HC Deb 21 June 1918 vol 107 cc654-74

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the third time."

Colonel COLLINS

I wish to ask the Chancellor of the Exchequer whether the new Bill which is to carry through the Luxury Duty will be introduced shortly? Does he anticipate that before the House rises it will have been considered and passed into law? I ask the question in view of the statement made in the other House yesterday that the Government are dropping certain of their contentious business. I think the Chancellor of the Exchequer is to be congratulated upon the ease with which his Finance Bill has passed through this House. He has shown a disposition to meet the wishes of hon. Members in all quarters of the House, and with the passage of the Bill into law this afternoon one of his main tasks will be completed. The other task which he has to face this year is to raise £2,100,000,000 by borrowing. The House will be glad to have some information from him as to the success which War Saving Certificates are meeting in the country, and whether he can give any further information as to what steps he proposes to take to find this large sum of money during the current financial year. There is a very general opinion outside the House that the present level of taxation will be reduced after the War. I know the right hon. Gentleman himself has not given any countenance to that idea, but in view of the general feeling outside, I desire to draw attention to one or two points in connection with our present financial position. The House will agree, I think, that the level of taxation in the future will depend very largely upon the amount required for interest on the National Debt. According to the White Paper which the Chancellor of the Exchequer issued, the interest this year is £315,000,000.

Mr. SPEAKER

I would remind the hon. and gallant Gentleman that the Third Reading of the Finance Bill does not afford an opportunity for a general review of the financial situation in the country. All that it affords an opportunity to do is to review the Clauses which are contained in the Bill. No discussion of matters outside this Bill will be relevant.

Colonel COLLINS

I was anxious to draw attention to the point that the level of a particular tax, such as the 6s. Income Tax, will be a permanent level of taxation for many years to come, and my argument will be addressed strictly to the point you desire me to keep to—that is, that the 6s. Income Tax is not only required for the present needs of the nation but will be required year by year in the future. In the financial statement we find that this sum is required to meet the interest on the Debt, and the Debt will be permanent. Whether it will be increased in the future depends naturally on the length of the War. Although we are raising a large sum of money to meet the interest on the Debt, the full charge of interest for that Debt will not fall upon the finances of the present year but of next year, as the money is being borrowed throughout the year, and, instead of, as I calculate, some £50,000,000 which is required to meet the interest of the Debt created during this year, in the coming financial year we shall require to find a very large sum of money to meet the interest on the Debt created this year. Therefore the hopes which are held in many quarters that the present level of taxation will be reduced after the War will not, I am afraid, mature in fact. But I do not think this need give us any cause for anxiety, because the country to-day is well able to support the present level of taxation. Our production during the War has greatly increased. We have scrapped, in our agricultural and manufacturing industries, our obsolete methods, and to-day the country is producing far more wealth and a far larger production is taking place than in pre-war times. Therefore, although the situation is not a pleasant one, yet I think the country can look forward to meeting the present level of taxation, and, if necessary, an increased level of taxation in the future. I desire to thank the Chancellor of the Exchequer for his courtesy in having met us so fully during the Debates on this Bill, but I hope he may take steps to review the Income Tax law during the coming financial year, if it is at all possible. Every week I receive letters from different parts of the country drawing my attention to anomalies under that Act, and in view of the very high rate of 6s. in the £, and in view also of the Excess Profits Tax of 80 per cent., all these anomalies, which are not oppressive in ordinary times, press with undue severity to-day. I know the right hon. Gentleman is anxious to review the Income Tax law if it is possible, and it is only the inability to find the necessary men to do the work that prevents him doing it now. I hope that during the coming twelve months he may find at the Treasury and outside sufficient men who are able to review these laws and to remove the anomalies which press severely on certain classes of the community.

