§ "The Treasury may accept, in lieu of any taxes due to be collected under this Act, deposit or security to such amount as the Treasury may deem sufficient, having regard to the total amount of the duties to be collected under the authority of a Resolution or of the Bill founded on the said Resolution."
§ Mr. STEEL-MAITLAND
I beg to move, "That the Clause be now read a second time."
This new Clause is intended to give the Treasury additional powers, and it is not intended to rule out those already conferred. As the House will see, its real effect is to give the Treasury power to take security from the unfortunate taxpayer instead of mulcting him at once of taxes which are not legally due. It may rather appear as if legislation on this subject in the House and the Committee were of a wonderland variety, because this is now submitted as an addition, just as the Select Committee, which might have preceded the passing of this legislation, is now to be set up as a tribunal afterwards. I submit that it is very advisable as an addition, quite apart from the fact that to give the Treasury power, if they wish it, to take security from the possible taxpayer instead of making him absolutely pay the duty in the first instance is a good alternative. It does affect the whole position, the question of which has been argued at very great length before the House and the Committee, and this Clause does permit of the revenue of the year being safeguarded without the necessity of actually exacting taxation before the Finance Act of the year is passed. That is to say it permits of a better alternative if the Treasury find it possible to apply it. One objection which may be urged against it is that, whereas it is peculiarly applicable to Customs and Inland Revenue and duties on consumption, it is not so applicable to the Income Tax. All I would submit is that so far as this alternative of taking security from traders, instead of making them pay the tax in the first instance, is not applicable to Income Tax, the objection could quite easily be met in various ways. It could quite easily be met by an extension of the Income Tax year, quite apart from an alteration of the date of the beginning of the year. When it comes to the Customs and Inland Revenue, then I submit that it forms an infinitely prefer- 2180 able alternative which the Treasury should have it in their power to exercise in addition to those they are at present taking under the Act. Unless they have powers of this kind, how will the Treasury or the Inland Revenue deal with the case of new duties? We have had new duties excepted from the operation of the Bill. Whatever risk there was to the revenue in regard to other taxes has now been stopped, but whatever risk has existed with regard to new duties will still continue to exist, and that in a fuller measure than ever before.
The very fact that the House passes legislation in order to prevent a leakage of revenue in regard to old duties, or the variation of old duties, practically constitutes an inducement to the trader to object to the paying of taxes on the strength of a Resolution in the case of new Customs Duties. Consequently, the very fact that you have legislation with regard to the variation of old duties makes it all the more necessary to safeguard the revenue with regard to new duties. The alternative which I suggest meets the difficulty without raising the objections. You are not met with the difficulty of collecting taxation without an Act of Parliament in the case of the new duties. All that you do is to safeguard the revenue by taking security from traders that those duties will be paid as soon as the provision comes into force as an Act of Parliament. Therefore, the exclusion from the Act of new Customs Duties makes additional powers of this kind all the more desirable. It may be objected that it will be difficult to work such an alternative system. But, when all is said and done, the proof of the pudding is in the eating, and in that financial year of difficulties 1909–10 when the Finance Act was delayed till 1910, the very procedure which I suggest was for the time being adopted by the Commissioners of Customs and Inland Revenue with perfect success. For a considerable period of that year, although they had not got legislative power, the Commissioners of Customs, I believe, did take security from traders in respect of goods that were dutiable under the Resolution. They found it to be a good and reasonable way of protecting the revenue. When the Budget of that year was rejected in December the Commissioners of Customs had to give notice that from the date of the notice the taxes would cease to be in force, and from that time they found they 2181 had very great difficulty indeed in collecting their revenue. But, if anyone will take the trouble to read the Report of the Commissioners of Customs for that year, they will find that in the end they were able to collect the whole of the revenue without any deficiency outstanding whatsoever. I believe there was considerable difficulty with regard to a certain amount of revenue which had to be collected in Ireland. I think I am right in stating that the collection in Scotland proceeded with due dispatch. Reluctant as persons were to pay the money, yet the naturally good financial character of the Kingdom enabled the Commissioners of Customs to get their revenue in properly.
§ Mr. STEEL-MAITLAND
The hon. and learned Member says that it was the same in Ireland. I fancy it was in the end, but they did not pay perhaps quite with the same willingness or dispatch.
