HC Deb 24 November 1914 vol 68 cc1004-29

(1) Section 133 of the Income Tax Act, 1842, and Section 6 of the Revenue Act, 1865 (which provide for the reduction of assessments or the repayment of duty in certain cases where the profits of the year of assessment fall short of the sum on which the assessment has been made) shall, notwithstanding their repeal by Section 24 of the Finance Act, 1907, have effect as respects any assessment to Income Tax for the current Income Tax year where it is proved to the satisfaction of the Commissioners by whom the assessment has been made that the diminution of profits and gains on account of which relief is claimed under those Sections is due to circumstances attributable directly or indirectly to the present War, whether those circumstances are a specific cause of the diminution of income within the meaning of Section 134 of the Income Tax Act, 1842, or not; and in any case where relief can be given under this Section, the said Section 134 shall not apply.

(2) Section 59 of the Taxes Management Act, 1880 (which relates to the statement of a case on a point of law), shall apply to cases in which relief is claimed under this Section.

Sir F. BANBURY

I beg to move, in Sub-section (1), after the words "Income Tax" ["any assessment to Income Tax"], to insert the words "including Super-tax."

The right hon. Gentleman said that he would give some rebate to those Income Tax payers who found that owing to the circumstances of the moment they did not receive the income which they had returned to the Commissioners. The Super-tax payer has to return the income of the previous year. This year, in the return in which he makes about April or May, he makes it for the income he has actually received, and not for the preceding year. It may happen that in this year 1914–15 the income he will receive will not be the income which he thought he would have received if the War had not taken place, and therefore the Attorney-General very rightly promised us that he would make some concession with regard to those whose income had decreased by one-third, who would then be entitled to be charged Super-tax on the reduced amount. That seemed to be a very large reduction, and it would certainly be rather hard on the man with £900,000 a year that he should have to lose £3,000 of his income before he got any benefit from the reduction. I quite agree that a email diminution of a few hundred pounds ought not to count, but I should have thought that some diminution like one-eighth would have been very much fairer. I find to my astonishment that no Amendment has been put into the Finance Act dealing with this question. I was under the impression that the right hon. Gentleman had said that he would deal with this point in the Finance Bill in the same way in which he was going to deal with the Income Tax, but the Financial Secretary to the Treasury yesterday read out from the OFFICIAL REPORT a statement by the right hon. Gentleman, which I must have missed, to the effect that this proposal which he was then discussing with regard to the Super-tax should be dealt with by the Inland Revenue. Personally I have a very great objection to leaving these things to be dealt with by the Inland Revenue. If it is right that some concession should be made it should be made by Parliament, and we should have a knowledge of what is being done. I would point out another objection to leaving this matter to be dealt with by the Inland Revenue. Who is to know that the Inland Revenue have power to do this?

Without being in any way derogatory to the right hon. Gentleman, I venture to say that the great bulk of the people have not read his speech last Thursday, and I think it is fortunate that they have not. I fancy a very large number of solicitors have not read it, and therefore the Super-tax payer who asks a solicitor whether any concession has been made with regard to the Super-tax, that solicitor will look at the Finance Bill of this year and he will see nothing whatever in it about a concession with regard to the Super-tax, and he will say to his client, "You must have made a mistake, because there is nothing in the Finance Act about this Super-tax concession." May I also point out that the right hon. Gentleman's speech does not bind the Inland Revenue authorities, and they can throw the right hon. Gentleman over and say they are very sorry but they did not authorise him to make that speech and do not choose to abide by it. Whatever concession we are going to have let us have it in the Bill. In order that there might be some peg on which to hang a discussion, I have put down an Amendment to insert the words "including Super-tax." I was quite aware when I put this Amendment down that the right hon. Gentleman would not accept it, because it would allow the Super-tax payer to make a claim if his income was diminished in a small degree. It was late last night when I put my Amendment down, and not being learned in the law I am not good at drawing Amendments which have to meet the critical eye of the Attorney-General, and so I thought that a little tiny Amendment would be the best. I have, in order to meet the right hon. Gentleman, a manuscript Amendment which, if this is carried. I propose to move. It is to add at the end of the Section these words:— Provided that this Section shall not apply in the case of Super-tax unless the income of the year of payment falls short of the sum on which the assessment has been made by at least one-eighth. That will, I think, meet the desire of the right hon. Gentleman, except that the amount by which the income has to be diminished will be rather smaller than he proposed. He proposed a third, and I propose an eighth. I do not particularly care about the eighth. I merely put that down as a figure. I know the right hon. Gentleman will probably say that my Amendment is not framed in legal phraseology, and that I have put in "the year of payment," instead of "the year of assessment." "The year of payment" are the words which appear in the Act of 1865, but I was advised by my hon. and learned Friend, who tells me that "the year of payment" is probably better than "the year of assessment." "The year of payment" seems clearer, and therefore I intend, if my Amendment is carried, to put that in.

