§ (1) No exemption, abatement, or relief under the Income Tax Acts which depends wholly or partially on the total income of an individual from all sources shall be given to any person, unless the person claiming the exemption, abatement, or relief is resident in the United Kingdom:
§ Provided that where the Commissioners are satisfied in the case of any person employed in the service of the Crown abroad, that he would, if not so employed, be resident in the United Kingdom, that person shall be entitled to any relief, exemption, or abatement to which he would be entitled if he were resident in the United Kingdom, and if his total income from all sources were calculated as including any income in respect of which Income Tax may not be chargeable as well as income in respect of which Income Tax is chargeable.
§ (2) Income Tax shall not be payable in respect of the interest or dividends of any securities of a foreign State or a British possession which are payable in the United Kingdom, where it is proved to the satisfaction of the Commissioners that the person owning the securities and entitled to the interest or dividends is not resident in the United Kingdom; but, save as pro- 233 vided by this or any other Act, no allowance shall be given or repayment made in respect of the Income Tax on the interest or dividends on the securities of any foreign State or any British possession which are payable in the United Kingdom.
§ Relief from Income Tax under this Subsection may be given by the Commissioners either by way of allowance or repayment on a claim being made to them for the purpose within six months of the end of the year for which the Income Tax is charged.
§ Mr. GEORGE CAVEI beg to move to leave out Sub-section (1).
I move the Amendment partly because there is some uncertainty as to the meaning of the Sub-section and partly because, if I understand it rightly, it is proposed that no exemption, abatement, or relief is to be given, unless the person is resident in the United Kingdom. Take the case of a Britisher who lives in India or in the Colonies. If I understand the Subsection rightly, he will not be entitled, although his income is receivable in England, and falls below £700 a year, to exemption or abatement. I do not quite see why that should be so. Take the case of a man who resides and works in India, who as not perhaps a Civil servant, and who does not fall within the protection of the proviso, but who has a wife and family living in England, and whose income is very small, and falls below the point at which exemption on abatement ought to be allowed, why should not he have the benefit of the exemption section of the Income Tax Acts or be entitled to a reduction of the Income Tax? Take next the case of a Britisher or an Irishman who lives abroad owing to ill-health or want of means, whose income accrues here and is below the exemption limit. Why should he be denied the benefit of the exemption? I do not see any reason. A third case is that of a foreigner whose income is received here and remitted to him abroad. In that case I see no reason from the point of view of the individual why he should be relieved from the Income Tax. But, on the other hand, there is the public consideration that we do not tax foreigner's incomes, and if you deprive the foreigner of all relief the effect may be that incomes of foreign investments will not be remitted to this country, as is sometimes done now, but will be paid direct to the foreigner abroad. That, I agree, is quite a different consideration, but it does affect business men, and the effect may be to drive away 234 from this country business which now comes here. There is one other point. I do not quite understand the meaning of the word "relief" in this Sub-section. I am rather anxious to make sure that it will not have an effect which may be undesirable. For instance, take the case which I have been putting, of the income or dividends of a foreign company which are remitted to this country and paid here to a foreigner. Is the effect of this word to make that taxable income? I am rather afraid that it is a little bit ambiguous when you compare this word with the language of Sub-section (2). I am not quite sure, putting the two together, that the effect might not be to subject for the first time to tax income that is not now subject to tax. I would be glad to hear the views of the Chancellor of the Exchequer on these points.
§ Sir F. BANBURYAs far as I can understand the first part of the Clause, it is very clear, and applies only to foreigners who, having invested £3,000 or £4,000, claim that because the income from it is less than seven hundred a year they are entitled to abatement, notwithstanding that their income may be greater.
§ Sir F. BANBURYOne of your questions is whether English people who, owing to want of means or illness, have to live abroad should be deprived of a certain advantage which is given to people who are living in England. The next question is how that is going to affect foreigners who invest their money, or some of their money, in England? I understood that my hon. and learned Friend laid great stress on the last question on the ground that it might divert money which otherwise would be invested in English securities or in England. I was dealing with this last question. I have considerable experience of foreigners who have invested money in England. Many of them may have invested £5,000 or £6,000, or even £10,000 to £15,000, the interest on which would still leave them within the exemption being under seven hundred pounds. It is very extraordinary how tenacious they are of the right to obtain exemption on Income Tax. Over and over again they have come to me and asked me to obtain this abatement for them. I pointed out that it does not affect them very much. On more than one occasion I have been compelled to refuse to obtain this particular abatement because the difficulties of 235 obtaining it have been so great, and I have referred them to people who make it their business to obtain abatements of Income Tax. In every case they have gone to these people and obtained the abatements which amounted to very small sums. I believe that this proposal will have a very marked effect upon the investments by foreigners of small sums of money in England.
In this matter I am speaking without any regard to party considerations, but we must not forget that at the present moment there is not that glamour about English investments which there used to be, and consequently anything, however slight—and I admit that this is slight—which tends to divert foreign investments from this country is a bad thing. I believe that the loss to the Chancellor of the Exchequer from avoiding this result would be very small, while the loss to the country, if he does not do so would be, comparatively speaking, great. I would like to ask the Chancellor of the Exchequer the meaning of the last words in Sub-section (2): "but, save as provided by this or any other Act, no allowance shall be given or repayment made in respect of the Income Tax on the interest or dividends on the securities of any foreign State or British possession which are payable in the United Kingdom."
As far as I remember where foreigners hold securities in England which are not English securities, for instance, Japanese or Russian bonds, which they may buy here and leave here, there is some encouragement to English enterprise, and it gives employment to financial people in the City. Up to the present time whatever the income was arising from those bonds here in England, if you could prove that those owners were resident abroad and were foreigners, they would not pay any Income Tax. I am not quite sure whether under that Clause this is going to be altered, because apparently now, where dividends are payable in England, if they are held by a foreigner, that foreigner would be liable to Income Tax. Take the case of Japanese Stock, drawing dividends payable either in London or in Paris or in various cities of the world, or in Japan. As far as I can gather, the result of this provision will be that if the foreigner bought Japanese securities in England, and held them in England, he would be liable to Income Tax.
§ Mr. JOHN WARDWhy not? Is not that taxing the foreigner?
§ Sir F. BANBURYNo. The Japanese securities are produced abroad and bought in England. The only result will be that the foreigner, instead of buying Japanese securities in London, will buy them in. Amsterdam, or in some other place, and the money which would have come over here and been circulated here in commissions and charges, and which would have accrued to Englishmen doing the business, would go to the foreigner. That is a fact. I am pointing out what I understand, and I do not think that the hon. Member would deprive Englishmen of this means of earning an honest livelihood in order to give the business to somebody else abroad. When the business is done here the money is circulated, and there is employment for workmen, but if the business be done abroad there will be less money circulated in England, and, therefore, there will be less spent in wages. Is that the intention of the Chancellor of the Exchequer? If it is, it will not give him any more revenue, and it is absolutely certain that the business will be done abroad and not in England. Whilst the Government might not lose anything, they would not gain anything, but business would be driven out of the City of London into some foreign city. I do not think the right hon. Gentleman wants to do that. I am not a great admirer of the right hon. Gentleman, but I really do not think he wants to do that. I am stating facts. I do not want the right hon. Gentleman to take my word for them. I am telling them to the House from my experience of over 30 years in the City, and I believe every word I have said is absolutely true in every respect. All I ask the right hon. Gentleman to do is to take some other opinion than mine, say that of Sir Felix Schuster, who is a good Liberal, and who contested the City of London at the last election. I am quite certain he will endorse every word I have said. If he does that, then I ask the Chancellor of the Exchequer on the Report stage to amend the Clause in the direction I have suggested.
§ Mr. LYTTELTONPerhaps this is a convenient moment in which to raise the question of servants of the Crown and British subjects who live abroad or in the Colonies. I have an Amendment later on in regard to this matter, but I think that it is perhaps convenient first of all to ascertain what is the policy of the Government with regard to these persons. Take 237 first those Colonial subjects who are in the service of the Crown. I need only mention a very distinguished Canadian, Sir Percy Girouard, who fought throughout the South African war, who has since done important service both in the Transvaal and in Nigeria, and who is now nominated to an important governorship in East Africa. I can hardly suppose, if my reading of the Section is right, that it is possible the Government intend to treat such a person as one not entitled to all the privileges and abatements which are extended to any one of His Majesty's subjects. It is extremely probable that a colonist in the service of the Crown, when he has finished his period of service, will return to the country of his original domicile. I am dealing with colonists who have been in the service of the Crown, whose term of service has expired, and who return to the country of their original domicile—Australians, or Canadians in the service of the Crown, who, after long and honourable service, return to finish their days in Canada or Australia, as the case may be. His Majesty's Government have certainly of late, I think, ever since the Colonial Conference of 1907, been well aware of the strong Colonial demand in favour, if possible, of an interchange of civil and permanent servants of the Crown, who know the opinions which exist with regard to naval defence, and the taking of service by colonists in the British Army and Navy. The right hon. Gentleman also knows the strength of the demand there is for interchange and reciprocity between the great professions of the country, such as the Bar, which the Attorney-General discussed with the Colonial representatives in 1907, the profession of surveyors and other professions. There has been a great and a keen desire on the part, not merely of the Colonies, but of those who represent the Government there, to extend the feeling of a common and wider citizenship of the British Empire. If the Government do not go so far in that respect as we desire, at any rate they have gone some distance. I cannot believe it is other than by inadvertence that British subjects—men who have been in the service of the British Crown, men who have been in the Army or Navy, and who have returned to the country of their original domicile—should be placed in a prejudicial position with regard to this tax—a position which stamps them for one important purpose as not enjoying the privileges of British subjects. I can hardly believe that it is the 238 policy of the Government to throw, I was going to say a stigma, on British subjects who are not living in this country, and I await with confidence some declaration from the Chancellor of the Exchequer upon this point. There is one other point I desire to mention. I have spoken of colonists—citizens of Australia, Canada, and New Zealand—but there are others in the same category. I have had communications of a very earnest character indeed from gentlemen in the Channel Islands—some from Jersey. I think also that the Isle of Man is affected, though I have not received any communication from that island. If I read the Section correctly, however, the Isle of Man would fall under the same disability. What is the reason for their exclusion? Why is a man who has gone to live in one of those islands for the purposes of health, or to bring up a large family in the most economical way, to be deprived of privileges which every British subject enjoys and ought to enjoy? It seems to me to be intolerable to say that a man with a small income in Guernsey should have no abatement. I cannot, I confess, understand what the policy of the Government is in this matter. If it is alleged by the Chancellor of the Exchequer that there would be any difficulty in machinery, I say with great confidence that those difficulties, even if they were very much greater than they are, ought to be surmounted, and that it would pay the British Government well to treat British subjects in those islands handsomely and generously, and not leave it open to them to say, as they do with perfect justice, that because a piece of sea interposes between them and this country they are to be placed in a position of disability as to the privileges which ought to attach to British subjects.
§ Mr. J. F. REMNANTI should like to emphasise what has been said by giving a concrete case which will illustrate the point I wish to bring before him. The Chancellor of the Exchequer has, I know, been petitioned by companies from India working with British capital but with registered headquarters in London. I mention one situated in my own Constituency, the Bombay Tramways Company. That company has its headquarters in London, and the dividends are paid from the head office in London to the native Indian shareholders. In Bombay they have something like 67,000 small native shareholders, and the average holding of those particular shareholders is something like nine £1 shares. Up to the 239 present they have been allowed either exemption or abatement of the Income Tax charged in this country where they complied with the conditions, and in India they have had only the native Income Tax to pay. Under the present provision not only would they have to pay the native Income Tax, but also the Income Tax which is now proposed to be levied here. [An HON. MEMBER: "So they ought."] So they ought, says an hon. Member. I am endeavouring and asking the Chancellor of the Exchequer if he could see his way to help those small native shareholders in India to relieve them from double taxation in this way. What would be the result? The hon. Baronet does not take the trouble to think. He thanks it is good enough to keep his party sin power by any means. We are anxious, and I am sure the Chancellor of the Exchequer wall appreciate my point, not to drive away work from this country. What would be the result of this particular provision? They wall have probably to transfer their office to India, with the result that the Government wall be no better off than if they made this concession. If they do not they will be doing the gravest injustice to those small native shareholders in India and other districts, as I only give the Indian case as that which is before me. They will also be adding a stimulus to those who advise investors against British investments. I believe, if the right hon. Gentleman has had time to consider the petition, that he will see that there is a fair case to be met, and I hope he will go so far as to make the exemption to those who are British subjects and who do not happen to be residents in this country.
Sir SEYMOUR KINGWe have heard something as regards the privileges supposed to be enjoyed by persons employed in the service of the Crown abroad. Speaking as a layman and not understanding the full legal meaning of the word, I am not quite certain as to the extent of those privileges which servants of the Crown are supposed to enjoy. According to Sub-section (1), the persons to be exempted are those whose "total income from all sources were calculated as including any income in respect of which Income Tax may not be chargeable as well as income in respect of which Income Tax is chargeable." Do those words include the income that the servant of the Crown is drawing, say in India, where he is at the 240 time carrying on his profession? If it does, then it practically negatives any advantage which this Clause gives to the servant of the Crown abroad, because, practically in almost every instance, if you add the income of the servant of the Crown abroad to the income he has here, it would take him out of the exemption to those with £700 per year. Hitherto, in all the Income Tax Acts, it has been the income of the servant of the Crown within the United Kingdom that has been subject to taxation in the United Kingdom. The wording of this Clause is so strange that it leads one to think that what the Chancellor of the Exchequer is giving with one hand he is taking away with the other. On behalf of a very large number of persons interested, I would like to have some direct explanation from the Chancellor of the Exchequer.