Mr. D. MASON

I do not know whether my hon. and gallant Friend supports the principle of the Luxury Duty so far as it has been outlined by the Chancellor of the Exchequer in the Clauses which were deleted from the Finance Bill. I hope he does not and that the introduction of the Bill may long be delayed, that in fact it may never see the light. My right hon. Friend (Mr. Samuel) spoke recently of the increased Cheque Tax being the only blot on this Bill. I think many of those who took part in the agitation against the increase in the Sugar Tax agree that that increase is a very big blot upon the Bill. It is regarded by many people as most unjust and as pressing very hard upon those who are least able to bear it. The right hon. Gentleman (Mr. Adamson) endeavoured to get some undertaking that separation allowances would be increased for this very reason. It seems like beginning at the wrong end. You increase the cost of living, which presses very hard on people with fixed incomes, such as those in receipt of separation allowances and old age pensioners, and then you have the right hon. Gentleman bringing this point forward, as he is bound to do, and asking for an increase in these Allowances. If we had a fair and more equitable system of finance it would go further in increased purchasing power if you had increased cost of living. Here again we have an illustration of this vicious circle. There is no doubt in the minds of many of us that the separation allowance is much too small, and this particular tax will accentuate that difficulty by increasing the struggle to live of those who have very little with which to maintain their existence. Another point which I would like to bring to the notice of the Chancellor of the Exchequer is of importance from the health point of view. I refer to the Sugar Tax. Even looked at from his own point of view, as I have no doubt he does look at it in that way, in the interests of the State and of sound economy, it is going to undermine the health of the children and affect the health of a vast mass of the community when an article like sugar, which does enter into the health of the community, is taxed. It seems to me most unwise and economically most unsound, because it will be dearly bought if in getting some slight increase of revenue by the increase in the Sugar Duty you do something to undermine the health of the State and interfere with the health of the children, thereby undoing with one hand what the right hon. Gentleman does with the other.

It would serve no useful purpose to repeat the arguments which have been advanced in regard to the Cheque Tax. Time will show whether the Chancellor of the Exchequer is right or whether the many critics, bankers, and others, who have warned him of the unwisdom of proceeding with that tax are right. There is one question which the Chancellor of the Exchequer raises from time to time, and that is the proportion of direct and indirect taxation. He gave us some statistics to show that there has been a very great increase in the proportion which direct taxation bears to indirect taxation. He seemed to deduce from that, and he wished the House to deduce from it, that because the proportion of direct taxation has very much increased compared with indirect taxation there was no necessity to proceed with any measures for reducing indirect taxation. In other words, he seemed to convey to the House that it is necessary now to maintain that balance. I, respectfully, submit that if he will study the history of taxation he will find that it is an ascending scale and that as nations become more civilised, and as countries get to understand finance the whole tendency is to get rid of, as we all hope to get rid of, indirect taxation. Lassalle, a famous writer, said that indirect taxation was inevitably a tax upon labour, and it presses hardest upon those with a fixed income. The right hon. Gentleman cannot expect us to be impressed by the argument as to the proportion of direct taxation having gone up in proportion to indirect taxation. We desire to see the time when indirect taxation will be abolished. It is a question of great heart-burning to the community, because we are all more or less engaged in labour, and anything which, as is the case with indirect taxation, imposes a tax upon labour is a penalty which labour suffers and which is increased by any extension of that principle. I hope, therefore, that the right hon. Gentleman will not favour us with any further disquisitions upon the proportion of direct and indirect taxation.

I should like to refer to the proportion of Revenue we are getting from taxation as compared with loans. This Finance Bill is—and I congratulate the Chancellor of the Exchequer upon it—with one or two important exceptions, a great step towards increasing the burden of taxation to enable us to finance this War. But when we look at our financial position, and when we have regard to the state of our trade, we find a very alarming state of affairs. While this Bill is a step in the right direction by increasing taxation, it is not by any means sufficient to guarantee either our financial position as being sound, and it does not do enough to maintain our credit. I submit that if we look at the figures of our trade that have been recently published, they ought to make us pause and consider whether we have really faced the position as it presents itself to us. Let me call the attention of the House to the position as it is to-day, and which this Bill is intended to meet. We find that the trade returns for the past month show that imports reached the unprecedentally large total of £126,000,000, an increase of £38,250,000 compared with May, 1917. The British exports rose only £1,500,000. It is further stated that on a purely arithmetical basis the adverse balance of trade—but I should prefer to call it the excess of imports—was £77,500,000, against £37,750,000 in May, 1917, and for the five months £334,000,000, as compared with £167,250,000 in 1917, and £147,750,000 in 1916. That is a most alarming statement. We find that for five months we have an excess of imports over exports of £334,000,000, as compared with £167,250,000 the previous year, and £147,750,000 in 1916—a gradual ascending scale. This Bill is a paltry contribution to that state of affairs. Assuming—and we are entitled to assume—that that proportion is maintained, because it has been maintained, and it has been gradually rising during the past three years, and the probability is that it will be further accentuated in the coming year, it may easily give us an excess of imports over exports of anything from £700,000,000 to £1,000,000,000 at the end of this year.

