§ Section twenty-one, Sub-section (1), of the Finance (No. 2) Act, 1915, is hereby repealed, and the exemption granted under Section one hundred and sixty-three of the Income Tax Act, 1842, as extended by Section thirty-four of the Finance Act, 1894, to persons whose respective incomes do not exceed one hundred and sixty pounds a year shall be restricted so as to apply only to persons whose respective incomes do not exceed one hundred and fifty pounds a year.— [Mr. W. Thorne.]
§ Brought up, and read the first time.
§ Mr. W. THORNE
I beg to move, "That the Clause be read a second time."
If this Clause is carried we should get back to where we were before the rebate was ordered in the Finance Bill of some two years ago. The position I take up is this: That in consequence of the purchasing power of the sovereign having been reduced from twenty shillings to eight shillings, what we call the small Income Tax payer is now being hit exceedingly hard. The man who is receiving about £2 10s. or a little over has to pay Income Tax, and I believe it is impossible for him to do so. I am one of those who believe, more especially at the present time, that any man who is receiving £3 1387 a week or less should not pay a single farthing in direct taxation. If you take the high price of commodities at present, the wage earners are being hit more than anybody else in the country. There has been a great agitation upon this question for some considerable time, and I am not quite sure as to whether a deputation did not wait upon the Chancellor of the Exchequer some time ago from the Miners' Federation on this question. I find, on looking at the Agenda Paper of the Trade Union Congress, to be held in September, that there is a resolution down in the name of the Miners' Federation with regard to it. There is great discontent in different parts of the country in consequence of these wage earners being called upon to bear this extraordinary burden of Income Tax. I remember many years ago there used to be an old standing Clause in the Socialist programme that anyone who is receiving £300 a year or less should not be called upon to pay Income Tax at all. This is a tax on what I call overtime, because the overtime work by the individual workers is calculated for Income Tax purposes. Therefore, because the State wants the lower-paid working men to work overtime—I am pleased they are working many hours' overtime—they are called upon to pay this tax. I do not think workmen should "be penalised in this way, and I hope the Chancellor of the Exchequer will be able to see his way to meet us in this matter. I cannot say for the moment what it would cost the Chancellor of the Exchequer. Personally, I do not think it would cost a great deal. Nevertheless, as a matter of principle, I say that in my humble judgment at the present time, when the price of commodities is so high, it is quite impossible for any wage earner in this country with a family to live on less than £3 a week. As the Chancellor of the Exchequer knows, the price of, commodities has jumped up anything ranging from 106 to 170 per cent., and in some cases a great deal higher. It was stated in the last "Labour Gazette" that there had been an average increase in the cost of commodities of something like about 106 per cent. I wish to point out that the essential things the working classes consume every day have jumped anything ranging from 150 to 175 per cent. Therefore, I say the man receiving £3 a week or less 1388 should not be called upon to pay Income Tax at all, because he is already hit heavily by the extraordinary price he has to pay for essential commodities.
§ Mr. ADAMSON
I desire to second the Motion. When the Income Tax standard was lowered two years ago from £150 to £130 we were told it was being done on two grounds—first, that the wages of workmen had been advanced, and, secondly, that the workmen themselves would gladly bear some share of the cost of this great War. I can remember when we were discussing this question that we had one or two right hon. Members rising from both sides of the House and pointing out that in their opinion the workmen would be quite pleased to pay a share of the cost of the War. One would have supposed that after having given expression to such an opinion those parties would have been willing to pay their share without grumbling. But the records of the House will not bear testimony to the fact that those parties have borne their share of the increased burden without grumbling. One only requires to go back two nights ago to the Debate which took place on the Finance Bill, when we had one of the interests making a great effort to get some relief. To such an extent were they pressing the Chancellor of the Exchequer that he gave the House and the country some very interesting figures as to the profits that have been made by the shipping industry of this country. As a matter of fact the right hon. Gentleman, in his reply, said he was sorry that there were not more Members present to hear the moanings of the shipowners. I think the shipowners, and a large number of other interests in the country, have far less reason to grumble than the working men have. I see from "The Statist" that during 1916 the shipping industry of the country paid an average dividend of 67½ per cent., whereas in 1913 it paid an average of 10½ per cent. I think that proves that that interest had very little reason to complain. The same argument can be applied to many of the industries of this country. I think they have been in a better position since the War began to meet the increased burden than they were to meet normal burdens before the War. The same thing cannot be said of the workmen of the country. What is their position to-day? Their wages have risen on the average from 30 1389 to 35 per cent, whereas, as my hon. Friend has already pointed out, the cost of foodstuffs has risen on the average at least 102 per cent. We do not mean to contend that the average cost of living has risen by 102 per cent., but the average cost of living has risen at least 70 per cent, over the pre-war standard, leaving the working-class of the country less able to bear any additional burden than they were before the War began. I think this is a case that requires the special consideration of the Chancellor of the Exchequer
Recently, we have been hearing a lot about industrial unrest and the Government has been appointing commissions to inquire into the causes of that unrest. I would suggest to the right hon. Gentleman that here is one of the main points, and in giving consideration to it I would remind him of the saying of Pitt during the Napoleonic Wars. He said that he was more afraid of high prices than he was of the enemy. This is the case we have to put for his special consideration, and I trust that the Chancellor of the Exchequer is going to give effect to the new Clause that has been moved by my hon. Friend, and which I have much pleasure in seconding.