§ 4.0 P.M.
§ Mr. JAMES MASONI should like to refer to a class of people who have not been mentioned, namely the colonists in our self-governing Colonies, who are not servants of the Crown, but are merely shareholders of companies registered in this country. Hitherto those shareholders, as in the case quoted as to India, have been able to get exactly the same abatements and privileges as shareholders in this country. Under this Clause it appears to me it is proposed to penalise those small shareholders inasmuch as it puts them on a different footing from their English fellow shareholders. I see that the right hon. Gentleman (Mr. Lloyd-George) shakes his head, and that assures me there is no intention of treating them on a different footing, because I am sure experience has shown that it would not be wise or justifiable in any way to put the Colonial shareholder at a disadvantage as compared with the British shareholder. There is a case in which this becomes especially hard, and I think it is best illustrated by a concrete case, particulars of which I have had given to me. It is a case where colonists are shareholders in a company registered in England and working the business in their own Colony, and carrying on a very important industry in New Zealand. There are over two thousand New Zealanders, many of them very small people, who have got shares in that industry. At the present time the secretary of the company assures me that they are exactly on the same footing as any shareholders in this country. They pay the same Income Tax and claim the same abatements when their incomes are small. 241 So far as I can see, this Clause prevents them any longer from claiming those abatements which shareholders in this country are able to claim. If I am right, and if Sub-section (1) has that effect, it is quite evident in the case of that particular company that they have obviously their remedy by transferring the domicile to New Zealand. That, I am sure, would not be to the advantage of the people of this country. Not only should we lose the business connected with it and the Income Tax which is now derived from these shareholders, but we should be starting a machine by which the English shareholders in the same company could evade the Income Tax altogether by keeping their dividends and reinvesting them in New Zealand. I cannot see that I am mistaken in the view I take of this provision, and the two Amendments which I have put on the Paper are designed to prevent what seems to me to be an unwise and unjustifiable state of things.
§ Mr. LLOYD-GEORGEThe whole point is not whether you will give the same treatment to the Colonial as to the British subject, but whether you are to continue a preference to the Colonial and the foreigner over British subjects. Exemptions and abatements are given to British subjects only if they can prove that their incomes are under a certain figure. The principle of the Income Tax is that up to £160 it is not fair to charge Income Tax at all. The recipient of such an income cannot afford a contribution in the way of Income Tax to the Imperial Exchequer. With incomes up to £700 it is not considered that the recipients are in a position to make a full contribution to the taxation of the country. If you apply a similar principle to the foreigner or to the Colonial, you must consider whether he is in a position to pay the full shilling or 1s. 2d. for Income Tax. But that is not the position at all under the law at the present moment. The Colonial or foreigner may be a millionaire, but he still gets the exemption as if he had less than £160 a year, simply because he has not £160 a year in this country. The exemption is supposed to be on the ground that a man cannot afford the contribution to the revenue of the country where the income is created. Therefore, the present system undoubtedly gives a preference to the foreigner or to a person residing abroad, either in a British Colony or in a foreign country, over a British subject. The object of this provision is to 242 withdraw that preference altogether. It may be said that the Government have rushed to the other extreme, and that we are withholding from the Colonial or the British subject abroad or the foreigner privileges and exemptions which are now given to British subjects. As far as the first part is concerned, there is general agreement, I think, that the Colonial or foreigner ought not to get a preference. [An HON. MEMBER: "No."] The hon. Baronet (Sir F. Banbury) is the only one who takes the view that a preference ought to be given to the foreigner. I believe he belongs to the section who want to tax the foreigner, but he would exempt the foreigner altogether. Here a preference is given by the law as it stands at present to the foreigner and to the Colonial over the British subject. I agree that this provision goes to the other extreme by withholding abatements and exemptions altogether. The right hon. and learned Gentleman (Mr. Lyttelton) frankly admits that there is some case for placing the foreigner at any rate in the same position as the British subject. His point was that we ought at any rate to extend the same privileges under the Income Tax laws to British subjects residing abroad as to foreigners. The difficulty is an administrative one, and in the case of a foreigner it is absolutely insuperable. You cannot ask a foreigner to give an account of the whole of his income, and if he gave you such an account you could not test it. It is therefore no use saying to the foreigner, "You can get these exemptions and abatements in the same way as the British subject, by proving that your income in the aggregate does not exceed £160, or whatever it may be." You have to adopt one of two courses. You must either exempt the foreigner altogether or say, "We cannot go to the trouble of proving your income abroad, we will deduct the tax at the source, and you cannot claim any exemption." The latter, I think, is the only course you can adopt. It is the course adopted by the Colonies themselves. The cases have been put to me of servants of the Crown who are Colonials, and who probably would not come within the words of the proviso. I think the right hon. Gentleman has established his case on that point, and I shall be glad to move the omission of the words or to accept an Amendment with the same object. It will not have very considerable application, but it would be very undesirable to hit Colonials who have served the Empire well, and it might look a little 243 shabby. It is the last thing we should like to do to any of those distinguished servants of the Crown, and therefore I shall be glad to accept an Amendment to deal with the point. We can settle the exact words later on; the great thing is to make the matter perfectly clear. We are agreed that it is not desirable that Colonials in the service of the Crown who, if they ceased to be in the service of the Crown, might reside outside the United Kingdom, should not be entitled to exactly the same privileges as British subjects in the service of the Crown. The Attorney-General will settle the form of words. I do not think there will be any difficulty about that.
§ Mr. ARTHUR LYNCHWhat exactly does the right hon. Gentleman mean by "Colonial"? Would he call a born Australian a Colonial?
§ Mr. LLOYD-GEORGEI used the term in the sense in which we all understand it. A question was put as to what the concluding words of the proviso mean. Supposing a British subject serving in India had an income there of £1,000. He clearly ought not to be entitled to an exemption, because he would not be so entitled if he lived in this country. A British subject earning £1,000 in India ought not to get a privilege which he would not get in the United Kingdom. We do want to deal with these cases, because they are serving the Crown abroad, but we do not wish to give them privileges which are not enjoyed by those who are serving the Crown at home.
There are one or two eases which I agree are rather hard. Take the case of a British subject who is forced from considerations of health to reside abroad. That, I agree, is a very difficult case, and if it were possible to devise a form of words to exclude British subjects in such circumstances I should be very glad to consider such an Amendment. Then there is the case of the Isle of Man and the Channel Islands. There again I agree that the right hon. Gentleman has made out a case, and I shall be prepared to consider it. These people ought not, in my judgment, to be given exemptions unless they can prove that they are entitled to them. As long as it is confined to the Channel Islands and the Isle of Man, I believe I can see my way to meet that case. The cases in regard to which I shall be prepared to consider a modification of this Clause are, first, the case of the Colonial who has been in the service of the Crown; secondly, that of the 244 British subject who is forced from reasons of health to reside abroad; and, thirdly, that of the Isle of Man and the Channel Islands.
Then I think that all the real cases of hardship are dealt with when these cases are exempted from the operation of the Section, because it is absolutely impossible—and the hon. Baronet admits it is quite impossible—for us to examine and scrutinise the declarations made by foreigners as to their incomes. Therefore there is only one thing to do, and that is to exempt foreigners altogether from the operation of that part of the Income Tax law, otherwise they would be receiving better treatment than British subjects.
Sir F. BAN BURYIt must not be forgotten that in the majority of foreign States an Englishman who has securities abroad is free from the taxes which are imposed in those foreign States. Therefore this is only reciprocal.
§ Mr. LLOYD-GEORGEThat is a totally different thing where it is made.
§ Mr. AUSTEN CHAMBERLAINI shall not deal with Sub-section (2) at this stage, but shall confine myself entirely to Subsection (1). I have heard with considerable satisfaction the announcement of the Chancellor of the Exchequer as to certain concessions which he is prepared to make, and with all the more satisfaction because the earlier portions of his speech appeared to be of a most uncompromising kind, and pointed directly to an obstinate adherence to the Bill exactly as drafted. At a very early stage, as the Chancellor will remember, I took exception to the whole of this Clause as one of those things which, whatever its theoretic equity in certain points of view, or whatever might be urged for it on the ground that you could not give the foreigner an exemption which you did not afford to the British citizen, was going to inflict a hardship out of proportion to the benefit derivable by the Exchequer. I must frankly admit that by the concessions which the Chancellor of the Exchequer has made he has met some specific cases which I instanced at that time, and on which I founded my observations. He has not met all that I mentioned. Let me deal in the first place with the British subject only. I am quite prepared to admit that in dealing with such a matter as Income Tax you may land yourselves in very grave difficulties if you attempt to differentiate between the foreigner and the British subject, and that you may 245 thereby cause retaliatory legislation, which would inflict very considerable hardship upon our own citizens abroad or holding securities abroad. Therefore, I am not now including that point of view. But I want for a moment to deal with the matter as it affects the British subject only. If it be urged that whatever treatment you afford to the British subject you must accord the same to the foreigner, I do not necessarily dispute that fact, because I think it is on the whole true. The question is whether the advantage of bringing in the foreigner, who in such cases now gets the advantage of the British subject at home, does not need some law like that under which the British subject is abroad, to counterbalance the disadvantage of inflicting these hardships on British subjects who are resident abroad? I do not think it does. What has the Chancellor of the Exchequer done? He has promised three concessions In the first place he will extend to the Colonial-born citizen of our oversea dependencies, who has been in the service of the Crown and returns to his own native land after his service under the Crown has finished, the exemption which is here given to ex-Civil servants; or a case of a servant of the Crown if he comes to live in the United Kingdom. That is good as far as it goes. I think the Chancellor of the Exchequer should consider whether he could not widen the concession a little. It is a very small point. But there are a certain number of cases where a man going to our oversea dominions, or elsewhere in the service of the Crown, makes his home there and spends the major portion of his life there; sets up his children around him, establishes them in business, and when the time comes for his retirement is unwilling to leave them, to leave all who are closest and nearest to him, and, therefore, though his service no longer requires him to remain in that place—having made his home there, having his whole family planted there—continues to reside there from motives that are quite reasonable and good, or because he has developed an affection for the place. The Chancellor of the Exchequer undertakes to continue the exemptions and abatements to people who are obliged to live out of this country by reason of health. They will have to produce, I suppose, a proper medical certificate that their health prevents them from wintering or living in this country, and that will be accepted by the Treasury officials unless they have good reason to question its bona fides. Then another 246 concession which I was very glad to hear was that the Chancellor of the Exchequer proposes to continue the exemption of relief to our fellow-citizens in the Isle of Man and the Channel Islands. The latter, I fancy, is the oldest of our oversea pos-cessions, and it is very intimately associated with us, and I am glad to note the Chancellor's action, for I should certainly have been very sorry to see this differentiation. I do not know what is exactly the financial effect of these various proposals on the total revenue which the Chancellor of the Exchequer expected to obtain from his proposals, nor, indeed, what the original estimate of the total revenue was or how it was arrived at. But I cannot help thinking that just over the borderland of the cases he has dealt with there are others equally hard, and if he meets them—as I hope he will—little by little, he is whittling away any revenue he might derive from this proposal, until it is hardly worth the irritation and difficulty which will arise. Let me take the case, in the first place, of British subjects resident in foreign countries: If they are exiled on account of health, the Chancellor will now afford them relief; if they are exiled on account of poverty, is he going to refuse relief?
The Chancellor of the Exchequer must know—it is within the knowledge of all of us—that, especially among families of ex-servants of the Crown, officers of the Army and Navy particularly, where the breadwinner has died early say, or where he has had to retire on a very small pittance indeed; that in order to educate their children in the manner in which they were brought up themselves, and, consequently, in order to fit those children to enter the services in which they themselves have borne an honourable part, these people go to some place abroad where they can get a good education for their children more cheaply than in this country. You go to Dresden, to Brussels, and to other towns which could be named, and you will find a little colony of English people there, perhaps largely widows, or actually those retired officers of the services who have gone to live there, not from any choice, not because they disliked England, or would not rather have lived in it, but because they can live abroad at less expense and with greater advantages than they could in their native country. They are as much forced by their circumstances to live abroad as the people who go abroad for reasons of health. I do think it is very hard that whilst you accord relief to 247 exiles from causes of health, you should refuse it to exiles on account of poverty! But I do not rest my case wholly on that. Let me say, too—I expect the Chancellor of the Exchequer has had so much to do that I am doubtful how much of his correspondence lately he has been able to read—but I have had some very piteous letters, obviously perfectly genuine, very pathetic, from people so situated abroad as to the effect of the Chancellor of the Exchequer's proposals. These people are leading a struggling life on a very small pittance, and on them the £1 or £2 additional which the Chancellor is now going to take is really a serious embarrassment in their domestic economy. Take another set of oases, that of English governesses residing abroad in order to earn their living. They have been left very likely a little money by a relative, by their father or mother. It is invested in this country, but the interest is not sufficient for them to live upon. They are abroad to add to that income by teaching the English language. Are they really to be refused such abatement as they have hitherto been accustomed to? It does seem hard, mean, petty, and unworthy of a great nation like ours that we should worry these poor people, who, heaven knows! have a hard and pathetic life under any circumstances, and whose, life has sometimes—as we have known in recent years—been made very hard in their foreign surroundings from the fact that they are British subjects. They do some work which is creditable and useful for their country, and it does seem mean and petty that we should make their lives harder in this effort to get a few extra shillings or pounds of taxation from them. Pass from that to the man who goes abroad in connection with a business. I am dealing with people now who, if they were resident at home, would be entitled to the exemptions and abatements specified. There are a considerable number of these men. I think it would be a very good thing if there were more Englishmen resident abroad as agents of English houses or in connection with commercial affairs. I am afraid there are a great many more foreign clerks and agents in our commercial houses in England than there are British clerks and agents in commercial houses abroad, where they are doing something for British trade. Naturally they have sympathy with the country of their birth, and they have a certain influence. I do not say in many cases that it is very powerful or 248 extends very far, but for what it is worth it is all in the right direction. Why penalise them because they are obliged to live abroad—to exile themselves? In all these cases I think it is bad policy to do what the Government are doing, and not merely bad policy, but a great, evident hardship. I am certain the Chancellor of the Exchequer has a good deal of sympathy with these cases. Really I am not at all certain that it he and I were to change places he would not make—in more eloquent language, with more passion, with more pathos—exactly the kind of appeal on behalf of exactly the same kind of persons as those I am appealing for now. I do myself an injustice when I say if the positions were reversed, because the Chancellor may take it from me that I would not have been responsible for this tax. I admit it was never suggested to me by my advisers at the Treasury, and I do not know whether this emanated from the Chancellor of the Exchequer himself or whether his advisers suggested it to him, but I say with confidence—of course the confidence of giving an answer to a question which one was never asked—if it were put to me I would not look at it, or, at any rate, I would not have adopted it. I do not think the Chancellor of the Exchequer will deny that he has a great deal of sympathy for the people for whom I am appealing, and also with the kind of argument I am now adducing. He says, I cannot give these people relief, though I should like to, without letting in other people to whom I do not want to give relief, and who have not claimed it. I am quite convinced that he could get from the classes of people affected certificates by Consular officials or by one or other of the authorities recognised for that purpose as competent and responsible attesting-witnesses to papers of that kind just as they are for pension papers, for instance, to-day. I do not think there will be any difficulty in getting such declarations as would prevent—I will not say any possibility of fraud—but as would prevent any extensive fraud. I am quite certain wherever there is a British colony resident in a foreign country that they would be ready through their organisation and British Vice-Consul to give such assistance to the Revenue authorities as they could in order to prevent fraud, so that this concession shall be fairly used by the people for whom it is intended.