To imagine that this Bill enables us to maintain our solvency, or to face this vast financial problem, is quite wrong. It is like a drop in the bucket. My hon. Friend (Colonel Collins) has referred to the enormous sum we shall have to borrow to maintain our financial equilibrium. We see how inadequate, in the face of these immense figures, is this Bill. It may be said, as the right hon. Gentleman is always telling us, that if you increase your taxation you interfere with your ability to borrow. I very much doubt it. In any case what we have to do is to recognise the position as it is, and not a hypothetical proposition which may not come to pass, and we ought not to allow that consideration to stop us from facing our position. Taxation would have a twofold object. In addition to bringing in revenue it would result in enforcing economy, and you cannot, and never will, get economy if the proportion of borrowed money so far exceeds the proportion which you raise by direct taxation. The only way you will get people to stop buying luxuries, the only way you can reduce private expenditure, is by increasing and ever increasing taxation. It is the only method by which you will get a position of financial equilibrium. If the right hon. Gentleman does not listen to the arguments submitted by many of us in this House these figures which I have quoted ought to make him pause. It is a most alarming position. How are we going to meet this enormous excess of imports over exports? One way is by going to our friends in the United States and asking them for a further extension of our liabilities. It is an easy way of paying your debts to incur further debts, but it is not a sound way. It does not get rid of the liability. We have not to think of these easy methods of increasing our artificial prosperity while increasing our debt. We have to try to pay our way as we go along from day to day or month to month. I congratulate the right hon. Gentleman on his skill and amiability in meeting the various questions submitted to him, but I ask him to consider the figures which I have submitted, in the hope that they will impress him with the fact that his Bill is a paltry and inadequate measure for meeting the real position, as in my humble judgment it presents itself to-day.

Sir ARTHUR FELL

I do not think that we ought to allow this great Bill, raising the largest sum that has ever been raised in this country, to leave the House without paying a tribute to the Income Tax payers of this country. Of all the taxes which have been proposed theirs is the only one which there has been no attempt to reduce. They knew that it was coming, and they met it without the slightest grumbling. I wish to pay them a personal tribute, and to say that, as far as finance is concerned, they are the people who are the very backbone of the War. They represent really the savings of this country. It is their fathers' savings or their ancestors' savings which are now being so heavily taxed. It is people like the widows who are living on the incomes of their husbands' savings who are now being taxed. These people form really the saving class of the country. While in France and other countries everyone saves, in this country I am afraid that those who save are a very limited class of prudent persons who, with an income of £1,000, would spend £500 or £600, and with an income of £5,000 would spend £3,000 to £4,000, and save the remainder. It is the money which they have provided that has not only developed these Islands, but has developed our Colonies, has gridironed the River Plate with railways, and added enormously to the trade of our country. It is these people who are now having 6s. in the £ deducted from their income. Take a common case, say, that of a Cabinet Minister or a judge—a person with an income of £5,000. His income is now, between Income Tax and Super-tax, reduced to very little over £3,000 a year. These people form the very backbone of subscriptions in this country to all the charitable societies, asylums, boys' homes and institutions of that kind, and it is surprising what a large proportion of the incomes of many rich widows and other people enjoying this considerable income are the subscriptions which they pay towards these institutions. I know that these people are endeavouring by every means to keep up their subscriptions. When an income of £5,000 is reduced to £3,000 they would have every justification for saying, "I must reduce my subscriptions all round. I must have sufficient to keep up a moderate establishment," but I do not think that they have done so. I believe that the first thing that they have said is, "I will keep up all my subscriptions to all charitable institutions, and I will cut down my own private expenses."

That is what you will find they have been doing in thousands of these establishments throughout the country, and it is a considerable deprivation to many of them. There are many ladies who used to have their motor cars, and who now go in omnibuses or walk on foot. These people whom I am describing would not go to a theatre at any price, unless to take a wounded soldier or other deserving person, because they would say, "We are saving every farthing we can to buy these bonds from the Chancellor of the Exchequer." Those are the people to whom this House owes a very deep debt of gratitude. They have not grumbled in the slightest, but I warn the Chancellor of the Exchequer that their savings must gradually be reduced almost to a minimum, and it will not be possible for them to continue subscriptions to these great loans. They might sell securities possibly to put into War Loan. But that does not produce any fresh amount of money, for these securities are sold to somebody else, and these people put into the War Loans the money which the others put into these securities. These people cannot find any further large sums as subscriptions towards War Loans, and the Chancellor must in future look to the people who are receiving the enormous sums which are raised by the Income Tax. Those are the people who in future will have to put their money into the War Loan, for the people who have been subscribing cannot continue to subscribe. I wish to add my tribute to these people throughout the country who are saving in every direction which they possibly can, denying themselves, and not grumbling at having their income reduced so materially as they have been reduced.

