§ Sir E. CORNWALL (by Private Notice)asked the Chancellor of the Exchequer whether, if the Canadian securities and those of neutral countries are not received on deposit in sufficient quantities, it is the intention of the Government to apply for powers to impose the special Income Tax on the income of such securities if not deposited?
§ Mr. McKENNAYes, without doubt. But I trust everyone will realise that it is a public duty to deposit these securities, more particularly securities of the Canadian and neutral Governments, without delay.
§ Mr. J. O'CONNORWill the Income Tax be charged on holdings under the statutory amount? I think the minimum amount received is £1,000.
§ Mr. McKENNAThe usual abatements of Income Tax will be allowed. Deposited securities under the scheme will not affect the Income Tax laws at all. What my hon. Friend was referring to was the imposi- 2674 tion of an additional Income Tax of 2s. in the £ in respect of securities which are not deposited.
§ Mr. O'CONNORWill that penalty apply to lesser holdings than £1,000?
§ Mr. McKENNAYes. When I ask Parliament to impose the tax I shall ask Parliament to impose it in respect of all securities which we offer to take. Securities in amounts under £1,000 can be deposited through a banker.
§ Mr. ROWLANDSWill the right hon. Gentleman consider the advisability of offering some other facilities for these smaller holders, especially now the list is extended to other securities?
§ Mr. McKENNAYes, I should be very glad to consider any possible additional facilities.
§ Mr. RAWLINSONThere seems to be some doubt about this matter. Supposing a person deposits securities which the Government have to sell, at, we will say, a profit of 10 per cent., will they give the person who deposited them only 5 per cent.?
§ Mr. McKENNANo, Sir. If securities are sold—and they can only be sold at all where it is necessary to sell them—then whatever the price may be the Treasury will get no advantage out of it, but the depositor, or the class of depositor, will get the advantage. Depositors of that class of securities will get the advantage. In no circumstances will the Treasury get the advantage, consequently there is no inducement to the Treasury at any time to sell. We are undertaking not to sell unless it is necessary to sell.
§ Mr. HOUSTONWill the right hon. Gentleman make the position quite clear? In a supplementary question the other day I asked him the price, and he mentioned—I think it was a slip of the tongue—the face value of the securities plus 5 per cent. I see he has corrected that to the current market price. Will the right hon. Gentleman correct the wrong impression which, I think, exists, that the current market price of many of these securities has very greatly depreciated during the War, and that if he purchases these securities, even plus the 5 per cent., it must still show very heavy loss in case of sale to the original holders?
§ Mr. McKENNAMy hon. Friend must understand that the securities, which are lodged as collateral securities for a time 2675 loan, can only be sold, to put it plainly, if the British Government is unable to meet its liabilities. In such a contingency as that, which I regard as extremely remote, I suppose the holders of those securities would be willing to suffer with the rest of the citizens of this country. That is the only contingency that I can foresee in which the securities may be sold. That is what we describe when we say that the securities will only be sold if it is necessary to sell them. The terms which we offer are these: We say we will not take these securities until it has become necessary to sell under the conditions I have described. We will give the owner the price at which the securities stood when he handed them over to us when we made our request.
§ Mr. HOUSTONThe market price?
§ Mr. McKENNAThe market price at the time we made our request, together with 5 per cent. We consider that that is a very fair offer, because under the conditions which I have named, the conditions under which it will become necessary to sell, I think these securities would stand at a very much lower price.
§ Mr. HOUSTONNot necessarily. I wish my right hon. Friend to understand that I am only putting this question so that the position may be made quite clear. I take no exception to what he proposes. I only ask that the position may be made quite clear so that those concerned may understand it.
§ Mr. McKENNAI am very much obliged.
§ Mr. J. O'CONNORIs it made quite clear, have instructions been issued that holders of smaller amounts than £1,000 will not be subject to the penalty of excessive Income Tax? Is it also made quite clear as to charges at the bank, and so on? I believe there is a good deal of confusion—
§ Mr. McKENNAI think the second point is perfectly clear. As to the first point, it does not at present arise, as neither small holders nor large holders are subject to the additional Income Tax at present. But, undoubtedly, if securities do not come in in sufficient quantities, it will be my duty to ask Parliament to impose the additional tax.