§ Section forty-three of the principal Act {which relates to Excess Mineral Rights Duty) shall have effect as if eighty per cent, of the excess were substituted as the rate of duty for sixty per cent, for any accounting year commencing on or after the first day of January, nineteen hundred and seventeen, or, in the case of an accounting year which commenced before that date but ends after that date, as if eighty per cent, were substituted for sixty per cent, as respects so much of the excess as may be apportioned under this Act to the part commencing on that date, and any additional duty may be recovered accordingly.
938§ Mr. CURRIEI beg to move, at the end of the Clause, to add,
Provided always that no person shall be liable to pay or shall have been deemed liable to pay as Excess Mineral Eights Duty in any accounting year any larger sum than—The Chancellor of the Exchequer, on the Second Reading, gave us a sort of promise that he would look into the position of this burden on mineral rights before the Committee stage of the Bill. The object of the tax is to extend the same treatment to men engaged in this business as to other traders. It is well known to the Chancellor of the Exchequer and the Treasury that I am not in the habit of advancing extreme pleas on behalf of landlords in any way whatever. But according to the system of reckoning the tax the pre-war rent value is the sum payable as rent in each of the three pre-war years, arrived at by applying the lordships past average price of coal in these areas to the output or sales in the accounting year. It will be observed that the excess is only hypothetical, or may be only hypothetical, and the result of the practice is that a mineral owner actually suffers loss of income, yet, on the theory of the Inland Revenue interpretation of the Act—which I think is technically correct—he is, nevertheless, liable to pay the Excess Mineral Rights Duty. May I give some figures to show what has really occurred? In one case there was a pre-war output of 10,000 tons on which' the lordship payable was an average of 1s. per 939 ton. The pre-war rent or value therefore came to £500. But the output in the accounting year is reduced to 5,000 tons and the lordship payable on that is 1s. 6d. per ton, thereby providing a rent on the accounting year of £375. The landlord consequently suffering an actual loss in rent of £125. He nevertheless has to pay the Excess Mineral Rights Duty according to the Inland Revenue theory. The output in the accounting year was 5,000 tons which, at 1s. per ton, gave £250. But the same output at 1s. 6d. per ton produced £375, thus showing an excess of £125, and on that there is now payable to the Government 60 per cent, as Excess Profits Tax, or £62 10s. In that way it comes about that the mineral owner suffers an actual loss in two ways—in the first place there is a reduction of rent of £125, and in addition to that on a purely hypothetical assumption he has to pay the Government an excess tax of £62 10s., a tax which, under this Clause, will be even more than that. That was never the intention of the Act. There are, it is true, only a few of these cases. I do not seek to challenge either the tax or the basis or method of calculation, but I do propose that a mechanical bar should be placed at a certain point. I think the Chancellor of the Exchequer will see that the present practice is tantamount to telling a man that although his income is decreased he must pay an Excess Profits Tax. Surely the right hon. Gentleman might be content with leaving the man his old income and not reducing it by making a claim for excess profits on a hypothetical profit. The very fewness of the cases strengthens the claim for justice because these people are not in a position to raise an agitation. The answer made last year was that the coal was there and it would be all the same a hundred years hence. But I do not think that that is an answer which the Treasury are entitled to return, and I hope the Chancellor of the Exchequer will do something to meet those cases.
- (a) fifty per cent, of the excess rents or lordships actually received by him in the accounting years to which Section forty-three of the principal Act, 1915, applies as compared with the rents or lordships actually received by him on the average of the pre-war years selected by such parson in terms of the provisions of the said principal Act;
- (b) sixty per cent, of the excess rents or lordships similarly received by him in the accounting years to which Section forty-six of the Finance Act, 1916, applies as com pared with the foresaid average; and
- (c) eighty per cent, of the excess rents or lordships actually received by him in the accounting years to which this Section applies as also compared with the foresaid average."
§ 5.0 P.M.
§ Sir G. YOUNGERI think the whole complaint arises from the fact that the ordinary person assumes that an Excess Profits Tax is meant to be a tax upon some profit actually realised and not upon a purely hypothetical construction of the Clause by officials of the Inland Revenue. No doubt they probably knew quite well when the Clause was passing through the 940 House that they intended to construe it in. this way. But surely no one else did, and it seems rather an absurdity that a man whose income is actually reduced owing to the fact that the output of coal is very much less should have to pay excess profits because the royalty upon the coal in the present year is 2s., while the royalty upon it in the pre-war was 1s. If on 10,000 tons raised in pre-war days he paid 1s. a ton and he now pays 2s. a ton on the 5,000 tons, obviously his income is the same; yet the Treasury think they are entitled to say that because he gets an extra shilling on the 5,000 tons he ought to pay an excess profit. That is the complaint which arises, and is the reason for the Amendment of my hon. Friend. It is impossible for an ordinary layman to construe these Clauses. We pass Clauses in this House very often on the assumption that they mean what they do not mean in the least in the eyes of experts. We have assurances that they mean a certain thing, and we find very often afterwards that the officials construe them to mean something entirely different. I have no doubt this is a Clause of that kind. No doubt my right hon. Friend the Chancellor of the Exchequer has been deluged with papers in regard to this, and I am quite sure he is desirous to be fair in what is done.
§ Mr. BONAR LAWI have not been deluged with papers about this, and indeed I think my right hon. Friend opposite (Mr. Currie) is right in saying that whatever case there is is based on the justice of the position. I am very unwilling to reopen a subject which is not affected by this Budget The point was discussed last year, and I know that there was great difficulty in dealing with mineral rights. The Committee will see that it would not be fair to deal with it in the ordinary way simply of a profit. It is not as if only a very small sum were allowed for depreciation. I do think, however, taking the principle of the Excess Profits Tax, there is a hard case when a man has to pay when he has no excess profits. I will promise—not definitely promise—to look into the matter, and unless there is something stronger against the view which I have just expressed than I believe to be the case I will put in a Clause dealing with it on Report.
§ Mr. CURRIEI beg to thank the right hon. Gentleman, and, with that promise, withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause ordered to stand part of the Bill.