§ 1. That—
- (a) Income Tax shall be charged for the year beginning the sixth day of April, nineteen hundred and fourteen, at the rate of one shilling and four pence in the pound; and
- (b) the like provisions shall have effect with respect to the Income Tax so charged, and the annual value of property, as had effect under Section two of the Finance Act, 1913, with respect to the Income Tax charged for the year beginning the sixth day of April, nineteen hundred and thirteen, and the value of property during that year; and
- (c) it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
§ Motion made, and Question proposed, "That this House doth agree with the Committee, in the said Resolution."—[The Chancellor of the Exchequer.]
§ Sir F. BANBURY
There was such a noise going on when the Clerk was reading the Resolution that, although I did my best to follow what he said, I was not able, with any great surety, to ascertain what it was. But I understand that the Question is whether we agree with the Committee in the alterations of the Income Tax.
§ Mr. AUSTEN CHAMBERLAIN
Will it be possible for us to have the Resolution read again, because there is some doubt as to exactly what it was?
§ Sir F. BANBURY
One of the chief reasons why I wish to raise a question regarding the Income Tax is that there is a very small number of people affected by this proposal. I believe that, out of something like seven or eight million electors, there are only about one and a quarter million who pay Income Tax of any description at all, and out of that you have to deduct about 750,000 who come under the exemption limits—that is to 1321 say, that they are exempted because their income is under £300, £400, £500, £600, or £700. I rather think, too, although I am not quite sure, that those persons who are exempted on account of earned incomes under £1,500 do not come into the 750,000. If that is so, it will be found that there are at the very outside only 300,000 or 400,000 people who are affected by the proposed change, and if you include the Super-tax, there are not more than 100,000 who are affected by this particular change. I think all economists will acknowledge that to allow a large body to pass legislation casting burdens upon a very small proportion is finance of the very worst description. I see the right hon. Gentleman the Member for West Islington (Mr. Lough) listening to me. I am inclined to think if he were a free agent he would agree with the maximums I have laid down, because I have often heard him make speeches somewhat in the same direction. In the Debate on the Committee stage the hon. Member for Blackburn (Mr. Snowden) congratulated the Chancellor of the Exchequer on the steps he had taken to find the surplus he required. I am not surprised at that. I have always considered that what financial ideas the Chancellor of the Exchequer possesses have been taken from the hon. Member for Blackburn, who not only in his speeches in this House and on public platforms, but in pamphlets which he has written, has laid down these doctrines. I do not blame him. I think he is a man of very great intellect, and although I do not agree with his opinions on any one point he is a man who has to be considered when he gets up in this House and makes a speech as he did the other day. I am sorry he is not present. But when we know the right hon. Gentleman the Chancellor of the Exchequer is a pupil of his, it is necessary we should survey the whole situation and ask ourselves to what this policy is leading?
I am glad to see that the hon. Member for Blackburn has now come in. I can assure him I have said nothing derogatory of him in his absence. I explained that in discussing the amount of the Income Tax he expressed great surprise at the moderation of the Chancellor of the Exchequer. He said that, in his opinion, the proper course to pursue was, not to say "we are going to take 1s. 2d., 1s. 4d., or 1s. 6d., or whatever the amount may be, but to look at the man's income, and having regard to that, and having regard also to the 1322 requirements of the State, to say that the State wants so much. How much can we leave the owner of the income, how much will be sufficient for him to live on, and what will allow him certain luxuries which we think sufficient for him?" The hon. Gentleman went on to say that all this would really be in the interests of the owner of the income, because it would prevent him from indulging in certain luxuries—he did not say what they were—luxuries which were not for his benefit; and if a certain portion of his income were taken away from him it would be all the better for him. The hon. Gentleman considered 50 per cent. a sufficient share of the income to be left to the owner. I do not doubt for a moment that the Chancellor of the Exchequer has not followed his mentor so far as that. I do not think he would get up and say, however great might be the needs of the State, that 50 per cent. of the income must be taken. But what I want to ask is, How far are we going with this doctrine; where is it going to stop? The hon. Member for the Blackfriars Division of Glasgow (Mr. Barnes) would probably say that 25 per cent. would be sufficient for the owner, and there are plenty of people in this country at the present moment who would be quite prepared to say that £400 a year was a sufficient sum upon which a person could live. Not so very long ago a Cabinet Minister—a Member of the present Government—said that in his opinion £500 a year was sufficient as an earned income for any single person in the realm. We have an example, therefore, of what might happen when £500 a year would be considered the limit which was sufficient for a person to live upon in comfort; the rest would be taken away by the then Chancellor of the Exchequer. Will hon. Gentlemen opposite consider where we are drifting? Of course, I do not mean to say that a rise of twopence in the Income Tax at the present moment, though it is a serious rise, is something which the country cannot afford to pay. It can, but it must be remembered that the Chancellor of the Exchequer himself said that next year there would be a further increase in the expenditure unless there was a diminution in the outlay on the Army and Navy. He said there would be a further increase in expenditure of something like £6,000,000.
§ Sir F. BANBURY
As far as I can remember, the right hon. Gentleman told us the Grants which he was giving to various local authorities would amount to eleven and a quarter millions, but that this year, as they would not begin until the 1st December, the amount for which he estimated was something over four and a half millions. If you deduct the latter sum from the former, it leaves six and three-quarter millions. The Chancellor of the Exchequer will correct me if I am wrong, but it does seem to me to be safe to assume that, unless there is a reduction in the expenditure of the Army and Navy, there will be an increased expenditure of something like £6,000,000 to be provided for. How is that going to be found? Is it to be found by a further increase in the Income Tax? We may as well be frank. If a further tax is put upon the working classes they will probably refuse to vote for hon. Gentlemen opposite at the next election. That is a very serious thing. Is all this increased taxation to be put upon the shoulders of a small class, numbering at the very outset 400,000 or 500,000, and not really numbering more than 100,000? The hon. Member for Blackburn took as an example an income of £10,000 a year, and said that, in his opinion, if the State needed it, an Income Tax of 50 per cent. might be levied upon the person enjoying it. Does the hon. Member know all the time, hard work and brain power that is required to earn £10,000 a year? I do not know whether he has ever earned £10,000 a year, but I can tell him it is a very hard thing to do, and in order to do it a person has to devote his whole life to his profession, whether he is a barrister, a solicitor, a merchant, a stockbroker, a member of Lloyd's, a member of Mincing Lane, or any of those professions in which the owner of the income has to work himself or direct the management of a business. Of course in a big manufacturing business where there is a senior partner, he will have clerks and people under him, and the actual amount of work required to earn a large income from a manufactory is not so great as it is in those businesses, trades, or professions which are in the nature of a personal business or trade.
I am, for the purpose of illustration, prepared to take a barrister or one of my own Constituents working in the City. In order to earn this income he has practically to devote the whole of his life to his business. He has practically no pleasures, he does 1324 not go to Monte Carlo, and, probably, ho does not even own a motor car. I can tell the hon. Gentleman that the fortunes which are made are made by saving and not by speculation or some big coup. Human nature being what it is, supposing he had been called to the Bar, and that he was, as he would have been, a great barrister earning £10,000 a year, and supposing he was told that half of that sum was to go to the State, what would he do? He would not work so hard, and would not earn £10,000 a year. The hon. Member shakes his head, but as he has admitted that he has never had experience in that particular direction, he will excuse me if I do not take the shake of his head as being strong evidence that I am wrong in my assertion. The majority of people in these circumstances would say, "I will not work as hard as this." The great majority have worked in this way because they desired to provide for their children. They deny themselves a great deal of what is pleasant in this world to achieve that result. If they are to be penalised they will say, "I do not see why Lloyd George should have the fruits of my hard work"—a sentiment with which I, personally, should quite agree. The result would be that the right hon. Gentleman would not get his money, because it would not be there to get. I do not suppose that any hon. Gentleman opposite will, in a speech, support my contention, but I honestly believe that many of them in their hearts secretly agree with what I am saying.
All this sort of thing tends to prevent enterprise, which has been the main foundation of our great prosperity. All this legislation, and especially the Income Tax, tends to show that thrift is a foolish thing, and that to work hard in order to get money for yourself, which you invest and keep as capital, is wrong, because on that you will be taxed. I venture to say to the Chancellor of the Exchequer that what he ought to encourage in this country is thrift. Employment depends, first of all, on thrift, and, secondly, upon the investment of the results of that thrift in the industries of this country. Without these two things you get practically no employment, and the result of this tendency on the part of the right hon. Gentleman is to discourage thrift and the investment of the result of that thrift in the industries of this country. The right hon. Gentleman and the hon. Member for Blackburn and the Labour party must not 1325 think that because certain people have money that it is kept in a hole in the ground, or in a stocking hung up somewhere, or in bank-notes concealed in a mattress. It is invested, and its investment is what gives employment to our people. This is a very serious matter indeed. I am afraid it will be misrepresented on the ground that the rich classes are endeavouring to avoid paying this increase of 2d. because they do not like to put their hands in their pockets. I cannot speak for anbody but myself, but I believe that the majority of the people in this country would be only too glad to pay an Income Tax of 1s. 4d., 1s. 6d., or even 2s. in the £, if it were for something that was absolutely necessary in order to keep this country in the position it now occupies among the nations of the world. What we fear is that the result of all this, instead of keeping the country in that position, will tend to reduce it to a kind of Holland, Belgium, or Spain, or something very different from what it is now. It is the duty of the right hon. Gentleman to encourage enterprise. Every single thing that the right hon. Gentleman has done since he—I think for the misfortune of the country—became Chancellor of the Exchequer has tended in the other direction. Every single project of his has been proposed to obtain money not in the way in which his predecessors obtained it. I am not certain whether it was the hon. Member for East Northamptonshire (Mr. Chiozza Money) who, in the discussion on the Committee stage, stated that all previous Chancellors of the Exchequer were wrong and that the only Chancellor of the Exchequer who had ever been right was the right hon. Gentleman.
§ Sir F. BANBURY
It was some hon. Member opposite who pointed out that as the country had been prosperous during the last three or four years, and that as every previous Chancellor of the Exchequer would have stated that the method of taxation adopted by the right hon. Gentleman was wrong, it proved that every previous Chancellor of the Exchequer was wrong and that the right hon. Gentleman was right. It is quite true that during the last three or four years there has been a great boom in trade, but the right hon. Gentleman knows perfectly well that trade runs in cycles and, although this boom has 1326 lasted rather longer than most, it is not going to last for ever, because there are signs, even at the present moment, that it is diminishing. Any argument founded upon the fact that there has been during the last three or four years a particular boom in trade, and that therefore the legislation of the right hon. Gentleman has not been injurious to trade, is worth nothing at all. The effect of legislation such as the right hon. Gentleman has initiated, and the effect of constant increases in the Income Tax are not apparent at once, and take some years to develop. People do not feel the effect of it all at once. Some people might say that they live in hope that my right hon. Friend (Mr. Austen Chamberlain) will soon be directing the fortunes of this country so far as regards these matters.
§ Sir F. BANBURY
There always is that feeling. Although the effect is not felt at once, yet it is as certain as I am standing here that in ten or fifteen years this legislation, if it is continued, will have the worst possible effects that could be imagined. I rose rather unexpectedly—there might possibly have been something else to discuss—therefore I apologise to the House if my remarks have not been so coherent as they might have been, but I feel so strongly on this subject that I believe I could get up at any moment and make a speech against increasing the Income Tax without very much trouble. I am afraid my remarks have been like the seed which fell on hard ground.
§ Sir F. BANBURY
I observe that the only hon. Member who cheers that is an hon. Member who has not got to pay.
§ Sir F. BANBURY
I suppose I do. That brings me to another point I had forgotten. Unfortunately, I do pay, because at the present moment the bulk of my small income is called unearned. It is not unearned, because the greater part of it has been what I have earned myself. I should like to draw the attention of the Chancellor of the Exchequer to the extreme hardship of the cases where professional men, or men engaged in business have during many years of their lives worked hard and saved money, or amassed what is a competency on which 1327 they have retired, and then they are taxed on that as if it were unearned income. It is not unearned income at all; it is earned just as much as any income which is being earned at the present moment. There again, the whole policy of this Government and of this kind of taxation has been directed against thrift and in favour of extravagance. Take the cases of two men earning £3,000 or £4,000 a year in any profession you like to name. One spends only £1,000 a year and saves the rest, while the other takes the opportunity of going to Monte Carlo, dining at the Ritz, buying a motor car, and indulging in other forms of luxury, and spending perhaps all his income. One man has continued saving, so that be may be able to provide for his children and live comfortably in his old age, yet he is taxed on what is called unearned income, while the extravagant man keeps up his extravagance and is taxed on what is called earned income and pays very much less, whereas the man who has saved has a stake in the country if he has invested it in this country, which he may not have done under the policy of the right hon. Gentleman, and the other man has nothing. He has spent his money in riotous living and has enjoyed himself. I am obliged to the hon. Member for reminding me of this, which I consider to be a very serious blot in the incidence of the Income Tax. I trust hon. Members will consider where we are drifting in this insane policy of allowing the many to pass the legislation and then requiring the few to pay.
§ Mr. LEES SMITH
I wish to ask the right hon. Gentleman's attention to one point, rather of administration than of policy. He told us, when he was announcing this concession on Monday, that he expected it would be a subject of great expense and trouble to the Inland Revenue. When he made that statement I was not very clear why that should follow, but I have tried to think it out since, and I have now come to see that it will not only be a subject of great expense to the Inland Revenue, but, corresponding to that expense, there is likely to be a very great deal of annoyance and irritation to a taxpayer with less than £500 a year. This 1s. 4d. is now, and must continue to be, deducted at the source. That means that all those who pay unearned Income Tax and have less than £500 a year will have to make claims for the repayment 1328 of their twopences or fourpences, as the case may be. I do not know whether the Inland Revenue has any figure upon this question, but I should say probably, if you take men with less than £500 a year and more than £160—probably three out of five of them have some small income from property or investments. This will mean that almost half a million taxpayers will be putting in claims for repayment. Not far from half the total number of Income Tax payers in the country will be doing so. I think, if one makes inquiries from those who have had to put in claims for repayment from the Inland Revenue, one realises that this part of the Income Tax is a greater nuisance and annoyance than almost any other. On this point I wish to put a suggestion before the Chancellor of the Exchequer. Most of these Income Tax payers are paying on earned income as well as unearned. When they fill in their returns for earned income in May or June, why should they not at the same time state their unearned income, and why should you not then calculate the repayments which are due to them on their unearned income, and then deduct the sum total of these twopences and fourpences from the tax which they would pay upon unearned income? This would be a means of ending the necessity for sending in claims for repayment. I imagine this would require a certain alteration in the existing law. It would require that instead of putting in a claim for the repayment of the unearned income in the year as they do under the existing law, they would have to be allowed to put in their claim on the basis of the preceding year. If a man sends in his return in May or June he cannot at that time know what dividends he is going to get later in the year, but by allowing him to send in his claims on the basis of his dividends in the preceding year, he would have good time to know before he made his return. I think if the Chancellor of the Exchequer would turn this suggestion over in his mind it would be a method of meeting some, although I realise not all, of the administrative difficulties which made him hesitate whether he would make this concession or not.
§ Mr. CASSEL
I believe the Income Tax itself is a good tax. It falls, on the whole, upon people in proportion to their ability to pay, but, like most things, you can have too much of it. It seems to me there are only really two methods by which you could reduce it to a lower rate. One would 1329 be to vary the taxes and have more on other things, and the other would be to reduce your expenditure. The Chancellor of the Exchequer seems to neglect both those methods. For instance, mutton is a good food, but mutton may play too large a proportion in your dinner. So I think Income Tax may play too large a proportion of your total tax, and in that ease you may do an injury to the very tax by which you are raising so large a proportion of your revenue. So far as reduction of expenditure is concerned, there is one item under this Budget to which I am not entitled to take any exception, and that is, the larger Grant to local authorities. The right hon. Gentleman rather complained that we were not sufficiently grateful in regard to that. I am going to reserve my gratitude until I know exactly what I get, and what conditions are going to be attached to it. His suggestion the other day was unfair, that we were not going to get these Grants unless we also assented to a system of valuation which we consider not to be in the best interests of the country. Previously the objection used to be taken to tacking against the House of Lords: that is tacking against the House of Commons.
§ Mr. SPEAKER
I do not think any discussion on the Grants or the method in which they are going to be given would be in order upon this. This is purely an Income Tax Resolution.
§ Mr. CASSEL
I was dealing with the question of expenditure, and in criticising expenditure I felt that, as having constantly urged it for local authorities, I am not entitled to complain of that particular item. But when you come to the total expenditure, which is what makes the Income Tax so high, the right hon. Gentleman among Chancellors of the Exchequer stands in the very worst position. I have made calculations of the amount by which every Chancellor of the Exchequer has increased the national expenditure per annum. The result of increasing this expenditure is to send up the Income Tax, and I find the right hon. Gentleman is by far the worst. As we are nearing the time of a classic race, I might say it is Lloyd George first and the rest nowhere. During his six years of office the right hon. Gentleman has increased the annual expenditure, and thereby we have this high rate of Income Tax, by £7,500,000 a year, and in that I have excluded the Post Office, because I do not think it is right to 1330 charge the Chancellor of the Exchequer with the increase in the Post Office expenditure. If you compare that with other Chancellors of the Exchequer, Mr. Goschen, excluding the Post Office again, increased it at the rate of £1,600,000. Sir William Harcourt during the three years he held office, again excluding the Post Office, increased it by just over £2,000,000 and during the ten years of Unionist Administration, which the right hon. Gentleman was never weary of criticising for their extravagance, excluding the Post Office expenditure and including everything which they borrowed for naval or military expenditure, of which I give the right hon. Gentleman the benefit—
§ Mr. LLOYD GEORGE
Does the hon. and learned Gentleman say he gives me the benefit of that £7,500,000? Has he excluded the Army and Navy?
§ Mr. CASSEL
I did not make myself clear. In taking the Unionist figures, I excluded the Post Office, but added the borrowings for the Army and Navy. That increases the figure by that amount, and it works out at £4,500,000 per annum, as compared with £7,500,000. The right hon. Gentleman has now the Income Tax at this high figure. During that very time what did he say about the Unionist Administration?—The Chancellor of the Exchequer ought to use his whole influence to check the wild, extravagant, expenditure. No one who has examined the expenditure of the last few years can characterise it in any other way. A shilling Income Tax in time of peace! It is a war tax in time of peace.He went on to say that they were reaching a point it was difficult for the public to tolerate. They were spending money which was their reserve, and which would be useful in case of war. The right hon. Gentleman there was not dealing at all with the character of the expenditure, but merely with the amount. I think the time has come when the Income Tax is so high that we ought to have fuller information as to what the national income and the national property is, and how the burdens of taxation really fall upon different classes of the community. I would suggest that the time has come when a Royal Commission or Select Committee ought to be appointed to inquire into what the national income really is, and what is the number of Income Tax payers. At present we make a vague guess. We had an answer to-day from the right hon. Gentleman telling us he could not say how many persons there were who had Income Tax 1331 deducted at the source and never made any return as Income Tax payers at all. If he is not in the position to tell us that, it is a matter of guesswork to try and estimate what the number of Income Tax payers is. I think the time has come when it might be advantageous to the Chancellor of the Exchequer to try and estimate what the national income really is, and how these heavy burdens fall upon the different classes of the community. We had a discussion as to Income Tax at a uniform rate of a shilling. So far as I can work out at present, the Income Tax, if you put it at a uniform rate, would be 1s. 3d., taking Income Tax and Super-tax together,
§ Mr. CASSEL
Yes. I will tell the hon. Member how I arrive at my conclusion. You arrive at it in this way. The hon. Member for Harwich (Mr. Newton) asked the Chancellor of the Exchequer a question on 12th May—What would be the yield on a full year of an Income Tax at the uniform rate of 1s. in the £, and the answer of the right hon. Gentleman was:—The yield on a full year would be about £41,000,000." —[OFFICIAL REPORT, 12th May, 1914, col. 931.]We are, as a matter of fact, collecting in Income Tax and Super-tax £50,750,000. From these figures I work out that if there was a uniform rate it would be 1s. 3d. in the £ to produce the same amount of money. While the Unionist party were in office the right hon. Gentleman blamed them—
§ Mr. LLOYD GEORGE
What is the date of the quotation the hon. Gentleman read? I am not challenging the accuracy of the quotation, but I want the date.
§ Mr. CASSEL
It was in 1904. I cannot give the date, but it appears in "Hansard," Vol. 138, page 512. The Prime Minister also in his Budget speech in 1906 stated that the Income Tax at the uniform rate of 1s. was high enough, and that it pressed upon commerce and wages. The hon. Gentleman, in dealing with that, laid all the stress upon the word "uniform," but I am sure if he were interpreting a legal document, he would not give that interpretation of what the Prime Minister said. The Prime Minister was not complaining that it was not uniform, but he was complaining that Income Tax at the rate of 1s. in the £ was too high, subject 1332 even to the abatements. At present we have an Income Tax which is equal to a uniform rate of 1s. 3d. in the £. I have calculated both in the same way, and the result shows that the Income Tax at present is 25 per cent. higher than it was at that time. Both the Prime Minister and the Chancellor of the Exchequer have completely departed from the views they held before, and I say that it was not fair for them to attack the Unionist Government for their expenditure when it was their intention when they came into office to increase expenditure at so much more rapid a rate. When I am dealing with the difference of the Income Tax as between earned and unearned incomes may I say that I recognise that there may be something to be said for the arrangement of the allowances. But I venture to say that the distinction is far too great. The right hon. Gentleman has made an allowance so far as unearned incomes up to £300 a year are concerned. That, so far as it goes, gives some relief to those on whom Income Tax presses hardest. But if you take incomes between £300 and £500, the difference is as between 9d. on earned and 1s. 2d. on unearned; and above £500 the difference is as between 9d. and 1s. 4d. That is a far greater difference than you can justify. The only ground on which you can justify the charging of a higher rate on unearned income than on earned income is that you enable the taxpayer who earns his income to set aside a certain proportion for the time when he cannot earn any more, or to make provision for his descendants after his death. You are franking seven-sixteenths of his income. I say that there is too great a difference between the amount of Income Tax charged to one with £500 and another with £1,000 a year. The difference is as between 9d. and 1s. 4d. and that is wholly incapable of justification.
Another point to which I wish to call the attention of the Chancellor of the Exchequer is one to which I have referred before on many occasions. Every time you increase the Income Tax you increase the injustice of every anomaly connected with it. That is the absurd way in which it works out in the case of husband and wife as our law stands at present. It is too ridiculous for words! It is due to the fact that the Act imposing the Income Tax preceded the Married Women's Property Act. The Income Tax was originally passed in 1842, and it has never been altered in that respect. What is the 1333 result? It is unjust to the husband and unjust to the wife, and it penalises the husband. You make the husband responsible for paying Income Tax on his wife's income, and you give him no power to recover it from her. There was even a case not long ago when a man was sent to prison because he either would not or could not pay the Income Tax on his wife's income. He had a comparatively small revenue himself, but the Commissioners of Inland Revenue put him in prison because he did not pay the tax on his wife's income.
