§ Section thirteen of the Finance Act, 1914 (Session 2), (which gives relief in respect of diminution of income due to war) shall apply to Income Tax (including Super-tax) for the current Income Tax year, but with the substitution, as respects postponed Super-tax, of the first day of January, nineteen hundred and seventeen, for the first day of January, nineteen hundred and sixteen, as the date on which the postponed Super-tax is to become payable.
§ Amendment made: Add at end the words, and any payment of Super-tax for the year beginning the sixth day of April, nineteen hundred and fourteen, 754 which has been postponed under that Section may be further postponed until the first day of January, nineteen hundred and seventeen, if the individual from whom the payment is due proves, to the satisfaction of the Special Commissioners, that his actual income from all sources for the current Income Tax year is or will be less than two-thirds of the income on which he was liable to be charged to Super-tax for the year beginning on the sixth day of April, nineteen hundred and fourteen."
§ Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
§ Mr. SANDERSON
Under this Clause notice is given to the taxpayer that in certain circumstances he is entitled to a rebate, or can claim to pay a certain rate of Income Tax, and have his abatement for so many children; but he does not receive any notice upon this most important point. It is a little difficult for anybody who is not a lawyer to follow this question, because, in order to understand the Clause, you have to refer not only to Clause 13, but to Clause 13 in the Finance Act of 1914, to a Section in the Income Tax Act of 1842, and to a Section of the Revenue Act of 1865, before you can arrive at any meaning whatsoever. Under the present system of legislation I defy anyone, except a lawyer versed in these matters, to have the slightest idea what it means. That is all the more-reason why this Committee, before it parts with the Clause, should have some assurance from the Chancellor of the Exchequer, or the right hon. Gentleman representing the Treasury, that this matter-shall be brought clearly to the notice of the taxpayers. It mean that if a man's actual profits for the present year turn out to be less than the amount of the assessment he is entitled to go to the Commissioners and claim that the actual amount of his income, instead of the average, should be taken into account. That, I believe, is the real effect of this. Clause, but that is not brought to the notice of the taxpayer. It is not put in this Yellow Paper, which we all hate so much when it is sent to us, and unless you happen to be pretty well conversant with these matters it never enters into your mind to make the claim. I dare say the right hon. Gentleman representing the Chancellor of the Exchequer will say we shall lose so much Income Tax if we do this, because we shall have so many more 755 claims made, but I do not think that is the proper way to look at this question. The Income Tax payer should be treated fairly, and you do not want to make him pay a sum which by law he is not bound to pay. I submit that the principle upon which these matters ought to be dealt with is that it ought to be made as simple and easy for the taxpayer as possible to understand, and I do not think it is playing the game to omit all reference to this right which the taxpayer has upon this Yellow Paper which is sent out claiming a return for Income Tax. I hope other hon. Members of the Committee who think this point is worthy of consideration will give me their support. I ask, is it really fair to the taxpayer to legislate in this form? It is all very well for the draughtsman to put in a short Clause like Clause 13, and then refer us to Clause 13 in the Act of last year, when you find that you have to refer back to two other Acts. Why cannot you set out what is the effect of these four Clauses, so that the taxpayer, if he wants to find out what his rights really are, can go to one Act, and at all events try to understand it without having to refer to three others? It really requires a trained lawyer to form the slightest conception of what Clause 13 means. I urge upon the right hon. Gentleman that this ought to be made clear in the notice, and legislation imposing a very heavy tax ought to be made perfectly clear and simple, so that everybody who has to consider it may understand it.
§ 8.0 P.M.
§ Mr. J. M. HENDERSON
As I was largely responsible for Clause 13, I confess that I entirely agree with the hon. and learned Gentleman opposite who has just spoken. This kind of legislation is by reference, and consequently very few people are able to understand the relief to which they are entitled. I think it is only a fair thing to the taxpayer that the meaning of this Clause should be fully indicated in the notices of assessments which are sent out. Otherwise, 90 per cent. of them will not understand it. It is very important, and I think that it is only fair to the taxpayer that some note should be put in the Yellow Paper.
