§ If either a husband or a wife who are living together claims to be separately assessed for the purposes of Income Tax, neither of them shall be liable to pay a larger sum in respect of Income Tax than they would be liable to pay if they were each unmarried.—[Mr. G. Locker-Lampson.]
§ Brought up, and read the first time.
Mr. LOCKER-LAMPSONI beg to move
That the Clause be read a second time.326 The object of the Clause is to remove, if possible, the present penalty tax on marriage. When I last had the honour of moving an Amendment on the Budget Resolution, the Chancellor dealt, if I may say so, with this whole question in a somewhat flippant spirit. I do not think he-would have dealt with it in a flippant way, supposing it had had an organised body behind it, like a great trade union, but unfortunately married people, as such, are not organised, and have not organised themselves into a great body, so far as I know, ever in history on any subject, and, therefore, I am afraid the Chancellor of the Exchequer, on that occasion at least, thought that he could afford to jest on the matter. But I hope to-night he will take this question very seriously, because there are a great many married people throughout the country who take a very serious view indeed of this penalty tax on marriage. In the last Debate on this question the Chancellor of the Exchequer really did not reply to any of the arguments on their merits, if I may say so with all respect. He did not really deal with the facts that were brought before him, but he brought forward three reasons against the proposal which I venture to put forward in this Clause. One reason was that a Royal Commission is sitting at the moment on this question, another reason was that he said it would be very difficult to disentangle the question of a marriage tax from the vest of the Income Tax law, and the third reason he brought forward was that it would cost a great deal of money.On the question of the Commission I would like to say one or two words. Only this morning there was published a large Blue Book containing the first instalment of the evidence given before the Royal Commission on Income Tax. It was published this morning just before, the Committee Debate on the Finance Bill. I happened to be passing the Government Publications Department in Abingdon Street. I had seen in the paper that this Blue Book had been published, and I went in and purchased a copy for 2s. I lent it to a friend, and on turning to this House I went to the Library before Question Time and asked them whether they had got a copy. They opened their book which records documents presented to Parliament and saw that they had got it down there as a document presented to Parliament, but they had not got it in the Library and could not show me a copy. I then went to the Vote Office, and they had 327 not got it there, but the gentleman in charge of the Vote Office said that although it was a document published at the expense of the taxpayers to be presented to Parliament an order had been given that that evidence was not to be used as a Command Paper to be laid before the House. I venture to say that that is really extraordinarily unfair. This is the second or third day in Committee on the Finance Bill, and, as a matter of fact, a great deal of evidence has reference to the tax on marriage, and this evidence has only just been published, but the House of Commons is not to have it. You can only get it by going to the Government Publication Department and paying 2s. for it. In fact, the Vote Office told me to-day before Questions that a special order had been given that it should not be laid before this House as a Command Paper.
Mr. CHAMBERLAINI hope the hon. Member will accept my word for it that this is the first I have heard about it. I imagine that the evidence before this Committee will be contained in a series of bulky volumes, and that somebody has thought it should not be treated as a Command Paper, and so circulated to every Member whether he wanted it or not.
Mr. CHAMBERLAINI think not, but I will make inquiries. My recollection is that I have been told that a Command Paper has to be sent to every Member of the House. I believe a Command Paper goes automatically to every Member of the House; I believe that is the rule. This document will no doubt appear and be circulated to Members who desire it, but I hope hon. Members will not think that either I or anybody else has deliberately tried to prevent Members getting this volume.
§ Sir F. BANBURYIf the facts are as stated, it is a breach of the privileges of this House, that Parliamentary documents should be circulated to the public which are not circulated and are prevented from being circulated to this House.
Mr. CHAMBERLAINNobody would forbid the circulation to this House. It may have been stated that it was not to 328 be circulated as a Command Paper automatically to every Member of the House, but the idea that anybody would forbid the House access to the Paper is, I am sure, mistaken.
Mr. LOCKER-LAMPSONI do not suggest for one moment that the Chancellor of the Exchequer or any member of the Government has had anything to do with the withdrawal of this document from the House of Commons, but what I do say is that you have to pay 2s. for this Government publication. It is not in the Library, and it is not in the Vote Office, and no Member of Parliament has access to it unless he actually goes and pays for a copy in the Government Publications Department. Also I may say that this evidence which was published this morning is not at all up-to-date, and I should think it is unprecedented to publish evidence like this bit by bit. It only goes as far as the beginning of May, and, as a matter of fact, on the 4th June very important evidence on this marriage tax was given by Mrs. Hubback, the head of the National Union of Societies for Equal Citizenship, and it would have been extremely useful if that evidence, instead of not being printed at all in the Blue Book, had been published for the benefit of hon. Members. I am especially sorry that this document is not before the House, because there are pages of evidence given by Mrs. Ogilvie Gordon in favour of the new Clause which I am proposing to the House. Before leaving the subject of this Commission I should like to place this before my right hon. Friend, in the hope that he will, perhaps, be able to convey it to the chairman and members of that Commission. When Mrs. Ogilvie Gordon was being examined she was rather heckled by the members of the Commission in regard to how she proposed that the money should be found if this reform were adopted. I must say that it does not seem to me to be in the least the business of witnesses called before such a Commission to try and suggest a way for the Chancellor of the Exchequer to find the means of obtaining money, supposing there is a loss on any particular reform of the Income Tax law. Mrs. Ogilvie Gordon was heckled over and over again by the chairman and by members of the Commission. I hope that procedure will not be adopted in future in regard to witnesses who are examined.
