- (1) Income Tax for the year beginning on the sixth day of April nineteen hundred and twelve shall be charged at the rate of one shilling and twopence, and the same Super-tax shall be charged, levied, and paid for that year as was charged for the year beginning on the sixth day of April nineteen hundred and eleven.
- (2) All such enactments relating to Income Tax (including Super-tax) as were in force with respect to duties of Income Tax granted for the year beginning on the sixth day of April nineteen hundred and
2406 eleven shall have full force and effect with respect to any duties of Income Tax hereby granted. - (3) The annual value of any property which has been adopted for the purpose either of Income Tax under Schedules A and B in the Income Tax Act, 1853, or of Inhabited House Duty, during the year ending on the fifth day of April nineteen hundred and twelve, shall be taken as the annual value of such property for the same purpose during the next subsequent year; provided that this Sub-section—
- (a) so far as respects the duty on inhabited houses in Scotland, shall be construed with the substitution of the twenty-fourth day of May for the fifth day of April; and
- (b) shall not apply to the metropolis as denned by the Valuation (Metropolis) Act, 1869.
§ Mr. AUSTEN CHAMBERLAINI beg to move, "That the Chairman do report Progress, and ask leave to sit again." 2407 The consideration of the Finance Bill has been delayed this Session until a date which would have been considered quite abnormally and scandalously late under any Government but the present, and they have set an unhappy precedent for delaying it still further. But their past misdeeds are no excuse for the perpetration of a further misdemeanour at the present time. I observe that we are discussing the Finance Bill in the absence of any representative of the Treasury. [At this point the Chancellor of the Exchequer and the Financial Secretary to the Treasury entered the House.] I see no occasion to qualify what I said or to make any apology at all. Others of us have to wait in attendance until a Bill is brought forward or make arrangements to be in the House when it is called on. I am not aware that there is any reason why the representatives of the Treasury should not have taken the same course.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Masterman)I went out as the right hon. Gentleman rose, in order to inform the Chancellor of the Exchequer.
§ Mr. AUSTEN CHAMBERLAINI suppose the right hon. Gentleman had to go out, as he says, as I rose, because the Chancellor of the Exchequer did not think it necessary to be here. I said we have been asked to discuss this Bill at a period of the Session which under any other Government would have been considered abnormally and scandalously late. That is not all. We have had half a day for the consideration of the Committee stage, and we are now asked to resume consideration of the Committee stage at twenty minutes past eleven o'clock. No Government before the present has ever treated finance in that way. It would be a scandal and a crime against the financial power of the House of Commons if we had had adequate opportunities for discusing the last two Budgets. But the last Budget but one was closured. The last Budget was disposed of in the closing days of a Session which lasted till December, and its discussion was then brought to a rapid and abrupt termination by an understanding between the two sides of the House in connection with other business and what I think I may almost say was a misunderstanding—[HON. MEMBERS: "Oh,"]—a perfectly honest misunderstanding, but a misunderstanding of which the Government had the advantage. There was therefore the most 2408 limited discussion on the Budget. This is an outrage on Parliamentary procedure. It is a perfect mockery of Parliamentary control over our finances to ask us to resume discussion on the Committee stage of the Budget, after a single half day, at this late hour. As a protest against this procedure, and in the hope that the Government will not proceed in the course which they have pursued, I make my Motion.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)The right hon. Gentleman has complained that there was no representative of the Treasury present when the Finance Bill was called. My right hon. Friend (Mr. Masterman) has corrected him on that point. He was present at the time. I was in my room discussing financial business and was ready to come in when summoned. The right hon. Gentleman has complained that we are taking the Bill late. He knows perfectly well that we had half a day on Friday—we had five hours.
§ Mr. AUSTEN CHAMBERLAINHalf a day in the Standing Orders.
§ Mr. LLOYD GEORGEWe had five hours, and that is, as a matter of fact, more than half a day. He says we are taking it at half-past eleven o'clock. We had five hours. [HON. MEMBERS: "NO, no."] The only point I want to make is we are not beginning the Committee stage of the Finance Bill late at night. We began it in the day-time, when it was discussed for three, four or five hours.
§ Mr. AUSTEN CHAMBERLAINWe did not have five hours on Friday. The right hon. Gentleman will remember that he moved a Resolution in Ways and Means which took up about an hour or an hour and a quarter in my recollection, and perhaps more. I did not complain he was commencing the Committee stage at night. I twice stated we began it on Friday. I said we had a half-day's sitting to consider it in Committee, and that we are now asked to resume after only a half-day's sitting at twenty minutes after eleven o'clock.
§ Mr. LLOYD GEORGEThe right hon. Gentleman is now treating a discussion we had on a Resolution as if it was not part of the whole discussion in regard to the Finance Bill. As he knows very well that was a preliminary Resolution to the Committee of the Finance Bill, and if the 2409 arrangement which he and his colleagues on the Front Bench opposite us were quite willing to enter into had been assented to it would have become part of the Finance Bill.
§ Mr. AUSTEN CHAMBERLAINNot of the Committee stage of the Finance Bill?
§ Mr. LLOYD GEORGEPart of the Finance Bill. It just happened that an hon. Gentleman behind the right hon. Gentleman did not take his view of the Resolution, otherwise it would have become part of the proceedings of the Finance Bill. Now the right hon. Gentleman complains we are resuming the Committee state at this late hour after eleven o'clock. He knows the Finance Bill suspends the eleven o'clock rule. I recollect a case in which the right hon. Gentleman took the Finance Bill at an all-night sitting.
§ Mr. AUSTEN CHAMBERLAINOn how many occasions?
§ Mr. LLOYD GEORGEI could give two occasions at any rate, and one of these occasions the House sat all night. On that occasion the right hon. Gentleman, in spite of repeated Motions, proceeded right through the night up to half-past two or three the following day in order to get his Committee stage. Was that treating finance respectfully?
§ Mr. AUSTEN CHAMBERLAINHow many days had that Bill been in Committee?
§ Mr. LLOYD GEORGEThe right hon. Gentleman now seems to think that discussing finance at a late hour of the night—and I am only dealing with that point—is not treating the finances of this country with great respect. On two occasions, that is my recollection, and if I am wrong I will accept the right hon. Gentleman's recollection—I had the privilege of sitting here until a late hour discussing the Finance Bill. That was at the time when we had the Coal Duties and important duties of that character to discuss. We discussed the Coal Duty at ten or eleven in the morning, after being at it all night. If we are treating finance disrespectfully, who taught us to do so? The right hon. Gentleman had only three Budgets and I am certain in two out of the three we had all-night sittings—one of them a very late sitting and the other projected into the next day. It was a very late sitting. After all, the right hon. Gentleman knows 2410 that Finance Bills are taken very late at night, especially those which do not contain any new proposals for taxation. There are no new proposals for taxation in this Bill, and we are simply renewing the Income Tax and the Tea Duty. There are certain proposals for remissions and alterations, but they occur in every Budget, and they have occurred in Budgets which have been discussed until the early hours of the morning many a time. I do not know what the right hon. Gentleman's suggestion is. My suggestion is that we should proceed as far as we can with the Finance Bill, and if we find that we cannot complete it, then at a reasonable hour we can report progress and proceed with the Bill to-morrow. It seems to me that the right hon. Gentleman has treated this matter somewhat prematurely, because eleven-twenty is not a very late hour for the consideration of the Finance Bill, having regard to the rules of the House, which place no limit to the discussion of Finance Bills. When the right hon. Gentleman feels that we are going on too long that will be the time for considering a Motion to report progress. I suggest that we should go on for some time and consider later on at what time progress should be reported.
§ Mr. JAMES HOPEI hope the Chancellor of the Exchequer will not think that I am actuated by a hostile spirit towards himself in what I am going to say. On the contrary, I have always been one of his admirers, and when he used to sit at this corner I watched his proceedings and I may say that I learned a lot from him. Next to the great Mr. Caldwell I consider the right hon. Gentleman to be in the first rank of my Parliamentary instructors. I should like to congratulate him upon the agility with which he gets out of one difficulty after another. When he finds that he cannot support himself on one leg he goes about pirouetting on the other with all the agility and grace of Mile. Pavlova. The right hon. Gentleman said that the right hon. Gentleman the Member for East Worcestershire had two all-night sittings, and that it is in accordance with the usual practice to have late sittings on finance. It is quite true that we used to have late sittings and in Lord St. Aldwyn's time we used to sit after eleven o'clock, but we never began after eleven o'clock. It is a scandal to ask us to discuss these important questions after eleven o'clock. This is not at all in accordance with precedent. Although this is a Budget in 2411 which there are no proposals for new taxation it must be remembered that the whole duty of Parliament is to revise existing taxation, to see where the shoe pinches and find out whether people are being subjected to undue burdens. It is the business of hon. Members when our faculties are not benumbed by long vigil to discuss these things in a rational and proper spirit. I have had some experience of late sittings, and I may inform the right hon. Gentleman that if he presses this matter and keeps us up it will not expedite the business of the Government. I trust, therefore, that the right hon. Gentleman will make some proposal for a reasonable compromise.
§ Mr. AUSTEN CHAMBERLAINThe right hon. Gentleman complained that I had offered no suggestion. I will state my remedy before I sit down. But I first wish to refer to the right hon. Gentleman's precedents. What is it of which I have complained? That, having had very inadequate time for the discussion of the Budget both last year and the year before, having had such inadequate time allowed us, on both occasions in the autumn of the year instead of at the usual time, the Budget this year is brought to its present stage only at the beginning of August, in what would be the last days of a normal Session, but what are, in fact, the last days of this part of the Session. And the Budget, having been so introduced, we are allowed a portion of a Friday sitting in Committee, and then are asked to resume the Committee stage after eleven o'clock at night. There is no precedent for that that the Chancellor of the Exchequer can find in any Budget, at any rate in the twenty years I have sat in this House. The Chancellor of the Exchequer says that when I filled his office I twice kept the House at night sittings, and then he modified the statement by describing them as very late sittings.
§ Mr. LLOYD GEORGEOne was an all-night sitting.
§ Mr. AUSTEN CHAMBERLAINI think the right hon. Gentleman is mistaken, but as I have been unable to look the matter up I will not insist on the accuracy of my memory. I believe the only one occasion on which I kept the House up very late was when we sat from three o'clock one day till four o'clock the next afternoon, and I have very good 2412 reason for remembering that. But what were the circumstances precedent to that long sitting? That Budget had been not merely opposed, but obstructed openly and grossly at every stage. [HON. MEMBERS: "No, no."] Hon. Members who contradict were probably not Members of the House at that time. I will undertake to say there is no Member of the party opposite who followed those discussions who can assert with his hand on his heart—I use that phrase because it is more polite than the terms of the oath in a Court of Law—that there had not been open and almost avowed obstruction at every stage of the Budget.
§ Mr. MacVEAGHWhat did you do in Ireland?
