all. Under the new Act the £300 a year man got an abatement of 3d. on £140 so that he was allowed £9 15s., whilst the other man got 3d. on his £800 which amounted to £10. The man with an income of £800 a year paid £30, and the £300 a year man paid £4 5s. It seemed to him that the £300 a year man had nothing to complain about whatever.
§ SIR F. BANBURY
said that although the hon. Member for Sleaford had given his illustration very clearly he was afraid the hon. Member had not grasped the meaning of this proposal. The hon. Member had apparently founded his case upon the assumption that the whole of the £800 a year was earned and the whole of the £300 as well. The case cited by
§ his hon. friend was one in which part o f the income was earned and part unearned.
§ MR. T. L. CORBETT (Down, N.)
regretted that hon. Members opposite did not oftener endeavour to assist the Government in shaping these financial proposals in the way they attempted to do on the Opposition side of the House. The real truth of the matter was that all sources of income were being so rapidly diminished under this Government that less and less interest was being taken in the income-tax. There were still a few small incomes left, and he thought the Government, through the solitary Undersecretary who was now sitting on the Treasury Bench might endeavour to say something in defence of those who were earning small incomes. No reply had been advanced by the Government, and he hoped the Financial Secretary to the Treasury would explain to the Committee how these small incomes would be protected under these proposals.
§ MR. E. GARDNER (Berkshire, Wokingham)
asked the Committee to consider the case of two persons, one with an income of £300 a year all earned, and another with £160 earned and £140 unearned. Under the existing system the man with £300 a year got an abatement of £160, leaving him £140 on which he had now to pay £7. Under the new system on that £140 he would have to pay 9d. instead of Is., and so he would get off with paying £5 5s. The saving fellow, however, who had £160 earned, and £140 unearned which he had saved, would get his abatement on the £160, but he would have to pay Is. on the £140. That supported the view which had been expressed that this allowance of 3d. was in the nature of a fugitive sum of money. [Opposition cries of "Reply."]
§ MR. RUNCIMAN
said that all these matters had been fully dealt with by the Chancellor of the Exchequer and the Postmaster-General, and any further reply would only be repetition.
§ Question put.
§ The Committee divided: —Ayes, 232; Noes, 39. (Division List No. 267.)779
|Abraham, William (Rhondda)||Allen,A. Acland (Christchurch)||Asquith,Rt.Hon.HerbertHenry|
|Acland, Francis Dyke||Allen, Charles P. (Stroud)||Astbury, John Meir|
|Baker, Sir John (Portsmouth)||Glendinning, R. G.||Morton, Alpheus Cleophas|
|Baker, Joseph A. (Finsbury, E.)||Glover, Thomas||Murray. James|
|Balfour, Robert (Lanark)||Goddard, Daniel Ford||Myer. Horatio|
|Barker, John||Gooch, George Peabody||Newnes. F. (Notts, Basset law)|
|Barlow, Percy (Bedford)||Grant, Corrie||Newnes, Sir George (Swansea)-|
|Barry, Redmond J. (Tyrone, N.)||Greenwood, G. (Peterborough)||Nicholls, George|
|Beale, W. P.||Gulland, John W.||Nicholson, Charles N. (Donc'r.)|
|Beauchamp, E.||Gurdon, Sir W. Brampton||Norton, Capt. Cecil William|
|Beck, A. Cecil||Hall, Frederick||Parker, James (Halifax)|
|Bell, Richard||Hardy, George A. (Suffolk)||Partington. Oswald|
|Bellairs, Carlyon||Hart-Davies, T.||Pearce, Robert (Staffs., Leek)|
|Benn, W.(T'w'r Hamlets, S. Geo.||Harvey, A. G. C. (Rochdale)||Pearce, William (Limehouse)|
|Berridge, T. H. D.||Harvey, W.E.(Derbyshire, N. E.||Price, Robert John(Norfolk, E.)|
|Bethell, Sir J.H. (Essex, Romf''rd)||Haslam, Lewis (Monmouth)||Priestley. Arthur (Grantham)|
|Billson, Sir Alfred||Haworth, Arthur A.||Priestley, W.E.B. (Bradford, E.)|
|Birrell, Rt. Hon. Augustine||Hazel, Dr. A. E.||Pullar, Sir Robert|
|Black, Arthur W.||Hedges, A. Paget||Radford, G. H.|
|Boulton, A. C. F.||Helme, Norval Watson||Raphael. Herbert H.|
|Brace, William||Henderson, J. M. (Aberdeen, W.)||Rees, J. D.|
|Bramsdon, T. A.||Henry, Charles S.||Rendall, Athelstan|
|Brigg, John||Herbert, Col. Sir Ivor (Mon, S.)||Richardson. A.|
|Brocklehurst, W. B.||Herbert, T. Arnold (Wycombe)||Ridsdale, E. A.|
|Brodie, H. C.||Hobart, Sir Robert||Roberts, Charles H. (Lincoln)|
|Brooke, Stopford||Holden. E. Hopkinson||Robertson, Sir G. Scott (Bradf'd|
|Bryce, J. Annan||Holland, Sir William Henry||Robinson. S.|
|Buckmaster, Stanley O.||Holt, Richard Durning||Rogers, F. E. Newman|
|Burns, Rt. Hon. John||Hope, W. Bateman(Somerset, N.||Rowlands, J.|
|Burt, Rt. Hon. Thomas||Horridge, Thomas Gardner||Runciman. Walter|
|Buxton, Rt. Hn. Sydney Charles||Isaacs, Rufus Daniel||Rutherford. V. H. (Brentford)|
|Cairns, Thomas||Jackson, R. S.||Samuel S.M. (Whitechapel)|
|Cameron, Robert||Jardine, Sir J.||Schwann. C. Duncan (Hyde)|
|Carr-Gomm, H. W.||Johnson, John (Gateshead)||Scott, A.H.(Ashton underLyne|
|Causton, Rt. Hn. Richard Knight||Johnson, W. (Nuneaton)||Seaverns, J. H.|
|Chance, Frederick William||Jones, Sir D. Brynmor(Swansea||Shipman. Dr. John G.|
|Cleland, J. W.||Jones, Leif (Appleby)||Smeaton. Donald Mackenzie|
|Clough, William||Jones, William (Carnarvonshire||Soares, Ernest J.|
|Clynes, J. R.||Jowett. F. W.||Stanger. H. Y.|
|Coats, Sir T. Glen(Renfrew, W.)||Kekewich, Sir George||Stanley. Hn. A. Lyulph (Chesh.)|
|Collins, Stephen (Lambeth)||King. Alfred John (Knutsford)||Steadman. W. C.|
|Collins, Sir Wm. J.(S. Pancras, W.||Laidlaw, Robert||Stewart. Halley (Greenock)|
|Cornwall, Sir Edwin A.||Lamb, Edmund G. (Leominster||Strachey. Sir Edward|
|Cory, Clifford John||Lament. Norman||Strauss, E. A. (Abingdon)|
|Cotton, Sir H. J. S.||Layland-Barratt, Francis||Stuart, James (Sunderland)|
|Cowan, W. H.||Leese, Sir Joseph F. (Accrington||Sutherland. J. E.|
|Cremer, Sir William Randal||Lever, A. Levy (Essex. Harwich||Taylor, Theodore C. (Radcliffe)|
|Dalziel, James Henry||Lever, W.H. (Cheshire, Wirral)||Thomas, Sir A.(Glamorgan, E.)|
|Davies, David (Montgomery Co.||Lewis, John Herbert||Thomas, David Alfred (Merthyr|
|Davies. Ellis Wiliam (Eifion)||Lloyd-George, Rt. Hon. David||Thomasson, Franklin|
|Davies, Timothy (Fulham)||Lupton, Arnold||Thompson, J.W.H. (Somerset. E|
|Davies, W. Howell (Bristol, S.)||Luttrell, Hugh Fownes||Torrance. Sir A. M.|
|Dewar, Arthur (Edinburgh, S.)||Lyell. Charles Henry||Toulmin, George|
|Dickinson, W.H. (St. Pancras,N.||Macdonald, J.M.(Falkirk Bg'hs)||Trevelyan. Charles Philips|
|Dobson, Thomas W||M'Callum, John M.||Wadsworth. J.|
|Duckworth. James||M'Crae. George||Walker. H. De R. (Leicester)|
|Dunn, A. Edward (Camborne)||M'Kenna, Rt. Hon. Reginald||Walters, John Tudor|
|Dunne, Major E. Martin(Walsall||M'Laren, Sir C. B. (Leicester)||Walton. Sir John L. (Leeds. S.)|
|Edwards, Enoch (Hanley)||M'Laren, H. D. (Stafford, W.)||Walton. Joseph (Barnsley)|
|Edwards, Sir Francis (Radnor)||M' Micking. Major G.||Wardle. George J.|
|Elibank, Master of||Mallet. Charles E.||Waring. Walter|
|Essex, R. W.||Manfield. Harry (Northants)||Wason, Eugene (Clackmannan|
|Esslemont, George Birnie||Markham, Arthur Basil||Waterlow. D. S.|
|Eve, Harry Trelawney||Marks, G. Croydon (Launceston)||Watt, Henry A.|
|Everett, R. Lacey||Mason. A. E." W. (Coventry)||Weir. James Galloway|
|Faber, G. H. (Boston)||Massie, J.||White. George (Norfolk)|
|Fenwick, Charles||Masterman, C. F. O||White. J.D. (Dumbartonshire)|
|Ferens, T. R.||Menzies. Walter||White. Luke (York, E.R.)|
|Fiennes, Hon. Eustace||Mond. A.||Whitehead. Rowland|
|Findlay, Alexander P||Money, L. G. Chiozza||Whitley, John Henry (Halifax)|
|Fuller, John Michael F.||Montagu, E. S.||Whittaker. Sir Thomas Palmer|
|Fullerton, Hugh M||Montgomery, H. G.||Wiles, Thomas|
|Furness, Sir Christopher||Morgan, G. Hay (Cornwall)||Williams. J. (Glamorgan)|
|Gibb, James (Harrow)||Morrell, Philip||Williamson. A.|
|Gill, A. H.||Morse, L. L.||Wilson, Henry J. (York, W.R.)|
|Wilson, John (Durham, Mid.)||Wilson, W. T. (Westhoughton)||TELLERS FOR THE AYES—Mr.|
|Wilson, J.W. (Worcestersh.N.)||Winfrey, R.||Whiteley and Mr. J. A.|
|Wilson, P. W. (St. Pancras, S.)||Wood, T. M'Kinnon||Pease.|
|Acland, Hood, Ht. Hn. Sir Alex.F||Chamberlain, Rt Hn. J.A.(Worc.||Moore, William|
|Balcarres, Lord||Collings. Rt. Hn. J. (Birmingh'm||Nield, Herbert|
|Banbury, Sir Frederick George||Corbett, T. L. (Down, North)||Powell, Sir Francis Sharp|
|Banner, John. S. Harmood-||Craig, Charles Curtis (Antrim,S.||Rawlinson, John Frederick Peel|
|Barrie, H. T. (Londonderry, N.)||Duncan, Robert(Lanark, Govan||Remnant, James Farquharson|
|Bignold. Sir Arthur||Faber, George Denison (York)||Thomson, W, Mitchell-(Lanark;|
|Bowles, G. Stewart||Fell, Arthur||Turnour, Viscount|
|Boyle, Sir Edward||Forster, Henry William||Walrond, Hon. Lionel|
|Bridgeman, W. Clive||Gordon, J.||Younger, George|
|Brotherton, Edward Allen||Haddock, George R.|
|Campbell, Rt. Hon. J. H. M.||Hill, Sir Clement (Shrewsbury)||TELLERS FOR THE NOES—Mr.|