§ Mr. W. GRAHAMI am sorry to interrupt my hon. Friend, hut I was a member 329 of the Commission, and, in point of fact, the cross-examination of this witness was on statements made by the witness, and not by members of the Commission.
Mr. LOCKER-LAMPSONI know what I am talking about, I read this evidence this morning. Mrs. Ogilvie Gordon was heckled over and over again by the chairman and other members of the Commission. My right hon. friend said that we ought not to adopt any alteration of the Income Tax law until the Commission had reported. Personally, I do not see, if I may venture to say so, that this is at all a sound doctrine. It is the business of this House to legislate, not to wait until a Royal Commission reports on any question. It is not the business of this House to wait to remedy an obvious injustice until a Commission has reported upon it. After all, it is not for an outside body to dictate to us on a question of principle; it is for the House of Commons to make up its mind on a great question of principle. If the House of Commons does not do that, but insists upon waiting until a Commission tells it its duty, we might just as well abdicate our rights as Members of Parliament. With regard to the right hon. Gentleman's argument about disentangling this question from the rest of the Income Tax law, the Government found no difficulty in disentangling the question of the wages of miners from the question of the nationalisation of mines. I suggest that if married people had been organised like the miners he would have found no difficulty in disentangling this question of a penalty tax on marriage. It has very little to do with the difficult machinery of the Income Tax law, and I believe it is perfectly easy to disentangle this question and accept this Clause without giving any more work to the officials of the Inland Revenue. In regard to his argument about the extra cost, that leaves me quite cold, because the more he proves that there is extra cost the greater he proves to be the injustice on married people at the present moment. Moreover, in the present state of the law, it is hitting the very poor, and not only the rich. Therefore, I suggest that if the right hon. Gentleman wants to get the money he should add it to the Super-tax and take away the penalty tax on marriage. I should like, if I may, also to suggest that he can find ways of saving money by doing what he can to diminish the present extravagance of a good many of the Government De- 330 partments. Anyway, I do not believe that the Estimates which we have heard are at all accurate; I believe they are greatly swelled and inflated. I believe that the loss from evasion could quite easily be avoided with proper machinery, such as is already used in the case of the Death Duties. The Death Duties are founded on quite a different principle, and I do not see why there should be a different principle for Death Duties from that which is applied in regard to this particular Income Tax. When a wife dies her income is treated as absolutely separate for the purpose of the duty, and the Exchequer gets its tax; but when she is living with her husband the income is treated as joint for the purposes of the Exchequer, and the Exchequer steps in and takes the tax. I maintain, and I do not believe it will be denied by the Chancellor of the Exchequer, that at the present moment there is a direct penalty tax on marriage, and that the Married Women's Property Act is every day being infringed by the Inland Revenue authorities. May I just give three short illustrations? As I say, they do not affect rich people, but comparatively poor-people. Take the case of a woman with an earned income of £78 and house property of, say, £40 a year. Take a man with an earned income of £120 and dividends amounting to £70 a year. That is a total income between those two persons of £308, or less than £6 a week; that is to say, less than a good many artisans get at the present moment. If they are unmarried the woman pays no tax at all, and the man pays an Income Tax of £10 10s. a year. But directly they marry there is a joint tax of £12 15s.; that is to say, a tax on marriage of £2 5s. Take the simpler case of a man who has a salary of £220 and a woman who has £180 in dividends; that is to say, a total income of £400. If they are unmarried the man would pay £11 5s. a year in Income Tax and the woman £9, or a total tax of £20 5s. Directly they marry they pay a tax of £35 8s. 9d., or a tax on marriage of £15 3s. 9d. Take the case of very much poorer people—that of a man who has £90 a year in wages, and a woman who has £90 in dividends. Before they are married neither of them pays any tax at all, as each of their income is under the limit; but directly they marry they have this joint income of £180, or £3 10s. a week, and they pay a tax on marriage of £5 5s. You do not treat anybody else like this, 331 but only people who marry. You do not treat two sisters living together like this, nor a father and a daughter, nor two brothers, nor an aunt and a niece, nor a mother and a son. They live together; they have all the advantages of a joint income, but you do not treat them like this. You do not treat like this a man and a woman who are living together unmarried, with all the advantages of a joint income; but directly that man and woman marry, directly they make up their minds to join in a legal bond, the State steps in and puts a penalty tax on that legal bond. I say that that is a monstrous system. The question of cost leaves me absolutely cold. That is a question for this House of Commons to decide. The other day— it has been quoted before, but I should like to quote it once more—the Financial Secretary to the Treasury, in a Debate in this House on this very subject, used these words:
I agree freely as an individual and as a married man that there is a great deal to be said for the coarse that has been presented tonight. It has always been an intolerable anomaly to feel that so far as taxation was concerned it would be cheaper to live with a, woman who was not your wife than with a woman who was. That is an intolerable anomaly.Does the Chancellor of the Exchequer agree with his Financial Secretary?
