§ (1) Any person occupying woodlands who proves to the satisfaction of the Special Commissioners that those wood lands are managed by him on a commercial basis, and with a view to the realisation of profits, shall have the same right under Sub-section (4) of Section twenty-two of the Finance (No. 2) Act, 1915, to elect to be charged under Schedule D, as a person who proves those facts to the satisfaction of the General Commissioners, but an application to prove those facts in any year in respect of the same woodlands must be made either to the General or Special commissioners, and not to both.
§ (2) Paragraph (a) of Sub-section (4) of Section twenty-two of the Finance (No. 2) Act, 1915, which provides that the election shall extend to all woodlands managed on the same estate, shall not apply to wood lands which are planted or replanted after the passing of this Act, if the person occupying those woodlands gives notice to the General or Special Commissioners within a year after the time when they are so planted or re-planted, that they are to be treated for the purpose of that paragraph as being woodlands on a separate estate.
§ (3) Section twenty-three of the Customs and Inland Revenue Act, 1890 (which gives relief to trading persons in case of loss), shall, where a person occupying woodlands has elected to be charged to Income Tax in respect of those woodlands under Schedule D, apply to losses on those wood lands as it applies to losses in any trade.—[Mr. McKenna.]
§ Clause brought up, and read the first time.
§ Mr. McKENNAI beg to move, "That the Clause be read a second time."
§ This is to carry out a pledge made yesterday with regard to woodlands.
Captain BATHURSTI should like to express my gratitude to the Chancellor of the Exchequer for moving this very generous Clause. I say "generous," not from the point of view of the landowner, but from the point of view of national exigencies. Most taxation of rural land and rural products has tended for many years past to restrict production. This Clause, at any rate, has the merit that it may encourage many public-spirited people to increase the production of an article of which there is great national 627 need at the present time. I should like to ask the right hon. Gentleman a question with regard to Sub-section (1). I under-stand that reference can be made under the Sub-section to either the General Commissioners or the Special Commissioners " to decide as to what are commercial woodlands?
§ Mr. McKENNAYes.
Captain BATHURSTI take it that by Special Commissioners the right hon. Gentleman means what are known at the present time as Special Commissioners, and not Commissioners ad hoc with special knowledge of woodlands. I believe we are approaching a time when there will be very great danger of what might be popularly regarded as sporting woodlands being unfairly treated when, in fact, they are woodlands of high commercial value. I will give the Chancellor of the Exchequer a small illustration of what I mean. In the West of England at the present time there is a large amount of alder being grown, not for local purposes, but for clogs for the Lancashire workers. I am quite sure the ordinary Commissioners, whether General or Special in the sense of this Clause, would find it very difficult to realise that there was any value in that alder except possibly for sporting purposes. The same thing applies to cricket-bat willow, of which a large amount is being grown for that purpose, which is an important commercial purpose. I do not want to press the point now, but to suggest to the Chancellor of the Exchequer that to get full justice done the time is coming when a special meaning ought to be given to the words "Special Commissioners"—that is, com-missioners ad hoc-who have to deal with questions relating to woodlands. With regard to Sub-section (2), I understand that is inserted in response to an appeal made to the Chancellor of the Exchequer in Committee and also yesterday, to exempt, as far as possible, all new plantations from taxation. I understand it will now toe possible for any person who plants land freshly with trees to take that portion of his estate and treat it for the purposes of Income Tax as though it were a separate estate altogether, and that if he elects to be taxed under Schedule B in respect of the bulk of the estate it will be possible for him to ask to be taxed under Schedule D in respect of that portion of his estate. That is going a long 628 way to encourage landowners, as far as their means permit, to take part with the State in afforesting a large area of land.
As regards Sub-section (3), which is quite new, so far as this sort of property is concerned, it looks as if it might prove to be a very valuable concession. What I want to know is this: Supposing in any one year, owing to larch disease or serious gales, a large amount of timber suffers loss or destruction, will it be possible to bring into account the loss upon that timber, after a careful valuation, as against a profit that may be derived during the same period from timber that is felled and has its full commercial value? If I read the Sub-section aright, that is what is contemplated, but it is a point upon which I should like some guidance, because it is the sort of thing that happens frequently. In a wind-swept country, where a good deal of planting goes on, you may get a large portion of a large plantation laid low in a single night. That happened last March in many parts of the country. I want to know whether, in conditions like that, either the present or prospective loss resulting from such abnormal conditions can be brought into account in reckoning whether the tax-payer is to be assessed up to the full value of the profits he derives from the other parts of his woodlands? The same thing frequently happens in the case of larch, disease, particularly in damp climates such as we suffer from, unfortunately, in the West of England, Subject to any enlightenment on that particular point, I desire to thank the Chancellor of the Exchequer and his advisers for the very reasonable' way in which we have been met in the matter of the taxation of wood-lands.
While referring to this subject I should like to suggest that the time is coming when the Government might well make it perfectly clear to landowners generally what part the Government are going to take in this work of afforestation, and what part landowners themselves are expected to take in that patriotic task, because it is a patriotic task. There is no great inducement to landlords to under-take that task with a view to future profits, but a large number are prepared to do their part if the Government at an early date indicate what their part is to be. We all know that the Government have in view, perhaps in a nebulous condition in their own minds, a large scheme of afforestation. If landowners are to be expected 629 to plant their estates, it is only fair to them that the Government should indicate to them at the earliest possible moment what the Government's scheme is to be.
§ Mr. McKENNAClause 1, except with regard to the construction of the word "special," was thoroughly well under-stood by my hon. and gallant Friend opposite who described its purport. It was un-due modesty on his part when he said he was not fully aware of what this intended. Sub-section (1) gives the same right of application to special Commissioners which now exists with regard to general Commissioners. Sub-section (2) enables the taxpayer to treat a newly planted part of his woodlands as a separate estate for the purposes of assessment. It gives him the option of applying Schedule B of the Income Tax to one part of his estate and Schedule D of the Income Tax to another part of the estate. It is, of course, a very valuable concession that is given, not primarily as a relief to the taxpayer, but in order to encourage afforestation. Only in Sub-section (3) did my hon. Friend fail to take in the full meaning. What we in-tend by Sub-section (3) is to give the owner of woodlands precisely the same advantage which is given to the trader. Supposing a landlord spends money upon developing woodlands and that money is all lost and does not give him any advantage, he may treat it as a loss, just as the trader would treat it as a loss.
§ Mr. McKENNAIt does not bring him the appropriate advantage. He spends money on his woodlands and expects to get a return. He does not, and he will treat that expenditure as a loss just as a trader would. The other descriptions of loss which the hon. Gentleman has mentioned would be treated as loss without this Clause. They would be loss in any event. I think I have given a sufficient answer, and I hope I may now have the Clause.
§ Mr. AINSWORTHI think everyone will be thoroughly obliged to the right hon. Gentleman for the concessions he has made to the forestry industry. I should like particularly to speak of forestry now as an industry of the country, and a most valuable one.
§ Clause added to the Bill.