Sir J. SIMON

The hon. Baronet really does not quite do me justice when he asks that I should not attack his Amendment on a technical point. I understand that he moves the Amendment in order to raise a substantial point. He has made it quite plain that he is disappointed by finding the Bill as introduced does not contain any provision about Super-tax. I quite understand the inference was drawn that it should, possibly owing to the fact that I found the subject, as we all do, a rather difficult one to explain. It was intended, at any rate, that, as regards Super-tax, regulations should be made, which the Inland Revenue Commissioners would promulgate, and which, of course, must be followed by their collectors. I sympathise with the hon. Baronet when he says that so far as we can, it is better to have these things down in an Act of Parliament rather than to do them by regulation. It is a pity, however, for people always to assume that you can put into an Act of Parliament every single thing and every minute consideration which ought in common fairness to be considered by a revenue collecting authority. There are concessions as there are cases in which there ought to be give and take, which are not to be found in an Act of Parliament, but which a department doing its business in a proper way, as I believe the Inland Revenue Department undoubtedly does, would, of course, make. Still, it is quite right to say that as far as possible we ought to put the thing into the Bill, though I do not want the Committee to imagine I am suggesting this because I have not carried out what I announced. I think it is quite a reasonable request to make, but, while that is so, I must quarrel with the hon. Baronet if he says, "Do not say a 'third'; take some other fraction, say, an 'eighth.'" It must be understood if we put this in the Bill that we put in what the Committee was disposed to regard in the circumstances as a concession which was well worth having and which was what the Inland Revenue could afford.

As a matter of fact, the concession to Super-tax payers does not follow quite the same scheme as the concession to ordinary Income Tax payers, and while on the one hand it may be said to be worse for them, in another respect it is better for them. It is worse for them because you do not make any concession at all unless their income is reduced by one-third, and it is also worse for them because we are not proposing to relieve them permanently of Super-tax; we are postponing the payment of the difference. It is a question, therefore, of delaying the collection as against reducing the burden. But it is better for them, because we do not ask them to take a new average. We take this year in which they are charged, and it is this year of charge we look at for the purpose of determining whether they ought to get relief, whereas the ordinary Income Tax payer does not get relief by reference to this year of charge, but by reference to a new average which he introduces. That being so and accepting the spirit of the suggestion that it should be done in this way, I suggest to the hon. Baronet that we should not insert the words, "including Super-tax" here, but that we should leave Sub-section (1) of Clause 12 as it is and should add a new Sub-section which will make our intentions plain, and, what may be equally important, give them statutory force and effect. This is the way in which I suggest the new Subsection (2) dealing with Super-tax only, should run:— Where it is proved to the satisfaction of the Commissioners for the special purposes of the Acts relating to Income Tax that the actual income from all sources of any individual charged to Super-tax for the current Income Tax year is or will be less than two-thirds of the income on which he is liable to be so charged he shall be entitled to postpone the payment of so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be assessed and the tax which would have been payable by him if he had been assessed on his actual income, and any amount of which the payment is so postponed shall, subject to any provisions which may be made by Parliament, become payable on the 1st day of January, 1916. That puts in statutory form the three things which I suggest. First, it says no relief to Super-tax payer unless he satisfies the Special Commissioners that his actual total income this year is two-thirds or less of the figure on which he is assessed for Super-tax. Secondly, it says, if he shows that, he shall only be asked to pay this year the Super-tax that he would be liable for if he were assessed on the total income which he had actually got. And, thirdly, it says we do not cancel the difference, but we postpone it. We will not collect it this year. Consequently it will become, subject to any provision Parliament makes in the meantime, payable in the year 1916. Whether that is adequate or not, it states quite clearly and fairly what I suggested the other day, and, if we do it in that way, we shall have it on the face of the Bill. If that would carry out what the hon. Baronet has in mind, I should be prepared to move it. I hope he may be prepared to withdraw his Amendment. Then we should all agree that we should have the thing on the face of the Statute, which I think is what he desires.

Mr. RAWLINSON

I am very much, indebted to the Attorney-General for inserting in the Bill that which he promised to us in a very vague form the other night, but the Amendment which we have now got in writing is, as I thought at the time, a most illusory Amendment and one exceedingly difficult to work. The Attorney-General, who is very accurate in all these matters, says that the question of average does not come into the question of the Super-tax at all. It certainly does.

Sir J. SIMON

I never said anything of the kind.

Mr. RAWLINSON

Yes, certainly. The right hon. Gentleman said that it was an advantage.

Sir J. SIMON

I never really said anything of the kind. I pointed out, in the case of the ordinary Income Tax payer who in this present year finds that his income has dropped below the sum on which he is charged, that he will not get relief on the basis of his actual income this year, but he will have to bring it into an average which will not only take in this year but also last year and the year before. I also said, as regards the Super-tax payer, that if he comes within this concession at all, the effect of the concession is not to use his actual total income this year in order to secure an average, but to use it as a figure in respect of which he is going to pay, apart from any average.

Mr. RAWLINSON

I quite understand that, and I am very much obliged to the right hon. Gentleman for putting it even more clearly than he did before. Of course, the Super-tax payer has equally, as far as he is an Income Tax payer, to deal with averages. Look at the difficulty in which he is placed. The Super-tax payer is assessed nominally for the year up to the 5th April last. Super-tax payers are assessed at the present moment presumably for money which has been received or has been earned up to 5th April last. The concession made by the Government is that if you can show that in the existing year—nominally up to the 5th April next, 1915—there has been a drop in your income you are then to get this concession. How is a Super-tax payer to know that his income up to 5th April next is going to be diminished by one-third? He has to pay from the 1st January. It is difficult enough if he is a person who earns a business income and has got to get his average there, but when you come to Super-tax payers it is an impossibility. Supposing for the moment that I am a Super-tax payer called upon to pay on the 1st January. How can one possibly deal with the question whether or not his income of the present year has been reduced by one-third? I put that to any fair-minded person as being a practical impossibility. The result is that the Super-tax payer must pay on the whole amount on the 1st January, because no Commissioner has power to do otherwise than make him pay. I protest most strongly against this loose method we have been having lately of giving instructions to permanent officials to do that which they have no power to do by Act of Parliament. No Inland Revenue Commissioner has the slightest power—the Attorney-General knows that as well as anybody—not to enforce on the 1st January payment from Super-tax payers who cannot prove that there has been a reduction of one-third between 5th April, 1914, and 5th April, 1915. This is the position, and therefore a man has to pay on the 1st January.

