HC Deb 29 April 1909 vol 4 cc509-10

The imposition of a super-tax, however, upon large incomes on the lines suggested by the Select Committee of 1906 is a more practicable proposition, and it is upon this basis that I intend to proceed. Such a super-tax might take the form of an additional poundage charged at a uniform rate upon the whole income of persons whose total income exceeds the maximum above which the tax is to be applied, or the poundage might be varied according to the amount of the income to be taxed. A third, and I think preferable, alternative is to adopt a uniform poundage, but to charge the tax not upon the total income, but upon the amount only by which the income exceeded a certain fixed amount which would naturally, but need not necessarily, be the amount of the minimum income which attracts the tax. We might begin, say, at £3,000, and levy the new tax upon all income in excess of £3,000, or at £5,000, and levy the tax upon income in excess of £5,000. In the former case some 25,000 assessments would be required, in the latter only 10,000—from the point of view of administration a very strong argument in favour of the adoption of the higher figure at any rate in the first instance. On the other hand, a general abatement of £5,000 per taxpayer would be extremely costly, and though it would have the effect of largely reducing the actual as compared with the nominal rate of the tax except in the case of very large incomes indeed, the nominal rate necessary to produce an adequate revenue—though in reality no measure of the general burthen—would tend to appear somewhat alarming. While therefore I propose to limit the tax to incomes exceeding £5,000, I propose to levy it upon the amount by which such incomes exceed £3,000, and at the rate of 6d. in the £ upon the amount of such excess. An income of £5,001 will thus pay in super-tax 6d. in the £ on £2,001, the equivalent of an addition to the existing income tax of rather less than 2½d. in the £, and an income of £6,000 the equivalent of an additional 3d. The equivalent of an extra 4d. (or a total income tax of 1s. 6d. in the £) will only be reached when the total income amounts to £9,000 and 5d. not until £18,000. Assessments to the new tax will be based upon the Returns of total income from all sources, which will be required from persons assessable. The machinery will be, in the main, independent of the machinery of the existing income tax, but the assessments will be made by the special Commissioners appointed under the Income Tax Acts, and assessable income will be determined according to the rules laid down in the income tax schedules. Total income for the purposes of the tax will be ascertained in the manner prescribed by Statute for determining total income for the purposes of the present income tax exemptions and abatements, that is to say, deductions will be allowed for interest upon loans and mortgages and any other payments made under legal obligation, while in the case of real property assessed to property tax under schedule A, a special 5 per cent. allowance will be made for cost of management, as well as the allowances of one-sixth and one-eighth for repairs at present made in collection of the property tax under that schedule. Sir Henry Primrose, in his evidence before the Select Committee in 1906 estimated the number of persons in receipt of incomes over £5,000 a year to be 10,000, and their aggregate income to be £121,000,000. From this it will be seen that the amount of income liable to a super tax would be £90,000,000. The yield of the super-tax in a full year is estimated at £2,300,000, but as new machinery has to be set up and as returns have to be obtained from taxpayers, examined, and assessments made upon them, I should be sanguine if I anticipated that more than a small proportion of the first year's income will reach the Exchequer before 31st March next. In these circumstances I have not felt justified in including more than £500,000 in my Estimate for the current year.