HC Deb 24 November 1914 vol 68 cc1031-7

The Death Duties (Killed in War) Act, 1914, shall be read and construed as if from the date of the commencement of that Act the remission of Death Duties thereby given applied not only to property passing on the death of the deceased to the widow, lineal descendants, and lineal ancestors, but to all property passing on the death of the deceased.—[Mr. Butcher.]

Clause brought up, and read the first time.


I beg to move, "That the Clause be read a second time."

The object of this Clause is to exempt from Death Duties any property which passes upon the death of a man killed in action. That there should be some exemption I suppose no one will dispute. It is a grievous thing, from one point of view, to think that when a man is killed serving his country the revenue of the country should directly benefit by his death and that other taxpayers of the country who do not go out to fight should also benefit indirectly by that death by having to pay less taxation. My own view is that there should be no benefit to the revenue, and no benefit to the taxpayers who stay at home, when a man is killed in action fighting for his country, and therefore that there should be some exemption. The Chancellor of the Exchequer may tell us, perfectly truly, that there was an Act passed earlier in the year which gave a certain exemption in certain classes of property, but the exemption was only given where the property passed to the widow or lineals. Where the property passes to a brother or sister or uncle no exemption of any kind was given. I do not know whether that Act was considered very much or not. It was passed in August, like a great many other Acts, rather hastily to meet emergency cases, but it is now three months since that Act passed and we have had an enormous number of lamentable deaths in consequence of the War and we are better able to judge now, I think, than we were then as to the scale of exemption which we should give these cases; and now that we know the nature of the War and that the number of deaths is likely to be large, I think the Chancellor of the Exchequer might go a little further than he went then and might give exemption when the property passes to others besides widows or lineals.

What reason is there for the restriction? Suppose that the property goes to a brother or a sister, owing to a man being killed prematurely, is the Chancellor of the Exchequer going to charge that duty which but for the War might not have been exacted for twenty or forty years? It is bad enough in the case of personal property, but in the case of real property it may come to be a very grievous charge indeed, because it may mean a family estate being broken up by the Death Duties being imposed far sooner than in the ordinary course of things might have been expected. I put this point before the Chancellor of the Exchequer and ask him to give this relief, and I feel confident that the taxpayers of the country who do not go to the front and do not risk their lives will gladly pay the increased taxation which they may be called upon to pay in consequence of the remission.

8.0 P.M.


I wish to say a few words in support of this Clause. I think that this Clause does not involve any great sacrifice to the revenue. To the revenue I should think it must be an extremely small matter, because the cases to which this Clause refers, though very sad, are not common. It is not common for men who are too young to marry and have children, to be killed and leave their property therefore to a brother or an uncle. It is in very exceptional cases that they would have any large amount of property, but it does sometimes happen, and I know a case in which it has actually happened. I am quite sure that it will be a reasonable thing, not to exempt from Death Duties altogether, but to charge the duties according to what would have been the amount if the man had lived to the ordinary time of life—that is, charging with the diminution corresponding to the expectation of life which the dead officer had at the time of his death. That is what the Chancellor of the Exchequer has done in respect of the living, and there is no reason for not doing it in the other case. Why should the revenue make a profit—an unexpected profit—out of the death of people killed in action? It is bad finance. Windfalls are an element of uncertainty for the revenue which ought to be avoided, and a tax ought to be levied as regularly as possible, and strictly in accordance with all the elements of finance. Where there are several members of a family interested in a particular landed estate, it inflicts a very great hardship on the whole family, and on the incoming heir, who may be a brother, if by the unexpected incidence of the Death Duties, they are prevented from living in the place to which they are attached, and which is very dear to them. In these cases I think a really serious hardship is inflicted, and, as the amount of revenue involved is very small, I hope the Chancellor of the Exchequer will be prepared to consider the proposal.


There is no doubt, as the Noble Lord says, that there may be exceptional cases where those who are left behind might receive some relief; but I think that the general proposition is one which should not be listened to by the Chancellor of the Exchequer, for the simple reason that, after all, workmen, poor people, who are fighting and risking their all leave, by their death their dependants under most unfortunate conditions. Their future income, by the death of the breadwinner of the family, is gone, and I think that is an element which founds as strong a claim as that to which we have just listened. I do not say that it militates against the proposal now before us, but at the same time if you want to give relief to one set of dependants there is no reason why you should not give relief to the other set of dependants. Under these circumstances, seeing that these men, both rich and poor, are giving all they can, inasmuch as they are risking their lives in defence of their country, I do not think one set has any higher claim to consideration than the other.


No one would dream of attacking the private soldier in respect of anything he possesses; all we suggest is that you should not take so much from the estate of people who are killed in action, because there was no reason to anticipate that they would be killed in action, and their death brings what is a sort of windfall.