Mr. LOCKER LAMPSONI am glad to get that admission from the Chancellor of the Exchequer. I am only asking that the tax shall be taken off. The Income Tax authorities, every day of their life, are violating the rights of women and of the Married Women's Property Act. They are treating the incomes of married women as part of those of the husbands. The Chancellor of the Exchequer very courteously received a deputation the other day in the House, when he refused to admit this. He said there was no differentiation under Income Tax law between husband and wife. I can prove there was. In 1842, when Sir Robert Peel revised Income, Tax, married women had no rights whatsoever. Directly they married the whole of their rights were taken away from them, and went into the ownership of the husband. This was felt to be an intolerable injustice, and in 1882 the Married Women's Property Act was passed. I should like to read these few words from the Act: 332
Every woman who marries after the commencement of this Act shall be entitled to have and to hold as her separate property all real and personal property that shall belong to her at the time of marriage, or be acquired or devolved upon her after marriage.This was the Act of 1882, and I say that that Act is just as much the Charter of the married women as was Magna Charta of the men. Last year the Government passed the Income Tax Act, and this Act came into operation, I believe, in April—only a few weeks ago. In that Act it says:The profits of the married woman living with her husband shall be deemed to be the profits of the husband and shall be assessed in his name—not in her name or the name of her trustee.this Act, therefore undermines the rights of women under the Married Women's Property Act It is a direct violation of the privileges that married women obtained under the Act. Under the present Income Tax law, no woman can get repayment of tax unless she makes a special appeal and goes through a good deal of difficult procedure. You do not treat the husband like this. The husband never has to appeal in order to get a repayment of tax that he has overpaid. It is only in the case of a married woman that a special appeal has to be made to the Inland Revenue authorities. I will say that even when she does appeal she does not often get repayment of the tax. Case after case can I bring before the Chancellor of the Exchequer where she does appeal and the repayment is made to the husband and not to her. I have a letter here from a surveyor of taxes, dated the 11th June, and addressed to a Mrs. Roscoe:Dear Madam, —In reply to your letter of the 9th instant, I do not appear to have made it clear to you that a married woman is not entitled to claim any repayment of tax whatever. A claim of repayment in respect of a wife's income can only be nude by the husband and repayment must be made by law to him.What I suggest to the Government is that the Income Tax law ought to be brought immediately into conformity with the Married Women's Property Act. It is not necessary for a Royal Commission to sit on the question. It is the duty of the House of Commons to decide upon it. In the second place, this penalty tax on marriage ought at once to be removed. You have no right to place a special tax upon this legal bond of marriage. You do not require a Commission to sit from now to the beginning of the next financial year to tell us we ought not to have a penalty tax on marriage.333 The other day the Government were divided in this House on a question about the rights of women. They sent out urgent Whips—they rang up half the telephone exchanges in London to get their supporters here to back them up against the women. They were defeated badly, and I do hope that will be a blessing and a warning to the House. They have absolutely no right to undermine the right of women—to put this discouraging and unique impost on the legal bond of marriage—to brand it as though it were something to be discouraged. I do hope the right hon. Gentleman, when he replies, will do his utmost to avoid that flippancy which he showed in the last Debate on the subject.
§ Mr. MACQUISTENI quite agree with my hon. Friend. No purpose can be served in going before a Royal Commission. The present system is monstrous. The Chancellor of the Exchequer tells us there may be a loss of money. There cannot be any loss of money in it. He is to get his Income Tax. It would be exactly like those cases in the country where you have a high valuation and low rates, and a low valuation and high rates. The tax will fall upon somebody's shoulders. It all depends on the incidence of the taxation. My Friend has not carried the matter far enough. I think the Clause should have gone to this extent—that when a man is married his income, when it is all his own, should be divided into two. In point of fact, he does divide the income. Sometimes he gives more. It is divided into two, and he should pay on two incomes by right. Similarly, he should be dealt with in accordance to the number of his family. His burden should ho just. The case will fall heavily on those who have not taken on those joyous burdens. Why should we class bachelors as the selfish part of the community? I remember once a conversation in a railway train with a handsome old lady whom I had to see about a certain man. "He is still a bachelor," I said, and she replied, "I cannot stand bachelors. I do not think they are respectable." There is a certain amount of truth in it. This Amendment cannot make any difference in the Income Tax, because the Chancellor of the Exchequer must get his money. It all depends on the incidence. The state of affairs described by my hon. Friend opposite, whereby people are taxed practically double, and the rights of women are de- 334 feated to this extent, is simply intolerable. It might be possible the Chancellor of the Exchequer would have to raise his tax. I hope not. At all events, the tax has got to be obtained, but there is no reason why there should be a double burden on people who should not be obliged to bear that burden. Therefore, I hope the Chancellor of the Exchequer will agree to this very sound, just, and equitable proposal.
§ Lieut.-Commander KENWORTHYI rise to support this Clause, and, in particular, I would like to draw the attention of the Chancellor of the Exchequer to the ease of the naval officer. I believe the defence for this tax is that you have a man with a certain income and a woman with a certain income, and they effect a saving by marrying and living in the same house and having half the expenses. To my mind, it is a weak argument, because it means a large addition to expenses in the course of time. Take the case, particularly, of a naval officer or of men who have to go abroad on business and are always travelling about. Take the case of a man who has to go to India and then has to send his wife and children home, or the case of a man in the Army who spends a good deal of time abroad. These people are distinctly hard hit when the wife has an income if the two incomes are to be put together for the assessment of Income Tax. A naval officer may be abroad for three years. He has to keep up his mess, and at the same time his family has to be kept at home. Yet the Income Tax is based on the double amount of the wife's little income and the husband's small income. The thing is intolerable, and I hope my hon. Friend will divide the Committee if the Chancellor of the Exchequer will not agree to this proposal. I will just give one figure to show how this tax particularly hits the naval officer, although, as I say, there is a large class of people who do not live at home because of their profession or calling. But take the case of a naval officer with an income of £700 a year. He has to pay at least £200 a year for his expenses on board ship. That leaves him with an. income of £500 on which to support his wife and family. Deducting the allowance for children, say, £100, and the abatement of £25 for his wife, and uniform allowance £35, altogether he gets off £230, leaving £470 on which to pay Income Tax at the rate of 1s. 9d., as at present, which comes to £41 2s. 6d. His brother, who has not gone into the Service, and is assessed 335 on an income of £500, only keeps up one establishment, and is, therefore, on all fours with his brother at sea. But with an income of £500, with allowance for wife and children, and an abatement of £100, pays on £275 at 2s. 3d. He only pays an income tax of £30 18s. 9d., so that the naval officer pays an extra Income Tax over and above his brother or neighbour of £10 3s. 9d. This obviously only hits the married man in this profession. It does not hit the bachelor at all. He spends the whole of his money on himself in most cases. But suppose he marries, and his wife has a small income. The two incomes are put together, and he has to pay at the higher rate. I do hope the Committee will support this altogether just proposal, and that my hon. Friend will force it to a Division, if necessary.
