§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ Mr. CASSEL
I desire to claim your ruling whether one of the provisions of the Bill is not outside the scope of the Resolution on which the Bill is founded. The particular provision to which I desire to call your attention is Sub-section (2) of Section 2 of the Bill. You may remember there were three heads of the Resolution, (a), (b), (c), which the House agreed to. (a) and (b) are embodied almost verbatim, with limitations in Clause 1 of the Bill. (c) is embodied almost verbatim with limitations in Sub-section (1). Section 2 of the Bill and Sub-section (2) is a sort of excrescence altogether outside the Resolution, to which no reference whatever was made in the speech of any Minister. It was not explained to the House in any sort of way, and yet it has a very wide and far-reaching effect altogether outside the scope of the Resolution. It provides that Section 95 of the Finance (1909–10) Act, 1910, shall have effect with respect to any duties imposed by the Finance Act of this or any previous year, with the substitution of a reference to that Finance Act for any reference to that Section to "this Act." It is a very long and complicated Section. The one thing which alone is sufficient to put it outside this Resolution is that it makes the Finance Act of this year retrospective at whatever date that Act may be 1210 passed or by whatever Government it may be passed. It would give prospectively retrospective effect to any duty whatever, whether permanent or temporary, which might be in that Bill, absolutely irrespective of the date on which that Finance Act was passed and also irrespective even of the Government by which it was passed. There are many other points in Section 95, which are also outside the scope of the Resolution, but that one is sufficient for my purpose. I desire to call your attention to two rulings. One was given in 1894, when the point was raised as to whether Section 15 of the Finance Act of that year was not outside the scope of the Resolution, and Mr. Speaker said this:—It is important that the Resolution passed in Committee of Ways and Means should cover exactly all the provisions of the Bill subsequently introduced, and the hon. Gentleman has done right in referring to the importance of the matter, and also, I think, in drawing attention to that particular Clause, Clause 15. In my opinion the original Resolution in Committee of Ways and Means upon which this Bill is founded did not contemplate the extra imposition of duty which may be involved by the operation of Clause 15. Under these circumstances it will be necessary not to withdraw the whole Bill, as the hon. Member seems to contemplate, but before we come to the Clause to go into Committee of Ways and Means, and adopt a new Resolution which will cover the particular Clause. Bat as the hon. Gentleman has referred to the possibility of withdrawing the whole Bill, I may say that in 1881, in the Customs and Inland Revenue Bill of that year there were two Clauses which were not covered by the original Resolution in Committee of Ways and Means … and the consequence was that before considering those two Clauses the House went again into Committee of Ways and Means and passed two subsequent Resolutions covering those Clauses.The Chancellor of the Exchequer on that occasion said:—I have to thank you, Sir, for the clear explanation you have given to the House on this point. The hon. Member was perfectly right in calling attention to what was certainly an oversight.There was one other ruling, in 1901, when the Chairman of Committees ruled that it was impossible to make the provisions in a Bill retrospective when the Resolution itself did not do so; that is to say, that it was impossible to ante-date the effect of the Resolution. The proposal in this Sub-section would have the effect of making legal any anticipatory collection of a duty whatever might be its nature, no matter at what date the Finance Bill of the year was passed. With reference to the provisions of the Act, it seems to have the same effect whenever the Bill may have been passed. I do not propose to question the effect of that, but there is one other point to which I wish to draw attention. Any Resolution on which this particular Sub-section should be founded ought to have been passed in Committee of Ways and Means, as that 1211 is the Committee to which the Finance Bill of the year is referred, and if there is to be any provision dealing with the finance of the year it ought to be dealt with by that Committee. It would not be in accordance with the rules of the House to take, with regard to the Finance Bill which we are going to pass, as it were, anticipatorily, power to make any duty to be imposed by it already retrospective. It would not be possible for the House really to consider, without knowing what those duties were, whether or not it should make them retrospective. I think it is stated in "May" that the rule to refer these matters to the Committee of Ways and Means is not without exception, but those exceptions date back sixty or a hundred years. It may be this is a matter to be dealt with when the particular Sub-section is reached, but I thought it right to draw your attention now to the course pursued in 1894 with the approval of Mr. Speaker on that occasion.
§ Mr. SPEAKER
As the House will gather, this is a very complicated point, and I quite agree with the hon. Member who has just spoken, that at first sight it is very difficult to grasp the whole meaning of Section 2, Sub-section (2), of the Bill. I do not profess to understand how far it would carry the House, but I look upon it in the nature of machinery which is designed to carry out the general provisions of this Bill. It is not correct to say that every provision in a Bill must necessarily receive the sanction of a Resolution in Committee, otherwise the Bill would simply be a verbatim reproduction of the Resolution passed in Committee. That is not necessary. There was one sentence quoted by the hon. and learned Member from the decision of my predecessor in 1894 which might lead one to take that view, but that inference cannot properly be drawn. The object of a Resolution in Committee is simply to deal with that part of a Bill which is of a charging nature. In the Finance Bill itself there are many provisions which are not covered by a special Resolution in Committee. I look upon Sub-section (2) of Clause 2 as being part of the machinery which is necessary for carrying out the general provisions of the Bill. Therefore no special Resolution is required for that purpose. With regard to the precedent of 1894, which the hon. and learned Member quoted, I think that on looking at it carefully he will see that that particular part of the Bill was out of order, because 1212 the Clause to which exception was taken was a Clause which imposed a charge upon the people. I have listened to what the hon. and learned Member said, but I have not had time to take in entirely the precedents. With regard to antedating, it appears to me that that is a matter of machinery for the collection of the duties that may be imposed, and it is not necessary that this Clause itself should impose any duty. The duties would have to be imposed by the Finance Bill when it is introduced. The hon. and learned Member will be entitled, if he likes, to renew the point when the Chairman of Ways and Means is in the Chair, and to see if he has any better luck with him.
§ Mr. CASSEL
I fully accept your suggestion, Sir, that the point might more properly arise when the particular Sub-section is reached. May I submit that this is a charging Sub-section, and that it will, from the moment it is passed, make legal charges on the people which otherwise would not be legal, and will make legal by anticipation any charge which may subsequently be imposed. With reference to that, if you tell me that I shall be in order in raising the point in Committee without being in any way prejudiced by any decision, I shall be content to leave it there. If you tell me that you leave it as being absolutely free to be dealt with in Committee I will not press the point further now. I regret I was only able to give you short notice, but I only received a copy of the Bill myself this morning.
§ Mr. SPEAKER
The hon. and learned Member shall not be prejudiced in regard to any representation he may make to the Chairman of Ways and Means by reason of what I have said just now. I may point out that with regard to Section 95 of the Finance Act, 1910, there was no special Resolution in that case upon which that Section was founded. That Section was introduced into the Finance Bill without any special Resolution governing it. Therefore a fortiori as this is a Bill which is not a Finance Bill, it is hardly necessary to have a Resolution dealing with a Sub-section which embodies Section 95, which itself had no Resolution.
§ Mr. JAMES HOPE
I submit that it is usual, I do not say universal, before a Finance or Revenue Bill is introduced, for an omnibus Resolution to be passed declaring that it is expedient to amend the law with regard to Customs, Inland Revenue, and the like. I suggest that 1213 such a Resolution would have covered machinery of this kind, but such a Resolution in this case has not been passed.
§ Mr. SPEAKER
That Resolution is introduced for the express purpose of enabling Members to propose reductions in taxation, and to propose their own Amendments, which otherwise they would not have been able to propose. If I remember aright, I have known a Finance Bill to be introduced without such a Resolution.
§ Mr. AUSTEN CHAMBERLAIN
May I suggest to you, Sir, that it is the practice for a Chancellor of the Exchequer, even when not wishing to make any alterations in the general law except those covered by his own specific Resolutions, to move that general Resolution for the purpose you have stated, namely, to give other Members of the House an opportunity of raising questions which otherwise they would be precluded from raising. I submit to you that if the Chancellor of the Exchequer himself proposes any alterations in the general law, not covered by his own Resolution, that Resolution is as necessary as a foundation for his action as for that of any private Member, and is always used by the Chancellor of the Exchequer for that purpose.
§ Mr. SPEAKER
In this case we are not discussing a Finance Bill. That is the first thing we should have clearly in our minds. This is more in the nature of a Revenue Bill, and during recent years we have had examples of such Bills being introduced in the same Session as a Finance Bill and dealing with a number of revenue topics which might possibly have been included in a Finance Bill. I look upon this Bill in the same light. As I said just now, the Sub-section to which exception is taken appears to be somewhat in the nature of machinery which enables the principle of the Bill to be applied. Therefore it would be in order.
§ Mr. JOYNSON-HICKS
I beg to move, as an Amendment, to leave out the word "now," and, at the end of the Question, to add the words, "upon this day six months."
I ought almost to apologise to the House for addressing it again on the subject of this Bill, in view of the arguments which were brought forward on the Resolutions. I think we may regard the arguments on those Resolutions as something 1214 in the nature of a preliminary skirmish. We have now got the Bill itself in black and white, and can see what alterations the Government propose to make in the constitutional practice which has for so many hundred years protected the subject against the taxing powers of the Crown. As everyone knows, this question has arisen owing to a decision in the recent case brought by Mr. Gibson Bowles. In order that the House should appreciate the position we are in and exactly what alterations the Government are proposing to make. I should like to read one sentence from the judgment of Mr. Justice Parker, now Lord Parker. At the commencement of his very important judgment, he asked himself the question what power a Resolution of the House of Commons had with regard to the imposition of Income Tax. That particular decision related to Income Tax only. This is the considered judgment of Lord Parker, laying down exactly what rights we have and what power a Resolution of Committee of Ways and Means has over the taxation of the subject. He said:—By the Statute 1st William and Mary"—that is the Statute known as the Bill of Rights—it was s finally settled that there could be no taxation in this country except under the operation of an Act of Parliament. The Bill of Rights still remains unrepealed, and no practice or custom, however prolonged or however acquiesced in on the part of the subject can be relied upon by the Crown as justifying any infringement of those privileges.That is the position we are in to-day. It has been declared by the Courts of Law, and the Attorney-General has admitted that the decision was right, that that is the position to-day. The Bill of Rights remains part of the Statute law of our land, and whatever Resolutions we pass in Committee of Ways and Means we cannot, without going through all the formulæ adopted by our ancestors for the protection of the subject, impose any taxation upon him. The argument has been brought forward that the public has for a great many years acquiesced in this method of carrying on the taxation of the country. That is perfectly true; but no acquiescence on the part of any individual can possibly be claimed as acquiescence on the part of the whole people. Anybody may acquiesce in an illegal tax being placed upon himself, but that cannot prevent any other person contesting the legality of the tax. I think the reason why Mr. Gibson Bowles brought his action was chiefly to call attention to the practice the Government has adopted during the 1215 last few years of postponing its financial legislation until a much later part of the Session. In the old days the Finance Bill was brought in immediately after the Budget. Sometimes it was a few days, and sometimes a few weeks, during which there was illegal collection of the taxes. If I may say so without offence, it is the Chancellor of the Exchequer himself who is very largely responsible for the position in which he finds himself, through the habit of letting his Budget run for so many months. I desire to deal with the constitutional aspect of the matter. I want to emphasise it even at this stage, after we have debated it twice, because I do not want the House of Commons, which is in its essence a different body from the Committee of Ways and Means, to pass the Second Reading of this Bill—which gives up powers which in all probability will never be got back again to the control of the Executive in the matter of finance, and simply hands everything over for a period of four months to them by a mere Resolution passed in Committee of Ways and Means—without realising what it is doing. There has never been before in the history of England a possibility of imposing taxation by a mere Resolution of Committee of Ways and Means. For the first time that is to be done under the provisions of this Bill.
If there is one thing we are sent here to do, it is to protect the rights of the subject. If we are going to throw away those rights and give up all those safeguards, at least let us do it with our eyes open, realising that what is being done under the provisions of this Bill by one Government may be carried a step further under the provisions of a somewhat similar Bill by another Government. It has taken a good many hundred years for any Government to have the audacity to come down and propose the abrogation of our financial procedure. I admit that some of our financial procedure has been cumbersome and that it might be altered or modified in certain particulars, but that is no justification for any Government coming down and proposing to sweep the whole thing away so far as four important months of the year are concerned, and saying that whatever the Committee of Ways and Means chooses to do with regard to Income Tax, Customs and Excise shall have statutory force as if it were an Act of Parliament. There is a great difference between passing a simple Resolution 1216 in Committee of Ways and Means and passing a subsequent Bill through all its stages in this House. You may—I say this without desiring to give offence—get a coalition majority to pass a Resolution in Committee of Ways and Means, but you may find it much more difficult to keep that same coalition together week after week and month after month while you go through all the stages of the Bill. It is no secret that the Budget of 1909 was a compromise between the right hon. Gentleman and the Leader of the Irish party. I think it was frankly admitted that the Irish party did not want the Budget of 1909, or many of its provisions, so they held up the right hon. Gentleman and would not pass his Finance Bill until certain other arrangements had been made with regard to Home Rule, with which I will not trouble the House at this moment. I want the House to realise how very much easier it would be for the right hon. Gentleman to come to terms with any particular section of his followers in order to pass a single Finance Resolution in Committee of Ways and Means than to keep those terms going and the coalition in existence while the Finance Bill was passed through all its stages from Committee to Third Reading. That is a point that the House must clearly realise. Then, having extended this particular form of procedure to finance, there seems to be no reason at all why some future Government should not bring in a Bill and extend the same procedure to other matters of legislation. It is just as reasonable to say that, having established the fact in this House that taxation may be imposed upon the subject by a mere Resolution for four months, there is no reason why you should not pass another Bill and say any legislative proposal should be passed and have statutory effect for four months, and, if four months, why not for eight or sixteen, or a limited period—by a mere Resolution in Committee of Ways and Means or the House of Commons itself? I ask the House to hesitate before passing this new system of legislation. When we were dealing with the Resolution various suggestions were made by Ministers, and the Home Secretary seemed to think we were making too much of the Resolution. He said:—The hon. and learned Gentleman seemed to think that this Resolution of itself is operative and effective. It is the Resolution on which the Bill is to be founded.Now we have the Bill itself. It is in its essential details exactly the same as the Resolution upon which it is founded. The 1217 Home Secretary went on to make a most extraordinary statement:—The question is treated by the hon. and learned Member as if the Bill was really going to impose taxation by a Resolution of this House. It will do no such thing. It will authorise the collection of taxation as if it had been imposed."—[OFFICIAL REPORT, 8th April, 1913, col. 1041.]I want the House to look at the Bill in the light of the speech of the Home Secretary. The Bill says that where a Resolution is passed by the Committee of Ways and Means of the House of Commons providing for the imposition of a new tax, or for the variation of any existing tax, or for the renewal of an old tax, such Resolution shall, for a limited period, have statutory effect as if it had been contained in an Act of Parliament. What does the Home Secretary mean by saying the Bill we are now discussing does not authorise the imposition of taxation by a mere Resolution? That is exactly what it does authorise. I cannot understand how the Home Secretary can possibly have made that suggestion in answer to us yesterday afternoon, when I think it is fair to assume that he knew what the conditions and contents of the Bill would be, and while we on this side of the House certainly did not know. Then the right hon. Gentleman made great play with the suggestion I made that a tax passed by this mere Resolution should not be operative until it had at least been reported to the House. I thought it right that the House itself, even if we are to give this power by mere Resolution of imposing a tax, should take some part in that proceeding and the Committee of Ways and Means should report to us and give us at least an opportunity of saying whether we desired that tax to he passed or not. He said, "You cannot do that, because, if you do, you will have all kinds of stocks taken out of bond, competitors will have to compete with them, and so forth," but that has nothing to do with new taxes at all. New taxes at all events do not refer to articles which are in bond. You may impose a new tax to-day, say, on the import of foreign watches. The right hon. Gentleman's argument with regard to goods coming out of bond is not effective at all, because there are no such things in bond at present. I quite agree it would refer to an alteration of the existing taxes on whisky or tea or anything of that kind, but I think there the matter might be reported to the House on the following day. At least we have felt on previous occasions that we could let these Resolutions go through because we knew they would come before the House on 1218 Report, and on the Finance Bill. It would be quite possible that even on existing articles there would be no question of taking cut of bond if we passed our Resolution late one evening and passed on Report stage the same Resolution the next day, making it retrospective. I do not think very much would get out of bond under those circumstances.
