§ If any person who has paid, by deduction or otherwise, United Kingdom Income Tax for the current Income Tax year on any part of his income at a rate exceeding three shillings and sixpence proves to the satisfaction of the Special Commissioners that he has also paid any Colonial Income Tax in respect of the same part of his income, he shall be entitled to repayment of a part of the United Kingdom Income Tax paid by him equal to the difference between the amount so paid and the amount he would have paid if the tax had been charged at the rate of three shillings and sixpence, or, if that difference exceeds the amount of tax on that part of his income at the rate of the Colonial Income Tax, equal to that amount.
§ In this Section the expression "United Kingdom Income Tax" means Income Tax charged under the Income Tax Acts; and the expression "Colonial Income Tax" means Income Tax charged under any law in force in any British Possession or any tax so charged which appears to the Special Commissioners to correspond to United Kingdom Income Tax.
§ The CHAIRMANWith regard to the first Amendment standing on the Paper, it is not quite in the correct form. It proposes to leave out two lines of the Clause, and then to put them back again, and the effect of that is that the Amendment in the name of the hon. Member for Nottingham (Sir J. D. Rees) has precedence.
§ Sir J. D. REESI beg to move, after the word "person" ["if any person"], to insert the words "or body corporate."
I do not think any speech is necessary on this matter. It may be that this is not necessary, but I am not sure that when the word "person" is employed in Section 28 of the Finance (No. 2) Bill of 1916 it covers companies. Section 192 of the 1842 Act states that
"Wherever in this Act, with reference to any person, matter, or thing, any word or words is or are used imparting the singular number or the masculine gender only, yet such word or words shall be understood to include several 396 persons as well as one person, females as well as males, bodies politic or corporate."
If that is so, my Amendment is not needed, but I am not quite sure that it is so, and I should like to be quite clear that the benefit of this Section does accrue to a company or body corporate. I therefore beg to move the Amendment standing in my name.
§ Mr. McKENNAI understand "person" does include "body corporate." I have always understood so.
§ Sir J. D. REESHas the right hon. Gentleman any objection to putting it in?
§ Mr. McKENNAYes, because if it does include "body corporate" it would be most undesirable to have it in the one Act and to leave the inference that it does not include "body corporate" in other Acts, whereas it does.
§ Mr. BRYCEI think the hon. Member for Nottingham (Sir J. D. Rees) will be assured when he knows that I put this in, because in the Interpretation Act of 1889 it expressly provides that the word "person" does include "body corporate," and that Act applies to all Acts passed after 1889.
§ Sir J. D. REESI ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ The CHAIRMANThe Amendment of the hon. Member for Inverness (Mr. Bryce) should be moved in this form: To leave out from the word "income" ["any part of his income"] to the end of the paragraph, in order to insert the words "proves to the satisfaction of the Special Commissioners," and so on.
§ Mr. BRYCEI am very glad to adopt the suggestion, and I will accordingly move the Amendment in this form: To leave out from the word "income" ["any part of his income"] to the end of the paragraph, and to insert instead thereof the words "proves to the satisfaction of the Special Commissioners that he has also paid any Income Tax levied in any of His Majesty's Dominions, Colonies, or Dependencies, Colonial Income Tax, not being an Income Tax imposed locally for local purposes, in respect of the same part of his income, he shall be entitled to repayment of a part of the United Kingdom Income Tax paid by him equal to the amount of the Colonial Income Tax paid by him, or 397 the whole of the United Kingdom Income Tax when the Colonial Income Tax rate is not less than the rate for the time being in force in the United Kingdom."
With regard to the general arguments, as the House will see, this is an Amendment introduced with a view to obviating double Income Tax within the Empire. The general argument against the double Income Tax has been very often laid before the financial authorities of this country, and ever since the year 1896 there have been continual memorials to the Chancellor of the Exchequer of the day with regard to the evils inflicted by the present system. But of late years, and especially since the beginning of this War, these evils have become very much more accentuated. The other day a very heavy war tax was imposed by the Commonwealth of Australia, and it is highly probable that if the War continues other Dominions and Possessions of the Crown will be forced to follow the same example. My argument with regard to this divides itself really into two branches. First of all, there is the individual aspect of the question, and, secondly, the Imperial, which includes the commercial, aspect of it. With regard to the individual aspect, I think even the Chancellor, who wishes to get money from every source that he can, and very properly wishes to do so, must admit that while on all sound principles of taxation it is fair that people equally able to bear the burden should be the persons to contribute, it cannot be right or fair, however much money he wants, that he should ask people in exactly the same position in different parts of the Empire to pay a very different rate of taxation for the very same purposes. That the question arises at all is due to the fact that the principle of taxation pursued in most of the Overseas Dominions, I think in all of them except in the Dominion of New Zealand, is based upon the principle that taxation should be levied upon the income earned in the particular country, whereas here the principle is that taxation should be levied upon the income of the person resident here, no matter where his money is earned. Personally, I am quite clear in my mind that the former principle, the principle pursued by the majority of the Overseas Dominions, is the right one. It appears to me a fair thing that a State should have power over the income earned within its own jurisdiction, and if that principle had been pursued in the Income Tax procedure of this country this ques- 398 tion would not have arisen at all. We ought to try to approximate as nearly as we can to the carrying out of that principle, and I suggest, as it was well put the other day by Mr. Young, the Agent-General for South Australia, that this war taxation should be regarded as a single tax for the purposes of the War, and that if a man has paid towards this war taxation in any part of the Empire, that should be counted to him in the other part. In other words, my Amendment tries to secure that if a man has paid in Australia, New Zealand, South Africa, or India towards war taxation, he should have that taxation deducted from the amount payable in this country, whatever it may be. The Chancellor, by the wording of this Clause, has admitted the principle already. The Exchequer up to this time has always disputed the principle. It has said that as there were two protecting countries, it was perfectly fair that a man should pay in each of the countries that protected him. I think, however, that with the views we have now of the unity of Empire, and the actual facts of to-day, that view is no longer maintainable; and the Chancellor himself has agreed that it is no longer maintainable by making the concession that he does up to the point of 3s. 6d. in this Clause 28.
6.0 p.m.
