§ (1) If the owner of any land or houses to which this Section applies shows that the cost to him of maintenance, repairs, insurance, and management, according to the average of the preceding five years, has exceeded, in the case of land, one-eighth part of the annual value of the land as adopted for the purpose of Income Tax under Schedule A, and in the case of 1228 houses one-sixth part of that value, he shall be entitled, in addition to any reduction of the assessment under Section thirty-five of the Finance Act, 1894, on making a claim for the purpose, to repayment of the amount of the duty on the excess, not exceeding in the case of land one-eighth part and in the case of houses one-twelfth part of the duty on an amount equal to the annual value.
§ (2) This Section shall apply to any land (inclusive of farm-houses and other buildings, if any) the assessment on which is, for the purpose of collection, reduced under Section thirty-five of the Finance Act, 1894, and to any houses the annual value of which, as adopted for the purpose of Income Tax under Schedule A, does not exceed eight pounds, the assessment on which is so reduced.
§ (3) In comparing the cost of maintenance, repairs, insurance, and management of any land or houses for the purpose of this Section with the annual value of the land or houses, the total cost of the maintenance, repairs, insurance, and management on any land managed as one estate, or of any houses on any such land, shall be compared with the total annual value of the land or houses as the case may be.
§ (4) All the provisions of the Income Tax Acts which relate to claims for exemption, relief, or abatement, or the proof to be given with respect to those claims, shall apply to claims for repayment under this Section and the proof to be given with respect to those claims:
§ Provided that if the owner of any land or house makes and delivers to the surveyor of taxes of any district in which the land or house is wholly or partly situate a declaration as to the cost to him of maintenance, repairs, insurance, and management, and the surveyor is satisfied as to the correctness of the declaration, the amount of the allowance to which the owner is entitled under this Section shall be certified by the surveyor, and repayment shall thereupon be made in accordance with his certificate.
§ (5) In computing the five-year average for the purposes of this Section, the year shall be taken to be the year ending on the thirty-first day of March, or such other date as may be adopted by the owner of the land or houses with the consent of the surveyor of taxes of the district, and the five preceding years shall be taken to be those preceding the commencement of the year for which the duty in respect of which a claim for repayment is made is charged.
1229§ Lord WILLOUGHBY de ERESBY moved, at the end of Sub-section (1), to add the words, "For the purposes of this Section the term 'maintenance' shall include the erection of new farm-houses, farm buildings, cottages, fences, and other works which are necessary to maintain the existing rent."
§ This matter was discussed in Committee, but was not definitely decided upon. The object of the Amendment is that the maintenance of new buildings and new works should be included, but only, of course, in those cases where no extra rent or revenue is brought in by them. I have consulted some gentlemen well up in legal parlance, and they tell me, with I do not know how much truth, that the term "maintenance" does not cover any new works, or new buildings, and I cannot help thinking that in exempting new buildings the Chancellor of the Exchequer will be missing a great opportunity of doing something towards the improvement of cottages and farmhouses in this country. At present, unfortunately, there are undoubtedly a large number of cottages in the country which are not in that good, sanitary state that we should like. I am certain that in a great number of cases it would be far better that those cottages, or, in many cases, farmhouses, should be demolished than that we should go on the old system-of patching up a wall here, putting a little more thatch on there, and caulking up a chimney somewhere else, and trying to make the thing do for another year; very likely throwing away money, and at the same time never providing a sanitary and comfortable house for the inmates. In addition to that, I think this is a question of the rules made by the rural district councils chiefly, but there is also a great inducement at present for landlords not to erect new cottages and farmhouses, but rather to go on patching up the old dilapidated ones, owing to the fact that as long as you patch the old houses the sanitary authority and the rural district council are probably a great deal more lenient and give far less trouble than if you erect a new house. The moment you try to erect a new house you have to go into the whole question of the water supply, and furnish plans and have everything to the satisfaction of the authorities, or you are told you cannot build the house at all. I am afraid unless some such Amendment is placed in the Bill we shall go on with the old system, which is not a good system, and which the Chancellor himself does not desire.
