INCOME TAX. (Hansard, 4 May 1914)

§ Mr. AUSTEN CHAMBERLAIN
The Committee have listened to a very important statement from the right hon. Gentleman, but his subject was not less complicated than it was important. I think I should exercise a wise discretion if I decline to attempt to follow the right hon. Gentleman at the moment when he has just sat down, and when, I must confess, that I am not able to appreciate the exact bearings of the proposals he has made. I am not, therefore, now going to offer any observations to the Committee on by far the largest part of the proposals he has made; indeed, I am only going to say a few sentences about one of them. I greatly regretted to hear the right hon. Gentleman announce his intention of again having recourse to the Sinking Fund. He justified it on the ground that the Government, of which he is a Member, has reduced the National Debt by £100,000,000. But that is a very one-sided description of what they have done. It is true that they have reduced the Debt—not merely the Debt of which we have usually talked on this occasion, but the whole Debt of the country, including the Army and Navy Debt, as the right hon. Gentleman said, by that figure. But he will bear in mind that the Government which created the Army and Navy Debt created a special Sinking Fund for it, in order to preserve the effective work- 95 ing of both the Old and the New Sinking Fund, and that the party which he represents stoutly announced that that money ought never to have been borrowed for that purpose at all, and has never recanted that opinion. If that be so, they certainly ought not to take into account, when they are considering the amount of the New Sinking Fund, the amount which is allocated to the payment of Army and Navy Debt. I have a more serious argument than that against their proposal. You have to look, not merely at the amount of Debt they have paid off, but at the amount of relief they have given. Equally important with the amount of relief they have given is the amount of new charges which they have created. They have paid off something under £100,000,000.

§ Mr. LLOYD GEORGE
Over.

§ Mr. CHAMBERLAIN
Excluding Army' and Navy Debt. We will take it at £104,000,000 if they like. They have therefore relieved the country of charges of something under £3,000,000, but, by their old age pensions and insurance schemes alone, as they stood before the right hon. Gentleman had announced the additions he has done to-day, they had added not to the capital expenditure at a given moment, but to the annual charges of the State, a new burden of £21,000,000. That, of course, finds its correspondent in the new taxes which they have imposed. The right hon. Gentleman is now carrying the Income Tax to heights which no statesman of any party would have contemplated until very recent years in time of peace. He is, therefore, to that extent draining one of the great reservoirs to which we can have recourse in time of war. This is not the moment for making a further drain upon the other great reservoir to which we can have recourse in the time of war, namely, the Sinking Fund. I am bound to say that when Consols are standing as low as they are now it is a very profitable transaction to pay off the Debt, and we ought to make the largest use of our means for that purpose. I put in, therefore, an immediate caveat against the Chancellor of the Exchequer's proposal to take another £1,000,000 this year and something more than £1,000,000 next year from the Sinking Fund. Beyond that I do not propose to go at this moment into the Budget proposals he has outlined to the Committee. I only want to ascertain from him, in the 96 first place, what information he proposes to supply to the House in the form of Papers to explain the statement that he has made, and, in the second place, what our procedure is to be. The right hon. Gentleman travelled over a great deal of ground. He has adumbrated a new rating system, but he has not explained it; he has adumbrated a new valuation, but he has not explained it. He has not told us how the rates are to be apportioned between what I may call the new form of the old valuation and the new site valuation which he proposes to create. I would ask him to tell us how the House is going to be put into possession of this information. We really need, before we can intelligently discuss these proposals, a very much fuller statement of how they will be carried into effect—and, indeed, of what they are—than he has yet given us. I should like to see a full statement, which I think we shall not find when we come to read his speech, of what are exactly the new Grants he proposes, and what is their amount and what they are. I may be asking in some respects for information which I shall find in looking at the speech, but the right hon. Gentleman very seldom gave two figures running which referred to exactly the same thing, therefore it was very difficult to follow. There would be a figure for the United Kingdom followed by one for England and Wales alone, or a figure of the additional produce of the tax followed by a figure of the total produce of the tax. However, it is possible that when I come to look at the speech I shall find there some of the information I am asking for, though it escaped my attention, but I think there will be other information that we shall have to ask for.
I should like to have a statement showing how these new Grants will work out as between different authorities, and in particular how they will affect the rural authorities of the country. The right hon. Gentleman proposes to abolish the existing Agricultural Bate Grant, I think the agricultural districts concerned may fairly ask to be informed at the earliest possible moment how it is estimated they will be affected by the withdrawal of that Grant and by the new proposal which the right hon. Gentleman has made. He evidently has had this comparison in regard to certain places, because he has given us some comparative figures. Probably he has it worked out on a much more extensive scale than he thought it necessary to 97 do, and I hope he will give it us on the fullest scale he can. London has had a special grievance in regard to local rating, and we should like to know how it is estimated London will be affected by it. I would ask the right hon. Gentleman to consider what Papers he can lay for our fuller information, and to lay them at the earliest possible moment, and to tell us, if he can this afternoon, how and at what time he expects to put the House in possession of the information in regard to local rating generally, to valuation, and to education, which he could only vaguely sketch out. I imagine it will be agreeable to the right hon. Gentleman himself and to the House at large that we should all adjourn early without attempting to carry this matter further to-day, and have time to think over the statement he has made. I assume, under these circumstances, the Government will be prepared to do what is usual, and not take any further contentious business.

