HC Deb 20 October 1909 vol 12 cc345-52

(1) Increment Value Duty shall not be charged on the increment value of any land, being the site of a dwelling-house, where immediately before the occasion on which the duty is to be collected the house was, and had been for twelve months previously, used by the owner thereof as his residence, and the annual value of the house, as adopted for the purpose of Income Tax under Schedule A, does not exceed—

  1. (a) in the case of a house situated in the administrative county of London, forty pounds; and
  2. (b) in the case of a house situated in a borough or urban district with a popu- 346 lation according to the last-published Census for the time being of fifty thousand or upwards, twenty-six pounds; and
  3. (c) in the case of a house situated elsewhere, sixteen pounds.

(2) Increment Value Duty shall not be charged on the increment value of any agricultural land where, immediately before the occasion on which the duty is to be collected, the land was, and had been for twelve months previously, occupied and cultivated by the owner thereof, and the total amount of that land, together with any other land belonging to the same owner, does not exceed fifty acres, and the average total value of the land does not exceed seventy-five pounds per acre:

Provided that the exemption under this provision shall not apply to any land occupied together with a dwelling-house the annual value of which, as adopted for Income Tax under Schedule A, exceeds thirty pounds.

(3) For the purposes of this Section—

  1. (a) the expression "owner" includes a person who holds land under a lease which was originally granted for a term of fifty years or more; but in such a case nothing in this Section shall prevent the collection of Increment Value Duty so far as it is payable in respect of any other interest in the land other than that leasehold interest; and
  2. (b) the site of a dwelling-house shall include any land valued together with the house for the purposes of Inhabited House Duty.

(4) Any Increment Value Duty which would, but for this Section, be charged shall, for the purpose of the provisions of this Act as to the collection of the duty, be deemed to have been paid.

Sir HENRY KIMBER

moved, in Subsection (1), to leave out all the words from the word "residence" ["used by the owner thereof as his residence"] to the end of the Sub-section.

The Amendment I have to propose is very simple and very clear. Clause 8 exempts from the Increment Value Duty the site of any dwelling-house in which the owner resides and has resided for 12 months, and, so far, I agree with it; but the Chancellor of the Exchequer adds modifications to exclude from the benefits of the Clause all houses over £40 per annum in London, or £26 per annum in county boroughs or urban districts of 50,000 inhabitants, or over £16 in rural parts. If exemption is to be given to a man because he resides in his own house, I am at a loss to understand why any distinction should be drawn between the man whose house is of the value of £40 and the man whose house is of the value of £42, or even £100 a year. We have had repeated declarations from the Chancellor of the Exchequer—and I always like to believe him, because I believe he intends to be accurate—that it is only the unearned increment which it is intended should be taxed. Last night an Amendment was moved to insert the word "unearned," and he could not accept it because he said the provisions of the Bill clearly defined that the tax was only to be charged in the case of unearned increment. He is somewhat mistaken in that, especially with regard to this particular case. The increment in the value of a house in which the owner has resided for a number of years can scarcely be called unearned. It is due, if anything, to the increased amenities which the resident owner has accumulated during his residence, and he is surely entitled to the benefit of that increment. If the increment in the case of a house of £40 a year and under in which the owner resides is to be exempt on the ground that it is unearned, why is not the increment which attaches to a house of over £40 a year in which the owner resides also unearned? Is it to be said that any increment in value in the case of a man who lives in a house of £35 a year is earned and that the increment in the case of a man who lives in a house of a higher value is not earned? The contrary is the case. It is more likely that any increment in value of a house of over £40 a year would arise from the action of the resident owner and the amenities increased by him. I should like to know if the Chancellor of the Exchequer is right in saying that they only intend to tax unearned increment, the grounds upon which he distinguishes the increment attaching to a house of under £40 as being earned and the increment attaching to a house of above £40 as being unearned. There can be no logical reason for any such differentiation. I do not wish to impute impure or political motives, but there is a natural bias in parties. I do not say that my party any more than other parties is free from that bias, but I can see a reason in political bias for extending an exemption to a class of supporters who may be presumed to reside in houses of less value than £40 a year, and for penalising those who reside in houses of a higher denomination, and who may, perhaps, be supporters of another party. I may mention the case of a builder who takes, we will say, a plot of 20 acres, intending ultimately to build upon it. He builds a house and resides in it. He builds perhaps on four acres a certain number of houses, and his capital, energy, labour, and pains increase the value of the land. He proposes to take in hand the building on another five acres a few years afterwards. That is treated under this Bill as unearned increment, whereas, I maintain, the owner, by residing in one house and by building other houses, has earned the increased value of the next five acres by his capital, brains, energy, and attention. Therefore the principle which the Chancellor of the Exchequer so earnestly repeated for the hundredth time last night, that increment is only to be charged on that which is unearned, has already been abolished. It does not apply to this Clause.