Mr. PETO

I rise only to call the attention of the Chancellor of the Exchequer to a matter for which, I think, the present is an appropriate time. I am grateful to him for having dealt with the question of woodlands in Clause 21 of the Bill, and for having seen the justice of the claim that woodlands should only pay upon once the annual value and not twice the annual value, as in the case of farm lands. I want to point out to the Chancellor of the Exchequer that this does not really quite meet the whole of the case. Under the Agricultural Rates Act of 1896, woodlands are excepted from the advantages given to agricultural land under Clause 1 of paying the half-rate in respect of holdings and hereditaments. Clause 9 defines the lands to which that applies as referring to farms and to lands used purely for agricultural purposes—for nursery gardens and the like—but the Clause does not include land occupied together with house, park or garden, and so on, while woodlands are not mentioned at all, and, as a matter of fact, woodlands pay the full rate and not the half-rate. We have had a Corn Production Act, and under that Act woodlands are expressly included. Osier lands and woodlands are included under the definition in Clause 17, so that woodlands have incurred all the additional cost and burdens placed on land generally by the Corn Production Act, although obviously woodlands have none of the advantages of the fixed price of wheat and so forth which is supposed to be an equivalent. When it is a case of increased burdens the woodlands are in, and when it is a case of relief the woodlands are out. I do not wish to show any want of gratitude to the Chancellor of the Exchequer, who met us as far as he could, but I should like to point out to him that the case of woodlands is not really wholly met, and what is necessary is that those woodlands should get the advantage of the Agricultural Rates Act, particularly in view of the fact that afforestation is as important to the future of the country as the additional growing of cereals and other foods.

There is one rather wider aspect of the case which I should like to point out to the Chancellor of the Exchequer. Under this Act he has imposed upon agricultural lands and farming the full burden of the Income Tax that is borne by any other trades. The farmer can produce full accounts under Schedule D for the purpose of the Income Tax, but if he does not do that, then he is charged to Income Tax on twice the annual value of the farm. I want the Chancellor of the Exchequer to see that this question cannot be considered apart from the incidence of rating. Since the Act of 1896 was passed the rates generally have increased very much—I am told so much, in many parts of the country, that the half-rate now is as much as the whole rate would have been before 1896. That is not the whole of the case. A small trader in any district, engaged in a retail trade, may carry on a business which gives him a turnover the same as that of a farmer who pays on a rent of £500 a year, but the trader's premises may be rated at no more than £50 a year; in fact, the rateable value of the farmer's house and buildings on such a holding as bears a rent of £500 a year might fairly be taken at £50, a figure which represents just about as much as the total annual value on which the trader is rated. Therefore, although you give the farmer the advantage of the half-rate, yet he is paying on five times the amount that the retail trader is paying on in his business.

Before the lapse of a year, another Finance Bill will be brought in, and evidence will be brought before the Chancellor of the Exchequer to show that, taking the rates and the Income Tax together, the farmer is now rated and taxed more highly than those engaged in any other trade or industry in the country, I submit that to the attention of the right hon. Gentleman as an important argument on behalf of those who have been called upon suddenly to pay this increased Income Tax. It is pointed out that large profits were made by the farmers in the earlier years of the War, but, as against that, it should be pointed out that prices of labour and material of all kinds have risen so enormously in the farming industry, and the sale of produce is so drastically regulated by maximum rates, that there appears to be very little evidence that profits in future will be on a high scale, and the present provision of the Bill cannot be considered as a satisfactory solution of the agriculturist's position, or one that can be left permanently where it is, the farmer paying four or five times the amount in rates that another trader in the district is paying. I call attention to these facts in the hope that the right hon. Gentleman will give the subject his attention between the present Bill and the next Finance Bill, because to place agricultural land permanently under such a burden would be contrary to the interests of the State.

