HC Deb 03 June 1918 vol 106 cc1301-23

Sections twenty-six and twenty-seven of the Finance Act, 1896 (which relate respectively to the application of the Income Tax Acts and to annual value for the purpose of exemption from or abatement of Income Tax under Schedule B), shall, as respects Income Tax under Schedule B, have effect as if for the references to one-third of the annual value there were substituted references to an amount equal to twice the annual value.

The following Amendment stood on the Paper in the name of Mr. PETO: After the words "Schedule B" ["Schedule B, have"] insert the words "assessed on land used solely for the purposes of husbandry."


The first Amendment is covered by the next Amendment but one on the Paper.


As far as I can read the Amendment of the Chancellor of the Exchequer it fairly meets the point of my Amendment, and I feel quite satisfied that, if the right hon. Gentleman will give such sufficient explanation as is necessary, it is more likely to meet the general acceptance of the Committee than any grounds which I should put forward.

Indeed, it is not necessary for me to argue the case. The Chancellor of the Exchequer has appreciated the point of my Amendment, and I, therefore, do not propose to move it, as his Amendment covers adequately the point.


I beg to move, at the end, to add the words except in the case of land used for charitable purposes only or bond fide for purposes of games or recreation, without any view to the payment of any dividend or profit out of the revenue thereof. This Amendment is in the interests of many charitable institutions which have a considerable amount of ground around the institution, and for the preservation of many playing fields and in the interests of many societies for the promotion of schemes of recreation throughout the country. Sections 26 and 27 of the Finance Act of 1896 give the opportunity of being assessed under Schedule D, or under the old fashioned Schedule B, which allowed only one-third of the annual value. Now under the new system all this land, being classed as agricultural land, would be charged, not under Schedule D, but under the new scale of Schedule B, which would be very prohibitive.


Is not that covered by my Amendment?


So, the right hon. Gentleman gives only the annual value of one year. That would penalise hopelessly the interests for which I plead. I want him to give Schedule D, so that many of these institutions and many of these sports provided by contributions should be kept under Schedule D and have nothing whatever to do with Schedule B. The annual value would be prohibitive. For instance, the Society of Playing Fields has one field at Walthamstow, and the amount paid in Income Tax under Schedule D in each of the two years 1914–15 and 1915–16 was £4 4s.; in 1917–18, notwithstanding the reduction in the assessment—of course, they would naturally appeal against it—it was £44 15s., while if the proposal now before the Committee were carried out for 1918–19 and the tax were paid on double the assessed value of the land, it would amount to £160, which would be practically blotting out these recreation grounds. In many cases the Amendment of the right hon. Gentleman will be welcomed as some lessening of the difficulties, but it does not go far enough. Where these concerns are not carried on for profit, but with a charitable object and by voluntary contributions, I submit that Schedule D should apply. The Playing Fields Association provide balance-sheets from which it will be seen that many of the fields hitherto used for recreation purposes cannot continue to be so used. Large numbers of munition workers and others still require recreation, and much useful work is done by this particular society, which is only one instance of many. I would appeal, therefore, to the right hon. Gentleman to leave the tax under Schedule D and not to have one year's value under Schedule B.


It seems to me that the Amendment of my hon. Friend is covered exactly by the Government Amendment—judging by the Amendment alone—because the Amendment which I am going to propose will have this effect: that if anything except actual husbandry was under Schedule B before and paid only one year's annual value, it will continue to do so. On the other hand, in the case of charitable undertakings there is no payment of taxation, so that in effect what I am doing under my Amendment is precisely what my hon. Friend has in view. But, having followed his speech, I think that he had something else in view than was contained in his Amendment, because institutions such as ago If club or a cricket club might be treated as if they were business institutions and put under Schedule D. I think that my hon. Friend should be satisfied that the Amendment about to be proposed will leave the situation as regards the places affected as it was before the alteration in this years' Budget.


The hon. Gentleman referred to the case of a field at Walthamstow being assessed the year before last at four guineas and last year at forty-four guineas. My recollection is that any assessment in respect of a charitable object is free from all tax at all, or ought to be free, and if an assessment has been put on this particular field and similar fields, and demands are made upon whoever is responsible for financing these fields, then I would ask the Chancellor of the Exchequer to direct the authorities of the Inland Revenue not to assess these kinds of recreation grounds which are used for charitable objects, as no demands should be made upon them for Income Tax. It is quite clear that the persons responsible for this particular piece of ground are ignorant of the privilege which they enjoy under the law, and that a demand has been made upon them by the Inland Revenue officials, and they, being ignorant of the law, paid the tax. The Inland Revenue are conniving at an infraction of the law when they demand payment of that which the law says ought not to be paid, and my right hon. Friend should instruct the Inland Revenue that in the case of notorious charitable objects such as public parks they should not make an assessment and demand this tax.


I do not think the Inland Revenue are in the habit of making the kind of assessment suggested, and there is no desire to apply the Act of Parliament other than in its spirit as well as in its letter. I will have this matter looked into, and if my hon. Friend will bring it up again I will endeavour to deal with it.


