HC Deb 30 September 1915 vol 74 cc1084-104

Resolution reported,

23. "That—

  1. (1) For the last six months of the current Income Tax year the rate of Income Tax shall be forty per cent. higher than the rate fixed by the Finance Act, 1915 (namely, three shillings and six pence instead of two shillings and six pence), and the rates of the amounts payable in respect of earned income and in respect of small incomes under Section six of the Finance Act, 1914, as amended by Section ten of the Finance Act, 1915, shall also be increased by forty per cent. for that period.
  2. (2) Effect shall be given to the said increase of tax as follows:—
    1. (a) By making such deductions in the case of dividends, interest, or other annual sums due or payable after the fifth day of October, nineteen hundred and fifteen, as will make the total amount deducted in respect of Income Tax for the year equal to that which would have been deducted if Income Tax for the year had been at the rate of three shillings;
    2. (b) By treating the amount payable in respect of any assessments already made of tax chargeable 1085 otherwise than by way of deduction as increased by twenty per cent.;
    3. (c) By increasing any such assessments not already made by twenty per cent.; and
    4. (d) Where the amount of any exemption, relief, or abatement under the Income Tax Acts is to be determined by reference to the amount of Income Tax on any sum, by calculating the amount of the tax at three shillings.
  3. (3) It is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Colonel YATE

I would like to ask the Chancellor of the Exchequer a question in regard to this Income Tax. In the case of warrant officers and non-commissioned officers of the Army, their pay has been hitherto under the Income Tax limit, but the limit has been changed from £160 to £130. Warrant officers and non-commissioned officers have £2 or so a week, and what I want to know is whether they will be liable to pay Income Tax, because, where they are married, a separation allowance is given to the wife and family living in some other part of the country. As the Chancellor of the Exchequer knows, one of the greatest injustices under the Income Tax Act is that the income of the married woman living with her husband is deemed to be his income; but here is a case of warrant officers and non-commissioned officers who are not liable to Income Tax, but who, if the separation allowance to wife and family is to be included in their income, would bring the total income up to a limit which would render it liable to Income Tax. This is not a case of a married woman living with her husband, but of a married woman who by the law of the land, and the rules of the Army, has to live separately from her husband. I trust, in these circumstances, the Chancellor of the Exchequer will be able to give the assurance that, in the case of warrant officers and non-commissioned officers who are married, the separation allowance to wife and family will not count against them under the present Income Tax proposals.

Secondly, I should like to draw the right hon. Gentleman's attention to the special case of officers now serving in the Army, especially the young officers, whose wives get no separation allowance. The lot of the officers now fighting our battles is even harder than that of warrant officers and non-commissioned officers. Officers and young officers living on their pay have not only to provide for themselves, but have also to provide for their wives and families at home, and I ask whether those officers, who are risking their lives on our behalf, ought to have the same taxation imposed upon them as persons who have nothing to do with the War. I cannot see why these officers should pay extra Income Tax for a war which they are actually waging on our behalf. I would remind the Chancellor that his predecessor has given Members of this House a certain exception in their pay. I do ask him to consider how is it possible to put this taxation on officers who are fighting at the front and give no exemption. I trust that the case of the officers, especially the younger officers, will receive favourable consideration. The third point I wish to mention is as to the very peculiar position of Indian and Colonial officers now serving in the Army. I have here a letter from an Australian officer, who is now serving in England, and he says relative to the Australian Income Tax their position is as set forth here below, namely, the Commonwealth 5s. tax in the £ and the double rate if absent for over six months. The letter proceeds:— The State Tax in Victoria, I believe, has been raised to 3s. and donble rate for absentees. Then comes the English Income Tax of 5s. in the £ on money from Australia which is already taxed. I am at home not on a pleasure trip but to attempt to do my duty. Any money that is remitted to the Australian, Canadian, or Indian officers is taxed from where it is sent, and has to pay double taxes. The case of the Indian officers is particularly hard, since they have to provide for wives and families and the larger expenses connected with them. I trust that the right hon. Gentleman will be able to take the case of these officers into special consideration.