I need not argue that particular point further, but I want to say a word or two with regard to the further aspect of the question. The persons who have studied this subject, and especially those who have to pay the extra taxation, do not consider that the concession which the Chancellor of the Exchequer has made is nearly enough, and they ask that on the principles of equity alone, he should modify his proposal. Surely it cannot be fair to ask a man merely because he has an investment in Australia, in India, in South' Africa, or in New Zealand, to pay Income Tax twice over? Why should he be in a1 worse position than the man who holds securities in the United States, in South America, in Japan, or in China? Why should his investments in the Empire be penalised, and his investments in foreign countries not be penalised? It seems to me that if you are going to penalise investment in any way, it would be much fairer to penalise investments held in foreign countries, and relieve those held in States of the Empire. The Treasury used to argue that it would be inequitable to make any distinction between the two 399 classes of investment, but I hope they have now abandoned that idea, and that we shall not hear anything more of it. I should rather hope that, as things are shaping, we shall find a distinction always maintained between investments in His Majesty's Dominions over the seas and investments in foreign countries. In regard to that point, I do press on the Chancellor that it is not fair that a man who holds investments in the Commonwealth of Australia, or in New Zealand, should have to pay double the taxation— because it amounts in many cases to that—that the man has to pay who holds investments in Japanese securities. In the case of Japanese securities, the man pays no Income Tax in Japan, and pays on it once only. In the case of the investment in Australia, he pays on it in Australia, and he pays also here. On no principle of equality of sacrifice can that principle be maintained. With regard to the actual amount of the imposition, the concession which the Chancellor has already made practically covers the grievance in the case of investments in India and South Africa, because the 1s. 6d. which he agrees to take off the 5s. Income Tax in the case of Colonial investments more than covers the tax in India, the Income Tax there being now 1s. 3d. It very nearly covers the total of the South African Income Tax, even at its highest points, on incomes of £24,000 a year and upwards. The Income Tax in South Africa is 2s. at the highest point, and is graduated downwards, so that practically with regard to investments held in that country there will no longer be, under the Chancellor's proposal, any grievance. The grievance remains extremely heavy, however, in cases of investments in Australia. The Commonwealth Tax has been put on since the War began. Before that there were State Income Taxes, used for local purposes, and they had a maximum amount of not more than 2s. in the £. But in the case of the Commonwealth Tax, which has had to be imposed for the very heavy expenditure which the Commonwealth has undertaken for the assistance of the Allies, the tax runs from 3d. in the £ on small incomes up to no less than 5s. in the case of incomes over £7,000 a year, and its incidence between those points becomes very heavy as the amounts become large. Besides that, investors in companies have 400 the double tax. A company under this Commonwealth tax pays 1s. 6d. on its undistributed income, and on its distributed income its shareholders also pay rates varying, according to their means, up to 5s.; so that it may be that a man holding an investment in Australia, and living here, will have to pay something like 13s. under this 5s. tax—now reduced to 3s. 6d. He will pay 3s. 6d. plus 5s., or 8s. 6d., and in the subsequent year his share of the undistributed income of the company in previous years plus his local taxation. The total amount would be something like 13s. or 14s. in the £. I do claim that investors holding investments of that nature are entitled to more consideration than the Chancellor seems to have given—that is so far as individuals are concerned. But I want to point out to the Chancellor what the effect of this very heavy double taxation is upon the whole commercial, industrial, and Imperial aspect of the question of taxation. It has already been shown that an amount of money is going to be taken away from this country. Many companies which are here and have been taxed here make large incomes in foreign and outside dominions and the Overseas Dominions of the Crown, and they are removing their head offices from London in order to escape British taxation. I have several times before pointed out to the Chancellor of the Exchequer that the Bombay Electric Supply and Tramways Company, Limited, paid in Income Tax £17,000 a year, and it is now removing its head office to Bombay. The effects of such procedure are various.
In the first place, it takes away from the Chancellor incomes from which the Chancellor would have derived Income Tax if the company had stayed here. Again, a large number of shareholders are resident in India and they will no longer pay any British tax at all; whereas, if the company had remained here, they would have paid their share of the taxation. Further, that company ordered its machinery from British manufacturers. Now that it head office is removed to India you cannot guarantee that the machinery will any longer be ordered here. The directors will be different. Their policy may be different. I am glad to say that we have seen much patriotic feeling in these matters, but still it would not, probably in the future, be the same kind of feeling that we have here in regard to the ordering of goods and the 401 developing of the resources of the Empire. It is not to be expected that it should. The result of all this may very probably be—I think probably will be—that large orders for machinery needed for the development of the company will be given in other countries—America and elsewhere— and not in this country. That will be the universal tendency if this leaving of England by important companies goes on, and it must continue. Numbers of companies are now considering whether or not they shall withdraw from England altogether, and the Chancellor will lose altogether very large blocks of Income Tax. Besides that loss of Income Tax and the loss of orders for machinery, there is the other fact that the Colonies will suffer, because they no longer will have put into them investments of large numbers of people in this country. It is perfectly clear that if you are going to have a double Income Tax, 5s. here and 5s. in the Commonwealth of Australia, people will begin to withdraw their investments from the Commonwealth of Australia.
Probably the Chancellor will say that there are very large amounts of British money in Australia. There are, and some of them are in a locked-up form which may not prove very easy to remove. But others are in a very fluid form. For instance, many of the Australian banks have very large deposits, principally or. very largely from Scotland, amounting to very many millions of money. Those deposits, which are very fluid, can be removed at seven days' notice, and they are already being removed in very considerable quantities from the Australian banks simply because the depositors will not stand an Income Tax of 10s. or more in the £. Surely we want to encourage investments within the Empire itself, instead of encouraging investments of money in foreign, and perhaps hostile countries. The existence of a tax like this will tend to drive money away from the King's Possessions Overseas to foreign countries: the existence and continuance of this tax inevitably involves withdrawals of this character. There is another point. The withdrawal of capital from our Overseas Dominions will necessarily involve a decreased flow of British population to those regions. Labour will flow where capital exists to employ it. If you diminish capital you inevitably diminish labour. It has been a happy thing for us that we have had these great Dominions in which our surplus population can settle 402 and live under good normal conditions. But with the withdrawal of capital, which is certain to follow upon the continuance of this taxation, we will find that the flow of population to those Overseas Dominions must inevitably diminish, and perhaps, eventually altogether cease. Our surplus population will, therefore, be diverted into countries where this heavy taxation does not exist.
The case of India offers some special features upon which I should like to say a word. In the case of our Overseas Dominions, all of which, irrespective of the Crown Colonies, are self-governing, the control of taxation is necessarily in the hands of the Governments of those countries. Delicate questions must necessarily arise between the Government of this country and the Governments of the great Overseas Dominions in regard to such taxation. I think that is an additional reason for diminishing the weight of this taxation—that it must necessarily, to some extent, hamper the free action of the Overseas Dominion Governments. If we take the case of Canada, which at present has no Income Tax—although it is going just to impose an Excess Profits Tax—is it not certain that the Canadian Government, although it may wish to impose an Income Tax, may feel a difficulty about it, knowing what the heavy effect will be on the United Kingdom investor? For most money in Canada comes from the United Kingdom! Is it not almost inevitable when the Canadian Government realises the heavy burden of the imposition that they will feel the freedom of their action restricted? I think that is a question which the Chancellor of the Exchequer ought to keep constantly before himself. One can see that there must be very great difficulties between the Governments which can only be settled by the Imperial Conference, and no doubt that question is one of the questions which will be brought up before the Imperial Conference. The Chancellor of the Exchequer has several times said that the whole of this question of double Income Tax is one which can only properly be settled by a Royal Commission, which he himself—or his successor—means to set up when the War is over. But the question is so urgent a one that it cannot be safely deferred to the Greek Kalends! We do not know when the War is going to stop. Besides, we all know that a Royal Commission takes a very long time to come to any conclusion. We also know that after the 403 Commissioners have come to a conclusion—as in many very important cases most definite conclusions have been arrived at—no action whatever has ever been taken on their Report. We can scarcely be satisfied that the question will be dealt with by a Royal Commission after the War.
I have said the case of India presented some special features. They present them in this way—that the great majority of the European inhabitants of India stay there only a limited time. They come away then, but they very, very often leave their money there. If they went on living there they would escape the double Income Tax. But as they must come home for the sake of their children's education and must eventually live here—India not being a place where a European wishes to stay all his time—the result will be that when they come home they will also bring home their money, instead of as at the present time largely leaving it in India. In the second place, India has the special feature that it is entirely under the control of the Home Government, and so it cannot take such measures to protect itself as it might seem desirable. It has not got the freedom of action of the self-governing Colonies. That being so, it is especially our duty to see that justice is done to India in regard to these matters of taxation. We in this House are the trustees for India. We ought not to permit any legislation which unduly weighs upon Indian interests. With regard to the Imperial question, I do not know that I need say very much, because the facts are clear. Investment must be diminished largely by the continuance of this taxation: that is an aspect which cannot fail to be obvious. There is the cessation of the investment of capital, the diminution of investments of capital, the diminution of the flow of population. There is one other aspect, and that is that it tends to prevent the interchange of residence between the Overseas Dominions and this country. There has been an increasing tendency of late years for Australians and Canadians to come to England for the education of their children. If they remained more than six months they become liable to this double taxation. The result of that is that already many of them have arranged to leave this country in order that they may not be subject to the taxation. The tendency is also to drive even the ordinary resident out of this country in order, to avoid the taxation. The Chancellor of the 404 Exchequer last night said that he realised what a very disastrous effect high taxes had not only on the life, but on the development of the country which had to impose them. Therefore, I confidently appeal to him to give further consideration to this question, and if he will, by the Report stage, endeavour to give us still further concessions, I am sure all those who have this matter at heart will be greatly indebted to him.