The London Playing Fields Society, of which I am a member, is an institution which cannot very well plead ignorance of the law, and I would remind the right hon. Gentleman that very valuable work is being done by societies of that description. It has never been suggested that such societies work for profits, for their members have to subscribe large amounts every year, and even then, very often, they do not make both ends meet. Not only have they to pay the local rates, but taxation upon them during the last two years has gone up at a very great rate. All the hon. Member who moved this Amendment asks is that the privilege which is given under the Bill should be extended to all societies or associations which are doing work of this kind. Last year, when the farmers were included, the provisions did not include persons who let out land in this manner.


I have promised to look into the matter in order to see what can be done.


The right hon. Gentleman is probably aware that there are a large number of football grounds in London, and even in Glasgow, which are making very handsome profits, and ought to be assessed. There is a difference between football grounds and these playing fields and other open spaces which are contemplated by the Amendment. Football grounds, of course, ought to pay upon their profits, but institutions of the kind under discussion very frequently have difficulty in making both ends meet, and it is for them the hon. Member is moving his Amendment to give them relief from the taxation which has been imposed on them in the last two years, and which has proved a very great difficulty indeed to them. I hope, therefore, that the Chancellor of the Exchequer will see whether he cannot help us to a greater extent than he has already promised up to the present moment, for after what he has said I am not very hopeful.

Amendment negatived.


I beg to move, at the end of the Clause, to add the words. Provided that where it is proved to the satisfaction of the Income Tax Commissioners concerned that any person occupying any lands and assessed to Income Tax in respect thereof under Schedule B is not occupying those lands for the purposes of husbandry only, or mainly for those purposes, the above provision shall, unless the Board of Agriculture and Fisheries, on a reference to the Board by the Commissioners of Inland Revenue, certify that the use of the lands by that person for purposes other than purposes of husbandry is unreasonable, apply in relation to those lands as if for the reference to an amount equal to twice the annual value there were substituted a reference to an amount equal to the annual value. The expression 'Board of Agriculture and Fisheries' means in the application of this Section to Scotland the Board of Agriculture for Scotland, and in the application of this Section to Ireland the Department of Agriculture and Technical Instruction for Ireland.


I do not quite understand why the Board of Agriculture and Fisheries is put in this Amendment. If those words were left out, I think there is no doubt that it would meet the point raised by several Members on the Committee stage of the Resolution. By putting in the Board of Agriculture and Fisheries, practically what the right hon. Gentleman has done is to give to the Board the power to say, "We choose to say that such-and-such a thing has occurred, and in our opinion this land ought to be used in a different manner; therefore, unless you do so-and-so, we shall certify you that it ought to be done, and it will be made a subject of increased taxation." I do not like the idea of putting into the hands of a Government Department the power of saying, "Unless you do such-and-such things we shall see that taxation is imposed upon you." What I think the Chancellor of the Exchequer has in mind is to meet exceptional cases where, for some unknown reason, the land is not properly utilised. I presume that is what the right hon. Gentleman has in his mind, but I would much prefer that he agreed to an Amendment of the Clause rather than to leave it in the power of a Department to make a charge.


I am very glad indeed the Chancellor of the Exchequer has seen his way to put down an Amendment which in substance meets an Amendment which I have upon the Paper. I agree with the right hon. Baronet (Sir F. Banbury) that it is not satisfactory that a Government Department should have power to say whether a person is to pay double Income Tax because he does not use a particular piece of land in a particular way for a year. I would like the Chancellor of the Exchequer to consider the further point, that if the Board of Agriculture is to certify that land is being improperly used, then the occupier should have power, if the improper use of the land is not due to his action but to some restriction under which he is placed by others, to obtain relief from the taxation. It might be that the conditions of his lease, or other restrictions, are imposed upon him, thus preventing his using the piece of land in the manner required by the authorities. It would really be unfair to the occupier of the land, and I would suggest to the right hon. Gentleman the Chancellor of the Exchequer that the taxation should be imposed upon the person who really prevents the land from being properly used, the owner, or whoever it may be, who has used his powers to prevent the occupier from complying with the demands of the Department.


In regard to this Amendment, I shall endeavour to meet the general view of the House, but I would point out that our object is to leave things exactly where they were previously, except in regard to land improperly used. There is a feeling, especially at this time, that land ought to be used for agricultural purposes, and the Clause provides for those cases. The taxpayer will have not only to deal with the Board of Agriculture, but the Inland Revenue, and he will have the protection of two Departments before he is called upon to pay. I quite admit that my right hon. Friend is right in his view that a Department ought not to have the power to make a charge, a power properly belonging to the House of Commons. There is no desire or intention on the part of Government Departments to use this power in any way save where it is found to be necessary. I suggest that the Amendment I have proposed should be left as it is. As to the point put by my hon. Friend (Mr. Holt), there is something in the view that the man who has the power to enforce restrictions and who prevents land from being properly utilised should be the person to pay the tax, and not the occupier, who has been prevented from properly using the land. I should be very glad to look into that point, but I hope the Committee will not expect me to give away my Clause altogether.