|Carlile, E. Hildred||Houston, Robert Paterson||Hicks Beach and Mr. Ernest|
|Cave, George||King, Sir Henry Seymour(Hull)||Gardner.|
|Cavendish, Rt. Hn. Victor C. W.||M'Calmont, Colonel James|
|Cecil, Evelyn (Aston Manor)||Magnus, Sir Philip|
Question, "That those words be there inserted," put, and agreed to.
§ *Mr. HICKS BEACH
moved to substitute 31st January for 30th September as the date in the year before which claims for relief under this section must be made. It appeared to him that 30th September was an unnecessarily early date to require a person to make a claim for relief in respect of earned income. He submitted that it was impossible for anybody to say for certain at that date what his income was likely to be before 31st March. It was quite possible that at 30th September a man might have an investment in funds of a rather precarious nature, and, although he might hope to receive a dividend in January or February of the ensuing year, some act. of nature might happen which would prevent the concern from producing the dividend at the time expected. It was obvious that a man who thought on September 30th that he was in receipt of an income of over £2,000 a year would not claim the abatement on the earned portion; but he might find before 31st March that his total income was below £2,000, and that he was therefore entitled to relief on his earned income which he would not be able to receive as he had failed to send in a claim. There was an alternative case in which a man might send in a return before 31st September, and claim abatement in the full belief that his income would not rise above £2,000, but something might happen which would give him an income above that figure before 31st March in the following year. That man would make a claim that he was entitled to an abatement on the earned portion of his 782 income, but at the end of the financial year he would not be entitled to have that abatement. He would like to get an explanation as to the necessity for fixing a date which seemed unnecessarily early.
In page 7, line 39, to leave out the words ' thirtieth day of September,' and insert the words ' thirty-first day of January.' "—(Mr. Hicks Beach.)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. RUNCIMAN
said the hon. Gentleman had quite rightly described the dilemma in which they were placed in regard to the date. The arrangement of the claims and returns sent in must of necessity involve a great deal of work on the Inland Revenue Department. At present there were 700,000 claims for abatements, and 600,000 of these were dealt with at the time of assessment. All that the clause required was that a claim should be made before 31st September. The special administrative reason was this. If a claim was made after the Commissioners had commenced their sittings in October there would be an enormous addition to the work of the Inland Revenue officials. The Government could not see their way to make the date for sending in claims later than 31st September. The position which would arise in the special cases mentioned by the hon. Gentleman were natural and unavoidable. It was quite true that a 783 man might find, contrary to expectation, that his income fell to under £2,000 after sending in his return. That was a case for which he did not see any way of providing. The other suggestion was that a man might get a windfall which would give him an income of over £2,000, and that he would get relief to which he was not entitled. The one case must be set off against the other, and they would balance each other so far as the Revenue was concerned.
§ MR. AUSTEN CHAMBERLAIN
said he appreciated the administrative difficulty to which the Financial Secretary had alluded. The hon. Gentleman admitted, as he was obliged to do, that cases might arise where one man would be charged more and another less than he ought to pay. The hon. Gentleman said that such cases could not be prevented, and that, from the point of view of the Revenue, the one case might be set off against the other. The man who had paid too little would not be inclined to complain, and he might be inclined to contribute "conscience money" to the Exchequer as many people did now. The case of the other man who had paid too much was one of real hardship. He did not wish to press for an immediate decision on the point, but he thought it was worthy of the consideration of the ' Government to see whether they could not grant an opportunity to an individual to make an amended return where he could show that new facts had arisen which entitled him to make the claim for relief after the date when his statement ought to have been made. He asked the hon. Gentleman to convey that suggestion to the Chancellor of the Exchequer with a view to its being considered.
§ MR. RUNCIMAN
said he would do that, but at the same time the right hon. Gentleman must see how dangerous it would be to give relief in all cases under the circumstances which had been indicated.
§ MR. AUSTEN CHAMBERLAIN
said the onus of proof would rest on the man who claimed to make an amended return.
§ SIR F. BANBURY,
in supporting the Amendment, maintained that the case mentioned by his hon. friend, in which a man unexpectedly found that his income did not come up to the amount stated in his return, was one where something should be done to give relief. The difficulty would, in some measure, be met by changing the date as proposed by the Amendment. He hoped the right hon. Gentleman would consider the point which had been raised by the Amendment of the hon. Member for Tewkesbury. This was only another instance of the great difficulty which lay at the root of any attempt to graduate the income-tax.
§ SIR F. BANBURY (on behalf of Lord R. Cecil)
moved to insert after the words "earned income." the words "whether by way of salary or share of profits for any office, or employment of profit in the year of assessment." The reason for moving the Amendment was very simple. His noble friend had had a case brought before him of certain partners in a business who, for private reasons, formed the business into a limited liability company, and they decided that their remuneration should be by way of dividends paid to the shareholders by the company, and not by way of salary. It was extremely doubtful whether in such a case these persons would be entitled to the abatement of 3d. in the pound, because it might be held that they were not receiving an earned income, but a share in the dividends of the company. He believed that the Chancellor of the Exchequer had told his noble friend that such a case was provided for, but his noble friend disagreed with the right hon. Gentleman.
§ SIR F. BANBURY
said that his noble friend had told him that in his opinion the Chancellor of the Exchequer was mistaken, and that that was the reason why he had requested him to move this Amendment. If the Chancellor of the 785 Exchequer admitted the justice of its principle, he might accept the Amendment or insert words giving effect to it.
In page 7, line 12, after the second word ' income,' to insert the words ' whether by way of salary or share of profits for any office, or employment of profit in the year of assessment.' "—(Sir F. Banbury.)
§ Question proposed, "That those words be there inserted."
§ MR. ASQUITH
said he quite agreed that this was a case which ought to come within the definition, and he thought it did. He had pointed out to the noble Lord the Member for Marylebone that his Amendment were limiting words. The word "remuneration" was carefully selected after a great deal of consideration, and any form of remuneration, whether by way of direct payment of salary, or the more indirect methods of commission or share of profits, was certainly covered. The real objection to the Amendment was that it would limit, according to the principles of legal construction, the wide sense of the term "remuneration" standing alone. The Amendment would be held by the Court to exclude, for example, remuneration by way of commission, and to apply only to cases of salary or share of profits. Wherever it could be shown that the whole of a man's income or a specific part, in whatever form it was received, was received by him in the way of remuneration, it. would fall within "earned income." and therefore would come within the abatement.
§ SIR F. BANBURY
asked whether it would not suffice to satisfy the Income- tax Commissioners for such persons as he. had described to say: " We receive no, salary for the work we do, but we do receive a share of the dividends, and we claim that that is our remuneration."
§ MR. ASQUITH
said that if the contract between them and the company was that they should not be paid a salary but a share of the profits, undoubtedly it would.
§ SIR F. BANBURY
said that under these circumstances he asked leave to withdraw the Amendment, on the under- 786 standing that if his noble friend was not satisfied he would be able to raise the question on the Report stage.