§ Sir F. BANBURYI am afraid I cannot agree with the hon. Member for Glasgow (Mr. Macquisten) that as soon as a man is married his income is divided into two. That, I think, is pressing the matter rather too far. But I do agree with' my hon. Friend who moved the Clause that something ought to be done in this direction, and that the argument that the Income Tax Commission is considering whether or not some change ought to be made does not really apply. After all, this House is the body which imposes taxation. We do not want to refer to a Royal Commission the question as to whether or not taxation should be imposed. It is the most ancient privilege of this House, that they should have the power of imposing taxation, and surely they ought to consider, in imposing taxation, whether that taxation is just or right. It does not seem to me to be any argument to say we have not to consider in this House whether a tax is just or right, but whether a Royal Commission are to usurp our function and tell us what the tax is to be. It is a very different thing to suggest how the Income Tax should be levied and collected, but the imposition of this tax ought to be left to this House. We come to the justice of the tax. Is this tax just or not? It may be expedient. It may be putting more money into the pocket of the Exchequer, but that does not prove it is right or just. Many taxes could be devised which would be expedient and put money into the Exchequer, but this tax, if not just and right, ought not to be imposed. It might be held that before the Married Women's 336 Property Act was passed in 1882, there was something to be said for this tax, because, after all, if the husband had the benefit of the income, as he did before 1882, unless there was a special settlement or something of that sort, it might be said to be just that, having the income, he should pay the tax on it. At the present moment ho has not the income. In many cases he has no means of knowing what his wife's income is, unless she chooses to tell him. It might be quite possible that a wife might have a certain amount of income, and be entitled to the whole of it. The husband cannot claim any of it, and she may invest it or leave it on deposit account unknown to the husband. Yet the husband is penalised if he does not return to the Inland Revenue what the exact income of his wife is, when he has no means of knowing. That is not a very strong reason, perhaps, against the tax, but it certainly is a reason. The real reason, however, is this: I choose to meet a woman whom I know has a certain amount of money, and I choose to disregard the ordinary conventions of life, and I live with her instead of marrying her. I benefit by it in more ways than one. If I change my mind, or if she changes hers, the matter is at an end. I have no doubt that I save money by it. Now, I venture to appeal to my right hon. Friend that he is not entitled to make money out of the morality of two people if they choose to do what I am quite sure my right hon. Friend would encourage, namely, to marry. I do not see why they should be put in any better position. I am not sure that I agree with the argument that a bachelor should be taxed above a married man, but I do say that the married man ought not to be put in a worse position than a man who chooses to live with a woman and not marry her. That is the fact put plainly.
Under these circumstances, and especially in view of the fact—I am sure it would not weigh with my right hon. Friend, though it might weigh with some members of the Government—that there are a large number of hon. Members who oppose this very simple act of justice, and some will have a reminder at the next election, from their female electors—and I shall not be sorry if that is done—I trust something will be done. Let me conclude by asking my right hon. Friend, who has, I am sure, by no means an obstinate 337 nature, not to consider himself bound by any statement he made before the case was put so ably before him as it has been put by my hon. Friend opposite, but to consider the right and the justice of it. After all, what have we been doing lately? Millions and hundreds of millions do not count. We may be a little short of £50,000,000 or £60,000,000; then we borrow, or issue more currency notes—a very bad thing! But if these things are done for purposes not so wise perhaps as they might be, surely we need not say, because we are going to lose a certain sum of money, that we shall not do an act of justice !
§ 10.0 p.m.
§ Mr. HAILWOODI rise to support the hon. Member for Wood Green who has so very ably put his arguments before the Committee. One point that I think is stronger than perhaps any of the others has not been brought out in the course of the Debate. It arises within, my own knowledge, and I am sure there must be a good many cases in the country on similar lines. I refer to the case where a lady is left an annuity by her father, while at the same time the father knows that her husband is not quite worthy of his daughter, and so ties the money up; she has a life interest solely, paid to her annually, and this ceases at her death or passes to her children. I happen to know the case where after a while the husband and wife have separated, the wife being entitled to draw this annuity. As a matter of fact, the money is invested in mortgages, and the Income Tax is deducted at 6s. in the £ which is returned. The wife, however, being separated from the husband is not entitled to get this money back, but the husband, who is not worthy of his wife, and does not support her, makes application for the return of the Income Tax. You have then the case of the husband actually drawing a return of Income Tax that has been paid on the wife's own money; he has not kept his wife in any shape or form, yet he is entitled to get back from the Government Income Tax which has been unjustly deducted from the income of the wife. That, I think, is a gross injustice. I am sure the Chancellor of the Exchequer has got a sufficiently just mind to say that he is not prepared to tolerate things of that sort. It can only be remedied by assessing the income of the husband and wife as entirely separate. We need not wait for a Royal Commission, for the whole of the House, I am convinced, has made up its mind that 338 this is an injustice. I hope and trust that the Chancellor will see his way to-night to agree to this Amendment.