The SOLICITOR-GENERAL (Sir Stanley Buckmaster)

I am sure no one is insensible to an argument which is based upon the misfortunes that all families suffer when their relations are lost in this terrible War. I have listened to my hon. and learned Friend the Member for York (Mr. Butcher) who moved this Clause, and to the Noble Lord who seconded it, and I am not at all convinced that this concession ought to be made, for this reason: It seems to me that their argument proceeded upon the hypothesis that this tax affected in some way the man who has suffered for his country. In point of fact it does nothing of the kind. It makes a man who receives the estate pay the tax for that estate which he gets; and if you take the lineals, both ascending and descending, who come unexpectedly into a property to which they could not have reasonably expected, or had little chance to succeed at all, it does not seem unfair that in those circumstances they should pay the tax. The Noble Lord put the case of a brother killed in war. If the brother had not been killed in war, it is perfectly possible that he might have married, and had children, and the surviving brother would never have succeeded at all. It is a painful thing to say that a man has got an advantage by such an accident, but, in truth, the lineal descendant has unexpectedly come into the property by virtue of the calamity, and it does not seem hard, in those circumstances, that he should pay. In reality this very matter was considered at the time the other Bill was before the House, and in Section 2 of that Statute an express provision inserted that in the case of a lineal where the second death took place within a certain period the property should pass and the tax not levied. That did not apply to other than the lineal descendants. That was approved by the House, and I ask hon. Members not to press this Amendment.


The hon. and learned Member does not realise the great hardship inflicted where there is a house and home concerned, where the relation is a brother, and where there are other dependants deeply interested in the place, and have been accustomed, all their lives to regard it as their home. It would be a very heavy grievance if, owing to the Death Duties, the property and home had to be let or even sold. I grant that it is an uncommon thing, but the cases do arise, and it would be a very great hardship indeed. I do suggest that the revenue might meet that sort of case, and I press the Chancellor of the Exchequer to consider the whole subject between now and Report.


I have considered this question with my colleagues, and I am very reluctant, exceedingly reluctant, to appear hard in such conditions, but I cannot see how, in justice, I can consent to a proposition of this kind. The Noble Lord knows perfectly well that the first time that relief was given was in the Bill which I introduced earlier in the year, and during the South African War the Government who were pressed upon the point, resolutely refused it in the case of the relatives of those who had fought. I agree with my hon. and learned Friend that there is no case for relief where a man comes unexpectedly into property that he would never have come into at all but for the War. I think I know the case to which the Noble Lord refers, but I am not at all sure whether that is not a case which for personal reasons appeals to a good many people. I think if the Noble Lord looks at the matter all round he will come to the conclusion, hard as it may appear, that all taxation, whether on commodities or property, must cause somebody to suffer hardship. But take a case of this kind. Here is a gentleman who really could not have expected to benefit by the property but for the War. I do not like to use the word "windfall" in this connection, but, from that point of view, and for this particular purpose, it is a windfall. The Noble Lord very properly stated that there was a sentimental attachment to property and houses in these cases, but, after all, they form a very small proportion of the property that becomes subject to the Death Duties as a consequence of the War—I think about 10 per cent. at the outside. I do not think it would be right to say in the circumstances, "You must pay your fair share for the general protection of the community and for the purpose of carrying on the War." We do not say that, for it would sound brutal, but what is the position? As a matter of fact it is a windfall to him under these circumstances, and, although it is with very great reluctance, I think I must say that we have gone to the utmost limit in the measure which we introduced during the course of the year. I regret it very much.


I do not wish to say anything of a controversial character, but I was glad to hear the Chancellor of the Exchequer recognise that the taxation was personal. That is quite inconsistent with the whole theory of the taxation. Take the case of aggregation. The tax is levied on the estate as though the estate paid, while it is the heir who does so. The family of a millionaire have all to pay on the scale of a million. I am very glad the Chancellor of the Exchequer has made that speech because the admission is valuable.

Question, by leave, withdrawn.

Mr. Butcher had given notice to move the following new Clause:— During the continuance of the War no duty of Income Tax shall be levied or payable out of the pay of any officer serving in the Naval or Military Forces of the Crown.

I have a new Clause on the Paper which is distinct from the Clause which has just been disposed of, and which deals with a subject which has not been discussed.


It is distinct from what has been already decided, but it ought to have come on Clause 12.


We discussed already as to charging a man on his income and not upon his income according to certain averages, and we discussed also charging an officer upon his whole income—that is, his pay and any private income he has. But I do submit that we have not discussed the question which is raised by my new Clause, namely, that an officer ought not to be charged Income Tax on his pay. I would therefore respectfully ask to be allowed to put that question before the Government in order that they may give their views on it.


On the point of Order. The hon. Member for Oldham (Mr. Denniss) had a discussion on an Amendment, and the Noble Lord the Member for Oxford University (Lord H. Cecil) suggested to the Attorney-General an alternative method to that proposed by the hon. Member, in order to relieve soldiers and officers from paying Income Tax, and it was on that particular suggestion of the Noble Lord that my right hon. Friend suggested that the better way to do it would be to increase the pay of the lower ranks of the officers concerned, and, as the Prime Minister has stated, the Government propose to announce a scheme for such increase.


What was discussed was really irrelevant to the Amendment of my hon. Friend the Member for Oldham. I appeal to the Chairman that I am entitled to move the Clause in order to get the views of the Government.


I have listened to what the hon. and learned Member has said, but I am still of opinion that, so far as the Chair is concerned, whatever the hon. Member's view may be, the subject substantially has been disposed of by the discussion that has already taken place.




I cannot allow the hon. and learned Member to argue with the Chair, but I may add, for the hon. Member's satisfaction, that I had an opportunity of consulting with the Chairman before I took the Chair on the point I have mow decided.


I shall raise it on Report.