Mr. McKEAN

Until last evening I was not aware that the Third Reading of this Bill was to be taken, so that I speak without preparation, though on a subject of this kind preparation is necessary, with a view to its proper treatment. Nevertheless, I think it will be admitted that a measure embodying the financial provisions for the year and embodying such vast financial obligations, ought not to leave this House without at least one representative among those who represent the majority of the Irish people giving some expression to his views. I think I am right in saying that not a single national representative has spoken on the Budget.

Mr. BOOTH

They have not been in the House.

Mr. McKEAN

Oh, yes, they have been in the House. In view of the blood tax which we bear now, and which threatens us for some time to come, possibly I may be excused for occupying some of the time of the House in calling attention to what appears to be financial industries. I do not rise to make out an Irish case; this is not the time for that, and it may seem rather a futile thing to get up on the Third Reading of the Finance Bill to enter any protest, but, for reasons that will appear before I sit down, it may not be altogether useless, even at this late stage of the progress of this measure into law. The chief feature of this measure is that it aggravates the already very serious grievance that Ireland labours under as to the financial relations between the two countries. A great many writers and public men in Ireland say it has been decided with this object in view, but I do not believe that is so. I do not believe the intention of the Chancellor of the Exchequer or of the Government generally was to add anything to the financial burdens that Ireland bears, but whether they intended this or not, that is its effect. It is a very remarkable thing indeed that the outstanding features of this measure have this result, namely, that they discriminate in a most unfair way against Ireland. The tax on farmers, the additional tax on spirits and on beer, and even such a detail as the tax on sugar, add to this unfair discrimination against Ireland.

Mr. PRINGLE

You were not here to vote against it.

Mr. McKEAN

I have yet to learn that I owe it to the hon. Member to explain my absence. When the hon. Member becomes the leader of the party of which I am a member I shall be very willing to hear him on that subject. I suppose, however, it will be some time yet before that period arrives. With regard to these taxes on beer and spirits, I do not propose to say much, but I do want to say something with regard to the tax on farmers. I think I am not doing the Chancellor any injustice in saying that he did not understand all the results or all the implications of the additional tax that he has imposed upon farmers. The last speaker has shown how by the progressive increase in rates the farmer is penalised more and more. If there is any one man in the community who ought to come last, if at all, under the harrow of the tax collector, it is the farmer. If the right hon. Gentleman would consider the hardships of the farmers, with all the difficulties which surround their employment and the uncertainty of their profits, if any, and if he would also consider the indispensability of their services to the community at large, I think he would be very much inclined to moderate, if not entirely to eliminate, these taxes from the Finance Bill, and if he is the Chancellor of the Exchequer next year I hope he will take all these things into consideration.

1.0 P.M.

I said some time ago that it might not be futile to raise this question even at this stage. The Chancellor of the Exchequer might say, "It is impossible for me to impose one set of taxes on England, Scotland, and Wales, and then to frame another Budget for Ireland." My answer to that objection is that if England, Scotland, and Wales pay taxes, those taxes come back again to them in the shape of war expenditure, but we get no war-expenditure in Ireland. [HON. MEMBERS: "Oh, oh!"] It is absurd for hon. Members to say "Oh, oh!" because the fact remains that there is practically no reproductive expenditure in Ireland. [An. HON. MEMBER: "Belfast!"] Belfast is not Ireland, for many reasons. If you take Ireland as a whole, the amount of war expenditure has been practically infinitesimal. Viscount Northcliffe, in that very remarkable speech to which I have referred in this House before, dealt at great length with this very market, and said it was a scandal that there should have been such a small amount of war expenditure in Ireland since the commencement of the War. People may say that the conditions in Ireland were not adapted to war expenditure, that we are not an industrial people, and that we have not a plant which is convertible for the purposes of making munitions. That is very true to a considerable extent, but it is only partially true. There are many ways in which expenditure of a very necessary character could have been made and should have been made in Ireland since the War commenced. There is a coal shortage in Ireland. We have abundance of coal in Ireland, but the Government is making no attempt what ever to develop the coal mines of Ireland. It is with the greatest difficulty that we get them to build a railway to bring coal to the markets. Then there are the Irish fisheries, which are a mine of undeveloped wealth, but the Government is doing nothing—

Mr. SPEAKER

This is not the opportunity for considering matters of industrial development in Ireland. The hon. Member is entitled to call attention to the theme which he has raised—that Ireland does not get sufficient return—but I do not think he is entitled to develop that argument.

