§ Motion made and Question proposed: "That any duty charged on the increment value of minerals which are comprised in a mining lease or are being worked shall be charged annually, and the increment value shall be taken to be the sum by which in each year the rental value of the mineral exceeds the annual equivalent of the original capital value of the minerals, or the capital value of the minerals on the last preceding occasion on which Increment Value Duty has been collected."—[Mr. Lloyd-George.]
§ Mr. PEEL
There are one or two questions I wish to ask the Chancellor of the Exchequer on this particular duty, and the first is as regards new mines. I wish the right hon. Gentleman to explain what he means by new mines. Does he mean a mine that has not been worked or developed at all? Does it apply to mines in the case of which only shafts have been sunk? He left it perfectly vague in the definition he made. The next point I want to put is this: In what sense really is this an Increment Value Duty at all? The hon. Member for the Mansfield Division really, I think, knocked the bottom out of this 554 tax altogether when he said that you could not have this valuation of ungotten minerals; that it was impossible to make such a valuation. As the whole of this tax depends on an accurate original valuation it is quite clear that if the hon. Member is right as regards that, it is impossible to charge this tax at all. The further point I wish to make is this: How is it possible to say that this is an increment due to the action of the community, because the whole basis for the other tax on increment in connection with land was that owing to the action of the community a piece of land, without any action or effort of the owner himself, increased in value on account of the action of others, and therefore it was perfectly fair to take a portion of the increment value and to place a tax upon it. But in this case it is impossible to say that there is any such increase in ordinary cases, owing to the action of the community.
Hon. Members always take the case of a man who has leased his mine. Take the case of a man who owns his mine and works it himself, he develops the mine himself, sinks the shafts, and, if he is lucky, he works his coal. In that case the value of the coal is increased because the coal is accessible and can be 555 worked, whereas before it was not accessible, could not be worked, and only had a very problematical value. The value is caused by the exertions of the owner, and the expenditure of his money and yet he is going to be charged an Increment Duty. What upon? On the difference between the valuation of the coal before he has developed his mine and the valuation after he has developed his mine. It is quite clear that the increment so charged is not due to any action of the community, and is therefore not increment—taking the analogy of the other taxes—he ought to be charged upon. It is solely due to his own expenditure of capital and to the fact that he has been able, by the operations in which he is engaged, to bring the coal to the surface. I submit in such cases there is absolutely no analogy between the Increment Tax in the case of land and this tax as it is proposed to charge it in the case of mines. I wish to know, therefore, the basis on which this tax is put forward. I am not speaking, of course, about the fact that there might have been a rise in the price of coal during the time he was developing his mine. If that was so it is purely on a parallel with the rise in price of any other commodity. That is an increase due to the action of the community. But it is not clear that if there is a difference between the original valuation before he worked the mine and the valuation after he worked it—if there is a large difference between the two, then that simply shows that there has been an erroneous valuation in the first place. It is exceedingly unfair, therefore, to charge him on the previous valuation and what the coal is after he worked it. You ought to correct your previous valuation and then make your subtraction between the previous value of the coal and the subsequent value. The method of charging this tax also makes it extraordinarily heavy.
The Committee must remember that we have already passed the Resolution about the shilling duty on the mineral rights. Therefore already a charge is being paid of one shilling by that particular owner. If the tax is to be charged as I heard it explained by the Chancellor of the Exchequer just now, it will be heavier than I thought when I read the Resolution. The right hon. Gentleman took a case where the annual value of the original capital value was £1,000, and imagined that in the second year of working the man got £3,000 a year or the equivalent of it in 556 royalties. He gets that £3,000 for the second, third, fourth, and fifth years. So far as I understand the Chancellor of the Exchequer, you raise the tax on the difference between £1,000 and £3,000, not only in the second year, but in the third, fourth and fifth years as well. You take 20 per cent. on the difference, namely, £2,000, which means an Income Tax of 14 or 15 per cent., because you deduct £1,000 from the rent he would get from the mine. That is an astonishingly heavy tax, and when I read the Resolution I certainly did not realise that the tax was going to work out to anything like so great an amount. I do not want to go over the ground already covered in the previous Resolution. Almost every argument which has been used on the previous Resolution applies with redoubled force in regard to this one dealing with Increment Duty. The tax on increment value works out far heavier than the Mineral Rights Duty. I should like to have some explanation from the Chancellor of the Exchequer as to whether he thinks it is really fair, after having mulcted the owner a shilling in the £ in respect of the previous Resolution, that he should add this further Increment Value Duty, which is a very heavy tax indeed, and which must have most unfortunate consequences as regards industry, and must decrease the amount of industrial employment in the country. All this was so clearly set forth by speakers on the previous Resolution, that I do not think it is necessary for me to repeat the arguments again.