But when it comes to the 5th April, what concession is the Government making? If the man can show there has been a reduction of one-third of his income during this particular year, what is going to happen? He will have paid it to the 1st January, and he will have the trouble and annoyance of proving to some Commissioners that his income has been reduced by one-third. After he has done that he may probably get an order for a reduction of the amount, and for repayment, if he is lucky. There is no power, as far as I can see in this Section, to give a rebate, but, later on, we can deal with that point. If he works hard he may get his repayment by about July; otherwise the matter may go over the Long Vacation, and the repayment will be delayed until September or October. The whole amount is payable on the 1st January following, and that is the concession which is given to the Super-tax payer. I do not suppose that the Super-tax payer meets with much sympathy, either in this or in the other House. I do not suppose that I have more sympathy with him than any other of His Majesty's subjects. But even a criminal is entitled to some sort of justice, and, at all events, when you are doing him justice, you should not pretend that you are letting him off easily when you are doing nothing of the kind. I submit that this Super-tax Amendment is illusory in its character. I will deal with the details when the Amendment comes under discussion. All I will say at the present moment is, that the thanks of the House are due to my hon. Friend the Member for the City of London for the action he has taken, although he has attacked the lawyers severely, and even I, who drafted this Amendment, have not escaped his criticism.

Mr. DAVID MASON

I do not think the hon. and learned Gentleman who has just spoken has really grasped the point at issue. It must be perfectly clear to any Super-tax payer that his payment is based on his income as assessed under Schedule D. Further than that, in the great majority of cases, people make up their books to the 31st December, and even if, in some few cases, the books are made up to the 31st March, it surely will be easy to make an estimate for those three months on the basis of the income for the preceding nine months. Very definite instructions are given that the assessment shall be based on the last balance sheet, and therefore many of the difficulties which the hon. and learned Gentleman suggested are quite imaginary.

Mr. RAWLINSON

This has reference to Income Tax, not to Super-tax.

Mr. DAVID MASON

Super-tax is, equally with Income Tax, based on Schedule D, and any gentleman who has the great privilege of paying Super-tax will confirm what I say, that the Super-tax assessment is based on Schedule D. I do not think there need be any difficulty whatever in this matter, and I submit that the explanation of the Attorney-General is perfectly clear and lucid.

Sir F. BANBURY

I wish to ask leave to withdraw my Amendment. The explanation of the Attorney-General may be satisfactory in spirit, but I hardly think it is quite adequate in fact.

Amendment, by leave, withdrawn.

Mr. J. M. HENDERSON

I beg to move, at the end of Sub-section (1), to add the following Sub-section:— (2) Provided that in the case of members of the Territorial and other Forces of the Crown, engaged in any profession or business at the time when they are called up for military or other service, there shall be deducted from the amount of their assessment for Income Tax on earned income, such portion of such assessment as they shall prove to the satisfaction of the Commissioners they have been unable to earn by reason of such military or other service of the Crown. I do not want to repeat what I said last night, but, as a matter of fact, we all know many men who are in the Territorial and other Reserve Forces, men engaged in business, who, as from the 1st August, closed their businesses or offices and have not since been able to earn a single penny piece at their business or profession. All I ask—and I am sure the House will readily grant it—is that these men should not be damnified by having to pay tax for an income which they have not had the power of earning, by reason of their service under the Crown. The only argument which could be used against that proposal would be that it will deplete the Treasury of so much money, and, as we need money, we are bound to get it as well as we can. But that argument ought not to be employed in cases of this nature. These men have left comfortable homes; they have shut up their offices, they have faced the anxiety and perils of the campaign, and many have been wounded and probably will never be quite the same men again. I think we ought, in justice, to say to them, "We will not charge you with any Income Tax in respect of that period during which you have been clearly unable to earn an income."

Sir J. SIMON

I think every Member of the Committee will have full sympathy with the subject of my hon. Friend's proposal, and certainly everybody will warmly share the spirit in which he expresses it. The question really is, not whether the class of citizens to whom he refers are worthy of special relief, but what is the best way in which to give it. We do not differ in the least in the view which the hon. Member has so well expressed, and, really, when you say that the Income Tax and the Super-tax is the contribution which those who sit at home must pay in an unusual degree, as their share in the international struggle, then those who are already making their contribution out in the field and in the trenches can hardly be treated in the same manner. That is perfectly natural and right, but it is not easy to find the best way in which to secure that end. My hon. Friend has, I see, realised that it would not do to confine his proposal to the members of the Territorial Force, and proposes to include the other forces of the Crown. That would appear to be quite right, but I doubt whether it ought to be limited to those called up for military service. I do not see, if we are making this concession, why it should not also be granted to those serving in the Fleet just as much as to those who are serving the country in the ranks of the Army. We ought to include the Navy as well as the Army in everything that we do.