We know now that there is to be a Report stage, and if on Report stage, which may be any time before the expiration of four months front the date of the Resolution, the tax is rejected, or if it is rejected on the Second Reading of the Finance Bill, or if there is a prorogation or a dissolution, the Resolution is to have no effect at all. In a very light and airy way Ministers tell us that anyone who has paid these taxes can get them back again, but there is very considerable difficulty, and the difficulty applies mostly to poor people and to small articles of consumption. The big importer might get his tax back again from the Treasury, but the man to whom he has sold will not get very much of it back, and the retailer will not get much back from the wholesaler, and certainly the consumer, the man who has drunk the whisky or the tea, will never get his proportion of the tax back again.
§ Mr. JOYNSON-HICKS
It will be out of order to turn this into a Tariff Reform discussion, but I will grant that the consumer undoubtedly pays the tax on tea. Then I want the House to understand a little further where they are going. The right hon. Gentleman (Mr. Austen Chamberlain) told us the other day that he would not think of passing a Tariff Reform Budget under the provisions of this Bill. He speaks, of course, with great experience of the difficulty there would be of passing a Budget, but after we have gone there may be other Chancellors of the Exchequer who will make as big a leap as the right hon. Gentleman opposite has made from past procedure, because this is a very much bigger leap than it would be, having got the Bill into working order, to pass a complicated Resolution with a Schedule imposing new taxes on a vast number of manufactured articles. The Home Secretary said yesterday that it is desirable to get your legislation through as quickly as possible in matters of taxation. Assuming it is desirable to have your tax clapped on immediately the 1219 Resolution is passed, it would be perfectly possible, and I think right, for the Chancellor of the Exchequer to say, "In addition to my tea and my whisky taxes, and so forth, I am going to put a Customs Duty of 10 per cent. on manufactured articles in the Schedule of this Resolution." It would be one Resolution, it would be perfectly simple to pass it, and you would get the very thick end of the Tariff Reform wedge passed through the Committee of Ways and Means, and it would have statutory effect under the provisions of your own Bill for at least four months. Look at the confusion! Supposing it were passed by a narrow majority in this House—supposing the Free Traders on the other side of the House set the whole country in a blaze of agitation against this particular Resolution imposing these taxes on manufactured articles. Supposing meetings were held, and a very strong demonstration was got up against the tax, and ultimately, at the end of three and a half months, the House rejected the particular Resolution on Report, what is to become of your taxation? You have imposed it; you have made it statutory for three and a half months; you have been collecting the taxes on these articles for that time; they have been sold to small dealers and consumers. What a condition of confusion you would have got into and how harshly you would have treated the consumer, who is really the person for whose care we in this House are actually elected! This Bill is constitutionally an outrage on the constitutional practice which has been ours for so many centuries. I know the difficulty, and I am quite prepared to admit it, but I think it should be overcome, and might be overcome, without going to such an extreme step as making a simple Resolution of the Committee of Ways and Means have statutory effect.
I want to refer to Sub-section (2) of Clause 2, and to protest against it as one more instance of legislation by reference. This is a Taxing Act, which affects the subject, and which everyone who runs ought to be able to read. Just read this Sub-section:—Section 95 of the Finance (1909–10) Act, 1910, shall have the effect with respect to any duties imposed by the Finance Act of this or any previous year, with the substitution of a reference to that Finance Act, for any reference in that Section to 'this Act.'1220 You, Sir, of course, are much more learned than I am in Acts of Parliament. Section 95 consists of five long and complicated Sub-sections. The Chancellor of the Exchequer is a lawyer and may understand his own Acts, but it is difficult for me, as a lawyer, to interpret them in another place, and no member of the public, none of the ordinary subjects of His Majesty, could understand an Act of Parliament containing a Clause like this referring to an Act containing a Section like Section 95 of the Act of 1910. I have protested before against legislation by reference, and I protest finally against this. This is a short Bill. Section 95 might have been altered and reintroduced in this Bill. There was no dispute about it in 1910. It is a mere machinery Section, and might and should have been introduced, and I hope even now the Attorney-General will consent to take out this Sub-section, and reintroduce Section 95 into this Bill. For these reasons, but more especially because of the grave breach of our constitutional usage and practice, I beg to move, "That the Bill be read a second time this day six months."
§ Mr. CASSEL
I beg to second the Amendment. I desire, in the first place, to express my regret that we are compelled to deal with this very complicated Bill at such very short notice. We only received it this morning, and I have been unable, though I have spent an hour or two at it this morning, to fully master its provisions. I quite agree the matter is an urgent one, but for months, ever since 4th November, I have been trying to press the Government to do something, and we ought not to have to suffer in not being able to discuss this Bill properly because the Government were too negligent to do anything at the proper time. It is a matter of the gravest constitutional importance that we should rush into it in a hurry without properly considering its Clauses and provisions, which may lead us into passing a Bill the effect of which we do not fully apprehend, and which may be very far from what we really wish to do. At first I was inclined to think there was very much more in the Bill than I think now after consideration of the Resolution, but the discussion on the Resolution has convinced me that this method of dealing with it is at least so open to doubt that I am not sure that the qualified assent which I was prepared to give to the provisions of the Resolution in 1221 the first instance was justified. In the first place, it appears to me that the Government have made absolutely no defence of their policy. They had a day and a half on the Resolution, and it was pointed out to them that no country in the world had similar provisions. There was only one case cited by the Attorney-General, and that was the Isle of Man. I should like to ask the right hon. Gentleman to-day whether he can cite any other precedent than that of the Isle of Man. That was an Imperial Act applying to the Customs of the Isle of Man. In the whole history of Financial Resolutions the Government have hitherto cited no other precedent. I have still an open mind on this matter, and it would be interesting if the Government could cite any other precedent. In our country during the time we had a protective tariff we had not this practice.
Let me point out that, if the Government really are justified in going on with this Bill in the form in which it stands, I cannot understand what they were about when dealing with the Government of Ireland Bill. I do not think attention has yet been called to Section 15 of the Government of Ireland Bill, which provides that the Irish Parliament is to have certain powers of taxation. When the Bill was under discussion we were told that the great financial stand-by for the Irish Parliament was the power to increase the duties on beer and spirits. With regard to that they have unlimited power of increasing the duties. Now, under this Bill, which is incapable of coming under the Parliament Act, it will be impossible for the Irish Parliament to do so, because in order to impose a duty it must be done by the Irish Parliament, and it would be incompetent for the Irish Parliament to pass any legislation of this description, or to do it by Resolution. In the case of the Irish Parliament, supposing you take the duties on spirits or beer, the same difficulty which is said to be insuperable here would be equally insuperable there. You might say that before the Irish Parliament had passed its Act the whole of the revenue expected for the year might have been forestalled. I wish the right hon. Gentleman to give some explanation, if they think this is so inevitable in the case of Great Britain, why it is not equally necessary for these additional duties, upon which the Irish Chancellor of the Exchequer will have to rely for any additional source of revenue. That is one of the matters which weighed with me since the Resolution was brought 1222 forward. It seems to me that it raises a wide constitutional question for the whole Empire, for although there have been two decisions in Colonial Courts before the case of Mr. Gibson Bowles, those decisions must be taken as overruled, or as decisions which would not be followed by the Privy Court if that Court came to deal with the matter now. The question is whether Canada, Australia, or South Africa could without an Imperial Act pass an Act of this description or legalise or sanction such a practice.
As to the provisions of the Bill itself, I should like to thank the Chancellor of the Exchequer for having embodied in the Bill a good many of the Amendments which he said he was going to embody in it, although he was not going to embody them in the Resolution. If I expressed myself somewhat warmly on that subject, perhaps he will attribute it to my study of his orations while in Opposition. Although he has gone a certain length in meeting those points, I must say with regard to the Income Tax that I do not think the argument has yet been answered that there is no necessity for taking such a course as is now proposed. I pointed that out before, and no attempt has been made to meet the point. The whole thing could be done by making the Income Tax year run from 5th July to 5th July. In 1842, when the Income Tax was originally imposed, the financial year ended on 5th January. The financial year now ends on 31st March. The Attorney-General did attempt to make an answer to that. He told us that the financial year for Income Tax was so impenetrably embedded in our financial system that, according to his view, we are bound to go with it to the crack of doom. I think that the resources of civilisation are not exhausted, and that it would be possible to alter the date. It might give a little trouble to officials. It might be that for a year it would put your statistics out of joint, and it might be that you would have to deal with a period of fifteen months instead of twelve months. I have not the knowledge which is possessed by the officials, but the Government in these matters, while considering the convenience of officials and the convenience of Members of this House, so far as their holidays are concerned, leave out of consideration altogether the convenience of the public. I say that we ought not to regard these matters as 1223 superior to and over and above the convenience of the public.
It is a very real inconvenience to the commercial community that this uncertainty should exist. Even under the terms of the Bill bankers and all those who deduct Income Tax from interest will be bound to keep a list, because if your Resolution ultimately fails through its statutory effect coming to an end, the bankers will be bound to repay everything they have deducted. They expose themselves to an action by every individual from whom they have deducted 6d. if there should be a dissolution after the date of the passing of the Resolution, and before the tax is legalised by Statute. Supposing you increase the Income Tax by a Resolution, and then in the Act that increase is not legalised, bankers and the whole commercial community, everybody who has deducted Income Tax from salaries, and every mortgagor who has deducted Income Tax from the interest, will have to refund the money. It is conceivable that a dissolution or a prorogation of Parliament might take place—it is highly within the bounds of probability—after the date of the passing of the Resolution and before an Act has been passed giving real effect to the Resolution. In that case the whole commercial community will have been wrongfully charged these taxes. I put it to the Government that it would have been a more statesmanlike way and more conconant with the principles of the Constitution, from the Bill of Rights onwards, if they had altered the Income Tax year, or if they had adopted some other expedient. Before I commit myself to any particular expedient I should like to have an opportunity of consulting the officials as to whether some other expedient which would not have led to such inconvenience to the whole commercial community could have been adopted on the present occasion.
I quite agree that, so far as the temporary difficulty is concerned, something must be done, because the Government was so negligent as to do nothing at an earlier date. In spite of all the endeavours I made by asking question after question, and moving the Adjournment of the House, and in spite of the fact that we had time to discuss whether we should have a billiard table or a bagatelle table in the House, there was no time to discuss this important matter before 5th 1224 April. With regard to Customs, I am bound to say that until I studied the matter more fully I thought something of this kind would have to be done. I am not sure now that that view is right. I am very much impressed with the fact that the Ministry has been unable to cite any case other than that of the Isle of Man. I am impressed also with the fact that they themselves as regards Ireland have not provided for the case at all. I am impressed with the fact that in the case of our own Colonies such procedure would be constitutionally impossible without an Imperial Act of Parliament. I am further impressed with the fact that some procedure could have been adopted whereby goods could have been taken out of bond, subject to security being given that the duty would be paid in accordance with the provisions of the Finance Act. I believe it was long the practice, when duties were reduced, to at once allow goods out at the reduced rate, but then security was always taken that, if the Act did not allow the reduction, the higher rate would have to be paid. I do not know exactly under what Act of Parliament that was done, but that practice apparently did not lead to any loss of revenue. I wish to get a little more information so far as Customs are concerned. I have an open mind on the question, and my only complaint is that the Government decline to deal with our arguments. For a day and a half we have been endeavouring to get them to answer these points. I should really like to know whether some other expedient could not have been adopted. My hon. Friend (Mr. Joynson-Hicks) has pointed out that there is great advantage in collecting duties before the Act of Parliament is passed. In the case of Customs and Excise you can do that, and in the case of the Income Tax in the majority of cases you can do it. By passing this Bill, under which a tax may be collected on the authority of a mere Resolution produced for the first time, and which is not fully appreciated by all the Members of the House, you may be doing a grievous wrong to a large number of persons. And you have got to weigh that in the balance against the convenience of the revenue. The convenience of the revenue has to be considered I quite agree. On the other hand, the interests of the public have also to be considered. The Government have not placed before us the opportunity for dealing with the question in a satisfactory way.
1225 This Bill goes much further than the Committee of Ways and Means into the details of our Parliamentary procedure; it introduces the words "when considered on Report." We have here stereotyped in an Act of Parliament the whole of that procedure, and in Committee we shall have to introduce a lot of modification of that. We shall have to be certain that the Report stage is taken within reasonable time, and there will have to be a number of detailed provisions which bring in the whole procedure of this House. The period of four months mentioned in Sub-section (2) of Section 1, is too long. During all the periods in which this Resolution will have a statutory effect people will have to keep a record, and will be subject to the possible risk of action. It is not only for four months, but for four months after the Resolution is "expressed to take effect." You might have a Resolution expressed to take effect three months hence, and then having statutory effect for four months afterwards, so that the uncertainty might last a long time. The Finance Act of the year might in accordance with the recent practice of the Government be again postponed until November or December. That requires considerable narrowing down and limitation. With regard to the one month to which the right hon. Gentleman said he would agree, though I was willing to accept one month in the Resolution instead of two months, it appears to be too long a time for the Bill. The right hon. Gentleman put it on this that Easter might be late and that we might want fourteen days' holiday. There, again, if the House chose to take the trouble to do it, it could always within fourteen days of the expiration of the Income Tax year, before 19th April, introduce the Budget; and the public have all the more right to look to us to sacrifice our convenience since we are in the enjoyment of salaries. It is important in a commercial community that the Budget should be introduced at the earliest possible moment, and on that ground I submit that the period should be shortened.