Mr. McKEAN

I hope that that general reference that I am permitted to make will be sufficient for the purpose. There is a special responsibility resting on the Government this morning which did not rest on them yesterday morning in this matter. It was announced in another place yesterday that both Conscription and Home Rule were practically abandoned, or at least hung up for the present. That is a very wise resolve for the Government to have taken with regard to Conscription, for they never would have been able to apply it in Ireland, but since they have now determined to hang up or to abandon Home Rule, we want to know what they are going to do for Ireland. As I pointed out here some three months ago, there never has been in Ireland, not for twenty-five years, so utterly barren a period of administration as the past eighteen months. The time when Ireland is paying most to the Exchequer is the time when the Government is doing the least for Ireland. Now I say that since the Government has determined not to give us control of our own affairs, for the present at all events—and we know very well that we are not going to get that power in any great hurry—it is incumbent on them to let us know what schemes of reproductive expenditure they propose to embark upon.

Next Tuesday I hope we shall have a declaration from the Government, and I think we are entitled to it. We in Ireland are contributing far more than our just share to the expenses of this War. We do not object to a certain contribution for the purposes of the War, but the contribution that you force from us is utterly unjust, and the least that we can expect from the Government is that they should give this matter their serious consideration. Notwithstanding the absence of the Irish representatives and the apparent impotence of Ireland, I can assure the Government that if they are not prepared willingly to meet the urgent requirements of Ireland they will lose very seriously indeed. Governments are the creation of the people. Under the new Representation of the People Act the Irish vote, which certainly was not a negligible factor up to the passage of that Act, will be a much more important factor still, and no Government can afford to ignore the Irish vote. If Ireland is neglected, if you allow the lands of Ireland to be flooded, and will not drain them, if you have a shortage of coal in Ireland, and do nothing to open up the mines or provide railway transport, if you do nothing to develop the industries that you have destroyed in the past, then the Irish voters in Great Britain will want to know the reason why, and the time will come when they will be able to make their voices felt by their votes. Any person who likes to study the facts of the case will know that what I have said is true, that Ireland is grievously and grossly over-taxed. There is another respect in which this war expenditure, so far as it is incurred by England, and so far as we agreed to it, will benefit England and not Ireland. If England succeeds in this War she will greatly gain by it, and will have broken the power of her most powerful political rival, but—

Mr. SPEAKER

If the hon. Member will keep to the Bill we are now discussing, it will be well. We do not want excursions into all sorts of other matters.

Mr. McKEAN

I have already shown that war expenditure in Ireland has a different value from what it has in England, Wales, and Scotland. I am showing you another way in which that war expenditure has a different value from Ireland, and that for this country it will bear a big dividend. It can bear no dividend whatever for Ireland.

Mr. SPEAKER

That has nothing to do with the Finance Bill we are now discussing. That may come up on Tuesday.

Mr. McKEAN

That may be your opinion, Mr. Speaker, but, with all due respect to you, it is not mine, and I am not in the least afraid of it. What I have come to say is that it is the duty of the Government to say whether taxes are just or unjust. It is the duty of the Government which imposes taxes upon a subject country—because that is the position which Ireland occupies, unwillingly, of course, and these taxes are not imposed with the consent of the people of Ireland—I say that a responsible Government of just-minded men is bound to consider the justness of the taxes it imposes. I call upon the Chancellor of the Exchequer to study the injustice of the taxes imposed upon Ireland. It ought to be sufficient to demonstrate the injustice of the case in the great Parliament of England in order to have justice given. But we know it is not so. We know it is only blocks of votes in the Division Lobby that count, but if blocks of votes do not make themselves felt to-day, perhaps they will in the future.

The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law)

I shall deal very briefly with a few points which have been raised at this stage of the Finance Bill. As regards the speech of the hon. Member who has last addressed us, I am in entire agreement with one observation made by him, which was that it was the duty of the Government to consider whether taxation was just or unjust. That is certainly the case, and I think we have tried to do it. As regards his other observations about Ireland, as to the question of taxation as compared with the War effort, I am sorry to say I do not agree with a single word which the hon. Member has said. Indeed, it requires some of the amiability and the temperament of the hon. Member to make the curious suggestion to the House that, on his assumption that the Government had abandoned Conscription, and had therefore given up the hope of getting a fair contribution of man-power from Ireland to this War, that was a reason why we should incur more expenditure on productive work in Ireland.

Mr. McKEAN

I did not suggest one word of that. What I did suggest was that, in view of the abandonment of Home Rule and the right to deal with our own affairs, the Government ought to reconsider its position with regard to finance.

