HC Deb 05 July 1917 vol 95 cc1326-60

The provisions of Sections twenty-nine, thirty, and forty-three of the Finance Act, 1916 (which give relief from Income Tax in certain cases for the current Income Tax year), shall have effect as if herein re-enacted and in terms made applicable to the Income Tax year beginning on the sixth day of April, nineteen hundred and seventeen:

Provided that—

  1. (a) for the words from "and in calculating," to the end of Sub-section (2) of the said Section thirty, there shall be substituted the words "and in calculating the earned income on which relief is to be given under this Section the deductions required to be made from earned income under Sub-section (2) of Section nineteen of the Finance Act, 1907, as amended by any other Act, shall not be made from the pay unless and except in so far as the amount of those deductions exceeds the aggregate amount of the earned income other than the pay and of the unearned income; and
  2. (b) the said Section thirty, as so amended, shall apply to any person who during the current Income Tax year has served, or serves, for not less than three months as master or a member of the crew of any ship or fishing boat as it applies to any of the persons mentioned in that Section.—[Mr. Bonar Law.]

Brought up, and read the first and second time [3rd June.]


May I ask you, Sir, in view of the fact that the Adjournment of the House is to be moved this evening, whether the arrangement which I understand was arrived at the other night that the Committee stage of the Finance Bill was to be finished to-night, will hold good, and whether the Government propose to go on with it after eleven o'clock tonight?


That is not a matter under my control. It may conduce to the brevity of speeches.

Mr. BALDWIN (Joint Parliamentary Secretary to the Treasury)

I beg to move, after the word "the" ["relief from Income Tax in certain cases for the current Income Tax year "], to insert the word "then." This word was omitted in the Clause as set up by the printer.

Amendment agreed to.


I beg to move, at the end of the Clause, to add (c) the said Section thirty, as so amended shall apply to any person in receipt of a pension granted in respect of death, wounds or disablement resulting from the present War. The object of this Amendment is to make the provisions of Section 30 of the Finance Act, 1916, apply to the cases of all persons who are in receipt of pensions granted in respect of death, wounds or disablement resulting from the present War. I had put down an Amendment in the form of a new Clause, which also appeared on the Paper in the name of the right hon. and learned Gentleman the Member for Anglesey (Mr. E. Griffith), the hon. Member for Stockport (Mr. Wardle) and other hon. Members of the Committee. With regard to that Clause, which would have provided that pensions for wounds, death or disablement incurred in the present War should be exempted entirely from Income Tax, I received an intimation the night before last from the Chancellor of the Exchequer that he would not be able to see his way to accept it. I therefore now ask for a more modest measure of relief in respect of these pensions for death, wounds or disablement. I fully appreciate that the Chancellor of the Exchequer might have said with regard to these exemptions that I was asking him to alter one of the fundamental bases of the Income Tax, because I am aware that Schedule E of the Act of 1842 provides for the collection of Income Tax, at that time at the rate of 7d. in the pound, upon every public office or employment of profit and upon every annuity, pension or stipend payable by Her Majesty out of the Public Revenue of the United Kingdom. Therefore, as that would have been too large a proposal to make, although I should have been glad to see special War pensions exempted from Income Tax, I am only asking that the special rate of Income Tax which was settled in Section 30 of the Finance Act, 1916, varying from 9d. in the pound in the case of a total income that does not exceed £300 a year from all sources up to 3s. 6d. in the pound on a total income exceeding £2,500, should be applicable in the case of all pensions.

There is one very obvious argument for it. It has taken three years to completely convince the Treasury that the pay of our soldiers and sailors should not be chargeable with the full rate of war taxation, in fact, that the principle should apply that we should not ask people to risk their lives as well as to pay in large measure into the fund for the provision of their own pay. If that is true with regard to the pay of those who are on active service, surely it is not right when people have actually made the sacrifice, in some cases the supreme sacrifice, and have died for their country and have left a widow with a small pension as some means of support in the absence of her natural supporter, that the widow's small pension should pay the War taxation. I do not think there is anything in that proposition which will contravene the underlying principle of Schedule E. It is quite true that all pensions, like any other incomes, have always been held to be liable for a contribution towards the national Revenue, but that is the ordinary peace Revenue which has to be collected from all alike. It does not contravene the principle that those who have not been wounded or disabled in the War, whose husbands, fathers or other supporters have not been killed in the War, should find the main Revenue, which will be demanded for certainly a generation, probably two generations, at a very high rate of Income Tax incurred entirely in respect of defending the country and the cause of liberty and civilisation. Therefore, I ask the Chancellor of the Exchequer to apply that principle, which is now admitted in respect of pay, to the pensions, and to say that the same scale of Income Tax, more modest and really, in respect of the small income not exceeding £300, precisely the same scale which was in force before the War in regard to earned incomes, shall apply to those pensions which, in the vast majority of cases, will all be below the £300 level, and that such pensions should pay only the peace taxation which I hold was the scale of taxation contemplated when the Income Tax, 1842, was passed. I hope I have put the case clearly before this Committee, and that as a matter of principle this Amendment will have the support of the majority of hon. Members. I hope, indeed, that paragraphs {a) and.' (b) of the new Clause, which embody two of the Amendments, the Chancellor of the Exchequer has been good enough to accept from me, will be rounded off and completed by exempting these war pensions from the special rate of Income Tax which is and will be demanded from civilians to pay for the War.


I hope the hon. Member will not press us in this matter. We have made considerable concessions, as he knows. I do not think it is quite reasonable to say that by granting this concession we shall be rounding oft a circle. So far from rounding off we shall be starting off in another direction upon a completely novel course, and it may go a considerable distance before we finish. The Committee must first bear in mind, in spite of the very natural sentimental appeal, that, as was stated on a former occasion by a previous Chancellor of the Exchequer, the rate of Income Tax was taken into account when the amount of the pensions was assessed. We must also bear in mind that the Section 30, to which the hon. Member alludes, is also renewed year by year for the period of the War, and it will give too little alleviation if we were to introduce a complete change in a system like this in so short a period, as we hope it will be, as may last as between the end of the War and a short time afterwards. There is no reason we can see why a concession of this kind should be granted which puts pensioners of this class on a completely different footing from every other kind of pensioner, and that pays no regard to the means of the person to whom the pension is awarded.


The very terms of the Amendment I propose would apply a scale which is graduated from a total income of £300 a year to £2,500 a year, and paying rates varying from 9d. to 3s. 6d. in the £.


I mean as compared with other pensions. Also, by granting this concession we should be improving the position of the Income Tax-payer as against the persons whose pension is so small as not to bring them within the limits of the Income Tax. I hope, therefore, that my hon. Friend will not press this Amendment.


I think the hon. Gentleman might have reversed what he has just said, that the Income Tax payer has his pension deducted and receives a less amount than those persons whose pensions are not subject to review. He claims consideration from the House because concessions have been made, but the concessions have been made to other persons, and not to those who were receiving these pensions, which are due to the survivors from those who have died or those who are suffering a loss of earning power by wounds or disablement. He claims that Income Tax is taken into account when the amount of pension is considered. That might probably be so when the amount of pension is of the proportion of two-thirds of a comparatively large Civil Service salary.


I meant in fixing the scale of the Warrant.


It was taken into account? That, I dare say, alters the argument. With regard to the question of it only being for the period of the War, we hope that the prices which are current during the period of the War will be reduced after the War, and if this concession were granted for the period of the War it would be during a time of exceptional need. I am sorry the Government has not seen its way to mate some concession here.

Amendment negatived.