Then there is a further extension which I should like to suggest. Although we naturally think first of all of the soldiers and the sailors who are serving, either as officers or men, at this time, it appears to me that the principle on which the hon. Gentleman wishes to apply is one that might very well be extended, under all proper limitations, to those who are not themselves actually serving as officers or men in the armed Forces of the Crown, but to those who, none the less, are a very essential part of the active contribution which professional people are making at the front. Therefore I propose to make the Clause—if I am allowed—to cover the cases of those who are working outside the United Kingdom for the British Red Cross Society or the St. John's Ambulance Association. Some of the very hardest cases are the cases of doctors who have sacrificed not merely their income for the time being but all that continuous professional connection means in the case of a medical man. They have sacrificed all that, and have gone away without a moment's hesitation: they have given up their ordinary professional prospects in order to help to tend the wounded at the front.

What I want to propose is to bring in any person who, during the present War, has been serving not as a member of any military or naval force of the Crown, but in any work at the front, with the British Red Cross Society, the St. John's Ambulance Association, or any other body with a similar object. The question is: What is the best way to do that? I think that, in substance, what my hon. Friend proposes is quite right, but the suggestion I am making is that we shall go a little further. I apologise to the Committee for going into technical points. But it will be remembered that the concession contained in Clause 12 of this Bill was based on this, that as far as cases which come within it are concerned, you revive a combination Section—Section 133 of the Act of 1842, and Section 6 of the Act of 1865. We are reviving the two in combination, and we say to ordinary people, we cannot take the income of the present year as the figure upon which we are going to charge you, but we will allow you to bring it in in certain cases for the purpose of the assessment. It seems to me that what we ought to do in the cases of those who are within the Clause which is now suggested, is to say to them, "We do not ask you to make any average at all; take your income for this year just at what it is, neither more

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nor less, and you may substitute that for any other figure which would be the figure on which, otherwise, you would be assessed." If we do that, then the officer, soldier, sailor, or doctor, even although the latter may belong to the British Red Cross Society or some kindred organisation and not be actually under military law, will at the end of their period of service for their country be granted relief according to the time during which they have been so working. If they are able to show that for a larger part of the year they have not carried on their ordinary engagements, we shall proportion the relief to the actual amount the man has earned. That will be effective if we add some words at the end of this Clause. I may say that the right hon. Gentleman opposite (Mr. Chamberlain) has been good enough to see that they cover the ground, and we are indebted to him for giving us the benefit, in this and other matters of detail, of his great experience. What we should like to do is this: We should like to say that the provisions of this Clause, in its aplication to the case of any person who in connection with the present War is or has been serving as a member of the Military or Naval Forces of the Crown, or in any work abroad, such as that of the British Red Cross Society or the St. John's Ambulance Association, or in any other body with similar objects, shall be construed as if those provisions referred only to Section 133 of the Income Tax Act, 1842, and contained no reference to Section 6 of the Act of 1865. I hope that the Committee and the public will follow that, and see that what it means is that, so far as the Income Tax of this year, 1914–15, is concerned, we do not apply any average, and that we do not apply any figure that is based upon past years to anybody who is or has been serving as a sailor or soldier, or in connection with Red Cross work at all. But we say to him, "Just in proportion as you have sacrificed your income to serve the country at the front, just in proportion shall the Income Tax be removed from your shoulders, and you will be asked to pay on the sum you have earned this year." This is not put in in order that the revenue may exact more if it appears that during a small portion of the year the Income Tax payer has had a very good time; this is a concession to make it possible to treat him as somebody who, in this great year of crisis, is asked to make a contribution strictly proportionate to the annual income, however small it may be.

Mr. CHAMBERLAIN

I desire to say how glad I am to hear the concession which the Attorney-General has announced. It did not come as a surprise to me, for, as the Committee know, I have been in consultation with the authorities. I am sure that it will not only meet with the general approval of this House, but with universal approval outside. Take the case of a professional man. That of a doctor is the commonest case. He foregoes the whole of his professional income, and goes on military pay, or perhaps on no pay at all. It would really be an outrage to say to a man who has foregone that income voluntarily, because of the circumstances of the time, in order that he might take up service for his country, "You shall pay as if you had earned the income which you gave up in order to serve."

Mr. J. M. HENDERSON

I very willingly withdraw my Amendment in favour of the Amendment indicated by the Attorney-General.

Amendment, by leave, withdrawn.

Sir J. SIMON

I beg to move, at the end of Sub-section (1), to add the words:— The foregoing provision in its application to the case of any person who in connection with the present War is or has been serving as a member of any of the Military or Naval Forces of the Crown, or in any work abroad of the British Red Cross Society, or the St. John's Ambulance Association, or any other body with similar objects, shall be construed as if that provision referred only to Section 133 of the Income Tax Act, 1842, and contained no reference to Section 6 of the Revenue Act, 1865.

Mr. BOYTON

May I ask the right hon. Gentleman whether he intends this concession to be restricted to those who serve abroad only? For instance, will there be any concession made to the doctor of a Territorial regiment, say, the second battalion, where he has left his practice in London, and gone to the station of the Territorial regiment?

Sir WALTER ESSEX

I should like to point out that this very important concession is embodied in words which give it only by reference. This Amendment will go to the Press to-morrow, and be scanned very eagerly by relatives of men to whom it will apply, but its value will be largely masked by phraseology not appreciated or understood by the ordinary reader. To make it clear it only needs to quote one or two words from these two Acts of Parliament.

Sir A. MARKHAM

Can the right hon. Gentleman say whether the Government have any estimate as to what the concession will cost them?

Colonel YATE

I should like to ask the Attorney-General whether the term "doctors" includes men like dentists. I know of a dentist who gives up his practice every Friday to Monday to go abroad and help in the hospital ships and other places. Will that man be also included, although a dentist and not a doctor?

