HC Deb 16 July 1907 vol 178 cc631-48

Postponed Proceeding on Amendment proposed, on consideration of the Bill, as amended, resumed.

Which Amendment was— In page 9, line 24, at the end to insert the words,'(d) any annuity which has been purchased out of savings from income derived from the exercise of any trade, profession, or vocation.' "—(Mr. Fell.)

Question proposed, "That those words be there inserted in the Bill."


said he would be inclined to think that incomes derived from annuities were much more worthy of consideration than those derived from pensions, because, as had already been pointed out, an income derived from pensions was really due to very little self-sacrifice on the part of the pensioner. A man accepted a situation under the Civil Service, or a railway, or an individual, or in the Army or Navy, at a certain salary, and with the full knowledge that when he retired from that service he would receive a definite pension. What was the case of a man who put aside a certain sum out of his annual income and saved sufficient money to buy himself an annuity? That demanded considerable self-sacrifice and determination on the part of a man, and he believed that such a man was far more worthy of consideration than the man who derived his income from a pension. The conclusion he had drawn from the debates on this subject of the differen- tiation between earned and unearned incomes was that the Chancellor of the Exchequer had not paid sufficient consideration to the evidence of Sir Henry Primrose given before the Income-tax Committee. He pointed out that evidence had been laid before the Committee, which showed that although the income-tax itself did not provide for differentiation between different kinds of income, the general scheme of our taxation did do so by means of other taxes, viz., house duty, stamps, and most of all, death duties. He had handed into the Committee a Paper in which an attempt was made to show in terms of an annual tax the burden that the death duties imposed on those who enjoyed incomes that had the character of being unearned or permanent. He pointed out that a man with an income of between £40 and £400 a year really paid 9d. in the £, which a man with an earned income did not pay; that a man with an income between £400 and £ 1,000 a year paid an income-tax of 1s., and between £1,000 and £ 2,000 a year an income-tax of 1s. l½d., quite apart from the ordinary income-tax. Sir Henry went on to say that the effect of a. variation of the income-tax would not be quite the same thing as an increase on the death duties, for it would impose a special tax on savings while still in the hands of the person who made the savings, whereas the death duties

Acland-Hood,RtHn Sir Alex. F. Douglas,Rt.Hon. A. Akers Mildmay, Francis Bingham
Alison, Sir William Reynell Duncan, Robt. (Lanark, Go van Morpeth, Viscount
Anstruther-Gray, Major Faber, George Denison (York) O'Neill, Hon. Robert Torrens
Arkwright, John Stanhope Faber,Capt.W.V. (Hants, W.) Rawlinson,John Frederick Peel
Ashley, W. W. Fletcher, J. S. Roberts,S.(Sheffield,Ecclesall)
Aubrey-Fletcher,Rt.Hn. Sir H. Forster, Henry William Rutherford, John (Lancashire)
Banbury, Sir Frederick George Gretton, John Rutherford, W. W. (Liverpool)
Baring,Capt.Hn.G(Winchester Gurdon,RtHnSirW.Brampton Salter, Arthur Clavell
Barrie,H.T.(Londonderry,N.) Harrison-Broadley, H. B. Sloan, Thomas Henry
Beach,Hn. Michael HughHicks Hay, Hon. Claude George Smith, Abel H.(Hertford,East)
Beckett,Hon. Gervase Helmsley, Viscount Starkey, John R.
Bignold, Sir Arthur Hervey,F.W.F.(BuryS.Edm'ds Staveley-Hill,Henry (Staff'sh.)
Bowles, G. Stewart Hill, Sir Clement (Shrewsbury) Talbot, Lord E. (Chichester)
Boyle, Sir Edward Hills, J. W. Thomson, W.Mitchell-(Lanark)
Campbell, Rt. Hon. J. H. M. Houston, Robert Paterson Thornton, Percy M.
Castlereagh, Viscount Hunt, Rowland Valentia, Viscount
Cavendish,Rt. Hn. VictorC. W. Kennaway,Rt.Hn.Sir John H. Walker,Col.W.H.(Lancashire)
Cecil, Evelyn (Aston Manor) Kenyon-Slaney,Rt.Hn. Col.W. Wilson,A.Stanley (York.,E.R.)
Cecil, LordR. (Marylebone, E.) Law, Andrew Bonar (Dulwich) Wortley,Rt.Hon.C.B.Stuart-
Chamberlain,RtHnJ.A. (Worc. Lockwood,Rt.Hn. Lt. -Col. A.R.
Chaplin, Rt. Hon. Henry Long,Rt.Hn.Walter(Dublin, S. TELLERS FOR THE AYES—Mr.
Cochrane, Hon. Thos. H. A. E. Lowe, Sir Francis William Fell and Mr. Harmood-
Court hope, G. Loyd Meysey-Thompson, E. C Banner.