§ MR. AUSTEN CHAMBERLAIN
asked if the whole of the profits of a private company would be treated as earned income.
§ MR. ASQUITH
said that where a partnership was transferred to a company, composed of the same people, and carrying on the business in the same way, and not offering their shares for public subscription, it was the clear intention of the Government that that should not make any difference at all. The remuneration in that case as provided for by the articles of association would still be treated. as earned income.
§ Amendment, by leave, withdrawn.
§ SIR SEYMOUR KING (Hull, Central)
moved an Amendment to bring within the definition of earned income "any pension or superannuation allowance not paid out of funds contributed by the recipient, received by the individual by reason of his holding, or having held" any office or employment of profit. The cases he had in his mind were of various sorts. There was the case of clerks in banks and mercantile firms, whose pensions were only granted after years of good service. During the whole of the time no rights accrued until the employee arrived at a certain age. The clerks themselves subscribed nothing for their pensions, and they could not enforce their claims to pensions. It was not a question of a contract entered into at the time they engaged, but was a free gift on the part of the employers. In a case like that there could be no question that the pension came directly within the limitation of an earned income. He would next take the case of the military and civil services. All the regulations affecting those services began by saying that the amount of pension might be determined by the length of service. The full pension admissible was not to be given as a matter of course, or unless the service rendered had been really approved. In other words, there was no absolute claim or right to the pension, which depended on faithful service. Future good conduct was an implied condition of every kind of 787 pension. The Government reserved to itself the right of withdrawing or withholding the pension if the pensioner were guilty of serious crime or gross misdemeanour, and in the case of the Army the regulations were still more stringent. It was impossible to argue that the pension was an acquired property like savings which a man had laid by, or an annuity he had bought which could not be taken from him. There was a further point. An income derived from any source of property could be attached at law. There was a class of pension which presented some difficulty, namely, that in which half the pension was due to a deduction of 4 per cent. of the salary. He admitted the difficulties in which no doubt the Government found themselves owing to the new position of affairs created by the report of the Income-tax Committee. He was entirely in sympathy with them in the course they had taken, and he quite approved of the limitation. They had met a demand in particular cases of barristers, doctors, journalists, and artists, and they would be doing a fair, just, and exceedingly popular act if they accepted his Amendment. He was perfectly prepared to accept any other words the Government suggested if they came to the same conclusion.
In page 8, line 21, to leave, out the word ' from,' and insert the words ' and any pension or superannuation allowance not paid out of funds contributed by the recipient received by the individual by reason of his holding or having held.' "—(Sir Seymour King.)
§ Question proposed, " That the word ' from ' stand part of the clause."
§ MR. ASQUITH
said he must confess that this question had given him cause for anxious consideration. He was anxious to include within the scope of the clause all those cases which were cognate to it, but on the other hand he was quite as anxious not to accept expressly or by implication an Amendment which would admit to the benefit of the clause classes of income which they had deliberately excepted from it. The real question was whether a pension ought to be regarded in some form or another as remuneration or as a form of investment. He had not been able 788 to reconcile the decision at which he had arrived with any strict and logical rule, but after giving full consideration to the matter, in consultation with his colleagues, he had come to the conclusion that the pensioner, speaking in broad and general terms, came in reason and equity, and in point of policy, upon the side of the line to which relief ought to be given. He had not tome to that conclusion without a great deal of heart-searching and doubt. Broadly speaking, the exceptions were so small as to be hardly worth special treatment—a pension might be regarded as part of the stipulated remuneration for the service which the holder of the office actually rendered to his employer. It was part of the remuneration, not immediately paid, and formed part of the consideration of the bargain when the contract was made. In that respect it seemed to him to stand on an entirely different footing from savings voluntarily and spontaneously made quite outside the contract of employment. In the next place, so far as the individual pensioner was concerned—he was not now dealing with the case of widows and children— the pension ended with the pensioner's life. That was also the case with a life annuity. But a life annuity was an investment which a man purchased for the sake of securing a larger income during his life. He might, if he pleased, have invested the purchase money in a form of security which would have endured after his life. In the case of a pension there was no such option. A third and an important point was that a pension, or the expectation or possibility of receiving a pension, was not a form of property in the ordinary sense. It could not be bought and sold, nor could it be bequeathed to children. Even while the pensioner was alive it could not be dealt with like any other investment as a form of property that could be put on the market to be realised at the best price. Consequently, after much hesitation and having reviewed the whole case, it seemed to him that those three considerations justified him in assenting to the principle that the income of a pensioner should be treated as an earned income for the purposes of this clause. He believed that was a conclusion which would lead to general 789 satisfaction. Lest ho should be supposed to exaggerate his virtue in the matter or his amenity to argument, he would say that from a Revenue point of view it was a matter of very slight importance. As a matter of fact there were very few pensions in this country which did not fall within the abatement limit of £700 a year. The additional relief that would now be given to pensioners, though substantial, was not so great as it was in the case of the class above the £700 limit. But that had not actually influenced his determination in the matter, which was based on the general interest and grounds of justice. If the Committee was disposed to concur in this solution of the question, he would suggest that the hon. Member should withdraw his Amendment, whose limitation he was not disposed to accept, in order that he might move an Amendment embodying his proposal.
§ Amendment, by leave, withdrawn.
'To leave out in line 22 the words, ' in the year of assessment' in order to insert' including any pension, superannuation allowance, or deferred pay in respect of past services in that office or employment.' "—(Mr. Asquith.)
§ Question, "That the words proposed to be left out stand part" put, and negatived.
§ Question proposed, " That those words be there inserted."
§ MR. AUSTEN CHAMBERLAIN
said he was sure the concession which the right hon. Gentleman had made met with the general approbation of the Committee. Extreme hardship would have been involved in treating as unearned incomes pensions which, in fact, could only be earned by long and faithful service of a meritorious kind. He did not want to criticise the distinction which the Chancellor of the Exchequer had drawn between these pensions and other sources of income more or less cognate. He asked the Chancellor of the Exchequer whether the words of his Amendment would cover 790 a common case in the Civil Service, that of a man who had earned his pension partly by service in one Department and partly by service in another.
§ MR. ASQUITH
said he would consider the point, and if necessary propose words to cover such a case on Report.
§ *MR. LUPTON
expressed his regret that the Chancellor of the Exchequer had made this concession. There had now begun an appeal ad misericordiam [cries of "No"] The original Amendment was not proposed on that ground, but on the ground that a man or woman earned a precarious income which terminated as soon as their life and vigour terminated. But in the case of a pensioner the question of precarious income did not arise. There were many men and women trying to push their way in life by some trade or profession and who found it difficult to bring up a family. But this concession the House would agree would go to pensioners who had fought the fight and won, because they had secured ample pensions. They were doing no work whatever for their country and were simply vegetating upon an ample pension—he said ample pension because in the case of a pensioner with £320 a year there was already an abatement of one half of his income. These pensioners voted generally for very large expenditure on bloated armaments and were ready to vote for a war on every possible opportunity. There was no reason whatever for making an additional allowance to them. The abatement of £160 was quite enough in their case. The Chancellor of the Exchequer had opened a very wide door. The concession could not be for the good of the community. People who voted for great national expenditure should be made to pay for it. If money were deducted from wages each Week, persons would be very careful how they embarked on war. In the case of richer people who were doing nothing, but were simply eating and drinking and wearing good clothes, he saw no reason whatever why they should be relieved from taxation which had to be paid by working people.
§ *MR. FORSTER (Kent, Sevenoaks)
said he wished to ask one question under the 791 Amendment. There was no question that retired pay would be covered, but was it intended that good service pay should be included? He thought that the name itself implied that it had been earned. He did not know whether this point had occurred to the Chancellor of the Exchequer, but he was sure that he would consider it in order to see whether it could be included. He thought that pensions for wounds were clearly included.
§ MR. ASQUITH
I will see what can be done. I intended to include it, but I will see whether other words are necessary.
§ *MR. SMEATON (Stirlingshire)
said he rose to congratulate the right hon. Gentleman, and he was sure that hundreds of pensioners would be very grateful to him for the concession which he had so gracefully made. Still he agreed with many hon. Members of the House that it was not in reality a concession at all but a matter of strict justice, and legally as well as morally the concession was justified. It was in fact unanimously admitted both by the givers and the recipients that pension was neither more nor less than deferred pay; and after all that was the best criterion of what a pension meant. It was the wages or salary that had been kept back by the employer and preserved for the employee against the time when he ceased to work. The right hon. Gentleman in discussing this matter had said that the distinction between the pensioner and the person who ac- cumulated savings was very thin, but he would venture to say that it was a very important one. The man who voluntarily saved money established a capital sum which he could set aside for his family, whereas the sum compulsorily accumulated by the employer in order to provide for his employee's pension, savings and pension both vanished, or rather—parodox as it might appear—the employer had the reversion of both on the death of the pensioner. That was a very substantial difference. In the case of family pensions it was a little difficult, for technical reasons, to place the case on very strong grounds. Under the Finance Act of 1894, Clause 15, Subsection 3, all family pensions granted by the 792 Government of India were expressly ex-empted from estate duty, notwithstanding that those were contributed to by the deceased officers themselves. The point was this: The savings which had been contributed by the deceased officers and which formed a. part of the pension fund were regarded as earnings., and he thought that would be a very strong precedent now. At that time there was no distinction between earned and unearned income, and what struck him as a remarkable fact- about this particular exemption was that the money saved and accumulated at the end of the officer's life was regarded, not as capital yielding an income, but as an earned sum of money. He took it that now that earnings were to be exempt from a certain part of the income-tax, this precedent to which he had referred ought to be taken advantage of, and the family pensions considered in the same light as they were considered under the Act of 1894. The right hon. Gentleman himself had quoted the case of the poor widow referred to by Mr. Gladstone—a widow with £300 a year derived from investments. But in this case the pension was not derived from investments, but from compulsory deductions from the bread-winner's pay, and the widow had to bring up a family: yet she would (unless the lower rate were applied to her allowance) be taxed at a higher rate than the small grocer who supplied her with goods, and who would pay only 9d. in the £ while she would have to pay Is. He hoped that this comparison, by Mr. Gladstone might, in this case, be considered, even if it approached to something like the plea ad misericordiam of which so much had been jauntily made by the hon. Member for Sleaford. Although that might be so, still the comparison was such, he thought, that it ought to weigh with the right hon. Gentleman in considering whether it was not common justice to give to the widow, who had a family to support, under very great stress, often in ill-health and in circumstances of great difficulty, the exemption which her grocer was to enjoy. He hoped the Chancellor would adopt the-view taken by Mr. Gladstone and by Sir William Harcourt in 1894. and extend the concession of the reduced rate of income-tax to the widows' pension.