I think you must in these matters give equal terms to the foreigner or the Englishman, or you may involve yourself in very 249 disagreeable fiscal controversy with foreign nations and in very complicated financial retaliation. I do not quite see why you should not say that anyone who can prove to the satisfaction of the Commissioners of Inland Revenue that they would be entitled to exemption if they were resident in Great Britain should be deprived of it by the mere fact that they were resident out of Great Britain. It would be for them to prove it. The right would be unable to prove it, the millionaire whom the Chancellor of the Exchequer has always in his mind will be unable to prove it; perhaps in some cases a few poor people would be unable to prove it, but in any case the onus and the difficulty of proof would rest with them, and not with the Inland Revenue authorities, and I think the Chancellor of the Exchequer and the authorities who advise him exaggerate the difficulty of the task they will have to pursue.
But even if I felt with the Chancellor that these difficulties were insuperable, and that you must either leave the law as it is or make the alterations he proposes, then my view is for leaving the law as it is, and in that connection I come to the point raised by my hon. Friend the Member for the City of London (Sir F. Banbury). I have no tenderness for the foreign taxpayer, whether he be millionaire or not, but I wish the Chancellor of the Exchequer had not the millionaire so constantly in his mind. So great is his anxiety to take something off the millionaire that he takes the shirt off the back of the working man. He is like the gentleman in Bon Gaultier, who missed the bluebottle and hit the mogul. He is always launching out and landing his blows in somebody else's eye. It is not worth while for the sake of foreign millionaires to inflict all this hardship on British subjects. I was rather surprised to hear from my hon. Friend the Member for the City how much importance is attached to these small abatements. [An HON. MEMBER: "It is the work of the Income Tax agencies."] Of course there are agencies in existence, and if people think it is well to employ the agencies well and good, but I have always heard that these agents charge very high rates. The people referred to by the hon. Member for the City are not those who are tempted by the touts of the agents to make claims. It is people who go to their agents upon the London Stock Exchange, and who ask him to try to get them back their money to which they attach very great importance.
250 Whatever views the Chancellor of the Exchequer may have about my hon. Friend's knowledge upon some points he will at least acknowledge that he has very large experience, and speaks with authority, on a matter of this kind. I am sorry that the hon. Member for the Newmarket Division is not in his place, because I have heard from other sources what my hon. Friend has said, and I would have appealed to the hon. Member for the Newmarket Division, who also has had great experience, to give the House the benefit of that experience. As my hon. Friend has said, it is not a question of justice. No doubt these people have no claim in equity or justice, but it is purely a question of policy, and the question is, are you going to deter these people in some cases from investing their money here? Are you going to induce companies to change their domicile? The Chancellor of the Exchequer, when anything of that kind is suggested, thinks that no company is going to change its domicile, because, if it did, it would find that the taxes which are pressing unduly upon them here would press still more heavily in whatever other place they might choose. The right hon. Gentleman is often mistaken about the amount of the taxes in other places. It is not at all necessary to go to New Zealand. If the taxes are very high here all they have to do is to get out of the United Kingdom to another place. Perhaps the right hon. Gentleman has heard of the Island of Guernsey.
§ Mr. LLOYD-GEORGEWhere is the company to carry on their business?
§ Mr. AUSTEN CHAMBERLAINDid the right hon. Gentleman never hear of a company being registered there or having an office there? I am not defending those companies; many of them go there in order to evade the law, because they want to do something to escape the tax which you have put upon the British investors. I am not defending the proceedings of such companies. What I say is, you have got to be careful to see you are able to do that which you are trying to do, and as regards the rich foreigners I do not myself believe you will be able to get more, and I do not believe you will be able to get much out of this tax. But for the sake of taxing these foreigners you are going to inflict a great deal of hardship. I am glad of the concession the Chancellor of the Exchequer has made, and I am glad of the extension which he has stated to me across the Table 251 he will give, but, though I recognise that as an important concession upon the Subsection of the Clause as it originally stood, still I maintain that the Chancellor of the Exchequer would be much better advised if he dropped the whole Clause, which is not worth all this trouble and difficulty.
§ Mr. W. BRIDGEMANThe Chancellor of the Exchequer has told us some of the concessions he intends to make, but I did not understand that amongst them were included any concession to those Englishmen who are working in British Protectorates or in a country which is either solely or jointly in British occupation. Such a man is serving abroad, though not directly drawing his salary from the Crown. They are serving the Crown as much as men who are directly paid out of the funds of this country. In Egypt there are an enormous number of Englishmen who are doing the work of the country, in a country which we occupy, by giving their advice and services for irrigation, and in many other ways. They would be excluded from any benefit under this Section, and so would people in a similar position in the Soudan. I should like, if the Chancellor would tell us, whether he can see any distinction between the position of those men and the servants of the Crown whom he has promised to exempt by an Amendment which is either to be moved by himself or accepted later on in this Debate? If he could hold out any hope of giving exemption in these cases it would not be necessary for me to move the Amendment I have on the Paper lower down, and for the sake of facilitating the course of the Debate perhaps it would save time if we knew now whether he will accept the proposal which I have made.
§ Mr. RAWLINSONI should like to draw the attention of the Chancellor of the Exchequer to the fact that by the words of this Sub-section he is injuring a very large number of people whom I think he never intended to injure for the purpose of carrying out his object in taxing the foreigner. Let me give one or two instances. I think it arises from the use of the word "resident" in the Section. No one has told us what construction is to be put upon that word, but one thing is certain, that it does not mean "domicile." I wish to deal with the case of a domiciled Englishman working abroad, who at the present moment is entitled to exemption, but who by this Sub-section is deprived of any. In the one case the man has in- 252 vested in Consols and goes abroad. For instance, a clergyman goes abroad either as a missionary or as a member of a Colonial church or a foreign church, as the case may be. Immediately this Section takes away the exemption which he would have had in connection with the interest on his Consols. Does the Chancellor of the Exchequer really intend that that should be done? Take another instance. An English lawyer goes over to practice at the Gold Coast. He is a domiciled Englishman, and he intends to return the moment he can. Under this Sub-section, having left his money invested in Consols, he immediately loses the exemption on the present-day basis, which I submit he ought to possess; he loses that exemption on his interest from Consols.
I could multiply those instances, and what I have said applies equally to a doctor who practices in that way, to a lawyer, to an engineer, or to those people who go out as secretaries to companies in the Colonies or elsewhere. Does the Chancellor of the Exchequer really intend this to apply to such cases, or is it merely a slip in the drafting? Does he really mean to take away the exemption from professional men of the character I have described? I should take it as a great courtesy if the Government would tell me whether they really intend to hit people who are domiciled Englishmen who have gone abroad in the service of the Church, the law, medicine, or engineering, or in any commercial enterprise? If it is inconvenient for the Chancellor of the Exchequer to tell me now, perhaps he will do so later on.
§ Mr. LLOYD-GEORGEI do not think there can be any doubt about this matter at all, because they are subject to this Section.
§ Mr. RAWLINSONThen that is a very great injustice.
§ Mr. LLOYD-GEORGEThe hon. and learned Member could not have been listening to the exhaustive speech of the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain), whose speech was directed to criticising that point.
§ Mr. RAWLINSONIf that is so, then it is a great injustice. Look at the folly of it from a financial point of view. What are the men I have alluded to to do? They are resident abroad. As long as they leave their money in Consols they will lose the exemption which they now get, but if 253 they transfer their investments in England into foreign bonds and keep them in England they will not lose the exemption. The Chancellor of the Exchequer has talked a great deal about taxing the foreigner. This Section is drawn in such a ridiculous way that the only method of getting this exemption is to transfer investments from Consols into foreign bonds. I submit to the Committee that it is an absolutely ridiculous farce to bring in such a financial clause as this. It will not bring in money, but it is sure to cause annoyance to Englishmen working abroad, and it will prevent them investing their money in Consols or other English securities, and it will tend to make them invest all their money in foreign bonds. Although those foreign bonds will be payable in London like Consols, yet they will continue to have the exemption. Can anybody defend that proposition? I submit that the whole of this scheme is thoroughly bad finance. Whether it is a good idea to attempt to hit foreign millionaires in the way which is supposed to be done under this Section, I have grave doubts. It will, however, hit Englishmen abroad, and it will certainly provoke a great deal of injustice amongst them. In my opinion the
§ whole finance of this Clause is absolutely ridiculous.
§ Mr. N. W. HELMEThere is one point I wish to put to the Chancellor of the Exchequer. Supposing a man with an income under £700 a year in the past goes away from England and is engaged for a temporary term of two or three years abroad, leaving his family behind and returning to England in the meantime. Will the Government refuse to continue to him the exemption which he has been accustomed to?
§ Mr. LLOYD GEORGECertainly that is not the case.
§ Mr. REMNANTI wish to ask the Chancellor of the Exchequer whether he cannot see his way in the future to make some concession to the British subject resident abroad whose income entitles him to total exemption so long as he remains in British territory as a British subject?
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided: Ayes, 198; Noes, 80.
