§ The next tax has given me more trouble, and has been more difficult to decide, than any other, and that is the treatment of farmers in this Budget. There is no doubt a widespread feeling that farmers are making large profits. It has been made plain to me not only in the House of Commons by such cheers as I have just listened to, but by deputations which I have received in connection with the Budget—and this would, I think, be admitted by the farmers themselves—that they are not bearing a fair share of the burden of taxation caused by the War. It is necessary, therefore, to make some change. Obviously the change which one would like to make—and it would be fair in every sense of the word—would be to put them like other people under Schedule D, 710 and make them pay on profits. There are many advantages in taking this course, and, in a sense, the present would be a suitable time to take it, because undoubtedly they could bear the change more easily now than would be the case at other periods. It would be a great advantage—and here I am expressing not only my own views, but those of my right hon. Friend the President of the Board of Agriculture, whom I have closely consulted in regard to this proposal—it would be an immense advantage to the fanners themselves, because undoubtedly correct finance and the keeping of accurate accounts is the beginning of all sound business undertakings. I should have liked to take this course, but I am not going to-take it, and I will tell the House why. My advisers tell me that it would not only be difficult, but that it would be impossible to carry out, and, after going into it most carefully myself and with the assistance of my advisers at the Treasury, I have come to the conclusion that they are right.
§ I will try to make the House understand why. The great bulk of the farmers—I am told more than 90 per cent.—much more than 90 per cent.—keep no accounts. That ought not to be a reason for excluding them from the tax, but I am dealing not with what is just, but with what is practicable. The farmers themselves would find it very difficult, their time being more usefully occupied in the national interest, to set to work framing their accounts. But that is not what makes it impossible; it is the difficulty of having the accounts checked by the tax-surveying staff. I want the House of Commons to try and realise—I certainly did not do so myself until I went closely into it—what an immense effect the withdrawal of so many of the men engaged in tax collecting has had upon the collection of our taxes. The numbers who have been withdrawn—and I am sure my right hon. Friend opposite will agree with me—are very great, while the total amount of taxation to be collected has increased many times, and there have been so many new taxes, especially the Excess Profits Tax, that the additional burden thrown upon what is left of the staff has become almost intolerable. I am prepared to say I do not believe there is any class of the community which has rendered better service during the War than what remains of the Inland Revenue staff in the collection of taxes. This has had another effect. 711 It has always been the pride of the British Government in regard to taxation that evasion should not be permitted. Many suggestions for new taxes in the past, and some to-day made to myself, have been rejected because they lent themselves easily to evasion. As a matter of fact, with our depleted staff, and with the immense amount of extra work, there is no doubt whatever that a certain amount of revenue, which in other circumstances would come in, has escaped. For that reason, and rightly, the heads of the Inland Revenue Department have given instructions that the work of the staff should be concentrated on the sources from which large revenue is derived, and I think the House will agree that that is a right course.
§ Consider that from the point of view of this proposed tax. The farmers have never been accustomed to it, and they would, therefore, bother the life out of the tax collector as to how to make up their accounts, and, when the accounts were made up, the tax surveyor would have no means of checking them. The real effect, stated by my advisers and accepted by myself, was that, if we were to adopt this course, the result would be that, in trying to get this form of revenue, we should lose many times over in other sources the amount of revenue we should collect by these means. For that reason I have rejected this proposal, and I propose, instead of making the assumption which is made low that the farmer's profits are equivalent to his rent, that we should take twice the rent as the equivalent of the profits and assess the farmer on that. That may be regarded in some quarters as inadequate, but there is this to be borne in mind: There is an immense difference in the profits on different kinds of crops. I have gone into this fully with the Board of Agriculture and with my right hon. Friend. I think it would have been possible to make a fairer adjustment by assessing a certain number of the higher-rented farms under Schedule D, for the reason that profits depend not so much on the size of the farm as on the kind of farming. I am told in able farms which produce corn make profits very small indeed in comparison with those of much smaller farms which produce potatoes. It is true that this arrangement which I am making is unequal as between one farmer and another. That is obvious, but I do not see 712 how it is to be avoided. On the other hand, it is not unfair to the farmers who have to pay on the double rent, for this reason, that everyone will have the option, if they prefer, of giving accounts under Schedule D, so as to be certain that they shall not in any circumstances pay more than any other section of the community.
§ I ask the House of Commons to keep in view what has been in my mind, that food production is much more important to the nation than any additional revenue we may get in this way, and it is essential that any proposals of this kind which I make to-day should not work unfairly on those on whom we rely for the production of food. They do not. My right hon. Friend the President of the Board of Agriculture agrees with me that the number of farmers who will not be in a position to pay on this scale will be small, and we all know, especially in the case of those who are unaccustomed to accounts—although I am told that farmers look at both sides of a penny as carefully as any other person—that sometimes they pay what they are asked to pay, without knowing exactly on what basis they are paying. I have, therefore, made arrangements with my right hon. Friend the President of the Board of Agriculture—and this will apply to the Agricultural Departments for Ireland and Scotland—I hope they will take the same course—that they shall, through their district committees and other local agents, give farmers every facility when they are satisfied that they are being asked to pay too much—to give them what help they can in making up their accounts. I am sure the House of Commons will feel unanimously that in making this change I am not acting unfairly towards the farmers. From this source the amount of increased revenue this year will be £2,500,000, and in a full year £5,300,000.