§ Mr. RAWLINSONI do not propose to repeat arguments that I have stated on various occasions. While on these occasions the Chancellor of the Exchequer has tried to defend the present position, I think he has really done it in a half hearted way. Seriously, surely this is a grievance which should be remedied as soon as possible! On broad principles, the income of husband and wife should be assessed separately, as if they were unmarried people. I do not propose to follow the arguments of my right hon. Friend the Member for the City of London. Apparently, from what he says, it would appear, with his experience on the Dogs Bill and other Bills, that the results for him are worse in promoting Bills than in opposing them. So far as this present matter is concerned, I want to put this very clearly: this is not a sex question in any sense at all; it is equally an injustice upon husband and upon wife. I quite realise what the Chancellor of the Exchequer is bound to say. The difficulty is this: of course, if this Clause be carried, it would mean a tremendous loss to the Exchequer. [HON. MEMBERS: "No, no!"] Obviously it must be so. If it did not, it would not be any use in moving the Amendment. But the greater the loss the greater the amount of injustice that is being done at the present time. I quite realise the extraordinary difficulty of the Chancellor of the Exchequer, for, having made his Budget and put the Income Tax at 6s., or whatever the sum was at the beginning of the year, he may, and very likely will, say, "It is quite impossible for me to accept the Amendment," which will mean the loss of a sum estimated at £1,000,000 or £2,000.000. He may quite fairly say that. If he takes that line, the only hope is that next year— [HON. MEMBERS: "No, no!"] —when he comes to the Budget, he may do something. Meantime, might I suggest that we might get an admission that this is an injustice which will be remedied at some possible time? I hope I shall be able to get that, if nothing better. At some future date I hope this anomaly will be put right once and for all, and that, quite irrespective of the question of sex.
Mr. CHAMBERLAINPerhaps I may say a word or two first about the minor matters which have been raised in this dis- 339 cussion. I am sorry that the hon. Member for Wood Green thought I treated his speech with undue levity on a previous occasion. Perhaps my efforts in that direction have been criticised before, but I think this is the first time I have been accused of undue levity, for the criticism has generally been the other way. I hope under these circumstances my hon. Friend will forgive me, and he will have no occasion to reproach me to-night. The second point of my hon. Friend was a complaint as to the procedure of the Royal Commission in regard to the publication of the evidence, and his inability to obtain a Blue Book in the Vote Office. I have sent to make inquiries, and I find there is no one there who knows anything of the statement made by my hon. Friend. They do not know why copies are not there, and I am making inquiries. I imagine the Blue Book will appear on the Pink Paper, and hon. Members will get this Report in the ordinary course. It is not unusual that the procedure of a Royal Commission comes within the discretion of the Commission itself, and we cannot dictate procedure to them. It is a common practice for a Commission, under such circumstances, to publish evidence from time to time as it goes along.
I turn from these minor matters to the consideration of the larger question. My hon. Friend who moves this new Clause said rightly that this is not a sex question, and he speaks with strong and almost passionate feeling, and quite definitely treats it as a wrong done to him. Whether the law be wrong or not, it is not an injury done to women but to married people, and it affects the husband as much as the wife. My hon. Friend quoted a letter from a surveyor which appeared to indicate that a married woman had no right to that part of the relief, which is applicable to her income, but my hon. Friend knows that that is not so. The surveyor in question evidently made an error, or did not explain the point as he should have done, but I will have his attention called to it, because it was a mistake. The grievance is not that the husband and wife cannot be assessed separately because they can, but if they wish it either of them must ask for it. If the wife is content to be assessed with her husband, and makes no request to be assessed separately, or if the husband wants to be assessed separately, he or she 340 will have to make such a request. The case may be reversed. If the wife desires to be assessed separately she must make the application; one of them must apply, and there is no differentiation —
Mr. LOCKER-LAMPSONThe husband gets repayment whether he applies or not. In order to get a repayment of the tax overpaid the wife is the only person who has to make the application, and if neither makes an application the husband gets the whole of it.
Mr. CHAMBERLAINReally does the hon. Member put that forward as a grievance? Any married woman who desires to have that relief can have it at the asking. Is that really the measure of my hon. Friend's grievance; if so, I really think he stands alone in the House, for it is a trifling matter?
Mr. CHAMBERLAINAt any rate, that is not worthy of the passion my hon. Friend has thrown into the matter. He says this is an attack upon married women's property, and he speaks of the Income Tax Act of last year as if it involved some new principle, and laid down some different treatment for married women from anything that had been applied before, and was being applied for the first time, and as if it took away from married women what up to last year they had already got. It is nothing of the kind. The Act of last year was a pure Consolidation Act, and resumed the existing law, and anyone familiar with our procedure knows nothing is more strictly observed than to keep Consolidation Acts purely to consolidation without any alteration of the law. What the Income Tax Acts do which are consolidated is what has been the practice all along, and what was the practice at the passing of the Married Women's Property Act? It was not altered, and it was not thought at the time to be inconsistent with the Married Women's Property Act, and it provided that the property of two married people shall be added together for the purpose of ascertaining at what rates they are to pay the tax. That is what it does.
§ Sir F. BANBURYWhen that was passed there were no graduations in the Income Tax, and therefore there was no penalty put upon them in regard to adding them together.
