§ MR. FELL, in opposing the clause, said that hitherto the assessors had been paid by results, and judging by the returns they had done extremely well. Under those circumstances he could not see why they should not go on with their remuneration as it was, 941 and there was no necessity to alter this arrangement in the Finance Bill this year.
§ MR. LLOYD-GEORGEsaid that although it was true that the assessors were paid by results there were certain principles laid down in regard to the basis of payment which prevented the Government from taking into account the special work. It was in order to enable the Government to deal with these cases on their merits, without being rigidly bound by the rules which were in force at present, that the Government made this proposal which would afford a little more elasticity.
§ Clauses 9 and 10 agreed to.
§ MR. FELL, in moving a new clause providing that "No Excise or other duties shall be levied on any sugar manufactured in the United Kingdom from beetroot," said that in the course of the last few years experiments had been conducted in Suffolk and Lincolnshire with regard to the growing of white beetroot and they had been very successful. The percentage of sugar obtained from this beetroot averaged 17 per cent.
§ MR. LLOYD-GEORGEsaid he understood the hon. Member was moving that no tax should be put on any sugar manufactured from beetroot in this country. No such tax was imposed at present, and therefore he contended that the Amendment was not in order.
§ MR. FELLsaid that what happened last year when this question was raised was that the Prime Minister said there was no Excise duty because there was no sugar grown here, but if sugar was grown in this country an equivalent duty would be put upon it.
*THE DEPUTY-CHAIRMANIf there is no Excise duty levied at the present time of course the hon. Member cannot move this new clause, and it is out of order.
§ *MR. WATT, on behalf of the hon. Member for Cambridge University, moved a new clause providing that the income-tax should be charged at one shilling, 942 "provided the incomes of husband and wife be taken to be the income of separate persons." He thought the Amendment had some inherent merit. It seemed to him an injustice that the income of husband and wife should be added together in estimating the income. The tendency of the law during the last thirty years had been to separate the incomes of husband and wife, and the last link that remained with the past was the system of estimating the two incomes as one for the purposes of the income-tax. If the Chancellor of the Exchequer was going to be thoroughly up-to-date in this matter, he would accept the Amendment. There was no reason in the world why for this specific purpose husband and wife should be considered one individual and have their incomes added together. He begged to move.
§
New clause—
Provided the incomes of husband and wife be taken to be the income of separate persons."—(Mr. Watt.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid he could not see his way to accept the Amendment. This was a hardy annual which, if accepted, would cost the revenue about £1,500,000, and he must resist attempts to raid the revenue by means of Amendments of this kind. He did not think a hard case was made out. Husband and wife pooled their income in the vast majority of cases. It was the family income, after all, that was being taxed. If he had any revenue to dispose of he would not begin to rectify matters in this direction.
§ MR. AUSTEN CHAMBERLAINthought that in some cases there was a measure of hardship; but it was really inseparable from the administration of the tax. By treating the incomes of husband and wife separately they would not get rid of anomalies and hardships; they would only alter their incidence. New hardships would be produced. The hardship had been a little aggravated as the result of the change in regard to earned income. It was in respect of the abatement that the hardship really arose; 943 and in proportion as the abatement extended the area, of this particular hardship would be increased. In the case of small incomes being united, persons who would separately be entitled to abatement might not remain so entitled. The Prime Minister could not see his way to afford relief in those cases last year, and if he were Chancellor of the
§ Exchequer he would not see his way himself. The hardship was one which certain people had to endure in order that the State might wield this great financial weapon—the income-tax.
§ Question put.
§ The Committee divided: Ayes, 32; Noes, 227. (Division List No. 195.)
945| AYES. | ||
| Abraham, William (Cork, N.E.) | Harris, Frederick Leverton | Roberts, S. (Sheffield, Ecclesall) |
| Banbury, Sir Frederick George | Helmsley, Viscount | Ropner, Colonel Sir Robert |
| Baring, Capt. Hn. G. (Winchester | Houston, Robert Paterson | Rutherford, W. W. (Liverpool) |
| Brotherton, Edward Allen | Hunt, Rowland | Salter, Arthur Clavell |
| Bull, Sir William James | Joynson-Hicks, William | Stanier, Beville |
| Carlile, E. Hildred | King, Sir Henry Seymour(Hull) | Stone, Sir Benjamin |
| Cave, George | Lane-Fox, G. R. | Thomson, W. Mitchell-(Lanark) |
| Clark, George Smith | Lowe, Sir Francis William | Willoughby de Eresby, Lord |
| Crean, Eugene | Magnus, Sir Philip | |
| Fell, Arthur | Rawlinson, John Frederick Peel | TELLERS FOR THE AYES—Mr. Watt and Mr. Ashley. |
| Gretton, John | Renton, Leslie | |
| Guinness, Walter Edward | Ridsdale, E. A. | |
| NOES. | ||
| Abraham, William (Rhondda) | Crooks, William | Hodge, John |
| Adkins, W. Ryland D. | Devlin, Joseph | Hogan, Michael |
| Agnew, George William | Dobson, Thomas W. | Hope, W. Bateman (Somerset, N. |
| Allen, Charles P. (Stroud) | Donelan, Captain A. | Horniman, Emslie John |
| Ashton, Thomas Gair | Duckworth, James | Howard, Hon. Geoffrey |
| Astbury, John Meir | Duncan, C. (Barrow-in-Furness | Hudson, Walter |
| Baker, Sir John (Portsmouth) | Dunn, A. Edward (Camborne) | Hyde, Clarendon |
| Balfour, Robert (Lanark) | Edwards, Clement (Denbigh) | Idris, T. H. W. |
| Barker, John | Edwards, Enoch (Hanley) | Illingworth, Percy H. |
| Barlow, Sir John E. (Somerset) | Edwards, Sir Francis (Radnor) | Jackson, R. S. |
| Barnard, E. B. | Essex, R. W. | Jacoby, Sir James Alfred |
| Barnes, G. N. | Esslemont, George Birnie | Jardine, Sir J. |
| Barran, Rowland Hirst | Evans, Sir Samuel T. | Johnson, John (Gateshead) |
| Beale, W. P. | Everett, R. Lacey | Jones, Leif (Appleby) |
| Beck, A. Cecil | Fenwick, Charles | Joyce, Michael |
| Bell, Richard | Findlay, Alexander | Kearley, Sir Hudson E. |
| Bellairs, Carlyon | Flynn, James Christopher | Kekewich, Sir George |
| Benn, Sir J. Williams (Devonp'rt | Fuller, John Michael F. | Kelley, George D. |
| Benn, W. (T'w'rHamlets, S. Geo.) | Fullerton, Hugh | Laidlaw, Robert |
| Berridge, T. H. D. | Gill, A. H. | Lamont, Norman |
| Bethell, Sir J. H.(Essex, Romf'rd | Gleudinning, R. G. | Lea, Hugh Cecil (St. Pancras, E. |
| Black, Arthur W. | Glover, Thomas | Lever, A. Levy (Essex, Harwich |
| Boland, John | Goddard, Sir Daniel Ford | Levy, Sir Maurice |
| Boulton, A. C. F. | Gooch, George Peabody (Ba th) | Lloyd-George, Rt. Hon. David |
| Bowerman, C. W. | Hall, Frederick | Lundon, W. |
| Branch, James | Halpin, J | Luttrell, Hugh Fownes |
| Brigg, John | Harcourt, Rt. Hn. L. (Rossendale | Lyell, Charles Henry |
| Bright, J. A. | Harcourt, Robert V. (Montrose) | Lynch, H. B, |
| Brocklehurst, W. B. | Hardie, J. Keir (Merthyr Tydvil) | Macdonald, J. R. (Leicester) |
| Brodie, H. C. | Hardy, George A. (Suffolk) | Macdonald, J. M. (Falkirk B'ghs |
| Brooke, Stopford | Harmsworth, Cecil B. (Worc'r) | Maclean, Donald |
| Brunner, J. F. L.(Lancs., Leigh) | Harvey, W. E. (Derbyshire, N. E. | Macpherson, J. T. |
| Buchanan, Thomas Ryburn | Harwood, George | MacVeagh, Jeremiah (Down, S. |
| Burns, Rt. Hon. John | Haslam, James (Derbyshire) | MacVeigh, Charles (Donegal, E.) |
| Burt, Rt. Hon. Thomas | Haworth, Arthur A. | McCallum, John M., |
| Buxton, Rt. Hn. Sydney Charles | Hazel, Dr. A. E. | McCrae, Sir George |
| Cawley, Sir Frederick | Hedges, A. Paget | McKenna, Rt. Hon. Reginald |
