HC Deb 12 August 1913 vol 56 cc2424-32

"In the case of the additional exemption from Income Tax under Section 69 of the Finance (1909–10) Act., 1910, there shall be no limit to the amount of the exemption for outlay shown to have been incurred in accordance with that Section."

Clause brought up, and read the first time.


I beg to move, "That the Clause be read a second time."

My excuse for bringing this new Clause again before the notice of the House is that last night, when we brought it up, the Chancellor of the Exchequer was not able to be present to give us his reasons for not agreeing to it. As the right hon. Gentleman is here to-night, perhaps I may be allowed, as shortly as I can, to remind him of the views which he has expressed on the subject repeatedly, on former occasions. This Clause is to abolish the limit of 25 per cent, which was instituted when the right hon. Gentleman abolished the injustice under which landowners were suffering from in the method by which they had to pay Income Tax. When the 25 per cent. Limit was imposed, the reason given by the right hon. Gentleman was that the finance of the year did not allow of his providing more than £500,000 towards removing this injustice. The right hon. Gentleman has constantly encouraged us on this side to think that-the limit would be removed. I think in 1910 he stated that if the £500,000 was not altogether disposed of, the Government would probably introduce a provision, at any rate the next year, to increase the amount, and if there was any surplus it was proposed to increase the maximum on this spending to more than 25 per cent. I will not go through the whole list of -quotations, because they have been brought to the notice of the Chancellor of the Exchequer year after year, and he must know them by heart almost. I will quote but one—what he said on the Second Reading of the Bill this year, because that seems to me to approach as nearly to the form of a pledge as anything which a Minister can say. This is what he said. My hon. Friend the Member for Oswestry (Mr. Bridgeman) said Is there any reason why a further rebate should not he given to those landlords who have understood and made the return, and who have proved that they have spent more than the 25 per cent.? Mr. LLOYD GEORGE: I think there is a good deal to be said from that point of view. Inasmuch as the £500,000 has not been spent, T do not see there would be any reason against raising the percentage. I will certainly give further consideration to that point." —OFFICIAL REPORT, 2nd June. 1913, [col. 666, Vol. LIII.] That is what the right hon. Gentleman 'said on 2nd June.


Had you not better go on?

Captain CLIVE

I will go on in a moment. I was only indicating that part of it in which the right hon. Gentleman said he did not feel that there would be any reason against raising the percentage. Therefore, it behoves the right hon. Gentleman now, not to say, as the Attorney-General did last night, merely that more time is required, and that the Government cannot yet form an estimate of what the effect of the concession will be, but to say now what are the reasons which have arisen since June 2nd which prevent him from doing what he practically promised. This is how the right hon. Gentleman went on—I take it this is what he wants me to read:— I will certainly give further consideration to that point. If the hon. Gentlemen will put down an Amendment to that, effect, I will see what can he done in the course of the Debates WI this Bill."—[OFFICIAL REPORT, 2nd June, 1913, col. 666, Vol. LILL.] The Amendment to that effect is continued in this new Clause, and that is the point on which I hope he will meet us. Of the £500,000 to be spent in this, the third year, no more than £68,000 has been expended, and perhaps I may remind the right hon. Gentleman that last year his excuse was this. He said, then, that that was only the third year of the concession, and that as Income Tax payers were allowed to claim on a basis of three years, and until the Government had the figures for the three years, they could not see what they would be liable for. Last year the right hon. Gentleman said:— Last year the landlords did not realise the concession at all, consequently they only claimed £9,000, the second year it went up to £43.000, and now they have realised it all round, and claims are pouring in, not only in respect to this year, but to all three years. The effect of the pouring in of those claims has only been to raise the amount of the claims from £43,000 to £68,000. The right hon. Gentleman has had the experience which he wanted of this concession for three years, and so far from the £500,000 limit being exceeded, we have got not more than 13 or 14 per cent. of that sum. In 1910 the right hon. Gentleman expressed himself favourably to the proposal, which my hon. Friend beside me (Mr. Hicks Beach) made last night, namely, that Schedule A Income Tax should be transferred to Schedule D. All that the right hon. Gentleman said was, "I certainly cannot do it this year." The proposal in this new Clause is that the surveyor should not be in the position, in which he now finds himself, of saying, "You may prove you have spent 50 per cent. on repairs, but under the Act, although I am fully satisfied on your figures, I can only give you credit for half of what you have proved." That is an injustice, winch the right lion. Gentleman has said, year after year, in effect, that he recognises, and which on the second reading, he practically promised to remove, saying he saw no reason why it should not be removed. What has happened since then to cause him to change his mind? I think the right hon. Gentleman recognises, as the whole House does, that Income Tax is an instrument that wants to be made as perfect as possible, and that, as long as there are these admitted injustices in its collection, it will fail to be that perfect instrument which we should desire.


I beg to second the Motion.