1230§ His answer may be that, of course, it is impossible for him to accept the Amendment, as it would mean that the revenue would gain less, and that there would be a further call upon the Exchequer; but I do not think that is the case, because there is only to be a limit up to 25 per cent., and the Chancellor of the Exchequer has laid by a certain sum of money to meet that expense; and if he is going to make a deduction of this description it would be far better to make it for those people who are trying to build new houses and cottages rather than for people who are patching up old places which are very likely insanitary, and which no power on earth could ever make good houses. There must be plenty of cases, too, where there is a butcher's shop and slaughterhouse in the middle of a village, where it would be far better to pull down the old slaughter-house and put up a new one at the back of the village. I do not think that could possibly come under the Clause, but it would all be to the benefit of the community and ought to be encouraged. In a great many parts of the country you see an old farmhouse standing in the middle of the village, with a crewyard against the house opening practically on to the village street, causing a good deal of smell and nuisance without any beauty arising therefrom. The whole place may be in a dilapidated condition, and yet under this Clause as it stands, so long as the landlord spends money in patching up the old farmhouse and putting up a few rails in the old tumbledown wooden fence round the crewyard, occasionally taking out a small drain, he will get exemption from Income Tax, but if he sets to work and sweeps the whole crewyard away and puts up a new farmhouse facing the street, with the crewyard at the back, though he gets no extra rent and gets no benefit from it, though it is a great advantage to the community, he will get no exemption whatever and will not be able to make any claim. I do not think the Amendment will lose any income to the Exchequer, because the right hon. Gentleman is only going to allow the 25 per cent., and that is made provision for. When he is doing what I consider an act of justice, which I am thankful to him for, as regards the treatment of agricultural land in this matter, I hope he will see the benefit of encouraging new and commodious cottages and farmhouses rather than bolstering up old insanitary dwellings which will never be satisfactory residences.
§ Mr. A. FELL seconded the Amendment.
1231§ Mr. LLOYD-GEORGEI have great sympathy with the object of the Amendment. I am strongly opposed to taxing landlords on expenditure in respect of improvements. On the contrary, it is just in itself, and it is desirable in the interests of the community that they should be exempted from taxation in respect of money they expend, not merely on necessary repairs, but on improvement to their property for agricultural purposes. It is distinctly desirable that they should be encouraged to spend money on improving their farm buildings and upon rendering sanitary cottages which are now uninhabitable, and generally on providing better housing accommodation for those who are labouring upon the soil. I have therefore always been strongly in favour of any readjustment of taxation which will encourage the land-owner who does anything of that kind. I quite agree that one of the most saddening spectacles in rural life is the way in which these old cottages are tumbling down. Therefore if the landlord spends part of his income upon improving or replacing these buildings he certainly ought not to be taxed upon that. If the builds cottages from which he draws additional rent, that is a different matter. When it is purely replacement and improvement I cannot conceive that it is in the interest of anyone to tax the landlord in respect of his expenditure on objects of that kind. I am not sure whether under the Amendment which I have had the pleasure of introducing with regard to Schedule A such expenditure would be covered I am told that this kind of expenditure would be covered by that Amendment, but I think the matter is so important that there should not be any doubt, and I am prepared to add words to make it absolutely clear that if the landlord does improve farm buildings, and generally spends money on capital improvements which do not add anything to his rent, he should be allowed a deduction. If the Noble Lord would withdraw this Amendment and move the insertion of the following words, I would accept the Amendment: "For the purpose of this Section the term 'maintenance' shall include the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent."
§ Lord WILLOUGHBY de ERESBYI am much obliged to the right hon. Gentleman. Would these words include the planting of a house on a different site?
§ Mr. LLOYD-GEORGEThat is one of the points which have been considered. The Amendment would certainly cover a case of that kind.
§ Lord WILLOUGHBY de ERESBYI beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Amendment made: To insert at the end of Sub-section (1) the words, "For the purposes of this Section the term 'maintenance' shall include the replacement of farmhouses, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent."—[Lord Willoughby de Eresby.]
§ Mr. FELLI beg to move, at the end of Sub-section (4), to leave out the words "repayment shall thereupon be made," and to insert instead thereof the words "the duty shall be reduced or repayment made (as the case may require)."
This is a small Amendment in procedure. The relief to the owners of land and houses is to be given on a declaration as to the accuracy of which the surveyor is satisfied. That presupposes that the owner shall previously have paid his Income Tax. The suggestion made in this Amendment is that the duty shall be reduced before payment is made. There is no necessity for paying the Income Tax and getting it back. The procedure I suggest will save a great deal of trouble.
§ Mr. LLOYD-GEORGEI trust the hon. Gentleman will withdraw this Amendment. It is an impossible Amendment from the point of view of machinery. If it were a fixed deduction of 12½ per cent., the Revenue officials could easily make it, but this relief involves a fluctuating deduction according to the expenditure by the landlord on repairs. For example, a landlord has to prove that he has spent 25 per cent. It may be that he has only spent 15 per cent. or 21 per cent. We proceed on the line of making the 12½, per cent. deduction, and then, if a further deduction is wanted, it should be in the form of a repayment. If the Amendment were accepted, you-would make the Schedule quite impossible. This is the only way in which it can be worked, at all events, for some time.
§ Amendment, by leave, withdrawn.