NEW CLAUSE.—(Income Tax on Unearned Incomes.) (Hansard, 28 June 1916)

§ Mr. D. MASON
I beg to move, "That the Clause be read a second time."
This Clause is merely a matter of machinery, and relates to the very severe hardship which presses upon those who have incomes from which the full amount of 5s. is deducted at the source. I am aware that the Chancellor of the Exchequer has made some concession in regard to this matter, and while he has gone 961 some way towards meeting this hardship he has not quite met the case, and I hope he will give this Clause further consideration and see his way to meet the case in the form of the Clause which I am moving. I do not claim that there is any magic in the 3s. 6d. which I name, but I think it ought to be done in some different way. The House will agree that it is a great hardship to those who have to pay 25 per cent, of their income when the full 5s. is deducted at the source. Many of those people are more or less not in easy circumstances, and perhaps derive their income from good securities, but they are probably living to the full amount of that income, and compelled to do so. The tax in the case of an income of £400 a year from securities would amount to £100, and this is a great hardship in respect of such incomes. I do not think I need say much more in order to commend this proposal to the Chancellor of the Exchequer. It might be argued that it would entail much extra labour, but, on the other hand, it would probably save a good deal of labour and a great deal of hardship because people have now to go to Somerset House to recover this amount, and they have to go through a great deal of trouble in order to get a repayment. If the right hon. Gentleman will give his consideration to this proposal and try to meet the case on the lines of my Clause it -will remove a great hardship.

§ Mr. McKENNA
My hon. Friend's proposal in substance is that Super-tax should begin at that rate. I will take the figure he puts down on the Paper. It would affect the assessment upon earned incomes because a great many persons who have a direct assessment on account of their earnings also have a portion of unearned income, and it would affect many hundreds and thousands of assessments which we should have to make on the Super-tax basis. That would lead to very grave complications, and I am not sure that it would not be a very grave complication to the taxpayer himself, and it would enormously delay the collection by the Inland Revenue, and we could not do this during the War. I am very doubtful whether it is the proper remedy for the evil which we all recognise. It is an evil that a person should have deducted at the source taxation in excess of the amount for which he is liable, but I think we have already gone a long way to meet that case, and I am quite sure the remedy 962 of my hon. Friend would be troublesome not only to the Inland Revenue but to the taxpayers. All those who are familiar with the filling-up of a Super-tax return know something of the difficulties, and it would become a great hardship on these people to have to pay Super-tax. This proposal is precisely according to Super-tax rules, and it is an additional assessment made upon persons who are now assessed.

Mr. HENDERSON
I agree that this proposal would be very difficult to carry out, but the moral attached to it is that there is a very great hardship in these people being kept from having their money. I agree that the remedy is to speed up the return, and there should be some sort of office where a man can go and get his cheque over the counter. If we can speed up the matter I think there will be very little difficulty.

§ Mr. McKENNA
Perhaps I might add that the remedy which we hope to apply after the War is more upon the lines suggested by my hon. Friend who has just spoken of speeding up the repayment. We cannot do that during the War, nor can we do what the hon. Member suggests during the War. As between those two proposals, the one of speeding up, the repayment would be less troublesome on the whole to the Income Tax payer.