1.0 A.M.

I think we are justified in asking the House to consider it again, on the Report stage, for the reason which has been already alluded to by my hon. Friend. Last night we had not the advantage of the presence of the Chancellor of the Exchequer. The Clause in the old Finance Act, which we are seeking to amend, obviously was the Chancellor of the Exchequer's Clause, and it is not saying too much to say that the Amendment which we propose to make in it, is the Amendment of the right hon. Gentleman. This concession—so far as it is called a concession —made to owners under Schedule A, was made at a time when most Chancellors of the Exchequer would have thought twice before making any reduction in taxation at all. It was made at a time when the right hon. Gentleman had to meet a deficiency of some £16,000,000. I do not think that even the right hon. Gentleman's most ardent friend would say that the right hon. Gentleman's political opinions were such as would make him likely to give any undue concession to the landed interest. There could have been only two reasons which induced the Chancellor to make that concession to the owners of land. The first was, I suppose, that he wanted to soften the blow inflicted by the Budget of 1909, on the agricultural interest. I suppose he wanted to throw what might be called a sop to Cerberus. This so-called concession is one which has turned out to be of very little value. But. I think the real reason which induced him to make this concession was because he was impressed with the injustice of the Income Tax Act upon owners under Schedule A; and he was anxious and desirous to encourage as far as he could good landlords to spend money in the development of their estates. He told us that we should have £500,000, even at a time when he had to raise large additional revenue, in order to redress this inequality. We have had three years' experience, and one thing is perfectly clear, that is, that this 25 per cent. would nothing like add up to the £500,000 he was prepared to give at a time when it was necessary for him to raise £16,000,000 in extra taxation. If at such a time he was prepared to give so much, at this present time when he did not require to raise any new taxes to meet the expenditure of the country I do not think we are asking too much when we ask that we should have this £500,000 to redress this inequality. The position taken up with regard to this abatement of 25 per cent. is a distinctly illogical one. If owners under Schedule A are entitled to anything they are entitled to everything they spend on the upkeep of their estates. That is what we ask, and I think that the past statements of the Chancellor of the Exchequer show that if he were able to treat us as he would like he would give us this concession. I do hope that now we have the advantage of having the right hon. Gentleman here in the House he will give us this concession which has been asked for more than once and has been more than once half promised by the Chancellor of the Exchequer. I beg to second the new Clause.


The two hon. Members who moved and seconded this Amendment moved and supported exactly the same Amendment yesterday and made exactly the same speeches. I can only give exactly the same reply as was given yesterday. What is the position? The position is that in the Budget of 1909 I recognised that a case was made for reduction in respect of repairs by certain landlords, more especially in regard to cottages. One of my distinguished predecessors had already made a concession of 12½ per cent., and I was pressed to extend that. I was told that 12½ per cent. by no means represented the expenditure of landlords on their repairs. I proposed an Amendment that a further reduction extending beyond the 12½ per cent. should be given to landlords under Schedule A, provided they proved they had spent the money. For three years they have had the opportunity to make their case. In the first year the amount of their claims proved trivial; in the second year it was not much greater; and even in the third year the amount claimed is barely one-fifth of the amount I was prepared to set aside, namely, £500,000, when I had to raise extra taxation to the extent of £16,000,000. I cannot say that the concession has been received in a very encouraging spirit. Nothing has been said about it outside.

I have never seen the slightest recognition by any landowner of the fact that this concession has been made; and even the hon. Gentleman who has just sat down was grudging and spoke of "this so-called concession." It is not altogether a question of whether it is just or unjust; because there are so many concessions of this kind one would like to make to various, classes in this country who have slight grievances against the Income Tax. It is very often a question of selection, and one would naturally prefer to choose classes who would really appreciate concessions instead of talking about a miserable £500,000. Before they ask for an extra amount the first thing landowners should do is to make their case for that £500,000. So far they have absolutely, utterly, and ignominously failed to make out their case. They have only to go to the Income Tax Commissioners and prove that they have expended more than 12½ per cent and they can get it; the £500,000 is there. I think the position is due to the extraordinary suspiciousness that there is with regard to the whole of the proposals of the Budget of 1909. They are so suspicious that they will not even claim the concession. The Government is not to blame for that. The hon. Member said I gave a definite pledge. All I promised was to give the matter my most careful consideration. I certainly have done so. Nobody can doubt that I have given this matter the most careful and favourable consideration. I do not think that landowners can really claim any further concessions until they can establish their case for the concessions already made. When that is done there will be a case for further consideration, but until that is done I very much regret that I cannot make any further concession.