Mr. CHAMBERLAINThe same problem arises, but I do not think it arises in the same way. The graduation has enormously Increased.
§ Sir F. BANBURYThat is no reason for an injustice.
§ Mr. MACQUISTENSo that if the Income Tax is small it is on the principle De minimis non curat lex.
Mr. CHAMBERLAINLet me deal with the question of principle—not of expediency. Is this inconsistent with the principle of the Married Women's Property Act? It was not thought so by those who passed that Act. My hon. Friend really puts his ease on entirely wrong grounds when he argues it from that point of view. The hon. Member for one of the Divisions of Manchester (Mr. Hailwood) described a particular case. I think it was a case of mistaken law: in my opinion the wife in the case he mentions is entitled to whatever relief is due on her own income. But if the hon. Member will give me particulars of the case I will have them investigated, and will communicate further with him.
§ Mr. HAILWOODThe point is that the money is always deducted at 6s. in the £.
Mr. CHAMBERLAINAs I understand it, the husband is not entitled to any relief in respect of the wife's income; but still if particulars are sent me I will have them looked into. I think the hon. Member will find that the injustice of which he complains is not the effect of the law, but an effect of ignorance. I have endeavoured to persuade the House, in the first place, that this is not a question between sexes, but rather a question between married people and unmarried people. In the second place, I have endeavoured to convince hon. Members that there is no infringement of the Married Women's Property Act whatever. Now I come to the Amendment itself. My hon. and learned Friend says, "Let the Chancellor of the Exchequer change the law, whatever the cost may be, even if it be a question of a £1,000,000." I wish it was only a question of £1,000,000. But in fact it is a question of £20,000,000, and it might easily become double that amount. It means a loss of £20,000,000 to revenue as now distributed, and it is obvious that if you allow the incomes of husband and wife to be separated, and it is found by the couple that they will secure an advantage by separating the incomes, they will do so. That is 342 why I think the cost of this change might be vastly increased. Let me work, however, on a smaller figure, on what it would cost immediately. Even in these days £20,000,000 of revenue is a rather serious loss for the Chancellor of the Exchequer to face. Where would this relief go? My hon. Friend who moved illustrated his argument by a certain number of cases of people with small incomes —I dare say actual cases. In the great majority of cases where the income is a small one practically the whole of it is earned by one of the parties. In that case there would be no relief. You have to take the case where the income is partly the husband's and partly the wife's to get any relief. That is not the normal case among small Income Tax payers. You would relieve a minority of the small Income Tax payers at the expense of all other Income Tax payers who were not relieved, including those cases of small taxpayers where the whole income was earned by the husband, instead of part earned by the husband and part, in the more normal cases, not earned by the wife but settled on her or her own property from investment. It is rather interesting to see what the relief would amount to on an average among the different classes of taxpayers. The average immediate gain to each couple between £131 and £500 of income would be £4, between £501 and £1,000 it would be £35, and exceeding £50,000 it would be £1,000. It is inevitable that the biggest relief would go to the people with the biggest incomes, and I do not think that in itself is the tendency in Income Tax taxation at this moment. The largest individual relief, which would be £l,000, goes to people with incomes exceeding £50,000. The bulk of the gain is distributed over married taxpayers with aggregate incomes between £500 and £10,000 per annum. This is due to the fact that within those limits the rise is steeper, from 1s. 8d. on an earned income of £500 to 8s. 4d. on an income of £10,000.
But would you get to a system of absolute justice if you accept the principle put forward by my hon. Friend and those who are supporting him? There are anomalies in the present system. You can make play with the fact that two people living together and not married pay less than if they had regularised their position and married, but would you create a fresh anomaly or injustice if you separated the incomes of married people for the purposes of Income Tax? Take the case of a 343 man and wife with £400 between them. Is there any principle of taxation on which one of them ought to pay more than the other? Yet if the income were earned by the husband my hon. Friend would make them pay more than if half the income came from the wife's and half from the husband's exertions. The Committee must use a little imagination and see the results of a change as well as the hardships of the present situation. The real matter before us is not the separation of the income of the wife from that of the husband, but the question of the taxation of married people and the allowances made for their responsibilities as compared with other people who presumably have not those responsibilities. At present you make an allowance of £25 for the wife in respect of small incomes. You allow a single person £ 130 free of tax, but if the income exceeds £130 you tax them as from £120. Where husband and wife live together you allow an abatement of £25 in respect of the wife. I do not think that is sufficient. I cannot undertake to do very much, but I am prepared to show my sympathy with that hardship without prejudice to what may be done on the general review of Income Tax, when we consider the whole problem—and to recognise it by doubling the wife's allowance. If that commends itself to the Committee I will move on the Report stage to give effect to that change. It may be said that that is too little. I know my hon. Friend (Mr. G. Locker-Lampson) will not accept it. When he introduced the deputation to me he repudiated any compromise or any transaction. He was out for a principle, a principle which I cannot admit, and of which I cannot see the equity, at any rate, for those who are not insisting on the whole principle and nothing but the principle. I submit that this is a reasonable recognition of such difficulties as those with which we are confronted. If they are content to accept it in the spirit in which it is offered, well and good; and if I have failed to satisfy my hon. Friend, I hope I have not done anything to give him unnecessary pain.
§ Mr. ACLANDI think the Chancellor of the Exchequer has gone a long way to meet the general feeling of the Committee on this matter. He has shown that he could not accept the new Clause without putting in much greater anomalies than those which exist. It is clearly the fact that there would not only be a definite 344 loss due to treating the two incomes separately, but there would be all sorts of possibilities in the adjustment.