Mr. ARTHUR FELL

seconded the Amendment.

Mr. LLOYD-GEORGE

I do not think the hon. Baronet really knows the history of this Clause, otherwise he would not have moved the Amendment. The Clause was introduced after some considerable pressure brought to bear upon the Government from both sides of the House in favour of the exemption of the small owner and the owner of the small dwelling house. It was adopted without any opposition. If you exempt both the small and the great owner, then who is left to be taxed?

Sir HENRY KIMBER

This applies only to resident owners.

Mr. LLOYD-GEORGE

Yes, but the small resident owner; that is the point. It is introduced entirely in order to meet that case, and now the hon. Baronet wants me to extend the exemption not merely to small working-class dwellings but to property in Park-lane or anywhere else. That is not the object of this Clause. It is entirely outside the object of the Clause, and it would be absolutely impossible to accept the Amendment.

Mr. COX

I want to ask the Chancellor of the Exchequer whether he will not take this opportunity of justifying the Clause, because I cannot imagine a more grossly unfair exemption than that made. This is a Clause to protect small people. Supposing a working man is doing well enough to go on living in his own house which he has bought, then he is exempt from the tax, but, supposing he is unfortunate, loses his work, and has to live in a smaller house and take in lodgers, then he will become liable.

Mr. LLOYD-GEORGE

dissented.

Mr. COX

Certainly, because he is no longer resident.

Mr. LLOYD-GEORGE

Surely my hon. Friend does not imagine the occupier pays the tax. It is paid by the owner.

Mr. COX

But he still remains the owner. Surely it is possible for a working man to leave his house and to let it to someone else. That constantly happens, and, just because a man has been un- fortunate, he is to be subject to this tax. And this is an exemption put forward to assist small men!

Mr. AUSTEN CHAMBERLAIN

The logic of the hon. Gentleman has enabled him to point to a most serious defect in this Clause. I suppose all of us would be glad to see more working men owning their houses. At any time work may fail them, and they may have to remove. Thereupon, they may, or may not, be able to dispose of their houses, and they may, or may not, wish to do so. They may wish to keep their houses, hoping to go back to them later. If they cease to reside in their houses in order to follow their work, they at once, no matter how poor they may be, become subject to the tax. That, as the Chancellor of the Exchequer says, has nothing to do with this Amendment, because that blot would still remain, even if the Amendment were carried. The Chancellor of the Exchequer seems to think that that dispenses with the necessity of his making any reply. He may have to make a reply elsewhere if he does not make it here. I do not suppose my hon. Friend (Sir Henry Kimber) anticipated that the Government would accept this Amendment. It would make the Clause a little better and more logical, but, as the Clause meets the great bulk and the Amendment is intended to benefit the smaller number, the Government do not attach any importance to it. The Clause, as it stands, is a perfectly illogical clause throughout. It is perfectly illogical in its exemptions. These exemptions are only given because there are so many voters who will be affected. That is the method on which the Government have proceeded in regard to this Clause, and, indeed, to many others. A Parliamentary situation is created, and, thereupon, the Government hastens to see how it can still tax the few while finding some provision which will let out the more numerous class of voters. Reason, justice, and logic have nothing whatever to do with the case. It is a Parliamentary and electoral situation which is the sole anxiety of the Chancellor of the Exchequer. I say that if this tax is right there is no logical ground for this exemption. But still we have the Clause, my hon. Friend seeks to improve it, and, if he carries his Amendment to a Division, I shall vote with him.

