§ Considered in Committee.
§ (In the Committee.)
§ [Mr. EMMOTT (Oldham) in the Chair.]
§ *MR. HICKS BEACH (Gloucestershire, Tewkesbury)resumed his speech on the new clause which he was submitting when Progress was reported on Tuesday night. The clause was as follows—
In addition to the deductions of one-eighth, and one-sixth allowed under Section thirty five of the Finance Act of 1894 there shall also, for the purposes of collection, be allowed the cost of insurance and a deduction for expenses 158 of management not exceeding five per centum of the gross annual value.The hon. Member said he first desired to refer to the sad news which caused the Prime Minister the other evening to interrupt the business of the House, and on behalf of himself and his friends he wished to say how very much they deplored the tragic manner in which a Member was suddenly taken away from them, and they deeply sympathised with the family and friends in their loss. With regard to the clause which he moved, under Schedule A. a landowner paid income-tax on the gross rental of his estate, less deductions for land tax and of one-eighth on land and one-sixth on buildings. After these deductions the rental which was left was supposed to be the rental which the landlord received. But as a matter of fact, landowners, not merely those owning thousands or hundreds of acres, but even small landowners, men owning a few acres, paid not only their fair share of taxation but more than their fair share, and largely out of proportion to their 159 revenue from the land. To illustrate his argument, he would take three estates. On one of them the calculation was made for the years 1902 to 1907, and in that period the income-tax had been at the average rate of 12.3d. in the £ but the landlord had paid 14.8d. on his net income; that was to say, he had paid 2.5d. in the £ in excess of that which he was legally required to pay. On two other estates on which an average had been taken for nine years, the average of the income-tax for that period was 11.11id. in the £ and on one estate the landlord paid in excess l.27d. in the £, and the other had paid in excess 2.44d. in the £ and he thought that, from those figures, one might very fairly conclude that the landlord paid an average rate of about 2d. in the £ in excess of the amount of income-tax which he ought to pay. These figures had been calculated on the bare up-keep of the estate, and no allowance whatever was made for the cost of management. He submitted that the allowance of one-sixth and one-eighth ought to be considerably increased, or else the landowner ought to be allowed to render each year an accurate account of the income of his estate and be assessed to income-tax under Schedule D., as proposed by his hon. friend the Member for Oswestry. Landowners had felt for some time past that they were suffering under a grievance, but the injustice had been brought to such a pitch by the present proposals of the Chancellor of the Exchequer that it was necessary to point out how great it was. The right hon. Gentleman's distinction between earned and unearned income introduced a further inequality, because the income of a landowner was to be considered as unearned, equally with that of shareholders of a company. But the gross profits of a company before they were assessed to income-tax were subject to deductions in respect of repairs, salaries, directors' remuneration, expenses of insurance, local rates and taxes, auditors' fees, bad debts, banking charges and allowances for depreciation of plant and machinery. All these things were deducted from the gross income of the company before it was assessed to income-tax, whereas the landowner was only allowed the deductions of one-eighth or 160 one-sixth, and he submitted that if the landowner was to be placed in the same category as a shareholder in an industrial company, then in common fairness he ought to be allowed the same deductions from his gross income, so as to bring his net income within the same assessment. The deductions he had referred to of one eighth and one sixth were introduced into the Finance Act of 1894, but they were not adequate then, and he was quite sure they were inadequate now. Those who knew the wages paid on estates now and those which were paid thirteen years ago would be fully aware of the fact that they had increased considerably. Not only that, but repairs generally cost a good deal more now than they did thirty years ago. In asking that some additional allowance should be made for the expenses of management, he did not think he was asking for anything excessive by putting it down at 5 per cent. The shareholder of an industrial company had very little to do to earn his income, but if a landowner spent no time at all in the management of his estate and employed nobody to look after it, it would deteriorate very rapidly and that would bring ruin not only to the estate but also to those who were employed upon it. Under the Finance Act of 1894 in Clause 7, Subsection (5), it was provided that in estimating the value of an estate there should be a deduction for expenses of management not exceeding 5 per cent, of the gross annual value. It was upon that clause that he had based his new clause. He thought he had taken a very modest estimate, and he was afraid that he should be told by his hon. friends that he had placed it too low. He thought, however, by drawing up his clause on the basis of Clause 7 of the Finance Act of 1894 he was following a good precedent. In regard to insurance, industrial companies were allowed to deduct from their gross profits the cost of insurance, and he did not think he was asking too much in providing that the landowner who insured his property should be allowed to deduct the cost of the insurance. If the right hon. Gentleman considered it more feasible to add a small percentage instead of the actual cost to the deductions already allowed he would be 161 quite willing to accept it. He submitted that in putting this new clause before the House he was only asking the Chancellor of the Exchequer to put the landowning class and the holders of shares in an industrial company upon equal terms. He begged to move.
§
New clause—
In addition to the deductions of one-eighth and one-sixth allowed under Section 35 of the Finance Act of 1894, there shall also, for the purposes of collection, be allowed the cost of insurance and a deduction for expenses of management not exceeding five per centum of the gross annual value."—(Mr. Hicks-Beach.)
§ Brought up and read a first time.
§ Motion made and Question proposed, "That the clause be read a second time."
§ The CHANCELLOR of the EXCHEQUER (Mr. Asquith,) Fife, E.said he thought the hon. Gentleman would not be surprised when he heard that he could not possibly accept this clause. The contentions the hon. Gentleman had raised had been equally valid for the last thirteen years, during ten of which Conservative Governments had been in power.
§ MR. HICKS BEACHsaid the injustice had been accentuated by differentiating between earned and unearned incomes.
§ MR. ASQUITHsaid that was not so. Sir William Harcourt gave to the landed interest by way of partial compensation the very large concession which was now contained in Section 35 of the Act of 1894 under which for the purposes of Schedule A they were allowed the right to deduct one-eighth on land and one-sixth in regard to repairs. That was a very large percentage as compared with the state of the law which previously existed. Under this Bill investments in land and industrial companies stood precisely on the same footing as in 1894. No one was more qualified to speak for the landed interest than Lord St. Aldwyn, but he never sought to give effect to the propositions the hon. Gentleman had advanced, nor did either of his two Conservative successors. What was good enough for them was good enough 162 for him, and he should shelter himself behind them.
§ MR. AUSTEN CHAMBERLAIN (Worcestershirc, E.)said he was afraid the tone which the Chancellor of the Exchequer had adopted would not make it easy for them to conclude this debate in a reasonable time. The right hon. Gentleman had chosen to adopt a most aggressive tone of which he was a past master, and he had proceeded by the method of argumentum ad hominen. The Chancellor of the Exchequer had included him in the various predecessors whose example was good enough for him. If the right hon. Gentleman would always act on that principle, his action would be good enough for him, but he was not consistent. He only pleaded the example of his predecessors when it suited him for the moment. He could not speak for his predecessors. He was himself not satisfied upon this particular point, but he deferred taking action pending the Report of a Committee which he appointed. He was not able to act on any of the recommendations of the Committee, their report coming too late for him to take action. A certain allowance was made by the Act of 1894. That allowance was a percentage of the whole. Agricultural rates had not risen since then, but the cost of labour had. Building operations might be carried out now in towns more cheaply than thirteen years ago, but agricultural buildings could not be erected more cheaply now than then. The tendency of agricultural rates was to fall, and that of agricultural expenses to rise. Therefore, prima facie an allowance which was no more than adequate in 1894 was less than adequate in 1907. He thought they had arrived at a period when they ought to reconsider this matter. In recent years they had been taking away the special privileges of land, and therefore they should also take away the special disabilities. His hon. friend had shown that other forms of property wore allowed deductions which were not allowed for land, and the only answer of the Chancellor of the Exchequer was that that had been going on a long time. So had the anomalies which the right hon. Gentleman had sought to remove. 163 He asked him to deal out even-handed justice all round. That was the minimum and the maximum of his claim.