| Cheetham, John Frederick | Hemmerde, Edward George | McLaren, H. D. (Stafford, W.) |
| Cleland, J. W. | Henderson, Arthur (Durham) | Manfield, Harry (Northants) |
| Clynes, J. R. | Henderson, J. M. (Aberdeen, W.) | Mansfield, H. Rondall (Lincoln |
| Collins, Stephen (Lambeth) | Henry, Charles S. | Marks, G. Croydon (Launceston) |
| Corbett, C. H (Sussex, E. Grinst'd | Higham, John Sharp | Marnham, F. J. |
| Cotton, Sir H. J. S. | Hobhouse, Charles E. H. | Meagher, Michael |
| Mcehan, Francis E. (Leitrim, N. | Richards, T. F. (Wolverh'mpt'n | Sutherland, J. E. |
| Menzies, Walter | Richardson, A. | Taylor, Theodore C. (Radcliffe) |
| Micklem, Nathaniel | Roberts, Charles H. (Lincoln) | Tennant, H. J. (Berwickshire) |
| Middlebrook, William | Roberts, G. H. (Norwich) | Thomas, Sir A. (Glamorgan, E. |
| Molteno, Percy Alport | Robertson, Sir G. Scott (Bradf'd | Thomas, David Alfred (Merthyr) |
| Mond, A. | Robinson, S. | Thorne, G. R. (Wolverhampton |
| Money, L. G. Chiozza | Roche, John (Galway, East) | Tomkinson, James |
| Montagu, Hon. E. S. | Roe, Sir Thomas | Torrance, Sir A. M. |
| Morse, L. L. | Rogers, F. E. Newman | Trevelyan, Charles Philips |
| Morton, Alpheus Cleophas | Rowlands, J, | Vivian, Henry |
| Nannetti, Joseph P. | Runciman, Rt. Hon. Walter | Walker, H. De R. (Leicester) |
| Nicholls, George | Rutherford, V. H. (Brentford) | Walsh, Stephen |
| Nicholson, Charles N.(Doncast'r | Samuel, Herbert L. (Cleveland | Wardle, George J. |
| Nolan, Joseph | Samuel, S. M. (Whitechapel) | Wason, Rt. Hn. E. (Clackmann'n |
| Norton, Capt. Cecil William | Schwann, C. Duncan (Hyde) | Wason. John Cathcart (Orkney |
| O'Brien, Kendal (Tipperary, Mid | Schwann, Sir C. E. (Manchester) | Weir, James Galloway |
| O'Brien, Patrick (Kilkenny) | Sears, J. E. | White, Sir George (Norfolk) |
| O'Connor, John (Kildare, N.) | Seaverns, J. H. | White, J. D. (Dumbartonshire) |
| O'Donnell, C. J. (Walworth) | Seddon, J. | White, Patrick (Meath, North) |
| O'Kelly, Conor (Mayo, N.) | Seely, Colonel | Whitehead, Rowland |
| O'Kelly, James (Roscommon, N | Shackleton, David James | Whitley, John Henry (Halifax) |
| O'Shaughnessy, P. J. | Shaw, Rt. Hon. T. (Hawick B.) | Wiles, Thomas |
| Parker, James (Halifax) | Shipman, Dr. John G. | Wilkie, Alexander |
| Partington, Oswald | Silcock, Thomas Ball | Wilson, Henry J. (York, W.R.) |
| Pearce, Robert (Staffs, Leek) | Simon, John Allsebrook | Wilson, John (Durham, Mid.) |
| Phillips, John (Longford, S.) | Snowdon, P. | Wilson, J. W. (Worcestersh. N.) |
| Pollard, Dr. | Soares, Ernest J. | Wilson, P. W. (St. Panrcas S.) |
| Price, C. E. (Edinb'gh, Central) | Stanley, Albert (Staffs. N.W.) | Wilson, W. T. (Westhoughton) |
| Price, Sir Robert J.(Norfolk, E. | Steadman, W. C. | Winfrey, R. |
| Priestley, Arthur (Grantham) | Stewart, Halley (Greenock) | Wood, T. McKinnon |
| Priestley, W. E. B. (Bradford, E.) | Stewart-Smith, D. (Kendal) | |
| Rea, Russell (Gloucester) | Strauss, E. A. (Abingdon) | TELLERS FOR THE NOES—Mr. Joseph Pease and Master of Elibank. |
| Rea, Walter Russell (Scarboro' | Stuart, James (Sunderland) | |
| Rendall, Athelstan | Summerbell, T. |
§
*MR. CHIOZZA MONEY moved the following new clause—
Every person upon whom notice is served in manner prescribed by Section 48 of the Income-Tax Act, 1842 (which section relates to the delivery of notices by assessors) requiring him to make a return of his income chargeable to duty under any and every schedule of the income-tax, shall make a return, in the form required by the notice, which shall show the amount of his aggregate income from all sources, whether he is or is not chargeable with duty, and upon what part or parts of such aggregate income, if any, income-tax has already been paid under the Income-Tax Acts by deduction at the source, and in default shall be liable to a penalty under Section 55 of the Income-Tax Act, 1842. Provided that a penalty inflicted in the case of a person proceeded against for not complying with this provision, who proves that he was not chargeable to income-tax, shall not exceed five pounds for any one offence.
He said that this was the second year that he had moved in this matter. On the last occasion the Prime Minister, then Chancellor of the Exchequer, said he would give it his most careful consideration this year; but he (Mr. Money) was unable to see that any attention had been given to it so fur. He submitted that the importance of the subject was great,
946
and that in the interval the case for his Amendment had been, considerably strengthened. Last year the inquisition into employees salaries was strengthened, and the method of going behind the backs of small taxpayers to their employers, combined with the abatement system now revealed the incomes of the greater number of the income-tax payers. It had been said that if they endeavoured to secure an abatement or the 9d. differentiation, that constituted the declaration a voluntary one, and that that robbed it of the character of inquisition; but if a man did not, in his declaration, show the amount of his aggregate income from all sources, a penal character attached to the declaration. It was generally conceded that the income-tax needed revision. There was a point in our national development at which public opinion demanded social reforms. But these social reforms cost money; and more money, therefore, had to be raised. It would be seen that if the present fiscal system were to be maintained there was only one legitimate means of paying for social reform, and that was that the income-tax should be
947
thoroughly revised and reformed. He regarded his Amendment as an essential preliminary to the re-adjustment of the income-tax, and a proper reform of our entire taxation. It had been admitted that compulsory declaration by persons with incomes over £700 would bring to light more incomes than had been revealed in the past. Last year, the differentiation brought to light £35,000,000 more income—not new income, but income which obviously had escaped taxation in the years before. If that were so, he asked the Committee to believe that probably a very much larger amount of income would come to light for taxation purposes if the rich man had to make a compulsory declaration of his income from all sources, whether that income was taxed at its source or not, as the poor man now had to do. If the Amendment were carried he would have to make such declaration, under penalty if he made a false return. The Income-tax Committee, in their Report, made a recommendation which was worth attention. They said—
Your Committee are of opinion that a personal declaration of total net income in respect of which taxes payable by everyone who may be called upon to make it should be compulsory, and would be of great value in preventing evasion and avoidance of full assessment, and in supplying information on which a system of graduation and differentiation could be based.
Two meanings were attached to that declaration. Some of the Members of the Committee took it to mean what he himself thought it meant, viz.: that the taxpayers should make a list of the whole of the items of his income, whether taxed already or not. Other Members of the Committee took it to mean that if a man had so much of his income taxed at its source, he had not to insert that in his declaration of income. It would be seen that a great difference lay between the two interpretations. In moving his Amendment he asked that the Committee should accept what was indeed the recommendation of some of the Members of the Income-tax Committee, viz.: that a personal declaration should be made by the taxpayer of the whole of his income. It was high time that in dealing with the income-tax they should cease to work in the dark. He contended that as at present levied the income-tax was not a
948
direct, but an indirect tax. If his Amendment were accepted, income at its source could be taxed moderately; and an additional tax could be put on such persons as had not already made a just contribution to the national revenue under a graduated scale. He thought that any reform of the income-tax ought to be preceded by the institution of some such provision as he suggested. He begged to move.