Mr. BONAR LAW

I have no doubt that is what he intended to say. I was dealing with what I understood him to say with regard to Conscription. As regards the general question, it is a great mistake to suppose that Ireland in any degree even in this Finance Bill is treated with any unfairness. He gave as an illustration the additional farmers' tax. As a matter of fact, that falls, in proportion to the output of Ireland, far less on Irish than on British farmers, and for this obvious reason: It applies only to those who come within the Income Tax scale. That means that where the rent does not come to £65 the farmer is not touched by Income Tax at all, and from the nature in which farming is carried on in Ireland—that is, the larger proportion of farmers in Ireland have small farms—it falls far less severely in Ireland than in the rest of the United Kingdom.

Mr. McKEAN

But you are getting in the thin edge of the wedge; you will draw them in later on.

Mr. BONAR LAW

I should like to see a thicker end of money than we are likely to get from it. As regards the general question, the hon. Member says they are having no reproductive expenditure in Ireland on account of the War. Yes; but he forgets that one of the industries which, from every point of view, has benefited from the War is agriculture, and Ireland is largely agricultural. Consequently, there is a general degree of prosperity which does not exist in any neutral country, not to speak of any belligerent country in the world. In these circumstances, I am afraid that the suggestion that Ireland in this War is being unfairly treated by the British Parliament is one that will not commend itself to any Englishman or Scotsman, and I hope very few Irishmen.

Another point was raised by the hon. Member for Greenock (Colonel Collins). It was with regard to the Luxury Duty. He asked when it will be introduced. Everyone knows how difficult it is to say. It all depends on when the Sub-committee, to whom I am grateful for the diligence with which they are pursuing their inquiries, are able to complete their work. It is a very difficult subject in any case, and it is probable that even after they have reported it will be necessary for me to receive deputations, as I have had to do on nearly every other aspect of the Budget, from those outside interested in it, and, therefore, how soon it will be possible for me to introduce it to the House I cannot say. But I ask the House to understand—and I say that with special reference to the speech of the hon. Member for Coventry (Mr. D. Mason)—it is my firm intention to carry the Duty through, unless I find that it becomes impossible to do so. I cannot now argue as to the merits of the Duty.

The hon. Member, in the same speech, told us that the only real way to effect economy was by taxation. It is perfectly true that Income Tax, for example, is a very good method of effecting economy. As my hon. Friend said, it has produced, and will produce, economy on the part of a great mass of those who are called upon to pay it. I do not think there is any Member in the House who considers the question who will not agree with me that that does not cover the whole ground. You may take, for instance, a man who would be regarded by those who live on a lower scale as having a very high income, say, for instance, an income of £1,000 or £2,000. If that man has nobody but himself and his wife to support he can pay Income Tax and still indulge in many forms of luxurious expenditure. On the other hand, if that man has a family of four or five children, he is not in a position to do so, and I think nothing could be fairer than that we should try to impose taxation which will secure economy on the part of those who have to pay it in their expenditure on luxuries.

The only other point was that raised by an hon Member opposite—the question of afforestry. He had recognised that, as far as this Finance Bill is concerned, the owners of woods are left in precisely the same position as before. I have previously examined this question from another point of view. There is no doubt that the destruction which has taken place as a result of the War, though it has brought for the time being considerable profits to a number of those engaged in that industry, these profits are really the reward of a generation of work when no profit was secured. But from the point of view of the State the question to consider is not what is happening now, but what is to be the future of afforestry in this country. I can assure the hon. Member that the Government fully realise that that is an industry which we must encourage, and I recognise that the present system of taxation is a handicap on the future development of that industry.

The House, I am sure, will not expect me to make a speech of any length on the general question. I should, however, like to say this, that no Finance Bill in my time has gone through the House of Commons with so little criticism and with such evidence of good will from every quarter of the House. I do not for a moment claim, and I am sure my right hon. Friend and other Members of the House will recognise I am speaking sincerely when I say so, that that is a proof of the merits of the Budget. I only claim it as proof that it is recognised by every one that, at all events, we have tried to deal justly with the taxpayer and in imposing this immense burden, to spread it fairly over those who are called upon to bear it. It is a fact that this Budget which has thus gone through imposes a larger amount of taxation than any Budget ever before produced in any country. It has gone through after criticism in Committee stage and on Report, with the result that the total change in the Bill will not make a difference of quite £2,000,000 in the amount anticipated at the time I introduced it. I will tell the House exactly why that has happened. It is because the House of Commons in this respect represents the country. Those who are called upon to bear the burden know that it is necessary in the interests of the nation, and they therefore bear it cheerfully. Their representatives in the House of Commons have acted in their name in treating the Budget in the same spirit. An additional reason, in my opinion, why it has gone through so easily is to be found in the fact that every Member of the House realises the position in which, from the military point of view, we stand as a nation, and while they felt that the taxation had to be raised, they also felt this was not the time to throw any obstacle in the way of the Government getting the money necessary to carry on the War.