Sub-section (2) of this Clause seems to me to be an altogether outrageous provision in its present form. It goes to this length, that we are now to say already by anticipation any duties whatsoever which the Finance Act which will be introduced at a future day may impose may be collected before that Act becomes law, however distant the date may be when the Act receives the Royal Assent. It leaves 1226 the right hon. Gentleman open to pursue his practice of getting his Finance Bill in December or November. It does not limit at all the character of the duties to which this is to apply. Of course I accept Mr. Speaker's ruling that this question cannot be raised now until that Section comes up in Committee, as to whether it is within the Resolution, but it seems to me to be very far-reaching to say prospectively that every duty, whether permanent or temporary, which may be imposed by the Budget of this year, and whatever may be the date when that Budget is passed into an Act of Parliament, shall have a retrospective effect as from the date when this is passed. If a Clause of the kind was intended to be put into the Bill the right hon. Gentleman might have given us some information. I do not in the least understand what the words "any previous year" mean. I should like the right hon. Gentleman to give us some explanation. In matters of finance, at least since I have been in the House in 1911, the Government have shown an unparalleled negligence which has got us into this constitutional tangle. The negligence of the Government in getting us into this tangle is only equalled by the want of resource and incompetency which they have shown in their endeavours to get us out of it.
§ Mr. T. M. HEALY
Although as a rule I have been a somewhat unsparing critic of the finances of the Chancellor of the Exchequer I feel bound to say on this occasion that I think sufficient allowance has not been made for his difficulties, nor do I think his difficulties have been created by any Act either of himself or the Government. I therefore feel bound to express the opinion that the line taken by the right hon. Gentleman the Member for East Worcestershire, was the proper and constitutional line. While saying that I wish strongly to criticise the frame in which the Bill has been shaped for which I do not believe that the Chancellor of the Exchequer is in the least degree responsible. I trust that the Chancellor of the Exchequer will not take any remarks that I may make as in any sense a criticism upon him. I desire to guard myself entirely in that direction, but I do submit that the Bill as it is framed is one of the most curious developments in the history of legislation, and that the frame of the Bill deserves to be entirely altered. What was the position? The Chancellor of the Exchequer found that a practice which 1227 had gone on for nearly a century had been attacked, and, as everyone knew, the moment it was attacked that practice was bound to be condemned by the Court. That was A B C law to everybody for the last seventy or eighty years. The Chancellor of the Exchequer was not responsible for that state of the law nor for that state of practice. He found it as his predecessors found it, and he did nothing since to incur or deserve the censure of this House. Then he had to apply a remedy. He had to bring in a Bill. If I were asked how this Bill should be dealt with I should deal with it in the way in which the difficulty has arisen. I should provide that if an action were brought in respect of any tax enforced by reason of any decision of the House of Commons, the certificate of the Chancellor of the Exchequer that such tax had been imposed by reason of the Resolution of this House should be an answer to the action. I would stop there, and I think that that would absolutely have provided a remedy for the difficulty that has arisen.
This Bill, to my mind—I am only criticising the drafting of the Bill and taking what I think is the historic view of the case—outrages Parliament in this way, that it takes the temporary procedure of this House and stereotypes the form of legislation while we have the power of altering our Standing Orders. Whoever drafted this Bill never dreamt for a moment that it would ever come before a Court for construction. He thought that what he was doing was saying to the public, "The moment we legalise this nobody will ever come into Court or challenge a tax in any Court"; and nobody who drew this Bill ever dreamt that a writ would be issued after it passed into law. But suppose for a moment that anybody challenged a tax after this Bill becomes law, a more deplorable muddle could not be conceived than the state of things that would come to pass if this Bill was challenged as an Act by means of a writ, and if Mr. Bowles attacks the Government a second time. If a judge had to consider the case the pleading would be that a Resolution in the House of Commons had passed. The judge would say, "What is the Resolution?" He would say, "Was it a Resolution of a Committee?" and then he would say, "What is a Resolution of a Committee of Ways and Means? Prove all that before me." 1228 That would have to be a matter of proof. Then the judge would say, "I dare say I can get some light on the matter by turning to the Standing Orders of the House of Commons," and he would look up in the index the words "Ways and Means"—because a judge is bound to be tender to the subject when a tax is imposed, and naturally he would want to see how this tax was laid on the subject. Turning to the index, he would see "Ways and Means: See Chairman of Ways and Means." That is the only clue which the Standing Orders of Parliament would give to the judge in construing this Act. Then he turns to "Chairman of Ways and Means." Remember you are dealing with one of the matters relating to the Chairman of Ways and Means. Standing Order 79 says that the Chairman of the Committee or Mr. Speaker's counsel shall confer with the Chairman of the Committee of the House of Lords; Standing Order 80 says that the Chairman of the Committee, with the assistance of the counsel of Mr. Speaker, shall examine all private Bills; Standing Order 81 says that the Chairman shall report on Bills relating to Government contracts; and so on down and along the whole of these Standing Orders, and there is not a single clue which a judge could find as to what was a Resolution imposing a tax on the subject in Committee of Ways and Means. The judge would say, "Well, this a term of art, and as a term of art it is absolutely novel." He would then derive assistance, I dare say, from some amicus curiœ, who would say, "Perhaps you will find the clue if you grope through the Standing Orders in relation to Money Bills." The extraordinary thing is this, that when you come to deal with this Section from the point of view of laying a tax on the subject, the words "Ways and Means" are not used at all in the Standing Orders of this House. Let me call the right hon. Gentleman's attention to the Standing Orders, because this Bill is attempting to import the language of the Standing Orders into the language of a Statute, and it should use the language of the Standing Orders. What is the language of Standing Order 66? It is this:—This House will receive no Petition for any sum relating to public service, or proceed upon any Motion for a Grant or charge upon the public revenue, whether payable out of the Consolidated Fund or out of money to he provided by Parliament, unless recommended from the Crown.The first thing any judge would insist upon would be that you should prove to the 1229 tribunal that there was a recommendation from the Crown for this tax. Standing Order 67 says:—This House will not proceed upon any Petition, Motion, or Bill for granting any money, or for releasing or compounding any sum of money owing to the Crown, but in a Committee of the whole House.The words "Ways and Means" are not mentioned at all. The words used are "Committee of the Whole House." Take the next Standing Order, "Restrictions on receipt of Petitions relating to public money." That also speaks of Committee of the Whole House; and Standing Order 69 deals with the procedure on Address to the Crown for the issue of public money. In the latter Standing Order also the words used are "Committee of the Whole House." These Standing Orders never use the phrase "Ways and Means." It is the same in regard to India—This House will not receive any Petition, or proceed upon any Motion for a charge upon the revenues of India, but what is recommended by the Crown.There it is, "Committee of the Whole House" again. All through the Standing Orders dealing with public money, from No. 66 to 71, the Committee of Ways and Means is not once mentioned. I do not know whether the Chancellor of the Exchequer was in the House—I think it was the year before he was elected—when Mr. Gladstone laid down that you could take your whole Budget with the Speaker in the Chair. We did not challenge it, but what happened was this: Mr. Arthur O'Connor had put down a Motion against the Speaker leaving the Chair, and he proposed to raise a question of grievance before the Speaker left the Chair on Budget night. It was a case of great importance, and it occurred at a time when we were fighting upon very many matters. Mr. Arthur O'Connor had acted on his own initiative, and we put pressure upon him, in view of Mr. Gladstone's great position and great age, not to take the course which he proposed to follow. Mr. Gladstone thanked the Irish party, and he said that if they had proceeded in keeping up obstruction he was prepared to make his Budget statement, not in Committee of Ways and Means at all, but with Mr. Speaker in the Chair. I never looked to see how far that view was correct, but I was convinced when the Chancellor of the Exchequer said that he was not wedded to those particular words that when we got the Bill the Bill would not contain them. I do not think that the Bill should contain those words, and I think they are a very grave mistake.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
The words "Committee of Ways and Means"?
§ Mr. T. M. HEALY
Yes. What is worse is, a worse thing, you import into this Bill, not merely the phrase, "Committee of Ways and Means," but you bring in the practice of the House, which we could abolish to-morrow morning by a majority vote. I therefore say that you have brought in a Bill which might land you in a procedure far more complicated than the recent case. An absolutely unnecessary course has been taken, and a simpler course I respectfully suggest to the right hon. Gentleman would absolutely suit his purpose. I know very well that as an old Member of this House he is attached to its rules and formulæ, and, therefore, I am quite sure that he is only acting on the advice of the draftsman, without having considered the matter in all its bearings from the Parliamentary point of view, in stereotyping by Statute the forms of this House, which have only been adopted by us within the last comparatively few years. I am dealing with the case of Money Resolutions and with the Standing Orders, and I say that you do not find in the Standing Orders this expression, "Ways and Means," which the right hon. Gentleman is using in this Bill. I do suggest to the right hon. Gentleman that the Standing Orders may be changed from one hour to another, and that he should not import them into this Bill and make them statutory. Some easier and simpler remedy should be found for what is undoubtedly the difficulty that he has to face—some simple remedy whereby a certificate could be given by him to a litigous person who brings a case into the Court for merely acting on a Resolution of this House—a practice which has been adopted for many years past. I do not believe the Chancellor of the Exchequer is in the least degree to blame, because he has only done what his predecessors have done, but I would respectfully ask him that he should pass such a Bill as will not make encroachments upon the forms and usages of this House and stereotype them as permanent, when really they are nothing but for our convenience and for use among ourselves.
§ Sir ALFRED CRIPPS
I should like to say a few words on what has been said by the hon. and learned Member who has just spoken. Nothing can be worse than to use under statutory conditions phrases which are merely applicable to the forms 1231 and Orders of this House, because the result of that is that, when you have once got terms of this kind embodied in a Statute, we are really prevented in this House from dealing with the forms and Orders in any way we think best. There was another case in which the duty was ultimately levied in such a form that so far as concerned the forms and orders of this House we were to have an absolutely free hand, and they were not to be stereotyped by Statute at all. If you once stereotype your procedure you cannot alter it except by Statute, and that, I think, would be a great mistake as regards the forms of this House. I want to speak to-night only in regard to the remedy proposed; I said what I had to say on the constitutional point on another occasion. Let me call attention to this matter as bearing upon the use of the phrase referred to. In the Customs Act of 1876, you had to deal with what is called "the Resolution of this House." This term was in Section 18 of the Act of 1876, and if you used now an expression similar to that which appears in Section 18, of the Act of 1876, the difficulty which is felt would not arise. I want to know why the phraseology which was used in Section 18 of the Customs Act of 1876, has been departed from. The terms there have been used for the very same purpose as that for which we are endeavouring to find some solution of the present difficulty. I want on that to urge two points upon the Solicitor-General. The first is that the solution of the difficulty proposed in this Bill is not only highly unconstitutional but highly inconvenient to the subject. Secondly, having regard to what was put in the Act of 1876, and having regard to the fact that we are dealing with the Income Tax, I suggest that the proper remedy is not that which we have in the terms of this Bill, and that, therefore, this Bill ought to be rejected and a proper remedy should be introduced.
On the first point, what can be more inconvenient than the proposals contained in this Bill? There is a period of time in which the liability of the subject remains in suspense; he may not be liable to pay a certain tax or particular duty. A Resolution has been passed, and while that Resolution is in force, and has not been upset by any subsequent procedure of this House, he will be liable. After a period, perhaps two or three months the liability imposed in the first instance no longer 1232 affects him; so that as regards everything in this country, as regards taxes, Customs, and duties, you are in this position of uncertainty which is admittedly most inconvenient to traders, to bankers, and to the ordinary subject. You may be held liable for the time being to pay a sum of money in the form of a tax or duty, or Customs charge, but after a period of three or four months—in my opinion much too long a time—you may find that you are no longer liable to pay at all, and that those taxes, duties, and Customs charges were only temporary, and were not to become permanent at all. I suggest that that is a most inconvenient position. It is said that the subject who has been put in that position can afterwards get repayment of recoupment from the Government. Is that really in substance a practical remedy at all? I am not now talking of who pays the tax in its ultimate incidence, but of the man who pays the actual amount, and who desires to obtain repayment or recoupment. Everyone's experience is that that is a costly, difficult matter, and there is no litigous business in which the subject proceeds which is more difficult to carry on without enormous expense than litigation against the Government or a Government Department. That is really no effective remedy at all, and, in my view, one of the essential wrongs of the Bill, so far as the subject is concerned, is that he has to pay money to the Government, which under the terms of this Bill he may not be liable ultimately for, and then it is put upon him to obtain repayment or recoupment. We do not find any particular methods mentioned, and I assume the method is by ordinary legal procedure, and I do not think you could put anything more unjust on the subject than to place upon him the trouble and inconvenience of obtaining repayment or recoupment under those circumstances. If that could be shown to be necessary, we would all agree to the argument that to necessity other considerations must give way, but I cannot see that there is any argument of necessity at all. It is from that point of view I desire to urge upon the Solicitor-General, with his knowledge of Finance Acts, whether all that is desirable could not be obtained, I do not say exactly under existing procedure, but by a modification.
Let me take the question of duties and Customs. The present procedure under the Act of 1876 has not been referred to, 1233 and I do not think it has been really appreciated. The procedure is when a Resolution of this House has been passed imposing a new duty or varying or placing an additional duty on something on which an existing duty has to be paid. The position is one which does no hardship whatever to the subject, who has got to pay the tax. If there is a dispute as to what the tax may ultimately be, during the period of time between the Resolution and the passing of the confirming Act, the money is kept in suspense, in order that it may be properly dealt with when you finally come to the proper legal position between the parties. It is not handed over to the Treasury or the Government, in order that when the real duty is ascertained, and there is very elaborate machinery for ascertaining it, then the proper amount shall be charged as against the subject. A very slight modification of that procedure would meet the present situation. The case brought by Mr. Gibson Bowles was not with regard to Duties and Customs, but only with regard to Income Tax. Mr. Justice Parker, now Lord Parker, said that it by no means follows that the reasoning he applied to Income Tax was applicable to Customs and Duties because of what he found in the Act of 1876, particularly Section 18. A very slight modification as regards the existing provisions of Section 18 and subsequent Sections of the Act of 1876 would amply, conveniently, and fully deal with every inconvenience which heretofore has been suggested as regards this question of the collection of Customs and Duties. Why have we heard nothing about that? The reason is this—and this is where, I think, the seriousness of the Bill comes in—that it enables a Chancellor of the Exchequer, and unfortunately, I think, on either Front Bench, and therefore the House does not get support from either Front Bench, to get his Resolution early, say, in April, and not again to touch his Budget Finance until some time in August.