It is an annual Clause, and therefore it can be revised in another year. I am glad that the Chancellor of the Exchequer thinks I am right, and that I can claim him as a purist in matters of finance.


I want to know where protection will be given to the occupier between the Board of Agriculture and Fisheries and the Treasury. The latter will follow the rule, and when the right hon. Gentleman says that the Treasury has no intention of dealing with these matters arbitrarily, I would point out that the Treasury do not regard what is said in the House as to the interpretation of an Act. I think the occupier should have some sort of protection or remedy as between the two Departments.


I want to raise one other point in reference to what the Chancellor of the Exchequer said as to the question of land being used purely for the purposes of husbandry. There are cases in which the land is used for large plantations, and is the Clause intended to deal with cases of that kind?


Those cases are absolutely excluded, and stand as they did before.


In raising the point of the incidence of Income Tax upon woodland, I hope that the Committee will not think that I have any desire to raise the personal grievances of a landowner. Landowners do pot complain of the sacrifices which the War has entailed upon them. Taxation is a very small part of the sacrifice, and they have borne without a murmur the burden of taxation which presses with a peculiar weight, as, I think, the Chancellor of the Exchequer would admit, upon the owners of agricultural land. I venture to say a word upon the question of taxation of woodlands, not because it presses upon landowners, but because it presses upon an industry of vital importance to the nation. From the point of view of the average landowner it is only a pebble compared to the mountain of taxation, Imperial and local, which he bears. There may be cases in which it presses hardly upon individuals with large areas of woodlands, but it is fair to remember that these have had the advantages of the recent high prices of timber. Now I ask the Committee to consider these figures. They are taken from a parish in the South of Scotland, and I can assure the Committee that they are not abnormal; in fact, other parishes in the same district can show an even heavier burden of taxation. The extent of woods concerned is 93.6 acres; the valuation roll rental is £14, or about 3s. an acre. This 3s. an acre is not a real rental, it is a valuation based on the value of the land as unimproved grazing, and though no rent is in point of fact paid or received for the land, this 3s. an acre is the basis for local and Imperial taxation. Now the total taxation, Imperial and local, on this imaginary rental of £14, amounted in 1917 to a little over £14, or over 20s. in the £, and this sum was by no means imaginary, but paid in hard cash. Of this £14, £6 5s. was accounted for by Income Tax under Schedules A and B. Super-tax was also paid, though I am aware that cannot be dealt with at present. Perhaps I may be allowed to say that the total of Imperial taxation on this 93 acres of wood was over £10.

Now forestry is an industry against which the charges ran up at compound interest, for it may be sixty to a hundred years before the wood is cut and sold. Taking the average rotation at seventy years, the Committee will see what a crushing burden these high rates of Income Tax will put upon woods planted within the last ten years. £1 at compound interest at 4 per cent.—a low rate at the present day—will amount to £10 10s. at the end of sixty years. I am well aware that the occupier of woodlands has the option under the Finance Acts of 1915 and 1916 of electing for assessment to Income Tax under Schedule D, but I would put it to the Chancellor of the Exchequer, who will doubtless correct me if I am wrong, that the option has been exercised in comparatively very few cases. It has been very difficult for landowners with their depleted staffs to institute the new and elaborate system of accounts required. That is, I hope, only a temporary reason. But I believe there will remain a strong argument against putting any but newly planted or very young woods under Schedule D. In the case of older woods it is often impossible to ascertain the cost of planting, fencing, maintenance and protection, and taxation. In the extreme case of mature woods, ready to cut now, only three years of maintenance charges —at this time at their lowest—and three years' taxation could be set against the price of a mature wood which may have stood for seventy to one hundred years, and all previous expenditure and compound interest must go by the board; and I think that the same objection will hold good with all but the youngest class of woods. In all other cases the option of Schedule D is of no value. I do not know how this difficulty can be met under the present circumstances. If there were in existence a forest authority with the necessary powers, it might be possible to adjust a scale of deductions on account of formation, maintenance, and other charges applicable to woods of various ages. This would be a slow process, requiring a. great deal of local knowledge and experience, and evidently could not come into general use for a long time to come.

I hope that the right hon. Gentleman will consider this point. I have raised this question of Income Tax because I believe that the present high rates will act as a deterrent against the planting of new ground for which even a very low grazing rent is being obtained at present, and that there is a danger that areas recently cleared of wood will be let for rough grazing which will, at all events, bring in something towards the cost of taxation, instead | of being replanted and taxed upon a rental which does not exist. This has always been something of an injustice in the case of woods grown for the production of timber. The present high rates if long continued will impose an impossible burden upon forestry, and I hope that the Chancellor of the Exchequer, of whose goodwill towards forestry there can be no doubt, will consider this aspect of the question.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."