deferred any special taxation (other than such as arose under the stamp duties) until the savings passed to someone other than the saver. It would surely be very inconsistent if the State, after encouraging saving by means of the Post Office and other savings banks, were to penalise the income derived from such savings. That was an important piece of evidence to which the Chancellor of the Exchequer had made no allusion at all, and he submitted that in resisting the Amendment of his hon. friend below him the right hon. Gentleman was directly imposing a premium on thriftlessness. It was no encouragement to a man who had saved sufficient to provide himself with an annuity if, when he had bought that annuity, it were treated not as a pension, but as an unearned income, and he believed the whole tendency of this differentiation between earned and unearned incomes would be to discourage a person to make any savings at all in his lifetime and to induce him to spend the whole of his income as rapidly as he could. For that reason he most cordially supported the hon. Gentleman.

Question put.

The House divided:—Ayes, 65: Noes, 260. (Division List, No. 286.)

Abraham, William (Rhondda) Davies, Ellis William (Eifion) Lewis, John Herbert
Acland, Francis Dyke Davies, Timothy (Fulham) Lupton, Arnold
Agnew, George William Davies, W. Howell (Bristol,S.) Luttrell, Hugh Fownes
Ainsworth, John Stirling Dewar,Arthur (Edinburgh,S.) Lynch, H. B.
Allen, A. Acland (Christchurch Dickinson, W.H.(St.Pancras,N. Macdonald, J. R. (Leicester)
Allen, Charles P. (Stroud) Duffy, William J. Macdonald,J.M.(FalkirkB'ghs
Ashton, Thomas Gair Duncan, C. (Barrow-in-Furness Macnamara, Dr. Thomas J.
Asquith,Rt.Hn.Herbert Henry Dunn, A. Edward (Camborne) Macpherson, J. T.
Astbury, John Meir Edwards, Clement (Denbigh) MacVeigh,Charles (Donegal,E.)
Baker, Sir John (Portsmouth) Edwards, Enoch (Hanley) M'Callum, John M.
Baker,Joseph A.(Finsbury,E.) Edwards, Sir Francis (Radnor) M'Crae, George
Balfour, Robert (Lanark) Elibank, Master of M'Kenna, Rt. Hon. Reginald
Baring,Godfrey (Isle of Wight) Esslemont, George Birnie M'Micking, Major G.
Barlow,Sir John E. (Somerset) Everett, R. Lacey Mallet, Charles E.
Barlow, Percy (Bedford) Fenwick, Charles Manfield, Harry (Northants)
Barnes, G. N. Ferguson, R. C.Munro Markham, Arthur Basil
Barran, Rowland Hirst Fiennes, Hon. Eustace Marks,G.Croydon (Launceston)
Barry, Redmond J.(Tyrone,N.) Fuller, John Michael F. Marnham, F. J.
Beale, W. P. Fullerton, Hugh Mason, A. E. W. (Coventry)
Beauchamp, E. Gardner,Col. Alan (Hereford, S. Massie, J.
Beck, A. Cecil Gibb, James (Harrow) Micklem, Nathaniel
Bell, Richard Gill, A. H. Mond, A.
Benn,SirJ.Williams (Devonp'rt Gladstone,Rt.Hn.Herbert John Montagu, E. S.
Benn,W. (T'w'r Hamlets,S.Geo. Glendinning, R. G. Montgomery, H. G
Bennett, E. N. Glover, Thomas Mooney, J. J.
Berridge, T. H. D. Goddard, Daniel Ford Morse, L. L.
Bertram, Julius Gooch, George Peabody Morton, Alpheus Cleophas]
Birrell,Rt. Hon. Augustine Grant, Corrie Murray, James
Black, Arthur W. Gulland, John W. Myer, Horatio
Bowerman, C. W. Haldane, Rt. Hon. Richard B. Nicholson,CharlesN.(Doncast'r
Brace, William Hall, Frederick Nolan, Joseph
Bramsdon, T. A. Hardy, George A. (Suffolk) Norton, Capt. Cecil William
Brigg, John Harmsworth,CecilB.(Worc'r.) O'Donnell. C. J. (Walworth)
Bright, J. A. Harmsworth,R.L(Caithn'ss-sh O'Grady, J.
Brocklehurst, W. B. Harvey, W.E.(Derbyshire,N.E.) Parker, James (Halifax)