§ The PRIME MINISTER (Mr. Asquith)
I agree with that, subject to one small order, Criminal Justice Administration Expenses (Committee), which is agreed. In reference to the appeal that the right hon. Gentleman has made for further information, my right hon. Friend, in consultation with myself, will consider all that the right hon. Gentleman has said, and give him all the information he can.

§ Mr. CHAMBERLAIN
When shall we have, what is a very important part of the Budget, the proposals which relate to local rating—when shall we know exactly what those proposals are?

§ The PRIME MINISTER
I cannot promise to lay them before our discussion on Wednesday and Thursday, of course, but I hope we shall have them in due course.

§ Mr. PRETYMAN
Will there be something additional before Wednesday and Thursday?

§ The PRIME MINISTER
Yes, certainly.

§ Mr. C. E. PRICE
May we also have details of the Grant for Scotland? The right hon. Gentleman said a great deal with regard to England and Wales, but gave us no details with regard to Scotland. May I ask whether he will issue a separate Paper?

§ Mr. LLOYD GEORGE
I am sorry the Secretary for Scotland is not here. I am afraid I could not give that undertaking "without further consultation with him.

§ Mr. PRINGLE
Will the right hon. Gentleman state the principle on which the money is to be allocated to Scotland? He did not make it clear whether it would be on the basis of expenditure or not.

§ Mr. LLOYD GEORGE
My right hon. Friend has certain proposals of his own in regard to Scotland. I do not want to enter into those.

§ Lord HUGH CECIL
Will the right hon. Gentleman consider whether it would be possible to lay before the House a statement of the approximate number of persons from whom various parts of the revenue are drawn, so that it can be seen how much money comes from how many people, because though in general we are all in sympathy with the principle in which the Budget is framed, of taxing rich people heavily, it is a danger if you levy too large a part of your taxation from a very small number of people. It is a danger both in regard to the principle of no taxation without representation—of course, a very small number of people have no weight in a representative body—and it is also a danger because it makes the national revenue depend on a very narrow basis, and it is liable to sudden fluctuations.

§ Mr. LLOYD GEORGE
I will consider that.

§ Mr. PRETYMAN
Will the right hon. Gentleman give some information showing what is the proportion of taxation paid by working-class householders, average middle-class householders, and people of independent means, and will he also with that give any figures showing what either of these classes derive as a direct receipt from the taxation. It is a very important point, because where a man pays a shilling and receives two shillings in actual receipts from the tax, that ought to be taken into consideration—I mean in the direction of old age pensions, or education, and so on.