May I thank the Chancellor of the Exchequer for the consideration he has displayed in accepting, in putting upon the Paper the Amendment which has just been passed? But I would also draw his attention to one or two other phases of this Clause on the Motion that it stand part, because the Clause must be, and I hope will be, administered fairly and sensibly, otherwise there will undoubtedly be a great grievance among the farmers of the community. I am not here for one moment to suggest that farmers, or any other class, while the Chancellor of the Exchequer is raising this enormous revenue, should be let off their reasonable obligations to the State. But there is at this moment a feeling against the farmers of this country. I do not suppose there is any class more unpopular than fanners, and at the present moment they are accused of being profiteers. It is no fault of theirs that the price of their products has risen, but still the public have to pay, and sees they have to pay, very much more for their food. I want the right hon. Gentleman to give an assurance that this Clause shall be worked reasonably. You cannot afford, at the present time, to play fast and loose with the agricultural industry. I have never known it to be in a more critical condition than it is at the present moment. It suffers from considerable interference. But, though there is this interference, and although labour has been taken away, yet the Reports of the Board of Agriculture have shown that the farmers have responded splendidly to the application of the Government to increase the cultivation of the land. Farmers have, I quite agree, made considerable profits in the early part of the War, but conditions are entirely changed to-day. The cost of production has gone up enormously, wages have risen —and rightly risen—and the agricultural labourer is at last, I am glad to say, coming into something of his own. The other costs of production have risen too; the cost of feeding stuffs, of manure, and of everything which the farmer has to buy. I myself—if I may give this experience to the Committee—wanted a couple of implements during the last few months. I wanted a milk separator, the price of which before the War was £ll 10s., and the price I had to pay for it to-day was £20. I had to purchase a self-binder, which, before the War, was about £27; the cost to-day was £59. That shows that the cost of production in the agricultural industry has increased enormously. There is a great temptation on the part of the farmer, at the present moment, to clear out and to sell his stock. He could get out at great advantage to himself. If you watch the agricultural sales, you will see that horses, cattle, pigs and implements are making what used to be thought to be fabulous prices. No man to-day can go in and take a new farm and stock it at the present prices with any hope of success. If any man with no stock of his own has to go into a farm and has to buy all the horses, cattle, implements, and the hundred and one things which are necessary, at present day prices, I am quite certain he will make no profit on it. Therefore, I want the Chancellor of the Exchequer to realise that farmers, when they are keeping on their farms to-day, are really, in many eases, doing so for a patriotic purpose. I came across a farmer the other day, a milk producer, who said: "Were it not for the War I would not be worried with this."

7.0 p.m.

There is one other caveat I wish to make as this Clause goes through, and that is the Chancellor of the Exchequer must be good enough to remember that local charges are still very heavy. There has been no relief or apportionment of local rates. Local rates press very heavily upon the farmer. I take, for instance, the Education Act of 1902, which probably increased the local rates to the farmer from l0d. to Is. in the £, and he did not get any special advantage. Now, we have an Education Bill going through the House. How much is that going to increase the rates on the farmer and the local community? These are burdens which are placed upon the local community without any demand from them, while in reality they are part of what are called, or of what ought to be, national expenditure. Take another thing, the roads, which are getting in a deplorable state. This is through no fault of the local authorities; they cannot get labour and material, but the roads will have to be repaired after the War, and the cost of repairing them will be very considerable indeed. Therefore, I want to enter a caveat that whilst this Clause shall pass through, it must be on condition that local taxation is fairly adapted between all classes of the community. That seems to me to be only just and legitimate, because there has been no class so heavily taxed as the farmer. Before the War, the farmer paid on one-third of the rent; last year, it was put up to the annual rent; to-day it is double the rent. I want the right hon. Gentleman, if he will, to give instructions to the Inland Revenue people that in the collection of this money and in the matter of the production of farmers' accounts.—if they do produce them—that, provided there is no attempt at fraud, they shall not be exacting as regards meticulous accuracy.—[Laughter.]—I say provided there is no attempt at fraud; you must comply with the spirit of the Act. Any hon. Gentleman who really laughs at this matter must remember that a fanner at about £70 or £80 a year to-day is liable to Income Tax, and a farmer of that class, if he is to get on to-day, has to work very hard.—[An HON. MEMBER: "£120 a year."]—No; double the rent. If a man is paying that rental he does not employ much labour, and has to work very hard. When he comes in from a hard day's work in the fields he has not very much time to keep accounts. That is why I ask the Chancellor of the Exchequer, though he has to get his Revenue, not to exact accounts which will require an accountant to keep, providing that the spirit of the law is kept and that there is no evasion. One other class of the community which, I think, has not really received that attention which—I do not know that they deserve—but which the circumstances demand, is that of the occupier of land who is also the owner. Many owners of land farm a portion of their own land, not so much for profit, but to have an interest in the soil. They have not been able to give that personal supervision to their farms which is necessary to make a profit; in fact, someone said the other day that the best manure on the farm is the print of the farmer's foot. I am not sure he is not right. The owner and occupier of agricultural land, provided his income is such as to compel him to pay at the highest rate, is taxed to-day 6s. in the £ on Schedule A, and 12s. in the £ on Schedule B; that is, altogether 18s. in the £. I do not think there is any class of the community taxed like that, and the attention of the Exchequer authorities has not, I think, really been drawn to this quite so pointedly as I have done to-day. Then take the case of the owner or occupier who has to pay tithes, which have enormously increased. I do not know whether any legislation is to be introduced, but they will very largely increase in future. Rates, as I have said, appear likely to rise, and the cost of repairs has gone up from 50 to 100 per cent., if they can get them done at all, and therefore their profits, although assessed at double the rent, will not come to anything like the sum. Therefore, I ask the Chancellor of the Exchequer that in this case, too, provided there are no signs of fraud, the Inland Revenue authorities shall act fairly and intelligibly towards, not only the farmers, but the owner-occupiers as well. Personally, I have always met with the greatest possible courtesy from the Inland Revenue, but this is a new matter to a very large number of small men who have not yet realised that they come under the Income Tax Act, and, therefore, I hope the Chancellor of the Exchequer will give me the assurance now that the taxation to be gathered and garnered under this Clause shall be reasonably administered, so that there shall be no sense of grievance engendered in the agricultural community.