§ Mr. J. H. THOMAS
I want to put before the Chancellor of the Exchequer one or two considerations in support of this Amendment. I do not think any useful purpose would be served, or that it would help the Amendment, to attempt to differentiate between the sacrifice which any one section of the people is making as against that of another. I am rather going to apply myself to the argument which was used by the Chancellor of the Exchequer himself when making the original alteration. In the first place, the primary object of this alteration was that the working classes receiving over 50s. per week should contribute directly to the cost of the War. I want first to draw the attention of the Committee to the fact that if at that period it was just, which for my purpose I am not admitting for a moment, that those receiving between 50s. and £3 per week should be subject to Income Tax, the increased cost of living between those two periods has more than wiped out the advantage that was then on the side of the Exchequer. Another point is this. You have a man—the railway man if you like—who prior to the War was getting 35s. per week, and is now in receipt of a war bonus of 15s. That brings him 1390 immediately within the Income Tax limit. For the past two-and-a-half years we have had railwayman who have worked between forty and fifty Sundays each year. This has been absolutely necessary in the interests of the State. It has been brought about by the pressure that we have exercised and by the anxiety on the part of everybody to do their bit. These men, for the Sunday, get between 5s. and 10s., put it, if you like, at an average of 7s. 6d. It will be admitted that working the large number of Sundays I have described is in itself a large contribution; but when they know that this one Sunday that we are all pressing them to work and on which they ought to have a rest brings them within the category of Income Tax, I put it to the Committee that it is a real cause of hardship and one that should be considered.
Then, on the other hand, I want to submit this point. The Chancellor of the Exchequer may be able to give us the figures, but I have gone carefully into this matter, trying to ascertain what value there was in it so far as the revenue is concerned, and I am assured that there is very little; and for this reason. In the case of the man earning between £2 10s. and £3, applying it to the working classes, with the opportunity that they have to claim abatements for children and other things really does not make it worth the while of the Exchequer. Then, it may be said that they arc not hit. What I am trying to point out is that it is difficult for people with fairly good educations to make out their Income Tax forms, but the irritation and the friction and the ignorance that exist among the poor, humble workers in trying to fill up their forms is a source of irritation and annoyance, and especially as it requires so much attention from the officials themselves in trying to give the information, and then ultimately there may be a reclaim for abatement. The proposal we are asking the right hon. Gentleman to accept is that he will go back to the original £160—
§ Mr. THOMAS
Yes, in the Amendment When you consider all these facts which I have put before the House, and especially the small amount of revenue as compared with the labour, friction, and, above all, the spending power of the civilian to-day, I do not think that whatever the circumstances may have been 1391 when this was introduced, the same circumstances exist to-day. On these grounds I support the proposal of my hon. Friend.