§ MR. LANE-FOX (Yorkshire, W.R., Barkston Ash)said the answer of the Chancellor of the Exchequer did not meet the argument of his hon. friend. It was not a complete answer for the right hon. Gentleman to say that he was doing what Conservative Governments had done. They did not expect an enlightened Liberal Government to do the same thing. He did not think that there was anything unfair in asking that land should be treated in exactly the same way as other forms of property. After outlays had been deducted, he thought that in most cases landlords put into their own pockets considerably less than 80 per cent. of the gross rental. What he objected to was that the present system of assessment gave a premium to the bad landlord who did not choose to spend much money on his estate. Good landlords who spent money in improving their estates should be encouraged, and he hoped that in the course of the year the Chancellor of the Exchequer would turn his attention to this anomaly with a view to land being treated in the same way as other forms of property.
§ *MR. BRIDGEMAN (Shropshire, Oswestry)said that the right hon. Gentleman had used an argument to the effect that the longer justice was delayed, the more unnecessary redress became, and he thought that if instead of sheltering himself behind previous Chancellors on that side he had followed the example of Sir William Harcourt on his own side, he would not have been able to take the line that he had taken. He had said that there was no particular reason why this grievance should be removed now more than in any previous year, but he could give him one reason for comparing this year with 1894, and that was that in both years there was a large increase in the death duties, and he believed it was largely owing to that increase that Sir William Harcourt did introduce what the right hon. Gentleman described as the very generous treatment of the landlords under the Act of 1894, as to compensation. If Sir William Harcourt had 164 followed the argument of the right hon. Gentleman to the effect that it had gone on for a long time and therefore nothing need be done, he thought he would not have found very much support; but his argument was that, although Committees had reported in favour of this as long ago as in the sixties and nothing had been done, he thought it ought to be done in 1894. When the Committee reported in favour of this particular reduction of one-eighth and one-sixth wheat was at 60s., labour and the cost of repairs were very much less than now, and the case was in no way parallel to the present conditions. But the repairs and necessity for making repairs on estates remained exactly the same; if anything, they had increased, and where the landlord managed his property well he certainly spent more on it, and suffered more under this particular system. They had been constantly told by hon. Gentlemen opposite that landlords ought to manage their property in a more businesslike manner, but why did not the Government allow them to do so? Why not allow them to produce their accounts and pay taxes according to their net income? They were also told, especially by the Drury Lane School of Agriculture, that the best landlords were those who had the largest number of small holdings on their property. Everyone knew that the repairs on small holdings were very much more heavy than where the property was divided into large farms, and, therefore, what they were doing now was to tax the man who, they said, was doing the best for his property about twice as much as they taxed the man who, according to them, was managing his property very badly indeed. The right hon. Gentleman also said that his proposals in regard to unearned incomes did not come into the question now being discussed at all, but he begged leave to differ as to that, and he would give a concrete instance which must make it perfectly clear as it was now under the Bill. He would take two lawyers, both earning £1,200 a year. One of them enjoyed an income of £700 a year out of funds left to him, or which he had accumulated; the other one was a landed proprietor with a gross rental of £1,200, of which he netted only £700. The result of the alteration under this Bill was that the 165 man who had £700 a year net income from land did not come below the £2,000 a year limit, and therefore did not get any relief at all, because they did not allow him to pay on his net income. But the other man did, and it worked out that, both men earning the same amount and both having the same income unearned, one of them paid £32 10s. more income-tax than the other. To say that the question of unearned income did not affect the point raised by his hon. friend was wholly inaccurate, and he thought the point in question could not have been properly understood by the Chancellor.
§ LORD WILLOUGHBY De ERESBY (Lincolnshire, Horncastle)said he had always understood that before the Finance Act of 1894 certain extra taxes in the way of death and succession duties were placed upon landed property, to which personalty was liable but from which real property was exempt that real property had been so exempt, owing to the fact that land was rated, and personal property was not rated, and for the first time by the Finance Act of 1894 those duties and the whole of the duties payable on an estate at death were equalised as between landed property and personal property. Therefore, all the argument which had been used that night as regarded concessions made by the Finance Act of 1894 were brushed away by the fact that then for the first time real property was brought on the same footing as personal property. The point now before them was the fact, perfectly well known to everybody, that the deductions on real estate now allowed did not in the least cover the cost of maintenance and of management, and the Amendment of his hon. friend was to make some further allowance for the cost of management and maintenance and other outgoings. He was always pleased to quote on this question the greatest authority on finance of the last century, the late Mr. Gladstone, and anybody who read Mr. Gladstone's Budget speeches must see that he recognised the injustice that was being done to real estate as against personal estate. In his famous Budget speech of 1853, he distinctly laid down what deductions should be 166 made for real estate for the purposes of the income-tax, and they were these: charges for repairs, building, fences, drains, etc.; secondly, insurance and law charges; thirdly, the cost of management; and fourthly, arrears of rent. The different deductions which ought to be allowed had, therefore, been laid down, and he was certain that if the Chancellor of the Exchequer were to take any estate, and take into account the deductions which Mr. Gladstone said should be allowed, he would arrive at the same conclusion as Mr. Gladstone as to the net income. The income-tax at that time was 7d. in the £, and Mr. Gladstone said that every landowner would pay not 7d. but 9d. They asked that the subject should be inquired into and that the Chancellor of the Exchequer should try to meet them in some manner. It was perhaps a perfectly fair retort for the right hon. Gentleman to say that previous Conservative Chancellors of the Exchequer had refused to move in this matter, but for himself he regretted that they had not done so. A few years ago he spoke on this subject to the late Chancellor of the Exchequer, but he was afraid that he spoke to deaf ears. He hoped, however, that the right hon. Gentleman who now occupied the position would give a more favourable consideration to his suggestion. They were not now talking of "wars and tumults of war," but were confining their attention to agricultural improvements and such like matters. They were now "in the piping times of peace," and talking about getting people back to the land, and he thought the Chancellor of the Exchequer should, in order to do justice, take these matters into account. He had heard it stated that the income derived from land was not a precarious income, and therefore if they paid a little more than other people they ought not to grumble; but those who knew anything about land knew that the income was very precarious and dependent upon whether the sun shone or the rain fell in adequate quantities. It was not so many years since the question of the taxes on land was considered by a Chancellor of the Exchequer, and a great concession was made by allowing the income of farms to be assessed under 167 Schedule D instead of as formerly under Schedule B. He thought that nobody could deny that it was right that the farmer should have that concession, and if the Chancellor of the Exchequer could not make any concession to them in this Budget he asked him to look into the matter himself and see if he could not do so next year. He would see that it was an undoubted fact that the income derived from lands and the income upon which the tax was paid were quite different amounts He was sure the right hon. Gentleman did not wish to raise taxation.
§ MR. ASQUITHsaid that he would of course consider the matter, and if the case was as stated, he would not be slow to do what he could to remove any grievance. What he had said was that a large concession to the land was made in 1894, and he had not heard any argument which proved that that concession was inadequate.
§ MR. LAURENCE HARDY (Kent, Ashford)was sure they would all welcome the second statement of the Chancellor of the Exchequer, but they would have been wanting in their duty if they had not raised this question at the present moment. The other Chancellors of the Exchequer to whom reference had been, made regarded this income-tax as an annual one, but the right hon. Gentleman now acknowledged that it must be a permanent tax. That was the difference which existed between the present condition of things and that which existed in 1894, and upon that ground alone it was certainly necessary that his hon. friend should bring it forward. If the Chancellor of the Exchequer was willing to view the matter in a favourable light, it made a great difference. The right
§ hon. Gentleman had referred to the Act of 1894, but if the tax fell heavily upon industries in one form and another, it also fell heavily upon agriculture. No allowance was made to landlords in regard to dairy and cow-shed regulations, which involved a very large expenditure upon buildings and maintenance. Rents also had fallen, and he thought the case of the landowner demanded the favourable consideration of the Chancellor of the Exchequer.