§ *MR. REES (Montgomery Boroughs)
said the hon. Member for Sleaford had said that pensioners ate and drank, wore good clothes, and were always in favour of war and voted for it. To eat and drink was necessary to the preservation of life, to wear good clothes was a comfort not only to the wearer, but to the company he frequented, and it was true that pensioners were not as a rule peace at any price men. He might inform the hon. Member that pensioners who had spent their lives in responsible situations were not likely to adopt the views he had expressed on that subject or on vaccination, or on any other subject, and it was extraordinary that the hon. Member, who regarded it as an intolerable hardship that parents should have to carry their children for a mile or two in order to obtain exemption certificates, should speak in this hard-hearted manner of men who had served their country well. It was simply trifling with a serious subject to describe a class of men who had earned pensions by hard work and a zealous performance of their duty in the terms used by the hon. Member for Sleaford. When he brought this matter forward on a previous occasion hon. Members below the gangway appeared to indulge in ironical cheers, as much as to say, " This man is speaking on behalf of his own pension." He might mention that the concession of the lower rate for which he pleaded would not affect himself, but although he would not profit by these proposals the vast majority of pensioners would profit, and they were a class of people who stood greatly in need of the relief which the Chancellor of the Exchequer had announced. The hon. Member for Sleaford had alluded to the great pensions drawn by public servants. He would remind the hon. Member that there were public servants and public servants, and that men who had represented their country abroad were not extravagantly rich on what he believed to be the largest pension drawn, viz. £1,750 a year. Indian civil servants with families were poor men on £1,000. This was a very serious question, and both the House and the country were to be congratulated upon. the decision which the Chancellor of the Exchequer had just announced in regard to the matter. As the hon. Member for 794 Hull had withdrawn his proposal, it would not now be necessary for him to move the Amendment to it which stood in his name on the Paper. Otherwise the hon. Member's proposal would have been open to serious objection from the point of view of the Indian pensioners. Nor would it now be necessary for him to move the substantive Amendment standing in his name. As regarded the widows and children, the Indian case was quite distinct from any other, because the pension which went to the widow was literally drawn from sums contributed by the pensioner during his life, such sums being earned income at the time they were devoted to this purpose by the deceased husband. In that respect he was in complete agreement with the hon. Member for Stirlingshire. It frequently happened that such pensions were the sole support of these widows. He submitted that the case of the widows was an exceedingly strong one, and as the right hon. Gentleman was now proceeding on entirely right and satisfactory lines, perhaps he would be able to extend the same measure of justice to the widows which he had extended to the pensioners.
§ MR. MEYSEY-THOMPSON (Staffordshire, Handsworth)
said the hon. Member for Sleaford had spoken of pensioners as a class who lived a life of eating and drinking, but he seemed to ignore the fact that a great many of them devoted the remainder of their lives to the service of their country, some of them in Parliament. If a man accumulated wealth in business he was able to end his life in comfort, and if they desired to secure the best men for the service of the State they were bound to see that at the end of their faithful service they were not placed in any worse position than those who had spent their lives in business. He thought the Chancellor of the Exchequer had taken a very wise course in the line he had adopted, and one which would tend to induce the best men in the country to devote their services to the State.
§ *Sir J. JARDINE (Roxburghshire)
asked if the concession which the Chancellor of the Exchequer had announced would apply to those cases where a servant had been employed for a great many years without any 795 promise of a pension, and in which in consideration of, his excellent services his employers awarded him a pension at the end of that service. As to the widows and children, being himself interested as an Indian pensioner, it would not be becoming for him to advance any arguments on that subject. He might, however, inform the Committee what was the practice of the Bombay Civil Service Fund, of which he was once the Secretary. When a man entered that service as a bachelor 2 per cent. of his earnings would be stopped, and that was raised to 3 per cent. the moment he married. Extra subscriptions based on actuarial calculations had to be paid for each son and daughter. He would add that the Government of India, which had vast experience of pension arrangements, treated pension as in essence salary deferred.
§ MR. MORTON (Sutherland)
asked the Chancellor of the Exchequer whether the Amendment covered the case of all who were entitled to pensions for services rendered. He had had many communications on this subject from persons in the city of London, and he was satisfied that the concession now announced would give great satisfaction to a large class who otherwise would have felt aggrieved.
§ MR. YOXALL (Nottingham, W.)
said there was the case of joint income of husband and wife—the former who was still in harness earning his income, and the latter drawing a pension to which she was entitled in respect of her having been connected with some service from which she had retired. The husband would be charged at the 9d. rate, but he wished to be assured that the tax on the wife's pension would also be calculated at the lower rate.
§ MR. ASQUITH
said he would consider that question. In connection with the concession in regard to pensions which he had just made, he did not propose to state the form of words now; he would like to have more time to consider the exact form which the Amendment should take. He would bring up the Amendment on the Report Stage.
§ Question put, and agreed to, "That those words be there inserted."
§ MR. ASQUITH
moved an Amendment providing that where an income is derived from the carrying on or exercise of a profession, trade, or vocation, it shall be regarded as earned if the individual carries on the vocation "either as an individual, or, in the case of a partnership, as a partner personally acting therein." He said the object of this addition was to get rid of cases in which the person who was claiming relief had really no active concern in the earning of the income at all. There were cases in which certain companies, which were not incorporated, consisted of as many as 200 or 300 persons, who were technically partners, though in all other respects they were exactly like shareholders in a joint stock company, receiving profits, but taking no part in the management of the business.
Amendment proposed —
In page 8, line 30, after the word vocation,' to insert the words,' either as an individual, or, in the case of a partnership, as a partner personally acting therein.' "—(Mr. Asquith.)
§ MR. HICKS BEACH
moved to add, after the words last inserted, "or any income derived by a landowner from farming his own land." He said that if a tradesman invested a certain amount of money in a business, and was allowed to be charged on the whole of his income as being earned, it was only fair and just that a man who chose to invest his money in the purchase of a small holding and farmed it himself should come within the classes whose incomes were regarded as earned. It was obvious that a man who invested money in land, and farmed the land himself, devoted the whole of his energies to that work, just as much as a man in any other form of business devoted his energies to the work in connection 797 therewith. The probability was that if he did not devote his whole energies to the cultivation of the land he would come to grief; but the man who devoted his energies to develop a small estate was deserving of encouragement. The Chancellor of the Exchequer was in favour of enlarging small holdings, and if he accepted this Amendment he would be doing a service to agriculture in this country, and would encourage the investment of money in the development of the land. He begged to move.
In page 8, line 30, to insert the words, ' or any income derived by a landowner from farming his own land.' "—(Mr. Hicks Bench.)
§ Question proposed, " That those words be there inserted."
§ MR. ASQUITH
said he did not think the Amendment would, if carried, have any effect at all. As he understood, the hon. Gentleman's point was that a landlord who farmed his own land ought to be put in a better position than the landlord who let his land to somebody else. He did not think that was a sound contention. So far as he was an occupier farming his own land he came under Schedule B, and under that schedule he was exactly the same as any other farmer under Schedule B. His income would be earned income, and it would be assessed on the lower rate, and already farmers were extremely lightly—in his opinion most inequitably -treated as regarded the general body of taxpayers for the purpose of income-tax. [Opposition cries of "Oh."] They were, because they only paid on one-third of their annual value. He should be glad to see Schedule B wiped out of the income-tax altogether. The landowner was taxed under Schedule B at a lower rate than any other payer of income-tax, and the hon. Member wanted him to get off Schedule A as well. Why should a man be put in a better position because he let his land to himself instead of letting it to someone else?
§ MR. ASQUITH
said that that was to raise another question—whether land 798 was fairly assessed. But the Amendment drew a distinction between the man who farmed his own land and the man who let his land to someone else. That distinction he was not prepared to recognise.
§ MR. AUSTEN CHAMBERLAIN
said that the question was whether the land owner was treated as favourably in respect of this concession as the man of business. The capital invested in a business was in the same position as a landlord's land. There was a perfect analogy between the active partner in a business and the man who farmed his own land.