§ Mr. BONAR LAW
This subject was discussed at some previous stage, and I am sorry now, as I was then, not to be able to accept this Amendment. I rather agree with the view of my hon. Friend the Member for West Ham (Mr. Thorne) about people not liking to pay. His view was that we are all inclined to kick if we are specially hit. I think that is human nature, and I do not think it is really so much what one of the hon. Members for a Scottish Division said, that they do not like paying at all, as that what people get into their heads is that they are being made, in some peculiar way, to pay more than their neighbours. That was the case in the shipping interest, although I do not known how it was.
§ Mr. BONAR LAW
Possibly. In regard to this matter there is no doubt whatever that the increase in the cost of living has made a difference. There is no doubt about that; but what I would like to point out to the hon. Gentleman—and I pointed it out to, I think, the deputation from the Miners' Federation when I saw them with regard to this matter and other things, I was not able to accept this, and I told them so—is that everyone, I think, admits that the working classes, no more than anyone else, if able, should bear some share. But the contention is that it should not be direct taxation, that whatever share they bear it ought to be in the form of indirect taxation.
§ Mr. THOMAS
No; I favour direct taxation. But my special point is that the indirect taxation that they are now paying on the top of the other is unfair.
§ Mr. BONAR LAW
I thought the contention was that they should not pay any direct taxation in any case. Although the increased cost of living makes a difference, comparatively little of that goes to the State in the form of revenue. I gave figures the other day showing how small is the proportion in new taxation of indirect taxes. There has been this great increase in cost which falls on the family, but the hon. Member put the case that I am going to put in a nutshell. He said that a man with £3 a week and a family 1392 could not afford to pay it. I say that he does not pay it. He does not pay a penny on it now. This is the position: Before 1914 there was only an allowance of £10 for each child. In 1915 the allowance was increased to £25 each child. That has the effect, for example—and I hope my hon. Friend will realise how important this is—that where a man has an income of £150 a year and two children it brings him a long way below the limit at which this stands. The result is that this tax does not fall on anyone with that kind of income unless he is a bachelor or has a wife without any family. If you are really considering the general effect of burdens on this country, in my belief—and I do not think the hon. Gentleman will differ from me—you will do move to help the serious position which is created by high prices, and you will affect the position caused by high prices, first, by doing your best to keep them on a reasonable level, but if you fail to do that, I think it will be wiser to take the revenue we get in this form and employ it in keeping down necessaries, such as the price of bread. When you consider that this is only paid by bachelors or people without families it is as fair a method as you may get for contributing to the War, and for that reason I sincerely hope the lion. Gentleman will not press this Clause.
Mr. T. WILSON
I hope the right hon. Gentleman has not said the last word in this matter. It seems to me that he has absolutely lost sight of one point in connection with it. In the early days of the War, hundreds, nay, thousands, of workmen left their homes, and during the last two years a very large number of other workmen have left their homes, to work in munition factories at a long distance from their homes. Some are married men with no family. They may be earning £3 a week.
§ 8.0 P.M.
I am coming to that, and that is where the right hon. Gentleman makes his mistake. Hundreds have gone from their homes and are not receiving a farthing of allowance. Men who have gone to the shipyards on the Clyde, the Tyne, at Barrow, and in the Government dockyards in the South, men who went on their own and obtained employment through their trade unions, are getting no subsistence allowance at all, and are com- 1393 pelled to pay for their board and lodging where they are working and to maintain their home in the town from which they went. I do say that they are entitled to some exemption. If the right hon. Gentleman is not prepared to raise the Income Tax limit for these men, then, as the representative of the Government in this House, he ought to give a pledge that men leaving their homes in the way I say they are doing should have the subsistence allowance given to them. Almost every day and every week I am receiving letters from the members of my own society complaining that they, as married men, are suffering under this hardship. They cannot, by the way, leave their employment now without the consent of the management of the yards in which they are working and go nearer home. The Government will not allow them to do that, and I say that if the Government retain the services of these men in the way that they are doing they must make some concession as far as Income Tax is concerned, or else by giving the subsistence allowance which is given to the munition volunteer workers. I say that these married men—I am not claiming for the single men—who are sacrificing home comforts, and, practically speaking, are keeping two homes, are entitled either to have the Income Tax limit raised or to receive a pledge from the Chancellor of the Exchequer now that men who can prove that they are keeping two homes going and are not receiving the subsistence allowance shall be paid that subsistence allowance. Many men as well, under similar conditions, living at home, are paying 5s. and 6s. per week, and more than that, in railway fares. They are not allowed to deduct that from their Income Tax return, and I say that some concession ought to be given. If, therefore, the right hon. Gentleman is not prepared to make the concession now, then, so far as I am concerned, I hope my hon. Friend who moved the Clause will go to a Division. The Clause was down in my name but, unfortunately, I was not in the House when it was called. I do, however, with all the power at my command, support the hon. Member in the case he has put forward, and I hope that the Government will reconsider their decision and will give us a pledge that this matter will be dealt with on Report, or that they will give us a pledge that the men who are not receiving subsistence allowance shall receive 1394 such an allowance. But if a Division is taken I shall certainly support my hon. Friend in the Lobby.