This question has been warmly taken up by great numbers of public bodies throughout the country, and particularly in the Overseas Dominions. The London Chamber of Commerce, the Associated Chambers of Commerce, special associations formed to promote the abolition of excessive Income Tax, and many chambers of commerce throughout the country, and in the Overseas Dominions, have warmly espoused this. A deputation was received this morning by Mr. Hughes, the Premier of the Commonwealth of Australia, and he gave his warm approbation to the proposals which the deputation laid before him, and which are embodied in the Amendment I am now moving. He said he would draft a special memorandum to the Chancellor of the Exchequer about it. I do not know whether the Chancellor of the Exchequer has yet received that memorandum, but I hope he will give it the consideratoin it deserves as coming from a man of such great power and ability as the Premier of the Commonwealth of Australia.
§ Mr. MONTAGUIf this Clause had not been put in, the Income Tax on Colonial incomes this year would be increased along with all other incomes. The Government is suggesting to the Committee that they should not increase the Income Tax in this case, yet the hon. Member makes the same speech that he would have made if we had never made a concession at all. I most respectfully suggest to the hon. Member that he has taken advantage of the peaceful condition in which we find ourselves in this House owing to the War, to air a very, very old grievance. Here we are at war, but the only arguments he used were peace arguments. He talked about inducements to invest in Colonial securities. We do not want our people now to invest in Colonial securities. He talked about the flow of the population of this country to the Colonies. We do not want emigration to our Colonies at this moment. He talked 405 about the disappearance of companies from this country, the investment of money in foreign countries, and a hundred and one other arguments, all very convincing if we were not at war, but absolutely irrelevant to the position in which we find ourselves. What is the position with regard to this double Income Tax? It is this, that year after year it has been aired in this House, certainly "ever since I was a Member of it, and year after year it has been postponed for settlement. It is not always to be regarded as something done for the benefit of our gallant fellow citizens who live in Australia. It is not to be regarded, as my hon. Friend suggested it should be regarded, as a boon to the helpless 300,000,000 citizens of India. It is not to be forgotten that it is also a boon, and in many cases a much larger boon, to the wealthy Australian merchant, in the City of London. This Clause we have introduced into this Bill in recognition of the fact that there would have been, if peace had obtained, an Imperial Conference before now, and that one of the subjects on the agenda would have been the subject of the double Income Tax. It is a very difficult question and a very difficult principle which is there involved. It is not necessarily right to say, as the hon. Member airily suggests, that our Income Tax is wrong in principle, and that the Colonial Income Tax is right in principle.
§ Mr. MONTAGUIt is a matter of discussion and adjustment. It is a matter of detail and complicated examination. It is a matter of how you are to apportion the loss of revenue between the Dominions concerned and this country, and, therefore, it is obviously necessary that it should be submitted to an Imperial Conference and to that Committee on Income Tax to which the hon. Member refers. Therefore, admitting that the grievance exists, and the question of (principle and the application of principle being in dispute, what is obviously the right course for this House to take? Why, obviously, I would suggest, you should take the course of leaving the grievance where it was, and taking care that no enactment made by this House this year, or next year, pending the settlement of this question, should make the alleged grievance worse than it was before the Bill was introduced. That is what we have done. The grievance my hon. Friend is 406 attacking is not instituted by this Bill. The grievance is no worse to-day than it was when the Budget went through last year. We have sacrificed something over a million of revenue in order to make sure that the grievance would be found by the postponed Imperial Conference where it was before this Bill was introduced. Now the hon. Member comes forward and says, "That is not satisfactory to me; you must take this opportunity of remedying the situation, and go much further." He would ask us to lose a certain revenue, as we have calculated, of £2,500,000, and a prospective revenue of £18,500,000. Why do I give that large figure? Because, if you exempt these subjects from taxation altogether, because they are being taxed in the Colonies, there is nothing to prevent anybody at once putting upon these people an Income Tax equal to the British tax. It would not make any difference to the subject concerned under the hon. Member's scheme, but we should lose every penny of Income Tax in this country on Colonial Investments—a sum of £18,500,000 altogether.
I tell the House, frankly, I am not prepared at this juncture, pending the sitting of an Imperial Conference, to recommend to the Committee the loss of a vast revenue of that kind. I will go further and point out, that when you do adjust this question you will have to consider not only the rate of tax, not only the double tax, but also methods of assessment. My hon. Friend must be aware that the methods of assessment in the Dominions and here differ very much indeed. Let me take one example. It is perfectly easy to imagine an income assessed in a given year on £200 here (on our three years' average) and on £2,000 in one of the Dominions on the basis of the preceding year. We could have examples worked out in which that might very, easily occur. Under my suggestion in this Budget, in the two years such an income would get relief amounting to £165. I am assuming here that the Dominion Income Tax is 2s. 6d. in the £, and the British Income Tax 5s., reduced to 3s. 6d. Under his scheme, in the two years that income would only get a relief of £75. My scheme works equitably year after year; his scheme is not always so generous. I do not say that by "way of criticism, and I do not base any other arguments upon it than this: It is not the simple matter it seems. A large number of complicated questions have got to be: examined, and they can only be 407 examined by the Imperial Government at home in relation to the Dominions. It seems to me we are justified in willingly sacrificing over a million revenue in order to ensure that the evil, if evil there be, is not exaggerated pending that examination. I most respectfully suggest to the (Committee that the hon. Member has not devised a reasonable means of solving the question, that it would be very expensive to adopt his suggestion, and that we have shown ourselves ready to sacrifice revenue by the very means of this Clause, which must not be accepted as a sacrifice of principle or the establishment of a new principle. It is only at best a temporary expedient until the restoration of peace. The deliberations I have suggested must at the earliest opportunity occur, and until they do occur I think we had better leave the matter where it stands. I would venture to point out that by the concession we make we are doing something which is not done by the Dominions which have the same Income Tax principle as ourselves. I mean New Zealand, British Columbia, and other Dominions. I submit with confidence that we have handled this matter in the best way possible. I submit that the hon. Member has been a little ungrateful, and I hope the Committee will not accept a proposal which is full of anomalies, and might cost as much as £18,500,000.
§ Sir G. REIDI have often listened to the statements made by the right hon. Gentleman, and I have always admired the clearness and force with which he has put the view of the Treasury. I regret that on this occasion I cannot quite accord to him the praise which mentally I have given to all his previous utterances. I would like to point out that this is not what has been represented by the right hon. Gentleman, but the urgency of this matter arises almost entirely out of the War. I know it has been a long standing injustice, but I do not now wish to refer to pre-war conditions. I am now speaking more for the Dominion with which I am more intimately acquainted, and I say that the urgency of this matter arises out of the War and out of the fact that the Australian Dominion has sent a large force to take part in this great struggle at its own expense. In consequence of the expense of maintaining that force the Federal Government of Australia, which had no Income Tax before the War, has imposed taxation now amounting to 5s. in the £. Consequently Australians are paying their war taxation twice over, 408 because they pay 5s. in the £ in Australia for this Imperial War and then if they indulge in the old sentiment of coming here they are called upon to pay another 3s. 6d. in the £ for the same War. I should like to know how the men of England would look if, after they had paid 5s. in the £ in Income Tax in this country, they were called upon to pay another 3s. 6d. in the £ when they went to the Colonies in respect of the same War! We really must remember this, because the present Chancellor of the Exchequer and his predecessor have always treated the representations and suggestions which we High Commissioners made during the course of the last six years with the greatest kindness and consideration.