Mr. CHAMBERLAINI repudiate the idea that if Parliament deliberately says that the incomes of the husband and wife are to be treated separately there is anything wrong for any one of us to so divide our income as to pay the lowest tax which Parliament allows us to pay. Parliament invites us to do it, and the suggestion that there would be anything wrong could not be sustained for a moment.
§ Mr. ACLANDI do not think that the Committee wants that sort of thing done, and as a certain amount of relief will be given to a comparatively large class it is generally felt that that sort of thing ought not to be done at a time like this. I think that the Committee do feel generally that we wish to avoid having any penalty on marriage, particularly in the case of people with low incomes, and I think, therefore, that the concession which has been forecasted will to a considerable extent, give relief in the case of poor people where there is a penalty at present, on marriage and will go a long way to meet the feelings which the Committee, as a whole, has on this subject. I welcome the concession very much as a real step in advance and a real assistance where assistance is mainly needed.
Mr. LOCKER-LAMPSONBefore the House comes to a decision on this question may I say that, though I am delighted that my right hon. Friend is going to turn the £25 into £50, that does not affect the principle one iota. It does not affect the question of a penalty tax on marriage. It is a very valuable concession, but has absolutely nothing to do with the Clause before the Committee. In regard to evasion, it seems tome that you could perfectly easily, just in the same way as you get over the evasions in the case of Death. Duties, get over evasions in the case of such an abatement as I am asking for by saying that any money handed over by a wife or by a husband within, say, five years of marriage should still be counted as part of the income of the person who handed it over. In regard to the cost, the right hon. Gentleman has tried to make out that if the Clause were accepted people with large incomes would benefit. But I have suggested to the Chancellor of the Exchequer that the 345 whole of the cost would be taken out of the pockets of the rich people. Therefore that argument, it seems to me, falls to the ground. I only wish that this Amendment had been in the hands of somebody more eloquent and more able, because I am certain of this, that this House sooner
§ or later will realise the justice of this Amendment.
§
Question put,
That the Clause be read a second time.
§ The Committee divided: Ayes, 66; Noes, 148.
347| Division No. 72. | AYES. | [10.36 p.m. |
| Agg-Gardner, Sir James Tynte | Green, J. F. (Leicester) | Raffan, Peter Wilson |
| Allen, Col. William James | Gretton, Col. John | Rawlinson, John Frederick Peel |
| Astbury, Lieut.-Corn F. W. | Griffiths, T. (Pontypool) | Richardson, R. (Houghton) |
| Balfour, George (Hampstead) | Gritten, W. G. Howard | Roberts, F. O. (W. Bromwich) |
| Banbury, Rt. Hon. Sir F. G. | Guest, J. (Hemsworth, York) | Rogers, Sir Hallewell |
| Bell, Lieut.-Col. W. C. H. (Devizes) | Guinness, Capt. Hon. R. (Southend) | Roundell, Lieut.-Colonel R. F. |
| Benn, Com. Ian Hamilton (Greenwich) | Guinness, Lt.-Col. Hon. W. E. (B. St. E.) | Samuel, A. M. (Farnham, Surrey) |
| Blake, Sir Francis Douglas | Hailwood, A. | Scott, Sir S. (Marylebone) |
| Bowles, Col. H. F. | Harbison, T. J. S. | Sexton, James |
| Briant, F. | Holmes, J. S. | Shaw, Hon. A. (Kilmarnock) |
| Brown, Captain D. C. (Hexham) | Hood, Joseph | Short, A. (Wednesbury) |
| Campbell, J. G. D. | Hunter, Gen. Sir A. (Lancaster) | Smith, Capt. A. (Nelson and Colne) |
| Carew, Charles R. S. (Tiverton) | Kenworthy, Lieut.-Commander | Sprot, Colonel Sir Alexander |
| Clough, R. | Kenyon, Barnet | Thomas-Stanford, Charles |
| Cowan, D. M. (Scottish University) | King, Commander Douglas | Ward, Col. L. (Kingston-upon-Hull) |
| Craig, Lt.-Com. N. (Isle of Thanet) | Lane-Fox, Major G. R. | Willoughby, Lt.-Col. Hon. Claud |
| Davison, J. E. (Smethwick) | Macquisten, F. A. | Wood, Sir J. (Stalybridge and Hyde) |
| Devlin, Joseph | MacVeagh, Jeremiah | Worsfold, T. Cato |
| Edge, Captain William | Meysey-Thompson, Lt.-Col. E. C. | Young, Sir F. W. (Swindon) |
| Entwistle, Major C. F. | Murray, Dr. D. (Western Isles) | Young, Robert (Newton, Lanes.) |