I beg to move, at the end of the Clause, to add the words, (c) Section forty-three of the Finance Act, 1916, shall have effect as if the words ' three shillings and sixpence.' were omitted, and the words ' one shilling and sixpence ' were substituted therefor. This Amendment raises the question of what is called double Income Tax. I think properly it should rather be called double War Tax, because really practically the whole of the taxation now under the head of Income Tax is war tax, and in the case of the Dominions it is entirely war tax, because, except for the very small local Income Tax of certain States in Australia, no Income Tax existed before the War at all. This Amendment is a proposal to extend the relief which was granted last year to a certain extent to a further extent. I and those who act with me are more modest this year than we were last year. Last year we asked that the whole 5s. charged in this country as Income Tax should be remitted to those who had paid Income Tax in another of His Majesty's Dominions. This year we only ask that the relief which was given last year to the extent of Is. 6d. should be extended to the amount of 3s. 6d.—in other words, extra relief to the extent of 2s. We protest against this tax on the ground of its injustice and of its impolicy. On the ground of its injustice I need not offer a long argument. Everyone has admitted it. It has been admitted by the financial authorities of the various Dominions. The key of the citadel, in so far as the old argument of the Treasury in favour of a double Income Tax is concerned, was given away by the allowance of Is. 6d. which was made last year. The present Chancellor of the Exchequer has admitted the injustice of it himself. The other day I introduced an influential deputation to him, and he told us that between us and him there was no difference of principle involved. He admitted, further, that the tax was an unjust one, but he pleaded the necessity.

With regard to that question of necessity, I wonder whether it is so great as he makes out. If it is admitted that there must be injustice in all taxation, it becomes a question of the degree of injustice and of the policy of injustice. As regards the degree of injustice, let us see what it is that the Chancellor is losing at present by the 1s. 6d., and then we might be able, perhaps, to see what he would lose if he made the further concession for which I ask. It was said last year by the then Secretary to the Treasury that the amount given up by the Treasury under the 1s. 6d. would be something like £1,000,000. That is a large sum under normal conditions, but at present it is an extremely small one. It is the cost of one-eighth of a day of the War. I have asked the Chancellor, and he has been asked privately, what is the actual loss which was incurred under the claims of this rebate of 1s. 6d. last year. He told me in reply to a question a few weeks ago that it was not possible yet to say—that the information was not available. I understand from him that the claims are constantly coming in, and there has not been a very long currency of the possibility of claims—only the last eight months. But supposing it amounts to £1,000,000 that he is going to sacrifice by this, what I am asking him to do is to give up about as much as that. I will try to show why it will not be more than another £1,000,000, supposing it is £1,000,000. The first 1s. 6d. rebate is the heaviest rebate which will have to be paid, because the rebate will have to be made, as regards Income Tax, in all the Dominions which have Income Tax. The Income Tax varies very much in the different Dominions. The local Income Tax in Australia amounts to 6s. 3d. in the £. At the Cape it is something like 3s. 6d., but I am not sure that it has not been increased to 5s. In New Zealand it amounts to something like that, and in India to 1s. 3d., plus a Super-tax which has recently been imposed. The amount of the rebate he will have to make if he accepts my Amendment will be considerably less in proportion to the amount of the rebate which he has to make under the first 1s. 6d. In other words the amount of rebate, as we get nearer to the 5s., will become progressively less. I do not believe, therefore, that if he rebated a further 2s. he would lose more than another £1,000,000. Is it too much to ask him, for the sake of the injustice which is being done, to rebate another £1,000,000? The other night he rebated £1,000,000 to the holders of liquor licences in this country on the grounds of justice. The words of the Financial Secretary to the Treasury were these: We shall not be doing more than justice to a large body of people who, although they may carry on a trade which in the eyes of many hon. Members the ought not to he allowed to carry on under any circumstances, are fully entitled to this abatement by every rule of equity.'"—[OFFICIAL. REPORT. 2nd July, 1915, col. 835. Vol. XVV.] There can be no complaint with regard to the nature of the business on which I ask for a rebate here. There can be no question of anything against the public interest being done by it, and if the liquor trade on grounds 01 pure equity were entitled to that rebate of £l,000,000 on their licences—a rebate which was founded upon a barrelage of 10,000,000 when it is now going to be increased by a third—I think is fair to ask the Chancellor to consider this question of giving a further rebate to the persons who hap pen to be taxed for a double war tax.

With regard to the impolicy of the tax, there has been no question. I have not seen any argument put forward by any assembly, any body of people or anyone to defend the imposition of this double war tax. By every rule of equity it is a thing which should be completely abolished. On what ground can you make a discrimination against a man who happens to have investments in Australia as against a man who happens to have investments in Canada? There if no Income Tax in Canada at present. There is no Income Tax in the West Indies, and in various other Colonial possessions, and a person who has his money invested there does not suffer. Still more is the discrimination intolerable when you remember that a person who has his money invested altogether outside the United Kingdom, in the Argentine for instance, or Chili, or Peru, or any other place, does not suffer from this double Income Tax at all. There is, therefore, a definite premium on the withdrawal of the investments of persons living in this country and the placing of that money in foreign countries. That appears to me to be an intolerable discrimination, and not only intolerable but absolutely disastrous to the Imperial interests of this country. It violates every kind of principle on which a country should be run. There is great talk nowadays of the development of the resources of the Empire for the benefit of the Empire, with which I entirely sympathise, and which I will do my best in every way to forward. All the members of the Imperial Conference laid emphasis on that point. The Secretary of State for India, the Premier of New Zealand, the Premier of Canada, and all the other statesmen who were present at that conference laid the greatest emphasis on that point. You will prevent development of that policy if you maintain this system.

Furthermore, you deeply offend the sentiments of the members of the great British Commonwealth living abroad by the fact that you discriminate against them as compared with those who put their money into other countries. There is nothing more calculated to destroy Imperial sentiment than the continuance of this system. I have heard in connection with the necessity of holding on to this tax which the Chancellor has alleged as a partial justification for it, that it is by no means certain that he is not at this moment losing a very large part of his income which is derived from the double tax by the re-transference to the-Colonies of businesses which formerly were conducted from here, and which therefore paid the double tax. I know a very large firm engaged in the Colonial trade which has transferred its headquarters abroad in order to avoid this double Income Tax. Of course, it still pays Income Tax to Australia, but no longer to this country. Sir Joseph Ward at the Imperial Conference mentioned the case of a business with a capital of £4,000,000 which was leaving the United Kingdom. The right hon. Gentleman (Mr. Chamberlain) admitted that there was very considerable danger, and he knew that this was happening with regard to a number of businesses. In fact, it is admitted largely by those who know, although so far it has not been admitted by the Treasury, that there is very considerable danger of income being lost to this country. We do not want to suggest that in the case of the rebate on licensed houses the right hon. Gentleman was in any way influenced by the fact of the very important power which that trade possesses, not perhaps in the House, but certainly in the country. I am sure that considerations of that kind did not enter into his mind. Anyone who has had contact with the present Chancellor of the Exchequer knows his fairness


I desire to support as strongly as I can the Amendment of my hon. Friend. I admit at once the Committee cannot be called upon on the present occasion to deal with the principle of double Income Tax. In its-widest and most comprehensive form it is a large question which will have to be settled after the War. The Imperial Conference have admitted that the question is of deep and far-reaching importance, and that in its widest aspect it cannot be settled until after the War. But while that is perfectly true, it is no less true to say that at this moment, during this War, there is an urgent question to be decided which ought to be dealt with not only during the War but for the very reason that the Was is going on, because it is due to the War that this question has become so urgent at the present moment. It is in consequence of the War that these largely increased Income Taxes are enacted both in this country and in some of our Dominions. I would -ask the Chancellor to bear primarily in mind that this question is urgent during the War and because of the War. There is a heavy hardship, a real injustice upon individuals during the War, and that fact makes it essential you should, so far as possible, mitigate and relieve this injustice while the War is going on. Let me illustrate my meaning by taking the case of Australia. Supposing a man, resident here has property in Australia. I am taking a case which I know exists. Supposing he derives the whole of his income from property in Australia, what is his position? He pays an Income Tax of 6s. 3d. in the Commonwealth, a State Tax of the nature of an Income Tax of about 2s. more, he pays 5s. Income Tax in this country, that is 13s. 3d., and if he pays upon Super-tax it brings up the taxation to something like 15s. or 16s. in the £. Can any human being tell me it is a reasonable thing to do in time of war to exact 15s. or 16s. not from all classes of the community—if it were necessary I should tax them up to 19s.—but to exact from certain specially selected classes of the community a sum of 15s. or 16s. in the £, while you leave the normal taxation of the rich man in this country at something like 9s. or 10s.? I therefore say if you want to relieve this definite and severe hardship on the individual, you must adopt this Amendment, or something like it.