§ Mr. AUSTEN CHAMBERLAINIt was the Budget concerning stripped tobacco. It may be said that was a new proposal. But does anyone suppose that the discussion or obstruction was limited to new proposals? Not a bit of it; every Clause of that Budget was obstructed. Scores of new Clauses were put down, and, obviously, the Coal Tax was not a new Clause. But all that is really immaterial. What is material is the time that should be given to the discussion of the Budget before the Government has a right to ask the House to sit all night. On the occasion of the Budget I am referring to, I cannot say the number of days given to the Resolutions or to the Second Reading, but I am sure it was much larger than the number devoted to those stages this year. There were five days given to the Committee stage—five normal days at a normal time of the year, and that is the precedent which the Chancellor of the Exchequer finds for asking us not to continue a discussion begun at a normal time or hour, but to begin a discussion after eleven o'clock when we have only had a half sitting to discuss the Committee stage of the Budget. That is a proceeding which I say is a scandal, and it is a scandal which is increased when it is remembered what has happened in connection with the last two Budgets. The right hon. Gentleman says I have made no suggestion, I did better than that, I made a Motion to report progress, so that we might resume this discussion not at near midnight but to-morrow at noon.
§ Question put, "That the Chairman do report Progress, and ask leave to sit again."
2413§ The Committee divided: Ayes, 133; Noes, 247.
2415| Division No. 185.] | AYES. | [11.44 p.m. |
| Agg-Gardner, James Tynte | Fletcher, John Samuel (Hampstead) | Newman, John R. P. |
| Amery, L. C. M. S. | Foster, Philip Staveley | Nicholson, William G. (Petersfield) |
| Anson, Rt. Hon. Sir William R. | Gastrell, Major W. Houghton | Norton-Griffiths, J. |
| Ashley, Wilfrid W. | Gibbs, George Abraham | Paget, Almeric Hugh |
| Bagot, Lieut.-Colonel J. | Gilmour, Captain J. | Parkes, Ebenezer |
| Baird, John Lawrence | Glazebrook, Capt. Philip K. | Peel, Hon. W. R. W. (Taunton) |
| Balcarres, Lord | Goldsmith, Frank | Peto, Basil Edward |
| Baldwin, Stanley | Gordon, John (Londonderry, South) | Pole-Carew, Sir R. |
| Banbury, Sir Frederick George | Goulding, Edward Alfred | Pollock, Ernest Murray |
| Banner, John S. Harmood- | Gretton, John | Pretyman, Ernest George |
| Barlow, Montague (Salford, South) | Guinness, Hon. Rupert (Essex, S.E.) | Pryce-Jones, Col. E. |
| Barnston, Harry | Gwynne, R. S. (Sussex, Eastbourne) | Rawlinson, John Frederick Peel |
| Bathurst, Charles (Wilts, Wilton) | Haddock, George Bahr | Rees, Sir J. D. |
| Beach, Hon. Michael Hugh Hicks | Hall, Fred (Dulwich) | Remnant, James Farquharson |
| Bennett-Goldney, Francis | Hamersley, Alfred St. George | Rolleston, Sir John |
| Beresford, Lord Charles | Harris, Henry Percy | Royds, Edmund |
| Bigland, Alfred | Harrison-Broadley, H. B. | Rutherford, Watson (L'pool, W. Derby) |
| Boyton, James | Heimsley, Viscount | Salter, Arthur Clavell |
| Bridgeman, William Clive | Henderson, Major H. (Berks, Abingdon) | Sanders, Robert Arthur |
| Burdett-Coutts, William | Herbert, Hon. A. (Somerset, S.) | Sandys, G. J. |
| Burn, Colonel C. R. | Hewins, William Albert Samuel | Smith, Harold (Warrington) |
| Carlile, Sir Edward Hildred | Hill, Sir Clement L. (Shrewsbury) | Spear, Sir John Ward |
| Cassel, Felix | Hills, J. W. | Stanier, Beville |
| Castlereagh, Viscount | Hope, Harry (Bute) | Stanley, Hon. Arthur (Ormskirk) |
| Cave, George E. | Hope, James Fitzalan (Sheffield) | Steel-Maitland, A. D. |
| Cecil, Lord R. (Herts, Hitchin) | Horne, Edgar (Surrey, Guildford) | Swift, Rigby |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Houston, Robert Paterson | Sykes, Mark (Hull, Central) |
| Chaplin, Rt. Hon. Henry | Hunter, Sir Charles Rodk. (Bath) | Talbot, Lord Edmund |
| Clive, Captain Percy Archer | Kimber, Sir Henry | Terrell, Henry (Gloucester) |
| Clyde, James Avon | Kyffin-Taylor, G. | Touche, George Alexander |
| Craig, Charles Curtis (Antrim, S.) | Lane-Fox, G. R. | Valentia, Viscount |
| Craig, Captain James (Down, E.) | Larmor, Sir J. | Walrond, Hon. Lionel |
| Craig, Norman (Kent, Thanet) | Law, Rt. Hon. A. Bonar (Bootle) | Wheler, Granville C. H. |
| Cripps, Sir Charles Alfred | Lloyd, George Ambrose | Winterton, Earl |
| Dalziel, Davison (Brixton) | Locker-Lampson, G. (Salisbury) | Wood, Hon. E. F. L. (Yorks, Ripon) |
| Dickson, Rt. Hon. C. Scott | Lonsdale, Sir John Brownlee | Worthington-Evans, L. |
| Dixon, Charles Harvey | Lowe, Sir F. W. (Birm., Edgbaston) | Wright, Henry Fitzherbert |
| Du Cros, Arthur Philip | Lyttelton, Hon. J. G. (Droitwich) | Wyndham, Rt. Hon. George |
| Duke, Henry Edward | Macmaster, Donald | Yate, Col. C. E. |
| Faber, George D. (Clapham) | McNeill, Ronald (Kent, St. Augustine) | Yerburgh, Robert |
| Falle, Bertram Godfray | Malcolm, Ian | Younger, Sir George |
| Fell, Arthur | Mason, James F. (Windsor) | |
| Finlay, Rt. Hon. Sir Robert | Middlemore, John Throgmorton | |
| Fisher, Rt. Hon. W. Hayes | Mildmay, Francis Bingham | TELLERS FOR THE AYES.—Mr. |
| Fitzroy, Hon. Edward | Mills, Hon. Charles Thomas | Pike Pease and Mr. Eyres-Monsell. |
| Flannery, Sir J. Fortescue | Morrison-Bell. Capt. E. F. (Ashburton) |
| NOES. | ||
| Abraham, William (Dublin Harbour) | Buckmaster, Stanley O. | Edwards, Sir Francis (Radnor) |
| Acland, Francis Dyke | Burke, E. Haviland- | Edwards, John Hugh (Glamorgan, Mid |
| Addison, Dr. C. | Buxton, Noel (Norfolk, N.) | Elibank, Rt. Hon. Master of |
| Ainsworth, John Stirling | Buxton, Rt. Han. S. C. (Poplar) | Esmonde, Dr. John (Tipperary) |
| Alden, Percy | Byles, Sir Wiliam Pollard | Esmonde, Sir Thomas (Wexford, N.) |
| Allen, Arthur Acland (Dumbartonshire) | Carr-Gomm, H. W. | Falconer, James |
| Allen, Rt. Hon. Charles P. (Stroud) | Chancellor, Henry George | Farrell, James Patrick |
| Armitage, Robert | Churchill, Rt. Hon. Winston S. | Fenwick, Rt. Hon. Charles |
| Arnold, Sydney | Clancy, John Joseph | Ffrench, Peter |
| Asquith, Rt. Hon. Herbert Henry | Clough, William | Field, William |
| Atherley-Jones, Llewellyn A. | Collins, Stephen (Lambeth) | Fitzgibbon, John |
| Baker, H. T. (Accrington) | Condon, Thomas Joseph | Flavin, Michael Joseph |
| Baker, Joseph Allen (Finsbury, E.) | Cornwall, Sir Edwin A. | Gelder, Sir William Alfred |
| Baring, Sir Godfrey (Barnstaple) | Cotton, William Francis | George, Rt. Hon. D. Lloyd |
| Barnes, G. N. | Crawshay-Williams, Eliot | Gill, A. H. |
| Beauchamp, Sir Edward | Crooks, William | Gladstone, W. G. C. |
| Benn, W. W. (Tower Hamlets, St. Geo.) | Crumley, Patrick | Glanville, Harold James |
| Bentham, G. J. | Cullinan, John | Goddard, Sir Daniel Ford |
| Birrell, Rt. Hon. Augustine | Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) | Greenwood, Granville G. (Peterborough) |
| Black, Arthur W. | Davies, Timothy (Lines., Louth) | Greig, Col. James William |
| Boland, John Pius | Dawes, James Arthur | Grey, Rt. Hon. Sir Edward |
| Booth, Frederick Handel | Delany, William | Guest, Hon. Major C. H. C. (Pembroke) |
| Bowerman, C. W. | Denman, Hon. R. D. | Guest, Hon. Frederick E. (Dorset, E.) |
| Boyle, D. (Mayo, N.) | Devlin, Joseph | Hackett, John |
| Brace, William | Dickinson, W. H. | Hall, Frederick (Normanton) |
| Brady, Patrick Joseph | Dillon, John | Hancock, John George |
| Brocklehurst, William B. | Donelan, Captain A. | Harcourt, Rt. Hon. H. L. (Rossendale) |
| Brunner, J. F. L. | Duffy, William J. | Harcourt, Robert V. (Montrose) |
| Bryce, J, Annan | Duncan, C. (Barrow-in-Furness) | Harmsworth, Cecil (Luton, Beds) |
| Harvey, T. E. (Leeds, West) | McCallum, Sir John M. | Rea, Walter Russell (Scarborough) |
| Harvey, W. E. (Derbyshire, N.E.) | McKenna, Rt. Hon. Reginald | Reddy, Michael |
| Haslam, James (Derbyshire) | M'Laren, Hon. H. D. (Leics.) | Redmond, John E. (Waterford) |
| Haslam, Lewis (Monmouth) | Manfield, Harry | Redmond, William (Clare, E.) |
| Havelock-Allan, Sir Henry | Marks, Sir George Croydon | Richardson, Albion (Peckham) |
| Hayden, John Patrick | Marshall, Arthur Harold | Richardson, Thomas (Whitehaven) |
| Hayward, Evan | Masterman, Rt. Hon. C. F. G. | Roberts, Charles H. (Lincoln) |
| Hazleton, Richard (Galway, N.) | Meagher, Michael | Roberts, George H. (Norwich) |
| Helme, Sir Norval Watson | Meehan, Francis E. (Leitrim, N.) | Robertson, Sir G. Scott (Bradford) |
| Hemmerde, Edward George | Molloy, Michael | Roch, Walter F. Pembroke |
| Henderson, Arthur (Durham) | Mond, Sir Alfred M. | Roche, Augustine (Louth) |
| Henderson, J. M. (Aberdeen, W.) | Money, L. G. Chiozza | Samuel, Rt. Hon. H. L. (Cleveland) |
| Henry, Sir Charles S. | Montagu, Hon. E. S. | Samuel, J. (Stockton-on-Tees) |
| Herbert, Col. Sir Ivor (Hon. S.) | Mooney, John J. | Scanlan, Thomas |
| Higham, John Sharp | Morgan, George Hay | Scott, A. MacCallum (Glas., Bridgeton) |
| Hinds, John | Morrell, Philip | Seely, Colonel Rt. Hon. J. E. B. |
| Hobhouse, Rt. Hon. Charles E. H. | Morison, Hector (Hackney, S.) | Sheehy, David |
| Hogge, James Myles | Morton, Alpheus Cleophas | Shortt, Edward |
| Holmes, Daniel Turner | Muldoon, John | Simon, Sir John Allsebrook |
| Holt, Richard Durning | Munro, R. | Smith, Albert (Lanes., Clitheroe) |
| Hope, John Deans (Haddington) | Murray, Captain Hon. Arthur C. | Smyth, Thomas F. (Leitrim, S.) |
| Horne, C. Silvester (Ipswich) | Nannetti, Joseph P. | Spicer, Rt. Hon. Sir Albert |
| Howard, Hon. Geoffrey | Neilson, Francis | Stanley, Albert (Staffs., N.W.) |
| Hudson, Walter | Nicholson, Sir Charles N. (Doncaster) | Sutherland, John E. |
| Hughes, Spencer Leigh | Nolan, Joseph | Sutton, John E. |
| Isaacs, Rt. Hon. Sir Rufus | Norman, Sir Henry | Taylor, Theodore C. (Radcliffe) |