§ Mr. CASSEL
The right hon. Gentleman shakes his head, but it is perfectly true. They let him out of prison the day before the House reassembled, because they could not face the criticism to which they would be subjected in this House. I say that is perfectly monstrous, and the law ought to be altered at the earliest possible moment. I think the right hon. Gentleman has promised to alter the law, but he has not included in the Budget Statement the Resolution necessary to enable him to do so. He failed in his attempt to legislate upon this point last year because he had no proper Resolution then upon which he could take action, and he has made the same mistake now. He will have to get a new Resolution, upon which I hope he will give us plenty of opportunity to discuss the question. The present method is unjust to the wife in this respect: You deduct Income Tax at the source of her income, but if she is entitled to an abatement she cannot claim it. The claim must be made by the husband, and he can make a profit by claiming an abatement in respect of the tax on the wife's income. There is no means by which she can recover the amount of the abatement from her husband. I could give a case where the husband made a profit of 12s. 6d. in that way. It is a small amount, but the matter to which I am referring affects a great many cases. [Laughter.] The right hon. Gentleman laughs, but this affects every case where the wife has got income from an investment and is entitled to an abatement. She cannot claim the abatement, and, if her husband claims it, she cannot recover it from him if he does not choose to pay it to her. That is the absurd position in which the law stands.
Then Income Tax, as it affects husband and wife at this moment, specially 1334 penalises marriage. The way it works out is absolutely absurd. You add the two incomes together and treat them as if they were the income of one person. Surely that is grossly unfair, and the more you increase the Income Tax, the more unfair does the injustice become, because the higher the Income Tax, the greater the penalty you impose upon marriage. Mind you, you only impose it upon marriage if husband and wife live together. If they live separately, they get the benefit of the abatements, and if there is a divorce, the State looks upon the parties as separate individuals. Surely the state of the law is most unsatisfactory in that regard. The right hon. Gentleman says that he feels some difficulty in treating husband and wife separately for all purposes, and that if he did so he would lose a lot of money. I see that there is some difficulty, but, at the same time, if you are going to lose money, surely it is better that the tax should be levied justly, even if you have to raise money from some other way.
I submit to the right hon. Gentleman that married people are entitled to some exemption as married people, because their requirements and expenditure must be greater. Supposing you take two people marrying with £200 each. I say that they have greater requirements than one person would have with the same amount of income. They contribute more in indirect taxation oil such articles, for example, as tea and sugar. They also contribute more to local taxation in the way of rates, because they require more accommodation. I think the present state of the law is absolutely indefensible, unjust, and unreasonable, and I shall certainly, when the Finance Bill comes before the House later press some Amendments upon the right hon. Gentleman. May I give him this example from America, and ask if he will follow the precedent set in that country? Will he, at all events, give a special marriage exemption? In America they do add the two incomes together, but they give a special exemption because they are married people. There is only one other anomaly in connection with the Income Tax to which I should like to call the attention of the right hon. Gentleman, and that is in connection with life insurance companies. At present life insurance companies do not pay Income Tax upon profits, but upon the interest of their investments. The interest on their investments 1335 is very much larger than the profits out of which they pay their claims. They pay their claims to policy holders out of premiums and interest on investments, and in cases where the amounts of interest on investments are greater than the profits—sometimes they are more than double—it is only just that they should be taxed upon the real profits; otherwise when the Income Tax is as at the present at a high rate, you send up the rate 4s. or 5s. in the £. It follows that the interest on their investment is much greater than the profits of the company. This affects all the policy holders who participate in profits. It also affects the industrial insurance companies as well, and in that way you touch a large number of persons who are in a position that heavier taxation should not be placed upon them than is absolutely justified. I can only repeat in regard to the Income Tax that I think we are really driving it too far, and that the time has come when the Chancellor of the Exchequer ought seriously to consider a greater variation in the taxation of this country, and also when he ought to take more seriously into consideration the growth of expenditure.
§ 5.0 P.M.
§ Mr. GODFREY COLLINS
The hon. Member who has just sat down has argued that direct taxation should not be so heavily increased, thereby implying that the only way to raise further sums of money is by increasing indirect taxation. Whether that will meet with general approval in this House I do not know; but, believing, as I do, in direct taxation, I certainly very heartily support the increase in the Income Tax. The hon. Baronet, in a very frank statement, admitted that all classes would willingly pay an Income Tax of 1s. 4d. if the payment of that tax was necessary to maintain our position in the world. No man is a better authority on public companies and the balance-sheets of our great industrial concerns than is the hon. Baronet, and he knows that successful industrial concerns, when trade is good and profits are large, set aside yearly out of revenue large sums to modernise their plant and meet future competition. In this Budget the State is setting aside a large sum out of yearly revenue to meet the international competition of the future, and, if my comparison is correct, it depends then on how wisely will the money be spent by this House.
§ Mr. GODFREY COLLINS
At the present moment I can only direct my attention solely to the Income Tax, and I am arguing that the increase of Income Tax can be justified by the objects for which the money is raised in the best interests of all concerned. The hon. Baronet also in the opening part of the speech, argued that the reasons why the Income Tax was being so largely increased was because there are so few Income Tax payers. I have a great belief in the sense of fairness of my fellow-countrymen, and if any Chancellor of the Exchequer on either side of the House was thought by the ordinary man of small income to be punitive and unfair, there is little doubt whatever that he would show his resentment at the polls when the opportunity arose.
§ Mr. G. COLLINS
Well, you will have an opportunity probably before eighteen months are over. The hon. Baronet also asked how far we are prepared to go. I think that that depends entirely on the objects for which the money is required. During the last three years I have often advocated that the Income Tax should be increased, and naturally when it is being increased this year I heartily support it. State income is determined by State expenditure. Private individuals adjust their expenditure to their income, and if I am asked how much further direct taxation should go, I answer that direct taxation and all forms of taxation will increase in future until the taxpayers say, "Thus far and no further will you go and take money from my pocket." That day has not yet arrived. But I rose with one definite purpose. The Government in their Budget appear to me to have discarded the principle of local Income Tax and the taxation of land values to raise money for local purposes. This increase in the Imperial Income Tax evidently is going to take the place of a local Income Tax and the taxation of land values to provide money for local purposes. I may be too previous in my judgment. Probably I should be out of order if I pursued this matter further, but I wish to add a word of protest against the policy of the Government, if I understand it aright, in that they are not going to give local authorities power to tap new sources of revenue for local purposes. Probably, before many weeks are over, 1337 we shall have the policy of the Government more clearly outlined. This Income Tax raising these large sums of money which are going to be spent upon purely local purposes, will undoubtedly place large sums of money in the coffers of local authorities. The hon. Baronet argued that perhaps some share of the increased taxashould come from the indirect taxpayer. I venture to assert—and I am sure that all parties in this House will agree—that local taxation does bear to-day very heavily on the working classes in the different localities, and because this Income Tax, raising as it does several million pounds, will give relief where relief is wanted, I shall have much pleasure in supporting it.
§ Mr. HICKS BEACH
There is no doubt that when we find the Income Tax raised to 1s. 4d. in the £ every attempt should be made by this House to ensure that the people who have to pay at that rate shall pay upon a fair and equitable basis. I wish to give a word of thanks to the Chancellor of the Exchequer on behalf of the owners of the land in the country, because I do believe that he has given us a real concession in the Budget this year in announcing that owners of agricultural land are in future to be assessed for Income Tax upon the net income which they receive from rents of their estates. That is a matter for very real congratulation, and I am sure that the Chancellor of the Exchequer would not have done this unless he was firmly convinced that the owners of land had put forward for a good many years claims that were eminently justifiable. The Resolution which we are now discussing does enact, as I understand it, that Income Tax under Schedules A and B shall be collected in the coming year in the same manner as they have been collected in the past. That does not carry out, to my mind, the announcement made by the Chancellor that the owner of property should pay upon his net income. I suppose he means that in order to get this rebate, or whatever you like to call it, he would have to put in a claim such as he has done in recent years, showing the excess amount spent on ordinary upkeep and repairs over the statutory amount hitherto allowed. I venture to ask the Chancellor of the Exchequer if he cannot now see his way to do away with the very cumbrous method of getting the collection of Income Tax under Schedule A, and allow an owner of property so assessed to send in a return, like 1338 anybody else, under Schedule D of the actual net income he receives, taken over an average of three years, as is done in any ordinary business? It is a much simpler thing for the purpose of accounts, and I believe that it is equally simple or more simple for the officials of the Inland Revenue themselves. We are told that this high Income Tax of 1s. 4d. in the £ is being levied chiefly for three purposes. There is first expenditure on armaments, which the hon. Member who has just sat down said ought to be treated as payments out of revenue for what is really putting in fresh capital in the form of new and better machinery for the State. I would rather be inclined to treat it, not as capital expenditure, but more as ordinary expenditure upon necessary upkeep and repairs, because, if we do not maintain our Army and Navy in a proper state of efficiency, then the machinery of the State is not in a proper condition to guarantee the safety of the State for the coming year. The hon. Member for Rushcliffe (Mr. Leif Jones) said that the Income Tax was not expenditure, because it was devoted to the payment of old age pensions. I do not know how he arrived at that conclusion.
§ Mr. LEIF JONES
What I really said was that the Income Tax was not expenditure in the sense in which the rest of the Budget was expenditure, for it is a transfer of property from one set of spenders to another set of spenders.
§ Mr. HICKS BEACH
I think that the hon. Member rather takes the same view as the hon. Member for Northampton (Mr. Chiozza Money), who, I think, gave expression to the view that this transference of money from the Income Tax payer to the old age pensioners was a really desirable thing from the point of trade and employment in the country. I think that the hon. Member said that the money was spent in a better class of trade by the old age pensioners than by the person who had to pay the Income Tax. I am not going to dispute that point. It may be so, though, at any rate, some of the money goes on such luxuries as a glass of beer, and possibly a glass of whisky, and I do not know if the hon. Member for Rushcliffe regards expenditure of that kind as so eminently superior to some of the forms of expenditure indulged in by the Super-tax payer. But both hon. Members will admit this fact. If you divert this money from one form of trade to 1339 another you must obviously throw out of employment a great many people who are now deriving employment as the direct result of this luxurious expenditure, as you call it, of the people who pay Income Tax and Super-tax, on various forms of luxuries and amusements. That money benefits certain classes of trade, and by converting this money into old age pensions you admittedly inflict at the same time a considerable hardship upon another section of the wage-earning community who are as much entitled to be considered as those who are provided with the comforts of old age pensions. The hon. Member for Blackburn says that old age pensions are eminently desirable, and the Income Tax payers certainly ought to pay for them, because he says that the workers are the sole creators of wealth in this country; and he gave expression to the view that, that being so, there was no harm at all in taking from the possessor of wealth a much larger share of his income than even the Chancellor of the Ex-proposed to take. I must dissent from the view that the worker is the sole creator of wealth. I was always led to understand that there are other factors in the creation of wealth. First of all, capital; and secondly, brains; and workers without either capital or brains behind them can no more produce wealth than can capital or brains produce wealth without workers.
If you are, as the hon. Member for Blackburn was suggesting, going to take away in future years a still larger share of the income of the capitalist or the man with brains, it seems to me obvious that in time the point of taxation will have been reached at which it will not only produce something of a check, but a very direct check, upon the proper creation of wealth in this country. If you pursue that course, obviously you will not improve the conditions of the workers of the country, but will render them very much worse, indeed, than they are at present. Whatever may be the views of economists as to the ultimate effect of high taxation, and as to whether or not the whole of the taxation is in the end indirectly thrown upon the shoulders of the less highly paid of the community, I do not feel myself really capable to argue, but certainly it is held by sound economists that very high taxation of the rich in the end either affects employment or makes prices to the workers higher, so that the taxation eventually 1340 falls on the more lowly paid members of the community. But, however that may be, at any rate I think that hon. Members opposite will support their own Prime Minister, who has told us that an Income Tax at the uniform rate of 1s. in the £ was impossible to justify in times of peace, for, among other reasons, that it was a check not only on profits, but also on wages. I myself am quite ready to rest myself behind the economic dictum and knowledge of the Prime Minister and to support him when he says that a tax of 1s. in the £ is a check upon the wages as well as profit.
We must not forget what the Prime Minister also said, namely, that the high rate of Income Tax is impossible to justify in time of peace, because it tends to destroy the most ready resource of taxation in time of emergency. That is a point which ought to be very seriously considered by the House. We are at the present moment in a time of profound peace, to all outward appearances, and we all hope that it will continue, but here we are with an Income Tax at the nominal rate of 1s. 4d. in the £, and in some cases more. These enormous direct taxes are far higher, I believe, than they have ever been in this country before—taking the Death Duties and the Income Tax together. Has not the time arrived when we ought really to consider whether there is not some other method of taxation which might be differently imposed—an equitable scheme of distribution of burdens of which this House might avail itself in time of peace, rather than make these increases in the rate of Income Tax? The Income Tax is far and away the easiest tax to raise; the whole machinery is regular and in working order; and an increase of a 1d. or 2d. is a by far easier way of raising revenue than any other form of taxation ever brought forward in this House. That is the point to which the House should give its full consideration before this Budget has finally left its hands.
We are told that a part of the money raised by the Income Tax is to be used to assist the ratepayers in both urban and rural districts. The Chancellor of the Exchequer told us that we have been complaining in the past about the burden of the rates, and that therefore we ought to be very grateful to him when he has put an additional 2d. on the Income Tax, part of which will go towards relieving the burdens on the ratepayers. The Chancellor of the Exchequer promises that there 1341 will be a reduction of 9d. in the £ in the rates. I, for one, do not expect to see that until it actually arrives, and I hesitate to express an opinion about what will be the real effect of the Chancellor of the Exchequer's local taxation proposals until I have seen them at work and witnessed their results. I should like a very much fuller explanation from the Government as to their reason for rejecting a local Income Tax. I believe we could have reduced the rate of Imperial Income Tax, or, rather, that we need not have raised the rate of the Imperial Income Tax to 1s. 4d., if you had set up a scheme of local Income Tax for the purpose of assisting the rates throughout the country. The only explanation which the Chancellor of the Exchequer gave us for not taking up this proposal was that a certain Committee of experts said it was impossible. I would like very much to know who those experts on the Committee were, and what were their real reasons for saying it was impossible. I have a very shrewd suspicion that one of their reasons was that the Committee was very largely composed of officials of the Inland Revenue Department, and I am very much afraid that they looked upon this particular product of the Income Tax as their own spoil, which would be taken away from them by the local authorities if they gave their sanction to any form of local Income Tax.
Speaking for myself, I feel that I personally would much sooner pay a larger share for national services by way of Income Tax than I would by way of rates. I do not think that the owner and occupier of land will get any real relief in respect of the rates by reason of his having to pay higher Imperial Income Tax himself. Our complaint has been that personal property has not contributed to local rates. You are increasing the Income Tax both on owners of real property and personal property. The owner and occupier of real property still pays the local rates, and he has, in addition, to pay the increased Imperial Income Tax in the same way as the owner of personal property. Therefore, I do not think the present proposals will bring about a much more equitable arrangement of local taxtaion as between real and personal property than we have had before. There is another point I wish to raise. Are we certain that everybody in this country is paying Income Tax in proportion to his proper income. We know that anybody with a fixed salary of over 1342 £160 per year pays Income Tax of a sort, but a great many people in this country—artisans, miners, and others who earn a good deal more than £160 per year—do not, so far as I understand, pay any Income Tax at all. Has not the time arrived when we are Budgeting for an expenditure of over £200,000,000, that something should be done. I cannot but feel regret that no Member of the Government, so far as I am aware, has expressed any regret at all at the expenditure of this country, but rather appeared to glorify in the fact that the Government have been able to Budget for an expenditure of over £200,000,000. I do not think that is quite the proper attitude to take in regard to so enormous an expenditure, and I think it would have been well if there had been some expression of regret at its vast amount. When we have those huge figures, and when a great deal of this expenditure is to be devoted more and more to what are called social reform schemes, I submit that it ought to be impressed on the general body of workers in this country, in one form or another, that, however much they may vote for the taxation of other persons, they themselves have got to pay something in the long run. Would it not be fair, therefore, to take off, if you like, some of the indirect taxation—say, part of the tax on tea and sugar—and put it on an Income Tax to be paid by every wage-earning person in the country?
I do not say it should be a high tax, but a penny in the pound would, to my mind, be far better in the long run than some of those indirect taxes, because direct taxation would enable the taxpayers to immediately observe the effect of any large expenditure of public money, and they would see that it meant that the workers, as well as others, would have to pay something towards that expenditure. After all, that is not an impossible thing to do. You are collecting stamps for another purpose, and it would not be so very much more to the employer if he were called upon to lick another penny stamp. I submit that this suggestion, if adopted, would be a very much sounder thing for the country generally, and in the long run would tend to promote some feeling or desire for proper and careful expenditure on the part of the great spending Departments of the country. One other point to which I wish to refer is the fact that the Chancellor of the Exchequer and 1343 his immediate associates are shouldering the duty of spending money on social reforms, but I sincerely hope that the Treasury will very soon give up that part of its duty, which consists of giving doles of money for old age pensions and national insurance, and that this duty may be handed over to one of the other Departments—say, the Local Government Board. Then the Treasury could revert to its old duty of criticising, and criticising severely, every item of expenditure incurred by any other public Department of the State. If that were done I believe it would be much more sensible and would curtail some of our expenditure. It is only by keeping the expenditure of this country within proper limits that we can hope for any chance of reducing the Income Tax or any other tax.
§ Sir WILLIAM BYLES
The hon. Member who has just sat down, and who speaks with a certain hereditary authority on questions of finance, is anxious to keep the Income Tax at 1s. in the £. I am quite sure he has the sympathy of a good many Income Tax payers in this House in that desire. I would refer the hon. Gentleman to an observation made by his colleague behind him, the hon. and learned Gentleman the Member for West St. Pancras (Mr. Cassel), who suggested that the Chancellor of the Exchequer should reduce the expenditure of the nation. That is a subject which I am quite sure Mr. Speaker would not allow me to speak upon, but I have no doubt that many Members of this House know perfectly well what I should put my finger upon as a suggested reduction in the expenditure of the nation. So long as we think it necessary to spend nearly half our income in defending ourselves against enemies who never come near us, I think the argument the hon. and learned Gentleman has addressed to us is incomplete.
§ Sir W. BYLES
I think that is a very futile and irrelevant interruption. The hon. Baronet who opened this Debate seemed alarmed at the rate at which we are going, and wondered when it was going to stop; he informed us, no doubt from his own experience, how difficult it was to earn £10,000 a year. In my belief very few people ever do earn £10,000 a year or are worth £10,000 a year to anybody. No doubt they acquire £10,000 a 1344 year, but it is generally earned for them by those whom they employ. The hon. Baronet the Member for the City (Sir F. Banbury) said that if we spent money at such a rate we were discouraging thrift. I am not quite sure whether the more the Chancellor takes out of our pockets we are not the more disposed to exercise the practice of thrift. What can we do if our pockets are rifled by the Chancellor of the Exchequer? I will not say he robs them—
§ Sir W. BYLES
As hon. Members opposite sometimes say, if our pockets are rifled by the Chancellor of the Exchequer we must take care of what is left. The tendency will be to make us more and more thrifty. Therefore, I contend, if I am right, that absolutely disposes of the hon. Baronet's point. The only reason I really rose to address the House was because I wished to express my strong approval of the method of taxing the community directly instead of indirectly. I rejoice that the Chancellor of the Exchequer, who had such a big job before him, nevertheless has been able to make up the very large sum he required without increasing indirect taxation. I have been for long opposed to indirect taxation. It costs a great deal more to collect for one thing, and a great deal less in proportion of what really falls on the taxpayer finds its way to the Treasury in the case of indirect taxation. But above all, and far more important than either of those points, is that in the case of indirect taxation men pay their taxes without knowing that they are paying them, and therefore they do not ask what becomes of them. Money is extracted from them by a sort of painless dentistry. The sugar basin is rifled, or the teapot, or the tobacco pouches, and when men call for a cigar, or drink a glass of beer, they never reflect for a moment that they are paying taxes. But when a man is called upon to pay direct taxes, he never does it without a squirm. The reflection that always comes into my mind when I unwillingly disgorge, for I belong to that very small class whom the hon. Baronet thinks is bearing too large a share of the burden, I always think do we really want to spend eighty millions to defend ourselves—against whom? Against neighbours who may be, and, so far as I know, are perfectly friendly.
1345 I approve of this new taxation being put on the wealthier classes of the community. I believe it does them good. I believe that it is not in their interests or in the interests of the nation that we should have excessive and vast accumulations of wealth in the hands of individuals. It gives them too much power, and it is neither good for their health, nor for the health of the community. Again, the expenditure of this country to which I have referred is, indeed, to protect their property, and that is another reason why the insurance or protection money should be taken from them. Lord Esher argued in the "Times" the other day that the taxes of which rich men are complaining, after all, will fall on the poor, and, if that be the case, then there is no more ground for the rich man's complaint. I do not say whether it be so or not, but I do know this, that the mass of the money has been obtained by the labour of the poor, or, rather, of the workers, rich and poor. There is one other reason why I approve of this Budget. The more you impose taxes upon the worker the more you are hindering his productivity—his output; and I remember about not muzzling the ox that treads the corn, and I think it is for the interests of us all that, as far as possible, the worker should be relieved and enabled to live a good, strong, healthy, vigorous life, and that the burdens, and especially those foolish burdens which I have already mentioned, should fall upon the accumulated resources and the accumulated wealth of which we are hearing such stories nowadays. The amount of money liable for Income Tax which has grown so largely shows that the accumulated sources of wealth are abundantly able to pay for the expenditure which, wisely or unwisely, the House of Commons votes.
§ Mr. SANDERSON
The general question as to the principles of Income Tax in regard to the trade and business of the country have been so clearly and forcibly put before the House that I do not propose to refer to them. I rise to draw attention to three points which are constantly being brought under my notice with regard to the Income Tax, and I think those points will show that the Chancellor, in framing his Budget, has not had regard, or, at all events, has not had sufficient regard to the principle that a man ought to be taxed according to the amount that he can pay. For instance, he has made an abatement with respect to children in the 1346 case of a person who has a limited income. If it is proper to apply that principle in any case, then for the life of me I cannot understand why it should not be applied in every case. Take the case of a man who has an income of £500 a year, which is the limit, I think, to which abatement in this respect applies. If it applies in that case, why should it not apply equally in the case of a man with an income of, say, £701? Everybody knows perfectly well that the professional man who is earning from £700 to £1,000 a year and who is a married man with a family is hard put to make ends meet, and in all probability just as hard put as a man who has an income of £499 a year. In my opinion, and I believe in the opinion of the large majority of people who have to pay Income Tax, that is a matter which ought to be taken into consideration, no matter what a man's income is, and that what the man's responsibilities are should be taken into account. One means of ascertaining that would be whether the man was married and had a family or not. If he is a married man with a family he ought not to be called upon to pay so much as the bachelor.