What possibility is there really for fair discussion and a fair grasp of financial topics in this House under conditions of that kind? In the meantime the tax has been levied for a period of four months, and then the discussion arises in August. There is not a Member of this House, and I wish they would express their views, who is not perfectly well aware of the fact that under those circumstances financial control and discussion are nothing more than 1234 a mockery. Just consider that you may be asked in August, or possibly in September, to discuss in detail whether a tax is a proper tax or not, while it has been collected for four months! To suppose after that period that you can get any proper discussion in the House is merely blinding ourselves to what is the truth and pretending that we are going to maintain a control which, in truth and substance, it is impossible to maintain under conditions of that kind. In my view the question of Customs and duties could easily be met by the adaptation of the Act of 1876, but the difficulty has not arisen yet. I do not believe it ever will arise, having regard to the terms of the Act of 1876, but, at the outside, nothing more is wanted than certain amendments and adaptation of that Act in order to meet any possible action which it is suggested could follow upon the action taken by Mr. Gibson Bowles. That is only an assumption.
May I say, in agreement with what was said by the last speaker, that you cannot talk about usage being the same as a statutory condition, because the very idea of usage is that it only holds so long as you utilise it reasonably, just exactly why it was set aside in the case of the Income Tax in Mr. Bowles' action. Once have a statutory provision that you can depend on the Resolution for four months, and under those circumstances usage is so transformed into a stereotyped condition that, in substance and in truth, it is entirely different from the old usage and from the conditions on which the old usage was based. As to the Income Tax, in my view, all this interference with constitutional privileges is wholly unnecessary. Suppose you have your Income Tax extended over a period of fifteen months to a later period in the year—and there is not the least reason why you should not do so—then, if you simply did that, your Income Tax would be collected, like all other taxes, under ordinary constitutional authority, and this innovation by mere Resolution giving power to tax the subject, which I look upon as a most serious innovation as regards the rights and privileges of this House and of the subject, would be wholly unnecessary. Why cannot that be done? There is not the least difficulty in it. In the old days you imposed Income Tax for two or three years, and it is not necessary for this purpose to make it run over more than about fifteen months, by which you would have everything you 1235 want. I know we have had extraordinary cases put, such as War Taxes, but those cases really are no test of what our ordinary procedure ought to be. When you have some great crisis of that kind you suspend all ordinary rules. We all come together and do what is necessary in order to provide money for a national crisis, but it is wrong to test our ordinary procedure by what may he wanted under exceptional conditions of that character. One word as to other points in the Bill. There is the question as to it being applicable to a Tariff Reform Budget. I should, personally, be very much opposed to a Tariff Reform Budget introduced, and made binding merely by Resolution, but if you are going to give power of this kind against this House to any Government, I do not see why a Government should not use that power, and I believe they will, and I think that many hon. Members opposite, who now vote for stopping the effective control of this House, will live to repent their action if they put this halter round their necks, when they find they have no opportunity of discussing some great financial change which may be introduced in some future Session.
I desire to refer also to Clause 2, the purpose of which, I imagine, is to apply to Income Tax somewhat the same provisions as Section 18 of the Act of 1876 applied to Customs and duties. Clause 2 says that although there is no Resolution of this House or any statutory power to collect the Tax, yet, for a period of time after all statutory power has come to an end, you may still go on collecting. I want to know what is the meaning of a provision of that kind. If it is to deal with the same subject matter as Section 18 of the Act of 1876, then I appreciate it, but then if the procedure is to be approached from that point of view, it is inconsistent with the framework of this Bill. If, on the other hand, you are going to say, without any statutory authority at all or any authority of this House, you are going to tax the subject and make him pay taxes, then I say that is a proposition which cannot be supported, and I do not believe any Member of this House, apart from strong party spirit and feeling, would attempt to support it by any argument, and I have not heard it supported by any argument up to the present. I do not believe anyone could support it, if the House understood what is proposed in this part of the Bill. I am not going 1236 to deal with matters to which I referred yesterday, but I agree with what was said by the hon. and learned Member who moved the Amendment. I think nothing could be worse than the unconstitutional aspect of this Bill, but, apart from that, when we come to the Bill itself, we know that it puts the remedy in a most inconvenient form possible, whereas, when we examine what is intended to be met, it ought to be met either in the way I have suggested or in the way suggested by my hon. and learned Friend, namely, that not as regards the imposition of a tax, but as regards the collection of a tax, no action should be brought against the collector during the period of time when you want to safeguard the revenue. I shall certainly vote in favour of the Amendment.
§ Mr. MILLS
I wish to support my hon. and learned Friend in his opposition to the Second Reading of this Bill. It seems to me that the Government have wantonly drawn up a very bad Bill—one which violates the constitutional forms of this House, and also inflicts a great deal of worry and trouble, and perhaps worse, upon the financial and commercial interests of the country. It is very difficult for a layman to understand the Bill in the short time that it has been in our hands, but, as far as I can gather, every banker who deducts Income Tax has necessarily to keep for a period of from four to seven months a complete list of the people for whom he has paid Income Tax and of the deductions that he has made. At any time during that period there may be a Dissolution or prorogation of Parliament, or the tax may be defeated or altered in the House of Commons. In that event, he will have to go to the trouble of notifying his customers, and they will have to try to get the money back from the Government. The Bill may also inflict a great deal of trouble on Government officials, who, after all, are ultimately responsible for repaying this money to the people from whom it has been exacted. I quite agree with my hon. and learned Friend that the difficulty sought to be met by this Bill might have been dealt with far more easily in another way. Moreover, the Government have brought this difficulty on themselves. Everybody knows that the action of "Bowles versus the Bank of England" and the whole of the muddle consequent thereupon would never have occurred had 1237 it not been for the habit of the present Chancellor of the Exchequer of postponing the financial business of the year to an altogether unseemly period of the Session.
It may sound foolish to say so, but it is actions of that sort, perhaps far more than the speeches of the Chancellor of the Exchequer, which tend to lower the credit and the prestige of the Government in financial circles. When the financial business of the country gets into the muddle indicated by this Bill, and the Chancellor of the Exchequer, during all the months when he might have taken steps to avert it, prefers to go on with some purely political and unnecessary measures, financial people all the world over are apt to think that our finances are not being properly managed, and that tends to depreciate the high standing of our credit all over the world. I should like to ask the Solicitor-General a question which may seem a stupid one, but, not being a legal light, I should like an answer to it. Does this Bill legalise the deductions of Income Tax which have or will have been made this year between the passage of the Resolution two nights ago and the day upon which the Bill receives the Royal Assent? I can see nothing in the Bill on that point. If it does not, a very serious situation may arise. All banks and business institutions have a few cranks among their clients, and if there is an opportunity, some crank will certainly institute legal proceedings, and there will be no defence whatever for the bank. For these reasons, in addition to the constitutional grounds which have been fully gone into by other speakers, I desire to oppose the Second Reading of this Bill.
§ Mr. JAMES MASON
I do not think that anyone will deny that this Bill creates a very great change in the taxing processes of this country. Now that we have the Bill in our hands, the objections which we foresaw when we were discussing the Resolution are even more marked than they were then. The speech of my hon. and learned Friend (Sir A. Cripps) has effectually shown that this Bill goes far beyond the necessities of the case. I am not sure that Clause 2 (1), coupled with the fixing of a later date to which the Income Tax should run, would not have entirely met the difficulty in which the Government find themselves. So long as the collection of taxes in this way remained illegal, but a mere matter of usage during 1238 a certain period, there would always be a tendency on the part of the Government to put themselves in a legal position as soon as possible. But if you once legalise the practice by giving a Resolution statutory effect, you will tend to make the intervening period not only longer than is necessary, but habitually longer, and, instead of the Budget following closely on the Resolutions upon which it is founded, it will become the regular practice to allow something like four months to elapse between one process and the other. If that should be so, and if the Resolutions were brought in at the time of the year to which we are accustomed, it would mean that the Budget would be brought in somewhere about August, when Members were already fatigued by the weather customary at that time of the year, and the holidays were approaching, and consequently that the finance of the country would receive less and less the attention which it deserves. It has been steadily contended during the discussion on the Resolution that the object of this Bill was merely to facilitate the collection of taxes during a certain period. Nevertheless it remains a fact that the Bill provides for the imposition of new taxes. It is true that in a later Sub-section there is the limitation that those taxes shall only be Customs, Excise, and Income Tax. But the Bill still provides for the possibility of imposing by a Resoluton in Ways and Means new taxes, so long as they are included in one of those three classes. Any new Customs Duties, including a whole series, such as has been mentioned by other speakers, might be imposed by a mere Resolution.
It seems to me that it would be quite possible, by a Resolution in Ways and Means, not only to impose new Customs Duties, but to differentiate between one part of the country and another. I cannot see anything in the Bill that would prevent the House from passing a Resolution by which Customs Duties were imposed upon one part of the United Kingdom and not upon another. That might—I do not say that it is likely to—have a serious bearing on the respective positions of the Governments of Great Britain and Ireland after an Irish Parliament has come into being. The Irish Parliament cannot claim to impose taxation by Resolution in the manner proposed by this Bill, and it is restricted in its field of taxation in respect of articles which this country already taxes. Is it not quite possible that, in 1239 the general scramble which a great many people foresee between the Chancellors of the Exchequer in Ireland and in this country, when the Irish Parliament suggests a tax, which it will have to carry through by the ordinary form of legislation, the Chancellor of the Exchequer in this country will be sorely tempted to forestall that tax by means of a Resolution in Ways and Means, in order to sweep it into the Imperial Exchequer. Taxes imposed by Resolution are open to be upset in various ways. There is the possibility of a Dissolution or prorogation of Parliament; there is the possibility of the Resolution being disagreed to by the House on Report; and there is also the possibility that the Bill necessary to confirm the Resolution would not be passed within the prescribed period. It is necessary to emphasise what has been already said with regard to the difficulty of readjusting a tax which has been wrongfully collected for so long a period as four months. In many cases the money would not be refunded to the people who had originally paid it, and feelings of great uncertainty and injustice would certainly be created throughout the community. It seems to me that unless a very strong case can be made out, showing the necessity for such a drastic measure, the disadvantages entirely outweigh the advantages of the Bill.
I suggest that Government might well consider whether Clause 2 (1), and an alteration of the date to which certain taxes could be collected, would not practically meet all the difficulties of the case. As regards Clause 2 (2), we have had absolutely no explanation whatever. I think we ought to have a clear exposition of that Sub-section, and especially of the words "or in previous years." It seems to me very uncertain whether they refer only to the years intervening between the Finance Act of 1910 and the present moment or whether they refer to all previous years. I am no lawyer, and perhaps it may be all right, but I cannot see at all clearly whether or not these words, "in previous years," really have a very wide scope. I trust, when the right hon. Gentleman replies, he will give us some further information upon that subject. The chief objection which I have to this proposal is, not the meeting, so far as necessary, of the definite difficulty which has arisen; I quite see that a diffi- 1240 culty has arisen, and that it must be met; but it does seem to me that this Bill goes very much further than necessary to meet that difficulty. I hope, if that is so, it may be cut down at a later stage, so that it should not impose undue difficulties and inconveniences upon the people of this country.
§ The SOLICITOR-GENERAL (Sir J. Simon)
The hon. Member who has just spoken concluded his observations by conceding, perfectly fairly, that a difficulty undoubtedly existed and had to be met. Though I do not feel certain that that is the effect of all the speeches which have been made this afternoon, and which I have heard on this matter, I do submit that it is most essentially a true view of the situation. The question whether the proposals of this Bill are apt to meet that difficulty or whether, as the hon. Member who has just spoken thinks, they go further than needed for that purpose, is another question. Let me say, first, that whatever may be the effect of our proposals, the object of our proposals—it is for the House to judge whether the effect and the object correspond—the object of our proposals is certainly not to do that which the hon. Member referred to earlier in his remarks. He began by saying that this Bill would create a great change in the taxing processes of this country. If by "the taxing processes of this country" he means the way in which in times past in practice the taxes have been collected, the object of this Bill is not to affect or change that at all; on the contrary, it is to justify and perpetuate it.
§ Sir J. SIMON
I may have misunderstood the hon. Gentleman, but I understood him to say that the effect of this Bill would be to create a great change in the taxing processes of this country. If he means that we wish to legalise a method which, according to a recent great judicial decision, is illegal, that is quite true. If he means that what will take place under this Bill is substantially different from what has in fact taken place hitherto, then I think he is wrong. Whatever may be the true effect of what we are proposing, our object at any rate is nothing more than to secure beyond doubt that the ordinary processes which have hitherto been followed should be beyond legal question, in order that we should not have undoubted 1241 inconvenience to the interests of the public revenue and good administration. What are in fact the processes which have in practice been followed hitherto? The hon. and learned Gentleman the Member for Buckinghamshire made reference to both direct and indirect taxes. Let us take them in turn. In order to take the instances which, of course, are most serious, let us take what are known as the temporary taxes, because they are obviously, capable of raising more difficulty than the taxes which when once introduced continue indefinitely. Take first an indirect tax like the Tea Duty. The Tea Duty, as we all know, runs from 1st July to 1st July. So at least we commonly say. As a matter of fact, the Tea Duty, if there is going to be any change in its amount runs, not from 1st July to 1st July, but from the morrow of the day of the Budget statement to the 1st July of the year following. If the Chancellor of the Exchequer stands here on Budget night and announces that he feels compelled to impose an additional penny on tea, and makes that announcement in April or May, that announcement will begin to take effect not on the following 1st July; it begins to have effect the next morning, and always has done.
§ Sir J. SIMON
I think so. I think if anybody will look at the Finance Act of 1900, for example, he will find that what I say is correct: that the additional duty commences not from 1st July following, but from the day following that on which the Budget statement was made—some date in April until 1st July twelve months. It must be so. The reason why it is so is so obvious that I do not delay to explain what everybody understands. That has been, in fact, the practice as regards indirect taxes, and I think the necessary practice and the convenient practice both in the interests of the taxpayer and in the interests of the public revenue. So far, then, as indirect taxes are concerned, all we desire to do by this Bill is to make sure that that practice which has been challenged, and which it is now suggested is illegal (I will not say has turned out to be illegal) shall be made beyond all question legal. Now I take direct taxes. Income Tax, of course, does not run between the same calendar dates. It starts at an earlier period of the year. 1242 Supposing in his Budget statement the Chancellor of the Exchequer announced—take this for the sake of illustration—an increase of the Income Tax, when deductions come to be made by bankers and others, if I rightly understand the matter, it has been the practice to assume that that which has been proposed in the House of Commons in the Budget Statement will be authorised by Statute, and to make that subtraction, rather than the subtraction hitherto current, as from the date that the increase was announced. There, again, the practice has certainly in the past been convenient; convenient not only in the interests of the public revenue, but in the interests of the individual taxpayer, although there is always a theoretical possibility of change. Sometimes it actually arises in practice that you may have a subsequent change. You may have your financial proposals for the year completely upset—as, for instance, by the defeat of the Finance Bill on the Second Reading or some subsequent stage. That has happened within living memory. But it is a chance comparatively slight compared with the chances of the proposals being carried through. Of the two inconveniences, the chance of the inconvenience of having to adjust matters by way of repayment is small as compared with the great inconvenience, both to the taxpayer and the public revenue, that would result if you make these announcements and do not put them into operation for some time afterwards.