I feel that the urgency of this matter is so great that I shall support the hon. Member for Inverness. I quite see the difficulties which might arise under this suggested Clause, but what I would suggest to my right hon. Friend is that this matter really shows a pressing aspect of the War, owing to the fact that although Australians are paying this heavy contribution cheerfully once they will not pay it cheerfully again, and the question of £2,000,000 or £3,000,000 in connection with this matter is not a very large question, because if there is one money interest or Treasury interest that ought to be remembered it is this fact that geographically the Imperial centre is not the centre of this vast Empire. We do not want to shift the grand centre which exists here. We have always come to it thousands of miles, and might I suggest, apart from these people who have investments and dividends; the aspect of the case which has struck me most forcibly of all: There are people who have come here not to make money but to spend it, and they are charged on the money they bring here to spend just the same as if it was money they had earned here. That has always seemed to me to be somewhat of an intolerable injustice, but I fear that we cannot raise those matters at a time like this. I think this is the first time I have shown any spirit of obstruction, and I do feel a spirit of obstruction in this matter, because I think it is the most vital interest of the British Isles not to discourage the movement of population and money from the outlying Dominions of the Empire. As years go on this country will have more and more to depend on the gigantic development of the great Dominions and the 409 outlying parts of the Empire. This, perhaps, touches Australians upon a tender point, because they have the Imperial sentiment in its keenest form. They have a feeling that their children should come here and breathe the same atmosphere and be educated here and spend their money in the Old Country.
Lord Rosebery once made use of a noble expression to a great conference of Imperial journalists from every part of the Empire, and he electrified that vast influential assemblage by using two simple words—"Welcome home!" I think the Board of Inland Revenue Commissioners is going to use that phrase "Welcome home!" with more sincerity than even that great Imperial statesman used it. I am so conscious of the difficulties of the Treasury, so sensible of the splendid way in which they have risen to the vicissitudes of this great crisis, that I am rather disappointed that the right hon. Gentleman should speak as he has done, and I do hope that there will be some opportunity in some way or other—I do not pin my faith to the Amendment altogether, because I see the difficulties of carrying it out; if the Treasury will only devote its great judgment and ability and experience to this matter, I think it will find a means of making the situation a little less hard for loyal Colonists who come here, and if they will only do that I think it will be a good tiling and in the lasting interests of this country.
§ Mr. STEWARTI should like to associate myself with the remarks which have been made by the hon. Member for Inverness and my right hon. Friend below me. I quite sympathise with the anxieties of the Chancellor of the Exchequer in this matter, but his action will be watched very closely by the Dominions, and I wish he could have given them a little more sympathy. It seems to me that the hon. Member for Inverness wants to lay down two principles, one that money invested in the British Empire should get as good treatment as money invested outside, and the other that British subscribers to the War should be asked to pay their taxes once and not twice. I do not minimise the difficulty at all, and I do not pin my faith to the actual wording of this Amendment, although I pin myself down to the principle of it. The Financial Secretary reproached us with bringing up this matter as an old grievance. The right hon. Gentleman has been in Parliament longer than I have, and all I can say is that my experience has 410 been that if you do not repeatedly bring up a grievance you will never get it lessened, or removed at all. The great difficulty about this matter is the height of the Income Tax in both places. I speak chiefly of Australia, because the Income Tax there is about the same as it is here. In old days people paid their Income Tax when it was a few pence in the pound, without saying anything about it; but now that is impossible, because people cannot stand double taxation like this.
Our difficulties have been very much added to by the all round the world taxation passed on the 8th of July, 1914, under the guillotine, when we passed a law that the British tax collector should gather in taxes in every quarter of the globe, no matter whether the money was brought back to this country or not. I think if you had a relaxation of that particular taxation, and if you allowed money which is invested in the British Empire, if not brought to this country, to remain there paying the local taxation and escaping additional taxation, it would be a good thing. Supposing a man has £2,000 a year. I am not dealing with large figures and I know of people who look upon £2,000 or £3,000 a year as enough for them. Supposing that a man with £2,000 a year income has half of it invested in Australia and half of it at home upon which he lived. In the old days his money would be allowed to fructify in Australia and he would live on his home money, and so continue holding investments under our own flag. I do not think that to brush this matter on one side, and say it is impossible to meet us in any way, is at all a sound thing to do. At the present moment no man in the world would think of investing money in Australia, because, if a man had £5,000 or £10,000 to invest, he would not put it anywhere where it was liable to such taxation as is now being imposed. Any man in the City will tell you that a rich man to-day in Australia may have to pay 5s. or 6s. in the £ here, 5s. in the £ in Australia, and 3s. 6d. in the £ Super-tax, or about 14s. 6d. in all, which is most unjust and calls immediately for a remedy. I agree with my right hon. Friend that it is highly essential for our future welfare that we should gather round ourselves as closely as we can the men who have come forward so magnificently in this War to help us, and for a matter of £2,500,000 of temporary advantage which the Treasury may get out of this double tax I do not 411 think anything could compensate us for the disappointment—bad blood and ill-will which this taxation will cause in those great Dependencies, which are now forced to put on heavy taxation themselves.
May I point out that you have already issued bonds in America free of Income Tax; and if you do that in the case of a friendly neutral, why should you charge investors in your own Colonies 10s. Income Tax? That does not seem to me to be at all fair or reasonable. The Chancellor of the Exchequer is so determined that nobody shall invest money even in our old Colonies in America that he charges 40 per cent. extra Income Tax if anyone chooses to do so. But in Australia, if you want to invest, you have to accept an extra income Tax of 100 per cent. I know you do not like taxation in another country interfering with your own taxation, but you accept that principle in the very Clause you have inserted in this Bill, and also in regard to the Probate Duty. If a man in India dies worth £50,000, and half of it is invested in India and half in this country, the Probate Duty which is paid in India is credited in this country, and you do not ask that man's children to pay double duty on the same money. It is not wise that you should wait till a man is dead before you treat him fairly, but you should encourage him to invest his money in our Empire and allow him some advantage for doing so. It is extremely hard, as the right hon. Gentleman the Member for St. George's, Hanover Square (Sir G. Reid), said, if an Australian father comes home because his son is fighting for us in Flanders, that he should have to surrender half his income in order to be near his own son. I do not think that that is a thing upon which we could possibly look with any approval at all.
The hon. Member's remarks about public companies are quite true. They are afraid of your Income Tax and of your exactions, and they do not know what your next move will be. I know two companies which have removed their offices from this part of the world and have gone to China, with which country most of their business is connected. The chief objection to this double Income Tax is the possibility of it stirring up a feeling that our Dominions are not fairly treated, and that is about the last feeling of which we ought to run any risk. Our wide Empire varies In climate, in local conditions, and in every particular, and each of the Dominions 412 throws up a special type of its own. This country is a common meeting ground, and we should not raise up barriers to keeping up a free interchange of sentiment and knowledge between the growing generations of our Colonies and ourselves. We are being welded together by blood and iron and German aggression into one solid unity, which we hope will not only be a war unity, but which, when peace comes, will be an economic and real unity of very far-reaching effect. With regard to the wealthy Australian merchant whom my right hon. Friend said was the only one to suffer, our Colonies and Dominions, when this War is over—please God it will not last for ever; I hope it will not last very much longer—are going to offer to our seamen and soldiers the hand of welcome, and if you are going to put up such barriers of taxation those men once they leave this country will never be able to come back again. When you have such taxation men have to consider where they will live, and many Australians and others will pack up and go home when perhaps they would rather spend a little more of their lives here. When you make those who pioneer for us in every sort of trade and occupation face taxation up to 10s. or 12s. in the £ you absolutely put a stop to a man coming back to spend the autumn of his days in this country, though he might wish to do so. These are some of the reasons why I think this system of double taxation requires very careful supervision. It has in it the elements of injustice and of danger, and I shall certainly support my hon. Friend if he goes to a Division.