Mr. RUTHERFORD

There is just a question as to where the exact meaning of the word "abroad" comes in.

The CHAIRMAN

The word "abroad" does not govern the words "Military or Naval Forces of the Crown," but only the subsequent words.

Mr. RUTHERFORD

I am a little afraid that owing to the presence of the word "abroad" in some part of the sentence many men of whom we know in the Territorial Force, either as officers or men, who have had to go to the opposite ends of the United Kingdom and do as they are told, either there or abroad, but who have not been sent abroad, will not get the benefit of this Clause. I suggest that the word should be put in such a position that there can be no possible mistake on that very important point.

Sir F. LOW

Some of us understand what this Amendment means, but as a matter of substance it strikes me that if it is to go in in the form proposed the persons affected by it will not understand anything at all about it, because who is there serving with the Forces, unless he happens to be a barrister who has had some experience of Income Tax matters, who will understand the reference to Section so-and-so of the Income Tax Act? Surely it is possible in drafting this Amendment to make the concession granted quite clear, or will some announcement be made, or some circular be framed, explaining to the people concerned precisely what it does mean? I would suggest to the Attorney-General that this is a very unfavourable specimen of what we are always being troubled with—legislation by reference, and that it is very desirable that a concession made to show in some small way the appreciation of this House of those who are serving the country at the moment should be made as clear as possible to them, so that they understand precisely the benefit that is being granted to them.

Mr. LEACH

In discharging my duties daily among wounded soldiers in some of the military hospitals, I am always meeting medical men who have given up their profession and their time to the assistance of wounded soldiers. Is it quite clear that these men will be included?

Mr. JONATHAN SAMUEL

I should like to support the suggestion made by my hon. Friend the Member for Norwich (Sir F. Low) and the hon. Member for Stafford (Sir W. Essex). I raised the point myself last night with regard to Clause 12 upon another matter. There are no fewer than four references to this Clause already.

Mr. RUTHERFORD

Why not leave out the word "abroad"?

Mr. J. SAMUEL

That does not touch my point at all. There are already four references to Sections of Acts of Parliament in this Clause. If this Amendment is added to the Clause it means that nobody will understand what the Clause means. It is quite impossible for any officer or man to understand a Clause like this with regard to any remission or rebate of the Income Tax unless they go through all these Acts of Parliament. I said the same last night with regard to property owners and others who are going to get relief in respect of diminution of income. I defy any man in the country to understand what this Clause means unless he consults a solicitor and, perhaps, takes counsel's opinion. From what one can see in the House of Commons, I think the lawyers who are present appreciate this legislation by reference. It is a thing to be strongly deprecated. All Clauses of this character should be self-contained, so that the public should be able to understand what the law is in regard to this matter. I hope the Attorney-General will accept this suggestion.

Sir J. SIMON

The hon. Member for East Marylebone (Mr. Boyton), and also the hon. Member for the West Derby Division of Liverpool (Mr. Rutherford), wanted to be assured as to the place in the Clause where the word "abroad" came in. I must apologise for not having put the Clause on the Paper, but the Committee will understand that it is not a very easy matter. I should not like my hon. Friend (Mr. J. Samuel) to suppose that there has been any conspiracy between the lawyers to wrap it up. On the contrary, our object has been to get it as clear as we can. It is not very easy. The person who is to get this advantage is any person who in connection with the present War is or has been serving as a member of any of the military or naval forces of the Crown. That is not qualified by the word "abroad" at all. It will include anybody who, at any time in connection with the present War, has served, or is serving, under military or naval law, I do not know, but I imagine that a medical officer serving with a Territorial regiment is certainly under military law. If so, he is a person who, in connection with the present War, is serving as a member of a military corps. The only place where we introduce the condition that a man must have served abroad is when we extend it to those who are working, for instance, in connection with the British Red Cross Society or the St. John's Ambulance Association, or any other body with a similar object. There is a certain number of people who are giving gratuitous help in connection with these societies at home; but it would be a strong thing to say that if they stay at home they are to get the same relief as soldiers at the front. Then I am asked whether it cannot be expressed in a form which will be understanded of the soldier in the trenches. What the soldier in the trenches is provided with I do not know, but I am quite certain that he is not provided with copies of Acts of Parliament, however plainly expressed, and it is not true that people who enjoy the relief which the Income Tax Clause sometimes gives them gloat over the Clause. I will undertake to say that there is not one of us—except in connection with these debates or some case in the Courts—who gets his Income Tax information by looking at the Income Tax Act.

Mr. J. SAMUEL

Yes.

Sir J. SIMON

My hon. Friend says he does.

Mr. J. SAMUEL

I do not say I do; but when you see the Income Tax assessor he does not place this information before the Income Tax payers. That is really the difficulty, and therefore men go to their solicitors for advice.

Sir J. SIMON

I am going to do a very unprofessional thing. It is very wrong that anyone should give advice which would otherwise be got for a suitable remuneration from a solicitor; but I flatter myself I can state what this Clause does—if that is any relief to the hon. Gentleman—in language which will be understood, though there are reasons which are really good reasons why we should have the Clause in this form. This is what the Clause does. It provides that officers and men who serve in the Military or Naval forces of the Crown in connection with this present War will not be taxed, either Income Tax or Super-tax, on past averages, but only on the income that they actually earn this year, 1914–15, and the same concession is made to those who have been engaged abroad in connection with the present War in any work with the British Red Cross Society and the St. John's Ambulance Association, or any other body, with a similar object.

