HC Deb 12 July 1916 vol 84 cc493-7

(1) Section forty-three of the principal Act (which relates to excess mineral rights duty) shall have effect as if sixty per cent. of the excess were substituted as the rate of duty for fifty per cent. of the excess, in the case of minerals which have become subject to a mining lease after the fourth day of August, nineteen hundred and fourteen, for all accounting years, and in the case of other minerals for any accounting year ending after the completion of the first accounting year, and any additional duty may be recovered accordingly.

(2) It is hereby declared that the words in Subsection (1) of Section forty-three of the principal Act "assets of any trade or business" refer only to assets of the trade or business of the person receiving the rent for the right to work the minerals or for the mineral wayleaves.

Mr. CURRIE

I be to move, at the end of Sub-section (1), to insert the words, "Provided that no person shall be liable to pay Excess Mineral Eights Duty whose mineral rent in the accounting year is less than the average of any two of the three last prewar rent values, and any person to whom this proviso applies who has already been assessed, or has already paid Excess Mineral Rights Duty, shall be entitled to repayment or relief accordingly as the case requires."

This is not the first occasion on which I have drawn the attention of the House to this point. In Committee the Chancellor explained to me that the drafting of my Clause was not very appropriate. On the present occasion I would not be surprised if he told me now that my effort was something worse. I have to choose between being intelligible to myself and being unintelligible to other people in a more remote part of the House, When I drew the attention of the Chancellor of the Exchequer to the matter he explained what the principle of the Excess Mineral Rights Duty really is. Sometimes when an explanation begins in that way I begin to be just a little suspicious, because if there is one thing more than another that I like about the Chancellor of the Exchequer just now it is the complacency, if not the actual pleasure, with which he faces the fact that he has temporarily mislaid all his principles, a position which we all know he must enjoy because he lives in the certainty that he can do no violence to them, and he leaves us with the hope that when he resumes the practice of keeping principles he will acquire a new set altogether. His explanation was that the principle is to charge the recipient of universal royalties who, owing to the increase in the selling price of minerals in the accounting year has received as rent in respect of the right to take minerals, an amount in excess of such rent had it been based on prewar prices. Emphasis should be laid on the Chancellor's use of the words "has received." That is the principle. The Chancellor admits that the practice is rather at variance with the principle. I did not notice when the Bill was brought forward last year that a case of this kind might arise. Perhaps for that reason I am not in a position to throw stones at other people. But it is one thing for a private Member not to notice a thing like that and it is quite another thing for the Chancellor to let it pass.

I may draw the attention of the House to what is actually going on. The facts are not disputed. The Chancellor goes to an owner of mining royalties and says to him, "Your ordinary income before the War was £10,000 a year. Now, owing to the War it is down to £9,000 a year. Therefore hand over to me £l,000 as Excess Tax." Then there is a case in which he says, "Your income was £5,000 a year. It is now £5,500 a year. Because you have got an actual excess of £500, you must pay me £1,000 of tax." I am using round figures but am using them perfectly fairly. I have all the evidence here, but it would take something like thirty minutes to go through it. I think a position of that kind only requires to be stated in order to see hat the House never had such an intention in passing this duty. A really ludicrous position has been allowed to arise. It seems impossible to argue that the Excess Tax should ever be allowed to be greater than the Excess itself. The Chancellor of the Exchequer admits that he knows cases of that kind are really arising. A case of that kind having arisen which he had never contemplated, I think, when it is pointed out to him, he ought to put it right. I think it is fair criticism to say that the sliding scale places undue reliance on certain hypothetical calculations. I only meant the Chancellor of the Exchequer to amend the Bill in such a way that an obvious anomaly and injustice will not be allowed to arise. The sliding scale is perfectly logical, I admit, but while logic may be a very good servant, it can be a very bad master. I hope, on investigation, the right hon. Gentleman will accept the Amendment.

Mr. POLLOCK

I beg to second the Amendment.

The difficulty can be very simply stated. Under the present system two standards are adopted—one what is received; the other, what is the price paid and obtained for the minerals which are sold. The Chancellor of the Exchequer intended to have his tax on what was actually received, and a mistake has arisen owing to that not really being the standard, and in order to obviate this glaring anomaly it seems perfectly fair to apply the old rule of Income Tax in every case where you can, if you want to mitigate absurdities—the rule of taking an average, and, under the provision of my hon. Friend, taking any two of three years—which is another system decided quite recently—and in that way getting rid of some of these anomalies.

Mr. McKENNA

My hon. Friends the Mover and Seconder of the Amendment have made their remarks upon the assumption that the Government do not intend to treat the Mineral Eights Duty on a different basis from the ordinary excess profits. It is quite clear from the Act that we have always intended to do so. Had we desired to follow the principle of the Excess Profits Tax we need not have had a separate Clause dealing with the Excess Mineral Rights Duty. The circumstances of the Excess Mineral Rights Duty were different from the excess profits in ordinary business. In that case we deliberately abandoned the Excess Profits Duty, and introduced a special Clause dealing with the Excess Mineral Rights Duty. On what principle have we proceeded? The point or comparison has been the price of the minerals sold. Where the duty on mineral rights has varied with the price of the minerals, we have based our charge upon the price of the mineral. Supposing that in any colliery less coal was worked but a higher price charged for the output, then it might be true that less would be paid in respect of mineral rights, because the output is less; but the rate of mineral rights would be higher, because the price of the coal was higher. The owner of the mineral rights if the coal is not worked has still got his mineral rights on the un worked coal, and he will have received in respect of the amount of the coal which has been worked an increased income, not in total amount, but according to the amount of coal worked, because of the rise in the price of coal. We take the view, and I submit it is the correct view, that that increase of income ought to be subject to Excess Duty. If we did not, the owner of the mineral rights could escape paying Excess Profits Duty altogether. We therefore adopted a different principle in dealing with mineral rights for profits, and we have charged Excess Mineral Eights Duty according to the value of the minerals, and not according to the 'amount of minerals worked.

Amendment negatived.