§ Sir F. BANBURYThis is an extremely difficult question, and, though I sympathise with the hon. Gentleman opposite, still I cannot help thinking that to a certain extent the Government are in the right. The position has been very greatly aggravated by the passing of the Act of 1914, which provided that income which was never received in this country but which was made abroad should be liable to taxation here in England. If my hon. Friend below the Gangway had proposed that Act should be repealed, I should have had much pleasure in voting with him.
§ Sir F. BANBURYThen I shall have much pleasure in supporting the hon. Member. The present Amendment goes a little too far. It has been said it is very hard upon a man who has made his fortune in Australia that because he comes over 413 to England to spend it he should be subjected both to Income Tax in Australia and in England, but, after all, one has got to remember that Income Tax is imposed partly because a person living here in England enjoys the privileges of England, and if you are going to say because a person has lived in a particular part of the Empire that he is only to be subject to Income Tax in that particular part of the Empire in which he makes his money and he may come over and live here and enjoy all the advantages of living here without paying anything, then I must say that I agree with the Government and not with my hon. Friend below the Gangway. It must not be forgotten that people do not send their money over to Australia for philanthropic purposes, but because it suits them to do so. Is that any reason why a man living here and investing his money in Australia should not be liable to an Income Tax here to which everybody else is liable?
§ Sir F. BANBURYI beg the hon. Member's pardon. If he did not invest his money in Australia he would not be liable to any double Income Tax at all. When he invests his money there he knows perfectly well that he will have to pay Income Tax both here and in Australia.
§ Sir J. D. REESIt has grown up to this height since he invested his money.
§ Sir F. BANBURYHe can remove it from Australia.
§ Sir F. BANBURYWhat is required is that there should be a preference given in this country to money which is invested in Australia.
§ Sir F. BANBURYThis is going the wrong way about it. If the Australian Government require English money, the Australian Government should encourage it. It is going to benefit the Australian country; it is not going to benefit us. It is to our advantage that it should remain in this country and be invested in enterprises in this country. The encouragement to its going out should be given by those people who benefit by its going out, and those people are the Australian Government, and not this Government. Under these circumstances, while 414 I quite agree that there is very great hardship in the Act of 1914—I cannot conceive that the right hon. Gentleman the Financial Secretary on consideration will really say that it is right that a man whose money is made and remains in Australia should be subjected to a tax here on something which he never received here—and while I shall have much, pleasure in supporting any Amendment to repeal that Act, which was passed in a very great hurry, I cannot agree that we should encourage English capital to leave this country by giving it a preference which the people who are going, to benefit by receiving it refuse to give it.
Colonel GRIFFITHSI must candidly say that I was disappointed by the remarks of the right hon. Gentleman the Member for the City of London (Sir F. Banbury) when he said that it was more or less of no consequence whether money went to Australia or to some other part of the world.
§ Sir F. BANBURYI said that it was more important that capital should remain, in this country than go to Australia. I said nothing about it going elsewhere.
Colonel GRIFFITHSI am sorry if I misunderstood the right hon. Gentleman. You cannot keep your money entirely in this country, and our main object, and the object, I submit, of the Paris Conference just finished, is to take measures by which we can encourage the investment of money within the countries of the Allies, and, so far as this present discussion is concerned, within this Empire. I submit that it is a very small matter whether you are going to lose a possible income of £18,500,000 compared with what you might achieve if you relieved the intense feeling which does exist on this question. This is the psychological moment to make some practical recognition of the way in which the Dominions have come forward both in treasure and men to join the Mother Country in this great War. Unless you deal with this question in some way you will arouse very great and intense feeling; but if you give way on this point and accept the Amendment moved by the hon. Member for Inverness (Mr. Bryce) you will take a great step in the direction of encouraging money to remain and circulate within the Empire, and you will get far greater benefit and return than is represented by the possible revenue of £18,000,000 at the most. Money would remain within the Empire, and you 415 would increase and encourage Imperial trade. Instead of money going into American or foreign securities, you would keep that money within the Empire and you would materially influence its coming back here as it constantly does in materials, goods, and what not that we require. It is of great importance that the Government should give way and in some manner meet the suggestion embodied in this Amendment. I hope if the Treasury do not see their way to accept the Amendment it will be carried to a Division, and I, personally, shall support my hon. Friend.
§ Sir J. D. REESIn spite of what my right hon. Friend opposite has said, we Indians and Colonials who are interested in this subject are not ungrateful for Clause 28. In point of fact, it is a very fair and reasonable Clause, though it leaves the matter where it was. That is what we do not quite want. Profits made in British India are taxed at 1s. 3d. Do I understand that sum is deducted from the English Income Tax in respect of the profits of a company registered in this country? If there is any doubt about it, it will be desirable to have it quite plainly stated.
§ Sir J. D. REESI believe that is a correct statement of the case?
§ Sir J. D. REESI should like to have that clearly from my right hon. Friend. I am sorry that he made the remark he did about relief to wealthy Australian merchants.
§ Mr. MONTAGUI did not say anything of the kind. What I said was "wealthy merchants in the City of London."
§ 7.0 p.m.
§ Sir J. D. REESYes, but deriving their income from Australia. They are the people who are hardest hit; they are hit harder than we Indians, and when a man pays a sum of 13s. in the £ Income Tax I think he ought to be very tenderly treated on the Treasury Bench. Here you have the case of a man paying high taxes in Australia called upon to pay Income Tax in England and Super-tax as well. He is made to pay 13s. in the £. I call that confiscation and not taxation. And then he is spoken of as a wealthy Australian who is able to pay anything he is asked.
§ Mr. MONTAGUIf the hon. Gentleman will quote me I would ask him to do so accurately. I never referred to wealthy Australians at all.
§ Sir J. D. REESI took down the words. I did think, sitting in this place, I could hear what my right hon. Friend said, because one of his many merits is that he speaks up like a man. If he says he did not use these words, I, of course, withdraw the expression, but I am in the memory of the House. He gave us some figures prepared for him by someone in a public office no doubt capable of preparing figures. I do not pretend to think that it is a small sum that is involved, or that it can be lightly foregone in taxation under present circumstances. But, nevertheless, he must not be astonished if what he is supposed to have treated rather light-heartedly as an ancient grievance is brought up again and again. I do not think his criticism on the speeches was really quite fair. You have people coming here with quite small incomes who suffer under this grievance. Take the case of Indian officials, and remember how they are affected by this double Income Tax. Take the case of people who come home and leave their money invested in India. My right hon. Friend the Member for the City of London (Sir F. Banbury), with whom I nearly always agree, said that if they did not like to invest their money in Australia and India let them bring it home. But how is a man who owns a silver mine in Australia to bring it home in his waistcoat pocket? How is a man who owns a tea estate in Bengal, or in Madras, to bring it home? Is property so mobile and so easily transferable that a man can pluck it up by the roots, roots which have been growing during the whole of his lifetime, and suddenly bring it home here in the lights hearted manner in which the right hon. Baronet suggests? This is really a serious matter.