That brings me to the point raised so forcibly by the hon. Member for St. Pancras (Mr. Cassel), who practically raised all the points that I had intended to deal with, so that I shall just summarise what he said. It seems to me to be absolutely indefensible that you should treat a man and his wife as one individual for the purposes of taxation. They are two people. [HON. MEMBERS: "Agreed!"] Hon. Members opposite say "Agreed!" but it is no use saying so unless we can induce the Chancellor to agree, and, until we do so, we must keep pressing the matter. I am very glad to have the assistance of hon. Members opposite, and I hope they will get up and support us on this point. They are two individuals; their expenses are those of two individuals, and so are their responsibilities. The Chancellor of the Exchequer said just now when my hon. Friend was speaking, "I should lose a lot of money by it." I do not know how much money he would lose, but if he is going to lose money by it I would suggest to him that he might give up the Land Taxes and the great expense involved in them, and in that way do justice to married women in this country. The third point is this: It is recognised now that a man who earns his income is to be put in a more privileged position than the person who has the great 1347 advantage of a settled income derived from capital which he probably has inherited. If you once apply that principle, I cannot see why you should do so to the income from capital which the man himself has earned.
The hon. Baronet the Member for the City made a point this afternoon that is constantly being made to me by professional men. They say, "We have worked for this capital, perhaps for many years, and have paid Income Tax on it already," and probably a large Income Tax. If the principle of differentiation is admitted, then I cannot understand why it should be applied in a case of that kind. It is in fact putting a premium on extravagance. It is a duty laid upon a man to provide for his old age, and to provide for his wife and family. Some hon. Members apparently have forgotten that there is such a duty, and that a man ought to do his best by confining his yearly expenditure so as to enable him to save money out of income in order that he may so make provision. Surely such a man ought to get the benefit of the abatements. These are quite distinct points well worthy of the attention of the Chancellor of the Exchequer. I understand some of this Income Tax, which is now at this high rate, is to be applied for the purpose of relieving the rates of localities. That question, however, is not, I believe, strictly in order on this occasion. I hope the Chancellor of the Exchequer will be able to give friendly and kindly consideration to those three points which are made, not only on this side, but on his own side, and that he will give some relief.
§ Mr. C. E. PRICE
I believe that the Budgets of the Chancellor of the Exchequer, more particularly the Budget of 1909 and that of this year, will rank with the great Budgets of Mr. Gladstone. I am sure that these Budgets are for all time, and I am extremely grateful for what the right hon. Gentleman has done. At the same time, I am not a great lover of the increase of the Income Tax. I say that quite impartially, because it makes no difference to me whether the extra tax is 2s., 3s., or 5s.; it will not affect me by a single farthing, because I live a long way below either limit. It is estimated that the increase this year will produce £5,250,000, but nearly the whole of it will go to relieve local rates. Next year the total increased yield of Income Tax and Death Duties will amount to £13,230,000, and the total Grants-in-Aid to £11,955,000. I would far 1348 rather, instead of this £11,000,000 going for the relief of local rates, it had been used for taking the taxes off food. If there is any trouble in passing this Budget, I hope that that will be the alternative. Both Mr. Gladstone and Lord Farrar declared that rates were a burden upon property which it could well afford to pay, and that doles like those under the Agricultural Bates Act really ultimately go to increase rents and raise the value of real property, whether in town or in country. Therefore, I look with very great concern upon these increased Grants towards local rates. My own reason for supporting this Budget is that we have indicated to us that we shall have a fresh valuation and a new Rating Bill.
I should like to point out one or two cases where Income Tax works up very unfairly. I remember many years ago, when I was in business, my firm had the great misfortune to have a place wholly burnt down. We took two other factories. Within a few weeks a second factory was burnt down, and we had the melancholy experience of having three factories lying idle. In consequence, we suffered a very great loss. What was the result? So soon as we erect a factory we begin to earn income, and we are taxed on that income. In point of fact, in this case we worked for two years for nothing, because it took us two years to make good our factory as it was before. It is grossly unfair that you should tax an income which is not really income, because you are only making good the losses you have sustained. I am perfectly certain that these great increases in Income Tax and Death Duties will turn men's minds to a form of raising revenue to which hitherto they have not given consideration. The first function of the State in all its legislative enactments is to see that wealth as it is created goes into the pockets of those who create it. You have a lot of wealth which is communistically created, and at present that communistically created wealth goes into the pockets of the few. The Chancellor of the Exchequer will render infinitely greater service to the State if he will make himself the means of raising his revenue first from that communistically created wealth instead of from increased Income Tax. If year by year you got into the Exchequer the communistically created wealth, you would have far less disturbance in connection with the estates of those who leave large sums of money. It is a great disturbance to estates and industries that they should 1349 have so much taken from them. If year by year, as wealth is being created, you take into the Exchequer that which is being communistically created, you do not rob any man; you simply take for the community that which the community has created. I support the increased Income Tax only because of the promise that we are to have valuation, and it is through valuation that we may get hold of that communistically created wealth. I shall support the Budget, although I say frankly it is not one that I care much about. The Prime Minister as long ago as 1898 delivered a speech pledging the Government to deal with local rating.
§ Mr. JOYNSON-HICKS
As far as I can gather, the hon. Member opposite (Mr. C. E. Price) disapproves of the Budget, but is going to vote for it for reasons which have nothing whatever to do with it. I will not follow him into the intricate mode by which he squares his conscience with his party allegiance. I cannot possibly agree with one or two of the remarks of my hon. Friend the Member for Tewkesbury (Mr. Hicks Beach) in regard to a local Income Tax. In my opinion, the idea of a local Income Tax will not commend itself to the majority of this House. Certainly, it would not to me. Such a tax would be exceedingly difficult to apply, and exceedingly unequal; it would lead to evasion of all kinds, and to moving about from district to district. I have no right to speak for the party on this side, but personally I do not want the House to think that the suggestions made by my hon. Friend, valuable as they may be from his own point of view, are accepted by any large number of those who sit round him. I am sorry to differ also from his suggestion to levy an Income Tax on working men's wages. I think that that is impracticable. I agree that all classes must pay something towards the taxation of the community, but I think that the best method of ensuring that working men shall pay something, as I believe that they desire to do, towards the upkeep of the country is the system of indirect 1350 taxation at present in vogue. The hon. Member for Salford (Sir W. Byles) made his usual speech against indirect taxation, the gravamen of his object being that it costs so much to collect. I am certain that any scheme of obtaining Income Tax on working men's wages would cost far more in proportion than the existing indirect taxes to collect.
I really rose for the purpose of dealing with the Chancellor of the Exchequer's references to a speech of mine at Grimsby. The hon. Member for Salford said that when people sign their cheques for Income Tax they generally ask themselves, "What do we really want with a Navy and an Army?" I am not at all sure that I agree with him. I am inclined to think that the expression much more likely to be used when people sign those cheques is, "Do we really want Lloyd George?" As regards my statement at Grimsby, if I am called upon to pay additional taxation—it does not matter whether it is £100 or any number of hundreds of pounds per annum—I have to get that money from somewhere. I have to save it from some form of expenditure which I now make. I cannot eat any less; I cannot drink any less. [Laughter.] That is perfectly true, as the Chancellor of the Exchequer knows. I cannot save it by smoking any less, because I am practically a non-smoker. Therefore, I cannot make up the money by any personal self-denial. To be perfectly frank, my principal hobby is a garden, where I employ a large number of gardeners. It is a luxury, if you like, but it is a luxury the money spent upon which goes practically entirely in wages to the working classes—in this case, the gardeners. It is quite within the bounds of possibility, that being my principal luxury, that in order to find money for extra taxation I shall have to economise upon my garden. That is bound to fall directly upon some of the working men employed there. I cannot help myself. If the right hon. Gentleman can suggest a better method by which I can get the money for him, I shall be delighted. The method I suggested the other day at Grimsby was in regard to a motor car. The right hon. Gentleman was wrong in one point by 10 per cent. It was not a £900, but an £800 car. What I told the people at Grimsby was that I had intended to have a new motor car, but that I was expecting the Budget to come on, and I knew my Lloyd George. Some of the audience said, "So do we," and by 1351 their votes they seem to have shown that they do. I said perfectly frankly to them—I think it is better to talk frankly when you are speaking to the working classes—that instead of buying that new car, I should have an old one repaired. I had my old car repaired, and the consequence is that, instead of £800 going into the pockets of the manufacturers and the working men of this country, only £120 or £130 went. The Chancellor of the Exchequer's answer to me was:—What the hon. Member does not recollect is that the money which is being raised is to be put into the hands of the local authorities for houses and that sort of thing. At the present moment—This is a most ingenious calculation—the loss on houses is 20 per cent. of the total cost, so that on that basis his £900 motor car would have financed the building of at least twenty cottages.6.0 P.M.
It is very difficult to say how you can ever build ten cottages out of the finance of a £900 motor car. The right hon. Gentleman quite forgot to tell the House that in order to do that he has got to extract not merely money from me, but he has got to extract a large amount of money in rates from the ratepayers of the different localities where the houses are going to be built. I am quite prepared to admit that his main argument was to this extent accurate: That if he takes money from me that I intended to buy a new motor car with, and so provide work for the men who make cars, and spend it on building cottages, he provides work for men there. On the face of it that is perfectly accurate. But the fallacy that lies behind the Chancellor of the Exchequer's statement, is this: That is depriving us of liberty if he is merely going to take taxation in order to spend it in ways that he thinks best, instead of in the way that I think best, he is doing a harm—not merely is he doing harm to the liberty of the subject in myself. If his argument means anything, he is quite justified from the point of view of the country in taking the whole of my income and spending it in cottages. If he thinks he is justified from a national point of view in taking some portion of my income, and spending it in cottages instead of allowing me to spend it on a motor car or my garden, he is logically justified in taking the whole to spend it in building cottages all over the country. If his argument is correct the country would not be in the least hurt by it.
Where the fallacy lies is here. He has no right to decide how a man shall work. 1352 He is taking work away from a skilled artisan who makes motor cars, and he is giving to another man who builds cottages. He has no right to come down as an Almighty Providence, and saying, "I am doing no harm to the country by compulsorily turning a man who would otherwise get work as a motor-car engineer into a man who will build cottages," and to say, "You have got your cottage building work instead of your motor-car work, and you have got nothing of which to complain." Surely the thing is absurd. You have only to go to the man who is dispossessed of his work through my extra taxation—I am not saying this of all extra taxation: we realise sometimes that we must have some of it—but the argument I have tried to drive in, and I think somewhat successfully, with the people of Grimsby was that it all must fall sooner or later upon the shoulders of the working man. I perfectly frankly say to this House that by the action I took in regard to my motor car I personally am not very much hurt by the new taxation, but the man who would have got the job is considerably hurt by it. It is no answer on the part of the Chancellor of the Exchequer to say to that man, "You can go and build cottages somewhere far away from Coventry—in Dorset or in Northumberland."
§ Mr. JOYNSON-HICKS
My hon. Friend near me says, "Or in Wales." Let me deal one moment further with my argument. In my speech at Grimsby I went to ask how is this money being spent. It is not necessarily being expended on cottages. The bulk of it—certainly my money and a good deal more—is being spent on the wages of black-coated officials whose number have been enormously increased under this Government. It would not, I agree, be in order for me to speak as to the enormous number of officials who have been created since the Chancellor of the Exchequer has been in office. They run, as of course the House well knows, into many thousands. It is not fair for the right hon. Gentleman to say to me, "Oh, yes, your working man will get good, solid work in building cottages." That is not at all the case. My working man will see that the money which should have gone to him is going into the pockets of the black-coated officials, friends of the Chancellor of the Exchequer. No one can say that that is work for working men!
§ Mr. LLOYD GEORGE
We have had a very interesting account of the details of the personal expenditure of the hon. Gentleman who has just sat down, which I have no doubt is a very fair illustration and sample of the kind of argument that is being used on thousands of platforms, not merely at Grimsby, but elsewhere. The hon. Gentleman is very pleased with Grimsby. I can only congratulate him upon having been responsible for that result. But there is one thing that strikes me in something he said personal to myself. He said that "the electors of Grimsby evidently knew their Lloyd George." From that point of view, the only thing evident from the figures is that the more they know their Lloyd George the better they like him.
§ Mr. JOYNSON-HICKS
The answer to the right hon. Gentleman is that that may be accounted for by the fact that they knew their Alf Bannister.
§ Mr. LLOYD GEORGE
The majority has gone down very considerably. If the right hon. Gentleman's speech had that effect at Grimsby there are a few other constituencies where we might send him. If he produces an effect of 400 or 500 votes in a single constituency, we might send him about at the General Election to increase our majority very considerably. The hon. Gentleman has embarked upon a very interesting argument, and, inasmuch as it rather illustrates the general drift of the criticism which was initiated by the hon. Baronet who sits by his side, perhaps I might as well fasten my reply to the argument of the hon. Gentleman. The hon. Gentleman said, "Here you are taking money out of the pockets of the subjects of this country, and you are spending it upon objects which you yourself think very admirable, but which the person who pays may object to; you are setting yourself up as a kind of Almighty Providence, and you say, 'I am going to dismiss the gardener or the chauffeur of the Member for Brentford, and am going to convert him into a road mender, or into a builder in some rural districts.'" He says, "You have no right to do that." There is one thing I should like to ask the hon. Member and all those who take that line. Is there a single item in the expenditure for which I am raising this money for which I have not been pressed, not from one side of the House, but from both sides of the House to provide money? Not one!
§ Mr. LLOYD GEORGE
I am coming to that. The hon. Member puts it now, and though it is not strictly relevant I will deal with it to show I am not afraid to face it. The hon. Member says, "Why do you not economise on land valuation?" As a matter of fact, I am not raising any of this money for the purposes of land valuation. That is not what has caused the increase. Suppose it were. The hon. and learned Gentleman who made a speech, and who is not present just now, said, "If you want to economise, economise ou the land valuers." If you economise on the land valuers, of course your land values go. If you get rid of your Land Taxes, and land valuers, you will be a loser on the account this year.
§ Mr. LLOYD GEORGE
No, it does not. I left that out. It would not be fair to use that for the purpose of proving that land valuation costs less than the yield of the Land Taxes. I agree that the Mineral Rights Duty is not a subject of valuation, and I have left it out. So that, therefore, even if you treat valuation as annual expenditure, which no business man ever would do, because it is capital expenditure, at the present moment you would lose money if you got rid of it. Do not, therefore, let us talk utter nonsense about raising money for land valuation from these new taxes. I will get rid of another argument of the same sort, the argument about black-coated officials. Suppose you added the salary of every black-coated official who has been taken into either the Inland Revenue, or any other Department, during the last few years it would not amount to a farthing in the £ on the Income Tax. You may say that is too much, but when you are raising taxation of this magnitude do not let us try to mislead ourselves, and other people, by arguing that it is due to things of that sort. What is it due to? You must look at the great items of expenditure. If you get rid of the great items of expenditure, neither I nor any other Chancellor of the Exchequer would be standing at this Box to suggest in any shape or form any fresh taxes. The hon. Member wants economy, and the hon. Baronet wants economy. The hon. Baronet is the only one who is consistent, because in regard to some of the items which I am going to mention I cannot taunt him. He stands absolutely alone on the bench opposite. If you want 1355 economy you must direct your mind to these huge items of expenditure. What are they? The hon. Gentleman says. "You are taking away my chauffeur and gardener, and putting him on to something else." I will tell the hon. Gentleman to what I am putting him. I am putting him first of all on to the main roads of this country. That has been pressed upon me by every hon. Member on the other side of the House. The hon. Member repudiates the speech of the hon. Gentleman just behind him (Mr. Hicks Beach), but I was told that speech was a real contribution to the Debate, and I am sorry I did not hear it. He attacks his hon. Friend behind him, but he will not repudiate the action of hon. Gentlemen many a time in pressing us to find money for these great items. It is no use hon. Gentlemen who are sitting round him treating this as if it were a mere abstract idea about general expenditure and extravagance. If you want to bring down the Estimates tell us where you can bring them down! The items mentioned by the hon. Gentleman, and others, would not make the slightest difference to the taxation which I am proposing this year—not a penny, not a halfpenny! Why have I to do this? Every year since I have been Chancellor of the Exchequer—and not merely for that time, but in the years the Prime Minister held this office—there have been Motions from the other side of the House pressing the Government to incur the very expenditure which I am asking money for now. Here I must say that the hon. Baronet the Member for the City of London—if I am wrong he will put me right—departed from his usual course. He voted, I believe, for all those Motions—
§ Sir F. BANBURY
I am not sure. It is very difficult to say whether I did or not. Unless the right hon. Gentleman says definitely I did.
§ Mr. LLOYD GEORGE
Yes, I will tell the hon. Baronet. I will give him the three Motions of the right hon. Gentleman the Member for Fulham demanding that we should immediately vote money out of the Exchequer for the purpose of relieving the local rates.
§ Mr. LLOYD GEORGE
I accept that. Therefore the hon. Baronet's record is a perfectly unstained one—without a 1356 blemish! I can quite understand, therefore, why he is the only one to get up now and criticise with a good conscience the raising of the Income Tax by twopence. He can do it. He voted, I believe, against old age pensions. I really forget whether he voted against the insurance Grants.
§ Mr. LLOYD GEORGE
Well, at any rate, that is fairly good. I think he is entitled to stand up and protest against the increase in the Income Tax, but there is no other hon. Member on that side of the House entitled to do so. What is the complaint against me. The hon. Gentleman (Mr. Joynson-Hicks) is one of those who met me very fairly, for he complained that I had not found the money before. Year after year I was pressed to find this money as if I were a kind of Almighty Providence that had a right to pick and choose, and say the people's money must be spent on this, that, and the other. It is the House of Commons that does these things. They make the demands upon the Government, and they find the cash. I do not want to make a mere party point, but what is it that has been the most embarrassing Motion to the Government? The most embarrassing Motion was that on local taxation. I knew there were so many men on our own side of the House who sympathised with many men opposite upon this question. We were always taunted with doing nothing, and it was a very awkward Motion to get over. Yet, for five or six years, I faced the House of Commons, and gave the best reasons I could for not finding the money. I am not sure that the Noble Lord opposite had not a Motion on this subject one year.
§ Mr. LLOYD GEORGE
Yes. I remember perfectly well. And now he turns round when the Government and the House of Commons are practically unanimous, and says the moment we are finding the money, "You are raising the taxes."
§ Viscount HELMSLEY
No; what some of us complain of is that the Chancellor of the Exchequer is not giving this money merely for the relief of local rates, but that he is at this moment increasing the services that they have to meet.
§ Mr. LLOYD GEORGE
The latest objection of the Noble Lord is that portion of the cash is to be used for new services. I should like to know to which portion he objects—for instance, there is some portion for technical instruction—
§ Mr. AUSTEN CHAMBERLAIN
I really must ask whether we are to be allowed to answer the questions which the Chancellor of the Exchequer is putting. Some of us would like to, but I should think it would not be in order?
§ Mr. SPEAKER
I also said that the Front Bench had no privileges beyond those which other benches enjoy.
§ Mr. LLOYD GEORGE
I am very grateful, Mr. Speaker, for the kindly hint you have given me. The charge throughout is not that putting 2d. on the Income Tax is unfair, but that I have no business to raise the Income Tax now, and that I am squandering the money in some sort of way. I am not trying to get round your ruling, Mr. Speaker, but it is rather difficult to answer that. Perhaps I may be allowed in a general way to make this point—I am not spending any money that I am not pressed from both sides of the House to spend. I should like to say a word or two in answer to the hon. and learned Gentleman the Member for West St. Pancras (Mr. Cassel). The hon. and learned Member said during the time you have been Chancellor the expenditure has gone up on the average 7½ millions.
§ Mr. LLOYD GEORGE
Spread over a period of six years. Taking that, I should like to know what the hon. and learned Member objects to? Four millions out of that is for the Army and Navy. There is not an hon. Gentleman on the other side who has not very grave suspicions that we are not spending enough on those Services. Does the hon. and learned Member think that I am responsible for having put up the expenditure on the Army and Navy?
§ Mr. CASSEL
Perhaps I had better explain. It was the reduction originally made by the Liberal Government which led foreign Governments to increase their armaments.
§ Mr. LLOYD GEORGE
The hon. and learned Member was making a point about the time I was Chancellor of the Exchequer. Whatever reductions were made, there have been none while I was at the Exchequer, and, if he takes the period preceding that, the average is certainly not 7½ millions, but considerably lower, and is about 5 millions. The hon. and learned Gentleman cannot have it both ways. The hon. and learned Gentleman picks out this period when it suits him, and when it does not suit him he takes the preceding years. That is a sort of criticism to which I object. He does not object to the expenditure on the Army and Navy. In regard to old age pensions, he not only voted for it, but for an increase.
§ Mr. LLOYD GEORGE
I apologise to the hon. Gentleman. He came in in 1910, but Members on the other side generally not merely voted for old age pensions, but voted for an increase in them, and the only hon. Member who did not do so was the hon. Baronet the Member for the City of London.
§ Mr. LLOYD GEORGE
I know there were a few. [An HON. MEMBER: "Thirteen!"] I think it was thirteen. That is a very unlucky number. All this is expenditure which the House of Commons has demanded, and it is no use saying that it is expenditure which I have started and invented, or assigned out of my head. It is House of Commons expenditure, and the House of Commons having pressed the Government to spend all this money, the question now is: Is it prepared to foot the bill, and how is it going to do it? The hon. Baronet opposite objects to 2d. being put upon the Income Tax. I think he indicated that I should have put something on indirect taxation. I had that experience in 1909. I divided the amount which I raised between direct and indirect taxation, and what happened? The indirect expenditure 1359 was, of course, unpopular. I was prepared to face that. How many hon. Members on the other side were?
