CLAUSE 1.—(Avoidance of contracts for payment of Increment Value Duty by transferee or lessee.)

HC Deb 09 March 1911 vol 22 cc1422-65

Any contract made after the passing of this Act between a transferor and transferee or a lessor and lessee for the payment by the transferee or lessee, as the case may be, of Increment Value Duty, or any expenses incurred in connection with the payment or assessment of the duty, or for the repayment or reimbursement by the transferee or lessee to the transferor or lessor in any manner of any payments made by the transferor or lessor in respect of that duty or any such expenses, shall be void.

Sir ALFRED CRIPPS moved to insert at the beginning of the Clause the word "Notwithstanding" ["Notwithstanding any contract"]. I wish to ask the Secretary to the Treasury one or two questions. First, Is it not the fact that apart from this Clause altogether, apart from the proposals embodied in it, under the principal Act the transferor or the lessor will be liable to pay the amount of the Increment Duty to the Inland Revenue, quite irrespective of whether there is any contract between the transferor and the transferee or the lessor and the lessee. And is it not equally the fact that the amount of the duty will also be entirely independent of any contract between these parties. Therefore, both as regards the persons liable to pay and the amount to be paid they will not be affected even if the contract between the parties is made void. If that is so, there can be no reason whatever in a Clause of this kind seeking to render void an ordinary business contract. I hope the hon. and learned Solictor-General will appreciate what is meant by making contracts of this kind void. It does not mean that they may not be entered into; they may be entered into and observed by honourable men whether they are made void or not, and the only result of making such a contract void is to allow a person who does not take an honourable view of his obligations to escape them. If the contract cannot be enforced in a court of law no power on earth will make such a man comply with the terms of the contract if he desires not to do so. I venture to protest against this principle of seeking to render void certain contracts which are entered into by business people for business reasons, unless there is some good purpose to be served. Personally, I see no such good purpose, and I will ask how the proposal will affect either the person liable or the amount of Increment Duty to be paid. I say it affects neither, and consequently a provision of this kind should not be included in a Clause of this sort. One of the first questions that arises in a court of law is as to the meaning of a Clause of this kind. But what meaning could be given to a Clause like this? I shall be quite willing to withdraw my Amendment if either the Secretary to the Treasury or the Solicitor - General can show any reason whatever for a Clause of this kind. I say it is wholly unnecessary. The Bill as it stands makes the amount of duty payable quite irrespective of whether there is a contract between lessor and lessee and transferor and transferee, except there be some desire to put in a Clause of this kind, rendering an ordinary business contract void which ought to be held binding between the parties. It appears to me that the Clause is wholly inoperative as regards the real purposes of the principal Act. Still, if it can be found that there is any special reason for it I am willing to withdraw my Amendment.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

The reason for drawing the Clause now under discussion is this. The intention of the original Act was to throw upon the lessor or transferor the duty of paying the Increment Duty. But the lessor or the transferor, as the case may be, looking at the question from what he thinks to be a business point of view, and not necessarily caring what the intention of this House was when it passed the original Bill, has endeavoured, in cases which have come to our notice, to transfer the payment of the duty from his shoulders to the shoulders of the lessee or transferee. I hope my hon. and learned Friend will accept our assurance that we have had a large number of cases brought to our notice in which that has been attempted or is desired to be done. We think that the burden of paying this new duty should rest where it was intended to rest by the original Act, on the shoulders of the person who transfers or leases, as the case may be, the land or interest upon which the Increment Duty arises. That is the intention of this clause, and if we were to accept the Amendment of the hon. and learned Gentleman; it is true, it would leave the duty still to be paid by the transferor, but it would enable him to recover it from the lessee or from the transferee after he had nominally paid the duty. We desire to make that impossible as far as we can, in the same way as the Income Tax is made irrecoverable from the tenant. We hope to prevent the recovery from the lessees by the lessor of this Increment Duty, and for that reason only have we drawn the Clause which the Committee are now discussing.

Mr. BALFOUR

This is a very strange Clause to introduce into a Taxing Bill, because it is not in the power of this House to say who shall pay a tax. Such a matter does not rest with the House nor with the Legislature, and should not be dealt with by Act of Parliament, because it rests upon the laws of supply and demand, and if you are to say on a transfer of any sort from the seller to the buyer how the tax should be paid you cannot settle who shall pay it. You may put in what you like, but the man who transfers and sells will get what he can, and the man to whom the property is transferred must give what he must, and you may frame your Bill as you please, and put in anything you like, but I do not believe that as long as contracts are free you can determine who shall pay the tax. I should like to know whether the Government adopt the opposite view and to ask the Solicitor-General, who often makes most able and interesting speeches on economic questions in this House—I should like to ask him as an economist whether he thinks it is an operative clause; whether he thinks that because the Government choose to put their intentions in the form of an Act of Parliament it will alter the ordinary law of supply and demand, or that it will cease to operate.

The CHAIRMAN

I should just like to point out to the right hon. Gentleman that this Amendment really is another way of putting what I understand to be the end really aimed at, and the right hon. Gentleman is, it seems to me, now discussing the substance of the Clause which would arise on the question "that the Clause stand part."

Mr. BALFOUR

I have no doubt, Sir, your ruling is correct. I was following the line of argument of the Mover of the Amendment, and of the Member of the Government who got up to defend the Clause, but if you think the argument should be deferred to a later stage I will postpone it.

The CHAIRMAN

I only intervened because it seemed to me that the right hon. Gentleman was discussing the principles of the Clause, and the right; time to discuss the substance of it would really be on the Question that the Clause should stand part.

Sir ALFRED CRIPPS

On the point of Order, Sir. I submit that the true meaning and effect of the words in the Clause is to make the contract void. The Bill allows the contract to be made, but you reinstate and reconstitute the provisions of the principal Bill, and, as far as the Inland Revenue is concerned, they will get their money from the transferor or lessor, leaving them to rely on such contract as has been made by the transferee or lessee.

The CHAIRMAN

The hon. Member is arguing the substance of the Clause. I think that the discussion of this Amendment ought to be confined to the question of the words proposed to be dealt with by the hon. and learned Gentleman, and then we can discuss the principle afterwards.

Sir ALFRED CRIPPS

May I say a few words in answer to what the right hon. Gentleman the Secretary to the Treasury said? I see the learned Solicitor-General there, but the point which I raised has not been answered. I understand that he would agree with me that, apart from this Clause, the transferor or the lessor is the person liable to the Inland Revenue, and he also agrees with me that, apart from this Clause, the amount of the Increment Duty will be exactly the same, whether there is a contract between the transferor and transferee or not. I take it that he agrees with those two propositions, and therefore so far as the Inland Revenue is concerned this Clause does not affect them one way or another. Under these circumstances, surely one is entitled to protest against introducing into a Clause of this kind voidance of a contract which can be made in regard to a business matter. It can easily be arranged so that the transferee should bear the cost of the transfer. That is a matter of every-day occurrence as regards the transfer of property in this country, and all the right hon. Gentleman has said is that the Government think there should be no power to pass on an obligation of this kind from the transferor to the transferee. Why not? Supposing as a business arrangement the transferee desires to take this obligation, and the two parties concerned desire that he should take it, why should there be any interference?

The CHAIRMAN

I think that is the substance of the Clause. I speak with some diffidence about this matter, because I am not a lawyer and the hon. Gentleman is a very distinguished one, but he does seem to me to be discussing the substance of this matter instead of his own Amendment.

Mr. E. G. PRETYMAN

On the point of Order, Sir. Shall we read these two Amendments on the Paper together as one?

The CHAIRMAN

Yes.

Mr. PRETYMAN

One Amendment is to leave out the words, "shall be void," at the end of the Clause. I respectfully submit that the leaving out of these words is the point of the argument we are trying to raise that the Clause does propose to void the contract, and my hon. Friend behind me having proposed to omit the words opens up, of course, the question whether a contract ought to be voided or not.

Mr. HOBHOUSE

If the discussion of the second Amendment is to be included in that of the first Amendment we cannot have the discussion all over again when we come to the question that the Clause should stand part.

Lord HUGH CECIL

I understand that the additional words amount to a consequential Amendment which has been put down.

The CHAIRMAN

Yes.

Lord HUGH CECIL

And I understand it is in order to argue that this Clause can have no operative effect, and since it can have no operative effect there can be no advantage in voiding the contract.

The CHAIRMAN

As long as we do not have two discussions on the substance of the Clause. I do not object to the discussion of the substance of the Clause now, but, I have been trying to get rid of the Amendment so that we can discuss the Clause without the technical part of the Amendment.

Sir ALFRED CRIPPS

I would bow at once to your ruling, only it would not be possible to discuss under it the whole gist of the Amendment. The whole gist of my Amendment is that notwithstanding a contract between the transferor and transferee, the obligation should not be put an end to. That, of course, is in direct opposition to the principle of the Clause proposed by the Government, namely, the voidance of the contract. I am the last person who would desire that the Committee should be troubled with discussing a question twice over, and I hope I am not making any suggestion of that kind, but I do not see now what answer has been made to the point which I am discussing that the voidance of the contract here is a mere brutum fulmen, and does not affect the liability of the parties to the Government, nor does it affect the amount to be paid. Under these circumstances the Government are safeguarded. They have their right against the transferor and they have the right of a man between the transferor and transferee. Why should you interfere in a business arrangement entered into between two parties to their mutual convenience? I should agree if it could be shown that the Government were embarrassed or that the duty could be altered, but if no such case is made, why should you interfere with the ordinary case of a mutual contract, more particularly when, although you may render it void, it may still be entered into between honourable people, and the only result will be that someone, whom I will call a rogue or sharp practitioner, might seek to get out of an obligation which he has incurred by pointing to this Clause.

Mr. BEALE

I really hope the Government will see their way to accept this Amendment, because it is a simpler and more businesslike way of attaining the object which they really have in view. They do not want a man to pass off his obligations to the transferee or lessee, and the Amendment does not do so. The Amendment leaves him primarily liable for it. The Clause only seeks to interfere with a possible contract between the transferor and transferee, or the lessor or lessee, as to who shall pay the transfer. The same thing might easily be done by stating it in the consideration for the contract, or in other ways. Personally I have always been an enemy to this method adopted here of drafting a Bill. I have always been an enemy in ordinary cases of the idea that you can do anything either way by putting in a section in an Act of Parliament that a contract shall be void, because it is always evidence of what the parties wish to arrive at. If you put in a clause of that kind you are very liable to raise the question of whether the whole contract is void, and the question whether you can dissociate this clause and say this clause is void and the whole contract stands good. I think this method should never be adopted if you can possibly do it in any other way, and I do not know of any case when any such expedient has been introduced where you could not have found a more simple and practical way of attaining the same object without running the risk of having to introduce the violent principle that what people are agreed upon is to be absolutely void between them. I hope this Amendment will be accepted, because I believe it will be useful.

Lord HUGH CECIL

I should like to ask the Government a question. I do not propose to enter into the question after your ruling, Sir, whether this Clause does actually alter the incidence of the tax. That will be discussed on the question that the Clause stand part of the Bill. But I should like the Government to say—

Mr. HOBHOUSE

The Noble Lord asks whether we are not to have another discussion on this point on the question that the Clause should stand part, but I understand you to rule that we are only to have one discussion, and that is the general discussion.

The CHAIRMAN

What has happened is this. I thought this was rather a technical point as to the way of putting it, and that it could be disposed of without discussing the substance of the Clause. If that had been the case I should have interfered to keep the Committee away from the wider question, but if it cannot be done in that way then I suggest that, at any rate, we should not have two discussions, which involve the principle of the Clause.