§
New clause—
Every person upon whom notice is served in manner prescribed by Section 48 ol the Income tax Act, 1842 (which section relates to the delivery of notices by assessors), requiring him to make a return of his income chargeable to duty under any and every schedule of the income-tax, shall make a return, in the form required by the notice, which shall show the amount of his aggregate income from all sources, whether he is or is not chargeable with duty, and upon what part or parts of such aggregate income, if any, income-tax has already been paid under the Income-tax Acts by deduction at the source, and in default shall be liable to a penalty under Section 55 of the Income-tax Act 1842. Provided that a penalty inflicted in th8/8/2007 12:30PMe case of a person proceeded against for not complying with this provision, who proves that he was not chargeable to income-tax, shall not exceed five pounds for any one offence."—(Mr. Chiozza Money.)
§ Brought up, and read the first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEadmitted that it would be desirable to obtain the information which the hon. Gentleman wished for if a system of graduation were on the point of being established; but he did not think that on the whole it would be justifiable on the part of the Government to impose upon persons the necessity of making returns of that kind in the absence of any provision for taxation to be based upon them in the current year. The demand would, in such circumstances, be purely of an inquisitorial character. The Government could not possibly demand to know what a man's earnings were in order to know what to tax him next year.
§ *MR. CHIOZZA MONEYThe Income Commissioners themselves pointed out that it would lead to the declaration of further income.
§ MR. LLOYD-GEORGEsaid there was no advantage in such, an inquiry until the time came for the imposition of a tax. He did not want declarations. He wanted revenue. He could not think that this was a practical step, because it would not help at all next year. This year's declarations were already issued and such declarations as would be returned were returned. It was not, therefore, desirable to make men return a second declaration in the course of the same year unless it was for a definite purpose. If it was for a definite purpose—if there was a scheme in the Budget—it might be justifiable, but there was no other cause for inflicting a penalty of this kind on the business men of the country, and therefore he could not accept the Amendment.
§ MR. AUSTEN CHAMBERLAINsaid that though it might be true of a particular trader that all the profits he made were used by him in his business to assist it, that was a fact known only to himself. The usual return made by individuals might be of the whole of their income or it might not. No one inquired whether it was or not under the present system. The hon. Member for Paddington suggested that the Chancellor of the Exchequer should not be content with such a return, but that the taxpayer should make out a return as to how his income was made and from what source. The demand that a man should make a return showing the particulars suggested was different from any demand made on an income-tax payer at present, except to secure benefits allowed by the State in certain circumstances. It was one thing to ask people to give the information to show that they were entitled to relief; another thing to call for it from all persons in order to pluck them to one's satisfaction. He thought the hon. Gentleman was suffering from a confusion of ideas, and whatever were the merits of his scheme he thought it would not hold water.
§ *MR. BYLES (Salford, N.)repudiated the idea that the hon. Member for Paddington suffered from confusion of thought. That was the very last accusation that should be levelled at him. Few Members addressed the House with such clarity of thought as his hon. friend. 950 So far as the Chancellor of the Exchequer's contention that this return would cause a great deal of annoyance was concerned, he pointed out that eight out of every ten income-tax payers of the country were already required to make this very declaration. He admitted it caused a certain amount of annoyance, as he knew from personal experience. Why the rich should be exempted from the annoyance he could not see. The right hon. Gentleman said he wanted revenue. So did everybody else. His hon. friend the Member for Paddington wanted revenue, and he wanted this declaration as a necessary channel through which to obtain revenue. So far as its practicability, which was denied by his right hon. friend, was concerned, he could only say that everybody desired to see a graduated income-tax which should reach the highest incomes in the land, and no such method of graduation was possible unless they obtained the declaration proposed by his hon. friend, which was already required from eight income-tax payers out of ten.
§ MR. GRETTON (Rutland)supported the Chancellor of the Exchequer in this matter. He contended that the valuation proposed in this Amendment was not possible in the present circumstances, and thought that the hon. Member who spoke last had rather given away the case for the Amendment.
§ *MR. CHIOZZA MONEYsaid he could not congratulate the right hon. Gentleman on the support he had just received. His right hon. friend had quite overlooked the fact that the new clause not merely created declarations but brought to light new income. Even in the past year £35,000,000 more income had come to light, owing to the new regulations, and if another £50,000,000 was brought to light as the result of this Amendment the additional yield would be equal to 1d. on the income-tax all round. As for what the ex-Chancellor had said as to present declarations being voluntary, what we now did in fact was to impose a very heavy fine upon persons who made no personal declaration. A man with an income of £500 a year, if he made no personal declaration, was penalised, and had to pay as much as the rich man. 951 That amounted to penal legislation and it could not be said that the poor man' declaration was voluntary.
§ MR. STUART (Sunderland)though the hon. Gentleman had raised a very important point in this Amendment Most Members on the Ministerial side of the House looked forward to the time when the man with a large income would pay a higher tax. No doubt the hon. Member thought that something like the Amendment he had moved was necessary and sufficient for the purpose of carrying out that principle. Although it would not be adopted at present it certainly ought to commend itself to the Chancellor of the Exchequer side by side with other schemes which no doubt would be suggested for the graduation of the income-tax. He knew the difficulties, but he also knew that it was a practical question which had to be worked out. The principle had been admitted by the graduation of the death duties, and, the rubicon having been passed, hon. Members were entitled to expect that the graduation of income-tax might be carried out by some such means as the hon. Member for Paddington had suggested, so that an adequate contribution might be obtained from the rich for the benefit of the poor, in order that some amends might be made for the present social condition in which they found themselves.
§ Proposed clause negatived.
§ MR. HUNT (Shropshire, Ludlow)proposed a new clause, the object of which was to repeal the duty on raw cocoa. He imagined he would have the support of all the teetotallers in the House, because cocoa was about the best temperance drink. It had none of the disadvantages of tea or coffee. He would like to point out how cocoa was recommended in the great organ, the Alliance News and Temperance Reformer. It there said—
Cadbury's cocoa is a liquid food, a genuine high-class beverage, made under ideal conditions of labour in an English factory, where the health and well-being of the workers receive the constant care of the firm.Yes, and it was taxed to the extent of 1d. a pound, and that was the reason why they could do so well, and why their 952 employers were able to look after them so well, but he did not know whether that was the reason why the head of that firm just before the last general election gave £20,000 to the free import party. He had never been able to make out quite how that was. That great bulwark of the Liberal Party, Lord Carrington, told them in the House of Lords that he could not put any import duty on hops, because it was the raw material of the poor man's beer, and surely if they could not put a duty on hops they could not put it on raw cocoa, especially as hon. Gentlemen opposite were so very strong on temperance. Were they going to tax the poor man's cocoa and put nothing on hops, thus encouraging hint to drink beer and discouraging him from drinking cocoa? It appeared that under what was called free trade, they could tax raw cocoa, which employed no British labour, but on hops, which employed an enormous amount of British labour, they might not put any import tax at all, and the reason, no doubt, was that it might have the effect of employing an enormous amount of British labour and getting for that labour a great amount of wages; they must not do it because it would help the British and would be a bad thing for the foreigner. It struck him that it would also have the effect of keeping many in the country if they grew their own hops instead of buying them from abroad. When hon. Members opposite called themselves free traders and taxed the law material of the very poorest of he poor, he really thought they had lot one single leg to stand on, and he country was rapidly beginning to think the same. He hoped the Chancellor of the Exchequer would give them some sort of reason why he kept this tax on the raw material of a great industry and also on what was food and drink for the poorest people.
§
New clause—
On and after the thirty-first day of March, nineteen hundred and nine, the duty of Customs of one penny in the pound on raw cocoa shall ease to be payable, and so much of the Customs Tariff Act, 1876, as refers to this duty is hereby repealed."—(Mr. Hunt.)
§ Brought up, and read the first time.
953§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid the hon. Gentleman was capable of waxing eloquent on any topic, and he was glad to see he could get hilarious on cocoa. The very famous firm of cocoa manufacturers which he had named would no doubt be thankful to him for the advertisement. He was not sure what complaint the hon. Member had against the Government. The tax had been on cocoa for some time.
§ MR. LLOYD-GEORGEsaid that amongst the duties they had been able to get rid of they had not yet been able to get rid of the tax on cocoa. He did not think they could see their way to do that. It would cost £200,000. They had done something in the way of the reduction of the duty upon another raw material, sugar, and they could not possibly go further and give an abatement of the duty on cocoa. He was not aware that the cocoa manufacturers had any considerable grievance, but with regard to sugar, the Government had been pressed by hon. Members on both sides of the House, and they had responded substantially to the appeal made to them. He was not aware that there had been any great pressure so far as cocoa was concerned. He was afraid, therefore, he could not see his way to accept the proposed new clause.