Major E. WOOD

I think the right hon. Member has done good service to the Committee and the agricultural community in taking this opportunity, before the Committee parts with the Clause, to draw the Chancellor's attention to matters of which he has just spoken. I think that he was quite right to lay emphasis upon the need for elasticity and simplicity in the administration of this Clause. I do not wish to restate any arguments that have been used before in this House, but I would like to say in that connection that I think the form of circular that has been issued, I think, by the Board of Agriculture in conjunction with the Treasury, is one for which farmers, and those concerned with agriculture, ought to express their gratitude to whatever Government Department is responsible for it, and I only suggest to my right hon. Friend that, if he could take such steps as might suggest themselves to him, to make sure that that circular as to the method in which farmers are to claim, when they are to claim, and the remedies for wrong claim, etc., gets into the hands of the people who have actually got to pay. I know in my own district—it may be they do not have time to read the newspapers. or only read them at the week-end—the ordinary work- ing farmer does not see these announcements in the papers, and you have to get, at him in a variety of ways. I would suggest, therefore, to the right hon. Gentleman that he should see, for instance, that this circular is sent, and that the agricultural societies to whom it is sent—small societies—should make it their business to draw the attention of their members to it, otherwise a great many people will not reap the advantages it offers.

I would like further to support the right hon. Member who introduced this subject in what he said with regard to rates. I have no intention to discuss that matter in detail, because this is not the time and place. I would only say this, that if the case that has been put before the Royal Commissions, and before Chancellors, and in this House times out of number on the subject, were sound before, it is a hundred-fold more sound to-day. The case, by what has been done in this Finance Bill, has become unanswerable, and I do want to urge this as strongly as I can on the Chancellor, that the real grievance is that, while we all go on laying duties upon local authorities that fall upon the rates, we levy rates upon one portion only of the income of the locality, because that is what the present system amounts to. Therefore, we shall find ourselves more and more in this position, that we shall goon passing laws in great number no doubt in the years that are coming; the expense of which will fall to be paid in great measure by the localities, and unless the Chancellor can arrive at some agreed settlement of this matter, he will find himself, and every Minister will find himself, either faced by the necessity of withdrawing some legislative project, which will confer great benefits, in response to the outcry which will arise from the localities when they see what it will cost, or else carry it in the absence of all the local sympathy that will be essential to the success of these schemes, and which, I believe, if the Chancellor could give some assurance that he did really mean to handle this matter generously and quickly, he might be able to secure.


I only want to say, in support of my right hon. Friend the Member for South Molton (Mr. Lambert), I do not suppose that anyone will deny, least of all Parliament itself, that in the past farmers have made considerable profit, but I do not believe next year they will make anything like the profit they have made.

As a matter of fact, the interference of the Food Controller has to a large extent destroyed the chance of cattle-raising. It was pointed out by a deputation to the Food Controller that, whereas previously the cattle-feeder bought store cattle from Ireland at 45s. a cwt., he could not buy it at less than 60s. a cwt., and all the price he could get was fixed by the Food Controller at 60s. He had to buy at that, feed it for three or four months, and then sell at 60s. At the very time they were fixing this price for mature cattle they were actually selling immature cattle in Ireland to the Army at something like 70s. If you could buy at 45s., and sell after six months' feeding at 70s. or 80s., there was profit; but if you buy at 60s. and sell at 60s., or buy at 67s. and sell at 67s. there is no profit at all. And then the price of feeding-stuff has risen enormously. Wages have risen, and the price of the keep of the men has also largely risen. What will happen will be this: The majority of these men, with rents of £100 or over a year, will try to keep books and come under Schedule D. I again support, and strongly urge, the point made by my right hon. Friend opposite.