§ Mr. CASSEL
May I ask a question with reference to an alteration in the law which the right hon. Gentleman promised me last Session he would introduce in connection with the Income Tax levied on the joint incomes of husband and wife. He said he would deal with it on the Revenue Bill. That is precisely what he was trying to do last Session, and because he dealt with it in that way, and did not pass the proper Resolution, he was himself unable to carry 99 out the very amendment which he desired to effect, and I notice that the Income Tax Resolution in this case is drawn in such a way as not to make it possible to introduce such an Amendment. I am not prepared to accept the suggestion that the Revenue Bill is the proper Bill on which to deal with it. It is Income Tax, and, if Income Tax is to be imposed by the Finance Bill, the House is entitled to insist that all questions dealing with Income Tax should be dealt with on that Bill. I should like to call his attention to the wording of this Resolution, and to remind him that last Session he failed to carry out his promise in this very matter, because of the form in which the Resolution had been brought.

§ Mr. HAYES FISHER
I am not sure that I quite understood the right hon. Gentleman, but this was my understanding of his figures so far as relief this year to local authorities is concerned, that they are certain to get the sum of £550,000 in relief of necessitous areas under the new Education Grant?

§ Mr. LLOYD GEORGE
That includes the provision of meals.

§ The PRESIDENT of the BOARD of EDUCATION (Mr. Pease)
£515,000, not £550,000.

§ Mr. HAYES FISHER
That is a fixed and certain sum independent of the passage of any new legislation. Is that so? Apart from that the £2,000,000 Grant promised to local authorities this year is entirely dependent on the passage of new legislation, particularly dependent on the passage of legislation inaugurating an entirely new system of valuation. Then I should like to know, if that is so, whether practically the whole of the new Grants, and possibly also this new necessitous new area Grant, are dependent on new legislation? I should like to ask when it is proposed to introduce that legislation, whether it will be introduced before Whitsuntide, and whether it will be pushed along by the Government, so that these local authorities will have the same chance of obtaining some relief this year to the extent at least of £2,000,000?

§ Mr. LEES SMITH
Will the figures which the Chancellor is to give us include information as to what is to be done with the £1,000,000 still in the Exchequer Balances?

§ Mr. JOYNSON-HICKS
May I ask the right hon. Gentleman not merely to deal with the question raised by my hon. and learned Friend (Mr. Cassel) as to which Bill this concession is to come into, but to make perfectly clear what the concession is that he is prepared to grant? When you were dealing with Income Tax at the rate of 8d. or 9d. in the £, that was an injustice to husband and wife having both earned incomes or one earned and the other unearned. When we are dealing, as we are in this Budget, with an Income and Super-tax combined of something like 2s. in the £, the hardship to a married couple becomes very much more intensified than it was a few years ago. I think we are entitled to ask the right hon. Gentleman, before we pass the Resolution, to make it perfectly plain what concession he is prepared to grant in respect of that question.

§ Mr. WORTHINGTON EVANS
May I ask a question with regard to the £1,000,000 extra for national insurance? I understand, of course, that with regard to the deposit contributor new legislation will be required. Will new legislation be required for dealing with abnormal case?. and does the right hon. Gentleman propose to introduce any Bill in regard to that shortly—this side of Whitsuntide?

§ Mr. STEEL-MAITLAND
A little con fusion was caused in the figures of the Chancellor of the Exchequer due to the fact that in one instance he gave figures for the whole of the United Kingdom and in others for England and Wales only. I think it would not be difficult for the Chancellor of the Exchequer to give us, before Wednesday, the figures for each Grant under each head of expenditure to local authorities for England and Wales and other parts, where available in the United Kingdom—in the first place, for the present year, and, in the second place, for the following year. I think there must be figures in the possession of the Chancellor of the Exchequer, and perhaps there would not be any objection to give them to the House. As to the other item of information, no doubt it would not be possible to give it by Wednesday, but I would ask whether the right hon. Gentleman at some time would give the House tables showing the amount of relief for the rest of the United Kingdom. He has stated the amount in respect of one or two special places, and it is quite clear that a good 101 many calculations have been made in respect of other places as well. I am sure it would make the matter clear to everybody if he would give tables showing the estimated relief to each county and county borough and each urban and rural district.