What is the position at present? There is really no question of principle involved, as I am sure the Chancellor of the Exchequer will admit. The principle has been conceded last year, and therefore it is only a question of amount, and the question I put to my right hon. Friend is this: "Does he really think that with these enormous taxes, which are war taxes, 1s. 6d. in the £ is a sufficient relief to grant to these specially selected classes of the community?" What we ask for is 3s. 6d. I do not think it is an extravagant demand, and I do put it that, conceding as Tie has done the principle, he is bound, if he wants to make his taxation fair and reasonable, to extend this reduction to something more reasonable, say, 3s. 6d., which is what the Amendment proposes. Let me very briefly give some general reasons which are applicable in peace, and perhaps especially so in war-time, against a tax of this sort. This double Income Tax, even if it be low, but more especially when it is as it now is exceedingly high, is in its nature essentially an anti-Imperial Tax. I am glad to have the assent of the Chancellor to that. In the first place, it discourages the man resident in this country from putting his money into the Dominions for investment. In the second place, it acts as an inducement upon a man who has already got his money there to withdraw it and invest it here, or in some happier country where the Income Tax is not so high. Is this the time to encourage that sort of action —to discourage investment in the Dominions and to encourage the withdrawal of money from the Dominions? I should think that if there was any time in the history of our Empire when we ought to encourage, as far as possible, the development of our Empire, the unity of our Empire and of the outlying Dominions, so far as possible, by investments from this country, that it was the present hour and the present day. We read the other day that the Imperial Conference passed a resolution with absolute unanimity. That Conference, attended by representatives not only of this country, but by representatives of India and of all the self-governing Dominions. That Resolution said that it is our duty as an Empire to give preferential treatment as between the different parts of the Empire, and to assist by our resources all parts of the Empire. Is this carrying out the resolution of the Imperial Conference? Will it give satisfaction throughout the Dominions to be told the British Government cannot afford to give an exemption of more than 1s. 6d. to people who are paying something like 15s. in the £ Income Tax here and in the Dominions? That is the Imperial point of view which might, I need hardly say, be very greatly elaborated.

Let me put it from the point of view of the individual. I say it is a very unfair discrimination against one class of individual as compared with another. Just think what the two classes are who are affected. There is the man who has made his money out in Australia, has practically, it may be, the whole of his property in Australia, and comes home to reside in the old country. A war is going on, and because he comes home to reside in this country he is taxed far more than any other class of the community, which has not property in Australia. Or take the man who, before the War invested money in Australia, whose outlook was perhaps somewhat wider than that of some of those who invested money in the South American Republics, or even in the United States itself, but who had the patriotism and insight and far-seeing outlook to see it was his duty to support, as far as he could, and to help the interests of Australia. Now he is to be rewarded by having this imposed upon him, whereas other people who have invested their money, say, in the South American Republic, where there is no Income Tax, are to be relieved of this tax. I do put it to the Chancellor of the Exchequer that the larger part of this tax, both in this country and in the Dominions is a war tax. Is it right that from the pure accident of a man living here and having property in Australia, that he should be called upon to contribute twice over for the War in which we are all interested, and to which we all ought to give a common sacrifice, and for which we all ought, as far as possible, to bear a common burden. It is one War. There is one Meet, one Army, one cause, and therefore I say that it is the duty of the Chancellor of the Exchequer, so far as he can, to make equality of sacrifice as between those who contribute to the cost of this War in different parts of the country. The logical demand, perhaps, we ought to make is this: We ought perhaps to say—and I venture to think this would be logically reasonable —"find out how much of the tax in the Dominions is pure War tax and deduct that from the British Income Tax payable here." I think that would be a logical way of carrying it out, but the Amendment asks something else. It asks: "Deduct from the British Income Tax 3s. 6d.; if the Dominion War tax is as much as that; if the Dominion tax is not as much as that, only deduct the amount of the Dominion tax." So that the most that can be deducted under this proposal is 3s. 6d., and it may very well be in the case of some Dominions less. In Canada, for instance, persons might have a deduction much less. I do appeal to the Chancellor of the Exchequer. This is a relatively small matter in point of money, compared to the daily cost of the War it is almost contemptibly small, and if he makes us this concession he will not only be relieving individuals from what is admitted to be a great hardship and a serious injustice, but he will be doing something to carry out that idea of Imperial unity, that desire to meet our Dominions in every way we possibly can in order to increase their material prosperity and development, for which he himself has in the past stood as so stalwart a champion.

Brigadier-General CROFT

The Chancellor of the Exchequer, two nights ago, owing to the lateness of the hour, permitted this discussion to be carried over till to-day, and if I only say a few words on this subject the Chancellor will, I am sure, understand that it is because my friends and I who were here at that time pledged our word to do all we could to keep this discussion as short as possible. There are just two or three points I wish to mention. First of all, it was said by the right hon. Gentleman who sits for Cambridgeshire, when he was Financial Secretary, that this really was only a question which affected a certain number of rich men in the City of London. I want the House to believe me that that is not in any way true. I myself addressed a meeting of over a thousand people, everyone of whom was affected by this impost, and most of them were people of very moderate means. In addition to that I have had hundreds of letters from the same type of people, and I could read a great number, but I will only read one which is typical. It is from a woman. She says: My income is just under £400 a year. I have had two children to bring up and I had to go to work very carefully in order to give them a public school education. This is now finished with, my son being a naval fighting-pilot in France and my daughter a V.A.D. worker. Unless we obtain some relief it is my intention to leave England on the first possible opportunity. And so it is all the way through. This burden has really become, not through any fault of the Chancellor of the Exchequer, but owing to the circumstances, of the War, absolutely intolerable to these people of limited means. I will not dwell on that part of the question, but I want to come to the question of the Imperial Conference. It is sometimes suggested the Dominion Prime Ministers were easily persuaded to fall in with the suggestion that this should all be left to a conference after the War. They did fall in with that suggestion patriotically, but I venture to think that it was solely because the Chancellor of the Exchequer was not there.


I was not there, but I saw them.

General CROFT

I cannot help thinking that if the Chancellor of the Exchequer had been there he would not have adopted the same arguments as were adopted by Sir Robert Chalmers, and which largely influenced the decision of the Conference. From what we know of the right hon. Gentleman we know that he could not have associated himself with those arguments. Sir Robert Chalmers said that there were so many anomalies that they could not touch this one until the whole question was reviewed. In other words, he admitted that he could not correct the most glaring anomaly in the whole of the Budget for fear it should become less anomalous. That is to say, he admitted that there was this string of anomalies, and he seemed to advance the argument that because there were so many he could not attack one which had become so gravely aggravated owing to the War. I do not think the Chancellor of the Exchequer would ever associate himself with that. With regard to the second point, he said the Inland Revenue authorities wore so overwhelmed owing to depletion of staffs that they could not undertake this change. As, however, you already have the rebate and the principle established, I put it that there cannot be this enormous work put on the depleted staff, and that therefore, that was hardly a worthy argument to put before the Prime Ministers. As has been mentioned, industries are leaving this country, and we only have to go back and see what a former Chancellor of the Exchequer, the hon. Member for West Birmingham (Mr. Chamberlain), said at the Conference. He said: He had no interest in delay in this matter because it is perfectly true that with the very high rates of tax which are now in force in this country there is a great and growing tendency to remove the offices of companies to other places, and the Chancellor of the Exchequer will thus lose not merely the revenue which he now collects on income earned abroad, but he loses the whole revenue. It is therefore to the interest of the British Chancellor of the Exchequer to get this matter reviewed and to arrive at a decision upon it as early as possible. I am glad to think that we shall probably have that right hon. Gentleman in our Lobby if the Chancellor of the Exchequer is not going to give us those joyful tidings which we expect. This is very eloquent testimony to show that the raising of this question is not merely the effort of private Members, but that the late Chancellor of the Exchequer, the present Secretary of State for India, has seen the great tendency to move these companies overseas.