§ Mr. WATT
I agree with the hon. and learned Gentleman (Mr. Sanderson) that this system of legislation by reference even to the third time is not the way this House 756 should legislate. Apart from that, this particular Clause 13, gives the taxpayer a right of relief, and I appeal to the right hon. Gentleman that it is his duty to indicate to the taxpayers who are entitled to this relief that the relief exists. It has already been said that no one but a lawyer can understand this, and that the average man submits to taxation without going to any expense in getting legal advice. I suggest that as there is this right of the taxpayer to get this relief in certain circumstances it is the duty of the Exchequer to intimate the fact to the taxpayer.
§ Mr. MONTAGU
I really think that the difficulty of understanding this Clause has been exaggerated. I have been reading it again and again, and it seems to me, compared with some other Clauses, that it is not so very difficult to understand. The only possible way of avoiding legislation by reference is to undertake a compendious consolidation of these Income Tax Acts, and that would not have been possible in this year's Finance Bill. I should like the hon. Member for Glasgow (Mr. Watt) to try drafting a Clause which has no reference in it between now and the Report stage.
§ Mr. MONTAGU
I cannot conceive my being unlikely to accept it, but I should like to see it first. The hon. Member opposite asked that the provisions of this Clause should be brought to the notice of the taxpayer. The appeals hitherto made, I have always understood, have been that we should keep things off that Yellow Paper. It is so crowded with reading matter already that taxpayers are really alarmed at the idea of putting anything more on it. I do not think it fair to say that Clause 13 has been hidden from the taxpayers, because during the past financial year no less than £400,000 of Income Tax has been withdrawn.
§ Mr. SANDERSON
You are talking about Super-tax. I can quite understand that people who pay Super-tax do not suffer so much, because they generally put these matters into the hands of lawyers who know all about them; but the Income Tax payer is not the kind of man who puts the matter into the hands of lawyers. In the large majority of cases he make3 out the return himself.
§ Mr. MONTAGU
My information is that there has been a very considerable amount of advantage also taken of the Income Tax provisions of the Statute, but if the hon. and learned Member has any reason to suspect that these advantages are not known to the taxpayers—
§ Mr. MONTAGU
I will gladly consult with the Inland Revenue authority to see what can be done to bring them to their notice.
§ Mr. RAWLINSON
I have seldom, if I may say so without disrespect, heard a more feeble defence of this abominable system of legislation by reference. To say that it is impossible to draft a comprehensive Section of a Statute to carry out the meaning which this Section is supposed to carry out is about the strongest admission of the villainy of the present system, because, if those who assist my right hon. Friend are unable to draw a comprehensive Statute, and if you must, therefore, throw it into this tangle, it shows pretty clearly that the public and the House of Commons have a very great right to complain of this system of legislation by reference. The only defence I have ever heard of legislation by reference is that if you did set out the law fully and clearly in any Bill or Act of Parliament it would take a very long time to get it through the House of Commons, because, if there were people who wished to obstruct, it would give an opportunity for obstruction. That, however, does not apply at the present time, and the sooner the Government give instructions to those who draft their Bills that excuse has gone the better. If they are incapable of writing plain language so that we can understand what they mean, well, instructions ought to be given to them to learn how to do so.
The right hon. Gentleman said that there was really very little difficulty in understanding this Section compared with other Sections. He gave us figures about Super-tax. With regard to Super-tax, the relief applies to a few large business houses, and it is practically no relief at all, because it is merely deferring payment. It is only to a person in a big way of business that it may be convenient to deer payment of Super-tax, and to my mind, so far as the general public is concerned, 758 it is hardly worth saying "thank you" for. Then comes the relief given to the Income Tax payer. The relief given to the Income Tax payer, said the right hon. Gentleman, is exceedingly simple, and any layman in the House can understand it. May I just read to them—no doubt they will understand it more quickly than I do—the relief that is given:—It it is made sure to the satisfaction of the Commissioners, by whom the assessment is made, that the diminution of profits and gains on account of which relief is claimed under this Section 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"—Does the right hon. Gentleman seriously say that any layman can form an opinion upon that? Does he himself really understand it? I should like to hear his description of it. I should really like a little treatise from him as to what it means.and diminution of profits and gains on which relief can be given under this Section shall not be deemed to be a specific cause authorising the grant of relief under the said Section 134.That is quite plain! Seriously, is it not playing with the Committee to be solemnly told that it is perfectly plain and that any Income Tax payer would be thoroughly aware of his rights? I am not ashamed to plead to this extent ignorance, and I should like to know what right that gives me if my income down to 5th April last has, owing to the War, been less than my three years' average. Assuming my income has been less than my three years' average, and I am returning now, what are my rights? That Section, clear though it is to the right hon. Gentleman, is not clear to me, and I want to know what my rights are. If he can tell the House clearly and succinctly, I hope that he will be able to draft such a notice on that Yellow Paper as will convey it to a layman. I am perfectly certain that it would be useless to reproduce the Section.