§ Mr. LLOYD GEORGE
There is the virtuous one again, but the bulk of his party found it was unpopular to put a tax upon tobacco, and upon whisky, and they were prepared to take advantage of that difficulty of the Government and they fought against us. There, I attempted to divide quite fairly the amount we were receiving between direct and indirect. Then we had a large majority. I have not the faintest doubt that if I proposed now to divide this amount between direct and indirect I should find the whole body of the Opposition, except the hon. Baronet the Member for the City of London, voting against us. Take the case put by the hon. Gentleman the Member for Brentford. The hon. Member would like to see a 1d. Income Tax upon wages. That is a proposal which, of course, Chancellors of the Exchequer have always got to consider. It is done in Prussia, Saxony, and some of the German States, and produces, a good deal of revenue. There are ways of collecting it quite simple and quite cheap. Does anyone imagine that if I put that down as one of my proposals, and hon. Members on the Labour Benches opposed it, that the Opposition would not join them. I had my experience of that over the Insurance Bill. Instead of putting £150,000 on to the Income Tax payer, I proposed that the workman should contribute what was called a tax. It was denounced as the imposition of a tax. The unpopularity of making the workman contribute was exploited in every constituency throughout the country. The fullest advantage was taken of that by the vast majority of the Opposition. It was denounced as a tax. I know there are some hon. and right hon. Gentlemen opposite who did not do that. I never saw the right hon. Gentleman the Member for East Worcester do it. I never saw him during the time the Bill was going through the House of Commons pressing the Government for more expenditure, but there he was almost alone, except for the hon. Baronet the Member for the City, and I assume now that the hon. Baronet's record is so clear that it is hardly necessary to mention him any more. Hon. Members now say, Why put Income Tax upon such a small number? Under the Insurance 1360 Act I put a share upon 14,000,000 of workmen, and ever since that fact has been exploited, to the detriment of the Government, and if I had done the same thing now, it would be denounced throughout the country on every platform. I do not say that this is not a serious matter; but it is a matter which ought to be considered even more by the Opposition, than by the Government. I have called attention to it once or twice before in this House. I knew perfectly well that to make the workmen pay 4d. a week, whether as Income Tax or otherwise, was not a popular thing. I knew what the effect of its being exploited was, and that it must be an inevitable warning to all Governments and Chancellors of the Exchequer when they wanted to have taxation distributed fairly over the community. I am not sorry that attention was called to it, but the lecture ought not to be addressed to me. The hon. Baronet ought to turn round, within the limits of order, and address his observations not to me, but to hon. Members behind him.
§ Mr. LLOYD GEORGE
No; but any Opposition has sufficient power to make it almost impossible for any Government to carry proposals of that kind. So much, therefore, for these two points. The first is that, speaking generally, the whole of that expenditure is expenditure by the House of Commons as a whole, pressed upon the Government over and over again; and the second point is that with regard to the extension of indirect taxation. I think I have dealt with most of the points. There are one or two other small points to which I want to refer. One was the point raised by my hon. Friend (Mr. Lees Smith), who made a very admirable suggestion with regard to the method of collecting Income Tax on incomes below £500—having regard to the concession which the Government have indicated. With regard to that I think I can assure him that is the course that will be pursued where it is practical, but it will not always be practical. It seems to me a very admirable suggestion, and I will consider it, and I think in many cases it can be done. The hon. Member opposite (Mr. Cassel) raised a point with regard to the position of married women. I understand him to contend that a married woman's income ought not to be added to that of her husband for the purpose either of determining 1361 the scale of payment whether the combined income comes under the Super-tax or whether it comes below that rate.
§ Mr. CASSEL
No, that is what I would have asked for, but I knew the right hon. Gentleman would not give it. What I asked for was a special exemption in the case of married women.
§ Mr. LLOYD GEORGE
With regard to the first suggestion, even on the old tax, it would have cost the revenue £1,500,000. The hon. and learned Gentleman said if it is just it ought to be done. The effect would be to put up the taxes of other persons, and the point is whether they can, in justice, demand that other people should bear the burden of £1,500,000 in order to redress what they regard as an injustice. I think the question is the income which is available for the purpose of running the household.
§ Mr. LLOYD GEORGE
That is another point which the Noble Lord will no doubt make when we come to the Death Duties. I think this is a perfectly fair thing to do; otherwise, you would find that another person whose available income for household expenses was very much lower would have to pay a higher tax. I think that would be very unfair, and I do not see my way to do that. What I can see my way to do is what I suggested last year. I agree that it is humiliating that a wife in those circumstances should be treated as a perfect cypher and of no account, and that the whole of the account should pass in the name of the husband, all returns having to be made by him, although in some cases it is the wife who is earning most of the money. This point was very well put before me by a deputation which waited on me last year, and I have promised to the best of my ability to put that matter right. I think, however, that the Revenue Bill is the place to do it. The hon. and learned Gentleman said that last year there was a Resolution which ought to have been made to enable me to redress the grievance which I have admitted. That will be moved when the Revenue Bill goes to Committee. But that is not a Resolution in Ways and Means, and therefore it is not necessary to move it now. Even if it were to be dealt with in the Finance Bill I should move it later on. It will be moved when the Revenue Bill gets into Committee in order that it 1362 may be dealt with. The right hon. Gentleman has spoken of the disparity between earned and unearned income. I do not agree that that disparity is a very substantial one. Supposing the right hon. Gentleman went to an insurance company or to Lloyd's, or anywhere else, with the case of a man earning £750 a year in a profession, in business, or in the Civil Service, and he asked, "How much will you guarantee that income for, say, for twenty years?" The right hon. Gentleman would find the insurance very heavy indeed.
§ Mr. LLOYD GEORGE
You may take almost any age. It is not merely the age, but it depends upon all sorts of things, such as the man's conduct, his work and capacity, and upon all sorts of circumstances and conditions over which he has no control. I do not think it would be an insurable proposition. If, on the other hand, a man is deriving £750 from the investment of £15,000 or £20,000, that is a very different proposition. There is a vast difference between the two, and I think the Prime Minister established a principle which ought to have been embodied in the Income Tax years ago. It is a perfectly fair and sound proposition, and I cannot for a moment admit that the disparity between the two cases is not adequately and fairly represented by the difference between the charge on the money in both cases.
§ Mr. CHAMBERLAIN
The Chancellor of the Exchequer has dealt very briefly with some detailed cases of hardship alleged by my hon. Friends behind me. I propose, like the right hon. Gentleman, to say the fewest possible words about them. I shall not take them in detail, but speak of them in general terms. When the attempt was made to differentiate between earned and unearned income I pointed out a great many of the grievances which have since been complained of by the taxpayers. I think the Chancellor of the Exchequer only adds to his difficulty in defending this distinction by the nomenclature he has employed. If the right hon. Gentleman called it a distinction between income from present exertion and income from investents it would more correctly represent the actual distinction than when he called it a differentiation between earned and unearned income. I will take a particular case put by an hon. Friend of mine of a 1363 professional man who, by hard work and economy, saves a modest retiring allowance for himself, every penny of which has been created by his own effort. The moment he retires and ceases to earn fresh income you treat the whole income which he had, all of which comes from his own exertions at an earlier period, as unearned. His receipt of income is due to his exertion, and he has earned every penny of it. That is the only point. Suppose a man entered upon a different career, and went into the service of the State, and made no provision because the conditions of his employment entitled him to a pension. Suppose he entered the service of a railway company or a bank, which has a pension scheme, and therefore the man feels it unnecessary to make provision for himself. His retiring allowance would be treated as earned income, though he is not then contributing to it in any sense in which the retired man has contributed to the retiring allowance which he has provided for himself, because no pension is attached to his exertions. I am bound to say that when once you try to establish the distinction in any form you are certain to have cases on the border line which will be of great hardship and anomalies which you cannot explain away, and certainly which you will never be able to explain away satisfactorily to the people who are aggrieved by them.
I think the nomenclature of the distinction is peculiarly unfortunate, because it does not bear any real reference to what the actual distinction is. In regard to this and the other case of married women in particular, I only want to say again what I think was said by one of my Noble Friends below the Gangway in an interjection, that of course every one of these anomalies which might be tolerable and insignificant with a low tax, becomes a severe burden and a great source of irritation when you get the tax to the height to which it has now been brought. This brings me to the more general side of the Chancellor of the Exchequer's observation. I confess to an unfeigned pleasure listening to the Chancellor of the Exchequer on occasions when he paints himself to the House as he sees himself. I think in the exuberance of an after-dinner speech the right hon. Gentleman described himself as a saint. He painted himself like a figure in a church window this afternoon of the good man struggling with adversity—the martyr of adverse influences brought to bear on him from all 1364 sides of the House of Commons. He says that expenditure is pressed upon him from all sides. That is quite true, but that does not differentiate him in that respect from any of his predecessors since the mid-Victorian epoch. If I may refresh his memory on this point, I would say that if he would refer to his speeches he would find even Mr. Gladstone, in the heyday of Gladstonian finance, when bringing in his great Budget, complained that the House of Commons had no care for economy. It always will be so. The right hon. Gentleman is not so much to be pitied as to be congratulated in that respect, for I know that there are two hon. Gentlemen, at least in the regular Opposition, who have never pressed him to exceed his own estimates of expenditure. After all, each man will come to the House, as each Department will go to the Chancellor of the Exchequer, with his own pet scheme and his immediate grievances and ask to have them remedied. The business of the Treasury is to bring all these different demands into focus and compare them with the resources of the country, and what I say is that the Chancellor of the Exchequer and the Treasury under his administration has been so much interested in spending that the right hon. Gentleman has ceased to exercise the kind of control that his predecessors in office, whatever party they belonged to, were accustomed to apply to the demands which were pressed upon the House of Commons and always will be pressed.
I do not think it is any answer to the criticisms put forward to call upon us to single out a particular item and say, "I object to that." I do not say that when the proper time comes some others may not object to particular items of expenditure. At any rate, I rose to order while the Chancellor of the Exchequer was speaking, and, of course, I cannot enter into that question now, and, indeed, it is not the time to do it. Suppose it is admitted that every individual item is good, it does not necessarily follow that every individual reform ought to be carried out at once, or that it is wise and in the interests of the country that expenditure should go on at this rate. My complaint against the Chancellor of the Exchequer, to put it in general terms, is that he has made the pace too hot, and that it is he who set that pace much more than the House of Commons. The right hon. Gentleman says that we urged all this expenditure upon him, and it is now for us 1365 to say whether he will foot the Bill. Even those who have urged expenditure upon him in a way which I had never done—having occupied that office, I felt that it did place upon me responsibilities different in degree from those which apply to hon. Gentlemen who have not had that happy experience—have a retort to his present argument. The Estimates of the present Government of the expenditure they are inviting the House to sanction have been singularly wide of the mark. Take old age pensions. I did not vote against the Old Age Pensions Bill, but I never throughout the discussions attempted, in this House or outside it, to conceal my opinion that it ought to have been a contributory scheme. In my opinion, it ought to have been linked with the provision for infirmity which the Chancellor at a later date made in the insurance scheme. I believe, if you had put those two together on a contributory basis and had left the sick arrangements to have been made by the people themselves, we should have spent much less money, and should have spent it much more effectively than we have done under the present circumstances. And not only have spent it more effectively, but with more gratification to the classes on whose behalf the expenditure was undertaken, and who in regard to the insurance part of it have to make a direct contribution. Is it quite fair to say, "You urged this expenditure on us, and now you are reluctant to foot the bill"? What did the Government say about old age pensions? They said, "The scheme which we propound to you will cost £6,000,000." It has cost £12,000,000, and more. They cannot say that is the result of the alterations which were made. Yes, I see the Chancellor of the Exchequer wants to say it.
§ Mr. CHAMBERLAIN
Thanks to the Chancellor of the Exchequer, we know pretty well what part of it. He was asked by the hon. Member for the Skipton Division of Yorkshire (Mr. Clough) what he estimated would be the full totals of the moneys which would have to be provided by Parliament to meet the payment of the old age pensions after the Bill had been read a third time in the House. That was after all these Amendments had been put in. He said:—The concessions made in Committee are estimated to increase the cost of the scheme in 1909 by approximately £500,000.1366 I give him something extra for succeeding years for the full cost of those concessions.
§ Mr. LLOYD GEORGE
I was referring to the addition of the paupers. There was an amending Bill in a subsequent Session which was certainly pressed upon me from all sides of the House and which cost—I am only quoting from memory—something like £3,000,000.
§ Mr. CHAMBERLAIN
I was going to set my memory as to the cost of that against that of the Chancellor of the Exchequer, but I will not do so. I agree that the new Bill did make a very considerable additional charge, but, taking your Estimate of £6,000,000 and £500,000 as being the cost of the further concessions made while the Bill was going through the House, and comparing that with the actual cost without the addition of the paupers, can anyone say that the House had a fair opportunity of judging the scheme when the Estimates of the Government were as reckless as that? The right hon. Gentleman must give up the idea that any Chancellor of the Exchequer in these days will be seriously helped by the House of Commons, whether from the Opposition or from his own side, to resist the growth of expenditure. After all, we have someone who ought to exert that self-restraint which the House as a whole may show, but which you cannot expect from individuals without that responsibility, and that somebody must be the Chancellor of the Exchequer. The Chancellor of the Exchequer the other day, in the speech with which he concluded the Committee stage of our Debate, said that after all this Income Tax was not a very high one, that a new world had been called into existence, with new needs, new aspirations, and new power, which it was now beginning to recognise, and his successor, be he whom he might, could not sit in the comfort or the lethargy of old days, if he thought there was comfort or lethargy. They could not sit at the ease which he rather suggested his predecessors had done, and say, "I will not find the money." He said, "You rich men, and men of moderate wealth, ought to be ready to pay, and glad to pay, an Income Tax of 1s. 4d. in the £ as an insurance against revolution." The House of Commons, partly because of its rules, partly because of the names of the taxes, and partly because it is our natural habit of mind, will treat each tax separately as it comes up before the Exchequer, and it does not put them together.
§ Mr. CHAMBERLAIN
Exactly. That was what I said earlier. Now I come to the taxation. They treat each tax separately as if one had no bearing on the other. A particular tax is picked out, like the Tea Duty, for instance, and it is attacked. There are objections to the Tea Duty quite apart from the difference of fiscal opinion between the two sides of the House. There are objections to a rate of tax so high ad valorem. It is asked ought the poor man to pay so much in the £ when the rich man only pays the same amount. If that were the only tax, and was judged by itself, it would be, of course, grossly unfair, but you compensate it by other taxes, and so it is grossly unfair for the Chancellor of the Exchequer to pick out the Income Tax by itself as being the only insurance which a wealthy man pays, if we are to put it in that way, against revolution. I asked the Chancellor of the Exchequer for a return which, on alternative bases, would convert the Death Duties in so far as they can be converted—that is without Succession Duty and without Settlement Duty—into terms of Income Tax. You must put them in terms of Income Tax and add them to your existing Income Tax before you find out what is the contribution which you are exacting from these people. I made a calculation with a friend the other day, very much on the basis of Sir Henry Primrose's calculation, of what might be the annual sum in the £ which a man owning a landed property with a capital value of £150,000 would pay year after year if he paid his Income Tax, his Super-tax, and such an annuity as would replace to his heir the slice of property taken away by those Death Duties. I know that the Chancellor of the Exchequer disputes the merits of the basis taken by Sir Henry Primrose, and you must take it on behalf of the Board of Inland Revenue at that time. I just mention that because I should like the House to bear it in mind that it was taken when the Prime Minister was Chancellor of the Exchequer, and therefore not at all under my inspiration. I do not suppose that it was taken under his. It was the independent view of the Board of Inland Revenue at that time. At any rate, it was not taken under my inspiration.
Taking that calculation, my friend whom I consulted and myself made out that a man with a landed estate of 1368 £150,000 coming into the estate at the average age and with the average expectation of life would pay 5s. in the £—a little more or a little less—for the term of his enjoyment of the estate. When the Chancellor of the Exchequer talks about these taxes as an insurance against revolution, I venture to assert that when rates at Lloyd's get at 25 per cent. it is generally only when there is a danger or a serious expectation of a total loss. The Chancellor of the Exchequer is asking a very high insurance if indeed figures of that kind at all represent the rate at which property is charged. In my opinion, as the House knows, it was inevitable in the circumstances of this year that there should be a considerable increase in direct taxation; but I am bound to say that when he was obliged to make such increases as he is making in this Budget I do think the right hon. Gentleman would have been well advised, in the first place, to have exercised a greater control over the new services that he is seeking to create and a stricter economy in regard to them, and in the second place, I agree with my hon. Friend the Member for one of the Divisions of Gloucestershire that when so much of this expenditure is being raised for the benefit of the poorer classes of the community, and when more money is wanted for the same purpose, it is right that they should make some further contribution, however small it be, to the sum which has to be raised That is my objection to the Income Tax Resolution of the right hon. Gentleman as it is now before the House, taking it, as I have to take it, in these general considerations, not by itself only, but in connection with the other direct taxes which he charges.
§ Mr. LLOYD GEORGE
May I just correct one figure of the right hon. Gentleman? He said that I had estimated the cost of old age pensions at £6,000,000. That was not my recollection. I have refreshed my memory, and I find that on 15th June, 1908, I said that the cost of the scheme would eventually be, if these figures were worked out, £7,500,000. That was before it went into Committee. I seemed to have estimated the amendments at £550,000. That brings it up to over £8,000,000, and subsequently there was a scheme to include the paupers, which cost nearly £3,000,000.
§ Mr. CHAMBERLAIN
If I may be permitted to rejoin, I would point out that he subsequently revised his estimates, and on 23rd July he put it at £6,500,000.
§ 7.0 P.M.
Mr. GORDON HARVEY
The hon. Member for Brentford (Mr. Joynson-Hicks), who spoke a few minutes ago, spoke of the Super-tax fishermen in Grimsby, who, in trembling tones, said they knew their Chancellor of the Exchequer. I think, with the knowledge that has come to us, we may congratulate ourselves on this side of the House that they do know the Chancellor of the Exchequer, and appreciate him in an ever-increasing manner. They appreciate him for his vigour, for his enthusiasm, and for his large-hearted devotion to the cause of the people. I rise, however, rather to criticise than to praise. I feel it my duty to say that, in default of more precise details with regard to the expenditure proposed, I shall find it very difficult to vote for these Financial Resolutions. Indeed. I must protest as strongly as I can with regard to the whole method of procedure that we are adopting in this House. Let me say at once that if the expenditure which would follow this taxation now proposed to be imposed could be proved to my judgment to be wise, necessary, and desirable expenditure, I have no suggestion to make as to how the money could be more fairly provided than under the proposals of the Chancellor of the Exchequer. With regard to the objects, although I cannot discuss these now, I may perhaps be allowed to say that the purposes for which this money is to be raised appear to me to demand most favourable and respectful consideration from both sides of the House. As the Chancellor of the Exchequer has told us, both sides have demanded the relief he proposes to give, and on broad lines all parties in the House have supported his idea, but I do submit that these proposals ought to have consideration of the fullest and most particular kind, and that consideration must, in my opinion, precede the granting of Supplies.
I, like other Members in this House, feel myself under a great responsibility in this matter to those whom I represent. I feel responsible both to those on whom the Chancellor of the Exchequer is making the demand for sacrifice, and I also feel 1370 responsible to those who will benefit by the money so extracted, because, after all, we may talk of the wealth of the great rich if we like, but the amount of money we get from them in the end must be a limited sum, and the people who are to be benefited by the taxes which rich men pay are very much interested to know that that money is spent in the best possible way. The ease with which nowadays Chancellors of the Exchequer have proved that they can extract money from the rich is, I am afraid, creating something of financial levity both in this House and outside. I have listened to Friends of mine on this side of the House—I may, perhaps, mention the hon. Member for Northants (Mr. Chiozza Money), who appears to me to glory very much in the size at which our national Budget has arrived. I cannot associate myself with him in such ideas. I know, indeed we all know, that it has been the habit of late years to increase the national expenditure, and as the Chancellor of the Exchequer has shown, both sides of the House have demanded it. Again the growing recognition of the needs of the people compel it. We shall have to go on spending money, and I am particularly interested, as I hope we all are, to see that the money is judiciously and wisely expended. Nor am I content to try to prove—as some of my hon. Friends seem to be—the possibilities of endurance of the taxpayer owing to the great growth of national wealth. Of course, the nation will not become bankrupt under the present proposals of the Chancellor of the Exchequer, or under any proposals likely to be made. Neither will those upon whom the new taxes are being placed really suffer serious inconvenience in these days, notwithstanding the fact that the hon. Member for Brentford (Mr. Joynson-Hicks) has had to postpone for one year the purchase of a motor-car.
§ Mr. JOYNSON-HICKS
I explained that I had suffered no inconvenience, as my old car, repainted, suits me quite as well. It is the working men who suffer the inconvenience.
Mr. G. HARVEY
I have no doubt that the newly painted car of the hon. Member must look most resplendent, especially when it is decorated with his figure when he comes down to this House. Of course, the country can bear the strain now put upon it, but, on the other hand, I have a settled conviction that a very great deal of 1371 the money which the Chancellor of the Exchequer obtains would be very much better employed if it were left under the control of the people to whom its existence is due. Although the hon. Member for Northants appears to think that, after a man has reached a certain standard of income, everything in excess is spent in useless luxury, and although a great Liberal paper to-day had the courage to state that these taxes upon the rich will only make them smoke a cigar less occasionally or drink a little less of the flowing champagne, I think many people can spend their money even if they are overwhelmingly rich quite as wisely as the Government has ever shown itself able to do. We talk of the broadest backs, and we decide to lay our burdens upon them. The first principle is intrinsically a right one; nay, more, it is very convenient for the Chancellor of the Exchequer to collect money in this way when it comes rolling in in big lumps, as it does in the case of the Income Tax collected at the source. But I do submit that, in some cases at any rate, there is some danger of crippling the provision for extended employment if the Government spend too much.
We pride ourselves in this country on an immense and well-founded commerce. That commerce—that trade—has been a plant of slow growth, and it will always be a very sensitive creation. It has been subject to no sudden eruptions of success, and I will ask those who deal with national finance to remember that there are countless cases to-day representing an enormous proportion of our industries which have grown up from the minutest beginnings which are now large enterprises employing many persons, and which have been nourished entirely on the accumulated savings of persons—savings carefully made up and often put aside at the expense of considerable self-denial. In my experience of business I know that for £100 you can capitalise the work and energies of a man, and I do not think that we ought to draw from that useful purpose a single £100 that can be possibly avoided. I am only saying these things because I desire that we should be very careful in what we are doing. I do not wish to object to the measures upon which these great sums are to be expended. Perhaps I am too cautious, but I was brought up in close contact with one or two of the greatest political economists of the time. The teachings of Cobden and of Bright do weigh with me, although I am willing 1372 to admit that things are changing and must change, and that the State is assuming, and must assume, responsibilities which would have been impossible and intolerable in the eyes of those who preceded us. I know for the performance of these services much money must be found. In outline I agree with the proposals and with the objects on which the money is to be spent, and it seems to me, on the whole, if the money is to be found, the Chancellor of the Exchequer is going to the right source for it. But at any rate I may be allowed to make a respectful protest in this way, and to say that if the Chancellor of the Exchequer has a deficit, as he has, he is right to provide for it. But that he should give us a mere outline of his programme is something with which I can hardly agree, and I do sincerely hope the right hon. Gentleman will lay before us details and specific plans, so that we may find no difficulty in supporting him.