Farmers, whether rightly or wrongly, have become accustomed—and this House is responsible—to do without books. In my Constituency, which is an agricultural one, I do not suppose that three or four years ago there were more than half a dozen farmers who paid any Income Tax at all. Step by step, however, you have proceeded, until at the present time you have brought into the vortex of Schedule D those who have never been brought up to keep these accounts. There is a very great difficulty, particularly in my part of the country, and, in fact, mostly all through Scotland, arising from this. Under the Scottish system, men are hired for six months, and sometimes for twelve months, but mostly for six months. They are paid so much money and given their keep. The question is, What are the farmers going to charge in their accounts for the keep of the men? That is a very difficult question, and that is where the assessor in the North will need to have instructions from my right hon. Friend and the Treasury that they are to agree upon some proper scale, and so enable the man simply to charge on this scale for the keep of his men as part of the expense. That is a very great trouble with which he is faced. There is also this trouble, that sometimes the farmer has a son or daughter who works for the farm. There is an allowance to be made for their keep and for their wages—a set of circumstances which does not arise in the ordinary trader's business, so far as I know. There is another difficulty with regard to taking stock, and it is this: the stock to-day is constantly moving, constantly increasing in value—or, it may be, decreasing. At all events, it is always fluid, and it is very difficult for the farmer at any given time in the year to say what his stock may be. Suppose he takes it at one period one year it may be large; the next year he may have cleared away the whole lot, or, anyhow, a portion of it. This is what differentiates him from the ordinary business man. There is no regularity so far as his stock prices are concerned. There is also, as I said, the difficulty in regard to the keep of the men, or the allowance to be made for them, all of which is avoided in England where the men receive a certain weekly wage. It is not so in Scotland, where the men get a six months' wage and their keep.

There is thus the difficulty of assessing the farmer, and all that I have said goes to this point, that the assessor ought to submit to these farmers a simple form of keeping their accounts so that they will be able easily to get at the result of their trading. I submit, with my right hon. Friend opposite, that there is no reason to suspect anything in the shape of fraud or misrepresentation, and these assessors and surveyors should give the fanner all the assistance they can, because I believe that even if they give them such assistance the profits this year will not be anything like double the rent. It will be wise for every farmer, whoever he is, to keep some simple form of accounts. When it comes to dealing with the farmer of £400 a year, representing an Income Tax assessment of £800, it will be found that very few farmers are making that profit. The question of breeding is another thing altogether, for breeders get very high prices for their stock. The ordinary farmer, however, will find himself better with a simple form of accounts in coming under Schedule D. Inasmuch as in the past you have accustomed him, rightly or wrongly, to do without accounts, now that you are starting to require accounts you ought to give him every facility, indulgence, and consideration.


The Chancellor of the Exchequer might perhaps deal with the point, which I support, which fell from my right hon. Friend the Member for South Molton in regard to the great increase in tithes. Hon. Members, unless they are directly interested in agriculture, hardly know how great that increase has been. I noticed the Chancellor of the Exchequer unconsciously shake his head, and I thought it meant assent to the suggestion that something should be done either in this Bill, or in the course of this Session, to deal with that great increase. The connection between that increase and this Clause arises in this way: Since the beginning of the War, certainly within the last ten years, and more particularly during the last four years, there has been, no doubt, a great breaking up of estates, and the acquisition of the greater part of those estates by the cultivating tenants. The consequences is that the number of assessments now made by the Inland Revenue upon this land for the purpose of revenue collection must, I imagine, have increased by something like 50 per cent. over the pre-war period. The tithe was formerly paid by the landlord. It now falls upon the owner and occupier who has become the landlord and the cultivator at the same time. He will, in addition to this charge which is going to be put upon him by the Chancellor of the Exchequer—this increased assessment—have to meet the greatly increased charge for tithes which will also reduce the assessment made on his farm, thus reducing the amount of revenue collected by the Exchequer. I think that is, if I may venture to say so, the point of view of the Chancellor of the Exchequer. The increased tax upon the farmers has been put upon them, to my mind, just a year too late. My right hon. Friend was perfectly right when he said the profits of the farmer have greatly fallen in the course of last year. They are going to fall still further.

Those farmers who keep their accounts, I think, like my right hon. Friend, are a great majority of the farmers of this country. I do not know whether the Chancellor of the Exchequer is aware, but I am sure my right hon. Friend is aware, and I am aware, that most of the farmers of this country now pay their accounts by cheque, and the fact that they have a working balance at the bank upon which they draw by cheque, indicates to my mind—and, I think, probably indicates to most minds—that they keep accounts, and that these cheques are in themselves a check. That is so in my experience. Well, now they will have to bear a greatly increased charge for labour. That has not yet become apparent, but it will do so during this year's assessment, because agricultural wages are increasing largely in every case that I know. Indeed, they have greatly increased, and will cause that addition to the expenses of the farmers which will be charged against the amount of profit which will be assessed under Schedule D. They will take advantage of that for the purpose of escaping the double assessment which is to be put upon them, if they choose to be so assessed instead of on their rent. Therefore, I think a very large part of the expected yield of this tax will escape the net of the Chancellor of the Exchequer. I am afraid he will be disappointed in the result which he expects from this yield. However, I do not want to go into that point. I may be quite wrong, and what I have said may be a more gloomy prospect than the result will show. But perhaps the right hon. Gentleman will tell us— I dare say he did tell us in his Budget statement—what he expects to get from this source. I shall, I confess, be greatly surprised if I am wrong and if the right hon. Gentleman is not disappointed at the end of the year at the revenue he at present expects. He might also tell us, when he answers, whether he proposes to deal with this question of tithe rent charge, which is really becoming a very serious item. I am told that in the county of Essex, for instance, the tithe rent charge amounts to something like 6s. in the £ per acre.