Lord HUGH CECIL

I, if I may respectfully say so, agree with your ruling, and I do not intend to enter upon this question; but the question between the Government and my hon. Friend is really a matter of machinery. As I understand the point now, I personally agree that the Clause cannot possibly have the effect that it is supposed to have, but what I want the Government to show me is why the particular Amendment would make any difference to the alleged effect. I do not know whether they do seriously urge that you can prevent the price of land being affected at will by a stipulation of this kind. It cannot be prevented; the tax can be taken indirectly into consideration. If you cannot do that you cannot prevent the incidence of the tax. But assuming that you can, for the sake of argument, what advantage is there in their case over the Amendment of my hon. Friend. The proposal of my hon. Friend would involve less risk to the general security of the transaction, and what I want to hear from the Government is whether they prefer their words to the words of my hon. Friend?

Sir PHILIP MAGNUS

May I ask whether this discussion, according to your ruling, will prevent a similar discussion on the proposition that the Clause be omitted?

Sir F. BANBURY

Is it not a fact that when we come to the question that the Clause stand part, it can be discussed, and it does not matter what takes place now?

The CHAIRMAN

The question can be debated, I was only deprecating having two discussions.

Mr. BALFOUR

I believe it was in consequence of some observations of mine that you made the ruling, and I am most anxious not to press any technical rights which Members may have, but merely to appeal for your guidance in the matter. I am not quite sure, even now, whether you consider that we are discussing the merits of the Clause, or whether we are only discussing in the narrower sense my Friend's Amendment.

Sir A. CRIPPS

I should not have gone further, after your ruling, but I thought my Amendment raised the principle of the Clause. I am bound to say I should have bowed to your ruling on the more technical ground.

The CHAIRMAN

The hon. and learned Gentleman who moved the Amendment pointed out to me that it does raise the wider issue of the Clause, and, that being the case, I cannot prevent that wider issue being discussed now. I think, on the whole, it perhaps would be more convenient to discuss the wider issue now. The Committee, of course, will understand that I thought at first that we might have got rid of the technical point and then discussed the larger question.

Mr. HOBHOUSE

Do I understand that under your present ruling we are to discuss this matter on the wider issue and that a subsequent re-discussion of the principle of the Clause, on the motion that the Clause be omitted, will not be possible?

The CHAIRMAN

I think the right hon. Gentleman must know that I have no power to limit the subsequent discussion on the question that the Clause stand part. It does not rest with me.

Mr. HOBHOUSE

But surely we are entitled to have this discussion limited to the narrow and technical point.

Sir A. CRIPPS

Surely the Amendment must be discussed in reference to the terms of the Amendment itself, and the Amendment raises the question that these contracts are not to be voided.

Viscount HELMSLEY

May I suggest that the most convenient course would be on this Amendment to discuss merely the machinery of the Clause?

The CHAIRMAN

I have looked carefully into the Amendment, together with the subsequent Amendment, and they raise the wider issue of the Clause, and therefore, if hon. Members desire to discuss the wider issue now, they are in order in doing so. When the Question that the Clause stand part comes to be put they can discuss the matter again. That very often arises, and it cannot be helped, Although I do not like it.

The SOLICITOR-GENERAL (Sir John Simon)

The Noble Lord (Lord Hugh Cecil) asked why the Government saw any difficulty in accepting the suggestion of my hon. and learned Friend opposite. If it was only a matter of alternative words that suggestion, of course, would have great force, but I think, if the Committee will look, they will see that the things are not really the same. There are three things: One is the law as it stands at this moment, the other is the change which would be effected by the Amendment now moved, and the third is the effect of the new Clause in the Bill. As the law stands at this moment it is, of course, for the lessor or the transferor to pay this duty as between the Inland Revenue and the taxpayer, and I imagine no one suggests, lawyer or layman, that any bargain that is made by the lessor or the transferor or anyone else will alter the fact that it is for the lessor to pay the duty to the Revenue. It is not suggested by the new Clause that there should be a change made in that, neither is it suggested by the Amendment, but the difference is this. If the Amendment, including the consequential Amendment, is accepted nothing will happen, the thing is left exactly as it was before, because what is proposed is to make it part of an Act of Parliament that where the Finance Act requires the lessor to pay the duty the lessor shall pay it. That really is not a matter which should occupy very long because it does not make any change. The Noble Lord fairly says, What is the Government's suggestion? The Government's suggestion, of course, is open to the economic criticism which all similar clauses must be open to. This is by no means the first of its kind. It is very familiar to anyone who has filled an Income Tax form for Schedule A. Whatever bargain you may have made with your landlord, you, as tenant, if you have paid any tax under Schedule A, are entitled to get it out of your landlord, and by the very language of the Income Tax Act, any contract to the contrary is void. All that is desired to be done by this Clause is to do that which has been done in connection with Schedule A. Similar instances could be found in the Tithe Act, if I am not mistaken, and in the Budget, Section 19, in connection with Undeveloped Land Duty. We do not attempt to rip up past bargains preceding the passing of this Act. We only say that a bargain after this date shall not be a binding and effective bargain. That is not going to produce any vast economic change. We are not going to stop the laws of supply and demand. We are going to suggest that we should lay down the same rule in connection with the Increment Duty which has been the law, as far as I remember, in connection with Undeveloped Land Duty. That is the position.

Sir A. CRIPPS

If the hon. and learned Gentleman will look at Section 19 the provision there is in exactly the same term as my Amendment, and not in the terms of the Government proposals.

Sir J. SIMON

The two Amendments together would run "Notwithstanding any contract between the lessor and the lessee, the Increment Value Duty shall be paid by the transferor." That is the existing law, and therefore the hon. and learned Member is moving an Amendment to a new Bill merely in order to preserve the existing law. If the Committee thinks it is desirable to preserve the existing law the right thing to do is to raise that question on the Clause, when I quite agree it will be in order, but at this stage all that is being proposed is the enactment that, notwithstanding a bargain between two subjects, the old law shall still apply and the duty shall be paid by the transferor. Of course, it will be paid by the transferor. No one else can be asked to pay it. That is why I think we may wait till the end of the Clause before we discuss it.

Sir A. CRIPPS

The words of Section 19 as regards Undeveloped Land Duty are that Undeveloped Land Duty shall be borne by the owner, notwithstanding any contract to the contrary. That is exactly the terms of my Amendment as regards Increment Duty.

Sir F. BANBURY

I understood the hon. and learned Gentleman to say at the commencement of his speech, that the Amendment had exactly the same effect as the words of the Government.

Sir J. SIMON

No; what I suggested was, that the Amendment does nothing more than say in effect that we will not have this Clause but will return to the Finance Act of 1909–10.

Sir F. BANBURY

I am glad I asked, because I did not quite understand. I thought the hon. and learned Gentleman's argument was that, as the Amendment had the same effect as the Clause brought forward by the Government, it was useless to discuss it. Now I understand that is not quite so, and the hon. and learned Gentleman thinks it ought to be taken later on on the Question that the Clause stand part. I quite agree to that. One of the arguments brought forward by the hon. and learned Gentleman in favour of the Clause was that there were these words in another part of the Budget. That seems to me a very bad argument. The Budget has been so badly worded that it is open to misapprehension, and if we can find other words which will have the same effect, and those other words are not in the Budget, I think the hon. and learned Gentleman ought to accept them.

Mr. PRETYMAN

I am sorry to support the Solicitor General's argument as against that of my bon. Friend behind me, because I desire to ask that the words in Clause 19 of the Budget, which are the same as those proposed by my hon. Friend, should be allowed to apply to this tax also. The very words suggested by my hon. Friend standing in Clause 19 of the Budget are a proof that he has no precedent for this particular argument of his as applied to this case, which is on an entirely different footing, because the Income Tax under Schedule A and the case of the Undeveloped Land Duty are cases of permanent burden at varying amounts placed annually on property, that property being subject to bargains for terms of years between individuals. It is therefore clearly necessary that in regard to a permanent and shifting tax—shifting in amount and permanent in character—where land is held for a term of years between two people, you should have a provision of that kind, and it is covered by the words proposed by my hon. Friend. But here you have a totally different consideration. You have a bargain once for all for the passing of property between one person and another, and I am sure the Solicitor-General will agree with me, that it is objectionable to void contracts if you can avoid it. It must be objectionable. It interferes with the market, and it is a process which should only be undertaken if you desire to obtain some clear advantage from it. I am sure, at any rate, that is a fair way of putting it. There are only two things which could be gamed by this—one to protect the Revenue, and the other to protect the purchaser. It has already been admitted that it cannot affect the Revenue at all. It is clear this is not a matter which has any effect, neither the Amendment or the Clause, on the Revenue. With regard to the purchaser, it will not really affect him at all and if it does it will affect him for evil, because there are only two ways of selling land—one by public auction, and the other by a private treaty. There was a recent sale of land in North Lincolnshire where this clause was introduced. What happened? On account of this Clause it was stated by the auctioneers that, on account of Lord Beauchamp having inserted in his conditions of sale a clause placing the whole burden of this tax upon the purchaser, the sale was entirely abortive, and only one lot was sold. Therefore it is quite obvious that where land is put up for auction in that way the Clause is unnecessary.

Where land is being sold by private treaty, what will happen? If the vendor desires to insert a clause of this sort, and cannot do it, he will simply add on something to the price. It is perfectly simple. An owner of land is approached, we will say, by a public authority, and is asked to sell a few acres of land for some public purpose. He desires to sell the land at a fair and reasonable price.

5.0 P.M.

But having this uncertain burden hanging over him he says, "Very well, I will sell land at a certain price, but you must undertake any burden the State puts upon me as a consequence of selling land to you." They may be willing to agree to that, but if they were not the owner puts £5 or £10 an acre on the price, and probably he will take care to cover himself two or three times over against the duty. The Secretary to the Treasury said that this Clause is proposed on business and practical grounds. I can see no business or practical ground in it at all. It appears to me to be inoperative and unnecessary, and to be complicating the law. It will not protect the vendor, or the purchaser, or the Revenue. I think it would be very much wiser for the Government to leave the thing alone. I believe that the law of supply and demand may be left to work. This Clause introduces unnecessary complications. I agree with the argument used by the hon. and learned Gentleman opposite (Mr. Beale). I do not think there are many men who have practical knowledge of business connected with the sale and purchase of land in this country who would not tell the Government that this is a Clause introduced in a hurry and without sufficient consideration, and that it would be better to leave the law as it is.

Mr. SHERWELL

The hon. and gallant Member for Chelmsford (Mr. Pretyman) seemed to lay great stress on the fact that the Revenue was safeguarded, and that therefore there was no practical purpose to be served by a Clause of this kind. I venture to suggest that when the principal Act was passed the idea of that Act was two-fold. It was not merely to secure the Revenue, but also to secure that the person properly chargeable with the tax should pay it. The hon. and gallant Member, like preceding speakers in the discussion, argued this case as if it were solely a case arising in connection with the sale of land. They have not met the case—which is the most important case in my estimation—of circumstances where there is a close monopoly in land, where the sale of land is made absolutely impossible and is not allowed, and where the whole transfer of land is under the three-nine lease. I represent a district where there is probably a closer land monopoly than in any other part of the country, and where it is impossible to buy a single yard of land and where it can only be leased. The only way in which a working man can procure a site is by leasing it on a three-nine lease. When the principal Act was passed, on certain estates in that particular district the lessors or transferrors at once introduced a new clause into their leases, passing on the tax, which this House clearly intended should fall on the land owner, to the transferee or lessee, with the result that a man who has not received the benefit of the increment is called upon to pay the tax upon the increment. The hon. and gallant Gentleman and the Noble Lord said that the ordinary economic laws must work, and that this tax will be paid by the lessee, whatever this House may enact.

Lord HUGH CECIL

I did not say whether it would be paid by the lessee or the lessor, but that anything this House could do could make no difference one way or the other.