So far, I am not laying down any abnormal doctrines. I am merely contending for that which has been found in the ordinary experience of Chancellors of the Exchequer, of whatever political party, to be convenient and what has, in fact, been done. The only object of this Bill is to make sure that what, in fact, has been done in the past, to the convenience of all the parties concerned, should be beyond question lawful. The hon. and learned Gentleman the Member for Buckinghamshire said that, after all, Mr. Gibson Bowles had been content to win a great victory in the matter of the Income Tax. No one admires the subtlety that the hon. and learned Gentleman applies to legal distinctions more sincerely than I do, but having done my best to see if there is a distinction, I should be very sorry indeed, when we are dealing with this subject, to pledge myself, if the House 1243 authorised the prompt collection of the changed Income Tax alone, that no authority is needed to levy the Tea Duty. I do not at all think that. I think the arguments, such as they are, which prevail and which satisfy most of the constitutional authorities of this country in the case of the Income Tax, have never in any constitutional authority of which I am aware ever been said to apply to the Income Tax only, and not to apply to indirect taxes. It is agreed that we must do something both as regards indirect and direct taxes. Substantially the question which the House has to consider on the Second Reading is whether what we propose to do is in the circumstances best. I recognise the cogency and force of some of the arguments on points which may very well arise in Committee. The hon. and learned Gentleman opposite, for instance (Mr. T. M. Healy), took objection to the reference in the Bill to Committee of Ways and Means. I do not myself quite see the full force of the criticism which the hon. and learned Gentleman obviously thought to be forcible. Be that as it may, the matter is one which might be considered in Committee. Let me only say just now that the hon. and learned Gentleman is doubtless aware that our Standing Orders do give specific recognition to Committee of Ways and Means—
§ Sir J. SIMON
I think the reason for that, if I may suggest it, is that there are two Committees of the Whole House which deal with the money; one is Committee of Ways and Means and the other Committee of Supply. Consequently, when the Standing Orders come to the Committees to deal with money, although they use the expression "Committee of Ways and Means" elsewhere—
§ Sir J. SIMON
If one looks at the index to the Standing Orders in the earlier part of the book, Standing Order No. 14—
§ Sir. J. SIMON
Standing Order No. 14, which is headed "Supply and Ways and 1244 Means," contains the well-known provision:—This House will, in future, appoint the Committees of Supply and Ways and Means at the commencement of every Session, so soon as an Address has been agreed to in answer to His Majesty's Speech.They become Sessional Committees from that moment. Of course there is the further Standing Order which makes specific provision for their being put down for so many days in every week while the House of Commons is in Session. I should have thought the Committee of Ways and Means was very well known in this House—
§ Sir J. SIMON
Let me just deal with what I am referring to. There is the expression known in the House for a great many years, an expression which means nothing more than a Committee of this Whole House, which considers the method by which the public money is to be raised. I have thought that that is all that Ways and Means meant. Then the hon. and learned Gentleman asked whether it was well known in the Courts! Hitherto, though not strictly legal, it none the less has been a convenient practice to treat a Resolution in Committee of Ways and Means as a justification for exacting taxes, and that has gone without challenge. I am perfectly willing to concede to the hon. and learned Member that to that extent a change is involved. But the hon. and learned Member seemed to think that it might be almost impossible to prove what has been done. I might point out to him that it would not be difficult to prove what had happened in Committee of Ways and Means; that no judge would ask what it was all about. The Journals of this House are evidence in any Court of Justice of that which is recorded in them. I do not think there would be any difficulty where they are King's printers. In the Journals of the House would appear exactly what is done in Committee of Ways and Means, and that would prove all that is necessary, so that if it comes to actually proving what was done it would not be a very difficult operation. The hon. and learned Gentleman will allow me to suggest that his criticism was more in the nature of a criticism of the Clauses, rather than of the principle of the Bill. Coming to the further question asked by the hon. Gentleman opposite on Sub-section (2) of Section 2, that Sub-section is the one which deals with the way in which the bankers have been acting as between 1245 the 5th April and the present time. The effect of that Sub-section is, and is intended to be, that in so far as there has been a deduction, for instance, by the bank between the 5th April and the time the Bill received the Royal Assent that this deduction in so far as may be shall be retrospectively legalised and the banks rendered safe from the possibility of action.
§ Sir J. SIMON
I do not think that Sub-section (2) says that in terms. The hon. and learned Gentleman is very likely right. The Sub-section says:—Section ninety-five of the Finance (1909–10) Act, 1910, shall have effect with respect to any duties imposed by the Finance Act of this or any previous year.
§ Sir J. SIMON
Possibly. Anything that induces the Chancellor of the Exchequer to get the Royal Assent to the Finance Act sooner, will, I am sure, be heartily welcomed by hon. Members. [HON. MEMBERS: "Hear, hear."] We are all happy together on that ground. The other question asked was asked by the hon. Member for Windsor (Mr. James Mason), and he not unnaturally inquired what the Sub-section was all about. I think I put it correctly when I say the intention is nothing more than to make sure, once we have put the present Bill upon the Statute Book and given statutory effect to our Resolution, that henceforth nobody shall be able, in respect of what has happened in times past, to complain because the bank, believing the common practice was legal, did that which every banker has done for a number of years past. The only probable case would be that a second Mr. Gibson Bowles, not content with his former triumph, might conceivably endeavour in the same way to obtain a declaration as regards some other case. But I do not think the occasion is likely to arise. That is the situation. The only substantial criticism I think I may submit of the principle of the Bill, and I recognise the importance of it, is the suggestion that they are alternative ways of doing it. Of course alternatives may be possible, but, if I may say so to those who offer them, I think they will find it one thing to make 1246 a suggestion about an alternative and quite another thing to sit down and put the alternative into an Act of Parliament to meet every possible difficulty and to safeguard every complication which such a course of treatment involves. I assure hon. Members it is not that we complain of alternatives, but we think we have chosen the best way. The suggestion that you should get over the difficulty by postponing the period of the year up to which Income Tax runs is based upon a complete misapprehension. It would not assist the matter in the least. The point is this, that as soon as the announcement is made by the Chancellor of the Exchequer of the Income Tax on Budget night, from that moment it is desirable that the banks and others should deduct that rate of Income Tax from the interests that they pay.
§ Sir J. SIMON
I am putting the point that it is desirable to legalise what has, in fact, been the common practice, and you do not get rid of the difficulty by saying, "Let us have Income Tax running to the 5th September, instead of the 5th April." Exactly the same difficulty arises then. But the Noble Lord puts the constitutional question, "Why is it desirable?" I take refuge in this general answer—that, in the submission of the Government, it is desirable that we should legalise that which has been for many years the common and convenient practice, and we believe the necessary practice, of the Treasury, whoever may be chief or head of the Department.
§ Mr. T. M. HEALY
May I ask the hon. and learned Gentleman is the effect of his argument this: That the Budget Resolutions are not passed under Standing Orders 66, 67, 68, and 69, but under some other Standing Orders?
§ Sir J. SIMON
If I am to answer the hon. and learned Gentleman correctly, I think I should say it is not accurate to speak of the Budget Resolutions being passed under Standing Orders at all. They are passed in accordance with the usages of the House, and they start in Committee of the House. If the object of the House is to raise money, it has to find ways and means by which money can be found.
§ Sir J. SIMON
The hon. and learned Member is attaching too much importance to words and too little to things. I am speaking of things, and the thing that is imporant is that, according to our constitutional usage, if we are going to find new sources of revenue or new taxes, we do it in Committee of the Whole House, and the thing we are engaged in is finding ways and means of raising money, which is called Committee of Ways and Means. There is no virtue in the words; it is a convenient expression, and I do not see that any great harm is done because we use that expression.
§ Mr. AUSTEN CHAMBERLAIN
I do not desire to dwell at any great length upon any of the detailed points raised in this discussion. There is, for instance, the matter with which the Solicitor-General was dealing a moment ago in answer to the hon. and learned Member for North-East Cork. I think there is force in the point made by the hon. and learned Member for North-East Cork, and force which perhaps the Solicitor-General has hardly seen. The contention of the hon. and learned Member was that you should not stereotype in an Act of Parliament the particular procedure of the House of Commons, which has hitherto been exclusively a matter for the House of Commons to alter when we please, where we please, and how we please, without anyone to say us nay. To put that into a Statute, and to make our taxation law depend upon that procedure, seems to be highly inconvenient and quite contrary to precedent, when dealing with our own privileges, and rather derogatory to the position of this House. Then there is a question of some detail on which I must say one word. You will have noticed, Mr. Speaker, I have no doubt, the very important explanation given by the Solicitor-General of the object of Sub-section (2) of Section 2. That is the Sub-section to which my hon. and learned Friend the Member for St. Pancras (Mr. Cassel), appealed to you earlier in the day to know whether it was in order, as not being covered by the Resolution of the House, and you said, if I correctly understood you, as I think I did, that you had some difficulty in appreciating the exact bearing of that Sub-section and its legal effect, but you took it to be a matter of machinery and not a charging Sub-section, and that accord- 1248 ingly my hon. and learned Friend's point fell to the ground. It will be seen from what the Solicitor-General said, that it is a charging Section.
§ Mr. AUSTEN CHAMBERLAIN
The Solicitor-General explained this Sub-section is necessary to prevent a second Mr. Gibson Bowles from claiming relief, which he could get in the Courts. I think his exact words were to stop the hole against the proceedings of another Mr. Gibson Bowles. The meaning of that is that if another Mr. Gibson Bowles chooses to go to the Courts without this Sub-section, he would be able to recover, but this Sub-section is going to destroy his cause of action, and prevent him from being able to recover where otherwise he would be able to recover. I submit that the learned Solicitor-General has supplied you with the legal evidence which was lacking before, that this Sub-section is in effect a charging Section.
§ Sir J. SIMON
That Sub-section does not authorise anybody to exact anything. What it says is that certain things which have happened shall not render people liable to an action. An Act of Indemnity is not the same thing as a Charging Act.
§ Mr. AUSTEN CHAMBERLAIN
Yes, I think it is. This Act of Indemnity is to indemnify people who have been charging without legal sanction. There has been no law, according to the Solicitor-General, to authorise these charges for deduction. We are now going to make a law to authorise them. That law is a charging Statute, and it does authorise them; it is the only lawful basis. I do not raise the point of Order now, but I think it is quite clear, after what the Solicitor-General said, that the point of Order raised by my hon. and learned Friend must be again submitted to the Chair. Now I come to the larger question, perhaps more especially appropriate to the Bill itself. There is a general admission that as a consequence of Mr. Gibson Bowles' action and his success, something has got to be done and some Amendment of the law has got to be made. For fifty or sixty years, a practice without legal sanction has prevailed in this matter, unquestioned in any Court of Law within the United Kingdom, either in respect of direct taxation or in respect of indirect taxation. I believe I am right in saying that it has been questioned in regard to 1249 indirect taxation in the Australian Courts, and the Australian Courts upheld the practice. I am not a lawyer, and I am not competent really to express an opinion upon this subject, but I would venture to express at least a grave doubt whether, having regard to the general principle laid down in the action of Bowles versus the Bank of England, although Customs were expressly excluded, whether that principle would not cause a similar decision to be given in the United Kingdom in regard to Customs, and whether it is not practically certain that if a case of Customs or Excise were brought before the Courts in this country, a decision would follow on the lines of Bowles versus the Bank of England, and would not uphold the decision of the Australian Courts.
I think it is admitted that something must be done to restore the custom that existed for fifty years. Many Members upon both sides of the House are not only extremely nervous—I think I may use as strong a word as that—about putting into a statutory form even previous practice, and I quite concur that in this matter the convenience of the Treasury is not a sufficient answer, and is not by any means the only thing we have to consider. Indeed, the convenience of the Treasury is the last argument that occurred to me. The convenience of the Treasury is not above public interest, which it is the business of the Treasury to consider. The convenience of the Treasury is about the last thing that would occur to my mind. I would say to hon. Gentlemen who show that anxiety that there must be very careful consideration as to the wording you choose and the methods you adopt to restore this practice. Quite obviously there must be careful inquiry and time for discussion and amendment of the proposals of the Government, but surely the practice itself would not have continued to exist for sixty years unchallenged in any Court of Law if it had merely served the convenience of the Treasury. Surely that fact alone shows that as long as it was not abused the practice served the convenience not merely of the Treasury, but even in a larger degree the convenience of the subject upon whom the tax was ultimately or directly to fall, and upon all those who did business for him and were made instruments in collecting the revenue from him. Why has the practice which has existed for sixty years unchallenged been challenged at last, and why is there any necessity for a Bill of this kind? It is because 1250 the Government have done in this case what they are doing in other cases—I wish they would take the lesson to heart—they have strained usage and custom and the conventions of the Constitution to the breaking point. When you have a practice of this kind and you use it, not in the public interest but for your party needs, when you subordinate the public interest to your party manæuvres, then people will begin to examine what underlies your proposals, and how far they are legal from a constitutional point of view.
That is a consideration which, though illustrated by what has happened, in this case is of far wider application, and may be illustrated in a much more serious way. That is the reason why we have this difficulty. It is because the Government in one year were in difficulties about their Budget and did not get it passed until another year had begun. During that year everyone, without complaint and without a single objection, raised no objection to levying the tax as if it had the force of law, and there was Income Tax and Customs collected without the sanction of law by the general agreement of those concerned, because they knew the Government was doing its best to pass the Budget. The year after that, and the next year, when there was no such difficulty, and the Budget was postponed, it was done for the convenience of Ministers in other respects, because every measure in their programme was considered of more consequence than the financial interests of this country. It is not surprising that someone arose who would challenge this practice as a matter of public policy. Now we are writing down in the language of a Statute a custom which has prevailed to everyone's advantage, but which has been destroyed by the abuse which the Government have indulged in. Given that situation, I find myself in agreement in principle, or, at any rate, in substantial agreement, with the Solicitor-General in his statement of the object which we ought to have before us. What we want to do is to restore the old practice, neither more nor less. Whether this Bill does it or not may be open to a great deal of doubt and argument, but, at any rate, I would prefer in the main to leave for Committee discussion matters of smaller detail. I express my general approval of that object.
