CHARGE OF SCHEDULE B TAX. (Hansard, 30 September 1915)

§ Mr. HARDY
I want to ask the right hon. Gentleman a question with regard to the wording of the Resolution. I rather gather from it that he desires to make this a permanent part of Income Tax law, and not merely a War tax. Is that his intention, or not? The farmers throughout the country are believing it is only intended as a War tax, and I think it is rather a serious matter that an old distinction which has existed ever since Income Tax came into force should be suddenly abolished in connection with a question of War taxation. I should also like to make a 1110 very strong appeal in reference to the class of persons who have just been alluded to. Farmers certainly, under this new law—the small farmer particularly—will suffer severely. I have a case where a man who, under the ordinary duty, would have been paying nothing, but who will now be called upon to pay 18 guineas; and that is proportionately a larger increase in the Income Tax than is being imposed on the man in receipt of an income of £3,000 a year. It is, in fact, the largest increase to any person under this new taxation, and, therefore, I do think the lower ranges of smaller farmers deserve that their case should have a little attention at the hands of the right hon. Gentleman in connection with this very large increase of taxation. He is well aware that, although they may come under Schedule D, it will be a matter of considerable difficulty for the smaller farmers to produce the accounts which are necessary to enable them to transfer to that Schedule. In passing, may I say that I hope the right hon. Gentleman may be able to see his way to give time to farmers to take up the question of Schedule D, as it would be rather unfair they should be precluded from having that resource this year, owing to the fact that the date has already passed at which they can legally obtain relief.
There is another special point under Schedule B to which I should like to call the right hon. Gentleman's attention. It is in regard to woodland. The right hon. Gentleman said in his speech the other day that Schedule B could be taken without affecting the right of a person to claim to be brought under Schedule D; but he knows it is impossible to come under Schedule D so far as woodland is concerned, because it is held not to be husbandry, and, therefore, there is no possibility of getting relief by proceeding under Schedule D. It is also impossible to come under Schedule A for relief as in farming. The Woodland Taxes are not in an altogether fair condition, and I shall be glad if the right hon. Gentleman will consider the question of woodland separately. Woodland has been the special object of government recently in order to give it encouragement in this country, and not long ago there was a circular issued by a Government Department urging that the rates on woodland should be reduced. At some places that was done, but in others it is still subject to the full rates. Again, woodland did not get relief under the Agricultural Rating Act. It is subject 1111 under Schedule A and under Schedule B, and now the tax will be trebled, and there is no means of getting out of all this taxation. It does seem to be a case for special consideration. It is a very small relief that would have to be given. It is everybody's desire to encourage the creation of woodland, and surely the industry is one which should not be specially penalised at this moment. In many cases woodland is a dead loss. The taxation is heavy, and, in the case of large owners, it affects not only the ordinary Income Tax, but also the Super-tax. I hope the right hon. Gentleman will give this matter consideration before we come to further deal with this Bill. It has often been said that this taxation on woodland is necessary because large shooting rights are concerned. I know that in Kent that is the fact, and assessment committees have refused to reduce the standard of rating on woodland because the shooting rights are very valuable. But at this moment those rights are valueless. Persons are giving up shooting, and therefore, although the tax is really upon the shooting, it is now really falling on the woodland itself. It is a complicated question, but I think the right hon. Gentleman may well consider the desirability of giving relief to a class of persons who are certainly very heavily hit by this new Budget.

§ Mr. MONTAGU
The first question which the right hon. Gentleman put was as to the drafting of this Resolution. Of course, it will be open to any hon. or right hon. Member at the close of the War to ask for a review of the circumstances which led to this increase. The Resolution deals not with a new tax but with the method of imposing it. It is generally conceded that the new method, whatever the result may be, is fairer than the old method, and it has been brought in in a permanent way unless the House of Commons in its wisdom chooses to alter it when the War comes to a close. It should be remembered that while the farmers are assessed on rents, in a very large number of cases their profits during the War are represented by a far greater sum, and those profits are excluded from the proposals of my right hon. Friend with regard to excess profits taxation. If this new method is to be regarded as temporary, then I think it will be necessary to include farmers in the Excess Profits Tax, which is not now suggested.
1112 I would point out further that although it is absolutely fair in my judgment to alter the methods of assessment of agriculture in this country, there is one thing which becomes more difficult to defend, that is the unjust and unfair incidence of local taxation. Both parties in the State, all Governments, nearly every Chancellor of the Exchequer, nearly every Prime Minister, and nearly every Leader of the Opposition are pledged to a revision of local taxation. It would have come last year if it had not been for the very regrettable action of those responsible for the government of Germany. It is therefore only delayed till the end of the War. One of the arguments urged against the revision of local taxation has always been that the farmer does not pay his fair share of the Income Tax. For those who favour a revision of local taxation the alteration of the assessment to Income Tax will be a very useful weapon. With regard to woodlands, I should like to ask the right hon. Gentleman to allow me to promise him very careful consideration before the Finance Bill is introduced. As at present advised, it seems to me that on a permanent basis the Schedule B alteration is not unfair. Woodland is either for pleasure or for business. If it is for pleasure, it surely ought not to differ from any other occupation of land. If it is for business, then by taking the new Schedule B value, the rateable value, it is probably rated at its prairie value, and therefore escapes as little as it is possible for it to escape. I think, if I may say so, that the right hon. Gentleman has made a new argument in his suggestion that, at any rate during the War, the sporting rights of woodlands are not very valuable, and if he will leave the matter at that I would be prepared to say something further when the Clause comes up in Committee.

§ Mr. HARDY
It is impossible under Schedule D to get at the exact profits.

§ Mr. MONTAGU
I would add that the Chancellor of the Exchequer has already promised a concession on this matter by an extension of time to farmers under Schedule D. He promised that at Question Time this afternoon.

§ Mr. J. M. HENDERSON
I should like to say a word on what the right hon. Gentleman opposite (Mr. Hardy) has said. I am glad the Chancellor of the Exchequer will take this matter into consideration. Apart from sporting rights, there is another 1113 element in woodlands. There are woodlands and woodlands. One of the difficulties which stands in the way of that which we all desire, namely, a larger afforestation, lies in the fact that rent is fixed upon these woodlands, and that no return is received from them until the trees have matured. A man will not like to put his land under timber for that very reason. Until the woodlands and forests are put upon a much more equitable basis of taxation than they are at the present time, I do not believe he will do so in future. That is worthy of consideration, in view of the fact that it rather stands in the way just now of people giving up their land for afforestation. The moment it is put under timber it is taxed as if it were like other farm land. The man can get no revenue until the trees are matured. I hope by next year this matter will be seriously considered by the Chancellor of the Exchequer, with a view to amelioration.