§ Mr. LLOYD-GEORGE
I understood that the Debate on the first Resolution was really to cover the whole ground, and as a matter of fact the point was distinctly raised by a hon. Member who rose just now as to whether the whole ground could not be—
§ Mr. LAURENCE HARDY
I especially rose to ask that the Debate on the Resolutions should be taken in two portions, and I thought that the Chancellor of the Exchequer understood that that was the position. In fact, I said that I would not allude in any way to the second part, and the Chairman also added that he would keep the Debate strictly to the first Resolution.
§ The CHAIRMAN
The Deputy-Chairman left me a note, and he agrees that the Debate should be confined to each Resolution separately.
§ Mr. LLOYD-GEORGE
If that is the case I have nothing more to say on the matter. The hon. Member who has just spoken has not really confined himself to the Resolution, but has referred to the Amendment. It is quite impossible to cover the whole ground now and enter into a detailed examination of the Amendments on the Paper. It would be very undesirable after having discussed the principle of the Mineral Clauses that we should enter into a detailed scrutiny of the Amendment. The Amendment referring to increment value has been on the Paper for days. There is a definition of what "worked" is in the Clause, whether it is a satisfactory one or not I will not discuss now, but it is one which can be examined when we arrive at the particular Amendment.
§ Sir J. RANDLES
I want to ask a question with regard to what the Chancellor of the Exchequer a little while ago told us in reference to the imposition of this Increment Tax. He put the case of a tenant paying £1,000, and stated that if the value of the property went up to £3,000 he would have to pay Increment Duty on the £2,000. The point I want to get at is this, what is to happen if instead of there being an increment, there is a decrement in the value of the property after the second or third years. It might be that in the two or three years following instead of the property being worth £1,000, it might be worth very considerably less than £1,000 a year. Now the royalty owner in that case has an arrangement with his tenant by which "shorts" are worked, and if the tenant, for instance, gets short for one, two, three, or four years, he is relieved during the run of the lease—generally seven, or fifteen, or twenty-one years—and is allowed to make it up and recoup himself for what he has paid during the lean years. What I want to get at is this: would not the Chancellor of the Exchequer treat this man in the same manner as the royalty owner would treat his tenant? Would it not be fair if he had overpaid in respect to increment for two or three years that he should be allowed to make it up in succeeding years, even if it were not done in direct repayment to him? If he were allowed to recoup himself in the following year as a tenant is allowed to do under the terms of his lease with a landlord in the majority of cases that might perhaps meet the difficulty. There is another question I should like to put to the right hon. Gentleman. 558 I understand him to say that no mine now in working was liable to this Increment Duty.
§ Mr. LLOYD-GEORGE
It is all in the Amendment which has been on the Paper for days. This is purely a Resolution enabling me to move new Clauses.
§ Mr. LAURENCE HARDY
This is a very different case to any other we have had, because you are proceeding to take the duty annually, and, so far as I understand, this Clause will not be affected by all the other Clauses which we passed with regard to increment value. I should like to be informed if that is the case. So far as I can see the mineral owners are to be in a very much worse position. Supposing in these first years the excess was very considerable between the rent and the equivalent annual value, there is never any opportunity for the mineral owner to make up any decrement of former years, and clearly he will have to pay a great deal more than should be charged to him. The right hon. Gentleman said valuation on all forms of minerals would be made. Under what Section or Clause of the Bill is that valuation to be made? I have not been able to discover anything in the Bill which enables a valuation to be made at all. It is not in this new Clause, and it does not, so far as I know, appear in the Bill at all. Some provision should be made as to who is going to make the valuation. I should like to ask the Government what is meant by "the last occasion on which Increment Value Duty has been collected"? When does that point arise? Is it only on the occasion when minerals are re-leased? During the whole continuance of the lease is there to be no opportunity of starting from a new point, as is the case with regard to other Increment Duties? Leases of minerals are very long, and if they are bound to pay every year a certain sum in respect of annual value to the end of the lease, mineral owners will be at a great disadvantage. These matters do, I think, require some explanation.