We are asked in some quarters why it is necessary to do anything. I am not wholly convinced by the argument of the 1251 Solicitor-General about the Income Tax, because I think he changed the ground of the Government a little on that subject. Hitherto the Bill has been defended on the ground that you will require it even when there was no change, but to-day the Solicitor-General rested his defence on the Income Tax part on the ground that if you changed the rate it was desirable to make the deduction from the first moment. I think it was obvious by providing that the tax should be levied for the year at such and such a rate that it should continue to be levied for so much of the next year at the same rate, unless Parliament should have previously otherwise determined. When it comes to a change in the rate of the tax, then I admit that that would not be sufficient, but when you are thinking of changing the rate of a tax, really the Income Tax is the least important of all the taxes you have to consider. Suppose you make a change in the rate of an Income Tax and you raise it by 2d. in the £, that can only be levied at the moment when your Budget passes, and you will only have lost a very small proportion of your year's income. On the other hand, suppose you make a change in the Tea Duty. That can only take effect from the moment your Budget passes, and therefore you may lose a very large portion and perhaps the whole of the increased revenue of the year.
The really important thing for the House to consider is, not the convenience of the Treasury, but the interests of the public and of the nation at time when it becomes necessary to change the rate of a tax. I said the other day, in answer to what I thought was a suspicion underlying the minds of hon. Gentlemen opposite, that I really was not arguing this question from the point of view of a party which desired to bring in a reformed tariff. I do not mean to say that a Tariff Reform Ministry would not be entitled to apply to a particular tax, even though it happened to he in a Tariff Reform Budget, the procedure which the present Chancellor of the Exchequer might be authorised to apply to any similar proposal made by himself, but what I do say is that, in my opinion, it is impossible for any Government introducing a reformed tariff of the kind that we have discussed so often, to try and levy the whole of those duties, or the greater portion of them, after the Resolution was carried in the House. That has not been done anywhere, and I do not think it would 1252 be possible in this country. Probably the modification made in the passing of those proposals through the House would be much greater than is ordinarily the case with the Budget. The application would be much greater, and you would have to treat any such alteration of duties as you would treat such an alteration of the Land Taxes as the Chancellor of the Exchequer made in 1906, and you could not bring it into force until you knew its final shape.
I ask both sides of the House to give the argument which I am putting forward credit for the fact that it is not the argument of a possible Tariff Reform Minister in distress. Let me say what I think will help to convince hon. Members. A Government making such a reform of the tariff does not ex hypothesi need that revenue immediately. They may contemplate having a great many things from which they can get revenue. There is no reason why they should not postpone the effect of their spending legislation until the time when they have got their revenue. There is no necessity for them to get their revenue at once. They are not making a temporary change to meet a temporary emergency, but a permanent change on grounds of general public policy, and they can afford to wait for the result. They may have to meet a deficit in the current year—a deficit may be caused by the growth of expenditure or by a falling revenue, or by the outbreak of a war. In any case, it is desirable to fill up that deficit as far as you can within the year. You want an immediate collection of the revenue, and if you allow the opportunity to slip through your fingers for a greater part of the year you still have to collect it, and you have not the immediate resources which the country requires. That is true of many things, and it is especially true in the case of the national emergency caused by war. Why do I dwell upon this point? It is because I think the Government have laid more stress even upon the Income Tax than they have upon indirect taxation. You lose much more by not collecting immediately the Customs and Excise Duties than you do by not collecting immediately the Income Tax, for not only does that part of the taxable commodity which is actually consumed in the interval escape the higher rate, but it is removed entirely out of your sphere of influence, and it might destroy your revenue for the whole year.
You cannot do that with the Income Tax. Nobody will pay Income Tax in 1253 advance, because they think a higher rate is going to be imposed. Mr. Gibson Bowles' argument is that the inconvenience to the trade and community would be so great that this would not be done, and Mr. Bowles was wise enough to add that it would not pay if the duties were small and regarded as ad valorem. But that is not the case with any of our existing duties, which are very high, such as 3s. 6d. per gallon on whisky, because under these circumstances it is worth while, and it is possible for the great dealers to clear enormous stocks and shatter your revenue entirely for the year, and probably in the only year when you want it most. I really believe in the case of tea there is no limit to the amount you could take out except the number of carts you could get to take it out, and the case is the same with tobacco. I remember one case in which a particular firm of tobacco dealers had two years' supply, and certainly a large proportion of that could have been cleared under the circumstances at that time. That is the really difficult problem. That is the really urgent problem the House has to face. It is a problem, above all, of meeting the case of alterations in Customs and Excise.
I believe in the long run the interests of the revenue and the interests of the trader in this matter are the same. The interests of the revenue and the interests of the taxpayer are the same. Supposing an increase of twopence in the Income Tax, if it could be collected in the old way, would finance the Chancellor of the Exchequer for the whole year, but owing to the Bowles' decision a great deal of it would escape before he could put it on, the result would be that for the remainder of the year he would have to put on an increase of fourpence. We have had once within my memory two different rates of Income Tax within the same year, and, if my memory serves me rightly, it was very much objected to. Take the case of Customs. All the trades concerned in dutiable articles want most of all to get their duties, at any rate of the kind we now have in existence, taken off, but, granted they are to have duties, they want certainty and security. They do not want the market unsettled. That is why they agreed to pay the Customs Duties in 1909 when there was no legal sanction for them. I remember, if I may venture on a personal recollection, that when I put on an increased Tea Duty I did as the Solicitor-General said: I collected it from 1254 the morrow on which the Resolution was passed in the House of Commons and the Budget statement made, but when I took it off I could not afford to do so for the whole year, and I took it off as from a date two or three months after the Budget statement was made. I shall not easily forget the amount of remonstrance I had from the trade against keeping before them so long a time an alteration of the tax before it took effect. Their desire for the convenience of their business was to have the alteration take effect as soon as possible. I believe that is as true of an addition to a tax as it is of a deduction from it. If I have made a case in regard to the existing taxes, then I venture to say I have made an equally strong case in regard to new taxes, not from the point of view of a reformed tariff which is in operation not to be done every year and not arising out of the particular fiscal emergency, but in regard to the normal course of the imposition of new taxes.
I am not even now quite certain what is the position of the Chancellor of the Exchequer upon this subject. He rather rashly, as I thought, committed himself more or less to some of his Friends when he made his statement in moving the Resolution on which this Bill is founded. Following him, I made an appeal to him to keep that question open, and he has kept it open in this sense, that he has put words in which include new taxes just as much as the alteration of old taxes; but, reading yesterday's Debate, I understand he then considered he was pledged to his Friends to move the omission or to accept the omission of those words. I hope that is not so, because, if that is done, then frankly I do not care about the Bill. I think then it does not meet the greatest of all the emergencies with which the House ought to be dealing, and, if new taxes are to be taken out, then I think I shall vote against the Third Reading of the Bill. I shall not vote against the Second Reading to-day; I shall wait and see what takes place in Committee. Looking back to the time of the Boer war and to the necessity for increased taxation which that war brought with it—it is obvious that any big war must bring with it the necessity for greatly increased taxation in these days when the cost of a war is greater than it was ever before—I must say that it was just as important, not to Sir Michael Hicks-Beach, and not to the Treasury as a matter of fiscal convenience or of convenience to their clerks, but to 1255 the financial condition of the nation that Sir Michael Hicks-Beach should be able to collect his Corn or Sugar Taxes from the moment they were imposed, as it was that he should be able to collect the increased Tea or Spirit or Beer Duty which he equally imposed to meet that war. Look how absurd the distinction is from the point of view of the protection of the subject. Supposing you had the Tea Duty reduced to 1d., you might then raise it to 1s. per pound, under the provisions of this Bill, if new taxes are cut out; but if you had not a tax at all on tea, you could not, under the same condition, put a 1d. on it. Could anything be more absurd from the point of view of the control of this House and the preservation of the liberty of the subject. You might, if you had an Income Tax of 1s. 2d., make it 4s., 5s., or 15s. in the £, but you could not impose a new direct tax. Is there any possible reason from the point of view of constitutional law why you should make a distinction of that kind? I can conceive of none.
The only cases in which you want to increase duties are those in which you urgently need revenue, and in those cases it is of importance that those duties should take effect at once. It is of special importance that the whole of the yield of the duty for a twelvemonth ahead should not be destroyed by forestalments. It is quite true, as Mr. Gibson Bowles said in his letter, that even under the present system you cannot altogether avoid forestalments, but you reduce them to their narrowest limits. In the first place, even when it is known that the Chancellor of the Exchequer must impose new taxes, nobody quite knows which article he will select, and people have to clear a good deal if they are going to make themselves perfectly safe against all his possibilities. The forestalments in the case of Sir Michael Hicks-Beach's first War Budget were reckoned to be between two and three millions or a little over, and, if it had not been for the power to collect on a Resolution of the House, no increased revenue would have been obtained for the year at all. Sir Michael Hicks-Beach antedated the usual time for introducing his Budget because those forestalments were going on at such a rate. He made his Budget statement before the close of the financial year, and began to collect the increased taxation from the moment the Budget statement was made. That is really the 1256 serious kind of emergency the House has to meet and anything which does not meet that emergency is not worth doing. Therefore, as far as I am concerned, I offer no opposition to the Bill at this stage. I confess particular provisions seem to me of more doubtful propriety after listening to this Debate than I thought them when they were first described on the Resolution. I am quite certain they will want the most careful and exhaustive inquiry, but I offer no personal opposition to the Second Reading of the Bill, and my course on its Third Reading will depend very largely at least upon the line the Chancellor of the Exhequer and the House eventually decide to adopt in regard to new taxes, that is to say, the way in which they carry out that which the Solicitor-General declared to be their intention, namely, the reinstatement as law of what has hitherto been a convenient custom practised without the sanction of law.
§ Mr. LLOYD GEORGE
The right hon. Gentleman has accepted the principle of the Bill, and throughout he has given a general support to the proposals which we have introduced to this House. This afternoon he has criticised in detail some portions of the measure. All his criticisms could have been raised in Committee and discussed there, but I propose to deal with one or two of his main criticisms. I am not going to follow him in apportioning the blame for the present position, because I think it is rather a fruitless inquiry. We certainly were not responsible, in my judgment, for what happened in 1909–10, and, even with regard to the second Budget. I was anxious to get it through before the Adjournment. It is true that was in August, but there are a dozen precedents of a Budget having been got through in August, including one of the right hon. Gentleman himself.
§ Mr. LLOYD GEORGE
It was, at any rate, very late in July, just about the end of the Session. We were pressed not to take it then, and I remember an hon. Member sitting on that Bench, the hon. Member for Chelmsford (Mr. Pretyman), took a leading part and made a very violent protest about it being taken. But for that it would have been taken in August. The only non-contentious Budget for which I have been responsible passed late in December. I did it at the urgent 1257 request and on pressure to which I was subjected by an hon. Gentleman sitting on that Front Bench.
§ 7.0 P.M.
§ Mr. LLOYD GEORGE
I am referring to that Budget. I do not think, however, it is a very useful inquiry. It simply means that right hon. Gentlemen opposite blame the Government, and I think we can make a good case for saying we are not responsible. Still, that is not the question. Here you have, for the first time, this long-established practice smashed in the Law Courts as the result of litigation initiated by one taxpayer. It is assumed now that everybody understood before that there was no legal right. I do not think that was the assumption at all; I think myself until the last three or four years people assumed that these Resolutions had the force of law during the currency of the Session. That was the general assumption. I remember the matter being gone into very carefully in 1909. Most of us assumed then that really was the state of things. It was very doubtful after very careful inquiry what the law was, but I am sure the general assumption was that a Resolution had the force of law. It has now been established that Resolutions have no legal validity. That is the state of things with which we have got to deal, and, if it had happened during the tenure of office of the right hon. Gentleman, he would have had to do exactly the same thing as I am proposing now in order to meet the emergency in which we find ourselves placed. He might not do it in perhaps exactly the same form, but I do not believe there would be any substantial difference between us. So much for that part of this argument. I come now to a much more important question, that which he raised somewhere towards the end of his speech, as to including new taxes in the Resolution. I certainly intended new taxes to be placed in the same position as has been the practice of late years. There has been no difference between absolutely new taxes and variations of old taxes, and when we were bringing in a Bill to legalise the procedure I think it was right for us to bring in one which would give us exactly 1258 the powers which everybody assumed we had before this difficulty arose. However, there is a very strong feeling, I believe, on both sides of the House, as shown by the discussion which has taken place during the last two days, and has proved that there is a remarkable unanimity of opinion on both sides in favour of excising this power as far as new taxes are concerned. I do not know that I shall meet with very much opposition if I strike out the provision as regards new taxes.
I do not agree with the right hon. Gentleman that there is no difference between new taxes and variations of old ones. I say there is a substantial difference. It has never been assumed that you can, by a Resolution, impose a new tariff and start collecting it immediately. A new tariff must be subject necessarily to a good deal of adjustment even if the principle is accepted by a large majority. It involves art enormous amount of adjustment between various interests concerned before you could possibly impose it. It would involve a revision of duties and sub-duties on many classes of articles, and these are all split up into sections and sub-sections, so that it would be impossible to bring it into operation without very prolonged discussion, not only in this House, but with interests concerned outside. It therefore is obviously impossible to do that by a Resolution of this House. Of course, I am confining this Bill to the kind of duty imposed in the past—a duty which is not a protective duty. There is a great difference between imposing a new duty on a subject not considered dutiable in the past, and imposing a duty on something which has been, for fifty or a hundred years, recognised as fair matter for taxation whenever the Chancellor of the Exchequer wants money. For instance, take the Tea Duty. I do not know how long it has been in existence; at any rate it has existed for a very long period of years.
§ Mr. LLOYD GEORGE
I should not be surprised. But whenever the Chancellor of the Exchequer finds himself short of money, in view of a great national emergency, tea is one of the subjects he always turns his thoughts to. The tea duty has gone up and down. It has been at 8d. It has been even at 2s. It has fluctuated from time to time because the Chancellor of the Exchequer considered it 1259 a subject marked out for taxation, and successive Parliaments have agreed that it is a fit subject for taxation. Let me take the War Budgets of 1899, 1900, and 1901—Budgets which raised taxes within the limits of the present fiscal system. Tea was put up. My recollection is that sugar was a new tax.
§ Mr. LLOYD GEORGE
There are two taxes, first of all tea, which was a dutiable commodity at that time, and that was put up. There was sugar, which had been a dutiable commodity, but which had been for some years free. Then a third class of tax was proposed—on corn and coal. I could understand the House of Commons saying, "When you are putting 2d. or 3d. on tea that it is a question of amount, very important no doubt, but still not a new question." But when you come to corn and coal the question arises whether they are fit subjects for taxation, and I can understand the House of Commons saying, "You ought not to decide that in the course of a Committee Resolution. Very great and vital questions of principle are involved"—as indeed the Government found out, for they got rid of them in the course of a couple of years.