§ MR. HICKS BEACHsaid the first speech of the Chancellor of the Exchequer was certainly not pleasant to those sitting on that side of the House, although his second speech was more sympathetic. There were some of them who felt that a landlord who spent a considerable time in the management of his own estate or employed a person to manage it for him did considerably more than the man who invested his money in an industrial concern and did nothing but draw his dividends. What they asked therefore was that the landlord should be put in the same position as the man who invested his money in an industrial concern. They desired that the landlord who did the work himself or employed a man to do it for him should get some allowance. A relative of his who had occupied the position of Chancellor of the Exchequer for many years was of the same opinion, and he thought that a person who was assessed under Schedule A should in common fairness be treated in the same way as to earned and unearned income as a person assessed under Schedule D.
§ Question put.
§ The Committee divided:—Ayes, 50; Noes, 192. (Division List No. 277.)
171| AYES. | ||
| Acland-Hood, Rt Hn. Sir Alex. F. | Cecil Lord. John P. Joicey- | Hills, J. W. |
| Anson, Sir William Reynell | Chamberlain. Rt Hn. J. A.(Wore. | Houston, Robert Paterson |
| Ashley, W. W. | Courthope, G. Loyd | Hunt, Rowland |
| Banbury, Sir Frederick George | Fell, Arthur | Kenyon-Slaney, Rt. Hon. Col. W. |
| Beckett, Hon. Gervase | Fleteher, J. S. | Lockwood, Rt. Hn. Lt,-Col. A. R. |
| Bignold, Sir Arthur | Forster, Henry William | Marks, H. H. (Kent) |
| Boyle, Sir Edward | Gretton, John | Morpeth, Viscount |
| Bridgeman, W. Clive | Hardy, Laurence(Kent, Ashford | Nicholson, Wm. G. (Petersfield) |
| Carlile, E. Hildred | Harrison-Broadley, H. B. | Pease, Herbert Pike(Darlington) |
| Castlereagh, Viscount | Hay, Hon. Claude George | Rawlinson, John Frederick Peel |
| Cave, George | Helmsley, Viscount | Renton, Major Leslie |
| Cevil, Evelyn (Aston Manor) | Hill, Sir Clement (Shrewsbury) | Roberts, S.(Sheffield, Ecclesall) |
| Ronaldshay, Earl of | Staveley-Hill, Henry (Staff'sh.) | Willoughby de Eresby, Lord |
| Salter, Arthur Clavell | Talbot, Lord E. (Chichester) | Wilson, A. Stanley (York, E. R.) |
| Scott, Sir S. (Marylebone, W.) | Thomson, W. Mitchell-(Lanark) | |
| Sheffield, Sir Berkeley George D. | Valentia, Viscount | TELLERS FOR THE AYES—Mr. |
| Smith, Abel H.(Hertford, East) | Walrond, Hon. Lionel | Hicks Beach and. Mr. Lane- |
| Smith, F. E.(Liverpool, Walton) | Warde, Col. C. E. (Kent, Mid.) | Fox. |
| NOES. | ||
| Acland, Francis Dyke | Greenwood, Hamar (York) | Pearce, Robert (Stuffs., Leek) |
| Ainsworth, John Stirling | Grey, Rt. Hon. Sir Edward | Pearson, W. H. M. (Suffolk, Eye) |
| Allen, A. Acland (Christchurch) | Hardy, George A. (Suffolk) | Philipps, Col. Ivor (South'mpton |
| Armitage, R. | Harmsworth, R. L. (Caithn'ss-sh | Pickersgill, Edward Hare |
| Asquith. Rt. Hn. Herbert Henry | Harvey, A. G. C. (Rochdale) | Pollard, Dr. |
| Astbury, John Meir | Harvey, W. E. (Derbyshire, N. E. | Price, C. E.(Edinburgh, Central) |
| Baker, Joseph A. (Finsbury, E.) | Hazel, Dr. A. E. | Priestley, W. E. B (Bradford, E) |
| Balfour, Robert (Lanark) | Helme, Norval Watson | Radford, G. H. |
| Baring, Godfrey (Isle of Wight) | Hemmerde, Edward George | Rainy, A. Rolland |
| Barker, John | Henderson, Arthur (Durham) | Raphael, Herbert H. |
| Barlow, Percy (Bedford) | Henry, Charles S. | Richards, T. F.(Wolverhampton |
| Barnes. G. N. | Higham, John Sharp | Rickett, J. Compton |
| Barran, Rowland Hirst | Holt, Richard Durning | Ridsdale, E. A. |
| Beale, W. P. | Horniman, Emslie John | Roberts, Charles H. (Lincoln) |
| Beauchamp, E. | Hudson, Walter | Roberts, G. H. (Norwich) |
| Beaumont, Hon. Hubert | Illingworth, Percy H. | Roberts, John H. (Denbighs.) |
| Benn, Sir J. Williams (Devonport | Jardine, Sir J. | Robertson, Sir G. Scott(Bradford |
| Benn, W.(T'w'r Hamlets, S. Geo. | Jenkins, J. | Robertson, J. M (Tyneside) |
| Bennett, E. N. | Johnson, John (Gateshead) | Roe, Sir Thomas |
| Berridge, T. H. D. | Jones, Leif (Appleby) | Rogers, F. L. Newman |
| Bertram, Julius | Jones, William (Carnarvonshire) | Rose, Charles Day |
| Brace, William | Jowett, F. W. | Rowlands, J. |
| Branch, James | Joyce, Michael | Runciman, Walter |
| Brigg, John | Kelley, George D. | Russell, T. W. |
| Brodie, H. C. | Kilbride, Denis | Samuel, Herbert L. (Cleveland) |
| Brooke, Stopford | Lambert, George | Samuel, S. M. (Whitechapel) |
| Bryce, J. Annan | Lamont, Norman | Scarisbrick, T. T. L. |
| Burnyeat, W. J. D. | Law, Hugh A. (Donegal, W.) | Scott, A. H.(Ashton under Lyne |
| Buxton, Rt. Hn. Sydney Charles | Layland-Barratt, Francis | Seaverns, J. H. |
| Byles, William Pollard | Lea, Hugh Cecil (St. Pancras, E. | Seddon, J. |
| Cawley, Sir Frederick | Leese, Sir Joseph F.(Accrington) | Seely, Major J. B. |
| Cherry, Rt. Hon. R, R. | Lehmann, R. C. | Shackleton, David James |
| Churchill Rt. Hon. Winston S. | Lever, A. Levy (Essex, Harwich) | Shaw,Rt. Hon. T. (Hawick B.) |
| Clough, William | Levy, Sir Maurice | Sheehy, David |
| Clynes, J.R. | Lewis, John Herbert | Shipman, Dr. John G. |
| Cobbold, Felix, Thornley | Lyell, Charles Henry | Silcock, Thomas Ball |
| Collins, Sir Wm. J.(S. Pancras, W. | Macdonald, J. R. (Leicester) | Spicer, Sir Albert |
| Cooper, G. J. | Maclean, Donald | Stanley, Hn. A. Lyulph (Chesh. |
| Corbett, CH. (Sussex, E. Grinst'd | Macpherson, J. T. | Steadman, W. C. |
| Cornwall, Sir Edwin A. | M'Kenna, Rt. Hon. Reginald | Strachey, Sir Edward |
| Cowan, W. H. | M'Micking, Major G. | Straus, B. S. (Mile End) |
| Crean, Eugene | Markham, Arthur Basil | Summerbell, T. |
| Cremer, Sir William Randal | Marks, G. Croydon (Launceston) | Taylor, Theodore C. (Radcliffe) |
| Crooks. William | Marnham, F. J. | Thompson, J. W. H.(Somerset E. |
| Crosfieid, A. H. | Mason, A. E. W. (Coventry) | Toulmin, George |
| Crossley, William J. | Massie, J. | Verney, F. W. |
| Dalziel, James Henry | Micklem. Nathaniel | Walsh, Stephen |
| Davies, Ellis William (Eifion) | Money, L. G. Chiozza | Walton, Sir John L. (Leeds, S.) |
| Dickson-Poynder, Sir John P. | Montagu, E. S. | Wardle, George J. |
| Duffy, William J. | Morgan, G. Hay (Cornwall) | Warner, Thomas Courtenay T. |
| Duncan, C. (Barrow-in-Furness | Morrell, Philip | Wason, Rt. Hn. E. (Clackmannan |
| Dunn, A. Edward (Camborne) | Morse, L. L. | Waterlow, D. S. |
| Elibank, Master of | Morton, Alpheus Cleophas | White, J. D. (Dumbartonshire) |
| Ellis. Rt. Hon. John Edward | Murray, James | White, Luke (York, E. R.) |
| Esslemont, George Birnie | Myer, Horatio | Whitehead, Rowland |
| Everett, R. Lacey | Nicholls, George | Whiteley, John Henry (Halifax) |
| Fenwick, Charles | Norton, Capt. Cecil William | Wiles, Thomas |
| Fiennes, Hon. Eustace | O'Connor, T. P. (Liverpool) | Wilkie, Alexander |
| Fuller, John Michael F. | O'Donnell, C. J. (Walworth) | Williams, Llewelyn(Carmarthen |
| Gibb, James (Harrow) | O'Grady, J. | Williams, Osmond (Merioneth) |
| Goddard, Daniel Frod | Parker, James (Halifax) | Wills, Arthur Walters |
| Grant, Corrie | Partington, Oswald | Wilson, John (Durham, Mid.) |
| Wilson, J. H. (Middlesbrough) | Wilson, W. T. (Westhoughton) | TELLERS FOR THE NOES.—Mr. |
| Wilson, J.W. (Worcestersh. N.) | Winfrey, R. | Whiteley and Mr. J. A. |
| Wilson, P. W. (St. Pancras, S.) | Wood, T. M'Kinnon | Pease. |