§ Mr. LUPTON
I am reluctant to intervene in the Debate; but the fact is I do not understand this Resolution. Very likely it is my own fault, because, in order to grasp the position it requires a very careful study indeed of the Bill and of the Amendments, and of many Amendments which I think are not down upon the Paper. Looking at the Clause to which the Chancellor of the Exchequer has referred—
§ The DEPUTY-CHAIRMAN
Order, order. The Bill does not come under discussion at all at this stage. This Motion is merely to give enabling power to do something. The terms of the Bill are not just now under consideration.
§ Mr. LUPTON
Certainly, Mr. Caldwell. But the right hon. Gentleman referred just now to the Amendments on the Paper. That did not, to my mind, throw any light on the Resolution. The difficulty about this matter is that in dealing with the increment on building land you see an increase in value. You see an acre valued one year; but where you have an acre of coal the royalty on an acre of coal is much the same now as 50 years ago. In fact, royalties have not gone up in my time per acre, and they will not go up per acre until nearly all the acres are let and there becomes great competition. Therefore, I do not quite know what the increment is to which the right hon. Gentleman has referred. The right hon. Gentleman has a scheme no doubt, but I want him to give us a memorandum or illustration that will enable us and other people to know exactly what he means. The value of a mineral estimate may increase in public estimation as the neighbouring mines approach to the mineral estate. But I do not know how the right hon. Gentleman is going to act. I know a case of more than forty years ago where a royalty was paid much higher than people would have to pay now. That was due to local circumstances. I hope the Chancellor of the Exchequer will give us an opportunity of ascertaining what he means. The ungotten mineral tax was very easy to calculate, and there was no difficulty about it in any way; but suddenly that was withdrawn, and what is proposed now is exceedingly difficult to apply and understand. This Income Tax is to my mind quite incomprehensible.
§ Mr. LLOYD-GEORGE
Earlier in the Debate these points were fully explained. The hon. Gentleman cannot have read the Resolution on the Paper.
§ Mr. LLOYD-GEORGE
All I can say is that it is very remarkable to me that my hon. Friend, having read what is on the Paper, should put these questions to me. As I have said, I gave a very full explanation and illustration earlier in the evening, and I should feel I ought to apologise to the Committee if I repeated an explanation 560 of that kind at this hour. The hon. Member opposite (Mr. Laurence Hardy) put a number of questions to me. Again, I say these points really do not arise upon the new Clause—or upon this Resolution—and it seems to me that it will double and treble the discussion if we enter upon those points now. Valuation is provided for in Clause 15. That Clause will be amended in consequence of the fact that the State has undertaken valuation.
§ Mr. WATSON RUTHERFORD
One cannot help sympathising with the Chancellor of the Exchequer in having to answer practically twice over the same points, but unfortunately it is one of the rules of the House that the Clause cannot be brought in and discussed in Committee unless we have first a Resolution which warrants it. Therefore we are entitled on this Resolution to object to the matters of principle involved in it. What are those matters of principle? First we object to there being any Increment Value Duty on minerals at all. Why do we object to it? For the simple reason that minerals are not a thing which, having regard to the royalties paid upon them, is in any way the same as the rent of property. The royalties on minerals are the price of an article that is being exhausted year by year and taken away. We also strongly object to the Resolution in that this particular Increment Duty is to be charged annually. We object to that on the ground that annually the rate of royalties does not alter. If coal is leased, it is leased upon the basis of so much a ton or upon the basis of so much an acre—it varies in different parts of the country. The lease is granted at a fixed rate. That rate is the same this year as it was last year, and it will be the same next year. There is no increase in the ton of coal, but there is a different amount of royalty payable, simply because the lessee takes out in some years a considerably larger quantity than he does in others. Why does he do that? Sometimes it is easier to get the coal, but generally because coal has gone up in price, and therefore he pays a larger sum in royalties. There has been really no increment at all.