Sir Robert Borden also said something of which this House ought to take note: An unintentional discrimination in favour of foreign capital which, coming to one of the Dominions for investment, will not be faced with double taxation, or may not be, while British capital invested for the same purpose is confronted with that handicap. There we have the real fact, that it may mean preferential treatment for the foreigner for the protection of his property as against our own. The Committee is well aware, I think, of the principle we are trying to get established. None of those interested in this question admit that there ought to be any double Income Tax at all within the British Empire, but we are not fighting that principle at this moment. What we suggest now is that practically the whole of this new taxation in Australia and the Dominions over the seas, I think it must be admitted, is War taxation, new taxation which has taken place since the War. If that be true, we maintain that it is only right that these Dominion citizens, owners of property in the Dominions, should have to pay that amount of Income Tax which they were paying prior to the War, and they should not have to pay anything over that twice over, as the hon. Member for York (Mr. Butcher) said, twice over for the same Armv that is fighting all over the world under the British flag. If we delay the question now and leave it over, as the Chancellor of the Exchequer was inclined to do, to a conference after the conclusion of peace, I put it that that will be absolutely fatal, because it is just at that moment, at the conclusion of hostilities, when you want to give confidence to the British Empire. What business man is going to leave it to chance to see this really confiscatory taxation of investments remedied? Who is going to invest in Australia if he is liable to duties ranging up to 13s. and 14s. in the £, in toto? Naturally you want to have confidence, and that can only be gained if the Chancellor of the Exchequer is prepared to meet us in the direction suggested in the Amendment. He seems to be deliberately killing the goose that lays the golden egg. He wants confidence and Revenue, and yet he is going to oppress the very companies who are going to pay within the country. He is penalising them for the mere fact that they have come back to, or are keeping in touch with, the Mother Country. He is granting a foreign preference against the British trader. He is imposing, as Sir Joseph Ward put it, a Poll Tax on the homing Britons who come back to the Mother Country.

I may not be able to appeal to the Chancellor of the Exchequer on grounds of sound finance or Imperialism—although he used to be wedded to both these great causes—but I believe I can appeal to him on the really bad ground of ordinary justice and equity in this matter. What did the Chancellor of the Exchequer himself say, speaking on the subject? I say now, and I have always thought., that double Income Tax as it exists now is unfair, and ought not to continue after the end of the War. It is one of the things which I am convinced ought to be altered. And then he went on to say: This is not a time when we can give up Revenue during the War. The financial stress and equity in this case do not seem to me to fit "This is not a time when we can give up Revenue during the War." The right hon. Gentleman pleads war necessity j but, after all, we have heard that before. The occupation of Belgium is supposed to be a war necessity, but it is as unjust as this double Income Tax. There was a crime there, and this is a crime. To suggest that on the ground of financial stress we ought to keep on putting this double burden upon our Dominions overseas at this time seems to me to be hardly fair. "This is not a time when we can give up Revenue during the War," but I would ask the Chancellor of the Exchequer to recollect what the vast majority of these people have given up during the War. Think of the contributions they have made. We in this country sometimes do not realise how vast is the Australian contribution, the Canadian contribution, and the New Zealand contribution. One has only to think of the recent names of victories; that of Messines Ridge, Vimy, Bullecourt, and those other fierce battles which were so largely contributed to—though not, as the Press suggest, won entirely—by those expeditionary forces paid for by those people for whom we are trying to get justice this afternoon. I would ask the Chancellor of the Exchequer to meet us on the ground, first of all, of equity, because it is not just or fair to go on with these present taxes; and, secondly, on the ground of confidence, so that at the conclusion of hostilities people will be encouraged to invest their money under the flag instead of being driven to countries of less civilisation where there is no double Income Tax to be paid. If the right hon. Gentleman will indicate I that he will be able to meet us, or, at any rate, to go a long way in our direction, I believe foe will do a great act; but if he neglects the very strong feeling that exists throughout the Empire on this subject he will be doing a grave disservice to the whole Imperial cause. I have great pleasure in supporting my hon. Friend.


Like the hon. and gallant, Gentleman who has just spoken, I appreciated very much the courtesy with which the Chancellor of the Exchequer the other evening met the request of those who are interested in this great question for delay in its consideration, and, like him, I propose that my speech shall be as short as possible. I have no wish to delay the Committee upon this point, but I do feel that in these times it is only right that those who are associated with, or have friends in many of these great Colonies and Dominions of the Empire, should show by their speech and, if necessary, by their vote in this House their sympathy with them in a question of this character, and that they are determined to give them their best support. For that reason only I am taking part in this Debate. Other speakers have pointed out the reason which makes this concession for which the Chancellor of the Exchequer is asked an act both of simple justice and, from our own point of view, of interest. The arguments really resolve themselves under two heads, the arguments that appeal to the heart, and the arguments that appeal to the head. Fortunately, in the present Chancellor of the Exchequer we boast a great Minister who is distinguished for qualities of both heart and head, and, if I may say so, after having listened to a great many of his speeches while this Bill has been under consideration, I think we may rest assured that so far as his heart is concerned he is already won. My observation also leads me to believe, however, that the Chancellor of the Exchequer is one of those whose head will always govern his heart. I think; therefore, that it is necessary to appeal slightly more to that hard head for which he is conspicuous.

The argument I wish to press upon him and the Committee most strongly is this. I am convinced, from my own experience and knowledge of financial matters in the city and overseas, that there is great force in the argument that by continuing our present policy of diminishing the credit of our Colonies we are indirectly lessening the revenue to this country; and, what is even more important, we are losing trades to this country. I do not think it is at all realised how great the effect is of the head office of a vast commercial undertaking being established in this country. It influences orders, it influences finance, it influences numbers of transactions that are not apparent on the surface, but which are very real in practice, and so, I believe, that there is an indirect loss to the Exchequer by allowing this to continue, and that to compel in many cases the transference of great businesses from this country elsewhere does very often mean an adverse effect on the receipts of the Exchequer, and also on the receipts of our merchants and manufacturers in this country. For that reason, therefore, I do press upon the Chancellor of the Exchequer that he should give his most sympathetic consideration to the arguments which have been placed before him, and more particularly to the arguments which, as my hon. and gallant Friend has just pointed out, were adduced with such great force by the Secretary of State for India at the recent Imperial Conference. Anyone, I think, who has studied the proceedings at that Conference must have recognised that the great Dominion Ministers who took part in it certainly went away disappointed, and I agree with my hon. and gallant Friend that they would have been unfit for the great positions they hold if they had been convinced by the extraordinarily weak arguments put forward by Sir Robert Chalmers, as representing the Treasury, as reasons for delay. There is no principle involved in this, and I do not think anybody can believe that a mere alteration in the rate of rebate could possibly give rise to an immense volume of new work. It is a childish argument, and one which I do not think would convince any business man for a moment. I do not wish to take up any more of the time of the Committee, and I am very glad to have had the opportunity of expressing my views on this great Imperial question, for it is no other.

5.0 P.M.


I think we ought to follow out the precept mentioned by the hon. Member opposite and regard this matter from the point of view of the head and not of the heart. What are the real facts with respect to it? The hon. and learned Member for York (Mr. Butcher) said that if you invest your money in South American securities you do not have to pay a double Income Tax, as you have to do if you invest it in Colonial securities. But is my hon. and learned Friend aware that one may make investments in Colonial Government securities without having to pay a double Income-Tax, and that anyone who invests his money in such securities is in exactly the same position as he who puts his money in South American securities? He is only subject to the double Income Tax if he carries on business in the Colonies and resides here, which is a totally different thing altogether.


I was referring to the case of the man who invested his money for the development of the Colony—who did not merely buy shares on the Stock Exchange for the purpose of mere money making, but who invested it for the development of the Colony.