§ Mr. D. MASON
I hope the hon. Member who moved this Clause will go to a Division, for I shall support him. I think the Chancellor of the Exchequer entirely misunderstood the attitude of the hon. Members below me as being opposed to direct taxation. On the contrary, I think they have always shown themselves to be enthusiastic supporters of direct taxation, but the reason that I support them in this case is because this is a question of justice. Here you have enormous increases going on in the cost of living, but you have no movement on the part of the Government to meet that. You have no reduction of the Sugar or the Tea Duty, or of the various things which go to make up the family budget. The result is that the working classes are suffering. We, who represent large industrial constituencies, have a right to speak for them, as well as the Labour Members. The feeling throughout the country in regard to the increase in the cost of living is becoming intense. The Government recognise it, and the Prime Minister spoke to the Commission appointed the other day to inquire into the increased cost of living. If I may say so, the right hon. Gentleman the Chancellor of the Exchequer and the Treasury are most directly responsible for accentuating this increased cost of living. The Chancellor of the Exchequer seems to have advanced considerably within the last few months on his previous views, because the hon. Member for Attercliffe Division of Yorkshire, about two weeks ago, asked if he were bearing in mind the effect of the continual debasement of the currency on prices—
§ The CHAIRMAN
Order, order! The hon. Member tries to introduce the subject of the currency on nearly every occasion. I must point out to him that it is not relevant.
§ Mr. MASON
I am sorry, Sir, that I have gone rather wide of the Amendment. But if I may say so, and I will pass from it, the reason that we support this Amendment is not that we are opposed to direct taxation, but because, if the Government, through their actions, and the Treasury, so increase the cost of living that the working classes are feeling the great burden, you must have relief in some direction. And if the Government will not, as I believe, make amends 1395 for their action by protecting free currency—and we cannot get away from that, because it has an effect on the cost of living—we are entitled to press for a rebate in direct taxation by reduction asked for in this Clause. There is no question, if one gives any study to this matter at all, of the growing problem. The right hon. Gentleman himself very courteously admitted it when he endorsed the statement of Pitt that high prices were even worse than facing the enemy. This Clause is an attempt to try to relieve the pressure on the industrial classes, and I heartily support it.
§ Mr. ARTHUR RICHARDSON
I would not have intervened in this Debate but for one or two expressions that have fallen from hon. Members in dealing with the subject. I wish more especially to say one or two things in relation to the prices of food as they bear upon the actual living cost of the working classes. Personally, I have always been in favour of every class paying their taxes directly rather than indirectly, but I would like to make this observation, that the taxes on the two things—tea and sugar—not only boar very heavily on the working classes, but, as compared with other classes, they are very unfair. Take the question of the tea duty. We are going to have a 2s. 4d. tea—a Government tea—and I venture to suggest that this 2s. 4d. tea will be purchased chiefly by the working classes. I would like to point out, if I may, to the Chancellor of the Exchequer that the duty to-day on tea is 1s.
§ The CHAIRMAN
Order, order; We really must have some regard to the relevance of the Clause. We cannot have these other questions drawn into the Motion now before the Committee.
§ Mr. RICHARDSON
I apologise, Sir. I desire to keep within the limits of fair discussion, and therefore I will leave that point, if I may make just this one remark. It is this that the shilling duty on 2s. 4d. tea, which the working classes have to pay, is very unfair as compared with the shilling duty on 3s. tea which the upper classes pay. The point which I desire specially to make is this. My friend the hon. Member for West Ham said that the increase in the price of food had been something like 106 per cent, to 107 per cent. Now, the articles of food upon which the working classes chiefly live, and 1396 spend their money, are tea, sugar, cheese, salmon, butter, oatmeal, rice, tapioca, haricot beans and potatoes.