§ Mr. STEEL-MAITLAND
Whether he objected or not, the money in the end was got in by this means. It would not under any other means have been equally easy to get in the money, and I submit to the Government that unless they have got quite convincing reasons to the contrary it would be very wise for the Treasury to have additional powers of this kind. The objections which have been brought against the rest of the Bill do not apply to them. They do stop a leakage which even now exists, and which may exist with regard to new Customs Duties, and as far as the best advice which a private Member can get goes, they give a perfectly good and desirable alternative to the other methods which otherwise the Treasury may be obliged to employ under the powers given them by the Act. We should be glad on a point of this kind to have some answer dealing with the actual merits of the case. I admit gladly that the Chancellor of the Exchequer has met us very fairly in many cases, but the Government have not met the objections that have been urged on this side of the House with regard to some points, and practically no reason has been vouchsafed to us whatsoever. A great deal of advice has been taken in this matter and the Clause is submitted as a 2182 real working alternative which might be useful to the Treasury. I therefore think the House would do well to accept it, and I hope, if the Government find it impossible to do so, that we shall be furnished in some detail with the reasons which make it imperative for them to refuse.
§ The SECRETARY OF STATE for the HOME DEPARTMENT (Mr. McKenna)
As I am not in a position to accept the hon. Member's Amendment, I speak with some anxiety lest he should say that I have been unable to supply him with adequate reasons for declining to do so. I will do my best to explain why it is regarded as undesirable to give this alternative power to the Treasury. He has fairly stated that this power does not in the least bit limit the existing power of the Treasury under the Bill. It increases the power of the Treasury, because it gives two alternative methods of proceeding against the person whom the hon. Member describes as "the unfortunate taxpayer." I do not say that it would be inconvenient—it might be convenient—to the Treasury to have this additional power, but, in asking for such exceptional powers as we do ask for under this Bill, we ought carefully to safeguard the interests of the unfortunate taxpayer. Above all things the trader wants certainty. He wants to know that in the ordinary exercise of his business the routine to which he is accustomed in his dealings with Government offices will be continued. He has throughout his business experience paid his Customs Duties when taking his goods out of bond. He has not been accustomed alternatively to giving security, and he certainly would not desire that the Treasury should ever exercise a discretion and allow one trader to take out his goods on giving security whilst insisting upon another trader, whose security the Treasury might not think equally good, paying the full amount of the taxes. The taxpayer wants every-trader to be treated alike, and he wants to know definitely and certainly what is the treatment which he is going to receive. This Amendment does not touch what has been called the "vital defect of the Bill." The Bill authorises the Government to exercise powers over the citizen under a Resolution instead of under an Act of Parliament. The new Clause of the hon. Member has precisely the same vice. 2183 The Treasury is allowed to interfere to exact security from the trader under a Resolution.
§ Mr. STEEL-MAITLAND
The right hon. Gentleman has really misstated the position. The Amendment, if he himself had not taken exception to it, would have been put forward as an alternative, and his present argument, therefore, is hardly fair. With regard to the other points, it does not exact taxation. It avoids that objection in taking security, instead of exacting taxation.
§ Mr. McKENNA
I corrected that and said that it exacts security. I quite admit that, excepting in one small particular, the hon. Member is strictly accurate, but I can only deal with this new Clause now as it stands upon the Paper as an alternative Clause.
§ Mr. McKENNA
I am much obliged to the hon. Member, I mean as an additional power. I quite agree that when the hon. Member moved the Clause as an alternative, I took exception to it in Committee as being out of order, but I would remind him that the Chairman of Ways and Means did not rule it out of order on the ground which I advanced, but on entirely different ground. I can only deal with this Clause as an additional power to the Treasury, and I have to ask the House not to accept it. I do not know whether the hon. Member would consider that I was treating him more fairly if I argued the case on the basis that it was an alternative to Clause 1, but I should clearly not be in order in doing so. I can only argue it as an additional power. I do not think the matter is of very serious consequence, but it would be undesirable to give the Treasury the power of dealing with different traders in different ways. I hope those are sufficient reasons why this Amendment should not be accepted as it stands, and I trust the hon. Member will not consider it necessary to press the Clause to a Division.
§ Mr. MITCHELL-THOMSON
I thought the right hon. Gentleman meant to deal with all the points contained in my hon. Friend's speech, but unfortunately he left off just as he began to be interesting. I wanted to know particularly what the Government proposed to do with regard to the cases of new taxes.
§ Mr. McKENNA
If the hon. Member will look at the Amendment he will see that we cannot touch the case of new taxes, because the words are "in lieu of any taxes due to be collected under this Act." New taxes, therefore, are not included.