I do not know whether the hon. and learned Gentleman is aware that if you invest money in Colonial Government securities you receive a, comparatively low rate of interest, while if the money is invested in commercial undertakings the return is a good deal more. I would also like to point out that, owing to the manner in which the Colonies conduct their affairs, money which, they raise over here in England is spent in carrying on business the object of which is the development of the resources of the Colony, and, therefore, that particular argument does not apply. As I have-said, the only question involved is whether people who start businesses or firms in a Colony but live here are or are not to be subjected not merely to the Income Tax levied in the Colony, but also to the Income Tax levied in this country. They are not so subjected, unless they are-residing in this country or have the head office of their undertaking here. If they are residing here or have their head office here, surely it is because it is to their advantage to do so, and that is what it really comes to. What my hon. Friend asks for is that if I think it is to my advantage to establish a business in Australia and to live over here, I shall only be called upon to pay the Income Tax which is levied in Australia and not have to pay any tax levied here. I am quite certain if the Committee will look upon this matter in that light it will see that the argument does not hold ground for one moment. I should not live in this country unless I considered it to my advantage to do so, and, it being to my advantage, surely I ought to pay the same tax as anybody else.

The hon. and learned Gentleman spoke about one war and one country. That raises a different point altogether. If affairs were so managed that there could be absolutely a united Empire, and the whole of the taxes raised in the Empire could be put into a common pot and dealt with accordingly, it would be an ideal state of affairs with which I should have sympathy. But such a state of affairs does not exist at the present moment. Under the Act of 1913 it was held by the judges to be the law of the land that if money was earned in any other part of the world and was not brought to England, then it was not liable to Income Tax. That is to say, if a person received £1,000 a year in Australia and spent it there, on that £1,000 he could not be called upon to pay Income Tax in this country; he would only have to pay the Income Tax in Australia. If the Chancellor of the Exchequer can see his way to restoring that law, and if he can make it applicable, say, to the Colonies, it would, I think, be a just thing to do, and it would to a certain extent meet the question which has been raised by my hon. Friends. But to go beyond that and to say that the Colonies are to have all the benefit of a business which is also carried on here, and which probably would not be so prosperous if it were not carried on here, and to say that that business is not to be liable to Income Tax here, seems to me to set up a position which will not hold water.

Sir J. D. REES

It must be admitted that the case of India is upon a different footing to that of Australia, but it is a difference in degree and not in any way a difference in principle. There, however, relief is given by the deduction of Income Tax up to 1s. 6d. in the £, and that covers the actual Indian Income Tax. It might be said, therefore, that in respect of India there is no grievance. That, however, is not so, because the Super-tax has created a grievance in respect of which I would make an appeal to the hard heart of the Chancellor of the Exchequer, for he must naturally have a hard heart in dealing with these matters. I believe the term dura ilia has been used in that regard, but at any rate I will appeal to his organs of compassion, wherever situated, and T will ask the right hon. Gentleman to consider the case of the poor Indian, who stands in a much less advantageous position than the colonial. His property is very largely invested in India,—in tea, for instance. He comes here, and finds himself hard put to to educate his children, yet he is caught by this double Income Tax. When I spoke on this subject on a previous occasion, the Chancellor of the Exchequer said, "Suppose the Government of India, instead of putting the tax in the form of Income Tax, levied a tax on production, then no more could be said on the question of Income Tax." I submit that Section 43 of the Finance Act of 1916 was so framed as to expressly cover cases like that. I would also urge that no such tax as the right hon. Gentleman suggests is levied in any British Colony or Possession.

May I revert for one moment to the case of the Indian Super-tax? It promotes bad finance; it promotes the distribution of resources as dividends right up to the hilt, because it is only levied on undistributed profits. If the correction of this admitted injustice is postponed until after the War, then those men on behalf of whom I am appealing will have suffered for a long time the injustice of paying this double tax, and we shall have more cases like that of the British Electric Supply and Tramway Company, which removed its offices from this country and started business in Bombay, to the great detriment of business here. I admit it is extremely difficult to get any remissions of taxation this year. I admit that the case of India is not so crushing or cruel as that of Australia, where individuals are subjected to confiscation up to 16s. or 17s. in the £ on their income, and where companies are taxed up to 50 per cent.; but the fact remains that the existence of this state of affairs is causing companies to contemplate moving their quarters from this country. The poet has spoken of "necessity the tyrant's plea." I do not want to represent the Chancellor of the Exchequer as a tyrant, but I do suggest he may well give Australia immediate redress, in view of the cruel and crushing injustice from which it is suffering, and at the same time I would point out that the case of India is only different in degree and not in principle, and that it therefore calls equally for treatment.


I think we all sympathise intensely with the anxieties of the Chancellor of the Exchequer at this juncture, and it is with no sort of pleasure that one prefers a claim against the Treasury even in the best of causes. But I would like to say a word or two on this matter. I should like, in the first place, to express my astonishment at the sentiments which have just been delivered by the right hon. Baronet the, Member for the City of London (Sir F. Banbury). Really, that speech takes one back full 200 years, to the time when the Colonies were called Plantations. We have got a little more enlightened now, and we have come to feel that the Colonies are, in many ways, a sound investment for British capital. Where, I would ask, has British capital ever got better returns for its outlay than in the Dominions of the British Crown? It must be the Imperial desire to make this country the real home of the colonist. Men go out as pioneers into the outlying parts of the Empire, and they come back here to spend their declining years. We want them to do that, and we think they should not be taxed twice on the same money and on the same earnings because of their desire to come back to the old country. I may mention one thing which always struck me, long before the War, as a very unfair thing. It has been going on for fifty years, but it is only now that taxation has become so enormous that my colonial friends draw attention to it. An Australian family comes home to England with the object of getting the children educated here. No one objects to that; it is a sign of regard for the old home and for the Empire. We do not wish to see the young children of the Empire deprived of the advantages of being educated in England. Now money is sent here from Australia to pay the expense of the residence of the wife and children in England, and that money is treated here as income and taxed as if it were the income of the taxpayer. I say, however, it is not income, but it is expenditure. It is spent here, but it is not earned here. It is earned elsewhere. My right hon. Friend near me makes all his money within one square mile of this House.


Oh, no!


I am sure it is not my right hon. Friend's fault if he does not do so. But let us see how this matter becomes so urgent. This matter used not to be pressed much on the Chancellor of the Exchequer. I am grateful to hon. Members who are not directly connected with the Colonies for the trouble which they have taken in the matter. It is the tremendous taxes arising out of the War that have created this crisis. We in the Colonies and people in this country who have got investments in the Colonies have to pay two war taxes in respect of incomes in many cases. I will mention one of many cases which I could give. An old English family went out and became a new Colonial family and made a lot of money. They put their money into Australian investments. They wanted to spend their last days at home in England. Now they have to pay a war tax on their income in Australia, and upon that very income in Australia, most of which never comes here at all, they have got to pay a separate war tax here. Surely one war tax is enough even for the moat patriotic. Much as I sympathise with the Chancellor, warmly as I admire his brilliant success in his arduous position, it is not a pleasant thing to appeal to his feelings, but I know that he has a conscience left owing to his revelations about the shipping profits, and I venture to press this claim upon him. In this Bill in another matter the justice of this claim is recognised. I think that I am right in saying that there is a Clause in this Bill which provides that in case of excess profits that have been taxed once in Australia, where they have been earned, and again in England, there are certain concessions made. That is the one thing that we want. I hope that the Chancellor of the Exchequer will at least be able to give us one of these pleasant able statements which make us feel that we have got all that we want.


I am going to try to fulfil the request just made by my right hon. Friend, but I do not think that I shall go the full length with those who feel keenly on this subject, for they have got a head as well as a heart to the extent of knowing the difference between results and talking. I have listened with great pleasure to the kind things that have been said about myself and my feelings on this subject. Certainly I have tried in this Budget to do what I thought right. I do not think that my hon. Friend the Member for Tamworth (Mr. Wilson-Fox) is right in saying, if you can divide your personality in that way, that my head is stronger than my heart. I really think that is too much the other way, and that I am much too liable to be touched by things that appeal to one's feelings, as, indeed, the majority of Members are. I have so much sympathy with the objects of this Amendment that I dislike very much not being able to accept it. I certainly feel as strongly as anyone who has spoken the Imperial nature of this question. I hold strongly the belief that the whole future of our nation and our Empire depends on the extent to which we can all work together. But I have always believed, with that object in view, that preference, in the sense of treating each other differently from the way in which we treat the rest of the world, would be the best step to take; and I always believed also that there is no way in which that preference could be mare easily given than to help our Dominions by facilitating our money going there rather than by sending it to the rest of the world. Having said this, I suppose that I ought to say at once that I accept the Amendment. I am sorry to say that I cannot do so. I should like to look at one or two of the arguments used, before giving my real reasons for not being able to meet the case in this way. My hon. Friend below the Gangway used, what seemed to me a curious argument. He said that a million at ordinary times would be a big thing, but that now it is almost nothing. Yet there is a feeling growing in this House, that has been shown more and more month by month, that because of the necessary expenditure of this War on this gigantic scale we are beginning to look at it in that way and to look at amounts of this character as not so very great. I take exactly tine opposite view. I think the more we are compelled to spend these immense sums the more it is right, and I think it is the duty of the House of Commons to try to save if we can every additional million either in saving expenditure or by increasing revenue.