I desire to ask a question as to the Income Tax. It is probably within the right hon. Gentleman's knowledge that numbers of limited liability companies take powers under their articles of association to contribute to charitable objects. In the past they have made large contributions to hospitals, and those contributions have not been charged with Income Tax, but have been included under working expenses. Those companies have now made large contributions, in many cases, towards hospitals for the relief of the wounded in the War, and have thereby relieved the Government of the obligation they were clearly under, to provide hospital accommodation. I desire to know whether it is the intention to charge those contributions with Income Tax, or whether they will be allowed to be regarded part of the general working expenses as they have done before the War.


I desire to support what has just been said by my hon. and gallant Friend (Colonel Yate) in reference to the case of officers. In addition to the arguments he advanced, I would ask the right hon. Gentleman to remember that a very great number of officers of our New Army gave up very valuable positions and large incomes in order to join the Army. They have great difficulty in supporting their homes, and under those circumstances any additional charge of Income Tax on the extremely small amount they are receiving while fighting for us seems to me to be an extra burden which ought if possible to be avoided. I would especially urge the case from the point of view of the officers of the New Army.


I desire to deal with the question relating to officers serving at the front. I hope the House will agree with me that this is a matter which ought to come forward on the Army Estimates. If an officer, having regard to all the taxation, is paid insufficiently, we ought not to give relief by way of Income Tax, but it ought to be relief graded right through the Army, taking into consideration all ranks and the burdens upon them. To give relief, particularly in the form of Income Tax, would be to give relief on a larger scale to those who are best off, and I am sure my hon. and gallant Friend has not that object in view. His representations ought really to be made to the War Office. If he considers, having regard to the taxation, that the officers are insufficiently paid, the representation ought to come to the Treasury from the Department concerned. I do not wish for a moment to criticise his arguments. I do not think they are really appropriate to a Debate on Income Tax. He raised the question also of the position of the Aus- tralian and Indian officers who are over here on duty. We have that case under review now, and I hope to be in a position to make a statement later, when we get to the Bill, as to what relief we hope we shall be able to give. Our view is that the officer should not be worse off by reason of his being over here on duty than he would be if he were pleasing himself at home. As to the other point about a separation allowance and whether its addition to a husband's income will make him liable to Income Tax it is quite new to me, and I am not sufficiently skilled in the law to be able to answer it. At a later stage I will be very happy to give the hon. Gentleman an answer on the point. It is not really relevant to this particular stage, when we are dealing with the Resolution covering the whole of the tax.

Colonel YATE

When will the right hon. Gentleman give an answer?


On the Clause of the Bill imposing the tax. This is only the Resolution on which the Bill is founded. When we get to the Finance Bill itself on the Clause I shall then have made the necessary inquiries and shall be able to give an answer. My hon. Friend the Member for Mansfield (Sir A. Markham) asked a question which I think would entail a change in the law—is that not so? Some companies at present under their articles of association contribute to charities, and the hon. Gentleman, I understand, wishes the power of exemption of those contributions from Income Tax extended to all companies.


That is not my point. I was referring to companies whose articles of association permit them now to contribute to hospitals, and I asked whether the amounts given during the War will be charged with Income Tax or not, or regarded as working expenses the same as they were before the War?


There is no change in the law, and in any case in which a contribution has been treated as working expenses it will continue to be so treated. I rather assumed that the hon. Gentleman wished for a change in the law to enable the same rule to be extended to all companies.




Then I think I have been able to give him a satisfactory answer.


I regret the reply of the Chancellor of the Exchequer to my hon. Friend the Member for Melton (Colonel Yate). He has given the same reply before, namely, that the proper way to raise this question is by asking for an increase in Army pay. When we raised the question on the Report stage of the last Finance Bill, the Chancellor then told us that the effect of a Clause which I put down, and which proposed to render officers' pay not subject to the increased Income Tax put on for War purposes, would cost the Treasury £375,000. The Income Tax has since been raised, and I calculate on the figure then given that the amount now would be about £500,000. The Chancellor of the Exchequer now tells us that the answer to this question is to raise the officers' pay in all grades right through the Army and not to raise the question on the Income Tax. I venture with all humility to entirely differ from that conclusion. The question is not a question of increased pay. It is quite a simple question as it appears to people outside this House, and it is as follows: In time of peace, before this War commenced, a certain scale of pay was considered appropriate to officers of the various grades. We have since become engaged in war, and a vast number of additional officers have taken on military duties. With regard to those who are officers in the Regular Army, the net effect of the whole thing is that whereas certain pay was considered appropriate in peace time duty, they are now required to pay Income Tax for the privilege of fighting for their country in amounts varying from 2s. to 3s. 6d. in the £. I do not think that is met by asking for increased pay. The Chancellor of the Exchequer told me on a recent occasion what would be the effect of any exoneration from this War Income Tax. We are only asking that the extra taxation should be borne by the civil population, and that we should not ask officers to bear a share of the special taxation raised for war purposes.