§ Proposed clause negatived.
§ LORD WILLOUGHBY DE ERESBY(Lincolnshire, Horncastle) moved the following new clause:—"It shall be lawful for any person owning and occupying woodlands 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 the assessment to the duties under Schedules A and B." He said that it raised a very important question to which he hoped the Chancellor of the Exchequer would give his careful consideration. I He was extremely doubtful whether the acceptance of the clause would have the effect of in any way reducing the revenue. It might indeed have the effect of bringing in a larger revenue than the Chancellor 954 was obtaining at the present time. Anyone who had for a moment considered the question must be well aware that in many cases the taxation raised on woodlands was excessively high, while in other eases it was his belief that people escaped taxation who might well afford to pay. He explained the principle on which income-tax was paid on the greater part of the woodlands in the country. For the purpose of the income-tax the assessment of the land for local rates was taken and the income-tax was charged first of all under Schedule A. practically without any deductions whatever. In addition to that a charge for income-tax was made under Schedule B. viz. one-third of the assessment, and consequently all those proprietors of land who attempted to improve their woods and to go in for re-afforestation had to bear considerably increased taxation, whereas those proprietors of woodlands who devastated their property, cut down all the wood, and sold it, escaped taxation to a very large amount. The proposal he made was that any person who owned and occupied woodlands should be, as far as the woodland was concerned, assessed for income-tax in the same way as trades and occupations were assessed on Schedule D, and pay income-tax on the average profits for three years. If this were done, they would remove from this portion of the income-tax one of the faults which Mr. Gladstone, Mr. Mill, and other great economists found in it, viz., that in many eases it was not equitably raised, but frequently paid on incomes which were never received. There were hundreds of thousands of pounds collected in income-tax from the owers of woodlands which had never been earned, and he believed that the present system of collecting income-tax under Schedules A. and B. was very unfair. It was well worth the attention of the Chancellor of the Exchequer to see whether he could not change it and collect the tax in woodlands under Schedule D. These cases were always difficult to explain in actual figures, and he thought he would be making it more clear if he took an actual concrete case which had come under his notice, and which showed how badly the present system worked. He was 955 the tenant of certain grass land for which he paid 5s. an acre. His landlord paid income-tax on 5s. an acre, and that was quite right. In the winter there was a great deal of unemployment among the labourers in the surrounding villages, and his landlord came to him and said: "Will you give up these fields for the purpose of afforestation." He replied that he was only too willing to do so, and his landlord during the winter employed a large amount of labour in this way—men who would otherwise have been out of work. That was a very good thing for the country and good for the men. What happened with regard to income-tax? Did the landlord get any advantage whatever from his action? No; he was severely handicapped by the assessment committee. The moment the land was planted the Assessment Committee came down and assessed that land at 10s. an acre, because they said that was the general rule in the country. Therefore, under Schedule A., the landlord was assessed at 10s. an acre, and under Schedule B. at 3s. 4d. an acre when he got nothing for the land in lieu of the 5s. which he was previously getting and putting into his pocket. That was an absolutely wrong principal of taxation. If they adopted the principle he suggested he did not think the Exchequer would be the loser by it. If a man cut down all his timber and sold it and planted nothing, making no provision for the future, he had not to pay income-tax. Any man who looked into the fairness and justice of the matter must see that it was in the interests of the country at large that they should encourage people to try and improve the land rather than encourage the man who devastated what he had. The present system of assessing woods was one of the worst forms of protection he knew of. In the first instance they were taxing raw material, and they were placing taxes on raw material grown in this country. What an outcry there would be if they put, say, 1d. or 2d. a square foot on all imported timber; and yet the moment a man took a bit of waste land and planted it he was charged a heavy income-tax, and when the timber was cut down in 100 or 120 years time every square foot of timber sold would 956 have had to bear a tax of 1d. or 2d. a foot. This fact was well worthy of the consideration of the Chancellor of the Exchequer. He believed they were handicapping re-afforestation, which many people considered a good thing. They would not encourage any private owner in England to plant. In Scotland they were treated much more fairly. The assessment committees did not place such enormous assessments on the woodlands, and consequently the tax came to a very small amount. In England the Chancellor of the Exchequer might say it was a question for the assessment committees and not for him, but he believed if the right hon. Gentleman took up the question, it would have a big effect on the assessment committees. At present it was absolutely vain to plead before the assessment committees, because they consisted mostly of farmers and landowners whose object was not to allow woodlands to be got down at lower assessments, because he supposed it meant they would have higher rents to pay on their farms. There was nothing which found more work for the unemployed daring the winter months, and there were hundreds of labourers who would be at work during the winter if re-afforestation could be carried on. He felt perfectly certain it would be a great boon to the country districts if private owners were encouraged to plant instead of having to pay on incomes which they did not receive. He was not trying to get taxation off anybody, but the principle he liked to see was that a man should not pay on income which he did not receive. There were plenty of people who were paying not 1s., but 1s. 2d. and 1s. 3d., for the simple reason that they were assessed for the purpose of income-tax on a far greater income than they were receiving. There was absolutely no, remedy, and it was well worth the attention of the Chancellor of the Exchequer to see whether he could not make some alteration in the law.
§
New clause—
It shall be lawful for any person owning and occupying woodlands 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
957
duties under Schedules A. and B."—(Lord Willoughby de Eresby.)
§ Brought up, and road a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid the noble Lord had supported the clause which he had moved with very great force and eloquence, and he was very much impressed with the case which he had made. He could not at the present moment accept the clause, because he was not quite sure that that would be the best method of dealing with the matter, but he would promise to give it careful, and he hoped practical, consideration. He was personally very interested in the question of re-afforestation, which he had urged a good many years ago. not on a Unionist but on a Liberal Government. A Commission was appointed which he hoped would report in the course of the next few weeks, and the matter would come in a very practical way before the Government. There had been a Report as far as Scotland was concerned, and there had been a very interesting Report for Ireland, and he hoped there would be one for England, as to the best and most practical method of re-afforesting the country. But it was of very little use coming to the Exchequer for grants for re-afforestation if private owners were to be discouraged. If he found the case which the noble Lord had made was borne out by the examination which he would undertake to give to the matter, and if private owners had to pay an unreasonable rate in respect of income which they did not derive, he certainly thought it was a case not merely for consideration but for readjustment. This was certainly not a time when they ought to discourage re-afforestation. He hoped the Government would be able to do something, but they would not be able to deal adequately with the needs of the country in that respect unless their efforts were supplemented by those of private owners. If the noble Lord would take that promise that he would look into the matter very closely, he trusted he would withdraw the Amendment.
§ MR. AUSTEN CHAMBERLAINsaid the Committee would have heard with great satisfaction the assurance which the right hon, Gentleman had given. He did not remember ever to have heard this question raised on the Budget Bill. Like the right hon. Gentleman, he was very much impressed with the case which the noble Lord had made out, but they would all admit that the Chancellor of the Exchequer could not deal with it offhand, and the promise he had made to consider it favourably if the case was sustained on examination was all they could expect at the moment. He hoped his noble friend would accept that assurance in the spirit in which it was given and not press his new clause to a division.
§ MR. COURTENAY WARNER (Staffordshire, Lichfield)hoped the noble Lord would withdraw the Amendment. At the same time, he knew there was a great deal in what he said. Some hon. Gentlemen seemed to think it was rather a landlord's question. It was not that, though it was a question to a certain extent between a good and a bad owner of land. But it was a question of people in the country, because there were many places where afforestation was not a landlord's question at all, but a question for the population. There were rubbish beds and old coal pits which paid practically nothing, but the moment they were planted the owner would have to pay income-tax on them. He agreed with every word the noble Lord had said as to the effect of the income-tax, because he knew it
§ Proposed clause, by leave, withdrawn.