| Foxcroft, Captain C. | Nall, Major Joseph | |
| Gardiner, J. (Perth) | Perkins, Walter Frank | TELLERS FOR THE AYES.—Mr. |
| Graham, W. (Edinburgh) | Rae, H. Norman | G. Locker-Lampson and Capt. Craig, |
| NOES. | ||
| Acland, Rt. Hon. Francis Dyke | Gibbs, Colonel George Abraham | Morris, Richard |
| Ainsworth, Captain C. | Gilmour, Lieut.-Colonel John | Mount, William Arthur |
| Archdale, Edward M. | Glanville, Harold James | Murray, William (Dumfries) |
| Armitage, Robert | Grant, James Augustus | Neal, Arthur |
| Austin, Sir H. | Greenwood, Col. Sir Hamar | O'Neill, Capt. Hon. Robert W. H |
| Baird, John Lawrence | Griggs, Sir Peter | Parker, James |
| Baldwin, Stanley | Grundy, T. W. | Parry, Major Thomas Henry |
| Barnes, Major H. (Newcastle, E.) | Hall, F. (Yorks, Normanton) | Pearce, Sir William |
| Barnett, Captain Richard W. | Hancock, John George | Pulley, Charles Thornton |
| Barnston, Major Harry | Harmsworth, Cecil B. (Luton, Beds.) | Purchase, H. G. |
| Benn, Capt. W. (Leith) | Hayday, A. | Ramsden, G T. |
| Bentinck, Lt.-Col. Lord H. Cavendish. | Hayward, Major Evan | Ratcliffe, Henry Butler |
| Blades, Sir George R. | Henderson, Major V. L. | Rees, Sir J. D. (Nottingham, E.) |
| Brackenbury, Col. H. L. | Henry, Denis S. (Londonderry, S.) | Roberts, Rt. Hon. George H. (Norwich) |
| Breese, Major C. E. | Hohler, Gerald Fitzroy | Roberts, Sir S. (Sheffield, Ecclesall) |
| Bridgeman, William Clive | Hope, Harry (Stirling) | Robinson, S. (Brecon and Radnor) |
| Briggs, Harold | Hope, James Fitzalan (Sheffield) | Robinson, T. (Stretford, Lanes.) |
| Brotherton, Col. Sir E. A. | Hope, John Deans (Berwick) | Sanders, Colonel Robert Arthur |
| Bull, Right Hon. Sir William James | Hopkins, J. W. W. | Seager, Sir William |
| Cairns, John | Hopkinson, Austin (Mossley) | Shaw, Captain W. T. (Forfar) |
| Carter, W. (Mansfield) | Horne, Edgar (Guildford) | Shortt, Rt. Hon. E. (N'castle-on-T., W.) |
| Casey, T. W. | Howard, Major S. G. | Smith, Harold (Warrington) |
| Cecil, Rt. Hon. Evelyn (Aston Manor) | Hughes, Spencer Leigh | Smithers, Alfred W. |
| Chadwick, R. Burton | Jephcott, A. R. | Stanier, Captain Sir Seville |
| Chamberlain, Rt. Hon. J. A. (Birm., W.) | Jesson, C. | Stanley, Colonel Hon. G. F. (Preston) |
| Chamberlain, N. (Birm., Lady wood) | Jodrell, N. P. | Stephenson, Colonel H. K. |
| Coates, Major Sir Edward F, | Johnson, L. S. | Stewart, Gershom |
| Colvin, Brigadier-General R. B. | Johnstone, J. | Sugden, W. H. |
| Cope, Major W. (Glamorgan) | Jones, Sir Edgar R. (Merthyr Tydvil) | Sutherland, Sir William |
| Courthope, Major George Loyd | Jones, J. Towyn (Carmarthen) | Swan, J. E. C. |
| Craig, Col. Sir James (Down, Mid.) | Jones, Wm. Kennedy (Hornsey) | Sykes, Sir C. (Huddersfield) |
| Davies, Alfred Thomas (Lincoln) | Kellaway, Frederick George | Terrell, Capt. R. (Henley, Oxford) |
| Davies, T. (Cirencester) | Knights, Capt. H. | Thomas, Brig. Gen. Sir O. (Anglesey) |
| Dawes, J. A. | Law, A. J. (Rochdale) | Tootill, Robert |
| Dean, Com. P. T. | Law, Right Hon. A. Bonar (Glasgow) | Vickers, D. |
| Doyle, N. Grattan | Lewis, T. A. (Pontypridd, Glam.) | Waddington, R. |
| Du Pre, Colonel W. B. | Locker-Lampson, Com. O (Hunt'don) | Walker, Col. William Hall |
| Edgar, Clifford | Long, Rt. Hon. Walter | Wallace, J. |
| Elliott, Lt.-Col. Sir G. (Islington, W.) | Lort-Williams, J. | Walsh, S. (Ince, Lanes.) |
| Eyres-Monsell, Commander | Lunn, William | Weston, Colonel John W. |
| Falcon, Captain M. | Mackinder, Halford J. | Wheler, Colonel Granville C. H. |
| Fell, Sir Arthur | M'Laren, R. (Lanark, N.) | White, Col. G. O. (Southport) |
| Fisher, Rt. Hon. Herbert A. L. | McNeill, Ronald (Canterbury) | Whitla, Sir William |
| Forestier-Walker, L. | Mitchell, William Lane- | Wignall, James |
| Fraser, Major Sir Keith | Mond, Rt. Hon. Sir Alfred Moritz | Williams, Lt.-Com. C. (Tavistock) |
| Gange, [...]. S. | Moreing, Captain Algernon H. | Williams, Col. Sir R. (Dorset, W.) |
| Wills, Lt.-Col. Sir Gilbert A[...]n H. | Wilson-Fox, Henry | Worthington-Evans, Rt. Hon. Sir L. |
| Wilson, Rt. Hon. J. W. (Stourbridge) | Wood, Sir H. K. (Woolwich, W.) | |
| Wilson, Colonel Leslie (Reading) | Wood, Major Mackenzie (Aberdeen, C.) | TELLERS FOR THE NOES.—Lord E. |
| Wilson, W. T. (Westhoughton) | Woolcock, W. J. U. | Talbet and Mr. Dudley Ward. |
Question put, and agreed to.