255| Division No. 691.] | AYES. | [4.55 p.m. |
| Abraham, W. (Cork, N.E.) | Cotton, Sir H. J. S. | Helme, Norval Watson |
| Acland, Francis Dyke | Craig, Herbert J. (Tynemouth) | Henry, Charles S. |
| Adkins, W. Ryland D. | Crosfield, A. H. | Herbert, Col. Sir Ivor (Mon. S.) |
| Alden, Percy | Crossley, William J. | Higham, John Sharp |
| Allen, Charles P. (Stroud) | Cullinan, J. | Hobhouse, Rt. Hon. Charles E. H. |
| Ashton, Thomas Gair | Davies. Ellis William (Eifion) | Hooper, A. G. |
| Asquith, Rt. Hon. Herbert Henry | Davies, Timothy (Fulham) | Hope, W. H. B. (Somerset, N.) |
| Atherley-Jones, L. | Davies, Sir W. Howell (Bristol, S.) | Idris, T. H. W. |
| Baker, Sir John (Portsmouth) | Dewar, Arthur (Edinburgh, S.) | Johnson, John (Gateshead) |
| Balfour, Robert (Lanark) | Duncan, C. (Barrow-in-Furness) | Johnson, W. (Nuneaton) |
| Baring, Godfrey (Isle of Wight) | Duncan, J. Hastings (York, Otley) | Jones, Sir D. Brynmor (Swansea) |
| Barker, Sir John | Dunne, Major E. Martin (Walsall) | Jones, William (Carnarvonshire) |
| Barnard, E. B. | Edwards, Sir Francis (Radnor) | Jowett, F. W. |
| Barnes, G. N. | Elibank, Master of | Joyce, Michael |
| Barry, Redmond J. (Tyrone, N.) | Ellis, Rt. Hon. John Edward | Keating, M. |
| Bell, Richard | Erskine, David C. | Kekewich, Sir George |
| Bethell, Sir J. H. (Essex, Romford) | Essex, R. W. | King, Alfred John (Knutsford) |
| Black, Arthur W. | Evans, Sir S. T. | Laidlaw, Robert |
| Bottomley, Horatio | Everett, R. Lacey | Lambert, George |
| Boulton, A. C. F. | Faber, G. H. (Boston) | Lamont, Norman |
| Bowerman, C. W. | Findlay, Alexander | Layland-Barratt, Sir Francis |
| Bramsdon, Sir T. A. | Foster, Rt. Hon. Sir Walter | Leese, Sir Joseph F. (Accrington) |
| Brigg, John | Fuller, John Michael F. | Lever, A. Levy (Essex, Harwich) |
| Bright, J. A. | Fullerton, Hugh | Levy, Sir Maurice |
| Brunner, J. F. L. (Lancs., Leigh) | Gibson, J. P. | Lloyd-George, Rt. Hon. David |
| Burt, Rt. Hon. Thomas | Ginnell, L. | Lough, Rt. Hon. Thomas |
| Buxton, Rt. Hon. Sydney Charles | Gladstone, Rt. Hon. Herbert John | Lundon, T. |
| Byles, William Pollard | Glendinning, R. G. | Lynch, A. (Clare, W.) |
| Causton, Rt. Hon. Richard Knight | Glover, Thomas | Macdonald, J. M. (Falkirk Burghs) |
| Cawley, Sir Frederick | Greenwood, Hamar (York) | Mackarness, Frederic C. |
| Chance, Frederick William | Gulland, John W. | MacVeagh, Jeremiah (Down, S.) |
| Channing, Sir Francis Allston | Hancock, J. G. | MacVeigh, Charles (Donegal, E.) |
| Cherry, Rt. Hon. R. R. | Harcourt, Rt. Hon. L. (Rossendale) | M'Callum, John M. |
| Clough, William | Harcourt, Robert V. (Montrose) | M'Laren, H. D. (Stafford, W.) |
| Cobbold, Felix Thornley | Hardle, J. Keir (Merthyr Tydvil) | M'Micking, Major G |
| Collins, Stephen (Lambeth) | Hardy, George A. (Suffolk) | Maddison, Frederick |
| Collins, Sir Wm. J. (St. Pancras, W.) | Haworth, Arthur A. | Mallet, Charles E. |
| Condon, Thomas Joseph | Hazleton, Richard | Markham, Arthur Basil |
| Corbett, C. H. (Sussex, E. Grinstead) | Hedges, A. Paget | Marnham, F. J. |
| Massie, J. | Rea, Walter Russell (Scarborough) | Tennant, Sir Edward (Salisbury) |
| Masterman, C. F. G. | Rendall, Athelstan | Tennant, H. J. (Berwickshire) |
| Meagher, Michael | Richards, T. F. (Wolverhampton, W.) | Thomas, Sir A. (Glamorgan, E.) |
| Menzies, Sir Walter | Roberts, G. H. (Norwich) | Tomkinson, James |
| Molteno, Percy Alport | Pobinson, S. | Toulmin, George |
| Montgomery, H. G. | Robson, Sir William Snowdon | Trevelyan, Charles Philips |
| Mooney, J. J. | Roch, Walter F. (Pembroke) | Verney, F. W. |
| Muldoon, John | Roe, Sir Thomas | Walker, H. De R. (Leicester) |
| Murray, Capt. Hon. A. C. (Kincard.) | Rogers, F. E. Newman | Walsh, Stephen |
| Murray, James (Aberdeen, E.) | Rowlands, J. | Ward, W. Dudley (Southampton) |
| Myer, Horatio | Runciman, Rt. Hon. Walter | Wardle, George J. |
| Nannetti, Joseph P. | Russell, Rt. Hon. T. W. | Waring, Walter |
| Nicholls, George | Rutherford, V. H. (Brentford) | Warner, Thomas Courtenay T. |
| Nicholson, Charles N. (Doncaster) | Samuel, Rt. Hon. H. L. (Cleveland) | Wason, Rt. Hon. E. (Clackmannan) |
| O'Brien, Patrick (Kilkenny) | Schwann, C. Duncan (Hyde) | Wason, John Cathcart (Orkney) |
| O'Connor, John (Kildare, N.) | Schwann, Sir C. E. (Manchester) | Watt, Henry A. |
| O'Connor, T. P. (Liverpool) | Seddon, J. | White, Sir George (Norfolk) |
| O'Donnell, John (Mayo, S.) | Smyth, Thomas F. (Leitrim, S.) | White, J. Dundas (Dumbartonshire) |
| Parker, James (Halifax) | Snowden, P. | Whittaker, Rt. Hon. Sir Thomas P. |
| Partington, Oswald | Soares, Ernest J. | Wiles, Thomas |
| Pearce, Robert (Staffs, Leek) | Stanley, Hon. A. Lyulph (Cheshire) | Wilkie, Alexander |
| Pickersgill, Edward Hare | Stewart, Halley (Greenock) | Wilson, Henry J. (York, W.R.) |
| Pirie, Duncan V. | Stewart-Smith, D. (Kendal) | Wilson, W. T. (Westhoughton) |
| Pollard, Dr. G. H. | Strachey, Sir Edward | Winfrey, R. |
| Ponsonby, Arthur A. W. H. | Straus, B. S. (Mile End) | Yoxall, Sir James Henry |
| Power, Patrick Joseph | Summerbell, T. | |
| Priestley, Sir W. E. B. (Bradford, E.) | Taylor, Austin (East Toxteth) | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Rea, Rt. Hon. Russell (Gloucester) | Taylor, John W. (Durham) | |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. P. | Gordon, J. | Parkes, Ebenezer |
| Arkwright, John Stanhope | Gretton, John | Pease, Herbert Pike (Darlington) |
| Baldwin, Stanley | Guinness, Hon. W. E. (B. S. Edmunds) | Peel, Hon. W. R. W. |
| Banbury, Sir Frederick George | Haddock, George B | Pretyman, E. G. |
| Beach, Hon. Michael Hugh Hicks | Hardy, Laurence (Kent, Ashford) | Randles, Sir John Scurrah |
| Beckett, Hon. Gervase | Heaton, John Henniker | Rawlinson, John Frederick Peel |
| Bridgeman, W. Clive | Helmsley, Viscount | Renwick, George |
| Bull, Sir Wiliam James | Hill, Sir Clement | Ridsdale, E. A. |
| Carlile, E. Hildred | Hills, J. W. | Roberts, S. (Sheffield, Ecclesall) |
| Cave, George | Joynson-Hicks, William | Ronaldshay, Earl of |
| Cecil, Lord John P. Joicey- | Kennaway, Rt. Hon. Sir John H. | Rutherford, John (Lancashire) |
| Cecil, Lord R. (Marylebone, E.) | Kerry, Earl of | Sheffield, Sir Berkeley George D. |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Kimber, Sir Henry | Smith, Abel H. (Hertford, East) |
| Clive, Percy Arche | King, Sir Henry Seymour (Hull) | Stanier, Beville |
| Courthope, G. Loyd | Lambton, Hon. Frederick William | Starkey, John R. |
| Craig, Captain James (Down, E.) | Lane-Fox, G. R. | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Craik, Sir Henry | Lockwood, Rt. Hon. Lt.-Col. A. R. | Thomson, W. Mitchell- (Lanark) |
| Dickson, Rt. Hon. C. Scott | Lonsdale, John Brownlee | Valentia, Viscount |
| Doughty, Sir George | Lyttelton, Rt. Hon. Alfred | Walker, Col. W. H. (Lancashire) |
| Douglas, Rt. Hon. A. Akers- | M'Arthur, Charles | Warde, Col. C. E. (Kent, Mid) |
| Duncan, Robert (Lanark, Govan) | Magnus, Sir Philip | Willoughby de Eresby, Lord |
| Faber, George Denison (York) | Mason, James F. (Windsor) | Wilson, A. Stanley (York, E.R.) |
| Faber, Capt. W. V. (Hants, W.) | Mildmay, Francis Bingham | Wortley, Rt. Hon. C. B. Stuart. |
| Fell, Arthur | Morpeth, Viscount | Younger, George |
| Fletcher, J. S. | Newdegate, F. A. | |
| Forster, Henry William | Nicholson, Wm. G. (Petersfield) | TELLERS FOR THE NOES.—Mr. Remnant and Mr. Evelyn Cecil |
| Foster, P. S. | Oddy, John James | |
| Gardner, Ernest | Parker, Sir Gilbert (Gravesend) |
Question, "That these words be there inserted," put, and agreed to.
§ Mr. CAVE moved, in Sub-section (1), to leave out the words "or relief" ["No exemption, abatement, or relief "].
§ I formally move this Amendment to make sure that the words do not carry the Section beyond the abatements and exemptions named.
§ The ATTORNEY-GENERAL (Sir William Robson)If we were to omit the words, it would make no difference at all. The words used are "exemption, abatement, or relief," and they sum up the phraseology of statutes dealing with two well-known forms of abatement or exemption. One, under the Act of 1898, Section 8, deals with the graduation of the Income 256 Tax up to £700. It gives an abatement or exemption to the taxpayer whose income is less than £700. In that Section the word "relief" is used. The Act of 1907, Section 19, deals with the exemption or abatement on earned incomes of under £2,000. The word "relief" alone is used in the first Sub-section, but in the second Subsection it is used in conjunction with the words "abatement" and "exemption."
§ Amendment, by leave, withdrawn.
§ Mr. E. H. CARLILE moved, in Subsection (1), to leave out the word "person" ["the total income of an individual from all sources shall be given to any 257 person"], and to insert instead thereof the word "alien."
§ I do not know whether the Debate will make it clear how far this Amendment may avoid some of the difficulties which have already been shown to obtain under Subsection (1) of this Clause. It is quite clear it is the desire of the Committee that if this provision is to be made to apply to any class, it should be made to apply to foreigners, and to foreigners only. It should not pass the wit of man to be able to draft the Section in such a way that all those persons who are British subjects in any part of the world should be able to obtain the abatement to which they have been accustomed in the past. It does seem very doubtful justice indeed if the alien, who may perhaps be a man of very considerable means in his own country, should be enabled under the present law to obtain an abatement which is not available for British subjects resident here or abroad, and whose means are still comparatively slender. It cannot be the wish of this country to give a preference to well-to-do foreigners over comparatively poor citizens and subjects of our own Empire. It is, therefore, suggested that we should substitute the word "alien" for "person" throughout this Sub-section. I am quite certain it is not the desire of the Committee to in any way discourage foreigners from investing in British securities. One is quite alive to the fact that the removal of this abatement, as at present granted, might discourage some, but I do not think it would be likely to discourage any serious investor abroad who had a fancy for the securities of this country, which, unfortunately, at the present time seems to be out of fashion with ourselves, owing to circumstances to which I need not refer.
§ Many of these abatements, although granted by the Treasury, reach the foreign investor in a very attenuated form. I am inclined to consider there is a considerable leakage between the Treasury and the foreigner. Abatements are, as it were, farmed out by agents in this country who are, I have no doubt, most desirable persons in every way, but who naturally, like everybody else, have their eye upon the main chance and carry out that first law of nature, self-preservation, by retaining as much of the abatement for themselves as they can and passing on only a small fraction of what they obtain from the Treasury in connection with the claim. If the substitution of the word "alien" for "per- 258 son" would in any way facilitate protection from abuse, then, I think, the Amendment would not have been moved in vain; but, at the same time, we do not want to take steps which would discourage the serious foreign investor from taking an interest in our securities, because, as the result of that, we have, of course, more money in this country, and that is always a good thing. The cheaper money is, the better it is for the country, if only that confidence obtains which is necessary to make it go into useful channels. We do not, therefore, want to discourage that, but, at the same time, I think this anomaly ought to be done away with, and perhaps this Amendment will in some way assist that object.
§ Mr. SAMUEL ROBERTSI would call the attention of the Committee to a case of great hardship which shows the injustice done to British subjects living abroad, and especially to British subjects living in our self-governing Colonies. The trustee of a lady in Natal, who was a supporter of the right hon. Gentleman at the last General Election, but whether he is now or not I have got my doubts, has written a letter, in which he says:—
I am the trustee under the will of an old friend of mine, who left his daughter an annuity of £200 a year. The lady is now a widow and she resides in Natal, and the £200 a year is all she has to depend on for her own living. She has partly to maintain two daughters, and she has very poor health. For a number of years she has been allowed an abatement of £160, which, at the recent rate, meant a remission of £8 a year. The proposed change will mean a difference to the lady of £9 13s. 4d. a year, which will indeed be a serious matter to her.I cannot imagine why the Government should propose that in a case like this a lady of very moderate means should be penalised because she lives in a self-governing Colony. If she had lived in England she would have been allowed the abatement, which she has been allowed up to the present time. Why should British subjects residing in one of our Colonies not be allowed the abatement they would be allowed if they resided in the United Kingdom? We want to bind our Colonies in closer ties to the Mother Country. We do not want to try and make them think there is any distinction, especially a property distinction, between them and persons residing in this country. I cannot understand the object of the Government. It cannot be a matter of very much money to them, and I hope the Chancellor of the Exchequer will, at all events, see that British subjects residing abroad, and especially in our self-governing Colonies, are still allowed the abatement.
§ Mr. A. WILKIEI want to ask a question. Take the case of a widow with an income from this country under £150. That here would not be taxed at all. Is it the intention of the Government that, because she resides abroad in one of our dependencies—in India, for instance—that that income should be taxed under this Clause?
§ Mr. LLOYD-GEORGEThe hon. Member who moved this Amendment, as he promised, did not take up much time in view of the fact that the general subject had already been pretty exhaustively discussed, and that it was unnecessary to split up the question into subordinate Amendments. I really have nothing to add to what I have already stated on this matter. The hon. Member deprecated altogether the theory adopted by the hon. Baronet the Member for the City of London (Sir F. Banbury), that a foreigner is entitled to special consideration in this matter. After all, only a small part of the abatement really reaches the Income Tax payer. It percolates through agents who write out suggesting that, if the matter is placed in their hands, they will be able to get certain abatements in consideration of a commission. This has become quite a trade, and it is not altogether to the benefit of the party mainly concerned. It is merely keeping up a certain profession in the City of London. The right hon. Friend the Member for East Worcestershire was very pathetic over the poverty of certain people residing abroad. It may be they do not care to live under the same conditions in this country as they would abroad. It is not unnatural that they should shrink from living in the same stinted conditions in this country. They could not do so perhaps without some sense of shame or some sensitiveness, and that is the real reason for going abroad, and not the fact that they are able to obtain the necessaries of life cheaper elsewhere. But there are those abroad drawing incomes from this country who do not contribute to its revenue. If they lived here they would be contributing by way of Income Tax. But if they live abroad this affords the only means of securing a contribution towards the revenue of the country from which they derive this particular property. I do not think it is unfair to call upon them to make these contributions, especially as, if you once make exceptions, the whole of your tax goes. I have already agreed to one or two propositions, but if I am to go on extending these concessions a legitimate source of 260 revenue will be taken away from the balance-sheet of the Chancellor of the Exchequer.