§ Mr. MITCHELL-THOMSON
No doubt that is a short answer to my point, but I fancy it would be quite possible, if this Clause were read a second time, to so amend it as to cover the cases of new taxes. On the merits the Government should have some alternative plan dealing with new taxes. I realise that one cannot improvise such a thing in a day or two, and I therefore hope that this is one of the points which the Select Committee will take into consideration. It is, I think, almost doubtful whether the Commissioners of Customs have not this power already. If the right hon. Gentleman will look at Section 30 of the Customs Laws Consolidation Act, 1876, and the following Section he will find it provided that if any dispute shall arise as to the proper rate to be paid on any goods it shall be admissible for the importer or consignee or his agent to deposit in the hands of the collector of Customs at the port of importation the duty demanded by the collector, all such deposits to be paid to the general account and to bear interest, in case of recovery, at 5 per cent. What I really want to ask the right hon. Gentleman is whether it is the intention of the Government that in the interval between the proposition of a new tax and its full regulation by the Finance Act of this House, it is not intended to collect anything by any procedure in respect of it?
§ Mr. J. M. HENDERSON
I cannot imagine anything more unfair than that the Government should have the power of exercising such an alternative when dealing with Customs. It may be called an additional power, but undoubtedly it is one which will always be exercised by the rich trader. It will give him an enormous advantage over the poor trader. If he is called upon to pay a large amount of duty, he will say, "I will not pay the money until the Finance Act has been passed, and, therefore, I will give you security." He will, consequently, have no duty to pay for some months, and he will save the interest on that money, while the poor trader who has to pay cash will lose the interest on his money. I 2185 cannot imagine anything more unfair. The power would always be claimed by the man who can afford to deposit security. Of course where cash has to be deposited it will not matter so much. This provision must tend to the benefit of the rich trader. It is not an alternative power; it is an additional power which will always be claimed, and there will be increased cost to the Government in dealing with these things. I do not think it is a wise suggestion on the part of the hon. Gentleman opposite.
§ Mr. T. M. HEALY
I think the Government have acted wisely in this matter. I should like to point out that the Bill of Rights has never applied to Ireland. Apart from the question of Income Tax, I have always taken the view that at common law there is, so far as Excise Duties are concerned, some such power as this. It was for this reason that I strongly held the opinion that this Bill was ultra vires. I am glad the right hon. Gentleman has declined to introduce such an invidious provision into it. With regard to the Bill generally, I must say that the Amendments the Attorney-General has put down have met many of the objections I felt in the early stages of the measure.
§ Mr. JONATHAN SAMUEL
I hope the hon. Member opposite will not press this proposal to a Division, because it would, if carried, involve very serious injury to the revenue, and inflict a grave injustice upon a very large number of small traders. Let me give an illustration showing how it would work. Take a person owning multiple shops—hundreds of shops. He would go into the market to get his tea; it is a well-known fact that sometimes persons in this position pay an enormous sum, as much as £50,000, in the form of Tea Duty. Under this scheme they would be enabled to get credit for four months as between the time of the introduction of the Resolution and the legalising of the duty by the passing of the Finance Act. What occurs? They obtain the duty from their customers week by week. The tea is sent out to the different shops throughout the country, and the duty is collected the same week and transmitted to the head office. Thus the dealer, while collecting the duty, is obtaining credit from the State for a period of four months. The same principle applies to the Sugar Duty. For hundreds of years the Inland Revenue authorities have had the power to charge the duty 2186 when tea or sugar or any other article subject to it has been taken out of bond. That is fair to all customers without exception, and I think it is an advantage to every customer that he should know he is equal in the eyes of the law with other men. One man should not have credit and another be compelled to pay his duty straight off. There is another thing, a large buyer might deposit securities which at the end of four months turned out to be valueless. What would occur then? The revenue would be bound to suffer the loss, while the customer would have paid the dealer the duty in the form of the increased price of tea. I think the hon. Member, under these circumstances, would be well advised not to press this Clause, even with regard to new taxes. I do not think it is possible under this Bill that any new indirect taxes can be enacted, and I do not see how, when you leave out the new taxes, to enforce them and to allow the traders to purchase goods between the time of the introduction of the Bill and its passage into law. I am quite sure, if this Clause were passed, it would involve a very severe loss to the Exchequer.
§ Motion, by leave, withdrawn.