HC Deb 07 May 1907 vol 174 cc65-6
MR. WATT

I beg to ask Mr. Chancellor of the Exchequer if he proposes to levy for income-tax at the unearned rate interest on money formerly earned by the personal exertion of the income-tax payer, and laid aside by means of his frugality.

MR. ASQUITH

Yes, Sir. As I have already explained to the House, my proposal is that the relief should be confined to current earnings.

MR. ALEXANDER CROSS

I beg to ask Mr. Chancellor of the Exchequer whether he proposes to find means by which some relief can be obtained by a payer of income-tax on the three years average system when the amount so taxed in any year is in excess of the actual year's income; and, if not, whether he will consider how severely this will affect a numerous class of persons whose income steadily diminishes and does not recover.

MR. ASQUITH

The 133rd Section of the Income Tax Act, 1842 (as amended) was intended to secure this object. Its effect, however, is that the "average" ceases to be an average, as under it traders escape from the result of averaging when it tells against them, but obtain the benefit of it when it results in their favour. Following the recommendation of the late Lord Ritchie's Committee, I therefore propose to abolish the provision. It is to be hoped that the class alluded to in the latter part of the Question is not really numerous.

MR. ALEXANDER CROSS

Does the right hon. Gentleman suggest that this provision has only been used by traders when it tells in their favour, and that it has not been used when it was to their disadvantage? Was not that the intention of it?

MR. ALEXANDER CROSS

I beg to ask Mr. Chancellor of the Exchequer whether, in arriving at the three years average of profits for income-tax assessment, he proposes to permit the income-tax payer, in making his average, to deduct the amount of loss in any of the three years, when such loss may occur, from the summation of the years of profit, so that the assessment shall be calculated upon the average of the actual income the tax-payer shall have received during the three years.

MR. ASQUITH

This is secured by the present practice, with which I do not propose to interfere.