Mr. SHERWELL

I myself hold it should be provided that the tax should be deductable from the ground rent, as in the case of Income Tax. I would make it more specific. I venture to think that in districts where there is a close monopoly in the holding of land, this Clause will protect the lessee in respect of a tax which the House has intended to be borne by the landowner. It may be argued that if the landowner pays the tax, the result will be to raise the price of land. The hon. Member did not bear in mind the fact that under the three-nine leases land cannot be put up in price without increasing the value of the land in the neighbourhood. I most certainly hope that the Government will stick to the Clause in the Bill.

Mr. JAMES HOPE

I cannot help thinking that the hon. Member for Huddersfield (Mr. Sherwell) forgot the fact that under the Finance Act long leaseholders are treated as freeholders, and are to be taxed accordingly. I think that must make a very great difference in his argument. I understand that those working-men in Huddersfield who have taken long leases will not be affected in any way by any contract of this kind whether—

Mr. SHERWELL

I was speaking of lessees who take out leases after the passing of this Act.

Mr. J. HOPE

But under the Act they are to be deemed freeholders, and if any increment comes along, they will have to pay the tax on it.

Mr. SHERWELL

My point is that, if after three or five years' time, a working-man takes a lease, he will not be liable for the Increment Duty on the increased value which has accrued up to that date. Of course, he will be liable to all Increment Duty while holding the land.

Mr. J. HOPE

I do not think that was the impression which the hon. Gentleman at first conveyed. Undoubtedly they will be subject to the duty on the increment which accrues when they hold land under these long leases. I want to know whether the Secretary to the Treasury in dealing with the matter considered the danger which has been referred to by the hon. and learned Member for South Ayrshire (Mr. Beale). He called attention to the danger which this Clause in its present shape would have, and especially to the danger of the words "shall be void" at the end. I believe that in a contract of sale or a preliminary agreement for a lease a provision of this kind will be one of many. Supposing it got into a contract of sale and that afterwards the lessee or transferee finds that the provision is null and void, and he returns it, the lessor or transferor will be very likely to say, "As this one provision is void the whole of the contract will be void." The provisions of the contract may be likely to be so tied up that it will be difficult to disentangle one provision from all the rest. Then, supposing that the transferor or lessor thought better of a bargain which he had made, he would have a very good lever for getting rid of it if the law says that one clause is null and void. This would probably lead to a very great deal of costly litigation

Colonel GREIG

The very point raised by the hon. Member for the Central Division of Sheffield (Mr. Hope) will occur in conveyancing transactions unless the Clause as it appears in this Bill is passed. What is happening at the present time? I speak for many conveyancers who know the facts. There are already inserted provisions which are intended to throw upon the transferee or the lessee this very tax. I had a case myself the other day in which I inserted a provision in the conditions of sale on behalf of the vendor. It was objected to by the solicitor because he was acting for a trustee. Unless this Clause is passed, you will have in the precedent books conflicting views, and every conveyancer who comes to draw up a contract of sale or a ground lease will not know whether he should put in this provision or leave it out. The best way will be to say clearly that if such a provision is put in a contract it will be void.

Lord HUGH CECIL

I listened with great attention to what fell from the Solicitor-General. It did not seem to me that the Government contention came to more than this. The clause is only meant to stop contracts for indirect payment as distinct from stopping contracts for direct payment.

Sir JOHN SIMON

That is not the point I made at all. The point I made is that if two taxpayers, A and B, choose to make an agrement with one another to pay one another's tax, that does not make any difference to the Revenue as regards the man who has to pay.

Lord HUGH CECIL

The Amendment of my hon. and learned Friend (Sir Alfred Cripps) provides that the transferor would still pay the tax. The Solicitor-General says he does that in any case. If that were plain on the face of the contract all the object the Government have in view would be served. You cannot prevent the price rising or falling in a particular case. All you can do is to say that the transferor must be the actual agent to pay the tax to the Government. All my hon. and learned Friend's Amendment does is to ensure that there shall be no evasion of what is the law already. You cannot affect realities. In pretending that they can do so the Government are only indulging in a muddling instance of mediæval finance.

Mr. HENRY TERRELL

I wish to say a word as to what fell from the hon. and gallant Member for Wednesbury (Mr. Norton-Griffiths). The Government have not met at all the point taken by the hon. Member for South Ayrshire. In this Clause it is provided that any contract made after the passing of the Act shall under certain circumstances be void. I would ask what the Solicitor-General meant when he referred to "contract." What is the contract? Is a lease to be voided if it contains a stipulation with reference to the payment of Increment Duty, or is it only the stipulation that shall be void, while the rest of the contract stands? I am sure the Solicitor-General will not suggest that a stipulation can be taken out of a contract and treated as a separate contract. You can only contract as a whole. I think we should be careful not to enact that where land leases contain this stipulation they may afterwards be rendered void if the lessor or the lessee says, "Here is the Statute which says that the lease is void." If it is intended by the Government to provide not that the contract shall be void, but merely that one particular stipulation in the contract shall be void, I can only say that they have taken the most cumbersome way of effecting that object which can be conceived, and one which is inaccurate in the terms used, and will lead to a result that was never intended. I suggest that the Clause as it stands does not carry out what was intended, and will have disastrous effects if adopted.

Question put, "That the word 'Notwithstanding' be there inserted."

The Committee divided: Ayes, 173; Noes, 272.

Division No. 43.]	AYES.	[5.15 p.m.
Anson, Sir William Reynell	Gilhooly, James	Ormsby-Gore, Hon. William
Anstruther-Gray, Major William	Gilmour, Captain John	Parker, Sir Gilbert (Gravesend)
Archer-Shee, Major Martin	Goldman, Charles Sydney	Parkes, Ebenezer
Ashley, Wilfrid W.	Goldsmith, Frank	Pease, Herbert Pike (Darlington)
Astor, Waldorf	Goulding, Edward Alfred	Peel, Capt. R. F. (Woodbridge)
Bagot, Lieut.-Colonel J.	Greene, Walter Raymond	Peel, Hon. W. R. W. (Taunton)
Balcarres, Lord	Guinness, Hon. Walter Edward	Perkins, Walter Frank
Baldwin, Stanley	Hall, D. B. (Isle of Wight)	Peto, Basil Edward
Balfour, Rt. Hon. A. J. (City Lond.)	Hambro, Angus Valdemar	Pole-Carew. Sir R.
Banbury, Sir Frederick George	Hardy, Laurence (Kent, Ashford)	Pretyman, Ernest George
Baring, Captain Hon. Guy Victor	Harris, Henry Percy	Pryce-Jones, Col. E
Barnston, Harry	Helmsley, Viscount	Quitter, William Eley C.
Barrie, H. T. (Londonderry, N.)	Henderson, Major H. (Berks, Abingdon)	Ratcliff, Major R. F.
Bathurst, Charles (Wilts, Wilton)	Hickman, Colonel Thomas E.	Rawson, Col. Richard H
Bathurst, Hon. Allen B. (Glouc., E.)	Hill, Sir Clement L. (Shrewsbury)	Remnant, James Farquharson
Beach, Hon. Michael Hugh Hicks	Hillier, Dr. Alfred Peter	Rice, Hon. Walter Fitz-Uryan
Beale, William Phipson	Hill-Wood, Samuel	Roberts, S. (Sheffield, Ecclesall)
Beckett, Hon. William Gervase	Hoare, Samuel John Gurney	Rolleston, Sir John
Benn, Arthur Shirley (Plymouth)	Hohler, Gerald Fitzroy	Ronaldshay, Earl of
Bennett-Goldney, Francis	Hope, Harry (Bute)	Rothschild, Lionel de
Bentinck, Lord Henry Cavendish	Hope, James Fitzalan (Sheffield)	Royds, Edmund
Beresford, Lord Charles	Horne, Wm. E. (Surrey, Guildford)	Rutherford, John (Lancs., Darwen)
Bird, Alfred	Houston, Robert Paterson	Salter, Arthur Clavell
Boyle, W. Lewis (Norfolk, Mid)	Hunt, Rowland	Samuel, Sir Harry (Norwood)
Brassey, H. Leonard Campbell	Hunter, Sir Charles Rodk. (Bath)	Sanderson, Lancelot
Bridgeman, William Clive	Ingleby, Holcombe	Sheehan, Daniel Daniel
Bull, Sir William James	Jardine, Ernest (Somerset, East)	Smith, Harold (Warrington)
Burgoyne, Alan Hughes	Jessel, Captain Herbert M.	Spear, John Ward
Burn, Colonel C. R.	Kebty-Fletcher, J. R.	Stanley, Hon. G. F. (Preston)
Butcher, John George	Kerr-Smiley, Peter Kerr	Staveley-Hill, Henry
Campion, W. R.	Kerry, Earl of	Stewart, Gershom
Carlile, Edward Hildred	Kimber, Sir Henry	Strauss, Arthur (Paddington, North)
Cassel, Felix	Kinloch-Cooke, Sir Clement	Swift, Rigby
Castlereagh, Viscount	Kirkwood, John H. M.	Sykes, Alan John
Cator, John	Knight, Captain Eric Ayshford	Talbot, Lord Edmund
Cecil, Lord Hugh (Oxford Univ.)	Lewisham, Viscount	Terrell, Henry (Gloucester)
Chaloner, Col. R. G. W.	Locker-Lampson, G. (Salisbury)	Thomson, W. Mitchell- (Down, N.)
Clay, Captain H. H. Spender	Locker-Lamnson, O. (Ramsey)	Tullibardine, Marquess of
Clive, Percy Archer	Lonsdale, John Brownlee	Valentia, Viscount
Clyde, James Avon	Lyttelton, Rt. Hon. A. (S. Geo. Han. S.)	Walker, Col. William Hall
Cooper, Richard Ashmole	Lyttelton, Hon. J. C. (Droitwich)	Ward, A. S. (Herts. Watford)
Courthope, George Loyd	Mackinder, Halford J.	Weigall, Capt. A. G.
Craig, Charles Curtis (Antrim, S.)	Macmaster, Donald	Wheler, Granville C. H.
Craig, Captain James (Down, E.)	Magnus, Sir Philip	White, Major G. D. (Lancs., Southport)
Crean, Eugene	Moysey-Thompson, E. C.	Williams, Col. R. (Dorset, W.)
Crichton-Stuart, Lord Ninian	Mildmay, Francis Bingham	Willoughby, Major Hon. Claude
Dairymple, Viscount	Mills, Hon. Charles Thomas	Wilson, A. Stanley (York. E. R.)
Douglas, Rt. Hon. A. Akers.	Moore, William	Winterton, Earl
Eyres-Monsell, Bolton M.	Morpeth, Viscount	Wolmer, Viscount
Falle, Bertram Godfray	Morrison-Bell, Major A. C. (Honiton)	Wood, Hon. E. F. L. (Yorks, Ripon)
Fell, Arthur	Mount, William Arthur	Wood, John (Stalybridge)
Fisher, William Hayes	Neville, Reginald J. N.	Worthington-Evans, L.
Flannery, Sir J. Fortescue	Newdegate, F. A.	Wortley, Rt. Hon. C. B. Stuart.
Fleming, Valentine	Newman, John R. P.	Yate, Col. C. E.
Fletcher, John Samuel (Hampstead)	Newton, Harry Kottingham	Younger, George
Forster, Henry William	Nicholson, William G. (Petersfield)
Foster, Philip Staveley	Nield, Herbert	TELLERS FOR THE AYES.— Sir A. Cripps and Mr. Sanders.
Gardner, Ernest	Norton-Griffiths, J. (Wednesbury)
Gastrell, Major W. Houghton	Orde-Powlett, Hon. W. G. A.