§ Mr. LYTTELTONI will be very brief, but I wish to understand rather more precisely than I do at present the position in which we stand. I have no desire to look a gift horse in the mouth. I do wish to express to the Chancellor of the Ex-chequer my gratitude for concessions he has made in the individual cases I brought forward. These cases were those of men who were in the service of the Crown and had served the King abroad, but had retired and returned to the country of their origin. In respect of these persons the right hon. Gentleman has promised to make exceptions in their favour and to give them the abatements which would otherwise be denied to them by this Clause. He also said that for every person who had been in the service of the Crown and had then retired to a Colony there would be an abatement.
§ Mr. LLOYD-GEORGEI said I was prepared to take the matter into consideration.
§ Mr. LYTTELTONAnd then further the right hon. Gentleman promised that in the case of any person compelled by illness, or in search of health, to go abroad, if he could satisfy the Commissioners that that was the reason of his living abroad, there also an exemption would be made. I am grateful for those concessions, and I am only waiting to see the words by means of which the right hon. Gentleman proposes to enforce them. I wish, once more, to press upon the Government cases which I have already mentioned, and which I understood the Chancellor of the Exchequer agreed with. One case was that of an Englishman who had gone abroad in temporary employment. I deprecate altogether what the Chancellor of the Exchequer said, that it is desirable not to encourage people to leave these shores. I think it would be deplorable if the authority of this House were invoked in support of such a proposal as that it is undesirable for Britons to go into the Colonies to build railways and to engage in works of a kindred nature.
§ Mr. LLOYD-GEORGEThat was not the proposition which I laid down. I was dealing with the question raised by the right hon. Gentleman the Member for East Worcestershire—the case of Britishers who have gone abroad merely to reside but not to work. A man who leaves his family 261 here and himself goes abroad for two or three years for the purpose of undertaking work should certainly receive consideration.
§ Mr. LYTTELTONI should have said, without question, that the young man who goes out as a resident engineer to the Gold Coast for a period of years, and resides there during that time, is one who deserves consideration. I am glad now to be able to claim the Chancellor of the Exchequer as assenting to my statement, it would be deplorable to discourage men going abroad to take part in the promotion of public works. After all, that is really legitimate enterprise on the part of professional men, and it also has a very large influence in finding employment for British labour abroad. Now that the Chancellor of the Exchequer has admitted that he does not wish to discourage this, I put it to him strongly that a man who takes employment of that kind in the Colonies should be encouraged and should not be penalised. If he will insert a provision that it shall be necessary for people in that position to satisfy the Commissioners that they are entitled to abatement, the administrative difficulty which he has pointed out, and which he seems to fear in the case of foreign countries, would really not exist. The burden of proof would be put on the British subject who went abroad. He would have to satisfy the Commissioners, and, if his proof were not satisfactory, the administrative difficulty would disappear. I hope the right hon. Gentleman will reconsider this point.
§ Mr. LLOYD-GEORGEThe right hon. Gentleman has put the case of the young engineer going abroad for five years. I agree there is a great deal to be said for it, but, after all, it is a purely administrative difficulty. The right hon. Gentleman suggests it may be overcome. If I can see my way to overcome it I shall be glad to do it. I promise I will consider the point and consult the proper officials as to whether there is any possibility administratively of securing satisfactory proof. If they are satisfied on that point I shall be very glad to meet the difficulty. I cannot see my way to do it at the moment without letting in other cases which are not equally meritorious.
§ Sir H. CRAIKI feel it would be absurd to waste the time of the Committee by moving in detail the Amendment of which I have given notice. I will just 262 mention it now to the right hon. Gentleman. I have to ask his attention to a case which has also been brought under the notice of one of his own followers, who has requested me, in his absence, to bring it forward. It is the case put forward by various missionary societies belonging to more than one Church.
§ Mr. LLOYD-GEORGEPerhaps I may be allowed to say at once that I am considering how to cover the case of missionaries. I think it may be possible to do so. I agree it is a case which should be covered, and I am anxiously considering the words. I think they must be so framed as to meet the case of "those engaged in missionary enterprise," but that is really a matter for my legal advisers.
§ Sir H. CRAIKI am quite satisfied.
§ Mr. ALEXANDER WILKIEI wish to put a question to the Chancellor of the Exchequer in regard to a lady who is a missionary in India. She is not under Government at all, nor receiving an income which would entitle her to ask for a deduction.
§ Mr. LLOYD-GEORGEIs this the case of a missionary?
§ Mr. WILKIEAre you willing to meet such a case?
§ Mr. LLOYD-GEORGECertainly. I wanted to make it perfectly clear I would do so. I understand the hon. Member is putting a case in India, and I am willing to consider the case of the missionary in India or elsewhere.
Sir GILBERT PARKERIn response to my hon. Friend behind me, the right hon. Gentleman included "chaplain" in the term "missionary," but subsequently he seemed to withdraw the word "chaplain." The gentlemen I am concerned about are foreign chaplains—chaplains in a British church in foreign towns, such as Liege and places like that.
§ Mr. LLOYD-GEORGEThat surely would not be a case that would come in here at all, and I should not think that it would come within the meaning of this Clause at all.
§ Mr. BRIDGEMANThe right hon. Gentleman conceded to my right hon. Friend the Member for St. George's, Hanover-square (Mr. Lyttelton) that he would consider the claims of certain gentlemen. Will he include those who are actually in 263 the position of resident engineers, or go out temporarily to the Colonies in that capacity? Surely if he has power to do what he has promised he will have power to consider the point of the men who are doing exactly the same thing in a country occupied by us or protected by us. They are just as much in the service of the Crown as the others who have been mentioned.
§ Mr. BRIDGEMANI was only mentioning it now in order to save time. I rather understood the Chancellor of the Exchequer was favourable to this view, and if he was prepared to say he will consider this case which I am bringing before him as well as those cases mentioned by my right hon. Friend, I will not move my Amendment when it comes on.
§ Mr. LLOYD-GEORGEYes, I think these are the cases which I can consider. I may be able to deal with them, but I do not know. If the hon. Member will be good enough to give me the kind of case he has in his mind. I will see if it is possible to overcome the administrative difficulty. There is no objection, except a purely administrative one, and if that is overcome I shall be prepared to consider the matter.
§ Mr. CAVEWe have obtained a promise from the Chancellor of the Exchequer to consider quite half a dozen special cases of British residents abroad and who have a small income. Would it not be better to deal with the matter broadly? I was struck with an observation of the Chancellor of the Exchequer, that whoever wishes to obtain exemption must bring in his whole income, whether it is income obtained here or abroad, and he must satisfy the Commissioners that his total income from all sources is within the limit. Provided you make that perfectly clear, would it not be well to extend the exemption on small incomes to all British subjects resident abroad? That is to say, take the Clause as it stands in the first part and make the proviso read, "provided that a British subject resident abroad shall be entitled to any relief, exemption, and abatement which he would be entitled to," and so on. Then you would cover all the cases.
§ Mr. LLOYD-GEORGENo; I do not think I can agree with that.
§ Mr. JOYNSON-HICKSOn a point of Order, Sir. There is an Amendment to that effect standing in my name on the Paper, and I want to know whether that will be out of Order if this discussion proceeds?
§ Mr. LLOYD-GEORGEOn the point of Order, Sir. I think there is a general desire that this discussion should be taken on this Amendment. It is felt, I think, that it would be better that these points should be taken together and the Government should consider the matter as a whole. I am willing to meet all these cass of special hardship, but words of that kind would include in the operation of the Clause cases which had no merits at all. I do not mean that the people have no merits, but only that they have none, so far as this Clause is concerned, and that they have no claim for consideration from the British Government. They are not compelled to go abroad for the service of the Crown or the country, but they go voluntarily and of their own free will. I am prepared to consider cases which demand the special indulgence of the State, such as those which have been put to me by several hon. Members in the course of this discussion. These special cases deserve special consideration, and I will do my best within the limits of administrative efficiency to see if I cannot propose something which will meet these cases.
§ Mr. H. BOTTOMLEYI must apologise for any one on this side of the House daring to rise in the course of this discussion, but I want to ask the Chancellor of the Exchequer, if I correctly understood him—it is rather difficult down here to hear that which goes on in a conversational discussion—if I understood him to say, during a part of this discussion, that he hopes to be able to deal with this question of missionary enterprise, because I should protest against any general indulgence in regard to missionary enterprise as distinguished from legitimate commercial enterprise.
§ Mr. JOYNSON-HICKSI do not often agree with the hon. Gentleman who has just spoken, and I am a strong supporter of the missionaries, although at the same time I am equally a strong supporter of commercial enterprise, but I want the Chancellor of the Exchequer to go as far as he possibly can in the way of exemption. My own Amendment says, "or is a British subject residing abroad."
§ Mr. JOYNSON-HICKSYes.
The CHAIRMANThat Amendment is not in order, because it would take away the relief provided for aliens. It is therefore outside the resolution.
§ Mr. JOYNSON-HICKSThe Chancellor of the Exchequer, I understand, has agreed to give certain exemptions to clergymen and the young men who go abroad for the purpose of taking up situations in various commercial houses. I want that exemption to be extended to all men who are commercial residents abroad. I submit that it is just as beneficial to the country and to the nation, that a man should serve commercially abroad as that he should serve under what is called the Crown abroad. I do submit to the Chancellor of the Exchequer that it is desirable to grant this exemption to everybody who is engaged in extending the commerce of Great Britain either in our Colonies or in Egypt or in India, or in any part of the world. This exemption should be given to any person who is residing abroad.
§ Mr. LLOYD-GEORGEThe words which I propose to move will make the Clause run, "Provided that any person who is, or has been, employed in the service of the Crown abroad, or any person resident in the Isle of Man or Channel Islands, or any person resident abroad who satisfies the Commissioners that he is so resident for the sake of his health shall be entitled," and so on. This is in reference to the cases which I have promised to consider, I have not included missionaries, but I do not know whether the Committee would prefer that those words should pass as they stand at the present moment, or that the Government should put down a more comprehensive Amendment later on. I should rather like the view of the right hon. Gentleman (Mr. Lyttelton) upon it. If he prefers it, I will move these words now at the present moment and move other words later on.
§ Mr. LYTTELTONWe should like the words of the substantive proposal of the Chancellor of the Exchequer to be moved now, and the subsequent Amendment to be made later.
§ Mr. LLOYD-GEORGE moved to leave out the words, "Where the Commissioners are satisfied in the case of any person employed in the service of the Crown abroad that he would, if not so employed, 266 be resident in the United Kingdom, that person," and to insert, instead thereof, the words, "any person who is or has been employed in the service of the Crown abroad or any person resident in the Isle of Man or Channel Islands or any person resident abroad who satisfies the Commissioners that he is so resident for the sake of his health."
§ Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.
§ Question put, "That those words be there inserted."
§ Lord ROBERT CECILI only just want to ask a question, and not to keep up the Debate, but I have put down an Amendment dealing with the clergy, which I am not going to say a word about; but there is also the case of charitable purposes. It is a small but rather a hard case. Take the case of a man who is stationed at Gibraltar, in charge of the Soldiers' and Sailors' Home there. Perhaps the Chancellor of the Exchequer will consider such a case at the same time as the others.
§ Mr. LLOYD-GEORGEThat is why I did not see my way at the present moment to accept any words on this particular point, because I saw that the Noble Lord had certain cases in his mind which might not be quite covered, and that it would be best to consider the point.
§ Mr. EVELYN CECILI think this is the right point to raise the question of those British subjects who are engaged in native States in India and also in Egypt in the service of the Khedive. As regards the native States in India, native rulers have British subjects under them, and I am not quite clear, from what the Chancellor of the Exchequer said, whether such persons could be said to be in the service of the British Crown abroad.
The CHAIRMANUnless the hon. Member's proposal is moved as an Amendment to this Amendment it does not arise here, but it can be moved after these words. It would be better for us to get these words in, and then it is quite possible for the hon. Member to move his Amendment afterwards.
§ Amendment proposed: After the words last inserted, to insert the words "or any person in the service of any of the native States of East India or in Egypt in the service of the Khedive."—[Mr. Evelyn Cecil.]
267§ Mr. LLOYD-GEORGEYes, I will consider that.
§ Amendment, by leave, withdrawn.
§ Mr. E. A. RIDSDALE moved to omit Sub-section (2).