The right hon. Gentleman has made two com-plaints. In the first place he has complained that Members on this side have not done him justice in regard to the concessions contained in the 1909 Budget. I do not think he can have read a great many of the speeches made in the country by Members on this side; because, although we have undoubtedly, and, I think justly, attacked a great many of the provisions of the 1909 Budget, we have never failed to call attention to two very valuable concessions in that Budget. The first is the one to which he has referred this evening with regard to the increased allowances to landowners, and the second with regard to the remission of Death Duties on articles which are of historic and national value. Both of those concessions we do undoubtedly appreciate to a considerable extent. The right hon. Gentleman has made a very striking point this evening when he said that we have no claim for a reconsideration of the question because the amount of the £500,000 that has been claimed during recent years has been a very trivial proportion indeed. I understand that to be his point. Let us look at what the position is. The right hon. Gentleman must know that it is a very difficult matter to make out a claim. First of all, you have to pay on the full amount, and then you have to claim a return. It is not only a very dilatory process, but it is also a very difficult matter indeed, and I think anybody who has had any experience even in regard to a small estate in this connection will agree that the present state of affairs is eminently unsatisfactory. The right hon. Gentleman talks of concessions. We do not want concessions in this matter. All we ask for is that land should be treated on precisely the same basis as other forms of property, and if it is right and proper that other forms of property should be taxed for the purposes of Income Tax on their profits, then we ask that land should be treated on exactly the same basis. I cannot imagine what logic he has on his side when he refuses to put land under Schedule D. I know my hon. Friend does not ask this in his present proposal, but I certainly think if he could find time to approach the financial system of the country from the scientific and not from the party or polemical point of view, he would be obliged to admit that we have an unchallengeable claim to have the taxation of land for Income Tax put under Schedule D.

Quite apart from the justice and equity of the case, I wish the right hon. Gentleman would take account of one very important result that would accrue if he placed land in Schedule D. One of the most important considerations that all agricultural reformers are advocating is the necessity that landowners and farmers should keep private accounts. If you place land in Schedule D one of the most important results, one more important even than the profit we shall derive from such a transfer, will be that both the farmers and landowners of this country will be compelled to keep private trading accounts. I would also point out that quite apart from there being any special reason why land should be treated more unfavourably than other forms of property in a matter of this sort, land already suffers certain very serious disadvantages in the matter of local taxation, and the mere fact that land has to bear an undue proportion of the cost of what are called local services, but which are services predominantly national in character, increases the force of our claim to be treated in the matter of Income Tax on exactly the same basis as other forms of property. I appeal to the right hon. Gentleman not to regard this as a matter in which he is making concessions to the landed interests at all, but as one in which he is selecting a particular industry or interest to which he is giving relief. I think he referred to the difficulty of selection just now. We ask him to give a substantial measure of justice to the landed interests to which I think we have a claim, which cannot be challenged from any quarter in this House, and so far from scoffing at the suggestion put forward by my hon. Friend I think we are entitled to claim that we should be put from under A to D.


I am not quite sure what steps the Chancellor of the Exchequer takes to ascertain whether the money has actually been spent on repairs in connection with property, but I hope that he does satisfy himself that the money claimed to be refunded has actually been expended. Why I say that is this. Within the last eighteen months I have stayed with a friend who has a large farm and who told me that his landlord had told him that he had expended £350 for repairs on the farm. He asked my opinion as to whether that claim was justified or not. I went very particularly into every item of expenditure, and I told him that a fair charge for the repairs that the landlord had done would be at the very outside £120. Now, if the landlord to whom I am referring was claiming that he had spent £350 for repairs of this kind, he was, practically speaking, attempting to defraud the Exchequer, and therefore I certainly think the Chancellor of the Exchequer ought to make the most particular inquiries into the amount expended. If he does, I feel satisfied that some of the claims for repairs will not be found to be justified, and therefore, so far as the claims made by the hon. Gentlemen opposite are concerned, I think they are asking to be treated more generously than the rights of the taxpayers justify.


I think the hon. Gentleman who has just spoken can hardly suggest that landlords expend an unnecessarily large sum on repairs and pay a higher figure than those should cost in order to get back a very small percentage of the cost on their income. They may be very foolish, but they are not quite as foolish as that. With regard to what the Chancellor of the Exchequer has said, he began by telling the House that he entirely adhered to the statement made on his behalf by the Attorney-General yesterday. He then went on to say exactly the opposite to what the Attorney-General told us, because the Attorney-General said his only reason for resisting the Clause was that the claim was growing so rapidly that it might exceed £500,000 and that sufficient time had not elapsed to enable them to form an opinion as to whether this claim might not be accepted, whereas the Chancellor of the Exchequer contests it on the ground that it has been so little availed of that we have not proved ourselves worthy of it. I do not think these two things march together. The Chancellor of the Exchequer cannot deny that, in the most conciliatory and responsive manner, he invited my hon. Friend to put down this Amendment, and that he promised to give it most favourable consideration. Having done so, I hardly think the speech he has just delivered was in tune with the speech he delivered at the beginning of the Session. It appears to me that his temper on the subject at the moment has been more consulted than the equities of the case. I do not want to go again into the equity of the point; we divided on it yesterday, but it is purely a, matter of ordinary justice. It has been admitted on the floor of this House and outside that we do not always get justice, and the Chancellor of the Exchequer in this respect has shown a desire to meet us. However just they may be, they are much better made when the Liberal party are in power than if they are made from this side of the House. I think he recognised that, and we recognised it too, and we value the concession all the more on that account. I hope, if the right hon. Gentleman cannot give favourable consideration now, because his frame of mind will not, allow him, my hon. Friend will consider that the invitation is carried forward to next, Session, and that he will find the Chancellor of the Exchequer in a frame of mind to deal with the subject in a more liberal spirit.

Amendment negatived.