The question has now become a wider one than it was on the last Finance Bill, and for two reasons. The first is that the tax has been raised, and, secondly, the exemption has been lowered, so that now it includes the pay of all warrant officers in the Navy, a very large number of men who are not officers in the same sense as those we were dealing with on the last Finance Act. With regard to the minor question which my hon. and gallant Friend raised, I was sorry not to have the opportunity of calling the right hon. Gentleman's attention to another small point, namely, the question of officers in the pay of the War Office who are serving in such places as West Africa and other Colonial centres. I am informed, if they are paid through the War Office they have to pay Income Tax, but if they are paid on the Colonial Estimates the Income Tax is not deducted, and the Income Tax is not deducted in the case of civil servants in the employment of the Colonial Office. I think there is an obvious injustice there. We should treat all these people alike, and it seems to me, as they are serving for a long while away, they cannot be supposed to benefit from the expenditure in this country. I believe ordinary members of the civilian population who are living entirely outside this country are not subject to Income Tax, while in the case of our officers commanding and of various grades in regiments which for a long while are quartered in such places as West Africa, though they have no benefit from the expenditure of taxation in this country, yet they have to contribute out of their pay towards it.

I hope that the Chancellor of the Exchequer is not going to think that the answer he gave my hon. and gallant Friend is going to satisfy us for a moment. I wished to raise this question on this Resolution because I thought it would have come in a much more graceful and appropriate manner from the Government themselves by adding a provision to the Bill relieving officers and warrant officers from the payment of these special war taxes. I hope that the Government will still reconsider this question, but if not I can assure them that it is one which will be raised in a very strenuous manner when the Finance Bill comes before the House. There is a very strong feeling outside among the whole civil population that it is utterly unjust to expect men who are serving their country, and in danger, and who are able to take that part of the burden, to bear also the burden of special war taxation which is required to meet the expenditure of the country at this particular time. The matter will be pressed until the Government have to give way to popular opinion. I invite them not to give rise to another question which will be taken up in the Press and in the country to such an extent that they will be forced finally and ungracefully to give way to agitation. The reply which we have had over and over again is not really a true reply. I do not say that in any offensive sense. We are not asking for an increase of pay. We are asking simply that officers in war time should at least be paid what they were paid in times of peace.

Captain AMERY

I should like to support very strongly the request that the Government should take into consideration our appeal that officers now serving and during the War should not have to pay the extra Income Tax. The alternative suggestion made by the Chancellor of the Exchequer is unsatisfactory. If the scale of pay were raised all round it would be very difficult to reduce it afterwards. I am by no means sure that the pay of officers is for ordinary peace time so unduly low. It may not be a satisfactory position, but the majority of officers are men with some small means of their own. I am not on this occasion complaining either of the pay of officers or of the normal peace taxation which they have to bear. But at this moment an enormous number of men have taken commissions—some have risen from the ranks, others have left occupations and businesses—who have families to maintain on a certain scale, and to whom this extra Income Tax is a severe hardship. It would be far simpler and fairer to take the War as an abnormal state of affairs—as indeed it is—and during that abnormal state of affairs to consider the special circumstances of officers, many of whom have given up a great deal, and others of whom have, as a reward for their gallantry, been raised nominally, but really put in a worse financial position. As everybody knows, a man who has risen from the ranks is in many cases, taking into the account the separation allowances and so on, in a worse position as an officer than he was in as a non-commissioned officer. After the War is over we shall have entirely new military problems to consider—what class of officers we shall have, what career the Army shall give to officers and men, and so on—and it would not be a desirable thing to alter the whole scale of officers' pay at the present time. But it is not fair to put upon officers who have taken commissions upon a certain scale this additional burden. It is much fairer that it should be added to the burden of those who cannot go to the front, while those who go to the front, whatever pay they get, do their best with their lives.