§ COLONEL KENYON-SLANEY (Shropshire, Newport)said that what he proposed by his Amendment was that in calculating the duty to be paid on any estate, in regard to which reliable accounts were produced, the allowance for maintenance should be the amount which such accounts showed to have been the average annual expenditure for maintenance for the last ten years. He hoped the Committee would recognise that he asked for this concession only when reliable accounts could be produced. Those accounts would have to be supported by vouchers, and they might be inspected by any officer whom the Chancellor of the Exchequer cared to send down. How did things stand at the present moment? When an estate came up for treatment they had to depend upon the presumption that a certain percentage would be deducted, but they had no knowledge at all what that percentage would be. The Chancellor of the Exchequer would probably tell him; that all these things were submitted to the reasonable discretion and fair-mindedness of the officers of the Inland Revenue, but that was not quite the same thing as the concession for which he asked. He wished especially to call the attention of the Labour representatives to this point. What was the expenditure in regard to which he desired to have these reliable accounts? In a very large degree the expenditure was incurred in the provision of cottages which would really be sanitary and a credit to the owner, and consequently those who occupied them would be substantially benefited. Another part of the expenditure would be in the promotion of all the various industries which would be encouraged by estate expenditure. This expenditure also went directly for increasing the productive capacity of the land and the fertility of the soil, and it gave those occupying the land the best possible chance of securing a remunerative return for their labour. It might be said that the proposal was not justified on strict business lines, but that only affected the position of the man who, for the time being, was spending that revenue. The community and the people at large benefited by the owner- 172 ship of land being in the hands of men who made it their practice to expend money largely upon their own estates. He believed that a man who spent money in his lifetime rendered a greater service to the community than a man who accumulated wealth and bequeathed it to others at his death. He would briefly illustrate his argument by quoting figures, for the accuracy of which he could vouch. In the case of a small squire's property the gross rents received amounted in fifteen years to £62,800 in round figures. The rates, taxes, and other charges amounted in the same period to over £10,000. During the fifteen years the expenditure upon improvements and repairs had been over £23,000. That meant that in those fifteen years over 40 per cent, of the income of the estate had been spent on improvements and repairs alone. The item of outdoor wages to workers employed on the estate during the fifteen years amounted to £20,000. Therefore, when these different charges were added together and the sum deducted from the gross rental, it appeared that the expenditure amounted to over 80 per cent, of the income derived from the estate. Besides all that there had been these particular estate charges, amounting to over £1,500 a year, and they were making the ownership of that land for those fifteen years result in not only not a profit but a considerable loss. He was asking that where an estate of that sort could show those figures in a way which absolutely satisfied the most stringent critic of their correctness, those figures should be taken as the amount to be deducted from the estate's net income in order to show the real amount on which it would be fair to charge the duty. Hon. Members would recognise that the expenditure was not selfish expenditure; it was directly for the good of the countryside and for the good of the objects they all had at heart, and therefore it must be a matter of importance, to be considered favourably, that those who were willing to spend in that way should be encouraged rather than discouraged. The work was genuine; it was not nonsense work. Every penny was spent on real improvements, and on carrying out in the 173 highest degree that which was put before them as the ideal at which owners of land ought to aim. Would it not therefore be fair that they should encourage such treatment of an estate by the owner, and as long as they absolutely safeguarded themselves from any possibility of fraud or exaggerated estimates or overdrawn statements, that they should fall in with his suggestion and say that under those circumstances they would allow that the fair deduction would be that which the estate accounts showed, so long as they were based upon the average of a sufficient number of years to make them reliable? He had suggested ten years, but if the Chancellor would rather take fifteen years, or a shorter number of years, well and good. But whatever number of years he took it should be sufficiently long to ensure the estate not losing because of the expenditure of some special sum in one particular year, and to make it certain that they were really giving a relief which had been fairly earned. He thought he had made a case which would justify the consideration of the Chancellor of the Exchequer, and he would be satisfied if the right hon. Gentleman gave an assurance that if that consideration led him to the belief that such action as he suggested would be beneficial to the estate and really good for the maintenance of the system under which the country was carried on now he would endeavour another year to meet him at all events in some degree.
§
New clause—
In calculating the duty to be paid on any estate, in regard to which reliable accounts are produced, the allowance for maintenance shall t)e the amount which such accounts show to have been the average annual expenditure for maintenance for the last ten years."—(Colonel Kenyon-Slaney.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid he was not going to complain of the manner in which the right hon. Gentleman had presented his case, and he quite agreed that there were in the present law provisions under which cases of hardship might arise, nor had he any difficulty in giving him the assurance which he asked for at the end 174 of his speech, that this question should receive the most careful consideration. He must, however, point out again that the scale of deductions had been in force for a considerable number of years, and none of his predecessors had seen their way to increase them. No doubt an argument of that kind did not commend itself to the right hon. Gentleman, and it was, of course, not conclusive, and he was quite ready to consider the question independently of any decision of previous Chancellors of the Exchequer. He must also point out that he was assured by those responsible for the Inland Revenue that they had no hard and fast rule as to what were necessary outgoings and that they would take into account any bona fide expenditure incurred upon the estate during the year preceding the death of the testator. If then, there was a statutory deduction under the Act of 1894 for management not exceeding 5 per cent, and all those other considerations were taken into account, there was no unfairness, particularly when the reasonableness and elasticity which the Inland Revenue officers applied was considered. Further, the language which the hon. Member used was not such as could be put upon the Statute-book. He therefore suggested that the Amendment should be withdrawn on his assurance that he would consider this point.