NOES.
Abraham, William (Dublin Harbour)	Beauchamp, Edward	Cawley, Sir Frederick (Prestwich)
Acland, Francis Dyke	Beck, Arthur Cecil	Chancellor, Henry George
Adamson, William	Benn, W. W. (Tower Hamlets, St. Geo.)	Chapple, Dr. William Allen
Addison, Dr. Christopher	Bethell, Sir John Henry	Churchill, Rt. Hon. Winston S.
Agar-Robartes, Hon. T. C. R.	Birrell, Rt. Hon. Augustine	Clancy, John Joseph
Agnew, Sir George William	Boland, John Plus	Clough, William
Ainsworth, John Stirling	Booth, Frederick Handel	Clynes, John R.
Alden, Percy	Boyle, Daniel (Mayo, North)	Collins, Godfrey P. (Greenock)
Allen, Arthur A. (Dumbarton)	Brace, William	Collins, Stephen (Lambeth)
Armitage, Robert	Brigg, Sir John	Condon, Thomas Joseph
Ashton, Thomas Gair	Brocklehurst, William B.	Corbett, A. Cameron
Atherley-Jones, Llewellyn A.	Brunner, John F. L.	Cornwall, Sir Edwin A.
Baker, Harold T. (Accrington)	Burke, E. Haviland.	Craig, Herbert J. (Tynemouth)
Baker, Joseph Allen (Finsbury, E.)	Burns, Rt. Hon. John	Crawshay-Williams, Eliot
Balfour, Sir Robert (Lanark)	Burt, Rt. Hon. Thomas	Crumley, Patrick
Barlow, Sir John Emmott (Somerset)	Buxton, Noel (Norfolk. North)	Davies, Ellis William (Eifion)
Barnes, George N.	Buxton, Rt. Hon. S. C. (Poplar)	Davies, Timothy (Lines., Louth)
Barran, Sir John N. (Hawick)	Byles, William Pollard	Davies, Sir W. Howell (Bristol, S.)
Barran, Rowland Hirst (Leeds, N.)	Cameron, Robert	Davies, M. Vaughan- (Cardiganshire)
Barry, Redmond John (Tyrone, N.)	Carr-Gomm, H. W.	Delany, William
Barton, William	Cawley, H. T. (Lancs., Haywood)	Devlin, Joseph

Dewar, Sir J. A	Leach, Charles	Reddy, Michael
Dickinson, W. H.	Levy, Sir Maurice	Redmond, John E. (Waterford)
Dillon, John	Lewis, John Herbert	Redmond, William (Clare, E.)
Donelan, Captain A.	Logan, John William	Redmond, William Archer (Tyrone, E.)
Doris, William	Lough, Rt. Hon. Thomas	Rendall, Athelstan
Duffy, William J.	Lundon, Thomas	Richards, Thomas
Duncan, C. (Barrow-in-Furness)	Lyell, Charles Henry	Richardson, Thomas (Whitehaven)
Edwards, Enoch (Hanley)	Lynch, Arthur Alfred	Roberts, Charles H. (Lincoln)
Edwards, Sir Francis (Radnor)	Macdonald, J. R. (Leicester)	Roberts, George H. (Norwich)
Elibank, Rt. Hon. Master of	Macdonald, J. M. (Falkirk Burghs)	Robertson, Sir G. Scott (Bradford)
Elverston, Harold	MacGhee, Richard	Robinson, Sidney
Esmonde, Dr. John (Tipperary, N.)	Macnamara, Dr. Thomas J.	Roch, Walter F. (Pembroke)
Esmonde, Sir Thomas (Wexford, N.)	MacNeill, John Gordon Swift	Roche, John (Galway, E.)
Essex, Richard Walter	Macveagh, Jeremiah	Roe, Sir Thomas
Esslemont, George Birnie	M'Callum, John M.	Rose, Sir Charles Day
Falconer, James	M'Curdy, Charles Albert	Rowlands, James
Farrell, James Patrick	M'Kean, John	St. Maur, Harold
Fenwick, Charles	M'Laren, Walter S. B. (Ches., Crewe)	Samuel, Rt. Hon. H. L. (Cleveland)
Ferens, Thomas Robinson	M'Micking, Major Gilbert	Samuel, J. (Stockton-on-Tees)
Ffrench, Peter	Marshall, Arthur Harold	Scanlan, Thomas
Field, William	Martin, Joseph	Schwann, Rt. Hon. Sir Charles E.
Flennes, Hon. Eustace Edward	Mason, David M. (Coventry)	Seely, Col. Rt. Hon. J. E. B.
Fitzgibbon, John	Masterman, C. F. G.	Sheehy, David
Flavin, Michael Joseph	Mathias, Richard	Sherwell, Arthur James
Furness, Stephen	Meagher, Michael	Shortt, Edward
Gill, Alfred Henry	Meehan, Francis E. (Leitrim, N.)	Simon, Sir John Allsebrook
Glanville, Harold James	Menzies, Sir Walter	Smith, Albert (Lancs., Clitheroe)
Goddard, Sir Daniel Ford	Molloy, Michael	Smyth, Thomas F. (Leitrim, S.)
Goldstone, Frank	Molteno, Percy Alport	Snowden, Philip
Greenwood, Granville G. (Peterborough)	Mond, Sir Alfred M.	Soares, Ernest Joseph
Greenwood, Hamar (Sunderland)	Money, L. G. Chiozza	Spicer, Sir Albert
Greig, Colonel James William	Montagu, Hon. E. S.	Summers, James Woolley
Guest, Major Hon. C. H. C. (Pembroke)	Morgan, Georgo Hay	Sutton, John E.
Guest, Hon. Frederick E. (Dorset, E.)	Morrell, Philip	Taylor, John W. (Durham)
Gwynn, Stephen Lucius (Galway)	Morton, Alpheus Cleophas	Tennant, Harold John
Hackett, John	Munro, Robert	Thomas, James Henry (Derby)
Harcourt, Robert V. (Montrose)	Murray, Capt. Hon. Arthur C.	Thorne, G. R. (Wolverhampton)
Hardie, J. Keir (Merthyr Tydvil)	Neilson, Francis	Thorne, William (West Ham)
Harvey, A. G. C. (Rochdale)	Nicholson, Charles N. (Doncaster)	Toulmin, George
Haslam, James (Derbyshire)	Nolan, Joseph	Trevelyan, Charles Philips
Haslam, Lewis (Monmouth)	Norman, Sir Henry	Ure, Rt. Hon. Alexander
Havelock-Allan, Sir Henry	Norton, Captain Cecil William	Verney, Sir Harry
Haworth, Arthur A.	O'Brien, Patrick (Kilkenny)	Wadsworth, John
Hayden, John Patrick	O'Connor, T. P. (Liverpool)	Walton, Sir Joseph
Hayward, Evan	O'Dowd, John	Ward, John (Stoke-upon-Trent)
Helme, Norval Watson	O'Grady, James	Ward, W. Dudley (Southampton)
Henderson, Arthur (Durham)	O'Kelly, Edward P. (Wicklow, W.)	Wardle, G. J.
Henry, Sir Charles S.	O'Malley, William	Waring, Walter
Hinds, John	O'Neill, Dr. Charles (Armagh, S.)	Wason, Rt. Hon. E. (Clackmannan)
Hobhouse, Rt. Hon. Charles E. H.	O'Shaughnessy, P. J.	Wason, John Cathcart (Orkney)
Holt, Richard Durning	O'Sullivan, Timothy	Watt, Henry A.
Hudson, Walter	Palmer, Godfrey Mark	Webb, H.
Hughes, Spencer Leigh	Parker, James (Halifax)	Wedgwood, Josiah C.
Isaacs, Sir Rufus Daniel	Pearce, Robert (Staffs., Leek)	White, Sir George (Norfolk)
Jardine, Sir John (Roxburghshire)	Pearce, William (Limehouse)	White, Patrick (Meath, North)
John, Edward Thomas	Pease, Rt. Hon. Joseph A. (Rotherham)	Whittaker, Rt. Hon. Sir Thomas P.
Johnson, William	Phillips, John (Longford, S.)	Whyte, A. F. (Perth)
Jones, Sir D. Brynmor (Swansea)	Pickersgill, Edward Hare	Wiles, Thomas
Jones, Edgar R. (Merthyr Tydvil)	Pointer, Joseph	Williams, John (Glamorgan)
Jones, Henry Haydn (Merioneth)	Pollard, Sir George H.	Williams, Penry (Middlesbrough)
Jones, Leif Stratten (Notts, Rushcliffe)	Ponsonby, Arthur A. W. H.	Wilson, Hon. G. G. (Hull, W.)
Jones, William (Carnarvenshire)	Power, Patrick Joseph	Wilson, J. W. (Worcestershire, N.)
Joyce, Michael	Price, C. E. (Edinburgh, Central)	Wilson, W. T. (Westhoughton)
Kellaway, Frederick George	Price, Sir Robert J. (Norfolk, E.)	Wood, T. M'Kinnon (Glasgow)
Kilbride, Denis	Priestley, Sir W. E. B. (Bradford, E.)	Young, Samuel (Cavan, East)
King, Joseph (Somerset, North)	Primrose, Hon. Nell James	Young, William (Perth, East)
Lambert, Ernest H. (Devon, Molton)	Radford, George Heynes	Yoxall, Sir James Henry
Lambert, Richard (Wilts, Cricklade)	Rainy, Adam Rolland
Lansbury, George	Raphael, Sir Herbert Henry	TELLERS FOR THE NOES.— Mr. Gulland and Mr. Illingworth.
Law, Hugh A.	Rea, Rt. Hon. Russell (South Shields)
Lawson, Sir W.(Cumb'rld., Cockerm'th)	Rea, Walter Russell (Scarborough)

Colonel GRIFFITH-BOSCAWEN

I wish to raise a point of Order. While the Division was being taken the door leading into the Ayes Lobby was closed before the door of the Noes Lobby, and I and several other Members, I think about fifty, but at any rate a large number, wished to vote in the Ayes Lobby, and were unable to get in. We could have got into the Noes Lobby, but as our object was to vote in the Ayes Lobby we did not go into the Noes Lobby. When we tried to get into the Ayes Lobby at that door and found it locked, we came up here and tried to get in behind the Speaker's Chair, and found the door there locked. In the circumstances I feel bound to submit that the Division ought to be taken again, because a large number of Members were unable to record their votes owing to the fact that the doors were locked.

The CHAIRMAN

I am afraid that the Division cannot be taken again. I am extremely sorry to hear that not only the hon. Member, but also various other hon. Members were unable to vote on this occasion. It is not the fact, however, that the doors of the Ayes Lobby are closed before the doors of the Noes Lobby. The door in the corner leading into the Ayes Lobby is closed before the door leading into the Noes Lobby; but behind the Chair the door leading into the Noes Lobby is closed before the door leading into the Ayes Lobby, so that the position there is reversed. The full time was given on this occasion.

Sir F. BANBURY

A Member wishing to vote in the Noes Lobby can go in at once through the large door, while a Member voting in the Ayes Lobby has to enter through the little door, unless he comes behind the Speaker's chair, which takes time. If that little door is closed earlier than the other door it really precludes Members who are outside the House getting into the Ayes Lobby at all. I would venture to suggest in the interests of business that it would be better if that door were left unlocked to the last, so that Members coming in should have every facility for voting in the Ayes Lobby.

The CHAIRMAN

That matter can be considered. I cannot, of course, presume to deal with it, because I am not the authority in the matter, but I may point out with reference to the hon. Baronet's remarks that he can get into the Noes Lobby by the large door when the small door is closed, that the reverse is the case behind the Speaker's chair.

Sir F. BANBURY

How can you get behind the Speaker's chair? The larger number of Members are outside in the smoking-room or in other places, at least, the Members of my side of the House are. It is really a question of the convenience of the House. Those Members who are outside sometimes cannot get behind the Speaker's chair in time, and therefore it is necessary when they come they should not be put at a disadvantage because they happen for a moment to be voting in the Ayes Lobby. As a rule Members on my side vote in the Noes Lobby, so that they are not at a disadvantage, and it is purely in the interests of hon. Gentlemen opposite that I make the suggestion.