§ LORD R. CECIL moved the addition of a new clause declaring that income arising from dividends on shares in a private company, held on the condition, express or implied, that the holder should give his services in the management or conduct of the business, should be deemed to be earned income within the meaning of Section 19 of the Finance Act, 1907. He said it had become increasingly the practice in this country for traders to turn their businesses into private companies, in which the only shareholders were the partners who 959 formerly carried on the undertaking, and the dividends paid represented the profits earned by them. It was arranged that they should not be paid anything for their services, but should share the dividends, as they formerly shared the profits. A particular case of this nature had been brought to his notice in his own constituency. It was the case of a business carried on by three brothers. They formed a company, took the whole of the shares themselves, received no salary from the company for carrying on the business, but they received the whole of the dividends which were derived from their exertions after paying all the costs of working the business. The question whether such dividends were "earned income" was raised in the course of debate on 3rd July, 1907, and the Prime Minister, speaking then as Chancellor of the Exchequer, said the case ought to come within the definition, and he thought it did; and the right lion. Gentleman added that where a partnership was transferred to a company composed of the same people and carrying on the business in the same way and not offering their shares to public subscription, it was the clear intention of the Government that that should make no difference at all. He did not think anything could be clearer than that, because the Prime Minister expressly rejected that Amendment on the ground that the point was already covered by the words in the Act, the right hon. Gentleman's argument being that the word "remuneration" was sufficiently wide to cover I the particular case he had in his mind. I In the case he had put before the Committee, the gentlemen concerned applied for abatement, and a considerable correspondence took place between them and I the Income-Tax Commissioners, who decided that the particular case did not I come within the words of the Act. The Commissioners did not state their reason for taking this course, but he conceived that they might have acted on the ground that there was nothing in the Articles of Association which expressly made a contract by which those gentlemen were to receive dividends in lieu of salary. But surely that made no difference to the principle. He thought his Amend ment made clear the intention of the 960 Prime Minister that the more technical difference between a partnership and a company was not to make any difference I in regard to assessments for income-tax—that, if the whole of the dividends were paid away to the former owners, it i did not matter that they now called dividends what before the formation of the private company were called profits, the rationale of the case was exactly the same. The object of the change was to exempt people who had to work for their bread from paying the same as those who received their income without working. He thought the words he had suggested were adequate, but if the Government thought otherwise he was willing to accept an assurance from the Chancellor of the Exchequer that the question would be looked into before the Report stage. He begged to move.
§
New clause—
Income arising from dividends on shares in a private company held on the condition, express or implied, that the holder shall give his services in the management and conduct of the business shall be denned to be earned income within the meaning of Section 19 of the Finance Act of 1907."—(Lord R. Cecil.)
§ Brought up, and read a first time.
§ Motion made, and question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid he was placed at a great disadvantage in dealing with a very complicated matter of this kind in not having had an opportunity of considering the Amendment.
§ LORD R. CECILPerhaps the right hon. Gentleman will allow me to state that I did send him a copy of it before the sitting of the House to-day.
§ MR. LLOYD-GEORGEsaid he had only had time to look into what was said in the debates on the Finance Bill of 1907. He understood that if the income was derived from shares which were given to a man as part of his remuneration for the management of a business, it was now treated, as earned income, provided the dividends and the possession of the shares ceased the moment he ceased to manage the business, otherwise they could hardly be treated as part of his remuneration. 961 That was the distinction which had been drawn by the Inland Revenue. Take the case of a company formed, say, with a capital of £100,000, the shares of which were not issued to the public. The man who owned the business which was converted into a company became the managing director, and a certain payment was made to him by way of remuneration. That clearly was earned income. But suppose instead of retaining all the shares lie got £50,000 in cash. Surely the noble Lord would not suggest in that case that the dividends which he got on the re investment of that money should be treated as earned income? That would clearly be unearned income, and he did not see that any difference should be made if he retained the £100,000 of shares in his own possession, because, if it were, it would be giving an advantage to a man purely because he did not part with his shares.
§ LORD R. CECILsaid the whole point was whether the income arose from his own exertions. The income in the private company which he had suggested did arise from the exertions of the gentleman who received the dividends, and in the ordinary sense of the word he earned the dividend. It was quite true that, in the other case, it technically belonged to the company, but it was due to the man's exertions that the dividend had been earned. That was earned income in exactly the same way as the private company's income was earned income before it became a limited company.
§ MR. LLOYD-GEORGEsaid it was the man who earned the money, even when the concern was carried on with public capital. It was the brain behind the business that counted in the earning of the money, and whether the money was earned for himself or for the public did not matter. Most capital was the accumulation resulting from individual exertions, and the owner of capital received a return for it whether he parted with it, reinvested it, or allowed it to remain in a business. He did not see, therefore, that it should be treated purely as a kind of remuneration for labour.
§ SIR F. BANBURYsaid the right hon. Gentleman had not quite grasped the 962 point. He would put it in another way. Two men—say the Chancellor of the Exchequer and himself—became partners in business, and agreed to divide the profits. They earned £3,000 and divided it equally. Under the Finance Act of last year they would be able to claim an abatement from 1s. to 9d., because they were each earning £1,500 a year. Then they agreed, for a variety of reasons, that they would turn the business into a limited company, that they would retain the ordinary shares, and that they would do the whole work of management of the company. The result was that they were still earning £1,500 a year each, but were taxed 1s. instead of 9d. That was the whole point. But supposing they retired from business, they would, of course, have to put someone in their place to do their work, thereby reducing their earnings from £1,500 a year each to. say, £500. Was a man in that case, and this was the real point, to be penalised because he put the word "Limited" after "Lloyd-George, Banbury & Co.," or simply left it "Lloyd-George & Banbury."
§ MR. AUSTEN CHAMBERLAINsaid he hoped the right hon. Gentleman would give rather more consideration to this subject. He was, of course, labouring under great difficulty, inasmuch he did not receive the notice of his noble friend; he did not know why.
§ MR. LLOYD-GEORGEsaid that the notice had only come at question time, and he had been occupied ever since.
§ MR. AUSTEN CHAMBERLAINsaid that in any case the right lion. Gentleman was labouring under difficulty, and had not been able to read the debate which took place last year. The hon. Gentle man was, of course, then not directly concerned in the Budget, but there was a very interesting discussion on this subject with the then Chancellor of the Exchequer, in the course of which that right hon. Gentleman gave ah assurance to his noble friend and himself, which appeared absolutely to meet the case they had propounded. He expected that his noble friend had, like himself, been the recipient of a considerable number of letters from people who 963 expected abatement on account of the assurance given by the then Chancellor of the Exchequer, but who had been denied that abatement. The statement did not appear in The Times report of the speech of the then Chancellor of the Exchequer, but it appeared in Hansard. It was to the effect that not only must the conditions and circumstances remain unaltered, but that the articles of association of the company must provide that the dividends were paid as remuneration.
§ MR. LLOYD-GEORGEHere is the quotation—
The remuneration in that case as provided for by the articles of association, would still be treated as income.
§ MR. AUSTEN CHAMBERLAINsaid that there were some such passage as that; and when some of them wrote to the Inland Revenue authorities and said: "Here is a case of the exact kind we put in the House of Commons," and asked for relief, the relief was refused, and the passage that was relied on to justify the refusal of the Inland Revenue authorities was that very passage used by the Prime Minister. The line taken now by the Chancellor of the Exchequer was wholly inconsistent with the line taken by the Prime Minister last year. The Prime Minister said that, provided the fact was that a private partnership was changed into a limited company for family reasons, that should make no difference to the method in which the partners were assessed for income-tax. The Chancellor of the Exchequer now argued that it ought to make a difference. So long as a firm was a private firm he did not have regard to their capital, but treated their profits as earned by their exertions. But directly that firm was turned into a limited company, the Inland Revenue said that part of their earnings was merely interest on their capital, their buildings, good will, and stock-in-trade. That was true, but the same was true of a private partnership. The buildings were the same, the good will was the same, and the stock-in-trade was the same. The difference which the Chancellor of the Exchequer intended to draw between, the two was not only not the distinction made by the Prime Minister last year, but was wholly in- 964 consistent with the line of his argument in defending the Budget at that time. Limited by the conditions which the Chancellor of the Exchequer had made, the Prime Minister's assurance was almost worthless. He could assure the Chancellor of the Exchequer that the conditions he imposed struck at the basis of the reasons for turning private partnerships into private companies and deprived the latter of all the advantages which they believed they had secured from the Prime Minister's statement. He assured the right hon. Gentleman that there were a large number of cases where great disappointment had been felt on account of the line which he had taken. It would prevent many companies being formed, inasmuch as it was inconsistent with the spirit if not actually with the letter of the Prime Minister's assurance; and he hoped that before next year the right hon. Gentle man would look into the matter and see whether those people could not get the full benefit which the Prime Minister intended.
