HC Deb 17 July 1916 vol 84 cc701-5

The relief given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, shall not, as regards insurances or contracts for deferred annuities made after the twenty-second day of June, 1916, be given at a greater rate than that of three shillings in the pound, and shall not as regards any insurance or contract for a deferred annuity, be given, notwithstanding anything in paragraph (b) of Subsection (2) of Section sixty-six of the Finance (1909–10) Act, 1910, for the purposes of Super-tax.

(2) The said relief shall not, as regards insurances or contracts for deferred annuities made after the twenty-second day of June, nineteen hundred and sixteen,—

  1. (a) be given except in respect of premiums or other payments payable on policies for securing a capital sum on death, whether in conjunction with any other benefit or not; or
  2. (b) be given in respect of premiums or payments payable during the period of deferment in respect of a policy of deferred assurance.
Provided that nothing in this Subsection shall affect premiums or payments payable on policies or contracts made in connection with any superannuation or bonâ-fide pension scheme, for the benefit of the employés of any employer or of persons engaged in any particular profession, vocation, trade, or business.


I beg to move to leave out the Clause.

I did not say anything upon the arrangement which was come to on the recommitted stage, and I am glad the right hon. Gentleman gave way as far as he did, but he only gave way partially and he made no alteration with regard to the Super-tax. At the present moment in the Courts the Solicitor-General is engaged in defending a case brought against a private individual relating to the Income Tax, and his contention is that the Super-tax is part of the Income Tax. If that contention is right, I see no reason why at present it should be separated from the Income Tax, and dealt with as being something totally distinct. In fact, the right hon. Gentle- man himself when the Motion was brought forward suggesting that Super-tax should not be charged upon that part of the income which was received—that is to say, should be charged only on the income after Income Tax had been deducted—used the very self-same argument that the Solicitor-General is now using, that the Super-tax is part of the Income Tax. But now, when it suits him, he takes the other ground and says Super-tax is something quite different and must not be treated in the same category as Income Tax. No doubt what was said by my right hon. Friend (Sir E. Carson) on the Committee stage of the Bill is correct, namely, that the Super-tax payer has no friend, and whether it is or is not logical to treat him in this way, as he consists only of a very small number of people, it is no use raising any argument in his defence, and though he may be badly treated, still it is no use in the present House of Commons attempting to defend him. The right hon. Gentleman to-day has addressed a letter to the newspapers in which he is endeavouring to persuade people to save. He does not go the right way to make them save, because if you do save you are immediately penalised by having extra taxation put upon you. I know it is useless, however just the argument may be, to bring any forward, because the right hon. Gentleman will not listen to them, and the Labour party, of course, are all taking everything they can from anyone who by thrift and industry has been unfortunate enough in this country to make any savings. I thought, as I did not make any observation upon this proposal on the recommital stage, I should not like to allow the Clause to go through without having stated my opinion that I see no adequate reason why there should be a difference between Income Tax and Super-tax. According to the arguments of the Solicitor-General, Super-tax is part of the Income Tax, and therefore ought to be treated in the same way.

Sir J. D. REES

The arguments used by my right hon. Friend were raised by myself when the Chancellor of the Exchequer announced his concession, and I hope that now they come from so distinguished a quarter the right hon. Gentleman will be good enough to reply to them. I cannot understand how it can be argued that Super-tax and Income Tax are upon the same basis for one purpose and not for another. It is a perfectly unarguable position, and I think the right hon. Gentleman gave away the case for the present distinction when he admitted with regard to the Amendment of my hon. Friend (Mr. Peto) that there was a good case for altering the rule under which Income Tax, which is an outgoing, is added to the incomings for the purpose of assessing Super-tax. The fact is that a very unjust prejudice is here allowed to operate against people who have admittedly taken advantage of the rule allowing deductions of premiums paid for insurance. They have taken advantage of that provision to pile up insurances. It is well known that a taxing Act must hit the bird in the eye. If it is not exactly to the point, the subject is perfectly justified in taking advantage of any omission or any laxity in the legal provision in that behalf. It is for this reason that in past times smuggling was regarded, if not as a gentlemanlike, at least as a sportsmanlike proceeding, and to this very day that principle rules to a great extent, and as people, perhaps people with large incomes, now take advantage of this provision in regard to Income Tax to increase their thrifty, prudent, desirable provision for their families in the future, it is most unfair that they should be come down upon in this manner while in respect of Income Tax no such penalty attaches. To my mind the case requires no argument. I have not heard a single argument advanced in justification of this arbitrary distinction, except the kind of jealousy which exists against those who are nominally rich but who are becoming poor with the most gigantic strides.

May I ask the Chancellor of the Exchequer a question on this other point? Under the Finance (No. 2) Act, 1915, it was provided that not more than 7 per cent, of the actual capital sum assured should be allowed as deduction-that is £70 for every £1,000. Now that the right hon. Gentleman is only going to allow 3s. in the £, does that 7 per cent, limit still hold good, or has it disappeared? So far as I can see, no corresponding provision to that of Clause 10 of the Finance (No. 2) Act, 1915, exists in the present Clause.


The deduction will be 3s. on every £70 in respect of every £l,000 insured.

Sir J. D. REES

Then the maximum does exist?


Of course.

Sir J. D. REES

Then I think that is another injustice. It practically penalises those who insure at older ages and at higher rates in favour of younger people who insure earlier in their lives and at lower rates. Whatever my right hon. Friend may think of the argument, that is the result, and a somewhat deplorable result. Take the case of an insurance of £2,500.


That is a matter which was enacted by the Act of last year, and it is not altered by this Clause. The hon. Gentleman can only discuss at present the contents of Clause 36.

Sir J. D. REES

I understand the right hon. Gentleman to say that the limit is still in force, and it appears to me that it is exceedingly germane to this present discussion. However, my purpose is served for the moment in getting a statement from the Chancellor of the Exchequer that the 7 per cent. limit still exists, and I hope he will explain whether he does not think that the continued existence of that limit is not somewhat inconsistent with, or at any rate a very severe addition to, the present restriction of the 3s. in the £, which is imposed by this Clause?

Amendment negatived.


I beg to move, at the end of the Clause, to add the words " or on any policy taken out by a teacher in a secondary school pending the establishment of a superannuation or pension scheme for those teachers."

This is an Amendment which I put down at the request of the hon. and learned Gentleman (Mr. Rawlinson). I think it meets his point.


I am much obliged to the right hon. Gentleman for meeting me in the matter, and for having put the Amendment down in accordance with his hope expressed last Thursday. There is one thing I want to make quite sure about. The draftsman has added certain words. I quite understand what he means. The words are "pending the establishment of a superannuation or pension scheme for those teachers." I understand the right hon. Gentleman means, as I do, that the exemption shall be complete until a scheme is formulated, as we hope it may be after the War. Afterwards we hope there will be a limitation to those who take part in the scheme. I want it clear that the exemption until then is complete, and that any secondary teacher who chooses to enter into one of these contracts is free from the tax until the scheme is formulated after the War. I have received letters, which I have not yet been able to investigate, so I will say no more about them now, showing that there are other classes in rather a similar condition to these secondary school teachers, such as lady doctors. They may be affected, and on some future occasion I might possibly make some request to the right hon. Gentleman. I just mention it now as, if I do not, he might say I have passed it over in silence. Amendment agreed to.