We consider that these observations will apply to the Clause itself, and we think 561 it only fair to indicate to the Chancellor of the Exchequer in advance our view that there should be no such Increment Value Duty as that indicated in the Clause, especially an Increment Duty which can be charged annually. The points which have been raised are to some extent disposed of by the new Clause on the Paper and some of the Amendments to Clause 15, but a large number of the Amendments which have been put down to Clause 15 will now require to be redrafted to fit in with the new Clause and in the extraordinary Resolution now before the Committee. I do not think that the Chancellor of the Exchequer should complain that we rise here to protest against the Resolution, which imposes a tax we consider inappropriate to the article, inconsistent with the facts, and charged in a way which will create a very great hardship. It is for these reasons I have endeavoured, I hope concisely, to state why we strongly object to this Resolution.
§ Mr. JAMES HOPE
I should like to ask the Chancellor of the Exchequer whether the valuation of these minerals is going to be undertaken by the staff of 500 the Prime Minister alluded to, and whether in his estimate of the time that the valuation would occupy and the cost of it allowance was made for the extremely difficult operation the valuers of all these minerals will have to carry out. When the Prime Minister explained the method, staff, and cost of the valuation he did not dwell upon the minerals at all, but I take it that this scheme now proposed of checking valuations annually will involve a much heavier cost than was contemplated when the scheme of valuation was put forward.
§ Mr. LLOYD-GEORGE
If the hon. Member will look at the Prime Minister's speech he will find that my right hon. Friend distinctly stated that the valuation of the minerals would be included. Further than that, he will find that a question was actually put by the Leader of the Opposition on that very point.
§ Mr. JAMES HOPE
Then I take it that the staff of 500 will do all this work, and that it will involve no extra cost in consequence of the Resolution and the amended Clause beyond the estimate the Prime Minister gave.
§ Lord BALCARRES
I should like to ask a few questions now. They deal with the question of ascertaining the original capital value of minerals. The real reason why the original mineral tax was post- 562 poned was because you cannot estimate the value of ungotten minerals.
§ Lord BALCARRES
The hon. Member for Mansfield told us to-night that it was impossible to value ungotten minerals.
§ Mr. MARKHAM
I never referred to it. I have previously stated that I thought the proposals made by the Government were quite impracticable, but I did not say so to-night.
§ Lord BALCARRES
I beg the hon. Member's pardon. What I want to do is to ask the Chancellor of the Exchequer how this original capital value is going to be ascertained. It is no good saying we are going to have a staff of 500 gentlemen to ascertain the original capital value without knowing what they are going to do. It may be very easy in Lancashire where there is a large number of open seams. You can do it approximately, of course, but there must be allowances on one side and the other. How can you value ungotten minerals where the seams are not open. I defy anybody to value them in the East of Lincolnshire where there are quantities of boreholes, and where people have spent thousands of pounds upon boring. It is no good to put down one borehole over 1,000 acres. You have to put down numerous boreholes. I ask the right hon. Gentleman what is going to be the cost of valuing ungotten minerals. I want further to ask him how long he estimates that this valuation is going to take. It is an enormously big job. Everything beneath the earth which is worth more than the space it occupies and is withdrawn for the purposes of profit with the exception of brickmaking, is going to be valued. That includes every slate and every piece of granite, all the salt in Cheshire, all the liquid brine. [HON. MEMBERS: "No."] Yes; because liquid brine is of course a mineral. It will also include all the metalliferous liquids which come up at Harrogate and Tunbridge Wells; all these things will have to be valued.
§ Lord BALCARRES
The hon. Member shakes his head, but every metalliferous liquid is a mineral, and it will have to pay the duty.
§ Mr. MARKHAM
The Bill does not say anything of the kind. It says only those mines which are being worked are to be valued. If the Noble Lord will refer to the Clause he will find that is the fact.