§ MR. J. M. HENDERSON (Aberdeenshire, W.)said that the point which the hon. Baronet opposite had missed was this: If this firm of Lloyd-George, Banbury & Co., earned £3,000 a year profit, and divided £1,500 between them, and they turned the firm into a company they capitalised their earnings, which at 5 per cent, would amount to £30,000. They had got, therefore, on paper, something representing the full value of twenty years earnings, and were not entitled to take off their income-tax.
§ MR. AUSTEN CHAMBERLAINsaid they might no doubt reduce their capital, but the capital in the new company might be and in many cases was the same as the capital of the partners in the private firm.
§ MR. J. M. HENDERSONsaid that assuming that was so, the remedy lay absolutely in their own hands, because they could not pass a resolution that each of the directors should receive the same remuneration as he got before.
§ *MR. DUNN (Cornwall, Camborne)said their sympathies need not always go out to the trader who for various reasons had turned his business into a limited liability company. There were many advantages and probably some disadvantages in his so doing. The payment of 1s. instead of 9d. might be one of the disadvantages. There were, however, many compensating advantages. The difference of the word limited in the name of the firm might make all the difference to the hon. Gentle man the Member for London if the business in which he supposed himself to be in partnership with the Chancellor of the Exchequer was not successful. If it was a private firm and was not successful a terrible calamity might happen. That House might even lose the presence of the hon. Member. But if it was turned into a limited liability company it mattered not whether the business was successful or not. The position of the hon. Member was assured. They could still retain his presence and listen to his speeches. Having regard to the fact that directly a business was turned into a limited company the whole of the private estate of the members of the company was protected, he did not think it was too much to ask them to pay a little increased income-tax as the price of the indemnity both to person and estate, that the company status conferred. In
§ addition to that, as had already been said, it was an easy thing for the directors by means of a resolution to agree to pay a reasonable sum for the services they rendered. He hoped the Amendment would not be accepted.
§ MR. BOWLES (Lambeth, Norwood)supported the new clause. He said the hon. Gentleman who had just sat down had made a flippant and roystering speech, but had not, if he might say so, met the point of his noble friend's new clause. The point was whether or not a particular kind of income was earned or unearned. There were many cases where a man in a company's service had to take shares on the understanding that when he left their service the shares would revert to the company. The dividend on the shares was the reward of his personal exertion, and ought to be regarded as income. If this were not recognised, the whole system of giving employees an interest in a business would be imperilled; profit-sharing of employees would be penalised. The refusal to recognise this was another instance of straining the letter and breaking the spirit of the Act of last year.
§ Question put.
§ The Committee divided:—Ayes, 57; Noes, 266 (Division List, No. 196).
969| AYES. | ||
| Anson, Sir William Reynell | Craig, Charles Curtis (Antrim, S. | Renton, Leslie |
| Ashley, W. W. | Craik, Sir Henry | Ronaldshay, Earl of |
| Aubrey-Fletcher, Rt. Hn. Sir H. | Dalrymple, Viscount | Ropner, Colonel Sir Robert |
| Balcarres, Lord | Duncan, Robert (Lannark, Govan | Rutherford, W. W. (Liverpool) |
| Banbury, Sir Frederick George | Fell, Arthur | Salter, Arthur Clavell |
| Banner, John S. Harmood- | Forster, Henry William | Sheffield, Sir Berkeley George D. |
| Baring, Capt. Hn. G.(Winshester) | Gibbs, G. A. (Bristol, West) | Smith, Abel H. (Hertford, East) |
| Beach, Hn. Michael Hugh Hicks | Gretton, John | Stanier, Beville |
| Beckett, Hon. Gervase | Guinness, Walter Edward | Starkey, John R. |
| Bignold, Sir Arthur | Harris, Frederick Leverton | Talbot, Lord E. (Chiehester) |
| Brotherton, Edward Allen | Houston, Robert Paterson | Talbot, Rt. Hn. J. G. (Oxf'd Univ |
| Burdett-Coutts, W. | Hunt, Rowland | Thomson, W. Mitchell-(Lanark) |
| Carlile, E. Hildred | Joynson-Hicks, William | Valentia, Viscount |
| Castlereagh, Viscount | Keswick, William | Walker, Col. W. H. (Lancashire |
| Cave, George | Lane-Fox. G. R. | Willoughby de Eresby, Lord |
| Cecil, Evelyn (Aston Manor) | Magnus, Sir Philip | Wortley, Rt. Hon. C B. Stuart- |
| Cecil, Lord John P. Joicey- | Morpeth, Viscount | Younger, George |
| Chamberlain, Rt Hn. J. A. (Wore. | Morrison-Bell, Captain | |
| Clark, George Smith | Pease, Herbert Pike (Darlington | TELLERS FOR THE AYES—Lord Robert Cecil and Mr. Bowles. |
| Coates, Major E. F. (Lewisham) | Rawlinson, John Frederick Peel | |
| NOES. | ||
| Abraham, William (Rhondda) | Agnew, George William | Ashton, Thomas Gair |
| Adkins, W. Ryland D. | Allen, A. Acland (Christchurch) | Asquith, Rt. Hn. Herbert Henry |
| Agar-Robartes, Hon. T. C. R. | Allen, Charles P. (Stroud) | Astbury, John Meir |
| Balfour, Robert (Lanark) | Guest, Hon. Ivor Churchill | Micklem, Nathaniel |
| Baring, Godfrey (Isle of Wight) | Gulland, John W. | Middlebrook, William |
| Barker, John | Haldane, Rt. Hon. Richard B. | Molteno, Percy Alport |
| Barlow, Sir John E. (Somerset) | Hall, Frederick | Mond, A. |
| Barnes, G. N. | Harcourt, Rt Hn. L. (Rossendale | Montagu, Hon. E. S. |
| Barran, Rowland Hirst | Harcourt, Robert V.(Montrose) | Mooney, J. J. |
| Barry, Redmond J.(Tyrone, N.) | Hardie, J. Keir (Merthyr Tydvil) | Morgan, G. Hay (Cornwall) |
| Beale, W. P. | Hardy, George A. (Suffolk) | Morgan. J. Lloyd (Carmarthen) |
| Back, A. Ceeil | Harmsworth, Cecil B. (Wore'r) | Morrell, Philip |
| Bell, Richards | Harvey, W. E. (Derbyshire, N. E. | Morse, L. L. |
| Benn, Sir J. Williams (Devonp'rt | Haslam, James (Derbyshire) | Alorton, Alpheus Cleophas |
| Benn, W. (T'w'r Hamlets. S. Geo. | Haslam, Lewis (Monmouth) | Murphy, John (Kerry, East) |
| Bennett, E. N. | Haworth, Arthur A. | Nannetti, Joseph P. |
| Barridge, T. H. D. | Hazel, Dr. A. E. | Nicholls, George |
| Birrell, Rt. Hon. Augustine | Hedges, A. Paget | Nicholson, Charles N. (Doncast'r |
| Black, Arthur W. | Hemmerde, Edward George | Nolan. Joseph |
| Bowerman, C. W. | Henderson, Arthur (Durham) | Norton, Capt. Cecil William |
| Branch, James | Henderson, J. M.(Aberdeen, W.) | Nussey, Thomas Willans |
| Brigg, John | Henry, Charles S. | O'Brien, Kendal(Tipperary Mid) |
| Bright, J. A. | Herbert, Col. Sir Ivor (Mon., S.) | O'Brien. Patrick (Kilkenny) |
| Brocklehurst, W. B. | Higham, John Sharp | O'Connor. John (Kildare, N.) |
| Brodie, H. C. | Hobart, Sir Robert | O'Donnell. C. J. (Walworth) |
| Brooke, Stopford | Hobhouse, Charles E. H. | O'Dowd, John |
| Brunner. J. F. L. (Lanes., Leigh) | Hodge, John | O'Grady, J. |
| Bryce, J. Annan | Hogan, Michael | Parker, James (Halifax) |
| Burt, Rt. Hon. Thomas | Holden, E. Hopkinson | Partington, Oswald |
| Buxton, Rt. Hn. Sydney Charles | Hope, John Deans (Fife, West) | Pearce, Robert (Staffs, Leek) |