§ MR. ASQUITH
said that the ownership of land had always been treated in a category by itself, and for very good reasons. Every landowner came under Schedule A, but when he farmed the land as well as owned it then he came under Schedule B as well. Under that schedule the occupier was put in a special class of his own, and in that respect he was entitled to the lower rate. Whether he owned the land or hired it, he equally brought in his capital. At this time of day he was certainly not going to make a departure from the settled practice of the Legislature.
§ MR. A. J. BALFOUR
said that the right hon. Gentleman tried to shelter himself behind the practice of the Legislature, instead of facing the arguments of the case. The right hon. Gentleman said that the income-tax was full of anomalies and injustices. They were tolerable as long as it was believed by successive Chancellors of the Exchequer that the income-tax was not a permanent part of the revenue system. Now that it was recognised on both sides of the House that the income-tax at some level was probably to be a permanent portion of our fiscal system, they should try to make it equitable. Let the Chancellor of the Exchequer try to apply the principles he had laid before the Committee to all parts of the tax which he desired to revise from top to bottom. But what was the case as to the small holder, whose interests, when the House was not discussing the Budget, occupied so large a part of the attention of the Government?
§ MR. ASQUITH
said the Amendment applied to every holder of land, and not to the small holder alone.
§ MR. A. J. BALFOUR
said it did not touch anyone whose income was more than £2,000 a year. It did not touch that unfortunate class who were regarded as the legitimate object of taxation by all sections of hon. Gentlemen opposite. It affected only the relatively poor man, and, for the most part, the small holder. The whole stock-in-trade of the man who put his money into some kind of business had some chance of relief, but the stock-in-trade of the small landowner was divided into two sections, one part of the produce receiving relief and one part not. The right hon. Gentleman had not succeeded in justifying that difference of treatment. Why should the right hon. Gentleman refuse to make a concession in a case and in places where he desired to see industry flourish in order that the greater vigour of the Anglo-Saxon race might be preserved? If there was any class which deserved consideration from the right hon. Gentleman it was the particular class whose interests he now refused to consider.
§ MR. A. L. STANLEY (Cheshire, Eddisbury)
reminded the Committee that small holders under this Bill would be tenant small holders whose income-tax would be assessed at one-third of their rent. Holdings under the Bill would not exceed fifty acres.
§ MR. A. J. BALFOUR
said he did not use the words "small holder" in the technical sense in which they were used in the Bill not yet passed. In common parlance the owners of farms 200 or 300 acres in extent might be regarded as small owners.
§ MR. A. L. STANLEY
said that small owners were defined in the Bill of 1892. The right hon. Gentleman would admit that when he spoke and somewhat chaffed those on that side with the interest they took in small holders that interest clearly referred to the Bill now before Parliament. The small holders who excited the sympathy of the right hon. Gentleman would be extremely small in number, inasmuch as they would have to be making a profit of 800 £10 an acre or £480 a year for their small holdings. Sympathy for such holders was not very much required.
§ VISCOUNT HELMSLEY (York, N. R., Thirsk)
supported the Amendment on the ground that it did something to relieve a very deserving class of men who were far too few in numbers at the present time, namely, the class of yeomen farmers. He was disappointed that the right hon. Gentleman had treated the Amendment in so unsympathetic a manner. More opposition was levelled against that class, though they were pursuing this industry, than any other in the country. The right hon. Gentleman and hon. Gentlemen opposite must carry their antipathy to such an extent that it even took effect when those men were farming their own land. He saw no objection to this Amendment and he certainly hoped it would be carried to a division.
§ *Mr. LUPTON
said that the senior Member for the City of London had said that the Chancellor of the Exchequer had not given any reason why, if he were starting the income-tax ab initio, no concession should be made to a landowner farming his own land under Schedule A. He (Mr. Lupton) would endeavour to give him such a reason. Suppose that in the same parish there were two men, one a landowner fanning his own land and making a gross profit of £1,000 a year, the other a manufacturer working his own factory and also making a gross profit of £1,000 a year. In each case the gross profit might be divided into two equal figures, £500 a year rent, £500 a year profit. The factory owner might take the whole of the gross profit as wages of management, and in that case would get a reduction on his income-tax of 3d. in the £, or £12 10s. The landowner, on the other hand, would only get a reduction of 3d. in the £ on half the gross income, the full tax being payable on the other half, which was rent. Therefore the rebate in his case would only be £6 5s. But if they take the total taxation, they must take into account the rates. The rates in this case were 5s. in the £, and the factory owner would pay on his £500 a year rateable value £125 in rates. The landowner, on his £500 a year rateable 801 value, would, as a result of the Agricultural Hating Act, only pay half the amount, or £62 10s., therefore the landowner gained ten times as much on the rates as the factory owner gained on the income-tax. He thought that would be generally admitted to be a sufficient answer to the demand for a rebate under Schedule A. At the same time, he could not sympathise with the Chancellor of the Exchequer, who had opened the
§ door for similar demands by his concession in regard to pensioners.
said the right hon. Gentleman was not in order in discussing a matter that had already been decided.
§ Question put.
§ The Committee divided:—Ayes, 85 Noes, 263. (Division List No. 268.)803
|Anson, Sir William Reynell||Corbett, T. L. (Down, North)||M'Calmont, Colonel James|
|Anstruther-Gray. Major||Craig, Charles Curtis(Antrim, S.||Magnus, Sir Philip|
|Arkwright. John Stanhope||Craik, Sir Henry||Mason, Sames F. (Windsor)|
|Aubrey- Flitcher, Rt. Hon. Sir H||Dalrymple, Viscount||Meysey-Thompson, E. C.|
|Balcarres, Lord||Davies, David (Montgomery Co.||Moore, William|
|Balfour, Rt Hn. A.J.(City Lond.)||Doughty, Sir George||Morpeth, Viscount|
|Banbury, Sir Frederick George||Douglas, Rt. Hon. A. Akers-||Muntz, Sir Philip A.|
|Banner, John S. Harmood-||Duncan, Robert (Lanark, Govan||Nield, Herbert|
|Baring, Capt. Hn. G (Winchester||Faber, George Denison (York)||Rawlinson, John Frederick Pee]|
|Barrie, H. T. (Londonderry, N.)||Faber, Capt. W. V. (Hants, W.)||Roberts, S. (Sheffield, Ecclesall)|
|Beach, Hn. Michael Hugh Hicks||Fell, Arthur||Ronaldshay, Earl of|
|Beckett, Hon. Gervase||Fletcher, J. S.||Rutherford, John (Lancashire]|
|Bignold, Sir Arthur||Forster, Henry William||Rutherford, W. W. (Liverpool)|
|Bowles, G. Stewart||Gardner, Ernest (Berks, East)||Scott, Sir S. (Marylebone, W.)|
|Boyle, Sir Edward||Gordon, J.||Smith, F.E. (Liverpool, Walton]|
|Bridgeman, W. Clive||Gretton, John||Talbot, Lord E. (Chichester)|
|Brotherton, Edward Allen||Hardy, Laurence (Kent, Ashford||Thomson. W.Mitchell-(Lanark;|
|Burdett-Coutts, W.||Harrison-Broadley, H. B.||Thornton, Percy M.|
|Campbell, Rt. Hon. J. H. M.||Hay, Hon. Claude George||Turnour, Viscount|
|Carlile, E. Hildred||Helmsley, Viscount||Walker, Col W. H.(Lancashire|