Brooke, Stopford Harwood, George Partington, Oswald
Brunner, J. F. L.(Lancs., Leigh) Haslam, Lewis (Monmouth) Pearce, Robert (Staffs, Leek)
Bryce, J. Annan Haworth, Arthur A. Pearce, William (Limehouse)
Buckmaster, Stanley 0. Hazel, Dr. A. E. Philipps,Col.Ivor (S'thampton)
Burke, E. Haviland- Hedges, A. Paget Philipps, Owen C. (Pembroke)
Burns, Rt. Hon. John Helme, Norval Watson Pickersgill, Edward Hare
Burnyeat, W. J. D. Henderson, Arthur (Durham) Pirie, Duncan V.
Burt, Rt. Hon. Thomas Henry, Charles S. Pollard, Dr.
Buxton,Rt.Hn.Sydney Charles Higham, John Sharp Price, C.E.(Edinburgh, Central)
Byles, William Pollard Hobart, Sir Robert Price,RobertJohn (Norfolk,E.)
Carr-Gomm, H. W Hobhouse, Charles E. H. Priestley,W.E.B. (Bradford,E)
Causton,Bt.Hn. Richard Knight Hodge, John Radford, G. H.
Cawley, Sir Frederick Hogan, Michael Rainy, A. Rolland
Chance, Frederick William Holden, E. Hopkinson Rea. Russell (Gloucester)
Cheetham, John Frederick Holland, Sir William Henry Rea. Walter Russell (Scarboro)
Cherry, Rt. Hon. R. R. Hope,W.Bateman(Somerset,N. Rees, J. D.
Cleland, J. W. Hudson, Walter Renton, Major Leslie
Clough, William Hyde, Clarendon Richards,T.F. (Wolverhampt'n
Clynes, J. R. Jenkins, J. Richardson, A.
Cobbold, Felix Thornley Johnson, John (Gateshead) Rickett, J. Compton
Collins, Stephen (Lambeth) Johnson, W. (Nuneaton) Ridsdale, E. A.
Collins,SirWm.J. (S.PancrasW. Jones, Leif (Appleby) Roberts, G. H. (Norwich)
Cooper, G. J. Jones, William(Camarvonshire Roberts, John H. (Denbighs.)
Corbett, A. Cameron (Glasgow Kearley, Hudson E. Robertson,SirG.Scott (Bradf'rd
Corbett,C.H.(Sussex,E.Grinst'd Kekewich, Sir George Robertson, J. M. (Tyneside)
Cornwall, Sir Edwin A. Kilbride, Denis Robinson, S.
Cory, Clifford John Kincaid-Smith, Captain Robson, Sir William Snowdon
Cotton, Sir H. J. S. King, Alfred John (Knutsford) Roche, John (Galway, East)
Cox, Harold Laidlaw, Robert Rogers, F. E. Newman
Crean, Eugene Lamb, Edmund G.(Leominster Rose, Charles Dav
Cremer, Sir William Randal Lambert, George Rowlands, J.
Crooks, William Lamont, Norman Runciman, Walter
Crossley, William J. Layland-Barratt, Francis Samuel, S. M, (Whitechapel)
Curran, Peter Francis Lehmann, R. C. Schwann, C. Duncan(Hyde)
Dalziel, James Henry Lever, A.Levy(Essex,Harwich) Seddon, J.
Davits, David (MontgomeryCo, Levy, Sir Maurice Seely, Major J. B.
Shackleton, David James Tomkinson, James White, J. D. (Dumbartonshire
Shaw, Charles Edw. (Stafford) Toulmin, George White, Luke (York, E. R.)
Shipman, Dr. John G. Trevelyan, Charles Philips Whitehead, Rowland
Silcock, Thomas Bell Ure, Alexander Whitley, John Henry (Halifax)
Sinclair, Rt. Hon. John Verney, F. W. Wiles, Thomas
Smeaton, Donald Mackenzie Vivian, Henry Williams, J. (Glamorgan)
Spicer, Sir Albert Walker, H. De R. (Leicester) Wills, Arthur Walters
Stanley,Hn.A.Lyulph (Chesh.) Walsh, Stephen Wilson,Hon. C.H.W. (Hull, W
Stewart, Halley (Greenock) Walters, John Tudor Wilson,Henry J. (York, W.R.)
Strachey, Sir Edward Ward,W.Dudley (Southampton Wilson, John (Durham, Mid)
Strauss, E. A. (Abingdon) Wardle, George J. Wilson, W. T. (Westhoughton
Stuart, James (Sunderland) Warner, Thomas Courtenay T. Wood, T. M'Kinnon
Summerbell, T. Wason,Rt.Hn.E.(Clackmannan Young, Samuel
Taylor, Austin (East Toxteth) Waterlow, D. S.
Taylor, John W. (Durham) Watt, Henry A. TELLERS FOR THE NOES—
Taylor, Theodore C. (Radcliffe) Whitbread, Howard Mr. Whiteley and Mr. J. A.
Thompson, J.W.H.(Somerset,E. White, George (Norfolk) Pease.