| Byles, William Pollard | Hope, W. Bateman (Somerset, N | Pearce, William (Limehouse) |
| Carr-Gomm, H. W. | Horniman, Emslie John | Phillips, John (Longford, S.) |
| Causton, Rt. Hn. Richard Knight | Howard, Hon. Geoffrey | Ponsonby, Arthur A. W. H. |
| Cawley, Sir Frederick | Hudson, Walter | Price, C. E. (Edinb'gh, Central) |
| Cheetham, John Frederick | Hyde, Clarendon | Price, Sir Robert J. (Norfolk, E. |
| Cleland, J. W. | Idris, T. H. W. | Priestley, Arthur (Grantham) |
| Clough, William | Illingworth, Percy H. | Priestley, W. E. B. (Bradford, E. |
| Clynes, J. R. | Jackson, R. S. | Radford, G. H. |
| Cobbold, Felix Thornley | Jacoby, Sir James Alfred | Raphael, Herbert H. |
| Collins, Stephen (Lambeth) | Johnson, John (Gateshead) | Rea, Russell (Gloucester) |
| Collins, Sir Wm. J. (S. Pancras, W | Jones, Leif (Appleby) | Rea. Walter Russell (Scarboro' |
| Cooper, G. J. | Jowett, F. W. | Rendall, Athelstan |
| Corbett, C. H. (Sussex, E. Grinst'd | Kearley, Sir Hudson E. | Richards T. F. (Wolvorh'mpt'n |
| Cornwall, Sir Edwin A. | Kekewich, Sir George | Richardson. A. |
| Cory, Sir Clifford John | Kelley, George D. | Ridsdale, E. A. |
| Cotton, Sir H. J. S. | Kettle, Thomas Michael | Roberts, Charles H.(Lincoln) |
| Cox, Harold | Laidlaw, Robert | Roberts, G. H. (Norwich) |
| Craig, Herbert J. (Tynemouth) | Lamont, Norman | Robertson, Sir G Scott (Bradf'rd |
| Crean, Eugene | Law, Hugh A.(Donegal, W.) | Robinson. S. |
| Crooks, William | Lea, Hugh Cecil (St. Pancras, E. | Robson. Sir William Snowdon. |
| Devlin, Joseph | Lever. A. Levy (Essex, Harwich) | Roe, Sir Thomas |
| Dewar, Sir J. A. (Invemess-sh.) | Levy, Sir Maurice | Rogers. F. E. Newman |
| Dobson, Thomas W. | Lloyd-George, Rt. Hon. David | Rowlands. J. |
| Duckworth, James | Lough, Rt. Hon. Thomas | Runciman, Rt. Hon. Walter |
| Duncan, C. (Barrow-in-Furness | Lupton, Arnold | Russell. T. W. |
| Dunn, A. Edward (Camborne) | Luttrell, Hugh Fownes | Rutherford. V. H. (Brentford) |
| Dunne, Major E. Martin (Walsall | Lyell, Charles Henry | Samuel, Herbert L.(Cleveland) |
| Edwards, Clement (Denbigh) | Macdonald, J. R. (Leicester) | Samuel, S. M. (Whitechapel) |
| Edwards. Enoch (Hanley) | Mackarness, Frederic C. | Scarisbrick, T. T. L. |
| Edwards. Sir Francis (Radnor) | Maclean, Donald | Schwann, C. Duncan (Hyde) |
| Erskine. David C. | Mac Neill, John Gordon Swift | Schwann, Sir C. E. (Manchester |
| Essex, R. W. | MacVeagh, Jeremiah (Down, S.) | Scott. A. H.(Ashton-under-Lyne |
| Esslemont. George Birnie | MacVeigh, Charles (Donegal, E.) | Seaverns. J. H. |
| Evans, Sir Samuel T. | M'Callum, Join M. | Seddon. J. |
| Everett, R. Lacey | M'Crae, Sir George | Seely, Colonel |
| Fenwick, Charles | M'Kenna. Rt. Hon. Reginald | Shackleton, David James |
| Findlay, Alexander | M'Laren, H. D. (Stafford, W.) | Shaw, Charles Edw.(Stafford) |
| Flynn, James Christopher | M'Micking, Major G. | Shaw, Rt. Hn. T. (Hawick B.) |
| Fuller, John Michael F. | Manfield, Harry (Northants) | Shipman, Dr. John G. |
| Fullerton. Hugh | Mansfield, H. Rendall(Lincoln) | Silcock, Thomas Ball |
| Gill, A. H. | Markham. Arthur Basil | Simon, John Allsebrook |
| Gladstone, Rt Hn. Herbert John | Marks, G. Croydon (Launceston | Smeaton, Donald Mackenzie |
| Glendinning, R. G. | Marnham, F. J. | Snowden, P. |
| Glover, Thomas | Mason, A. E. W. (Coventry) | Soares, Ernest J. |
| Goddard, Sir Daniel Ford | Massie, J. | Stanley, Albert (Staffs, N.W.) |
| Gooch, George Peabody (Bath) | Menzies, Walter | Stanley, Hn. A. Lyulph (Chesh. |
| Steadman, W. C. | Toulmin, George | Whitley, John Henry (Halifax |
| Stewart, Halley (Greenock) | Verney, F. W. | Whittaker, Rt Hn. Sir Thomas P. |
| Stewart-Smith, D. (Kendal) | Vivian, Henry | Wiles, Thomas |
| Strachey, Sir Edward | Walker, H. De R. (Leicester) | Wilkie, Alexander |
| Strauss, E. A. (Abingdon) | Walsh, Stephen | Wilson, Henry J.(York, W.R.) |
| Stuart, James (Sunderland) | Wardle, George J. | Wilson, John (Durham, Mid) |
| Surnmerbell, T. | Warner, Thomas Courtenay T. | Wilson, J. W.(Worcestersh. N.) |
| Sutherland, J. E. | Wason, John Cathcart (Orkney) | Wilson, P. W.(St. Pancras, S.) |
| Taylor, Theodore C.(Radcliffe) | Waterlow, D. S. | Wilson, W. T.(Westhoughton) |
| Tennant, H. J. (Berwickshire) | Watt, Henry A. | Wood, T. M'Kinnon |
| Thomas, Sir A. (Glamorgan, E. | Weir, James Galloway | |
| Thomas, David Alfred (Merthyr | White, Sir George (Norfolk) | TELLERS FOR THE NOES—Mr. Joseph Pease and Master of Elibank. |
| Thorne, G. R (Wolverhampton) | White, J. D. (Dumbartonshire) | |
| Tomkinson, James | White, Luke (York, E. R.) |
§ MR. HICKS BEACH, in moving the following 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 5 per cent, of the gross annual value," said he wished to draw the attention of the Committee to assessments for income-tax under Schedule A. Under Schedule A the owner was supposed to pay income-tax on the net income of his property. But in many cases he paid on a sum which was much more than the net income. Under the schedule he was allowed to deduct from the gross rental one-sixth in houses and one-eighth in land. That deduction was supposed to represent the actual cost of repairs to such property, but as a matter of fact, the allowances made did not by any means cover the actual cost of upkeep, and the owner of an estate paid income-tax at the rate of about 2d. in the £ more than he ought to do. When this clause was moved last year, the Prime Minister said he saw no reason to interfere in a matter in which a Tory Chancellor of the Exchequer had not seen fit to take any steps. But his point was that while there was graduation of income-tax nothing had been done to remedy this grievance. Suppose there was a small landowner who derived an income of £1,200 a year from his property and £1,000 a year from his profession, his total income brought1 him beyond the limit of £2,000, and he was not allowed to claim a deduction in respect to his earned income. But that income received from his property, which was assessed at £1,200, was not £1,200 but very often only £800, and in that case he certainly ought to be allowed to claim the deduction. The differentia- 970 tion in the income-tax introduced last year threw additional hardship on the small property owner and the small land owner. The clause he had put on the Paper was framed very moderately. It only asked that an allowance should be made for insurance similar to that made to shareholders of industrial companies before their gross profits were assessed for income-tax, and that a small sum should be deducted for cost of management. In the case of an industrial company every allowance was made for cost of management, and, in asking for an allowance of 5 per cent, on the gross income, he was not putting forward any excessive claim. It was based on a good precedent. Clause 7, subsection 5, of the the Finance Act of 1894, in dealing with the principal value of an estate for in come, provided that there should be allowed the cost of management out of the gross value of the estate. He did not plead for the big but for the small land owners of the country, and he did so because he thought the assessment under Schedule A did a great injustice to them. He begged to move.