I do not think it is in consonance with the feeling of the House that we should question the amount to which it is proposed to raise the Income Tax, but there is a most important subject going to the root of the whole question, to which I should like to direct attention. We have been promised from time to time a consolidation of the different regulations concerning Income Tax. I know a man at present who is assessed to a very large Incame Tax and Super-tax, but who for the last five years has not had a shilling of real income. It sounds very stupid and almost incredible, but, as a commercial man, I assure the Government that there are thousands of people who are not paying anything like the Income Tax they ought to pay, and thousands who are paying a great deal more than they ought to pay having regard to their actual income. That arises from the vast number of Acts of Parliament, alterations in Finance Acts, regulations, some of which are exceedingly stupid and inconsistent, and supposed guiding principles which have been laid down. We have been promised over and over again that the matter should receive attention, and I believe it has received attention in the Department. Now that the tax is being raised to such an extent it is very important that the incidence should be made more just and equitable. I would, therefore, ask the Financial Secretary to represent to the Chancellor of the Exchequer what I believe to be a very strong feeling indeed, particularly in the City of London, that the regulations and methods connected with the assessment to Income Tax should be carefully investigated and formulated, a large number of anomalies removed, and the whole question put upon a better footing, instead of its depending upon Acts of Parliament which go back sixty-five years and have been altered over and over again until it is impossible to say what the solution of any question concerning the Income Tax is without looking up a variety of decisions, rules and regulations.


I wish to put a point to the Chancellor of the Exchequer which I hope he will deal with on the same principle as that which he has suggested in regard to the exemption of officers' pay from Income Tax. He said that that was not the right way to deal with the question —that it should be dealt with as an increase of pay, and not by way of exemption from Income Tax. I wish him to say that the method of exemption is not the proper way of dealing with the matter I am about to put before him. There is a total income of about £15,000,000 a year which by reason of statutory exemptions is wholly free from Income Tax. I refer to the income applied to charitable purposes throughout England. I suggest that the Chancellor of the Exchequer should abolish the exemption in this case. The effect would be to bring all that property under charge, and the result would probably amount to the yield of a penny on the Income Tax. If there is any case in which it is reasonable that there should be a contribution from the Consolidated Fund for such charitable purposes, it could be taken into account and dealt with in the proper way by a grant from the Treasury, which could be discussed on the proper occasion. Another reason why this exemption should be abolished is that the amount grows every year. A comparatively few years ago, when the Income Tax was much lower, the amount was very small. The question was raised in the House of Commons by the late Mr. Gladstone, who in a speech of two hours' duration gave reasons why the exemption of charitable money from Income Tax should be done away with. The matter has now grown to the dimensions which I have mentioned. In order to carry out the exemption, every charity in the country has to make a claim for the return of Income Tax actually paid, and those claims are investigated at Somerset House by the skilful gentlemen there who occupy their time in receiving Income Tax and handing it back again to these institutions. I think that is a great mistake, and that if at a time when the pressure is so great, the Chancellor of the Exchequer abolished the exemption he would do a service to the State.


I desire to ask the Chancellor of the Exchequer whether he intends the Income Tax to apply to co-operative societies, or whether the present exemption is to continue. That is a far more important matter than the exemption just referred to, because the co-operative societies compete, not only in retail but in wholesale, with the trading classes of the community. If the right hon. Gentleman will look at the report in the "Manchester Guardian" of a week ago, he will see that these co-operative societies deal not in tens or hundreds of thousands, but in millions, and their profits are immense. Therefore, one cannot understand why, in these times of pressure, they should ask for exemption, or why they should not come forward, as I hope the whole nation does, ready to say, "We will pay to the Exchequer what is due for the purposes of the War." There was something to be said formerly for dealing with the matter in this way. The exemption limit then stood at £160. Now that the exemption limit is reduced to £130, there will not be nearly so many people applying for the return of their Income Tax, so that there would not be involved the same amount of labour to the Exchequer. You have small shopkeepers who are now obliged to pay. When you find big shopkeepers, colliery owners, sawmills, and establishments for soap boiling, with every appliance that science has brought about, paying, and you have co-operative societies trading in competition with the ordinary trader and paying no Income Tax, I can assure my right hon. Friend of a very great feeling amongst the nation that we are not all equally taxed. I ask him to look into the matter and tell us what he is going to do. If he is going to exempt them he will find that there is a very strong feeling that he is dealing unjustly with the taxpayers of the country.