Mr. BUTCHER

made an observation which was not heard in the Reporters' Gallery.

Sir J. SIMON

Call it his income. Persons who are not concerned to look at Acts of Parliament only speak of Income Tax on their income. It will never do to put that into this Act of Parliament. It would be a delightful thing if we could take advantage of emergency legislation to revise, recast, and re-enact the whole of the Income Tax law. I sometimes think it will only be by general consent and sub silentio that this desirable consummation will ever be reached. If the hon. Member imagines that it is some perversity of mine that it is put in this way, and if he thinks it will be better to write it out, he can go into the Library, find Section 133 of the Income Tax Act of 1842, and write it into this Clause, and when he has done that he will find that he has produced a provision about four times as long and quite as difficult to understand as this. I hope the Committee will see that as long as a plain statement is made, that at any rate will give to anyone who wants it what is in ordinary English the effect of this Clause, and I am very glad to think it is going to be generally received as a reasonable and satisfactory concession. Then I was asked to what extent this concession would involve loss of revenue. Of course loss of revenue is the same as gain to the person we are trying to treat in what is after all only an ordinary fair way. The estimate is this. In respect of ordinary Income Tax, leaving out Super-tax, this concession, it is estimated, will this year lose the revenue £150,000, and in a full year, supposing of course that the War went on to next year, it will lose them £225,000, and as regards Super-tax it is estimated that this year it will lose the revenue £40,000, and in a full year it would lose the revenue £60,000. These are substantial sums and I am certain, although no doubt we must find these sums in some other way, there is no burden which the country as a whole will more readily accept.

Question, "That those words be there inserted," put, and agreed to.

Further Amendment proposed: After the words last inserted, insert the words, "(2) Where it is proved to the satisfaction of the Commissioners for the special purposes of the Acts relating to Income Tax that the actual income from all sources of any individual charged to Super-tax for the current Income Tax year is or will be less than two-thirds of the income on which he is liable to be so charged, he shall be entitled to postpone the payment of so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be assessed and the tax which would have been payable by him if he had been assessed on his actual income, and any amount of which the payment is so postponed shall, subject to any provisions which may be made by Parliament, become payable on the 1st day of January, 1916."—[The Attorney-General.]

Mr. POLLOCK

I desire to ask the Attorney-General's attention to this Clause, because I can fully appreciate its value. I want to make two suggestions to him. They are really matters of drafting to carry out his purpose. The year on which Super-tax is assessed is the year last passed. It has nothing to do with the current year, and as the matter stands it will be necessary to put a word or two in to make clear what is the contrast that is intended to be created by the Sub-section. I suggest that these words will be required after the words "so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be," and I think you want to add the words "and has been assessed," because that is the actual assessment which you are dealing with—"liable to be and has been assessed, and the tax which would have been payable by him, if he had been assessed on his actual income." Does that mean in the year only in which the Super-tax was assessed? It does not really mean that. It means the current year, and if the Attorney-General asks his advisers they will advise that he should add the words "assessed on his actual income for the current year," or perhaps for the year last passed. I believe these two Amendments are necessary to make the intention of the Clause clear.

Sir F. BANBURY

I am very much obliged to the right hon. Gentleman for putting his concessions into the Bill, but they are very poor concessions. They amount really to nothing at all. My hon. and learned Friend said that Super-tax payers are criminals, but even a criminal is entitled to justice. I do not know that I altogether regard a Super-tax payer as being a criminal, but even if he is, let us give him justice. All that this concession means is that after a very great deal of trouble with the Inland Revenue you may be able to enjoy for about two months a certain sum of money which you have to refund at the end of that period, so that really all that will happen will be that you will save the interest on a small sum of money for a very short time. If the right hon. Gentleman is desirous of making a concession, and if he limits it by saying that no concession is to be made until the Super-tax payer has lost a third of his income, at any rate when that loss has occurred he might make some substantial concession. I really do not understand what the object of postponement is. If you are going to make a concession, let it be a concession; and if he has lost a third of his income, why should not the right hon. Gentleman say that the Super-tax shall be assessed upon the actual income which he has, leaving out any question of disposal?

Mr. RUTHERFORD

It has been pointed out by my hon. Friend that this really does not amount to very much of a concession. I should like to ask one question with regard to it. Will the payers of Super-tax be obliged to take advantage of this astounding concession, because, if they will, it will double the labour, the annoyance and the difficulties of dealing with these complications of Super-tax, and the Lord deliver us from the concessions which the Attorney-General is now offering to give!

Sir J. SIMON

Shall I withdraw it?

Mr. RUTHERFORD

The idea that hours should have been wasted on this point last week, yesterday, and to-day and then when we come to see what this great concession is for the unfortunate payer of Super-tax whose income has gone down by more than a third—no one else is to get it unless he has lost a third of his income—we find that for two or three months he is going to have a postponement of part of that tax. It reminds me of Mr. Micawber, who paid that celebrated debt by giving a bill. When he paid it he said, "I always intended to pay that money, and thank God it is paid." Anything more illusory and unsatisfactory than this astonishing concession to Super-tax payers which we have listened to from the Attorney-General has never been mentioned in this House.