§ Mr. J. M. HENDERSON
There is a further relief given to officers and others who have left their business and gone to the front. Those who have gone to the War, including the Red Cross people, are entitled to be only charged on what they have actually earned during the year. I do not believe that half of them know anything about it. I have come across any number of them who are astounded that there is any such relief.
§ Mr. POLLOCK
May I remind the right hon. Gentleman that one of his difficulties need not seriously embarrass him? He 759 said that he did not like to write any more on this piece of yellow paper which was already abundantly covered. That is quite true, but if the Department would furnish him with one of these papers he would find that now an additional White Paper is included in the yellow form, and that certain notes, explanations, and instructions are given. There are two sheets, and there is a particular one which deals with exemptions, abatements, reductions of rates on small incomes, and so on. Although there is abundant space on this White Paper, not one of the exemptions, abatements, allowances, and relief given under this Section is referred to. The right hon. Gentleman has a very good opportunity to fill up the blank spaces and call attention to this relief which is given. I am in sympathy with the right hon. Gentleman. I am not quite sure that I share all the views expressed by my hon. and learned Friend the Member for Cambridge University (Mr. Rawlinson). After all, this is an Income Tax point and, when my hon. and learned Friend says that he wants to have something perfectly explicit, it seems to me that he is asking almost for the impossible. If I recollect rightly, there are at present in force several score—I and not sure that there are not over one hundred—Income Tax Acts, and to ask that they should all be written quite plainly is to ask us to unwrite history, and to forget the fact that we go back to 1842 for the purpose of the Income Tax Acts. If the right hon. Gentleman will fill up this new White Paper in the way I suggest, he will meet a practical point, and we shall be very grateful to him.
§ Mr. SANDERSON
Will not the right hon. Gentleman respond to the appeal of my hon. and learned Friend, and tell us what is really the meaning of that Clause in the 1914 Act? My hon. and learned Friend and I are not quite agreed as to what the meaning is, and, if we do not agree, I do not suppose that the taxpayer will be clear about it. Supposing my income, or any man's income, for the year ending 5th April last is in consequence of the War less than the average of the three years, what is the result? What right has the taxpayer? And, secondly, when is he bound to make the claim for the relief given?
§ Mr. MONTAGU
When this Section was passed last year the Home Secretary, then the Attorney-General (Sir J. Simon), explained 760 it to the House at great length. I believe two, and I would almost say three, of the hon. and learned Members whom I see opposite were present. I do not think I could do better than he did on that occasion, and I propose to save the time of the Committee, if I may, by saying that I will send them copies of his speech.
§ Mr. RAWLINSON
Does the right hon. Gentleman propose to put that on the Yellow Paper, because it is really a serious thing? There is no better exponent of the law than the Home Secretary, who, I quite agree, did make certain points. My memory of his speech encourages me to venture to go so far as to say that my hon. and learned Friend (Mr. Sanderson) is not quite correct in his construction of this Section. That being so, it was a Section which I must say tried even the explanatory powers of the right hon. Gentleman to their fullest extent. Those who were here will remember we had to have two or three speeches before it was really understood. I am perfectly certain it would be very difficult indeed to condense it in an intelligent form on the Yellow Paper, but some effort should, at any rate, be made to do it.
§ Mr. RAWLINSON
It is a very difficult thing, but it ought to be done, because everybody must be in the greatest possible doubt as to what the real position of the Income Tax payer is.
§ Question put, and agreed to.