CLAUSE 17. —(Allowance in Respect of Mills, Factories, etc.) (Hansard, 15 July 1919)

I beg to move, in Sub-section (1), to leave out the word "similar."

This Clause gives an additional relief of one-sixth allowed in this country between the gross value and the annual net value to premises abroad as a deduction for Income Tax purposes, but hon. Members will notice that in the Bill as it stands it only gives this additional relief to mills, factories, or similar premises. The pith of this matter really lies in the words "similar premises," which, in the past, have always been held to mean premises containing machinery. These words do not include any premises that do not contain machinery, and up to now I may mention that this allowance has been supposed to be used for the purposes of re-pairs. The object of the Amendment is to bring within the scope of this relief buildings used for the purposes of trade, although they do not happen to contain machinery. For instance, one may take the rubber plantations abroad. On the plantations in the Federated Malay States you have a large number of buildings which are used for the conveniences of coolie labourers. In that case, although those buildings would be used for the purposes of a man's trade, without this Amendment they would be outside the scope of the relief. I will take another case, that of stores used for dry goods. Take Singapore, for instance, where you have very large stores used for storing cotton goods from Manchester, or cheap jewellery from Birmingham, and other such stores. Without this Amendment, I think I am right in saying that this relief could not be given to any of these buildings, although it would be given supposing these buildings held machinery. I do not see why these particular buildings should be left outside the scope of the relief, because they are jut as much utilised for the purposes of a man's business as any of the other buildings he may happen to use.

241 I imagine that this has really been an oversight, perhaps on the part of the gentleman who drafted this Clause. I hope the result of my right hon. Friend's conversation may be to produce some concession. It is rather a technical question, but I think the Chancellor of the Exchequer will agree that the interpretation I have put on these words is a correct one, and I very much hope he may be able to give some concession.

§ Mr. BALDWIN (Joint Financial Secretary to the Treasury)

The point raised by my hon. Friend is an interesting one, as all his points are. What he wants to do is to get a very much wider extension of a concession that we have put into this Bill than we meant to give. He will remember the concession that we gave last year, and the point was raised, I think, by the hon. Member for Nottingham calling our attention to the fact that the Clause we put into last year's Bill only gave the relief to premises situated within the United Kingdom, and not to all of them. I remember the occasion, because I myself gave him the reply, that, in my opinion, this point was a valid one, but he had only raised it on the Report stage, when it was too late to give it the consideration that it merited, and I told him that I hoped to be in a position in the following year to give effect to his desires. That pledge the present Chancellor of the Exchequer has kept, and he gives in this Bill the corresponding privilege that was given to the trades at home to trades that are situated abroad, and he has extended it at the same time to certain businesses under the rules and regulations quoted in the Clause. There, I think, to-day we must take our stand. I do not pretend for a moment that it is all that traders would like to have. Traders are like every other section of the community. They like to get as much as ever they can, and I know as well as my hon. Friend the claim which is made that the excessive wear and tear that is due to the immediate presence of machinery should be extended to buildings that may be in proximity to machinery, but which have hitherto not been included in those buildings for which special depreciation is allowed. I know my hon. Friend will not like my quoting at him again the Income Tax Commission which is sitting at present, but this question of depreciation is a very wide one, which involves large questions of principle and very complicated questions of detail. The whole subject of wear and tear will come up before 242 them, and I submit that until they are in a position to make recommendations on this subject we shall only make confusion worse confounded by trying to amend a Clause of this nature to get the wider meaning that my hon. Friend wishes to give to it. I would remind him, in conclusion, that, after all, traders in computing their liability under Schedule D are allowed to deduct in full the amount of expenditure on repairs, maintenance, and insurance of trade premises. That covers to a considerable extent the point that he raises. If he were successful in carrying this point ho would have to make further emendations in the Bill to cover the point with regard to buildings at home, but I hope, in consideration of the explanation I have given, that he will not wish at this stage to press the point further.