I should like in a very few words to assure the Chancellor of the Exchequer that farmers are very disappointed that he has not been able to yield to the suggestion made on the First Reading of the Bill that he should place the assessment on which farmers pay Income Tax on something less than that which corresponds to two years' rent. The feeling is this: We acknowledge that the right hon. Gentleman has endeavoured to meet, in reference to the losses realised during the year from bad harvests or from any other cause, the farmer who finds that his income will not be what was reasonably expected. Though his financial year ends in September, the right hon. Gentleman has made the concession, which we appreciate, that the fanner can present his accounts and pay his Income Tax in January on the basis of the actual receipts rather than under Schedule D. We appreciate that, but it is extremely difficult for the farmer to keep accounts that will accomplish that purpose. Still, I hope the difficulty will be overcome by the farmers learning to keep accounts as well as they may. The point, however, upon which we feel aggrieved is the increase of the Income Tax to 600 per cent. on what was paid before the War. When the Government takes the farmer's crop the price paid is based on figures calculated as to 60 per cent. on pre-war prices. Again, the price of hay taken by the Government is based on 40 per cent. above pre-war prices. We therefore complain, and think it is unfair, inconsistent, and unjust that the Government should charge the farmer 600 per cent. increase on his Income Tax when the same Government only pays the farmer 40 and 60 per cent. respectively above pre-war prices for the commodities they take from him. Even the military authorities in taking land from the farmer for military purposes base the compensation paid to him on one year's rent. Here, again, the Government are inconsistent, for their transaction with the farmer is on a level altogether lower from that to which they make their demands from the farmer. All this has a deterrent effect upon the farmer's enterprise.

Farmers are not less patriotic than any other section of the community. Farmers are anxious to contribute their fair share to the cost of the War. Farmers, indeed, have shown their patriotism in a substantial way by sticking to their business during the awful thirty years' depression up to the end of 1917. They have shown their pluck and patriotism, but for which the scarcity of food and the deplorably high prices would have been much more serious than they are. In response to the appeal of the Government they have increased production wonder fully. The Prime Minister has very properly and frequently borne testimony to the magnificent efforts made by the farmers under very difficult circum stances owing to the increased cost and increased scarcity of labour. Yet we are all invited to rejoice because they have been able to make the land yield the equivalent of food for forty weeks in the year. I do not want to exaggerate, but I hear it on all hands said by the farmers — for they feel it— "We have done our very best for the Government. We have parted with our men, we have parted with our sons, we have worked day and night to get our crops in so that the country shall be independent of the foreigner; yet the Government turn upon us and seek our goods at 40 and 60 per cent. only above pre-war prices and then demand that we shall pay it back to them on a basis of 600 per cent." If he were not the British farmer it would have discouraged him altogether. The increased basis of Income Tax never ought to have been made until there had been rearrangement of the basis of local taxation. Five years ago, when I moved an Amendment to the Address in reply to the King's Speech, the present Prime Minister, in reply, admitted that the burden of local rates on agriculture was intolerable and must be remedied. Nothing has been done since— except that they have gradually increased. Therefore I urge the right hon. Gentleman to see if he cannot even now meet the farmer in a spirit of justice. The Government, we say, should hold themselves responsible to have at the earliest moment an equitable and just re arrangement of the basis of local taxation. I join in the appeal that is being made that the Government will endeavour to procure this simple form on which agriculturists can make their return. I wish just to say this word more, that the farmers, although they have made progress and profits out of the latter, have to pay the debts and losses incurred by the terrible depression of thirty years. This House is not really aware of what that means. It means pork sold at 3¾d. a Lb., wheat at 5s. a bag, and I have sold plenty of it at that price; and beef and mutton at 5d. a lb. If it had not been for the pluck of the farmers and the loyalty of the landlords and labourers through that depression the position of the country to-day would be far more alarming than it is. We think the Government are not showing a right spirit in return for the perseverance of agriculturists to impose taxation to this extent because we have had a couple of good years.