§ COLONEL KENYON-SLANEYsaid it would be discourteous to resist the appeal of the Chancellor of the Exchequer, and he had no intention of doing so. He understood that the right hon. Gentleman was going to deal with this question with a fair and open mind. He hoped the right hon. Gentleman would understand that if his object was attained, it would be to the advantage of the country. He would not put the Committee to the trouble of a division.
§ Amendment, by leave, withdrawn.
§ MR. FELL (Great Yarmouth)moved a new clause to provide that every company or corporation which was chargeable with income-tax on its profits should be assessed only in respect of such profits as were distributed among the shareholders of that company or corporation.
§ MR. ASQUITHsaid the matter had already been discussed.
§ *MR. FELLsaid he would be very short, but it was felt to be a hardship by many people that the profits of a company which were not divided among shareholders should have to pay income-tax. There was a marked discrepancy in the way in which profits were assessed. The Court of Chancery, on the one hand, declared that the profits of a company were only those which were made after the capital of the company had been maintained. The Commissioners of Inland Revenue, on the other hand, said that none of the profits of a company might be applied for the purpose of keeping capital intact, but the whole must be treated as profit and pay income-tax. He thought the Committee would agree with him that the Court of Chancery took a more sound financial view of the subject than did the Commissioners of Income-Tax. If a company was to be a permanent institution carried on for the benefit of shareholders, the first object of the directors must be to keep the capital fully maintained and to distribute only the profit which remained over and above that amount. The Commissioners of Income-Tax did not allow the deduction, and the shareholders therefore had to pay ls. in the pound on the sum put aside for reserve. They never received that money. If they did many of them would be able to get the ls. back, because their income would come within the limit of abatement. Under the present arrangement, however, they had no chance of getting it back, and therefore a company paid to the income-Tax Commissioners a larger sum than really would be obtained if the money was distributed amongst the partners or shareholders of a company. That was one of the points he wished to press. There was another, namely, that the directors of a company might be relied upon to distribute as much as possible to the shareholders. He should; say that they put their best foot forward in most cases, and the Courts had agreed with this, because they did not allow the shareholders to propose at the annual meeting that a larger dividend should be distributed than that which the directors themselves suggested. The clause was framed on the assumption that the directors always would distribute the very maximum sum they were justified in distributing on the profits which might; be reasonably held to be made in each 176 year, and even if they did put something aside the income-tax derived the full benefit, because it was to be supposed that the sum would be employed and, consequently, would earn further income on which income-tax had to be paid. He thought they might rest assured that the directors would always distribute as much profit as might safely be distributed, and the Income-Tax Commissioners should not tend to make the directors distribute more than they ought. It would be sounder finance, therefore, if they only charged a company the tax on the profits which the shareholders received.
§
New clause—
Every company or corporation which is chargeable with income-tax on its profits shall be assessed only in respect of such profits as are distributed among the shareholders of that company or corporation."—(Mr. Fell).
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid he was sorry the hon. Gentleman had raised this point again, because it had been discussed only a few days ago. He did not want to repeat the speech he made then, in which he dealt very fully with the arguments the hon. Gentleman had just used. He would briefly recapitulate his views. In the first place the clause sought to make a difference between a statutory company and an individual. But what was law for a company ought to be law for an individual also, and if they were going to allow a company to escape assessment for income-tax on that part of its profits which were placed to reserve the same rule must be applied to an individual. That in itself was sufficient to dispose of the clause, but, quite apart from that, it was contrary to the fundamental principles of our taxation. The tax was assessed on profits. The moment a sum was ascertained to be a profit it became chargeable to income-tax: the person who received it had nothing to do with it. It might be placed to a reserve fund, distributed in charity, or spent in reckless and riotous living—all these things were absolutely immaterial. The moment it appeared in the character of profit it was subject to the definition of the income-tax law. On these two 177 grounds, which were fully set forth the other day, he could not assent to the clause.
§ MR. AUSTEN CHAMBERLAINhoped his hon. friend would not proceed to a division on the clause. He could not support it in the form in which it stood, and it was perfectly true they had had a discussion on the same point, which ho thought had not been wholly useless. The only further hope he would express was that the Chancellor of the Exchequer would give a little attention to the subject. What was said by his right hon. friend the Member for Dublin University first of all, and afterwards concurred in by the Chancellor of the Exchequer was that the real question was how profits should be arrived at. He thought that as the Chancellor of the Exchequer had an open mind with regard to injustices of the income-tax, he might profitably spend a little time in examining the definition of profits, with particular reference to wasting capital. Part of the reserves were really the replacement of wasting capital. Part of them were nothing of the kind, but were additional capital placed in the business. If they were for the equalisation of dividends it might affect the Chancellor of the Exchequer's revenue in a particular year, but not in the long run, because if the revenue received too little one year, the Chancellor would get the tax whenever the reserve was utilised for the equalisation of dividends.
§ Amendment, by leave, withdrawn.
§ MR. SAMUEL ROBERTSmoved a new clause providing that on and after 1st January, 1908, the customs duty of ld. per 1b. on cocoa should cease to be payable. He thought in this matter he might claim the support of the Chancellor of the Exchequer, because in a former speech this session the right hon. Gentleman stated that the duty was not defensible, and moreover, it only brought in a small amount and would not interfere as the sugar duty would with the Budget. The yield in raw' cocoa in 1906, amounted to £184,952, and that was the item he asked the Chancellor of 178 the Exchequer to remit after 1st January next. This year it would only amount to £46,000, and therefore would not interfere with his Budget in any way. Cocoa was produced in the tropics only; it could not be produced in this country. It was produced in our own Possessions in the West Indies. It was an article of food and was also used in the manufacture of chocolate in this country. The Chancellor of the Exchequer on the 18th April said that this duty was a small and not very lucrative tax. The right hon. Gentleman also thought there was a good deal of the flavour of protection about it, and that it was not defensible though it was a very small affair. If it were a very small affair he asked the right hon. Gentleman to accept this clause. He simply asked the right hon. Gentleman to repeal the duty on the raw cocoa, and not on the other forms of cocoa. He thought if this country were commencing afresh its customs duties, it would not adopt the system at present followed. We were raising at the present time about £13,500,000 on articles of food imported,, and which did not compete in any way with the products of this country. While doing that we allowed to come in absolutely free last year as much as £131,000,000 worth of articles wholly or mainly manufactured. Those articles competed with our own manufactures and labour.
§ MR. SAMUEL ROBERTSsaid he was giving a reason why it seemed to him absurd that we should adopt a system, whereby we taxed articles of food coming into this country which did not compete with what we made. He would not, of course, go further into that. The argument was used by Members on the other side of the House, including the Chancellor of the Exchequer, that they who held the views he himself did were placed on the horns of a dilemma, because if a duty were imposed and the goods still came into this country we got no protection for our manufactures; but, on the other hand, if the goods were kept out we got no duty. Here was a case which met that argument. We were receiving at the present time from manufactured cocoa, £70,616. That was just an instance where a small duty of 2d. per lb. did not prevent the manufactured goods coming 179 into the country, but brought a revenue to the Exchequer. He did not propose to interfere with that in his clause. What he was asking the Chancellor of the Exchequer to do—and it was only a small request —was to remit the duty on raw material, which only brought in £184,000 odd last year; and, assuming that the same amount would be realised this year, it would only mean remitting the sum of £46,000. The right hon. Gentleman could easily do that, because he had a large increase recently. The clause would not interfere with the Budget or dislocate it in the slightest way, and the right hon. Gentleman by taking this step would give satisfaction to consumers of cocoa in this country. It was a temperance drink and he was quite sure the Chancellor of the Exchequer would have the support of his followers if he acceded to this request.