|Cave, George||Hervey, F.W.F.(Bury S. Edm'ds||Walrond, Hon. Lionel|
|Cavendish. Rt. Hon. Victor C.W.||Hill, Sir Clement (Shrewsbury)||Warde, Col. C. E. (Kent, Mid.)|
|Cecil, Evelyn (Aston Manor)||Houston. Robert Paterson||Wilson. A. Stanley (York, E.R)|
|Cecil, Lord John P. Joicey-||King, Sir Henry Seymour (Hull)||Wortley. Rt. Hon. C. B. Stuart-|
|Cecil, Lord R. (Marylebone, E.)||Lane-Fox, G. R.||Younger, George|
|Chamberlain, Rt. Hn. J.A. (Worc||Lee, Arthur H. (Hants, Fareham|
|Chaplin, Rt. Hon. Henry||Lockwood, Rt. Hn. Lt.-Col. A.R.||TELLERS FOR THE AYES— Sir|
|Coates, E. Feetham (Lewisham||Long, Rt. Hn. Walter(Dublin, S)||Alexander Acland-Hood and|
|Cochrane, Hon. Thos. H. A. E.||Lonsdale, John Brownlee||Viscount Valentia.|
|Collings.Rt. Hn.J.(Birmingh'm||Lyttelton, Rt. Hon. Alfred|
|Abraham, William (Rhondda)||Billson, Sir Alfred||Clynes, J. R.|
|Acland, Francis Dyke||Birrell, Rt. Hon. Augustine||Coats, Sir T. Glen (Renfrew, W.)|
|Allen, A. Acland (Christchurch)||Black, Arthur W.||Cobbold, Felix Thornley|
|Allen, Charles P. (Stroud)||Boulton, A. C. F.||Collins, Stephen (Lambeth)|
|Armitage, R.||Brace, William||Collins, Sir Wm, J (S. Pancras, W.|
|Ashton, Thomas Gair||Bramsdon, T. A.||Cooper, G. J.|
|Asquith, Rt. Hn. Herbert Henry||Branch. James||Corbett, A. Cameron (Glasgow)|
|Astbury John Meir||Brigg. John||Corbett, C.H (Sussex. E. Grinst'd|
|Baker. Joseph A. (Finsbury, E.)||Brocklehurst. W. B.||Cornwall, Sir Edwin A.|
|Balfour, Robert. (Lanark)||Brooke. Stopford||Cory, Clifford John|
|Baring, Godfrey (Isle of Wight)||Bryce, J. Annan||Cotton, Sir H. J. S.|
|Barker, John||Buckmaster. Stanley||Cowan, W. H.|
|Barlow, Percy (Bedford)||Burns, Rt. Hon. John||Cremer, Sir William Randal|
|Barnes, G. NT.||Burt, Rt. Hon. Thomas||Crosfield, A. H.|
|Barry, Redmond J. (Tyrone, N.)||Buxton, Rt. Hn. Sydney Charles||Dalziel, James Henry|
|Beale W. P.||Byles, William Pollard||Davies, Ellis William (Eifion)|
|Beauchamp, E.||Carr Gomm, H. W.||Davies, Timothy (Fulham)|
|Beaumont. Hon. Hubert||Causton, Rt. Hn. Richard Knight||Davies, W. Howell (Bristol, S.)|
|Beck, A. Cecil||Cawley, Sir Frederick||Dewar, Arthur (Edinburgh, S.)|
|Bell, Richard||Chance, Frederick William||Dickinson, W.H. (St.Pancras. N.|
|Bellairs, Carlyon||Cheetham, John Frederick||Dobson, Thomas W.|
|Benn, W.(T'w'r Hamlets, S.Geo.||Cleland, J. W.||Duckworth, James|
|Berridge, T. H. D.||Clough, William||Dunn, A. Edward (Camborne)|
|Dunne, Major E. Martin(Walsall||Lamont, Norman||Rose, Charles Day|
|Edwards, Clement (Denbigh)||Layland-Barratt, Francis||Rowlands, J.|
|Edwards, Enoch (Hanley)||Leese, Sir Joseph F. (Accrington||Runciman, Walter|
|Edwards, Sir Francis (Radnor)||Lever, A. Levy (Essex, Harwich||Samuel. S. M. (Whitechapel)|
|Elibank, Master of||Levy, Sir Maurice||Scarisbrick, T. T. L.|
|Erskine, David C.||Lewis, John Herbert||Schwann, C. Duncan (Hyde)|
|Essex, R, W.||Lloyd-George, Rt. Hon. David||Scott, A.H.(Ashton under Lyne|
|Esslemont, George Birnie||Lough, Thomas||Seaverns, J. H.|
|Evans, Samuel T.||Lupton, Arnold||Seely, Major J. B.|
|Eve, Harry Trelawney||Luttrell, Hugh Fownes||Shaw. Charles Edw. (Stafford)|
|Everett, R. Lacey||Lyell, Charles Henry||Shipman. Dr. John G.|
|Fenwick, Charles||Lynch, H. B.||Sinclair, Rt. Hon. John|
|Ferens, T. R.||Macdonald, J. R. (Leicester)||Sloan. Thomas Henry|
|Fiennes, Hon. Eustace||Macdonald, J.M.(Falkirk B'ghs||Smeaton, Donald Mackenzie|
|Findlay, Alexander||M'Callum, John M.||Soares, Ernest J.|
|Fuller, John Michael F.||M'Crae, George||Spicer, Sir Albert|
|Fullerton, Hugh||M'Kenna, Rt. Hon. Reginald||Stanger, H. Y.|
|Gill, A. H.||M'Laren, Sir C. B. (Leicester)||Steadman. W.C.|
|Gladstone, Rt. Hn. Herbert John||M'Micking, Major G.||Stewart. Halley (Greenock)|
|Glendinning, R. G.||Mallet, Charles E.||Strachey, Sir Edward|
|Glover, Thomas||Manfield, Harry (Northants)||Strauss. E. A. (Abingdon)|
|Goddard, Daniel Ford||Markham, Arthur Basil||Stuart, James (Sunderland)|
|Gooch, George Peabody||Marks, G. Croydon (Launceston)||Sutherland. J. E.|
|Grant, Corrie||Mason, A. E. W. (Coventry)||Taylor. Theodore C. (Radcliffe)|
|Greenwood, G. (Peterborough)||Massie, J.||Tennant, Sir Edward (Salisbury|
|Grey, Rt. Hon. Sir Edward||Menzies, Walter||Tennant, H. J. (Berwickshire)|
|Gulland, John W.||Micklem, Nathaniel||Thomas, Abel (Carmarthen, E.)|
|Gurdon. Sir W. Brampton||Mond, A.||Thomas, Sir A. (Glamorgan. E.)|
|Hall, Frederick||Money, L. G. Chiozza||Thomas. David Alfred(Merthyr)|
|Harcourt, Rt. Hon. Lewis||Montagu, E. S.||Thomasson. Franklin|
|Harvey, A. G. C. (Rochdale)||Montgomery. H. G.||Thornpson, J.W.H.(Somerset. E.|
|Harvey, W.E. (Derbyshire, N.E.||Morgan, G. Hay (Cornwall)||Torrance. Sir A. M.|
|Harwood, George||Morrell, Philip||Toulmin, George|
|Haslam, Lewis (Monmouth)||Morse, L. L.||Trevelyan, Charles Philips|
|Haworth, Arthur A.||Morton, Alpheus Cleophas||Ure, Alexander|
|Hazel, Dr. A. E.||Murray, James||Wadsworth. J.|
|Hedges, A. Paget||Myer, Horatio||Walker, H. De R. (Leicester)|
|Helme, Norval Watson||Napier, T. B.||Walton, Sir John L. (Leeds. S.)|
|Hemmerde. Edward George||Newnes, F. (Notts, Bassetlaw)||Walton, Joseph (Barnsley)|
|Henderson, J.M. (Aberdeen, W.)||Newnes, Sir George (Swansea)||Ward, W. Dudley (Southampton|
|Henry, Charles S.||Nicholls, George||Wardle, George J.|
|Herbert, Col. Sir Ivor (Mon., S.)||Nicholson, Charles N. (Doncast'r||Waring, Walter|
|Herbert, T. Arnold (Wycombe)||Norton, Capt. Cecil William||Wason, Eugene (Clackmannan)|
|Hobart, Sir Robert||Nussey, Thomas Willans||Waterlow, D. S.|
|Holden. E. Hopkinson||O'Donnell, C. J. (Walworth)||Watt, Henry A.|
|Holland, Sir William Henry||Parker, James (Halifax)||Weir, James Galloway|
|Holt, Richard Durning||Partington, Oswald||White, George (Norfolk)|
|Hope, John Deans (Fife, West)||Pearce, Robert (Staffs., Leek)||White, J. D. (Dumbartonshire)|
|Hope, W. Bateman(Somerset, N.||Pearson, W.H.M. (Suffolk, Eye)||White, Luke (York. E.R.)|
|Horniman, Emslie John||Philipps, Col. Ivor (S'thampton)||Whitehead, Rowland|
|Horridge, Thomas Gardner||Price, Robert John (Norfolk, E.)||Whitley. John Henry (Halifax)|
|Hutton. Alfred Eddison||Priestley, W.E.B. (Bradford, E.)||Whittaker, Sir Thomas Palmer|
|Hyde, Clarendon||Radford, G. H.||Wiles, Thomas|
|Illingworth. Percy H.||Raphael, Herbert H.||Williams, J. (Glamorgan)|
|Jackson, R. S.||Ratcliff, Major R. F.||Williamson, A.|
|Jardine, Sir J.||Rees, J. D.||Wills, Arthur Walters|
|Johnson. John (Gateshead)||Kendall, Athelstan||Wilson, Hon. C.H.W.(Hull. W.)|
|Johnson, W. (Nuncaton)||Richardson, A.||Wilson, John (Durham, Mid.)|
|Jones, Leif (Appleby)||Ridsdale, K. A.||Wilson, P. W. (St. Pancras, S.)|
|Jones, William(Carnarvonshire)||Roberts, Charles H. (Lincoln)||Wilson. W. T. (Westhoughton)|
|Jowett, F. W. '||Roberts, John H. (Denbighs.)||Winfrey. R.|
|Kearley, Hudson E.||Robertson, Sir G. Scott(Bradf'rd||Wood. T. M Kinnon|
|Kekewich, Sir George||Robinson, S.|
|King, Alfred John (Knutsford)||Robson, Sir William Snowdon||TELLERS FOR THE NOES— Mr.|
|Laidlaw, Robert||Roe, Sir Thomas||Whiteley and Mr. J. A.|
|Lambert, George||Rogers, F. E. Newman||Pease.|
§ MR. BRIDGEMAN (Shropshire, Oswestry)
moved to insert a proviso in regard to income derived from patent rights or copyright, and said his proposal 804 was on behalf of a class of people who were deserving of great consideration and who did not seem to him to be provided for under the Bill as it stood. 805 It was perfectly certain that their income was precarious and not permanent, and be could not help thinking that the right hon. Gentleman might be prepared to accept his Amendment, at any rate as far as the sense of it went.
In page 8, line 30, at the end to insert the words ' (d) any income arising from patent rights or copyrights which is immediately derived by the inventor or author of the works in respect of which the rights are held.' "—(Mr. Bridgeman.)