§ Captain CLIVE
I have had much pleasure in hearing the reasoned protest of the hon. Member who has just spoken against the excessive increase of the Income Tax. As one of my hon. Friends observed just now, the mere fact that mutton is good does not imply that you cannot have too much of it, and in the same way, although the Income Tax may be the best instrument for raising taxation, it will be a very grave danger to the nation should that machine be used to excess in time of peace. The hon. Member for Rochdale (Mr. G. Harvey) took exception to the illustration cited by my hon. Friend the Member for Brentford (Mr. Joynson-Hicks) in relation to his own motor car. But I think we can all agree in the principle which my hon. Friend advanced, and it would be well for everyone who supports that principle to emphasise, as he did, the fact that this large abstraction of income from rich people must mean a diminution of employment, almost to the extent of that abstraction. The hon. Member for North Salford (Sir W. Byles), who spoke earlier, expressed his desire that every tax should be felt, and he gave that as his reason for advocating an ever-incerasing amount of direct taxation and an ever-diminishing amount of indirect taxation. We have all heard of the courage of the hon. Member. We know that if he had his way he would advance on Ulster with sword drawn. We also know now that he is extending his activities to another sphere. He objects to what he calls 1373 the painless dentistry of taxation. He would go into the dentist's chair and would say, "Make me squirm, and then I shall feel that you are earning your fee." If that is his view, I contend it is not being carried out by this Budget, and he can only think it is if he is under the impression, which I hold is quite erroneous, that it is the Income Tax payer and the Super-tax payer who dictate the policy of this country. It certainly is nothing of the sort, and those who talk with alarm of this incrasing Income Tax do so very largely because they realise it is the many who dictate the policy, and the few who have to find the money.
The general opinion has been expressed that it is more than ever incumbent on the Government and the Treasury to make the machinery by which Income Tax is collected as perfect as possible if the Income Tax is to be increased to such a large extent. Obviously, we are going to use it more and more in the future, and the more we use it the more such anomalies as exist will grow. Therefore, it becomes more than ever essential that those anomalies should be abolished. The Chancellor of the Exchequer has done one or two things in that direction. He has abolished the perfectly indefensible limit of 25 per cent. on the allowance made in respect of repairs on agricultural estates. As the House knows, until now, even if an agricultural landowner or the owner of houses can show that he has spent practically the whole of his income in a particular year, or on an average of five years, in repairs to his estate to maintain the rent without increasing it, he can only have 25 per cent. reduction. Although the Chancellor of the Exchequer was not very sympathetic last year, he has now removed that, but the grievance will not be removed except by putting all classes of Income Tax payers under Schedule D. In these days, when nearly all Income Tax payers, for one reason or another, are made to declare their incomes, Schedule A has become almost obsolete. It would simplify the whole scheme of Income Tax if Schedule A were abolished and the whole tax collected under Schedule D. The man who comes under Schedule A is made to pay more than is right, and can only get a reduction after he has successfully proved, with an elaborate set of figures going over an average of five years, that he is entitled to it. Those who come under Schedule D can in no circumstances pay too much. A person makes a certain declaration of income, or, if he prefers 1374 it, the Income Tax Commissioners assess him. If they think they have underestimated his income they raise it, and continue to do so until they get to a mark when he appeals and gets it brought down again. If that is fair for one class of Income Tax payers it ought also to be fair for every class.
I hope my hon. and learned Friend (Mr. Cassel) will not rest satisfied with the Chancellor of the Exchequer's reply as regards the grievance of married people. I cannot understand how the Chancellor of the Exchequer is able to dismiss that grievance with so little sympathy. His chief argument seemed to be that though there was some justification for the grievance, it would cost £1,500,000, and he asked who is to pay that. I suppose that the Income Tax and Super-tax payers are the principal contributors to taxation at the present day, and that they are not married. I do not know why, if the grievance is admitted, it should not be removed simply because it is the bachelors and those who are not married who would have to pay a little more. It is a distinct grievance that the two incomes should be reckoned as one. In the case of married people we have the old age pensions, and the system now is to add the incomes of the two married people together and to ascertain whether either of them who is over seventy is entitled to receive an old age pension. If that system is right in the case of old age pensions, is it not also right in the case of married couples who are charged with Income Taxi As to the curious little bit of sentimental legislation the Chancellor of the Exchequer has introduced, namely, the abatement for Income Tax payers with an income between £160 and £500 a year who have children, I suggest to him that better use might be made of the money he gives back under that heading. I do not see what particular claim to special consideration is enjoyed by those who have only one child or two or three children. It is only reasonable, when a man is married, that he should consider whether he is able to afford the expense of a moderate family of that size. In considering the minimum wage, the chief consideration is whether the wage will support a family of five. It is only when the family is increased beyond that number that they are deserving of any consideration. I have always thought that the social legislation of the future ought to be in the direction of helping the working class families which are 1375 beyond that average number. It is not justifiable that only a particular class should receive assistance, namely, those persons whose incomes are over £160 and under £500. Instead of doubling the amount given back, and therefore doubling the anomaly, the right hon. Gentleman should have gone a little deeper into the matter and tried to distribute his benefits more equally among those who ought to receive them.
Members on this side of the House have been very indulgent in this Debate by not filling up the time by suggesting alternatives to the high Income Tax. The Chancellor of the Exchequer is inclined to jeer at us for not having done so. I am not one who has rubbed in Tariff Reform in and out of season, but I marvel that the Chancellor of the Exchequer, who has shown himself to be not tied to the rigid letter of Free Trade, as, for example, in his Patents Act and his refusal to put an Excise Duty on home-grown sugar, when so large an increased sum is required, should absolutely refuse to put any sort of tax on foreign imported luxuries. Luxuries produced in this country are taxed. We tax spirituous liquors and tobacco because they are luxuries, and they happen to be the luxuries which the poor enjoy as well as the rich. There is a great number of luxuries which are especially enjoyed by the rich, but which contribute nothing to the welfare of the country, and I wonder how much longer it will be before we put some form of duty upon them. In these days when exemptions are being extended in various directions and made more complicated, it is very essential that the whole staff of the Treasury throughout the country should not only be collectors of Income Tax, but should be, as far as they can, the friends of the Income Tax payers. It should be as much their duty to explain to all Income Tax payers in what way they can obtain exemption as it is their duty to insist on the last penny due to the Treasury being collected. It is not an honest or an honourable attitude for the servants of a great country to say, "I have got so much from that man. If he does not know what the law is and that he is entitled to such exemption, it is his own fault, find the more fool he if he does not claim the exemption." I have no doubt that a large sum is collected through these exemptions not being claimed. Instructions should be given to the surveyors of taxes, and those 1376 who come in contact with the poorer Income Tax payers throughout the country, to make known, as far as possible, the benefits the Chancellor of the Exchequer has thought right to give to certain classes of Income Tax payers.
The hon. Member for Blackburn (Mr. Snowden) wishes to go a great deal further than the Chancellor of the Exchequer has gone at present. In his speech the other day he said that he saw no reason why a man with £10,000 a year should not be taxed until his income is reduced to £5,000. In the first place, I would suggest to the hon. Member that he presupposes that everybody who enjoys £10,000 a year has it in readily realisable income, with no charges upon it, and that if one-half is taken away, the other half would be enough for all they need for personal purposes. That is not the case. I cannot but note, in passing, that the hon. Member stopped at the figure of £5,000. I do not know whether that was because he had an eye to a seat off the Treasury Bench, to which his abilities would justly entitle him, or whether he was taking the precaution to avoid the trap into which his former colleague, the President of the Board of Trade, fell when he declared that £500 a year was enough for any man. I find it impossible to say that some increase in the Income Tax is not essential at the present moment, but there is very grave danger to this country in the readiness with which the Chancellor of the Exchequer has had recourse to that means of raising money, without looking about at all for any other source of income. There is great danger in the enthusiasm that appears to exist among a good many hon. Members opposite in that we have reached figures of over £200,000,000. No alarm is expressed, and there is no apology by the Chancellor of the Exchequer that such a charge should be laid on the country. He has confessed that he is one of the greatest offenders in increasing the amount and raising the charge, instead of being, as former guardians of the Treasury have been, the one who stood in the way of every new expenditure.
§ Mr. WALTER REA
I congratulate the hon. Member who has just sat down upon being the only Member of the Opposition who has had the courage to advocate a full-blooded alternative to the Income Tax proposals of my right hon. Friend. Even he has failed to avoid the pitfall into which nearly every one of his predecessors have 1377 fallen, namely, of complimenting the Chancellor of the Exchequer upon the proposed remissions of taxation which suit his own particular views, regardless of the fact that all these concessions must tend in future to an increase in the burden of the Income Tax and similar duties. We, at any rate, are free from any reproach in asking the Chancellor of the Exchequer to add to these burdens, which some of us have done to a small extent, because we recognise frankly that the Income Tax is a fair tax, and all of us on this side of the House are going to support the Chancellor of the Exchequer in carrying through the Income Tax at a rate which is erroneously called 1s. 4d. in the £, but which is a rate that is not burdensome upon incomes in the ratio in which it is applied to them. The hon. Baronet the Member for the City of London (Sir F. Banbury) raised the old and plausible point as to the heavy Income Tax making it impossible for professional men to put forth all their energies because so large a proportion would go to the State. We all recognise that that is a danger if Income Tax is carried too far, but we are very far from that point at present. It will take a great deal more than a 1s. 4d. or a 2s. 6d. Income Tax to make merchants and professional men, who are enjoying huge incomes, work less hard and take less rather than carry on the employments in which they are engaged, which very largely are carried on, not because of the enormous profits that they get out them, but because they are interested in the operation and carry it on very largely on account of that interest and for the good of the community. I believe we could raise this Income Tax considerably higher, though I hope it will not be necessary to do so, before we should reduce the energy of the business classes in earning the incomes. But while we recognise that the burdens, which are caused at present by the social reform which we have all in every part of the House supported the Chancellor in putting forward, have to be met by the richer classes, it is only fair that a large portion of the wealth which has so largely increased during the last few years should be diverted from those pockets into which an undue proportion of it has fallen to assist the working classes, who have not had their fair share. We feel, nevertheless, that the Income Tax is a distinct burden upon this class, and I would particularly ask my right hon. Friend while he is placing this impost, which, just though it is, is a heavy one, upon the commercial classes of the community, 1378 to see that it is administered with the most scrupulous fairness as between the nation and the tax collector and the State.
We thank him, of course, for some of the concessions that he has made, particularly the concession to the small unearned Income Tax payer, on whom, of course, the burden falls very heavily at 1s. 2d., and on whom at 1s. 4d. it is almost unbearable, and we thank him none the less because he refused this concession to some of us last year and the year before, and gave quite conclusive reasons why it should not be granted. We are more pleased that he should have completed this, because it encourages us to press him for some of the things that he has refused during the present Debate. For instance, I very much regret that he has not seen his way to make at least some concession in regard to the joint incomes of husband and wife. It is, I believe, not only in the interests of morality, but in the interests of the race itself, that people should be encouraged to marry young and to produce their families at an early age, when they have not a large income, rather than wait till later, when they will not produce children who will be as able to carry on the burden of the race, and that is distinctly checked when two people with small incomes, both entitled to abatements, find that if they many and pool their incomes they are not entitled to relief. It is just at the time when they marry and incur extra expense that they should not be penalised by the State, but should, if possible, be helped; and while I recognise gladly the concessions that the right hon. Gentleman has made in increasing the allowance for children on small incomes, I would urge that he should also consider whether in some future years it is not possible to relieve the burden which falls upon the small joint income of husband and wife.
Meanwhile there are certain things I would urge my right hon. Friend to do at once in order to put his house in order, and see that these taxes are imposed, certainly with justice, but also with fairness to the taxpayer. It is only too prevalent an opinion at present amongst commercial men that the Income Tax official is a public enemy, and that it is justifiable to take any steps which an honourable man would not take in his dealings in ordinary private commerce to do the Income Tax Commissioners. And if he has succeeded in getting off for less than he ought to have paid, 1379 he feels that he has performed a meritorious act. I am quite certain that that feeling is due largely to the fact that the Income Tax officials have in very many instances used their powers unfairly as against the taxpayer, and there is good reason for the prevalent impression that if the Income Tax officials can get the better of them they will do so, and that you are only within your rights in trying to get ahead of them, and to get back something that has been lost. I have found in my own experience more than one instance where officials have taken advantage of a mere technical omission to insist upon the payment of Income Tax at the unearned rate where a man was clearly entitled to rebate and only to pay at the earned rate, and it is only to be wondered at that after an experience like that the taxpayer takes very good care and get a little of his own back from the Government, and my right hon. Friend may be quite sure that in regard to a man's own business he is much more likely to be able to do the Government than the Government is likely to be able to do him. Therefore I would suggest that it would even be good business on the part of my right hon. Friend if he were to set himself to establish a better relationship between his officials and the taxpaying public. Another instance which comes to my mind is of the eternal grievance of wasting assets, in regard to which the Income Tax has been most unjust, and very many people who are engaged in commerce feel that they are being made to pay taxes on profits which they have not earned and which they are certainly not dividing because they feel that they have had to put them on one side to replace assets which are wearing out. And yet the Income Tax officials over and over again refuse to take those assets into account and to allow any diminution from the amount on which the tax has to be paid. I notice that the hon. Member (Mr. Snowden) is prepared to justify that, but I could give him instances where it would be very difficult indeed for even him to prove that it is fair as compared with other people and other businesses also paying Income Tax, to penalise an enterprising man who is carrying on business on a sound, financial basis.
Then I want also to make an appeal to my right hon. Friend, not for the present year but in the future, to consider whether it is not possible to simplify this whole system of Income Tax assessment, and 1380 enable everyone to know where he really stands. I really do defy anybody without a very large amount of labour to find out how much he himself is liable to for Income Tax, and if it is desired to work out a scale to see what the actual income paid on each income is, it is an almost impossible labour, which I do not think anyone but my hon. Friend (Mr. Chiozza Money) and the Treasury officials have ever attempted, and they do not always agree at the conclusion of the mathematical calculation. Therefore I would suggest that my right hon. Friend should see whether in future, years he cannot abandon a system which really any stranger coming to look at it for the first time would refuse to believe to have been devised outside a lunatic asylum. It would be a perfectly simple matter to set up two scales for earned and unearned income, not necessarily the same, but I should say diverging and perhaps coming together again. It could be so arranged that the burden came to very much the same on each income, and I know no reason why, if the steps proved difficult, it should not even be carried down to decimal points of a penny in the pound, so that there should be a real graduated Income Tax and no unequal step, so that a man when he gets up from £699 to £701 is a loser, and so forth. It should be possible to design a graduated Income Tax rising perhaps by pence or even by fractions of a penny, as a man's income went up, which would be perfectly fair, and would certainly be easy to understand so that a man should know what he was owing. And it would have this advantage—that it would no longer be possible for people to say they were paying 9d. and 1s. 4d. in the £ when, as a matter of fact they are paying nothing of the kind.
This also would, of course, make possible the suggestion thrown out by the hon. Member (Mr. Hicks Beach), with regard to which a little more might be said. It is, of course, a very unpopular thing to suggest that taxation should be graded downwards, and I should be the last man to suggest it if I had not coupled with it as an absolute condition the sweeping away of the taxes which bear heavily upon the poorest of the poor. If it were possible to sweep away the Sugar Duty and the Tea Duty I should be prepared to see a minute Income Tax placed even upon small incomes. The right hon. Gentleman has shown how to do it in the Insurance Act. I admit that it would 1381 not be popular, but he has been brave enough to face unpopularity when he thought it was right, and I believe the working classes, if they were relieved of these wearing taxes on tea and sugar, would be prepared to face some minute tax, and it would have the inestimable advantage that the taxpayer would then know what he was paying, and the man who voted for the expenditure would know that he was having to foot the bill when it came in. It would be a most desirable reform, in my belief. It is, of course, I admit, not very popular but I trust that my right hon. Friend will not set it on one side without giving it very careful consideration, not, of course, with a view to immediate action, but in order that it may be brought into operation in future years. With that modification I believe the Income Tax, even at the heavy rate at which it stands at present, is a most logical and scientific tax, and that it will stand. It is no use hon. Members protesting against it. It has come to stay, and will be the standby of Chancellors of the Exchequer now and in the future. That is what they will look to for their ordinary source of revenue, and the bogey raised by an hon. Member an hour ago that it was the easiest method of raising money in time of emergency and war, will cease to have any terrors for Chancellors of the Exchequer, who will recognise that the proper way to raise ordinary income is from the Income Tax, and that if necessary in time of war they may then, and not till then, come to taxes upon food.
§ Mr. SANDYS
The hon. Member has made the sort of speech which we are accustomed to hear from Members on the other side. There has been a certain amount of mild criticism of the right hon. Gentleman's proposals, but all the earlier part of his speech was taken up with expressions of thanks, gratitude and admiration of the right hon. Gentleman, which I am sorry we on this side of the House do not in any degree share. The hon. Member sees no danger in the enormous extensions of the Income Tax which are before us in the present proposals, and apparently sees no danger in further extensions of the Income Tax which we have to look forward to in the future. In fact, he regards this tax from a perfectly different point of view from all the great financiers who have controlled the financial destinies of this country in the past. He regards it as absolutely an 1382 ordinary form of revenue, and as by no means to be regarded as a financial reserve of the country. I was very pleased to listen earlier in the Debate to the very courageous speech made by the hon. Member (Mr. A. G. Harvey). I think that speech struck a very exceptional note. The hon Member, unlike most of his colleagues, appears to have some regard for economy, and he made the demand, which I am sure the right hon. Gentleman will never accede to, that he should have some details of these various proposals which are necessary in order to put this Budget into operation, otherwise, unless he was satisfied that the expenditure would be wise. I almost gathered that he was prepared to vote against his own party.
§ Mr. LLOYD GEORGE
I think the hon. Gentleman said it was a demand I would not accede to. On the contrary, I think it is a most reasonable request.
§ Mr. SANDYS
I am sure that will give great satisfaction, not only to the hon. Member, but to hon. Members on this side of the House and to the country at large. I should like to make one or two remarks with regard to the right hon. Gentleman's own speech. It was an extremely interesting speech and one which was remarkably characteristic of the right hon. Gentleman's methods. I was especially struck by one very characteristic touch in it. He was evidently going to draw an eloquent and persuasive argument from my hon. and learned Friend's vote on the Old Age Pensions Bill, when it turned out that my hon. and learned Friend was not in the House at the time. That struck me as rather characteristic and rather reminiscent of some of the right hon. Gentleman's efforts on the public platform. I think some of the remarks he made on the Insurance Act were distinctly unfair. I do not think he can point to any statement made in this House or the country in which we have attacked the general principle of the Act, namely, the necessity of the working classes making some contribution to insurance. We have attacked, and we were perfectly justified in attacking, the fact that this scheme was never properly discussed in this House, and was never thought out by the right hon. Gentleman himself. We attacked the finance of the Insurance Act, because we believed—and it has turned out that our belief was absolutely justified—that the financial basis was unsound, but I am 1383 not aware that any member of our party has ever attacked the principle that contributions by the working classes were desirable.
The right hon. Gentleman taunted hon. Members on this side of the House for being largely responsible for expenditure which they now object to pay. The right hon. Gentleman's Budget has been announced throughout the country as a popular Budget. I understand it is the second edition of the People's Budget, with all those advantages which the People's Budget has conferred upon the people of this country. In fact, it has been described as an election Budget. If it is true, as the right hon. Gentleman says, that it is owing to hon. Members on this side of the House, and the way they have insisted on these various financial reforms, especially with regard to the readjustment of the burdens of local and Imperial taxation, that these improvements have been brought about, I think he will find it difficult to explain to the country, as no doubt he will try, that all these reforms are due to the liberality and generosity of the Radical party. But the statement of the right hon. Gentleman that all this enormous expenditure to which the country is committed for the ensuing year is largely, or to any appreciable extent, due to demands which have come from this side of the House, is, I think, an argument which cannot be substantiated. Have we on this side of the House ever demanded that this enormous expenditure of public money should be made to find salaries for thousands of public officials all over the country, and for which a considerable portion of the money must go? [An HON. MEMBER: "How much?"] I do not know, but we all know that there are thousands of them drawing substantial salaries indeed. The exact amount does not matter. It is the principle with which I am dealing. We have never demanded that enormous sums of public money should be expended on a system of land valuation, which, so far as I can understand at the present time, appears to be more or less a failure. We have never demanded that these additional sums should have to be found from time to time in order to prop up the failing finance of the Insurance Act. That has been our principal objection to the Insurance Act—not that the working classes have to contribute, but that the finances of the scheme from the beginning were unsound.
1384 Under these circumstances, I do not think the right hon. Gentleman is justified in the attack he has made upon our party as being responsible for this expenditure. I think we are in every way justified in protesting on this occasion to the utmost of our ability against the enormous expenditure to which the country is committed at the present time, and of which a considerable proportion will be found out of the increased Income Tax and Super-tax. The right hon. Gentleman told us in his speech that the wealthy classes of this country must be prepared to pay insurance against revolution, but when the right hon. Gentleman himself has gone about the platforms of this country, deliberately and for political purposes, setting class against class, setting the poor against the rich, and dividing the nation against itself, it is not for him to say that we should pay insurance against revolution. If there is to be revolution, it will be one for which the right hon. Gentleman himself would be largely responsible. So far as the Income Tax and the Super-tax are concerned, there must inevitably be danger in any form of taxation which is voted by a large class of the community the incidence of which only falls upon comparatively few persons, and the very facility with which this tax is collected makes it, in my view, an extremely powerful weapon which should only be employed with the greatest moderation and discretion. It is desirable and necessary that the wealthier classes of the country should contribute largely to the upkeep of the State, but that one class should decide what another class has got to pay is in itself a rather dangerous state of affairs. The fact that people have to pay something themselves with regard to any particular tax is a wholesome and necessary check upon expenditure.
There can be no doubt that this heavy taxation with which we are face to face at the present time must have the result of throwing people out of employment. It makes conditions harder, it makes competition more severe, and the result of that must be, if not to lower wages, at any rate to prevent wages from rising. It increases the cost of production, and consequently adds to the cost of living. If wages have a tendency, if not to go down, to remain stationary, whilst the cost of living goes up, is it not evident that in the end this tax falls upon the working classes? What is the result? The result is that the struggle for existence becomes keener and 1385 more severe, and that the conditions of the working classes become harder. Many unfortunate people who have not the moral or physical strength to continue the struggle fall out, and they have to fall back on the resources of the State, which means more taxation, and so the whole system moves round in a vicious circle of taxation creating further burdens of taxation, and making the position of all classes more and more difficult. I say this Income Tax system, which, I admit, is necessary for the preservation of the financial stability of the country, is a weapon which can be applied with such facility, and only concerns such a comparatively small class of the community, that there is great temptation for any Chancellor of the Exchequer to make use of it beyond the real bounds of prudence. I sincerely hope—though I do not suppose we shall get any support from the other side of the House—that the right hon. Gentleman, if he should be in charge of the finances of this country next year, will reconsider this question, and will certainly not make it part of his financial scheme to impose further burdens upon those who are already sufficiently taxed.
§ Mr. TIMOTHY DAVIES
I do not know exactly how the hon. Member opposite (Mr. Sandys) would propose to raise money in a better way than has been proposed by the Chancellor of the Exchequer. The hon. Member suggested that the raising of additional revenue by increasing the Income Tax is because of the number of officials who have been brought into Government Departments during the last four or five years. It is evident that the hon. Gentleman was not in the House when that charge was answered earlier today, and when it was stated that the whole extra cost for officials appointed in the last six years would not amount to a farthing in the £ of Income Tax.