When you speak of a man investing his money in Australia, you are dealing with the position upside down. The fact is the man began his investment before the taxes reached these penal and prohibitive rates. That is the position with which we have to deal. It is not the case of a man who, having money to spend as he thinks right, invests it in tea estates in India or in mines in Australia. These things have grown with him. He has grown old with the investment, and now he finds that 13s. out of every 20s. of the profits is 417 taken away from him by this tax. That is a man whose case requires most sympathetic attention, and I am sorry the right hon. Gentleman the Member for the City of London did not meet it in that spirit. I know that companies already registered in London have left the country on account of this double Income Tax. When I asked a question on this subject the other day I was told that their leaving the country was not due to the tax. But I feel sure it was, and it is the case that on account of the double Income Tax the Bombay Electric Supply Company removed its offices from London. I am afraid this is only the first of a long string of such removals, unless something is done to remedy this ancient but still acute grievance.
I consider it an unpardonable thing in war time to make long speeches. I do not remember, since the War commenced, having made one speech which lasted more than ten minutes. If it can be shown I have done so I will undertake not to make another speech in this House for another ten days. I want to remind the Committee that this is an extremely serious matter, so serious, indeed, that my hon. Friend was perfectly justified in bringing it up. All of us who are thoroughly at home in this subject, and who know where the shoe pinches, agree with him. We think that even in war time the House can properly spare a short time for the consideration of the question. I do not allow the right hon. Gentleman could go no further than he has done today. He has left things where they are. We want a great deal more, and if he is not going to do anything more to-day, the very least he can do is to devote the remainder of his days, which I hope may be long, to putting the Income Tax Committee which is going to deal with this matter in a proper frame of mind, to see that this double Income Tax grievance is so mitigated as to leave no further justification for the frequent, but not too loud, complaints that are heard about it.
§ Mr. MONTAGULet me say at once the Government are not anxious to persist with this Clause, and if hon. Members are convinced that it is of no use, I shall be delighted to recommend the Committee to drop it, and so get an extra revenue of something over £1,000,000 sterling. I confess I thought it would be regarded as a very satisfactory solution of the difficulty in the state of suspense in 418 which we now find ourselves. If the Indian Income Tax is 1s. 3d. it has the effect of abolishing the double Income Tax, so far as India is concerned. The last thing I had in my mind was to suggest any aspersion upon the Australians who see a difficulty in regard to this double Income Tax system; and anxious as the British Government are to find an adjustment which will cure the difficulty without putting the whole burden of the loss of revenue on the Imperial taxpayer at home, what makes me sick is, when an Australian father sending his family here for education, or coming home to live after a life spent in Australia, or even, it may be, coming home in order that he may visit his son in Flanders, is made the instrument to get a boon which is intended for the British shareholder in the City of London.
Mr. RUTHERFORDI am inclined to agree very largely with the attitude which the Government have taken up on this question. There is no doubt at all that any appeal which is made to British audiences from the Colonial point of view is sympathetically listened to when it is put in the way we have heard it put to-day, that because the Colonials have behaved so splendidly, because they have organised large armies, and subscribed big sums of money, therefore some especial exception is to be made in their favour from a purely British fiscal point of view. Such a proposition, I venture to say, will not hold water. One cannot help agreeing with the right hon. Gentleman who represents the Government in the few words which he addressed to us with considerable feeling a few moments ago, when he pointed out that it was a dangerous thing to try and exploit the great gratitude which we owe to our Colonial kinsmen, and to use it for the purpose of giving them special financial or fiscal privileges. The figures which have been given in the course of the Debate show that this is really a serious and important matter. What lies at the root of the question is that we are now taxing for British purposes a large amount of income which does not come to England at all, which does not belong altogether to English people, and which ought not therefore to—and in fact did not prior to 1914—pay British Income Tax. The whole root and gravamen of the difficulty arises from the fact that we are now charging such high rates of Income Tax upon money which does not come to this country, and which has been invested in enterprises undertaken by English people 419 abroad. Whether these undertakings are in the Colonies or in foreign countries they have to pay the taxes to which they are subjected by the Dominions or foreign countries where the British enterprise is carried on. The money should not be treated as income for the purpose of putting the British Income Tax on it unless it arrives here in the shape of profit. That was the rule formerly. It was a reasonable one, and I think a great deal of the complaints which we have heard, and which no doubt are justified, have arisen owing to the applications of the Act of 1914.
I do not see any difficulty in the matter of principle between a silver mine, such as my hon. Friend for East Nottingham (Sir J. D. Rees) has referred to in India, or a similar mine in South Africa or in any foreign country. Take the three cases. The money is British, and is provided from London. The company is housed in London, and wherever that concern carries on its operations it is liable to pay the local taxes, whatever they are. In some cases it may be a Property Tax. In other cases it may be Government royalties on output, but still that concern has to pay that taxation on the spot where its operations are carried on. We say that if a company is registered in London it shall pay the full tax upon the whole of its profits, although they are made abroad, and although they do not come to England at all. I think that is unreasonable, and the right hon. Gentleman the Member for the City of London has pointed it out. If there is an Amendment calculated to deal with that aspect of the question, if it can be met in some reasonable way by the Government, I think it would do a great deal to dispose of the complaints made in the course of this Debate, and would certainly bring about a state of affairs far more equitable in the imposition of this Income Tax.
§ Sir J. HARMOOD-BANNERI only want to add a few words rather in the nature of an appeal to the Chancellor of the Exchequer to consider this matter with a sympathetic mind. I must confess I quite agreed with the speech of the Financial Secretary in the first instance, when he pointed out the great difficulties in the way at the present time of dealing with this Amendment. The fact that it was an old matter which had been discussed on many previous occasions, the fact that the grievance is becoming larger and larger, and the fact that the Income Tax has risen 420 to such a high figure, probably make the grievance more serious, and there is no wonder the Amendment has been moved. I therefore ask the right hon. Gentleman to favourably consider it. When the Financial Secretary spoke of the difficulty of dealing with these matters at the present time, and told us it would be necessary to have a Colonial Conference to consider it, and when one recognises that the right hon. Gentleman has already reduced the 5s. to 3s. 6d., and tints to some extent met the justice of the claim, I rather gathered he was quite sympathetic with the Amendment, and considered it was an absolutely proper matter to be dealt with according to the justice of the case. The justice of the case is absolutely convincing. We send money out to the Colonies, and with it they buy large quantities of manufactures from us. They add immensely to the trade of this country. In some cases the whole of the trade is done in Australia or these other places. For instance, tramways are carried on. The only thing the company has to do is to remit money monthly home to be divided by the directors here among their shareholders. Australia now, because of the War, has had to put on high taxation, and those who send their money out pay that high taxation there. Simply for the receipt and distribution of the money in this country the recipient has to pay another 5s. in the £, making nearly 10s. altogether out of the money which has been earned there and with which this country has had nothing to do beyond its mere distribution.
That has been going on up to the present. There are many cases in which to my knowledge companies have closed their offices—for instance, sugar estates in Natal—simply because they prefer to carry on their business in Natal and pay Income Tax there rather than pay it again here in this country. In many cases the residents were in Natal and did not get the benefit of the residential occupation referred to by the right hon. Gentleman as being so beneficial to them. That a man in Natal should have his whole trade in Natal and yet be subject to the English Income Tax seems a very great hardship. In his first speech—I will not say in his second, when he rather made a violent attack upon the Treasury dispatch box—the Financial Secretary to the Treasury spoke quite sympathetically. I would ask him to consider 421 this case in that light. It is an old injustice from which Colonials, Indians and people in this country suffer. I would ask him to give us an undertaking that as soon as possible after the War is ended this subject will be taken up at a Colonial Conference in order that all may bear their proper share and none shall have to bear the very extreme charge which is now inflicted on anyone who resides in Australia or in this country. We must keep up the Imperial spirit now existing between us and we cannot do so if we inflict a damage on trade and on individual expenditure. We can only do it by sharing our burdens and by laying upon a man who in both countries is doing his best for the State in general a just and proper charge about which he will not have to complain.