| John, Edward Thomas | Nugent, Sir Walter Richard | Tennant, Harold John |
| Jones, Rt. Hon. Sir D. B. (Swansea) | Nuttall, Harry | Thorne, G. R. (Wolverhampton) |
| Jones, Edgar (Merthyr Tydvil) | O'Brien, Patrick (Kilkenny) | Ure, Rt. Hon. Alexander |
| Jones, H. Haydn (Merioneth) | O'Connor, John (Kildare, N.) | Verney, Sir Harry |
| Jones, William (Carnarvonshire) | O'Connor, T. P. (Liverpool) | Wadsworth, J. |
| Jowett, Frederick William | O'Doherty, Philip | Walters, Sir John Tudor |
| Joyce, Michael | O'Donnell, Thomas | Ward, John (Stoke-upon-Trent) |
| Keating, Matthew | O'Dowd, John | Wardle, George J. |
| Kellaway, Frederick George | O'Grady, James | Warner, Sir Thomas Courtenay |
| Kelly, Edward | O'Kelly, Edward P. (Wicklow, W.) | Webb, H. |
| Kennedy, Vincent Paul | O'Kelly, James (Roscommon, N.) | Wedgwood, Josiah C. |
| Kilbride, Denis | O'Malley, William | White, J. Dundas (Glas., Tradeston) |
| King, Joseph | O'Neill, Dr. Charles (Armagh, S.) | White, Sir Luke (Yorks, E.R.) |
| Lambert, Richard (Wilts, Cricklade) | O'Shaughnessy, P. J. | White, Patrick (Meath, North) |
| Lardner, James Carrige Rushe | O'Shee, James John | Wiles, Thomas |
| Law, Hugh A. (Donegal, West) | O'Sullivan, Timothy | Wilkie, Alexander |
| Lawson, Sir W. (Cumb'rid, Cockerm'th) | Outhwaite, R. L. | Williams, John (Glamorgan) |
| Lewis, John Herbert | Parker, James (Halifax) | Williamson, Sir Archibald |
| Lough, Rt. Hon. Thomas | Pease, Rt. Hon. Joseph A. (Rotherham) | Wilson, Hon. G. G. (Hull, W.) |
| Lundon, Thomas | Phillips, John (Longford, S.) | Wilson, Rt. Hon. J. W. (Worcs., N.) |
| Lyell, C. H. | Pirie, Duncan V. | Wilson, W. T. (Westhoughton) |
| Lynch, Arthur Alfred | Ponsonby, Arthur A. W. H. | Wood, Rt. Hon. T. McKinnon (Glasgow) |
| Macdonald, J. Ramsay (Leicester) | Power, Patrick Joseph | Young, William (Perth, East) |
| Macdonald, J. M. (Falkirk Burghs) | Price, C. E. (Edinburgh, Central) | Yoxall, Sir James Henry |
| McGhee, Richard | Pringle, William M. R. | |
| Macnamara, Rt. Hon. T. J. | Radford, George Heynes | |
| MacNeill, John G. S. (Donegal, South) | Raffan, Peter William | TELLERS FOR THE NOES.—Mr. |
| Macpherson, James Ian | Raphael, Sir Herbert H. | Illingworth and Mr. Gulland. |
| MacVeagh, Jeremiah | Rea, Rt. Hon. Russell (South Shields) |
§ Amount proposed [36th July]: At the beginning of the Clause, insert the words, "After the commencement of this Act.'
§ Mr. POLLOCKI desire to conclude my remarks on the Amendment I was moving last week, the object of which is to make it perfectly clear that the Act was the legal authority and the only legal authority under which this House imposes taxation, and also to enforce a reversion to the old practice under which the Act containing the finances of the year was passed at a time when the taxes were falling due, and not to create some interval during which there is no legal authority for the purpose of collecting the tax. I have observed that our own practice as laid down in the Standing Orders emphasises the fact that the Resolution is no legal authority for the purpose of collecting any tax, and I drew 2416 attention to what happened in 1901, when under the opinion of the Law Officers the Comptroller and Auditor-General felt that he was not authorised to pay out money by virtue of a Resolution, because the Act which made the Resolution into a law had not been passed at the time. The Law Officers gave the opinion that the true view was that there was no legal authority for the purpose of paying out money before the Act had been passed.
I desire to meet the argument, which could possibly be made, that if you were to emphasise the fact that the Act and the Act only imposes this legislation, you might be creating a difficulty. It may, perhaps, be interesting, after the Motion made by my right hon. Friend the Member for East Worcestershire (Mr. Austen Chamberlain), to recall 2417 to the Committee the history of the Income Tax and the method by which it has been imposed. The Committee will remember that until the year 1862 each tax was imposed by means of a separate Bill, and, therefore, Bills were often passed very rapidly after the Resolutions had been passed in Committee of Ways and Means. I have been at some pains to get information as to the way in which the Income Tax used to be imposed—the plan which was adopted in order to avoid the difficulty which now appears. It stands in this way: The first Act of 1842 imposed the Income Tax for three years. That was passed on 22nd June; in 1845, after the Resolution had been obtained, the Act was passed on 5th April and imposed the tax for three years. When we are told that it is necessary to levy the Income Tax without any legal authority, standing by the Resolution only, I desire to affirm the old principle which was to pass the Act at such time that there could be legal authority for the collection of the tax.
In 1848 the Act was passed on 13th April, and again the tax was granted for three years. In 1852 the Act was passed on 28th May, and the tax was granted for one year. In 1860 the Act was passed on 3rd April, and again the tax was granted for one year. You will find that down to 1862 there were hardly any cases where so long delay took place as at present. In 1862 an unfortunate practice was established when the House was dealing with a particular purpose. In 1861 the House of Lords had refused to pass a Bill for the purpose of repealing the Paper Duties, and this House in order to prevent the House of Lords from interfering in that way with finance thereupon put all the taxes in one Bill. That made it much more difficult to pass the Act at the right time for the purpose of she legal collection of the taxes. That change was made for a purpose which has no longer any weight or force. I find that Lord Morley in his "Life of Gladstone" says:—
The abiding feature of constitutional interest in the Budget of 1861, was this inclusion of the various financial proposals in a single Bill, so that the Lords must either accept the whole of them or try the impossible performance of rejecting the whole of them. Until now the practice had been to make different taxes the subject of as many different Bills. By including all the taxes in a single Finance Bill, the power of the Lords to override the other House was effectually arrested.That power no longer exists, and I think we might ask the Government to revert to the old practice of passing the statute authorising the Income Tax at such an early period as will enable its collection 2418 to be carried out legally, and not to continue the present irregular system. That it is irregular there can be no question or doubt. That was put very clearly in the early days of the Income Tax. In 1862 the Income Tax Resolution was passed on 7th April, but the Act itself was not passed until 3rd June. According to our modern notions that is a very small delay—rather less than two months—but inasmuch as there had been that delay the Act contained a Clause to meet the difficulty.12.0 M.
It provides that, "Whereas since the 5th day of April now last past and before the passing of this Act divers dividends "and so on," directed by the Act relating to Income Tax to be assessed and payable by reason of the expiration of the said Acts before the passing of this Act, have not been assessed and charged with the said tax, and it is expedient to provide for the assessment thereof and for the collection of the sums assessed"; and then it was enacted that certain provisions should have effect, making it perfectly clear that the House of Commons in those days thought it was not fair to the nation at large to continue to collect taxes which had no legal basis, and this Act was passed within seven weeks of the passing of the Resolution in order to meet this want of legal authority which had existed in the interval. I have shown by the history of the case and the law applicable to it that we have got into a very bad practice at the present time, of collecting taxes without any authority whatever, month after month, until it happens to be convenient to the Government to pass a Finance Bill which sometimes is very late—last year it was Christmas week. This practice is so very bad that I desire to put these words into the Bill to emphasise the importance of having the Act passed at a proper time. If we were to go back to the old practice of passing one Act for the Income Tax especially in April no difficulty would arise, but while we are content to regard finance as an unimportant matter, and to cease to be efficient careful guardians of finance, the time must come when difficulties will arise and the system will be challenged. In the interests of a proper method of collecting taxes and to make quite clear what is our position in the matter I desire to move the addition of these words.
§ Mr. LLOYD GEORGEI do not think that the hon. Member who moved 2419 this Amendment can possibly have considered its effect. Let me point out exactly what would happen. A great deal of the Income Tax is collected by way of deduction. All these deductions made before the passing of the Bill would be absolutely void, and would have to be returned as there would be no right to retain them, and then they would have to be collected again.
§ Mr. POLLOCKThe right, hon. Gentleman really cannot have listened to my argument. I pointed out in the Statute which I read that special power was taken in the year 1862, and ought to be taken in this Act, if he wishes to make legal these deductions that have so far taken place. If the right hon. Gentleman does not do what was done in 1862, then he must rely on the method which I pointed out last week—which also he cannot have heard—in regard to the Act of 1890, which I specially referred to.