At first I thought the new proposals with respect to Income Tax would weigh rather heavily upon people with limited incomes, but after taking everything into consideration, and particularly the relief which will be given by the Bills which will be brought before the House, I think that both in regard to business men in towns, and people in agricultural districts, we shall be better off when the full fruition of the proposals have been realised. I am thankful to the Chancellor of the Exchequer for the concession he is making on unearned incomes up to £300. A person who has an unearned income of £300 a 1386 year will pay £7, instead of £8 3s. 4d., if the concession suggested by the Chancellor of the Exchequer is carried out. The Income Tax with reference to persons having incomes up to £500 will be exactly the same as previously. I did not quite understand the argument of the hon. Gentleman with respect to the division of incomes of married people. I really do not think that this is a great grievance. It is more a matter of sentiment than a grievance. After all, most men and women who are married live together in the same house. Still, if the Chancellor of the Exchequer finds out that there is a real grievance, and that there may be hard cases here and there, I am sure he will consider the matter. I am glad, also, that the Chancellor of the Exchequer has seen fit to give a further concession to persons who have young children. Indeed, I should have liked to have seen the Chancellor ox the Exchequer go further and put an extra tax on the bachelors, and I am not quite sure whether it would not be fair for the married people who have no children to pay an even higher tax than those who have children. At any rate, I think that all the suggestions in reference to the Income Tax this year go in the right direction, and the more I consider them the more I am convinced that they will bear very slightly upon persons of limited income.
The hon. Member for Brentford (Mr. Joynson-Hicks) in his speech at Grimsby last week told how, owing to the Budget, he had to abandon his intention to purchase a £900 motor car, and be satisfied with the repair of an old one. I was also sorry to learn that he is afraid that he will be obliged to economise on his garden. The income of the hon. Gentleman must be very large indeed if the extra taxes mean £700 or £800 more, and I have not much sympathy with gentlemen who cannot pay a little extra, and who have incomes of, say, from £20,000 to £50,000 a year. I think that there would be sufficient left for them to live, and live very well. I am glad of the concessions foreshadowed a day or two ago by the Chancellor in reference to small incomes, and when they are embodied in the Budget I think that the Budget this year will be very fair, considering that the Chancellor has got to find the money. The hon. Member for St. Pancras told us this afternoon that the Chancellor of the Exchequer has been responsible for an increase on the average of £7,500,000 a year 1387 since he has been in office. It is clear that of that sum £4,000,000 go to the Army and Navy, and £2,000,000 to old age pensions. That makes £6,000,000. I should like to sec the first of those items cut down, if possible, as long as we are safe from foreign invasion and that sort of thing. Then we have only got £1,500,000 left. Of that sum £750,000 at least must be attributed to the natural increase, and therefore all we have to account for is, even according to the hon. Gentleman himself, the remaining £750,000, and there is nothing to find fault with in that. On the whole we are perfectly satisfied with the Budget, and as he had to find the money we think that the Chancellor has gone the best way to get it.
§ Sir J. HARMOOD-BANNER
I am perhaps in a different position from some of my fellows—in fact, I am almost bound in regard to the Income Tax to express a feeling of thanks to the Chancellor of the Exchequer because he has for the first time brought personal property into contribution towards the rates. If there is one matter particularly as to which I have been seeing him on deputations for years, it has been with the object of pressing the necessity of this contribution. While I am not at all certain that the way in which it is done out of Imperial taxes instead of out of local Income Tax, is the proper method to adopt, yet it will bring a good contribution towards the municipal rates, in so far as the Income Tax is being used for this purpose. But while I say that, I must add that in reference to the increasing of the Income Tax there are one or two points in which it is necessary to make a few remarks. In the first place, while we recognise the very able speeches made from time to time by the hon. Member for Blackburn (Mr. Snowden), it is as well to point out one great fallacy which I think always underlies his speeches, and the speeches of many hon. Members below the Gangway who represent labour, and that is that all wealth is created by labour. The House will agree with me that an enormous part of the income on which the Chancellor of the Exchequer levies his Income Tax is based upon foreign investments with which the labour of the country has nothing whatever to do. It is quite right that that foreign income should bear Imperial taxation in a proper degree while it receives the benefit of our protection throughout the world from our Imperial forces, and all the interest that we can give, and the 1388 prestige and the capital that we employ. But, for instance, if you take a man working in the centre of Africa or in Nigeria, who makes his fortune there out of the working of a tin mine, or a man who makes his fortune there out of the working of a gold mine in the Transvaal, or men who go into the wilds of Borneo, or all over the world, there you see where incomes are created.
Those incomes are created without one iota of help from the labour of this country. They are created out of the capital of this country and out of the Imperial prestige, and to say when those incomes come home that they are to be subjected to a heavy tax—heavy as it is, 1s. 4d., but still bearable—but to be passed on, as the hon. Gentleman below the Gangway said, until you denude it to the extent that very little is left out of the profits of that great labour and that great danger to life and health which these men had to experience in foreign countries, is to say that you are going to tell the man who labours abroad and makes his wealth abroad, "You may make your wealth abroad, but do not bring it to this country, because there is a Labour party here who will denude you of your possession." And what I say in regard to this is to tell the Chancellor of the Exchequer that if the Income Tax is raised too high, the effect will be that those industries would be taken abroad and be carried on from abroad. Some have gone away already, yet there is a huge sum in those companies upon which the Chancellor of the Exchequer now collects Income Tax, which is paid and distributed, and which he would lose if the companies were taken away to be carried on, say, in France, or in Italy, or in any of these foreign places where this business is carried on.
It is a most important point for us to remember what an enormous amount of our income is coming from abroad, because it is not only the income of wealth which comes from abroad, but the income which is paid not once, but twice over in this country, arising from the expenditure of that income which so comes here. What would happen without that income to the consumption even of coal, and of the luxuries which are sold in shops in Regent Street and in this great City of London? If you are going to so tax the incomes of those Britishers who go abroad and labour at the peril of life and health, and then, when they come over here, have their wealth taken from them, it would not 1389 be 10 per cent. of the income of this country on which Income Tax is levied that would go, but it would be 50 per cent., because the shopkeepers and manufacturers and the workers all round the country would all suffer from the fact that there was not that income coming from abroad, added to our own income, which creates expenditure on these luxuries which leads to the production of these works of art, which creates these palaces in Park Lane, and all the huge industry resulting from these things, which all bring income to this country. This Income Tax question is a very wide question indeed, and now that the tax is so heavy it is important that we should have it just. The hon. Member for Scarborough (Mr. W. Russell Rea) made a most businesslike speech. I would like to associate myself with him in the appeal to the right hon. Gentleman to see that when the tax is levied, it is levied on a fair basis. What is the position at present? I do not wish the Chancellor of the Exchequer to resign his office and become a director of a public company. But if he were a director of a public company and distributed his dividends on the basis on which he exacts Income Tax from his fellows, all I can say is that the company would go to ruin, and the Chancellor of the Exchequer as a director would find himself in the hands of the Official Receiver, and the directors and auditors would find that they would be compelled, for having paid dividends on the basis on which the Chancellor of the Exchequer has proceeded, to recoup those dividends out of their own pockets as not having been paid out of profit.
Is it right or proper that the Income Tax should be exacted on a basis which the law declares is wrong? If, further then, the Chancellor of the Exchequer was in trade and adopting the same basis and taking Income Tax as assessed by the Income Tax Association, say his income is £6,000 a, year when he is trading, and he does not provide for ordinary depreciation, but is trading without providing for that depreciation, and on the basis of his Income Tax collection, what would be the effect on the Chancellor of the Exchequer? He would very shortly be in the insolvent Court. His capital would be gone. He would have been spending income without having provided for depreciation of capital which was lost, and he would then be coming up as a bankrupt, and on examination in the Bankruptcy Court 1390 he would find himself committed to prison as a fraudulent insolvent for having spent his income not on a real basis, but on a fictitious basis. That is an absolutely true statement of the case which I am sure the Chancellor of the Exchequer, if he consults his legal advisers, will find to be the real position of the traders in this country. When the Income Tax is to be assessed on this high basis, this figure, so extreme that, with Super-tax added, it means that every man has to work six weeks during the year before he can earn a penny for himself, then I do think that it ought to be a fair and just Income Tax, and I consider that the Chancellor of the Exchequer would be well-advised, for the purpose of a true collection of that revenue which he desires to pay the expenditure which is incurred, to have the basis of Income Tax so revised that it would be on a true basis upon which all good directors can distribute their dividends to their shareholders. There is one other point. I would venture also to appeal for more simplicity, because the Super-tax and the Income Tax together involve a mass of calculations which are most difficult to make, and I hope that in another year it will be quite possible to adopt a freer system.
I think the collectors do their duty, as do the Income Tax surveyors, extremely well, looking at the instructions they receive from Somerset, House, which impose on them the necessity very often of taking most unfair advantage. The result is that by no means infrequently people escape Income Tax, and, feeling that the tax is so oppressive, they do not think that they are doing anything dishonest. I think it would be a very good thing if, instead of all these numerous methods of assessment which the Chancellor of the Exchequer creates, we had an index of all the inhabitants of this country, showing their history in such a way as to indicate what their income is and what they ought to pay. It would almost be politic to say that every man in this country ought to take out a licence, and on that licence make a declaration of his income. That would be possible, and it would be a far more simple and less oppressive form than the present, and would embrace every man in the list of those who should contribute. I know many men who are well able to pay Income Tax who do not do so because there is no such record. We do want simplicity and we do want fairness in the collection of these taxes. There is no doubt about it that this is a heavy 1391 tax, and I am sorry to say that so long as the Chancellor of the Exchequer is on the other side and we are on this side we have no hope of any other taxation being created to meet expenditure except this Income Tax which is now before us. I am waiting anxiously to see whether the Income Tax taken for the relief of municipal rates is only going to be an incentive to future expenditure or a relief in regard to the past. I am rather afraid sometimes that it will be a relief for the past only, or, if not a relief for the past only, then only an incentive to future expenditure. So long as the Income Tax is heavy at least let it be fair and let it be collected so that the honest trader can feel, though he considers the tax oppressive, that he is doing his duty, and that nobody is injuring him and making an unfair distinction between him and his fellows.
§ Sir WALTER ESSEX
One word in passing to refer somewhat sympathetically to the remarks of the preceding speaker, who declared his disagreement altogether with the system of levying taxes upon perishable assets. To go into a case of that kind might prove a very fertile subject of discussion, but to-day there does not seem much prospect of relief coming to the manufacturer who feels this burden to be an unjust one. One thing that has interested me in this discussion more than anything else has been the absence of the old cry of protest that year after year we have been accustomed to hear raised from the benches opposite, that the prime reason for the Income Tax was that thereby funds necessary and adequate might be raised only for purposes of national defence and, possibly, national offence, and the Civil Service. To-day, I have only heard that once or twice, and the note of protest has been almost apologetically low. I suppose we must all of us agree that we as a country have come to recognise that the functions of the Chancellor of the Exchequer are no longer embraced within those narrow limits which called him to provide only for those particular items of expenditure. We are more and more, as has been frequently remarked, looking for social amelioration in many directions as a means, or, rather, a part of the taxes which the Chancellor of the Exchequer from year to year raises. I, for one, however, could wish that the amount raised for armaments were evaded, and if I had 1392 any reason for disquiet in my mind with regard to the action of the Government, which it is my privilege to support in this House, it is sometimes that I am disposed to doubt whether they have been industrious enough in seeking to spread more widely and effectively the doctrines of peace amongst the nations of Europe. One finds it, when one considers it coldly, almost beyond belief that with the march of science, the increasing powers of the people in intellectual exercises and mental analysis, we should find in all the Chancelleries of Europe an increasing straining towards a more abundant measure of armaments. I would have liked to see my own Government doing obviously more in the direction of urging this greatly to the desired end. I put side by side with that disquiet which I feel the small comfort that remains to me from what was said and done by the Leader who headed our party in this House in 1906, when he held out that splendid olive branch to our great competitors across the German Ocean. But to get back to the main theme, on which I wish to say a few words. I would say that we have departed from the old idea of civil and military service as being the chief causes of expenditure to be met by the Chancellor of the Exchequer, and we have made our first great departure, in all probability, from these narrow limits, in the Education Act of 1870. It is true that had we then had a clearer foresight as to the way money was going to be spent, we should have insisted on laying upon that outgoing stream the control of the State, or, at any rate, that the various local authorities should have full and unrestricted control over the expenditure of those sums so contributed.
§ Mr. DEPUTY-SPEAKER (Mr. Whitley)
We are no longer engaged in a general discussion on the Budget, and we must deal specifically with the Resolutions as they arise.
§ Sir W. ESSEX
Yes, Mr. Deputy-Speaker, I will do so. In regard to the Resolution, I would say that I desire to see that revenue provided still more from the sources from which we draw it, because I feel that although we may total so many millions from one class of taxes, so many millions from another class, so much from Income Tax, Super-tax, so much from indirect taxation, and the rest of it, yet I feel that the tendency of the present Government, and the Chancellor of the Exchequer is one of its most active advocates, has been, as it were, to move 1393 in a sort of circle, so that it comes back again reproductively under his power and direction. He told us he had to provide about £12,000,000 for one particular outlay, namely, that of old age pensions. I would like to say, if I may be allowed to do so, how that, in a sense, has a circular flow, and there can be no doubt—
§ Mr. DEPUTY-SPEAKER
This is not the occasion for that kind of argument. The hon. Member must deal with the subject of the Resolution.
§ Sir W. ESSEX
I desired to get back to the point that even in this particular benefit to what is commonly phrased the lower classes, there was that effect. I was also trying to get back to the argument of the hon. Member for Tewkesbury (Mr. Hicks Beach), namely, that the Chancellor of the Exchequer missed a source of possible income in that he had not an Income Tax which levied a penny in the pound on wages. I think that might be fairly urged as being a very very daring suggestion. I do sincerely hope, however wide the Chancellor may cast his net, seeing that he is drawing today, and rightly, so much from indirect taxation, that he will see that it is his duty to stand between the working classes of this country and any further increase in the burdens they have to bear. Your ruling shuts me out, Sir, from referring to one or two other matters as to the means by which these taxes are being spent and the necessary purposes for which they are raised, but I may be permitted again to say that I do hope we have heard the last of any proposal to place a heavier tax on those lower classes whom it is the desire of this side of the House to relieve and protect from heavy burdens.
§ Mr. G. LOCKER-LAMPSON
I am very sorry that the hon. Gentleman who has just spoken was shut out from rather wider Debate, as he is always a very convincing speaker, and I should have been glad to have heard his arguments on the particular points he wanted to raise. I will try to do my best to keep very strictly to your ruling. I merely want to deal with two grievances which I think arise on the proposals of the Chancellor of the Exchequer respecting these new taxes. The anomalies and injustices which always have during recent years existed in connection with the Income Tax, have become far more serious and far more acute through the Chancellor having increased the burden of the rate, and, so far as I 1394 know, we have got absolutely no guarantee that the tax will not be far heavier in the future. The particular point I wish to place before the Chancellor is as to the income which really ought to come in upon the rate, which under the present law comes under earned rates. The Act of 1907 provides that earned income means any income which is charged under Schedule B or D, and which is immediately derived from the carrying on of a business, or through the exercise by the individual of his profession, trade or vocation.
Let me now take the case of the stockjobber. It very often occurs that the stock-jobber is obliged to hold large blocks of shares for the purpose of his business, and in calculating his profits, and the probability of his profits, before entering into that particular profession, he has to bear in mind the income that he is going to receive from such holdings in the shape of dividends, and he has to take that into account, because it is part of the profession in which he is engaged. The income from dividends is, of course, taxed before receipt, and the company or bank takes the tax at the full rate of 1s. 4d, under the right hon. Gentleman's new proposals. Being entitled to the earned rate, because, after all, it is part of his business and profession, on the ground that his income does not exceed £2,000, the jobber makes his claim to the Commissioners in the ordinary way, but, as a matter of fact, he will not be able to claim the earned rate on the portion accruing as dividend. Although it is his proper business to hold those stocks, because he is obliged to keep a certain amount of them in order to sell to the stockbroker when he makes a claim, he is unable to get the earned rate on that portion of his income, because the Crown contends that the income does not come within the scope of the Act of 1907, and that he has not really immediately derived it from carrying on his trade or profession. As regards the jobber who happens to hold Government or Colonial securities, his income again is deemed to be outside the Act of 1907, as that particular income is assessed under Schedule B, to which, as the right hon. Gentleman knows, the earned rate does not apply at all. So, therefore, the unfortunate jobber, and I only take him as one instance, since I could cite many others, is hit all round. He has to pay the full rate under the right hon. Gentleman's new proposals of 1s. 4d. on all those portions of his business income.
1395 In order to make the point perfectly clear, I give the instance of the builder who builds houses for the purpose of selling them. He builds them always with the idea of selling, but he has to bear in mind that very often he will not be able to sell his houses at once, and that, pending sale, he will have to let them. It continually happens in such cases that the houses are let until the builder can get a customer for them. The builder is assessed under Schedule D, less, of course, expenses, but the income arising from the letting of the houses is assessed under Schedule A at 1s. 4d. in the £ upon each house, which the tenant pays in the first instance and then recovers from the landlord by making the necessary deductions from the rent. Thus, the builder is taxed on what is really part of his business profits at the full rate of 1s. 4d. in the £. On the other hand, the clergyman, whom I take as an instance on the opposite side, and who has rents and property taxed at the higher rate under Schedule A, can obtain repayment of the difference in the rates if the income happens to be part of the emoluments of his office. I do not see really in the least why the same principle should not apply to all others who draw their income quite directly and in close connection, and necessary connection, in carrying on their trade or profession. All incomes accruing to the trader or professional man from the actual carrying on of his trade and profession are assessed at the higher rate in the first instance, and they ought to be deemed earned income. I think it is only fair that they ought to be able to recover the difference in the rates in the cases I have mentioned, and cases of a similar nature.
My final instance is another case which I really think the right hon. Gentleman ought to do his best to meet, and I think it is a very substantial grievance which the recipients of earned incomes have got against the right hon. Gentleman's new proposal. I do not say that it is a grievance originated by the right hon. Gentleman; he did not originate it, but it is a grievance which has become much more acute under the increased taxes which he has just placed upon the people. The right hon. Gentleman knows that in the Super-tax an allowance is made of life insurance premiums up to one-sixth of the total income. If the premium allowed reduces the total income below the Super-tax limit, then the person who 1396 receives that income has no liability with regard to the Super-tax. For instance, suppose a man has an income of £3,200 a year, and pays life assurance premiums of £300 a year, that reduces his income to £2,900, and he will be entirely exempt from Super-tax. But, for the purpose of calculating his ordinary Income Tax, the amounts paid for life assurance premiums are not allowed to be deducted. For instance, supposing under the new system a man has an income of £705. and is paying life assurance premiums of £35, he will not be allowed any abatement, on the ground that his income has been reduced below the limit of £700. That, again, is not fair, especially having regard to the very high rate under the new proposals. To my mind, life assurance premiums—I think every fair-minded man will say so—ought to be allowed in calculating the statutory abatement for ordinary Income Tax, just as they are allowed when calculating for Super-tax. In fact, it is really much more reasonable, because it applies to a much more needy class than under the Super-tax proposals.
The Chancellor of the Exchequer will probably say that it would cost a great deal of money to allow this to be done, and that he cannot afford it. If it would cost a great deal of money, it only shows that the Exchequer is making a great deal of money out of some very hard cases. There is one method by which the right hon. Gentleman could raise a considerable amount of money. I will not go into it at any length. At present he gets practically no Income Tax whatever out of foreign firms trading in this country. Suppose a foreign firm has an agent getting business for them in this country: the Exchequer gets practically no Income Tax out of that firm's profits in this country at all, and it fails to do so merely on a very technical point. If the agent of the foreign firm sends all orders to his firm for confirmation, and if delivery takes place abroad that agent is not liable to pay Income Tax on the profits. If, on the other hand, these technicalities are not observed, Income Tax has to be paid. I suggest that these technical subterfuges for evading the payment of Income Tax ought to be done away with entirely. The right hon. Gentleman ought to be able to recover Income Tax from every foreign firm making profits in this country through an agent getting orders for them. That seems to me a business proposition, and I cannot believe that hon. Members 1397 opposite will object to it on account of its bearing any taint of Tariff Reform. It has nothing to do with Tariff Reform or Protection. It is merely netting the foreign firms, who escape by purely technical subterfuges from paying their proper Income Tax to the Exchequer. I was going to develop the machinery for doing it, but I will not, as the right hon. Gentleman wants to leave the House. It is perfectly easy to get hold of these people, and I hope the Chancellor of the Exchequer will consider the point.
§ Mr. GEORGE TERRELL
I wish to emphasise the point just made by the hon. Member for Salisbury (Mr. G. Locker-Lampson) with regard to foreign agencies. There is not the slightest doubt that there are carried on in this country an enormous number of foreign agencies which practically entirely escape Income Tax, particularly so now, when the tax is becoming heavier and more oppressive. People feel that Income Tax is no longer a fair or just tax, but that one class is being penalised for the benefit of another, and instead of every man wishing to do his duty by his country he considers that there is a certain amount of merit in escaping it. If that is the feeling amongst our own country people, how much more may we expect to find it amongst foreigners who trade here? The difficulty is how to catch these foreign parties. As a manufacturer having some considerable knowledge of business and business ramifications, I know that it is extremely difficult. At the same time, it is hard on the manufacturers in this country that they should be oppressed with this heavy Income Tax and the system of inquisition practised by the Income Tax authorities, and at the same time know that our rivals in commerce practically escape. It is a point which I hope the Inland Revenue authorities will give consideration. Their one idea at present seems to be to oppress people. You are constantly harassed with forms. If a man has a business, and perhaps two or three residences of different kinds, he has to fill up different forms which are difficult to understand. One wants to do what is right, but when he is followed up by all the different authorities and oppressed by all these forms, it adds to the feeling of injustice to which I have referred.
Income Tax is very unjust also in the form in which it is levied on companies. It ought to be levied on dividends, not on profits. If it were levied on dividends, 1398 in the course of a period of years the revenue would get at every penny of profit that the company made. There is a tussle each year with the Inland Revenue authorities. Experts are employed by the company to try and resist, dodge, or evade the tax. A great deal of expense is incurred; books are overhauled and examined. If the tax were levied on dividends the whole thing would right itself, it would be infinitely fairer, and it would remove that feeling of oppression which everybody experiences when private concerns are being each year raked over by the tax-gatherer. A matter which seems to me to be a branch of this is the very great hardship which happens so frequently in businesses which for family reasons are turned into private companies. From the moment such a business is turned into a private company the profits, which were formerly earned profits, become unearned profits, and are taxed at the higher rate. That, surely, is a matter of injustice? The Revenue authorities ought to discriminate, and discriminate in the case of a firm where the directors are working directors, and where simply for private reasons the company has been registered as a private company. They should be returned as earned, and not as unearned profits. Another class of income, or rather of profit, which I should have thought the Chancellor of the Exchequer would have dealt with in this year's Budget, is the sort of speculative profits which we hear of being sometimes made by gentlemen who dabble in stocks and shares.