§ Lord BALCARRES
Indeed they are. I invite the Chancellor of the Exchequer to say whether that is not the fact.
§ Lord BALCARRES
The right hon. Gentleman admits that all minerals which are not being worked now will have to be valued. I say that the immensity of this obligation is not fully realised even by the Chancellor of the Exchequer. Where the minerals are being developed clearly it is much more easy to ascertain their original capital value than where they are not being developed. A further point I wish to put to the right hon. Gentleman is that he or the learned Attorney-General should consent to give us in the form of a return or an answer to an unstarred question, a statement as to what matters are going to be taxed under this Increment Value Duty Resolution. The House has a right to that information, and to know the legal decisions upon which the Government depends for the definition of the term minerals. We asked the Attorney-General what minerals were, but he refused to say anything except that clay for the purposes
§ of this Bill would not be considered a mineral. He said it was perfectly clear, although there have been conflicting decisions in the Courts, that there were certain decisions on which the Government relied. I take it that, in answer to an unstarred question, the right hon. Gentleman would be willing to give us a list of the decisions on which the Government rely and on which they have relied in making an estimate of the yield of the duty. I do not think that is an unreasonable demand to make. I hope that the other question I have put as to the probable cost of valuation and the probable time it will occupy will also be answered in the course of the next few days.
§ Mr. WATSON RUTHERFORD
Are we to understand, Sir, that the questions put to the Government are not going to be answered?
§ Question put: "That any duty charged on the increment value of minerals which are comprised in a mining lease or are being worked shall be charged annually, and the increment value shall be taken to be the sum by which in each year the rental value of the minerals exceeds the annual equivalent of the original capital value of the minerals, or the capital value of the minerals on the last preceding occasion on which Increment Value Duty has been collected."
§ The Committee divided: Ayes, 120; Noes, 44.565
|Division No. 711.]||AYES.||[1.45 a.m.|
|Acland, Francis Dyke||Davies, Sir W. Howell (Bristol, S.)||Horniman, Emslie John|
|Ainsworth, John Stirling||Dewar, Arthur (Edinburgh, S.)||Howard, Hon. Geoffrey|
|Allen, A. Acland (Christchurch)||Duckworth, Sir James||Jenkins, J.|
|Allen, Charles P. (Stroud)||Duncan, C. (Barrow-in-Furness)||Jones, Leif (Appleby)|
|Baring Godfrey (Isle of Wight)||Duncan, J. Hastings (York, Otley)||King, Alfred John (Knutsford)|
|Barnes, G. N.||Edwards, Sir Francis (Radnor)||Lamont, Norman|
|Barran, Sir John Nicholson||Elibank, Master of||Layland-Barratt, Sir Francis|
|Barry, Redmond J. (Tyrone, N.)||Essex, R. W.||Lehmann, R. C.|
|Beaumont, Hon. Hubert||Evans, Sir Samuel T.||Lever, A. Levy (Essex, Harwich)|
|Benn, W. (Tower Hamlets, St. Geo.)||Everett, R. Lacey||Levy, Sir Maurice|
|Bennett, E. N.||Falconer, James||Lloyd-George, Rt. Hon. David|
|Berridge, T. H. D.||Ferguson, R. C. Munro||Lough, Rt. Hon. Thomas|
|Bowerman, C. W.||Fuller, John Michael F.||Macpherson, J. T.|