§ Mr. LLOYD GEORGEI heard everything that was said by the hon. and learned Gentleman, both last week and to-night, but the hon. and learned Gentleman's interpretation is different from that which my advisers put upon it, and he has not explained to the Committee what would be the effect of his Amendment. I think he is quite inaccurate in his view, and that the result of his proposal would be to render null and void any reductions made up to the present. The hon. and learned Gentleman said it would have to be supplemented by some other provision, but I do not see the object of the provision, and the Amendment would have no effect at all. If it were supplemented by the Amendment which the hon. and learned Member foreshadows, what would be the effect next year? The effect would be that unless the Budget went through by the 6th April—and no one except the hon. and learned Member ever suggested that it could be got through both Houses by the 6th April—these deductions would be absolutely null and void in future. There is a way of dealing with the difficulty which the hon. and learned Gentleman pointed out, but I cannot enter into that now. That is the view taken by my advisers who have more experience in these matters than the hon. and learned Gentleman. Unless the Budget went through by the 6th April these deductions would be absolutely void, and that would be destructive of the Income Tax machine. 2420 The hon. and learned Gentleman said that we have had two Budgets discussed in December, but I proposed last year, in regard to a suggestion put before the House, that there should be an Amendment to meet this difficulty, the Budget being put through by a certain date in August. I hope the hon. and learned Gentleman will not press his Amendment.
§ Sir ALFRED CRIPPSI do not think the Chancellor of the Exchequer appreciates the argument of my hon. and learned Friend, or, if he does, he has not answered it. His argument is that until authorised by Act of Parliament the raising of any taxation in this country is in itself illegal. I do not think anyone will be found who really questions that statement. What we are discussing is the legalising of taxation, while not interfering with the convenience of the Treasury as regards the collection of Income Tax. The hon. and learned Member pointed out that as far as the deduction is concerned it can be done in the Act itself in accordance with what was done in 1862, or under the provisions of the Act of 1390.
I cannot think that there would be the least difficulty in introducing into this Act or any other Act, a provision which would specifically deal with the difficulty to which reference was made by the right hon. Gentleman. We are really dealing with a wider question than that. Everyone paying Income Tax could go to the Courts in order to ascertain the deductions or payments and whether they are legalised or not, but I do not think the Chancellor of the Exchequer would desire that. I think all the difficulties which he has raised would immediately come to the front. If this matter was discussed in the law courts, I have very little doubt where you are dealing with a claim for Income Tax and deductions that there is no legal authority whatever until an Act of Parliament has been passed. That is what we have got to meet. Under those circumstances is not the Amendment the first step not only to legalise this collection but to put the Treasury in the position in which it ought to be and of not being attacked for raising taxation in an illegal manner. All those objections exist at the present time and this Amendment would be the first step to other Amendments, so that in accordance with what the Chancellor of the Exchequer said was the convenience of the Treasury, we might have Income Tax levied in a legal way, and not merely by Resolution of this House, 2421 which would give no legal sanction whatever to its collection.
§ Sir J. D. REESThe right hon. Gentleman in his remarks said that my hon. and learned Friend's Amendment would be destructive of the Income Tax as a machine. I submit it is not my hon. and learned Friend, but the action of the Chancellor which has already made the machine creak in every joint. If the right hon. Gentleman did not treat the poor Income Taxpayer as a kind of criminal and hold him up on public platforms to public odium these difficulties would not arise. He says that no Chancellor could get a Budget through by 6th April. That may be so, but he could get it through before 6th December. Surely there is so much more behind the Amendment than has been actually put into my hon. and learned Friend's argument that he was entitled to more respectful consideration at the hands of the Chancellor of the Exchequer than he received. The real fact is that it is because the Chancellor of the Exchequer has made finance in general and the Income Tax in particular, the plaything of party politics that the machine creaks at every joint and is being destroyed.
It is because the Chancellor of the Exchequer is cornered in the
§ Law Courts that this question now arises. If the people who pay Income Tax, and, more particularly, Supertax, while they are paying and contributing in this manner to the expenses of the country have by their own industry and prudence enabled themselves to pay these taxes, surely the right hon. Gentleman—[Laughter.]—Hon. Gentlemen who regard that as a matter for laughter illustrate most admirably the point of view of the Chancellor of the Exchequer which I am endeavouring to state. I put it to the House that this question is entitled to more respectful consideration. If those who pay Income Tax and Super-tax are called wicked monopolists, surely it is obvious the conditions under which they pay must be more carefully scrutinised in future, and there must be some return to the earlier ideals to which my hon. and learned Friend referred when finance was regarded as the greatest function of this House and the taxpayer regarded as a person to be cherished and respected, and not held up to odium on every public platform, and merely treated with simulated respect from the Front Bench.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 129; Noes, 239.
2425| Division No. 186.] | AYES. | [12.16 a.m. |
| Agg-Gardner, James Tynte | DJ Cros, Arthur Philip | Ingleby, Holcombe |
| Anson, Rt. Hon. Sir William R. | Duke, Henry Edward | Jackson, Sir John |
| Ashley, W. W. | Eyres-Monsell, B. M. | Kimber, Sir Henry |
| Bagot, Lieut.-Colonel J. | Faber, George D. (Clapham) | Kinloch-Cooke, Sir Clement |
| Baird, John Lawrence | Falle, Bertram Godfray | Kyffin-Taylor, G. |
| Balcarres, Lord | Fell, Arthur | Lane-Fox, G. R. |
| Baldwin, Stanley | Finlay, Rt. Hon. Sir Robert | Larmor, Sir J. |
| Banbury, Sir Frederick George | Fisher, Rt. Hon. W. Hayes | Law, Rt. Hon. A. Bonar (Bootle) |
| Banner, John S. Harmood- | Fitzroy, Hon. Edward A. | Locker-Lampson, G. (Salisbury) |
| Barlow, Montague (Salford, South) | Flannery, Sir J. Fortescue | Locker-Lampson, O. (Ramsey) |
| Bathurst, Charles (Wilts., Wilton) | Fletcher, John Samuel | Lonsdale, Sir John Brownlee |
| Beach, Hon. Michael Hugh Hicks | Foster, Philip Staveley | Lowe, Sir F. (Edgbaston) |
| Bennett-Goldney, Francis | Gibbs, George Abraham | Lyttelton, Hon. J. C. (Droitwich) |
| Beresford, Lord Charles | Glazebrook, Capt. Philip K. | McNeill, Ronald (Kent, St. Augustine's) |
| Bigland, Alfred | Goldsmith, Frank | Malcolm, Ian |
| Boyton, James | Gordon, John (Londonderry, South) | Mason, James F. (Windsor) |
| Bridgeman, William Clive | Goulding, Edward Alfred | Middlemore, John Throgmorton |
| Burdett-Coutts, William | Greene, Walter Raymond | Mildmay, Francis Bingham |
| Burn, Colonel C. R. | Gretton, John | Mills, Hon. Charles Thomas |
| Carlile, Sir Edward Hildred | Gwynne, R. S. (Sussex, Eastbourne) | Morrison-Bell, Capt. E. F. (Ashburton) |
| Cassel, Felix | Haddock, George Bahr | Newman, John R. p. |
| Castlereagh, Viscount | Hall, Fred (Dulwich) | Nicholson, William G. (Petersfield) |
| Cave, George | Hamersley, Alfred St. George | Paget, Almeric Hugh |
| Cecil, Lord R. (Herts, Hitchin) | Harris, Henry Percy | Parkes, Ebenezer |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Helmsley, Viscount | Pease, Herbert Pike (Darlington) |
| Chaplin, Rt. Hon. Henry | Henderson, Major H. (Berks, Abingdon) | Peel, Hon. W. R. W. (Taunton) |
| Clive, Captain Percy Archer | Herbert, Hon. A. (Somerset, S.) | Peto, Basil Edward |
| Clyde, James Avon | Hewins, William Albert Samuel | Pole-Carew, Sir R. |
| Coates, Major Sir Edward Feetham | Hill, Sir Clement L. | Pretyman, Ernest George |
| Craig, Charles Curtis (Antrim, S.) | Hills, John Waller | Pryce-Jones, Colonel E. |
| Craig, Captain James (Down, E.) | Hope, Harry (Bute) | Rawlinson, John Frederick Peel |
| Craig, Norman (Kent, Thanet) | Hope, James Fitzalan (Sheffield) | Rees, Sir J. D. |
| Dalziel, Davison (Brixton) | Horne, Edgar (Surrey, Guildford) | Remnant, James Farquharson |
| Dickson, Rt. Hon. C. S. | Houston, Robert Paterson | Royds, Edmund |
| Dixon, Charles Harvey | Hunter, Sir Charles Rodk. (Bath) | Rutherford, Watson (L'pool, W. Derby) |
| Salter, Arthur Clavell | Swift, Rigby | Winterton, Earl of |
| Sanders, Robert | Sykes, Mark (Hull, Central) | Wood, Rt. Hon. E. F. L. (Yorks, Ripon) |
| Sandys, G. J. | Talbot, Lord Edmund | Wright, Henry Fitzherbert |
| Sasscon, Sir Philip | Terrell, Henry (Gloucester) | Wyndham, Rt. Hon. George |
| Smith, Harold (Warrington) | Touche, George Alexander | Yate, Col. C. E. |
| Spear, Sir John Ward | Valentia, Viscount | Younger, Sir George |
| Stanier, Beville | Walrond, Hon. Lionel | |
| Stanley, Hon. Arthur (Ormskirk) | Warde, Colonel C. E. (Kent, Mid) | TELLERS FOR THE AYES.—Mr. |
| Steel-Maitland, A. D. | Wheler, Granville C. H. | Pollock and Sir Alfred Cripps. |
| NOES. | ||
| Abraham, William (Dublin Harbour) | Gill, Alfred Henry | Marks, Sir George Croydon |
| Acland, Francis Dyke | Gladstone, W. G. C. | Marshall, Arthur Harold |
| Addison, Dr. Christopher | Glanville, Harold James | Masterman, Rt. Hon. C. F. G. |
| Ainsworth, John Stirling | Goddard, Sir Daniel Ford | Meagher, Michael |
| Allen, A. Acland (Dumbarton) | Greenwood, Granville G. (Peterborough) | Meehan, Francis E. (Leitrim, N.) |