§ By this Sub-section we are going to permit to any millionaire or rich man who chooses to invest his money in certain securities, the dividends of which are payable in the United Kingdom, exemption from all taxation whatever provided he goes and lives in Paris, Berlin, St. Petersburg, or Rome, and spends the interest of his money there. I cannot conceive for what purpose this Sub-section was drafted. If we are to give any preference at all to any class of securities, why should you select the securities of foreign States? Why should not we exempt our own Consols? It is difficult enough to keep up the price of Consols already, but if you are absolutely going to encourage people with big holdings to sell out their Consols in order to invest in foreign Government securities which are payable in London, and offer them, as an inducement to do so, a bonus of the Income Tax, you are going to add to the steady stream of the sale of Consols an entirely fresh stream, and one, which as soon as people appreciate it, will not be at all a small one. There is another consideration also mixed up with this. It used to be the practice of foreign potentates to have a kind of sheet anchor in holding our securities. Nearly every ruler of a European State had investments of some size or another in Consols, and that has been on occasion very useful to us in our foreign diplomacy. Supposing the Czar, for instance, has a million or so in English Consols, if we passed this Sub-section we are going to say to him, "If you would only sell out your holding in British Consols and transfer your interest to some foreign securities the dividends on which are payable in London we will give you a bonus of 1s. 2d. in the pound." I cannot conceive that it is in the interest of the country that we should do anything so foolish as that. We want to popularise our own securities and not to popularise foreign securities. I am utterly at a loss to know why this Sub-section was drafted. It seems to offer a bonus to the rich man, which you have taken away from the poor man, to invest in foreign securities rather than home securities.
§ The POSTMASTER-GENERAL (Mr. Sydney Buxton)My hon. Friend is under 268 some misapprehension in regard to the Clause. This is really no additional concession to the foreign holder of foreign stocks, but it is an administrative matter which since 1856 has been carried out, and it is really only to make statutory what has been done in the last 50 years without the frightful results following which my hon. Friend anticipates, and it also to a certain extent limits any further extension of this concession. The original reason for the concession, as I understand, was that these are stocks the source of which was abroad, and which are really only in transitu as far as this country was concerned, and it was not thought then, and it is thought now, that to take away this concession which has been existing all these years would do exactly what the hon. Baronet (Sir F. Banbury) anticipated and feared on the former clause, namely, to prevent these stocks coming here and being dealt with here as they are at present. That is really largely the reason, apart from the fact that these stocks are not under the ordinary operations of the Income Tax looked upon as income which has to be taxed. They are not held in England, and are only dealt with in transitu. My hon. Friend is under a misapprehension in thinking that this is any extension of the existing state of things. It is only to regularise what has existed for 50 years.
§ Mr. E. G. PRETYMANI cannot help thinking that this Sub-section throws a very interesting light on the whole question of the position of this tax and on the whole Clause, and it illustrates what an extraordinarily light hold the Government of this country has on any investment which they propose to tax. What is the meaning of the Clause? You have two domiciles to consider. You have to consider the domicile of the individual and the domicile of the dividend, and in this case it is obvious that you have the individual abroad, whether he is a British subject or not. For the moment his dividend is domiciled in this country, but it originates abroad, and no Government can possibly prevent him from altering the domicile of his dividend and saying, "That dividend shall no more pass to a banking house in London. It arises in Canada, and I desire to spend it in Paris, where I am living," and the dividends will be paid direct in Paris, and the British Government will have no cognisance of it, nor will it pass through the City of London, and so add to the amount of money which 269 is constantly passing that great financial centre. It was obviously the impossibility of securing this tax which has led to the cessation of any administrative attempt to collect it, and this is merely legalising that. Surely the subject has a most obvious remedy. All he has to do is to say, "My dividends will not come to London at all." I can quite understand the hon. Gentleman's objection to this, but to make his objection good he has to show to the Government of this country some way in which they can force the owner of that dividend to have it paid in London. What way can he suggest? Surely this consideration may be carried a little further, and what is possible in the case contemplated here may be very considerably extended. The Government in this Clause are putting an additional burden upon an English resident abroad so long as he keeps his dividends and investments in this country. It is just as easy for him to transfer them abroad as it has been for the Englishman resident abroad to have them dealt with in this particular case. It seems to me that the actual financial benefit which the Government are going to obtain from this Clause is infinitesimal compared with the injury that they are going to do indirectly and directly to the revenue in another direction. They are very likely to lose a shilling for every sixpence they will gain, and their object might have been perfectly simply attained by a simple clause. The case they wish to deal with is the rich foreigner who has a small investment in this country and who is thereby escaping any payment of tax because the investment in this country happens to produce a dividend below the limit which entitles him to exemption. It is obvious that in that case it would have been quite simple to say he must prove, and obtain, if necessary, the British Consul's certificate that in his belief his total income was below the exemption limit. If you had done that you would have met the case, and you would not have gone into by-ways which would have created such difficulty. This Sub-section is a very strong illustration of how easy it is for the owner of this class of property to escape the taxation, and however much we may sympathise with the hon. Member's desire to get the Sub-section taken out, unless we can show that it is possible to prevent a British subject resident abroad from saying this money does not pass through the British money market at all, I do not see 270 how it is possible for us to object to this Sub-section.
§ 6.0 P.M.
§ Mr. JAMES MASONIt is really a rather serious matter to do anything in the way of legislation which will have the effect of causing dividends not to be paid in this country which can equally well be paid in other countries. The result of this would be not only that a large number of banking accounts and a large amount of brokerage business and business of that kind, which is now carried on in this country by foreigners who are living in other countries, which can equally well be carried on in other European capitals, will naturally be transferred from this country to other countries, but there is a point beyond that. It seems to me that you must consider the question of foreign and Colonial companies which are now carrying on business abroad but are registered in this country. We have as an example of that all the large groups of foreign railways, such as the Argentine railways, the Brazilian railways, and so forth, which are British companies domiciled here but which carry on very extensive operations in other countries. If you penalise the dividends of companies payable to foreigners who are resident abroad by making them subject to Income Tax in this country, it is quite evident that to that extent you handicap that particular class of investments for the purpose of those foreigners, and by doing so you remove from the sphere of possible holders a class of people who are at present to a large extent holders of them. If you do that, you tend to increase the difficulties of those companies when they come to issue fresh securities and to require further capital. It may be said that it is no concern of the State that they should have difficulty in getting more capital. But I would point out that it is wholly a question of domicile, and it is perfectly possible for a great number of those companies, without any great disadvantage to themselves, to be domiciled abroad. The Chancellor of the Exchequer told us this afternoon that they cannot remove their domicile without jumping out of the frying-pan into the fire. That is not the case. There are many centres of commerce and industry where a company could be equally well domiciled, and where they would be subject to less Income Tax or other taxes. We know very well that a change of domicile to these companies is not by any means an impossible thing, and if on 271 account of the burden which you inflict on certain large groups of shareholders, you make them change the domicile of a company in order to avoid the taxation which you impose, it is quite evident that a large amount of industry, banking, and other commercial work which is now carried on in the City of London would be transferred to other places, and, if once transferred, it would not return to this country.
§ Mr. BUXTONI have followed the point made by the hon. Member opposite. I understood him to say that in the case of some of these companies Income Tax would be charged on the whole of the dividends, and that the foreigner residing abroad would not get the benefit of the concession under the other parts of the Sub-section (2). I think the hon. Member is wrong, because these companies are assessed under Schedule D, and no Income Tax is payable on any such dividends unless the person entitled to them is resident in the United Kingdom. Therefore they are really on the same basis as other stocks and shares.
§ Mr. PRETYMANSurely a company which is carrying on business in the Argentine and has its headquarters in London is assessed under Schedule E?
§ Mr. BUXTONNo, I do not think so.
§ Mr. RIDSDALEAs I understand the Postmaster-General, the present state of things has been in existence for 53 years. What I cannot understand is how it could be in existence for so long a period, because so far as my memory goes it would be difficult to find a Colonial loan dating back to so early a time as that. I do not think the arguments which have been advanced really touch the case of the British possessions at all. Take the case of British Columbia Inscribed Stock. If we agree to this Clause every British subject resident abroad who has invested money in British Columbia 3 per cent. Stock will be free from Income Tax on the dividend. There is no question of any difficulty as to the cashing the dividends in Melbourne, Vancouver, or Victoria. The investor could not get the dividends cashed in any place but the City of London by the bank whose duty it is to cash them. If you pass this Sub-section, you will deliberately say to every person resident abroad that he shall be free from that Income Tax, but that if he invests in British Consols he shall not be able to 272 recover the amount. I think that is not defensible on any ground. It is entirely opposed to public policy and calculated to discredit our public securities. As to the point touched upon by the hon. Member for Chelmsford (Mr. Pretyman), the reason why the Government have legalised these foreign stocks is because anyone living abroad has only to have the dividends cashed in Berlin or Paris instead of London, thereby preventing the London banker from obtaining his profit. My answer to that is that if the investor gets the coupons cashed in these places they are subject to any foreign taxes in operation in the countries where they are cashed. But if you put in the Clause that if he gets them cashed in London he will get the tax refunded it is obvious that he will prefer to have them cashed in London. By doing so you are actually encouraging foreign investors to invest in this class of securities and giving him a bonus for so doing. I should be very glad to be shown that I am wrong if that is not so, but I have not had an answer to my argument. We have only heard the historical argument that it has been the law in the past, and I think it is high time that the law was undone and stopped.
Sir SEYMOUR KINGI think the hon. Member for Brighton (Mr. Ridsdale) is quite right in this matter. I cannot help thinking that the Postmaster General has been misinformed. I have never heard of the practice which the right hon. Gentleman says has been prevailing. I think the Clause has been erroneously drafted, and that the words "payable in the United Kingdom" have been put in by mistake. I think the words should be "not payable in the United Kingdom." When dividends on securities are payable in the currency of the country that issues them, they are exempt from taxation in this country because they are not payable here. The hon. Member for Brighton has rightly said that in the case of securities payable in this country the Income Tax has to be deducted by the banker who pays the dividends, and that being so everybody wherever resident becomes subject to the British Income Tax. What you are going to do now is to let people who are not living in the country get the Income Tax returned to them. We are told that the poor woman with £200 a year living in Natal must contribute to the support of this Imperial country out of her poverty, because it is the only contributions she makes. Why should not the people who own these foreign securities also makes some contribution? I really do 273 not think the Postmaster-General is correctly informed, and I must impress on the Government that they are making a mistake in allowing this Section to go forward in its present form.
§ Mr. HART-DAVIESI think the reason which the Government have for putting on a tax is that the people who are taxed pay for something, say, protection. If money is earned in a foreign country, and is paid to you by way of income in a foreign country, you have nothing to pay, but if you have British Consols and live abroad what you pay in the shape of Income Tax is for the protection which is given to your capital. If you hold a foreign stock it is quite fair that you should not pay the tax at all. I think that is the rationale of the question.
§ Sir F. BANBURYI think my hon. Friend the Member for the Central Division of Hull (Sir Seymour King) is incorrect. I think the practice that obtains at present is that where a foreigner resident abroad holds securities in England he is entitled to claim exemption from Income Tax, provided that these securities are foreign securities. If they are British securities he would not obtain exemption. That, I believe, is the existing state of the law. I have dealt with these matters in my business, and I have had to obtain the abatement for foreigners. I think it is right that that should be so. But this Clause goes very much further. It says that "Income Tax shall not be payable in respect of the interest or dividends of any securities of a foreign State or a British possession which are payable in the United Kingdom, where it is proved to the satisfaction of the Commissioners that the person owning the securities and entitled to the interest or dividends is not resident in the United Kingdom." That would allow an Englishman resident abroad to claim exemption. He has never been able to do so up to the present time, and, therefore, the Government are extending this exemption to people resident abroad, whether they are foreigners or Englishmen. The reason why I think the exemption ought to be continued to foreigners is this. By continuing that exemption you induce foreigners to transact their business in London. If you do not give the exemption you will make them transact their business elsewhere, and I think that would be a mistake. It would affect the City and other parts of the country, and the revenue would gain nothing by it. This is not a question of Protection or Tariff Reform. 274 The vast majority of foreign countries do the same thing. They allow foreigners to hold securities in their own country, and they do not charge them. In this matter we are treating foreigners as they treat us. In fact, we treat foreigners rather harder, because if they hold British securities they have to pay Income Tax. All we say is that if they hold foreign securities they should get the abatement. If I buy French rentes I get an advantage which a Frenchman does not get here if he buys Consols. The Frenchman would have to pay Income Tax on the security he holds, but I would not have to pay a farthing in respect of the rentes. I hope the Government will not alter the practice which has hitherto obtained for many years.
§ Mr. AUSTIN TAYLORI was greatly surprised to hear any Gentleman on this side of the House attacking this Subsection, and I have been equally surprised at the very excellent doctrine which we have heard from the hon. Gentleman opposite. On the broad ground of policy it is a good thing to encourage the business of finance in this country. The hon. Baronet the Member for the City of London was extremely careful to point out that there was no element of favour or affection in this matter, but that there is no trading or fiscal concession here. This movement in finance is paralleled by what is called the entrepôt trade in goods in this country. Such trade in this country is made possible by the entire absence of anything like difficulty or restriction similar to what would be imposed if we charged an Income Tax under this financial proposal. I am therefore justified in my surprise that there is any hon. Gentleman on this side of the House who would not see how very desirable it is that financial business should be allowed to go through in this country just as goods do in and out, free from every possible hindrance, whether of Income Tax or of any other.
§ Mr. LEVERTON HARRISI do not altogether agree with my hon. Friend the Member for the City of London, because, according to the words of the Clause, in the case of any foreign bank having foreign shareholders whose dividends are paid in this country, those shareholders are to have no deduction from their dividends at all.
§ Mr. SYDNEY BUXTONIt only affects foreign securities, but not commercial.