§ Mr. LLOYD GEORGE
At any rate there is a real and substantial difference between the two cases. In the case of a new tax you have to decide on the principle of taxing the commodity at all, whereas in the other case the principle has been decided over and over again, not merely in Committee and on Report stage, but on First, Second, and Third Reading of successive Bills, Session after Session, and Parliament after Parliament, until it has been more or less accepted either as a dutiable subject by the community generally. The Chancellor of the Exchequer stands at this box and proposes that various commodities shall be taxed. I am perfectly certain—I was in the House at the time—that the proposal to tax coal and corn came as a great surprise to everyone. I can understand the House of Commons seeing a great difference between the two cases and insisting upon it from that point of view. Still, I agree with the right hon. Gentleman that it would undoubtedly be convenient to the 1260 revenue, and I think it would be for the convenience of the taxpayer himself, that this power should be included. I do not know of a single case where it has been abused in the past; I do not see how it can be abased in the future, certainly within the limits proposed by the Bill. In the case of the Corn Duty, inconvenience, as the right hon. Gentleman will remember, was caused by the uncertainty of trade.
§ Mr. AUSTEN CHAMBERLAIN
I was referring to the Tea Duty. I put it up 2d. in the £ for one year, and I was able to take it off the next year, but I did not take it off till the morrow of the Budget statement.
§ Mr. LLOYD GEORGE
I know there was a great deal of uncertainty as to what was happening, and that is the real reason why my hon. Friends insist on differentiating between new taxes and variations of old ones. I agree with another point made by the right hon. Gentleman, namely, that there is a great difference between the sort of forestalment that takes place when anticipating increased taxation and the forestalment which would take place if it were known which commodity was chosen for that increased taxation. In 1899 it was known that the Government would have to tax something, and there were very large forestalments of tea and sugar and considerable ones of beer.
§ Mr. LLOYD GEORGE
There were forestalments at any rate on three or four commodities which were never touched at all. Suppose it were known that there was only going to be a tax on whisky. There would have been no forestalment on tea, sugar, or tobacco. Tobacco was what I intended to refer to when I mentioned beer. We lost a very large sum of revenue in consequence of those forestalments, but it was spread aver four commodities, and if it had been known that the duty was going to be put up on whisky the forestalments would have been concentrated on that.
§ Mr. LLOYD GEORGE
if the right hon. Gentleman had been obliged to bring his tea Resolution to the House, and to wait until he had got the Report stage, and 1261 had passed the Bill through all its stages, and sent it to the House of Lords, he would have had no revenue at all from tea. Take spirits. [An HON. MEMBER: "And a very good thing to take."] They cleared out spirits at the rate of at least half a million a day. I agree with the right hon. Gentleman that the only limit to forestalment in such a case is cartage. It is not the number of clerks, but it is the number of carts that you can get through the Customs. There is no great hurry on the part of the Customs officials in cases of forestalment, but even though they exercised their well known powers on that occasion to the utmost, spirits were cleared out at the rate of half a million a day, and in a case like that, unless you have the power which this Bill will legalise, your whole revenue may be completely cut off. You may check it as best you can, but there is undoubtedly a very considerable loss. There is a good deal of leakage. That was the case in 1909 when the whole tea trade agreed to do their very best to assist us. It was at a time when it was to the interests of both political parties to see that the revenue was collected. They had all agreed to pay the duty, although there was no law at that moment imposing it. But one great dealer stood out, and the pressure of the whole trade was brought to bear on him, as if he had continued to refuse, as he could have done, the others would have been bound to follow suit
§ Mr. LLOYD GEORGE
I do not think that applies to tea, and I do not think it was very considerable. My recollection is that there was some difficulty with regard to Irish whisky, and that we lost the money.
§ Mr. LLOYD GEORGE
Oh, yes! The hon. Baronet will find that the amount was given in this House in reply to a question. Supposing a number of them had done the same thing, then we should have lost a considerable sum of money. It was purely because we had then an agreement between the parties to do their best to tide over the difficulty, each in order to meet his own particular interest, that we did not lose. You might net get that state of things in future. You might find that the whisky trade would say they did not see 1262 why they should assist the Government paying the extra half-crown, or whatever it might be. In that case there is only this way of doing it. It is not of any use quoting what happens in other countries. I am told there is nothing that corresponds to this in other countries. That may be so, but the result is that they lose an enormous amount of revenue whenever they impose new duties or whenever there is an increase of old duties. The result is that they get very little out of it during the first year. I think our practice is the better one. It has been justified by very long experience. Every Chancellor of the Exchequer for the last sixty or 100 years has profited by it. I hope the House will enable us to legalise what has been the custom in the past and a usage which Las undoubtedly been to the advantage of the State.
§ Lord HUGH CECIL
We have heard three speeches in succession in defence of the principle of the Bill, or rather I should say two, because the Solicitor-General adopted a method of Parliamentary argument which may be commended to any Minister in a difficulty. He said that the details could only be discussed properly in Committee, and he assumed the principle. One could defend almost any Bill on those terms. He said that the existing usage was desirable, that the Bill did not go beyond the existing usage, and he deferred all the other important questions to be considered in Committee. My right hon. Friend (Mr. Austen Chamberlain) has made much the best and most convincing speech in defence of the principle of this Bill to which we have listened in the course of these Debates. The defense of the Chancellor of the Exchequer amounts to the single point of forestalment in respect of Customs Duties. I do not think there is any defence in respect of the Income Tax. It is true that if any long delay takes place in carrying an Act imposing Income Tax you lose through it.
§ Lord HUGH CECIL
There is no inconvenience if a tax comes into force so many weeks earlier or later. You lose so much revenue for those weeks. That can only be the case in a time of national emergency, to which my right hon. Friend referred, when war has broken out, or when there is an actual deficit to be filled. The House of Commons could 1263 pass an Income Tax Act in a single week, and the loss would be very trifling. There would be no difficulty in those circumstances in passing a Bill through all its stages in a very short time. There is nothing in the case for the Bill so far as Income Tax is concerned, for there is no injury to the public in waiting untll the Bill has passed through all its stages. We have, therefore, the single case of the forestalment of Customs Duties. Observe the position in which the Chancellor of the Exchequer now is! He says that the existing usage is desirable, that we should lose a great deal of revenue, and that there would be dislocation of trade if the existing usage were dropped. Nevertheless, at the instance of his hon. Friends and, I admit, of the House generally, he is prepared to depart from the existing usage in respect to existing taxation. He is really in a dilemma. If there is all this inconvenience, mischief and injury, it applies to the new taxes. It is quite true that there is a stronger case against including new taxes, but the case for including them is just the same. What seems to me regrettable is that the Government do not seem to have made any effort to avoid the extremely odious course of levying taxation by a single vote of the House of Commons without passing a Bill through all its stages. For example, why is it impossible, instead of this Bill, to have a Bill dealing solely with the case of Customs, and providing, not that the duty shall be paid, but that some document should be signed by those who are carrying dutiable goods through the Customs House, showing how much they were carrying, on the strength of which subsequent proceedings could he taken against them compelling them to pay the duty when Parliament had agreed to it.
§ Lord HUGH CECIL
He would have to calculate the price. He would have to calculate whether or not the Bill would pass. He would know he could not be called upon to pay until the, Bill had been read a second time and passed through all its stages. If Parliament subsequently makes a change in the duty, there would be a certain amount of inconvenience, which is more or less made good. I was looking at the case of the Sugar Duty, 1264 where machinery was set up making good to the trade any change which was made. The Government would not be any worse off, and it would save the very harsh principle of allowing taxation to be levied by a mere decree passed in Committee. I desire to turn to one or two details in the Bill. I have read several times the retrospective Sub-section, and I shall be glad if the right hon. Gentleman can tell me whether I correctly understand it. As I understand it, this Sub-section will have no operation until the subsequent Finance Act is passed. The Sub-section says:—
"Section 95 of the Finance (1909–10) Act, 1910, shall have effect with respect to any duties imposed by the Finance Act of this or any previous year."
It will have no effect, as I understand, at this moment, except in regard to the Finance Act of the previous year, and it will have no effect in respect to the Finance Act of next year, which we are about to pass, until that Act passes. The only immediate effect which it will have is so far as it has a bearing on the Finance Act now in operation. What that bearing is I do not know. Perhaps we might have that explained to us. What will be the immediate effect of the Sub-section when it is passed? There seems to be some difficulty in regard to that. One of two things seems to follow if it has no immediate effect. If it charges the people it ought to have been founded upon a Resolution and to have been in the Title of the Bill. It does not appear in the Title of the Bill and it has not been the subject of a Resolution; therefore I apprehend that it, and, indeed, the whole Bill would be out of order. On the other hand, if it does not have an immediate effect, I do not understand what becomes of the case of urgency. This Bill has not been unreasonably pressed forward, but it has been pressed forward with very short intervals of discussion. I understand that was done because some immediate effect was going to result and there was some urgency. If it does not put a charge on the people in any respect there is no urgency, and we might have taken the Bill at considerably longer intervals without the inconvenience of discussing the same Bill on successive days. I do not know, Mr. Speaker, whether the right hon. Gentleman proposes to take your opinion before this Bill is read a second time, for I suppose any question of order ought to be decided on a Second Reading, as to Whether the Sub-section is in order.
§ Mr. SPEAKER
The Noble Lord could not have been here at the commencement of the Debate, when we had all this out.
§ Lord HUGH CECIL
I beg your pardon. I quite agree that I am to blame for not having followed what happened. I understood my right hon. Friend to say that you had reserved your decision till a later period.
§ Mr. SPEAKER
No, the point we reached was this: I told the hon. and learned Member for West St. Pancras (Mr. Cassel) that the decision I gave, which was against him, was not to prejudice him in any way in raising the point in Committee, and that he would be entitled then to ask the Chairman of Committees not to put that particular Sub-section from the Chair on the ground that there was no Resolution in support of it. It is more or less arranged that the matter should again be taken before the Chairman of Ways and Means.
§ Lord HUGH CECIL
I am sorry I have troubled you with the matter. I ought to have been here. Perhaps the right hon. Gentleman will explain the exact bearing of the Sub-section—it is difficult for any one who is not a lawyer to understand it—so that we may know what we are doing. There is another point to which I wish to draw his attention. He did not deal with the point raised by the hon. and learned Member for North-East Cork (Mr. T. M. Healy) with regard to the Committee of Ways and Means. There is very great inconvenience in using in an Act of Parliament an expression which has a meaning according to the procedure of this House, for the reason that the House can, by Standing Order, alter the meaning of any thing which relates to its own procedure. For example, it will he perfectly easy, if the Bill passes in its present shape, to make the Committee of Ways and Means a Select Committee. Then, by order of the Select Committee, you could levy taxation for four months. There is nothing to prevent the House to-morrow making the Committee of Ways and Means a Select Committee or a Grand Committee, and in that case it would be the order of that Committee. I think that on reflection the Government ought to alter that expression.
I confess to being still of the opinion that we ought to vote against the Second Beading of this Bill. The measure will undoubtedly put into the hands of the 1266 Government, and into the hands of the majority of the day, a power they do not possess. We have seen these things done over and over again in respect of the procedure of this House. The minority uses its power to stop what it considers to be an unreasonable act on the part of the Government of the day. The Government thereupon take away that power by an alteration in the Standing Orders—this has happened on both sides of the House—and the power is destroyed from that time forth. We are having the same thing in another sphere. Mr. Gibson Bowles, representing the liberty of the subject, fought the Government for abusing their power and used the reserve power of an appeal to law. Instantly the Government come down to this House and take away altogether the power by which he made that appeal. The matter is not being decided by giving new safeguards with regard to the liberty of the subject on the one side, and setting up new machinery giving the Treasury what they need on the other, but the matter is being decided wholly in favour of the Treasury and the Government of the day, so that in future we shall be in a position much less secure than we are in now. If you are going to take the very grave course of setting up statutory power in place of customary power you ought to do it with such safe guards as may effectually prevent the abuses which have in a degree arisen in the past, and may be expected to arise in the future. What you are now doing is sanctioning, not merely the usage of the past, but the particular abuses which Chancellors of the Exchequer have in emergency had recourse to. You are sanctioning the most extreme form of the old usage without the safeguard that it was known to be a usage which could be overthrown if challenged in a Court of Law.
The right hon. Gentleman reminds me of an episode which took place in the early months of 1910. In those days the right hon. Gentleman and I and a great many other Members on this side were constantly pressing the Government to have recourse to this very machinery of a Resolution levying Income Tax all through February and March, 1910, and they obstinately refused to do so. They threw the greatest doubts on the legality of the proceeding, and they said it could only be done if a Bill was immediately to follow. I did not think they were right then, and I am sure they are wrong now. It is amazing, when they took up that 1267 extremely pedantic view, when there were manifest motives of convenience and it was quite easy to get over the difficulty by carrying a Resolution levying the Income Tax, that now they should turn round and take the opposite view and sweep away all the old traditions of insisting on an Act of Parliament in the matter and rely for ever on a statutory Resolution. I think we are taking a step which we shall find will be worked very unfairly indeed, both to the House and to the subject, if it is passed in the form in which it is presented now. We shall find that the Budget is not properly discussed, but is more and more postponed to the last days of the Session and left to take its chances with the Appropriation Bill and the Indian Budget in the dog-days. That is the danger to which we are exposed, and there is nothing to safeguard the House against such treatment as that. If you substitute a rigid system for an elastic system you always lose very much, and there ought to have been in the Bill, what there certainly is not, abundant evidence of carefulness to safeguard the House and the country against the dangers which are inseparable from setting up a rigid system of statutory control in place of the old system of flexible usage. I hope the Government will reconsider most earnestly the Amendments which will be put down in Committee and will resume the conciliatory tone which the right hon. Gentleman adopted when he introduced the matter, because if they do not do that, the Bill will be found to be the beginning of a long series of malpractices by successive Governments.
§ Mr. JAMES HOPE
In this Debate we have had a remarkable and curious instance of the unseen sympathetic electric current which passes from one of those boxes to another and binds together in a common purpose subjects who are not usually naturally sympathetic. Both my right hon. Friend (Mr. Austen Chamberlain) and the Chancellor of the Exchequer have taken exactly the same view, in principle, of the Bill. Everyone on this side
§ of the House so far agreed with me in recognising that something has got to be done, but neither my right hon. Friend nor the Chancellor of the Exchequer has said one word as to either of the concrete proposals which have been made for getting rid of this difficulty in a way that is not open to the objections which have been raised. It has been suggested that it would be sufficient if an action were taken in the future, such as Mr. Bowles took, that a certificate should be produced in Court that the tax was levied in pursuance of a Resolution passed by the House, and that that certificate should stop the action for a certain time, presumably until the Bill has been passed. It might be a certificate of the Chancellor of the Exchequer or of Mr. Speaker, but there was a concrete suggestion made by a very able lawyer, and not a word of answer has been given as to whether it is practicable or not. It was suggested on every night of the Debate, without a word of answer, that it would be sufficient to amend the law of Customs and Inland Revenue so as to make the effect of a tax retrospective. The principle is admitted in Clause 2 about deductions having to be refunded, therefore it is certainly not impossible in some cases to recover when the Act has become legal. Why is not that possible in every case? Why cannot you take power to give notice to the importer, in the case of Customs Duty, that he only clears subject to a tax being imposed later and, if necessary, takes some bond or some acknowledgment that that is so. That question has been put by six or seven Members if it has been put by one, and not one word of answer has been given to that point. Here are two concrete proposals which are not open to the objections, both as a matter of practice and precedent, which have been urged against the proposal in the Bill, and I do not think this Debate should cease without some answer being given on these points.