| Allen, Rt. Hon. Charles P. (Stroud) | Greig, Col. J. W. | Molloy, Michael |
| Armitage, Robert | Grey, Rt. Hon. Sir Edward | Mond, Sir Alfred M. |
| Arnold, Sydney | Guest, Hon. Major C. H. C. (Pembroke) | Money, L. G. Chiozza |
| Asquith, Rt. Hon. Herbert Henry | Guest, Hon. Frederick E. (Dorset, E.) | Montagu, Hon. E. S. |
| Baker, H. T. (Accrington) | Hackett, John | Morgan, George Hay |
| Baker, Joseph Allen (Finsbury, E.) | Hall, F. (Yorks, Normanton) | Morison, Hector |
| Baring, Sir Godfrey (Barnstaple) | Hancock, John George | Morrell, Philip |
| Barnes, George N. | Harcourt, Robert V. (Montrose) | Muldoon, John |
| Barran, Sir J. N. (Hawick) | Harmsworth, Cecil (Luton, Beds) | Munro, Robert |
| Beauchamp, Sir Edward | Harvey, T. E. (Leeds, West) | Murray, Captain Hon. A. C. |
| Benn, W. W. (T. H'mts., St. George) | Harvey, W. E. (Derbyshire, N.E.) | Nannetti, Joseph P. |
| Bentham, George Jackson | Haslam, Lewis (Monmouth) | Neilson, Francis |
| Birrell, Rt. Hon. Augustine | Havelock-Allan, Sir Henry | Nicholson, Sir Charles (Doncaster) |
| Black, Arthur W. | Hayden, John Patrick | Nolan, Joseph |
| Boland, John Pius | Hayward, Evan | Norman, Sir Henry |
| Booth, Frederick Handel | Hazleton, Richard (Galway, N.) | Nugent, Sir Walter Richard |
| Bowerman, C. W. | Helme, Sir Norval Watson | Nuttall, Harry |
| Boyle, Daniel (Mayo, North) | Hemmerde, Edward George | O'Brien, Patrick (Kilkenny) |
| Brace, William | Henderson, Arthur (Durham) | O'Connor, John (Kildare) |
| Brady, Patrick Joseph | Henderson, J. M. (Aberdeen, W.) | O'Connor, T. P. (Liverpool) |
| Brocklehurst, William B. | Henry, Sir Charles | O'Doherty, Philip |
| Brunner, John F. L. | Herbert, Col, Sir Ivor (Mon. S.) | O'Donnell, Thomas |
| Bryce, John Annan | Higham, John Sharp | O'Dowd, John |
| Buckmaster, Stanley O. | Hinds, John | O'Grady, James |
| Burke, E. Haviland- | Hobhouse, Rt. Hon. Charles E. H. | O'Kelly, Edward P. (Wicklow, W.) |
| Burns, Rt. Hon. John | Hogge, James Myles | O'Malley, William |
| Buxton, Noel (Norfolk, North) | Holmes, Daniel Turner | O'Neill, Dr. Charles (Armagh) |
| Buxton, Rt. Hon. S. C. (Poplar) | Holt, Richard Durning | O'Shaughnessy, P. J. |
| Byles, Sir William Pollard | Hope, John Deans (Haddington) | O'Sullivan, Timothy |
| Carr-Gomm, H. W. | Horne, C. Silvester (Ipswich) | Outhwaite, R. L. |
| Chancellor, H. G. | Howard, Hon. Geoffrey | Parker, James (Halifax) |
| Clancy, John Joseph | Hudson, Walter | Pease, Rt. Hon. Joseph A. (Rotherham) |
| Clough, William | Hughes, Spencer Leigh | Phillips, John (Longford, S.) |
| Collins, Stephen (Lambeth) | Isaacs, Rt. Hon. Sir Rufus | Pirie, Duncan V. |
| Condon, Thomas Joseph | John, Edward Thomas | Ponsonby, Arthur A. W. H. |
| Cornwall, Sir Edwin A. | Jones, Rt.Hon.Sir D.Brynmor (Sw'nsea) | Power, Patrick Joseph |
| Cotton, William Francis | Jones, Edgar R. (Merthyr Tydvil) | Price, C. E. (Edinburgh, Central) |
| Craig, Herbert J. (Tynemouth) | Jones, Henry Haydn (Merioneth) | Pringle, William M. R. |
| Crawshay-Williams, Eliot | Jones, William (Carnarvonshire) | Radford, G. H. |
| Crooks, William | Jowett, Frederick William | Raffan, Peter Wilson |
| Crumley, Patrick | Joyce, Michael | Raphael, Sir Herbert Henry |
| Cullinan, John | Keating, Matthew | Rea, Rt. Hon. Russell (South Shields) |
| Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) | Kellaway, Frederick George | Rea, Walter Russell (Scarborough) |
| Davies, Timothy (Lincs., Louth) | Kelly, Edward | Reddy, M. |
| Dawes, J. A. | Kennedy, Vincent Paul | Redmond, John E. (Waterford) |
| Delany, William | King, J. | Redmond, William (Clare, E.) |
| Denman, Hon. R. D. | Lambert, Richard (Wilts, Cricklade) | Richardson, Albion (Peckham) |
| Devlin, Joseph | Lardner, James Carrige Rushe | Richardson, Thomas (Whitehaven) |
| Dickinson, W. H. | Law, Hugh A. (Donegal, West) | Roberts, Charles H. (Lincoln) |
| Dillon, John | Lawson, Sir W. (Cumb'rld, Cockerm'th) | Roberts, G. H. (Norwich) |
| Donelan, Captain A. | Lewis, John Herbert | Robertson, Sir G. Scott (Bradford) |
| Duffy, William J. | Lough, Rt. Hon. Thomas | Roch, Walter F. (Pembroke) |
| Duncan, C. (Barrow-in-Furness) | Lundon, Thomas | Roche, Augustine (Louth) |
| Edwards, Sir Francis (Radnor) | Lyell, Charles Henry | Samuel, Rt. Hon. H. L. (Cleveland) |
| Edwards, John Hugh (Glamorgan, Mid) | Lynch, A. A. | Samuel, J. (Stockton-on-Tees) |
| Elibank, Rt. Hon. Master of | Macdonald, J. Ramsay (Leicester) | Scanlan, Thomas |
| Esmonde, Dr. John (Tipperary, N.) | Macdonald, J. M. (Falkirk Burghs) | Scott, A. MacCallum (Glas., Bridgeton) |
| Esmonde, Sir Thomas (Wexford, N.) | Macnamara, Rt. Hon. Dr. T. J. | Seely, Rt. Hon. Col. J. E. B. |
| Falconer, J. | MacNeill, John G. S. (Donegal, South) | Sheehy, David |
| Farrell, James Patrick | Macpherson, James Ian | Shortt, Edward |
| Fenwick, Rt. Hon. Charles | MacVeagh, Jeremiah | Simon, Sir John Allsebrook |
| Ffrench, Peter | McCallum, Sir John M. | Smith, Albert (Lancs., Clitheroe) |
| Field, William | McGhee, Richard | Smyth, Thomas F. (Leitrim, S.) |
| Fitzgibbon, John | McKenna, Rt. Hon. Reginald | Spicer, Rt. Hon. Sir Albert |
| Flavin, Michael Joseph | M'Laren, Hon. H. D. (Leics.) | Sutherland, John E. |
| Gelder, Sir William Alfred | Manfield, Harry | Sutton, John E. |
| George, Rt. Hon. D. Lloyd | Markham, Sir Arthur Basil | Taylor, Theodore C. (Radcliffe) |
| Tennant, Harold John | Webb, H. | Wilson, Rt. Hon. J. W. (Worcs.,N.) |
| Thorne, G. R. (Wolverhampton) | Wedgwood, Josiah | Wilson, W. T. (Westhoughton) |
| Ure, Rt. Hon. Alexander | White, J. Dun das (Glas., Tradeston) | Wood, Rt. Hon. T. McKinnon (Glasgow) |
| Verney, Sir Harry | White, Sir Luke (York, E.R.) | Young, William (Perth, East) |
| Wadsworth, John | White, Patrick (Meath, North) | Yoxall, Sir James Henry |
| Walters, Sir John Tudor | Wiles, Thomas | |
| Ward, John (Stoke-upon-Trent) | Wilkie, Alexander | TELLERS FOR THE NOES.—Mr. |
| Wardle, G. J. | Williams, J. (Glamorgan) | Illingworth and Mr. Gulland. |
| Warner, Sir Thomas Courtenay | Wilson, Hon. G. G. (Hull, W.) |
Question, "That the proposed Clause be added to the Bill," put and agreed to.
§ Mr. PETOhad the following Amendments on the Order Paper:—
In Sub-section (1), after the word "Tax" ["Income Tax for the year"] insert the words, "in respect of the annual value of real property or the occupation thereof, and upon profits or gains actually received or accruing during the calendar year immediately preceding the year of assessment."
After the word "twelve" ["nineteen hundred and twelve"] insert the words, "on all profits derived from land after deduction of all sums properly expended and necessary to maintain the property, and on all other profits as defined by the Income Tax Acts after deduction therefrom of full allowance for depreciation of all capital consisting of wasting assets, and Section 69 of the Finance Act, 1910, so far as it is inconsistent, is hereby repealed."
After the word "twelve" ["nineteen hundred and twelve"] insert the words, "on all profits as defined by the Income Tax Acts after deduction therefrom of full allowance for the depreciation of all capital employed consisting of wasting assets."
§ The CHAIRMANThe first Amendment in the name of the hon. Member for Devizes (Mr. Peto) is not in order, because it involves a charge on some taxpayers, and therefore cannot be proposed without a Resolution.
§ Mr. PETOOn a point of Order. Would it not be impossible to reduce any tax under that ruling, because the reduction of any tax may require the collection of some other tax to make up the loss. I cannot understand in what way this Amendment, if carried, would involve any other additional tax. I only wish to define what are the profits on which Income Tax should be paid. The title of the Act of 1842 sets out that "it is to amend the laws relating to the land and assessed taxes, and also the laws relating to the duties on profits arising from property, professions, trades, and offices." The question I want to raise is that Income 2426 Tax is not now collected upon profits, but in a perfectly arbitrary manner, and upon sums which the taxpayer has not received in the form of profits. I submit this is not a question of imposing a burden upon anybody, but is rather a just method of collecting taxes upon real property and the profits of professions and industries according to the title of the original Act.
§ Mr. PRETYMANI should like, Mr. Whitley, to point out that this is a limiting Amendment. The words Income Tax, as I understand it, implies a tax upon incomes of above a certain annual value; this Amendment would limit that and restrict the raising of the tax to a certain proportion of incomes, and therefore does not impose a new tax.
§ The CHAIRMANWith regard to the point that this Amendment would but slightly reduce taxation on the subject, that is not the objection I raise to it. It is not competent for any Member to propose an Amendment which, although it will reduce taxation on some persons, will increase taxation upon other persons. The point is not because the money will have to be made up by other taxes, but that this very proposal itself would have the effect of increasing the taxes upon other persons. As I read this Amendment if it was intended to convey what the hon. Member urged it is badly drafted. The effect of this Amendment clearly is to abolish what is known as the three years' average and to assess Income Tax "upon profits or gains received or actually accruing during the calendar year immediately preceding the year of assessment." At present assessment is based upon the three years' average. Therefore this Amendment would raise the taxes upon some persons and therefore it cannot be moved. The second Amendment in the hon. Member's name covers two questions. I take the second half of it first, which would repeal Section 69 of the Finance Act, 1910. That, of course, must be moved in the form of a new Clause, and the hon. Member's third Amendment, dealing with the subject of wasting assets, is not in order, as that also should come up as a new Clause. I observe the hon. Member 2427 for Warwick and Leamington has down a new Clause dealing with this matter and that is the correct form.
