HC Deb 21 June 1916 vol 83 cc261-5

(1) If any individual who has been assessed or charged to Income Tax or has paid Income Tax either by way of deduction or otherwise claims and proves in manner prescribed by the Income Tax Acts that his total income from all sources does not exceed two thousand pounds he shall be entitled to the repayment of such a part of the Income Tax paid by him as will reduce the amount of Income Tax on his unearned income to the amount which would have been paid if the tax were charged on that income at the rate of—

(2) The relief given under this Section shall be in addition to and not in derogation of any exemption, or other relief or abatement, under the Income Tax Acts, but where any such exemption, relief, or abatement is to be determined by reference to the amount of the Income Tax on any sum, the amount of the tax shall be calculated at the reduced rate.

(3) All the provisions of the Income Tax Acts which relate to claims for exemption, relief, or abatement, or the proof to be given with respect to those claims, shall apply to claims for relief under this Section and the proof to be given with respect to those claims.

(4) An individual shall not be entitled to relief under this Section in respect of any income the tax on which he is entitled to charge against any other person, or to deduct, retain, or satisfy out of any payment which he is liable to make to any other person.

(5) Section six of the Finance Act, 1914, shall cease to have effect.


The Amendment standing in the name of the hon. Member for Wigtownshire (Mr. Dalrymple) is not in the proper form to be inserted as it stands on the Paper. It can be put in a new form as a new Sub-section at the end of the Clause.


I beg to move to leave out

  • "3s. 0d. if the total income does not exceed three hundred pounds;
  • 3s. 6d. if the total income exceeds three hundred pounds and does not exceed five hundred pounds;
  • 4s. 0d. if the total income exceeds five hundred pounds and does not exceed one thousand pounds;
  • 4s. 6d. if the total income exceeds one thousand pounds and does not exceed two thousand pounds,"
and to insert instead thereof,
  • "3s. 0d. if the total income does not exceed five hundred pounds;
  • 3s. 6d. if the total income exceeds five hundred pounds and does not exceed one thousand pounds;
  • 4s. 0d. if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;
  • 4s. 6d. if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds."


I beg to move, as an Amendment to the proposed Amendment, to insert at the beginning "2s. 6d. if the total income does not exceed three hundred pounds."

The Clause as it stands at present makes the charge 3s. if the total income does not exceed £300. The Chancellor of the Exchequer's Amendment proposes to strike out those lines and to make the tax 3s. up to £500. In this tax, which is upon unearned income, I think 2s. 6d. in the £ is a very fair compromise. I believe everybody will agree that people of very small incomes from unearned sources are now suffering very intensely by the War. They suffered very intensely before the War, but since the War, with the large increase in the price of food, they have suffered much more. When we find in the newspapers this morning that a sovereign is only worth in purchasing food 12s. 6d., I think that everyone will agree that in the case of the income of these people who have small investments up to £300, 2s. 6d. in the £ Income Tax is ample for them to pay. Therefore, I think that some concession ought to be made on incomes up to £300. In that case the 3s. tax would apply to incomes above £300 and not exceeding £500. I raised this matter on the Second Reading of the Bill, when it was foreshadowed that we should have some concessions. The Chancellor of the Exchequer has made a concession to some extent above £500, but below that there has been no concession whatever.


I support what has been said by my hon. Friend. Where you are dealing with unearned income below £300 a year you are dealing with an income which is very much nearer the point of subsistence now in war time than it is in time of peace. Therefore, I think it is of great importance, and if the Government could agree to this proposal I believe it would give relief in cases which are much nearer hardship than is caused by the scale to the higher incomes. I am sure if the Government could meet my hon. Friend in this matter the concession would be very widely appreciated by a very deserving class of the community whose anxieties are exceptionally high in times of war like these.


It is very difficult for me to be able to appreciate and explain to the Committee the financial effect of the proposal because it is not on the Paper. I do not think that it is a suggestion which ought to commend itself to the Committee. After the pledge given by my right hon. Friend on the Second Reading this scale has been carefully adjusted as regards unearned income and the taxes have been carefully considered in relation to one another and in relation to existing taxation. I think it would be considered a rather strange proceeding if in this year we reduced the taxation upon anybody to a lower figure than it would have been if we had not introduced this Finance Bill. I have before me the rates which would be paid on an income under £300 a year under the Finance Act, 1915, Section 20. I find that a man with an unearned income under £300 a year would be paying 2s. 9d. and three-fifths of a penny, which is over 3d. more than my hon. Friend suggests. Therefore, his Amendment would actually reduce the existing taxation on these incomes. Surely that would be out of harmony with the proposal that all classes should pay a fair share of the increased taxation. We have only raised the tax by a very small amount, a little over 2d., and at the same time there has been a promise made this afternoon with regard to improvement of machinery. I hope that my hon. Friend will not persist in asking for a reduction of taxation to that particular class of person.

Amendment to the proposed Amendment negatived.

Original Amendment agreed to.


I beg to move as a new Sub-section: (3) The relief given under Sub-section (1) of this Section shall extend to the income of any corporation or municipal council so far as such income is not derived from rates. I desire to call attention to a hardship which exists in the case of small burghs which have to bear the full burden of the new Income Tax, and which are not allowed to claim exemption, as a private individual is whose income is under a certain sum. I will give the case of a burgh in my own Constituency—the borough of Wigtown, which has a population of 1,368. The income of the corporation of that borough in 1914–15 was £311, composed mostly of feu duties and rents of pasture. When the ordinary deductions were made that sum was reduced to £263 15s. Last year they had to pay Income Tax on that amount of £39 3s. 3d. This year, if the full amount is charged, it will amount to £65 18s. 9d. There are a good many small burghs in Scotland in which the rate of 1d. in the £ produces very little. I believe there is one burgh in which it produces only £6. The matter has been brought before the Committee of the Convention of Royal Burghs, in Edinburgh, and they gave it as their opinion that small trading authorities should have the same right to obtain repayment as private individuals. It has been impressed on the local authorities that they should as far as possible in these times study economy, and I think they are endeavouring to do so. But if this full rate is charged in the case of the burgh of Wigtown it would make a difference of 1d. in the burgh assessment. I have put down the Amendment to call attention to this grievance, and I hope the Secretary to the Treasury will give it favourable consideration.


This is an original suggestion. The whole theory of Income Tax relief is to relieve the poorer class of taxpayers, to relieve the individual, and not a body of persons. In so far as the income of a corporation, or of a company, or of a society is distributed among individuals, those individuals are, of course, entitled to the relief from taxation. But it is clearly a great extension of the principle of relief, and is, I submit, unjustifiable, to treat in the same way the poor individual and a corporation or municipality. What is the test of the hon. Member as to whether the corporation, or municipality, or society deserves relief? His test is that they should be relieved on the income which is not provided from the rates, on the income from some property, irrespective of whether the municipality or corporation is a rich corporation with wealthy ratepayers, or a poor corporation with poor ratepayers, and whether it possesses gasworks, or racecourses, or anything of the kind. There is no use in giving Income Tax relief unless you give it to deserving people. The test of the hon. Member is not a fair test. The only fair way of applying relief is to give relief to individuals whose income we can test, and not to a company or a corporation with private means.

Amendment negatived.