I think there is fair ground for complaint as to the manner in which taxation is applied in relation to co-operative societies. After all, a co-operative society is a trading company, and a trading company is simply an individual in the eye of the law. It does not matter whether the trade is carried on by an individual, by a partnership, or by a trading company, the profits made by the concern should be equally subjected to taxation in the public interest. As we are told, those who join co-operative societies do so for the purposes of profit and advantage which they get. Certainly a co-operative society is a corporation which makes a certain profit, and, making that certain profit, I am unable to discover any sound reason why it should not be subjected to taxation of that profit at the source. I understand that in ordinary business companies the rule is to tax at the source the profits which are made by the company. An hon. Member to-day asked a question with regard to this matter, and I myself also asked one. The answer that I received was this: Such profit as is made by a co-operative body is already assessable to Income Tax in the hands of the recipient. That is to say, in the hands of the shareholders. But that is a reversion of the ordinary principle which applies with regard to the taxation of profits that are made by an ordinary company. All I suggest to the Chancellor of the Exchequer is that the rule in this respect among traders, whether co-operative societies or individual trading concerns, should be on one and an equal basis.

I desire to associate myself with the question raised by my hon. Friend on my left in regard to the case of officers and petty officers on service during the War. I cannot understand why there should not be a readjustment in regard to officers' salaries. It has been truly pointed out that when the question of the increase of salaries comes up you will have to take into account the whole Civil Service. But so far as officers and petty officers are concerned, it seems to me that the rate at which they are to be paid ought not to be lost sight of; certainly not less in time of war than in time of peace. The result of subjecting them to increased taxes, as proposed under this measure, is to diminish substantially in time of war, when probably they need it most, the very limited income to which they are entitled under the law.

There is another consideration in that connection which I pointed out on a previous occasion. It must be remembered that these men are continuously engaged in the most dangerous occupation with which they could possibly be occupied—that they are living practically in the constant and imminent presence of death, seeing they are engaged in a war of the character in which we are now engaged. In the event of the unhappy contingency of death their estates—such of them as have estates—immediately become subject to very onerous Death Duties. Therefore they are affected not merely by the certainty of this increased taxation, but their families also are faced with the contingency that their lives, by reason of their occupation, may be shortened, and the estates supporting those dependent upon them will become further limited by the additional taxation of the State. These contingencies should be taken into account.

I should also like to associate myself with the hon. Member for Liverpool, who suggested that there should be a codification—he did not use that word—of the laws in regard to taxation in this country. It is a well-known fact that the laws of taxation with which we are affected go back as far as 1842. The leading Statute of 1842 has to-day to be consulted in connection with a succession of Statutes from that date until the present time. It is impossible for any civilian to make out the obligations to which he is subjected in the way of taxation under the laws of this country. For myself, though I am familiar with the examination of Statutes and have been for many years, I have found it most difficult, not merely in my case, but in the case of professional clients, to discover what is the real law applicable in a variety of cases under the Statutes which exist. I think the suggestion of the hon. Member most timely; there should be some sort of consolidation, some simpler way for the civilian as well as the lawyer to find out what are his obligations in this matter.


I join in the view of the hon. and learned Gentleman who has just sat down that some steps should be taken in respect to setting up a Committee—which I believe was promised by the Prime Minister previous to the War—to investigate the anomalies of the Income Tax. What the hon. Member for Chertsey (Mr. Macmaster) has said cannot be contradicted. It is becoming more and more impossible for the ordinary layman to understand the intricacies of the law in connection with the Income Tax, and the effect of it is that a great many individuals have to call in an accountant in order that they may return their Income Tax upon an equitable basis. I have never heard a stranger request made to the Chancellor of the Exchequer than that of my other hon. Friend at this critical moment. Charitable institutions are in dire distress and find it difficult to find the necessary sums to carry on their work, and the Chancellor comes with the proposal that they should no longer receive the rebate in connection with Income Tax. I am afraid my right hon. Friend does not know the conditions of charitable institutions; otherwise he would not have made such a suggestion. I am going to make a suggestion by which some relief may be given to charitable institutions, and it is this that, in making their return for Income Tax, hospitals and kindred institutions where vouchers have been produced should be allowed to deduct the subscriptions and donations. I should like subscriptions and donations treated in the same manner as premiums for insurance, which are now allowed to be deducted. I feel sure my right hon. Friend will recognise that, not only on account of the War, but on account of the great necessity on the part of hospitals and other institutions to obtain adequate support, something of the kind is needed. On account of the Income Tax a good many subscriptions are gradually but surely being withdrawn, and although I would be the last to urge at this particular time that any abatement of any importance should be made from the Income Tax, I do urge upon him, under the conditions that are now existing, that he should take into consideration whether these donations and subscriptions for hospitals might be taken into account and deducted when they are making their returns for Income Tax.