§ Viscount HELMSLEYI do not understand which part of your ruling touched the first part of the second Amendment of the hon. Member for Devizes (Mr. Peto). Would it be in order to move the Amendment as far as the word "and"? ["necessary to maintain the property, and"]. Is not that part of the second Amendment in order?
§ The CHAIRMANThe subject, of course, is in order, but that should be a new Clause, because it is repealing Section 69 of the Act of 1010. The Noble Lord will observe that several of his friends have that down in the right form as a new Clause.
§ Mr. PETOOn the third Amendment, may I call your attention to the fact that this was moved in identical words on 8th July, 1910, by Mr. Gibson Bowles, who was then Member for King's Lynn and a supporter of the Government? It was then allowed to be in order and was debated very fully. Even I myself was allowed an opportunity of speaking on that very occasion on this Amendment, which is now ruled out of order.
§ The CHAIRMANIn reply to that point, my recollection is that the Bill was not in Committee on the 8th July, 1910. My recollection is that the Committee stage of the Finance Bill of 1910 was taken in the month of December. I have looked up what the hon. Member referred to as taking place on the 8th July, and I find it was not the Committee stage of the Bill at all, but the Ways and Means Resolution.
§ Captain CLIVEWith great respect, may I point out that the thirtieth day of the Committee on the Finance Bill was reached on the 23rd November?
§ Mr. PETOAm I to understand that it is in order on the Resolution in Committee of Ways and Means but out of order in Committee now?
§ The CHAIRMANThe occasion was different. I have no doubt it was in order on the Ways and Means Resolution. All I have said is that here it should come properly as a new Clause. The same thing applies to the next Amendment in the name of Mr. Charles Bathurst. The 2428 subject is in order, but it should brought in as a new Clause.
The Amendment of Mr. Charles Bathurst was, in Clause 2, Sub-section (1), after the word "twopence" ["shall be charged at the rate of one shilling and twopence"], to insert the words, "but shall not be charged upon the income of any land upon which there has been grown and harvested during the current financial year a crop of wheat which remains in stack on the premises of its cultivator on the first day of February, nineteen hundred and thirteen."
§ Mr. C. BATHURSTOn a point of Order. This Amendment does not have the effect of creating a larger charge upon other taxpayers, which, I think, was the objection you made.
§ The CHAIRMANIf that had been so I should have ruled it out of order altogether. I only said it should come as a new Clause, and not as an Amendment to the Clause we are considering. The next Amendment in the name of the hon. Member for the Central Division of Sheffield (Mr. James Hope), I am afraid, falls because that requires a Money Resolution.
The Amendment in the name of Mr. Hope was, in Clause 2, Sub-section (1), after the words "two pence" ["shall be charged at the rate of one shilling and two pence"] to insert the words "of which two pence shall be paid to a separate account and thereafter distributed among the local authorities of the United Kingdom in relief of rates in such manner and proportion and on such conditions as the Treasury may determine."
§ Mr. JAMES HOPEOn a point of Order. May I call your attention to what took place on 24th May, 1905? The present Home Secretary moved an Amendment to the Sinking Fund Clause of the Finance Bill of that year. That Clause, which was passed into law, allotted £28,000,000 to the Sinking Fund. The present Home Secretary moved to increase that charge to £29,000,000, and at the same time he said that the extra £1,000,000 should be paid out of Estate Duty. Now the effect of that was to anticipate £1,000,000 of the Estate Duty, and it was paid to the Commissioners of National Debt. I contend that that Amendment was exactly on a par with the Amendment which I now submit, the only difference being that, whereas the present Home Secretary by his 2429 Amendment sought to anticipate the Estate Duty and apply it to the National Debt Commissioners, I seek to anticipate a portion of the Income Tax and apply it to the local authorities.
§ The CHAIRMANI observed the case the hon. Member referred to which occurred on 24th May, 1905. It was in fact not a parallel case, as it was not proposed to distribute the money among local authorities. I have found a more recent precedent which much more closely conforms to the hon. Member's Amendment. In 1909 there was a proposal to distribute half the proceeds of the Land Taxes to the local authorities. That was a proposal brought in by the Government, and in order to do that the Government had to ask the House to pass a Money Resolution. If the Government had to ask for a Resolution, a private Member must certainly have to do so.
§ Viscount HELMSLEYWas not that because it was an entirely new tax that year?
§ The CHAIRMANNo; it was because of the distribution of half the proceeds to local authorities.
§ Mr. JAMES HOPEI submit that the action of the Government on that occasion was what is known to theologians as supererogatory. It was no doubt advisable that they should do it to put themselves thoroughly in order before the House, but I do submit it is not necessary in this Amendment which, as a precedent shows, it can be done without a Resolution. I submit that the question whether it is in order or not does not depend whether the money is to go to the National Debt Commissioners or the local authorities. In each instance there is the proposal to anticipate money and devote it to a purpose.
§ The CHAIRMANI do not think the Government is often accused of excessive virtue in the matter of finance. I am quite convinced they did not have two stages of finance procedure except for necessary reasons. The subject of the next Amendment in the name of the hon. Member for Devizes (Mr. Peto) is also in order but it should also be a new Clause. That in the name of the hon. Member for the Ross Division of Herefordshire (Captain Olive) should also be a new Clause, and I observe that he has put it down alternatively in that form. The Amendment of the Noble Lord the Member for Hitchin (Lord 2430 Robert Cecil) proposes to abolish the three years' average, which entails an additional charge on the taxpayer.
§ Mr. POLLOCKThis is only a different method of ascertaining in what proportion persons should pay the same amount, and it does not necessarily involve that the result will be different.
§ The CHAIRMANIt docs not necessarily result in the total receipts of the tax being different, but it obviously must increase the charge on some persons. I think it is a simple arithmetical proposition which must involve increased charge on some persons. The subject of the Amendment of the hon. Member for St. Pancras (Mr. Cassel) is also in order, but it must be brought up as a new Clause.
The Amendment in the name of Mr. Cassel was, in Clause 2, at end of Subsection (1) to insert the words, "Provided always, and it is hereby expressly declared, that, in the case of any person dying during the year beginning on the sixth day of April, nineteen hundred and twelve, Super-tax shall be apportioned and shall be only payable in respect of the period up to the death of the person so dying."
§ Mr. CASSELI respectfully submit that this Amendment is in order in this place, but I am not quite sure whether you have appreciated one point in which it rather differs from the other Amendments, namely, that it is confined to the particular year of assessment. You have here a Sub-section which says all the enactments relating to Income Tax are to apply to this year of assessment. I wish to say that one of these enactments shall not apply. I wish to modify the provision that all the enactments relating to Income Tax should apply to the year of assessment. I do not see any other place in which I can do that. If, instead of that, I referred to other years, I could have understood the force of the observation of the Chairman that it should come in as a new Clause, but it is simply relating to the general provision that all the enactments relating to Income Tax should apply to this particular year, and I wish to exclude one tax. As far as I can see, the only way in which I could do that now would be to move to omit the Subsection altogether. If I could do that, surely I can move to modify the Subsection which says that all the enactments relating to income are to apply, so that 2431 it shall not apply to one tax. I submit that the Amendment is specifically limited to the particular year, and is correct in form, and that this is the right place to put it in upon the Section which says that it shall apply to all. I cannot see on what principle this is out of order. If it related to future years, I would agree that it ought to be a new Clause, but as I have limited it to the particular year of assessment, I submit that it ought to be put here.
§ The CHAIRMANI see that on page 48 of the Order Paper the hon. Member himself has put down a new Clause on this subject.
§ Mr. CASSELAs some doubt had arisen, I did that merely as a safeguard. I was in doubt how it ought to be put down. But private Members are ruled out of order on a good many points in bringing forward Amendments, and I respectfully submit that a private Member has a right when the Government say that all the enactments are to apply on a particular year, to say that in a particular case they shall not apply.
§ The CHAIRMANI do not say that the hon. Member did not act wisely in putting down his Amendment and also a Clause as an alternative, but I do say that this Amendment is not in the right place. It ought to be a new Clause. I do not think that the point that he confines it to a particular year would cause me to alter the decision I have already given.
§ Mr. CASSELIn that case, I beg to move to omit Sub-section (2). The reason why I do that is because the Sub-section includes a very unjust provision with regard to the Super-tax. That provision is that in the case of a person who dies in the middle of the year of assessment, he has to pay a full year.
§ The CHAIRMANI do not wish to make any suggestion to the hon. Member, but I would point out that the new Clause is in the correct form for what he wants to do, and he may actually block that by raising the subject here.
§ Mr. CASSELThe difficulty I feel with regard to the new Clause is that I am afraid it may not be reached. I must, therefore, take any opportunity whilst I can. It is an unfortunate thing that I should have to do it in this way, because 2432 I have to move something which goes further than I really wish to go. The point which I desire to raise, and which I am afraid I shall be shut out from raising unless I do so now, is a point of real substance and of grievious injustice to taxpayers. I think those who pay Super-tax have not on the whole complained much about it, but they do say that if it is to be imposed at all it ought to be fairly imposed as between man and man, and I say that in a case where a man dies in the middle of the year it is an injustice to make him pay for a whole year. The Act was never intended to be retrospective. It does not say in words that it is retrospective. But the Government is now trying to enforce it in a manner which is making it retrospective. Whether they have the power to do that or not is a point of legal doubt, and I ask here that that legal doubt should be resolved by a Clause making it perfectly clear that if a man dies in the middle of the year of assessment he shall only be assessed for a proportionate part of the tax for that year.
§ Sir W. P. BYLESHas any question been put from the Chair, and if so, what?
§ The CHAIRMANThe hon. Member is moving to leave out the Sub-section.
§ Mr. CASSELMy point is this, Supertax was first payable for the year which began on the 6th April, 1909, and ended on the 5th April, 1910, and it was payable for the income of the previous year. It was assumed that a man's income for the year beginning 6th April, 1909, and ending 5th April, 1910, was in fact the income of the previous year, and that was the first year on which he would have to pay it. Then he pays for the year 1910–11, and again for the year 1911–12. I assume that he does on the 10th April, 1912. He has paid for the full three years, and what the Treasury are seeking to do is because he has lived three days into the fourth year they will make him pay for the whole of that year. I do not think that such a grevious injustice ought to be left as it is, and therefore I raise it now instead of waiting until we come to the new Clauses later on. The first view of the Treasury, I understand, was that if a man had made a return, then he was liable to the Supertax, but if he had not made a return, then he was not. That is a most unintelligible theory. Because a man has been prompt to comply with an obligation under a statute, is he or his executors for that 2433 reason to be subject to a liability which otherwise would not have fallen upon them? I think I am right in saying that the injustice of that course was so gross and so manifest that when the hon. Member for Chelmsford (Mr. Pretyman) raised the point on an earlier occasion the Chancellor of the Exchequer said he so far recognised the injustice of any proceeding of that kind that sooner than allow it to be fought in the Law Courts he himself would look into it and introduce an Amendment to rectify it.