§ Mr. FELLForeign securities are always to bearer. They are bearer bonds. I do not think there are foreign securities which would be included in this which are registered in this country at all. They are all bearer bonds with coupons attached. They can be put into a safe in London or sent over to Paris next day, and put into a French bank there. There is one country only which has, I believe, put a tax upon its bonds, and that is the Italian Government. That has always had a most deterrent effect on investors. They could not buy Italian bonds because there was a 3 per cent. or 4 per cent. duty, and the Income Tax might be raised or lowered, and, therefore, there was no security in buying as to what amount of cash you would put on your coupons. But the other foreign stocks which are here in London are all bearer bonds, and have no Income Tax charged on them in their own countries. The Government, realising that they may be transferred from one place to another, some time ago came to the conclusion that it would be better that they should not be taxed, and that foreigners abroad should be encouraged to invest them in London, for the reasons that we have heard—that brokerage business may be done in London and Income Tax may be payable on the broker's business, and that a certain profit would come to London from the money lying uninvested here and in other ways. With regard to the securities of British possessions, I believe that there has been an arrangement with the Colonies that their securities should be placed in this kind of beneficial position. It may be hard on our holders of Consols, but they get the issues here, and we want to encourage them to get the issues, and we want to be their financial agents in paying the dividends. For that reason I believe it has been thought advisable by the Bank, who, of course, control in this matter to some extent the action of the Chancellor of the Exchequer, that these securities should not bear any Income Tax. Those are the two grounds on which I believe those two securities, foreign and British possessions, have been exempted. There is no doubt that this Clause proposes to continue that, and the Government consider there will be less disturbance to business if they leave this arrangement as it is rather than make a change. On those grounds I support this Clause.
§ Mr. PRETYMANThe words in the Clause are, "persons not residing in the 276 United Kingdom." That is not a legal definition of a foreigner.
§ Mr. BUXTONAs the hon. Member for Yarmouth (Mr. Fell) has pointed out, the words "persons not resident in the United Kingdom" have been applied to either foreign or Colonial persons.
§ Mr. PRETYMANWe have just been discussing for the last three hours Subsection (1), in which the same definition of persons resident abroad is held to apply to all Englishmen to be taxed. Here we have the identical expression for the purpose of remitting the tax, and we cannot be told that in Sub-section (1) these words do not cover an Englishman, whereas they do in Sub-section (2).
§ Mr. BUXTONIt only covers the same class of person. The same definition which applied to the last Clause applies to this Clause.
§ Mr. PRETYMANWe have heard from the Postmaster-General that it has been administratively granted, but not legally, for the last 50 years. We have since been told on high authority that the concession has only been administratively granted to foreigners and not to Englishmen resident abroad.
§ Mr. BUXTONIt applies to Colonials.
§ Mr. PRETYMANHas it been applied not only to foreigners and Colonials, but to all Englishmen resident abroad? We want to know whether it is an extension or a legalisation of an existing practice.
§ Mr. WALTER GUINNESSIt is necessary to clear this up. It is most undesirable that an Englishman, just because he lives abroad, should be able to evade payment. The hon. Member for Chelmsford (Mr. Pretyman) wishes to know whether there is a new principle in this. I am quite certain it is a new principle, because I happen to have made inquiries recently in Amsterdam as to how they would recover Income Tax on British securities in favour of Dutch subjects, and there is very great difficulty in getting these payments of Income Tax back. They do not admit all banks. It is a special privilege to certain banks whose bona fides cannot be suspected, and they only accept these certificates when, not only the coupons have been presented, but also the bonds, so as to make it quite certain that the coupons have not been cut off and sent over to be negotiated in Amsterdam. There is no possibility of anyone whatever getting off at present. 277 I think there will be a great deal of evasion and a great deal of injustice if this definition is allowed to stand, and that British subjects choose to live abroad and are able to avail of it.
§ Mr. BUXTONThis must be read with the former Sub-section. It is in conformity with the general system that has been administered by the Inland Revnue. There is a slight extension, but not one that you would talk about from a financial point of view.
§ Mr. PRETYMANI think that this brings this Amendment into a matter of very great importance. I understood the Postmaster-General to say that this was merely the legalisation of an existing practice, and that was the ground on which I made my previous observation. But I now understand that this is an actual extension to what the Postmaster-General calls bring it into conformity with the previous Sub-section. It appears to me to be doing exactly the opposite. The first Sub-section says that if an Englishman spends abroad money invested in England he has to pay taxes upon it, but the second Sub-section says, provided he does not invest any money in England, he shall not pay any tax upon it at all. I certainly think this Amendment ought to be very strongly pressed upon the Government, because so far from bringing it into conformity with the previous Sub-section, it only aggravates every observation made on this side, and indeed on both sides of the House in condemnation of the previous Subjection. How by a series of arguments it is possible to bring these two Sub-sections into conformity and to commend them to the Committee passes my comprehension altogether. I really think we are entitled to much more light and leading and more cogent reasons for this Sub-section in its present form before it can be passed, and I hope that the Postmaster-General, or perhaps the Secretary to the Treasury, can tell us on what principle this difference is made; and why, if under Sub-section (1) a British subject resident abroad is to be taxed in any holding he has in any individual security in this country, he is at the same time to be freed from any obligation to pay taxes upon investments in any foreign Government security and payable in London? That is the clear issue. We have been told by the Postmaster-General that Subsection (2) has been brought into conformity with Sub-section (1). They appear to me to be diametrically opposite. A 278 large majority of the Committee has not been present to hear this Debate, and I suppose at the last moment they will, as the hon. Member for Louth once said, come pouring in at the neck of the bottle. But I do not believe there is a single Member who has heard the Debate who would not desire to support this Amendment in the direction suggested. The Clause ought to be omitted unless we can get some Amendment of it.
§ Mr. HORATIO MYERThe practice in the past as far as I know has been that if an Englishman has property in this country he has to make a declaration with regard to his income, and after making that declaration he has to say whether he has any foreign possessions abroad, and what is his income derived from those foreign possessions.
§ Mr. JOHN O'CONNORThere seems to be some confusion here, and, perhaps, I may be allowed, in order to illustrate a difficulty, to mention a concrete case, that of one of my colleagues who sits near me from time to time. My friend is an Irishman. He emigrated to Australia, where he holds Commonwealth securities. He is mulcted for Income Tax in Australia, and he is again charged Income Tax here. Suppose he were to reside abroad, what would his status be? If he were a Colonial he would be entitled to exempt according to the terms of the Bill we are now considering. But he is an Irishman. He has resumed his domicile at home, and he must, therefore, be regarded for the purpose of this Bill when it becomes law as an Englishman. He still holds the securities in the Australian Commonwealth, and if it had been his good fortune to have been born in one of the Colonies he would be exempt under the Bill. But because he has had the misfortune to be born in Ireland he would not be exempt. That is a case which I think shows there is some necessity for clearing up the point that has been evolved in the course of this discussion. A hare has been started which I think can be run for some time with the aid of the fertile imagination and ingenuity of hon. Gentlemen above the Gangway. I trust that the right hon. Gentleman the Postmaster-General will be able to give some explanation of the position that has arisen. I observe that he consulted experts below the Gallery, and I think it would be to the advantage of the Committee if he gave us some explanation, or, at all 279 events, it would be an advantage to the Committee if one or other of the Law Officers of the Crown were in his place to make clear any points of doubt that may arise, and so assist the Committee to understand the intricacies of what is undoubtedly a very involved measure.
§ Sir F. BANBURYI presume, after the discussion that has taken place, that the object of this Clause is only to carry out the wish that English money should be invested abroad. Personally, I disagree with it, and I think the only solution is to omit the Clause altogether.
§ Mr. COURTENAY WARNERThe Member for the City of London seems to have turned round very quickly. He approved the Clause just now, but now he apparently finds fault with it.
§ Sir F. BANBURYWhat I said was that I approved of the practice which is carried out in this Section of exempting the foreigner, but supposing this Clause were carried the foreigner would go on just the same as he has been going on for many years. All that will happen will be that the Englishman will not have that privilege, and he will be tempted to invest in foreign securities instead of English securities. This provision only applies to foreign securities.
§ Mr. COURTENAY WARNERThe hon. Baronet does not approve of the extension of the practice. Some of my hon. Friends on this side of the House have found fault with the whole Clause simply on the words "not resident in the United Kingdom." In regard to the point raised by hon. Gentlemen opposite, probably the Treasury would be willing to consider whether words could not be introduced which would not cover the Englishman—I do not say the Colonial, but the Englishman—resident abroad, and I think that would meet all the difficulties, and perhaps get over the objections to the Clause. This Clause legalises what has been going on, but the extension of the Clause to Englishmen resident abroad might be considered further with a view to seeing whether some words could be found to prevent that extension taking place.
§ Mr. RIDSDALEThe question is this: Supposing a foreigner invested his money either in Colonial Government securities payable in London or in British Consols, why should he be exempt from the British income Tax? Why should I be able to 280 invest money in New Zealand Threes and recover my Income Tax, whereas if I invest in Consols I cannot recover the Income Tax? I want to know the reason.
§ Mr. HART-DAVIESIn this Clause there is no mention of the Englishman at all. It is only a "person" not resident in the United Kingdom or resident abroad. There is no difference in this Clause between the foreigner and the Englishman. It applies to the foreigner or the Englishman. It is a "person," whether he is an Englishman or a foreigner. I do not quite understand what the difficulty is or where it comes in.
§ Mr. BUXTONI have listened to what has been said with regard to this point as to whether there is an extension to Englishmen living abroad. There seems to be a somewhat exaggerated idea that the Clause might be a greater inducement to Englishmen to invest in foreign Government stock rather than in British Government stock. I doubt whether that would be so. When I made my first statement I was under the impression that the words did not extend the practice to this degree, but from some information I have received I think it would be well if the Committee would allow me to have an opportunity of considering the particular point as to whether it should be extended. I will consider the matter before the Report stage as to whether these words extending the Clause to British subjects ought to be included. I will undertake to look into the matter to see how it stands.
§ Amendment, by leave, withdrawn.
§ Mr. CAVE (for Mr. Fletcher) moved, in Section (2), to leave out after the word "Kingdom" ["not resident in the United Kingdom "] all the words to the end of the Section, "but, save as provided by this or any other Act, no allowance shall be given or repayment made in respect of the Income Tax on the interest or dividends on the securities of any foreign State or any British Possession which are payable in the United Kingdom."
§ I move this Amendment in order to ascertain from the Government what the effect of the words is. Take the case of an Englishman living here who has a small income derived entirely from Colonial stock, and who would be entitled to exemption or abatement. Would not the effect of these words be to deprive him of that benefit so that he would get no exemption if his income is under £160, 281 and no abatement if it is over that amount? If so, it is a very serious and most penalising provision. I should like some explanation.
§ Mr. HOBHOUSEThe explanation of these words is very simple. The practice in the past, I am happy to say the distant past now, has been to allow certain exemptions. Under the words which follow the words "United Kingdom" the object is to prevent the Treasury indulging in any practice of that sort in the future. If these words were left out, as the hon. and learned Gentleman suggests, very considerable latitude would be left to the Government Department, and we do not think it is desirable to give that latitude. I think if the Amendment were adopted, it would also lead to the omission of the next paragraph of the Sub-section. I think the hon. and learned Gentleman will agree that it is desirable we should retain these words.
§ Mr. PRETYMANThe object of the words is not quite clear.
§ Mr. HOBHOUSEThe words, "Save as provided by this or any other Act," are a clear instruction to the Government Department. Extra statutory exemptions were made, but by this that wall not be possible.
§ Amendment, by leave, withdrawn.
§ Question proposed, "That the Clause, as amended, stand pant of the Bill."
§ Sir F. BANBURYThe effect of this Clause, as I understand it, is absolutely contradictory. The first Sub-section provides that where an Englishman lives abroad he is not to have the privilege of abatement which has been hitherto granted in the case of incomes under £700. I think that is a very hard provision, and I cannot see why it is introduced. Apparently it is introduced in order that a certain number of foreigners, who also share that exemption, should not have it any longer, because they happen to be rich men. The Clause wall hit a number of men who have done no wrong, and who ought not to suffer. At the same time I believe that the foreigner will not be touched or roped in, and that all that will ensue is that the foreigner will take his money and invest it in other securities. We come to the second Sub-section, which goes exactly in the contrary direction. Instead of taking away from an Englishman abroad privileges he has hitherto had, this Sub-section gives Englishmen residing abroad privileges which they have never 282 held before. It is true that the right hon. Gentleman (Mr. Buxton) says that he will look into the matter. The Committee have had put before them a Clause which contains two contradictory statements. The first Sub-section deals with small men, but the second Sub-section deals with the rich man, the bête noir of the Radical party, who has got £10,000 per year, and who, if he chooses to live abroad and put his £10,000 in foreign securities is freed of Income Tax at all. I think a more absurd Clause has never been put before the Committee. I do not blame the Postmaster-General in the least. We all understand that he made his first statement in error. I must say it is really very hard on him to put him in charge of a very intricate and complicated Clause, which is contradictory in itself. I really do think the Chancellor of the Exchequer might have been here, and possibly he might have explained this to the Committee, and then we should not have had all this discussion. All this arises from the fact that hon. and right hon. Gentlemen do not know the meaning of their own Bill. When we are kept here for many hours at a stretch it is not our fault that hon. Members do not understand their own Bill. I certainly hope we will not add this Clause to the Bill. Its omission would leave everything as it was before, and no harm would result. I do not believe the Revenue is going to gain by the first Sub-section, and I am quite certain it is going to lose by the second Sub-section. Therefore, from the point of view of the Revenue, we had better omit the Clause. Perhaps it would be a little hard on the right hon. Gentleman, but no great man is afraid of making a mistake. Therefore I appeal to the only representative of the Cabinet here to acknowledge the mistake and agree to the omission of the Clause and let us get on.