Mr. WALTER LONG

I would point out that a special disability is cast upon Members who desire to go to the Aye Lobby, because hon. Members are coming out of the House, either having voted, or are not voting at all. To my knowledge they blocked the two doors leading to the outer Lobby. For myself, I found it impossible to enter when I came to the doors, the entrance being absolutely full, and many other Members besides myself could not get access to the House at all. I presume that the doors were locked whilst we were held up there, and unless some special arrangement is made it is impossible in such conditions to enter the Aye Lobby.

The CHAIRMAN

I can only promise consideration. It is the first complaint of this kind that has occurred for quite a long time.

Mr. FELL

I have a small Amendment to move, which I hope will be taken into consideration, in order to meet cases of great hardship felt by a great many. I move, after the words "by the transferee or lessee," to insert the words" except for a valuable consideration."

The case I have in view is where a man sells his property for a certain price and desires to get his money to take away with him to the Colonies, or for some other investment. Under this Bill, he would have to wait six months at least before he could draw the money, or could learn how much he would receive to invest. He cannot pay any sum to the purchaser in respect of the Increment Duty in order to get the liability off his shoulders. I do not think if he took a reduced price it would be meeting the case, because that would be to some extent defrauding the Government, who would get less Increment Duty on the reduced price. The Government are entitled to Increment Duty on the increased value of this property. It is not known what that is. The vendor wishes to ascertain how much he will have to invest or how much he can take away with him, but under the Bill as it stands, you prevent him from making any arrangement. If he could go to the purchaser and say that he will give him £10 to settle any question of Increment Duty in the future that perhaps might meet the case. A man might sell his property for a thousand pounds, but there might be some Increment Duty on the site value of that house, and the vendor might offer a sum to the purchaser to settle any question of Increment Duty. There are hundreds and thousands of these cases, and it may be that the owners of property when they sell will not ascertain for many years what will be the sum they will realise, and they will not be able to make any arrangements such as that of paying a reasonable sum to the purchaser on the latter agreeing to pay the Increment Duty that may arise on the property he has purchased. If the vendor is not allowed to get clear of his property by the payment of a sum of money which would enable him to receive the purchase money to take away with him or to invest, then he will be subject to hardship, and may have to wait a considerable time before he ascertains how much he is to receive. I hope the Government will be able to meet this point, if not by the words which I propose, then by some others, whereby a man would be able to get himself out of the difficulty in which, under the Bill as it stands, he will find himself.

Mr. HOBHOUSE

The proposal which the hon. Gentleman makes would defeat that which is contained in the Clause under discussion. It is quite clear that if every other contract which would otherwise be void were to be made of force and effect by the insertion of these words, "except for a valuable consideration," then, of course, they would have to be inserted in every contract, which would be at once driving a coach-and-four through the whole of the Clause as it stands. I regret that I cannot accept the Amendment.

Mr. BALFOUR

If my hon. Friend has pointed out a practical blot, I do not think it is met by his being told that his Amendment, if accepted, would permit a coach-and-four to be driven through the Clause. If the Amendment has no effect in altering or controlling the incidence of the tax, if the incidence of the tax is determined by causes outside the control and purview of this House, then I think my hon. Friend's Amendment should receive some consideration.

Earl WINTERTON

I want to give a specific case which will come under what has been said by my hon. Friend. I do not say that his Amendment is the best form of meeting the difficulty, and, therefore, in what the Financial Secretary said on that point, he has a certain amount of right on his side. Still, cases of great hardship will arise where the seller is unable to ascertain what amount he will obtain for his property. The particular case which I have in mind is that where property jointly held is to be sold—that is to say, a property in which A has the majority of the farm buildings, and B holds the farmhouse and the rest of the farm. A and B agree to sell on the understanding that each should get a minimum sum. Under the Bill as it stands it would be impossible for them to know what would be the net amount they would receive, owing to this question of the duty, for some two or three months after the sale has been effected. I think it is very hard that in a case of that kind the sellers should not have some opportunity of contracting out of their liabilities in respect of Increment Duty, if by so doing they do not in any way injure the position of the revenue. As I understand my hon. Friend's Amendment, the position of the revenue will not be affected. I, therefore, support what has been said by my right hon. Friend the Leader of the Opposition, that if there is this difficulty—and I have given an example of it—it is no answer to say that this Amendment does not deal with it. Perhaps the Law Officers of the Crown may be able to give some hint or suggestion as to how the difficulty can be got over.

Mr. WORTHINGTON-EVANS

I support the Amendment. Although we can appreciate what the Government are trying to do by this Clause, namely, to put the duty on the transferor or the lessor, yet I think that if the transferor and transferee, or the lessor and lessee agree, as an additional term of the contract that the former shall pay to the latter a certain sum in respect of Increment Duty, surely that is an agreement which is not against public policy, nor is it one in which the Government could wish to protect the transferee. There may be cases such as the Noble Lord has just spoken of where it is the intention and deliberate wish of the transferee or the lessee to assume this burden as part of the price. Surely the Government in these cases need not say that in no such circumstances and in no such cases should a contract of this sort be made. I am inclined to think that the words of the Amendment are not sufficient for their purpose, because if you insert the words "except far a valuable consideration," then I think there will be, as the Secretary to the Treasury has said, no exception at all to the rule. But there are specific cases such as that mentioned by the Noble Earl where the transferee or the lessee are willing, as a part of the bargain, to assume the liability. Why should he not be allowed to assume the liability?

Colonel GREIG

If these words were inserted in the Clause they would immediately introduce an enormous amount of uncertainty and inconvenience in conveyancing. First of all, if you insert the words "except for valuable consideration," the question will arise on every occasion whether there is a contract for good or valuable consideration. If you insert these words you do not cover the whole field of contract.

Viscount HELMSLEY

I would like to suggest that the inconvenience to conveyancers is not of so much importance to us as the convenience of the citizens. The whole thing arises out of the absurd policy of trying to set up a practice before you have got the machinery ready. You have a tax on increment value, but you have no earthly means of knowing what it is, nor are you within approach of finding out what the original site value is. The original site value is being ascertained all over the country, and there will be hundreds of cases in which those who sell their property will not be able to ascertain the sum they are to receive for a very long time. It will take years before this valuation is made all over the country, and the transaction will not be completed until the tax collecting authorities are able to catch up the arrears of their work. If the machinery to be used were of such a character that it could be pretty certain that within six weeks of the sale the Increment Duty could be assessed then I do not think there would be any need for this Amendment. But it may not be assessed, as I have said, for a very long time. I am sure the hon. Gentleman must recognise that it is a very severe grievance that the seller will not be able for a very long time to ascertain how much money he is going to receive for his property. If the Government do not meet the point they will show that they are actually unwilling even to consider the inconvenience they are causing.

Mr. BEALE

I would point out that the hon. Gentleman's Amendment only goes to the subject matter of the previous discussion. Let the hon. Gentleman recollect that the lease or conveyance is itself a consideration. The real effect of the Amendment, accepting as I must do the Clause as it stands, although I protested against it, is that the contract for the payment of duty, if it is on a lease or sale shall be void, and yet, that it shall not be void if it is part of the consideration for a lease or sale. I could not support an Amendment to that effect.

Mr. SANDERS

I rise to support the Amendment because I believe if these words were inserted, they would be a real benefit to the jobbing builder. When this Clause was drafted I have no doubt that the person who was in the mind of the Government was not the builder, but the large landowner who sells a big estate. For one transaction of that kind there are hundreds of transactions all over the country in which the small jobbing builder is selling single houses. It is to him that this would be a particular convenience. The difficulty of the jobbing builder at present, and undoubtedly one of the greatest effects in the Act, is that not only having to pay the tax, but not knowing what he has got to pay. The Amendment would, to a certain extent, relieve that uncertainty, which is having such a disastrous effect on the building trade at the present time. I put it to the Government, it would be in their own interests to accept the Amendment, because as pointed out by the mover of the Amendment, if a builder sells houses and goes abroad, where are the Government going to look for their Increment Duty? It may be six months before they have ascertained how much that is going to be. If they allow for valuable consideration, the liability for that duty to pass on, they would be able to get it from the man who having bought the house, ipso facto remains in the country, or at all events, has a valuable asset in the country. I hope the Government will accept the principle of the Amendment.

Mr. NEWDEGATE

The speech of the hon. Member for South Ayrshire makes me think that the whole of this Clause is an extremely silly Clause. I wonder what would happen supposing a man sold a bit of property for £1,000, and if it would not be discovered for weeks or months what duty he would have to pay, and if he wished to go to Canada or the United States. What is the Government going to do in a case of that kind? Is the man to be kept in the country until the duty is paid, or can he go off? It seems to me that the Government have got this matter into a great mess. They brought forward their Bill, and rushed it through the House, and we had to sit night after night discussing it, when it was closured by the gag.

The CHAIRMAN

That remark is totally irrelevant, and also out of order in itself.

Mr. NEWDEGATE

I am sorry, and I apologise. Unless the Government give way on this point they would find it extremely difficult to obtain the money which they hope to get out of every person who sells land. At the eleventh hour even, I would ask the right hon. Gentleman to reconsider the red tape which there is in this first Clause, on their own account, as well as on the account of others.

Mr. BEALE

The hon. Member seems to think that if it was in the contract between the transferor and the transferee that the transferee would pay, this would pass on the liability to the transferee as between him and the Government, but that contract could not have that effect; it would leave the transferor primarily liable to the Government.

Mr. BUTCHER

The hon. Gentleman has given us a most conclusive reason for accepting this Amendment. He has pointed out that if this Amendment is adopted the Government is in no way injured, and can have recourse to the persons to whom it wants to have recourse in order to get the money. What we point out is, that while the Government is in no way prejudiced, the seller and the purchaser are convenienced. Was there ever a more flimsy pretext offered by a Government for rejecting such a proposal? The right hon. Gentleman does not say it is going to hurt the Government, or that it is going to benefit the public. All he says is, "By this Amendment you make a hole in my Clause." I have no objection to make a hole in his Clause. Let me take the case of a man who sells a bit of land to another. Owing to the imperfections of the Act, and its complex and complicated character, and to the difficulty of establishing machinery to find out what the duty is, it may be years, and it certainly will be months, before it can be ascertained what the Increment Duty is. Under those circumstances, it is very natural for the purchaser and the seller to lay their heads together. The seller will say to the purchaser, "You are going into this land, and will you undertake the payment of this duty?" A proper business arrangement can be made that the man who is going into the possession of the land, should contract as between him and the man who sells, that when the duty is ascertained, he, the purchaser, will pay as between him and the seller. To that no answer is given, except that it will interfere with this Clause. I submit we are entitled to have a better reason than that, and unless the Government can show that in some way the proposal is injurious either to the Revenue or the public then I say that hon. Members on both sides ought to help in passing the Amendment.

Earl WINTERTON

I do not wish to delay the Committee, as I am anxious that there should be discussion on the Licensing Clauses, but I should like to have an answer to the case which I put, and which I actually know of. I am quite willing to await an answer on a subsequent Amendment. Up to the present, neither the right hon. Gentleman who spoke, nor the law officers have given any indication of any willingness to answer the case. I think I have a grievance in the matter. I want information on the question, and I do not mind saying that I am personally interested in the transaction of which I spoke. I have endeavoured to obtain information outside, but no one has yet been able to give me the information. Therefore I am compelled to ask it on this Clause from the right hon. Gentleman. It is a case of A and B, who decide to sell property which they have held more or less in common. It is a series of farms, A's property is interlaced in rather a remarkable way with that of B. After long negotiations, owing to the unsatisfactory nature of the position, both decide to sell. B will only agree to an actual sale only if he obtain a certain minimum. They proceed to take steps to sell, and they have offers, but owing to the fact that no one knows what the Increment Duty will be as the machinery is not in working order, they are unable to know what the minimum net price will be. I say it is nothing short of monstrous that a transaction and what should be a contract of that kind is held up because of the unwillingness or inability of the Government to place the machinery of the Act in a sufficiently forward state to enable a decision to be arrived at. I respectfully ask what is the remedy of A and B in this case, and how are they to arrive at the amount?