§ Mr. LLOYD GEORGENo.
§ Mr. CASSELThat is my recollection of what he said. It was something to that effect. He said he would look into it. Perhaps I am overstating the case. He said, as it struck him at the moment, that sooner than allow it to be fought in the Law Courts, a new Clause ought to be put in. As to the theory that it makes any difference whether a man has made a return or not, I do not know on what it is founded. It is manifestly unjust, apart from that, that a man who has paid the full tax for three years should have to pay the fourth year because he has lived three or four days into the fourth year, and that he should have to pay another full year for that reason. Take the case of the ordinary Income Tax. There is there an express provision that if a man dies in the course of the year, then a just proportion shall be returned to his estate. In other words the Act provides that there is in those circumstances to be an apportionment in the case of the ordinary Income Tax. The right hon. Gentleman may say to me: "This is the income of the previous year." That is perfectly true; but you assume that the income of this year is the income of the previous year. Similarly in the case of the ordinary Income Tax, it is not the actual income of the year that you deal with, but the average income for the previous three years. When, as in the case of the Super-tax, you make the assumption that last year's income is this year's income and deal with this year's income in that way, you should, at any rate, deal with it fairly if a man lives only for a portion of the year for which he is charged. I am sorry to have to move the proposal in a form which makes me go really further than I wish to go. But I must raise the question at a time when I am able to do so in the hope that the Chancellor of the Exchequer will tell the Committee what has been the result of his cogitations since 2434 the hon. and gallant Member for Chelmsford (Mr. Pretyman) raised the point. I propose now to move that the words "including Super-tax" be omitted.
§ Mr. LLOYD GEORGEAs the hon. and learned Gentleman has fairly admitted his Amendment goes very much further than the proposal upon which he really wishes to take the judgment of the Committee. The omission of the words he proposes to leave out would have the effect of destroying all the machinery of the Super-tax. The hon. and learned Gentleman himself admitted that the Super-tax is a fair tax and he said there was no complaint on the part of those who are subjected to it. [HON. MEMBERS: "NO, no."] I understood him to say that they did not complain of the Super-tax.
§ Mr. CASSELI did say that no complaint was made with reference to the Super-tax itself, but I complained of this particular injustice.
§ Mr. LLOYD GEORGEThat is what I meant. I understand the hon. and learned Member is simply moving the Amendment in this form in order to obtain the judgment of the Committee on that particular grievance. He is perfectly correct in saying that I promised to give the matter my attention. I did not promise to introduce an Amendment, but I did promise that if I found the grievance was exactly as stated the Government would meet that grievance. The hon. and learned Member, however, has simply stated the case of the taxpayer. There is also a case so far as revenue is concerned, and that must be considered when we are dealing with the matter. This matter cannot be remedied except by means of a Resolution. In some cases it would undoubtedly let off the subject, but in other cases it would involve a charge. The practice has, I think, been quite fairly stated by the hon. and learned Gentleman. If a return is made before the date of the death then the Super-tax undoubtedly is paid for the whole of that year, but if there is no return then there is no claim.
Therefore, if the grievance is to be redressed at all it must be redressed all round. That would mean that the strictly fair thing possibly might be—there is a consideration against this—to charge the proportion up to the date of the death; but then that ought to be done all round. That is exactly what I want to point out and what I hope the Committee will 2435 realise. It means that the estate of a person who has not made a return before death must be liable to pay Super-tax up to the date of death in the same way as if there had been a return. I cannot redress this grievance in an equitable manner—in a manner, that is to say, equitable to the Exchequer as well as to the subject—without having a Resolution. That I cannot do at the present moment. [HON. MEMBERS: "Why?"] It is impossible. I am not sure that it could be done even by consent. If it would be possible to do it by consent I would offer no objection so long as it is made perfectly clear that the revenue gets the advantage of cases where it is now losing, or rather getting no payment, because a return has not been made. I cannot, however, agree to the one-sided proposal made by the hon. and learned Gentleman.
§ Mr. PRETYMANThere is one point, and one only, I think, which has been omitted in the discussion. It is this. The right hon. Gentleman said the Super-tax was paid when a return had been made. I do not think that statement was perfectly correct. The duty is not paid. True it is claimed, but that is a very different thing. I think the Chancellor of the Exchequer will admit it is a very doubtful point of law.
§ Mr. LLOYD GEORGEI said so.
§ Mr. PRETYMANI understood the Chancellor of the Exchequer to say the duty was paid.
§ Mr. LLOYD GEORGEI simply put that point rather in favour of the hon. and learned Gentleman, because unless it is paid there is no grievance so far as the taxpayer is concerned. I am only assuming that in favour of the hon. Gentleman.
§ 1.0 A.M.
§ Mr. PRETYMANThe Chancellor of the Exchequer always appears to me to take the attitude that it is no possible hardship to the subject to make a claim on him and take him into a court of law where he has to defend his resistance to the claim. The grievance of the taxpayer begins, not when the duty is paid, but when the duty is claimed. I do not wish to make this point in an aggressive way at all, because I was going on to add that the proposal of the Chancellor of the Exchequer seemed to me a perfectly fair one, 2436 and I believe would be perfectly satisfactory to my hon. and learned Friend. But the point I wished to make on it was this, that, in view of the general agreement, that either this year, or if possible, next year, a Clause should be introduced to carry out the Chancellor's proposal. I will not waste time in repeating it, because everybody understood it. It would be a most unfortunate proceeding that these claims should now be pressed, and that expenses should be incurred in a Court of Law in fighting them, when an agreement has been reached here simply because of the pressure of business here, and of the conditions under which we are working now—which are certainly not the fault of the taxpayer. Therefore, I think we may reasonably ask that while we, on this side of the House, accept the right hon. Gentleman's proposal, he shall undertake to introduce it as soon as possible, and that in the meantime these claims shall not be pressed, and the taxpayer shall not be put to the expense of contesting them in the Courts of Law.
§ Mr. CASSELThe right hon. Gentleman has met very fairly the point which I put forward, but there are some difficulties. On the question as to whether a Resolution is necessary or not, I should submit that no Resolution would be necessary, because, so far as it is claimed by the Inland Revenue that it makes no difference whether you have or have not made a return, I cannot see on what that is based at all. Either you are liable, or you are not liable at all. I see the two Law Officers there; if they would explain on what the suggestion is based that it makes no difference whether a return is made or not, it might have a bearing on the question of whether a Resolution is necessary or not. My submission is that if the Act is capable of interpretation at all, that you can collect for the whole year, it is capable of that interpretation, whether a return is made or not, and it is in order to get rid of that that I proposed this Amendment, which, in every case is for the benefit of the subject. All that I want is, for the benefit of the subject, to reduce it in the case where a man dies in the middle of the year. The contention of the Inland Revenue, if it is any contention at all, must be that where a man dies in the middle of the year, he is liable for the whole year. My suggestion is that for such year he should only be liable for a proportionate part, and it is therefore a reduction for the benefit of the subject. I submit, although I speak on 2437 subjects of procedure in this House with very great diffidence, as a new Member, that no new Resolution is necessary.
§ Mr. LLOYD GEORGEIf the Chairman of the Committee is of opinion that an Amendment on the lines indicated by me would be in order without a Resolution, then I would proceed to draft it.
§ Mr. AUSTEN CHAMBERLAINI think, Sir, if I may say so, without trenching on your prerogative, this is a question of law before it becomes a question for the Chairman. The great thing is whether the hon. and learned Gentleman who last spoke is right as to the law. If the claim is what the Inland Revenue I believe have stated it to be—that a man is liable, if he has made a return, though he dies immediately afterwards, but is not liable, though he dies on the same date, if he has not yet made a return, then no doubt, as the Chancellor of the Exchequer said, while relieving some people, you would be placing a new charge on others. My hon. Friend disputes the legality, and contends that that is not the correct reading of the law, and on that, he really wanted the opinion of the Attorney-General. I do not want to disturb the harmony of the proceedings, which at the present time is remarkable, and I hope my remarks will not be taken in that sense by right hon. Gentlemen opposite, but it really is the question of law on which I think both the Committee and the Chair should have the guidance of the Attorney-General.
If the view of the law taken by my hon. and learned Friend is disputed, and the contention of the Inland Revenue is maintained, that the fact of the return having been made or not having been made decides the liability, clearly the law—as agreed by the Chancellor of the Exchequer—is both inequitable, and highly inexpedient. It becomes the interest of everyone who receives a claim for a return, to delay that return to the utmost possible limit, and even beyond the legal limit. That is highly inexpedient, and if the Government takes that view, then I do submit that the Chancellor of the Exchequer might fairly do one of two things; either find the little time that is required for a Resolution to apportion the tax according to the length of time a man has lived, which meets the views of my hon. Friends; or, if under the circumstances in which we are discussing the subject, he cannot find time for a Resolution of that kind, then at least 2438 he should cease to commit the present injustice.
He says he cannot afford to do justice to the people who are now over-taxed, because by an oversight, some other people have been under-taxed. Is that the real ground that either the Chancellor of the Exchequer or this Committee ought to take up? The matter cannot be a big one, financially, though perhaps the bigger it were, the greater the offence against justice. But in any individual case there might be a considerable hardship, and it is not too much to ask the Chancellor, if he cannot find time to right the whole thing now, with the general assent of the Committee, at least to right the actual thing that is wrong, and in his Budget next year to take the matter in time and do so.
§ Mr. LLOYD GEORGEI would like to meet the right hon. Gentleman and his friends in this case, because there is a grievance. But I do not think that is a good way of doing it. I would rather that the hon. and learned Gentleman (Mr. Cassel) should preserve his rights of moving his Amendment later on, by withdrawing it now. I should be inclined to consult the authorities of the House as to whether it is necessary that there should be a Resolution, and if it is, see if it is possible to do it. But it is much better that we should do it on an equitable basis if it can be done this year. I do recognise that this is a very real grievance. I need say only one word in reply to the hon. Gentleman. He has quite forgotten that I suggested that a test case should be fought at the expense of the Crown, not of the subject. I did not invite the subject to litigate at his own expense; on the contrary, I suggested it should be done at the expense of the Crown. I asked about it when the matter was first mentioned, but I heard nothing further about it. If the hon. and learned Member (Mr. Cassel) can see his way now to withdraw his proposal, without further discussion, then he will be able to preserve his right to move an Amendment later.
§ The CHAIRMANIt may be for the convenience of the Committee that I should say that to set up a Committee of Ways and Means would mean several days' delay—that is to say, if the case I have just heard argued is a correct one.