§ Question proposed, " That those words be there inserted."
§ MR. ASQUITH
said that his belief was that incomes derived from the avocation of author or patentee already came within the operation of the clause; but he would have the point carefully considered by the Report stage in order that it might be made perfectly clear.
§ MR. AUSTEN CHAMBERLAIN
said he had heard the right hon. Gentleman's announcement with great satisfaction. He was rather surprised to hear him state that the Bill in his opinion already covered the point. He thought he was the first person to raise this particular question in the House—[Ministerial cries of " Oh "]—and the answer given by the right hon. Gentleman was not the same as that given to him by the President of the Board of Education, who contended not only that it was not in the Bill, but that it ought not to be in the Bill.
§ Amendment, by leave, withdrawn.
§ MR. FELL (Great Yarmouth)
moved to add at the end of the clause, "(d) any income arising from investments which have been made out of savings from income derived from the exercise of any trade, profession, or vocation; (e) any annuity which has been purchased out of savings from income derived as in the last subsection." He could see no distinction between the case of a man who received a pension provided out of compulsory savings and that of a man who purchased an annuity out of his savings. He begged to move.
In page 8, line 30, at end, to insert the words (d) any income arising from investments
which have been made out of savings from income derived from the exercise of any trade, profession, or vocation; (e) any annuity which has been purchased out of savings from income derived as in the last sub-section."— (Mr. Fell.)
§ Question proposed, " That those words be there inserted."
§ MR. ASQUITH
said that in dealing with pensions he laid down the distinction. The income derived from investments was clearly not earned income in any sense in which the term could be fairly applied. He could not accept the Amendment, for it would destroy the whole foundation of the clause. As regarded annuities purchased out of savings, the same considerations applied as to other annuities, and they were nothing more than investments, whether they wore made out of savings or not.
§ MR. HICKS BEACH
said the Chancellor of the Exchequer had put himself in an absolutely illogical position. Why should a man who had saved out of his income to create a pension for himself in his old age be in a worse position than an officer, naval or military, or a civil servant who enjoyed a pension as deferred pay? By resisting this Amendment the right hon. Gentleman was putting a direct encouragement upon extravagance, because he was encouraging the professional man not to put aside any of his income, but to spend the whole of it. The right hon. Gentleman told them that it was very difficult to ascertain what investments were derived from savings. He would remind him that the whole machinery of this differentiation clause depended upon a return which the claimant had to sign himself. He had to sign a return declaring that his total income fell below a certain amount, and if he could be trusted to do that, surely they could trust him to declare which part was derived from investments, and which were direct savings out of his own pocket. He believed this proposal on the part of the Chancellor of the Exchequer was a feeble attempt to get himself out of a very difficult position. He hoped his hon. friend would press this Amendment to a division.
§ SIR F. BANBURY
said the right hon. Gentleman had asked how it was possible to tell whether investments were derived from savings or not. Upon that point 807 his hon. friend who preceded him had anticipated his explanation, and had explained the point quite clearly. The whole foundation of this Budget rested upon the acceptance by the Chancellor of the Exchequer of the statements made by people who claimed exemption. There was no means of proving those statements, and they had to be accepted. If they were not accepted he could hardly conceive the immense number of officials who would be required to make investigations. In that matter they must take a man's word. He would like to point out to the Chancellor of the Exchequer the position in which he was putting a deserving class. The right hon. Gentleman had rightly said that pensions were deferred pay, and that those who were entitled to them would be exempted under the new Amendment. But if an Indian Civil servant who earned, say, £1,500 a year, and was compelled to put by a certain
§ amount to provide himself with a pension, was only to be charged on the lower scale on his pension, the business man who earned the same amount and voluntarily put by to provide for old age should be treated equally well. A man in business who avoided the temptation which was much too prevalent among Englishmen of all classes to spend too much—[laughter] well, it was so—if the people of this country followed the example of the French, they would be in a very much better position, and the Chancellor of the Exchequer would be in a more comfortable position than now. It was really the right hon. Gentleman's own interest that he should encourage men to be thrifty, and have some regard to the responsibilities which would be incurred in the future.
§ Question put.
§ The Committee divided:—Ayes, 78; Noes, 252. (Division List Xo. "269.)809
|Acland-Hood,Rt.Hn.SirAlex.F.||Dalrymple, Viscount||Moore, William|
|Anson, Sir William Reynell||Doughty, Sir George||Morpeth, Viscount|
|Arkwright, John Stanhope||Douglas, Rt. Hon. A. Akers-||Muntz, Sir Philip A.|
|Ashley, W. W.||Faber, George Denison (York)||Nield. Herbert,|
|Balcarres, Lord||Faber, Capt. W. V. (Hants, W.)||Ratcliff, Major R. F.|
|Banner, John S. Harmood-||Fletcher, J. S.||Rawlinson, JohnFrederickPeel|
|Baring,Capt.Hn.G.(Winchester||Forster, Henry William||Roberts,S.(Sheffield,Ecclesall)|
|Barrie, H.T. (Londonderry.N.)||Gardner, Ernest (Berks, East)||Ronaldshay, Earl of|
|Beach,Hn.Michael Hugh Hicks||Gordon, J.||Rutherford. John (Lancashire)|
|Beckett, Hon. Gervase||Gretton, John||Rutherford, \W.(Liverpool)|
|Bignold, Sir Arthur||Hardy.Laurence (Kent,Ashf'rd||Scott, Sir S. (Marylebone, W.)|
|Bowles, G. Stewart||Harris, Frederick Leverton||Smith,F.E.(Liverpool, Walton)|
|Boyle, Sir Edward||Harrison-Broadley, H. B.||Talbot, Lord E. (Chichester)|
|Bridgeman, W. Clive||Hay, Hon. Claude George||Thomson, W.Mitchell-(Lanark)|
|Brotherton, Edward Allen||Helmsley, Viscount||Thornton, Percy M.|
|Butcher, Samuel Henry||Hervey,F.W.F.(BuryS.Edm'ds||Valentia, Viscount|
|Campbell, Rt. Hon. J. H. M.||Hill, Sir Clement (Shrewsbury)||Walker,Col.W.H.(Lancashire)|
|Carlile, E. Hildred||Houston, Robert Paterson||Walrond. Hon. Lionel|
|Cave, George||King,SirHenry Seymour (Hull)||Warde, Col. C. E. (Kent, Mid)|
|Cavendish, Rt. Hon. VietorC. W.||Lane-Fox, G. R.||Williams. Col. R. (Dorset, W.)|
|Cecil, Evelyn (Aston Manor)||Lockwood.Rt.Hn.Lt.-Col.A.R.||Wortley, Rt. Hon. C. B. Stuart-|
|Cecil, Lord John P. Joicey-||Long,Rt.Hon.Walter(Dublin,S.||Younger, George|
|Cecil, Lord R. (Marylebone, E.)||Lonsdale, John Brownlee|
|Chaplin, Rt. Hon. Henry||Lyttelton, Rt. Hon. Alfred||TELLERS FOR THE AYES—Mr.|
|Coates,E.Feetham (Lewisham)||M'Calmont, Colonel James||Fell and Sir Frederick Ban-|
|Cochrane, Hon. Thos, H. A. E.||Magnus, Sir Philip||bury.|
|Craig, CharlesCurtis (Antrim, S.)||Mason, James F. (Windsor)|
|Craik, Sir Henry,||Meysey-Thompson, E. C.|
|Abraham, William (Rhondda)||Balfour, Robert (Lanark)||Beck, A. Cecil|
|Acland, Francis Dyke||Baring,Godfrey (Isle of Wight)||Bellairs, Carlyon|
|Allen,A.Acland (Christchurch)||Barker, John||Benn,W.(T'w'rHamlets,S.Geo.|
|Allen, Charles P. (Stroud)||Barlow, Percy (Bedford)||Berridge, T. H. D.|
|Armitage, R.||Barnes, G. N.||Billson, Sir Alfred|
|Ashton, Thomas Gair||Barry, Redmond J.(Tyrone,N.||Birrell, Rt. Hon. Augustine|
|Asquith.Rt.Hon.HerbertHenry||Beale, W. P.||Black, Arthur W.|
|Astbury, John Meir||Beauchamp, E.||Boulton, A. C. F.|