§
New clause—
On and after the first day of January, nineteen hundred and eight, the duty of customs of one penny the pound on cocoa shall cease to be payable, and so much of The Customs Tariff Act, 1876, as refers to this duty is hereby repealed."—(Mr. Samuel Roberts.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid he did not suppose the hon. Gentleman expected that he would consent to this clause. He had said what he had to say on the subject in his Budget speech. He thought there was a slight flavour of protection in this duty, but it had passed the scrutiny of free traders so severe as Mr. Gladstone, Mr. Goschen and Sir William Harcourt. He was not sure that he did not take rather a stricter view himself than they did on the matter. In some ways he thought the duty interfered injuriously with the food of the people, but the hon. Gentleman, although he naturally minimised his proposal because it involved only £46,000, and although he had been kind enough to postpone the operation of this clause until 1st January next, did not give a reason why if the thing were injurious it ought not to be begun at once.
§ MR. SAMUEL ROBERTSsaid he suggested 1st January in order to give manufacturers an opportunity of getting rid of their stock.
§ MR. ASQUITHsaid he would rather give them a longer period—until 31st March. It made not very much difference to the manufacturer or consumer, but it made a good deal of difference to him, because, if he once assented to this proposal, although he would only part with £46,000 this year, it would mean a prospective loss of £200,000 in the year following, and he did not feel inclined to tie himself to that extent. Therefore, without entering into the general merits of that question or the various deductions which the hon. Gentleman was disposed to draw, he should ask the Committee to allow him to be free in this respect until the time came for the next. Budget.
§ MR. HUNT (Shropshire, Ludlow)said he would have thought all the Members on the other side of the House and below the gangway would have supported this Amendment, as they were always accusing the Unionist Party of wishing to tax raw material. It seemed to him that if it were wrong to tax very slightly part of our wheat supply, it must be still more wrong to tax the whole of the raw cocoa very considerably. Cocoa, after all, was undoubtedly a food, and here was the Chancellor of the Exchequer not only taxing it heavily, but, so far as he could make out, he was to go on taxing it. Cocoa was very largely used by the very poor, and they considered it both food and drink. It was moreover very nourishing, and it had none of the disadvantages of tea and coffee. His opinion certainly was that it was used very considerably by the poorest class in Shrewsbury, and he believed it was the same in the other large towns. We could not produce it in this country, and consequently the people who bought it had to pay the whole of the tax. Why was it a terrible wrong to talk about putting on a tax of less than one-fifth of a farthing per lb. on about half the supply of wheat coming into this country, and quite right to put a 1d. a lb. on all cocoa, and another 1d. a lb. on all imported manufactured cocoa? This seemed to be breaking all the rules of what the Government were pleased to 181 call free trade. He hoped the right hon. Gentleman would excuse his saying so, but it appeared to him a particularly warm performance, seeing that the head of one of the largest cocoa manufacturers in this country was reported to have given to the Liberal Party £20,000 for the last general election. He thought that gentleman was very wise in his generation; he got a tariff himself, and he was going to take thundering good care no one else got it. Liberals said they must stick to free trade in order to keep politics pure. He hoped they would take this matter into their consideration
§ The Government might at least have taken off the duty on the raw cocoa that came from the Colonies. Surely by so doing they would have got nearer to real free trade. It would not; have cost the Chancellor of the Exchequer a very largo sum, and they could hardly have been accused of making.my sort of use of what he believed the Prime Minister called squalid bargains.
§ Question put.
§ The Committee divided: —Ayes, 36; Noes, 170. (Division List, No. 278.)
183| AYES. | ||
| Acland-Hood, Rt. Hn. Sir Alex. F | Hardy, Laurence(Kent, Ashford | Scott, Sir S. (Marylebone, W.) |
| Anson, Sir William Reynell | Harrison-Broadley, H. B. | Sheffield, Sir Berkeley George D. |
| Ashley, W. W. | Helmsley, Viscount | Staveley-Hill, Henry(Staff'sh.) |
| Bignold, Sir Arthur | Hill, Sir Clement (Shrewsbury) | Summerbell, T. |
| Boyle, Sir Edward | Hills, J. W. | Talbot, Lord E. (Chichester) |
| Bridgeman, W. Clive | Hunt, Rowland | Thomson, W.Mitehell-(Lanark) |
| Carlile, E. Hildred | Lockwood, Rt. Hn Lt.-Col. A. R. | Valentia, Viscount |
| Cecil, Evelyn (Aston Manor) | Macdonald, J. R (Leicester) | Walrond, Hon. Lionel |
| Cecil, Lord John P. Joicey | Marks, H. H. (Kent) | |
| Courthope, G. Loyd | Morpeth, Viscount | TELLERS FOR THE AYES—Mr. |
| Duffy, William J. | Nicholson, Wm. G. (Petersfield) | Samuel Roberts and Mr. |
| Fell, Arthur | Rawlinson, John Frederick Peel | Claude Hay. |
| Forster, Henry William | Ronaldshay, Earl of | |
| Gretton, John | Salter, Arthur Clavell | |
| NOES. | ||
| Acland, Francis Dyke | Cooper, G. J. | Hemmerde, Edward George |
| Ainsworth, John Stirling | Corbett, C H(Sussex, E. Grinst'd | Henderson, Arthur (Durham) |
| Allen, A. Acland (Christchurch) | Cornwall, Sir Edwin A. | Higham, John Sharp |
| Armitage, R. | Cowan, W. H. | Holt, Richard Darning |
| Asquith, Rt. Hn. Herbert Henry | Crean, Eugene | Horniman, Emslie John |
| Astbury, John Meir | Crosfield, A. H. | Hudson, Walter |
| Baker, Joseph A.(Finsbury, E.) | Crossley, William J. | Illingworth, Percy H. |
| Balfour, Robert (Lanark) | Dalziel, James Henry | Jardine, Sir J. |
| Banbury, Sir Frederick George | Davies. Ellis William (Eifion) | Jenkins, J. |
| Baring, Godfrey (Isle of Wight) | Davies, W. Howell (Bristol, S.) | Johnson, John (Gateshead) |
| Barker, John | Duncan, C.(Barrow-in-Furness) | Jones, Leif (Appleby) |
| Barlow, Percy (Bedford) | Dunn, A. Edward (Camborne) | Jones, William (Carnarvonshire |
| Barran, Rowland Hirst | Elibank,. Master of | Kelley, George D. |
| Beale, W. P. | Ellis, Rt. Hon. John Edward | Kincaid-Smith, Captain |
| Beaumont, Hon. Hubert | Esslemont, George Birnie | Lambert, George |
| Bennett, E. H. | Evans, Samuel T. | Lamont, Norman |
| Berridge, T. H. D. | Everett, R. Lacey | Layland-Barratt, Francis |
| Bertram, Julius | Fenwick, Charles | Lea, Hugh Cecil(St, Pancras, E.) |
| Brace, William | Ferens, T. R. | Leese, Sir Joseph F.(Accrington |
| Branch, James | Fiennes, Hon. Eustace | Lehmann, R. C. |
| Brooke, Stopford | Fuller, John Michael F. | Lever, A. Levy(Essex, Harwich) |
| Bryce, J. Annan | Gill, A. H. | Levy, Sir Maurice |
| Burnyeat, W. J. D. | Goddard, Daniel Ford | Lewis, John Herbert |
| Buxton, Rt. Hn. Sydney Charles | Greenwood, Hamar (York) | Lough, Thomas |
| Byles, William Pollard | Gulland, John W. | Lyell, Charles Henry |
| Cawley, Sir Frederick | Harmsworth, Cecil B. (Worc'r) | Lynch, H. B. |
| Cheetham, John Frederick | Harmsworth, R. L.(Caithn'ss-sh | Maclean, Donald |
| Cherry, Rt, Hon. R. R. | Harvey, A. G. C. (Rochdale) | Macpherson, J. T. |