§
New clause—
In addition to the deductions of one-eighth and one-sixth allowed under Section 5 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 5 per cent, of the gross annual value."—(Mr. Hicks Beach.)
§ Brought up, and read the first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. HOBHOUSEreminded the Committee that the principle now raised had been discussed before. In the 971 discussion in connection with the Act of 1894 the allowance made by the then Chancellor of the Exchequer was raised from one-tenth to one-eighth in response to representations from both sides of the House, and, if not absolutely satisfactory to everybody, it, nevertheless, met with general assent as a reasonable figure. He recognised that there was some hardship with regard to the question of insurance, and, while he could make no definite promise, he would consider it as fully as he could between now and next year.
§ LORD WILLOUGHBY DE ERESBYsaid that, when they brought this question forward last session, they received a bigger promise than careful consideration, because the Chancellor of the Exchequer gave a most emphatic answer. The right hon. Gentleman then stated that he would consider the matter, and if he found that income-tax was being paid on incomes which were not received he would not be slow to remove any such grievance. He took the trouble to send the right hon. Gentleman a case pointing out what they had always argued, that one-eighth on laud and one-sixth on buildings was not sufficient, and that in every case more income-tax was secured from land than was warranted by the income received from it. In addition to that, the legislation proposed this session practically meant paying a premium to the landowner to do nothing for the housing of labourers on the land. It was upon the building of cottages that the largest expenditure took place on the land, and therefore a larger percentage ought to be allowed off the gross rental. So long as they did not allow a proper percentage for the upkeep of those cottages on an estate and passed legislation to build cottages out of the rates it would be most disastrous to the ratepayers, and there would be a feeling of injustice.
§ MR. HICKS BEACHasked if it would meet the views of the Treasury if next year he put down a clause providing that a man might make a declaration of his income under Schedule D, setting forth the receipts from his farms on the one hand, and the cost of upkeep on the other. He ventured to assert 972 that a good case had been made out for this Amendment.
§ Proposed clause negatived.
§ MR. BRIDGEMAN(Shropshire, Oswestry) moved a new clause to repeal the excess duty on hackney carriages. His proposal was to relieve the cab-driver of 15s. out of the £3 he paid for his licence. He moved this new clause some two years ago, and the Chancellor of the Exchequer then stated that the carriages to which he referred were instruments by which the business was carried on, and being a tax on locomotion erred against sound principle. On that occasion he was asked to be content with that expression of sympathy, and he had consequently possessed him self in patience for two years. He could not, however, remain content any longer. The Chancellor of the Exchequer on the occasion he referred to suggested at the end of his speech that the matter should be deferred, and he would give it his careful consideration when the Government took up the question of the relation between local and Imperial taxation. He moved his Amendment now in order to see what position this very reasonable demand now occupied.
§
New clause—
The excess duty of fifteen shillings for every hackney carriage as denned in Section 4 of the Customs and Inland Revenue Act, 1888, shall be and is hereby repealed."—(Mr. Bridgeman.)
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid that this was really a matter for the local authorities rather than for the Exchequer, as the whole sum went towards local taxation. The question was whether, the Committee desired to take away £140,000 from the relief of rates. He was not prepared to recommend that course, and did not think that the hon. Member would find much support.
§ MR. BRIDGEMANsaid he wished to know when the Government were going 973 to carry out the promise made by the Prime Minister two years ago and take into consideration the relations between local and Imperial taxation. He did not wish this sum to be taken away from the local authorities. He wished to give them more, but he wished the tax to be taken off cab-drivers.
§ Proposed clause negatived.
§ MR. LAURENCE HARDY moved a, new clause providing that Section 12 of the Finance Act, 1898, shall apply in cases where the owner is a body of persons, corporate or incorporate, who is exempt from income-tax under the Acts dealing with exemptions for charitable purposes. He explained that it was devised in the interest of certain small charities, which, under a legal decision in the House of Lords, had been required to pay the land tax in full. He took a somewhat paternal interest in this matter, because it was on an Amendment of his own which the Chancellor of the Exchequer in 1898 accepted that this question had arisen. That Amendment gave con siderable relief to small payers of land tax. It also gave the same exemption with respect to income-tax. There were a good many small charities throughout the qpuntry—several of which were in his immediate neighbourhood—which had for a number of years received the relief given under the clause, but unfortunately in a case brought by the Excise, and decided by the House of Lords, it was held that the word "owner" did not apply to trustees. That case was taken in regard to the income-tax and had no reference to the land tax, but apparently the Inland Revenue had applied the decision of the Court to the land tax as well as to the income-tax. The result was that these small charities had had to pay the land tax in full. The matter concerned poor people whom the House was desirous of helping, as had been shown in the discussion on the Old-Age Pensions Bill. The effect of the legal decision given by the House of Lords had been to fine these poor people for no fault of their own. He could state on the authority of Lord St. Aldwyn, who was Chancellor of the Exchequer in 1898, that it was intended to exclude charities of the character referred to from the land 974 tax. He asked the Chancellor of the Exchequer whether he could see his way to restore the exemption. It could not be a serious matter to the Exchequer, but it would be a great benefit to the pensioners who were receiving help from the charities. He begged to move.
§
New clause—
Section 12 of the Finance Act, 1898, shall apply in cases where the owner is a body of persons, corporate or incorporate, who is exempt from income-tax under the Acts dealing with exemptions for charitable purposes."—(Mr. Laurence Hardy.)—
§ Brought up, and read a first time.
§ Motion made, and Question proposed, "That the clause be read a second time."
§ MR. LLOYD-GEORGEsaid the effect of the proposed new clause would be, not to restore an exemption, but to over ride a decision of the Courts interpreting an Act passed by a Government of which the hon. Member was a sup porter. The hon. Member had minimised the financial result of his proposal.
§ MR. LAURENCE HARDYsaid the Revenue authorities were in possession of all the facts already. They gave the exemption in earlier years, and they knew exactly what the weight of it was.
§ MR. LLOYD-GEORGEsaid they could tell exactly what it was in those particular eases, but once the principle of the Amendment was accepted, they would have to extend its application very considerably. Under those circumstances he could not see his way to accept the Amendment, because it might mean considerable loss to the revenue.
§ *MR. EVERETTsaid he supported the new clause. He had had a good many communications from persons in his constituency pointing out that without restoration of the exemption great hard ship would be caused to numbers of very poor people.
§ Proposed clause negatived.
§ MR. RAWLINSON(Cambridge University) moved a new clause, the object of which was to provide that in 975 future railway companies should be allowed to deduct from their income-tax the sums they had paid for railway passenger duty. This railway passenger duty was, he said, put on a long time ago, in 1831, and was a tax on locomotion. Its object was to prevent undue com petition with post-gigs and tramways—which latter had long since been practically relieved of the duty of 5 per cent. The matter came before a Select Committee in 1876 which reported that in their opinion a strong case had been made out, when the state of the revenue permitted, for a repeal of the tax, on the ground that the reasons for it had ceased to exist, and that it was unfair to continue a tax on one kind of locomotion when all taxes on other kinds of locomotion had been repealed. That argument was equally good to-day as it was in 1876. Indeed, the tax was far more unjust to-day than when the Committee reported, and he hoped that the Chancellor of the Exchequer would, if not this year, in some subsequent year repeal it. He begged to move.
§
New Clause—
Any railway company shall be entitled to deduct from the total amount payable by such company under this section the aggregate sum paid by the same company during the above-mentioned year for duty at the rate of five pounds per one hundred pounds under Section two of 5 and 6 Viet., c. 79, and to the schedule thereto, and for duty at the rate of two pounds per one hundred pounds under Section 2, Subsection 2 of 40 and 47 Vict., c. 34, upon moneys received or charged for the hire, fare, or conveyance of passengers upon or along any such railway. "—(Mr. Rawlinson.)—
§ Brought up, and read the first time.
§ Motion made, and Question proposed, "That the clause be road a second time."
§ MR. LLOYD-GEORGEsaid he was not going to defend the railway passenger duty or enter upon its merits. He had to point out that this involved a sum of £350,000 which lie would have to make up by imposing taxes in other directions, and he did not think that anything could be gained by that. He did not think that the imposition of the railway passenger duty had ever really interfered with railway development or the prosperity of railway companies. 976 Under these circumstances no case had been made out for its abolition such as would justify him in accepting the Amendment.
§ Proposed clause negatived.
§ Schedule agreed to.
§ Bill reported, without Amendment; to be read the third time To-morrow.