§ Mr. RICHARDSON
The actual increase in the price of these articles since the War commenced—and I can assure the Committee these are actual prices which were paid before the War and which are being paid to-day—is as follows. Tea, before the War, was costing is. 3£d.; now the same tea is costing 2s. 7d., an increase, roughly of 100 per cent. Sugar before the War was 16s. —
§ The CHAIRMAN
Order, order. That would be relevant on the Food Debate, but we are now discussing the Income Tax. The hon. Member who moved the Amendment quite rightly gave a summary in a sentence, but that does not allow other hon. Members to go into details.
§ Mr. RICHARDSON
Then, Mr. Whitley, without going into any details, may I be permitted to make this final statement, which, after all, is a specific statement. The articles of food on which the working classes mainly live to-day—I will show the figures to the Chancellor of the Exchequer if he likes afterwards—the increase in price of the articles of food which I have mentioned is nearer 150 per cent, to 160 per cent, rather than 106 per cent, or 107 per cent.
§ Mr. CURRIE
I just rise to ask for an answer to the question which has been put. I think the right hon. Gentleman might have agreed to a suggestion made by my hon. Friend. The amount of money represented by the concession would be very small. I would like to ask the right hon. Gentleman if he could give us the figure that would be involved.
§ Mr. BONAR LAW
In answer to the hon. Gentleman I must say that it is impossible to give the figure. I would venture to ask the Committee for a decision on this question before a quarter past eight, so that we can start on a new point. In reply to the other hon. Member I would point out that the subsistence allowance has nothing to do with the matter. The fact is that in assessing the income of a workman who has two houses, the extra cost is deducted before he becomes liable for Income Tax. That point was dealt with earlier on the ground that the local assessors were harsh, and I promised then 1397 to see the Inland Revenue people and to do my best to see that it was fairly carried out, and I think that this particular hardship does not arise.
§ Mr. BONAR LAW
Yes, but it is in connection with the subsistence allowance, which is quite another thing.
§ It being a Quarter past Eight of the clock, and leave having been given to move the Adjournment of the House under Standing Order No. 10, further Proceeding was postponed without Question put.1398
§ Mr. W. THORNE
In consequence of our party having received so many forcible letters on the matter, I am very much afraid we shall have to divide the Committee on the question.
§ Question put, "That the Clause be read a second time."
§ The Committee divided: Ayes, 47; Noes, 92.1397
|Division No. 66.]||AYES.||[8.12 p.m.|
|Adamson, William||Hickman, Colonel Thomas E.||Richardson, Arthur (Rotherham)|
|Adkins, Sir W. Ryland D.||Hinds, John||Rowlands, James|
|Anderson, W. C.||Holmes, Daniel Turner||Thomas, Rt. Hon. James Henry|
|Armitage, Robert||Hudson, Walter||Thome, G. R. (Wolverhampton)|
|Arnold, Sydney||Ingleby, Holcombe||Trevelyan, Charles Philips|
|Baker, Joseph Allen (Finsbury, E.)||Joyce, Michael||Wedgwood, Lt.-Commander Josiah|