Mr. J. M. HENDERSON

I wish to say a few words, after which I will appeal to my right hon. Friend to withdraw the Amendment. The concession amounts to practically nothing. It amounts to this: That if you have £6,000 and you are reduced to £4,000 you will be asked to pay only £52 on 1st January, and £16 next January, postponing £163 for twelve months. But that will not do, because you have no right to make that concession, great as it is, to a £6,000 man and refuse it to a £5,000 man who gets down to £4,000, or a £5,500 man who gets down to £4,000. You have no right to take an arbitrary sum and say that at £6,000 you have lost a third, but you who have lost a fourth or a fifth get no concession at all. It is no concession. It is merely a postponement of payment, and it is doing an injustice to other people. There is one concession which the right hon. Gentleman might make, and I appeal to him to consider it. The Super-tax is made up in a great many cases of one portion under Schedule D, and, so far as it is made up from Schedule D, the Super-tax payer ought to be entitled to the benefit of Section 12, just the same as anyone else. I do not know whether that appeals to my right hon. Friend or not. But there is this to be said for the Super-tax payer: This is a consolation to him, at all events. It will enable us to get level with the Treasury by-and-by. Super-tax is based, so far as unearned increment is concerned, upon the income of the last year. We will take our £6,000 a year man who has been reduced to £4,000. Remember that next year the tax will be doubled, and next year, no matter how well his income has recovered, he will only pay on £4,000. Therefore, if his income recovers next year, he would only pay on the £4,000 and save the double tax on the other £2,000, so that he is made right by next year. The only question is as to the withdrawing of the Amendment and substituting another which would give the Super-tax man the benefit, so far as Schedule D is concerned, of Section 12 of the Act. Subject to that, I suggest the withdrawal of the Amendment.

Mr. BUTCHER

I agree with some of my hon. Friends that the concession given by this Amendment is not a large one. I want to know how this Sub-clause would work out. In order to get the benefit of the Sub-clause, the Super-tax payer must be in a position to say what his income will be next year, and inasmuch as he has got to pay by 1st January next year, he will have to show to the Commissioners how much his income is going to be for the year ending 31st March next. On 1st January he has to satisfy the Commissioners that his income for the year ending 31st March will be one-third less than it would have been if calculated in the normal way. I say it is absolutely impossible for a man to say in January next year what his income will be by the end of March. Take the case of a man who gets most of his income from dividends on securities. That is just the time when they would show the greatest loss. Dividends paid in August or September this year have felt the effect of the War, but dividends paid in February and March would just begin to show the effect of the War. It is practically impossible for any man, I do not care how intelligent, to estimate how much his dividends in February and March next year will fall from the normal. I ask the House to suppose the case of any man who takes the benefit of this concession. Suppose he estimates his income up to 31st March at more than it actually turns out to be, and he pays more tax than he ought to pay, what does the Attorney-General do then? Will he give him back what he has overpaid? It seems to me that that is the only thing to do. Surely he ought to be allowed to get back in April the amount overpaid in January. Will the Attorney-General explain how the Clause would work out from the point of view to which I have referred?

Sir J. SIMON

I will deal, in the first place, with the point raised by the hon. Member opposite (Mr. Butcher). The answer to his question is the same as the answer which I gave just now on another Amendment. The explanation in the one case applies in the other. The hon. Member for the West Derby Division of Liverpool (Mr. Watson Butherford) said he did not wish this thing to be conceded at all. I do not think the Bill would be in any way damaged by omitting the Clause. The revenue will be advantaged. As I explained the other day we propose to give Super-tax payers the right to pay the Super-tax by instalments. I thought payment by instalments was supposed to be advantageous to this class. If a man's income this year is only £4,000 and he is asked to pay Super-tax on £9,000, he has to pay on 1st January £408 6s. 8d. in respect of Super-tax. If this Clause passes he will not pay £408 on 1st January, and he will only have to pay £52 16s. 6d. He will have to pay the balance twelve months later. Does anybody say in regard to this concession, "Let us withdraw it"? It appears to me that there is a concession which is fair in the circumstances, and I would invite those who think the concession is worth having to take without grumbling what is allowed to the taxpayer.

Sir F. BANBURY

May I say that through the course of a long life I have thought it wise to take anything you can get in the shape of a concession.

Amendment agreed to.

Mr. DENNISS

had given notice of an Amendment to add the following words at the end of Sub-section (2):— Provided that no officer on active service shall be assessed to any larger sum in respect of Income Tax or Super-tax than he would have been if this Act had not been passed.

The CHAIRMAN

This Amendment is covered by another Amendment which has already been moved.

Mr. DENNISS

This Amendment is the corollary of the Clause proposed by the Attorney-General, and I want to propose it in somewhat different terms, namely:— Provided that no person who is or has been serving in the Military or Naval Forces shall be assessed to any larger sum in respect of Income Tax or Super-tax than he would have been if this Act had not been passed. I am going to ask the Committee to say that the tax should not be increased in respect of these men. The Attorney-General said the other day that officers were making their contribution in the field. Surely it was never intended to put the increased tax on officers and men. They are already paying their Income Tax in the field by helping to protect the income by which we live. In drawing up the Amendment in its original form I was thinking more of the Regular Army and the private soldier. I now extend it to all men in the Services who have incomes. In that case, the objection applying to the soldier is gone. That was the objection made by the Financial Secretary to the Treasury. The second objection which was stated was that officers were going to have their salaries increased. I think that has nothing to do with the spirit of the Amendment, and I ask the House to consider what would happen. I have had a great deal of experience of officers and men in the Army, some of my family having been connected with the Service. My youngest boy gets 5s. 3d. a day. He has gone through Sandhurst in the usual way. As he was wounded at Mons he came back. He lost the whole of his kit. He has to be doctored at home, and it costs nearly half his year's pay to do that and to get a new kit. I ask whether, on the top of that, he is to be asked to pay Income Tax of 1s. 8d. on the money he happens to possess himself? It seems to me extremely hard in such a case that the tax should be raised. These men are paying their contribution in the field, and when they are risking their lives and limbs they ought not to be asked to pay the increased tax.