§ Mr. G. TERRELL
Week-end investments! Surely that is a class of profits which should be taxed. Of course, you are told that when you make a profit through a little "flutter" on the Stock Exchange that that is an appreciation of capital, and that when you lose through an unlucky speculation that it is a loss on capital, and one class is set against the other. That might be very well in some cases. But in these days, when unearned incomes of all kinds are being taxed or the demand being made, I think all classes should be treated alike. Gentlemen who make profits by speculation in any shape or form should contribute their toll to the national revenue. I would urge that steps should be taken—and it would be time well spent if steps were taken—to simplify the collection of this taxation. I 1399 never could see why there should be one class of collection for Imperial taxation and another for local taxation. To my mind, whatever form taxation takes, the collection as a whole should for all purposes be centred in one authority. Without a doubt it would simplify, and save an enormous amount of expense, if each man every year had a demand note from the Government of so much for Imperial taxation and so much for local taxation. It would make it easy. At present you are oppressing your man who gives you the income; you are harassing and worrying him. I should think it would be good business for the Exchequer to try to make the pill as sweet as possible; to try to help the man who pays the taxes; lo make his trouble as light as possible. I think a great deal could be done in this connection. I would urge on the hon. Gentleman opposite that it would be to the advantage of the Treasury and to the advantage of everyone who has to provide the taxes, if something of the sort were done.
§ Sir RYLAND ADKINS
If I understand rightly the argument of the hon. Gentleman who has just sat down on the question of the collection of taxes, I think I may say that I agree with it. There is no doubt all taxes, whether they are local or Imperial, whether they are raised locally or not, require standardisation, but they, too, also require that there should be local knowledge, as well as the knowledge of those people who are immediately responsible to the Treasury, and who are sent from time to time from one locality to another. There are one or two things in regard to the Income Tax proposals that I desire to say. In the first place, I desire to thank my right hon. Friend for the concessions which he announced the other day in regard to small unearned incomes. I am quite certain that this will be greatly appreciated, for it really corresponds with the facts of life, which ought to be recognised. I desire to associate myself with what has been said earlier in the Debate to-day by my hon. Friend the Member for Northampton as to the methods by which that relief should be given, without incessant worry and trouble on the part of the individual taxpayer. We all know that the difficulty of getting back taxes improperly paid is often intolerable, and in many cases involves more trouble and expense than the actual tax paid. At 1400 the same time to know that when one has paid a tax which one is bound to-pay, but which really is improperly levied, leaves just that sense of irritation which is most undesirable that any citizen should have, and certainly it is most undesirable that it should become widespread amongst any class of the community. Apart from that I support, on the whole, the proposals of the Government in regard to Income Tax.
There is one point to which I desire to call the attention of my right hon. Friend and the attention of the House—that is the considerable steepness with which the graduation of Income Tax on earned income is applied to incomes between £1,500 and £2,000. Under the new proposals, you have no alteration of income under £1,000 per year. You have an increase of Income Tax from 9d. to 10½d. on incomes between £1,000 and £1,500, but for between £1,500 and £2,000 the increase goes from 9d. to 1s., which is really an increase, as is obvious, of something like 33 per cent. on the tax levied upon incomes of that kind. If you put aside the Super-tax, which is levied on an entirely different principle, that is a far steeper rate of graduation than is the case when you come to incomes of over £2,000 a year. I think, therefore, the Government would do well to consider whether it is essential that their scheme should have so steep a scale of graduation at this particular point, because incomes of between £1,500 and £2,000 in this country, if they are largely earned incomes, are very often the income of persons in the prime of life, who know perfectly well that their earning capacity will decrease as they get older, and who, therefore, if they are wise, know that this is the time of life to which they have to look for the necessary saving and provision for the future, other than actual life insurance. I think that the steepness of that graduation at that point is open to objections which do not apply to the taxation of larger incomes, and which does not apply to the graduation of the 1½d. additional tax of between £1,000 and £1,500. I should like to know whether, in discussing this matter on the Report stage, one is, or is not, allowed by your ruling, Mr. Whitley, to deal in any way with the way in which that money so raised is to be returned in any shape to the individuals who pay the taxes by means of any alleviation of the charges which they are paying as rates? 1401 It makes a great deal of difference—I want to put my point quite respectfully—when one is prepared to vote for increased taxation in a particular form, whether one knows that that taxation is going to come back in any form into the pockets of those, or many of those, who are paying it; and, therefore, it is not altogether so easy to discuss the propriety and the fitness of an increase of Income Tax if one has to think of it as wholly detached from the effect which it will have on the taxpayers according to the way in which it is spent. I quite agree it is not in order now or probably relevant to discuss the way in which the taxes should be spent in one Imperial service as against another, but if any portion of the money so raised by the taxation we are now discussing is intended, and that it is arranged it shall come back to the taxpayers in another form, that certainly is germane to the question whether we should proceed to argue it or not, and therefore I ask whether hon. Members are to be allowed to refer—not, of course, in detail, but in the generality—to the relief of the taxpayer, who is also a ratepayer, and who might be very much more willing to submit to an increased Income Tax than if he knew it was a net loss?
§ Mr. DEPUTY-SPEAKER
That is rather a long point of Order. I am sure the Rule is that, when we reach the Report stage of a Resolution on a Bill, that Resolution is taken by itself. A general discussion of the Budget will be relevant more to the Second Reading of the Bill.
§ Sir RYLAND ADKINS
Then the Resolutions, being Resolutions for the imposition of a certain new rate of Income Tax, I would say that acceptance of these proposals in this House and in the country will depend, possibly considerably, on the way in which the Government can convince the House and convince the public outside that these very considerable increases are not really so great as they appear, because an appreciable part of them will be returned during the present year; and as regards the present year, on the existing basis to the taxpayers in their other capacity as ratepayers. Speaking here strictly, I hope, upon this Resolution, and speaking upon those proposals, which in any way I think are highly desirable which have this great advantage, that you are taking money from the pockets of the bulk of persons who have no income beyond a very low limit, and in some particular classes of the community these proposals, 1402 having this quality of justification, will, I think, depend a great deal for their support on the questions to which I have referred as to how much really goes back in some form, in the form of relief of rates. Speaking in general support of this Resolution, and referring to what I venture to call the excessive steepness of the graduation, I reserve both for my independent judgment upon the third reading of the Resolution, and upon the Finance Bill to be founded upon them, till I for one am convinced that the general amount in this current year in which the actual burden is admitted, and that relief is of a kind in equality and distribution which is necessary to compel the support which this Resolution would have upon the community generally because of the wideness of their application, and because, apart from these details, they are an equitable form of taxation.
§ 9.0 P.M
§ Mr. NEVILLE
The last words of the last speaker alluded to the wideness of the basis upon which these Resolutions have been founded. It seems to me that that is one of the most fatal pieces of criticism one could make against these proposals. The fact is, that the number of people who are liable to Income Tax are much too small for a really safe and sound basis of taxation. And the point that I should like to make is this: I am not quarrelling for a moment either with the application of the money or the amount of the taxes, but I should like to call attention to the sources from which the money has come. Income Tax is no doubt a tax entirely upon the thrifty, and when you come to look upon the trade and commerce of this country and see upon what it is based, you can see that the fate of this country depends, and its commerce is financed and based upon the surpluses of the thrifty. It is a fact that a certain number of people are able to live within their income, and money which is collected in this way is able to be lent out to finance big business and to help the market, and anything which is done to penalise the thrifty or makes them think they are unfairly dealt with, has an effect upon their surplus collected at the present time, and which are so useful to trade. I want to point out this fact, which seems to be self-evident. The effect of excessive taxation upon the thrifty is, that the thrifty try to do their best to avoid and evade taxation. I do not mean to say evade it improperly, but people can so arrange matters 1403 and fix financial burdens that they can legitimately and with perfect propriety get out of paying taxes; that is the man who feels he is undoubtedly burdened by the incidence of this taxation will see if he cannot by splitting up his liability, or handing over his property in his own lifetime to those who come after him, try and avoid the burdens of this description. It must be quite understandstable by everybody that a number of small incomes and small surpluses are not available in the same way for the benefit of trade as large surpluses are in the hands of bankers.
I remember thirty years ago, that doing business with the bankers with whom I banked there was a large landed proprietor who wished to keep a permanent balance of half a million available. He had enormous commitments and enormous estates, and there was no period of the year in which he would not have to put his hand in his pocket to find large and unexpected sums in order to enable his to finance as he did his large estate, and manage it to the best possible advantage. He found it necessary to keep that balance with the bank. Of course, that £500,000 was not drawn out the day after it was paid in, nor did the bankers know when it was to be drawn out. It was drawn out at an average rate, and a very large proportion of that £500,000 was available every fortnight for helping the markets and the Stock Exchange, for the markets and Stock Exchange from time to time require money to carry out the financial transactions which take place. That £500,000 kept there as a balance was being continually lent to the market, and was available for financing the commerce of the country. If you split that up into blocks of £500 each, how much would be the balance left at the bank? I believe people with families having £500 a year find it extremely difficult to have a surplus at all. Persons in cases of that kind are habitually charged interest because their accounts are overdrawn. The working classes are most thrifty in the way they save, and I do not think it would be possible for them to save more. The only class which saves largely is the middle class, and the middle class is the backbone of the country, and supplies the money to carry on the industries of the country and the finance of the business. Anything that discourages the thrift of the middle classes is dealing a mortal blow at 1404 the prosperity of the country and its commerce. One can easily see the effect of dividing up one's property during his lifetime. When a man has a son who comes of age, if he is a person in whom he can put confidence, it is only right that the parent should place him in a position of independence for himself. That is entirely democratic, and it is a principle which will no doubt be carried out in a most democratic way in this country. May I, however, point out the effect of such a splitting up of property. Take, for example, the policy of the Government with regard to the Land Taxes. We have seen the effect of the Budget of 1909 in the quantity of sales of large estates which have taken place. If you take a large estate of 1,000 acres which in the hands of the late owner was subject to Super-tax, and full Income Tax, and every other tax, and split it up into estates of 50 or 100 acres, then those smaller estates would practically pay no income at all, because they are below the limit. The result of the policy of splitting up the large estates, which is due to the heavy taxation which has been imposed and which has been threatened, will be that the land of this country will practically pay no Income Tax at all. It must have the effect which I have suggested.
The same thing will apply to personalty. If you adopt a tax which places an undue burden on the middle classes, and if you once make the middle classes feel that they are going to be treated, as the milch cow, upon which every additional expenditure is to be imposed, the effect will be that the middle classes will naturally cease to be thrifty; and, if that happens, I should like to know where the country is going to get the money to finance business. The hon. Member for Blackburn (Mr. Snowden) said he looked forward to the time when we should have a £250,000,000 Budget, and therefore this is only the beginning. If you cannot get money to finance business from the middle classes, where are you going to get it? Clearly the poor cannot save it, and I do not expect them to save it. The rich will be living up to their incomes, and the only people who do not live up to their incomes and are walling to forego the pleasure of spending every penny they make in order to provide for the future are the middle classes, and incidentally they provide the funds which the bankers lend out to traders to pay the wages which the working classes get at 1405 the present time. I think that point ought to be emphasised. I should also like to draw attention to the Returns which have to be filled up for the Inland Revenue. It used to be said in this country that the real advantage which Englishmen had over foreigners was that there was no imposition at all. One may say that there is no other country in the world where taxation is based upon the bed-rock honesty of the people who make the returns. No other country has ever dared to base the taxation of its people upon the well-known innate honesty of the people in the way the Government of this country can trust to the returns being made.
All that has been altered now, and we are in the hands of inquisitors who are continually sending us their forms and multiplying them. I received myself yesterday a form with regard to the abatement which may be claimed by Members of Parliament. I cannot tell you how many questions that contains which I was to answer. I have other forms which I am now filling in, and with regard to which I cannot tell what the proper amounts are. The difficulties with regard to land are such that it is almost impossible to arrive at the proper amount, and it is impossible for anybody who is not an expert to fill them up correctly. I belong to the legal profession, and I can only say that I should be the last person to dare to make out a return with regard to the little land I possess without taking expert advice upon the point. I have received lately a form with regard to the abatement on the £400 a year which all of us are not enjoying, and it contains a multiplicity of questions from start to finish. If that was the only form an hon. Member had to fill up, or any particular taxpayer had to fill up, then it is not such a bad thing, but if that is only one of about ten, it is a totally different thing. Some of these forms may take a fortnight to find out the information and correctly answer the questions, because they are such that nobody but an expert can fill them up. At the end of the form there is the statement "that those who do not claim, an abatement may sign here." There was no statement as there ought to have been that anyone who did not claim an abatement was to sign the form without answering the other questions. I dare say there are many hon. Members who are now racking their brains as to how to fill up this form, making calculations as to children, born or unborn, and other questions. These 1406 points ought to be made clear, and we should not be put to the expense and trouble of making the returns and be subject to a heavy penalty if they are not correctly made. You are not sure after filling up the form that you are not rendering yourself liable to pay some penalties after doing your best to arrange that you are giving full and complete answers. There is also the question of the joint income of husband and wife. Now that we have the Married Women's Property Act, and so many ladies have asserted their independence and their financial independence—I do not say rightly or wrongly—and using their own money in their own way, it seems to me a monstrous shame that the income of a wife should be aggregated with that of her husband in order to see whether they are liable for Income Tax or Super-tax. These taxes press heavily upon the middle classes, and it is upon them that the burden falls heavily at the present time. I do not think that the middle classes at the present time have tumbled to the fact that they will be attacked in that way if the hon. Member for Blackburn has his way with the Chancellor of the Exchequer, and if the Chancellor of the Exchequer is an apt pupil of the hon. Member. When they do tumble to the fact that they are being attacked, both by Death Duties and the Income Tax because you wish to avoid the trouble of thinking, and the brain fag of finding out a broader basis of taxation, then I say they may take every means in their power to save themselves, and to spend up to the hilt, because that is what they are asked to do. They are encouraged in extravagance, and, once they realise that, you will have destroyed your best asset, namely, the thrift and self-sacrifice of the middle classes.
§ Mr. TOUCHE
I sincerely hope that I shall not have to do six months' hard labour, but I confess that I did not rack my brains over the form to which my hon. Friend (Mr. Neville) has referred. When I received it, I promptly put it into the waste-paper basket. I am in entire agreement with everything my hon. Friend has said, with one exception. He said that he had no quarrel with the amount of the Income Tax. I have a considerable quarrel with the amount of the Income Tax. The amount of the tax is most objectionable on public grounds. At an earlier stage in the proceedings the hon. Member for Salford (Sir W. Byles) told us that we ought to regard the predatory attacks of the 1407 Chancellor of the Exchequer as a blessing in disguise. I think he said that if the Chancellor of the Exchequer rifles our pockets, it only has the effect of making us more careful of what remains. There is a certain element of truth in that, and it is on that aspect of the situation that I desire to say a few words. It is undoubtedly necessary for those whose incomes are penalised to try to make the best of the balance. The result of that is that they have to seek a very much larger return than heretofore, and that has a very far-reaching effect on the general finances of the country, and on the conditions of industry.
We have heard a good deal about the way in which money has been sent abroad. It is a mistake to assume that money has been sent abroad chiefly with the object of escaping the payment of Income Tax at home. That, no doubt, to some extent has been the case. It has been sent abroad partly for that reason, and partly also because of the fear of new burdens, but chiefly in order that the investor may receive a larger return, which will make him the better able to bear the heavy burden of direct taxation. Everyone has been driven to seek a higher rate of interest. It is notorious that investors are no longer satisfied with the yield that satisfied them a few years ago. That is a new feature which has undoubtedly changed the financial outlook. Now this higher rate of interest necessarily means higher cost of production, and to my mind it seems that a higher rate of Income Tax, involving a demand for a higher rate of interest, necessarily means higher cost of living for all. I think that there is a very direct connection between the higher Income Tax and the increased cost of living from which our working classes are suffering in this country at the present time. It is in order to get this higher rate that investors have to seek these foreign investments.
Mr. Lehfeldt has recently prepared some very interesting statistics showing the movement of the investment market. Last year the public issues in London was very much of the normal amount, but they were abnormal and peculiar in this respect, that they showed an extraordinary balance in favour of the number of issues of foreign securities. Of the large issues at fixed interest, by which I mean issues representing upwards of £900,000 in cash value, and excluding bonds and notes of less than seven years' currency, the total was a 1408 little more than £111,000,000, and of that less than £5,000,000 represented Home securities. The balance was represented by Colonial and foreign issues, and the highest proportion of all was in the foreign issues. Why was that? The reason of that was that the foreign issues yielded a much larger average rate of interest. Taking the total, the amount was something like very nearly 5½ per cent. If we take the smaller issues, the medium issues between £200,000 and £900,000, we find that the same story is told. The Home issues again were completely eclipsed by the foreign and Colonial issues. The total of these smaller issues was £36,479,000, and of these no less than £27,676,000 were represented by foreign and Colonial issues.
§ Mr. DEPUTY-SPEAKER
I do not think that this is really pertinent to the Resolution we are now considering. At any rate it is too large a matter to come out of the confirmation of the Income Tax.
§ Mr. TOUCHE
Of course, I accept your ruling, but I was endeavouring to point out how money was being transferred abroad as the direct result of the heavy Income Tax in this country. I do do not know whether you will permit me to say that an extended experience has shown that the higher rate received from these foreign issues is not accompanied by a corresponding risk of default. I will not however, pursue that subject further. I hope I shall be in order if I point out that this drain of money to abroad has considerably reduced the supply that is available at home for our British investments as a direct result of this heavy Income Tax; and, if this heavy Income Tax is going to be added to, as the Chancellor proposes, then we shall suffer still further in this respect in the future. Money is already dear for all Home industries in consequence of the higher rates which are demanded to meet the requirements of this constantly increasing direct taxation. One of the results of that is that the expansion of enterprise is checked, employment is restricted, wages are stationary, and living in this country is dearer. Not only does this high Income Tax drive our own money abroad, but it also has the effect of preventing foreign capital from coming here. The presence of large accumulations of foreign capital in the City of London has been of very great advantage 1409 to us in the past, and has done a great deal to make London the centre of monetary exchange. For a very long time it was regarded as the safest centre, and it brought many advantages to us and to the trade of the country. But we are now steadily losing ground in that respect, as, I believe, a direct result of the financial policy of increasing direct taxation in this country; and we shall lose a great deal more as a result of the present Budget. The indirect result of interference with that sensitive instrument, finance, is very far-reaching, and I am afraid it has not received the consideration it deserves from the Chancellor of the Exchequer. Just imagine, for instance, what the effect would be if some foreign Government were to give a bounty of upwards of 6 per cent. on the revenue of all investments made in that particular country. It would necessarily attract capital; and, surely, if a Government does the reverse of that, if it puts a tax of upwards of 6 per cent., as this Government is doing, on the interest of capital, it must have the effect of repelling capital. They are putting a charge of more than 6 per cent. In many cases it is a charge of upwards of 13 per cent. on capital in this country. That, I think, cannot fail to have the effect of repelling the accumulation of foreign capital in this country.
I fear that when the Chancellor of the Exchequer is looking round for victims he does not fully consider the far-reaching effects of his policy. Like the thrush on the lawn looking for his breakfast worm, he merely considers where he can find an easy victim. He seeks one who cannot protect himself, owing to his not having control of a large number of votes, and, consequently, We have these proposals which unduly penalise directly a small portion of the community, and which indirectly, I believe, are detrimental to every citizen in the country. Only the other day I had brought to my notice the case of a large private trust. It is a trust consisting entirely of foreign money. The beneficiaries are foreigners, and much of the revenue is not distributed. The greater part of it is allowed to accumulate. Hitherto, it has been the practice for that revenue to come to London and to be invested in the London market, but now, as a direct result of this Budget, instructions have been sent by the foreigners to the effect that in future the money is not to come here but is to go to a foreign bank to be invested in a foreign country. [An HON. MEMBER: "In what country?"] I believe 1410 it is to go to a Swiss bank, but in what particular way it will be invested, I cannot say, as I have no control over that matter. That illustrates the way in which foreign money is being deflected from our markets, owing to what I regard as the short-sighted policy of the Chancellor of the Exchequer. It should be the policy of the Chancellor of the Exchequer to encourage capital, and a policy which discourages it is, to my mind, a very short-sighted policy. When a clumsy hand is placed on the delicate machinery of finance, it does much harm, and, in my opinion, the injury caused by this Budget is going to be very far-reaching. It is not of a kind, however, which the ordinary elector can at once understand. It will do a great deal of injury to our commerce and our wage-earners, but that is only what one would have expected from a Budget which, in my opinion, is the illegitimate offspring of class prejudice and financial ignorance.
§ Mr. ELLIS DAVIES
We have been told by the hon. Member for Brentford (Mr. Joynson-Hicks) that one effect of the increase of the Income Tax will be to reduce purchasing capacity in this country, and that he, for instance, had had to consider whether or not he could invest his money in a new motor car, and had decided against so doing at present. The hon. Member who has just resumed his seat has also been criticising the effect of the increase of the Income Tax, and he suggests the effect would not be to reduce expenditure, but that it will have the effect of making him invest far more money in foreign countries. As a matter of fact, that process has been going on for years, and in the past we have comforted ourselves with the reflection that if that exportation of money was going on it took the form of goods. During the last three years no less a sum than £137,000,000 has been exported in gold, and, consequently, this country has not had the benefit of exporting goods to the value of that sum. If that be so, then I submit to the House, whether it be by way of Income Tax or of Death Duty, anything which reduces the exportation of gold from this country must ultimately help us; it will increase the amount of work in this country, and consequently wages, and steady the home markets. But this increase of Income Tax is to be enforced for two objects: first, to provide the new services of which we have heard; and, secondly, to give relief to the local ratepayers. I am rather sorry that 1411 a suggestion thrown out by an hon. Gentleman opposite has not been adopted, and that a part, at least, of this money is not to be obtained by the imposition of a local Income Tax. An hon. Member on this side this afternoon suggested a Land Tax as another source of revenue. But the difficulty with regard to that is that if you are going to respect existing contracts, then the occupier will of necessity have to pay. I should be glad if anyone could show that it would not operate in that way. I do not object to the proposals made here, but I do think the House ought to consider the question of the imposition of local, rather than of a general, Income Tax for meeting local expenses, because at the present moment the system by which we levy the money required for local purposes is unfair to the poorer classes—to the poor householder, for instance, who pays more than a fair proportion of his income and thus has to pay more in proportion to his income than any other class in rates. It is also unfair to tradesmen and to persons with large families.
§ Mr. DEPUTY-SPEAKER
I do not think that that argument is relevant. We are now dealing with the Income Tax alone, and the hon. Member is not entitled to deal with the question of local rating.