| Clough, William | Harvey, W. E.(Derbyshire, N.E. | M'Crae, George |
| Cobbold, Felix Thornley | Hazel, Dr. A. E. | M'Laren, H. D. (Stafford, W.) |
| Collins. Sir Wm. J.(S. Pancras, W. | Helme, Norval Watson | M'Micking, Major G. |
| Marks, G. Croydon(Launceston) | Renton, Major Leslie | Thompson, J. W. H.(Somerset, E |
| Marnham, F. J. | Richards, T. F. (Wolverh'mp'n | Tomkinson, James |
| Mason, A. E. W. (Coventry) | Rickett, J. Compton | Toulmin, George |
| Massie, J. | Ridsdale, E. A. | Ure, Alexander |
| Micklem, Nathaniel | Roberts, Charles H. (Lincoln) | Verney, F. W. |
| Money, L. G. Chiozza | Roberts, G. H. (Norwich) | Walsh, Stephen |
| Montagu, E. S. | Roberts, John H. (Denbighs.) | Wardle, George J. |
| Morgan, G. Hay (Cornwall) | Robertson, Sir G. Scott (Bradf'rd | Warner, Thomas Courtenay T. |
| Morrell, Philip | Rogers, F. E. Newman | Wason, Rt. Hn. E (Clackmannan |
| Morton, Alpheus Cleophas | Rose, Charles Day | Waterlow, D. S. |
| Murray, James | Rowlands, J. | Watt, Henry A. |
| Nicholls, George | Runciman, Walter | White, George (Norfolk) |
| Norton, Capt. Cecil William | Russell, T. W. | White, J. D.(Dumbartonshire) |
| O'Donnell, C. J. (Walworth) | Samuel, Herbert L. (Cleveland) | White, Luke (York, E.R.) |
| O'Grady, J. | Scarisbrick, T. T. L. | Whitehead, Rowland |
| Parker, James (Halifax) | Scott, A H (Ashton under Lyne | Whitley, John Henry (Halifax) |
| Partington, Oswald | Seaverns, J. H. | Wills, Arthur Walters |
| Pearce, Robert (Staffs. Leek) | Seddon, J. | Wilson, John (Durham, Mid.) |
| Pearson, W. H. M. (Suffolk, Eye) | Shackleton, David James | Wilson, J.W. (Worcestersh. N.) |
| Philipps, Col. Ivor(S'thampton) | Shaw, Rt. Hon. T. (Hawick B.) | Wilson, P. W. (St. Pancras, S.) |
| Pickersgill, Edward Hare | Silcock, Thomas Ball | Wilson, W. T. (Westhoughton) |
| Pollard, Dr. | Spicer, Sir Albert | Winfrey, R. |
| Price, C. E. (Edinb'gh, Central) | Stanley, Hn. A. Lyulph (Chesh.) | Wood, T. M'Kinnon |
| Priestley, W. E. B. (Bradford, E.) | Strachey, Sir Edward | |
| Radford, G. H. | Straus, B. S. (Mile End) | TELLERS FOR THE NOES—Mr. |
| Rainy, A. Rolland | Sutherland, J. E. | Whiteley and Mr. J. A. |
| Raphael, Herbert H. | Taylor, Theodore C. (Radcliffe) | Pease. |
Bill read the third time, and passed.
§ MR. H. H. MARKSmoved a new clause to ensure, first, that payments should be made under the Workmen's Compensation Act without deductions, and, secondly, so far as one could ensure it, that income-tax should not be paid in respect of those portions of a person's receipts which he had to part with by reason of the enactments of the Workmen's Compensation Act. Under the original Income-Tax Act of 1799 taxpayers made a general return, and it was within the knowledge of the Committee that some important changes had taken place since that time. Under the original system the income-tax payer deducted from the total income the statutory exceptions, and thus arrived at the chargeable income upon which he had to pay the tax. Since then the process had been changed, and the tax was now deducted in the course of business. Under the Act of 1799 the taxpayer returned his income after deducting from it any sum paid by way of annual interest. Thus, if his income were £1,000and he paid away £100 in interest or annuity he returned only £900 as chargeable for income-tax. Under the present system he returned £1,000, but he had paid the £100 less income-tax, and he had therefore got the £5 tax on the £100 in hand. He paid the same amount under the new system as under the old, and the principle was the same, namely, that he was not charged on what was not his income. 184 But let them take the case of a man who under the Workmen's Compensation Act paid £200 or £300 in compensation. Either he had to deduct income-tax, in which event the recipient suffered, or if he did not deduct the tax he himself had to pay it. The Chancellor of the Exchequer shook his head, but if he was under a misapprehension on the point he hoped he would be corrected. The point, however, was not entirely clear, and was of sufficient importance to justify elucidation, and with that object he moved the clause.
§
New clause—
(1) It shall be lawful for any employer, within the meaning of The Workmen's Compensation Act, 1906, in estimating the amount at which he is chargeable for income-tax, to deduct there from any payments made by him during the year preceding the year in respect of which he is assessed—(a) by way of compensation to any person under The Workmen's Compensation Act, 1906; or (b) by way of premium in respect of any policy of insurance against liability under the said Act; or (c) by way of contribution to any scheme of compensation benefit or insurance duly certified by the Registrar of Friendly Societies under the said Act. (2) In making payment to any person of any money payable to him as compensation under The Workmen's Compensation Act, 1906, the payer shall not deduct income-tax."—(Mr. H. H. Marks.)—
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
185§ *MR. ASQUITHcould not help thinking the hon. Gentleman was under some misapprehension. If an employer engaged in a business paid compensation to a workman or premium on insurance against liability to pay such compensation, that would be treated as part of the expenses of the business, and would be deducted before arriving at the assessable profits. That was the law as it now stood. This clause, therefore, was not necessary.
§ MR. CLAUDE HAY (Shoreditch, Hoxton)asked the Chancellor of the Exchequer if there were any words in any Act of Parliament which carried out what the right hon. Gentleman had said, or whether it was merely a question of practice. All that was desired was that it should be in black and white on the Statute-book.
§ *MR. ASQUITHsaid the law with regard to deductions of income-tax was very peculiar in this respect. What the Statute did was to prohibit certain deductions from being made; it did not enumerate the deductions which were allowed. It had been the uniform practice to have regard to these prohibitions and to treat as not prohibited, and therefore allowable, all expenses which were reasonably incident to a business before arriving at the profit, and these payments had always been included as allowable deductions under the Act.
§ MR. H. H. MARKSsaid in view of the important statement of the right hon. Gentleman he would ask leave to withdraw the clause.
§ Amendment, by leave, withdrawn.
§ *SIR A. SPICER (Hackney, Central)moved it new clause relating to deductions by clergymen or ministers of religion in respect of dwelling houses in certain cases. He said he desired to ask that clergymen and ministers of religion should be placed in the same position as medical men, who were allowed to make a deduction for the value of their consulting rooms. Ministers and clergymen were allowed under the Act of 1853 for some years in some parts of the country to make 186 these deductions, but in recent years they had not been allowed to make them because they could not always show that their studies were wholly and exclusively used for the purpose of carrying on their profession, and in one or two cases where it had been shown that a Minister's golf clubs, for instance, had been kept in his study—
§ MR. ASQUITH (interrupting)said he would agree to the clause. The principle, he thought, was quite right, but the clause would require reconstruction on Report.