|Baker,Joseph A.(Finsbury,E.)||Beaumont, Hon. Hubert||Brace, William|
|Bramsdon, T. A.||Harwood, George||Partington, Oswald|
|Branch, James||Haslam, Lewis (Monmouth)||Pearce, Robert (Staffs., Leek)|
|Brigg, John||Haworth, Arthur A.||Pearson,W.H.M.(Suffolk,Eye)|
|Brocklehurst, W. B.||Hazel, Dr. A. E.||Philipps,Col.Ivor(S'thampton)|
|Brooke, Stopford||Hedges, A. Paget||Price, C. E. (Edinb'gh,Central)|
|Bryce, J. Annan||Helme, Norval Watson||Price, Robert John (Norfolk.E.)|
|Buckmaster, Stanley O.||Hemmerde, Edward George||Priestley, W.E. B. (Bradford,E.)|
|Burns, Rt. Hon. John||Henderson,J.M.(Aberdeen,W.)||Radford, G. H.|
|Buxton, R t. Hn. SydneyCharles||Henry, Charles S.||Raphael, Herbert H.|
|Byles, William Pollard||Herbert,Col.SirIvor (Mon, S.)||Rees, J. D.|
|Carr-Gomm, H. W.||Hobart, Sir Robert||Rendall, Athelstan|
|Causton, Et. Hn. Richard Knight||Holland, Sir William Henry||Richardson, A.|
|Cawley, Sir Frederick||Holt, Richard Durning||Ridsdale, E. A.|
|Chance, Frederick William||Hope, John Deans (Fife, West)||Roberts,Charles H. (Lincoln)|
|Cheetham, John Frederick||Hope, W. Bateman(Somerset, N.||Roberts,John H. (Denbighs.)|
|Clcland, J.W.||Horniman, Emslie. John||Robertson,SirG.Scott(Bradf'rd|
|Clough, William||Horridge, Thomas Gardner||Robinson, S.|
|Clynes, J. R.||Hutton, Alfred Eddison||Robson, Sir William Snowdon|
|Coats,SirT.Glen (Renfrew,W.)||Hyde, Clarendon||Roe, Sir Thomas|
|Cobbold, Felix Thornley||Illingworth, Percy H.||Rogers, F. E. Newman|
|Collins, Stephen (Lambeth)||Jackson, R. S.||Rose, Charles Day|
|Collins,SirWm.J.(S.Pancras,W.||Jardine, Sir J.||Rowland, J.|
|Cooper, G. J.||Johnson, John (Gateshead)||Runciman, Walter|
|Corbett, A. Cameron (Glasgow)||Johnson, W. (Nuneaton)||Samuel, S. M. (Whitechapel)|
|Corbett,C.H.(Sussex,E.Grinst'd||Jones, Leif (Appleby)||Scarisbrick, T. T. L.|
|Cornwall, Sir Edwin A.||Jones, William(Carnarvonshire||Schwann, C. Duncan (Hyde)|
|Cory, Clifford John||Jowett, F. W.||Scott,A.H. (Ashton under Lyne|
|Cotton, Sir H. J. S.||Kearley, Hudson E.||Seaverns, J. H.|
|Cowan, W. H.||Kekewich, Sir George||Seely, Major J. B.|
|Cremer, Sir William Randal||King, Alfred John (Knutsford)||Shaw, Charles Edw. (Stafford)|
|Crosfield, A. H.||Laidlaw, Robert||Shipman, Dr. John G.|
|Dalziel, James Henry||Lambert, George||Silcock, Thomas Ball|
|Davies. David (MontgomeryCo.||Lamont, Norman||Sinclair, Rt. Hon. John|
|Davies, Ellis William (Eifion)||Layland-Barratt, Francis||Sloan, Thomas Henry|
|Davies, Timothy (Fulham)||Leese,SirJosephF (Accrington)||Smeaton, Donald Mackenzie|
|Davies, W.Howell (Bristol,S.)||Lever,A.Levy(Essex,Harwich)||Soares, Ernest J.|
|Dewar, Arthur (Edinburgh,S.)||Levy, Sir Maurice||Spicer, Sir Albert|
|Dickinson, W.H.(St.Pancras,N.||Lewis, John Herbert||Stanger, H. Y.|
|Dobson, Thomas W.||Lough, Thomas||Stanley,Hn.A.Lyulph (Chesh.)|
|Duckworth, James||Lupton, Arnold||Steadman, W. C.|
|Dunn, A. Edward (Camborne)||Luttrell, Hugh Fownes||Stewart, Halley (Greenock)|
|Dunne,MajorE.Martin (Walsall||Lyell, Charles Henry||Strachey, Sir Edward|
|Edwards, Clement (Denbigh)||Lynch, H. B.||Strauss, E. A. (Abingdon)|
|Edwards, Enoch (Hanley)||Macdonald, J. R. (Leicester)||Stuart, James (Sunderland)|
|Edwards,Sir Francis (Radnor)||M'Callum, John M.||Sutherland, J. E.|
|Elibank. Waster of||M'Crae, George||Taylor, Theodore C. (Radcliffe)|
|Essex, R. W.||M'Kenna, Rt. Hon. Reginald||Tennant,SirEdward(Salisbury)|
|Esslemont, George Birnie||M Laren, Sir C. B. (Leicester)||Tennant, H. J. (Berwickshire)|
|Evans, Samuel T.||M'Micking, Major G.||Thomas,DavidAlfred(Merthyr)|
|Eve, Harry Trelawney||Mallet, Charles E.||Thompson, J.W.H(Somerset,E.|
|Everett, R. Lacey||Manfield, Harry (Northants)||Toulmin, George|
|Fenwick. Charles||Markham, Arthur Basil||Trevelyan, Charles Philips|
|Kerens, T. R.||Marks,G.Croydon (Launceston)||Ure, Alexander|
|Ferguson, R. C. Munro||Mason, A. E. W. (Coventry)||Wadsworth, J.|
|Fiennes, Hon. Eustace||Massie, J.||Walker, H. De R. (Leicester)|
|Findlay, Alexander||Menzies, Walter||Walters, John Tudor|
|Fuller,John Michael F.||Micklem' Nathaniel||Walton, SirJohn L.(Leeds,S.)|
|Fullerton. Hugh||Mond, A.||Ward,W.Dudley(Southampton|
|Gill, A. H.||Montagu, E. S.||Wardle, George J.|
|Gladstone,Rt.Hn.Herbert John||Montgomery, H. G.||Waring, Walter|
|Glendinning, R. G.||Morgan, G. Hay (Cornwall)||Warner,Thomas Courtenay T.|
|Glover, Thomas||Morrell, Philip||Wason, Eugene (Clackmannan)|
|Goddard, Daniel Ford||Morse, L. L.||Waterlow, D. S.|
|Gooch, George Peabody||Morton, Alpheus Cleophas||Watt, Henry A.|
|Grant, Corrie||Murray, James||Weir, James Galloway|
|Greenwood, G. (Peterborough)||Napier, T. B.||White, George (Norfolk)|
|Grey, Rt. Hon. Sir Edward||Newnes, F. (Notts, Bassetlaw)||White, J. D. (Dumbartonshire)|
|Gulland, John W.||Nicholls, George||White, Luke (York., E.R.)|
|Gurdon, Sir W. Brampton||Nicholson,C'harlesN.(Doncaster||Whitley, John Henry (Halifax)|
|Hall, Frederick||Norton, Capt. Cecil William||Whittaker, Sir Thomas Palmer|
|Harcourt, Rt. Hon. Lewis||Nussey, Thomas Willans||Williams, J. (Glamorgan)|
|Harvey, A. G. C. (Rochdale)||O'Donnell, C. J. (Walworth)||Williamson, A.|
|Harvey,W.E.(Derbyshire,N.E.||Parker, James (Halifax)||Wills, Arthur Walters|
|Wilson,Hn. C. H.W.(Hull,W.)||Wilson, W. T. (Westhoughton)||TELLERS FOR THE NOES—Mr.|
|Wilson, John (Durham, Mid)||Winfrey, R.||Whiteley and Mr. J. A.|
|Wilson, P. V. (St. Pancras, S.)||Wood,T. M'Kinnon||Pease.|
Question, " That those words be there added," put, and agreed to.
In page 8, line 33, at the end, to add the words ' (8) Section thirty-four of The Finance Act, 1894, shall cease to have effect so far as it gives relief or abatement to persons who are entitled to relief under Section eight of The Finance Act, 1898.' "—(Mr. Asquith.)
§ Question proposed, " That the Clause, as amended, stand part of the Bill."
§ MR. AUSTEN CHAMBERLAIN
said he did not propose to travel over the ground already traversed during the debate, but he wished to ask the Chancellor of the Exchequer as to what he estimated would be the cost of the concessions he had made. The right hon. Gentleman estimated the cost of the differentiation at £1,250,000, that was to say that the incomes which would have returned £5,000,000 if the tax had applied all round would now only return £3,750,000. The right hon. Gentleman had estimated that the abatement would apply only to £100,000,000. Last week in reply to the hon. Member for Leicester the Chancellor of the Exchequer stated that the earned incomes between £160 and £2,000, which was the limit to receive the abatement, amounted to £200,000,000, and now it was admitted that the differentiation would cost £2,500,000 instead of £1,250,000. How could the two figures be reconciled? The abatement in the last year in which he was in office applied to £108,000,000. Obviously a great part of these abatements must apply to other than earned incomes. His own belief was that the right hon. Gentleman had under-estimated the cost of the concessions by about £625,000.
§ MR. ASQUITH
said he would consider the point raised by the right hon. Gentleman. He did not think there was any discrepancy between the figures ho had quoted last week and this; but the whole thing was largely conjectural, and they could not make anything but a rather rough estimate. There might be a great many unearned incomes under £2,000.
§ MR. AUSTEN CHAMBERLAIN
said that that would not explain the discrepancy, because the right hon. Gentleman had already excluded the earned portion of incomes which were over £2,000.
§ MR. ASQUITH
said that that did not follow at all; but if the right hon. Gentleman put down a Question he would, give him the fullest information. He did not suppose that the original estimate of £1,250,000 would be largely exceeded.
§ MR. AUSTEN CHAMBERLAIN
said that if he was not satisfied with the Answer to the Question which he would put on the Paper, he would raise the matter again on the Report stage.
§ Clause, as amended, agreed to.
§ Committee report Progress; to sit again upon Monday next.