Of course, I was not going into that question at all. I am one of the signatories to the memorial which is going to be debated on Friday with regard to waste. Waste is a very different thing from economy.


Yes, but from the point of view of effect after the War, our total indebtedness will depend on two things—revenue and expenditure. Therefore, from the- war point of view, an additional million of revenue is of great value, almost as much value as an additional million saved from expenditure. It has been said that the result of the present system is to drive companies away from this country. There is, of course, risk of that. But so far as that is concerned, we have got to take one risk with another. But one thing in the speech of the hon. Member shows us that that is exaggerated. He told us of a firm which has gone to New York for that purpose. I see accounts of discussion as to immense Income Tax, and perhaps the patriotic gentleman will find that he has gone out of the frying pan into the fire, and, if so, we shall be rather pleased than otherwise. It is not with me a question of whether or not this change ought to be made. I think that it ought. The whole point I am arguing is whether it ought to be made now, during the War. When I say that a change ought to be made, I do not accept the principle of the Amendment. What I mean is that there ought to be some readjustment. There are two distinct points of view from which this has to be regarded. One is the effect on our Colonies and Dominions and the extent to which they have been hindered by keeping on the tax or can be helped by removing it. The other side is the effect on individuals, on British subjects, as to what the hardship is of having to pay under the present system.

On the Imperial side I wish the Committee in the first place to be clear in their minds that this Amendment has an effect which from the point of view of the Chancellor of the Exchequer is entirely wrong, and I know that the Prime Ministers of the Dominions would also regard it as entirely wrong. The effect of this Amendment would be that if there is a Colony which paid Income Tax at 3s. 6d., they are to get the whole of it and we are to get nothing—that is to say, it is not to be divided. That never was the position of the representatives of the Dominions here. In talking to them they quite recognised that this was a case for adjustment or trying to divide equally between the two Exchequers, and that was done, or is going to be attempted to be done, in regard to excess profits. I could never accept the plea that in trying to set this matter right we should start on the principle that anything extra is to be borne entirely by the British Exchequer, and that the Dominions are not to share in it; and I say further that if hon. Members were to press that view now it is most unlikely that they would get any sympathy, so far as my conversations with the Prime Ministers are concerned, from the Prime Ministers of the Dominions themselves. They think that it is a case of readjustment between the two Exchequers. See how obvious that must be. It may be said that if this were carried it would mean that the Dominions got the whole benefit and we got none of the War taxation. I may be told, as I was by the deputation which I received on this subject, that the Dominions arc spending the money in this War, and that it would be spent in that way no matter who got it. That is not the way to regard the question, and no Dominion Government would regard it in that way. We have got to consider, if we are dealing with the whole Empire as an entity, what is fair in all cases. If the Committee will look at it from that point of view, I think that they will agree with me in this, that splendid as has been the assistance of the Dominions, and certainly I think that taking into account the difference of relationship, the difference of power to control, it has very likely not only been greater than we could have expected, but perhaps greater on the whole in proportion even than that of the United Kingdom, yet you have to look at the condition after the War.

I do ask the Committee to remember that in no country are its absolute resources being more and more used up, and I do not believe that there is any fair-minded representative of either Canada or Australia who will not see that, looking to the future, the Dominions will probably be better able, without suffering, to bear their share of the burden thrown on them by the War than the United Kingdom will be. That is the first reason why I say we cannot do it. The share has got to be divided. The principles on which it will have to be divided have first to be decided. Another point. It is only Income Tax collecting Colonies which are to get this-benefit as against us. There are some of the Dominions which have no Income Tax at all, but they put on very heavy war taxation in other forms. The result of doing this now during the War would be this, that you would be giving a preference to one Dominion which is raising war revenue by Income Tax as against another Dominion which is raising it by putting on other taxes in a form which is not called Income Tax. In Canada I understand that there is no Income Tax. It is said that they are talking about it, but they have not get it now. I quite agree that if you adopt this plan it would obviously be their interest to have it, but at this moment the effect would be that this preference would be given to some of the Dominions but would not be given to others.

General CROFT

May I ask if that does, not apply already?


It does. The concession made by my right hon. Friend was wise, but my view is that it is not necessary from the point of view of sentiment or justice to go beyond that concession at the present time. There is another consideration which is very important. The difference between during the War and after the War is simply enormous from this point of view. During the War, practically speaking, there are no opportunities for investing money. On the contrary, we try, in every possible way, to prevent money going away, and from that point of view there is every reason for allowing this question to stand over until after the War comes to an end. I myself have not been able to attend the Conferences, but I have, over and over again, put forward the same considerations which I put to the Committee now-that a broad outlook on the situation ought to be laken—and the conclusion I have come to in regard to the recommendations is that what we have to do should be done immediately after the War and not now. I have to look to the effect on this Bill, and I ask the Committee to remember that so far as concerns the British subject who invests in companies in Canada or Australia the only question in regard to him is whether or not he is suffering, on the whole, with regard to the War to a greater extent than other people. Is that the case? I am inclined to think it is not. Some of my hon. Friends who have spoken presented the subject in a form which is not quite correct. It should be remembered that the War means not only hardship to the whole community, but it means the necessity for this kind of taxation all round. It means hardship of a particular kind which we cannot avoid.

Why is it, apart from patriotic motives, that anybody invests money in one of the Dominions? What he does is, he looks at the return on the money he invests, and he only takes into account whatever burdens are imposed in the Dominion, or wherever it may be. Obviously there is only a hardship if the net result, when the Income Tax or whatever it is abroad, is deducted, is to give him an income similar to that which a man who is investing in the ordinary way in this country would get. On the balance, I do not think the British subject investing abroad is treated more harshly than others in the thousands of cases with which we have to deal in this country. It should also be remembered that anyone at home who has invested in a company doing business has excess profits taken from him. Up till now in the Colonies they have escaped excess profits, and that is another reason for stating that on the whole I do not think these investors have suffered more as individuals than many thousands of people who have been taxed in this country. My hon. Friend the Member for York (Mr. Butcher) gave figures with regard to Australia, but I would point out that there there is a graduated tax for individuals, while the tax imposed upon companies is a fixed one, and until now those who have' invested in these companies in Australia have had nothing to pay except a fixed tax. The amount deducted is one-sixth, so that the British investor in a company there only pays one-sixth in Income Tax.


I have figures which certainly satisfy me that the man who owns property in Canada and in the Commonwealth pays a tax of 6s. 3d.


I am talking only of companies. The tax on property is graduated, but as regards the companies, the money invested in them is in the position which I have stated. I have really tried to look at this matter from the point of view of what is fair to individuals here as compared with others, and I have tried also to consider it from the point of view of the general interest. Between myself and those who support this Amendment there is no difference whatever on the principle that this ought to be adjusted. The only difference is whether or not it ought to be adjusted during the War; and I have come to the conclusion, in view of all the circumstances I have put forward, and in view of the need of this country of every penny of taxation we can possibly get, that we should deal with this matter after the War ends, and that we should not do anything until the War ends.


I would point out that if a man living in Australia earns his money here, when it goes to him it is taxed. Why should the reverse be the case when investors in this country get income from the Colonies?


I do not want to interrupt my lion. Friend, but I have had complaints from people who are doing business that they are now being taxed in Australia.