§ Mr. WEDGWOOD
May I ask the Chancellor of the Exchequer whether, when he is supplying information on the lines asked by the hon. Gentleman the Member for Birmingham, he will state if the relief to rates, which is to average 9d. in the £, is based on the present assessment, and whether, if that is so, the relief will not amount to 1s. 6d., or approximately some such sum, if it is relief solely on improvements, and whether there is no relief on the land value part of the valuation? I was not quite clear whether 9d. was the total amount of relief on the improvement part or whether it was intended to cover the whole valuation.

§ Mr. CHAPLIN
In view of the great number of Acts which have been passed recently, and which have so greatly increased the rates of agricultural land, will the right hon. Gentleman also remember that he received a deputation not long ago on the subject of further relief in regard to the agricultural industry? I think he gave a deputation from the Farmers' Union the greatest hopes that considerable relief would be given in that particular direction in the very near future. It was extremely difficult, if not impossible, to follow from his speech how this will be done. I have studied very carefully the recent reports of the Local Taxation Committee which has been laid on the Table, and I do not follow with any clearness at all that there is going to be any substantial relief in that respect to agricultural land. At all events, I am sure it will be a matter of great relief to the agricultural world if the right hon. Gentleman before we pass the Finance Bill, or at the earliest possible opportunity, will state how that further relief which he has promised is to be made.

§ Sir J. D. REES
Will the right hon. Gentleman state what relief is to be given to Nottingham among the great centres?

§ Mr. MOUNT
May I ask the right hon. Gentleman whether he proposes to include a Grant to small schools in rural districts? He will remember that £370,000 was proposed in the Kempe report. I wish to know whether that is included in the Grant which is to be given for education?

§ Lord ALEXANDER THYNNE
The right hon. Gentleman referred to the fact that the suggestion which has been made with respect to a local Income Tax has been considered by the Treasury experts and unanimously rejected. Would it be possible for the right hon. Gentleman to circulate their opinion, because it is a subject which attracts a good deal of interest on both sides of the House. There are many hon. Members in all quarters of the House who think that a local Income Tax is a possible solution of some of our difficulties. It would be a matter of great interest if we could have a statement circulated giving the opinion of the Treasury officials. I would ask the Chancellor of the Exchequer whether he could see his way to circulate the new grading of the Death Duties. He gave us certain figures in regard to that matter, and told us that £1,000,000 would pay 20 per cent. He referred to the rapid steepening of the grade, and I think it would be useful for the House to know the details of the new grade.

Mr. MacCALLUM SCOTT
There is one point of principle which I would be glad if the Chancellor of the Exchequer would clear up before we discuss the matter again. I understand that ho is going to give some relief to local taxation, and that he proposes to raise the money by a graduated increase on the Income Tax. The Land Tax is, we believe, somewhat unfairly distributed as between the different ratepayers, but still the burden is upon land. The right hon. Gentleman is granting this relief from Income Tax, or largely from Income Tax. I rather understood from his preliminary remarks that he proposed to grant this relief by means of a direct tax upon land assessed upon site value, and that the relief would be granted somewhat in proportion to the amount of the improvement of the value in each district; but when it came to the question of raising the money, there was no indication of any proposal in that respect—certainly no indication of any proposal as regards the current year. May I ask if the proposal to meet this relief of rates out of Income Tax is merely a temporary proposal for the present year, and does he intend in the following year or in an early year to grant this relief in respect of the unfairly distributed Land Tax, and to add another Land Tax which shall be fairly distributed.

§ Mr. W. THORNE
I wish to put a question to the Chancellor of the Exchequer 103 in regard to secondary school fees. I understand that certain Grants are going to be made to local authorities towards secondary schools. I have introduced two deputations to the President of the Board of Education in regard to the fees charged for scholars attending secondary schools. In some cases they are higher than the parents can afford to pay. In West Ham the charge is £4 per annum, and in some places it is as high as £8. I wish to know whether, in the event of this Grant being given to local authorities for secondary education, he will take into consideration the fees which are charged, with the view of preventing the charging of extraordinary fees?

Captain WILSON
In regard to necessitous school areas, I understand that £515,000 is to be granted this year. May I ask whether this is to be granted on the same principle as in previous years?

