§ Then we come to the conclusion. The best method of equalising the burden is by means of a graduated Income Tax. In Germany the Income Tax is the most useful weapon for the purpose of assisting the local authorities in their local expenditure. In Berlin the Income Tax is 1s. 9½d. in the £; in Elberfeld it is 2s. 8½d.; in Kiel it is 3s. in the £. It is always forgotten that in this country what is equivalent to a 9d. Income Tax goes now to local purposes. About £27,000,000 goes from the Ex- 86 chequer, which, in Germany, is treated as purely local purposes, and that is equal to an Income Tax of 9d. Lord St. Aldwyn lent the weight of his great authority before the Kempe Committee to a suggestion that we should have a Local Income Tax, but he stated that before it was adopted it ought to be very carefully examined by experts. It has been examined by the experts, and they are unanimously of the opinion that it would not work. As a matter of fact, in Germany it works in this way. A man, whose income is made in the district and who cannot get away from it, pays, and the man who has private means, and to whom, therefore, it does not matter where he lives, here or there, escapes. He compounds with the local authority. He just says to them, "If you assess me at £15,000 I go; but, if you assess me at £3,000 I will remain." In order to have the privilege of his assistance, they keep him there at his own valuation. That means that the men who have the largest incomes are apt to flit, under those conditions. I propose, therefore, that the Income Tax should be raised. I do not propose to interfere with earned incomes up to £1,000.
§ Between £1,000 and £1,500, I propose that the rate should be 10½d.
§ Between £1,500 and £2,000, I propose that it should be 1s.
§ Between £2,000 and £2,500, I propose that it should be 1s. 2d.
§ Between £2,500 and £3,000, I propose that it should be 1s. 4d.
§ [An HON. MEMBER: "Earned Incomes? "] That is on all earned incomes. I am coming to unearned incomes now. The hon. Gentleman seems to be more concerned about income that, is not earned. The present rates on unearned income and all incomes above £3,000 I propose to raise from 1s. 2d. to 1s. 4d. I think I ought to point out that when you talk about 9d. and 1s. 2d. Income Tax, there are not very many who actually pay it. For instance, when you take a person at £180, his rate is 9d., but, as a matter of fact, he is only paying 1d. A person at £400 is only paying 5d., and a person does not pay the full 9d. until he comes to £701. That is on account of abatements. The same thing applies to the 1s. 4d. rate. I propose that one deduction should be made in respect of incomes under £500. In the Budget of 1909 I proposed a deduction in respect of each child on all incomes under £500, which in the case of earned incomes amounted to 7s. 6d. a child. I propose 87 that allowance should be doubled for total incomes under £500, earned or unearned. I will just show how that works. A man with an earned income of £200 per year would pay 30s. Income Tax. With two children, he would, under this proposal, get a relief of 30s., and he would pay nothing.
§ Mr. JOYNSON-HICKSWhat if he had four children?
§ Mr. LLOYD GEORGEThe hon. Gentleman wants to know something about the case of a man with four children.
§ Mr. JOYNSON-HICKSAnd with £200 a year.
§ Mr. LLOYD GEORGETake the case of a man with £300 a year and with four children. [An HON. MEMBER: "What about a man with four children and £200 a year?] I do hope that hon. Members will extend the courtesy which is, I think, invariably given to a Chancellor of the Exchequer. I am not pleading for any special privilege, because I really have something to communicate. Take the case of a man earning £300 a year. His Income Tax would be £5 5s., but with four children he would receive a deduction of £3, so that his Income Tax would be £2 5s. under the new proposal. There is another deduction which I propose to make. In the Budget of 1909 there was a further extension of the principle which I think was started by Sir William Harcourt of an allowance under Schedule A in respect of repairs. A 12½ per cent. allowance was made. I proposed in the Act of 1909 that should be extended to 25 per cent. I thought it would have cost very much more than it did, as a matter of fact, cost in practice. I stated then that if there were a surplus I should assent to a proposition that the 25 per cent. should be eliminated, and a landlord should be allowed to deduct bonâ-fide and legitimate repairs and cost of maintenance to any legitimate extent, and I now propose that the 25 per cent. limit should be abolished.