Sir HENRY KIMBER

moved, in Subsection (2), to leave out the words "and the average total value of the land does not exceed £75 per acre."

I suppose this Amendment will meet the same kind of objection. The Sub-section provides that the "Increment Value Duty shall not be charged on the increment value of any agricultural land where, immediately before the occasion on which the duty is to be collected, the land was, and had been for twelve months previously, occupied and cultivated by the owner thereof, and the total amount of that land, together with any other land belonging to the same owner, does not exceed fifty acres." So far I am agreed with the Subsection, but the remainder limits the benefit to cases where the total value of the land does not exceed £75 per acre. I am at a loss to understand why, if the principle is good for the exemption of land at all, it should be limited to land of the value of only £75 per acre. Why should it not extend to land valued at £76 or even £100? I extend my Amendment also to striking out the proviso which follows: "That the exemption under this provision shall not apply to any land occupied, together with a dwelling-house, the annual value of which, as adopted for Income Tax under Schedule A, exceeds £30." I had put down these Amendments to be moved separately, but for some good reason I suppose at the Table, they have been put together as one Amendment. I am quite willing that they shall be so dealt with for the sake of brevity. Will the Chancellor of the Exchequer explain why this limitation of the exemption is fixed at land valued at £75 per acre?

Mr. G. D. FABER

I beg to second the Amendment.

Mr. MASTERMAN

This raises exactly the same point as the last Amendment. It merely applies to small holders of land instead of to householders. I do not want to go into the question whether or not it is logical or right. There are scores of examples in our legislation where we have made exemptions of this kind—exemptions which act against the symmetry of the Bill, but which are, nevertheless, in the interests of poor men.

Mr. COX

I regret that the hon. Member has not taken advantage of this opportunity to explain the principle underlying this Clause. He says the object is to exempt small men. Surely a man who owns is better off than a man who rents the land. It has been suggested that the tax is paid by the owner, but that argument cannot be put forward by the Government, because in another part of the Bill they have exempted golf links and sporting lands from the tax when occupied for those purposes, although the owner pays the tax. They thereby imply that though the tax falls on the owner, it may react on the occupier. Is it not the same in the case of agricultural land? I suppose the real answer is that there are a good many small owners in Ireland.

Sir W. ROBSON

moved to add at the end of Sub-section (2): "(3) Where a dwelling-house is valued for the purposes of Income Tax under Schedule A together with other land, and it is necessary for the purpose of this Section to determine the annual value of the dwelling-house, the total annual value shall be divided between the dwelling-house and the other land in such manner as the Commissioners may determine."

In Sub-section (2) it is provided that the exemption under this provision shall not apply to any land occupied together with a dwelling-house the annual value of which, as adopted for Income Tax under Schedule A, exceeds thirty pounds. Hence it becomes necessary to ascertain exactly the value of the house, and we therefore empower the Commissioners to value it apart from the other land. Of course, there will be a full right of appeal.

Sir W. ROBSON

moved, in Sub-section (3), paragraph (6), to leave out the words, "any land valued together with the house for the purpose of Inhabited House Duty," and to insert instead thereof the words, "offices, courts, and yards, and gardens not exceeding one acre in extent, occupied together with the dwelling-house."

As the Inhabited House Duty does not apply to Ireland, we, instead of making the definition by reference, propose to incorporate here the words of the Act itself.

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