I desire to say a word or two in regard to what was said on the other side in relation to co-operative societies. An appeal has been made to the right hon. Gentleman the Chancellor of the Exchequer to tax the profits of co-operative societies at the source, the same as is done with other trading and manufacturing companies. I want to ask him to turn a deaf ear to that appeal. I want to suggest to hon. Gentlemen opposite that they have not got the "hang" of the thing, so to speak, or otherwise they would not have put forward their plea. So far as I understand the principle of the Income Tax, it is that the person who pays Income Tax has up till now paid on £160 per year and above, and that that limit is now reduced to £130. There is absolutely no difference between a member of a co-operative society and anybody else in the community. If a member of a co-operative society has now £130 per year and upwards he is liable to Income Tax. There is no exemption.


What about trading companies?


I am coming to that. Supposing you were to tax the ordinary co-operative society as you do the ordinary trading company? All that would happen would be that inasmuch as possibly 95 per cent. of the members of a co-operative society are entitled to exemption because their income is not up to the tax-earning mark, you would have your Government Departments flooded with that 95 per cent. of, say, 3,100,000 and odd members of co-operative societies throughout the length and breadth of the country, claiming a return of the money that had been taxed at the source. To the hon. Gentleman who raised this question I would suggest that it is not worth while. It might be said that the other 5 per cent. would be reached, but that 5 per cent. are taxable now. I do not know how these things are managed, but I suppose if the authorities have the slightest doubt as to whether or not a man is taxable they send him a form, and from that form they find out whether or not he is in receipt of money from a co-operative society in respect of an investment there. If he is, and it is part of his income, he is taxed upon it. Therefore, I do not think there is anything at all in this matter. If the suggestion is persisted in, the Government authorities might possibly get a small amount, but for that small amount you very likely would pay more in dealing with the claims for exemption. Therefore, I again suggest that it is not worth while

8.0 P.M.

I want to identify myself with the claim that has been put forward for more generous treatment for the men at the front. I heard a statement made the other day that there have been 80,000 officers made during the War; at all events, there has been a large number. I suppose that a large number of those officers are now for the first time in their lives in receipt of an income which makes them liable to Income Tax. I think it would be a mean thing on the part of the country, having regard to the fact of the dangers, privations, and risks that these men are running on behalf of the country, to come down upon them and tax their incomes now. Therefore I heartily associate myself with the appeal that has been made for the exemption of these men. Might I also repeat the plea—if this be the right place—on behalf of men with low incomes. I do think you are putting it on to these men very stiff. I refer to the man with £200 a year or thereabouts. Hitherto he has paid on £40. If the Government's proposal be carried, he will have to pay not only upon £80, but will have to pay upon that an increasd amount. Instead of £40 at 1s. 6d. in the pound, it will be £80 at 2s. 1d. Having regard to the fact that these men as a rule live up nearly to the top of their income, and having regard to the importance of these men in keeping things going, I think they might be more generously dealt with. I do not know whether we shall have a chance—though I suppose we shall on the Finance Bill the week after next—of raising this matter, but I say to the right hon. Gentleman that I feel so strongly about that particular class of people that I would not mind putting an Amendment down and having the matter discussed, and following what course should be considered necessary. I hope, however, some concession will be made, and therefore there will be no need to put any Amendment down. The last point upon which I desire to offer a word or two of comment is in regard to this extraordinary plea put forward by the hon. Member below me. I think that this is, perhaps, the most extraordinary time that such an extraordinary thing should be put forward. I suppose hospitals and all sorts of institutions which are run on voluntary principles are just now finding themselves in the greatest quandary they have ever experienced. Money is being collected from the people in taxes, and, of course, the more taxes are imposed by the State the less people have to give away; and these institutions are just now being put at their wits' ends to make things go along. Therefore, I think that, if any change is to be made at all, it should be in the direction of encouraging rather than hindering them in their good work. But the plea of my hon. Friend would not only affect hospitals and institutions of that sort that are being maintained by voluntary contributions coming along intermittently; it would also affect organisations, I take it, such as friendly societies, and even the trade unions on their friendly society side. For instance, I was secretary of the Engineers' Society for a good many years until they kicked me out, and we had a good deal to do with money subscribed by the members to provide old age pensions. We maintained something like 6,000 to 7,000 of our old members, and started to give them pensions a long time before they reached the pensionable age entitling them to a State pension. The net result is that these men, when they reach seventy, will be in receipt of an income exceeding 13s. a week, so that they are not entitled to a State pension, and, therefore, the fact that they contributed in their working life to funds which are dealt out to them when they reach sixty or sixty-five years of age relieves the State of a great responsibility. These 6,000 or 7,000 men, or a large proportion of them, were it not for the money they subscribed to this particular society—I am only speaking for one society, and there are many societies—entitling them to old age pensions, a large number of them would be in receipt of 5s. per week State pension. Now we are exempt from Income Tax in consideration of the fact that these moneys are—I will not say for charitable purposes, because that is not the proper word, but devoted to the purpose of providing for old age. We pay, and then we keep a record of the payments, and on a certain date in the year we send the particulars to Somerset House, and we get the money back. When I was in office, it reached a few hundred pounds a year. If the plea put forward by my hon. Friend were accepted by the Chancellor of the Exchequer, we should be short of, perhaps, £600 or £700 a year, and it does seem to me that would be a very unjust proceeding. I therefore put in a plea that the Chancellor of the Exchequer, at all events, will not consider that particular proposal, and I think it is particularly ill-timed just now.