§ Mr. LLOYD GEORGEMay I ask your opinion on this: supposing we are advised 2439 by the Law Officers of the Crown that the law is doubtful, would it then be competent for the Government to move an Amendment on the lines I have indicated? In that case, the effect undoubtedly would be to reduce the charge on the subject.
§ The CHAIRMANOf course, if the Government can show me that it would not increase the charge on any person during the current year I would accept it.
§ Mr. POLLOCKMay I make a practical suggestion? I hold in my hand the ordinary document for Super-tax, which sets out the two sections under which the tax is collected, and gives the intelligent subject four pages of regulations under which he is to make his return. If it is a matter of doubt as to whether or not it can be collected—whether the subject or State ought to pay it or not—there is a power under Section 72 for the Commissioners to make regulations for the purpose of carrying this Section into effect. If it is a matter of doubt it is quite possible for the Commissioners to make clear what is doubtful, and under their regulations, prevent difficulty arising.
§ The CHAIRMANOf course I cannot compete with hon. and learned Members on this point, but I think if they put their heads together they can find a way out, and I suggest under those circumstances the satisfactory method would be to bring up the matter at a later stage.
§ Mr. CASSELAfter what the right hon. Gentleman has said I ask leave to withdraw the Amendment but I take it time will be found in which to discuss it at a later stage.
§ Amendment, by leave, withdrawn.
§ Lord ROBERT CECILI desire to raise the point which I was precluded from raising in my Amendment. The clause of course re-enacts all the provisions of the Income Tax laws that are now in force, and among these is the three years' average. That average was originally enacted in 1842, and was extended under the Act of 1853. When it was enacted the machinery was that the taxpayer might in effect choose to pay the tax either on the three years' average or on the income for the actual year of assessment, because after having been taxed on the three years' average he could always say, "In point of fact, I have not been able to earn as much as the three years' average, and, therefore, 2440 I ask to be assessed upon my actual income." Gradually, by the action of Parliament, the alternative of being taxed on the actual profit of the year was taken away, and now the taxpayer is forced to be taxed on the three years' average. The effect of that is that while a man's income is increasing he pays less than what he would have to pay if he were paying on his actual income, but if for any reason his income begins to come down he has to pay a larger tax. I do submit that is a very unfavourable form of taxation. When a man's income is going up he can well afford to pay his tax, because his scale of expenditure is fixed upon his income as it was. He gets a little more next year, and he has a certain amount of money to spare, and is really able to meet his taxes with greater ease. If, on the other hand, his income goes down, it is quite plain the tax fails very much more heavily upon him than it would otherwise do, and in the case of a professional man—because my knowledge happens to extend more to professional men than to business men, and my Amendment is confined to professional men—it may be a very great hardship indeed.
Take the case of a doctor in large practice. He falls into ill-health, or he may have to move, owing to the health of his family, from one town to another, losing his practice altogether. He may have to go on for the next three years paying on the basis of the income he was making before, and this is a very serious hardship indeed. The matter was considered by the Committee who sat in 1905. After considering the matter very elaborately in reference to business men, they said that the position of the professional men and of employés was somewhat different, and that the argument in favour of the average system applied to the one has not the same force when applied to the other. To most professional men who do not keep books, like a business firm, it might probably be an advantage to return the profit of one year rather than three years, and if an appeal were made it would involve less troublesome proof. It is worthy of consideration, therefore, whether in a case of employés and professional men the income should not be returned on the receipts of the previous year. They therefore reported substantially in favour of the proposition, that in the case of professional men at any rate—and my Amendment only deals with professional men—it would be desirable to substitute the last year's actual income instead of the average for the three years. Of course I quite admit 2441 that on Clause 2 I cannot do more than submit the matter to the consideration of the Committee and the Government. I trust I may receive an assurance from the Government—and I do not at this minute ask for more—that the matter will receive attention, and that if it is raised, as I suppose it ought to be, as a matter of Order on the Resolution of Ways and Means, the Government will be prepared to consider the matter with an open mind.
§ Mr. LLOYD GEORGEThis is an old topic—I think a hardy annual. The Noble Lord will realise that from the point of view of the Exchequer at the present moment nothing would have suited better. I say that, because I believe the profits of last year were higher than the average of the preceding three years, and it would mean an increase probably of half-a-million in the Income Tax if charged upon profits of the previous year. I have no doubt that the same thing would apply to next year, because the profits seem to be very high in the present year. I am sure that the Noble Lord will recognise that by merely charging upon one year he does not avoid the difficulties which he has pointed out. A man's income may be going down, and he is charged upon the income of the preceding three years, whilst the income of the year has gone down considerably; but the same thing applies to charging him on the preceding year.
§ Lord ROBERT CECILIt is only on the one year, the last year; that is better than the three years.
§ Mr. LLOYD GEORGEI am not sure that it may not be a good thing, in the case of the professional man, and the Noble Lord has confined himself to the professional man, but it certainly would not apply in the same way to traders. Take the case of the professional man; his income fluctuates a good deal, according to the trade in a particular district. In three years, you get something like a cycle, you might have it worse in one year and better in the other years. Take the case of an architect, the building trade might be prosperous in one year, and the income might be good, but next year down it goes, and the profits are very small. He has got to pay upon that what may be an exceptional year, whilst if you take the three years' average these things are equalised more or less. I am not sure that a good many professional men would not rather object 2442 to it. It would suit some perhaps. But I am sure the business men would object to it for that very reason, because the fluctuations are very considerable, and the three years' average works out better.
If the Noble Lord will go into the figures he will find how it works out. There is a gradual increase. There is no great fluctuation, because you take the average of three years. Whereas, if you took it only for the preceding year you would get a very considerable income in one year, and if trade went down in the next year you would find a considerable depression. By taking the average of three years you will find there is a steady growth right through the years without any fluctuations. I think that suits the subject, and it certainly suits the revenue. The Noble Lord has appealed to the Government to take the matter into consideration so far only as the professional man is concerned. There is no doubt he has the Report of the Committee behind him. They considered the subject and they were on the whole inclined in favour of the alteration as regards professional men. That, coupled with the request of the Noble Lord that we should take the matter into account, is sufficient to justify me in pledging the Inland Revenue to give further consideration to the matter before the Budget is introduced in the coming year.
§ Lord ROBERT CECILI am very much obliged to the right hon. Gentleman. I desire to say a few words in reply. First, as to the point of fluctuations of trade. If a fluctuation gives a man a very large income in one year, I do not think he would feel it a very great hardship to have to pay on that in the next year. The average over the three years means that he may be taxed on an income which has almost vanished, and that is a hardship. I do not want to argue the matter, but I think, although I will not pledge myself, that if the Chancellor of the Exchequer looks at the Reports he will find that the Commissioners did say that they did not think it would make any difference to the revenue one way or the other. The thing would average out in any case, whether three years or one year was taken. I think the Chancellor of the Exchequer will find a statement of that kind.
Mr. MacCALLUM SCOTTI wish to ask the Chancellor of the Exchequer to give his consideration to another hardship which presses upon many people with regard to the method of assessing income 2443 for Income Tax. It presses especially upon those people who derive their income from hotels or boarding-houses or boarding-schools. In the Income Tax Act of 1842, Section 101 deals with a person who rents a dwelling-house and uses part of it for the purpose of his trade or profession, and it is provided that in computing the true income derived from such concern, business or profession, a sum may be deducted from the profits not exceeding two-thirds of the rental of the house. That limit of two-thirds is a very arbitrary one when we come to calculate the profits from hotels or boarding-houses or boarding-schools. Let me illustrate that by an extreme case.
Suppose the Hotel Cecil belonged to a single individual, and that individual occupied a bedroom or sitting - room in the hotel. The Surveyor of Taxes, in calculating the profits derived from the Hotel Cecil, in these circumstances would deduct from the profits a sum not exceeding two-thirds of the total rent of the rooms and would then hold that the other one-third represented the value of the accommodation which was reserved by the proprietor for himself. Of course, that is quite a ridiculous proportion to preserve as representing the rent of the proprietor in such a case. A few surveyors have boldly grappled with the difficulty, and have tried to find a way out. They have held that a hotel or boarding-house, or boarding-school, in these circumstances is not a dwelling house at all, and that the proper way of dealing with it is to deduct from the profits the whole of the rent of the premises. But on the other hand there is added to the profits a sum equal to the value of the accommodation which is reserved by the proprietor for himself, the whole accommodation, whether including lodging, food or board. [HON. MEMBERS: "Agreed."] I think hon. Gentlemen may well spend a few moments upon this subject. It is the only opportunity we have of calling attention to these matters. Only a very few Surveyors of Taxes have adopted the method which I have just described. The vast majority of the surveyors adhere to the letter of the law, and in order to secure relief for these people who suffer hardship from it, some alteration of the law is necessary. I ask the Chancellor of the Exchequer to take the matter into consideration with a view to practically dealing with it on some future occasion.
§ Captain CLIVEIn view of the ruling which has been given, I wish to take this opportunity of calling attention to the point on which I proposed to amend the Clause. The Chancellor of the Exchequer knows the point very well. It is the effect of Section 69 of the Finance Act of 1909–10, that all repairs that have been proved to have been executed—
§ Mr. LLOYD GEORGEI do not mind the matter being discussed now. But there is a new Clause dealing with the proposal, and I should have thought the hon. and gallant Gentleman would have discussed it on the concrete proposal. I understand the Chairman has ruled that the new Clause is in order.
§ The CHAIRMANI have already said that the new Clause is certainly in order, but of course it is not for me to advise the hon. Member.
§ Captain CLIVEIn view of that suggestion I will wait for the new Clause.
§ Clause 3 added to the Bill.
§ Mr. AUSTEN CHAMBERLAINI hope the Chancellor of the Exchequer, after what he said earlier in the evening, will now consent to report Progress. We have come to an end of the Clauses which stand in the Bill, and are now approaching the consideration of the new Clauses. The right hon. Gentleman expressed the intention of not sitting later than half-past one o'clock, and as we have to meet again at twelve o'clock to-day, I hope he will agree to report Progress now.
§ The CHAIRMANI must remind the right hon. Gentleman that there is one more Clause in the Bill—a formal Clause.
§ Clause 4 added to the Bill.
§ Mr. LLOYD GEORGEIn reference to what the right hon. Gentleman has just said, I do not want to take the responsibility of keeping the Committee sitting very late, but still, for a Finance Bill, this is really fairly early. I am not going to quote again the precedent of the right hon. Gentleman's own Budget; but I find that even in the case of his second Budget the Committee was kept sitting until after two o'clock in the morning. I hope therefore, that we may be able to make some progress to-night with the new Clauses. I am not going to keep the Committee very 2445 late, and like the right hon Gentleman, I have also in mind the fact that we have to meet at twelve o'clock to-day.