§ Whenever payment are made in respect of Excess Profits Duty or Income Tax in advance of due dates interest at the rate of 5 per cent, per annum shall be allowed on such payments for the period so paid in advance of the due date.
§ Clause brought up, and read the first time.
§ Mr. NEEDHAMI beg to move, "That the Clause be read a second time."
I propose this Clause with a view to providing that interest shall be given where people pay their Income Tax or Excess Profits Duty in advance of the actual date when it is due. There are large numbers of people in the country who know perfectly well that they will have to pay Excess Profits Duty—
§ Mr. McKENNAWe have dealt with the Excess Profits Duty.
§ Mr. NEEDHAMIf the Chancellor of the Exchequer says that is done—
§ Mr. McKENNAIt is done in the Clause in the Bill with regard to Excess Profits Duty. We have not done it in regard to Income Tax.
§ Mr. NEEDHAMThe same arguments will apply to the Income Tax. At the present time on Income Tax paid in advance a discount of 2½ per cent. is given. As money is paid for now at the rate of 5 per cent., it would be to the interest of the Treasury to allow 5 per cent, on anticipated Income Tax payments. Considerable amounts have to be paid into the Treasury prior to the time when they are legally due, and if the rate of interest allowed were 5 per cent, it would cause a large number of people to pay large amounts of Income Tax prior to the legal due date. That would be an advantage to the Treasury, because it would place bankers' balances in the hands of the Treasury, which is what the Treasury want at this time.
§ The CHAIRMANThe hon. Member will notice that I have confined the Clause to the Income Tax, as we have already dealt with the Excess Profits Duty.
§ Mr. McKENNAThis is one of those Amendments which, on paper, has everything to be said for it, but in practice very little. The Committee will remember that by last year's Bill we have already postponed the payment of Income Tax. The tax can now be paid in half-yearly payments, not ante-dated payments but postdated payments. The difficulty is that if we do not get an assessment we cannot receive payment until the payment is about due.
§ Mr. NEEDHAMCannot you make an arrangement by which a man can make a deposit on account, and if he does so that there shall be a discount?
§ Mr. McKENNAWe have not the staff. At the present time we are dealing with Excess Profits Duty. That can be done readily, because the cases only number some thousand. When we get to the Income Tax, however, we are not dealing with thousands of assessments but hundreds of thousands. It is quite impossible for us to enter into these arrangements on the scale my hon. Friend wishes us to do. There is already an allowance of a discount of 2½ per cent, on Income Tax paid iii advance, provided the discount is claimed at the time of payment. The amount of interest is modest, and does not tend to induce more people to offer more Income Tax in advance than we are able to deal with. If we were to offer 5 per cent, as the rate, we should be inundated with business which really we do not wish to do.
§ Question put, and negatived.