|Barran, Sir Rowland Hurst (Leeds, N.)||King, Joseph||White, J. Dundas (Glasgow, Tradeston)|
|Bowerman, Rt. Hon. C. W.||Lambert, Richard (Wilts, Cricklade)||Whitty, Patrick Joseph|
|Crooks, Rt. Hon. William||Maden, Sir John Henry||Williams, John (Glamorgan)|
|Crumley, Patrick||Mallalieu Frederick William||Williams, Thomas J. (Swansea)|
|Doris, William||Mason, David M. (Coventry)||Wilson, W. T. (Westhougnton)|
|Dougherty, Rt. Hon. Sir J. B.||Meshan, Francis E. (Leitrim, N.)||Wing, Thomas Edward|
|Duncan, C. (Barrow-In-Furness)||Nolan, Joseph||Yeo, Alfred William|
|Finney, Samuel||O'Connor, John (Kildare, N.)|
|Fletcher, John Samuel||O'Leary, Daniel||TELLERS FOR THE AYES.—Mr.|
|Hackett, John||O'Malley, William||W. Thorne and Mr. Goldstone.|
|Harvey T. E. (Leeds, West)||O'Neill, Dr. Charles (Armagh, S.)|
|Agg-Gardner, Sir James Tynte||Greig, Colonel J. W.||Ries, G. C. (Carnarvonshire, Arfon)|
|Baldwin, Stanley||Haddock, George Bahr||Roberts, George H. (Norwich)|
|Banner, Sir John S. Harmood-||Harmsworth, Cecil (Luton, Beds)||Robinson, Sidney|
|Barnes, Rt. Hon. George N.||Hewart, Sir Gordon||Rutherford, Sir John (Darwen)|
|Barnett, Captain R. W.||Hohler, Gerald Fitzroy||Rutherford, Watson (L'pool, W. Derby)|
|Barrie, H. T.||Howard, Hon. Geoffrey||Samuel, Samuel (Wandsworth)|
|Beck, Arthur Cecil||Jessel, Col. Sir Herbert M.||Scott, A. MacCallum (Bridgeton)|
|Benn, Com. Ian Hamilton||Johnston, Sir Christopher||Shortt, Edward|
|Boyton, James||Jones, J. Towyn (Carmarthen, East)||Smith, Sir Swire (Keighley, Yorks)|
|Broughton, Urban Hanlon||Keating, Matthew||Spear, Sir John Ward|
|Brunner, John F. L.||Kellaway, Frederick George||Stanley, Rt. Hon. Sir A.H.(Asht'n-u-Lyne)|
|Eryce, John Annan||Larmor, Sir J.||Stewart, Gersham|
|Bull, Sir William James||Law, Rt. Hon. A. Bonar (Bootle)||Strauss, Arthur (Paddington, North)|
|Cave, Rt. Hon. Sir George||Lloyd, George Butler (Shrewsbury)||Strauss, Edward A. (Southward West)|
|Cawley, Rt. Hon. Sir Fdk. (Prestwich)||Locker-Lampson, G. (Salisbury)||Tatbot, Lord Edmund|
|Clough, William||Lowe, Sir F. W. (Birm., Edgbaston)||Terrell, George (Wilts, N.W.)|
|Cochrane, Cecil Algernon||Loyd, Archie Kirkman||Thompson, Rt. Hon. R. (Belfast, N.)|
|Compton-Rickett, Rt. Hon. Sir J.||M'Callum, Sir John M.||Tickler, T. G.|
|Coote, William||Maclean, Rt. Hon. Donald||Ward, A. S. (Herts, Watford)|
|Craig, Ernest (Cheshire, crewe)||Macmaster, Donald||Williams, Aneurin (Durham)|
|Croft, Brigadier-General Henry Page||Montagu, Rt. Hon. E. S.||Williams, Penry (Middlesbrough)|
|Currie, Georgo W.||Morton, Alpheus Cleophas||Williams, Col. Sir Robert (Dorset, W.)|
|Davies, Timothy (Lines., Louth)||Nield, Herbert||Wilson, Rt. Hon. J. W. (Worcs., N.)|
|Davies, Sir W. Howell (Bristol, S.)||Nuttall, Harry||Wilson-Fox, Henry|
|Denniss, E. R. B.||Parker, James (Halifax)||Wood, John (Stalybridge)|
|Duke, Rt. Hon. Henry Edward||Parrott, Sir James Edward||Yate, Colonel C. E.|
|Essex, Sir Richard Walter||Pease, Rt. Hon. Herbert Pike||Young, William (Perth, East)|
|Fell, Arthur||Peto, Basil Edward||Younger, Sir George|
|Fisher, Rt. Hon. W Hayes (Fulham)||Pratt, J. W.|
|Fleming, Sir John||Pryce-Jones, Colonel E.||TELLERS FOR THE NOES.—Captain|
|Gardner, Ernest||Radford, Sir George Heynes||F. Guest and Colonel Craig.|
|Gibbs, Col George Abraham||Rea, Walter Russell (Scarborough)|