The right hon. Gentleman the Member for South Molton (Mr. Lambert) made what I thought was an interesting speech from the point of view of any Minister in charge of a Bill, and I congratulate myself upon it. I thought the Clause was just going through, but the result of that speech has produced a large number of other speeches equally interesting, and although I do not complain, from the point of view of getting the Bill through, a little more time has been taken. I listened to the speech of my hon. Friend (Sir J. Spear) with great interest, and there is a.great deal of truth in what he said. The same remark also applies to the speech made by the right hon. Gentle man the Member for South Moulton. I believe that there has been a great deal of exageration as to the amount of the profits made toy the farmers. On the other hand, I think it will be admitted that, considering what their profits have been, they have not hitherto borne their full share of the burden of taxation necessitated by the War. I think it is quite true that this tax ought to have been imposed a year ago, and I say that, apart from the necessity under which I as Chancellor of the Exchequer stood of trying to make taxation fall more equally on those classes who have not been paying their full share. If one class does not pay its proper share, other classes have to pay more.

Apart from imposing taxation on that ground, there was another ground which made it almost a necessity, and it was the feeling that farmers were not doing their duty in this respect. It is perfectly true that as a nation we are bearing all this taxation with very little grumbling, yet I wish to point out that of all the deputations which I have received in regard to the Budget com plaining that they were being treated worse than their neighbours, hardly one of those deputations failed to point to the case of the farmers. The farmers have done splendid work, and the production of food at this time is more important than taxation, and neither the Government nor the House of Commons could have done anything more unwise than to place such a burden on the farmers that would have caused them to feel that they were being badly treated by the Government and the country. But I do not think that is the case, and I feel sure that what we are doing will not have such a bad effect as my hon. Friend thinks. I believe that even yet the farmers can well afford to bear the burden of taxation which we are placing upon them, for we are putting them on precisely the same footing as everybody else. I think they must take into account that they pay no excess profits as the result of the War, although they have made more profits than they did before the War, and, therefore, I do not think they have any cause to complain.

My right hon. Friend (Sir C. Hob-house) referred to tithes, but I do not think that question is very much connected with this Bill. What I meant by nodding my head on the occasion he referred to was that I fully realised what he was saying, and I knew the Government were considering whether anything could be done. It is a hard case not merely for the landowner who is cultivating his own land, but it is hard for the landlord who is letting his land; in fact, it is harder on him, because we have made it impossible for him to raise his rent and yet. he has to pay additional taxation. I admit all that was said about the un-equality of local taxation. It is quite true that before the War all parties in this House were pledged to adjust this matter. I cannot hold out any hope at present, but it is one of the first things that ought to be taken in hand when the War comes to an end. There is certainly no feeling on the part of the Government except one of gratitude towards the farming community for the efforts they have made in response to the Government appeal. But we do not think that our taxation is unfair. I should like to say that I believe, so far as I can tell, that nothing which this country has done in connection with the War is so remarkable from, every point of view as the way in which the food production has increased since the War.


Does the right hon. Gentleman propose to instruct the Inland Revenue to proceed in a more reasonable spirit with regard to the accounts?


I think I made that point very plain in previous speeches on the Budget. I approached the Board of Agriculture to get them to act as the farmer's friend in the matter of framing the accounts so as to see that not only was the simplest possible method adopted, but that they should also get the assistance which is necessary in the framing of those accounts, and my right hon. Friend can rely upon it that the Inland Revenue will act as reasonably as possible.


I shall not attempt to add anything to the general Debate, but I do want to put a definite point to the Chancellor of the Exchequer to consider between now and the Report stage. The right hon. Gentleman the Member for South Moulton referred to the occupier owner, and pointed out that in the case of an owner he was taxable at the highest rate of Income Tax. The double Income Tax on the farm rental would be some thing altogether different to what the Chancellor of the Exchequer intends. In the case of a small farm let to a tenant he is taxed on the earned income at the lowest level, but if the owner holds that farm and cultivates it himself he is liable to the full rate of Income Tax, and consequently he will be paying very nearly three times the tax which is supposed to be the equivalent of a tenant occupying the same farm would pay. Perhaps between now and the Report stage the right hon. Gentleman will consider limiting the amount of this double tax in every case to the rate applicable and appropriate to the rental of the farm itself, without regard to the other income of the occupier, whether he is the owner or the occupier. That would make the incidence of the tax a little less onerous in the case of persons with other incomes, and it would make it more what the Chancellor of the Exchequer intends— namely, a tax on the real profits of the farm. I hope the Chancellor of the Exchequer will consider that point. I have had representations made to me in this sense, if this tax is imposed as proposed, "It will force me to let a farm which for years I have cultivated myself, and that ought not to be the intention of the Chancellor of the Exchequer." Therefore I hope he will seriously consider this point. I should have liked to have had an opportunity of congratulating the right hon. Gentleman the Member for South Moulton and of confirming what he has said. I do believe that the whole basis of this demand for a double tax is perfectly simple. The public at large know that prices have risen enormously. They therefore presume that the farmers are getting enormous profits, but the facts are the other way, because the prices of everything the farmers have to buy have risen much more in proportion, quite independently of the control and interference of various Government Departments.