The man in Australia who draws his dividends from a London business has no Income Tax to pay upon them. That is of very serious importance. Why, if I am drawing my dividends from a company in Melbourne and I have paid my tax in Melbourne, should I still have to pay money when it comes here? Why should we not reciprocate with Australia in that respect? That is a very important point, and it ought really to be considered. I quite agree that my right hon. Friend puts it on a higher plane, as a question of adjustment between the peoples. If Australia wants to get money to develop her future industries she must come to some arrangement about taxation. The question after all is one of residence, and when the Conference meets I think it ought to be put plainly to them that wherever the money is earned there should be the bigger portion of the taxation, and where it is spent the smaller portion of the taxation. The point my right hon. Friend must press upon the Colonial people is that if they want British money for the development of their industry they must come to an equitable arrangement in regard to the question of taxation, as the basis on which the matter ought to be adjusted between the Colonies and this country.


I think the right hon. Gentleman the Chancellor of the Exchequer is really not quite correct in what he said in reply to the hon. and learned Member for York. There is a large amount of deduction from the trading profits by the Australian Government, and a person investing money in Australia has that deducted from the capital which is penalised to that extent. I think the Chancellor of the Exchequer will find on inquiry that there is a real grievance, and that he is not quite right in his statement of facts in regard to what is really taken off. The hon. and learned Member for York (Mr. Butcher) in his very eloquent and convincing speech went to the root of this grievance. I am sure that if the Treasury would agree to inquire into the matter and make some concession if they find the facts to be as stated, that the movers of this Amendment would be prepared to withdraw it. The facts in dispute are fundamental, and we ought to know them definitely before we legislate. I think the principle which has been admitted is one which requires no argument. It is very clearly set out in Clause 20 with regard to excess profits which provides: His Majesty may, by Order in Council, declare that arrangements have been made with the Government of any such possession whereby in respect of any profits only the duty which is higher in amount is to be payable and the amount of such duty is to be apportioned between the respective Exchequers. The Chancellor told us that this is a matter of adjustment, but he thought the Amendment should not be accepted. The hon. and learned Member for York brought out clearly that the British or Australian subject had his capital penalised to the extent of the deduction from profits by this charge. In the Argentine or Brazil no doubt capital there has to suffer from local taxes. This tax of which we complain is neither fair nor equitable. I entirely associate myself with the hon. Member who moved the Amendment in thinking that an investor should not be taxed in several parts of one Empire for the same War to the extent that he is taxed. I appeal to the right hon. Gentleman, who I am sure will agree that there is some doubt as to the amount of the taxation, to promise a further investigation, and in doing so he need not commit himself.


May I venture to make an appeal to the Committee? Those who were here on Tuesday night will remember the circumstances under which this discussion was arranged for to-day, and as the Adjournment is to be moved, and in view of the general understanding that we would get the rest of the Bill to-night, I would ask the Committee to come to a decision on this point.


[HON. MEMBERS: "Agreed!"] I was only anxious to explain why I was going to vote, if there is to be a Division.


I am very sorry the Chancellor has not been able to make some concession, and under the circumstances I must divide, because I think it is really necessary that the opinion of the House should be taken on this matter. I think so very strongly. As regards the form of the Amendment, we were quite willing to meet the Chancellor if he had been willing to meet us. We only adopted this particular form because it is that which the Government themselves adopted and embodied in Clause 43 of the Act of last year. That was a rebate, and there was nothing about adjustment. If the Chancellor will say now that he will make some abatement to be settled by adjustment we are perfectly willing to agree to that. On a personal explanation with regard to what the Chancellor said about my remark as to small amounts, of course I was talking about this being a small amount as compared with other allowances in these matters. A million is an eighth of the expenditure which we are making; every twenty-four hours, and means three hours' expenditure. I think a million of money might be saved per day by avoidance of waste. The Chancellor seemed to draw a distinction between the income of a. person affected by this tax before the War and now, but he did not deal with the question of discrimination. He said that the Australian investor was doing just as well on account of the rise in raw material, but he did not point out that the investor in the Argentine is doing a great deal better and does not pay double tax. With regard to the effect on investments abroad, at the Imperial Conference the Secretary of State said that it was a matter of immediate urgency that companies and firms should have this settled at once.




I have his words here, and they have only one meaning.

Question put, "That those words be there added."

The Committee divided: Ayes, 86; Noes, 142.