Mr. HOBHOUSE

The answer is very clear. The Noble Lord suggests that there was greater advantage to the transferor and transferee in this case coming to an agreement, if there is a burden put on the transferee rather than upon the transferor. I do not see that there would be any advantages greater in one case than the other.

Earl WINTERTON

The trouble is that the burden is undefined and no one knows what it is. If the purchaser is willing to take it on trust at a certain figure the sale can be affected, but that is not permitted by the Clause.

Mr. HOBHOUSE

I do not see the bearing of this question on the Amendment under discussion. The question is, whether or not valuable consideration shall be put in the contract. I do not really see that the question bears on that particular Amendment.

Mr. YOUNGER

The difficulty is at the present moment, that the transferee cannot undertake that contract.

Mr. JAMES HOPE

I do not think that the Government have met the case of a man who sells his property to go abroad. A man in that position wants to wind up his affairs and know his capital before he goes to the country to which he is emigrating. The Clause is bad from the point of view of the Government, because they have no security that Increment Duty will be paid. Unless there are some words

inserted that difficulty will remain. If they are not inserted this Clause will simply be evaded by a double contract. The seller will make a contract with his lawyer, supposing he is going away, that the lawyer shall be responsible for the payment of the Increment Duty, and then the lawyer in turn, country lawyers, will get some security from the buyer in the event of the duty being more than he anticipates. The effect of the Clause therefore will be that you will have two separate contracts instead of one. There is nothing to prevent that.

Sir F. BANBURY

Supposing a man sells his house, which is all the property he has in this kingdom, and, having been paid the price of the house, goes away. Can the Government obtain the Increment Duty from the purchaser or not, in the event of not being able to do so what is going to happen?

Earl WINTERTON

Can we have an answer to the important question raised by the hon. Gentleman? If we cannot, then we can only assume that it would be one of the many bad debts made by the present Government.

Question put. "That the proposed words be there inserted."

The Committee divided: Ayes, 178; Noes, 279.

Division No. 44.]	AYES.	[6.0 p.m.
Acland-Hood, Rt. Hon. Sir Alex. F.	Cassel, Felix	Gretton, John
Anson, Sir William Reynell	Castlereagh, Viscount	Guinness, Hon W. E.
Anstruther Gray, Major William	Cave, George	Hall, D. B. (Isle of Wight)
Archer-Shee, Major Martin	Cecil, Lord Hugh (Oxford Univ.)	Hall, Fred (Dulwich)
Arkwright, John Stanhope	Chaloner, Col. R. G. W.	Hambro, Angus Valdemar
Ashley, W. W.	Clay, Captain H. Spender	Hamilton, Lord C. J. (Kensington, S.)
Astor, Waldorf	Clive, Percy Archer	Hardy, Laurence (Kent, Ashford)
Bagot, Lieut.-Colonel J.	Clyde, James Avon	Harris, Henry Percy
Baird, J. L.	Cooper, Richard Ashmole	Helmsley, Viscount
Baker, Sir Randoll L. (Dorset, N.)	Courthope, G. Loyd	Henderson, Major H. (Berks, Abingdon)
Baldwin, Stanley	Craig, Charles Curtis (Antrim, S.)	Hickman, Colonel Thomas E.
Balfour, Rt. Hon. A. J. (City, Lond.)	Craig, Captain James (Down, E.)	Hill, Sir Clement
Banbury, Sir Frederick George	Crean, Eugene	Hill-Wood, Samuel
Baring, Captain Hon. Guy Victor	Crichton-Stuart, Lord Ninian	Hoare, S. J. G.
Barnston, Harry	Cripps, Sir C. A.	Hohler, G. F.
Barrie, H. T. (Londonderry, N.)	Dairymple, Viscount	Hope, Harry (Bute)
Bathurst, Hon. A. B. (Glouc., E.)	Douglas, Rt. Hon. A. Akers.	Hope, James Fitzalan (Sheffield)
Bathurst, Charles (Wilton)	Eyres-Monsell, B. M.	Horne, W. E. (Surrey, Guildford)
Beach, Hon. Michael Hugh Hicks	Falle, Bertram Godfray	Houston, Robert Paterson
Beckett, Hon. W. Gervase	Fisher, W. Hayes	Ingleby, Holcombe
Benn, Arthur Shirley (Plymouth)	Flannery, Sir J. Fortescue	Jardine, E. (Somerset, E.)
Bennett-Goldney, Francis	Fleming, Valentine	Jessel, Captain, H. M.
Bentinck, Lord H. Cavendish	Fletcher, John Samuel (Hampstead)	Kebty-Fletcher, J. R.
Bird, A.	Forster, Henry William	Kerr-Smiley, Peter
Boscawen, Sackville T. Griffith.	Foster, Philip Staveley	Kerry, Earl of
Boyle, W. L. (Norfolk, Mid)	Gardner, Ernest	Kimber, Sir Henry
Brassey, H. Leonard Campbell	Gastrell, Major W. H.	Kinloch-Cooke, Sir Clement
Bridgeman, W. Clive	Gibbs, G. A.	Kirkwood, John H. M.
Bull, Sir. William James	Gilhooly, James	Knight, Capt. E. A.
Burdett-Coutts, W.	Gilmour, Captain J.	Larmor, Sir J
Burgoyne, A. H	Goldman, C. S.	Lewisham, Viscount
Burn, Colonel C. R.	Goldsmith, Frank	Locker-Lampson, O. (Ramsey)
Butcher, J. G.	Goulding, Edward Alfred	Long, Rt. Hon. Walter
Campion, William Robert	Grant, J. A.	Lonsdale, John Brownlee
Carlile, Edward Hildred	Greene, Walter Raymond	Lyttelton, Rt. Hon. A. (S. Geo. Hon. S.)
Lyttelton, Hon. J. C. (Droitwich)	Pretyman, Ernest George	Sykes, Alan John
Mackinder, Halford J.	Pryce-Jones, Col. E. (M'tgom'y B'ghs.)	Talbot, Lord E.
Macmaster, Donald	Quitter, William Eley C.	Terrell, H. (Gloucester)
Magnus, Sir Philip	Ratcliff, Major R. F.	Thompson, Robert (Belfast, North)
Meysey-Thompson, E. C.	Rawson, Colonel R. H.	Thomson, W. Mitchell- (Down, N.)
Mildmay, Francis Bingham	Rice, Hon. W.	Tullibardine, Marquess of
Moore, William	Roberts, S. (Sheffield, Ecclesall)	Valentia, Viscount
Morpeth, Viscount	Rolleston, Sir John	Walker, Col. William Hall
Morrison-Bell, Major A. C. (Honiton)	Ronaldshay, Earl of	Weigall, Capt. A. G.
Mount, William Arthur	Rothschild, Lionel de	Wheler, Granville C. H.
Neville, Reginald J. N.	Royds, Edmund	White, Major G. D. (Lancs., Southpert)
Newdegate, F. A.	Rutherford, John (Lancs., Darwen)	Williams, Col. R. (Dorset, W.)
Newman, John R. P.	Salter, Arthur Clavell	Willoughby, Major Hon. Claude
Newton, Harry Kottingham	Samuel, Sir Harry (Norwood)	Wilson, A. Stanley (York, E. R.)
Nicholson, William G. (Petersfield)	Sanders, Robert A.	Winterton, Earl
Nield, Herbert	Sanderson, Lancelot	Wolmer, Viscount
Norton-Griffiths, J. (Wednesbury)	Scott, Leslie (Liverpool, Exchange)	Wood, Hen. E. F. L. (Ripon)
Orde-Powlett, Hon. W. G. A.	Sheehan, Daniel Daniel	Wood, John (Stalybridge)
Ormsby-Gore, Hon. William	Smith, Harold (Warrington)	Worthington-Evans, L.
Parkes, Ebenezer	Spear, John Ward	Wortley, Rt. Hon. C. B. Stuart.
Pease, Herbert Pike (Darlington)	Stanley, Hon. G. F. (Preston)	Yate, Col. C. E.
Peel, Capt. R. F. (Woodbridge)	Staveley-Hill, Henry (Staffordshire)	Younger, George
Peel, Hon. W. R. W. (Taunton)	Steel-Maitland, A. D.
Perkins, Walter F.	Stewart, Gershom	TELLERS FOR THE AYES.— Mr. Fell and Dr. Hillier.
Peto, Basil Edward	Swift, Rigby
Pole-Carew, Sir R. (Cornwall, Bodmin)
NOES.
Abraham, William (Dublin Harbour)	Corbett, A. Cameron	Hayden, John Patrick
Acland, Francis Dyke	Cornwall, Sir Edwin A.	Hayward, Evan
Adamson, William	Craig, Herbert J. (Tynemouth)	Helme, Norval Watson
Addison, Dr. C.	Crawshay-Williams, Eliot	Henderson, Arthur (Durham)
Agar-Robartes, Hon. T. C. R.	Crumley, Patrick	Henderson, J. McD. (Aberdeen, W.)
Agnew, Sir George William	Davies, E. William (Eifion)	Henry, Sir Charles S.
Ainsworth, John Stirling	Davies, Timothy (Lines., Louth)	Hinds, John
Alden, Percy	Davies, Sir W. Howell (Bristol, S.)	Hobhouse, Rt. Hon. Charles E. H.
Armitage, Robert	Davies, M. Vaughan- (Cardigan)	Holt, Richard Durning
Ashton, Thomas Gair	Dawes, J. A.	Hudson, Walter
Atherley-Jones, Llewelyn A.	Delany, William	Hughes, Spencer Leigh
Baker, Harold T. (Accrington)	Denman, Hon. Richard Douglas	Isaacs, Sir Rufus Daniel
Baker, Joseph A. (Finsbury, E.)	Devlin, Joseph	Jardine, Sir J. (Roxburgh)
Balfour, Sir Robert (Lanark)	Dewar, Sir J. A. (Inverness)	John, Edward Thomas
Barlow, Sir John Emmott (Somerset)	Dickinson, W. H. St. Pancras, N.)	Johnson, W.
Barnes, G. N.	Dillon, John	Jones, Sir D. Brynmor (Swansea)
Barran, Sir John N. (Hawick)	Donelan, Captain A.	Jones, H. Haydn (Merioneth)
Barran, Rowland Hirst (Leeds, N.)	Doris, William	Jones, Leif Stratten (Notts, Rushcliffe)
Barry, Redmond John	Duffy, William J.	Jones, William (Carnarvonshire)
Barton, W.	Duncan, C. (Barrow-in-Furness)	Jones, W. S. Glyn- (T. H'mts., Stepney)
Beale, W. P.	Edwards, Enoch (Hanley)	Joyce, Michael
Beauchamp, Edward	Edwards, Sir Francis (Radnor)	Kellaway, Frederick George
Beck, Arthur Cecil	Elibank, Rt. Hon. Master of	Kilbride, Denis
Benn, W. (Tower Hamlets, S. Geo.)	Elverston, H.	King, Joseph (Somerset, North)
Bentham, G. J.	Esmonde, Dr. John (Tipperary, N.)	Lambert, George (Devon, Molten)
Bethell, Sir John Henry	Esmonde, Sir Thomas (Wexford, N.)	Lambert, Richard (Wilts, Cricklade)
Birrell, Rt. Hen. Augustine	Essex, Richard Walter	Law, Hugh A. (Donegal, W.)
Black, Arthur W.	Esslemont, George Birnie	Lawson, Sir W. (Cumb'rl'nd., Cockerm'th)
Boland, John Plus	Falconer, J.	Leach, Charles
Booth, Frederick Handel	Farrell James Patrick	Levy, Sir Maurice
Boyle, D. (Mayo, N.)	Fenwick, Charles	Lewis, John Herbert
Brace, William	Ferens, T. R.	Logan, John William
Brady, P. J.	Ffrench, Peter	Lunden, Thomas
Brigg, Sir John	Field, William	Lynch, Arthur Alfred
Brocklehurst, W. B.	Fiennes, Hon. Eustace Edward	Macdonald, J. R. (Leicester)
Brunner, J. F. L.	Fitzgibbon, John	Macdonald, J. M. (Falkirk Burghs)
Bryce, J. Annan	Flavin, Michael Joseph	MacGhee, Richard
Burke, E. Haviland	Furness, Stephen	Macnamara, Dr. Thomas J.
Burns, Rt. Hon. John	Gelder, Sir W. A.	MacNeill, John Gordon Swift
Burt, Rt. Hon. Thomas	Gill, A. H.	MacVeagh, Jeremiah
Buxton, Noel (Norfolk, N.)	Glanville, H. J.	M'Callum, John M.
Buxton, Rt. Hon. Sydney C. (Poplar)	Goddard, Sir Daniel Ford	M'Curdy, C. A.
Byles, William Pollard	Goldstone, Frank	M'Kean, John
Cameron, Robert	Greig, Colonel J. W.	M'Laren, Henry Duncan (Leics.)
Carr-Gomm, H. W.	Guest, Major Hon. C. H. C. (Pembroke)	M'Laren, Walter S. B. (Ches., Crewe)
Cawley, Sir Frederick (Prestwich)	Guest, Hon. Frederick E. (Dorset, E.)	M'Micking, Major Gilbert
Cawley, Harold T. (Heywood)	Gwynn, Stephen Lucius (Galway)	Marks, George Croydon
Chancellor, H. G.	Hackett, J.	Marshall, Arthur Harold
Chapple, Dr. William Allen	Harcourt, Robert V. (Montrose)	Martin, Hon. J.
Churchill, Rt. Hon. Winston S.	Hardie, J. Keir (Merthyr Tydvil)	Mason, David M. (Coventry)
Clancy, John Joseph	Harvey, A. G. C (Rochdale)	Masterman, C. F. G.
Clough, William	Harvey, T. E. (Leeds, W.)	Mathias, Richard
Clynes, J. R.	Haslam, James (Derbyshire)	Meagher, Michael
Collins, G. P. (Greenock)	Haslam, Lewis (Monmouth)	Meehan, Francis E. (Leitrim, N.)
Collins, Stephen (Lambeth)	Havelock-Allan, Sir Henry	Menzies, Sir Walter
Condon, Thomas Joseph	Haworth, Arthur A.	Molloy, M.