Amendments proposed and agreed to without discussion:— In page 10, line 9. to leave out the word 'provision,' and to insert the word ' section.' In page 11, line 21, after the word 'made, to insert the words and allowed or signed.' In page 11, line 37, to leave out the words 'be repealed,' and to insert the words 'cease to have effect as respects income-tax charged for the year beginning the sixth day of April, nineteen hundred and seven, or for any subsequent year.' "—(Mr. Asquith.)


moved the omission of Subsection (1) of Clause 25. He said he did so because the Chancellor of the Exchequer had evidently been unable to find words embodying the con cession which they had understood he desired to make. The right hon. Gentle man promised to meet the case of the man who had a dwindling business, and what he had done was to meet the entirely different case of the man who had decided to discontinue his business because of failure. Unless the subsection of the old Act was allowed to remain in operation the man with a dwindling business would be compelled. under the system of three years' average to pay income-tax on income he had not earned. He begged to move the omission of Subsection (1).


in seconding the Amendment, was understood to say that it could not be denied that so far as regarded losses made during three or four years the trader was never recouped in making his return. If he made profits in the succeeding years after those in which he had sustained the losses, he was never recouped, because he could not bring all those years of losses into account, It was not simply a question of taking up a calculation of averages and saying that by deleting the clause they were placing it on a fair basis, because a man who had sustained losses in his business for a succession of years was unable to recoup himself in the prosperous years when he made profits. He could assure the House it was by no means uncommon in the shipping trade to make losses for two, three, and four years together. And the experience in the coal-mining industry was similar. If they made their big shilling one year they made their little halfpenny or penny another, or made losses. Losses on collieries were frequent, and continued sometimes for three years or more together, and those losses could not be recouped in the time of the big shilling. They could only bring in two of the years in calculating the average. That was one of the reasons why this particular clause had been given to the public. He quite understood that the clause gave a great amount of trouble in making assessments that had immediately to be revised and the whole trouble to be gone over again. It was the same thing as regarded capital and expenditure. No doubt the Chancellor of the Exchequer was familiar with the Minutes of the evidence taken before the Income Tax Committee. Sir Henry Primrose, in answer to a question, put it very clearly that this clause was given to the coal-owners as compensation for the fact that they were not allowed to take into account capital expenditure on shafts and other works connected with the mines. If they drove a horizontal tunnel it was charged to revenue; but if they sunk a shaft it was charged to capital, and was not allowed for in the return for income-tax. There were other years which showed that coal owners were very hardly dealt with in regard to this question of income and profits, and it was for that reason that this clause was given to mine owners and ship owners and thousands of others in the community. The Chancellor of the Exchequer was taking away that benefit, though it was perfectly true—and he and others were grateful to him for it—that in this Finance Bill these questions were being dealt with on a broader and wider basis than they had ever been dealt with before. Still, the right hon. Gentleman was taking away the benefit of this clause, and was giving them no boon by way of compensation. This subsection ought to be withdrawn until the right hon. Gentleman had brought in the clauses he had promised. The process of taking the average might be a proper one, but to take away the benefit and not give compensation was neither fair nor reasonable.

Amendment proposed to the Bill— In page 11, line 38, to leave out Subsection (2) of Clause 25."—(Sir F. Banbury.)

Question proposed, "That the words proposed to be left out stand part of the Bill."


said the proposal was the unanimous recommendation of a departmental Committee of acknowledged authority upon which sat Lord Ritchie and Sir Henry Primrose. The Postmaster-General pointed out the other night that the present system caused injustice between taxpayers and operated unfairly as between the taxpayer and the State. Under the present law the taxpayer could claim the benefit of a bad year, but the State could not claim the extra benefit of a good year. Taking the three years average, if in the first two a man made a loss and in the third did pretty well, he would pay income-tax on the average. What could be fairer? The three years average must work out reasonably in the long run. That was the ground on which the powerful Ritchie Committee made their recommendation. He agreed, however, that where a business was practically moribund it ought to be possible to make some revision to meet the exigencies of the case. That, however, did not affect the general question.


said he agreed with the report of the Committee to which the right hon. Gentleman had alluded and also with the argument put forward by the Postmaster-General on a former occasion. The Chancellor of the Exchequer made an important statement the other night when he said that, when a man. had an actual loss in any one year, it would enter into his average, not merely as a nil, but as a minus quantity. To many traders that fact was of great importance, and he hoped the discussion of the point would make it-more widely known that where they made an actual loss they were entitled to treat it that year as a minus quantity for the purpose of their average and not merely as nil. As far as he was concerned, he thought the Chancellor of the Exchequer had met his objection by the Amendment he had put on the Paper. He thought the right hon. Gentleman had gone as far as it was possible for him to go, and, so far as he was concerned, he had only to express his thanks to the right hon. Gentleman.

