SUPER-TAX. (Hansard, 14 May 1914)

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu)
I beg to move, in Sub-section (a) after the word "for" ["for the remainder of the excess: one shilling and four pence"], to insert the words "every pound of."
With your permission, Mr. Speaker, and the permission of the House, I beg to move this Amendment. It does not in the least alter the effect of the Resolution, but clears up an ambiguity which I was astonished to see had arisen in the minds of one or two people. By referring to the last line of Section (a) in the Resolution, it reads: "For the remainder of the 1430 excess." No one can have thought for one moment that the whole of the excess was to be covered by the payment of 1s. 4d., and, in order that there may be no ambiguity, I beg to move this Amendment.

§ Mr. WORTHINGTON EVANS
I want to ask the Chancellor of the Exchequer whether, in order to let the public know what the effect really is, he would alter the form of his Resolution so as to make the tax payable on the net amount income actually received. I would remind the Chancellor of the Exchequer that the Super-tax falls, not upon what is actually received, but upon what is received as a net income, plus a multiple of one-sixteenth, which represents the Income Tax paid upon that net income. Let me give an example. Assuming the income was a multiple of £1,600, and that £100 had been paid in Income Tax, the Super-tax would not be payable upon a multiple of £1,600, but you would have to add one-sixteenth of the income—that is, £100—added to the £1,600, so as to make it £1,700, and Super-tax would have to be paid on £1,700. Therefore, it is quite deceptive to say that a Super-tax at the rate of 1s. 4d. in the £ is the maximum. It is, in fact, a Super-tax of 1s. 5d. in the £, and not 1s. 4d., that is the maximum. Where the Super-tax is 8d. in the £, so-called under this Resolution, it is in fact 8½d. in the £, because the tax is payable not upon the net income, but upon the net income plus the Income Tax. Surely it would be wiser when a tax is being made that the actual amount should be stated and not an amount which is really deceptive, and which does not give credit to the Super-tax payer. I think he is entitled to the credit of that, but by this proposal he is cheated of one-sixteenth of the credit due to him. I suggest that it is good finance and common honesty that the figures should be graduated in that way.

§ Mr. LLOYD GEORGE
The hon. Gentleman's proposal is really one for the reduction of the Super-tax. [An Hon. MEMBER: "No!"] At any rate, it is in the direction of a graduated scale. If the hon. Member looks at the White Paper and refreshes his memory, he will find that 1431 the present scale is graduated and there is no break at the Super-tax point. You might as well in the case of an income of £2,500 take the Income Tax and pay on £1,000, and then pay the balance, deducting the amount of the Income Tax. That is really a method of valuation—at any rate it is a point for the Committee and not one for the Report stage.

§ Mr. BUTCHER
I really think the right hon. Gentleman has misunderstood the point. This is not a question of graduation at all. My hon. Friend suggests that you should put into your Schedule the true amount of the percentage of Super-tax which you are levying on the net income. Suppose a man receives £1,500 in cash less his Income Tax, when he is called upon to pay Super-tax he pays not upon £1,500, but upon £1,600, or £100 more than he receives. My hon. Friend does not want to reduce the amount of the Super-tax paid, but the percentage on the net amount, so as to show a true percentage and not a fictitious one. As matters stand you are putting down a really fictitious percentage, because you are charging a tax upon money which has never been received. Would the right hon. Gentleman alter the amount paid for Super-tax so as to make it a true percentage upon the net amount received?

§ Mr. G. LOCKER-LAMPSON
I want to put one point to the Chancellor of the Exchequer. Under the present law Super-tax is a tax of the year of assessment, but for the purpose of calculation it is a tax on the income of the preceding year. Take a man with an income of £4,500, ho dies in the year of assessment and only gets half that income, namely, £2,250. Under the Re venue Act of 1912 he is allowed an abatement proportionate to the period during which he lives, and he has to pay Super-tax on £1,000, although he receives money to the extent of £2,250. I think that is a point which the Chancellor of the Exchequer might consider. There is one more point with regard to the Super-tax I should like to bring before his notice. A man with an income of £3,500, derived from employment and from investments, may in the year of assessment be deprived of his employment and merely go on receiving money from his investments, coming, say, to an income of about £2,000 a year, but in spite of that in the year of assessment he has to pay 1432 Super-tax on a sum of money which does not reach the Super-tax limit. I do not know whether the Chancellor of the Exchequer will remember these points when he comes to deal with the Revenue Bill, but I hope that he will think them worthy of consideration.

§ Mr. WATSON RUTHERFORD
When we listened to the Chancellor of the Exchequer, and he gave us the total of the Income Tax and the Super-tax on various incomes, we were, of course able to understand that a man with a very large income would be paying a tax at the rate of 2s. 7½d. upon his income, and that people with smaller incomes would be paying smaller amounts in proportion. The point I wish to draw attention to is the annoyance to the taxpaying community owing to the way in which this tax is levied, and owing to the way in which the present Chancellor of the Exchequer has divided it into two parts. All taxpayers who pay Super-tax at the present time have got to deal with two sets of officials. They first of all have got to deal with a set of officials in an entirely different office in relation to their Income Tax. It sometimes takes weeks and months to get various points cleared up and appeals disposed of. When that is done they have to deal with Super-tax. Exactly the same points are often raised, and all the annoyance, time, confusion and difficulty is doubled. I think, if his tax were frankly and straightforwardly fixed at the figure at which it is intended to be imposed in a graduated scale, so that one set of people would have to be dealt with, it would be a great boon to the commercial business community, who in these days have not got the time to waste upon getting out these particulars and going into these matters in the way in which they really ought to be dealt with if the right amounts are assessed. If he has got a certain amount of money to raise by way of Income Tax, it is the duty of the Chancellor of the Exchequer to lay that tax, and to have it imposed in such a manner as to cause the least possible annoyance and the least possible consumption of time to the various people who have got to pay the tax, whereas I contend that, under the way in which it is at present done, the exact opposite is the case.

Major WHITE
I should like to support the arguments of my hon. Friends the Members for Colchester (Mr. Worthington Evans) 1433 and York (Mr. Butcher), and to put this point to the Chancellor. In charging Super-tax on the gross, especially where the money is derived from dividends you are charging a man Super-tax on what is not his income, but is the income of the State at the moment, because it is deducted before it ever becomes his property. Therefore, you are charging a man a tax on what is really the revenue of the State at that moment. I think that it is a case the Chancellor of the Exchequer might consider in regard to the Amendment of my hon. Friend.

In respect of the first £2,500 of the income	nil
In respect of the excess over £2,500—
for every pound of the first £500 of the excess	five pence
for every pound of the next £1,000 of the excess	seven pence
for every pound of the next £1,000 of the excess	nine pence
for every pound of the next £1,000 of the excess	eleven pence
for every pound of the next £1,000 of the excess	one shilling and a penny
for every pound of the next £1,000 of the excess	one shilling and three pence
for the remainder of the excess	one shilling and four pence;