§ Mr. CHIOZZA MONEY
May I ask the right hon. Gentleman if, in order to assist in the elucidation of the Income Tax and the Super-tax, he will give the House two tables showing what they amount to, first, on earned incomes, and, second, on unearned incomes? In that way it would be possible to see what the Income Tax charge on £2,000, £5,000, and £10,000 would actually be.

§ Mr. ROBERT PEARCE
May I ask the right hon. Gentleman whether he has taken into account, or will take into account, the fact that all the charity property in the Kingdom is exempt from Income Tax altogether? There is now £12,000,000 per annum received by the Charity Commissioners and Charity Trustees arising from landed property which is exempt from Income Tax. A great many years ago the late Mr. Gladstone made a proposal in relation to that question. Now it has become a serious matter. It would make a difference of one halfpenny in the pound upon the Income Tax to all the payers of that tax if the income from the property was the subject of assessment. It seems hardly fair that a large amount of property amounting to £500,000 a year should be exempted from Income Tax altogether.

§ Mr. PETO
As a very much larger amount of the revenue is to be collected from Income Tax, may I ask whether the right hon. Gentleman has the intention of doing what he indicated in previous years, 104 in the way of allowing a careful estimate to be made for wasting assets in respect of any industry? The heavier the Income Tax is, the more important it is that it should be levied on the real amount, and that there should be a proper method of accounting.

§ Mr. LLOYD GEORGE
It is impossible to get through the discussion of the Finance Bill in any year without being, confronted with many of the "hardy annuals" which always come up. I will deal with the questions which have been addressed to me from both sides of the House. Most of the hon. Members who have spoken have asked for information and returns. I will do my very best to comply with all the requests. My hon. Friend (Mr. Chiozza Money) has asked me whether I would consider the possibility of issuing certain information with respect to the Income Tax and the Super-tax. I think I shall be able to grant that request. It would help very much if hon. Members would put their requests in the form of Motions for Returns, which would give one an opportunity of considering them with one's advisers. With regard to the amount of the Grants, I say that ought to be made quite clear. Unfortunately, the only figure which I had on my notes was for the United Kingdom. The same thing applies to some of the special Grants. However, I shall take care to circulate a White Paper showing exactly what are the Grants. I shall circulate them, so far as possible, in the form in which they are desired by hon. Members who have addressed questions to me. A question was put in respect of the treatment of Scotland and Ireland. At the present moment I am not in a position to say Scotland will get a proportionate Grant. I think the hon. Member who asked the question will do well to be content with that declaration. I have gone into the matter, and I would advise my hon. Friend not to press it. I come to the question of the Irish contribution, upon which my hon. Friend the Member for East Mayo wishes to get some in formation. The portion of the Irish contribution is to be paid over to the Irish Parliament for the services at their disposal. The hon. Member for Colchester asked me as to whether legislation is required in reference to insurance. Legislation will be required, I think, for dealing with all the points which I have indicated, and it will, be introduced as soon as possible.
105 The right hon. Gentleman the Member for Wimbledon (Mr. Chaplin) asked whether I could give, in reference to rural areas, a calculation similar to that which I had already given with regard to county boroughs. The difficulty in the case of rural areas is that it depends so much on the classification of the roads. I have been able to get it without much trouble in the case of the county boroughs, but have found it difficult to get figures for the rural areas, because they depend so much on the classification of the roads. I will not say it is the main burden, but it is a very important element in the burdens upon rural areas. I shall do my best to get the information asked as soon as possible. Some of the questions addressed to me are questions which relate to the Bills that are to be introduced to deal with these matters of local taxation. I am only dealing with them now in so far as they affect the finances of the year. I have given a general idea of the money that I have to provide, and the questions addressed to me would be dealt with better on other Bills than on the Finance Bill, which is dealt with by the Resolution before the Committee at present. The hon. and gallant Gentleman asked me a question about necessitous school areas. In some cases it will be the old basis, but in other cases it will not be. There would be some new participants in the scheme. That will add considerably to the amount. Some of the old participants will, I think, get increases in subsidy, but there will be new participants that will add considerably to the expenditure which I have to provide for necessitous school areas. The hon. and gallant Gentleman will get some information on that point. My right hon. Friend will take care to lay it on the Table or to give some information, whether by question and answer or otherwise, to the House. I cannot give it at the present moment, but I will do my best if the hon. Gentleman will put down a question. In reference to the question made by the hon. and learned Gentleman (Mr. Cassel), he seemed to think that it is not a question to be dealt with in the Revenue Bill.