MR. SAMUEL ROBERTS (Sheffield, Ecclesall)

said that some of those who took part in the former debate were disappointed at what the Chancellor of the Exchequer now proposed. They anticipated that the right hon. Gentleman would have met the case of the man with a dwindling business which he had admitted was a case that ought to be met. This section had been in operation since 1842, and he understood that it was imported into the statute of that year from the original Act of 1806. Therefore, the Chancellor of the Exchequer was acting on a section which had been in operation for 100 years. Traders were entitled to repayment, but they could not get repayment without taking professional advice, and that that was an expensive process. He thought the Chancellor of the Exchequer might have accepted the Amendment, for he felt certain that under the present system the exchequer received money every year in respect of income which had not been earned.


said that, in spite of what the right hon. Gentleman had said, it could be easily proved that under the present system of averaging many traders paid more for income-tax than they ought to pay.

Abraham, William (Rhondda) Crossley, William J. King, Alfred John (Knutsford)
Agnew, George William Dalziel, James Henry Laidlaw, Robert
Ainsworth, John Stirling; Davies, David (Montgomery C.) Lamb, Edmund G. (Leominster)
Allen,A. Acland (Christchurch) Davies, Ellis William (Eifion) Lambert, George
Allen, Charles P. (Stroud) Davies, W. Howell (Bristol, S.) Lamont, Norman
Ashton, Thomas Gair Dewar, Arthur (Edinburgh, S.) Layland-Barratt, Francis
Asquith,Rt. Hon.HerbertHenry Dewar,Sir J. A. (Inverness-sh.) Lehmann, R. C.
Astbury, John Meir Dickinson,W.H. (St.Pancras,N. Lever, A.Levy (Essex,Harwich)
Baker, Sir John (Portsmouth) Duffy, William J. Levy, Sir Maurice
Baker, Joseph A. (Finsbury, E.) Duncan,C. (Barrow-in-Furness) Lough, Thomas
Balfour, Robert (Lanark) Dunn, A. Edward (Camborne) Lupton, Arnold
Baring,Godfrey (Isle of Wight) Edwards, Clement(Denbigh) Luttrell, Hugh Fownes
Barlow, Percy (Bedford) Edwards, Enoch (Hanley) Lyell, Charles Henry
Barnes, G. N. Edwards, Sir Francis (Radnor) Lynch, H. B.
Barran, Rowland Hirst Elibank, Master of Macdonald, J. R. (Leicester)
Barry,Redmond J. (Tyrone, N.) Esslemont, George Birnie Macnamara, Dr. Thomas J.
Beale, W. P. Everett, R. Lacey Macpherson, J. T.
Beauchamp, E. Fenwick, Charles M'Callum, John M.
Beck, A. Cecil Ferens, T. R. M'Crae, George
Bell, Richard Ferguson, R. C. Munro M'Kenna, Rt. Hon. Reginald
Bellairs, Carlyon Fiennes, Hon. Eustace M'Micking, Major G.
Benn,SirJ.Williams(Devonp'rt) Foster, Rt. Hon. Sir Walter Mallet, Charles E.
Benn, W. (T 'w'rHamlets. S.Geo Fuller, John Michael F. Manfield, Harry (Northants)