Division No. 65.] AYES. [5.53 P.M.
Agg-Gardner, Sir James Tynte Haddock, George Bahr Martin, Joseph
Anderson, W. C. Hamilton, C. G. C. (Ches.; Altrincham) Mason, David M (Coventry)
Baker, Joseph Allen (Finsbury, E.) Hanson, Charles Augustin Meehan, Francis E. (Leitrim, N.)
Barlow, Sir John Emmott (Somerset) Harris, Henry Percy (Paddinuton, S.) Neville, Reginald J. N.
Bathurst, Col. Hon. A. B. (Glouc., E.) Harris, Percy A. (Leicester, S.) Nicholson, William G. (Petersfield)
Bellairs, Commander C. W. Henderson, John M. (Aberdeen, W.) Nield, Herbert
Benn, Arthur Shirley (Plymouth) Hermon-Hodge, Sir R. T. Nolan, Joseph
Bird, Alfred Hickman, Colonel Thomas E. O'Leary, Daniel
Boland, John Plus Hogge, James Myles Paget, Almeric Hugh
Boyton, J. Houston, Robert Paterson Parrott, Sir James Edward
Broughton, Urban Hanlon Hunt, Major Rowland Perkins, Walter F.
Burdett-Coutts. William Ingleby, Holcombe Pollard, Sir George H.
Cator, John Jackson, Sir John (Devonpert) Price, C. E. (Edinburgh, Central)
Cautley, H. S. Jones, W. Kennedy (Hornsey) Rawson, Colonel R. H.
Cecil, Rt. Hon. Evelyn (Aston Manor). Keating, Matthew Roes, Sir J. D. (Nottingham, E.)
Coats, Sir Stuart A. (Wimbledon) Kinloch-Cooke, Sir Clement Reid, Rt. Hon Sir George H.
Cochrane, Cecil Algernon Lambert, Rt. Hon. G. (Devon, S. Molton) Scanlan, Thomas
Cowan, Sir W. H. Lambert, Richard (Wilts, Cricklade) Scott, A. MacCallum (Glas., Bridgeton)
Craig, Ernest (Cheshire, Crewe) Lane-Fox. Major G. R. Sharman-Crawford. Colonel R. G.
Croft, Brigadier-General Henry Page Lloyd, George Butler (Shrewsbury) Spicer, Rt. Hon. Sir Albert
Crooks, St. Hon. William Lough, Rt. Hon. Thomas Touche, Sir George Alexander
Crumley, Patrick Lowe, Sir F. W. (Birm., Edgbaston) Whitty, Patrick Joseph
Cullinan, John Lynch, A. A. Williams, T. J. (Swansea)
Doris, William MacCaw, William J. MacGeagh Willoughby, Major Hon. Claud
Ganzoni, Francis John C. M'Kean, John Wilson, Captain Leslie O. (Reading)
Gardner, Ernest Mackinder, Halford J. Wilson, Lt.-Cl. Sir M. (Bethn'l Green, S. W.)
Gilbert, J. D. MacVeagh, Jeremiah Yate, Colonel C. E.
Guinness, Hon. W. E. (Bury S. Edmunds) Maden, Sir John Henry
Gwynn, Stephen Lucius (Galway) Mallalieu, Frederick William TELLERS FOR THE AYES. —Mr.
Hackett, John Marriott, John Arthur Ransome A. Bryce and Mr. Butcher.
Adamson, William Goddard, Rt. Hon. Sir Daniel Ford Richardson, Thomas (Whitehaven)
Agnew, Sir George William Goldstone, Frank Roberts, Charles H. (Lincoln)
Ainsworth, Sir John Stirling Greenwood, Sir G. G. (Peterborough) Roberts, George H. (Norwich)
Allen, Arthur A. (Dumbartonshire) Greig, Colonel James William Roberts, Sir S. (Sheffield, Ecclesall)
Armitage, Robert Gulland, Rt. Hon. John William Robinson, Sidney
Arnold, Sydney Hamilton, Rt. Hon. Lord C. J. Rowlands, James
Baldwin, Stanley Hardy, Rt. Hon. Laurence Runciman, Sir Walter (Hartlepool)
Banbury, Rt. Hon. Sir F. G. Hewart, Sir Gordon Rutherford, Sir John (Lanes., Darwen)
Baring, Sir Godfrey (Barnstaple) Hinds, John Samuels, Arthur W.
Barran, Sir John N. (Hawick Burghs) Hohler, G. F. Samuel, Rt. Hon. Sir Harry (Norwood)
Barran, Sir Rowland Hurst (Leeds, N.) Holt, Richard Durning Sanders, Col. Robert Arthur
Barrie, H. T. Howard, Hon. Geoffrey Scott, Sir S. (Marylebona, W.)
Beach, William F. H. Hudson, Walter Seely, Lt. Col. Sir C. H. (Mansfield)
Beale, Sir William Phipson Hughes, Spencer Leigh Shortt, Edward
Bcauchamp, Sir Edward Jackson, Lieut.-Col. Hon. F. S. (York) Smith, Rt. Hon. Sir F. E. (Walton)
Beckett, Hon. Garvase Johnston, Sir Christopher Smith, Sir. Swire (Keighley, Yorks)
Bentinck, Lord H. Cavendish- Jones, J. Towyn (Carmarthen, East) Spear, Sir John Ward
Bowerman, Rt. Hon. C. W. Jones, Rt. Hon. Leif (Notts, Rushcliffe Starkey, Captain John R.
Bridgeman, William Clive Joyce, Michael Stewart, Gershom
Brunner, John F. L. Joynson-Hicks, William Strauss, Arthur (Paddington, North)
Bull, Sir William James Kenyon, Barnet Strauss, Edward A. (Southwark, West)
Burn, Colonel C. R. King, Joseph Talbot, Lord Edmund
Burns, Rt. Hon. John Lamb, Sir Ernest Henry Thomas-Stanford, Charles
Carew, Charles R. S. (Tiverton) Larmor, Sir J. Thompson, Rt. Hon. R.
Carr-Gomm, H. W. Law, Rt. Hon. A. Bonar (Bootle) Thorne, G. R. (Wolverhampton)
Cawley, Rt. Hon. Sir F. (Prestwich) Lewis, Rt. Hon. John Herbert Thorne, William (West Ham)
Chancellor. Henry George Lonsdale, Sir John Brownlee Tickler, T. G.
Clough, William Loyd, Archie Kirkman Toulmin, Sir George
Collins, Sir Stephen (Lambeth) M'Callum, Sir John M. Trevelyan, Charles Philips
Collins, Sir W. (Derby) Macdonald, Rt. Hon. J. M. (Falk. B'ghs) Walton, Sir Joseph
Compton-Rickett, Rt. Hon. Sir J. McMicking, Major Gilbert Wason Rt. Hon. E. (Clackmannan)
Cornwall Sir Edwin A. Meysey-Thompson, Colonel E. C. Wason, John Cathcart (Orkney)
Craig, Herbert J. (Tynemouth) Money, Sir L. G. Chiozza Watson, Hon. W. (Lanark, S.)
Craig, Colonel James (Down, E.) Morgan, George Hay Wedgwood, Lt. Commander Josiah
Currie, George W. Morison, Hector White, J. Dundas (Glasgow, Tradeston)
Dairymple, Hon. H. H. Morton, Alpheus Cleophas Williams, Aneurin (Durham, N.W.)
Davies, Timothy (Lines.. Leuth) Nicholson, Sir Charles N. (Doncaster) Williams, Penry (Middlesbrough)
Davies, Sir W. Ho well (Bristol, S.) O'Neill, Dr. Charles (Armagh, S.) Williams, Col. Sir Robert (Dorset, W.)
Denniss, E. R. B. Orde-Powlett, Hon. W. G. A. Wilson, Rt. Hon. J. W. (Worcs., N.)
Dickinson, Rt. Hon. Willoughby H. Parker, James (Halifax) Wilson, W. T. (Westhoughton)
Dougherty, Rt. Hon. Sir J. B. Pearce, Sir William (Limehouse) Winfrey, Sir Richard
Duncan, C. (Barrow-in-Furness) Pease, Rt. Hon. Herbert Pike (Darlington) Wing, Thomas Edward
Essex, Sir Richard Walter Philipps, Gen. Sir Ivor (Southampton) Wood, John (Stalybridge)
Faber, George D. (Clapham) Pratt, J. W. Worthington Evans, Major Sir L
Fell, Arthur Pryce-Jones, Colonel E. Yeo, Alfred William
Fenwick, Rt. Hon. Charles Res, Walter Russell (Scarborough)
Fleming, Sir John Bees, G. C. (Carnarvon, Arton) TELLERS FOR THE NOES—Captain
Fletcher, John Samuel Richardson, Albion (Peckham) F. Guest and Mr. J. Hope.
Gibbs, Col. George Abraham

Question put, and agreed to.

Motion made, and Question proposed, "That the Clause, as amended, be added to the Bill."


I want to make a very strong protest against this Clause. I find no fault whatever with the action of the Government on the subject under discussion. I agree with the right hon. Gentleman and with the Chancellor of the Exchequer. But in this matter of the double Income Tax my grievance has always been against the Colonial Governments and not against the British Government. I want also to protest against the re-enactment of the extension of Clause 30 of the Finance Act of 1916. I think it is absolutely wrong to give any class of the community special exemption from taxation by means of an acknowledgment of good and honourable service. The correct way to pay for the services of soldiers and sailors is to give them adequate wages and salaries, for their work; to give them exemption and special reductions of taxation, I submit, is entirely unsound. It is wrong, because it gives most to the people who need it least, and it increases automatically the salaries of the better paid men. This extension is a proposal that the officers and masters of the mercantile marine, who are servants of private persons, should receive special relief of taxation. I do submit to the Committee that it is taking a step which is most improper. These persons no doubt are receiving from those who employ them extra pay, and why the country should go out of its way to give a special reduction of taxation, and to pay part of the wages of somebody else, I cannot for the life of me understand. That is the real effect of it. What is it the House proposes to do? To pay part of the wages of another man's servant. The result is that the other man reduces his wages bill. It is an unwise course. Take the case of a hotel or station porter. If he gets a large sum of money in tips the effect is that his wages are reduced. Therefore, if you proceed with this proposition, the effect will be that it will not be the man to whom you give the relief who will benefit, but his employer. It may not happen at once, but that will be the ultimate effect. I shall make the strongest possible protest against the whole idea of any person receiving relief from taxation for their services. These ought to be rewarded straightforwardly, and with proper payment; and all classes of the community ought to pay taxes equally, in proportion to their income and ability to pay.


The hon. Member for Hexham has again repeated what he said on a previous occasion in speaking of these officers and men of the merchant service. He persists in falling them somebody's servants—


So they are!


In this War we have found that they are everybody's servants, that they are the servants of the nation. They have rendered services to the nation which I say compare, and compare favourably, with those rendered by the officers and men of His Majesty's Navy and Army. I am quite sure the servants of the hon. Member for Hexham will not forget that he has compared them with hotel waiters in the speech he has just delivered.


I did not!


The hon. Gentleman painted out that hotel waiters receiving large tips were liable to have their pay reduced. That was his argument. Why, I ask, should not a concession which has already been extended to soldiers and sailors of His Majesty's Army and Navy be extended to those gallant men who have rendered such signal service during the War? This, however, was not my purpose in rising. I wanted to ask the right hon. Gentleman the Financial Secretary whether it is possible, or administratively impossible, to make Sub-section (a) of the new Clause retrospective1! It has been pointed out to me, even in the day or two which have elapsed since this concession was made, and was made known outside, that it had operated with great hardness to men who are in receipt of very small pay, subalterns in the Army and others. In particular, I have received one letter from a lieutenant invalided out of the Service, who points out that he has had to pay, owing, as I think, to a mistake in the legislation of last year or the year before, at full rates on all his income, and that he has not benefited at all by the concession of the 9d. rate on his pay. I do not know whether it is administratively possible to do what I ask; if it is, I should like the hon. Gentleman to consider between now and Report whether, now that he has rectified this matter, we shall make it retrospective in respect of the last two years.