§ I now come to an item of much greater amount, the Income Tax. Every Chancellor of the Exchequer, and I think almost everyone, is inclined to be tempted 708 by the facility with which revenue can be raised by this tax. It is only a case of taking a decision, and immense sums come in. I do not think it is right to be too much influenced by that consideration. I think the House of Commons, and hon. Members in every quarter of it, should take into account seriously what is the effect of an Income Tax on anything like this scale, not only on the individuals who have to pay it, but on the whole trade and industry of this country. I should have been glad if it had been possible to leave it at 5s., but that is impossible, and I propose to increase the rate of Income Tax by one shilling and make it 6s. in the £l. [HON. MEMBERS: "Hear, hear!" and "Not enough!"] I hope the exclamations I have just heard reflect the general view of Income Tax payers. This proposal will bring in this year £11,250,000, and in a full year it will bring in £41,400,000. The difference is accounted for by the permission to pay by instalments.
§ As regards the Income Tax, I do not propose to make any change in the existing rates of incomes up to £500. On the whole, looking at the question from the point of view of ability to pay, which ought to be the test, I think this is fair. I may say to the House of Commons that I have looked upon my taxation proposals as a whole, and I should not have felt justified in relieving this class altogether from this form of taxation if I had not seen my way to make additions to indirect taxation, by which they will pay their share. There will be no alteration up to £500. There will be no change in the Income Tax rate on the service pay of soldiers and sailors.
§ As regards the double Income Tax within the Empire, I propose to adopt the same principle which was adopted by my predecessor—that is to say, this extra 1s. will not be paid where the combined tax in other parts of the Empire and here amounts to as much as 6s., and the tax will remain 3s. 6d. in the £. I propose to make the children allowance apply to a wife also, and so far, much to my surprise, I have had no representations from any women's suffrage societies suggesting the impropriety of proceeding on that basis. I also propose, and I have already promised this, to extend a similar allowance to real dependants who are incapacitated. The only other change in this respect is that these allowances which I have just mentioned, together with the allowance to children up to sixteen years of age, will 709 apply in case of incomes up to £800, instead of £700 as at present. The reason for that change is that without this alteration the sharpness of the gradation at this point would have been so marked as to act almost unfairly.
§ Mr. BONAR LAWI said the rate would be 63.
§ Mr. BONAR LAWNo; that remains as before. Indeed, that would be the last thing we should be inclined to consider when we are raising money, and our need is greater than it has ever been before.