§ Mr. PETOThe main argument brought by the Financial Secretary to the Treasury against my hon. Friend the Member for Inverness (Mr. Bryce) was that this was an old grievance and that it had been aired year after year and postponed. The right hon. Gentleman the Member for St. George's, Hanover Square (Sir G. Reid), speaking with authority for Australia, pointed out that this is a difficulty and a grievance which has arisen in consequence of the special War taxation that Australia in particular has had to put on in order to defray the expenses of the great assistance she has rendered to this country. No answer has been made to that. All the arguments of the Financial Secretary about this being an old grievance and its being left where it is have absolutely fallen to the ground. We are in a most extraordinary position if we pass this Clause without the Amendment of the hon. Member for Inverness. In effect, the Financial Secretary claims merit for the Clause in the Bill because it makes matters no worse than when the Budget went through last year. Which Budget? I suppose he means the Second Finance Bill, in which the new Income Tax went through at the rate of 3s. 6d., which is the rate mentioned in this Clause. We are in no more logical position if we say we will not charge this double Income Tax in this country at higher than 3s. 6d. than we were when we fixed upon the figure of 3s. 6d. Why is the conscience of the Chancellor of the Exchequer only just aroused to admit there is some injustice when it becomes an injustice of 5s.?
I would call attention to that part of the speech of the Financial Secretary in which 422 he said my hon. Friend's speech was only applicable to peace times, and that he had pointed out that double Income Tax offered no inducement to investment in the Colonies and checked the flow of emigration. Dealing with it as a fundamental fact that if you have such a state of unjust taxation that you check the flow of population and capital to our Dominions, on what do you propose they should raise their very necessary revenue in order to assist us in the fight with the enemy? It is perfectly clear to my mind that you cannot possibly expect people to pay cheerfully. My right hon. Friend the Member for St. George's, Hanover Square, said the people in Australia were prepared to pay, but he would not admit that they were ready to pay cheerfully twice. On that argument the Financial Secretary to the Treasury said something which everybody will admit they did not think we should have lived to have heard. We find him saying that it was not the purpose of my hon. Friend's proposal to benefit the poor people, the 300,000,000 of India, but the gravamen of his charge against my hon. Friend was that the person he had in his mind was the wealthy Australian merchant in the City of London.
When we find a Financial Secretary to the Treasury putting it to the Committee that it is a crime to protect the interests of capital which is in the hands of wealthy Australian merchants in the City of London, and that we should do nothing to prevent robbery by the Treasury, the time is approaching when these wealthy businesses will remove from the City of London to the City of Adelaide or Perth, or any of the other great cities of Australia, and truly we have come to a time when, if that spirit is to prevail at the Treasury, it will be difficult for them to raise by means equitable or inequitable the revenue to carry on the country. I hope my hon. Friend will go to a Division upon this Amendment, because I regard this as a matter of principle. This is an injustice. War taxation has been imposed for the purpose of fighting the common battles of the whole Empire. The Australians pay the Australian share of it. Because these arguments have not been met in the slightest degree I shall vote, as a matter of principle, against the system being continued—I admit it is an old system—now that it has become simply monstrous and a great injustice. I hope, therefore, that my hon. Friend will go to a Division, and that he 423 will have, as I know he will have, the support of the right hon. Gentleman the Member for St. George's, Hanover Square, and, I hope, from a large section of the committee, who regard with horror this attitude of the Treasury towards capital and particularly towards capital which is invested in all parts of the Dominions of the Empire.
§ Mr. BRYCEI had not thought it would be necessary to go to a Division upon this Amendment, because I hoped the Treasury would have met the suggestions made in a more reasonable spirit. But, especially after the extraordinary outburst of the Financial Secretary to the Treasury in his second speech, when he said that this was an attempt to boom the Imperial feeling of the Empire for the sake of saving the pockets of some wealthy people in London, it is absolutely impossible to pass over such a statement as that without a protest and without going to a Division. If the Financial Secretary to the Treasury had reflected, I am certain he would not have given vent to that outburst, because it will produce a most unfortunate effect all over the Empire. Nothing was further from my intentions, my position in these matters is perfectly well known. I have never been what is known as an Imperialist in the Jingo sense. I have never had, and have not now, any desire to exploit any such jingoistic feeling, and I am certain that none of the hon. Gentlemen who have spoken in favour of the Amendment had any such feeling whatever in their minds. The protest against this double Income Tax is a protest made, not with a view of making any boom in Imperial feeling, but with a view to remedying the crying injustice that a man should have to pay twice over for the same investment. It is a crying injustice that he should have to pay a War Tax in Australia, a tax imposed since the War in Australia, for the purpose of meeting the expenditure arising during the War, and that he should, at the same time, have to pay a similar tax here for the same purpose. No Chancellor of the Exchequer can justify an injustice of that kind. It is perfectly right that he should ask everybody to pay according to their means, but he has no right to make anybody pay twice over. I am therefore reluctantly compelled to go to a Division.
§ Mr. McKENNAI hope my hon. Friend will reconsider the decision to which he has come. I did not have the pleasure of 424 hearing my right hon. Friend, but I am sure that the general tone of his speeches in this House is not of the kind attributed to him. Not having heard him, I cannot enter into the question of what he said. Suppose for a moment that we accept the whole of the argument put forward by my hon. Friend the Member for Inverness (Mr. Bryce). I do not say we do accept them, but supposing that for the present we do, and say that everything he says is true, let us consider the remedy. At the present moment any person in this country who has property in Australia from which he draws a profit which he brings into this country pays Income Tax here, and he pays Income Tax in Australia. That is quite true. Any Australian who has property in this country from which he draws a profit pays Income Tax in this country and pays Income Tax in Australia.
§ Mr. BRYCENo, he does not pay Income Tax in Australia on money earned in this country. He pays Income Tax in Australia only upon money earned in Australia.
Mr. RUTHERFORDThe Australian rule and practice is just. They only levy their Income Tax upon the income which goes to Australia.
§ Mr. McKENNA"Comes there" is the right word. If it comes to Australia it pays. That is the situation.
§ Mr. McKENNAThe hon. Member is prejudging the answer. I am assuming for the moment that his view is right in order to follow the argument. We propose in our Bill, as a beginning, that Australian money in this country remitted to Australia shall not pay our excess Income Tax and we propose that British money in Australia remitted here should also not pay the excess tax.
§ Mr. McKENNAI mean the difference between 3s. 6d. and 5s. Is my meaning clear? Is there any hon. Member who does not understand what I mean?
§ Mr. McKENNAI am endeavouring to state the case as it is. I am assuming the whole of the hon. Member's argument for the moment. We say that at the present 425 moment, both in the case of British money remitted from Australia here and of Australian money remitted to Australia, we lose the whole of the Income Tax in excess of 3s. 6d. That is the beginning. Hon. Members go further and say that in both cases we ought to lose the whole Income Tax up to 5s. if the Australian tax is at the same rate. That is to say, that if the Australian Government put their tax up to 5s. we should lose the whole of our Income Tax, not merely on Australian money remitted to this country, but on British money remitted to Australia, while the Australian Government would get the whole 5s. from both. Is that quite reasonable? What we say is this: We have made a beginning. We have given the Dominion Governments the benefit of the whole case, so far as the addition is concerned between 3s. 6d. and 5s., and we go further and say that this is a case which must be a matter of arrangement between the British Government and the Dominion Government, and the Treasury say to this House, do you ask us to go into that arrangement with the Dominion Government, having first of all given up everything and clearly some things which hon. Members do not think we ought to give, up, because it would mean that the Dominion Government would get Income Tax on both sets of money where we get Income. Tax on neither. This is clearly a matter of arrangement. We have said again and
§ again that we are willing to enter into an arrangement with the Dominion Governments on the subject, and in the meanwhile I think we have done very fairly in leaving the situation where it stood last year, and saying that, so far as this additional tax is concerned, we will not impose anything additional, and we will lose the advantage of both sets of moneys so far as the additional tax is concerned.