While I am on my feet I would just say a word or two with regard to the rather unpleasant incident that happened this afternoon when an hon. Friend of mine made certain charges of a personal character. I was extremely sorry to hear those charges made, and the more so as they were made unwittingly, and were not intended to be applied personally, though it might be taken that they applied personally to a right hon. Gentleman in this House, who, I am told, is a very generous subscriber to many funds, and who I know is a model employer of labour. I am sorry that charge was made, and I do not associate myself with it at all. My general attitude with regard to this Budget was fairly enough stated by my hon. Friend the Member for West Ham this afternoon. Speaking generally, we are going to support the Government. We have not gone into this matter light-heartedly. We have discussed the Budget in all its details, and, while we are against some of the taxes, and if they were taken by themselves, and on their merits alone, we should not vote in favour of them—


This is not the opportunity to discuss the Budget as a whole. That will come when we reach the Second Reading of the Bill. We are now confined to the Income Tax.


I bow to your ruling, Mr. Speaker, but the thing has been discussed this afternoon on a previous Resolution. I have said all I want to say on this particular Resolution, which appertains to Income Tax alone. I hope the right hon. Gentleman will have regard to what I have said as to those charitable or other funds which I have indicated, and also to the argument, which I think is a fair one, that I have put forward with regard to co-operative societies. The co-operative society member pays now. We do not ask any privilege for him, but it is a matter merely of expediency, a matter of administration. If you proceed to tax co-operative societies at the base, you will simply land yourself in an amount of work that will cost you more than any money you might get thereby.


I do not wish to follow the hon. Member in the arguments he has just used. I think there is a possible answer. I imagine what my hon. Friend meant was to tax the co-operative society as a separate entity. For instance, if there is a trading company in London such as the London and North-Western, or Spiers and Pond, with whom a large number of people deal, and who may be poor or may be rich, they may have to return their respective incomes for Income Tax, but the point is that the body which owns the concern, and carries on the trade, should be looked upon as a separate entity and pay Income Tax quite irrespective of the people who may trade there. The hon. Member who has just spoken is absolutely right legally, but the point that was made was, that this was a narrow legal point. The broad basis which ought to be the law is that the society should be taxed as an entity just in the same way as any other trading concern. The purpose for which I rose, however, was to join in the appeal of the hon. Member for Liverpool for greater clearness with regard to the Income Tax Acts. It is really little less than a scandal that any lawyer who wants to understand any simple point has to turn up three or four Statutes. I know the right hon. Gentleman is not responsible for it, but I do hope now that so much of the Income Tax has been altered, he will help to remedy the matter. It is extremely difficult for anyone to answer any question of the Income Tax, and even a Consolidation Bill purely would be one step in the right direction, if that were possible at the present time. A Consolidation Bill is very largely a matter of printing, and I think that possibly might be done at the present time. That the Income Tax should be made plainer to the layman is, I think, a crying necessity.