Molteno, Percy Alport	Primrose, Hon. Neil James	Sutton, John E.
Mond, Sir Alfred	Radford, G. H.	Taylor, John W. (Durham)
Money, L. G. Chiozza	Rainy, A. Rowland	Tennant, Harold John
Montagu, Hon. E. S.	Raphael, Sir Herbert H.	Thomas, J. H. (Derby)
Morgan, George Hay	Rea, Rt. Hon. Russell (South Shields)	Thorne, G. R. (Wolverhampton)
Morton, Alpheus Cleophas	Rea, Walter Russell (Scarborough)	Thorne, William (West Ham)
Munro, R.	Reddy, M.	Toulmin, George
Murray, Captain Hon. A. C.	Redmond, John E. (Waterford)	Trevelyan, Charles Philips
Neilson, Francis	Redmond, William (Clare)	Ure, Rt. Hon. Alexander
Nolan, Joseph	Redmond, William Archer (Tyrone, E.)	Verney, Sir Harry
Norman, Sir Henry	Rendall, Athelstan	Wadsworth, J.
Norton, Capt. Cecil W.	Richardson, Thomas (Whitehaven)	Walton, Sir Joseph
O'Brien, Patrick (Kilkenny)	Roberts, Charles H. (Lincoln)	Ward, A. S. (Herts, Watford)
O'Connor, T. P. (Liverpool)	Roberts, George H. (Norwich)	Ward, John (Stoke-upon-Trent)
O'Dowd, John	Robertson, Sir G. Scott (Bradford)	Wardle, G. J.
O'Grady, James	Robinson, Sidney	Waring, Walter
O'Kelly, Edward P. (Wicklow, W.)	Roch, Walter F. (Pembroke)	Wason, Rt. Hon. E. (Clackmannan)
O'Malley, William	Roche, John	Wason, John Cathcart (Orkney)
O'Neill, Dr. Charles (Armagh, S.)	Roe, Sir Thomas	Watt, Henry A.
O'Shaughnessy, P. J.	Rose, Sir Charles Day	Webb, H.
O'Sullivan, Timothy	Rowlands, James	Wedgwood, Josiah C.
Palmer, Godfrey Mark	Runciman, Rt. Hon. Walter	White, Sir George (Norfolk)
Parker, James (Halifax)	St. Maur, Harold	White, Patrick (Meath, North)
Pearce, Robert (Staffs., Leek)	Samuel, Rt. Hon. H. L. (Cleveland)	Whittaker, Rt. Hon. Sir Thomas P.
Pearce, William (Limehouse)	Samuel, J. (Stockton-on-Tees)	Whyte, A. F. (Perth)
Pearson, Hon. Weetman H. M.	Scanlan, Thomas	Wiles, Thomas
Pease, Rt. Hon. Joseph A. (Rotherham)	Scott, A. M'Callum (Glasgow, Bridgeton)	Williams, John (Glamorgan)
Philipps, Col. Ivor (Southampton)	Seely, Col., Right Hon. J. E. B.	Williams, Penry (Middlesbrough)
Phillips, John (Longford, S.)	Sheehy, David	Wilson, Hon. G. G. (Hull, W.)
Pickersgill, Edward Hare	Sherwell, Arthur James	Wilson, J. W. (Worcestershire, N.)
Pirie, Duncan V.	Shortt, Edward	Wilson, W. T. (Westhoughton)
Pointer, Joseph	Simon, Sir John Allsebrook	Wood, T. M'Kinnon (Glasgow)
Pollard, Sir George H.	Smith, Albert (Lancs., Clithero)	Young, Samuel (Cavan, E.)
Ponsonby, Arthur A. W. H.	Smyth, Thomas F. (Leitrim, S.)	Young, William (Perth, East)
Power, Patrick Joseph	Snowden, Philip	Yoxall, Sir James Henry
Price, C. E. (Edinburgh, Central)	Soares, Ernest J.
Price, Sir Robert J. (Norfolk, E.)	Spicer, Sir Albert	TELLERS FOR THE NOES.— Mr. Illingworth and Mr. Gulland.
Priestley, Sir W. E. B. (Bradford, E.)	Summers, James Woolley

Question put, and agreed to.

Question proposed, "That Clause 1 stand part of the Bill."

Lord HUGH CECIL

I confess that this Clause is surprising both in its contents and in the light which it reflects on the intelligence of the Government who proposes it. We have here a Government who are never tired of professing that they are economists. They stand up and thank Heaven constantly that they are not even as Tariff Reformers, who believe that the incidence of taxation can be thrown on the foreigner, and yet they come forward with a Clause which is wholly meaningless unless they believe that you can regulate prices by Act of Parliament. I had always thought that they held the view that the idea of regulating taxes by law was a delusion, but it is obvious that the Government do not take that view, because they propound a Clause the only operative effect of which, if it has any, must be to change the incidence of the tax by regulating the price. Suppose a piece of land is worth £1,000, and that the additional expenses, including the tax, come to £40, either the value of the land is fully accounted for by the price of £1,000 or it is not. If it is the rack price, by no possibility can the vendor escape paying the tax. He cannot charge more than the utmost he can get, and if the utmost he can get is £1,000, he must, whatever happens, pay the extra £40, whether this Clause is passed or whether it is not. On the other hand if he is an easy-going man, who does not trouble about the matter, and £1,000 is not the full price that he can get, if he can obtain £40 more, and wishes to do so, no statutory regulation can possibly prevent him from doing so. Why, then, are you to stultify Parliament in the eyes of the whole community by passing a ridiculous enactment of this kind? The Government might just as well propound a clause saying that the tax should always be paid by the free importer, or Tariff Reformers insert in a Tariff Reform Budget a clause providing that the foreigner should always pay the tax. You cannot prevent a man from charging as high a price as he can obtain; therefore you cannot prevent the incidence of the tax going where it will. If the vendor is getting the highest price that he can obtain he cannot escape the tax; but if he is able to charge more you cannot prevent him from throwing the tax on somebody else. The consequence is that this enactment is wholly illusory. I wonder why it is put in the Bill. One can hardly suppose that the Government wished to display their un-acquaintance with economics. The Solicitor-General brought in as an analogy the provision relating to Income Tax. There is no analogy whatever. This is a tax upon a transference; therefore it is a tax which comes into relation with price, and unless it is maintained that you can regulate price by law, it is obvious that this enactment is not analogous with the Income Tax Acts at all.

Sir JOHN SIMON

Rent depends on contract, and Income Tax is subtracted from rent.

Lord HUGH CECIL

But it is conceivable, of course, that it does not so arise. When you are dealing with a thing which is a matter of actual practice it is perfectly easy to get round a provision of this sort. All these matters are the commonplaces of economics. Why do the Government put in the provision at all? I am afraid that they are not so silly as they would have us believe. They know perfectly well, as we do, that this provision is nonsense. It has no operative effect at all. They wish to play to the shilling gallery. They desire to have the opportunity of saying, "We are a rigorous Government, which exacts the last penny from the landlord," and so get a little credit for it—and, perhaps, some votes! The process which the Home Secretary denounced the other day of making legislation in order to get votes for the Referendum is really much more familiar on the Treasury Bench than the Home Secretary would have us believe. I have very little doubt the effort will be made to impose upon the lack of information and reading in economic science which is necessarily the lot of the greater part of the electorate by trying to pretend that this enactment will have operative effect. There is no depth of intellectual degradation to which the Government are reluctant to sink! There is nothing too cheap for them to pretend! Their experience leads them to see that there is nothing too groundless for any elector to believe! For my part, I am not going to be a party to Acts of Parliament being made applicable to things and the putting in of enactments which can have no effect. Therefore I should certainly divide the House against the Question that this Clause stands part of the Bill.

Earl WINTERTON

I am afraid that there is possibly another reason besides that given by my Noble Friend as to why the Government has brought in this Clause. I fully agree with him when he says that the intention of the Government is not so foolish as it first appeared. I think they are anxious to put on a white sheet for one of their Members, who, like many others, is a much better capitalist in his private affairs than he would have us believe on the platform. Earl Beauchamp, in the sale of his property inserts in the agreement an express condition that the purchaser should pay all the charges imposed by his own colleagues. A considerable amount of animadvertion has been made upon this action, and the Government, no doubt, are anxious at the earliest possible moment to show their penitence, and at the same time, as my Noble Friend so well pointed out, to be able to go down to their friends at Limehouse and elsewhere and call attention to the fact that they are doing their utmost to protect the people against the landlords who are so rapidly selling up in order to invest their money elsewhere.

Mr. STUART-WORTLEY

This is the place where we are entitled to put to the Government this question: Can they in a few simple words, understandable by plain men, say what are the abuses—the imaginable abuses—against which this Clause is aimed?

Mr. BALFOUR

We have wasted on this discussion a very great deal of valuable Parliamentary time, and I venture to suggest that, as the Government have taken the course they have, against, I think, their own interests, that there is really no object in wasting more time by a Division on a matter which it is perfectly futile to go on with. The Clause carries with it no meaning, nor is it worth putting into the Bill.

Colonel GREIG

I have already pointed out that if you leave the matter at large you will introduce into land transactions an enormous amount of uncertainty. I suggest that the matter should not be left in doubt. If you put the charge on the vendee or the lessee, or the man who contracts to take the lease, you will put the liability for the duty upon the man who knows practically nothing about the value of the land except what he may get from his adviser, whereas if you put it upon the vendor or the lessor you at least put it on the shoulders of the man who knows, or is supposed to know, the value of his own property. Therefore from any point of view it is far better to put it on the vendor or the lessor.