§ Mr. PRETYMANI only wish to enter a renewed protest against the whole principle of this Clause. It does seem to me at a moment like this, when communications are daily becoming easier, and when the one hope for this country is to weld the Empire more closely together, and to treat the Colonies as if they were part of the United Kingdom in regard to individual enterprise, that this is a time when the young man who is born in England should feel that he is as much a member and still remains a citizen of the Empire, whether he is in Canada or in Australia, just as if he were at home. It does seem an extraordinary moment to impose a disability of 283 this kind upon him, and a disability which cannot be justified, as if it involved a large amount of revenue, but which, on the contrary, gives a comparatively small result but a large sense of injustice. I think you are doing an injury wholly out of proportion to the advantage you are going to secure. No argument has been brought forward in support of the principle of the Clause. I desire to enter my protest against it, while at the same time I would have voted for a simple Clause which would have safeguarded the country
§ and the revenue against freeing from Income Tax very rich foreigners who have small investments in this country. That object is a good one, and could have been perfectly well met. I think the Clause is extremely ill-advised considering the small amount of revenue involved. It imposes a maximum of injury with a minimum of advantage to the Exchequer.
§ Question put, "That the Clause, as amended, stand part of the Bill."
§ The Committee divided: Ayes, 244; Noes, 95.
285| Division No. 692.] | AYES. | [6.55 p.m. |
| Abraham, W. (Cork, N.E.) | Duncan, C. (Barrow-in-Furness) | Kilbride, Denis |
| Acland, Francis Dyke | Dunne, Major E. Martin (Walsall) | King, Alfred John (Knutsford) |
| Adkins, W. Ryland D. | Edwards, Sir Francis (Radnor) | Laidlaw, Robert |
| Agar-Robartes, Hon. T. C. R. | Elibank, Master of | Lamb, Edmund G. (Leominster) |
| Agnew, George William | Ellis, Rt. Hon. John Edward | Lamb, Ernest H. (Rochester) |
| Alden, Percy | Erskine, David C. | Lambert, George |
| Allen, A. Acland (Christchurch) | Essex, R. W. | Lamont, Norman |
| Allen, Charles P. (Stroud) | Evans, Sir S. T. | Layland-Barratt, Sir Francis |
| Ashton, Thomas Gair | Everett, R. Lacey | Lea, Hugh Cecil (St. Pancras, E.) |
| Atherley-Jones, L. | Falconer, J. | Lehmann, R. C. |
| Baker, Sir John (Portsmouth) | Ferguson, R. C. Munro | Lever, A. Levy (Essex, Harwich) |
| Baker, Joseph A. (Finsbury, E.) | Findlay, Alexander | Levy, Sir Maurice |
| Baring, Godfrey (Isle of Wight) | Foster, Rt. Hon. Sir Walter | Lewis, John Herbert |
| Barker, Sir John | Fuller, John Michael F. | Lloyd-George, Rt. Hon. David |
| Barlow, Sir John E. (Somerset) | Fullerton, Hugh | Lough, Rt. Hon. Thomas |
| Barnard, E. B. | Gibb, James (Harrow) | Lundon, T. |
| Barnes, G. N. | Gibson, J. P. | Macdonald, J. M. (Falkirk Burghs) |
| Barran, Sir John Nicholson | Ginnell, L. | Mackarness, Frederic C. |
| Barry, Redmond J. (Tyrone, N.) | Gladstone, Rt. Hon. Herbert John | MacVeagh, Jeremiah (Down, S.) |
| Benn, Sir J. Williams (Devonport) | Gledinning, R. G. | MacVeigh, Charles (Donegal, E.) |
| Benn, W. (Tower Hamlets, St. Geo.) | Glover, Thomas | M'Callum, John M. |
| Bennett, E. N. | Gooch, George Peabody (Bath) | McKenna, Rt. Hon. Reginald |
| Bethell, Sir J. H. (Essex, Romford) | Gulland, John W. | M'Laren, H. D. (Stafford, W.) |
| Black, Arthur W. | Haldane, Rt. Hon. Richard B. | M'Micking, Major G. |
| Bottomley, Horatio | Hancock, J. G. | Maddison, Frederick |
| Boulton, A. C. F. | Harcourt, Rt. Hon. L. (Rossendale) | Mallet, Charles E. |
| Bowerman, C. W. | Harcourt, Robert V. (Montrose) | Markham, Arthur Basil |
| Bramsdon, Sir T. A. | Hardie, J. Keir (Merthyr Tydvil) | Marnham, F. J. |
| Branch, James | Hardy, George A. (Suffolk) | Massie, J. |
| Brigg, John | Harmsworth, Cecil B. (Worcester) | Masterman, C. F. G. |
| Brunner, J. F. L. (Lancs., Leigh) | Harmsworth, R. L. (Caithness-sh.) | Menzies, Sir Walter |
| Burns, Rt. Hon. John | Hart-Davies, T. | Middlebrook, William |
| Buxton, Rt. Hon. Sydney Charles | Harwood, George | Molteno, Percy Alport |
| Byles, William Pollard | Haworth, Arthur A. | Mond, A. |
| Causton, Rt. Hon. Richard Knight | Hazleton, Richard | Mooney, J. J. |
| Chance, Frederick William | Healy, Maurice (Cork) | Muldoon, John |
| Channing, Sir Francis Allston | Healy, Timothy Michael | Murphy, John (Kerry, E.) |
| Cherry, Rt. Hon. R. R. | Hedges, A. Paget | Murray, Capt. Hon. A. C. (Kincard.) |
| Clough, William | Helme, Norval Watson | Murray, James (Aberdeen, E.) |
| Clynes, J. R. | Henderson, J. McD. (Aberdeen, W.) | Myer, Horatio |
| Cobbold, Felix Thornley | Henry, Charles S. | Nannetti, Joseph P. |
| Collins, Stephen (Lambeth) | Herbert, Col. Sir Ivor (Mon. S.) | Nicholls, George |
| Collins, Sir Wm. J. (St. Pancras, W.) | Higham, John Sharp | Nicholson, Charles N. (Doncaster) |
| Condon, Thomas Joseph | Hobhouse, Rt. Hon. Charles E. H. | Nolan, Joseph |
| Corbett, C. H. (Sussex, E. Grinstead) | Holland, Sir William Henry | Norman, Sir Henry |
| Cornwall, Sir Edwin A. | Holt, Richard Durning | O'Brien, Patrick (Kilkenny) |
| Cory, Sir Clifford John | Hooper, A. G. | O'Connor, John (Kildare, N.) |
| Cotton, Sir H. J. S. | Hope, W. H. B. (Somerset, N.) | O'Connor, T. P. (Liverpool) |
| Cowan, W. H. | Horniman, Emslie John | O'Donnell, C. J. (Walworth) |
| Cox, Harold | Howard, Hon. Geoffrey | O'Donnell, John (Mayo, S.) |
| Craig, Herbert J. (Tynemouth) | Hudson, Walter | O'Malley, William |
| Crosfield, A. H. | Idris, T. H. W. | Parker, James (Halifax) |
| Crossley, William J. | Isaacs, Rufus Daniel | Partington, Oswald |
| Cullinan, J. | Jackson, R. S. | Pirie, Duncan V. |
| Davies, Ellis William (Eifion) | Johnson, John (Gateshead) | Ponsonby, Arthur A. W. H. |
| Davies, Timothy (Fulham) | Johnson, W. (Nuneaton) | Power, Patrick Joseph |
| Davies, Sir W. Howell (Bristol, S.) | Jones, William (Carnarvonshire) | Price, Sir Robert J. (Norfolk, E.) |
| Dewar, Arthur (Edinurgh, S.) | Jowett, F. W. | Priestley, Sir W. E. B. (Bradford, E.) |
| Dickinson, W. H. (St. Pancras, N.) | Joyce, Michael | Radford, G. H. |
| Duffy, William J. | Kekewich, Sir George | Raphael, Herbert H. |
| Rea, Rt. Hon. Russell (Gloucester) | Soares, Ernest J. | Wardle, George J. |
| Rea, Walter Russell (Scarborough) | Stanley, Hon. A. Lyulph (Cheshire) | Waring, Walter |
| Reddy, M. | Steadman, W. C. | Warner, Thomas Courtenay T. |
| Rendall, Athelstan | Stewart, Halley (Greenock) | Wason, Rt. Hon. E. (Clackmannan) |
| Richards, T. F. (Wolverhampton, W.) | Stewart-Smith, D. (Kendal) | Wason, John Cathcart (Orkney) |
| Roberts, G. H. (Norwich) | Strachey, Sir Edward | Watt, Henry A. |
| Robinson, S. | Straus, B. S. (Mile End) | White, Sir George (Norfolk) |
| Robson, Sir William Snowdon | Strauss, E. A. (Abingdon) | White, J. Dundas (Dumbartonshire) |
| Roch, Walter F. (Pembroke) | Summerbell, T. | White, Patrick (Meath, North) |
| Roe, Sir Thomas | Taylor, Austin (East Toxteth) | Whittaker, Rt. Hon. Sir Thomas P. |
| Rogers, F. E. Newman | Taylor, John W. (Durham) | Wiles, Thomas |
| Rowlands, J. | Tennant, H. J. (Berwickshire) | Wilson, Hon. G. G. (Hull, W.) |
| Runciman, Rt. Hon. Walter | Thomas, Sir A. (Glamorgan, E.) | Wilson, Henry J. (York, W.R.) |
| Russell, Rt. Hon. T. W. | Thorne, G. R. (Wolverhampton) | Wilson, P. W. (St. Pancras, S.) |
| Samuel, Rt. Hon. H. L. (Cleveland) | Tomkinson, James | Wilson, W. T. (Westhoughton) |
| Scarisbrick, Sir T. T. L. | Trevelyan, Charles Philips | Winfrey, R. |
| Schwann, C. Duncan (Hyde) | Verney, F. W. | Wood, T. M'Kinnon |
| Schwann, Sir C. E. (Manchester) | Villiers, Ernest Amherst | Yoxall, Sir James Henry |
| Seddon, J. | Vivian, Henry | |
| Shaw, Sir Charles E. (Stafford) | Walker, H. De R. (Leicester) | |
| Shipman, Dr. John G. | Walsh, Stephen | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Simon, John Allsebrook | Walters, John Tudor | |
| Snowden, P. | Ward, W. Dudley (Southampton) | |
| NOES. | ||
| Anson, Sir William Reynell | Gordon, J. | Pease, Herbert Pike (Darlington) |
| Arkwright, John Stanhope | Gretton, John | Peel, Hon. W. R. W. |
| Baldwin, Stanley | Guinness, Hon. W. E. (B. S. Edmunds) | Pretyman, E. G. |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Haddock, George B. | Randies, Sir John Scurrah |
| Banbury, Sir Frederick George | Hamilton, Marquess of | Rawlinson, John Frederick Peel |
| Banner, John S. Harmood- | Hardy, Laurence (Kent, Ashford) | Renton, Leslie |
| Beach, Hon. Michael Hugh Hicks | Harris, Frederick Leverton | Renwick, George |
| Beckett, Hon. Gervase | Hay, Hon. Claude George | Ridsdale, E. A. |
| Bridgeman, W. Clive | Helmsley, Viscount | Roberts, S. (Sheffield, Ecclesall) |
| Bull, Sir William James | Hill, Sir Clement | Ronaldshay, Earl of |
| Burdett-Coutts, W. | Hills, J. W. | Rutherford, John (Lancashire) |
| Campbell, Rt. Hon. J. H. M. | Hunt, Rowland | Rutherford, Watson (Liverpool) |
| Carlile, E. Hildred | Joynson-Hicks, William | Salter, Arthur Clavell |
| Carson, Rt. Hon. Sir Edward H. | Kennaway, Rt. Hon. Sir John H. | Sheffield, Sir Berkeley George D. |
| Cave, George | Kerry, Earl of | Smith, Abel H. (Hertford, East) |
| Cecil, Evelyn (Aston Manor) | Keswick, William | Smith, Hon. W. F. D. (Strand) |
| Cecil, Lord John P. Joicey- | Kimber, Sir Henry | Stanier, Beville |
| Cecil, Lord R. (Marylebone, E.) | King, Sir Henry Seymour (Hull) | Starkey, John R. |
| Clive, Percy Archer | Lambton, Hon. Frederick William | Staveley-Hill, Henry (Staffordshire) |
| Clyde, J. Avon | Lee, Arthur H. (Hants, Fareham) | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Coates, Major E. F. (Lewisham) | Lockwood, Rt. Hon. Lt.-Col. A. R. | Thomson, W. Mitchell- (Lanark) |
| Courthope, G. Loyd | Long, Col. Charles W. (Evesham) | Walker, Col. W. H. (Lancashire) |
| Craig, Captain James (Down, E.) | Lonsdale, John Brownlee | Warde, Col. C. E. (Kent, Mid) |
| Craik, Sir Henry | Lowe, Sir Francis William | Wilkie, Alexander |
| Douglas, Rt. Hon. A. Akers- | Lyttelton, Rt. Hon. Alfred | Williams, Col. R. (Dorset, W.) |
| Duncan, Robert (Lanark, Govan) | MacCaw, William J. Mac Geagh | Willoughby de Eresby, Lord |
| Faber, George Denison (York) | M'Arthur, Charles | Winterton, Earl |
| Faber, Captain W. V. (Hants, W.) | Magnus, Sir Philip | Wortley, Rt. Hon. C. B. Stuart- |
| Fell, Arthur | Mason, James F. (Windsor) | Younger, George |
| Fletcher, J. S. | Mildmay, Francis Bingham | |
| Forster, Henry William | Newdegate, F. A. | TELLERS FOR THE NOES.—Sir A. |
| Gardner, Ernest | Oddy, John James | Acland-Hood and Viscount Valentia. |
| Gooch, Henry Cubitt (Peckham) | Parkes, Ebenezer |