Bennett, E. N. Fullerton, Hugh Mansfield, H. Rendall(Lincoln)
Berridge, T. H. D. Gibb, James (Harrow) Markham, Arthur Basil
Bertram, Julius Gill, A. H. Marks,G.Croydon (Launceston)
Birrell, Rt. Hon. Augustine Gladstone, Rt.Hn.Herbert John Marnham, F. J.
Black, Arthur W. Glendinning, R. G. Mason, A. E. W. (Coventry)
Bowerman, C. W. Glover, Thomas Massie, J.
Brace, William Goddard, Daniel Ford Micklem, Nathaniol
Bramsdon, T. A. Gooch, George Peabody Mond, A.
Brigg, John Grant, Corrie Montagu, E. S.
Brights, J. A. Grey, Rt. Hon. Sir Edward Montgomery, H. G.
Brorklehurst, W. B. Gulland, John W. Morrell, Philip
Brooke, Stopford Gurdon,Rt. Hn.SirW. Brampton Morse, L. L.
Brunner,J. F. L. (Lanes., Leigh Haldane, Rt. Hon. Richard B. Morton, Alpheus Cleophas
Bryce, J. Annan Hall, Frederick Murray, James
Buckmaster,Stanley O. Hardy, George A. (Suffolk) Newnes, F. (Notts. Bassetlaw)
Burns,Rt. Hon. John Harmsworth, Cecil B. (Worc'r.) Nicholson,Charles N.(Doncast'r
Burnyeat, W. J. D. Harmsworth.R.L.(Caithn'ss-sh. Norman, Sir Henry
Hurt, Rt. Hon. Thomas Harvey, W.E.(Derbyshire,N.E.) Norton, Capt. Cecil William
Buxton,Rt. Hn. SydneyCharles Harwood, George Parker, James (Halifax)
Byles, William Pollard Haslam, Lewis (Monmouth) Partington, Oswald
Carr-Gomm, H. W. Haworth, Arthur A. Pearce, Robert (Staffs. Leek)
Causton,Rt.Hn.RichardKnight Hazel, Dr. A. E. Philipps,Col.Ivor (S'thampton)
Cawley, Sir Frederick Healy, Timothy Michael Pickersgill, Edward Hare
Chamberlain,Rt Hn.J.A.(Worc. Hedges,A. Paget Pine, Duncan V.
Chance, Frederick William Helme, Norval Watson Pollard, Dr.
Chaplin, Rt. Hon. Henry Henderson, Arthur (Durham) Price, C. E. (Einb'gh, Central)
Cheetham, John Frederick Henry, Charles S. Price,Robert John (Norfolk,E.)
Cherry, Rt. Hon. R. R. Higham, John Sharp Priestley,W.E.B.(Bradford,E.,
Clough, William Hobhouse, Charles E. H. Radford, G. H.
Clynes, J. R. Hodge, John Rainy, A. Rolland
Cobbold, Felix Thornley Holland, Sir William Henry Rea, Russell (Gloucester)
Collins, Stephen (Lambeth) Hope,W.Bateman(Somerset,N. Rea, Walter Russell (Scarboro')
Collins,SirWm.J.(S.Pancra,s,W. Hudson, Walter Rees, J. D.
Cooper, G. J. Hyde, Clarendon Renton, Major Leslie
Corbett, A. Cameron (Glasgow) Jenkins, J. Richards,T.F.(Wolverhampton
Corbett,C H.(Sussex,E.Grinst'd Johnson, John (Gateshead) Richardson, A.
Cornwall, Sir Edwin A. Johnson, W. (Nuneaton) Rickett, J. Compton
Cotton, Sir H. J. S. Jones, Leif (Appleby) Ridsdale, E. A.
Cox, Harold Jones, William(Carnarvonshire) Roberts, G. H. (Norwich)
Craig, Herbert J. (Tynemouth) Kearley, Hudson E. Roberts, John H. (Denbighs.)
Cremer, Sir William Randal Kekewich, Sir George Robertson,SirG.Scott(Bradf'rd
Crooks. William Kincaid-Smith, Captain Robertson, J. M. (Tyneside)