|Bramsdon, Sir T. A.||Gibson, J. P.||M'Laren, H. D. (Stafford, W.)|
|Brodie, H. C.||Gulland, John W.||Mallet, Charles E.|
|Burns, Rt. Hon. John||Harcourt, Rt. Hon. L. (Rossendale)||Markham, Arthur Basil|
|Byles, William Pollard||Harcourt, Robert V. (Montrose)||Marnham, F. J.|
|Causton, Rt. Hon. Richard Knight||Hardie, J. Keir (Merthyr Tydvil)||Masterman, C. F. G.|
|Channing, Sir Francis Allston||Harmsworth, Cecil B. (Worcester)||Middlebrook, William|
|Clough, William||Harmsworth, R. L. (Caithness-shire)||Montagu, Hon. E. S.|
|Collins, Sir Win. J. (St. Pancras, W.)||Harwood, George||Montgomery, H. G.|
|Cooper, G. J.||Haworth, Arthur A.||Murray, Capt. Hon. A. C. (Kincard.)|
|Corbett, A. Cameron (Glasgow)||Hedges, A. Paget||Nicholls, George|
|Corbett, C. H. (Sussex, E. Grinstead)||Helme, Norval Watson||Nussey, Sir Willans|
|Craig, Herbert J. (Tynemouth)||Henry, Charles S.||Nuttall, Harry|
|Crosfield, A. H.||Herbert, Col. Sir Ivor (Mon. S.)||Parker, James (Halifax)|
|Dalziel, Sir James Henry||Higham, John Sharp||Partington, Oswald|
|Davies, Timothy (Fulham)||Hooper, A. G.||Paulton, James Mellor|
|Pearce, Robert (Staffs, Leek)||Seddon, J.||Wason, John Cathcart (Orkney)|
|Pearson, W. H. M. (Suffolk, Eye)||Seely, Colonel||White, Sir George (Norfolk)|
|Pointer, J.||Shaw, Sir Charles E. (Stafford)||White, J. Dundas (Dumbartonshire)|
|Pollard, Dr. G. H.||Strachey, Sir Edward||White, Sir Luke (York, E. R.)|
|Priestley, Arthur (Grantham)||Summerbell, T.||Wilkie, Alexander|
|Radford, G. H.||Thorne, G. R. (Wolverhampton)||Williams, J. (Glamorgan)|
|Richards, T. F. (Wolverhampton, W.)||Tomkinson, James||Williamson, Sir A.|
|Roberts, Charles H. (Lincoln)||Trevelyan, Charles Philips||Wilson, Henry J. (York, W. R.)|
|Roberts, G. H. (Norwich)||Verney, F. W.||Wilson, W. T. (Westhoughton)|
|Robinson, S.||Walsh, Stephen||Wood, T. M'Kinnon|
|Robson, Sir William Snowdon||Ward, John (Stoke-upon-Trent)|
|Roch, Walter F. (Pembroke)||Waring, Walter||TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.|
|Russell, Rt. Hon. T. W.||Wason, Rt. Hon. E. (Clackmannan)|
|Acland-Hood, Rt. Hon. Sir Alex. F.||Fell, Arthur||Renton, Leslie|
|Anson, Sir William Reynell||Guinness, Hon. R. (Haggerston)||Rutherford, Watson (Liverpool)|
|Arkwright, John Stanhope||Hardy, Laurence (Kent, Ashford)||Salter, Arthur Clavell|
|Balcarres, Lord||Harrison-Broadley, H. B.||Sheffield, Sir Berkeley George D.|
|Baldwin, Stanley||Hay, Hon. Claude George||Smith, Hon. W. F. D. (Strand)|
|Banner, John S. Harmood-||Hope, James Fitzalan (Sheffield)||Thomson, W. Mitchell- (Lanark)|
|Baring, Capt. Hon. G. (Winchester)||Hunt, Rowland||Walker, Col. W. H. (Lancashire)|
|Beckett, Hon. Gervase||Lambton, Hon. Frederick Wm.||Warde, Col. C. E. (Kent, Mid)|
|Bowles, G. Stewart||Lane-Fox, G. R.||Williams, Col. R. (Dorset, W.)|
|Bridgeman, W. Clive||Lockwood, Rt. Hon. Lt.-Col. A. R.||Wilson, A. Stanley (York, E. R.)|
|Campbell, Rt. Hon. J. H. M.||Morrison-Bell, Captain||Wortley, Rt. Hon. C. B. Stuart-|
|Carlile, E. Hildred||Nicholson, Wm. G. (Petersfield)||Younger, George|
|Clyde, James Avon||Pease, Herbert Pike (Darlington)|
|Courthope, G. Loyd||Peel, Hon. W. Robert Wellesley||TELLERS FOR THE NOES.—Viscount|
|Douglas, Rt. Hon. A. Akers-||Randles, Sir John Scurrah||Valentia and Mr. H. W. Forster.|
|Faber, George Denison (York)||Ratcliff, Major R. F.|