§
New clause —
Nothing in the Income tax Acts or the schedules thereto contained shall restrain any clergyman or minister of religion who shall rent a dwelling house, a part whereof shall be used by him mainly and substantially for the purposes of any profession or office, by the said Acts or schedules charged, from deducting or setting off from the stipend, salary, emoluments, fees, or profits of his profession or office, such sum not exceeding one-eighth part of this rent bona fide paid for such dwelling house, with the appurtenances, as the Commissioners shall on due consideration allow, and the Commissioners shall have authority to allow such deductions as in other cases, and to assess such persons accordingly.'"—(Sir A. Spicer.)—
§ Brought up, and read a first and second time, and added to the Bill.
§ MR. CLAUDE HAYasked the Chancellor of the Exchequer whether the declaration he had just made covered the point in the clause standing in his name relating to the deduction of income-tax and compensation under the Workmen's Compensation Act, 1906.
§ MR. ASQUITHsaid he did not exactly know the object of the clause
§ MR. CLAUDE HAYsaid the idea of the clause was that it was quite possible that a workman might receive by way of compensation a sum of money which, together with other sources of income, might necessitate his having to pay at the rate of unearned income upon the amount he received as compensation.
§
New clause—
It shall be lawful for any person, in estimating the amount of which he is chargeable
187
for income-tax, to deduct there from any sums received by him during the year preceding the year in respect of which he is assessed (a) As compensation under the Workmen's Compensation Act, 1906, for any injury to himself or to any person on whom he was dependent within the meaning of the Act; or (b) Arising out of the investment or application of any sum paid or awarded to him as compensation under the said Act."—(Mr. Claude Hay.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid the sum received as compensation would not be treated as profit. The second part of the clause was, of course, another matter.
§ Amendment, by leave, withdrawn.
§ MR. CLAUDE HAYmoved to make the stamp duty upon a policy of sea insurance one penny. He said this was a clause which ought to meet with the warmest sympathy from the Chancellor of the Exchequer.
§
New clause—
The stamp duty upon a policy of sea insurance for or upon any voyage shall be one penny."—(Mr. Claude Hay.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid there were several other Amendments to the same effect. He agreed that the present scale of stamp duties on policies of marine insurance was not defensible and ought to be altered. The question was, however, rather a complicated one. The only reason he had not produced a clause as he had intended was that there was a Committee considering the whole question of indemnity for loss, particularly in case of war, and he thought it was desirable to have their Report before finally bringing the Government proposals before Parliament. The hon. Gentleman might, therefore, be quite sure that the matter would be dealt with next year. He was entirely in sympathy with his object.
§ MR. CLAUDE HAYsaid that after what had fallen from the right hon. Gentleman, in which he gathered that ho pledged himself to deal with this matter substantially next year so that marine insurance might be relieved of its present onerous condition, he certainly would not press his Amendment, and he hoped next year there would be a very important step forward in marine insurance.
§ Amendment, by leave, withdrawn.
§ MR. AUSTEN CHAMBERLAINsaid he understood, from private communications, that the Chancellor of the Exchequer would accept the clause standing in his name, and therefore he moved it with no explanation.
§
New clause—
Notwithstanding anything to the contrary in Section 10 of the Revenue Act, 1883, and subject to the conditions there set forth, gold and silver plate imported into Great Britain or Ireland may be delivered into the hands of the officers of any assay office selected by the importer though it be not the assay office nearest to the port of importation, and may, upon security being given to the satisfaction of the Commissioners of Customs, be removed to the assay office without being in charge of an officer of customs."—(Mr. Austen Chamberlain).
§ Brought up, and read a first and second time, and added to the Bill.
§ MR. H. H. MARKSmoved a new clause to make stamp duties on insurance policies where the premium did not exceed £5 one penny. He said he moved the clause pro forma in order to give the Chancellor of the Exchequer an opportunity of stating definitely his position in regard to a point discussed at an earlier stage.
§ MR. ASQUITHsaid he would try to meet the hon. Gentleman. He did not want to go into details. He thought they might be a bit more generous than they were in this matter, and therefore he would be prepared to accept a penny stamp where the premium paid did not exceed £2.That was a very substantial consideration and would cover the case of those who were poor.
§ MR. H. H. MARKSsaid he would gladly accept the suggestion and would move the clause in the new form.
§
New clause—
The stamp duty on any policy of insurance, or indemnity against liability incurred by employers in consequence of claims, or possible claims, upon them by workmen who have sustained personal injury, where the premium paid does not exceed two pounds, shall be one penny."—(Mr. H. H. Marks.)
§ Brought up, and read a first and second time, and added to the Bill.
§ MR. FELL,who had a new clause on the Paper with respect to the abolition of duty on sugar from the Colonies, said it was so important and would require so much discussion that he did not propose to move it at that hour of the night.
§ *MR. BRIDGEMANsaid he did not want to detain the Committee, but he would like to appeal to the Chancellor of the Exchequer to consider the Question raised in the clause standing in his name. In the second answer which the right hon. Gentleman gave on the Amendment of the hon. Member for Tewkesbury—
*The CHAIRMANsaid he was afraid he could not allow this irregular discussion. He must have a Motion before him.
§ *MR. BRIDGEMANsaid he was moving his clause, and if the right hon. Gentleman would consider the point he would not trouble the House with any long speech. Perhaps the right hon. Gentleman would look into the whole question and enquire as to how seriously the landlords of poor agricultural land were affected by the present system, and try to do something to meet it another year, in which case he would be quite satisfied.
§
New clause—
It shall be lawful for any persona owning land and hereditaments to elect to be assessed to the duties of income-tax, chargeable under Schedule D, and in accordance with the rules of that Schedule, in lieu of assessment to the duties under Schedule A. The election of such person shall be signified by notice in writing
190
delivered personally or sent by post in a registered letter to the surveyor of taxes for the district within two calendar months after the commencement of the year of assessment; and from and after the receipt of such notice the charge upon him to the duties of income-tax for such year shall be under Schedule D, and the profits and gains arising to him from the ownership of the lands shall for all purpose be deemed to be profits or gains of a trade chargeable under that schedule."—(Mr. Bridgeman.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid he had already promised that this matter should receive full consideration.
§ MR. BRIDGEMANasked leave to withdraw the clause.
§ Amendment, by leave, withdrawn.
§ MR. RAWLINSONmoved a new clause to add the incomes of husband and wife together and divide them by two for ascertaining the exemption or abatement of income-tax. He said the matter was brought to the notice of the Chancellor of the Exchequer last year. The point was that where husband and wife were living together their incomes should be taken as that of separate people and not of one person. In the case of a husband with £500 a year, and a wife with,£300 a year, if they had remained single both would have been entitled to exemption, but being married their joint incomes came to £800 a year.
§
New clause—
Incomes of husband and wife shall be added together and divided by two for the purpose of ascertaining the exemption from or abatement of income-tax to which they are respectively entitled."—(Mr. Rawlinson.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. ASQUITHsaid he must give the same answer that was given by every Chancellor of the Exchequer. The theory 191 of the law was that where two persons became domestic partners they became members of one household and their two incomes were fused together. Such a change as that proposed in this clause would involve the Revenue in a loss of most enormous magnitude.
§ MR. RAWLINSONsaid he would bring the matter forward on some other occasion.
§ Amendment, by leave, withdrawn.
§ Bill reported.
§ Bill re-committed in respect of an Amendment to Clause 16.—(Mr. Chancellor of the Exchequer.)