Question put.

The House divided:—Ayes, 251; Noes, 54. (Division List No. 287.)

Robinson, S. Stuart, James (Sunderland) Watt, Henry A.
Rogers. F. E. Newman Taylor, Austin (East Toxteth) Whit bread, Howard
Rose, Charles Day Taylor, John W.(Durham) White, George (Norfolk)
Rowlands, J. Taylor, Theodore C. (Radcliffe) White, J. D. (Dumbartonshire)
Runciman, Walter Tennant,Sir Edward(Salisbury) White, Luke (York. E. R.)
Samuel, S. M. (Whitechapel) Thompson, J. W.H. (Somerset,E. Whitehead, Rowland
Schwann, C. Duncan (Hyde) Tomkinson, James Whitley, John Henry(Halifax)
Seddon, J. Toulmin, George Wiles, Thomas
Seely, Major J. B. Trevelyan, Charles Philips Wilkie, Alexander
Shackleton, David James Ure, Alexander Williams, J. (Glamorgan)
Shipman, Dr. John G. Vivian, Henry Wills, Arthur Walters
Silcock, Thomas Ball Walker, H. De R. (Leicester) Wilson, Henry J. (York. W. R.)
Simon, John Allsebrook Walsh, Stephen Wilson, John (Durham, Mid)
Sinclair, Rt. Hon. John Walters, John Tudor Wilson, W. T.(Westhoughton)
Sloan, Thomas Henry Walton, Sir John L. (Leeds, S.) Young, Samuel
Smeaton, Donald Mackenzie Ward,W.Dudley (Southampton
Stanley, Hn.A.Lyulph (Chesh.) Wardle, George J. TELLERS FOR; THE AYES—Mr.
Stewart, Halley (Greenock) Warner, Thomas Courtenay T. Whiteley and Mr. Herbert
Strachey, Sir Edward Wason,Rt.Hn. E.(Clackmannan Lewis.
Strauss, E. A. (Abingdon) Waterlow, D. S.
Acland-Hood,RtHn.SirAlex.F. Faber, Capt. W. V. (Hants, W.) Rawlinson,John Frederick Peel
Anson, Sir William Reynell Fell, Arthur Roberts, S. (Sheffield,Ecclesall)
Anstruther-Gray, Major Fletcher, J. S. Rutherford, John (Lancashire)
Arkwright, John Stanhope Forster, Henry William Rutherford, W. W. (Liverpool)
Ashley, W. W. Gretton, John Salter, Arthur Clavell
Barrie, H. T. (Londonderry,N.) Harrison-Broadley, H. B. Starkey, John R.
Beach,Hn. Michael Hugh Hicks Hay, Hon. Claude George Staveley-Hill, Henry (Staff'sh.)
Beckett, Hon. Gervase Helmsley, Viscount Talbot, Lord E. (Chichester)
Bignold, Sir Arthur Hervey,F.W.F.(Bury S.Edm'ds Thomson, W. Mitchell- (Lanark
Bowles. G. Stewart Hill, Sir Clement (Shrewsbury) Thornton, Percy M.
Boyle, Sir Edward Hills, J. W. Valentia, Viscount
Castlereagh, Viscount Hunt, Rowland Walker, Col. W.H. (Lancashire)
Cavendish,Rt. Hon. Victor C.W. Kenyon-Slaney,Rt.Hon.Col.W. Wilson,A. Stanley (York, E.R.)
Cecil, Evelyn (Aston Manor) Lockwood,Rt.Hn. Lt.-Col.A.R. Wortley, Rt. Hon. C.B. Stuart
Cecil, Lord R. (Marylebone,E.) Long,Rt.Hn. Walter(Dublin,S.) Younger, George
Cochrane, Hon. Thos. H. A. E. Meysey-Thompson, E. C.
Courthope. G. Loyd Mildmay, Francis Bingham TELLERS FOR THE NOES—Sir
Douglas, Rt. Hon. A. Akers- Morpeth, Viscount Frederick Banbury and Mr.
Faber, George Denison (York) O'Neill, Hon. Robert Torrens Harmood-Banner.

Amendment proposed— In page 12, line 11, at end, to insert the words '(3) Where a profession, trade, or vocation is discontinued in any year, any person charged or chargeable with income-tax in respect of that profession, trade, or vocation shall be entitled to be charged on the actual amount of the profits or gains arising from the profession, trade, or vocation in that year, and shall also, if he proves to the satisfaction of the Commissioners, by whom the assessment has been or could have been made, that the total amount of the income-tax paid during the three previous years in respect of that profession, trade, or vocation exceeds the total amount which would have been paid if lie had been assessed in each of those years on the actual amount of the profits or gains arising in respect of the profession, trade, or vocation, be entitled to repayment of the excess.' "—(Mr. Asquith.)

Question proposed, "That those words be there inserted in the Bill."

MR. WILLIAM RUTHERFORD (Liverpool, West Derby)

said he presumed the intention of the Amendment was that the person who discontinued a trade should not be charged on more than his actual earnings during the year in which he discontinued that trade and the two previous years, and if that was the case he would respectfully suggest to the Chancellor of the Exchequer that the clause was worded wrongly, because it brought in not merely the year in which the trade was discontinued" but the three previous years. He therefore suggested that it should read "during the year in question and the two previous years."


moved to add after the word "discontinued" the words "or the income derived from them is diminished." He said he did not depend upon those words to meet the case completely, but he maintained that the proposed clause did not entirely carry out the undertaking which the right hon. Gentleman gave in Committee. It dealt with the case of a defunct industry, but the Chancellor of the Exchequer promised to deal also with the case of a dwindling industry. They all knew that an industry might continue to dwindle during far more than two or three years, but this clause would only meet the case of the last few years of that process, and it was in the hope of abstracting some further concession from, the right hon. Gentleman that he moved; the addition of the words he had mentioned.

*MR. MORTON (Sutherland)

said he desired to second the Motion, which was not a political but a business matter. He quite agreed that the Chancellor of the Exchequer had carried out his promises to a large extent and had endeavoured to meet the points which were raised in Committee, but it was not quite clear as to what would be done with diminished incomes. It might be that an income was discontinued altogether, as the clause apparently read, but it might not be discontinued altogether; it might be greatly diminished. He had no doubt the Chancellor of the Exchequer was anxious to do what was right and fair in the matter, and that traders should pay only on the actual income they made, and he hoped the right hon. Gentleman would not object to adopting the words proposed, or similar words, so as to make the matter quite clear to traders. It 'was a difficult and complicated matter to deal with this question of the average income, but he hoped, if the Chancellor of the Exchequer would not adopt the words proposed that he would endeavour to meet them so that it might be clearly understood that a diminished income as well as a discontinued income would be dealt with in the clause.