§ Mr. CASSEL
It could easily be dealt with in the Finance Bill.

§ Mr. LLOYD GEORGE
I will consider that point. I am quite as anxious as the hon. and learned Gentleman is to have the matter settled, because I cannot afford to give the concession which has been 106 asked for, and am prepared to resist it on principle.

§ Mr. CASSEL
The right hon. Gentleman failed last Session to carry what he wanted.

§ Mr. LLOYD GEORGE
I agree. I must see that that is put right this Session. I will do my best to see that the concession which I was prepared to make last year, should be incorporated in an Act of Parliament this year.

§ Mr. HAYES FISHER
Can the right hon. Gentleman answer my question as to when these new Bills embodying the now Grants will be introduced, and whether this will be done before Whitsuntide?

§ Mr. LLOYD GEORGE
The right hon. Gentleman must address that question to the Leader of the House. It is a question of the business arrangements of the House, over which I have no control. Perhaps he will kindly ask the Prime Minister the question.

§ Mr. CHAPLIN
I am very much obliged to the right hon. Gentleman for his reply, but I would ask him to bear in mind, as his reply is directed to the rural districts alone, that my question was directed as to what is the position of agricultural land under these new proposals as compared with what it is now, and as to whether under these proposals it would derive the further relief which the right hon. Gentleman promises, of which I confess I have considerable doubts at present as far as I can follow what he said.

§ Mr. LEES SMITH
Will the right hon. Gentleman kindly answer the question which I asked as to what should be done with the £1,000,000?

§ Mr. LLOYD GEORGE
The £1,500,000, as it is, is still in the Exchequer balance, and it will remain there until the day comes.

§ Mr. GOLDMAN
Would the right hon. Gentleman prepare a statement showing how the Super-tax is going to act, and whether it is to be in respect of incomes received during the current year, or whether the incomes are to be calculated according to previous years? The right hon. Gentleman will remember that when he introduced the Super-tax the last time the Super-tax was not calculated on the income of the current year, but in respect of the income of the previous year.

§ Mr. LLOYD GEORGE
No statement will be necessary. We do not propose to make any alteration in the basis of the law. I would like, before answering the hon. Gentleman, to have a further consultation with my hon. Friend.

Mr. MacCALLUM SCOTT
Is it proposed that this very large relief to local burdens should be made permanent out of general taxation and not out of specific taxes?

§ Mr. LLOYD GEORGE
Perhaps I did not make myself clear. The relief is not to land but to improvements of the land. That is the whole basis of the relief. It is in order to avoid it being a relief to land that we propose to have it a relief to improvements.

§ Mr. PRINGLE
Does the altered basis apply to the full amount? At the present time a large sum is distributed in relief to local rates.

§ Mr. LLOYD GEORGE
It is only in new Grants.

§ Mr. OUTHWAITE
In reference to the new basis upon which the land is to be rated, are we to take it that the compulsory provision of the new rate—

§ Mr. LLOYD GEORGE
My hon. Friend is really asking in reference (o the Rating Bill. I have nothing to do, as Chancellor of the Exchequer, with that proposal. I have simply explained my financial proposals and how the money is to be applied.

§ Mr. OUTHWAITE
Are not these land proposals dependent on the Eating Bill?

§ Mr. LLOYD GEORGE
They are.

Mr. MacCALLUM SCOTT
I really wish to be sure that I understand the proposals. Is it certain that the right hon. Gentle- 108 man's proposal towards the relief of local taxation is to be a relief granted to each individual ratepayer in proportion to the amount of his improvement?

§ Mr. LLOYD GEORGE
I have said so already. I repeat it now for the third, time.