§ Question put, "That the word 'now' stand part of the Question."
§ The House divided: Ayes, 257; Noes, 114.1271
|Division No. 38.]||AYES.||[7.37 p.m.|
|Abraham, William (Dublin, Harbour)||Arnold, Sydney||Beauchamp, Sir Edward|
|Acland, Francis Dyke||Asquith, Rt. Hon. Herbert Henry||Beck, Arthur Cecil|
|Adamson, William||Baker, H. T. (Accrington)||Benn, W. W. (T. Hamlets, St. George)|
|Addison, Dr. C.||Baker, Joseph Allen (Finsbury, E.)||Bentham, G. J.|
|Agnew, Sir George William||Balfour, Sir Robert (Lanark)||Bentinck, Lord H. Cavendish-|
|Ainsworth, John Stirling||Baring, Sir Godfrey (Barnstaple)||Birrell, Rt. Hon. Augustine|
|Alden, Percy||Barnes, G. N.||Black, Arthur W.|
|Allen, Rt. Hon. Charles P. (Stroud)||Barton, W.||Boland, John Pius|
|Armitage, Robert||Beale, Sir William Phipson||Booth, Frederick Handel|
|Bowerman, C. W.||Hinds, John||Phillips, John (Longford, S.)|
|Boyle, Daniel (Mayo, North)||Hobhouse, Rt. Hon. Charles E. H.||Pollard, Sir George H.|
|Brace, William||Hodge, John||Ponsonby, Arthur A. W. H.|
|Brady, Patrick Joseph||Hogge, James Myles||Price. C. E. (Edinburgh, Central)|
|Brocklehurst, W. B.||Holmes, Daniel Turner||Priestley, Sir W. E. B. (Bradford, E.)|
|Brunner, John F. L.||Howard, Hon. Geoffrey||Pringle, William M. R|
|Bryce, J. Annan||Hudson, Walter||Radford, George Heynes|
|Burke, E. Haviland-||Hughes, Spencer Leigh||Raffan, Peter Wilson|
|Burns, Rt. Hon. John||Jardine, Sir J. (Roxburgh)||Rea, Walter Russell (Scarborough)|
|Burt, Rt. Hon. Thomas||John, Edward Thomas||Reddy, M.|
|Buxton, Noel (Norfolk, North)||Jones, Edgar R. (Merthyr Tydvil)||Redmond, John E. (Waterford)|
|Byles, Sir William Pollard||Jones, Henry Haydn (Merioneth)||Redmond, William Archer (Tyrone, E.)|
|Care-Gomm, H. W.||Jones, J. Towyn (Carmarthen, East)||Richards, Thomas|
|Chancellor, H. G.||Jones, William (Carnarvonshire)||Roberts, Charles H. (Lincoln)|
|Chapple, Dr. William Allen||Jowett, F. W.||Roberts, G. H. (Norwich)|
|Clancy, John Joseph||Joyce, Michael||Roberts, Sir J. H. (Denbighs)|
|Clough, William||Keating, Matthew||Robertson, Sir G. Scott (Bradford)|
|Clynes, J. R.||Kellaway, Frederick George||Robertson, Sir John M. (Tyneside)|
|Compton-Rickett, Rt. Hon. Sir J.||Kelly, Edward||Robinson, Sidney|
|Condon, Thomas Joseph||Kennedy, Vincent Paul||Roch, Walter F. (Pembroke)|
|Cornwall, Sir Edwin A.||Kilbride, Denis||Roche, Augustine (Louth)|
|Cory, Sir Clifford John||King, J.||Roe, Sir Thomas|
|Cotton, William Francis||Lambert, Rt. Hon. G. (Devon, S. Molton)||Rowlands, James|
|Cowan, W. H.||Lambert, Richard (Wilts, Cricklade)||Rowntree, Arnold|
|Craig, Herbert J. (Tynemouth)||Lardner, James C. R.||Russell, Rt. Hon. Thomas W.|
|Crawshay-Williams, Eliot||Lawson, Sir W. (Cumb'rld, Cockerm'th)||Samuel, Rt. Hon. H. L. (Cleveland)|
|Crooks, William||Leach, Charles||Samuel, J. (Stockton-on-Tees)|
|Crumley, Patrick||Lundon, Thomas||Scanlan, Thomas|
|Cullinan, John||Lynch, A. A.||Seely, Rt. Hon. Colonel J. E. B.|
|Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)||Macdonald, J. M. (Falkirk Burghs)||Sheehy, David|
|Davies, E. William (Eifion)||McGhee, Richard||Shorth Edward|
|Davies, Timothy (Lincs., Louth)||MacNeill, J. G. Swift (Donegal, South)||Smith, Albert (Lancs., Clitheroe)|
|Davies, Sir W. Howell (Bristol, S.)||Macpherson, James Ian||Smith, H. B. Lees (Northampton)|
|Davies, M. Vaughan- (Cardigan)||MacVeagh, Jeremiah||Smyth, Thomas F.|
|Dawes, J. A.||M'Callum, Sir John M.||Snowden, Philip|
|Delany, William||M'Curdy, Charles Albert||Spicer, Rt. Hon. Sir Albert|
|Devlin, Joseph||M'Kean, John||Sutherland, J. E.|
|Doris, William||McKenna, Rt. Hon. Reginald||Sutton, John|
|Duffy, William J.||M'Laren, Hon. H. D. (Leicester)||Taylor, John W. (Durham)|
|Duncan, C. (Barrow-in-Furness)||M'Micking, Major Gilbert||Taylor, Thomas (Bolton)|
|Edwards, Clement (Glamorgan, E.)||Manfield, Harry||Tennant, Harold John|
|Elverston, Sir Harold||Marshall, Arthur Harold||Thomas, James Henry|
|Esmonde, Dr. John (Tipperary, N.)||Mason, David M. (Coventry)||Thorne, G. R. (Wolverhampton)|
|Essex, Sir Richard Walter||Meagher, Michael||Thorne, William (West Ham)|
|Esslemont, George Birnie||Meehan, Francis E. (Leitrim, N.)||Toulmin, Sir George|
|Falconer, James||Middlebrook, William||Trevelyan, Charles Philips|
|Farrell, James Patrick||Millar, James Duncan||Ure, Rt. Hon. Alexander|
|Fenwick, Rt. Hon. Charles||Molloy, M.||Verney, Sir Harry|
|Forens, Rt. Hon. Thomas Robinson||Montagu, Hon. E. S.||Wadsworth, John|
|Ffrench, Peter||Mooney, John J.||Walsh, Stephen (Lancs., Ince)|
|Field, William||Morgan, George Hay||Walters, Sir John Tudor|
|Fitzgibbon, John||Morton, Alpheus Cleophas||Ward, John (Stoke-upon-Trent)|
|Flavin, Michael Joseph||Muldoon, John||Wardle, George J.|
|Gelder, Sir W. A.||Munro, R.||Warner, Sir Thomas Courtenay|
|George, Rt. Hon. D. Lloyd||Munro-Ferguson, Rt. Hon. R. C.||Wason, Rt. Hon. E. (Clackmannan)|
|Gill, A. H.||Murphy, Martin J.||Wason, John Cathcart (Orkney)|
|Ginnell, Laurence||Murray, Captain Hon. A. C.||Webb, H.|
|Gladstone, W. G. C.||Nicholson, Sir Charles N. (Doncaster)||Wedgwood, Josiah C.|
|Glanville, H. J.||Norton, Captain Cecil W.||White, J. Dundas (Glas., Tradeston)|
|Goddard, Sir Daniel Ford||Nugent, Sir Walter Richard||White, Sir Luke (Yorks, E.R.)|
|Goldstone, Frank||Nuttall, Harry||White, Patrick (Meath, North)|
|Griffith, Ellis J.||O'Brien, Patrick (Kilkenny)||Whitehouse, John Howard|
|Guest, Hon. Major C. H. C. (Pembroke)||O'Connor, John (Kildare, N.)||Whittaker, Rt. Hon. Sir Thomas P.|
|Gunest, Hon. Frederick E. (Dorset, E.)||O'Connor, T. P. (Liverpool)||Whyte, A. F. (Perth)|
|Gwynn, Stephen Lucius (Galway)||O'Doherty, Philip||Williams, John (Glamorgan)|
|Hackett, J.||O'Donnell, Thomas||Williams, Llewelyn (Carmarthen)|
|Hall, Frederick (Normanton)||O'Dowd, John||Williams, Penry (Middlesbrough)|
|Hancock, J. G.||O'Grady, James||Wilson, John (Durham, Mid)|
|Harcourt, Robert V. (Montrose)||O'Kelly, Edward P. (Wicklow, W.)||Wilson, Rt. Hon. J. W. (Worcs., N.)|
|Hardie, J. Keir||O'Malley, William||Wilson, W. T. (Westhoughton)|
|Harvey, T. E. (Leeds, West)||O'Neill, Dr. Charles (Armagh, S.)||Wing, Thomas|
|Harvey, W. E. (Derbyshire, N.E.)||O'Shaughnessy, P. J.||Wood, Rt. Hon. T. McKinnon (Glas.)|
|Haslam, Lewis (Monmouth)||O'Shee, James John||Young, William (Perth, East)|
|Hayden, John Patrick||O'Sullivan, Timothy||Yoxall, Sir James Henry|
|Hayward, Evan||Outhwaite, R. L.|
|Hazleton, Richard||Palmer, Godfrey||TELLERS FOR THE AYES.—Mr.|
|Henderson, Arthur (Durham)||Pearce, William (Limehouse)||Illingworth and Mr. Gulland.|
|Higham, John Sharp||Pease, Rt. Hon. Joseph A. (Rotherham)|
|Amery, L. C. M. S.||Baker, Sir R. L. (Dorset, N.)||Baring, Maj. Hon. Guy V. (Winchester)|
|Archer-Shee, Major Martin||Baldwin, Stanley||Barlow, Montague (Salford, South)|
|Baird, J. L.||Banbury, Sir Frederick George||Barnston, Harry|
|Barrie, H. T.||Guinness, Hon. W.E. (Bury S. Edmunds)||Pollock, Ernest Murray|
|Bathurst, Charles (Wilts, Wilton)||Haddock, George Bahr||Randles, Sir John S.|
|Benn, Arthur Shirley (Plymouth)||Hall, Frederick (Dulwich)||Rawson, Col. R. H.|
|Bigland, Alfred||Harris, Henry Percy||Roberts, S. (Sheffield, Ecclesall)|
|Boyton, J.||Harrison-Broadley, H. B.||Royds, Edmund|
|Bridgeman, William Clive||Henderson, Major H. (Berks, Abingdon)||Rutherford, Watson (L'pool, W. Derby)|
|Burn, Colonel C. R.||Herbert, Hon. A. (Somerset, S.)||Salter, Arthur Clavell|
|Campbell, Capt. Duncan F. (Ayr, N.)||Hewins, William Albert Samuel||Samuel, Sir Harry (Norwood)|
|Campion, W. R.||Hibbert, Sir Henry F.||Sanders, Robert A.|
|Cator, John||Hohler, G. F.||Scott, Sir S. (Marylebone, W.)|
|Cecil, Evelyn (Aston Manor)||Hope, James Fitzalan (Sheffield)||Stanier, Beville|
|Cecil, Lord Hugh (Oxford University)||Hope, Major J. A. (Midlothian)||Stanley, Hon. G. F. (Preston)|
|Cecil, Lord R. (Hems, Hitchin)||Horne, Edgar (Surrey, Guildford)||Steel-Maitland, A. D.|
|Clay, Captain H. H. Spender||Horner, Andrew Long||Stewart, Gershom|
|Clive, Captain Percy Archer||Houston, Robert Paterson||Strauss, Arthur (Paddington, North)|
|Coates, Major Sir Edward Feetham||Hume-Williams, William Ellis||Sykes, Alan John (Cites., Knutsford)|
|Cooper, Richard Ashmole||Hunt, Rowland||Sykes, Mark (Hull, Central)|
|Craig, Ernest (Cheshire, Crewe)||Jardine, E. (Somerset, E.)||Talbot, Lord Edmund|
|Craig, Captain James (Down, E.)||Kinloch-Cooke, Sir Clement||Thompson, Robert (Belfast, North)|
|Craik, Sir Henry||Lane-Fox, G. R.||Thomson, W. Mitchell- (Down, N.)|
|Crichton-Stuart, Lord Ninian||Lewisham, Viscount||Thynne, Lord Alexander|
|Cripps, Sir C. A.||Locker-Lampson, O. (Ramsey)||Touche, George Alexander|
|Dalziel, Davison (Brixton)||Lyttelton, Hon. J. C. (Droitwich)||Weston, Colonel J. W.|
|Dickson, Rt. Hon. C. Scott||MacCaw, Wm. J. MacGeagh||White, Major G. D. (Lancs., Southport)|
|Eyres-Moosell, Bolton M.||Mackinder, Halford J.||Wills, Sir Gilbert|
|Faber, George D. (Clapham)||M'Calmont, Major Robert C. A.||Winterton, Earl|
|Faber, Captain W. V. (Hants, W.)||Mason, James F. (Windsor)||Wolmer, Viscount|
|Falle, B. G.||Mills, Hon. Charles Thomas||Wood, John (Stalybridge)|
|Fell, Arthur||Mount, William Arthur||Worthington-Evans, L.|
|Fetherstonhaugh, Godfrey||Nicholson, William G. (Petersfield)||Wortley, Rt. Hon. C. B. Stuart-|
|Finlay, Rt. Hon. Sir Robert||Norton-Griffiths, John||Wyndham, Rt. Hon. George|
|Fletcher, John Samuel||O'Neill, Hon. A. E. B. (Antrim, Mid)||Yate, Colonel C. E.|
|Gastrell, Major W. H.||Orde-Powiett, Hon. W. G. A.||Younger, Sir George|
|Gilmour, Captain J.||Paget, Almeric Hugh|
|Goldman, C. S.||Pease, Herbert Pike (Darlington)||TELLERS FOR THE NOES.—Mr.|
|Greene, Walter Raymond||Peto, Basil Edward||Cassel and Mr. G. Locker-Lampson.|
Bill read a second time, and committed to Committee of the Whole House for to-morrow (Thursday).