Viscount CASTLEREAGH

I have received no answer from the Government. Apparently they have so little defence of this section. The main principle which has actuated taxation in this country, so long as this Government has been in power, has not been the idea of raising revenue, but of penalising individuals. Consequently they desire by this section to destroy all possibility of contracting out of it, because they desire that the transferor should pay the tax. Now the transferor, in the eyes of every Gentleman on the other side of the House, because he may be a landowner in most cases, is an individual who is guilty of every crime which the human brain can devise. [HON. MEMBERS: "No, no."] Consequently this penalising tax has been brought forward in the interests of the transferee when he takes over this property from the transfer or—the transferee being supposed to be a poor, guileless individual in the hands of a landlord who desires to exact a large and probably unfair price from him. But the moment the transaction is completed the transferee becomes a landlord. Surely that individual then should be the object of the Government for the extraction of money. If there is anything in the contention of the Government in regard to this taxation—when they say that they desire to acquire a certain sum of money from the landowners, they should keep their eyes fixed on that land! The land should bear the tax, and the Government have no right whatsoever to say that one individual in the contract should pay the tax, and that the other individual, if he so desires, should not be permitted to do so.

Mr. HOBHOUSE

The Noble Lord, the Member for Maidstone (Viscount Castlereagh) asked me a question. If he turns to Section 4, Sub-section (3), paragraph (6) in the original Act he will see that both the cases he mentioned are there provided for by the man having to give security if he has not already paid the duty. One single thing further. It is this: I shall ask the Committee to adopt the admirable advice tendered by the Leader of the Opposition and to pass the Clause without a Division, so that we can come to the discussion of the main subject.

Mr. MITCHELL-THOMSON

I think some defence should really have been made by the Government on what they intend this Clause to mean. The only explanations I have heard of it came from two hon. Gentlemen on the back benches opposite. Both being compatriots of mine, Scotsmen, they have a vested interest in economics. I had hoped that the arguments they addressed to the Committee were going to be reinforced by the words of the Financial Secretary. May I point out, in respect to the speech of the hon. Member (Mr. Ainsworth) and the hon. and learned Member (Colonel Greig) that they both started off by assuming the very points which they wanted to prove. They both assumed you could put this tax upon the shoulders of either the vendor or the vendee. That is an absolute fallacy. You cannot by legislation or by anything else do anything of the kind, or say whether a tax will fall upon the shoulders of the vendor or the vendee.

Colonel GREIG

You can put the legal liability to pay the tax on the vendor or the vendee; economic law will work this out.

Mr. MITCHELL-THOMSON

The hon. Member forgets it is upon these shoulders it rests at the present moment, and if that be a fact, I cannot see what the object of the Government is in putting an obvious fact into the Bill. It depends upon the pull of the market. If the pull of the market is in favour of the vendor, he will have to pay the tax.

Mr. AINSWORTH

How is it hat an Income Tax is invariably deducted from the vendor.

Mr. MITCHELL - THOMSON

In the case of Income Tax you have the payment over a considerable period of the year, but here you have a case of a single transaction, and I say no amount of legal phraseology or anything else can do anything to regulate the incidence of that tax, except the ordinary pull of the market. The hon. Member opposite gave the whole of his case away. His defence of the clause ignores the laws of supply and demand. That is our complaint, not only with regard to this Clause, but in regard to the action of the Government throughout.

Dr. HILLIER

I would like to ask the right hon. Gentleman the Secretary to the Treasury to explain how it is that this Government, who are never tired of proclaiming themselves the champions of the liberties and the privileges of the individual, justify the insertion of this Clause in this Revenue Bill. It is clearly an infringement of the rights and privileges enjoyed by individuals, and clearly interferes with the ordinary right of contract It has been pointed out by various speakers that in several hypothetical, and also actual, cases this Clause will interfere with the ordinary conduct of business. I think the instance cited by the Noble Lord (Earl Winterton) clearly demonstrates that. We must look, therefore, to some explanation for the presence of this Clause. It is perfectly obvious it can have no real effect upon the incidence of the burden of this tax. That can be arranged for in the ordinary course of negotiations, and no number of clauses will interfere with that. This Clause is really intended to attract some flashes again from the Mile End limelight. It is a piece of windowdressing. It is a specious pretence intended to catch the eye and adorn the perorations of Radical Members.

Mr. KELLAWAY

The Leader of the Opposition wants this Amendment to be withdrawn. I hope the Noble Lord who moved it will show his independence about which we hear so frequently by sticking to the Amendment.

Colonel GRIFFITH-BOSCAWEN

I think we have got into a most absurd position. Here is a new Clause put in by the Government, of which no real explanation is given. The right hon. Gentleman in charge of the Bill gives no explanation at all, and contents himself by saying we ought to follow the advice of the Leader of the Opposition and not divide. We are pressing the Government to tell us what it is they mean by this Clause. We ask him to tell us whether it is not really intended as a mere piece of window-dressing for platform purposes. Instead of the right hon. Gentleman explaining the Clause, the explanation is left to the hon. learned and gallant Member (Colonel Greig). He gives an explanation which ought to be given by the Front Bench. His explanation is that you can fix the legal liability. But if the Clause only means that you fix the legal liability on the transferor, then there is no necessity for the Clause at all, because that is in the principal Act. If that interpretation is right, we have here a Clause simply repeated with a great deal of additional verbiage, what is already the law of the land enacted in the Budget passed last year. The hon. Member for Argyll (Mr. Ainsworth) also joined in the explanation, and his explanation is that you are simply doing in the case of Increment Value Duty what is done in the case of Income Tax, but the two things are totally different. Income Tax is a regular tax going on from year to year. This is a tax levied upon special occasions. It is provided by a regular plan that Income Tax should be deducted under Schedule A and placed definitely upon the owner. It is exceedingly inconvenient in cases of these special transactions that a man should be unable to get quit of the whole business by some contract of laying down distinctly that the tax should be paid by the transferee. I press the right hon. Gentleman opposite to endeavour to explain what the Government have in their minds. I do not know I should vote against this Clause if I only knew what it meant, but if I vote for it I do not know what I am voting for. I hope the Financial Secretary to the Treasury will tell us whether the explanation given from the benches behind the Government is the real explanation, or whether there is any other.

Mr. CLAVELL SALTER

The object of this Clause obviously is to place the liability to make this particular payment on a particular person; but I am at the present moment uncertain if it can have any possible effect of forcing the real payment on this duty on the vendor as distinguished from the purchaser. I rise in perfectly good faith, seeing many most eminent lawyers upon the benches opposite, for the purpose of asking their opinion. We must assume here a willing purchaser and a willing vendor, or the Section has no application. They have agreed upon a price—say, £1,000. Then comes the question of Increment Duty. Now, either the amount of that duty will be known between the contracting parties or it will not be known. First, let us take the case where it will be known. Hon. Members will remember the duty is the difference between the original site value so far as known to-day and the value in the case of the transfer. Suppose the duty to be known, and suppose it to be £40. Either the purchaser is or is not willing to pay for the land, in addition to £1,000, another £40. If he is willing, what is the object of this Section. The contract would provide that the payment is to be £1,040, and the vendor, having received £1,040, will pay £40 to the Government. Is it not obvious that where the duty is known this Section can have no operation. It must deal only with cases where the amount of the duty is not known and remains to be ascertained. Let me take that case. Let me suppose that the contracting parties say to one another "The duty here will be something between £20 and £100," and the vendor says, "If the amount were ascertained, I am willing to give you whatever it may be in addition to £1,000 for the land." In the first place, it is quite obvious that the parties can do this without infringing the Section. They can say this: "We will estimate the duty at £60 or thereabouts," and as this Section works more and more the duty will be more easily ascertained in advance. The purchaser says, "I will give £1,060, and we will take the risk if it is a little more or a little less." Obviously that would not be an infringement of the Section?

Supposing the parties are desirous that the vendor should pay the duty and he is willing to do so, and that the purchase price of the land would be £1,000 plus the amount of the duty to be ascertained, would that be an infringement of this Section? Supposing that is an infringement of the Section, would it also be an infringement of the Section if parties, seeing the duty would be about £100, fixed the purchase price in the contract as follows: "It shall be £1,100, but if, and so far, as the Increment Value Duty shall be ascertained to be less than £100, the difference between that duty and £100 shall be refunded." Will that be an infringement of the Section? I appeal to the lawyers opposite to tell us that, so that we can form some idea how far this Section is a reality.

Mr. NEWMAN

The Noble Lord the Member for Oxford said, in moving his Amendment, that the Government were playing to the gallery. I want the House to turn to line 10 of the first Clause, where they will see reference to '"expenses incurred in connection with the payment of the assessment of the duty." It is perfectly obvious when the duty is to be assessed there must be a provisional site value fixed. Let me go a step further, and make it certain that the owner will pay all expenses in regard to the original valuation. May I give a concrete example myself of what I mean. About three years ago I acquired the fag end of a lease of a house in London, and this morning I received a letter from my solicitors as follows:— Enclosed we send yon copy of a letter which we have received from the district vainer. If yon wish us to deal with it kindly send us the information required. After reading that letter I wired back to my solicitors telling them on no account to send the information, and stated that I would do so myself. My solicitors do not work for nothing, and probably they would have charged me 6s. 8d. or 10s. 6d., or perhaps £1 1s., for answering the letter and reading my telegram. In the case of this particular house I received Form IV. and I did not fill it in. I was not the owner of the house, and merely had the fag end of the lease. The owner is much wealthier than I am, and why should he not fill up Form IV. In taking that course I was simply following out the advice given us by the Secretary to the Treasury the other day, when, speaking in a discussion on Form IV., he said that the only person who could tell the value was the owner. That is the reason why I did not fill up Form IV. The following is a letter, dated March 7th, 1911, which I have received on this question from the Valuation Department of the Inland Revenue:— The Estate Duty account herein has come before this Department for the purpose of valuation, and on looking into the matter, I find no proper return has been made on Form IV. in respect thereto. In order to proceed with the matter it will be necessary to have further certain particulars as follows: Are the premises held on separate leases? The names and addresses of the Lessors and the rents they receive. Dates of leases and length of terms. What rents do the Lessors receive and what rents do each of the occupiers pay?

Mr. CHIOZZA MONEY

May I ask what this has to do with the question whether the vendor or the vendee pays the increment?

The CHAIRMAN

That is a question which I cannot answer. I would invite the hon. Member to explain it.

Mr. NEWMAN

The letter concludes:— If you can let me hear as to these points I will then issue the provisional valuation. The information required would have cost me money to find out, and my solicitor would have sent me in a bill for doing the work. I want the Government to make it clear that it shall be the real owners who pay—

The CHAIRMAN

This is not a question of the Government altering the Clause. The question is that Clause 1 stands part of the Bill, and no Amendment can be made.

Viscount HELMSLEY

May I suggest that the hon. Member is giving eloquent arguments why the Clause should stand part.

Mr. JAMES HOPE

I rather like the Clause as a whole, because it will form a valuable precedent. I have drafted something in keeping with this proposal, and I will read it to the Committee—

The CHAIRMAN

That is not in order.

Mr. JAMES HOPE

If hon. Members think they can interfere with natural economic laws in this way, then it can be applied to every other matter, such as Customs Duties. Exactly the same principles as are suggested in this Clause could be applied to the taxation of commodities coming from abroad. It is just as easy to say that a purchaser shall not pay any part of the Customs Duty on an article he purchases as to say that the lessee or the vendee shall go scot free in (regard to any transaction of that sort. I think this Clause is a very valuable lesson, and we shall certainly rub it in when the time comes!

Mr. HOBHOUSE rose in his place, and claimed to move "That the Question be now put."

The CHAIRMAN

I think the Committee is prepared to come to a decision on the Question before the Chair.