Sir R. COOPER

I shall not take many moments in submitting a question connected with the raising of Income Tax and Super-tax which is already having prejudicial effects on the nation's finance, and which will inevitably next year, and possibly for some time afterwards, prove a matter of serious importance. I should have liked to have raised this matter on the Committee stage of the Bill by putting down Amendments, but it is one of those matters which affects me personally. Still, I feel justified in submitting to the House my own experience, and in pointing out how I think this is going to work generally in the interests of national finance in the future. My point is as to the double taxation now borne by British-owned businesses in neutral and Allied countries, and particularly it applies to businesses in the United States, a country which is making gigantic efforts to assist us and our Allies in the War and which, consequently, is driven, as we have been driven, to raise very heavy taxes. I happen to have had brought to my notice the figures of three firms which are in this position of operating in the United States. All three are making substantial profits, and are paying in one way or another, roughly, 10s. 2d. in the £ at the present time in taxation to the British Treasury, and also, on the average, 5s. 2d. in the £ on their earnings to the American Government. That makes a total in these three businesses of 15s. 4d. in the £, and the total amount the three businesses are paying to the British Treasury alone at the present time approximates very nearly to £100,000. Now the American Government at the present moment, so we are informed, is concerned in imposing fresh taxation, and the information which has been brought to me anticipates that there will be, in fact, another 3s. added to the 5s. 2d. already being paid in the United States, thus bringing the amount of taxation which will be payable to the American and British Governments on these particular businesses to 18s. in the £.

These three businesses to which I refer are not any of them concerned in what we speak of as war material, and while they may be able more or less to maintain their rate of profit can only really maintain their position by finding very considerable additional capital. To my knowledge in one case the burden has already become almost greater than can be borne, and, therefore, I submit that where the double Income Tax operates to the extent of calling upon the business to pay 17s. or 18s. in the £, it is already overburdened, and we must anticipate that, in the course of a short time, if additional taxation is to be imposed, some at least of these businesses will have to go under. I recognise, first of all, that the right hon. Gentleman has got to take such steps as he possibly can in every direction to raise money to meet the War expenditure, so long as he can do that without prejudicing our future interests. If the position I am representing to him was one in which the crushing out of the businesses to which I refer merely meant transfer to other British firms or to other concerns from which the right hon. Gentleman might obtain, more or less, the same amount of revenue, then my point would have no reference whatever to actuality. But of my absolute knowledge and personal experience the operation of this double tax is going to have the effect in some cases of crushing out British-owned businesses and leaving them absolutely and entirely to be picked up by American businesses in the United States.

If that does happen—and I am sure it will happen in certain of the cases which I am submitting—it is not only going to mean depreciating British work and industry in different parts of the world, but, apart from the United States, it is going to deprive the right hon. Gentleman more and more, in proportion as this burden presses upon the businesses, of the means next year and afterwards of raising the considerable sums of money which he is now enjoying. That is really all I want to submit to him—the whole of my general point. I venture to think that he will recognise, assuming my representations are well founded, that it is a point which he ought, in the interests of the Exchequer and in the interests of British finance in the immediate future, to give his personal attention to. So far as I am personally concerned—I cannot speak for the other three firms, because we all know how reticent everyone is in offering freely to submit all private facts and figures to Government Departments—but as far as lies in my power and my particular experience, I am perfectly willing to have an investigation made to show what has happened in my own case. I do not, however, want to appear here to be representing to the House my own interests, except so far as my own knowledge does place me in a position to point to my right hon. Friend, and to the Government, what I know is taking place, and what I am sure is going to happen. With these few words I leave this matter confidently in the hands of the right hon. Gentleman, for I feel sure he will be willing to give his careful attention to the matter, in the interests of national finance.

Question put, and agreed to.

Bill accordingly read the third time, and passed.