§ Mr. ELLIS DAVIES
I am only pointing it out as a reason for adopting the suggestion made this afternoon for the imposition of a local Income Tax. If you tell me, however, that it is not in order to point out the advantages of a local Income Tax as against rating, I cannot pursue the subject further. But the point I am making is this: that the imposition of a local Income Tax would be a much fairer method of obtaining money for local purposes than the present method. A local Income Tax would be based upon his ability to pay rather than upon his necessities. In the same way a professional man who makes a large income in a small office would be compelled to contribute according to his abilities, instead of as at present escaping with an exceeding small contribution to the local rates, while the tradesman and family man who must occupy large premises or houses are mulcted in heavy rates. I need not add I am not only in sympathy with, but I heartily support the proposals of the Chancellor of the Exchequer, and I only hope that the new services which are to be created will secure relief to the ratepayer.
§ Sir J. D. REES
I have been asked to represent the case of a class I am supposed to represent, in regard to the allowance for children to those whose income is less than £500 a year, and I want to urge that that should be extended at least to persons having an income of £1,000. At the moment I really have in mind the retired Indian official. He probably is as poor, if he has no resources besides his pension, as any man can possibly be. Such a man will probably want to give his children the same advantages as he had before he entered the public service. He is really very hard hit by this extra 2d. on the Income Tax, and the man with £1,000 a year and four children would be far worse off, perhaps, than a man with £500 a year and two children, provided he wanted to send his children, as he might reasonably desire, to a public school and, possibly, a university. There is here a really very hard case. Although it was mentioned by one of my hon. Friends, the Chancellor of the Exchequer paid no attention to it in his reply. I ask the Financial Secretary to the Treasury to represent this hard case to his chief. I do not know what the argument against it is. I can see none. Upon the point of taxing incomes which accrue abroad and are not brought into this country, may I ask on what principle those incomes should be taxed, because ex hypothesi they do not obtain the protection of the law of this country—they owe nothing to Great Britain, its Parliament, its Army, its Navy, or anything that belongs to Great Britain. It might happen in the case of a British Colony or British Possession that if money were remitted from someone in England to someone there, it would be fair in that case that the Income Tax should be paid, because there it would have the protection of the two Governments and of the two Legislatures. But if the Chancellor of the Exchequer is going to tax incomes which accrue abroad and are never brought into this country, I do not know why they are being taxed, or what is the justice of taxing them. It might be desirable to get as many taxes as possible for the British Exchequer, but I presume some justice should govern the principle upon which they are based.
As regards the Income Tax on companies, I would urge that it should be paid upon dividends and not upon profits. It frequently happens in regard to a company that it pays no dividend perhaps for years and is really at a loss every year on 1413 its balance sheet, although it may have to show a profit upon the profit and loss account. That is really not fair to the company or to the shareholders, and it is a grievance which urgently requires to be amended. As to the rest, I regard this extra 2d. on the Income Tax as part of the usual procedure of an electoral bribe, which is represented as being taken from one class that is financially separate from another class, and, for that reason, it appears to be an extremely immoral proceeding. My right hon. Friend (Mr. A. Chamberlain) suggested that as this money was to be spent to a great extent for the benefit of the poorer classes, a part of the taxes should fall upon them. So far as the poor of my own Constituency is concerned, I do not think that can be done, because they have already, owing to the compulsory contributions under the Insurance Act, been so ground down that they have no money left for the payment of any contribution of that sort, however just and proper it may be in principle. The Chancellor of the Exchequer has, in fact, created a deficit. He has then doubled it by putting into the Budget new propositions, each one of which should have come before the House separately on its own merits, and he has then proceeded to levy the whole of the doubled amount on one class of the taxpayers, a class which he believes, probably with great justice, has the lowest possible opinion of his financial capacity and of his political principles. The Income Tax is already over high. I have been asked to bring forward these particular points by retired public servants, who live upon small incomes, and who are put to the greatest straits to educate their children and to pay these taxes, which are now imposed for what is called social reform. Although the Chancellor of the Exchequer is not here, I urge the Financial Secretary to the Treasury to bring before him these cases in order that justice may be done to them.
§ Mr. GRANT
I will not follow my hon. Friend on the points he has touched upon, much as I agree with him in everything he has said. One of the most interesting conclusions with regard to the whole discussion is the fact that one of the great parties in the State seem to accept the fact that the Income Tax is to be a regular tax, and in no way to be looked upon as a source of income in great emergencies. I do not question for one moment the sincerity of the Government or of the Chancellor of 1414 the Exchequer, especially in his underlying ideas and his financial policy. He thinks that he can benefit the many by taxing the few. It seems to be an accepted policy now that you can, with advantage to the whole community, tax a few rich people, and in that way give certain benefits to the poorer classes. In that policy the right hon. Gentleman is supported by those immediately connected with him, and he is, of course, enthusiastically supported by hon. Members on the Labour Benches, who would go a great deal further than the right hon. Gentleman has led us to understand he is at present prepared to advance. The time has come when Parliament ought to come to some conclusion as to how far we can go in that direction with advantage to the whole community. Hon. Members who sit below the Gangway opposite put no limits on the extent to which they will go. The hon. Member for Blackburn (Mr. Snowden) took the instance of a man with £10,000 a year, and said that if you took £1,000 a year from him, he would still have £9,000, and could live in luxury, and that if you took £5,000 from him he could still live in luxury. No one questions the fact, and one could go a great deal further than that, but it is hardly the point before us when we are discussing our national finance.
It is not a question of individuals, but a question of how, by our financial policy, we can give the greatest benefit to the whole of the communtiy, and the Chancellor of the Exchequer, if he looked at the matter from a statesmanlike point of view, ought to consider how by his financial policy he can best assist the community as a whole. The hon. Member for Blackburn takes an extreme view, and believes that you can go very much further than the Chancellor of the Exchequer does, but if his idea were adopted it would certainly mean that you would do away with the man of unusual ability, who creates large industries in this country, gives a vast amount of employment, and who adds enormously to the wealth of the country, and, in that way, adds to the taxable capacity of the country in the future. I think one complaint we can make of the right hon. Gentleman's policy in regard to finance is that he never from first to last, as far as I know his policy, has done anything to encourage or to extend the taxable capacity of the country. He has rather gone in the opposite direction, and 1415 any man who really looks to the future ought to see that any action he takes is not depriving the country of its capacity for taxation in the future. I should not have referred to the speech of the hon. Member (Mr. Snowden) if it had not been made as a serious contribution to the Debate by a leader of thought in a certain section of the House, and I do not think the immediate followers of the Government really go as far as he does, although the Chancellor of the Exchequer has, I think, fallen a good way down the Socialist hill without very much attempt to put the brake upon him by his supporters. But I think the country has a right to know how far he is going to go. Quite apart from the harm or the good that such a policy may do, one must realises that it creates a great feeling of uncertainty in those financial and commercial centres where security is a very fundamental essential. A Socialistic policy like this gives this feeling of insecurity, which is extremely detrimental to the very best interests of the country. I think, on the whole, it would have been better if the Chancellor of the Exchequer had gone even further than he has done in imposing these new taxes, if at the same time he could have assured the country that in the future he would not go any further in that direction. That would give a feeling of security to the great commercial and financial interests of the country.
To give a short illustration, by the financial policy of the Chancellor of the Exchequer royalties are taxed. I do not agree myself with the morality of taxing royalties. I look upon it as a most direct tax upon capital. I do not think, when one realises that the policy of hon. Members below the Gangway is to tax royalties to the extent of 20s. in the £, you can expect owners of royalties to develop their property. There is nothing more important to my mind than the great housing question. It is a question which comes before owners of royalties who wish to develop their properties. I do not think any very serious complaint should be made against the large royalty owners of not doing their duty as owners
§ of property. But when you commence to tax royalties, you can go a great deal further. Hon. Members opposite are supported by Members below the Gangway, and the time may come when they will have a deciding vote in this House, and then royalty owners have this feeling of insecurity and cannot invest their money with the certainty that they will always possess this property, and it may conceivably pass from them. You do distinct damage to the general welfare of the country by taxes of this sort and not letting the country know how far you are prepared to go. It is generally slipping away, and no man knows where he will come to, and he always has that feeling of insecurity which is so detrimental, not only to himself—that is a small matter—but to those who are dependent upon him and the general welfare of the country. Take in your mind's eye a picture of a community of rich men and middle men and poor men. Undoubtedly you have a certain amount of equalling up to do. You take so much from the rich man and level up the poor man, but you cannot go as far as hon. Members below the Gangway. However, there must be some point which is good for the country. I submit that the right hon. Gentleman already has gone too far, and that in his desire to make the rich man poorer he has not made the poor man richer. He has made the poor man poorer, and, in doing so, he has lowered the financial status of this country, and, from all I have heard from hon. Members opposite, nothing has gone to disprove that. I only wish we could hear some argument from an hon. Member opposite who would tell us how this taxation is really going to benefit the community.
§ Mr. EDGAR JONES
I hoped some time ago that the Committee would have come to a decision upon this Resolution. [HON. MEMBERS: "Divide!"] If hon. Members on the other side will not get up, I will sit down immediately.
§ Question put, "That this House doth agree with the Committee in the said Resolution."
§ The House divided: Ayes, 248; Noes, 123.1419
|Division No. 104.]||AYES.||[9.53 p.m.|
|Abraham, William (Dublin, Harbour)||Allen, Rt. Hon. Charles P. (Stroud)||Barran, Sir John N. (Hawick Burghs)|
|Addison, Dr. Christopher||Arnold, Sydney||Barran, Rowland Hurst (Leeds, N.)|
|Adkins, Sir W. Ryland D.||Baker, Joseph Allen (Finsbury, E.)||Beauchamp, Sir Edward|
|Agnew, Sir George William||Balfour, Sir Robert (Lanark)||Beck, Arthur Cecil|
|Alden, Percy||Baring, Sir Godfrey (Barnstaple)||Benn, W. W. (T. Hamlets, St. George)|
|Allen, Arthur A. (Dumbartonshire)||Barnes, George N.||Bentham, George Jackson|
|Black, Arthur W.||Higham, John Sharp||Parker, James (Halifax)|
|Boland, John Plus||Hinds, John||Parry, Thomas H.|
|Booth, Frederick Handel||Hobhouse, Rt. Hon. Charles E. H.||Pearce, Robert (Staffs, Leek)|
|Bowerman, Charles W.||Hodge, John||Philipps, Col. Ivor (Southampton)|
|Boyle, Daniel (Mayo, North)||Hogge, James Myles||Phillips, John (Longford, S.)|
|Brady, Patrick Joseph||Holmes, Daniel Turner||Pirie, Duncan V.|
|Brocklehurst, W. B.||Holt, Richard Durning||Pratt, J. W.|
|Brunner, John F. L.||Howard, Hon. Geoffrey||Price, C. E. (Edinburgh, Central)|
|Bryce, J. Annan||Hughes, Spencer Leigh||Price, Sir Robert J. (Norfolk, E.)|
|Buckmaster, Sir Stanley O.||John, Edward Thomas||Pringle, William M. R.|
|Burns, Rt. Hon. John||Jones, Edgar (Merthyr Tydvil)||Radford, George Heynes|
|Burt, Rt. Hon. Thomas||Jones, H. Haydn (Merioneth)||Raffan, Peter Wilson|
|Byles, Sir William Pollard||Jones, J. Towyn (Carmarthen, East)||Rea, Rt. Hon. Russell (South Shields)|
|Carr-Gomm, H. W.||Jones, Leif (Notts, Rushcliffe)||Rea, Walter Russell (Scarborough)|
|Cawley, Sir Frederick (Prestwich)||Jones, William (Carnarvonshire)||Reddy, Michael|
|Cawley, Harold T. (Lancs., Heywood)||Jones, William S. Glyn-(Stepney)||Redmond, John E. (Waterford)|
|Chancellor, Henry George||Jowett, Frederick William||Redmond, William (Clare, E.)|
|Chapple, Dr. William Allen||Joyce, Michael||Redmond, William Archer (Tyrone, E.)|
|Clancy, John Joseph||Kelly, Edward||Rendall, Athelstan|
|Clough, William||Kilbride, Denis||Richardson, Albion (Peckham)|
|Collins, Sir Stephen (Lambeth)||King, Joseph||Richardson, Thomas (Whitehaven)|
|Condon, Thomas Joseph||Lambert, Rt. Hon. G. (Devon, S. Molton)||Roberts, Charles H. (Lincoln)|
|Cornwall, Sir Edwin A.||Lambert, Richard (Wilts, Crickiade)||Roberts, George H. (Norwich)|
|Cory, Sir Clifford John||Lardner, James C. R.||Roberts, Sir J. H. (Denbighs)|
|Cotton, William Francis||Lawson, Sir W. (Cumb'rld, Cockerm'th)||Robertson, John M. (Tyneside)|
|Cowan, W. H.||Levy, Sir Maurice||Robinson, Sidney|
|Craig, Herbert J. (Tynemouth)||Lewis, Rt. Hon. John Herbert||Roch, Walter F. (Pembroke)|
|Crumley, Patrick||Lundon, Thomas||Roche, Augustine (Louth)|
|Cullinan, John||Lynch, Arthur Alfred||Roe, Sir Thomas|
|Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)||Macdonald, J. Ramsay (Leicester)||Rowlands, James|
|Davies, David (Montgomery Co.)||Macdonald, J. M. (Falkirk Burghs)||Russell, Rt. Hon. Thomas W.|
|Davies, Ellis William (Eifion)||McGhee, Richard||Samuel, J. (Stockton-on-Tees)|
|Davies, Timothy (Lincs., Louth)||Maclean, Donald||Scanlan, Thomas|
|Davies, Sir W. Howell (Bristol, S.)||Macnamara, Rt. Hon. Dr. T. J.||Seely, Rt. Hon. Colonel J. E. B.|
|Dawes, James Arthur||MacNeill, J. G. Swift (Donegal, South)||Sheehy, David|
|Delany, William||Macpherson, James Ian||Simon, Rt. Hon. Sir John Allsebrook|
|Denman, Hon. Richard Douglas||MacVeagh, Jeremiah||Smith, Albert (Lancs., Clitheroe)|
|Devlin, Joseph||M'Callum, Sir John M.||Smith, H. B. Lees (Northampton)|
|Dewar, Sir J. A.||McKenna, Rt. Hon. Reginald||Smyth, Thomas F. (Leitrim, S.)|
|Dillon, John||M'Laren, Hon. F. W. S. (Lincs., Spalding)||Snowden, Philip|
|Donelan, Captain A.||Marks, Sir George Croydon||Spicer, Rt. Hon. Sir Albert|
|Doris, William||Marshall, Arthur Harold||Sutherland, John E.|
|Duffy, William J.||Meagher, Michael||Swann, Rt. Hon. Sir Charles E.|
|Duncan, C. (Barrow-in-Furness)||Meehan, Francis E. (Leitrim, N.)||Taylor, John W. (Durham)|
|Duncan, J. Hastings (Yorks, Otley)||Meehan, Patrick J. (Queen's Co., Leix)||Taylor, Theodore C. (Radcliffe)|
|Edwards, Sir Francis (Radnor)||Millar, James Duncan||Taylor, Thomas (Bolton)|
|Edwards, John Hugh (Glamorgan, Mid)||Molloy, Michael||Thomas, J. H.|
|Elverston, Sir Harold||Mond, Rt. Hon. Sir Alfred||Toulmin, Sir George|
|Esmonde, Dr. John (Tipperary, N.)||Money, L. G. Chlozza||Trevelyan, Charles Philips|
|Esmonde, Sir Thomas (Wexford, N.)||Montagu, Hon. E. S.||Verney, Sir Harry|
|Essex, Sir Richard Walter||Mooney, John J.||Walton, Sir Joseph|
|Falconer, James||Morgan, George Hay||Warner, Sir Thomas Courtenay T.|
|Farrell, James Patrick||Morison, Hector||Wason, Rt. Hon. E-(Clackmannan)|
|Fenwick, Rt. Hon. Charles||Morton, Alpheus Cleophas||Wason, John Cathcart (Orkney)|
|Ffrench, Peter||Muldoon, John||Watt, Henry A.|
|Field, William||Munro, Rt. Hon. Robert||Webb, H.|
|Flavin, Michael Joseph||Murphy, Martin J.||White, J. Dundas (Glasgow, Tradeston)|
|Furness, Sir Stephen Wilson||Murray, Captain Hon. Arthur C.||White, Patrick (Meath, North)|
|Gelder, Sir W. A||Nannetti, Joseph P.||Whittaker, Rt. Hon. Sir Thomas P.|
|George, Rt. Hon. D. Lloyd||Needham, Christopher T.||Whyte, Alexander F. (Perth)|
|Gill, A. H.||Nolan, Joseph||Wilkie, Alexander|
|Gladstone, W. G. C.||Nugent, Sir Walter Richard||Williams, Aneurin (Durham, N. W.)|
|Glanville, Harold James||Nuttall, Harry||Williams, John (Glamorgan)|
|Goldstone, Frank||O'Brien, Patrick (Kilkenny)||Williams, Penry (Middlesbrough)|
|Greig, Colonel J. W.||O'Connor, John (Kildare, N.)||Wilson, Hon. G. G. (Hull, W.)|
|Griffith, Ellis Jones||O'Connor, T. P. (Liverpool)||Wilson, John (Durham, Mid)|
|Guest, Hon. Frederick E. (Dorset, E.)||O'Doherty, Philip||Wilson, Rt. Hon. J. W. (Worcs., N.)|
|Gwynn, Stephen Lucius (Galway)||O'Donnell, Thomas||Wilson, W. T. (Westhoughton)|
|Hackett, John||O'Dowd, John||Winfrey, Sir Richard|
|Harcourt, Robert V. (Montrose)||O'Kelly, Edward P. (Wicklow, W.)||Wing, Thomas Edward|
|Harvey, T. E. (Leeds, West)||O'Kelly, James (Roscommon, N.)||Wood, Rt. Hon. T. McKinnon (Glasgow)|
|Haslam, Lewis (Monmouth)||O'Malley, Wiliam||Yeo, Alfred William|
|Havelock-Allan. Sir Henry||O'Neill, Dr. Charles (Armagh, S.)||Young, William (Perthshire, East)|
|Hayden, John Patrick||O'Shaughnessy, P. J.||Yoxall, Sir James Henry|
|Hayward, Evan||O'Shee, James John|
|Hazleton, Richard||O'Sullivan, Timothy||TELLERS FOR THE AYES.—Mr.|
|Helme, Sir Norval Watson||Outhwaite, R. L.||Illingworth and Mr. Gulland.|
|Herbert, General Sir Ivor (Mon., S.)||Palmer, Godfrey Mark|
|Amery, L. C. M. S.||Baird, John Lawrence||Barnston, Harry|
|Anstruther-Gray, Major William||Banbury, Sir Frederick George||Barrie, H. T.|
|Ashley, Wilfrid W.||Baring, Major Hon. Guy V. (Winchester)||Bathurst, Charles (Wilts, Wilton)|
|Beach, Hon. Michael Hugh Hicks||Hall, D. B. (Isle of Wight)||Pollock, Ernest Murray|
|Beckett, Hon. Gervase||Hall, Frederick (Dulwich)||Pryce-Jones, Colonel E.|
|Benn, Ion Hamilton (Greenwich)||Hamilton, C. G. C. (Ches., Altrincham)||Randles, Sir John S.|
|Bird, Alfred||Harrison-Broadley, H. B.||Rawson, Colonel R. H.|
|Boyton, James||Henderson, Major H. (Berks, Abingdon)||Rees, Sir J. D.|
|Bridgeman, William Clive||Herbert, Hon. A. (Somerset, S.)||Roberts, S. (Sheffield, Ecclesall)|
|Bull, Sir William James||Hewins, William Albert Samuel||Rutherford, Watson (L'pool, W. Derby)|
|Butcher, John George||Hill-Wood, Samuel||Samuel, Sir Harry (Norwood)|
|Campbell, Captain Duncan F. (Ayr, N.)||Hohler, Gerald Fitzroy||Sanders, Robert Arthur|
|Campion, W. R.||Hope, Harry (Bute)||Sanderson, Lancelot|
|Carlile, Sir Edward Hildred||Hope, James Fitzalan (Sheffield)||Sandys, G. J.|
|Cautley, Henry Strother||Horner, Andrew Long||Smith, Harold (Warrington)|
|Cave, George||Hume-Williams, William Ellis||Spear, Sir John Ward|
|Chaloner, Colonel R. G. W.||Hunt, Rowland||Stanley, Hon. G. F. (Preston)|
|Chamberlain, Rt. Hon. J. A. (Worc'r., E.)||Hunter, Sir Charles Rodk.||Starkey, John R.|
|Clive, Captain Percy Archer||Ingieby, Holcombe||Swift, Rigby|
|Clyde, J. Avon||Jardine, Ernest (Somerset, East)||Talbot, Lord Edmund|
|Coates, Major Sir Edward Feetham||Kerr-Smiley, Peter Kerr||Terrell, G. (Wilts, N. W.)|
|Cooper, Sir Richard Ashmole||Kerry, Earl of||Terrell, Henry (Gloucester)|
|Courthope, George Loyd||Kyffin Taylor, G.||Touche, George Alexander|
|Craig, Ernest (Cheshire, Crewe)||Lane-Fox, G. R.||Tryon, Captain George Clement|
|Craig, Norman (Kent, Thanet)||Larmor, Sir J.||Walrond, Hon. Lionel|
|Currie, George W.||Lloyd, George Butler (Shrewsbury)||Watson, Hon. W.|
|Denison-Pender, J. C.||Locker-Lampson, G. (Salisbury)||Weigall, Captain A. G.|
|Denniss, E. R. B.||Lockwood, Rt. Hon. Lt.-Colonel A. R.||Weston, Colonel J. W.|
|Dixon, C. H.||Lowe, Sir F. W. (Birm., Edgbaston)||Wheler, Granville C. H.|
|Duke, Henry Edward||Lyttelton, Hon. J. C.||Williams, Colonel R. (Dorset, W.)|
|Du Pre, W. Baring||Mackinder, H. J.||Willoughby, Major Hon. Claud|
|Eyres-Monsell, Bolton M.||Magnus, Sir Philip||Wilson, A. Stanley (Yorks, E. R.)|
|Fell, Arthur||Mount, William Arthur||Wilson, Captain Leslie O. (Reading)|
|Fitzroy, Hon. Edward A.||Neville, Reginald J. N.||Wilson, Maj. Sir M. (Bethnal Green, S. W.)|
|Foster, Philip Staveley||Newdegate, F. A.||Wood, John (Stalybridge)|
|Gibbs, George Abraham||Nicholson, William G. (Petersfield)||Worthington Evans, L.|
|Gilmour, Captain John||Ormsby-Gore, Hon. William||Yate, Colonel Charles Edward|
|Glazebrook Captain Philip K.||Paget, Almeric Hugh||Younger, Sir George|
|Goldman, C. S.||Parkes, Ebenezer|
|Gordon, Hon. John Edward (Brighton)||Peel, Lieut.-Colonel R. F.||TELLERS FOR THE NOES.—Sir|
|Grant, J. A.||Perkins, Walter F.||John Harmood-Banner and Mr. M.|
|Gretton, John||Pole-Carew, Sir R.||Barlow|
|Haddock, George Bahr|