The only other point on which I wish to trouble the right hon. Gentleman is as regards unearned incomes of, say, £200 or £300 a year. They are, of course, very severely taxed by the present alteration in taxation. A person with an unearned income of £200 a year at the present time is paying, we know, a comparatively small amount—some £4 every year. Under the proposed legislation it will be £11 odd. A person who is retired, or it may be a married couple, living on savings of about £200 a year, are people who are not like persons earning an income, and who may possibly earn a little more. They are unable to earn any income other than that which they have got at the present time, and they are very likely to be hit by any kind of taxation. What I suggest to the right hon. Gentleman is that he might give some relief to that class. It might be done in one of two ways—by classing all incomes under a certain minimum, say £300 or £400, as being earned income, because really a person who has under £300 a year can hardly be looked upon as a rich person; or else, possibly, some relief might be given to married couples by treating their incomes as being separate incomes. I am not referring in any way to the amount of the tax, but I hope the right hon. Gentleman before next week will look into the hard case of those with unearned incomes of something like £300 a year.


I am sure the hon. Member for Wiltshire and the hon. Member for Birmingham will acquit me of any discourtesy if I do not give an answer to the question they raised, because I have answered the hon. Member for Wiltshire again and again. He regards my answers as perfunctory; they make him very angry, and I am sorry to say what he said this afternoon, reinforced as it has been by the hon. Member for Birmingham and the hon. Member for Blackfriars, has not convinced me that to exempt officers at the Front from Income Tax would not be, as I have said before, a very poor way—a very insignificant way—of acknowledging the incalculable debt of gratitude we owe them. I do not think still that the right way to treat taxation is to apply it to, or to exempt from it, particular classes of individuals. I do not see how it can be possible to defend the claim of officers at the front, rather than any number of other people who have made great sacrifices for their country in this time of stress. We have made concessions with regard to men in the Army both as regards Death Duties and as regards Income Tax, because the conditions of life make it impossible for them to earn the income upon which they were assessed, or because of the special risks to which they are put. But I do still submit that, just as we have again and again refused to increase the pay of other Government servants simply because of the rise in the taxation, or the increase of prices, so I think we ought to consider rates of pay at the appropriate time, and not consider them merely because of extra taxation or because of the special work which the taxed person is doing for the country. I entirely agree with what my hon. Friend the Member for Cambridge University (Mr. Rawlinson) has said on the question of Income Tax law. Not only is it quite impossible for the layman ever to understand Income Tax laws, but I have sometimes seen very distinguished lawyers at sea with regard to them. There never was anything to be compared with Income Tax laws, except, perhaps, the laws of the Government of India, which have just been consolidated. I may say that the Government at the end of the War is already pledged to institute a Committee to examine into the inequalities and inconveniences of the Income Tax law. I am happy to say that the consolidation of the Income Tax law is now proceeding. The Department are already at work, and their preliminary work will be reviewed, with a view to presentation to Parliament, by a Committee on which this great profession will be very largely represented, and it will be under the charge of the Attorney-General, who has interested himself very much in this most important work.

With regard to many of the points raised this evening, I think it will be for the Committee which works on the Consolidated Income Tax Act to deal with many of these suggestions, which I think would be better dealt with when we have money to give away rather than at a time when we want every penny we can get. Inequalities of the law as it stands ought to be treated when the Income Tax laws are treated as a whole, and not now. I do not say anything about co-operative societies, because I endorse every word that has been said by my hon. Friend the Member for Blackfriars. It is largely a question of expediency. We do not want all the trouble of deducting Income Tax which we shall have to give back again. With regard to what the hon. Member for Blackfrairs (Mr. Barnes) said about the lower scale of Income Tax, I will content myself by saying that his arguments on this point, and those used by the hon. and learned Member for Cambridge University, should be addressed to the next Resolution, because the hardship which is alleged arises from the operation of the exemption and abatement of the Income Tax. I think it would be more in order for me not to answer those arguments now, and I will simply say that I have made a careful note of them for the guidance of the Government when the proper time comes.