Sir J. SIMON

I am making a proper concession to those who are serving with the armed forces of the Crown. What I have proposed is intended to be a concession, and I could not agree to add this further concession. The concession which the hon. Member proposes would have this disadvantage: it would operate so that the richer the man the greater the disproportion will be in the relief he would get. The principle we have enshrined in the Bill is that everybody who has to pay the tax, so long as he is serving at the front, shall pay in proportion to his actual income. That seems to me to be the proper rule to adopt. There may be cases where the burden will be severe, but I hope the hon. and learned Gentleman will agree to take the concession we have already put in the Bill.

Lord HUGH CECIL

On this point I think that the Government might consider the question of the officers' pay, which is a rather different proposition—that is to say, whether officers and soldiers should not be exempt from Income Tax on the pay which they receive?

Sir J. SIMON

Obviously there are more ways than one of meeting that difficulty. One is the way which the hon. and learned Member has suggested for consideration, and of course we will consider it. Another is to increase the pay, especially of the officers who get the smallest pay, and it is that second measure which may commend itself to most people.

Mr. DENNISS

As originally drafted this Amendment was that no officer on active service should be assessed to any larger sum in respect of Income tax or Super-tax than he would have been if this Act had not passed. I am very much obliged to the right hon. Gentleman for what he has said, and before asking me to withdraw my Amendment would like to know if he can say when it is likely that the question of officers' salary shall be considered and when it is likely to be raised?

Sir J. SIMON

I am afraid that is a matter as to which I cannot say.

Mr. DENNISS

The difficulty is that if that is not done soon we ought to have some relief now. Perhaps between this and the Report stage the right hon. Gentleman may be able to get some little information.

Sir A. MARKHAM

I would ask the right hon. Gentleman whether he could not find out a little more. As I understand him, he says on behalf of His Majesty's Government that this difficulty would be overcome by increasing the officers' pay. We find officers, such as second-lieutenants, getting very much less pay than certain classes of workmen, and if the right hon. Gentleman says that this matter is receiving the attention of His Majesty's Government it will give great satisfaction throughout the country.

Mr. NIELD

Will the right hon. Gentleman say whether the raising of the officers' pay is rather the reward for their services and has no reference whatever to the burdens put upon them by this Budget?

Sir J. SIMON

I do not imagine that anybody in this House will think that the observation which I made to the Noble Lord was intended to be a solemn and precise announcement of policy. That, of course, is a matter for the War Office primarily to announce and not for me. The Prime Minister, I think, made a statement about it some days ago, and there was a statement made yesterday by the Financial Secretary to the Treasury. If the hon. Gentleman will look at the OFFICIAL REPORT of yesterday, at col. 882, he will see that the Financial Secretary said, at the bottom of that column:— My right hon. Friend the Prime Minister said the other day in this House that the Government proposed shortly to issue a scheme under which the pay of the lower ranks of officers in the Army was going to be substantially increased at a far greater cost than any remission of taxation would represent. I have not the slightest intention of going one word beyond that, but I was referring to the fact that that was one way of doing it, and that it might be a better way.

Amendment, by leave, withdrawn.

Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. POLLOCK

I desire to call attention to Sub-clause 2. I am sorry that the hon. Member for Stockton-on-Tees is not here, because I am sure he would share the view which I am going to express. Sub-clause 2 looks very unimportant, but it really is very important. In effect it cancels the recent decision of the Court and leaves open to appeal all the decisions of the Income Tax Commissioners. That may be right or wrong, but I do not think that we ought to do it in the case of what may be called emergency legislation. It is a matter which I think needs much more careful consideration. There was a case decided at the end of last year by the Courts, which is reported this year, in which it was held that the Crown in a case in which it had desired to appeal against the decision of the Commissioners of Income Tax, were not able to do so because they had not got the power in reference to these appeals or in reference to these applications for relief under Sections 133 and 134. There may be a great deal to be said on both sides, but I should like to ask the Attorney-General why it is determined now in respect of this matter of release, to enable appeals to be heard and determined, and why it is not decided to adhere to the present practice as laid down in that case, and leave the decision of the Commissioners as final? I am not sure whether it is wise either on one side or the other to have appeals. I think probably in this case, as it is a matter of business, that it would be determined quite satisfactorily and sufficiently by the Commissioners, and I do not think that at the present time we ought to open any avenue for long litigation by means of appeal. For that reason I ask, before this Clause is passed, that some explanation and justification should be given for this Sub-clause 2.

Sir J. SIMON

This Clause applies what is a new test, namely, whether or not diminution is attributable directly or indirectly to the present War. It is highly desirable that, if that phrase is capable of several interpretations, it should not be interpreted in one part of the country in one way, and in another part of the country in another way, because this is a time when everybody ought to stand on the same level. For that reason we have introduced the Sub-section, and the hon. and learned Gentleman below the Gangway (Mr. Butcher) will remember that when I was endeavouring to explain this proposal a few days ago he asked me if there would be an appeal, and I told him that there would, and I understood that that proposal was regarded on the whole as favourable.

Question put, and agreed to.