§ Mr. J. W. WILSONMy right hon. Friend has not quoted another case, namely, that of the Dominion of Canada, which recently passed a fresh Income Tax, and in that they have made a reciprocal arrangement with regard to avoiding double tax, and I commend that to the attention of the Chancellor of the Exchequer and of my hon. Friends who have been talking so much about Australia. They have made allowances in their new tax that they propose with regard to moneys which are coming over to the Old Country from Canada, and they are making certain exceptions with regard to Income Tax. A reciprocal arrangement like that is very different from what is advocated here this afternoon.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided: Ayes, 128; Noes, 32.
427| Division No. 27.] | AYES. | [7.35 p.m. |
| Adamson, William | Davies, Timothy (Lines., Louth) | Kenyon, Barnet |
| Agg-Gardner, Sir James Tynte | Denniss, E. R. B. | King, Joseph |
| Ainsworth, John Stirling | Dickinson, Rt. Hon. Willoughby H. | Lambert, Richard (Wilts, Cricklade) |
| Anderson, W. C. | Dixon, C. H. | Layland-Barrett, Sir F. |
| Arnold, Sydney | Dougherty, Rt. Hon. Sir J. B. | Lewis, Rt. Hon. John Herbert |
| Baldwin, Stanley | Duncan, C. (Barrow-in-Furness) | Lough, Rt. Hon. Thomas |
| Balfour, Sir Robert (Lanark) | Edwards, Sir Francis (Radnor) | Lowe, Sir F. W. (Birm., Edgbaston) |
| Banbury, Rt. Hon. Sir F. G. | Essex, Sir Richard Walter | M'Callum, Sir John M. |
| Baring, Sir Godfrey (Barnstaple) | Falconer, James | Macdonald, Rt. Hon. J. M. (Falk. B'ghs) |
| Barnes, Rt. Hon. George N. | Fell, Arthur | McKenna, Rt. Hon. Reginald |
| Beach, William F. H. | Ferens, Rt. Hon. Thomas Robinson | Magnus, Sir Philip |
| Beale, Sir William Phipson | Finney, Samuel | Markham, Sir Arthur Basil |
| Beck, Arthur Cecil | Fisher, Rt. Hon. W. Hayes | Mason, David M. (Coventry) |
| Bliss, Joseph | Flannery, Sir J. Fortescue | Mason, James F. (Windsor) |
| Bowerman, Rt. Hon. C. W. | Fletcher, John Samuel | Millar, James Duncan |
| Brace, William | Glanville, Harold James | Montagu, Rt. Hon. E. S. |
| Bridgeman, William Clive | Goddard, Rt. Hon. Sir Daniel Ford | Morton, Alpheus Cleophas |
| Brunner, John F. L. | Goldstone, Frank | Munro, Rt. Hon. Robert |
| Bull, Sir William James | Gretton, John | Needham, Christopher T. |
| Byles, Sir William Pollard | Gulland, John William | Newdegate, F. A. |
| Cator, John | Hancock, John George | Nicholson, Sir Charles N. (Doncaster) |
| Cautley, Henry Strother | Hardy, Rt. Hon. Laurence | Outhwaite, R. L. |
| Cawley, Sir Frederick (Prestwich) | Harris, Percy A. (Leicester, S.) | Parker, James (Halifax) |
| Chancellor, Henry George | Harvey, A. G. C. (Rochdale) | Parkes, Ebenezer |
| Clynes, John R. | Harvey, T. E. (Leeds, West) | Pearce, Sir Robert (Staffs, Leek) |
| Collins, Sir Stephen (Lambeth) | Henderson, Rt. Hon. Arthur (Durham) | Pease, Rt. Hon. Joseph A. (Rotherham) |
| Compton-Rickett, Rt. Hon. Sir J. | Herbert, Major-Gen. Sir Ivor (Mon. S.) | Pollock, Ernest Murray |
| Cornwall, Sir Edwin A. | Hewart, Gordon | Pratt, J. W. |
| Craig, Ernest (Cheshire, Crewe) | Hobhouse, Rt. Hon. Charles E. H. | Pryce-Jones, Colonel E. |
| Crooks, Rt. Hon. William | Jacobsen, Thomas Owen | Radford, Sir George Heynes |
| Currie, George W. | Jones, Edgar (Merthyr Tydvil) | Raffan, Peter Wilson |
| Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy) | Jones, William S. Glyn- (Stepney) | Rea, Waiter Russell (Scarborough) |
| Davies, David (Montgomery Co.) | Joynson-Hicks, William | Richardson, Thomas (Whitehaven) |
| Roberts, Charles H. (Lincoln) | Spear, Sir John Ward | Wilkie, Alexander |
| Roberts, George H. (Norwich) | Strauss, Arthur (Paddington, North) | Williams, Aneurin (Durham, N.W.) |
| Roberts, S. (Sheffield, Ecclesall) | Sykes, Sir Mark (Hull, Central) | Williams, Llewelyn (Carmarthen) |
| Robinson, Sidney | Tickler, T. G. | Wilson, Rt. Hon. J. W. (Worcs., N.) |
| Roch, Walter F. (Pembroke) | Toulmin, Sir George | Wilson, W. T. (Westhoughton) |
| Rowlands, James | Wason, Rt. Hon. E. (Clackmannan) | Wing, Thomas Edward |
| Samuel, Rt. Hon. H. L. (Cleveland) | Watt, Henry Anderson | |
| Sherwell, Arthur James | Weston, J. W. | TELLERS FOR THE AYES.—Mr. |
| Shortt, Edward | White, J. Dundas (Glasgow, Tradeston) | Geoffrey Howard and Mr. James Hope. |
| Smith, Harold (Warrington) | Whiteley, Herbert J. | |
| Snowden, Philip | Whittaker, Rt. Hon. Sir Thomas P. | |
| NOES. | ||
| Banner, Sir John S. Harmood- | Henderson, John M. (Aberdeen, W.) | Perkins, Walter F. |
| Bellairs, Commander C. W. | Hewins, William Albert Samuel | Peto, Basil Edward |
| Benn, Arthur Shirley (Plymouth) | Hibbert, Sir Henry F. | Rees, Sir J. D. (Nottingham. E.) |
| Bird, Alfred | Hickman, Colonel Thomas E. | Rutherford, Watson (L'pool, W. Derby) |
| Boyton, James | Hogge, James Myles | Salter, Arthur Clavell |
| Butcher, John George | Hunt, Major Rowland | Scott, A. MacCallum (Glas., Bridgeton) |
| Campion, W. R. | Ingleby, Holcombe | Walker, Colonel William Hall |
| Coats, Sir Stuart A. (Wimbledon) | Mackinder, Halford J. | Yate, Colonel C. E. |
| Cowan, W. H. | Macleod, John Mackintosh | |
| Guinness, Hon.W. E. (Bury S. Edmunds) | Nield, Herbert | TELLERS FOR THE NOES.—Mr. |
| Hamilton, C. G. C. (Ches., Altrincham) | Norton-Griffiths, J. (Wednesbury) | Annan Bryce and Mr. Stewart. |
| Harris, Henry Percy (Paddington, S.) | Pennefather, de Fonblanque |
Question put, and agreed to.