Amendment proposed to the proposed Amendment to the Bill— In line 1, after the word 'discontinued,' to insert the words 'or the income derived there from is diminished.'—(Mr. Courthope.)

Question proposed, "That those words be there inserted in the proposed Amendment to the Bill."


explained that on three whole years a person would be able to obtain the excess of income-tax he had paid if in those years, and only if in those years, the profit in an individual year had been less than the average of those years. The Amendment moved by the hon. Member for Rye went far beyond any pledge given by the Chancellor of the Exchequer, and the Government could not accept it. Of course what they wanted to deal with was this question of dwindling incomes, but it was now proposed to get rid of the average system of ascertaining the profits made from year to year. The average system was a benefit to those who paid under Schedule B. as they were in a much better position than income-tax payers under other schedules. The object of the average system was that men should pay on their actual profits. It was thought that it would be more convenient on the whole that, instead of paying on the profit from year to year, they should pay on an average of three years. That involved that, while in the good year the income-taxpayer would pay less, in the bad year necessarily he would have to pay more in the way of income-tax than that which would be due on the profit he had made in that year. Now the hon. Gentleman was proposing that where the profits were falling the income-taxpayer should be able to pay. not on the three years average but on the income of the year. The only way out of that was to make him pay on a particular year. Having examined into the question while on a Departmental Committee he was not enamoured of the three years system, but traders preferred that system and they could not have it without its disadvantages. He could not understand how they could propose to have the benefit of one particular year in which their profits were dwindling and not suffer in other years. They would of course be unable in any one year to substitute the bad year's profit for the good year's profit on the three years average. It was suggested, however, that the taxpayer should be able in bad years to substitute the income of the year for the three years average. That would so destroy the average system that they could not accept the Amendment. Under the proposal of his right hon. friend no harm would be done, whereas the suggestion of the hon. Gentleman would do a great deal of harm to people engaged in trade.


thought there had been a little misunderstanding. They thought the Chancellor of the Exchequer had promised more than had been given. They understood that he was going to deal with the case of a dwindling business.


said he had never done anything more than promise to try to do his best to meet a case of hardship. He had promised nothing.


said the right hon. Gentleman had not met the case of a dwindling business, but only that of a business which had ceased altogether. He would suggest that he should leave it to the Commissioners to find whether any injustice had been done.


said he was sorry he could not accept the hon. Member's suggestion. He was afraid there had been a misunderstanding, because he knew the extreme limits of the case with which he was dealing. He was afraid he should not be able to give any relief at all, but these words would give substantial relief. What he understood by a dwindling business was one which was steadily going down hill. This subsection which he proposed— though of course he should not press it, if it was not desired—would meet the case of dwindling businesses. The cases which hon. Members had in mind were already provided for. They had an average system which enabled traders to take into account three years profits, and then they had a special provision where there had been a specific cause for falling profits. He thought he had done as fairly as he could, and he asked the House to pass this clause on his assurance that if after a year's working it was capable of amendment it should be reconsidered.


joined in the appeal of the Chancellor of the Exchequer, who had he thought done all he could to meet the grievance. Perhaps some of them had led to a mistake by using the words "a dwindling business" too loosely. He thought the Chancellor of the Exchequer had met them as fairly as he could.

Amendment to the proposed Amendment, by leave, withdrawn.

Proposed words there inserted in the Bill.

The following Amendments were also agreed to:— In page 13, line 12, after the word 'the,' to insert the word 'expression.' In page 13, line 25, to leave out from the beginning to the word 'clergyman,' in line 26, and to insert the words 'Where a.' In page 13, lines 26 and 27, to leave out the words 'religion who shall,' and to insert the words 'any religious denomination pays.' In page 13, line 27, after the word 'rent,' to insert the word 'for.' In page 13, line 27, to leave out from the word 'dwelling-house,' to the word 'mainly,' in line 28, and to insert 'and uses any part thereof.' In page 13, line 28, to leave out from the word 'of,' to the end, and to insert the words 'his duty or function as such clergyman or minister, such part of the rent of the dwelling-house, not exceeding one-eighth, as the Commissioners by whom any assessment for income-tax is made may allow, shall be treated for the purposes of section fifty-two of The Income Tax Act, 1853, as expenses to which the pro- visions of that section as to deduction and repayment apply.' "—(Mr. Asquith.)

Bill to be read a third time upon Monday next.